EX-99 2 a201706jun308kpressrelease.htm EX-99.1 Exhibit

 
 
Exhibit 99.1
boeingblacksmall300a03.jpg
 
News Release
  
 
 
 
 
  
Boeing Corporate Offices
100 North Riverside Plaza
Chicago, IL 60606-1596
www.boeing.com
Boeing Reports Strong Second-Quarter Results; Raises EPS and Cash Flow Guidance
▪
GAAP EPS of $2.89 and core EPS (non-GAAP)* of $2.55 on solid execution across the company
▪
Strong operating cash flow of $5.0 billion; repurchased 13.6 million shares for $2.5 billion
▪
Revenue of $22.7 billion reflecting 226 commercial and defense aircraft deliveries and services
▪
Backlog grew to $482 billion, including $27 billion of net orders during the quarter
▪
Increased guidance for GAAP EPS $0.75 and core EPS (non-GAAP)* $0.60 on improved performance and tax
▪
Raised operating cash flow guidance by $1.5 billion and lowered capital expenditures guidance by $300 million
Table 1. Summary Financial Results
 
Second Quarter
 
First Half
(Dollars in Millions, except per share data)
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Revenues
 

$22,739

 

$24,755

 

$43,715

 

$47,387

 
 
 
 
 
 
 
 
 
GAAP
 
 
 
 
 
 
 
 
Earnings/(Loss) From Operations
 

$2,535

 

($419
)
 

$4,559

 

$1,369

Operating Margin
 
11.1
%
 
(1.7
)%
 
10.4
%
 
2.9
%
Net Earnings/(Loss)
 

$1,761

 

($234
)
 

$3,212

 

$985

Earnings/(Loss) Per Share
 

$2.89

 

($0.37
)
 

$5.22

 

$1.51

Operating Cash Flow
 

$4,950

 

$3,190

 

$7,044

 

$4,465

Non-GAAP*
 
 
 
 
 
 
 
 
Core Operating Earnings/(Loss)
 

$2,212

 

($488
)
 

$3,921

 

$1,206

Core Operating Margin
 
9.7
%
 
(2.0
)%
 
9.0
%
 
2.5
%
Core Earnings/(Loss) Per Share
 

$2.55

 

($0.44
)
 

$4.55

 

$1.35

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”     
CHICAGO, July 26, 2017 – The Boeing Company [NYSE: BA] reported strong earnings and operating cash flow in the second quarter of 2017, driven by improved operating performance (Table 1). Second-quarter GAAP earnings per share increased to $2.89 and core earnings per share (non-GAAP)* increased to $2.55. Revenue was $22.7 billion, reflecting planned production rates and timing of commercial and defense aircraft deliveries. 
For the full year, GAAP earnings per share guidance increased to between $11.10 and $11.30 from $10.35 and $10.55 and core earnings per share (non-GAAP)* guidance increased to between $9.80 and $10.00 from $9.20 and $9.40, primarily driven by improved performance across the company and a lower-than-expected tax rate. Operating cash flow guidance increased by $1.5 billion to $12.25 billion on solid execution and a cash tax benefit from accelerating pension funding in the third quarter of 2017. Additionally, capital expenditures guidance decreased by $300 million to $2.0 billion.

1



“Our teams are delivering better performance in every segment of the business, which is reflected in our strong second-quarter results and improved 2017 outlook,” said Chairman, President and Chief Executive Officer Dennis Muilenburg. “Our robust cash flow enabled us to return more value to shareholders, invest in future growth and in our people, including a plan to accelerate pension funding that also reduces risk and cyclicality in our business.”
“In the second quarter, we added to our large and diverse order backlog with key wins in commercial airplanes, defense, space and services, while achieving important milestones such as delivering the first 737 MAX airplane, flying the second production-ready T-X trainer aircraft, and conducting a successful Ground-based Midcourse Defense intercept test.”
“As we look to the second half of the year, our teams are focused on accelerating productivity, quality and safety improvements across the company, while completing key development efforts and delivering better capabilities and economics to our customers.”
Table 2. Cash Flow
 
Second Quarter
 
First Half
(Millions)
 
2017
 
2016
 
2017
 
2016
Operating Cash Flow
 

$4,950

 

$3,190

 

$7,044

 

$4,465

Less Additions to Property, Plant & Equipment
 

($439
)
 

($671
)
 

($905
)
 

($1,419
)
Free Cash Flow*
 

$4,511

 

$2,519

 

$6,139

 

$3,046

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”     
Operating cash flow in the quarter of $5.0 billion was driven by strong operating performance and favorable timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 13.6 million shares for $2.5 billion, leaving $9.0 billion remaining under the current repurchase authorization. The company also paid $0.9 billion in dividends in the quarter, reflecting a 30 percent increase in dividends per share compared to the same period of the prior year.
Table 3. Cash, Marketable Securities and Debt Balances
 
Quarter-End
(Billions)
 
Q2 17
 
Q1 17
Cash
 

$8.7

 

$8.2

Marketable Securities1
 

$1.6

 

$1.0

Total
 

$10.3

 

$9.2

Debt Balances:
 
 
 
 
The Boeing Company, net of intercompany loans to BCC
 

$7.8

 

$7.7

Boeing Capital, including intercompany loans
 

$3.0

 

$3.1

Total Consolidated Debt
 

$10.8

 

$10.8

1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $10.3 billion, up from $9.2 billion at the beginning of the quarter (Table 3). Debt was $10.8 billion, unchanged from the beginning of the quarter.
Total company backlog at quarter-end was $482 billion, up from $480 billion at the beginning of the quarter, and included net orders for the quarter of $27 billion.

2



Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
183

 
199

 
(8)%

 
352

 
375

 
(6)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$15,713



$17,456

 
(10)%

 

$30,018

 

$31,855

 
(6)%

Earnings/(Loss) from Operations
 

$1,567



($973
)
 
NM

 

$2,782

 

$60

 
NM

Operating Margin
 
10.0
%

(5.6
)%
 
15.6 Pts

 
9.3
%
 
0.2
%
 
9.1 Pts

Commercial Airplanes second-quarter revenue was $15.7 billion on planned production rates and timing of deliveries (Table 4). Second-quarter operating margin was 10.0 percent, reflecting solid execution.
During the quarter, Commercial Airplanes delivered the first 737 MAX 8 aircraft and announced the launch of the 737 MAX 10. Demand continues to be healthy with 571 incremental orders and commitments announced at the Paris Air Show, including 56 for widebody aircraft and 361 for the launch of the 737 MAX 10. Also at the Paris Air Show, a number of commercial service agreements were announced that provide further growth opportunity for Boeing Global Services.
Commercial Airplanes booked 183 net orders during the quarter. Backlog remains robust with more than 5,700 airplanes valued at $424 billion.
Defense, Space & Security
Table 5. Defense, Space & Security
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$2,904

 

$2,979

 
(3)%

 

$5,540

 

$6,638

 
(17)%

Network & Space Systems
 

$1,674

 

$1,810

 
(8)%

 

$3,238

 

$3,545

 
(9)%

Global Services & Support
 

$2,308

 

$2,385

 
(3)%

 

$4,640

 

$4,947

 
(6)%

Total BDS Revenues
 

$6,886

 

$7,174

 
(4)%

 

$13,418

 

$15,130

 
(11)%

Earnings from Operations
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$382

 

$175

 
NM

 

$703

 

$509

 
NM

Network & Space Systems
 

$152

 

$153

 
(1)%

 

$250

 

$301

 
(17)%

Global Services & Support
 

$356

 

$265

 
34%

 

$674

 

$605

 
11%

Total BDS Earnings from Operations
 

$890

 

$593

 
50%

 

$1,627

 

$1,415

 
15%

Operating Margin
 
12.9
%
 
8.3
%
 
4.6 Pts

 
12.1
%
 
9.4
%
 
2.7 Pts

Defense, Space & Security second-quarter revenue was $6.9 billion (Table 5). Second-quarter operating margin increased to 12.9 percent, reflecting increased productivity in all three segments.
Boeing Military Aircraft (BMA) second-quarter revenue was $2.9 billion, reflecting lower planned C-17 deliveries, and operating margin increased to 13.2 percent on improved performance. During the quarter, BMA was awarded a contract for the remanufacture of 38 AH-64E Apache helicopters for the United Kingdom, and the second production-ready T-X aircraft completed first flight.

3



Network & Space Systems (N&SS) second-quarter revenue was $1.7 billion, reflecting timing of satellite volume. Operating margin increased to 9.1 percent reflecting improved performance. During the quarter, N&SS was awarded a contract from the Missile Defense Agency for Redesigned Kill Vehicle Development.
Global Services & Support (GS&S) second-quarter revenue was $2.3 billion, reflecting timing of contracts. Operating margin increased to 15.4 percent reflecting strong performance. During the quarter, GS&S was awarded a contract from the Defense Logistics Agency to support the F-15 fleet, which will be carried out by Boeing Global Services.
Backlog at Defense, Space & Security was $58 billion, of which 37 percent represents orders from international customers.
Additional Financial Information
Table 6. Additional Financial Information
 
Second Quarter
 
First Half
(Dollars in Millions)
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$72

 

$84

 

$164

 

$148

Unallocated items, eliminations and other
 

$68

 

$41

 

$115

 

$254

Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$25

 

$18

 

$64

 

$23

Unallocated pension/postretirement
 

$323

 

$69

 

$638

 

$163

Other unallocated items and eliminations
 

($270
)
 

($126
)
 

($552
)
 

($292
)
Other income, net
 

$27

 

$13

 

$49

 

$39

Interest and debt expense
 

($93
)
 

($73
)
 

($180
)
 

($146
)
Effective tax rate
 
28.7
%
 
51.1
%
 
27.5
%
 
21.9
%
At quarter-end, Boeing Capital's net portfolio balance was $3.9 billion. Total pension expense for the second quarter was $100 million, down from $463 million in the same period of the prior year. Other unallocated items and eliminations earnings decreased primarily due to timing of expense allocations. The effective tax rate for the second quarter was 28.7 percent reflecting higher-than-expected tax benefits related to share-based compensation.
Accelerated Pension Funding
In addition to the $500 million pension contribution originally planned for 2017, the company will accelerate approximately four years of pension funding by making a discretionary contribution of $3.5 billion of Boeing common shares in the third quarter of this year. Subsequently, the company expects to utilize its strong cash position and increase its 2017 planned share repurchases by $3.5 billion to a total of approximately $10 billion for the full year. It is expected that this contribution will nearly eliminate all future mandatory pension funding through 2021 based on existing assumptions for asset returns and discount rates. “Over the past several years, we have taken meaningful actions to retire risk and reduce cyclicality, and today’s actions are another step forward,” said Greg Smith, Chief Financial Officer and Executive Vice President of Enterprise Performance & Strategy. 
The company expects approximately $700 million cash tax savings from the accelerated pension funding in 2017, which is reflected in the updated cash flow guidance. Boeing continues to anticipate cash flows to grow annually through the end of the decade and remains committed to returning free cash flow to shareholders.

4



Outlook
The company’s 2017 updated guidance (Table 7) reflects the impact of improved performance across the company and a lower-than-expected tax rate.
Table 7. 2017 Financial Outlook
Current
 
Prior
(Dollars in Billions, except per share data)
Guidance
 
Guidance
 
 
 
 
The Boeing Company
 
 
 
Revenue
$90.5 - 92.5
 
$90.5 - 92.5
 
 
 
 
GAAP Earnings Per Share
$11.10 - 11.30
 
$10.35 - 10.55
Core Earnings Per Share*
$9.80 - 10.00
 
$9.20 - 9.40
 
 
 
 
Operating Cash Flow
~$12.25
 
~$10.75
 
 
 
 
Commercial Airplanes
 
 
 
Deliveries
760 - 765
 
760 - 765
Revenue
$62.5 - 63.5
 
$62.5 - 63.5
Operating Margin
>10.0%
 
9.5% - 10.0
 
 
 
 
Defense, Space & Security
 
 
 
Revenue
 
 
 
Boeing Military Aircraft
~$11.5
 
~$11.5
Network & Space Systems
~$7.0
 
~$7.0
Global Services & Support
~$10.0
 
~$10.0
 
 
 
 
Total BDS Revenue
$28.0 - 29.0
 
$28.0 - 29.0
 
 
 
 
Operating Margin
 
 
 
Boeing Military Aircraft
>12.0%
 
~12.0%
Network & Space Systems
~8.0%
 
~9.0%
Global Services & Support
>13.5%
 
>12.5%
 
 
 
 
Total BDS Operating Margin
>11.5%
 
~11.5%
 
 
 
 
Boeing Capital
 
 
 
Portfolio Size
Stable
 
Stable
Revenue
~$0.3
 
~$0.3
Pre-Tax Earnings
~$0.08
 
~$0.05
 
 
 
 
Research & Development
~ $3.6
 
~ $3.6
Capital Expenditures
~ $2.0
 
~ $2.3
Pension Expense 1
~ $0.6
 
~ $0.7
Effective Tax Rate
~ 29.0%
 
~ 31.0%
1 Approximately ($1.0) billion is expected to be recorded in unallocated items and eliminations
*    Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”


5



Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share
Core operating earnings/(loss) is defined as GAAP earnings/(loss) from operations excluding unallocated pension and other postretirement benefit expense. Core operating margin is defined as core operating earnings/(loss) expressed as a percentage of revenue. Core earnings/(loss) per share is defined as GAAP diluted earnings/(loss) per share excluding the net earnings per share impact of unallocated pension and other postretirement benefit expense. Unallocated pension and other postretirement benefit expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes. Pension costs allocated to BDS segments are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings/(loss), core operating margin and core earnings/(loss) per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 13.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow without capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.


6




Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials, (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital’s customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

# # #
Contact:
 
 
 
Investor Relations:
  
Troy Lahr or Ben Hackman (312) 544-2140
Communications:
  
Bernard Choi (312) 544-2002


7



The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

Six months ended June 30
 
Three months ended June 30
(Dollars in millions, except per share data)
2017

 
2016

 
2017

 
2016

Sales of products

$38,659

 

$42,069

 

$20,147

 

$22,184

Sales of services
5,056

 
5,318

 
2,592

 
2,571

Total revenues
43,715

 
47,387

 
22,739

 
24,755


 
 
 
 
 
 
 
Cost of products
(31,806
)
 
(37,210
)
 
(16,443
)
 
(20,265
)
Cost of services
(3,820
)
 
(4,180
)
 
(1,932
)
 
(2,044
)
Boeing Capital interest expense
(26
)
 
(32
)
 
(13
)
 
(16
)
Total costs and expenses
(35,652
)
 
(41,422
)
 
(18,388
)
 
(22,325
)

8,063

 
5,965

 
4,351

 
2,430

Income from operating investments, net
120

 
151

 
39

 
97

General and administrative expense
(1,973
)
 
(1,694
)
 
(1,040
)
 
(806
)
Research and development expense, net
(1,651
)
 
(3,044
)
 
(813
)
 
(2,127
)
Loss on dispositions, net


 
(9
)
 
(2
)
 
(13
)
Earnings/(loss) from operations
4,559

 
1,369

 
2,535

 
(419
)
Other income, net
49

 
39

 
27

 
13

Interest and debt expense
(180
)
 
(146
)
 
(93
)
 
(73
)
Earnings/(loss) before income taxes
4,428

 
1,262

 
2,469

 
(479
)
Income tax (expense)/benefit
(1,216
)
 
(277
)
 
(708
)
 
245

Net earnings/(loss)

$3,212

 

$985

 

$1,761

 

($234
)
 
 
 
 
 
 
 
 
Basic earnings/(loss) per share

$5.28

 

$1.52

 

$2.93

 

($0.37
)
 
 
 
 
 
 
 
 
Diluted earnings/(loss) per share

$5.22

 

$1.51

 

$2.89

 

($0.37
)
 
 
 
 
 
 
 
 
Cash dividends paid per share

$2.84

 

$2.18

 

$1.42

 

$1.09

 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
615.3

 
654.9

 
609.6

 
636.3






8




The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
June 30
2017

 
December 31
2016

Assets
 
 
 
Cash and cash equivalents

$8,737

 

$8,801

Short-term and other investments
1,589

 
1,228

Accounts receivable, net
9,503

 
8,832

Current portion of customer financing, net
549

 
428

Inventories, net of advances and progress billings
42,453

 
43,199

Total current assets
62,831

 
62,488

Customer financing, net
3,398

 
3,773

Property, plant and equipment, net of accumulated depreciation of $17,380 and $16,883
12,820

 
12,807

Goodwill
5,347

 
5,324

Acquired intangible assets, net
2,567

 
2,540

Deferred income taxes
325

 
332

Investments
1,278

 
1,317

Other assets, net of accumulated amortization of $484 and $497
1,470

 
1,416

Total assets

$90,036

 

$89,997

Liabilities and equity

 

Accounts payable

$12,093

 

$11,190

Accrued liabilities
14,294

 
14,691

Advances and billings in excess of related costs
25,802

 
23,869

Short-term debt and current portion of long-term debt
720

 
384

Total current liabilities
52,909

 
50,134

Deferred income taxes
1,415

 
1,338

Accrued retiree health care
5,856

 
5,916

Accrued pension plan liability, net
19,651

 
19,943

Other long-term liabilities
2,128

 
2,221

Long-term debt
10,055

 
9,568

Shareholders’ equity:
 
 
 
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued
5,061

 
5,061

Additional paid-in capital
4,644

 
4,762

Treasury stock, at cost - 419,062,607 and 395,109,568 shares
(40,730
)
 
(36,097
)
Retained earnings
42,222

 
40,714

Accumulated other comprehensive loss
(13,234
)
 
(13,623
)
Total shareholders’ equity
(2,037
)
 
817

Noncontrolling interests
59

 
60

Total equity
(1,978
)
 
877

Total liabilities and equity

$90,036

 

$89,997




9



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30
(Dollars in millions)
2017

 
2016

Cash flows – operating activities:
 
 
 
Net earnings

$3,212

 

$985

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
98

 
97

Depreciation and amortization
965

 
890

Investment/asset impairment charges, net
46

 
50

Customer financing valuation expense/(benefit)
5

 
(4
)
Loss on dispositions, net


 
9

Other charges and credits, net
129

 
141

Changes in assets and liabilities – 
 
 
 
Accounts receivable
(912
)
 
(503
)
Inventories, net of advances and progress billings
877

 
3,004

Accounts payable
419

 
1,221

Accrued liabilities
(680
)
 
(269
)
Advances and billings in excess of related costs
1,934

 
(954
)
Income taxes receivable, payable and deferred
712

 
(494
)
Other long-term liabilities
(18
)
 
(103
)
Pension and other postretirement plans
13

 
181

Customer financing, net
343

 
275

Other
(99
)
 
(61
)
Net cash provided by operating activities
7,044

 
4,465

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(905
)
 
(1,419
)
Property, plant and equipment reductions
25

 
13

Contributions to investments
(1,820
)
 
(657
)
Proceeds from investments
1,441

 
705

Purchase of distribution rights
(131
)
 
 
Other
4

 
8

Net cash used by investing activities
(1,386
)
 
(1,350
)
Cash flows – financing activities:
 
 
 
New borrowings
874

 
1,323

Debt repayments
(56
)
 
(267
)
Repayments of distribution rights and other asset financing


 
(24
)
Stock options exercised
240

 
147

Employee taxes on certain share-based payment arrangements
(112
)
 
(79
)
Common shares repurchased
(5,000
)
 
(5,501
)
Dividends paid
(1,720
)
 
(1,408
)
Net cash used by financing activities
(5,774
)
 
(5,809
)
Effect of exchange rate changes on cash and cash equivalents
52

 
(3
)
Net decrease in cash and cash equivalents
(64
)
 
(2,697
)
Cash and cash equivalents at beginning of year
8,801

 
11,302

Cash and cash equivalents at end of period

$8,737

 

$8,605




10



The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
 
Six months ended June 30
 
Three months ended June 30
(Dollars in millions)
2017

 
2016

 
2017

 
2016

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$30,018

 

$31,855

 

$15,713

 

$17,456

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
5,540

 
6,638

 
2,904

 
2,979

Network & Space Systems
3,238

 
3,545

 
1,674

 
1,810

Global Services & Support
4,640

 
4,947

 
2,308

 
2,385

Total Defense, Space & Security
13,418

 
15,130

 
6,886

 
7,174

Boeing Capital
164

 
148

 
72

 
84

Unallocated items, eliminations and other
115

 
254

 
68

 
41

Total revenues

$43,715

 

$47,387

 

$22,739

 

$24,755

Earnings/(loss) from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$2,782

 

$60

 

$1,567

 

($973
)
Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
703

 
509

 
382

 
175

Network & Space Systems
250

 
301

 
152

 
153

Global Services & Support
674

 
605

 
356

 
265

Total Defense, Space & Security
1,627

 
1,415

 
890

 
593

Boeing Capital
64

 
23

 
25

 
18

Segment operating profit
4,473

 
1,498

 
2,482

 
(362
)
Unallocated items, eliminations and other
86

 
(129
)
 
53

 
(57
)
Earnings/(loss) from operations
4,559

 
1,369

 
2,535

 
(419
)
Other income, net
49

 
39

 
27

 
13

Interest and debt expense
(180
)
 
(146
)
 
(93
)
 
(73
)
Earnings/(loss) before income taxes
4,428

 
1,262

 
2,469

 
(479
)
Income tax (expense)/benefit
(1,216
)
 
(277
)
 
(708
)
 
245

Net earnings/(loss)

$3,212

 

$985

 

$1,761

 

($234
)
 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$1,238

 

$2,548

 

$602

 

$1,877

Defense, Space & Security
435

 
521

 
222

 
263

Other
(22
)
 
(25
)
 
(11
)
 
(13
)
Total research and development expense, net

$1,651

 

$3,044

 

$813

 

$2,127

 
 
 
 
 
 
 
 
Unallocated items, eliminations and other
 
 
 
 
 
 
 
Share-based plans

($46
)
 

($41
)
 

($25
)
 

($18
)
Deferred compensation
(96
)
 
(5
)
 
(46
)
 
(21
)
Amortization of previously capitalized interest
(51
)
 
(48
)
 
(20
)
 
(18
)
Eliminations and other unallocated items
(359
)
 
(198
)
 
(179
)
 
(69
)
Sub-total (included in core operating earnings)
(552
)
 
(292
)
 
(270
)
 
(126
)
Pension
533

 
79

 
278

 
34

Postretirement
105

 
84

 
45

 
35

Total unallocated items, eliminations and other

$86

 

($129
)
 

$53

 

($57
)

11



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
  
Deliveries
 
Six months ended June 30
 
Three months ended June 30
 
Commercial Airplanes
 
2017

 
2016

 
2017

 
2016

 
737
 
236

 
248

 
123

 
127

 
747
 
4

(1)
3

 
3

 
2

 
767
 
5

 
5

 
3

 
4

 
777
 
42

 
51

 
21

 
28

 
787
 
65

 
68

 
33

 
38

 
Total
 
352

 
375

 
183

 
199

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
5

 
15

 
2

 
8

 
AH-64 Apache (Remanufactured)
 
28

 
18

 
15

 
7

 
C-17 Globemaster III
 

 
4

 


 
1

 
CH-47 Chinook (New)
 
4

 
10

 
1

 
7

 
CH-47 Chinook (Renewed)
 
19

 
16

 
10

 
7

 
F-15 Models
 
7

 
7

 
4

 
3

 
F/A-18 Models
 
12

 
14

 
6

 
6

 
P-8 Models
 
9

 
9

 
5

 
5

 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
3

 
1

 
2

 

 
Military Satellites
 

 
1

 

 
1

 
 
 
 
 
 
 
 
 
 
 
Contractual backlog (Dollars in billions)
 
June 30
2017

 
March 31
2017

 
December 31
2016

Commercial Airplanes
 

$423.4

 

$415.1

 

$416.2

Defense, Space & Security:
 
 
 
 
 
 
Boeing Military Aircraft
 
22.4

 
23.4

 
21.4

Network & Space Systems
 
4.5

 
6.0

 
5.1

Global Services & Support
 
17.3

 
17.0

 
15.6

Total Defense, Space & Security
 
44.2

 
46.4

 
42.1

Total contractual backlog
 

$467.6

 

$461.5

 

$458.3

Unobligated backlog
 

$14.6

 

$18.0

 

$15.2

Total backlog
 

$482.2

 

$479.5

 

$473.5

Workforce
 
144,000

 
147,000

 
150,500



12



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings/(loss), core operating margin, and core earnings/(loss) per share with the most directly comparable GAAP financial measures, earnings from operations/(loss), operating margin, and diluted earnings/(loss) per share. See page 6 of this release for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share data)
Second Quarter

First Half

Guidance
  
2017

2016

2017

2016

2017
Revenues

$22,739



$24,755



$43,715



$47,387


 
 
 
 
 
 
 
 
 

 
GAAP Earnings/(Loss) From Operations

$2,535



($419
)


$4,559



$1,369


 
 
 
 
 
 
 
 
 

 
Unallocated Pension Income

($278
)


($34
)


($533
)


($79
)

 
Unallocated Other Postretirement Benefit Income

($45
)


($35
)


($105
)


($84
)

 
Unallocated Pension and Other Postretirement Benefit Income

($323
)


($69
)


($638
)


($163
)

~($1,220)
Core Operating Earnings/(Loss) (non-GAAP)

$2,212



($488
)


$3,921



$1,206


 
 












 
GAAP Diluted Earnings/(Loss) Per Share

$2.89



($0.37
)


$5.22



$1.51


$11.10 - $11.30
Unallocated Pension Income

($0.46
)


($0.05
)


($0.86
)


($0.12
)

 
Unallocated Postretirement Benefit Income

($0.07
)


($0.06
)


($0.17
)


($0.13
)

($1.30)
Provision for deferred income taxes on adjustments (1)

$0.19



$0.04



$0.36



$0.09


 
Core Earnings/(Loss) Per Share (non-GAAP)

$2.55



($0.44
)


$4.55



$1.35


$9.80 - $10.00
 
 
 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
609.6


636.3


615.3


654.9


~ 610
 
 
 
 
 
 
 
 
 
 
(1) The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments.


13