Boeing Reports Second-Quarter Results and Raises 2014 EPS Guidance
-- Revenue of $22 billion reflects higher commercial deliveries
-- Core EPS (non-GAAP)* increased 45 percent to $2.42; GAAP EPS of $2.24
-- Solid operating cash flow of $1.8 billion; strong liquidity of $11.3 billion in
cash & marketable securities
-- Backlog remains strong at $440 billion with over 5,200 commercial airplane
orders
-- Repurchased 11.4 million shares for $1.5 billion
-- 2014 core EPS guidance increased $0.75 to between $7.90 and $8.10
CHICAGO, July 23, 2014 --
Table 1. Summary
Financial Results Second Quarter First Half
(Dollars in Millions, 2014 2013 Change 2014 2013 Change
except per share data)
Revenues $22,045 $21,815 1% $42,510 $40,708 4%
Non-GAAP*
Core Operating Earnings $1,991 $2,028 (2)% $4,086 $3,895 5%
Core Operating Margin 9.0% 9.3% (0.3) Pts 9.6% 9.6% 0.0 Pts
Core Earnings Per Share $2.42 $1.67 45% $4.16 $3.40 22%
Operating Cash Flow Before
Pension Contributions $1,809 $3,480 (48)% $2,921 $4,004 (27)%
GAAP
Earnings From Operations $1,787 $1,716 4% $3,329 $3,244 3%
Operating Margin 8.1% 7.9% 0.2 Pts 7.8% 8.0% (0.2) Pts
Net Earnings $1,653 $1,088 52% $2,618 $2,194 19%
Earnings Per Share $2.24 $1.41 59% $3.50 $2.85 23%
Operating Cash Flow $1,809 $3,467 (48)% $2,921 $3,991 (27)%
* Non-GAAP measures (core operating earnings, core operating margin and core
earnings per share) exclude certain components of pension and post retirement
benefit expense that management believes are not reflective of underlying
business performance. Complete definitions of Boeing's non-GAAP measures are on
page 7, "Non-GAAP Measures Disclosures."
The Boeing Company [NYSE: BA] reported second-quarter core earnings per share
(non-GAAP) of $2.42, reflecting strong performance and favorable tax items
(Table 1). Second-quarter 2014 results included a $272 million after-tax charge
($0.37 per share) on the KC-46A Tanker program reflecting the cost of
additional engineering and systems installation work required to complete the
Engineering and Manufacturing Development contract. Favorable tax items include
the previously announced tax benefit of $116 million for the 2007-2008 tax
settlement, as well as an additional tax benefit of $408 million in the second
quarter.
Core earnings per share guidance for 2014 increased to between $7.90 and $8.10,
from $7.15 to $7.35, reflecting the $408 million tax benefits, strong operating
performance and the KC-46A Tanker charge. GAAP earnings per share guidance for
2014 increased to between $6.85 and $7.05.
"Strong operating performance across our production programs and services
businesses drove revenue and earnings-per-share growth and healthy operating
cash flow, which supported $1.5 billion in additional share repurchases in the
quarter," said Boeing Chairman and Chief Executive Officer Jim McNerney. "We
delivered our first 787-9 and our 8,000th 737, successfully completed a key
missile defense intercept test, and delivered our 100th EA-18G Growler to the
U.S. Navy."
"While challenges resolving engineering and systems installation issues on our
tanker test aircraft are resulting in higher spending to maintain schedule, the
issues are well understood and we remain on path to begin flight testing fully
provisioned tankers the first part of next year," McNerney said.
"With 783 new commercial airplane orders to date this year and significant
contracts in the quarter for military aircraft and satellites, our backlog
remains large and diverse. Overall, our strong first-half financial
performance, sustained focus on growth and productivity, and positive market
outlook support our increased earnings guidance for the year," he said.
Table 2. Cash Flow Second Quarter First Half
(Millions) 2014 2013 2014 2013
Operating Cash Flow Before
Pension Contributions* $1,809 $3,480 $2,921 $4,004
Pension Contributions ($13) ($13)
Operating Cash Flow $1,809 $3,467 $2,921 $3,991
Less Additions to Property, Plant & Equipment ($449) ($455) ($946) ($976)
Free Cash Flow* $1,360 $3,012 $1,975 $3,015
Operating cash flow in the quarter was $1.8 billion, reflecting commercial
airplane production rates, strong operating performance and timing of receipts
and expenditures (Table 2). During the quarter, the company repurchased 11.4
million shares for $1.5 billion, leaving $6.8 billion remaining under the
current repurchase authorization expected to be completed over approximately
the next two years. The company also paid $0.5 billion in dividends in the
quarter, reflecting an approximately 50 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 14 Q1 14
Cash $7.5 $6.9
Marketable Securities (1) $3.8 $5.3
Total $11.3 $12.2
Debt Balances:
The Boeing Company, net of intercompany loans to BCC $6.4 $6.3
Boeing Capital, including intercompany loans $2.5 $2.6
Total Consolidated Debt $8.9 $8.9
(1) Marketable securities consists primarily of time deposits due within one year
classified as "short-term investments."
Cash and investments in marketable securities totaled $11.3 billion at
quarter-end (Table 3), down from $12.2 billion at the beginning of the quarter,
primarily due to the share repurchases. Debt was $8.9 billion, unchanged from
the beginning of the quarter.
Total company backlog of $440 billion was unchanged from the beginning of the
quarter, and included net orders for the quarter of $23 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
Second Quarter First Half
(Dollars in Millions) 2014 2013 Change 2014 2013 Change
Commercial Airplanes Deliveries 181 169 7% 342 306 12%
Revenues $14,304 $13,624 5% $27,041 $24,314 11%
Earnings from Operations $1,550 $1,453 7% $3,052 $2,672 14%
Operating Margin 10.8% 10.7% 0.1 Pts 11.3% 11.0% 0.3 Pts
Commercial Airplanes second-quarter revenue increased 5 percent to $14.3
billion on higher deliveries. Second-quarter operating margin was 10.8 percent,
reflecting the delivery volume and strong performance offset by the $238
million pre-tax charge on the KC-46A Tanker program (Table 4). During the
quarter, Commercial Airplanes delivered the first 787-9 Dreamliner and the 787
program received 330-minute ETOPS certification. In July, Emirates Airline and
Qatar Airways finalized orders totaling 200 777X airplanes and Monarch Airlines
announced a commitment to purchase 30 737 MAX airplanes.
Commercial Airplanes booked 264 net orders during the quarter. Backlog remains
strong with over 5,200 airplanes valued at a record $377 billion.
Defense, Space & Security
Table 5. Defense, Space & Security Second Quarter First Half
(Dollars in Millions) 2014 2013 Change 2014 2013 Change
Revenues (1)
Boeing Military Aircraft $3,523 $3,641 (3)% $6,981 $7,621 (8)%
Network & Space Systems $1,920 $2,049 (6)% $3,796 $4,009 (5)%
Global Services & Support $2,304 $2,496 (8)% $4,603 $4,666 (1)%
Total BDS Revenues $7,747 $8,186 (5)% $15,380 $16,296 (6)%
Earnings from Operations(1)
Boeing Military Aircraft $165 $386 (57)% $497 $813 (39)%
Network & Space Systems $150 $137 9% $318 $293 9%
Global Services & Support $267 $253 6% $545 $502 9%
Total BDS Earnings from Operations $582 $776 (25)% $1,360 $1,608 (15)%
Operating Margin 7.5% 9.5% (2.0) Pts 8.8% 9.9% (1.1) Pts
(1) During the first quarter of 2014, certain programs were realigned between
Boeing Military Aircraft and Global Services & Support.
Defense, Space & Security's second-quarter revenue was $7.7 billion. Operating
margin was 7.5 percent, reflecting the $187 million pre-tax charge recorded at
BMA on the KC-46A Tanker program partially offset by strong operating
performance (Table 5).
Boeing Military Aircraft (BMA) second-quarter revenue was $3.5 billion,
reflecting fewer C-17 and P-8 deliveries partially offset by higher F-15
deliveries. Operating margin of 4.7 percent was impacted by the charge on the
KC-46A Tanker program. During the quarter, BMA was awarded a contract for 44 E/
A-18 and F/A-18 aircraft from the U.S. Navy.
Network & Space Systems (N&SS) second-quarter revenue was $1.9 billion,
reflecting lower commercial satellites volume, and operating margin increased
to 7.8 percent. During the quarter, N&SS completed a successful Missile Defense
System intercept in flight test.
Global Services & Support (GS&S) second-quarter revenue was $2.3 billion,
reflecting lower volume in maintenance, modifications and upgrades. Operating
margin increased to 11.6 percent reflecting strong performance. During the
quarter, GS&S was awarded a 5 year contract to provide support for Australia's
Airborne Early Warning & Control (AEW&C) aircraft.
Backlog at Defense, Space & Security was $63 billion, of which 36 percent
represents orders with international customers.
Additional Financial Information
Table 6. Additional Financial Information Second Quarter First Half
(Dollars in Millions) 2014 2013 2014 2013
Revenues
Boeing Capital $90 $104 $172 $209
Other segment $22 $27 $42 $54
Unallocated items and eliminations ($118) ($126) ($125) ($165)
Earnings from Operations
Boeing Capital $33 $19 $77 $63
Other segment income/(expense) ($48) ($43) ($110) ($101)
Unallocated items and eliminations excluding
unallocated pension/postretirement expense ($126) ($177) ($293) ($347)
Unallocated pension/postretirement expense ($204) ($312) ($757) ($651)
Other income, net $11 $13 $20 $22
Interest and debt expense ($81) ($96) ($173) ($195)
Effective tax rate 3.7% 33.4% 17.6% 28.6%
At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion down
from $3.5 billion at the beginning of the quarter.
Unallocated items and eliminations totaled $126 million at quarter end, down
from $177 million in the same period of the prior year, primarily due to lower
deferred compensation expense. Total pension expense for the second quarter was
$693 million, down from $753 million in the same period of the prior year. The
company's effective income tax rate was 3.7 percent at quarter end, down from
33.4 percent in the same period of the prior year. The second quarter 2014
effective income tax rate included a $265 million benefit for a tax basis
adjustment, $143 million benefit for a 2009-2010 tax settlement and the
previously announced benefit of $116 million for the 2007-2008 tax settlement.
Outlook
The company's 2014 financial guidance (Table 7) reflects continued strong
performance in both businesses.
Table 7. Financial Outlook
(Dollars in Billions, except per share data) 2014
The Boeing Company
Revenue $87.5 - 90.5
Core Earnings Per Share* $7.90 - 8.10
GAAP Earnings Per Share $6.85 - 7.05
Operating Cash Flow Before Pension Contributions* ~ $7
Operating Cash Flow (1) ~ $6.25
Commercial Airplanes
Deliveries (2) 715 - 725
Revenue $57.5 - 59.5
Operating Margin greater than 10%
Defense, Space & Security (revised for business realignment)
Revenue
Boeing Military Aircraft ~ $14.2
Network & Space Systems ~ $7.7
Global Services & Support ~ $8.6
Total BDS Revenue $30 - 31
Operating Margin
Boeing Military Aircraft ~ 9.0%
Network & Space Systems ~ 8.5%
Global Services & Support ~ 11.0%
Total BDS Operating Margin ~ 9.5%
Boeing Capital
Portfolio Size Lower
Revenue ~ $0.3
Pre-Tax Earnings ~ $0.05
Research & Development ~ $3.2
Capital Expenditures ~ $2.5
Pension Expense (3) ~ $3.2
Effective Tax Rate (4) ~ 23%
(1) After discretionary cash pension contributions of $0.75 billion and assuming
new aircraft financings under $0.5 billion
(2) Assumes approximately 110 787 deliveries
(3) Approximately $1.3 billion is expected to be recorded in unallocated items
and eliminations
(4) Assumes the extension of the research and development tax credit
* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on
page 7, "Non-GAAP Measures Disclosures."
Boeing's core earnings per share guidance for 2014 increased to between $7.90
and $8.10, from $7.15 to $7.35, reflecting the $408 million tax benefits,
strong operating performance and the KC-46A Tanker charge. GAAP earnings per
share guidance for 2014 increased to between $6.85 and $7.05.
Commercial Airplanes operating margin guidance increased to greater than 10
percent on strong operating performance.
Defense, Space & Security operating margin guidance is unchanged at
approximately 9.5 percent. Boeing Military Aircraft operating margin guidance
is lowered to approximately 9 percent. Global Services & Support operating
margin guidance increased to approximately 11 percent reflecting strong
performance.
Boeing's effective tax rate is now expected to be approximately 23 percent in
2014, down from approximately 29 percent, to reflect the additional tax
benefits recorded in the second quarter and continues to assume the extension
of the research and development tax credit.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under U.S.
generally accepted accounting principles (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, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding
unallocated pension and post-retirement expense. Core operating margin is
defined as core operating earnings expressed as a percentage of revenue. Core
earnings per share is defined as GAAP diluted earnings per share excluding the
net earnings per share impact of unallocated pension and post-retirement
expense. Unallocated pension and post-retirement expense represents the portion
of pension and other post-retirement costs that are not recognized by business
segments for segment reporting purposes. Management uses core operating
earnings, core operating margin and core earnings 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 14.
Operating Cash Flow Before Pension Contributions
Operating cash flow before pension contributions is defined as GAAP operating
cash flow less pension contributions. Management believes operating cash flow
before pension contributions provides additional insights into underlying
business performance. Management uses operating cash flow before pension
contributions as a measure to assess both business performance and overall
liquidity. Table 2 provides a reconciliation between GAAP operating cash flow
and operating cash flow before pension contributions.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow less 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.
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 are used to 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 our current expectations
and assumptions, which 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 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 Matt Welch (312) 544-2140
Communications: Chaz Bickers (312) 544-2002
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Six months ended Three months ended
June 30 June 30
(Dollars in millions, except per share data) 2014 2013 2014 2013
Sales of products $37,542 $35,556 $19,527 $19,238
Sales of services 4,968 5,152 2,518 2,577
Total revenues 42,510 40,708 22,045 21,815
Cost of products (31,932) (30,165) (16,674) (16,437)
Cost of services (3,999) (4,004) (1,979) (1,995)
Boeing Capital interest expense (35) (37) (17) (18)
Total costs and expenses (35,966) (34,206) (18,670) (18,450)
6,544 6,502 3,375 3,365
Income from operating investments, net 120 88 61 43
General and administrative expense (1,795) (1,900) (918) (929)
Research and development expense, net (1,542) (1,468) (733) (763)
Gain on dispositions, net 2 22 2
Earnings from operations 3,329 3,244 1,787 1,716
Other income, net 20 22 11 13
Interest and debt expense (173) (195) (81) (96)
Earnings before income taxes 3,176 3,071 1,717 1,633
Income tax expense (558) (878) (64) (546)
Net earnings from continuing operations 2,618 2,193 1,653 1,087
Net gain on disposal of discontinued
operations, net of taxes of $0, $0, $0 and $0 1 1
Net earnings $2,618 $2,194 $1,653 $1,088
Basic earnings per share from
continuing operations $3.55 $2.88 $2.26 $1.43
Net gain on disposal of discontinued
operations, net of taxes
Basic earnings per share $3.55 $2.88 $2.26 $1.43
Diluted earnings per share from
continuing operations $3.50 $2.85 $2.24 $1.41
Net gain on disposal of discontinued
operations, net of taxes
Diluted earnings per share $3.50 $2.85 $2.24 $1.41
Cash dividends paid per share $1.46 $0.97 $0.73 $0.485
Weighted average diluted shares (millions) 747.4 770.1 740.1 771.8
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
June 30 December 31
(Dollars in millions, except per share data) 2014 2013
Assets
Cash and cash equivalents $7,533 $9,088
Short-term and other investments 3,797 6,170
Accounts receivable, net 7,694 6,546
Current portion of customer financing, net 237 344
Deferred income taxes 15 14
Inventories, net of advances and progress billings 46,251 42,912
Total current assets 65,527 65,074
Customer financing, net 3,180 3,627
Property, plant and equipment, net of accumulated
depreciation of $15,424 and $15,070 10,449 10,224
Goodwill 5,139 5,043
Acquired intangible assets, net 3,004 3,052
Deferred income taxes 2,664 2,939
Investments 1,196 1,204
Other assets, net of accumulated amortization of $420 and $448 1,578 1,500
Total assets $92,737 $92,663
Liabilities and equity
Accounts payable $11,060 $9,498
Accrued liabilities 13,222 14,131
Advances and billings in excess of related costs 21,244 20,027
Deferred income taxes and income taxes payable 6,222 6,267
Short-term debt and current portion of long-term debt 1,591 1,563
Total current liabilities 53,339 51,486
Accrued retiree health care 6,506 6,528
Accrued pension plan liability, net 9,812 10,474
Non-current income taxes payable 740 156
Other long-term liabilities 864 950
Long-term debt 7,292 8,072
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 4,524 4,415
Treasury stock, at cost - 290,904,517 and 264,882,461 shares (21,381) (17,671)
Retained earnings 34,516 32,964
Accumulated other comprehensive loss (8,659) (9,894)
Total shareholders' equity 14,061 14,875
Noncontrolling interests 123 122
Total equity 14,184 14,997
Total liabilities and equity $92,737 $92,663
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
June 30
(Dollars in millions) 2014 2013
Cash flows - operating activities:
Net earnings $2,618 $2,194
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Non-cash items -
Share-based plans expense 101 107
Depreciation and amortization 900 865
Investment/asset impairment charges, net 36 26
Customer financing valuation benefit (26) (5)
Gain on disposal of discontinued operations (1)
Gain on dispositions, net (2) (22)
Other charges and credits, net 87 31
Excess tax benefits from share-based payment arrangements (97) (47)
Changes in assets and liabilities -
Accounts receivable (1,286) (550)
Inventories, net of advances and progress billings (3,402) (2,614)
Accounts payable 1,783 848
Accrued liabilities (913) (682)
Advances and billings in excess of related costs 1,217 1,472
Income taxes receivable, payable and deferred 394 608
Other long-term liabilities (88) (60)
Pension and other postretirement plans 1,118 1,638
Customer financing, net 466 188
Other 15 (5)
Net cash provided by operating activities 2,921 3,991
Cash flows - investing activities:
Property, plant and equipment additions (946) (976)
Property, plant and equipment reductions 17 44
Acquisitions, net of cash acquired (163) (26)
Contributions to investments (5,657) (7,045)
Proceeds from investments 8,030 4,632
Net cash provided/(used) by investing activities 1,281 (3,371)
Cash flows - financing activities:
New borrowings 85 531
Debt repayments (854) (1,361)
Payments to noncontrolling interests (12)
Repayments of distribution rights and other asset financing (184) (139)
Stock options exercised, other 261 484
Excess tax benefits from share-based payment arrangements 97 47
Employee taxes on certain share-based payment arrangements (88) (57)
Common shares repurchased (3,998) (1,000)
Dividends paid (1,071) (735)
Net cash used by financing activities (5,764) (2,230)
Effect of exchange rate changes on cash and cash equivalents 7 (37)
Net decrease in cash and cash equivalents (1,555) (1,647)
Cash and cash equivalents at beginning of year 9,088 10,341
Cash and cash equivalents at end of period $7,533 $8,694
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Six months ended Three months ended
June 30 June 30
(Dollars in millions) 2014 2013 2014 2013
Revenues:
Commercial Airplanes $27,041 $24,314 $14,304 $13,624
Defense, Space & Security:
Boeing Military Aircraft 6,981 7,621 3,523 3,641
Network & Space Systems 3,796 4,009 1,920 2,049
Global Services & Support 4,603 4,666 2,304 2,496
Total Defense, Space & Security 15,380 16,296 7,747 8,186
Boeing Capital 172 209 90 104
Other segment 42 54 22 27
Unallocated items and eliminations (125) (165) (118) (126)
Total revenues $42,510 $40,708 $22,045 $21,815
Earnings from operations:
Commercial Airplanes $3,052 $2,672 $1,550 $1,453
Defense, Space & Security:
Boeing Military Aircraft 497 813 165 386
Network & Space Systems 318 293 150 137
Global Services & Support 545 502 267 253
Total Defense, Space & Security 1,360 1,608 582 776
Boeing Capital 77 63 33 19
Other segment (110) (101) (48) (43)
Unallocated items and eliminations (1,050) (998) (330) (489)
Earnings from operations 3,329 3,244 1,787 1,716
Other income, net 20 22 11 13
Interest and debt expense (173) (195) (81) (96)
Earnings before income taxes 3,176 3,071 1,717 1,633
Income tax expense (558) (878) (64) (546)
Net earnings from continuing operations 2,618 2,193 1,653 1,087
Net gain on disposal of discontinued
operations, net of taxes of $0, $0, $0 and $0 1 1
Net earnings $2,618 $2,194 $1,653 $1,088
Research and development expense, net:
Commercial Airplanes $970 $865 $441 $446
Defense, Space & Security 577 579 297 307
Other (5) 24 (5) 10
Total research and development expense, net $1,542 $1,468 $733 $763
Unallocated items and eliminations:
Share-based plans ($44) ($53) ($20) ($22)
Deferred compensation (19) (102) (26) (46)
Amortization of previously capitalized interest (36) (34) (18) (17)
Eliminations and other (194) (158) (62) (92)
Sub-total (included in core operating earnings) (293) (347) (126) (177)
Pension (804) (689) (228) (331)
Postretirement 47 38 24 19
Total unallocated items and eliminations ($1,050) ($998) ($330) ($489)
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Deliveries Six months ended Three months ended
June 30 June 30
Commercial Airplanes 2014 2013 2014 2013
737 239 218 124 116
747 6 12 2 6
767 1 12 1 8
777 48 47 24 23
787 48 17 (1) 30 16 (1)
Total 342 306 181 169
Note: Deliveries under operating lease are identified by parentheses.
Defense, Space & Security
Boeing Military Aircraft
F/A-18 Models 23 24 12 12
F-15E Eagle 8 3 4
C-17 Globemaster III 5 6 2 3
CH-47 Chinook 32 17 15 8
AH-64 Apache 19 20 9 5
P-8 Models 2 5 2 3
Global Services & Support
AEW&C 2 1
Network & Space Systems
Commercial and Civil Satellites 2 1 2
Contractual backlog (Dollars in billions) June 30 March 31 December 31
2014 2014 2013
Commercial Airplanes $376.3 $374.0 $373.0
Defense, Space & Security:
Boeing Military Aircraft 23.8 23.2 23.6
Network & Space Systems 9.6 9.4 9.8
Global Services & Support 16.3 16.1 16.2
Total Defense, Space & Security 49.7 48.7 49.6
Total contractual backlog $426.0 $422.7 $422.6
Unobligated backlog $14.3 $17.1 $18.3
Total backlog $440.3 $439.8 $440.9
Workforce 169,300 169,000 168,400
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core
operating earnings, core operating margin and core earnings per share with the
most directly comparable GAAP financial measures, earnings from operations,
operating margin and diluted earnings per share. See page 7 of this release for
additional information on the use of these non-GAAP financial measures.
Second Quarter First Half Guidance
2014 2013 2014 2013 2014
Revenues $22,045 $21,815 $42,510 $40,708
GAAP Earnings From Operations $1,787 $1,716 $3,329 $3,244
GAAP Operating Margin 8.1% 7.9% 7.8% 8.0%
Unallocated Pension/Postretirement Expense $204 $312 $757 $651 ~ $1,200
Core Operating Earnings (non-GAAP) $1,991 $2,028 $4,086 $3,895
Core Operating Margin (non-GAAP) 9.0% 9.3% 9.6% 9.6%
Increase/(Decrease) in GAAP Earnings
From Operations 4% 3%
GAAP Diluted Earnings Per Share $2.24 $1.41 $3.50 $2.85 $6.85 - $7.05
Unallocated Pension/Postretirement $0.18 $0.26 $0.66 $0.55 $1.05
Expense (1)
Core Earnings Per Share (non-GAAP) $2.42 $1.67 $4.16 $3.40 $7.90 - $8.10
Weighted Average Diluted Shares (millions) 740.1 771.8 747.4 770.1 ~ 740
Increase in GAAP Earnings Per Share 59% 23%
Increase in Core Earnings Per Share 45% 22%
(1) Earnings per share impact is presented net of the federal statutory tax rate
of 35.0 percent.
SOURCE Boeing
