Non-GAAP Measure Disclosure
Management believes that the non-GAAP (Generally Accepted Accounting Principles) measures (indicated by an asterisk *) used in this report provide investors with important perspectives into the company's ongoing business performance. The company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define the measures differently. The following definitions are provided:
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 internally to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.
Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this report may be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," "targets," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission: the effect of economic conditions in the United States and globally; the impact on our accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values; the impact on our revenues and operating results of changes to indices included in indexed price escalation clauses included in our contracts with commercial airplane and defense customers; the successful execution of our Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers cancelling, modifying and/or rescheduling contractual orders; the timing and effects of any decisions to increase or decrease the rate of commercial airplane production; the timing and effects of decisions to complete or launch a Commercial Airplanes program; the ability to successfully develop and timely produce the 787 and 747-8 aircraft; the ability of our suppliers and, as applicable, subcontractors to successfully and timely perform their obligations; the effect on our revenues of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting Boeing defense programs; our relationship with our union-represented workforce and the negotiation of collective bargaining agreements; the continuation of long-term trends in passenger and cargo traffic and revenue yields in the airline industry; the impact of volatile fuel prices and the airline industry's response; the effect of declines in aircraft valuation; the impact on our revenues or operating results of airline bankruptcies; the extent to which we are called upon to fund outstanding financing commitments or satisfy other financing requests, and our ability to satisfy those requirements; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which we are a party, and other contingencies; returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs; our ability to access external capital resources to fund our operations; the amounts and effects of underinsured operations, including satellite launches; and the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications related thereto.
CONTACT: Investor Relations: Diana Sands or Rob Young (312) 544-2140 Communications: Todd Blecher (312) 544-2002 The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited) Three months ended March 31 (Dollars in millions except per share data) 2009 2008 ------------------------------------------- ---- ---- Sales of products $13,835 $13,688 Sales of services 2,667 2,302 ----------------- ----- ----- Total revenues 16,502 15,990 Cost of products (11,579) (10,788) Cost of services (2,119) (1,755) Boeing Capital Corporation interest expense (47) (62) ------------------------------------------- --- --- Total costs and expenses (13,745) (12,605) ------------------------ ------- ------- 2,757 3,385 Income from operating investments, net 32 58 General and administrative expense (791) (775) Research and development expense, net (970) (869) Loss on dispositions/business shutdown, net (3) ------------------------------------------- -- ----- Earnings from operations 1,025 1,799 Other (loss)/income, net (36) 100 Interest and debt expense (57) (46) ------------------------- --- --- Earnings before income taxes 932 1,853 Income tax expense (317) (647) ------------------ ---- ---- Net earnings from continuing operations 615 1,206 Net (loss)/gain on disposal of discontinued operations, net of taxes of $3 and ($3) (5) 5 ------------------------------------------- -- - Net earnings $610 $1,211 ============ ==== ====== Basic earnings per share from continuing operations $0.88 $1.63 Net (loss)/gain on disposal of discontinued operations, net of taxes (0.01) 0.01 ------------------------------------------- ----- ---- Basic earnings per share $0.87 $1.64 ======================== ===== ===== Diluted earnings per share from continuing operations $0.87 $1.61 Net (loss)/gain on disposal of discontinued operations, net of taxes (0.01) 0.01 ------------------------------------------- ----- ---- Diluted earnings per share $0.86 $1.62 ========================== ===== ===== Cash dividends paid per share $0.42 $0.40 ============================= ===== ===== Weighted average diluted shares (millions) 707.4 747.4 ========================================== ===== ===== The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited) March 31 December 31 (Dollars in millions except per share data) 2009 2008 ------------------------------------------- ---- ---- Assets Cash and cash equivalents $4,237 $3,268 Short-term investments 213 11 Accounts receivable, net 6,238 5,602 Current portion of customer financing, net 353 425 Deferred income taxes 1,114 1,046 Inventories, net of advances and progress billings 15,649 15,612 ----------------------------------------- ------ ------ Total current assets 27,804 25,964 Customer financing, net 5,854 5,857 Property, plant and equipment, net of accumulated depreciation of $12,402 and $12,280 8,798 8,762 Goodwill 3,654 3,647 Other acquired intangibles, net 2,627 2,685 Deferred income taxes 3,880 4,114 Investments 1,261 1,328 Pension plan assets, net 12 16 Other assets, net of accumulated amortization of $437 and $400 1,450 1,406 -------------------------------- ----- ----- $55,340 $53,779 ===================================== ======= ======= Liabilities and Shareholders' Equity Accounts payable and other liabilities $17,553 $17,435 Advances and billings in excess of related costs 11,527 12,737 Income taxes payable 355 41 Short-term debt and current portion of long-term debt 530 560 -------------------------------------- --- --- Total current liabilities 29,965 30,773 Deferred income taxes Accrued retiree health care 7,336 7,322 Accrued pension plan liability, net 8,484 8,383 Non-current income taxes payable 1,035 1,154 Other long-term liabilities 287 337 Long-term debt 8,742 6,952 Shareholders' equity: Common shares, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 and 1,012,261,159 shares issued 5,061 5,061 Additional paid-in capital 3,289 3,456 Treasury shares, at cost - 286,098,252 and 285,661,944 (17,756) (17,758) Retained earnings 23,284 22,675 Accumulated other comprehensive loss (13,511) (13,525) ShareValue Trust shares - 28,861,019 and 28,460,769 (1,029) (1,203) ------------------------------------- ------ ------ Total Boeing shareholders' equity (662) (1,294) Noncontrolling interest 153 152 ----------------------- --- --- Total shareholders' equity (509) (1,142) --------------------------------- ---- ------ $55,340 $53,779 ======= ======= The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31 (Dollars in millions) 2009 2008 --------------------- ---- ---- Cash flows - operating activities: Net earnings $610 $1,211 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 60 45 Depreciation 335 322 Amortization of other acquired intangibles 49 40 Amortization of debt discount/premium and issuance costs 2 2 Investment/asset impairment charges, net 21 Customer financing valuation provision/(benefit) 9 (6) Loss/(gain) on disposal of discontinued operations 8 (8) Loss on dispositions/business shutdown, net 3 Other charges and credits, net 63 56 Excess tax benefits from share-based payment arrangements (5) (43) Changes in assets and liabilities - Accounts receivable (869) 197 Inventories, net of advances and progress billings (82) (604) Accounts payable and other liabilities 475 628 Advances and billings in excess of related costs (1,210) 113 Income taxes receivable, payable and deferred 534 502 Other long-term liabilities (51) (127) Pension and other postretirement plans 304 (419) Customer financing, net 21 72 Other (84) (48) ---------------------------------------------- --- --- Net cash provided by operating activities 193 1,933 ---------------------------------------------- --- ----- Cash flows - investing activities: Property, plant and equipment additions (442) (409) Property, plant and equipment reductions 25 9 Acquisitions, net of cash acquired (30) (40) Contributions to investments (200) (2,958) Proceeds from investments 49 3,630 Other (95) ---------------------------------------------- ---- --- Net cash (used)/provided by investing activities (598) 137 ------------------------------------------- ---- --- Cash flows - financing activities: New borrowings 1,827 5 Debt repayments (71) (32) Stock options exercised, other 15 Excess tax benefits from share-based payment arrangements 5 43 Employee taxes on certain share-based payment arrangements (15) Common shares repurchased (50) (1,158) Dividends paid (305) (306) ---------------------------------------------- ---- ---- Net cash provided/(used) by financing activities 1,391 (1,433) ---------------------------------------------- ----- ------ Effect of exchange rate changes on cash and cash equivalents (17) 28 ---------------------------------------------- --- -- Net increase in cash and cash equivalents 969 665 Cash and cash equivalents at beginning of year 3,268 7,042 ---------------------------------------------- ----- ----- Cash and cash equivalents at end of period $4,237 $7,707 ============================================== ====== ====== The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited) Three months ended March 31 (Dollars in millions) 2009 2008 --------------------- ---- ---- Revenues: Commercial Airplanes $8,554 $8,161 Integrated Defense Systems: Boeing Military Aircraft 3,010 3,202 Network and Space Systems 2,678 2,694 Global Services and Support 2,032 1,679 --------------------------------- ----- ----- Total Integrated Defense Systems 7,720 7,575 Boeing Capital Corporation 163 185 Other 39 75 Unallocated items and eliminations 26 (6) ---------------------------------- -- -- Total revenues $16,502 $15,990 ================= ======= ======= Earnings from operations: Commercial Airplanes $417 $983 Integrated Defense Systems: Boeing Military Aircraft 282 384 Network and Space Systems 207 267 Global Services and Support 220 209 --------------------------------- --- --- Total Integrated Defense Systems 709 860 Boeing Capital Corporation 37 61 Other (23) (50) Unallocated items and eliminations (115) (55) ---------------------------------- ---- --- Earnings from operations 1,025 1,799 Other (loss)/income, net (36) 100 Interest and debt expense (57) (46) ---------------------------- --- --- Earnings before income taxes 932 1,853 Income tax expense (317) (647) --------------------- ---- ---- Net earnings from continuing operations 615 1,206 Net (loss)/gain on disposal of discontinued operations, net of taxes of $3 and ($3) (5) 5 ------------------------------------------- -- - Net earnings 610 1,211 =============== === ===== Research and development expense: Commercial Airplanes $711 $633 Integrated Defense Systems: Boeing Military Aircraft 130 125 Network and Space Systems 86 76 Global Services and Support 34 34 --------------------------------- -- -- Total Integrated Defense Systems 250 235 Other 9 1 -------- - - Total research and development expense $970 $869 ========================================= ==== ==== Unallocated items and eliminations: Share-based plans $(57) $(30) Deferred compensation 23 61 Pension 23 (67) Postretirement (23) (20) Capitalized interest (15) (13) Other (66) 14 -------- --- -- Total $(115) $(55) ===== ===== ==== The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited) Three months ended Deliveries March 31 ---------- -------- Commercial Airplanes 2009 2008 -------------------- ---- ---- 737 Next-Generation 91 87 747 4 4 767 3 3 777 23 21 --- -- -- Total 121 115 ========= === === -------------------------- Integrated Defense Systems -------------------------- Boeing Military Aircraft F/A-18 Models 10 10 F-15 4 4 C-17 Globemaster 3 3 KC-767 Tanker 1 2 CH-47 Chinook 2 T-45TS Goshawk 2 1 AH-64 Apache 5 Network and Space Systems Commercial and Civil Satellites 1 Military Satellites 1 March 31 December 31 Contractual backlog (Dollars in billions) 2009 2008 ----------------------------------------- ---- ---- Commercial Airplanes $266.0 $278.6 Integrated Defense Systems: Boeing Military Aircraft 28.2 25.7 Network and Space Systems 8.9 8.9 Global Services and Support 11.6 10.7 -------------------------------- ---- ---- Total Integrated Defense Systems 48.7 45.3 ----------------------------------- ---- ---- Total contractual backlog $314.7 $323.9 ========================= ====== ====== Unobligated backlog $24.7 $28.2 =================== ===== ===== Total backlog $339.4 $352.1 ============= ====== ====== Workforce 160,900 162,200 ========= ======= =======
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