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," "anticipates," 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 canceling, 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 valuations; the impact on our revenues or operating results of airline bankruptcies; the availability of commercial and government financing and 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; our ability to recover the proportionate amounts owed to us from the other Sea Launch partners; 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 and guarantees related thereto.
Contact:
Investor Relations:
Diana Sands or Rob Young
(312) 544-2140
Communications:
Todd Blecher
(312) 544-2002
Second-quarter financial presentation: http://www.boeing.com/companyoffices/financial/2009q2/2009q2.pdf
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Six months ended Three months ended
(Dollars in millions except per June 30 June 30
share data) 2009 2008 2009 2008
------------------------------- ---- ---- ---- ----
Sales of products $28,131 $27,986 $14,296 $14,298
Sales of services 5,525 4,966 2,858 2,664
----------------- ----- ----- ----- -----
Total revenues 33,656 32,952 17,154 16,962
Cost of products (23,159) (22,425) (11,580) (11,637)
Cost of services (4,303) (4,003) (2,184) (2,248)
Boeing Capital Corporation
interest expense (90) (119) (43) (57)
-------------------------- --- ---- --- ---
Total costs and expenses (27,552) (26,547) (13,807) (13,942)
------------------------ ------- ------- ------- -------
6,104 6,405 3,347 3,020
Income from operating
investments, net 102 123 70 65
General and administrative
expense (1,716) (1,610) (925) (835)
Research and development
expense, net (1,930) (1,874) (960) (1,005)
(Loss)/gain on dispositions, net (6) 2 (3) 2
-------------------------------- --- --- --- ---
Earnings from operations 2,554 3,046 1,529 1,247
Other income, net 11 202 47 102
Interest and debt expense (137) (96) (80) (50)
------------------------- ---- --- --- ---
Earnings before income taxes 2,428 3,152 1,496 1,299
Income tax expense (816) (1,095) (499) (448)
------------------ ---- ------ ---- ----
Net earnings from continuing
operations 1,612 2,057 997 851
Net (loss)/gain on disposal of
discontinued operations,
net of taxes of ($3), $4, $0,
and $1 (4) 6 1 1
-------------------------------- --- --- --- ---
Net earnings $1,608 $2,063 $998 $852
============ ====== ====== ==== ====
Basic earnings per share from
continuing operations $2.29 $2.82 $1.42 $1.18
Net (loss)/gain on disposal of
discontinued operations, net of
taxes (0.01) 0.01
-------------------------------- ----- ---- ----- -----
Basic earnings per share $2.28 $2.83 $1.42 $1.18
======================== ===== ===== ===== =====
Diluted earnings per share from
continuing operations $2.28 $2.78 $1.41 $1.16
Net (loss)/gain on disposal of
discontinued operations, net of
taxes (0.01) 0.01
-------------------------------- ----- ---- ----- -----
Diluted earnings per share $2.27 $2.79 $1.41 $1.16
========================== ===== ===== ===== =====
Cash dividends paid per share $0.84 $0.80 $0.42 $0.40
============================= ===== ===== ===== =====
Weighted average diluted shares
(millions) 707.8 740.0 707.4 732.8
=============================== ===== ===== ===== =====
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
June 30 December 31
(Dollars in millions except per share data) 2009 2008
------------------------------------------- ---- ----
Assets
Cash and cash equivalents $4,599 $3,268
Short-term investments 171 11
Accounts receivable, net 6,588 5,602
Current portion of customer financing, net 463 425
Deferred income taxes 1,099 1,046
Inventories, net of advances and
progress billings 17,200 15,612
-------------------------------- ------ ------
Total current assets 30,120 25,964
Customer financing, net 5,969 5,857
Property, plant and equipment, net of accumulated
depreciation of $12,534 and $12,280 8,808 8,762
Goodwill 3,688 3,647
Other acquired intangibles, net 2,727 2,685
Deferred income taxes 3,858 4,114
Investments 1,188 1,328
Pension plan assets, net 21 16
Other assets, net of accumulated amortization
of $474 and $400 1,333 1,406
--------------------------------------------- ----- -----
$57,712 $53,779
===================================== ======= =======
Liabilities and Shareholders' Equity
Accounts payable $6,664 $5,871
Other accrued liabilities 11,821 11,564
Advances and billings in excess of related costs 11,717 12,737
Income taxes payable 654 41
Short-term debt and current portion of
long-term debt 416 560
-------------------------------------- --- ---
Total current liabilities 31,272 30,773
Accrued retiree health care 7,336 7,322
Accrued pension plan liability, net 8,553 8,383
Non-current income taxes payable 1,182 1,154
Other long-term liabilities 335 337
Long-term debt 8,700 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 3,561 3,456
Treasury shares, at cost - 285,882,820
and 285,661,944 (17,741) (17,758)
Retained earnings 23,668 22,675
Accumulated other comprehensive loss (13,120) (13,525)
ShareValue Trust shares - 29,089,996
and 28,460,769 (1,249) (1,203)
------------------------------------- ------ ------
Total Boeing shareholders' equity 180 (1,294)
Noncontrolling interest 154 152
----------------------- --- ---
Total shareholders' equity 334 (1,142)
--------------------------------- --- ------
$57,712 $53,779
======= =======
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
June 30
(Dollars in millions) 2009 2008
--------------------- ---- ----
Cash flows - operating activities:
Net earnings $1,608 $2,063
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Non-cash items -
Share-based plans expense 121 98
Depreciation 666 643
Amortization of other acquired
intangibles 99 81
Amortization of debt discount/
premium and issuance costs 4 4
Investment/asset impairment
charges, net 50
Customer financing valuation
provision 12 80
Loss/(gain) on disposal of
discontinued operations 7 (10)
Loss/(gain) on dispositions, net 6 (2)
Other charges and credits, net 78 78
Excess tax benefits from share-based
payment arrangements (5) (45)
Changes in assets and liabilities -
Accounts receivable (1,215) (129)
Inventories, net of advances and
progress billings (1,593) (649)
Accounts payable 804 1,022
Other accrued liabilities 262 (406)
Advances and billings in excess of
related costs (1,030) (1,166)
Income taxes receivable, payable
and deferred 921 275
Other long-term liabilities (20) (149)
Pension and other
postretirement plans 586 (281)
Customer financing, net (262) 278
Other 95 (103)
---------------- --- ----
Net cash provided by operating
activities 1,194 1,682
---------------------------------------------- ----- -----
Cash flows - investing activities:
Property, plant and equipment additions (736) (807)
Property, plant and equipment reductions 23 16
Acquisitions, net of cash acquired (47) (94)
Contributions to investments (372) (5,606)
Proceeds from investments 286 6,238
Purchase of distribution rights (148)
----------------------------------- ---- ----
Net cash used by investing
activities (846) (401)
------------------------------------------ ---- ----
Cash flows - financing activities:
New borrowings 1,843 5
Debt repayments (218) (154)
Stock options exercised, other 7 41
Excess tax benefits from share-based
payment arrangements 5 45
Employee taxes on certain share-based
payment arrangements (17)
Common shares repurchased (50) (2,064)
Dividends paid (610) (606)
------------------ ---- ----
Net cash provided/(used) by
financing activities 960 (2,733)
------------------------------------------- --- ------
Effect of exchange rate changes on cash and
cash equivalents 23 29
------------------------------------------- --- ---
Net increase/(decrease) in cash and
cash equivalents 1,331 (1,423)
Cash and cash equivalents at beginning of year 3,268 7,042
---------------------------------------------- ----- -----
Cash and cash equivalents at end of period $4,599 $5,619
========================================== ====== ======
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Six months ended Three months ended
June 30 June 30
(Dollars in millions) 2009 2008 2009 2008
--------------------- ---- ---- ---- ----
Revenues:
Commercial Airplanes $16,985 $16,728 $8,431 $8,567
Integrated Defense Systems:
Boeing Military Aircraft 6,373 6,467 3,363 3,265
Network and Space Systems 5,781 5,498 3,103 2,804
Global Services and Support 4,216 3,544 2,184 1,865
--------------------------------- ----- ----- ----- -----
Total Integrated Defense
Systems 16,370 15,509 8,650 7,934
Boeing Capital Corporation 330 364 167 179
Other 74 227 35 152
Unallocated items and
eliminations (103) 124 (129) 130
------------------------ ---- --- ---- ---
Total revenues $33,656 $32,952 $17,154 $16,962
================= ======= ======= ======= =======
Earnings from operations:
Commercial Airplanes $1,234 $1,760 $817 777
Integrated Defense Systems:
Boeing Military Aircraft 674 541 392 157
Network and Space Systems 446 504 239 237
Global Services and Support 465 452 245 243
--------------------------------- --- --- --- ---
Total Integrated Defense
Systems 1,585 1,497 876 637
Boeing Capital Corporation 73 106 36 45
Other (69) (185) (46) (135)
Unallocated items and
eliminations (269) (132) (154) (77)
------------------------ ---- ---- ---- ---
Earnings from operations 2,554 3,046 1,529 1,247
Other income, net 11 202 47 102
Interest and debt expense (137) (96) (80) (50)
---------------------------- ---- --- --- ---
Earnings before income taxes 2,428 3,152 1,496 1,299
Income tax expense (816) (1,095) (499) (448)
--------------------- ---- ------ ---- ----
Net earnings from continuing
operations 1,612 2,057 997 851
Net (loss)/gain on disposal of
discontinued operations, net of
taxes of ($3), $4, $0, and $1 (4) 6 1 1
-------------------------------- --- --- --- ---
Net earnings $1,608 $2,063 $998 $852
=============== ====== ====== ==== ====
Research and development expense:
Commercial Airplanes $1,370 $1,403 $659 $770
Integrated Defense Systems:
Boeing Military Aircraft 287 240 157 115
Network and Space Systems 185 154 99 78
Global Services and Support 84 75 50 41
--------------------------------- --- --- --- ---
Total Integrated Defense
Systems 556 469 306 234
Other 4 2 (5) 1
-------- --- --- --- ---
Total research and development
expense $1,930 $1,874 $960 $1,005
================================= ====== ====== ==== ======
Unallocated items and eliminations:
Share-based plans expense $(116) $(45) $(59) $(15)
Deferred compensation expense (46) 81 (69) 20
Pension 45 (143) 22 (76)
Post-retirement (44) (40) (21) (20)
Capitalized interest (27) (27) (12) (14)
Other (81) 42 (15) 28
-------- --- --- --- ---
Total $(269) $(132) $(154) $(77)
======== ===== ===== ===== ====
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Six months ended Three months ended
Deliveries June 30 June 30
---------- ------- -------
Commercial Airplanes 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
737 Next-Generation 190 187 99 100
747 6 9 2 5
767 6 6 3 3
777 44 39 21 18
--- --- --- --- ---
Total 246 241 125 126
========= === === === ===
--------------------------
Integrated Defense Systems
--------------------------
Boeing Military Aircraft
F/A-18 Models 23 21 13 11
F-15E Eagle 6 4 2
C-17 Globemaster 7 8 4 5
KC-767 Tanker 1 2
CH-47 Chinook 1 4 1 2
T-45TS Goshawk 4 3 2 2
AH-64 Apache 13 1 8 1
Network and Space Systems
Delta IV - Commercial/International 1 1
Commercial and Civil Satellites 2 1 2
Military Satellites 1
June 30 March 31 December 31
Contractual backlog (Dollars in billions) 2009 2009 2008
----------------------------------------- ---- ---- ----
Commercial Airplanes $257.4 $266.0 $278.6
Integrated Defense Systems:
Boeing Military Aircraft 28.2 28.2 25.7
Network and Space Systems 8.0 8.9 8.9
Global Services and Support 11.7 11.6 10.7
--------------------------------- ---- ---- ----
Total Integrated Defense Systems 47.9 48.7 45.3
----------------------------------- ---- ---- ----
Total contractual backlog $305.3 $314.7 $323.9
========================= ====== ====== ======
Unobligated backlog $22.5 $24.7 $28.2
=================== ===== ===== =====
Total backlog $327.8 $339.4 $352.1
============= ====== ====== ======
Workforce 158,700 160,900 162,200
========= ======= ======= =======
