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Boeing Reports Strong First-Quarter Results Core EPS (non-GAAP) rose 12 percent* to $1.97 on strong operating performance; GAAP EPS of $1.87 Revenue increased 8 percent to $22.1 billion reflecting higher commercial deliveries Backlog remains strong at $495 billion with over 5,700 commercial airplane orders Repurchased 17 million shares for $2.5 billion Cash & marketable securities of $9.6 billion provide strong liquidity 2015 financial and deliveries outlook reaffirmed CHICAGO, April 22, 2015 -- Table 1. Summary Financial Results First Quarter -------------(Dollars in Millions, except per share data) 2015 2014 Change---------------------------- ---- ---- ------ Revenues $22,149 $20,465 8% Non-GAAP*--------Core Operating Earnings $2,132 $2,095 2%Core Operating Margin 9.6% 10.2% (0.6) PtsCore Earnings Per Share $1.97 $1.76 12%GAAP----Earnings From Operations $2,019 $1,542 31%Operating Margin 9.1% 7.5% 1.6 PtsNet Earnings $1,336 $965 38%Earnings Per Share $1.87 $1.28 46%Operating Cash Flow $88 $1,112 (92)%------------------- --- ------ ---- * Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are onpage 6, "Non-GAAP Measures Disclosures." The Boeing Company [NYSE: BA] reported first-quarter revenue increased 8percent to $22.1 billion on higher commercial deliveries (Table 1). Coreearnings per share (non-GAAP) increased 12 percent* to $1.97, reflecting strongperformance across the company, and GAAP earnings per share was $1.87. TheCompany reaffirmed its 2015 financial and deliveries guidance. "With disciplined execution and a sharp focus on productivity, we are meetingincreasing customer commitments while profitably growing our business," saidBoeing Chairman and Chief Executive Officer Jim McNerney. "The strongoperational and financial performance reinforces our ability to continueproviding competitive returns for our shareholders while investing intechnology and our people." "Our outlook for the full year remains positive as our teams work toefficiently deliver our portfolio of industry-leading aerospace products andservices. We are also maximizing the expertise of our talented people acrossthe company to accelerate development program milestones and improveaffordability for our customers." Table 2. Cash Flow First Quarter -------------(Millions) 2015 2014--------- ---- ----Operating Cash Flow $88 $1,112 Less Additions to Property, Plant & Equipment ($574) ($497) ----- -----Free Cash Flow* ($486) $615--- ----- ---- Operating cash flow in the quarter was $0.1 billion, reflecting timing ofreceipts and expenditures, commercial airplane production rates and strongoperating performance (Table 2). During the quarter, the company repurchased 17million shares for $2.5 billion, leaving $9.5 billion remaining under thecurrent repurchase authorization which is expected to be completed overapproximately the next two to three years. The company also paid $0.6 billionin dividends in the quarter, reflecting an approximately 25 percent increase individends per share compared to the same period of the prior year. Table 3. Cash, Marketable Securities and Debt Balances Quarter-End -----------(Billions) Q1 15 Q4 14--------- ----- -----Cash $8.6 $11.7Marketable Securities(1) $1.0 $1.4 ---- ---- Total $9.6 $13.1Debt Balances:The Boeing Company, net of intercompany loans to BCC $6.6 $6.7Boeing Capital, including intercompany loans $2.4 $2.4 ---- ----Total Consolidated Debt $9.0 $9.1--- ---- ---- (1) Marketable securities consists primarily of time deposits due within one yearclassified as "short-term investments." Cash and investments in marketable securities totaled $9.6 billion atquarter-end (Table 3), down from $13.1 billion at the beginning of the year,primarily due to the share repurchases and timing of cash flows. Debt was $9.0billion, down from $9.1 billion at the beginning of the year. Total company backlog at quarter-end was $495 billion, down from $502 billionat the beginning of the year, and included net orders for the quarter of $15billion. Segment Results Commercial Airplanes Table 4. Commercial Airplanes First Quarter -------------(Dollars in Millions) 2015 2014 Change-------------------- ---- ---- ------ Commercial Airplanes Deliveries 184 161 14% Revenues 21% $15,381 $12,737Earnings from Operations 8% $1,617 $1,502Operating Margin 10.5% 11.8% (1.3) Pts---------------- ---- ---- --------- Commercial Airplanes first-quarter revenue increased 21 percent to $15.4billion on higher delivery volume and mix (Table 4). First-quarter operatingmargin was 10.5 percent, reflecting the dilutive impact of higher 787deliveries. During the quarter, Commercial Airplanes captured orders for 52 737 MAXairplanes. The 737 program has won over 2,700 firm orders for the 737 MAX sincelaunch. Also during the quarter, the company opened a new Propulsion Systemsfacility at Boeing South Carolina that will initially support the 737 MAX and777X, delivered the first Boeing South Carolina-built 787-9 Dreamliner andreceived 330-minute ETOPS certification on the 747-8 Intercontinental. Commercial Airplanes booked 110 net orders during the quarter. Backlog remainsstrong with over 5,700 airplanes valued at $435 billion. Defense, Space & Security Table 5. Defense, Space & Security First Quarter ------------- (Dollars in Millions) 2015 2014 Change-------------------- ---- ---- ------Revenues(1) Boeing Military Aircraft $2,744 $3,455 (21)% Network & Space Systems $1,732 $1,876 (8)% Global Services & Support $2,233 $2,302 (3)% ------ ------Total BDS Revenues $6,709 $7,633 (12)%Earnings from Operations(1) Boeing Military Aircraft $261 $332 (21)% Network & Space Systems $167 $168 (1)% Global Services & Support $315 $278 13% ---- ----Total BDS Earnings from Operations $743 $778 (4)%Operating Margin 11.1% 10.2% 0.9 Pts---------------- ---- ---- ------- (1) During the first quarter of 2015, certain programs were realigned betweenBoeing Military Aircraft and Global Services & Support. Defense, Space & Security's first-quarter revenue was $6.7 billion with anoperating margin of 11.1 percent (Table 5). Boeing Military Aircraft (BMA) first-quarter revenue was $2.7 billion,reflecting planned timing of deliveries and mix; operating margin was 9.5percent. During the quarter, BMA was awarded contracts for 43 Apachehelicopters. Network & Space Systems (N&SS) first-quarter revenue was $1.7 billion,reflecting lower satellites and missile defense system program volume partiallyoffset by higher volume on the Commercial Crew program. Operating marginincreased to 9.6 percent on strong performance related to our United LaunchAlliance joint venture. During the quarter, the first two all-electric Boeing702SP satellites were launched on a single rocket. Global Services & Support (GS&S) first-quarter revenue was $2.2 billion,reflecting slightly lower volume in integrated logistics. Operating marginincreased to 14.1 percent on strong operating performance and program mix.During the quarter, GS&S was awarded a combat logistics support agreement withthe U.S. Defense Logistics Agency. Backlog at Defense, Space & Security was $60 billion, of which 37 percentrepresents orders from international customers. Additional Financial Information Table 6. Additional Financial Information First Quarter -------------(Dollars in Millions) 2015 2014Revenues Boeing Capital $86 $82 Unallocated items, eliminations and other ($27) $13Earnings from Operations Boeing Capital $20 $44 Unallocated pension/postretirement ($113) ($553) Other unallocated items and eliminations ($248) ($229)Other (loss)/income, net ($12) $9Interest and debt expense ($61) ($92)Effective tax rate 31.3% 33.9%------------------ ---- ---- At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion, downfrom $3.5 billion at the beginning of the year (Table 6). Total pension expensefor the first quarter was $785 million, down from $1,035 million in the sameperiod of the prior year. Unallocated pension expense in 2014 included a $334million non-cash charge related to retirement plan changes. Outlook The company's 2015 financial and delivery guidance (Table 7) is reaffirmed andreflects continued strong performance across the company. Table 7. 2015 Financial Outlook(Dollars in Billions, except per share data) 2015 The Boeing Company Revenue $94.5 - 96.5 Core Earnings Per Share* $8.20 - 8.40 GAAP Earnings Per Share $8.10 - 8.30 Operating Cash Flow greater than $9 Commercial Airplanes Deliveries 750 - 755 Revenue $64.5 - 65.5 Operating Margin 9.5% - 10.0% Defense, Space & Security (revised for business realignment) Revenue Boeing Military Aircraft ~$12.5 Network & Space Systems ~$8.0 Global Services & Support ~$9.5 Total BDS Revenue $29.5 - 30.5 Operating Margin Boeing Military Aircraft ~9.5% Network & Space Systems ~9.0% Global Services & Support ~11.0% Total BDS Operating Margin 9.75% - 10.0% Boeing Capital Portfolio Size Stable Revenue ~$0.3 Pre-Tax Earnings ~$0.05 Research & Development ~ $3.5Capital Expenditures ~ $2.8Pension Expense (1) ~ $2.1Effective Tax Rate (2) ~ 30.5%--------------------- ------ (1) Approximately $0.3 billion is expected to be recorded in unallocated itemsand eliminations (2) Assumes the extension of the research and development tax credit * Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are onpage 6, "Non-GAAP Measures Disclosures." 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 financialinformation. The non-GAAP financial information presented excludes certainsignificant items that may not be indicative of, or are unrelated to, resultsfrom our ongoing business operations. We believe that these non-GAAP measuresprovide investors with additional insight into the company's ongoing businessperformance. These non-GAAP measures should not be considered in isolation oras a substitute for the related GAAP measures, and other companies may definesuch measures differently. We encourage investors to review our financialstatements and publicly-filed reports in their entirety and not to rely on anysingle 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 excludingunallocated pension and post-retirement expense. Core operating margin isdefined as core operating earnings expressed as a percentage of revenue. Coreearnings per share is defined as GAAP diluted earnings per share excluding thenet earnings per share impact of unallocated pension and post-retirementexpense. Unallocated pension and post-retirement expense represents the portionof pension and other post-retirement costs that are not recognized by businesssegments for segment reporting purposes. Management uses core operatingearnings, core operating margin and core earnings per share for purposes ofevaluating and forecasting underlying business performance. Management believesthese core earnings measures provide investors additional insights intooperational performance as they exclude unallocated pension and post-retirementcosts, which primarily represent costs driven by market factors and costs notallocable to government contracts. A reconciliation between the GAAP andnon-GAAP measures is provided on page 13. Free Cash Flow Free cash flow is defined as GAAP operating cash flow without capitalexpenditures for property, plant and equipment additions. Management believesfree cash flow provides investors with an important perspective on the cashavailable for shareholders, debt repayment, and acquisitions after making thecapital investments required to support ongoing business operations and longterm value creation. Free cash flow does not represent the residual cash flowavailable for discretionary expenditures as it excludes certain mandatoryexpenditures such as repayment of maturing debt. Management uses free cash flowas a measure to assess both business performance and overall liquidity. Table 2provides 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 ofthe 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 theseforward-looking statements. Examples of forward-looking statements includestatements relating to our future financial condition and operating results, aswell as any other statement that does not directly relate to any historical orcurrent fact. Forward-looking statements are based on our current expectationsand assumptions, which may not prove to be accurate. These statements are notguarantees and are subject to risks, uncertainties, and changes incircumstances that are difficult to predict. Many factors could cause actualresults to differ materially and adversely from these forward-lookingstatements. Among these factors are risks related to: (1) general conditions inthe economy and our industry, including those due to regulatory changes; (2)our reliance on our commercial airline customers; (3) the overall health of ouraircraft production system, planned production rate increases across multiplecommercial airline programs, our commercial development and derivative aircraftprograms, and our aircraft being subject to stringent performance andreliability standards; (4) changing budget and appropriation levels andacquisition priorities of the U.S. government; (5) our dependence on U.S.government contracts; (6) our reliance on fixed-price contracts; (7) ourreliance on cost-type contracts; (8) uncertainties concerning contracts thatinclude in-orbit incentive payments; (9) our dependence on our subcontractorsand suppliers, as well as the availability of raw materials, (10) changes inaccounting 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 governmentinvestigations; (14) customer and aircraft concentration in Boeing Capital'scustomer financing portfolio; (15) changes in our ability to obtain debt oncommercially reasonable terms and at competitive rates in order to fund ouroperations and contractual commitments; (16) realizing the anticipated benefitsof mergers, acquisitions, joint ventures/strategic alliances or divestitures;(17) the adequacy of our insurance coverage to cover significant riskexposures; (18) potential business disruptions, including those related tophysical 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 onpension assets; (21) potential environmental liabilities; and (22) threats tothe security of our or our customers' information. Additional information concerning these and other factors can be found in ourfilings with the Securities and Exchange Commission, including our most recentAnnual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reportson Form 8-K. Any forward-looking statement speaks only as of the date on whichit is made, and we assume no obligation to update or revise any forward-lookingstatement, whether as a result of new information, future events, or otherwise,except as required by law. Contact: Investor Relations: Troy Lahr or Rob Martin (312) 544-2140 Communications: Bernard Choi (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) 2015 2014------------ ---- ----Sales of products $19,485 $18,015Sales of services 2,664 2,450--------- ----- -----Total revenues 22,149 20,465 Cost of products (16,380) (15,258)Cost of services (2,100) (2,020)Boeing Capital interest expense (16) (18)--------- --- ---Total costs and expenses (18,496) (17,296)------------- ------- ------- 3,653 3,169Income from operating investments, net 79 59General and administrative expense (945) (877)Research and development expense, net (769) (809)Gain on dispositions, net 1-------------- ---Earnings from operations 2,019 1,542Other (loss)/income, net (12) 9Interest and debt expense (61) (92)------------- --- ---Earnings before income taxes 1,946 1,459Income tax expense (610) (494)---------- ---- ----Net earnings $1,336 $965============ ====== ==== Basic earnings per share $1.89 $1.30================== ===== ===== Diluted earnings per share $1.87 $1.28==================== ===== ===== Cash dividends paid per share $0.91 $0.73=================== ===== ===== Weighted average diluted shares (millions) 714.2 754.1=========== ===== ===== The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited) (Dollars in millions, except per share data) March 31 December 31 2015 2014 ---- ----AssetsCash and cash equivalents $8,655 $11,733Short-term and other investments 976 1,359Accounts receivable, net 8,087 7,729Current portion of customer financing, net 184 190Deferred income taxes 17 18Inventories, net of advances and progress billings 48,502 46,756-------------------------------- ------ ------ Total current assets 66,421 67,785Customer financing, net 3,301 3,371Property, plant and equipment, net of accumulated depreciation of $15,880 and $15,689 11,172 11,007Goodwill 5,105 5,119Acquired intangible assets, net 2,809 2,869Deferred income taxes 6,485 6,576Investments 1,154 1,154Other assets, net of accumulated amortization of $506 and $479 1,328 1,317-------------------------------- ----- ----- Total assets $97,775 $99,198 ============ ======= =======Liabilities and equityAccounts payable $11,497 $10,667Accrued liabilities 11,958 13,343Advances and billings in excess of related costs 22,752 23,175Deferred income taxes and income taxes payable 8,916 8,603Short-term debt and current portion of long-term debt 133 929----------------------------------- --- --- current liabilities 55,256 56,717Accrued retiree health care 6,789 6,802Accrued pension plan liability, net 17,362 17,182Non-current income taxes payable 352 358Other long-term liabilities 1,081 1,208Long-term debt 8,905 8,141Shareholders' 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 4,657 4,625 Treasury stock, at cost -- 318,257,541 and 305,533,606 shares (25,513) (23,298) Retained earnings 37,516 36,180 Accumulated other comprehensive loss (13,815) (13,903)------------------------------------ ------- ------- Total shareholders' equity 7,906 8,665 Noncontrolling interests 124 125 ------------------------ --- --- Total equity 8,030 8,790 Total liabilities and equity $97,775 $99,198 ============================ ======= ======= The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31(Dollars in millions) 2015 2014-------------------- ---- ----Cash flows -- operating activities:Net earnings $1,336 $965Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 50 52 Depreciation and amortization 459 448 Investment/asset impairment charges, net 17 29 Customer financing valuation benefit (2) (23) Gain on disposal of discontinued operations (1) Gain on dispositions, net (1) Other charges and credits, net 76 47 Excess tax benefits from share-based payment arrangements (112) (68) Changes in assets and liabilities -- Accounts receivable (389) (792) Inventories, net of advances and progress billings (1,822) (2,049) Accounts payable 848 1,350 Accrued liabilities (900) (1,385) Advances and billings in excess of related costs (422) 1,085 Income taxes receivable, payable and deferred 443 455 Other long-term liabilities (82) (124) Pension and other postretirement plans 608 733 Customer financing, net 31 408 Other (50) (18) ----- Net cash provided by operating activities 88 1,112 ----------------------------------------- --- -----Cash flows -- investing activities: Property, plant and equipment additions (574) (497) Property, plant and equipment reductions 15 Contributions to investments (807) (2,737) Proceeds from investments 1,159 3,625 Other 8 ----- --- Net cash (used)/provided by investing activities (214) 406------------------------------------- ---- ---Cash flows -- financing activities: New borrowings 761 51 Debt repayments (813) (757) Stock options exercised 231 109 Excess tax benefits from share-based payment arrangements 112 68 Employee taxes on certain share-based payment arrangements (87) (84) Common shares repurchased (2,500) (2,500) Dividends paid (639) (540) Other (15) ----- --- Net cash used by financing activities (2,935) (3,668) ------------------------------------- ------ ------Effect of exchange rate changes on cash and cash equivalents (17) 4------------------------------------------- --- ---Net decrease in cash and cash equivalents (3,078) (2,146)Cash and cash equivalents at beginning of year 11,733 9,088----------------------------------------- ------ -----Cash and cash equivalents at end of period $8,655 $6,942========================================== ====== ====== The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited) Three months ended March 31(Dollars in millions) 2015 2014---------- ---- ----Revenues: Commercial Airplanes $15,381 $12,737 Defense, Space & Security: Boeing Military Aircraft 2,744 3,455 Network & Space Systems 1,732 1,876 Global Services & Support 2,233 2,302---------- ----- ----- Total Defense, Space & Security 6,709 7,633 Boeing Capital 86 82 Unallocated items, eliminations and other (27) 13 --- ---Total revenues $22,149 $20,465============== ======= =======Earnings from operations: Commercial Airplanes $1,617 $1,502 Defense, Space & Security: Boeing Military Aircraft 261 332 Network & Space Systems 167 168 Global Services & Support 315 278---------- --- --- Total Defense, Space & Security 743 778 Boeing Capital 20 44 Unallocated items, eliminations and other (361) (782) ------------ ---- ----Earnings from operations 2,019 1,542Other (loss)/income, net (12) 9Interest and debt expense (61) (92)--------- --- ---Earnings before income taxes 1,946 1,459Income tax expense (610) (494)---------- ---- ----Net earnings $1,336 $965============ ====== ==== Research and development expense, net:Commercial Airplanes $543 $529Defense, Space & Security 224 280Other 2 ---Total research and development expense, net $769 $809================== ==== ==== Unallocated items, eliminations and other:Share-based plans ($21) ($24)Deferred compensation (58) 7 Amortization of previously capitalized interest (29) (18) Eliminations and other unallocated items (140) (194) ------------ ---- ----Sub-total (included in core operating earnings) (248) (229) Pension (152) (576) Postretirement 39 23 --- ---Total unallocated items, eliminations and other ($361) ($782)================= ===== ===== The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited) Deliveries Three months ended March 31 --------Commercial Airplanes 2015 2014-------------------- ---- ----737 121 115747 4 4767 5777 24 24787 30 18 ---Total 184 161===== === === Note: Deliveries under operating lease are identified by parentheses. Defense, Space & Security-------------------------Boeing Military AircraftAH-64 Apache (New) 6 10AH-64 Apache (Remanufactured) 10 14C-17 Globemaster III 1 3CH-47 Chinook (New) 6 17CH-47 Chinook (Renewed) 4F-15 Models 1 4F/A-18 Models 11 11P-8 Models 2 Global Services & SupportAEW&C 1C-40A 1 Network & Space SystemsCommercial and Civil SatellitesMilitary Satellites Contractual backlog (Dollars in billions) March 31 December 31 2015 2014 ---- ----Commercial Airplanes $435.0 $440.1Defense, Space & Security: Boeing Military Aircraft 21.3 21.1 Network & Space Systems 9.4 8.9 Global Services & Support 16.9 16.9 ---- ----Total Defense, Space & Security 47.6 46.9------------------------------- ---- ----Total contractual backlog $482.6 $487.0========================= ====== ======Unobligated backlog $12.5 $15.3=================== ===== =====Total backlog $495.1 $502.3============= ====== ======Workforce 163,100 165,500========= ======= ======= 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 operatingmargin and core earnings per share with the most directly comparable GAAP financial measures, earnings fromoperations, operating margin and diluted earnings per share. See page 6 of this release for additionalinformation on the use of these non-GAAP financial measures. First Quarter Guidance ------------- -------- 2015 2014 2015 ---- ---- ----Revenues $22,149 $20,465 GAAP Earnings From Operations $2,019 $1,542GAAP Operating Margin 9.1% 7.5% Unallocated Pension/Postretirement Expense $113 $553 $110 ---- ---- ----Core Operating Earnings (non-GAAP) $2,132 $2,095Core Operating Margin (non-GAAP) 9.6% 10.2% Increase/(Decrease) in GAAP Earnings From Operations 31% Increase/(Decrease) in Core Operating Earnings (non-GAAP) 2% GAAP Diluted Earnings Per Share $1.87 $1.28 $8.10 - $8.30Unallocated Pension/Postretirement Expense(1) $0.10 $0.48 $0.10 ----- ----- -----Core Earnings Per Share (non-GAAP) $1.97 $1.76 $8.20 - $8.40 Weighted Average Diluted Shares (millions) 714.2 754.1 695 - 700Increase/(Decrease) in GAAP Earnings Per Share 46% Increase/(Decrease) in Core Earnings Per Share (non-GAAP) 12% (1)Earnings per share impact is presented net of the federal statutory tax rate of 35.0 percent.

SOURCE Boeing