20 Oct 2010 12:30
Boeing Reports Strong Third-Quarter Results and Improves 2010 Outlook CHICAGO, Oct. 20 -- - Third-quarter earnings per share of $1.12 reported on operating margin of 8.2 percent and revenue of $17.0 billion - Operating cash flow of $1.9 billion reflects strong operating performance - Cash and marketable securities of $10.0 billion provides strong liquidity - Backlog grew to $321 billion including $25 billion of new orders in the quarter - 2010 earnings per share guidance increased to between $3.80 and $4.00 per share on stronger Commercial Airplanes outlook
Table 1. Summary Financial Results
Third Quarter Nine Months ------------- -----------(Dollars in Millions, except per share data) 2010 2009 Change 2010 2009 Change------------ ---- ---- ------ ---- ---- ------
Revenues $16,967 $16,688 2% $47,756 $50,344 (5%) Earnings/
(Loss) From
Operations $1,387 ($2,151) NA $3,868 $403 NA Operating
Margin 8.2% (12.9%) NA 8.1% 0.8% NA Net Income/
(Loss) $837 ($1,564) NA $2,143 $44 NA Earnings/
(Loss) per
Share $1.12 ($2.23) NA $2.89 $0.06 NA Operating
Cash Flow $1,855 $1,197 55% $1,836 $2,391 (23%) ---------- ------ ------ --- ------ ------ -----
The Boeing Company reported third-quarter net income of $0.8 billion, or $1.12 per share, on revenue of $17.0 billion. The results reflect higher Commercial Airplanes volume and strong performance across the company's core businesses (Table 1). Results in 2009 were impacted by a 787 R&D reclassification ($2.60 per share) and a 747 charge ($0.99 per share).
The company increased its 2010 earnings per share guidance to between $3.80 and $4.00 per share and operating cash flow guidance to greater than $1.5 billion reflecting the continued strong performance in its Commercial Airplanes business. Revenue guidance was narrowed to between $64.5 billion and $65.5 billion.
"Our results and revised outlook reflect the continued strong performance of our commercial production and services programs and the ability of our defense businesses to produce solid results in a challenging environment," said Jim McNerney, Boeing chairman, president and chief executive officer. "Orders were particularly encouraging, with a multi-year production contract for 124 F/A-18 aircraft and more than 200 net commercial airplane orders booked in the quarter, increasing our backlog and demonstrating improved overall market confidence."
Boeing's quarterly operating cash flow was $1.9 billion, reflectingstrong operating performance and timing of certain receipts and expenditures.For the first nine months of 2010, operating cash flow was $1.8 billion. Freecash flow* was $1.6 billion in the quarter and $1.1 billion year-to-date(Table 2).Table 2. Cash Flow Third Quarter Nine Months ------------- -----------(Millions) 2010 2009 2010 2009---------- ---- ---- ---- ----Operating Cash Flow $1,855 $1,197 $1,836 $2,391
Less Additions to Property, Plant
& Equipment ($282) ($229) ($725) ($965) ----- ----- ----- -----Free Cash Flow* $1,573 $968 $1,111 $1,426--------------- ------ ---- ------ ------
(*)Non-GAAP measure. A complete definition and reconciliation of Boeing's use of non-GAAP measures, identified by an asterisk (*), is found on page 8, "Non-GAAP Measure Disclosure."
Cash and investments in marketable securities totaled $10.0 billion at quarter-end (Table 3), unchanged from the prior quarter. Debt decreased by $0.5 billion in the quarter due to Boeing Capital Corporation maturities. Also during the quarter, the company paid $0.8 billion for the previously announced Argon ST and Narus acquisitions.
Table 3. Cash, Marketable Securities and Debt Balances
Quarter-End -----------(Billions) 3Q10 2Q10---------- ---- ----Cash $2.9 $4.5Marketable Securities(1) $7.1 $5.5 ---- ---- Total $10.0 $10.0Debt Balances:The Boeing Company $8.9 $8.9Boeing Capital Corporation $3.5 $4.0 ---- ----
Total Consolidated Debt $12.4 $12.9
----------------------- ----- -----
(1) Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Total company backlog at quarter-end was $321 billion, up 3 percent in the quarter, as backlog for both Commercial Airplanes and Defense, Space & Security increased during the period.
Segment Results
Commercial Airplanes
Boeing Commercial Airplanes third-quarter revenue was $8.7 billion, on higher airplane deliveries and services volume. Operating margin was 11.6 percent, reflecting the higher deliveries and continued strong operating performance (Table 4). The prior year quarterly results were impacted by a $2.6 billion 787 R&D reclassification and a $1.0 billion 747 charge.
Commercial Airplanes booked 257 gross orders during the quarter while 36 orders were removed from its order book. This contrasts with the year-ago period when net orders were 79 airplanes. Contractual backlog remains strong with 3,401 airplanes valued at $255 billion, more than seven times the unit's projected 2010 revenue.
Table 4. Commercial Airplanes Operating Results
Third Quarter --------------(Dollars in Millions) 2010 2009 Change--------------------- ---- ---- ------Commercial Airplanes Deliveries 124 113 10%Revenues $8,749 $7,883 11%Earnings/(Loss) from Operations $1,017 ($2,837) NAOperating Margins 11.6% (36.0%) NA----------------- ---- ------- --- Nine Months -----------(Dollars in Millions) 2010 2009 Change--------------------- ---- ---- ------Commercial Airplanes Deliveries 346 359 (4%)Revenues $23,650 $24,868 (5%)Earnings/(Loss) from Operations $2,379 ($1,603) NAOperating Margins 10.1% (6.4%) NA----------------- ---- ------ ---
The 787 program achieved a series of flight test milestones during the quarter, and the sixth - and final - dedicated test aircraft joined the flight test fleet on October 4. Total firm orders for the 787 at quarter-end were 847 airplanes from 55 customers. First delivery is expected in mid-first quarter 2011.
Flight testing of the 747-8 Freighter also continued during the quarter as engineers worked to resolve previously identified technical discoveries. Delivery of the first 747-8 is planned for mid-2011, and a fifth flight test aircraft is being added to support the test schedule.
Boeing Defense, Space & Security
Boeing Defense, Space & Security's third-quarter revenue declined 6 percent to $8.2 billion and operating margin was 8.4 percent on lower volume and margins in Network & Space Systems (N&SS) and Boeing Military Aircraft (BMA) (Table 5).
Table 5. Defense, Space & Security Operating Results
Third Quarter -------------(Dollars in Millions) 2010 2009 Change--------------------- ---- ---- ------Revenues Boeing Military Aircraft $3,790 $4,000 (5%) Network & Space Systems $2,344 $2,711 (14%) Global Services & Support $2,048 $2,033 1% ------ ------Total BDS Revenues $8,182 $8,744 (6%)Earnings from Operations Boeing Military Aircraft $312 $480 (35%) Network & Space Systems $152 $252 (40%) Global Services & Support $220 $153 44% ---- ----
Total BDS Earnings from Operations $684 $885 (23%)
Operating Margins 8.4% 10.1% (1.7)Pts----------------- --- ---- -------- Nine Months -----------(Dollars in Millions) 2010 2009 Change--------------------- ---- ---- ------Revenues Boeing Military Aircraft $10,611 $10,499 1% Network & Space Systems $7,021 $8,492 (17%) Global Services & Support $6,146 $6,123 0% ------ ------Total BDS Revenues $23,778 $25,114 (5%)Earnings from Operations Boeing Military Aircraft $935 $1,165 (20%) Network & Space Systems $493 $698 (29%) Global Services & Support $631 $607 4% ---- ----
Total BDS Earnings from Operations $2,059 $2,470 (17%)
Operating Margins 8.7% 9.8% (1.1)Pts----------------- --- --- --------
BMA third-quarter revenue decreased by 5 percent to $3.8 billion driven by fewer deliveries and a less favorable mix on the C-17 program. Operating margin was 8.2 percent, impacted by lower pricing and mix on the C-17. During the quarter, the U.S. Navy awarded a new multi-year contract for 124 F/A-18 and EA-18G aircraft, and the P-8A and Apache Block III were both approved for Low Rate Initial Production.
N&SS third-quarter revenue was $2.3 billion, reduced by expected lower volume on Brigade Combat Team Modernization (BCTM) and Ground-based Midcourse Defense (GMD). Operating margin was 6.5 percent on lower BCTM and GMD earnings. During the quarter, NASA awarded an extension to the International Space Station contract, Inmarsat ordered three 702HP satellites and BCTM completed its Increment 1 technical tests, a key milestone in its 2010 testing cycle.
Global Services & Support (GS&S) revenue was $2.0 billion in the quarter, essentially unchanged from the same period last year. Operating margin increased to 10.7 percent, driven by strong performance in integrated logistics and maintenance, modifications and upgrades. During the quarter, the U.S. Air Force awarded a contract to modernize its B-52 fleet.
Backlog at Defense, Space & Security is $65.6 billion, approximately two times the unit's projected 2010 revenue. The backlog increased by $5.0 billion during the quarter driven by the F/A-18 multi-year contract award.
Boeing Capital Corporation
Boeing Capital Corporation (BCC) reported third-quarter pre-tax earnings of $45 million compared to $39 million in the same period last year (Table 6). During the quarter, BCC's portfolio balance declined to $5.0 billion, down from $5.7 billion at year end, on normal run-off, asset pre-payments and depreciation. BCC's debt-to-equity ratio decreased to 5.0-to-1.
Table 6. Boeing Capital Corporation Operating Results
Third Quarter Nine Months ------------- ------------(Dollars in Millions) 2010 2009 Change 2010 2009 Change--------------------- ---- ---- ------ ---- ---- ------Revenues $170 $166 2% $494 $496 (0%)Earnings from Operations $45 $39 15% $146 $112 30%------------------------ --- --- --- ---- ---- ---
Additional Information
The "Other" segment consists primarily of Boeing Engineering, Operations and Technology, as well as certain results related to the financial consolidation of all business units. Other segment expense was $132 million in the third quarter, up from $36 million in the same period last year driven by an $81 million impairment of the Mexicana 717 financing portfolio.
Total pension expense for the third quarter was $280 million, as compared to $230 million in the same period last year. A total of $301 million was recognized in the operating segments in the quarter (up from $254 million in the same period last year), partially offset by a $21 million contribution to earnings in unallocated items.
Unallocated expense was $227 million up from the $202 million reported in the same period last year.
Interest expense for the quarter was $130 million, up from $92 million in the same period last year due to debt issued in 2009.
Outlook
Financial guidance for 2010 (Table 7) has been updated to reflect the improved Commercial Airplanes outlook resulting from its continued strong core operating performance. The guidance also reflects the recently announced rescheduling of the initial 787 and 747-8 deliveries.
Boeing's 2010 revenue guidance is now between $64.5 billion and $65.5 billion, narrowed from between $64 billion and $66 billion. Earnings guidance for 2010 is increased to between $3.80 and $4.00 per share, from between $3.50 and $3.80 per share. Operating cash flow guidance is now expected to be greater than $1.5 billion, up from approximately zero. The increase to earnings per share and operating cash flow guidance are both driven by the improved outlook at Commercial Airplanes.
The company continues to expect that 2011 revenue will be higher than 2010, although 2011 revenue estimates will be impacted by the revised 787 and 747-8 delivery schedules. After taking into account the impact of these revised schedules and anticipated pension contributions of approximately $0.5 billion, operating cash flow in 2011 is now expected to be greater than $4 billion, down from greater than $5 billion. The total two year (2010 - 2011) expected cash flow outlook is up slightly from prior guidance.
Commercial Airplanes' 2010 delivery guidance is now at approximately 460 airplanes, while revenue is expected to be approximately $31.5 billion. Operating margin guidance has been increased to approximately 9.5 percent, up from between 7.5 percent and 8.5 percent on continued strong core operating performance.
Defense, Space & Security's revenue guidance for 2010 is reaffirmed at between $32 billion and $33 billion with operating margins reduced to approximately 9 percent, from approximately 9.5 percent, reflecting
performance to date and the current contracting environment.
Boeing Capital Corporation has reaffirmed its expectation that its aircraft finance portfolio will continue to reduce as its expected new aircraft financing for 2010 remains at less than $0.5 billion, below normal portfolio runoff through customer payments and depreciation. BCC expects its debt-to-equity ratio to remain at 5.0-to-1 at the end of 2010.
Boeing's 2010 R&D forecast is unchanged at between $3.9 billion and $4.1 billion. The company now expects 2011 R&D to decrease by approximately $0.5 billion. Capital expenditures for 2010 have been reduced to approximately $1.6 billion, down from $1.7 billion. Capital expenditures are expected to increase in 2011 as the company invests in commercial production rate increases and completes the 787 final assembly line in North Charleston, S.C. The company's 2010 non-cash pension expense is expected to be approximately $1.2 billion. Non-cash pension expense in 2011 is estimated to increase by approximately $0.7 billion driven by the low discount rates currently being experienced in the marketplace. Actual 2011 pension expense will be determined at year end based on market conditions at that time.
Table 7. Financial Outlook 2010
(Dollars in Billions, except per-share data)
The Boeing Company Revenue $64.5 - $65.5 Earnings Per Share (GAAP) $3.80 - $4.00 Operating Cash Flow(1) > $1.5Boeing Commercial Airplanes Deliveries ~ 460 Revenue ~ $31.5 Operating Margin ~ 9.5%
Boeing Defense, Space & Security
Revenue Boeing Military Aircraft ~ $14.5 Network & Space Systems ~ $9.5 Global Services & Support ~ $8.5 ------ Total BDS Revenue $32 - $33 Operating Margin Boeing Military Aircraft ~ 9% Network & Space Systems ~ 7.5% Global Services & Support ~ 10.5% ------- Total BDS Operating Margin ~ 9%Boeing Capital Corporation Portfolio Size Lower Revenue ~ $0.6 Return on Assets ~ 1.5%Research & Development $3.9 - $4.1Capital Expenditures ~ $1.6-------------------- ------
(1) After cash pension contributions of less than $0.1 billion and assuming new aircraft financings under $0.5 billion.
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 Statements -------------------------- This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "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, but are not limited to, statements we make regarding our guidance relating to 2010 and 2011 financial and operating performance, 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: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) risks attributable to our reliance on our commercial customers, our suppliers and the worldwide market; (3) risks related to our development programs, including the 787 and 747-8 commercial aircraft programs; (4) risks related to our dependence on U.S. government contracts; (5) our reliance on fixed- price contracts, which could subject us to losses in the event of cost overruns; (6) risks related to cost-type contracts; (7) uncertainties concerning contracts that include in-orbit incentive payments; (8) changes in accounting estimates; (9) significant changes in discount rates and actual investment return on pension assets; (10) work stoppages or other labor disruptions; (11) changes in the competitive landscape in the markets in which we operate; (12) risks related to our doing business in other countries, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) changes in the financial condition or regulatory landscape of the commercial airline industry as they relate to Boeing Capital Corporation; (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) risks related to realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) adequacy of our insurance coverage to cover significant risk exposures; and (18) potential business disruptions related to physical security threats, information technology attacks or natural disasters. 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 any forward-looking statement, except as required by law. -------------------------------------------------------------------- Contact: Investor Relations: Scott Fitterer or Jennifer Mack (312) 544-2140 Communications: Chaz Bickers (312) 544-2002 The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited) Nine months ended September 30(Dollars in millions, except per share data) 2010 2009-------------------------------------------- ---- ----Sales of products $39,017 $42,098Sales of services 8,739 8,246----------------- ----Total revenues 47,756 50,344Cost of products (31,169) (35,432)Cost of services (7,137) (6,468)
Boeing Capital Corporation interest expense (124) (132) ------------------------------------------- ---- Total costs and expenses
(38,430) (42,032)------------------------ ------- ------- 9,326 8,312Income from operating investments, net 187 186General and administrative expense (2,667) (2,584)Research and development expense, net (2,987) (5,504)Gain/(loss) on dispositions, net 9 (7)-------------------------------- -- --Earnings/(loss) from operations 3,868 403Other income/(expense), net 20 7Interest and debt expense (384) (229)------------------------- ----Earnings/(loss) before income taxes 3,504 181Income tax (expense)/benefit (1,359) (129)---------------------------- ------ ----
Net earnings/(loss) from continuing operations 2,145 52 Net loss on disposal of discontinued
operations, net of taxes of $1, $5, $0 and $2 (2) (8) ----------------- -- --Net earnings/(loss) $2,143 $44=================== ===== ==
Basic earnings/(loss) per share from
continuing operations $2.91 $0.08
Net loss on disposal of discontinued
operations, net of taxes (0.01)------------------------------------ -----Basic earnings/(loss) per share $2.91 $0.07=============================== ==== ====
Diluted earnings/(loss) per share from
continuing operations $2.89 $0.07
Net loss on disposal of discontinued
operations, net of taxes (0.01)------------------------------------ -----Diluted earnings/(loss) per share $2.89 $0.06================================= ==== ====Cash dividends paid per share $1.26 $1.26============================= ==== ====
Weighted average diluted shares (millions) 743.0 708.1 ========================================== ==== ====
Three months ended September 30(Dollars in millions, except per share data) 2010 2009-------------------------------------------- ---- ----Sales of products $14,077 $13,967Sales of services 2,890 2,721-----------------Total revenues 16,967 16,688Cost of products (11,232) (12,273)Cost of services (2,472) (2,165)
Boeing Capital Corporation interest expense (42) (42) ------------------------------------------- Total costs and expenses
(13,746) (14,480)------------------------ ------- ------- 3,221 2,208Income from operating investments, net 74 84General and administrative expense (936) (868)Research and development expense, net (986) (3,574)Gain/(loss) on dispositions, net 14 (1)-------------------------------- -- --Earnings/(loss) from operations 1,387 (2,151)Other income/(expense), net (13) (4)Interest and debt expense (130) (92)
-------------------------
Earnings/(loss) before income taxes 1,244 (2,247)Income tax (expense)/benefit (407) 687---------------------------- ---- --
Net earnings/(loss) from continuing operations 837 (1,560) Net loss on disposal of discontinued
operations, net of taxes of $1, $5, $0 and $2 (4)----------------- --Net earnings/(loss) $837 $(1,564)=================== === =======
Basic earnings/(loss) per share from
continuing operations $1.13 $(2.22)
Net loss on disposal of discontinued
operations, net of taxes (0.01)------------------------------------ -----Basic earnings/(loss) per share $1.13 $(2.23)=============================== ==== ======
Diluted earnings/(loss) per share from
continuing operations $1.12 $(2.22)
Net loss on disposal of discontinued
operations, net of taxes (0.01)------------------------------------ -----Diluted earnings/(loss) per share $1.12 $(2.23)================================= ==== ======Cash dividends paid per share $0.42 $0.42============================= ==== ====
Weighted average diluted shares (millions) 744.6 701.3 ========================================== ==== ====
The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited) September 30(Dollars in millions except per share data) 2010
Assets
Cash and cash equivalents $2,864Short-term and other investments 7,102Accounts receivable, net 6,445Current portion of customer financing, net 285Deferred income taxes 1,066Inventories, net of advances and progress billings 21,692 Total current assets 39,454Customer financing, net 4,688
Property, plant and equipment, net of accumulated
depreciation of $13,265 and $12,795 8,671Goodwill 4,871Other acquired intangibles, net 3,027Deferred income taxes 2,223Investments 1,035Pension plan assets, net 33
Other assets, net of accumulated amortization
of $583 and $492 1,220
--------------------------------------------------------- -----
Total assets $65,222 =======Liabilities and equityAccounts payable $7,563Other accrued liabilities 12,760Advances and billings in excess of related costs 11,844Income taxes payable 1,118Short-term debt and current portion of long-term debt 953----------------------------------------------------- --- Total current liabilities 34,238Accrued retiree health care 7,062Accrued pension plan liability, net 6,522Non-current income taxes payable 838Other long-term liabilities 544Long-term debt 11,466
Equity:
Common stock, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 shares issued 5,061 Additional paid-in capital 3,826 Treasury stock, at cost - 278,871,303 and 256,406,709 shares (17,302) Retained earnings 24,244 Accumulated other comprehensive loss (11,375) ShareValue Trust - 0 and 29,563,324 shares Total Boeing shareholders' equity 4,454 Noncontrolling interest 98 ----------------------- -- Total equity 4,552 ------------ ---- Total liabilities and equity $65,222 ============================ ======= December 31(Dollars in millions except per share data) 2009
Assets
Cash and cash equivalents $9,215Short-term and other investments 2,008Accounts receivable, net 5,785Current portion of customer financing, net 368Deferred income taxes 966Inventories, net of advances and progress billings 16,933 Total current assets 35,275Customer financing, net 5,466
Property, plant and equipment, net of accumulated
depreciation of $13,265 and $12,795 8,784Goodwill 4,319Other acquired intangibles, net 2,877Deferred income taxes 3,062Investments 1,030Pension plan assets, net 16
Other assets, net of accumulated amortization
of $583 and $492 1,224
--------------------------------------------------------- -----
Total assets $62,053 =======Liabilities and equityAccounts payable $7,096Other accrued liabilities 12,822Advances and billings in excess of related costs 12,076Income taxes payable 182Short-term debt and current portion of long-term debt 707----------------------------------------------------- -- Total current liabilities 32,883Accrued retiree health care 7,049Accrued pension plan liability, net 6,315Non-current income taxes payable 827Other long-term liabilities 537Long-term debt 12,217
Equity:
Common stock, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 shares issued 5,061 Additional paid-in capital 3,724 Treasury stock, at cost - 278,871,303 and 256,406,709 shares (15,911) Retained earnings 22,746 Accumulated other comprehensive loss (11,877) ShareValue Trust - 0 and 29,563,324 shares (1,615) ------ Total Boeing shareholders' equity 2,128 Noncontrolling interest 97 ----------------------- -- Total equity 2,225 ------------ ---- Total liabilities and equity $62,053 ============================ ======= The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30(Dollars in millions) 2010--------------------- ----
Cash flows - operating activities:
Net earnings $2,143 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 172 Depreciation 1,101 Amortization of other acquired intangibles 169 Amortization of debt discount/premium and issuance costs 15 Investment/asset impairment charges, net 127 Customer financing valuation provision 24 Loss on disposal of discontinued operations 3 (Gain)/loss on dispositions, net (9) Other charges and credits, net 103 Excess tax benefits from share-based payment arrangements (17) Changes in assets and liabilities - Accounts receivable (701) Inventories, net of advances and progress billings (4,686) Accounts payable 235 Other accrued liabilities 397 Advances and billings in excess of related costs (303) Income taxes receivable, payable and deferred 1,133 Other long-term liabilities 276 Pension and other postretirement plans 973 Customer financing, net 559 Other 122 ----- Net cash provided by operating activities 1,836 ----------------------------------------- ----
Cash flows - investing activities:
Property, plant and equipment additions (725) Property, plant and equipment reductions 47 Acquisitions, net of cash acquired (867) Contributions to investments (12,745) Proceeds from investments 7,657 Payments on Sea Launch guarantees Reimbursement of Sea Launch guarantee payments 40 Receipt of economic development program funds 115 Purchase of distribution rights (2) Net cash used by investing activities (6,480) ------------------------------------- ------
Cash flows - financing activities:
New borrowings 30 Debt repayments (655) Repayments of distribution rights financing (137) Stock options exercised, other 71 Excess tax benefits from share-based payment arrangements 17 Employee taxes on certain share-based payment arrangements (26) Common shares repurchased Dividends paid (945) -------------- Net cash (used)/provided by financing activities (1,645) ------------------------------------- ------
Effect of exchange rate changes on cash
and cash equivalents (62)--------------------------------------- ---
Net (decrease)/increase in cash and cash
equivalents (6,351)Cash and cash equivalents at beginning of year 9,215----------------------------------------- -----Cash and cash equivalents at end of period $2,864========================================== ====== Nine months ended September 30(Dollars in millions) 2009--------------------- ----
Cash flows - operating activities:
Net earnings $44 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 180 Depreciation 1,047 Amortization of other acquired intangibles 152 Amortization of debt discount/premium and issuance costs 7 Investment/asset impairment charges, net 66 Customer financing valuation provision 31 Loss on disposal of discontinued operations 13 (Gain)/loss on dispositions, net 7 Other charges and credits, net 170 Excess tax benefits from share-based payment arrangements (5) Changes in assets and liabilities - Accounts receivable (818) Inventories, net of advances and progress billings (582) Accounts payable 1,169 Other accrued liabilities 1,091 Advances and billings in excess of related costs (961) Income taxes receivable, payable and deferred 133 Other long-term liabilities (3) Pension and other postretirement plans 819 Customer financing, net (204) Other 35 ----- Net cash provided by operating activities 2,391 ----------------------------------------- ----
Cash flows - investing activities:
Property, plant and equipment additions (965) Property, plant and equipment reductions 25 Acquisitions, net of cash acquired (639) Contributions to investments (728) Proceeds from investments 606 Payments on Sea Launch guarantees (448) Reimbursement of Sea Launch guarantee payments Receipt of economic development program funds Purchase of distribution rights Net cash used by investing activities (2,149) ------------------------------------- ------
Cash flows - financing activities:
New borrowings 3,772 Debt repayments (256) Repayments of distribution rights financing Stock options exercised, other 8 Excess tax benefits from share-based payment arrangements 5 Employee taxes on certain share-based payment arrangements (19) Common shares repurchased (50) Dividends paid (915) -------------- Net cash (used)/provided by financing activities 2,545 ------------------------------------- -----
Effect of exchange rate changes on cash
and cash equivalents 40--------------------------------------- ---Net (decrease)/increase in cash and cash equivalents 2,827Cash and cash equivalents at beginning of year 3,268----------------------------------------- -----Cash and cash equivalents at end of period $6,095========================================== ====== The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited) Nine months ended September 30(Dollars in millions) 2010 2009--------------------- ---- ----Revenues: Commercial Airplanes $23,650 $24,868 Boeing Defense, Space & Security: Boeing Military Aircraft 10,611 10,499 Network & Space Systems 7,021 8,492 Global Services & Support 6,146 6,123 ------------------------- ---- ---- Total Boeing Defense, Space & Security 23,778 25,114 Boeing Capital Corporation 494 496 Other segment 107 125 Unallocated items and eliminations (273) (259) ----------------------------------Total revenues $47,756 $50,344============== ======= =======
Earnings/(loss) from operations:
Commercial Airplanes $2,379 $(1,603) Boeing Defense, Space & Security: Boeing Military Aircraft 935 1,165 Network & Space Systems 493 698 Global Services & Support 631 607 ------------------------- Total Boeing Defense, Space & Security 2,059 2,470 Boeing Capital Corporation 146 112 Other segment (254) (105) Unallocated items and eliminations (462) (471) ---------------------------------- ---- ----Earnings/(loss) from operations 3,868 403Other income/(expense), net 20 7Interest and debt expense (384) (229)
-------------------------
Earnings/(loss) before income taxes 3,504 181Income tax (expense)/benefit (1,359) (129)---------------------------- ------ ----
Net earnings/(loss) from continuing
operations 2,145 52
Net loss on disposal of discontinued
operations, net of taxes of $1, $5, $0 and $2 (2) (8)Net earnings/(loss) $2,143 $44=================== ====== ===
Research and development expense, net:
Commercial Airplanes $2,102 $4,642 Boeing Defense, Space & Security: Boeing Military Aircraft 459 466 Network & Space Systems 327 293 Global Services & Support 99 90 ------------------------- -- -- Total Boeing Defense, Space & Security 885 849 Other segment 13
Total research and development expense, net $2,987 $5,504 =========================================== ====== ======
Unallocated items and eliminations:
Share-based plans expense $(112) $(140) Deferred compensation expense (84) (134) Pension 64 69 Post-retirement (36) (61) Capitalized interest (41) (42) Other (253) (163) ----- ---- ----Total $(462) $(471)===== ===== ===== Three months ended September 30(Dollars in millions) 2010 2009--------------------- ---- ----Revenues: Commercial Airplanes $8,749 $7,883 Boeing Defense, Space & Security: Boeing Military Aircraft 3,790 4,000 Network & Space Systems 2,344 2,711 Global Services & Support 2,048 2,033 ------------------------- ---- ---- Total Boeing Defense, Space & Security 8,182 8,744 Boeing Capital Corporation 170 166 Other segment 27 51 Unallocated items and eliminations (161) (156)
----------------------------------
Total revenues $16,967 $16,688============== ======= =======
Earnings/(loss) from operations:
Commercial Airplanes $1,017 $(2,837) Boeing Defense, Space & Security: Boeing Military Aircraft 312 480 Network & Space Systems 152 252 Global Services & Support 220 153 ------------------------- Total Boeing Defense, Space & Security 684 885 Boeing Capital Corporation 45 39 Other segment (132) (36) Unallocated items and eliminations (227) (202) ---------------------------------- ---- ----Earnings/(loss) from operations 1,387 (2,151)Other income/(expense), net (13) (4)Interest and debt expense (130) (92)
-------------------------
Earnings/(loss) before income taxes 1,244 (2,247)Income tax (expense)/benefit (407) 687---------------------------- ---- --
Net earnings/(loss) from continuing
operations 837 (1,560)
Net loss on disposal of discontinued
operations, net of taxes of $1, $5, $0 and $2 (4)Net earnings/(loss) $837 $(1,564)=================== ==== =======
Research and development expense, net:
Commercial Airplanes $711 $3,272 Boeing Defense, Space & Security: Boeing Military Aircraft 139 156 Network & Space Systems 106 108 Global Services & Support 30 29 ------------------------- -- -- Total Boeing Defense, Space & Security 275 293 Other segment 9Total research and development expense, net $986 $3,574=========================================== ==== ======
Unallocated items and eliminations:
Share-based plans expense $(22) $(24) Deferred compensation expense (47) (88) Pension 21 24 Post-retirement (12) (17) Capitalized interest (13) (15) Other (154) (82) ----- ---- ---Total $(227) $(202)===== ===== ===== The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited) Nine months ended Three months endedDeliveries September 30 September 30 ------------ ------------Commercial Airplanes 2010 2009 2010 2009---------- ---- ---- ---- ---- 737 281 280 100 90 747 6 767 9 10 3 4 777 56 63 21 19 Total 346 359 124 113 ===== === === === ===Boeing Defense, Space & Security---------Boeing Military Aircraft F/A-18 Models 39 36 15 13 F-15E Eagle 10 10 3 4 C-17 Globemaster 10 12 4 5 KC-767 Tanker 1 CH-47 Chinook 13 4 5 3 T-45TS Goshawk 6 2 AH-64 Apache 11 20 2 7 AEW&C 3Network & Space Systems Delta IV 1 1 Commercial and Civil Satellites 2 2 Military Satellites 1 3 2 September 30 June 30 December 31Contractual backlog (Dollars in billions) 2010 2010 2009------------ ---- ---- ---- Commercial Airplanes $255.2 $251.6 $250.5 Boeing Defense, Space & Security: Boeing Military Aircraft 25.7 26.6 26.4 Network & Space Systems 8.3 7.5 7.7 Global Services & Support 12.3 11.9 11.9 ----------- ---- ---- ---- Total Boeing Defense, Space & Security 46.3 46.0 46.0Total contractual backlog $301.5 $297.6 $296.5============ ====== ====== ======Unobligated backlog $19.4 $14.7 $19.1=========== ===== ===== =====Total backlog $320.9 $312.3 $315.6============= ====== ====== ======Workforce 159,600* 159,900* 157,100========= ======== ======== ======= *Note: Workforce data vary from those reported in 2009 and earlier. The new totals include all subsidiaries, some of which were excluded in prior years. SOURCE Boeing
CONTACT: Investor Relations, Scott Fitterer or Jennifer Mack, +1-312-544-2140, or Communications, Chaz Bickers, +1-312-544-2002, all of Boeing
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