25 Jan 2012 12:34
Boeing Reports Strong Fourth-Quarter Results and Provides 2012 Guidance CHICAGO, Jan. 25, 2012 -- Fourth-Quarter 2011 - Earnings per share rose to $1.84, driven by strong core performance - EPS includes favorable tax settlement of $0.52 compared with $0.50 in 2010 - Revenue rose to $19.6 billion on increased commercial airplane deliveries Full Year 2011 - Earnings per share increased 20 percent to $5.34 on record revenue of $68.7 billion - Operating cash flow increased 36 percent to $4.0 billion - Backlog grew to a record $356 billion including $103 billion of orders during the year Outlook for 2012 - EPS guidance of between $4.05 and $4.25 reflects strong operating performance offset by $0.83 of higher pension expense - Revenue guidance established at between $78 and $80 billion - Operating cash flow guidance set at greater than $5.0 billion includes $1.5 billion of discretionary pension contributions Table 1. Summary Financial Results Fourth Quarter Full Year (Dollars in Millions, except per share data) 2011 2010 Change 2011 2010 Change Revenues $19,555 $16,550 18% $68,735 $64,306 7% Earnings From Operations $1,597 $1,103 45% $5,844 $4,971 18% Operating Margin 8.2% 6.7% 1.5 Pts 8.5% 7.7% 0.8 Pts Net Income $1,393 $1,164 20% $4,018 $3,307 21% Earnings per Share $1.84 $1.56 18% $5.34 $4.45 20% Operating Cash Flow $2,931 $1,116 NM $4,023 $2,952 36%
The Boeing Company reported fourth-quarter net income rose to $1.4 billion, or $1.84 per share, on revenue of $19.6 billion. The results reflect continued strong core performance across the company's businesses, a $0.52 per share impact related to a favorable tax settlement, and higher pension expense (Table 1). Fourth-quarter 2010 results included a $0.50 per share favorable tax settlement.
Net income for the full year increased to $4.0 billion, or $5.34 per share, on revenue of $68.7 billion, which included the impact of the favorable tax settlement ($0.53 per share for the year). Full-year 2010 results included the $0.50 per share favorable tax settlement and a $0.20 per share tax charge resulting from health care legislation.
Earnings guidance for 2012 has been established at between $4.05 and $4.25 per share reflecting solid core performance and higher pension expense. Revenue guidance for 2012 is between $78 and $80 billion.
"Strong fourth-quarter operating performance, record revenue and backlog, and expanded earnings and cash flow capped a year of substantial progress for Boeing in 2011," said Jim McNerney, Boeing chairman, president, and chief executive officer. "Major accomplishments of our team during the year included certifying and delivering the first 787s and 747-8s, winning the U.S. Air Force Tanker program, launching the 737 MAX, and securing both an important U.S. missile defense contract and a key agreement for F-15s to Saudi Arabia."
"We enter 2012 with renewed momentum, and proven business and product strategies. With a record backlog and intense focus on productivity, we are well positioned to deliver growth and increased competitiveness, even as we face constrained U.S. defense spending and pension headwinds. Our priorities for the year are to continue with disciplined increases in production rates for our commercial airplane customers, and to build on our strong position in defense, space and security with aggressive pursuit of growth in core, adjacent and international markets," he said.
Table 2. Cash Flow Fourth Quarter Full Year (Millions) 2011 2010 2011 2010 Operating Cash Flow $2,931 $1,116 $4,023 $2,952 Less Additions to Property, Plant & Equipment ($571) ($400) ($1,713) ($1,125) Free Cash Flow* $2,360 $716 $2,310 $1,827 * Non-GAAP measure. A complete definition of Boeing's use of non-GAAP measures, identified by an asterisk (*), is found on page 9, "Non-GAAP Measure Disclosures."
Boeing's quarterly operating cash flow was $2.9 billion, with strong operating performance more than offsetting continued investment in the 787 and 747-8 programs. For the full year, operating cash flow was $4.0 billion. Free cash flow* was $2.4 billion in the quarter (Table 2).
Table 3. Cash, Marketable Securities and Debt Balances Quarter-End (Billions) 4Q11 3Q11 Cash $10.1 $5.9 Marketable Securities (1) $1.2 $3.3 Total $11.3 $9.2 Debt Balances: The Boeing Company $9.0 $9.0 Boeing Capital Corporation $3.4 $3.4 Total Consolidated Debt $12.4 $12.4 (1) Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $11.3 billion at year-end (Table 3), up from $9.2 billion at the beginning of the quarter. Debt was unchanged in the quarter.
Total company backlog at year-end was a record $356 billion, up from $332 billion at the beginning of the quarter. Net orders for the quarter were $42 billion and included a significant mix of wide-body commercial airplanes. Backlog is up $34.6 billion from prior year-end, reflecting $103 billion of net orders in 2011.
Segment Results Commercial Airplanes Table 4. Commercial Airplanes Operating Results Fourth Quarter Full Year (Dollars in Millions) 2011 2010 Change 2011 2010 Change Commercial Airplanes Deliveries 128 116 10% 477 462 3% Revenues $10,695 $8,184 31% $36,171 $31,834 14% Earnings from Operations $981 $627 56% $3,495 $3,006 16% Operating Margins 9.2% 7.7% 1.5 Pts 9.7% 9.4% 0.3 Pts
Boeing Commercial Airplanes fourth-quarter revenue increased by 31 percent to $10.7 billion on higher delivery volume and mix. Operating margin was 9.2 percent, reflecting lower R&D partially offset by the dilutive impact of initial 787 and 747-8 deliveries and higher period costs (Table 4).
For the full year, revenue increased by 14 percent on higher delivery volume, increased services revenue and mix. Operating margin was 9.7 percent, reflecting improved mix and lower R&D partially offset by higher period costs and the dilutive impact of initial 787 and 747-8 deliveries.
During the quarter, the first 747-8 Freighter was delivered to Cargolux and the 747-8 Intercontinental achieved FAA certification. Also during the quarter, the company and the International Association of Machinists & Aerospace Workers reached agreement on a four-year contract extension primarily related to machinists in Puget Sound.
At year-end, the company had over 1,000 orders and commitments for the 737 MAX, including 150 firm orders from launch customer Southwest Airlines.
Commercial Airplanes booked 379 net orders during the quarter and 805 during the full year. Backlog remains strong with more than 3,700 airplanes valued at a record $296 billion.
Boeing Defense, Space & Security Table 5. Defense, Space & Security Operating Results Fourth Quarter Full Year (Dollars in Millions) 2011 2010 Change 2011 2010 Change Revenues Boeing Military Aircraft $3,949 $3,627 9% $14,947 $14,238 5% Network & Space Systems $1,967 $2,434 (19%) $8,673 $9,455 (8%) Global Services & Support $2,555 $2,104 21% $8,356 $8,250 1% Total BDS Revenues $8,471 $8,165 4% $31,976 $31,943 0% Earnings from Operations Boeing Military Aircraft $374 $315 19% $1,526 $1,250 22% Network & Space Systems $170 $218 (22%) $690 $711 (3%) Global Services & Support $321 $283 13% $942 $914 3% Total BDS Earnings from Operations $865 $816 6% $3,158 $2,875 10% Operating Margins 10.2% 10.0% 0.2 Pts 9.9% 9.0% 0.9 Pts
Boeing Defense, Space & Security's fourth-quarter revenue increased by 4 percent to $8.5 billion, while operating margin was 10.2 percent (Table 5).
For the full year, revenue was unchanged at $32.0 billion. Operating margin increased to 9.9 percent, driven by higher Boeing Military Aircraft (BMA) margins.
BMA fourth-quarter revenue increased to $3.9 billion, due to Airborne Early Warning & Control (AEW&C) mix and higher KC-767 International Tanker deliveries partially offset by fewer C-17 deliveries. Operating margin increased to 9.5 percent, reflecting strong execution across various programs. Fourth-quarter 2010 included charges for higher costs on the AEW&C program. During the quarter, the U.S. Government and Saudi Arabia reached agreement on the purchase of 84 new F-15SA aircraft and upgrades to an additional 70 F-15Ss. Additionally, BMA was awarded the P-8A low rate initial production lot II production award from the U.S. Navy.
Network & Space Systems (N&SS) fourth-quarter revenue decreased to $2.0 billion, due to lower volume driven by termination of the Brigade Combat Team Modernization program. Operating margin decreased to 8.6 percent, reflecting higher R&D. During the quarter, N&SS was awarded the development and sustainment contract for Ground-based Midcourse Defense from the U.S. Missile Defense Agency. Also during the quarter, N&SS delivered the first 702 medium power satellite.
Global Services & Support (GS&S) fourth-quarter revenue increased to $2.6 billion, due to higher revenues in integrated logistics. Operating margin decreased to 12.6 percent, reflecting the current defense contracting environment. During the quarter, GS&S was awarded the C-17 Globemaster III Integrated Sustainment Program from the U.S. Air Force.
Backlog at Defense, Space & Security was $60 billion. Additional Financial Information Table 6. Additional Financial Information Fourth Quarter Full Year (Dollars in Millions) 2011 2010 Change 2011 2010 Change Revenues Boeing Capital Corporation $116 $145 (20%) $532 $639 (17%) Other segment $31 $31 $138 $138 Unallocated items and eliminations $242 $25 ($82) ($248) Earnings from Operations Boeing Capital Corporation ($8) $6 NM $125 $152 (18%) Other segment income/(expense) $43 ($73) $54 ($327) Unallocated items and eliminations ($284) ($273) ($988) ($735) Other income/(expense), net ($29) $32 $47 $52 Interest and debt expense ($124) ($132) ($498) ($516) Effective tax rate 3.9% -16.3% 25.6% 26.5%
At year-end, Boeing Capital Corporation's (BCC) portfolio balance was $4.3 billion, unchanged from the beginning of the quarter and down from $4.7 billion at the start of the year. BCC's earnings decreased due to a smaller portfolio and higher asset impairments. BCC's debt-to-equity ratio was unchanged at 6.2-to-1.
The "Other" segment includes unallocated activities of Engineering, Operations and Technology, Shared Services Group as well as certain intercompany guarantees provided to BCC. Other segment earnings of $43 million in the fourth quarter 2011 were driven by assigning an upgraded credit rating category to certain financing receivables.
The loss in unallocated items and eliminations increased due to higher pension and deferred compensation expense partially offset by a charitable trust contribution that impacted fourth-quarter 2010. Total pension expense for the fourth quarter was $344 million, as compared to $254 million in the same period last year. A total of $291 million was allocated to the operating segments in the quarter, up from $244 million in the same period last year, and $53 million was recognized in unallocated items, compared to $10 million in the same period last year.
The company's income tax expense of $57 million in the quarter (compared to a benefit of $163 million in the same period last year) included a $397 million non-cash gain due to an IRS settlement for tax years 2004 through 2006. Fourth-quarter 2010 included a $371 million non-cash gain due to an IRS settlement and a benefit of $154 million due to the extension of the R&D credit.
Outlook
The company's 2012 financial guidance (Table 7) reflects continued strong core performance, generating a 7 percent increase in adjusted earnings per share*, which is offset by higher pension expense and other items.
Table 7. Financial Outlook (Dollars in Billions, except per-share data) 2012 The Boeing Company Revenue $78 - 80 Earnings Per Share (GAAP) $4.05 - 4.25 Operating Cash Flow (1) > $5.0 Boeing Commercial Airplanes Deliveries (2) 585 - 600 Revenue $47.5 - 49.5 Operating Margin 8.5% - 9% Boeing Defense, Space & Security Revenue Boeing Military Aircraft ~ $15.0 Network & Space Systems ~ $7.25 Global Services & Support ~ $8.0 Total BDS Revenue $30.0 - 30.5 Operating Margin Boeing Military Aircraft ~ 9.25% Network & Space Systems ~ 7.5% Global Services & Support ~ 10.5% Total BDS Operating Margin > 9.0% Boeing Capital Corporation Portfolio Size Lower Revenue ~ $0.4 Return on Assets ~ 0.5% Research & Development $3.3 - 3.5 Capital Expenditures ~ $2.0 Pension Expense $2.6 (1) After discretionary cash pension contributions of $1.5 billion and assuming new aircraft financings under $0.5 billion. (2) 2012 is sold out and includes an expected 70 to 85 787 and 747-8 deliveries, of which approximately half are 787 aircraft. * Non-GAAP measure. A complete definition of Boeing's use of non-GAAP measures, identified by an asterisk (*), is found on page 9, "Non-GAAP Measure Disclosures." A complete reconciliation is attached to this release.
Boeing's 2012 revenue guidance is between $78 and $80 billion. Earnings guidance for 2012 is established at between $4.05 and $4.25 per share. Total pension expense in 2012 is expected to be $2.6 billion (of which approximately $1.0 billion is expected to be recorded in unallocated items and eliminations) or $2.21 per share, an increase of $0.83 per share from 2011. Operating cash flow is expected to be greater than $5.0 billion in 2012, including $1.5 billion of discretionary pension contributions.
Commercial Airplanes' 2012 deliveries are expected to be between 585 and 600 airplanes and is sold out. This includes an expected 70 to 85 787 and 747-8 deliveries, of which approximately half are 787 aircraft. Commercial Airplanes' 2012 revenue is expected to be between $47.5 and $49.5 billion with operating margins between 8.5 and 9 percent.
Defense, Space & Security's revenue for 2012 is expected to be between $30.0 and $30.5 billion with operating margins greater than 9.0 percent.
Boeing Capital Corporation expects that its aircraft finance portfolio will continue to decline in 2012, as new aircraft financing of less than $0.5 billion is expected to be lower than normal portfolio runoff through customer payments and depreciation. BCC's debt-to-equity ratio is expected to return to 5.0-to-1 in the first quarter of 2012 due to the repayment of maturing debt.
Boeing's 2012 R&D forecast is between $3.3 and $3.5 billion. Capital expenditures for 2012 are expected to be approximately $2.0 billion.
Non-GAAP Measure Disclosures
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.
Increase in Adjusted Earnings Per Share
Adjusted earnings per share is defined as GAAP diluted earnings per share adjusted for certain significant charges or credits. Management believes the increase in adjusted earnings per share is important to understanding the company's on-going operations and provide additional insights into underlying business performance. Significant charges or credits are described in the attachments to this release which provide reconciliations between GAAP earnings per share and adjusted earnings per share.
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) our commercial development programs, planned production rate increases across multiple commercial airline programs and the overall health of our production system; (4) changing acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials, (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital Corporation's customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers' information.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Contact: Investor Relations: Scott Fitterer or Jennifer Mack (312) 544-2140 Communications: Chaz Bickers (312) 544-2002 The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited) Twelve months ended Three months ended December 31 December 31 (Dollars in millions, except per share data) 2011 2010 2011 2010 Sales of products $57,401 $52,586 $16,960 $13,569 Sales of services 11,334 11,720 2,595 2,981 Total revenues 68,735 64,306 19,555 16,550 Cost of products (46,642) (42,194) (14,307) (11,025) Cost of services (9,097) (9,489) (1,920) (2,352) Boeing Capital Corporation interest expense (128) (160) (34) (36) Total costs and expenses (55,867) (51,843) (16,261) (13,413) 12,868 12,463 3,294 3,137 Income from operating investments, net 278 267 76 80 General and administrative expense (3,408) (3,644) (864) (977) Research and development expense, net (3,918) (4,121) (913) (1,134) Gain/(loss) on dispositions, net 24 6 4 (3) Earnings from operations 5,844 4,971 1,597 1,103 Other income/(expense), net 47 52 (29) 32 Interest and debt expense (498) (516) (124) (132) Earnings before income taxes 5,393 4,507 1,444 1,003 Income tax (expense)/benefit (1,382) (1,196) (57) 163 Net earnings from continuing operations 4,011 3,311 1,387 1,166 Net gain/(loss) on disposal of discontinued operations, net of taxes of ($4), $2, ($3) and $1 7 (4) 6 (2) Net earnings $4,018 $3,307 $1,393 $1,164 Basic earnings per share from continuing operations $5.38 $4.50 $1.85 $1.57 Net gain/(loss) on disposal of discontinued operations, net of taxes 0.01 (0.01) 0.01 Basic earnings per share $5.39 $4.49 $1.86 $1.57 Diluted earnings per share from continuing operations $5.33 $4.46 $1.83 $1.56 Net gain/(loss) on disposal of discontinued operations, net of taxes 0.01 (0.01) 0.01 Diluted earnings per share $5.34 $4.45 $1.84 $1.56 Cash dividends paid per share $1.68 $1.68 $0.42 $0.42 Weighted average diluted shares (millions) 753.1 744.3 757.1 747.0 The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited) December 31 December 31 (Dollars in millions, except per share data) 2011 2010 Assets Cash and cash equivalents $ 10,049 $ 5,359 Short-term and other investments 1,223 5,158 Accounts receivable, net 5,793 5,422 Current portion of customer financing, net 476 285 Deferred income taxes 29 31 Inventories, net of advances and progress billings 32,240 24,317 Total current assets 49,810 40,572 Customer financing, net 4,296 4,395 Property, plant and equipment, net of accumulated depreciation of $13,993 and $13,322 9,313 8,931 Goodwill 4,945 4,937 Acquired intangible assets, net 3,044 2,979 Deferred income taxes 5,892 4,031 Investments 1,043 1,111 Other assets, net of accumulated amortization of $717 and $630 1,643 1,609 Total assets $ 79,986 $ 68,565 Liabilities and equity Accounts payable $ 8,406 $ 7,715 Accrued liabilities 12,239 13,802 Advances and billings in excess of related costs 15,496 12,323 Deferred income taxes and income taxes payable 2,780 607 Short-term debt and current portion of long-term debt 2,353 948 Total current liabilities 41,274 35,395 Accrued retiree health care 7,520 8,025 Accrued pension plan liability, net 16,537 9,800 Non-current income taxes payable 122 418 Other long-term liabilities 907 592 Long-term debt 10,018 11,473 Shareholders' equity: Common stock, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 shares issued 5,061 5,061 Additional paid-in capital 4,033 3,866 Treasury stock, at cost - 267,556,388 and 277,002,059 shares (16,603) (17,187) Retained earnings 27,524 24,784 Accumulated other comprehensive loss (16,500) (13,758) Total shareholders' equity 3,515 2,766 Noncontrolling interest 93 96 Total equity 3,608 2,862 Total liabilities and equity $ 79,986 $ 68,565 The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Twelve months ended December 31 (Dollars in millions) 2011 2010 Cash flows - operating activities: Net earnings $ 4,018 $ 3,307 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 186 215 Depreciation 1,457 1,510 Amortization of acquired intangible assets 203 217 Amortization of debt discount/premium and issuance costs 15 19 Investment/asset impairment charges, net 119 174 Customer financing valuation provision (269) 51 (Gain)/loss on disposal of discontinued operations (11) 6 Gain on dispositions, net (24) (6) Other charges and credits, net 500 512 Excess tax benefits from share-based payment arrangements (36) (19) Changes in assets and liabilities - Accounts receivable (292) 8 Inventories, net of advances and progress billings (10,012) (7,387) Accounts payable 1,164 313 Accrued liabilities 237 668 Advances and billings in excess of related costs 3,173 238 Income taxes receivable, payable and deferred 1,262 822 Other long-term liabilities 127 328 Pension and other postretirement plans 2,126 1,335 Customer financing, net (6) 717 Other 86 (76) Net cash provided by operating activities 4,023 2,952 Cash flows - investing activities: Property, plant and equipment additions (1,713) (1,125) Property, plant and equipment reductions 94 63 Acquisitions, net of cash acquired (42) (932) Contributions to investments (6,796) (15,548) Proceeds from investments 10,757 12,425 Reimbursement of Sea Launch guarantee payments 82 Receipt of economic development program funds 69 206 Purchase of distribution rights (2) Net cash provided/(used) by investing activities 2,369 (4,831) Cash flows - financing activities: New borrowings 799 41 Debt repayments (930) (689) Repayments of distribution rights financing (451) (137) Stock options exercised, other 114 87 Excess tax benefits from share-based payment arrangements 36 19 Employee taxes on certain share-based payment arrangements (24) (30) Dividends paid (1,244) (1,253) Net cash used by financing activities (1,700) (1,962) Effect of exchange rate changes on cash and cash equivalents (2) (15) Net increase/(decrease) in cash and cash equivalents 4,690 (3,856) Cash and cash equivalents at beginning of year 5,359 9,215 Cash and cash equivalents at end of period $ 10,049 $ 5,359 The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited) Twelve months ended Three months ended December 31 December 31 (Dollars in millions) 2011 2010 2011 2010 Revenues: Commercial Airplanes $ 36,171 $ 31,834 $ 10,695 $ 8,184 Boeing Defense, Space & Security: Boeing Military Aircraft 14,947 14,238 3,949 3,627 Network & Space Systems 8,673 9,455 1,967 2,434 Global Services & Support 8,356 8,250 2,555 2,104 Total Boeing Defense, Space & Security 31,976 31,943 8,471 8,165 Boeing Capital Corporation 532 639 116 145 Other segment 138 138 31 31 Unallocated items and eliminations (82) (248) 242 25 Total revenues $ 68,735 $ 64,306 $ 19,555 $ 16,550 Earnings from operations: Commercial Airplanes $ 3,495 $ 3,006 $ 981 $ 627 Boeing Defense, Space & Security: Boeing Military Aircraft 1,526 1,250 374 315 Network & Space Systems 690 711 170 218 Global Services & Support 942 914 321 283 Total Boeing Defense, Space & Security 3,158 2,875 865 816 Boeing Capital Corporation 125 152 (8) 6 Other segment 54 (327) 43 (73) Unallocated items and eliminations (988) (735) (284) (273) Earnings from operations 5,844 4,971 1,597 1,103 Other income/(expense), net 47 52 (29) 32 Interest and debt expense (498) (516) (124) (132) Earnings before income taxes 5,393 4,507 1,444 1,003 Income tax (expense)/benefit (1,382) (1,196) (57) 163 Net earnings from continuing operations 4,011 3,311 1,387 1,166 Net gain/(loss) on disposal of discontinued operations, net of taxes of ($4), $2, ($3) and $1 7 (4) 6 (2) Net earnings $ 4,018 $ 3,307 $ 1,393 $ 1,164 Research and development expense, net: Commercial Airplanes $ 2,715 $ 2,975 $ 524 $ 873 Boeing Defense, Space & Security: Boeing Military Aircraft 541 589 172 130 Network & Space Systems 476 417 156 90 Global Services & Support 121 130 37 31 Total Boeing Defense, Space & Security 1,138 1,136 365 251 Other segment 65 10 24 10 Total research and development expense, net $ 3,918 $ 4,121 $ 913 $ 1,134 Unallocated items and eliminations: Share-based plans $ (83) $ (136) $ (20) $ (24) Deferred compensation (61) (112) (65) (28) Pension (269) 54 (53) (10) Post-retirement (248) (59) (40) (23) Capitalized interest (51) (54) (12) (13) Eliminations and other (276) (428) (94) (175) Total $ (988) $ (735) $ (284) $ (273) The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited) Twelve months ended Three months ended Deliveries December 31 December 31 Commercial Airplanes 2011 2010 2011 2010 737 372 376 91 95 747 9 9 767 20 12 6 3 777 73 74 20 18 787 3 2 Total 477 462 128 116 Boeing Defense, Space & Security Boeing Military Aircraft F/A-18 Models 49 50 11 11 F-15E Eagle 15 13 4 3 C-17 Globemaster 13 14 2 4 KC-767 International Tanker 3 1 2 1 CH-47 Chinook 32 20 10 7 AH-64 Apache 13 2 AEW&C 3 4 1 1 Network & Space Systems Delta II 1 1 Delta IV 1 Commercial and Civil Satellites 1 3 1 1 Military Satellites 3 1 1 Contractual backlog December 31 September 30 December 31 (Dollars in billions) 2011 2011 2010 Commercial Airplanes $293.3 $270.3 $255.6 Boeing Defense, Space & Security: Boeing Military Aircraft 24.1 24.2 25.1 Network & Space Systems 9.1 9.5 9.6 Global Services & Support 13.2 12.9 13.7 Total Boeing Defense, Space & Security 46.4 46.6 48.4 Total contractual backlog $339.7 $316.9 $304.0 Unobligated backlog $15.8 $14.7 $16.9 Total backlog $355.5 $331.6 $320.9 Workforce 171,700 170,600 160,500 The Boeing Company and Subsidiaries Reconciliation of Non-GAAP Measures 2012 Increase in Adjusted Earnings Per Share (Unaudited) In addition to disclosing results that are determined in accordance with U.S. generally accepted accounting principles (GAAP), the company also discloses non-GAAP results that exclude certain significant charges or credits or highlight certain significant items that are important to an understanding of the company's ongoing operations. The company provides reconciliations of its non-GAAP financial reporting to the most comparable GAAP reporting. The company believes that discussion of results excluding certain significant charges or credits provides additional insights into underlying business performance. The company also believes that it is useful to highlight the significant impact pensions and the higher tax rate and shares have on the company's projected 2012 results. The determination of significant charges or credits or exclusion of certain items may not be comparable to similarly titled measures used by other companies and may vary from quarter to quarter. Year Ended Year Ended December 31, 2011 December 31, 2012 - Guidance Earnings Per Share Earnings Per Share GAAP Diluted Earnings Per Share $5.34 $4.05 - 4.25 Favorable Tax Settlement ($0.53) a Increased Pension Expense $0.83 b Higher Tax Rate $0.12 c Higher Shares $0.06 d Adjusted Earnings Per Share $4.81 $5.06 - 5.26 Weighted Average Diluted Shares (in millions) 753.1 762.0 2012 Decrease in GAAP Earnings Per Share (~ 22%) 2012 Increase in Adjusted Earnings Per Share ~ 7% a Represents favorable tax settlement of $397 million recorded in 2011 related to Internal Revenue Service (IRS) settlement for 2004 through 2006 tax years, expressed as earnings-per-share. b Represents pension expense increase of $934 million (2012 projection of $2,582 million vs. $1,648 million in 2011), expressed as earnings-per-share. The earnings per share amount is presented net of income taxes of approximately 35 percent. c Represents impact of higher tax rate (approximately 35 percent projection in 2012 vs. 33.0 percent in 2011) of $92 million, expressed as earnings-per-share. The 33.0 percent tax rate in 2011 represents the 2011 GAAP effective income tax rate of 25.6 percent adjusted by 7.4 percent for the $397 million favorable IRS settlement for 2004 through 2006 tax years. Our 2012 guidance assumes Congress extends the R&D tax credit for 2012. d Represents impact of higher weighted average diluted shares (762.0 million projection in 2012 vs. 753.1 million in 2011), expressed as earnings-per-share.
SOURCE Boeing
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