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