Non-GAAP Measure Disclosure
Management believes that the non-GAAP (Generally Accepted Accounting Principles) measures (indicated by an asterisk *) used in this report provide investors with important perspectives into the company's ongoing business performance. The company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define the measures differently. The following definitions are provided:
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow less capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow internally to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.
Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this report may be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission: the effect of economic conditions in the United States and globally; the impact on our accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values; the impact on our revenues and operating results of changes to indices included in indexed price escalation clauses included in our contracts with commercial airplane and defense customers; the successful execution of our Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers canceling, modifying and/or rescheduling contractual orders and advance payments; 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 impact of volatile fuel prices and the airline industry's response; the effect of trade and globalization on long-term growth in passenger and cargo traffic; the effect of world trade and credit availability on air cargo traffic; the effect of declines in aircraft valuations; the impact of airline traffic volumes and revenue yields on near-term global airline profitability; the impact on our revenues or operating results of airline bankruptcies; the availability of commercial and government financing and the extent to which we are called upon to fund outstanding financing commitments or satisfy other financing requests, and our ability to satisfy those requirements; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which we are a party, and other contingencies; returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs; our ability to access external capital resources to fund our operations; the amounts and effects of underinsured operations, including satellite launches; our ability to recover the proportionate amounts owed to us from the other Sea Launch partners; and the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications and guarantees related thereto.
Contact:
Investor Relations: Diana Sands or Rob Young (312) 544-2140
Communications: (312) 544-2002
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Nine months Three months
ended ended
September 30 September 30
(Dollars in millions, except
per share data) 2009 2008 2009 2008
---------------------------- ---- ---- ---- ----
Sales of products $42,098 $40,393 $13,967 $12,407
Sales of services 8,246 7,852 2,721 2,886
----------------- ----- ----- ----- -----
Total revenues 50,344 48,245 16,688 15,293
Cost of products (35,432) (32,736) (12,273) (10,311)
Cost of services (6,468) (6,179) (2,165) (2,176)
Boeing Capital Corporation
interest expense (132) (173) (42) (54)
-------------------------- ---- ---- --- ---
Total costs and expenses (42,032) (39,088) (14,480) (12,541)
------------------------ ------- ------- ------- -------
8,312 9,157 2,208 2,752
Income from operating investments, net 186 195 84 72
General and administrative expense (2,584) (2,350) (868) (740)
Research and development expense, net (5,504) (2,811) (3,574) (937)
(Loss)/gain on dispositions, net (7) 2 (1)
-------------------------------- -- -- -- -----
Earnings/(loss) from operations 403 4,193 (2,151) 1,147
Other income/(loss), net 7 257 (4) 55
Interest and debt expense (229) (145) (92) (49)
------------------------- ---- ---- --- ---
Earnings/(loss) before income taxes 181 4,305 (2,247) 1,153
Income tax (expense)/benefit (129) (1,565) 687 (470)
---------------------------- ---- ------ --- ----
Net earnings/(loss)
from continuing
operations 52 2,740 (1,560) 683
Net (loss)/gain on disposal
of discontinued
operations, net of
taxes of $5, ($10), $2
and ($6) (8) 18 (4) 12
--------------------------- -- -- -- --
Net earnings/(loss) $44 $2,758 $(1,564) $695
=================== === ====== ======= ====
Basic earnings/(loss)
per share from
continuing operations $0.08 $3.78 $(2.22) $0.95
Net (loss)/gain on disposal
of discontinued
operations, net of taxes (0.01) 0.02 (0.01) 0.02
--------------------------- ----- ---- ----- ----
Basic earnings/(loss) per share $0.07 $3.80 $(2.23) $0.97
=============================== ===== ===== ====== =====
Diluted earnings/(loss) per share
from continuing operations $0.07 $3.74 ($2.22) $0.94
Net (loss)/gain on disposal
of discontinued
operations, net of taxes (0.01) 0.02 (0.01) 0.02
--------------------------- ----- ---- ----- ----
Diluted earnings/(loss) per share $0.06 $3.76 $(2.23) $0.96
================================= ===== ===== ====== =====
Cash dividends paid per share $1.26 $1.20 $0.42 $0.40
============================= ===== ===== ===== =====
Weighted average diluted
shares (millions) 708.1 734.2 701.3 721.9
======================== ===== ===== ===== =====
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
September 30 December 31
(Dollars in millions except per share data) 2009 2008
------------------------------------------- ---- ----
Assets
Cash and cash equivalents 6,095 $3,268
Short-term investments 351 11
Accounts receivable, net 6,718 5,602
Current portion of customer financing, net 341 425
Deferred income taxes 741 1,046
Inventories, net of advances and
progress billings 15,981 15,612
-------------------------------- ------ ------
Total current assets 30,227 25,964
Customer financing, net 5,923 5,857
Property, plant and equipment, net of
accumulated depreciation of
$12,742 and $12,280 8,912 8,762
Goodwill 4,293 3,647
Other acquired intangibles, net 2,920 2,685
Deferred income taxes 3,835 4,114
Investments 1,120 1,328
Pension plan assets, net 20 16
Other assets, net of accumulated
amortization of $511 and $400 1,417 1,406
-------------------------------- ----- -----
Total assets $58,667 $53,779
============ ======= =======
Liabilities and shareholders' equity
Accounts payable 7,053 $5,871
Other accrued liabilities 12,217 11,564
Advances and billings in excess
of related costs 11,792 12,737
Income taxes payable 14 41
Short-term debt and current
portion of long-term debt 973 560
--------------------------- --- ---
Total current liabilities 32,049 30,773
Accrued retiree health care 7,344 7,322
Accrued pension plan liability, net 8,553 8,383
Non-current income taxes payable 998 1,154
Other long-term liabilities 535 337
Long-term debt 10,065 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 3,956 3,456
Treasury shares, at cost -
285,761,457 and 285,661,944 (17,733) (17,758)
Retained earnings 22,104 22,675
Accumulated other comprehensive loss (12,821) (13,525)
ShareValue Trust shares -
29,338,820 and 28,460,769 (1,595) (1,203)
-------------------------- ------ ------
Total Boeing shareholders' equity (1,028) (1,294)
Noncontrolling interest 151 152
------------------------------ --- ---
Total shareholders' equity (877) (1,142)
--------------------------------- ---- ------
Total liabilities and
shareholders' equity $58,667 $53,779
============================ ======= =======
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
September 30
(Dollars in millions) 2009 2008
--------------------- ---- ----
Cash flows - operating activities:
Net earnings $44 $2,758
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Non-cash items -
Share-based plans expense 180 159
Depreciation 1,047 952
Amortization of other
acquired intangibles 152 122
Amortization of debt discount/
premium and issuance costs 7 8
Investment/asset
impairment charges, net 66 21
Customer financing
valuation provision 31 73
Loss/(gain) on disposal of
discontinued operations 13 (28)
Loss/(gain) on dispositions, net 7 (2)
Other charges and credits, net 170 83
Excess tax benefits from share-based
payment arrangements (5) (100)
Changes in assets and liabilities -
Accounts receivable (818) (145)
Inventories, net of advances and
progress billings (582) (1,670)
Accounts payable 1,169 742
Other accrued liabilities 1,091 (570)
Advances and billings in excess
of related costs (961) (2,061)
Income taxes receivable,
payable and deferred 133 733
Other long-term liabilities (3) (157)
Pension and other
postretirement plans 819 (159)
Customer financing, net (204) 628
Other 35 (147)
---------------- -- ----
Net cash provided by
operating activities 2,391 1,240
------------------------------------- ----- -----
Cash flows - investing activities:
Property, plant and equipment additions (965) (1,229)
Property, plant and
equipment reductions 25 16
Acquisitions, net of cash acquired (639) (490)
Contributions to investments (728) (6,372)
Proceeds from investments 606 8,399
Payments on Sea Launch guarantees (448)
Purchase of distribution rights (151)
----------------------------------- ------ ----
Net cash (used)/provided by
investing activities (2,149) 173
------------------------------------------- ------ ---
Cash flows - financing activities:
New borrowings 3,772 5
Debt repayments (256) (616)
Repayments of distribution
rights financing (210)
Stock options exercised, other 8 43
Excess tax benefits from share-based
payment arrangements 5 100
Employee taxes on certain share-based
payment arrangements (19) (81)
Common shares repurchased (50) (2,583)
Dividends paid (915) (901)
------------------ ---- ----
Net cash provided/(used) by
financing activities 2,545 (4,243)
------------------------------------------- ----- ------
Effect of exchange rate changes on cash
and cash equivalents 40 (26)
--------------------------------------- -- ---
Net increase/(decrease) in cash
and cash equivalents 2,827 (2,856)
Cash and cash equivalents at
beginning of year 3,268 7,042
---------------------------- ----- -----
Cash and cash equivalents at end of period $6,095 $4,186
========================================== ====== ======
Non-cash investing and
financing activities:
Purchase of distribution rights $316 $180
================================== ==== ====
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Nine months Three months
ended ended
September 30 September 30
(Dollars in millions) 2009 2008 2009 2008
--------------------- ---- ---- ---- ----
Revenues:
Commercial Airplanes $24,868 $23,674 $7,883 $6,946
Integrated Defense Systems:
Boeing Military Aircraft 10,324 10,169 3,951 3,702
Network and Space Systems 8,492 8,485 2,711 2,987
Global Services and Support 6,298 5,352 2,082 1,808
--------------------------------- ----- ----- ----- -----
Total Integrated Defense Systems 25,114 24,006 8,744 8,497
Boeing Capital Corporation 496 535 166 171
Other segment 125 527 51 300
Unallocated items and eliminations (259) (497) (156) (621)
------------------------------------- ---- ---- ---- ----
Total revenues $50,344 $48,245 $16,688 $15,293
================= ======= ======= ======= =======
Earnings/(loss) from operations:
Commercial Airplanes $(1,603) $2,154 $(2,837) $394
Integrated Defense Systems:
Boeing Military Aircraft 1,160 929 486 388
Network and Space Systems 698 806 252 302
Global Services and Support 612 616 147 164
--------------------------------- --- --- --- ---
Total Integrated Defense Systems 2,470 2,351 885 854
Boeing Capital Corporation 112 143 39 37
Other segment (105) (233) (36) (48)
Unallocated items and eliminations (471) (222) (202) (90)
------------------------------------- ---- ---- ---- ---
Earnings/(loss) from operations 403 4,193 (2,151) 1,147
Other income/(loss), net 7 257 (4) 55
Interest and debt expense (229) (145) (92) (49)
---------------------------- ---- ---- --- ---
Earnings/(loss) before income taxes 181 4,305 (2,247) 1,153
Income tax (expense)/benefit (129) (1,565) 687 (470)
------------------------------- ---- ------ --- ----
Net earnings/(loss) from
continuing operations 52 2,740 (1,560) 683
Net (loss)/gain on disposal
of discontinued
operations, net of taxes
of $5, ($10),
$2 and ($6) (8) 18 (4) 12
------------------------------ -- -- -- --
Net earnings/(loss) $44 $2,758 $(1,564) $695
====================== === ====== ======= ====
Research and development expense, net:
Commercial Airplanes $4,642 $2,108 $3,272 $705
Integrated Defense Systems:
Boeing Military Aircraft 430 361 143 121
Network and Space Systems 293 227 108 73
Global Services and Support 126 113 42 38
--------------------------------- --- --- -- --
Total Integrated Defense Systems 849 701 293 232
Other segment 13 2 9
---------------- -- -- -- ----
Total research and development
expense, net $5,504 $2,811 $3,574 $937
================================= ====== ====== ====== ====
Unallocated items and eliminations:
Share-based plans expense $(140) $(115) $(24) $(70)
Deferred compensation expense (134) 136 (88) 55
Pension 69 (194) 24 (51)
Post-retirement (61) (60) (17) (20)
Capitalized interest (42) (38) (15) (11)
Other (163) 49 (82) 7
-------- ---- -- --- --
Total $(471) $(222) $(202) $(90)
======== ===== ===== ===== ====
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Nine Three
months months
ended ended
September September
Deliveries 30 30
---------- --------- ---------
Commercial Airplanes 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
737 Next-Generation 280 254 90 67
747 6 13 4
767 10 8 4 2
777 63 50 19 11
--------- -- -- -- --
Total 359 325 113 84
========= === === === ==
--------------------------
Integrated Defense Systems
--------------------------
Boeing Military Aircraft
F/A-18 Models 36 33 13 12
F-15E Eagle 10 11 4 7
C-17 Globemaster 12 12 5 4
KC-767 Tanker 1 2
CH-47 Chinook 4 8 3 4
T-45TS Goshawk 6 5 2 2
AH-64 Apache 20 2 7 1
Network and Space Systems
Delta II 1 1
Delta IV 1
Commercial and Civil Satellites 2 1
Military Satellites 3 2
September June March December
Contractual backlog 30 30 31 31
(Dollars in billions) 2009 2009 2009 2008
---------------------- ---- ---- ---- ----
Commercial Airplanes $253.9 $257.4 $266.0 $278.6
Integrated Defense
Systems:
Boeing Military
Aircraft 26.1 28.2 28.2 25.7
Network and
Space Systems 7.8 8.0 8.9 8.9
Global Services
and Support 11.1 11.7 11.6 10.7
--------------------- ---- ---- ---- ----
Total Integrated
Defense Systems 45.0 47.9 48.7 45.3
------------------- ---- ---- ---- ----
Total contractual backlog $298.9 $305.3 $314.7 $323.9
========================= ====== ====== ====== ======
Unobligated backlog $21.1 $22.5 $24.7 $28.2
=================== ===== ===== ===== =====
Total backlog $320.0 $327.8 $339.4 $352.1
============= ====== ====== ====== ======
Workforce 158,300 158,700 160,900 162,200
========= ======= ======= ======= =======
