0000950123-14-000750.txt : 20140129 0000950123-14-000750.hdr.sgml : 20140129 20140129074839 ACCESSION NUMBER: 0000950123-14-000750 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140129 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140129 DATE AS OF CHANGE: 20140129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOEING CO CENTRAL INDEX KEY: 0000012927 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT [3721] IRS NUMBER: 910425694 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00442 FILM NUMBER: 14555191 BUSINESS ADDRESS: STREET 1: P O BOX 3707 MS 1F 31 CITY: SEATTLE STATE: WA ZIP: 98124 BUSINESS PHONE: 312-544-2000 MAIL ADDRESS: STREET 1: 100 N RIVERSIDE PLZ CITY: CHICAGO STATE: IL ZIP: 60606-1596 FORMER COMPANY: FORMER CONFORMED NAME: BOEING AIRPLANE CO DATE OF NAME CHANGE: 19730725 8-K 1 8K4Q.htm FORM 8-K 2013 12 Dec 31 8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 29, 2014
 
THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
 
 Commission file number 1-442
 
 
Delaware
 
91-0425694
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
100 N. Riverside, Chicago, IL
 
60606-1596
(Address of principal executive offices)
 
(Zip Code)
 
 
 
 
 
 
(312) 544-2000
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
c
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
c
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
c
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
c
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 





Item 2.02. Results of Operations and Financial Condition
On January 29, 2014, The Boeing Company issued a press release reporting its financial results for the fourth quarter of 2013. A copy of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.


Item 9.01 Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibits
 
99.1
 
Press Release issued by The Boeing Company dated January 29, 2014, reporting Boeing's financial results for the fourth quarter of 2013, furnished herewith.




2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
           



 
 
THE BOEING COMPANY
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ Diana L. Sands
 
 
 
 
Diana L. Sands
 
 
 
 
 
 
 
 
 
Vice President of Finance & Corporate Controller
 
 
 
 
January 29, 2014
 
 

          


3


EXHIBIT INDEX


Exhibit
Number
 
Description
99.1
 
Press release issued by The Boeing Company dated January 29, 2014, reporting Boeing’s financial results for the fourth quarter of 2013, furnished herewith.



4
 EX-99 2 EX9918K4Q.htm EX-99.1 2013 12 Dec 31 8K Press Release Exhibit 99.1


 
 
 
Exhibit 99.1
 
 
 
 
  
News Release
 
 
 
 
  
Boeing Corporate Offices
100 North Riverside Plaza
Chicago, IL 60606-1596
www.boeing.com
Boeing Reports Record 2013 Revenue, EPS and Backlog and Provides 2014 Guidance
Fourth-Quarter 2013
▪
Core EPS (non-GAAP)* rose 29 percent to $1.88 on strong operating performance; GAAP EPS of $1.61
▪
Revenue increased 7 percent to $23.8 billion reflecting higher deliveries
Full Year 2013
▪
Core EPS increased 20 percent to a record $7.07 on record revenue of $86.6 billion; GAAP EPS of $5.96
▪
Operating cash flow before pension contributions* grew to $9.7 billion; GAAP operating cash flow of $8.2 billion
▪
Backlog grew to a record $441 billion, including $135 billion of net orders during the year
Outlook for 2014
▪
2014 Core EPS guidance of between $7.00 and $7.20; GAAP EPS guidance of between $6.10 and $6.30
▪
Revenue guidance of between $87.5 and $90.5 billion with commercial deliveries of between 715 and 725
Table 1. Summary Financial Results
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions, except per share data)
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$23,785

 

$22,302

 
7%

 

$86,623

 

$81,698

 
6%

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating Earnings
 

$1,838

 

$1,836

 
0%

 

$7,876

 

$7,189

 
10%

Core Operating Margin
 
7.7
%
 
8.2
%
 
(0.5) Pts

 
9.1
%
 
8.8
%
 
0.3 Pts

Core Earnings Per Share
 

$1.88

 

$1.46

 
29%

 

$7.07

 

$5.88

 
20%

Operating Cash Flow Before Pension Contributions
 

$1,409

 

$4,204

 
(66)%

 

$9,721

 

$9,058

 
7%

GAAP
 
 
 
 
 
 
 
 
 
 
 
 
Earnings From Operations
 

$1,515

 

$1,624

 
(7)%

 

$6,562

 

$6,290

 
4%

Operating Margin
 
6.4
%
 
7.3
%
 
(0.9) Pts

 
7.6
%
 
7.7
%
 
(0.1) Pts

Net Earnings
 

$1,233

 

$978

 
26%

 

$4,585

 

$3,900

 
18%

Earnings Per Share
 

$1.61

 

$1.28

 
26%

 

$5.96

 

$5.11

 
17%

Operating Cash Flow
 

$1,380

 

$4,167

 
(67)%

 

$8,179

 

$7,508

 
9%

* Non-GAAP measures (core operating earnings, core operating margin and core earnings per share) exclude certain components of pension and post retirement benefit expense that management believes are not reflective of underlying business performance. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”
CHICAGO, January 29, 2014 – The Boeing Company [NYSE: BA] reported fourth-quarter revenue of $23.8 billion and core earnings per share (non-GAAP) that increased 29 percent* to $1.88, driven by strong performance across the company's businesses and higher deliveries (Table 1). Fourth-quarter core operating

1


earnings (non-GAAP) of $1.8 billion includes a $406 million non-cash charge to settle A-12 litigation dating back to 1991, retiring a longstanding risk to the company. Excluding the A-12 charge, fourth-quarter 2013 core operating earnings increased 22 percent* to $2.2 billion and core operating margin increased to 9.4 percent*. Core and GAAP earnings per share includes a charge of $0.34 per share related to A-12 partially offset by a benefit of $0.28 per share for a tax regulation change.
Revenue rose 6 percent in the full year to a record $86.6 billion and core earnings per share increased 20 percent* to a record $7.07. Full-year 2013 GAAP earnings per share was $5.96.
Core earnings per share guidance for 2014 is set at between $7.00 and $7.20, while GAAP earnings per share guidance is established at between $6.10 and $6.30. Revenue guidance is between $87.5 and $90.5 billion, including commercial deliveries of between 715 and 725. Operating cash flow before pension contributions* is expected to be approximately $7 billion, while operating cash flow guidance is set at approximately $6.25 billion.
     “Strong fourth-quarter results underscored an outstanding full year of core operating performance that drove record revenue and earnings and increased returns to shareholders,” said Boeing Chairman and Chief Executive Officer Jim McNerney.
“Our Commercial Airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response. Our Defense, Space & Security unit overcame a tough operating environment to record expanded revenue, earnings and margins while executing to our commitments on the KC-46A tanker and developing and delivering important new capabilities to customers, such as the P-8 maritime aircraft and the Inmarsat-5 satellite,” said McNerney.
“For 2014, we remain focused on maintaining our commercial airplanes market leadership, strengthening and repositioning our defense, space and security business and continuing to meet the needs of our customers by improving productivity, executing to development plans and delivering our unmatched portfolio of innovative aerospace products and services.”
Table 2. Cash Flow
 
Fourth Quarter
 
Full Year
(Millions)
 
2013
 
2012
 
2013
 
2012
Operating Cash Flow Before Pension Contributions*
 

$1,409

 

$4,204

 

$9,721

 

$9,058

        Pension Contributions
 

($29
)
 

($37
)
 

($1,542
)
 

($1,550
)
Operating Cash Flow
 

$1,380

 

$4,167

 

$8,179

 

$7,508

Less Additions to Property, Plant & Equipment
 

($638
)
 

($495
)
 

($2,098
)
 

($1,703
)
Free Cash Flow*
 

$742

 

$3,672

 

$6,081

 

$5,805

Operating cash flow in the quarter was $1.4 billion, reflecting commercial airplane production rates, strong core operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 7.6 million shares for $1.0 billion and paid $0.4 billion in dividends, reflecting a 10 percent increase in dividends paid compared to the same period of the prior year. Based on the strong cash generation and outlook, in December, the board of directors authorized an additional $10 billion share repurchase program and raised the quarterly dividend 50 percent.
Table 3. Cash, Marketable Securities and Debt Balances
 
Quarter-End
(Billions)
 
Q4 13
 
Q3 13
Cash
 

$9.1

 

$10.0

Marketable Securities1
 

$6.2

 

$5.9

Total
 

$15.3

 

$15.9

Debt Balances:
 
 
 
 
The Boeing Company, net of intercompany loans to BCC
 

$7.0

 

$7.0

Boeing Capital Corporation, including intercompany loans
 

$2.6

 

$2.6

Total Consolidated Debt
 

$9.6

 

$9.6

1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $15.3 billion at year-end (Table 3), down from $15.9 billion at the beginning of the quarter. Debt was $9.6 billion, unchanged from the beginning of the quarter.
Total company backlog at year-end was a record $441 billion, up from $415 billion at the beginning of the quarter, and included net orders for the quarter of $48 billion. Backlog is up $51 billion from prior year-end, reflecting $135 billion of net orders in 2013.

Segment Results
Boeing Commercial Airplanes
Table 4. Boeing Commercial Airplanes
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions)
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
172

 
165

 
4%
 
648

 
601

 
8%

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$14,680

 

$14,161

 
4%
 

$52,981

 

$49,127

 
8%

Earnings from Operations
 

$1,506

 

$1,266

 
19%
 

$5,795

 

$4,711

 
23 %

Operating Margin
 
10.3
%
 
8.9
%
 
1.4 Pts
 
10.9
%
 
9.6
%
 
1.3
 Pts
Boeing Commercial Airplanes fourth-quarter revenue increased to $14.7 billion and full-year revenue increased to a record $53 billion on higher delivery volume. Fourth-quarter operating margin improved to 10.3 percent and full-year operating margin grew to 10.9 percent on the higher volume, favorable delivery mix and continued strong operating performance (Table 4).
During the quarter, the company launched the 777X with 259 orders and commitments. During the year, the 787 program completed first flight of the 787-9, successfully launched the 787-10 and began operating at a 10 per month production rate in final assembly. The 737 program delivered at a record production rate of 38 per month and has won nearly 1,800 firm orders for the 737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered. In January 2014, the company reached an eight-year contract extension through 2024 with the International Association of Machinists & Aerospace Workers District 751 (IAM).

2


Commercial Airplanes booked 465 net orders during the quarter and 1,355 during the year. Backlog remains strong with 5,080 airplanes valued at a record $374 billion.
Boeing Defense, Space & Security
Table 5. Defense, Space & Security
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions)
2013
 
2012
 
Change
 
2013
 
2012
 
Change
Revenues
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft

$4,395

 

$4,037

 
9%

 

$15,936

 

$16,019

 
(1)%

Network & Space Systems

$2,272

 

$2,024

 
12%

 

$8,512

 

$7,911

 
8%

Global Services & Support

$2,188

 

$2,282

 
(4)%

 

$8,749

 

$8,677

 
1%

Total BDS Revenues

$8,855

 

$8,343

 
6%

 

$33,197

 

$32,607

 
2%

Earnings from Operations
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft

$441

 

$313

 
41%

 

$1,465

 

$1,489

 
(2)%

Network & Space Systems

$233

 

$138

 
69%

 

$719

 

$562

 
28%

Global Services & Support

$280

 

$300

 
(7)%

 

$1,051

 

$1,017

 
3%

Total BDS Earnings from Operations

$954

 

$751

 
27%

 

$3,235

 

$3,068

 
5%

Operating Margin
10.8
%
 
9.0
%
 
1.8 Pts

 
9.7
%
 
9.4
%
 
0.3 Pts

Boeing Defense, Space & Security’s fourth-quarter revenue increased 6 percent to $8.9 billion, while operating margin increased to 10.8 percent (Table 5). For the full year, revenue increased 2 percent to $33.2 billion, while operating margin increased to 9.7 percent.
Boeing Military Aircraft (BMA) fourth-quarter revenue increased to $4.4 billion, reflecting higher deliveries. Operating margin increased to 10.0 percent, reflecting the higher deliveries and strong performance. During the quarter, BMA achieved Initial Operating Capability (IOC) on the P-8A Poseidon aircraft.
Network & Space Systems (N&SS) fourth-quarter revenue increased to $2.3 billion, reflecting higher delivery volume and mix, and operating margin increased to 10.3 percent on strong performance.  During the quarter, N&SS was awarded a contract for a fourth Inmarsat-5 satellite.
Global Services & Support (GS&S) fourth-quarter revenue was $2.2 billion, reflecting lower volume in integrated logistics.  Operating margin was 12.8 percent.  During the quarter, GS&S was awarded contracts for the B-52 and B-1 bomber modifications and upgrades. 
Backlog at Defense, Space & Security was $67 billion, of which 37 percent represents orders with international customers.

3


Additional Financial Information
Table 6. Additional Financial Information
 
Fourth Quarter
 
Full Year
(Dollars in Millions)
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
 
Boeing Capital Corporation
 

$105

 

$129

 

$408

 

$468

Other segment
 

$22

 

$27

 

$102

 

$106

Unallocated items and eliminations
 

$123

 

($358
)
 

($65
)
 

($610
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital Corporation
 

$9

 

($12
)
 

$107

 

$88

Other segment income/(expense)
 

($99
)
 

$31

 

($156
)
 

($186
)
Unallocated items and eliminations excluding unallocated pension/postretirement expense
 

($532
)
 

($200
)
 

($1,105
)
 

($492
)
Unallocated pension/postretirement expense
 

($323
)
 

($212
)
 

($1,314
)
 

($899
)
Other income, net
 

$15

 

$23

 

$56

 

$62

Interest and debt expense
 

($96
)
 

($112
)
 

($386
)
 

($442
)
Effective tax rate
 
14.0
%
 
36.3
%
 
26.4
%
 
34.0
%
At quarter-end, Boeing Capital Corporation’s (BCC) net portfolio balance was $3.9 billion down from $4.1 billion at the beginning of the quarter. BCC's debt-to-equity ratio was 5.0-to-1. Other segment earnings decreased $130 million in the quarter partly due to higher asset impairment expense.
Unallocated items and eliminations excluding unallocated pension/postretirement expense increased in the fourth quarter of 2013 primarily due to a $406 million charge associated with the A-12 settlement. Total pension expense for the fourth quarter was $717 million, up from $576 million in the same period last year. The company's income tax expense was $201 million in the quarter, compared to $557 million in the same period of the prior year, due to a $212 million benefit recorded in fourth-quarter 2013 for a tax regulation change.



4


Outlook
The company’s 2014 financial guidance (Table 7) reflects continued strong performance in both businesses.
Table 7. Financial Outlook
 
(Dollars in Billions, except per share data)
2014
 
 
The Boeing Company
 
Revenue
$87.5 - 90.5
Core Earnings Per Share*
$7.00 - 7.20
Earnings Per Share
$6.10 - 6.30
       Operating Cash Flow Before Pension Contributions*
~ $7
Operating Cash Flow 1
~ $6.25
 
 
Boeing Commercial Airplanes
 
Deliveries 2
715 - 725
 Revenue
$57.5 - 59.5
 Operating Margin
~ 10%
 
 
Boeing Defense, Space & Security
 
Revenue
 
Boeing Military Aircraft
~ $15
Network & Space Systems
~ $7.7
Global Services & Support
~ $7.8
 
 
Total BDS Revenue
$30 - 31
 
 
Operating Margin
 
Boeing Military Aircraft
~ 9.5%
Network & Space Systems
~ 8.5%
Global Services & Support
~ 10.5%
 
 
Total BDS Operating Margin
~ 9.5%
 
 
Boeing Capital Corporation
 
Portfolio Size
Lower
Revenue
~ $0.3
Pre-Tax Earnings
~ $0.05
 
 
Research & Development
~ $3.2
Capital Expenditures
~ $2.5
Pension Expense 3
~ $3.1
Effective Tax Rate 4
~ 31%
1    After discretionary cash pension contributions of $0.75 billion and assuming new aircraft financings under $0.5 billion
2    Assumes approximately 110 787 deliveries
3 Approximately $1.1 billion is expected to be recorded in unallocated items and eliminations
4 Assumes the extension of the research and development tax credit
*    Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”
    Boeing's 2014 revenue guidance is established at between $87.5 and $90.5 billion. Core earnings per share guidance is set at between $7.00 and $7.20, and earnings per share guidance is expected to be between $6.10 and $6.30. Total company 2014 operating cash flow before pension contributions is expected to be approximately $7 billion, while operating cash flow is expected to be approximately $6.25 billion in 2014, including

5


$0.75 billion of discretionary pension contributions. Total company pension expense in 2014 is expected to be approximately $3.1 billion (of which approximately $2.0 billion is expected to be recorded in core operating earnings and $1.1 billion recorded in unallocated items and eliminations).
Commercial Airplanes' 2014 deliveries are expected to be between 715 and 725, which includes approximately 110 787 deliveries. Revenue at Commercial Airplanes is expected to be between $57.5 and $59.5 billion with operating margins of approximately 10 percent. Defense, Space & Security's revenue for 2014 is expected to be between $30 and $31 billion with operating margins of approximately 9.5 percent.
Boeing Capital Corporation expects that its aircraft finance portfolio will continue to decline in 2014, as new aircraft financing of less than $0.5 billion is expected to be lower than normal portfolio runoff through customer payments and depreciation. Boeing’s 2014 R&D forecast is approximately $3.2 billion, and capital expenditures for 2014 are expected to be approximately $2.5 billion. Boeing’s effective tax rate is expected to be approximately 31 percent in 2014, which assumes the extension of the research and development tax credit.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and post-retirement expense. Unallocated pension and post-retirement expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.
Core Operating Margin and the Increase in Core Operating Earnings Excluding A-12 Settlement Charge
The company is disclosing the core operating margin and the increase in core operating earnings in the fourth quarter of 2013 over the fourth quarter of 2012 excluding the A-12 settlement charge in the fourth quarter of 2013. Management believes it is useful to occasionally exclude certain items that are not reflective of underlying performance and that can distort period to period performance comparisons. Management uses similar measures for purposes of evaluating and forecasting underlying business performance. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.
Operating Cash Flow Before Pension Contributions
Operating cash flow before pension contributions is defined as GAAP operating cash flow less pension contributions. Management believes operating cash flow before pension contributions provides additional insights into underlying business performance. Management uses operating cash flow before pension contributions as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and operating cash flow before pension contributions.
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 as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.

6



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) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (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’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:
  
Troy Lahr or Matt Welch (312) 544-2140

Communications:
  
Chaz Bickers (312) 544-2002


7



The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

Twelve months ended December 31
 
Three months ended December 31
(Dollars in millions, except per share data)
2013

 
2012

 
2013

 
2012

Sales of products

$76,792

 

$71,234

 

$21,482

 

$19,793

Sales of services
9,831

 
10,464

 
2,303

 
2,509

Total revenues
86,623

 
81,698

 
23,785

 
22,302


 
 
 
 
 
 
 
Cost of products
(65,640
)
 
(60,309
)
 
(18,610
)
 
(17,206
)
Cost of services
(7,553
)
 
(8,247
)
 
(1,758
)
 
(1,816
)
Boeing Capital interest expense
(75
)
 
(109
)
 
(20
)
 
(24
)
Total costs and expenses
(73,268
)
 
(68,665
)
 
(20,388
)
 
(19,046
)

13,355

 
13,033

 
3,397

 
3,256

Income from operating investments, net
214

 
268

 
67

 
57

General and administrative expense
(3,956
)
 
(3,717
)
 
(1,100
)
 
(943
)
Research and development expense, net
(3,071
)
 
(3,298
)
 
(848
)
 
(753
)
Gain/(loss) on dispositions, net
20

 
4

 
(1
)
 
7

Earnings from operations
6,562

 
6,290

 
1,515

 
1,624

Other income, net
56

 
62

 
15

 
23

Interest and debt expense
(386
)
 
(442
)
 
(96
)
 
(112
)
Earnings before income taxes
6,232

 
5,910

 
1,434

 
1,535

Income tax expense
(1,646
)
 
(2,007
)
 
(201
)
 
(557
)
Net earnings from continuing operations
4,586

 
3,903

 
1,233

 
978

Net loss on disposal of discontinued operations, net of taxes of $0 and $2
(1
)
 
(3
)
 
 
 
 
Net earnings

$4,585

 

$3,900

 

$1,233

 

$978

Basic earnings per share from continuing operations

$6.03

 

$5.15

 

$1.63

 

$1.29

Net loss on disposal of discontinued operations, net of taxes

 

 

 

Basic earnings per share

$6.03

 

$5.15

 

$1.63

 

$1.29

Diluted earnings per share from continuing operations

$5.96

 

$5.11

 

$1.61

 

$1.28

Net loss on disposal of discontinued operations, net of taxes 

 

 

 

Diluted earnings per share

$5.96

 

$5.11

 

$1.61

 

$1.28

Cash dividends paid per share

$1.94

 

$1.76

 

$0.485

 

$0.44

Weighted average diluted shares (millions)
769.5

 
763.8

 
768.4

 
768.3



8



The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
December 31
2013

 
December 31
2012

Assets
 
 
 
Cash and cash equivalents

$9,088

 

$10,341

Short-term and other investments
6,170

 
3,217

Accounts receivable, net
6,546

 
5,608

Current portion of customer financing, net
344

 
364

Deferred income taxes
14

 
28

Inventories, net of advances and progress billings
42,912

 
37,751

Total current assets
65,074

 
57,309

Customer financing, net
3,627

 
4,056

Property, plant and equipment, net of accumulated depreciation of $15,070 and $14,645
10,224

 
9,660

Goodwill
5,043

 
5,035

Acquired intangible assets, net
3,052

 
3,111

Deferred income taxes
2,939

 
6,753

Investments
1,204

 
1,180

Other assets, net of accumulated amortization of $448 and $504
1,500

 
1,792

Total assets

$92,663

 

$88,896

Liabilities and equity

 

Accounts payable

$9,498

 

$9,394

Accrued liabilities
14,131

 
12,995

Advances and billings in excess of related costs
20,027

 
16,672

Deferred income taxes and income taxes payable
6,267

 
4,485

Short-term debt and current portion of long-term debt
1,563

 
1,436

Total current liabilities
51,486

 
44,982

Accrued retiree health care
6,528

 
7,528

Accrued pension plan liability, net
10,474

 
19,651

Non-current income taxes payable
156

 
366

Other long-term liabilities
950

 
1,429

Long-term debt
8,072

 
8,973

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
4,415

 
4,122

Treasury stock, at cost – 264,882,461 and 256,630,628 shares
(17,671
)
 
(15,937
)
Retained earnings
32,964

 
30,037

Accumulated other comprehensive loss
(9,894
)
 
(17,416
)
Total shareholders’ equity
14,875

 
5,867

Noncontrolling interest
122

 
100

Total equity
14,997

 
5,967

Total liabilities and equity

$92,663

 

$88,896




9


The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Twelve months ended December 31
(Dollars in millions)
2013

 
2012

Cash flows – operating activities:
 
 
 
Net earnings

$4,585

 

$3,900

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
206

 
193

Depreciation and amortization
1,844

 
1,811

Investment/asset impairment charges, net
96

 
84

Customer financing valuation benefit
(11
)
 
(10
)
Loss on disposal of discontinued operations
1

 
5

Gain on dispositions, net
(20
)
 
(4
)
Other charges and credits, net
528

 
694

Excess tax benefits from share-based payment arrangements
(128
)
 
(45
)
Changes in assets and liabilities – 
 
 
 
Accounts receivable
(879
)
 
(27
)
Inventories, net of advances and progress billings
(5,562
)
 
(5,681
)
Accounts payable
(298
)
 
1,199

Accrued liabilities
883

 
801

Advances and billings in excess of related costs
3,353

 
1,177

Income taxes receivable, payable and deferred
1,445

 
1,605

Other long-term liabilities
2

 
157

Pension and other postretirement plans
1,720

 
1,288

Customer financing, net
391

 
407

Other
23

 
(46
)
Net cash provided by operating activities
8,179

 
7,508

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(2,098
)
 
(1,703
)
Property, plant and equipment reductions
51

 
97

Acquisitions, net of cash acquired
(26
)
 
(124
)
Contributions to investments
(15,394
)
 
(12,921
)
Proceeds from investments
12,453

 
10,901

Purchase of distribution rights
(140
)
 
(7
)
Net cash used by investing activities
(5,154
)
 
(3,757
)
Cash flows – financing activities:
 
 
 
New borrowings
571

 
60

Debt repayments
(1,434
)
 
(2,076
)
Repayments of distribution rights and other asset financing
(280
)
 
(228
)
Stock options exercised, other
1,097

 
120

Excess tax benefits from share-based payment arrangements
128

 
45

Employee taxes on certain share-based payment arrangements
(63
)
 
(76
)
Common shares repurchased
(2,801
)
 
 
Dividends paid
(1,467
)
 
(1,322
)
Net cash used by financing activities
(4,249
)
 
(3,477
)
Effect of exchange rate changes on cash and cash equivalents
(29
)
 
18

Net (decrease)/increase in cash and cash equivalents
(1,253
)
 
292

Cash and cash equivalents at beginning of year
10,341

 
10,049

Cash and cash equivalents at end of period

$9,088

 

$10,341




10


The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
 
Twelve months ended December 31
 
Three months ended December 31
(Dollars in millions)
2013

 
2012

 
2013

 
2012

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$52,981

 

$49,127

 

$14,680

 

$14,161

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
15,936

 
16,019

 
4,395

 
4,037

Network & Space Systems
8,512

 
7,911

 
2,272

 
2,024

Global Services & Support
8,749

 
8,677

 
2,188

 
2,282

Total Defense, Space & Security
33,197

 
32,607

 
8,855

 
8,343

Boeing Capital
408

 
468

 
105

 
129

Other segment
102

 
106

 
22

 
27

Unallocated items and eliminations
(65
)
 
(610
)
 
123

 
(358
)
Total revenues

$86,623

 

$81,698

 

$23,785

 

$22,302

Earnings from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$5,795

 

$4,711

 

$1,506

 

$1,266

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
1,465

 
1,489

 
441

 
313

Network & Space Systems
719

 
562

 
233

 
138

Global Services & Support
1,051

 
1,017

 
280

 
300

Total Defense, Space & Security
3,235

 
3,068

 
954

 
751

Boeing Capital
107

 
88

 
9

 
(12
)
Other segment
(156
)
 
(186
)
 
(99
)
 
31

Unallocated items and eliminations
(2,419
)
 
(1,391
)
 
(855
)
 
(412
)
Earnings from operations
6,562

 
6,290

 
1,515

 
1,624

Other income, net
56

 
62

 
15

 
23

Interest and debt expense
(386
)
 
(442
)
 
(96
)
 
(112
)
Earnings before income taxes
6,232

 
5,910

 
1,434

 
1,535

Income tax expense
(1,646
)
 
(2,007
)
 
(201
)
 
(557
)
Net earnings from continuing operations
4,586

 
3,903

 
1,233

 
978

Net loss on disposal of discontinued operations, net of taxes of $0 and $2
(1
)
 
(3
)
 


 


Net earnings

$4,585

 

$3,900

 

$1,233

 

$978

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$1,807

 

$2,049

 

$510

 

$411

Defense, Space & Security
1,215

 
1,189

 
323

 
321

Other
49

 
60

 
15

 
21

Total research and development expense, net

$3,071

 

$3,298

 

$848

 

$753

 
 
 
 
 
 
 
 
Unallocated items and eliminations:
 
 
 
 
 
 
 
Share-based plans

($95
)
 

($81
)
 

($21
)
 

($17
)
Deferred compensation
(238
)
 
(75
)
 
(73
)
 
(26
)
Capitalized interest
(69
)
 
(70
)
 
(17
)
 
(17
)
Eliminations and other
(703
)
 
(266
)
 
(421
)
 
(140
)
 Sub-total (included in core operating earnings)
(1,105
)
 
(492
)
 
(532
)
 
(200
)
Pension
(1,374
)
 
(787
)
 
(329
)
 
(179
)
Postretirement
60

 
(112
)
 
6

 
(33
)
Total unallocated items and eliminations

($2,419
)
 

($1,391
)
 

($855
)
 

($412
)

11


The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
 
 
Deliveries
 
Twelve months ended December 31
 
Three months ended December 31
Commercial Airplanes
 
2013

 
2012

 
2013

 
2012

 
737
 
440

 
415

 
110

 
105

 
747
 
24

 
31

 
8

 
10

 
767
 
21

 
26

 
4

 
6

 
777
 
98

 
83

 
25

 
21

 
787
 
65

(1)
46

(3)
25

 
23

(3)
Total
 
648

 
601

 
172

 
165

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
F/A-18 Models
 
48

 
48

 
12

 
12

 
F-15E Eagle
 
14

 
8

 
11

 


 
C-17 Globemaster III
 
10

 
10

 
2

 
2

 
CH-47 Chinook
 
44

 
51

 
12

 
11

 
AH-64 Apache
 
37

 
19

 
6

 
6

 
P-8 Models
 
11

 
5

 
4

 
2

 
AEW&C
 


 
3

 


 
1

 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
3

 
3
 
2

 

 
Military Satellites
 
4

 
7
 
3

 
1
 
 
 
 
 
 
 
 
 
 
 
Contractual backlog (Dollars in billions)
 
December 31
2013

 
September 30
2013

 
December 31
2012

Commercial Airplanes
 

$373.0

 

$344.3

 

$317.3

Defense, Space & Security:
 
 
 
 
 
 
Boeing Military Aircraft
 
24.8

 
26.4

 
29.2

Network & Space Systems
 
9.8

 
9.9

 
10.1

Global Services & Support
 
15.0

 
14.6

 
15.8

Total Defense, Space & Security
 
49.6

 
50.9

 
55.1

Total contractual backlog
 

$422.6

 

$395.2

 

$372.4

Unobligated backlog
 

$18.3

 

$19.9

 

$17.9

Total backlog
 

$440.9

 

$415.1

 

$390.3

Workforce
 
168,400

 
170,800

 
174,400



12



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core Operating Margin and Increase in Core Operating Earnings Excluding A-12 Settlement Charge
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin and core earnings per share as well as core operating margin and the increase in core operating earnings excluding the A-12 settlement charge with the most directly comparable GAAP financial measures, earnings from operations, operating margin and diluted earnings per share. See page 7 of this release for additional information on the use of these non-GAAP financial measures.

Fourth Quarter
 
Full Year
 
Guidance
  
2013
 
2012
 
2013
 
2012
 
2014
Revenues

$23,785

 

$22,302

 

$86,623

 

$81,698

 
 
 
 
 
 
 
 
 
 
 
 
GAAP Earnings From Operations

$1,515

 

$1,624

 

$6,562

 

$6,290

 
 
GAAP Operating Margin
6.4
%
 
7.3
%
 
7.6
%
 
7.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Pension/Postretirement Expense

$323

 

$212

 

$1,314

 

$899

 
~ $1,050

Core Operating Earnings (non-GAAP)

$1,838

 

$1,836

 

$7,876

 

$7,189

 
 
Core Operating Margin (non-GAAP)
7.7
%
 
8.2
%
 
9.1
%
 
8.8
%
 
 
 
 
 
 
 
 
 
 
 
 
A-12 Settlement Charge

$406

 
—

 

$406

 
—

 
 
Core Operating Earnings Excluding A-12 Settlement Charge

$2,244

 

$1,836

 

$8,282

 

$7,189

 
 
Core Operating Margin Excluding A-12 Settlement Charge (non-GAAP)
9.4
%
 
8.2
%
 
9.6
%
 
8.8
%
 
 
Increase/(Decrease) in GAAP Earnings From Operations
(7
%)
 
 
 
4
%
 
 
 
 
Increase in Core Operating Earnings Excluding A-12 Settlement Charge (non-GAAP)
22
%
 
 
 
15
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Diluted Earnings Per Share

$1.61

 

$1.28

 

$5.96

 

$5.11

 
$6.10 - 6.30

 
 
 
 
 
 
 
 
 
 
Unallocated Pension/Postretirement Expense1

$0.27

 

$0.18

 

$1.11

 

$0.77

 

$0.90

 
 
 
 
 
 
 
 
 
 
Core Earnings Per Share (non-GAAP)

$1.88

 

$1.46

 

$7.07

 

$5.88

 
$7.00 - 7.20

 
 
 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
768.4

 
768.3

 
769.5

 
763.8

 
750 - 755

Increase in GAAP Earnings Per Share
26
%
 
 
 
17
%
 
 
 
 
Increase in Core Earnings Per Share
29
%
 
 
 
20
%
 
 
 
 

1 Earnings per share impact is presented net of the federal statutory tax rate of 35.0 percent.


13
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