EX-99.1 2 a201712dec318kpressrelease.htm EX-99.1 Exhibit

 
 
Exhibit 99.1
boeingblacksmall300a03.jpg
 
News Release
  
 
 
 
 
  
Boeing Corporate Offices
100 North Riverside Plaza
Chicago, IL 60606-1596
www.boeing.com
Boeing Reports Record 2017 Results and Provides 2018 Guidance
Fourth-Quarter 2017
▪
Record operating earnings of $3.0 billion with operating cash flow of $2.9 billion on strong performance
▪
GAAP EPS of $5.18 and core EPS (non-GAAP)* of $4.80 on strong deliveries, performance and tax reform
Full-Year 2017
▪
Record operating cash flow of $13.3 billion; repurchased 46.1 million shares for $9.2 billion
▪
Revenue of $93.4 billion reflecting a record 763 commercial deliveries
▪
Backlog remains robust at $488 billion, including a record 5,864 commercial aircraft
▪
Cash and marketable securities of $10.0 billion provide strong liquidity
Outlook for 2018
▪
Operating cash flow expected to increase to approximately $15.0 billion
▪
Revenue guidance of between $96.0 and $98.0 billion reflects commercial deliveries of between 810 and 815
▪
2018 GAAP EPS of between $15.90 and $16.10; core EPS (non-GAAP)* of between $13.80 and $14.00
Table 1. Summary Financial Results
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions, except per share data)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$25,368

 

$23,286

 
9
%
 

$93,392

 

$94,571

 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
 
 
 
 
 
 
 
 
 
 
 
Earnings From Operations
 

$3,030

 

$2,183

 
39
%
 

$10,278

 

$5,834

 
76
 %
Operating Margin
 
11.9
%
 
9.4
%
 
2.5
 Pts
 
11.0
%
 
6.2
%
 
4.8
  Pts
Net Earnings
 

$3,132

 

$1,631

 
92
%
 

$8,197

 

$4,895

 
67
 %
Earnings Per Share
 

$5.18

 

$2.59

 
100
%
 

$13.43

 

$7.61

 
76
 %
Operating Cash Flow
 

$2,904

 

$2,832

 
3
%
 

$13,344

 

$10,499

 
27
 %
Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating Earnings
 

$2,676

 

$2,064

 
30
%
 

$8,970

 

$5,464

 
64
 %
Core Operating Margin
 
10.5
%
 
8.9
%
 
1.6
 Pts
 
9.6
%
 
5.8
%
 
3.8
  Pts
Core Earnings Per Share
 

$4.80

 

$2.47

 
94
%
 

$12.04

 

$7.24

 
66
 %
* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     
CHICAGO, January 31, 2018 – The Boeing Company [NYSE: BA] reported fourth-quarter revenue of $25.4 billion with GAAP earnings per share of $5.18 and core earnings per share (non-GAAP)* of $4.80 reflecting record deliveries and strong performance, as well as favorable tax reform of $1.74 per share (Table 1).
Revenue was $93.4 billion for the full year reflecting deliveries mix with GAAP earnings per share of $13.43 and core earnings per share (non-GAAP)* of $12.04 reflecting strong execution and favorable tax reform.

1



“Across Boeing our teams delivered a record year of financial and operational performance as they focused on disciplined execution of production and development programs, growing services, and delivering value to customers,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “That performance enables increased investments in our people and our business, and greater cash return to shareholders.”
"In 2017 we delivered the first 737 MAX airplanes, launched the 737 MAX 10 and completed the 787-10 first flight, all while delivering more commercial airplanes than ever before. We flew the first KC-46 Tanker to be delivered to the U.S. Air Force, were awarded an initial contract for the Ground Based Strategic Deterrent program, and a contract to provide 36 F-15 fighters to Qatar. We launched Boeing Global Services during the year, to deliver greater lifecycle value, and achieved growth that outpaced the market."
“We actively positioned for future markets and growth by developing new products and services, investing to build vertical capabilities, launching the HorizonX innovation organization and bringing in new capabilities, including the acquisition of Aurora Flight Sciences. Looking forward, our team remains focused on winning through innovation, driving growth and productivity and extending our position as the world's leading aerospace company – delivering the best value to our customers, our employees and our shareholders."
Table 2. Cash Flow
 
Fourth Quarter
 
Full Year
(Millions)
 
2017
 
2016
 
2017
 
2016
Operating Cash Flow
 

$2,904

 

$2,832

 

$13,344

 

$10,499

Less Additions to Property, Plant & Equipment
 

($435
)
 

($599
)
 

($1,739
)
 

($2,613
)
Free Cash Flow*
 

$2,469

 

$2,233

 

$11,605

 

$7,886

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     
Operating cash flow in the quarter of $2.9 billion was driven by strong operating performance (Table 2). During the quarter, the company repurchased 6.7 million shares for $1.7 billion and paid $0.8 billion in dividends. For the full year, the company repurchased 46.1 million shares for $9.2 billion and paid $3.4 billion in dividends. Based on strong cash generation and confidence in the company's outlook, the board of directors in December increased the quarterly dividend per share by 20 percent and replaced the existing share repurchase program with a new $18 billion authorization. Share repurchases under the new authorization are expected to be made over the next 24 to 30 months.

2



Table 3. Cash, Marketable Securities and Debt Balances
 
Quarter-End
(Billions)
 
Q4 17
 
Q3 17
Cash
 

$8.8

 

$8.6

Marketable Securities1
 

$1.2

 

$1.4

Total
 

$10.0

 

$10.0

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

$8.6

 

$7.8

Boeing Capital, including intercompany loans
 

$2.5

 

$3.0

Total Consolidated Debt
 

$11.1

 

$10.8

1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $10.0 billion, unchanged from the beginning of the quarter (Table 3). Debt was $11.1 billion compared to $10.8 billion at the beginning of the quarter.
Total company backlog at quarter-end was $488 billion, up from $474 billion at the beginning of the quarter, and included net orders for the quarter of $40 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
209

 
185

 
13
%
 
763

 
748

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues1
 

$15,466



$14,382

 
8
%
 

$56,729

 

$58,012

 
(2
)%
Earnings from Operations1
 

$1,784



$1,191

 
50
%
 

$5,432

 

$1,995

 
172
 %
Operating Margin1
 
11.5
%

8.3
%
 
3.2
 Pts
 
9.6
%
 
3.4
%
 
6.2
  Pts
1 Prior year results have been adjusted to reflect the realignment of the services business.
Commercial Airplanes fourth-quarter revenue increased to $15.5 billion on higher planned delivery volume and mix (Table 4). Fourth-quarter operating margin increased to 11.5 percent, reflecting strong execution.
During the quarter, Commercial Airplanes delivered a record 209 airplanes and the 787 program rolled out the first 787-10 airplane expected to deliver to launch customer Singapore Airlines. The 737 program delivered 44 MAX airplanes during the quarter and has captured over 4,300 orders since launch for the 737 MAX, including a recent order from flydubai for 175 airplanes. Development on the 777X is on track as production began on the first 777X flight test airplane this quarter.
Commercial Airplanes booked 414 net orders during the quarter. Backlog remains robust with over 5,800 airplanes valued at $421 billion.

3



Defense, Space & Security
Table 5. Defense, Space & Security
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues1
 

$5,537

 

$5,282

 
5
%
 

$21,057

 

$22,563

 
(7
)%
Earnings from Operations1
 

$553

 

$523

 
6
%
 

$2,223

 

$1,966

 
13
 %
Operating Margin1
 
10.0
%
 
9.9
%
 
0.1
 Pts
 
10.6
%
 
8.7
%
 
1.9
  Pts
1 Prior year results have been adjusted to reflect the realignment of the services business.
Defense, Space & Security fourth-quarter revenue increased to $5.5 billion primarily on higher weapons deliveries, and fourth-quarter operating margin was 10.0 percent (Table 5).
During the quarter, Defense, Space & Security signed a contract with the U.S. Air Force to provide 36 advanced F-15 fighter aircraft to Qatar. The KC-46 Tanker program received a contract to provide the first international KC-46 Tanker to Japan and received FAA certification for the 767-2C aircraft, verifying that the fundamental design of the KC-46 Tanker is safe and reliable. Additionally, we continued to make progress on the Commercial Crew program as we successfully completed Design Certification Review, which is a requirement prior to docking with the International Space Station.
Backlog at Defense, Space & Security was $50 billion, of which 40 percent represents orders from international customers.
Global Services
Table 6. Global Services
 
Fourth Quarter
 
 
 
Full Year
 
 
(Dollars in Millions)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$4,001

 

$3,417

 
17
%
 

$14,639

 

$13,925

 
5
%
Earnings from Operations
 

$617

 

$568

 
9
%
 

$2,256

 

$2,177

 
4
%
Operating Margin
 
15.4
%
 
16.6
%
 
(1.2) Pts

 
15.4
%
 
15.6
%
 
(0.2) Pts

Global Services fourth-quarter revenue increased to $4.0 billion, reflecting growth across our portfolio (Table 6). Fourth-quarter operating margin was 15.4 percent reflecting commercial parts mix.
During the quarter, Global Services was awarded a contract for F-15 Qatar Sustainment, signed an agreement with All Nippon for the 787 landing gear exchange program, and India selected BGS for P-8I Poseidon training. Global Services began flight testing on the first 737-800 Boeing Converted Freighter and received an order from GECAS for seven conversions. We continued to expand our digital solutions as a key enabler for growth, with our portfolio reaching around $1 billion of annual revenue in the quarter.

4



Additional Financial Information
Table 7. Additional Financial Information
 
Fourth Quarter
 
Full Year
(Dollars in Millions)
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$73

 

$87

 

$307

 

$298

Unallocated items, eliminations and other
 

$291

 

$118

 

$660

 

($227
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$27

 

$23

 

$114

 

$59

Unallocated pension/postretirement
 

$354

 

$119

 

$1,308

 

$370

Other unallocated items and eliminations
 

($305
)
 

($241
)
 

($1,055
)
 

($733
)
Other income/(loss), net
 

$35

 

($1
)
 

$129

 

$40

Interest and debt expense
 

($93
)
 

($79
)
 

($360
)
 

($306
)
Effective tax rate
 
(5.4
)%
 
22.4
%
 
18.4
%
 
12.1
%
At quarter-end, Boeing Capital's net portfolio balance was $3.0 billion. Total pension expense for the fourth quarter was $105 million, down from $434 million in the same period of the prior year. Revenue in other unallocated items and eliminations increased primarily due to timing of eliminations of intercompany aircraft deliveries, including those accounted for under operating lease. Earnings attributed to other unallocated items and eliminations decreased primarily due to higher deferred compensation. The effective tax rate for the fourth quarter reflects the Tax Cuts and Jobs Act enacted into law in December 2017, which reduced income tax expense by $1,051 million and increased fourth-quarter earnings per share by $1.74, primarily due to the remeasurement of our net U.S. deferred tax liabilities to reflect the reduction in the federal tax rate from 35% to 21%.


5



Outlook
The Company is adopting two new accounting standards, as previously planned, in the first quarter of 2018, the revenue recognition standard (ASC 606) and the pension and postretirement accounting changes (ASC 715). Additional exhibits are included on pages 15-18 with restated 2017 and 2016 results adjusted for the adoption of ASC 606 and ASC 715. The Company has provided this comparable information in the exhibits and below to help investors understand the 2018 financial outlook (Table 8).
Table 8. 2018 Financial Outlook
 
 
Restated
(Dollars in Billions, except per share data)
2018
 
2017 Results
 
 
 
 
The Boeing Company
 
 
 
Revenue
$96.0 - 98.0
 
$94.0
 
 
 
 
GAAP Earnings Per Share
$15.90 - 16.10
 
$13.85
Core Earnings Per Share*
$13.80 - 14.00
 
$12.33
 
 
 
 
Operating Cash Flow
~$15.0
 
$13.3
 
 
 
 
Commercial Airplanes
 
 
 
Deliveries
810 - 815
 
763
Revenue
$59.5 - 60.5
 
$58.0
Operating Margin
>11.0%
 
9.4%
 
 
 
 
Defense, Space & Security
 
 
 
Revenue
$21.5 - 22.5
 
$20.6
Operating Margin
~11.0%
 
10.7%
 
 
 
 
Global Services
 
 
 
      Revenue
$15.0 - 15.5
 
$14.6
      Operating Margin
~15.5%
 
15.4%
 
 
 
 
Boeing Capital
 
 
 
Portfolio Size
Stable
 
$3.0
Revenue
~$0.2
 
$0.3
Pre-Tax Earnings
~$0.05
 
$0.1
 
 
 
 
Research & Development
~$3.7
 
$3.2
Capital Expenditures
~$2.2
 
$1.7
Pension Expense 1
~$0.1
 
$0.4
Effective Tax Rate
~16.0%
 
16.3%
1 Approximately $1.4 billion of pension expense is expected to be allocated to the business segments
* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”


6



Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (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 other postretirement benefit 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 other postretirement benefit expense. Unallocated pension and other postretirement benefit expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. 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.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow without 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.
Adoption of ASC 606 and ASC 715
We are adopting Accounting Standards Update Nos. 2014-09, Revenue from Contracts with Customers (ASC 606) and ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASC 715) in the first quarter of 2018. The following definition reflects the changes to Non-GAAP measures as a result of the adoption of those standards.
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. 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 the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. 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 non-service 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 pages 17-18.


7




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 generally 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 expectations and assumptions that we believe to be reasonable when made, but that 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 commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and 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) threats to the security of our or our customers’ information; (14) potential adverse developments in new or pending litigation and/or government investigations; (15) customer and aircraft concentration in our customer financing portfolio; (16) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates; (17) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (18) the adequacy of our insurance coverage to cover significant risk exposures; (19) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (20) work stoppages or other labor disruptions; (21) substantial pension and other postretirement benefit obligations; (22) potential environmental liabilities.
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:
  
Maurita Sutedja or Ben Hackman (312) 544-2140
Communications:
  
Allison Bone (312) 544-2002


8



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)
2017

 
2016

 
2017

 
2016

Sales of products

$83,204

 

$84,399

 

$22,720

 

$20,836

Sales of services
10,188

 
10,172

 
2,648

 
2,450

Total revenues
93,392

 
94,571

 
25,368

 
23,286


 
 
 
 
 
 
 
Cost of products
(68,365
)
 
(72,713
)
 
(18,509
)
 
(17,596
)
Cost of services
(7,631
)
 
(8,018
)
 
(1,901
)
 
(1,855
)
Boeing Capital interest expense
(70
)
 
(59
)
 
(17
)
 
(13
)
Total costs and expenses
(76,066
)
 
(80,790
)
 
(20,427
)
 
(19,464
)

17,326

 
13,781

 
4,941

 
3,822

Income from operating investments, net
204

 
303

 
35

 
83

General and administrative expense
(4,094
)
 
(3,616
)
 
(1,206
)
 
(999
)
Research and development expense, net
(3,179
)
 
(4,627
)
 
(761
)
 
(726
)
Gain/(loss) on dispositions, net
21

 
(7
)
 
21

 
3

Earnings from operations
10,278

 
5,834

 
3,030

 
2,183

Other income/(loss), net
129

 
40

 
35

 
(1
)
Interest and debt expense
(360
)
 
(306
)
 
(93
)
 
(79
)
Earnings before income taxes
10,047

 
5,568

 
2,972

 
2,103

Income tax (expense)/benefit
(1,850
)
 
(673
)
 
160

 
(472
)
Net earnings

$8,197

 

$4,895

 

$3,132

 

$1,631

 
 
 
 
 
 
 
 
Basic earnings per share

$13.60

 

$7.70

 

$5.25

 

$2.63

 
 
 
 
 
 
 
 
Diluted earnings per share

$13.43

 

$7.61

 

$5.18

 

$2.59

 
 
 
 
 
 
 
 
Cash dividends paid per share

$5.68

 

$4.36

 

$1.42

 

$1.09

 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
610.7

 
643.8

 
605.1

 
630.3






9



The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
December 31
2017

 
December 31
2016

Assets
 
 
 
Cash and cash equivalents

$8,813

 

$8,801

Short-term and other investments
1,179

 
1,228

Accounts receivable, net
10,516

 
8,832

Current portion of customer financing, net
309

 
428

Inventories, net of advances and progress billings
44,344

 
43,199

Total current assets
65,161

 
62,488

Customer financing, net
2,740

 
3,773

Property, plant and equipment, net
12,672

 
12,807

Goodwill
5,559

 
5,324

Acquired intangible assets, net
2,573

 
2,540

Deferred income taxes
341

 
332

Investments
1,260

 
1,317

Other assets, net of accumulated amortization of $482 and $497
2,027

 
1,416

Total assets

$92,333

 

$89,997

Liabilities and equity

 

Accounts payable

$12,202

 

$11,190

Accrued liabilities
15,292

 
14,691

Advances and billings in excess of related costs
27,440

 
23,869

Short-term debt and current portion of long-term debt
1,335

 
384

Total current liabilities
56,269

 
50,134

Deferred income taxes
1,839

 
1,338

Accrued retiree health care
5,545

 
5,916

Accrued pension plan liability, net
16,471

 
19,943

Other long-term liabilities
2,015

 
2,221

Long-term debt
9,782

 
9,568

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
6,804

 
4,762

Treasury stock, at cost
(43,454
)
 
(36,097
)
Retained earnings
45,320

 
40,714

Accumulated other comprehensive loss
(13,376
)
 
(13,623
)
Total shareholders’ equity
355

 
817

Noncontrolling interests
57

 
60

Total equity
412

 
877

Total liabilities and equity

$92,333

 

$89,997




10



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Twelve months ended December 31
(Dollars in millions)
2017

 
2016

Cash flows – operating activities:
 
 
 
Net earnings

$8,197

 

$4,895

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
202

 
190

Depreciation and amortization
2,069

 
1,910

Investment/asset impairment charges, net
113

 
90

Customer financing valuation expense/(benefit)
2

 
(7
)
(Gain)/loss on dispositions, net
(21
)
 
7

Other charges and credits, net
287

 
369

Changes in assets and liabilities – 
 
 
 
Accounts receivable
(1,821
)
 
112

Inventories, net of advances and progress billings
(1,085
)
 
3,755

Accounts payable
130

 
622

Accrued liabilities
573

 
726

Advances and billings in excess of related costs
3,570

 
(493
)
Income taxes receivable, payable and deferred
857

 
(810
)
Other long-term liabilities
94

 
(68
)
Pension and other postretirement plans
(582
)
 
153

Customer financing, net
1,017

 
(696
)
Other
(258
)
 
(256
)
Net cash provided by operating activities
13,344

 
10,499

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(1,739
)
 
(2,613
)
Property, plant and equipment reductions
92

 
38

Acquisitions, net of cash acquired
(324
)
 
(297
)
Contributions to investments
(3,601
)
 
(1,719
)
Proceeds from investments
3,639

 
1,209

Purchase of distribution rights
(131
)
 
 
Other
2

 
2

Net cash used by investing activities
(2,062
)
 
(3,380
)
Cash flows – financing activities:
 
 
 
New borrowings
2,077

 
1,325

Debt repayments
(953
)
 
(1,359
)
Repayments of distribution rights and other asset financing


 
(24
)
Stock options exercised
311

 
321

Employee taxes on certain share-based payment arrangements
(132
)
 
(93
)
Common shares repurchased
(9,236
)
 
(7,001
)
Dividends paid
(3,417
)
 
(2,756
)
Net cash used by financing activities
(11,350
)
 
(9,587
)
Effect of exchange rate changes on cash and cash equivalents
80

 
(33
)
Net decrease in cash and cash equivalents
12

 
(2,501
)
Cash and cash equivalents at beginning of year
8,801

 
11,302

Cash and cash equivalents at end of period

$8,813

 

$8,801




11



The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
 
Twelve months ended December 31
 
Three months ended December 31
(Dollars in millions)
2017

 
2016

 
2017

 
2016

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$56,729

 

$58,012

 

$15,466

 

$14,382

Defense, Space & Security
21,057

 
22,563

 
5,537

 
5,282

Global Services
14,639

 
13,925

 
4,001

 
3,417

Boeing Capital
307

 
298

 
73

 
87

Unallocated items, eliminations and other
660

 
(227
)
 
291

 
118

Total revenues

$93,392

 

$94,571

 

$25,368

 

$23,286

Earnings from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$5,432

 

$1,995

 

$1,784

 

$1,191

Defense, Space & Security
2,223

 
1,966

 
553

 
523

Global Services
2,256

 
2,177

 
617

 
568

Boeing Capital
114

 
59

 
27

 
23

Segment operating profit
10,025

 
6,197

 
2,981

 
2,305

Unallocated items, eliminations and other
253

 
(363
)
 
49

 
(122
)
Earnings from operations
10,278

 
5,834

 
3,030

 
2,183

Other income/(loss), net
129

 
40

 
35

 
(1
)
Interest and debt expense
(360
)
 
(306
)
 
(93
)
 
(79
)
Earnings before income taxes
10,047

 
5,568

 
2,972

 
2,103

Income tax expense
(1,850
)
 
(673
)
 
160

 
(472
)
Net earnings

$8,197

 

$4,895

 

$3,132

 

$1,631

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$2,247

 

$3,706

 

$492

 

$554

Defense, Space & Security
834

 
815

 
235

 
149

Global Services
140

 
153

 
39

 
27

Other
(42
)
 
(47
)
 
(5
)
 
(4
)
Total research and development expense, net

$3,179

 

$4,627

 

$761

 

$726

 
 
 
 
 
 
 
 
Unallocated items, eliminations and other
 
 
 
 
 
 
 
Share-based plans

($77
)
 

($66
)
 

($10
)
 

($16
)
Deferred compensation
(240
)
 
(46
)
 
(66
)
 
(8
)
Amortization of previously capitalized interest
(98
)
 
(94
)
 
(26
)
 
(23
)
Eliminations and other unallocated items
(640
)
 
(527
)
 
(203
)
 
(194
)
Sub-total (included in core operating earnings)
(1,055
)
 
(733
)
 
(305
)
 
(241
)
Pension
1,120

 
217

 
312

 
88

Postretirement
188

 
153

 
42

 
31

Total unallocated items, eliminations and other

$253

 

($363
)
 

$49

 

($122
)

12



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
  
Deliveries
 
Twelve months ended December 31
 
Three months ended December 31
 
Commercial Airplanes
 
2017

 
2016

 
2017

 
2016

 
737
 
529

 
490

 
148

 
122

 
747
 
14

(1
)
9

(3
)
6


1


767
 
10

 
13

 
3

 
3

 
777
 
74

 
99

 
16

 
26

 
787
 
136

 
137

 
36

 
33

 
Total
 
763

 
748

 
209

 
185

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
11

 
31

 
3

 
6

 
AH-64 Apache (Remanufactured)
 
57

 
34

 
14

 
7

 
C-17 Globemaster III
 

 
4

 


 


 
CH-47 Chinook (New)
 
9

 
25

 
3

 
8

 
CH-47 Chinook (Renewed)
 
35

 
25

 
7

 
2

 
F-15 Models
 
16

 
15

 
5

 
4

 
F/A-18 Models
 
23

 
25

 
5

 
5

 
P-8 Models
 
19

 
18

 
5

 
5

 
C-40A
 
 
 
1

 


 
1

 
Commercial and Civil Satellites
 
3

 
5

 

 
2

 
Military Satellites
 
1

 
2

 
1

 

 
Total backlog (Dollars in millions)
 
December 31
2017

 
December 31
2016

Commercial Airplanes
 

$421,345

 

$413,036

Defense, Space & Security
 
49,577

 
44,825

Global Services
 
17,223

 
15,631

Total backlog
 

$488,145

 

$473,492

 
 
 
 
 
Contractual backlog
 

$470,241

 

$458,277

Unobligated backlog
 
17,904

 
15,215

Total backlog
 

$488,145

 

$473,492

Workforce
 
141,300

 
150,500



13



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share 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.
(Dollars in millions, except per share data)
Fourth Quarter

Full Year
  
2017

2016

2017

2016
Revenues

$25,368



$23,286



$93,392



$94,571

 
 
 
 
 
 
 
 
GAAP Earnings From Operations
3,030


2,183


10,278


5,834

 
 
 
 
 
 
 
 
Unallocated Pension Income
(312
)

(88
)

(1,120
)

(217
)
Unallocated Other Postretirement Benefit Income
(42
)

(31
)

(188
)

(153
)
Unallocated Pension and Other Postretirement Benefit Income
(354
)

(119
)

(1,308
)

(370
)
Core Operating Earnings (non-GAAP)

$2,676



$2,064



$8,970



$5,464

 











GAAP Diluted Earnings Per Share

$5.18



$2.59



$13.43



$7.61

Unallocated Pension Income

($0.51
)


($0.14
)


($1.83
)


($0.33
)
Unallocated Postretirement Benefit Income

($0.07
)


($0.05
)


($0.31
)


($0.24
)
Provision for deferred income taxes on adjustments (1)

$0.20



$0.07



$0.75



$0.20

Core Earnings Per Share (non-GAAP)

$4.80



$2.47



$12.04



$7.24

 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
605.1


630.3


610.7


643.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments.





14



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

The Company is adopting two new accounting standards, as previously planned, in the first quarter of 2018, the revenue recognition standard (ASC 606) and the pension and postretirement accounting changes (ASC 715). The restated amounts below reflect the impact of the adoption of ASC 606 and ASC 715.
(Dollars in millions, except per share data)
2017

 
Q4 2017

 
Q3 2017

 
Q2 2017

 
Q1 2017

 
2016

Total revenues

$94,005

 

$24,770

 

$24,223

 

$23,051

 

$21,961

 

$93,496

Total costs and expenses
(76,612
)
 
(19,881
)
 
(19,956
)
 
(18,702
)
 
(18,073
)
 
(79,026
)
 
17,393

 
4,889

 
4,267

 
4,349

 
3,888

 
14,470

Income from operating investments, net
204

 
35

 
49

 
39

 
81

 
303

General and administrative expense
(4,095
)
 
(1,205
)
 
(918
)
 
(1,043
)
 
(929
)
 
(3,613
)
Research and development expense, net
(3,179
)
 
(762
)
 
(768
)
 
(813
)
 
(836
)
 
(4,626
)
Gain/(loss) on dispositions, net
21

 
21

 
—

 
(2
)
 
2

 
(7
)
Earnings from operations
10,344

 
2,978

 
2,630

 
2,530

 
2,206

 
6,527

Other income/(loss), net
123

 
32

 
40

 
25

 
26

 
(438
)
Interest and debt expense
(360
)
 
(93
)
 
(87
)
 
(93
)
 
(87
)
 
(306
)
Earnings before income taxes
10,107

 
2,917

 
2,583

 
2,462

 
2,145

 
5,783

Income tax (expense)/benefit
(1,649
)
 
403

 
(773
)
 
(713
)
 
(566
)
 
(749
)
Net earnings

$8,458

 

$3,320

 

$1,810

 

$1,749

 

$1,579

 

$5,034

 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share

$14.03

 

$5.57

 

$3.03

 

$2.91

 

$2.57

 

$7.92

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share

$13.85

 

$5.49

 

$2.99

 

$2.87

 

$2.54

 

$7.83

 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends paid per share

$5.68

 

$1.42

 

$1.42

 

$1.42

 

$1.42

 

$4.36

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
610.7

 
605.1

 
606.3

 
609.6

 
621.2

 
643.8

 
 
 
 
 
 
 
 
 
 
 
 
Core earnings per share (non-GAAP)*

$12.33

 

$5.07

 

$2.62

 

$2.49

 

$2.17

 

$6.94

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     




15



The Boeing Company and Subsidiaries
Summary of Business Segment Data - Restated
(Unaudited)

The restated amounts below reflect the impact of the adoption of ASC 606 and ASC 715.
(Dollars in millions)
2017

 
Q4 2017

 
Q3 2017

 
Q2 2017

 
Q1 2017

 
2016

Revenues:
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes

$58,014

 

$15,388

 

$15,393

 

$14,280

 

$12,953

 

$59,378

Defense, Space & Security
20,561

 
5,257

 
5,050

 
5,142

 
5,112

 
20,180

Global Services
14,581

 
3,797

 
3,579

 
3,552

 
3,653

 
13,819

Boeing Capital
307

 
73

 
70

 
72

 
92

 
298

Unallocated items, eliminations and other
542

 
255

 
131

 
5

 
151

 
(179
)
Total revenues
94,005

 
24,770

 
24,223

 
23,051

 
21,961

 
93,496

Earnings from operations:

 
 
 
 
 
 
 
 
 
 
Commercial Airplanes
5,452

 
1,787

 
1,513

 
1,282

 
870

 
1,981

Defense, Space & Security
2,193

 
544

 
486

 
614

 
549

 
1,678

Global Services
2,246

 
559

 
495

 
569

 
623

 
2,159

Boeing Capital
114

 
27

 
23

 
25

 
39

 
59

Segment operating profit
10,005

 
2,917

 
2,517

 
2,490

 
2,081

 
5,877

Unallocated items, eliminations and other
(1,099
)
 
(328
)
 
(233
)
 
(317
)
 
(221
)
 
(707
)
FAS/CAS service cost adjustment
1,438

 
389

 
346

 
357

 
346

 
1,357

Earnings from operations
10,344

 
2,978

 
2,630

 
2,530

 
2,206

 
6,527

Other income/(loss), net
123

 
32

 
40

 
25

 
26

 
(438
)
Interest and debt expense
(360
)
 
(93
)
 
(87
)
 
(93
)
 
(87
)
 
(306
)
Earnings before income taxes
10,107

 
2,917

 
2,583

 
2,462

 
2,145

 
5,783

Income tax (expense)/benefit
(1,649
)
 
403

 
(773
)
 
(713
)
 
(566
)
 
(749
)
Net earnings

$8,458

 

$3,320

 

$1,810

 

$1,749

 

$1,579

 

$5,034

Additional information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated items, eliminations and other:
 
 
 
 
 
 
 
 
 
 
 
Share-based plans

($77
)
 

($10
)
 

($21
)
 

($25
)
 

($21
)
 

($66
)
Deferred compensation
(240
)
 
(66
)
 
(78
)
 
(46
)
 
(50
)
 
(46
)
Amortization of previously capitalized interest
(96
)
 
(28
)
 
(22
)
 
(22
)
 
(24
)
 
(106
)
Eliminations and other unallocated items
(686
)
 
(224
)
 
(112
)
 
(224
)
 
(126
)
 
(489
)
Unallocated items, eliminations and other

($1,099
)


($328
)


($233
)
 

($317
)
 

($221
)
 

($707
)
 
 
 
 
 
 
 
 
 
 
 
 
FAS/CAS service cost adjustment:
 
 
 
 
 
 
 
 
 
 
 
Pension

$1,127

 

$316

 

$271

 

$278

 

$262

 

$1,029

Postretirement
311

 
73

 
75

 
79

 
84

 
328

FAS/CAS service cost adjustment

$1,438



$389



$346

 

$357

 

$346

 

$1,357

 
 
 
 
 
 
 
 
 
 
 
 
Other income/(loss), net:
 
 
 
 
 
 
 
 
 
 
 
Other income

$129

 

$35

 

$45

 

$27

 

$22

 

$40

Non-operating pension expense
117

 
29

 
26

 
28

 
34

 
(327
)
Non-operating postretirement expense
(123
)
 
(32
)
 
(31
)
 
(30
)
 
(30
)
 
(151
)
Other income/(loss), net

$123

 

$32

 

$40

 

$25

 

$26

 

($438
)


16



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures - Restated
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin, and diluted earnings per share as restated after the adoption of ASC 606 and ASC 715. See page 7 of this release for additional information on the use of these non-GAAP financial measures.
 
Guidance
 
Full Year
 
Full Year
(Dollars in millions, except per share data)
2018
 
2017
 
2016
 
$ millions
 
Per Share
 
$ millions
 
Per Share
 
$ millions
 
Per Share
Revenues
 
 
 
 

$94,005

 
 
 

$93,496

 
 
Earnings from operations (GAAP)
 
 
 
 
10,344

 
 
 
6,527

 
 
Operating margins
 
 
 
 
11.0
%
 
 
 
7.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAS/CAS service cost adjustment:
 
 
 
 
 
 
 
 
 
 
 
Pension FAS/CAS service cost adjustment(1)
 
 
 
 
(1,127
)
 
 
 
(1,029
)
 
 
Postretirement FAS/CAS service cost adjustment(1)
 
 
 
 
(311
)
 
 
 
(328
)
 
 
FAS/CAS service cost adjustment
~($1,395)
 
 
 

($1,438
)
 


 

($1,357
)
 


Core operating earnings (non-GAAP)
 
 
 
 
8,906

 
 
 
5,170

 
 
Core operating margins (non-GAAP)
 
 
 
 
9.5
%
 
 
 
5.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share (GAAP)

 
 
$15.90 - 16.10
 
 
 

$13.85

 
 
 

$7.83

Pension FAS/CAS service cost adjustment(1)
~($1,395)
 
 
 

($1,127
)
 

($1.84
)
 

($1,029
)
 

($1.60
)
Postretirement FAS/CAS service cost adjustment(1)
 
 
 
(311
)
 

($0.51
)
 
(328
)
 

($0.51
)
Non-operating pension expense(1)
~($170)
 
 
 
(117
)
 

($0.19
)
 
327

 

$0.51

Non-operating postretirement expense(1)
 
 
 
123

 

$0.20

 
151

 

$0.23

Provision for deferred income taxes on adjustments(2)
 
 
 
 
501

 

$0.82

 
308

 

$0.48

Subtotal of adjustments
 
 
($2.10)
 

($931
)
 

($1.52
)
 

($571
)
 

($0.89
)
Core earnings per share (non-GAAP)
 
 
$13.80 - 14.00
 
 
 

$12.33

 

 

$6.94

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares (in millions)
585 - 590
 
 
 
 
 
610.7

 
 
 
643.8


(1)  
Prior to the implementation of ASC 715, these categories were previously called unallocated pension and postretirement expenses.
(2)  
The income tax impact is calculated using the tax rate in effect for non-GAAP adjustments.


17



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures - Restated
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin, and diluted earnings per share as restated after the adoption of ASC 606 and ASC 715. See page 7 of this release for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share data)

Q4 2017
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
$ millions

Per Share

 
$ millions

Per Share

 
$ millions

Per Share

 
$ millions

Per Share

Revenues

$24,770

 
 

$24,223

 
 

$23,051

 
 

$21,961

 
Earnings from operations (GAAP)
2,978

 
 
2,630

 
 
2,530

 
 
2,206

 
Operating margins
12.0
%
 
 
10.9
%
 
 
11.0
%
 
 
10.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
FAS/CAS service cost adjustment:
 
 
 
 
 
 
 
 
 
 
 
Pension FAS/CAS service cost adjustment(1)
(316
)
 
 
(271
)
 
 
(278
)
 
 
(262
)
 
Postretirement FAS/CAS service cost adjustment(1)
(73
)
 
 
(75
)
 
 
(79
)
 
 
(84
)
 
FAS/CAS service cost adjustment
(389
)
 
 
(346
)
 
 
(357
)
 
 
(346
)
 
Core operating earnings (non-GAAP)

$2,589

 
 

$2,284

 
 

$2,173

 
 

$1,860

 
Core operating margins (non-GAAP)
10.5
%
 
 
9.4
%
 
 
9.4
%
 
 
8.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share (GAAP)
 

$5.49

 
 

$2.99

 
 

$2.87

 
 

$2.54

Pension FAS/CAS service cost adjustment(1)

($316
)
(0.52
)
 

($271
)
(0.45
)
 

($278
)
(0.46
)
 

($262
)
(0.42
)
Postretirement FAS/CAS service cost adjustment(1)
(73
)
(0.12
)
 
(75
)
(0.12
)
 
(79
)
(0.13
)
 
(84
)
(0.14
)
Non-operating pension expense(1)
(29
)
(0.05
)
 
(26
)
(0.05
)
 
(28
)
(0.05
)
 
(34
)
(0.06
)
Non-operating postretirement expense(1)
32

0.05

 
31

0.05

 
30

0.05

 
30

0.05

Provision for deferred income taxes on adjustments(2)
135

0.22

 
119

0.20

 
125

0.21

 
122

0.20

Subtotal of adjustments
(251
)

($0.42
)
 
(222
)

($0.37
)
 

($230
)

($0.38
)
 

($228
)

($0.37
)
Core earnings per share (non-GAAP)
 

$5.07

(3) 

$2.62

 
 

$2.49

 
 

$2.17

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares (in millions)
 
605.1

 
 
606.3

 
 
609.6

 
 
621.2


(1)  
Prior to the implementation of ASC 715, these categories were previously called unallocated pension and postretirement expenses.
(2)  
The income tax impact is calculated using the tax rate in effect for non-GAAP adjustments.
(3)  
Includes $2.10 per share related to the Tax Cuts and Jobs Act enacted into law in December 2017.



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