Exhibit
99.1
Boeing Reports Second-Quarter Results
▪ |
Financial results continue to be significantly impacted by COVID-19 and the 737 MAX
grounding |
▪ |
Revenue of $11.8
billion, GAAP loss per share of ($4.20) and core (non-GAAP)* loss per share of ($4.79) |
▪ |
Operating cash flow of ($5.3) billion; cash and marketable securities of $32.4 billion |
▪ |
Total backlog of
$409 billion, including more than 4,500 commercial airplanes |
Table 1. Summary Financial Results |
Second Quarter |
First Half |
||||||||||||||||||
(Dollars in Millions, except per share data) |
2020 |
2019 |
Change |
2020 |
2019 |
Change | ||||||||||||||
Revenues |
$11,807 |
$15,751 |
(25)%
|
$28,715 |
$38,668 |
(26)% | ||||||||||||||
GAAP |
||||||||||||||||||||
Loss
From Operations |
($2,964 |
) |
($3,380 |
) |
NM |
($4,317 |
) |
($1,030 |
) |
NM
| ||||||||||
Operating Margin |
(25.1
|
)% |
(21.5
|
)% |
NM
|
(15.0
|
)% |
(2.7 |
)% |
NM | ||||||||||
Net
Loss |
($2,395 |
) |
($2,942 |
) |
NM |
($3,036 |
) |
($793 |
) |
NM
| ||||||||||
Loss Per Share |
($4.20 |
) |
($5.21 |
) |
NM
|
($5.31 |
) |
($1.40 |
) |
NM | ||||||||||
Operating
Cash Flow |
($5,280 |
) |
($590 |
) |
NM |
($9,582 |
) |
$2,198 |
NM
| |||||||||||
Non-GAAP* |
||||||||||||||||||||
Core
Operating Loss |
($3,319 |
) |
($3,745 |
) |
NM |
($5,019 |
) |
($1,759 |
) |
NM
| ||||||||||
Core Operating Margin |
(28.1
|
)% |
(23.8
|
)% |
NM
|
(17.5
|
)% |
(4.5
|
)% |
NM | ||||||||||
Core Loss Per Share |
($4.79 |
) |
($5.82 |
) |
NM
|
($6.49 |
) |
($2.60 |
) |
NM | ||||||||||
*Non-GAAP measure; complete
definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures
Disclosures."
CHICAGO, July 29, 2020 – The Boeing Company
[NYSE: BA] reported second-quarter revenue of $11.8 billion, GAAP loss per share of ($4.20) and core loss per share (non-GAAP)* of ($4.79), primarily reflecting the impacts of COVID-19 and the 737 MAX
grounding (Table 1). Boeing recorded operating cash flow of ($5.3)
billion.
“We remained focused
on the health of our employees and communities while proactively taking action to navigate the unprecedented commercial market impacts from the COVID-19 pandemic,” said Boeing President and Chief Executive Officer Dave Calhoun.
“We’re working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side.”
In the second quarter, Boeing restarted production operations across key sites following
temporary pauses to protect its workforce and introduce rigorous new health and safety procedures. Despite the challenges, Boeing continued to deliver across key commercial, defense, space and services programs. The company also resumed early stages
of production on the 737 program with a focus on safety, quality and operational excellence. Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737, including completion of FAA certification
flight tests.
To align to the sharp reduction in commercial market demand in light of
COVID-19, the company is taking several actions including further adjusting commercial airplane production rates and reducing employment
levels.
1
“The diversity of our balanced portfolio and our government services, defense and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to
adapt for new market realities,” Calhoun said. “We are taking the right action to ensure we're well positioned for the future by strengthening our culture, improving transparency, rebuilding trust and transforming our business to become
a better, more sustainable Boeing. Air travel has always proven to be resilient - and so has
Boeing.”
Table 2. Cash Flow |
Second Quarter |
First Half | ||||||||||||||
(Millions) |
2020 |
2019 |
2020 |
2019 | ||||||||||||
Operating Cash Flow |
($5,280 |
) |
($590 |
) |
($9,582 |
) |
$2,198 |
|||||||||
Less Additions to
Property, Plant & Equipment |
($348 |
) |
($421 |
) |
($776 |
) |
($922 |
) | ||||||||
Free Cash Flow* |
($5,628
|
)
|
($1,011
|
)
|
($10,358
|
)
|
$1,276
|
|||||||||
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures
Disclosures."
Operating cash flow was ($5.3) billion in the quarter, primarily reflecting lower commercial
deliveries and services volume due to COVID-19 and the 737 MAX grounding, as well as timing of receipts and expenditures (Table 2).
Table 3. Cash, Marketable Securities and Debt Balances |
Quarter-End | |||||||
(Billions) |
Q2 20 |
Q1 20 | ||||||
Cash |
$20.0
|
$15.0
|
||||||
Marketable
Securities1 |
$12.4 |
$0.5 |
||||||
Total |
$32.4
|
$15.5
|
||||||
Debt
Balances: |
||||||||
The
Boeing Company, net of intercompany loans to BCC |
$59.5 |
$36.9 |
||||||
Boeing Capital,
including intercompany loans |
$1.9 |
$2.0 |
||||||
Total Consolidated Debt |
$61.4 |
$38.9 |
||||||
1 Marketable securities consists primarily of time deposits due within one year classified as "short-term
investments."
Cash and investments in marketable securities increased to
$32.4 billion, compared to $15.5 billion at the beginning of the quarter, driven by the issuance of new debt (Table
3). Debt was $61.4 billion, up from $38.9 billion at the beginning of the quarter due to the issuance of new debt, partially offset by repayment of maturing
debt.
Total company backlog at quarter-end was $409 billion.
2
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes |
Second Quarter |
First Half |
||||||||||||||||||
(Dollars in Millions) |
2020 |
2019 |
Change |
2020 |
2019 |
Change | ||||||||||||||
Commercial Airplanes Deliveries |
20 |
90 |
(78)%
|
70 |
239 |
(71)% | ||||||||||||||
Revenues |
$1,633 |
$4,722 |
(65)%
|
$7,838 |
$16,544 |
(53)% | ||||||||||||||
Loss from
Operations |
($2,762 |
) |
($4,946 |
) |
NM |
($4,830 |
) |
($3,773 |
) |
NM
| ||||||||||
Operating Margin |
(169.1 |
)% |
(104.7 |
)% |
NM |
(61.6 |
)% |
(22.8 |
)% |
NM | ||||||||||
Commercial Airplanes second-quarter revenue and operating margin decreased reflecting lower
delivery volume, partially offset by a lower 737 MAX customer consideration charge of $551 million in the quarter compared to a $5.6 billion charge in the same period last year. Second-quarter operating margin was also negatively impacted by $712
million of abnormal production costs related to the 737 program, $468 million of severance expense and $133 million of
abnormal production costs from the temporary suspension of operations in response to COVID-19.
The 737 program resumed early stages of production in May and expects to continue to produce at low rates for the remainder of 2020. The COVID-19 pandemic has significantly impacted air travel and
reduced near-term demand, resulting in lower production and delivery rate assumptions. Commercial Airplanes expects to gradually increase the 737 production rate to 31 per month by the beginning of 2022, with further gradual increases to correspond
with market demand. Estimated potential concessions and other considerations to customers related to the 737 MAX grounding increased by $551 million in the quarter. There was no material change to estimated abnormal production costs.
Commercial Airplanes has further updated its production rate
assumptions this quarter to reflect impacts of COVID-19 on its demand outlook, and will continue to assess them on an ongoing basis. The 787 production rate will be reduced to 6 per month in 2021. The 777/777X combined production rate will be
gradually reduced to 2 per month in 2021, with 777X first delivery targeted for 2022. At this time, production rate assumptions have not changed on the 767 and 747
programs.
Commercial Airplanes delivered 20 airplanes during the quarter,
and backlog included over 4,500 airplanes valued at $326 billion.
3
Defense, Space & Security
Table 5. Defense, Space & Security |
Second Quarter |
First Half |
||||||||||||||||||
(Dollars in Millions) |
2020 |
2019 |
Change |
2020 |
2019 |
Change | ||||||||||||||
Revenues |
$6,588 |
$6,579 |
—
|
$12,630 |
$13,166 |
(4)% | ||||||||||||||
Earnings
from Operations |
$600 |
$975 |
(38)% |
$409 |
$1,827 |
(78)%
| ||||||||||||||
Operating Margin |
9.1 |
% |
14.8 |
% |
(5.7) Pts |
3.2 |
% |
13.9 |
% |
(10.7) Pts | ||||||||||
Defense, Space & Security second-quarter revenue was $6.6 billion, reflecting COVID-19 impact on derivative aircraft programs, partially offset by
higher volume across the remainder of the portfolio (Table 5). Second-quarter
operating margin decreased to 9.1 percent primarily due to a gain on sale of property in the second quarter of 2019 and a $151 million
KC-46A Tanker charge primarily driven by additional fixed cost allocation resulting from lower commercial airplane production volume due to
COVID-19.
During the quarter, Defense, Space & Security received an
award for three additional MQ-25 unmanned aerial refueling aircraft for the U.S. Navy, as well as contracts for Cruise Missile Systems for the U.S. Navy and a contract for 24 AH-64E Apache helicopters for the Kingdom of Morocco. Defense, Space &
Security completed Critical Design Review for the T-7A advanced trainer, achieved first flight and delivery of the F/A-18 U.S. Navy Block III Super Hornet, and achieved first flight of the F-15 Qatar Advanced aircraft. Defense, Space & Security
also delivered the 100th U.S. Navy P-8A Poseidon, the 400th V-22 Osprey, and the 2,500th AH-64
Apache.
Backlog at Defense, Space & Security was $64 billion, of which 31 percent represents orders from customers outside the
U.S.
Global
Services
Table 6. Global Services |
Second Quarter |
First Half |
||||||||||||||||||
(Dollars in Millions) |
2020 |
2019 |
Change |
2020 |
2019 |
Change | ||||||||||||||
Revenues |
$3,488 |
$4,543 |
(23)%
|
$8,116 |
$9,162 |
(11)% | ||||||||||||||
(Loss)/Earnings
from Operations |
($672 |
) |
$687 |
NM |
$36 |
$1,340 |
NM
| |||||||||||||
Operating Margin |
(19.3 |
)% |
15.1 |
% |
NM |
0.4 |
% |
14.6 |
% |
NM | ||||||||||
Global
Services second-quarter revenue decreased to $3.5 billion, driven by lower commercial services volume due to COVID-19, partially offset by higher
government services volume (Table 6). Second-quarter operating margin decreased to
(19.3) percent primarily due to lower commercial services volume, less favorable mix of products and services, and $923 million of
charges related to asset impairments and severance costs as a result of the COVID-19 market environment.
During the quarter, Global Services was awarded a contract modification for P-8A integrated logistics support for the U.S. Navy. Global Services captured an order for four 767-300 freighter conversions for
DHL and was awarded a contract for F-15 pre-delivery training support for the Qatar Emiri Air Force. Global Services also delivered the first F/A-18 Super Hornet test aircraft modified for the U.S. Navy Blue
Angels.
4
Additional Financial Information
Table 7. Additional Financial Information |
Second Quarter |
First Half | ||||||||||||||
(Dollars in Millions) |
2020 |
2019 |
2020 |
2019 | ||||||||||||
Revenues |
||||||||||||||||
Boeing
Capital |
$69 |
$75 |
$134 |
$141 |
||||||||||||
Unallocated
items, eliminations and other |
$29 |
($168 |
) |
($3 |
) |
($345 |
) | |||||||||
Earnings from
Operations |
||||||||||||||||
Boeing
Capital |
($7 |
) |
$37 |
$17 |
$57 |
|||||||||||
FAS/CAS service cost
adjustment |
$355 |
$365 |
$702 |
$729 |
||||||||||||
Other
unallocated items and eliminations |
($478 |
) |
($498 |
) |
($651 |
) |
($1,210 |
) | ||||||||
Other
income, net |
$94 |
$107 |
$206 |
$213 |
||||||||||||
Interest and debt expense |
($553 |
) |
($154 |
) |
($815 |
) |
($277 |
) | ||||||||
Effective tax rate |
30.0
|
% |
14.2
|
% |
38.4
|
% |
27.5
|
% | ||||||||
At quarter-end, Boeing Capital's net portfolio balance was $2.1 billion. Revenue from other unallocated items and eliminations increased primarily due to reserves related to cost accounting litigation recorded in
the second quarter of 2019. Interest and debt expense increased due to higher debt balances. The second quarter effective tax rate reflects tax benefits related to the 5 year net operating loss carryback provision in the Coronavirus Aid, Relief, and
Economic Security (CARES) Act as well as the impact of pre-tax
losses.
5
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 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 page 13.
Free Cash
Flow
Free cash flow is GAAP operating cash flow reduced by capital expenditures for
property, plant and equipment. 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
of free cash flow to GAAP operating 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 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) the COVID-19 pandemic and related government actions, including with respect to our operations, our liquidity, the health of our customers and suppliers, and future demand for our products
and services; (2) the 737 MAX, including the timing and conditions of 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, and increased considerations to customers and suppliers, (3) general conditions in the
economy and our industry, including those due to regulatory changes; (4) our reliance on our commercial airline customers; (5) 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; (6) changing budget and appropriation levels and acquisition priorities of the U.S. government; (7) our dependence on
U.S. government contracts; (8) our reliance on fixed-price contracts; (9) our reliance on cost-type contracts; (10) uncertainties concerning contracts that include in-orbit incentive payments; (11) our dependence on our subcontractors and suppliers,
as well as the availability of raw materials; (12) changes in accounting estimates; (13) changes in the competitive landscape in our markets; (14) our non-U.S. operations, including sales to non-U.S. customers; (15) threats to the security of our or
our customers’ information; (16) potential adverse developments in new or pending litigation and/or government investigations; (17) customer and aircraft concentration in our customer financing portfolio; (18) changes in our ability to obtain
debt on commercially reasonable terms and at competitive rates; (19) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (20) the adequacy of our insurance coverage to cover significant
risk exposures; (21) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (22) work stoppages or other labor disruptions; (23)
substantial pension and other postretirement benefit obligations; and (24) 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 Keely Moos (312) 544-2140 | |
Communications: |
Michael Friedman [email protected]
| |
7
The Boeing Company and
Subsidiaries
Consolidated Statements of
Operations
(Unaudited)
Six months ended June
30 |
Three months ended June
30 | ||||||||||||||
(Dollars in
millions, except per share data) |
2020
|
2019 |
2020
|
2019 |
|||||||||||
Sales of products |
$23,254
|
$33,319 |
$9,063
|
$13,094 |
|||||||||||
Sales of services |
5,461
|
5,349 |
2,744
|
2,657 |
|||||||||||
Total
revenues |
28,715 |
38,668
|
11,807 |
15,751
|
|||||||||||
Cost of
products |
(25,091
|
) |
(31,910 |
) |
(10,378
|
) |
(15,672 |
) | |||||||
Cost of services |
(4,632 |
) |
(4,511 |
) |
(2,589 |
) |
(2,122 |
) | |||||||
Boeing Capital interest expense |
(23 |
) |
(34
|
)
|
(11 |
) |
(16
|
)
| |||||||
Total costs and
expenses |
(29,746 |
) |
(36,455 |
)
|
(12,978 |
) |
(17,810 |
)
| |||||||
(1,031 |
)
|
2,213
|
(1,171 |
)
|
(2,059
|
) |
|||||||||
(Loss)/income from operating investments, net |
(47 |
) |
5 |
(45 |
) |
(15 |
) | ||||||||
General and
administrative expense |
(2,034
|
) |
(1,856 |
) |
(1,161
|
) |
(672 |
) | |||||||
Research and development expense, net |
(1,297 |
) |
(1,692 |
) |
(625 |
) |
(826 |
) | |||||||
Gain on dispositions, net |
92 |
300 |
38 |
192
|
|||||||||||
Loss from operations |
(4,317
|
) |
(1,030 |
) |
(2,964
|
) |
(3,380 |
) | |||||||
Other income,
net |
206
|
213 |
94
|
107 |
|||||||||||
Interest and debt
expense |
(815
|
) |
(277 |
) |
(553
|
) |
(154 |
) | |||||||
Loss
before income taxes |
(4,926 |
)
|
(1,094
|
) |
(3,423 |
)
|
(3,427
|
) |
|||||||
Income tax
benefit |
1,890
|
301 |
1,028
|
485 |
|||||||||||
Net loss |
(3,036 |
) |
(793 |
) |
(2,395 |
) |
(2,942 |
) | |||||||
Less: net loss attributable to noncontrolling
interest |
(32 |
) |
(19 |
) |
|||||||||||
Net loss attributable to Boeing Shareholders |
($3,004 |
) |
($793
|
) |
($2,376 |
) |
($2,942
|
) | |||||||
Basic loss per share |
($5.31 |
) |
($1.40
|
) |
($4.20 |
) |
($5.21
|
) | |||||||
Diluted loss per share |
($5.31 |
) |
($1.40
|
) |
($4.20 |
) |
($5.21
|
) | |||||||
Weighted average diluted shares (millions) |
566.1 |
566.6 |
566.4 |
565.3 |
|||||||||||
8
The Boeing Company and Subsidiaries
Consolidated
Statements of Financial
Position
(Unaudited)
(Dollars in millions, except per
share data) |
June 30
2020 |
December 31
2019 |
|||||
Assets |
|||||||
Cash and cash equivalents |
$19,992 |
$9,485 |
|||||
Short-term and
other investments |
12,438
|
545 |
|||||
Accounts receivable, net |
2,793 |
3,266 |
|||||
Unbilled
receivables, net |
8,570
|
9,043 |
|||||
Current portion of customer financing, net |
115 |
162 |
|||||
Inventories
|
83,745
|
76,622 |
|||||
Other current assets,
net |
2,624
|
3,106 |
|||||
Total current assets |
130,277 |
102,229
|
|||||
Customer financing, net |
2,054 |
2,136 |
|||||
Property, plant
and equipment, net of accumulated depreciation of $19,863 and $19,342 |
12,182
|
12,502 |
|||||
Goodwill |
8,064 |
8,060 |
|||||
Acquired
intangible assets, net |
3,019
|
3,338 |
|||||
Deferred income taxes |
729 |
683 |
|||||
Investments
|
1,066
|
1,092 |
|||||
Other assets, net
of accumulated amortization of $617 and $580 |
5,481 |
3,585 |
|||||
Total assets |
$162,872 |
$133,625
|
|||||
Liabilities and
equity |
|||||||
Accounts
payable |
$13,700 |
$15,553 |
|||||
Accrued liabilities |
22,493 |
22,868 |
|||||
Advances and
progress billings |
53,367
|
51,551 |
|||||
Short-term debt and current portion
of long-term debt |
2,922
|
7,340 |
|||||
Total current liabilities |
92,482 |
97,312
|
|||||
Deferred income taxes |
404 |
413 |
|||||
Accrued retiree
health care |
4,427
|
4,540 |
|||||
Accrued pension plan liability, net |
15,663 |
16,276 |
|||||
Other long-term
liabilities |
2,821
|
3,422 |
|||||
Long-term debt |
58,457 |
19,962 |
|||||
Total liabilities |
174,254 |
141,925
|
|||||
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 |
6,648 |
6,745 |
|||||
Treasury
stock, at cost - 447,840,938 and 449,352,405 shares |
(54,829
|
) |
(54,914 |
) | |||
Retained earnings |
47,478 |
50,644 |
|||||
Accumulated other comprehensive loss |
(16,025 |
) |
(16,153
|
)
| |||
Total shareholders’
equity |
(11,667
|
) |
(8,617 |
) | |||
Noncontrolling interests |
285 |
317
|
|||||
Total equity |
(11,382 |
) |
(8,300 |
) | |||
Total liabilities and equity |
$162,872 |
$133,625
|
|||||
9
The Boeing Company and
Subsidiaries
Consolidated Statements of Cash
Flows
(Unaudited)
Six months ended June
30 | |||||||
(Dollars
in millions) |
2020
|
2019 |
|||||
Cash flows – operating activities: |
|||||||
Net loss |
($3,036 |
) |
($793 |
) | |||
Adjustments to
reconcile net loss to net cash (used)/provided by operating activities: |
|||||||
Non-cash items – |
|||||||
Share-based
plans expense |
115
|
104 |
|||||
Depreciation and amortization |
1,103 |
1,067 |
|||||
Investment/asset
impairment charges, net |
280
|
70 |
|||||
Customer financing valuation adjustments |
9 |
249 |
|||||
Gain on
dispositions, net |
(92
|
) |
(300 |
) | |||
Other charges and credits, net |
815 |
145 |
|||||
Changes in
assets and liabilities – |
|||||||
Accounts receivable |
143 |
588 |
|||||
Unbilled
receivables |
285
|
(222 |
) | ||||
Advances and progress billings |
1,822 |
1,842 |
|||||
Inventories
|
(6,741
|
) |
(5,233 |
) | |||
Other current assets |
433 |
(887 |
) | ||||
Accounts
payable |
(3,181
|
) |
2,002 |
||||
Accrued liabilities |
514 |
4,959 |
|||||
Income taxes
receivable, payable and deferred |
(1,894
|
) |
(921 |
) | |||
Other long-term liabilities |
(109 |
) |
(509 |
) | |||
Pension and
other postretirement plans |
(357
|
) |
(390 |
) | |||
Customer financing, net |
62 |
347 |
|||||
Other |
247
|
80 |
|||||
Net cash
(used)/provided by operating activities |
(9,582 |
) |
2,198 |
||||
Cash flows – investing activities: |
|||||||
Property, plant and equipment additions |
(776 |
) |
(922 |
) | |||
Property, plant
and equipment reductions |
96
|
331 |
|||||
Acquisitions, net of cash acquired |
(492 |
) | |||||
Contributions to
investments |
(12,557
|
) |
(496 |
) | |||
Proceeds from investments |
543 |
758 |
|||||
Purchase of
distribution rights |
(20 |
) | |||||
Other |
8
|
(12 |
) | ||||
Net cash used by investing activities |
(12,686 |
) |
(853 |
) | |||
Cash flows –
financing activities: |
|||||||
New
borrowings |
42,302
|
11,670 |
|||||
Debt repayments |
(8,265 |
) |
(6,422 |
) | |||
Contributions
from noncontrolling interests |
7 |
||||||
Stock options exercised |
27 |
47 |
|||||
Employee taxes
on certain share-based payment arrangements |
(164
|
) |
(238 |
) | |||
Common shares repurchased |
(2,651 |
) | |||||
Dividends
paid |
(1,158
|
) |
(2,317 |
) | |||
Net cash provided by financing activities |
32,742 |
96 |
|||||
Effect of exchange rate changes on cash and cash equivalents, including restricted |
(11 |
) |
(2
|
)
| |||
Net increase in cash
& cash equivalents, including restricted |
10,463
|
1,439 |
|||||
Cash & cash
equivalents, including restricted, at beginning of year |
9,571 |
7,813
|
|||||
Cash & cash equivalents, including restricted, at end of period |
20,034
|
9,252 |
|||||
Less restricted
cash & cash equivalents, included in Investments |
42
|
85 |
|||||
Cash and cash equivalents at end of period |
$19,992
|
$9,167 |
|||||
10
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Effective at the beginning of 2020, certain programs were realigned between our Defense, Space & Security segment and Unallocated items, eliminations and other. Business segment data for 2019 has been
adjusted to reflect the realignment.
Six months ended June
30 |
Three months ended June
30 | ||||||||||||||
(Dollars
in millions) |
2020
|
2019 |
2020
|
2019 |
|||||||||||
Revenues: |
|||||||||||||||
Commercial Airplanes |
$7,838 |
$16,544 |
$1,633 |
$4,722 |
|||||||||||
Defense, Space
& Security |
12,630
|
13,166 |
6,588
|
6,579 |
|||||||||||
Global Services |
8,116 |
9,162 |
3,488 |
4,543 |
|||||||||||
Boeing
Capital |
134
|
141 |
69
|
75 |
|||||||||||
Unallocated items, eliminations and
other |
(3
|
) |
(345 |
) |
29
|
(168 |
) | ||||||||
Total revenues |
$28,715 |
$38,668
|
$11,807 |
$15,751
|
|||||||||||
Earnings/(loss) from operations: |
|||||||||||||||
Commercial
Airplanes |
($4,830 |
) |
($3,773 |
) |
($2,762 |
) |
($4,946 |
) | |||||||
Defense, Space & Security |
409 |
1,827 |
600 |
975 |
|||||||||||
Global
Services |
36
|
1,340 |
(672
|
) |
687 |
||||||||||
Boeing Capital |
17
|
57 |
(7
|
) |
37 |
||||||||||
Segment
operating loss |
(4,368
|
) |
(549 |
) |
(2,841
|
) |
(3,247
|
) |
|||||||
Unallocated items, eliminations and other |
(651 |
) |
(1,210 |
) |
(478 |
) |
(498 |
) | |||||||
FAS/CAS service cost adjustment |
702 |
729
|
355 |
365
|
|||||||||||
Loss from operations |
(4,317 |
) |
(1,030 |
) |
(2,964 |
) |
(3,380 |
) | |||||||
Other income,
net |
206
|
213 |
94
|
107 |
|||||||||||
Interest and debt
expense |
(815
|
) |
(277 |
) |
(553
|
) |
(154 |
) | |||||||
Loss before
income taxes |
(4,926
|
) |
(1,094 |
) |
(3,423
|
) |
(3,427 |
) | |||||||
Income tax benefit |
1,890
|
301 |
1,028
|
485 |
|||||||||||
Net loss |
(3,036
|
) |
(793 |
) |
(2,395
|
) |
(2,942 |
) | |||||||
Less: Net loss attributable to
noncontrolling interest |
(32
|
) |
(19
|
) |
|||||||||||
Net loss attributable to Boeing Shareholders |
($3,004 |
) |
($793
|
) |
($2,376 |
) |
($2,942
|
) | |||||||
Research and development expense,
net: |
|||||||||||||||
Commercial
Airplanes |
$786 |
$1,062 |
$361 |
$498 |
|||||||||||
Defense, Space & Security |
330 |
374 |
167 |
190 |
|||||||||||
Global
Services |
65
|
73 |
35
|
33 |
|||||||||||
Other |
116 |
183 |
62 |
105 |
|||||||||||
Total research and development expense, net |
$1,297 |
$1,692
|
$625 |
$826
|
|||||||||||
Unallocated items, eliminations and
other: |
|||||||||||||||
Share-based
plans |
($43 |
) |
($36 |
) |
($25 |
) |
($22 |
) | |||||||
Deferred compensation |
73 |
(129 |
) |
(120 |
) |
(27 |
) | ||||||||
Amortization of
previously capitalized interest |
(50
|
) |
(45 |
) |
(27
|
) |
(21 |
) | |||||||
Customer financing impairment |
(250 |
) |
|||||||||||||
Research and
development expense, net |
(116
|
) |
(183 |
) |
(62
|
) |
(105 |
) | |||||||
Eliminations and other unallocated
items |
(515 |
) |
(567 |
) |
(244 |
) |
(323 |
) | |||||||
Sub-total (included in core operating loss) |
(651 |
) |
(1,210 |
) |
(478 |
) |
(498 |
) | |||||||
Pension FAS/CAS service cost adjustment |
513 |
549 |
258 |
275 |
|||||||||||
Postretirement
FAS/CAS service cost adjustment |
189
|
180 |
97
|
90 |
|||||||||||
FAS/CAS service cost adjustment |
702 |
729 |
$355
|
$365 |
|||||||||||
Total |
$51
|
($481 |
)
|
($123
|
) |
($133 |
)
| ||||||||
11
The Boeing Company and Subsidiaries
Operating and
Financial Data
(Unaudited)
Deliveries |
Six
months ended June 30 |
Three
months ended June 30 |
|||||||||||
Commercial Airplanes |
2020 |
2019
|
2020 |
2019
|
|||||||||
737 |
9
|
113
|
4
|
24
|
|||||||||
747 |
1 |
4 |
1 |
2 |
|||||||||
767 |
14 |
22 |
4 |
10 |
|||||||||
777 |
10 |
22 |
(1) |
4 |
12 |
||||||||
787 |
36 |
78
|
7 |
42
|
|||||||||
Total |
70 |
239
|
20 |
90
|
|||||||||
Note:
Aircraft accounted for as revenues by BCA and as operating leases in consolidation identified by parentheses | |||||||||||||
Defense, Space & Security |
|||||||||||||
AH-64 Apache (New) |
11 |
10 |
9 |
4 |
|||||||||
AH-64 Apache
(Remanufactured) |
32 |
35 |
18 |
13 |
|||||||||
C-17 Globemaster III |
— |
— |
— |
— |
|||||||||
C-40A
|
— |
— |
— |
— |
|||||||||
CH-47 Chinook (New) |
15 |
7 |
6 |
— |
|||||||||
CH-47 Chinook
(Renewed) |
1 |
9 |
— |
5 |
|||||||||
F-15 Models |
3 |
5 |
3 |
1 |
|||||||||
F/A-18
Models |
9 |
10 |
4 |
3 |
|||||||||
KC-46 Tanker |
6 |
12 |
1 |
5 |
|||||||||
P-8
Models |
6 |
8 |
3 |
5 |
|||||||||
Commercial and Civil Satellites |
— |
1 |
— |
1 |
|||||||||
Military
Satellites |
— |
— |
— |
— |
|||||||||
Total
backlog (Dollars in millions) |
June 30
2020 |
December 31
2019 |
||||||
Commercial
Airplanes |
$325,674
|
$376,593 |
||||||
Defense, Space & Security |
64,286 |
63,691 |
||||||
Global
Services |
18,168
|
22,902 |
||||||
Unallocated items, eliminations and
other |
522
|
217 |
||||||
Total backlog |
$408,650 |
$463,403
|
||||||
Contractual
backlog |
$385,389 |
$436,473 |
||||||
Unobligated backlog |
23,261
|
26,930 |
||||||
Total backlog |
$408,650 |
$463,403
|
||||||
12
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core operating loss, core operating
margin, and core loss per share with the most directly comparable GAAP financial measures, loss from operations, operating margin, and diluted loss per share. See page 6 of this release for additional information on the use of these non-GAAP financial
measures.
(Dollars in
millions, except per share data) |
Second
Quarter 2020 |
Second Quarter
2019 | ||||||||||||
$
millions |
Per
Share |
$
millions |
Per
Share |
|||||||||||
Revenues |
11,807 |
15,751
|
||||||||||||
Loss from operations (GAAP) |
(2,964 |
) |
(3,380 |
) |
||||||||||
Operating margin
(GAAP) |
(25.1 |
)%
|
(21.5
|
%) |
||||||||||
FAS/CAS
service cost adjustment: |
||||||||||||||
Pension FAS/CAS service cost
adjustment |
(258 |
) |
(275 |
) |
||||||||||
Postretirement FAS/CAS
service cost adjustment |
(97 |
) |
(90
|
)
|
||||||||||
FAS/CAS
service cost adjustment |
(355
|
) |
(365 |
) |
||||||||||
Core operating loss (non-GAAP) |
($3,319 |
) |
($3,745 |
) |
||||||||||
Core operating margin
(non-GAAP) |
(28.1 |
)% |
(23.8 |
%) |
||||||||||
Diluted loss per share (GAAP) |
($4.20 |
) |
($5.21 |
) | ||||||||||
Pension FAS/CAS service
cost adjustment |
($258 |
) |
(0.46
|
) |
($275 |
) |
(0.49 |
) | ||||||
Postretirement FAS/CAS service cost
adjustment |
(97 |
) |
(0.17 |
) |
(90 |
) |
(0.16 |
) | ||||||
Non-operating pension
expense |
(84
|
) |
(0.14
|
) |
(94 |
) |
(0.17 |
) | ||||||
Non-operating postretirement
expense |
14 |
0.02 |
26 |
0.05 |
||||||||||
Provision for deferred
income taxes on adjustments 1 |
89 |
0.16 |
91
|
0.16
|
||||||||||
Subtotal of
adjustments |
($336 |
) |
($0.59 |
) |
($342 |
) |
($0.61 |
) | ||||||
Core loss per share (non-GAAP) |
($4.79 |
) |
($5.82 |
) | ||||||||||
Weighted average
diluted shares (in millions) |
566.4
|
565.3 |
||||||||||||
1 The income tax impact is calculated
using the U.S. corporate statutory tax
rate.
13
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core operating loss, core operating
margin, and core loss per share with the most directly comparable GAAP financial measures, loss from operations, operating margin, and diluted loss per share. See page 6 of this release for additional information on the use of these non-GAAP financial
measures.
(Dollars in
millions, except per share data) |
First
Half 2020 |
First Half
2019 | ||||||||||||
$
millions |
Per
Share |
$ millions |
Per
Share |
|||||||||||
Revenues
|
28,715 |
38,668
|
||||||||||||
Loss from operations (GAAP) |
(4,317 |
) |
(1,030 |
) |
||||||||||
Operating
margin (GAAP) |
(15.0 |
)%
|
(2.7
|
%) |
||||||||||
FAS/CAS service cost adjustment: |
||||||||||||||
Pension FAS/CAS service cost
adjustment |
(513 |
) |
(549 |
) |
||||||||||
Postretirement
FAS/CAS service cost adjustment |
(189 |
) |
(180
|
)
|
||||||||||
FAS/CAS
service cost adjustment |
(702
|
) |
(729 |
) |
||||||||||
Core operating loss (non-GAAP) |
($5,019 |
) |
($1,759 |
) |
||||||||||
Core operating margin
(non-GAAP) |
(17.5 |
)% |
(4.5 |
%) |
||||||||||
Diluted loss per share (GAAP) |
($5.31 |
) |
($1.40 |
) | ||||||||||
Pension
FAS/CAS service cost adjustment |
($513 |
) |
(0.91
|
) |
($549 |
) |
(0.97 |
) | ||||||
Postretirement FAS/CAS service cost
adjustment |
(189 |
) |
(0.33 |
) |
(180 |
) |
(0.32 |
) | ||||||
Non-operating
pension expense |
(171
|
) |
(0.30
|
) |
(187 |
) |
(0.32 |
) | ||||||
Non-operating postretirement
expense |
27 |
0.05 |
53 |
0.09 |
||||||||||
Provision
for deferred income taxes on adjustments 1 |
178 |
0.31 |
181
|
0.32
|
||||||||||
Subtotal of
adjustments |
($668 |
) |
($1.18 |
) |
($682 |
) |
($1.20 |
) | ||||||
Core loss per share (non-GAAP) |
($6.49 |
) |
($2.60 |
) | ||||||||||
Weighted
average diluted shares (in millions) |
566.1
|
566.6 |
||||||||||||
1 The income tax impact is calculated
using the U.S. corporate statutory tax rate.
14