Boeing Co 10-Q for FY2020 Q1

Boeing Co (BA)

10-Q 2020-04-29 For: 2020-03-31

Added on April 07, 2026

About this 10-Q

Boeing Co filed this 10-Q on April 29, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.91B; down 26.2% from $22.92B a year earlier
Net loss: $628M; compared with net income of $2.15B a year earlier
Diluted EPS: -$1.11; compared with $3.75 a year earlier

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Delaware			91-0425694
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

100 N. Riverside Plaza,	Chicago,	IL	60606-1596
(Address of principal executive offices)			(Zip Code)



Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $5.00 Par Value	BA	New York Stock Exchange



Part I. Financial Information (Unaudited)		Page

Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Equity	5
	Summary of Business Segment Data	6
	Note 1 - Basis of Presentation	7
	Note 2 - Acquisitions and Joint Ventures	9
	Note 3 - Goodwill and Acquired Intangibles	9
	Note 4 - Earnings Per Share	9
	Note 5 - Income Taxes	11
	Note 6 - Allowance for Losses on Financial Assets	11
	Note 7 - Inventories	11
	Note 8 - Contracts with Customers	12
	Note 9 - Customer Financing	13
	Note 10 - Investments	15
	Note 11 - Commitments & Contingencies	15
	Note 12 - Arrangements with Off-Balance Sheet Risk	20
	Note 13 - Debt	21
	Note 14 - Postretirement Plans	21
	Note 15 - Share-Based Compensation and Other Comprehensive Arrangements	21
	Note 16 - Shareholders' Equity	22
	Note 17 - Derivative Financial Instruments	23
	Note 18 - Fair Value Measurements	24
	Note 19 - Legal Proceedings	26
	Note 20 - Segment and Revenue Information	26
	Report of Independent Registered Public Accounting Firm	30

Forward-Looking Statements		31

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	Consolidated Results of Operations and Financial Condition	33
	Commercial Airplanes	39
	Defense, Space & Security	42
	Global Services	44
	Boeing Capital	45
	Liquidity and Capital Resources	46
	Off-Balance Sheet Arrangements	47
	Contingent Obligations	47
	Non-GAAP Measures	48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

Part II. Other Information

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

Signature		55



(Dollars in millions, except per share data)	Three months ended March 31
	2020			2019
Sales of products		$14,191			$20,225
Sales of services	2,717			2,692
Total revenues	16,908			22,917

Cost of products	(14,713		)	(16,238		)
Cost of services	(2,043		)	(2,389		)
Boeing Capital interest expense	(12		)	(18		)
Total costs and expenses	(16,768		)	(18,645		)
	140			4,272
(Loss)/income from operating investments, net	(2		)	20
General and administrative expense	(873		)	(1,184		)
Research and development expense, net	(672		)	(866		)
Gain on dispositions, net	54			108
(Loss)/earnings from operations	(1,353		)	2,350
Other income, net	112			106
Interest and debt expense	(262		)	(123		)
(Loss)/earnings before income taxes	(1,503		)	2,333
Income tax benefit/(expense)	862			(184		)
Net (loss)/earnings	(641		)	2,149
Less: net loss attributable to noncontrolling interest	(13		)
Net (loss)/earnings attributable to Boeing Shareholders		($628	)		$2,149

Basic (loss)/earnings per share		($1.11	)		$3.79

Diluted (loss)/earnings per share		($1.11	)		$3.75

Weighted average diluted shares (millions)	565.9			572.4



☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



(Dollars in millions)	Three months ended March 31
	2020			2019
Net (loss)/earnings		($641	)		$2,149
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments	(77		)	1
Unrealized gain on certain investments, net of tax of $0 and $0				1
Unrealized (loss)/gain on derivative instruments:
Unrealized (loss)/gain arising during period, net of tax of $77 and ($3)	(275		)	11
Reclassification adjustment for losses/(gains) included in net earnings, net of tax of ($1) and $1	2			(2		)
Total unrealized (loss)/gain on derivative instruments, net of tax	(273		)	9
Defined benefit pension plans and other postretirement benefits:
Amortization of prior service credits included in net periodic pension cost, net of tax of $6 and $6	(23		)	(23		)
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($53) and ($32)	193			118
Pension and postretirement cost related to our equity method investments, net of tax of $0 and ($2)				8
Total defined benefit pension plans and other postretirement benefits, net of tax	170			103
Other comprehensive (loss)/income, net of tax	(180		)	114
Comprehensive (loss)/income, net of tax	(821		)	2,263
Less: Comprehensive loss related to noncontrolling interest	(13		)
Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax		($808	)		$2,263



(Dollars in millions, except per share data)	March 31 2020			December 31 2019
Assets
Cash and cash equivalents		$15,039			$9,485
Short-term and other investments	488			545
Accounts receivable, net	3,211			3,266
Unbilled receivables, net	9,365			9,043
Current portion of customer financing, net	149			162
Inventories	80,020			76,622
Other current assets, net	2,739			3,106
Total current assets	111,011			102,229
Customer financing, net	2,116			2,136
Property, plant and equipment, net of accumulated depreciation of $19,591 and $19,342	12,405			12,502
Goodwill	8,057			8,060
Acquired intangible assets, net	3,256			3,338
Deferred income taxes	678			683
Investments	1,124			1,092
Other assets, net of accumulated amortization of $611 and $580	4,428			3,585
Total assets		$143,075			$133,625
Liabilities and equity
Accounts payable		$14,963			$15,553
Accrued liabilities	21,483			22,868
Advances and progress billings	52,883			51,551
Short-term debt and current portion of long-term debt	5,173			7,340
Total current liabilities	94,502			97,312
Deferred income taxes	336			413
Accrued retiree health care	4,483			4,540
Accrued pension plan liability, net	15,962			16,276
Other long-term liabilities	3,398			3,422
Long-term debt	33,754			19,962
Total liabilities	152,435			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	6,595			6,745
Treasury stock, at cost - 447,947,807 and 449,352,405 shares	(54,842		)	(54,914		)
Retained earnings	49,854			50,644
Accumulated other comprehensive loss	(16,333		)	(16,153		)
Total shareholders’ equity	(9,665		)	(8,617		)
Noncontrolling interests	305			317
Total equity	(9,360		)	(8,300		)
Total liabilities and equity		$143,075			$133,625



	Boeing shareholders
(Dollars in millions, except per share data)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Total
Balance at January 1, 2019		$5,061		$6,768			($52,348	)		$55,941			($15,083	)		$71			$410
Net earnings									2,149									2,149
Other comprehensive income, net of tax of ($30)												114						114
Share-based compensation and related dividend equivalents			47															47
Treasury shares issued for stock options exercised, net			(36		)	77												41
Treasury shares issued for other share-based plans, net			(206		)	(18		)										(224		)
Common shares repurchased						(2,341		)										(2,341		)
Changes in noncontrolling interests															36			36
Balance at March 31, 2019		$5,061		$6,573			($54,630	)		$58,090			($14,969	)		$107			$232

Balance at December 31, 2019		$5,061		$6,745			($54,914	)		$50,644			($16,153	)		$317			($8,300	)
Impact of ASU 2016-13									(162		)							(162		)
Balance at January 1, 2020		$5,061		$6,745			($54,914	)		$50,482			($16,153	)		$317			($8,462	)
Net loss									(628		)				(13		)	(641		)
Other comprehensive income, net of tax of $29												(180		)				(180		)
Share-based compensation and related dividend equivalents			55															55
Treasury shares issued for stock options exercised, net			(16		)	36												20
Treasury shares issued for other share-based plans, net			(189		)	36												(153		)
Changes in noncontrolling interests															1			1
Balance at March 31, 2020		$5,061		$6,595			($54,842	)		$49,854			($16,333	)		$305			($9,360	)



(In millions - except per share amounts)	Three months ended March 31
	2020			2019
(Decrease)/increase to Revenue		($434	)		$160
(Decrease)/increase to (Loss)/earnings from operations		($839	)		$147
(Decrease)/increase to Diluted EPS		($0.63	)		$0.24


⁽¹⁾	Diluted earnings per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.



(Shares in millions)	Three months ended March 31
	2020	2019
Performance awards	6.7	2.6
Performance-based restricted stock units	1.4	0.5



	March 31 2020		December 31 2019
Long-term contracts in progress		$990		$1,187
Commercial aircraft programs	68,719		66,016
Commercial spare parts, used aircraft, general stock materials and other	10,311		9,419
Total		$80,020		$76,622



	March 31 2020			December 31 2019
Financing receivables:
Investment in sales-type/finance leases		$1,002			$1,029
Notes	452			443
Total financing receivables	1,454			1,472
Operating lease equipment, at cost, less accumulated depreciation of $231 and $235	816			834
Gross customer financing	2,270			2,306
Less allowance for losses on receivables	(5		)	(8		)
Total		$2,265			$2,298



	THE BOEING COMPANY



	(312)	544-2000



Rating categories	Current		2019		2018		2017		2016		Prior		Total
BBB												$449		$449
BB		$33		$53		$17					156		259
B			38					$106			188		332
CCC			1				205			$194	14		414
Total carrying value of financing receivables		$33		$92		$17		$311		$194		$807		$1,454



	March 31 2020		December 31 2019
717 Aircraft ($118 and $124 accounted for as operating leases)		$708		$736
747-8 Aircraft ($130 and $130 accounted for as operating leases)	489		475
737 Aircraft ($236 and $240 accounted for as operating leases)	258		263
777 Aircraft ($233 and $236 accounted for as operating leases)	235		240
MD-80 Aircraft (accounted for as sales-type finance leases)	188		186
757 Aircraft ($21 and $22 accounted for as operating leases)	177		182
747-400 Aircraft ($29 and $31 accounted for as operating leases)	84		90



	March 31 2020		December 31 2019
Equity method investments ⁽¹⁾		$1,062		$1,031
Time deposits	173		50
Available for sale debt instruments	226		405
Equity and other investments	67		65
Restricted cash & cash equivalents⁽²⁾	84		86
Total		$1,612		$1,637


⁽¹⁾	Dividends received were $33 and $63 for the three months ended March 31, 2020 and 2019.


⁽²⁾	Reflects amounts restricted in support of our workers’ compensation programs, employee benefit programs, and insurance premiums.



	2020
Beginning balance – January 1		$7,389
Reductions for payments made	(671		)
Reductions for concessions and other in-kind considerations	(2		)
Changes in estimates	(30		)
Ending balance – March 31		$6,686



	Total
April through December 2020		$3,366
2021	2,737
2022	852
2023	1,951
2024	1,174
Thereafter	3,096
		$13,176



	Maximum Potential Payments				Estimated Proceeds from Collateral/Recourse				Carrying Amount of Liabilities
	March 31 2020		December 31 2019		March 31 2020		December 31 2019		March 31 2020		December 31 2019
Contingent repurchase commitments		$1,570		$1,570		$1,570		$1,570
Indemnifications to ULA:
Contributed Delta inventory	30		30
Inventory supply agreement	34		34
Questioned costs			317									$48
Credit guarantees	478		92		33		36			$23	16



	Pension						Postretirement
	2020			2019			2020			2019
Service cost					$1			$21			$19
Interest cost		$614		731			36			49
Expected return on plan assets	(939		)	(965		)	(2		)	(2		)
Amortization of prior service credits	(20		)	(20		)	(9		)	(9		)
Recognized net actuarial loss/(gain)	258			161			(12		)	(11		)
Net periodic benefit (income)/cost		($87	)		($92	)		$34			$46

Net periodic benefit cost included in (Loss)/earnings from operations					$78			$21			$22
Net periodic benefit (income)/cost included in Other income, net		($87	)	(93		)	13			27
Net periodic benefit (income)/cost included in (Loss)/earnings before income taxes		($87	)		($15	)		$34			$49



	Currency Translation Adjustments			Unrealized Gains and Losses on Certain Investments		Unrealized Gains and Losses on Derivative Instruments			Defined Benefit Pension Plans & Other Postretirement Benefits				Total⁽¹⁾
Balance at January 1, 2019		($101	)				($62	)		($14,920	)			($15,083	)
Other comprehensive (loss)/income before reclassifications	1			1		11			8				21
Amounts reclassified from AOCI						(2		)	95			⁽²⁾	93
Net current period Other comprehensive (loss)/income	1			1		9			103				114
Balance at March 31, 2019		($100	)		$1		($53	)		($14,817	)			($14,969	)

Balance at January 1, 2020		($128	)		$1		($84	)		($15,942	)			($16,153	)
Other comprehensive (loss)/income before reclassifications	(77		)			(275		)					(352		)
Amounts reclassified from AOCI						2			170			⁽²⁾	172
Net current period Other comprehensive (loss)/income	(77		)			(273		)	170				(180		)
Balance at March 31, 2020		($205	)		$1		($357	)		($15,772	)			($16,333	)



	Notional amounts⁽¹⁾				Other assets						Accrued liabilities
	March 31 2020		December 31 2019		March 31 2020			December 31 2019			March 31 2020			December 31 2019
Derivatives designated as hedging instruments:
Foreign exchange contracts		$3,399		$2,590		$5			$29			($285	)		($60	)
Commodity contracts	503		645		2			4			(163		)	(72		)
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	181		285		4			1			(2		)	(6		)
Commodity contracts	583		1,644
Total derivatives		$4,666		$5,164		$11			$34			($450	)		($138	)
Netting arrangements					(9		)	(20		)	9			20
Net recorded balance						$2			$14			($441	)		($118	)


⁽¹⁾	Notional amounts represent the gross contract/notional amount of the derivatives outstanding.



	March 31, 2020								December 31, 2019
	Total			Level 1		Level 2			Total			Level 1		Level 2
Assets
Money market funds		$3,658			$3,658					$2,562			$2,562
Available-for-sale debt investments:
Commercial paper	67						$67		108						$108
Corporate notes	159					159			242					242
U.S. government agencies									55			55
Other equity investments	35			35					33			33
Derivatives	2					2			14					14
Total assets		$3,921			$3,693		$228			$3,014			$2,650		$364
Liabilities
Derivatives		($441	)				($441	)		($118	)				($118	)
Total liabilities		($441	)				($441	)		($118	)				($118	)



	2020					2019
	Fair Value		Total Losses			Fair Value		Total Losses
Investments		$52		($21	)		$90		($33	)
Property, plant and equipment	36		(5		)	43		(1		)
Total		$88		($26	)		$133		($34	)



	March 31, 2020
	Carrying Amount			Total Fair Value			Level 1	Level 2			Level 3
Assets
Notes receivable, net		$452			$428				$428
Liabilities
Debt, excluding commercial paper and capital lease obligations	(34,010		)	(32,796		)		(32,759		)		($37	)


⁽¹⁾	Includes revenues earned from foreign military sales through the U.S. government.



FORWARD-LOOKING STATEMENTS
This report 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 and access to suppliers, our liquidity and access to funding, 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, delays in the resumption of production, 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 information 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.


⁽¹⁾	These measures exclude certain components of pension and other postretirement benefit expense. See page 48 for important information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.


*	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 (loss)/earnings is a Non-GAAP measure that excludes the FAS/CAS service cost adjustment. See page 48.



(Dollars in millions)	Three months ended March 31
Pension Plans	2020			2019
Allocated to business segments		($255	)		($352	)
Pension FAS/CAS service cost adjustment	255			274
Net periodic benefit cost included in (Loss)/earnings from operations		$0			($78	)