REG-Boeing Co: Annual Financial Report <Origin Href="QuoteRef">BA.N</Origin> - Part 1
01/04/2016 13:34
Boeing Reports Fourth-Quarter Results and Provides 2016 Guidance
CHICAGO, Jan. 27, 2016 --
Fourth-Quarter 2015
* Core EPS (non-GAAP)* of $1.60 on revenue of $23.6 billion; GAAP EPS of
$1.51
* Strong operating cash flow of $3.1 billion on solid core operating
performance
Full Year 2015
* Record revenue of $96.1 billion on record commercial deliveries
* Operating cash flow increased to $9.4 billion; strong liquidity of $12.1
billion in cash and marketable securities
* Backlog remains strong at $489 billion, including $83 billion of net orders
during the year
Outlook for 2016
* 2016 Core EPS* guidance of between $8.15 and $8.35; GAAP EPS guidance of
between $8.45 and $8.65
* Revenue guidance of between $93 and $95 billion reflects commercial
deliveries of between 740 and 745
* Reaffirming planned production rate increases over the next several years
* Operating cash flow guidance of approximately $10 billion
Table 1. Fourth Quarter Full Year
Summary
Financial
Results
(Dollars in 2015 2014 Change 2015 2014 Change
Millions,
except per
share data)
Revenues $23,573 $24,468 (4)% $96,114 $90,762 6%
Non-GAAP*
Core $1,259 $2,344 (46)% $7,741 $8,860 (13)%
Operating
Earnings
Core 5.3% 9.6% (4.3) Pts 8.1% 9.8% (1.7) Pts
Operating
Margin
Core Earnings $1.60 $2.31 (31)% $7.72 $8.60 (10)%
Per Share
Operating $3,137 $5,032 (38)% $9,421 $9,642 (2)%
Cash Flow
Before
Pension
Contributions
GAAP
Earnings From $1,161 $2,025 (43)% $7,443 $7,473 0%
Operations
Operating 4.9% 8.3% (3.4) Pts 7.7% 8.2% (0.5) Pts
Margin
Net Earnings $1,026 $1,466 (30)% $5,176 $5,446 (5)%
Earnings Per $1.51 $2.02 (25)% $7.44 $7.38 1%
Share
Operating $3,119 $4,998 (38)% $9,363 $8,858 6%
Cash Flow
* Non-GAAP measures. Complete
definitions of Boeing's non-GAAP
measures are on page 7, "Non-GAAP
Measures Disclosures."
The Boeing Company [NYSE: BA] reported fourth-quarter revenue of $23.6 billion
and core earnings per share (Non-GAAP)* of $1.60 (Table 1). Fourth quarter 2015
results reflect the previously announced $569 million after-tax charge ($0.84
per share) on the 747 program as a result of a slow recovery in the air cargo
market which was partially offset by solid core operating performance across
the company. GAAP earnings per share was $1.51.
Revenue rose 6 percent in the full year to a record $96.1 billion reflecting
record commercial deliveries. Core earnings per share (Non-GAAP)* totaled $7.72
for the full year, reflecting the KC-46 Tanker (2Q) and 747 program (4Q)
charges ($1.61 per share) partially offset by strong core operating performance
across the company. GAAP earnings per share totaled $7.44 for the full year.
Core earnings per share (non-GAAP)* guidance for 2016 is set at between $8.15
and $8.35, while GAAP earnings per share is established at between $8.45 and
$8.65. Revenue guidance is between $93 and $95 billion, including commercial
deliveries of between 740 and 745. Operating cash flow is expected to be
approximately $10 billion.
"Building on our foundation of solid core operating performance and customer
focus, Boeing extended its leadership of the aerospace industry in 2015 with
record deliveries and revenues in commercial airplanes, and solid sales and
healthy margins in our defense and space business. We also generated
significant cash flow to fuel investments in innovation and our people, and
provide compelling returns to our shareholders," said Boeing President and
Chief Executive Officer Dennis Muilenburg. "With clear strategies and strong
positions in our markets, a large and diverse order backlog worth nearly $500
billion, and multiple additional production rate increases planned yet this
decade, we are well positioned for profitable growth and higher cash flow as we
move into our second century in business."
"Our priorities for 2016 and beyond are to build on our existing strengths to
deliver on current plans and commitments, and to stretch beyond them by
accelerating progress on key enterprise growth and productivity initiatives,
investing in our team, and creating more value and opportunity for our
customers, shareholders and employees," Muilenburg said.
Table 2. Cash Flow Fourth Quarter Full Year
(Millions) 2015 2014 2015 2014
Operating Cash Flow Before Pension $3,137 $5,032 $9,421 $9,642
Contributions*
Pension Contributions ($18) ($34) ($58) ($784)
Operating Cash Flow $3,119 $4,998 $9,363 $8,858
Less Additions to Property, Plant & ($623) ($668) ($2,450) ($2,236)
Equipment
Free Cash Flow* $2,496 $4,330 $6,913 $6,622
Operating cash flow in the quarter was $3.1 billion, reflecting commercial
airplane production rates, solid core operating performance and the timing of
receipts and expenditures in the prior period (Table 2). During the quarter,
the company repurchased 5 million shares for $0.8 billion and paid $0.6 billion
in dividends. For the full year, the company repurchased 47 million shares for
$6.8 billion and paid $2.5 billion in dividends. Based on strong cash
generation and outlook, in December, the board of directors raised the share
repurchase authorization to $14 billion, replacing the authorization approved
in 2014 of which $5.3 billion was remaining, and increased the quarterly
dividend 20 percent. Share repurchases under the new authorization are expected
to be made over the next two to three years.
Table 3. Cash, Quarter-End
Marketable Securities
and Debt Balances
(Billions) Q4 15 Q3 15
Cash $11.3 $9.4
Marketable Securities1 $0.8 $0.5
Total $12.1 $9.9
Debt Balances:
The Boeing Company, $7.6 $6.6
net of intercompany
loans to BCC
Boeing Capital, $2.4 $2.4
including intercompany
loans
Total Consolidated $10.0 $9.0
Debt
1 Marketable securities consists primarily of
time deposits due within one year classified as
"short-term investments."
Cash and investments in marketable securities totaled $12.1 billion, up from
$9.9 billion at the beginning of the quarter, primarily due to the timing of
cash flows. Debt was $10.0 billion, up from $9.0 billion at the beginning of
the quarter, primarily due to the issuance of new debt (Table 3).
Total company backlog at quarter-end was $489 billion, up from $485 billion at
the beginning of the quarter, and included net orders for the quarter of $28
billion. Net orders for the full year totaled $83 billion.
Segment Results
Commercial Airplanes
Table 4. Fourth Quarter Full Year
Commercial
Airplanes
(Dollars in 2015 2014 Change 2015 2014 Change
Millions)
Commercial 182 195 (7)% 762 723 5%
Airplanes
Deliveries
Revenues $16,098 $16,839 (4)% $66,048 $59,990 10%
Earnings $566 $1,562 (64)% $5,157 $6,411 (20)%
from
Operations
Operating 3.5% 9.3% (5.8) Pts 7.8% 10.7% (2.9) Pts
Margin
Commercial Airplanes fourth-quarter revenue decreased slightly to $16.1 billion
on lower delivery volume (Table 4). Fourth-quarter operating margin was 3.5
percent, reflecting the previously announced $885 million pre-tax charge on the
747 program and higher R&D partially offset by strong performance on production
programs.
During the quarter, Commercial Airplanes won orders for 203 737 MAX airplanes.
The 737 program has captured nearly 3,100 orders for the 737 MAX since launch.
Also during the quarter, the company completed detailed design for the 787-10
Dreamliner, final systems definition on the 777X, and rolled out the first 737
MAX airplane.
Commercial Airplanes booked 321 net orders during the quarter and 768 net
orders in 2015. Backlog remains strong with nearly 5,800 airplanes valued at
$432 billion.
Defense, Space & Security
Table 5. Fourth Quarter Full Year
Defense,
Space &
Security
(Dollars in 2015 2014 Change 2015 2014 Change
Millions)
Revenues1
Boeing $3,199 $2,991 7% $13,482 $13,500 0%
Military
Aircraft
Network & $1,954 $2,180 (10)% $7,751 $8,003 (3)%
Space
Systems
Global $2,632 $2,417 9% $9,155 $9,378 (2)%
Services &
Support
Total BDS $7,785 $7,588 3% $30,388 $30,881 (2)%
Revenues
Earnings
from
Operations1
Boeing $438 $366 20% $1,318 $1,301 1%
Military
Aircraft
Network & $163 $191 (15)% $726 $698 4%
Space
Systems
Global $362 $360 1% $1,230 $1,134 8%
Services &
Support
Total BDS $963 $917 5% $3,274 $3,133 5%
Earnings
from
Operations
Operating 12.4% 12.1% 0.3 Pts 10.8% 10.1% 0.7 Pts
Margin
1 During the first quarter of 2015,
certain programs were realigned
between Boeing Military Aircraft and
Global Services & Support.
Defense, Space & Security's fourth-quarter revenue was $7.8 billion with an
operating margin of 12.4 percent (Table 5).
Boeing Military Aircraft (BMA) fourth-quarter revenue increased to $3.2 billion
and operating margin increased to 13.7 percent, reflecting higher volume and
delivery mix. During the quarter, BMA was awarded a contract for 15 EA-18G
Growlers and Japan selected the KC-46 tanker to meet their tanker requirement.
Network & Space Systems (N&SS) fourth-quarter revenue was $2.0 billion,
reflecting lower satellite volume. Operating margin was 8.3 percent, reflecting
lower performance on a development program. During the quarter, NASA awarded
Boeing its second commercial contract for a human spaceflight mission as part
of the existing Commercial Crew contract.
Global Services & Support (GS&S) fourth-quarter revenue increased to $2.6
billion, reflecting the timing of Airborne Surveillance, Command and Control
deliveries. Operating margin was 13.8 percent reflecting program mix. During
the quarter, GS&S delivered the final AEW&C aircraft to Turkey.
Backlog at Defense, Space & Security was $58 billion, of which 40 percent
represents orders from international customers.
Additional Financial Information
Table 6. Additional Financial Fourth Quarter Full Year
Information
(Dollars in Millions) 2015 2014 2015 2014
Revenues
Boeing Capital $98 $153 $413 $416
Unallocated items, eliminations and ($408) ($112) ($735) ($525)
other
Earnings from Operations
Boeing Capital $9 $26 $50 $92
Unallocated pension/postretirement ($98) ($319) ($298) ($1,387)
Other unallocated items and ($279) ($161) ($740) ($776)
eliminations
Other (loss)/income, net $10 ($14) ($13) ($3)
Interest and debt expense ($72) ($81) ($275) ($333)
Effective tax rate 6.6% 24.0% 27.7% 23.7%
At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion,
unchanged from the beginning of the quarter. Unallocated items and eliminations
revenue totaled $408 million at quarter end, up from $112 million in the same
period of the prior year, primarily due to the timing of eliminations for
intercompany aircraft deliveries. Total pension expense for the fourth quarter
was $529 million, down from $772 million in the same period of the prior year.
The company's income tax expense was $73 million in the quarter, compared to
$464 million in the same period of the prior year.
Outlook
The company's 2016 financial and delivery guidance (Table 7) reflects continued
solid performance across the company.
Table 7. 2016
Financial Outlook
(Dollars in Billions, 2016
except per share data)
The Boeing Company
Revenue $93.0 - 95.0
Core Earnings Per $8.15 - 8.35
Share*
GAAP Earnings Per $8.45 - 8.65
Share
Operating Cash Flow ~$10.0
Commercial Airplanes
Deliveries 740 - 745
Revenue $64.0 - 65.0
Operating Margin ~9.0%
Defense, Space &
Security
Revenue
Boeing Military ~$12.3
Aircraft
Network & Space ~$7.3
Systems
Global Services & ~$9.4
Support
Total BDS Revenue $28.5 - 29.5
Operating Margin
Boeing Military ~10.0%
Aircraft
Network & Space ~9.0%
Systems
Global Services & ~11.5%
Support
Total BDS Operating >10.0%
Margin
Boeing Capital
Portfolio Size Stable
Revenue ~$0.3
Pre-Tax Earnings ~$0.05
Research & Development ~ $3.6
Capital Expenditures ~ $2.8
Pension Expense 1 ~ $2.1
Effective Tax Rate ~ 30.0%
1 Approximately ($0.1) billion is expected to be recorded
in unallocated items and eliminations
* Non-GAAP measures. Complete definitions of Boeing's
non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures."
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under U.S.
generally accepted accounting principles (GAAP) with certain non-GAAP financial
information. The non-GAAP financial information presented excludes certain
significant items that may not be indicative of, or are unrelated to, results
from our ongoing business operations. We believe that these non-GAAP measures
provide investors with additional insight into the company's ongoing business
performance. These non-GAAP measures should not be considered in isolation or
as a substitute for the related GAAP measures, and other companies may define
such measures differently. We encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to rely on any
single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding
unallocated pension and post-retirement expense. Core operating margin is
defined as core operating earnings expressed as a percentage of revenue. Core
earnings per share is defined as GAAP diluted earnings per share excluding the
net earnings per share impact of unallocated pension and post-retirement
expense. Unallocated pension and post-retirement expense represents the portion
of pension and other post-retirement costs that are not recognized by business
segments for segment reporting purposes. Management uses core operating
earnings, core operating margin and core earnings per share for purposes of
evaluating and forecasting underlying business performance. Management believes
these core earnings measures provide investors additional insights into
operational performance as they exclude unallocated pension and post-retirement
costs, which primarily represent costs driven by market factors and costs not
allocable to government contracts. A reconciliation between the GAAP and
non-GAAP measures is provided on page 14.
Operating Cash Flow Before Pension Contributions
Operating cash flow before pension contributions is defined as GAAP operating
cash flow without pension contributions. Management believes operating cash
flow before pension contributions provides additional insights into underlying
business performance. Management uses operating cash flow before pension
contributions as a measure to assess both business performance and overall
liquidity. Table 2 provides a reconciliation between GAAP operating cash flow
and operating cash flow before pension contributions.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow 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.
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "may,"
"should," "expects," "intends," "projects," "plans," "believes," "estimates,"
"targets," "anticipates," and similar expressions are used to identify these
forward-looking statements. Examples of forward-looking statements include
statements relating to our future financial condition and operating results, as
well as any other statement that does not directly relate to any historical or
current fact. Forward-looking statements are based on our current expectations
and assumptions, which may not prove to be accurate. These statements are not
guarantees and are subject to risks, uncertainties, and changes in
circumstances that are difficult to predict. Many factors could cause actual
results to differ materially and adversely from these forward-looking
statements. Among these factors are risks related to: (1) general conditions in
the economy and our industry, including those due to regulatory changes; (2)
our reliance on our commercial airline customers; (3) the overall health of our
aircraft production system, planned production rate increases across multiple
commercial airline programs, our commercial development and derivative aircraft
programs, and our aircraft being subject to stringent performance and
reliability standards; (4) changing 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)
potential adverse developments in new or pending litigation and/or government
investigations; (14) customer and aircraft concentration in Boeing Capital's
customer financing portfolio; (15) changes in our ability to obtain debt on
commercially reasonable terms and at competitive rates in order to fund our
operations and contractual commitments; (16) realizing the anticipated benefits
of mergers, acquisitions, joint ventures/strategic alliances or divestitures;
(17) the adequacy of our insurance coverage to cover significant risk
exposures; (18) potential business disruptions, including those related to
physical security threats, information technology or cyber-attacks, epidemics,
sanctions or natural disasters; (19) work stoppages or other labor disruptions;
(20) significant changes in discount rates and actual investment return on
pension assets; (21) potential environmental liabilities; and (22) threats to
the security of our or our customers' information.
Additional information concerning these and other factors can be found in our
filings with the Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. Any forward-looking statement speaks only as of the date on which
it is made, and we assume no obligation to update or revise any forward-looking
statement, whether as a result of new information, future events, or otherwise,
except as required by law.
Contact:
Investor Relations: Troy Lahr or Ben Hackman (312) 544-2140
Communications: Bernard Choi (312) 544-2002
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Twelve months ended Three months ended
December 31 December 31
(Dollars in millions, except per 2015 2014 2015 2014
share data)
Sales of products $85,255 $80,688 $20,847 $21,768
Sales of services 10,859 10,074 2,726 2,700
Total revenues 96,114 90,762 23,573 24,468
Cost of products (73,446) (68,551) (18,426) (18,528)
Cost of services (8,578) (8,132) (2,201) (2,167)
Boeing Capital interest expense (64) (69) (15) (16)
Total costs and expenses (82,088) (76,752) (20,642) (20,711)
14,026 14,010 2,931 3,757
Income from operating investments, 274 287 67 75
net
General and administrative expense (3,525) (3,767) (931) (1,040)
Research and development expense, net (3,331) (3,047) (905) (755)
(Loss)/gain on dispositions, net (1) (10) (1) (12)
Earnings from operations 7,443 7,473 1,161 2,025
Other (loss)/income, net (13) (3) 10 (14)
Interest and debt expense (275) (333) (72) (81)
Earnings before income taxes 7,155 7,137 1,099 1,930
Income tax expense (1,979) (1,691) (73) (464)
Net earnings $5,176 $5,446 $1,026 $1,466
Basic earnings per share $7.52 $7.47 $1.52 $2.05
Diluted earnings per share $7.44 $7.38 $1.51 $2.02
Cash dividends paid per share $3.64 $2.92 $0.91 $0.73
Weighted average diluted shares 696.1 738.0 681.2 724.8
(millions)
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions, except per share data) December 31 December 31
2015 2014
Assets
Cash and cash equivalents $11,302 $11,733
Short-term and other investments 750 1,359
Accounts receivable, net 8,713 7,729
Current portion of customer financing, net 212 190
Inventories, net of advances and progress billings 47,257 46,756
Total current assets 68,234 67,767
Customer financing, net 3,358 3,371
Property, plant and equipment, net of accumulated 12,076 11,007
depreciation of $16,286 and $15,689
Goodwill 5,126 5,119
Acquired intangible assets, net 2,657 2,869
Deferred income taxes 265 317
Investments 1,284 1,154
Other assets, net of accumulated amortization of 1,408 1,317
$451 and $479
Total assets $94,408 $92,921
Liabilities and equity
Accounts payable $10,800 $10,667
Accrued liabilities 14,014 13,462
Advances and billings in excess of related costs 24,364 23,175
Short-term debt and current portion of long-term 1,234 929
debt
Total current liabilities 50,412 48,233
Deferred income taxes 2,392 2,207
Accrued retiree health care 6,616 6,802
Accrued pension plan liability, net 17,783 17,182
Other long-term liabilities 2,078 1,566
Long-term debt 8,730 8,141
Shareholders' equity:
Common stock, par value $5.00 - 1,200,000,000 shares 5,061 5,061
authorized; 1,012,261,159 shares issued
Additional paid-in capital 4,834 4,625
Treasury stock, at cost - 345,637,354 and (29,568) (23,298)
305,533,606 shares
Retained earnings 38,756 36,180
Accumulated other comprehensive loss (12,748) (13,903)
Total shareholders' equity 6,335 8,665
Noncontrolling interests 62 125
Total equity 6,397 8,790
Total liabilities and equity $94,408 $92,921
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Twelve months ended
December 31
(Dollars in millions) 2015 2014
Cash flows - operating activities:
Net earnings $5,176 $5,446
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Non-cash items -
Share-based plans expense 189 195
Depreciation and amortization 1,833 1,906
Investment/asset impairment charges, net 167 229
Customer financing valuation benefit (5) (28)
Loss/(gain) on dispositions, net 1 10
Other charges and credits, net 364 317
Excess tax benefits from share-based payment arrangements (157) (114)
Changes in assets and liabilities -
Accounts receivable (1,069) (1,328)
Inventories, net of advances and progress billings (1,110) (4,330)
Accounts payable (238) 1,339
Accrued liabilities 2 (1,088)
Advances and billings in excess of related costs 1,192 3,145
Income taxes receivable, payable and deferred 477 1,325
Other long-term liabilities 46 36
Pension and other postretirement plans 2,470 1,186
Customer financing, net 167 578
Other (142) 34
Net cash provided by operating activities 9,363 8,858
Cash flows - investing activities:
Property, plant and equipment additions (2,450) (2,236)
Property, plant and equipment reductions 42 34
Acquisitions, net of cash acquired (31) (163)
Contributions to investments (2,036) (8,617)
Proceeds from investments 2,590 13,416
Other 39 33
Net cash (used)/provided by investing activities (1,846) 2,467
Cash flows - financing activities:
New borrowings 1,746 962
Debt repayments (885) (1,601)
Repayments of distribution rights and other asset (185)
financing
Stock options exercised 399 343
Excess tax benefits from share-based payment arrangements 157 114
Employee taxes on certain share-based payment arrangements (96) (98)
Common shares repurchased (6,751) (6,001)
Dividends paid (2,490) (2,115)
Other (12)
Net cash used by financing activities (7,920) (8,593)
Effect of exchange rate changes on cash and cash (28) (87)
equivalents
Net (decrease)/increase in cash and cash equivalents (431) 2,645
Cash and cash equivalents at beginning of year 11,733 9,088
Cash and cash equivalents at end of period $11,302 $11,733
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Twelve months ended Three months ended
December 31 December 31
(Dollars in millions) 2015 2014 2015 2014
Revenues:
Commercial Airplanes $66,048 $59,990 $16,098 $16,839
Defense, Space & Security:
Boeing Military Aircraft 13,482 13,500 3,199 2,991
Network & Space Systems 7,751 8,003 1,954 2,180
Global Services & Support 9,155 9,378 2,632 2,417
Total Defense, Space & Security 30,388 30,881 7,785 7,588
Boeing Capital 413 416 98 153
Unallocated items, eliminations and (735) (525) (408) (112)
other
Total revenues $96,114 $90,762 $23,573 $24,468
Earnings from operations:
Commercial Airplanes $5,157 $6,411 $566 $1,562
Defense, Space & Security:
Boeing Military Aircraft 1,318 1,301 438 366
- More to follow, for following part double click ID:nPRrR15D1bRecent news on Boeing Co
See all newsREG-Boeing Company: First Quarter Financial Results
AnnouncementREG - Official List - Official List Notice
AnnouncementREG - Stock Exch Notice - Admission to Trading - 19/04/2024
AnnouncementREG - Air Astana JSC - Strategic partnership with Neos
AnnouncementREG - Official List - Official List Notice
Announcement