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BOEING CO Earnings Release 2013
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Earnings Release
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BOEING COMPANY - Final Results
PR Newswire
London, January 29
Boeing Reports Record 2013 Revenue, EPS and Backlog and Provides 2014 GuidanceCHICAGO, Jan. 29, 2014 --Fourth-Quarter 2013 \* Core EPS (non-GAAP)\* rose 29 percent to $1.88 on strong operating performance; GAAP EPS of $1.61 \* Revenue increased 7 percent to $23.8 billion reflecting higher deliveriesFull Year 2013 \* Core EPS increased 20 percent to a record $7.07 on record revenue of $86.6 billion; GAAP EPS of $5.96 \* Operating cash flow before pension contributions\* grew to $9.7 billion; GAAP operating cash flow of $8.2 billion \* Backlog grew to a record $441 billion, including $135 billion of net orders during the yearOutlook for 2014 \* 2014 Core EPS guidance of between $7.00 and $7.20; GAAP EPS guidance of between $6.10 and $6.30 \* Revenue guidance of between $87.5 and $90.5 billion with commercial deliveries of between 715 and 725 Table 1. Summary Financial Results Fourth Quarter Full Year (Dollars in Millions, except per share data) 2013 2012 Change 2013 2012 Change Revenues $23,785 $22,302 7% $86,623 $81,698 6% Non-GAAP\* Core Operating Earnings $1,838 $1,836 0% $7,876 $7,189 10% Core Operating Margin 7.7% 8.2% (0.5) Pts 9.1% 8.8% 0.3 Pts Core Earnings Per Share $1.88 $1.46 29% $7.07 $5.88 20% Operating Cash Flow Before Pension Contributions $1,409 $4,204 (66)% $9,721 $9,058 7% GAAP Earnings From Operations $1,515 $1,624 (7)% $6,562 $6,290 4% Operating Margin 6.4% 7.3% (0.9) Pts 7.6% 7.7% (0.1) Pts Net Earnings $1,233 $978 26% $4,585 $3,900 18% Earnings Per Share $1.61 $1.28 26% $5.96 $5.11 17% Operating Cash Flow $1,380 $4,167 (67)% $8,179 $7,508 9% \* Non-GAAP measures (core operating earnings, core operating margin and core earnings per share) exclude certain components of pension and post retirement benefit expense that management believes are not reflective of underlying business performance. Complete definitions of Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures Disclosures."The Boeing Company (NYSE: BA) reported fourth-quarter revenue of $23.8 billionand core earnings per share (non-GAAP) that increased 29 percent\* to $1.88,driven by strong performance across the company's businesses and higherdeliveries (Table 1). Fourth-quarter core operating earnings (non-GAAP) of $1.8billion includes a $406 million non-cash charge to settle A-12 litigationdating back to 1991, retiring a longstanding risk to the company. Excluding theA-12 charge, fourth-quarter 2013 core operating earnings increased 22 percent\*to $2.2 billion and core operating margin increased to 9.4 percent\*. Core andGAAP earnings per share includes a charge of $0.34 per share related to A-12partially offset by a benefit of $0.28 per share for a tax regulation change.Revenue rose 6 percent in the full year to a record $86.6 billion and coreearnings per share increased 20 percent\* to a record $7.07. Full-year 2013 GAAPearnings per share was $5.96.Core earnings per share guidance for 2014 is set at between $7.00 and $7.20,while GAAP earnings per share guidance is established at between $6.10 and$6.30. Revenue guidance is between $87.5 and $90.5 billion, includingcommercial deliveries of between 715 and 725. Operating cash flow beforepension contributions\* is expected to be approximately $7 billion, whileoperating cash flow guidance is set at approximately $6.25 billion."Strong fourth-quarter results underscored an outstanding full year of coreoperating performance that drove record revenue and earnings and increasedreturns to shareholders," said Boeing Chairman and Chief Executive Officer JimMcNerney."Our Commercial Airplanes business accelerated delivery of its record backlogby successfully increasing production rates while also achieving importantdevelopment milestones on the 737 MAX and 787-9 and launching the new 787-10and 777X models with an unprecedented customer response. Our Defense, Space &Security unit overcame a tough operating environment to record expandedrevenue, earnings and margins while executing to our commitments on the KC-46Atanker and developing and delivering important new capabilities to customers,such as the P-8 maritime aircraft and the Inmarsat-5 satellite," said McNerney."For 2014, we remain focused on maintaining our commercial airplanes marketleadership, strengthening and repositioning our defense, space and securitybusiness and continuing to meet the needs of our customers by improvingproductivity, executing to development plans and delivering our unmatchedportfolio of innovative aerospace products and services." Table 2. Cash Flow Fourth Quarter Full Year (Millions) 2013 2012 2013 2012 Operating Cash Flow Before Pension Contributions\* $1,409 $4,204 $9,721 $9,058 Pension Contributions ($29) ($37) ($1,542) ($1,550) Operating Cash Flow $1,380 $4,167 $8,179 $7,508 Less Additions to Property, Plant & Equipment ($638) ($495) ($2,098) ($1,703) Free Cash Flow\* $742 $3,672 $6,081 $5,805Operating cash flow in the quarter was $1.4 billion, reflecting commercialairplane production rates, strong core operating performance and timing ofreceipts and expenditures (Table 2). During the quarter, the companyrepurchased 7.6 million shares for $1.0 billion and paid $0.4 billion individends, reflecting a 10 percent increase in dividends paid compared to thesame period of the prior year. Based on the strong cash generation and outlook,in December, the board of directors authorized an additional $10 billion sharerepurchase program and raised the quarterly dividend 50 percent. Table 3. Cash, Marketable Securities and Debt Balances Quarter-End (Billions) Q4 13 Q3 13 Cash $9.1 $10.0 Marketable Securities(1) $6.2 $5.9 Total $15.3 $15.9 Debt Balances: The Boeing Company, net of intercompany loans to BCC $7.0 $7.0 Boeing Capital Corporation, including intercompany loans $2.6 $2.6 Total Consolidated Debt $9.6 $9.6(1) Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."Cash and investments in marketable securities totaled $15.3 billion at year-end(Table 3), down from $15.9 billion at the beginning of the quarter. Debt was$9.6 billion, unchanged from the beginning of the quarter.Total company backlog at year-end was a record $441 billion, up from $415billion at the beginning of the quarter, and included net orders for thequarter of $48 billion. Backlog is up $51 billion from prior year-end,reflecting $135 billion of net orders in 2013.Segment ResultsBoeing Commercial Airplanes Table 4. Boeing Commercial Airplanes Fourth Quarter Full Year (Dollars in Millions) 2013 2012 Change 2013 2012 Change Commercial Airplanes Deliveries 172 165 4% 648 601 8% Revenues $14,680 $14,161 4% $52,981 $49,127 8% Earnings from Operations $1,506 $1,266 19% $5,795 $4,711 23 % Operating Margin 10.3% 8.9% 1.4 Pts 10.9% 9.6% 1.3 PtsBoeing Commercial Airplanes fourth-quarter revenue increased to $14.7 billionand full-year revenue increased to a record $53 billion on higher deliveryvolume. Fourth-quarter operating margin improved to 10.3 percent and full-yearoperating margin grew to 10.9 percent on the higher volume, favorable deliverymix and continued strong operating performance (Table 4).During the quarter, the company launched the 777X with 259 orders andcommitments. During the year, the 787 program completed first flight of the787-9, successfully launched the 787-10 and began operating at a 10 per monthproduction rate in final assembly. The 737 program delivered at a recordproduction rate of 38 per month and has won nearly 1,800 firm orders for the737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered.In January 2014, the company reached an eight-year contract extension through2024 with the International Association of Machinists & Aerospace WorkersDistrict 751 (IAM).Commercial Airplanes booked 465 net orders during the quarter and 1,355 duringthe year. Backlog remains strong with 5,080 airplanes valued at a record $374billion.Boeing Defense, Space & Security Table 5. Defense, Space & Security Fourth Quarter Full Year (Dollars in Millions) 2013 2012 Change 2013 2012 Change Revenues Boeing Military Aircraft $4,395 $4,037 9% $15,936 $16,019 (1)% Network & Space Systems $2,272 $2,024 12% $8,512 $7,911 8% Global Services & Support $2,188 $2,282 (4)% $8,749 $8,677 1% Total BDS Revenues $8,855 $8,343 6% $33,197 $32,607 2% Earnings from Operations Boeing Military Aircraft $441 $313 41% $1,465 $1,489 (2)% Network & Space Systems $233 $138 69% $719 $562 28% Global Services & Support $280 $300 (7)% $1,051 $1,017 3% Total BDS Earnings from Operations $954 $751 27% $3,235 $3,068 5% Operating Margin 10.8% 9.0% 1.8 Pts 9.7% 9.4% 0.3 PtsBoeing Defense, Space & Security's fourth-quarter revenue increased 6 percentto $8.9 billion, while operating margin increased to 10.8 percent (Table 5).For the full year, revenue increased 2 percent to $33.2 billion, whileoperating margin increased to 9.7 percent.Boeing Military Aircraft (BMA) fourth-quarter revenue increased to $4.4billion, reflecting higher deliveries. Operating margin increased to 10.0percent, reflecting the higher deliveries and strong performance. During thequarter, BMA achieved Initial Operating Capability (IOC) on the P-8A Poseidonaircraft.Network & Space Systems (N&SS) fourth-quarter revenue increased to $2.3billion, reflecting higher delivery volume and mix, and operating marginincreased to 10.3 percent on strong performance. During the quarter, N&SS wasawarded a contract for a fourth Inmarsat-5 satellite.Global Services & Support (GS&S) fourth-quarter revenue was $2.2 billion,reflecting lower volume in integrated logistics. Operating margin was 12.8percent. During the quarter, GS&S was awarded contracts for the B-52 and B-1bomber modifications and upgrades.Backlog at Defense, Space & Security was $67 billion, of which 37 percentrepresents orders with international customers.Additional Financial Information Table 6. Additional Financial Information Fourth Quarter Full Year (Dollars in Millions) 2013 2012 2013 2012 Revenues Boeing Capital Corporation $105 $129 $408 $468 Other segment $22 $27 $102 $106 Unallocated items and eliminations $123 ($358) ($65) ($610) Earnings from Operations Boeing Capital Corporation $9 ($12) $107 $88 Other segment income/(expense) ($99) $31 ($156) ($186) Unallocated items and eliminations excluding unallocated pension/postretirement expense ($532) ($200) ($1,105) ($492) Unallocated pension/postretirement expense ($323) ($212) ($1,314) ($899) Other income, net $15 $23 $56 $62 Interest and debt expense ($96) ($112) ($386) ($442) Effective tax rate 14.0% 36.3% 26.4% 34.0%At quarter-end, Boeing Capital Corporation's (BCC) net portfolio balance was$3.9 billion down from $4.1 billion at the beginning of the quarter. BCC'sdebt-to-equity ratio was 5.0-to-1. Other segment earnings decreased $130million in the quarter partly due to higher asset impairment expense.Unallocated items and eliminations excluding unallocated pension/postretirementexpense increased in the fourth quarter of 2013 primarily due to a $406 millioncharge associated with the A-12 settlement. Total pension expense for thefourth quarter was $717 million, up from $576 million in the same period lastyear. The company's income tax expense was $201 million in the quarter,compared to $557 million in the same period of the prior year, due to a $212million benefit recorded in fourth-quarter 2013 for a tax regulation change.OutlookThe company's 2014 financial guidance (Table 7) reflects continued strongperformance in both businesses. Table 7. Financial Outlook (Dollars in Billions, except per share data) 2014 The Boeing Company Revenue $87.5 - 90.5 Core Earnings Per Share\* $7.00 - 7.20 Earnings Per Share $6.10 - 6.30 Operating Cash Flow Before Pension Contributions\* ~ $7 Operating Cash Flow (1) ~ $6.25 Boeing Commercial Airplanes Deliveries (2) 715 - 725 Revenue $57.5 - 59.5 Operating Margin ~ 10% Boeing Defense, Space & Security Revenue Boeing Military Aircraft ~ $15 Network & Space Systems ~ $7.7 Global Services & Support ~ $7.8 Total BDS Revenue $30 - 31 Operating Margin Boeing Military Aircraft ~ 9.5% Network & Space Systems ~ 8.5% Global Services & Support ~ 10.5% Total BDS Operating Margin ~ 9.5% Boeing Capital Corporation Portfolio Size Lower Revenue ~ $0.3 Pre-Tax Earnings ~ $0.05 Research & Development ~ $3.2 Capital Expenditures ~ $2.5 Pension Expense (3) ~ $3.1 Effective Tax Rate (4) ~ 31%(1) After discretionary cash pension contributions of $0.75 billion and assuming new aircraft financings under $0.5 billion(2) Assumes approximately 110 787 deliveries(3) Approximately $1.1 billion is expected to be recorded in unallocated items and eliminations(4) Assumes the extension of the research and development tax credit \* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures Disclosures."Boeing's 2014 revenue guidance is established at between $87.5 and $90.5billion. Core earnings per share guidance is set at between $7.00 and $7.20,and earnings per share guidance is expected to be between $6.10 and $6.30.Total company 2014 operating cash flow before pension contributions is expectedto be approximately $7 billion, while operating cash flow is expected to beapproximately $6.25 billion in 2014, including $0.75 billion of discretionarypension contributions. Total company pension expense in 2014 is expected to beapproximately $3.1 billion (of which approximately $2.0 billion is expected tobe recorded in core operating earnings and $1.1 billion recorded in unallocateditems and eliminations).Commercial Airplanes' 2014 deliveries are expected to be between 715 and 725,which includes approximately 110 787 deliveries. Revenue at CommercialAirplanes is expected to be between $57.5 and $59.5 billion with operatingmargins of approximately 10 percent. Defense, Space & Security's revenue for2014 is expected to be between $30 and $31 billion with operating margins ofapproximately 9.5 percent.Boeing Capital Corporation expects that its aircraft finance portfolio willcontinue to decline in 2014, as new aircraft financing of less than $0.5billion is expected to be lower than normal portfolio runoff through customerpayments and depreciation. Boeing's 2014 R&D forecast is approximately $3.2billion, and capital expenditures for 2014 are expected to be approximately$2.5 billion. Boeing's effective tax rate is expected to be approximately 31percent in 2014, which assumes the extension of the research and developmenttax credit.Non-GAAP Measures DisclosuresWe supplement the reporting of our financial information determined under U.S.generally accepted accounting principles (GAAP) with certain non-GAAP financialinformation. The non-GAAP financial information presented excludes certainsignificant items that may not be indicative of, or are unrelated to, resultsfrom our ongoing business operations. We believe that these non-GAAP measuresprovide investors with additional insight into the company's ongoing businessperformance. These non-GAAP measures should not be considered in isolation oras a substitute for the related GAAP measures, and other companies may definesuch measures differently. We encourage investors to review our financialstatements and publicly-filed reports in their entirety and not to rely on anysingle financial measure. The following definitions are provided:Core Operating Earnings, Core Operating Margin and Core Earnings Per ShareCore operating earnings is defined as GAAP earnings from operations excludingunallocated pension and post-retirement expense. Core operating margin isdefined as core operating earnings expressed as a percentage of revenue. Coreearnings per share is defined as GAAP diluted earnings per share excluding thenet earnings per share impact of unallocated pension and post-retirementexpense. Unallocated pension and post-retirement expense represents the portionof pension and other post-retirement costs that are not recognized by businesssegments for segment reporting purposes. Management uses core operatingearnings, core operating margin and core earnings per share for purposes ofevaluating and forecasting underlying business performance. Management believesthese core earnings measures provide investors additional insights intooperational performance as they exclude unallocated pension and post-retirementcosts, which primarily represent costs driven by market factors and costs notallocable to government contracts. A reconciliation between the GAAP andnon-GAAP measures is provided on page 14.Core Operating Margin and the Increase in Core Operating Earnings ExcludingA-12 Settlement ChargeThe company is disclosing the core operating margin and the increase in coreoperating earnings in the fourth quarter of 2013 over the fourth quarter of2012 excluding the A-12 settlement charge in the fourth quarter of 2013.Management believes it is useful to occasionally exclude certain items that arenot reflective of underlying performance and that can distort period to periodperformance comparisons. Management uses similar measures for purposes ofevaluating and forecasting underlying business performance. A reconciliationbetween the GAAP and non-GAAP measures is provided on page 14.Operating Cash Flow Before Pension ContributionsOperating cash flow before pension contributions is defined as GAAP operatingcash flow less pension contributions. Management believes operating cash flowbefore pension contributions provides additional insights into underlyingbusiness performance. Management uses operating cash flow before pensioncontributions as a measure to assess both business performance and overallliquidity. Table 2 provides a reconciliation between GAAP operating cash flowand operating cash flow before pension contributions.Free Cash FlowFree cash flow is defined as GAAP operating cash flow less capital expendituresfor property, plant and equipment additions. Management believes free cash flowprovides investors with an important perspective on the cash available forshareholders, debt repayment, and acquisitions after making the capitalinvestments required to support ongoing business operations and long term valuecreation. Free cash flow does not represent the residual cash flow availablefor discretionary expenditures as it excludes certain mandatory expendituressuch as repayment of maturing debt. Management uses free cash flow as a measureto assess both business performance and overall liquidity. Table 2 provides areconciliation between GAAP operating cash flow and free cash flow.Caution Concerning Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning ofthe 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 theseforward-looking statements. Examples of forward-looking statements includestatements relating to our future financial condition and operating results, aswell as any other statement that does not directly relate to any historical orcurrent fact. Forward-looking statements are based on our current expectationsand assumptions, which may not prove to be accurate. These statements are notguarantees and are subject to risks, uncertainties, and changes incircumstances that are difficult to predict. Many factors could cause actualresults to differ materially and adversely from these forward-lookingstatements. Among these factors are risks related to: (1) general conditions inthe economy and our industry, including those due to regulatory changes; (2)our reliance on our commercial airline customers; (3) the overall health of ouraircraft production system, planned production rate increases across multiplecommercial airline programs, our commercial development and derivative aircraftprograms, and our aircraft being subject to stringent performance andreliability standards; (4) changing acquisition priorities of the U.S.government; (5) our dependence on U.S. government contracts; (6) our relianceon 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 theavailability 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 adversedevelopments in new or pending litigation and/or government investigations;(14) customer and aircraft concentration in Boeing Capital's customer financingportfolio; (15) changes in our ability to obtain debt on commerciallyreasonable terms and at competitive rates in order to fund our operations andcontractual commitments; (16) realizing the anticipated benefits of mergers,acquisitions, joint ventures/strategic alliances or divestitures; (17) theadequacy of our insurance coverage to cover significant risk exposures; (18)potential business disruptions, including those related to physical securitythreats, information technology or cyber-attacks or natural disasters; (19)work stoppages or other labor disruptions; (20) significant changes in discountrates and actual investment return on pension assets; (21) potentialenvironmental liabilities; and (22) threats to the security of our or ourcustomers' information.Additional information concerning these and other factors can be found in ourfilings with the Securities and Exchange Commission, including our most recentAnnual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reportson Form 8-K. Any forward-looking statement speaks only as of the date on whichit is made, and we assume no obligation to update or revise any forward-lookingstatement, whether as a result of new information, future events, or otherwise,except as required by law.Contact:Investor Relations: Troy Lahr or Matt Welch (312) 544-2140Communications: Chaz Bickers (312) 544-2002 The Boeing Company and Subsidiaries Consolidated Statements of Operations (Unaudited) Twelve months Three months ended December 31 ended December 31 (Dollars in millions, except per share data) 2013 2012 2013 2012 Sales of products $76,792 $71,234 $21,482 $19,793 Sales of services 9,831 10,464 2,303 2,509 Total revenues 86,623 81,698 23,785 22,302 Cost of products (65,640) (60,309) (18,610) (17,206) Cost of services (7,553) (8,247) (1,758) (1,816) Boeing Capital interest expense (75) (109) (20) (24) Total costs and expenses (73,268) (68,665) (20,388) (19,046) 13,355 13,033 3,397 3,256 Income from operating investments, net 214 268 67 57 General and administrative expense (3,956) (3,717) (1,100) (943) Research and development expense, net (3,071) (3,298) (848) (753) Gain/(loss) on dispositions, net 20 4 (1) 7 Earnings from operations 6,562 6,290 1,515 1,624 Other income, net 56 62 15 23 Interest and debt expense (386) (442) (96) (112) Earnings before income taxes 6,232 5,910 1,434 1,535 Income tax expense (1,646) (2,007) (201) (557) Net earnings from continuing operations 4,586 3,903 1,233 978 Net loss on disposal of discontinued operations, net of taxes of $0 and $2 (1) (3) Net earnings $4,585 $3,900 $1,233 $978 Basic earnings per share from continuing operations $6.03 $5.15 $1.63 $1.29 Net loss on disposal of discontinued operations, net of taxes Basic earnings per share $6.03 $5.15 $1.63 $1.29 Diluted earnings per share from continuing operations $5.96 $5.11 $1.61 $1.28 Net loss on disposal of discontinued operations, net of taxes Diluted earnings per share $5.96 $5.11 $1.61 $1.28 Cash dividends paid per share $1.94 $1.76 $0.485 $0.44 Weighted average diluted shares (millions) 769.5 763.8 768.4 768.3 The Boeing Company and Subsidiaries Consolidated Statements of Financial Position (Unaudited) December 31 December 31 (Dollars in millions, except per share data) 2013 2012 Assets Cash and cash equivalents $9,088 $10,341 Short-term and other investments 6,170 3,217 Accounts receivable, net 6,546 5,608 Current portion of customer financing, net 344 364 Deferred income taxes 14 28 Inventories, net of advances and progress billings 42,912 37,751 Total current assets 65,074 57,309 Customer financing, net 3,627 4,056 Property, plant and equipment, net of accumulated depreciation of $15,070 and $14,645 10,224 9,660 Goodwill 5,043 5,035 Acquired intangible assets, net 3,052 3,111 Deferred income taxes 2,939 6,753 Investments 1,204 1,180 Other assets, net of accumulated amortization of $448 and $504 1,500 1,792 Total assets $92,663 $88,896 Liabilities and equity Accounts payable $9,498 $9,394 Accrued liabilities 14,131 12,995 Advances and billings in excess of related costs 20,027 16,672 Deferred income taxes and income taxes payable 6,267 4,485 Short-term debt and current portion of long-term debt 1,563 1,436 Total current liabilities 51,486 44,982 Accrued retiree health care 6,528 7,528 Accrued pension plan liability, net 10,474 19,651 Non-current income taxes payable 156 366 Other long-term liabilities 950 1,429 Long-term debt 8,072 8,973 Shareholders' equity: Common stock, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 shares issued 5,061 5,061 Additional paid-in capital 4,415 4,122 Treasury stock, at cost - 264,882,461 and 256,630,628 shares (17,671) (15,937) Retained earnings 32,964 30,037 Accumulated other comprehensive loss (9,894) (17,416) Total shareholders' equity 14,875 5,867 Noncontrolling interest 122 100 Total equity 14,997 5,967 Total liabilities and equity $92,663 $88,896 The Boeing Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Twelve months ended December 31 (Dollars in millions) 2013 2012 Cash flows - operating activities: Net earnings $4,585 $3,900 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash items - Share-based plans expense 206 193 Depreciation and amortization 1,844 1,811 Investment/asset impairment charges, net 96 84 Customer financing valuation benefit (11) (10) Loss on disposal of discontinued operations 1 5 Gain on dispositions, net (20) (4) Other charges and credits, net 528 694 Excess tax benefits from share-based payment arrangements (128) (45) Changes in assets and liabilities - Accounts receivable (879) (27) Inventories, net of advances and progress billings (5,562) (5,681) Accounts payable (298) 1,199 Accrued liabilities 883 801 Advances and billings in excess of related costs 3,353 1,177 Income taxes receivable, payable and deferred 1,445 1,605 Other long-term liabilities 2 157 Pension and other postretirement plans 1,720 1,288 Customer financing, net 391 407 Other 23 (46) Net cash provided by operating activities 8,179 7,508 Cash flows - investing activities: Property, plant and equipment additions (2,098) (1,703) Property, plant and equipment reductions 51 97 Acquisitions, net of cash acquired (26) (124) Contributions to investments (15,394) (12,921) Proceeds from investments 12,453 10,901 Purchase of distribution rights (140) (7) Net cash used by investing activities (5,154) (3,757) Cash flows - financing activities: New borrowings 571 60 Debt repayments (1,434) (2,076) Repayments of distribution rights and other asset financing (280) (228) Stock options exercised, other 1,097 120 Excess tax benefits from share-based payment arrangements 128 45 Employee taxes on certain share-based payment arrangements (63) (76) Common shares repurchased (2,801) Dividends paid (1,467) (1,322) Net cash used by financing activities (4,249) (3,477) Effect of exchange rate changes on cash and cash equivalents (29) 18 Net (decrease)/increase in cash and cash equivalents (1,253) 292 Cash and cash equivalents at beginning of year 10,341 10,049 Cash and cash equivalents at end of period $9,088 $10,341 The Boeing Company and Subsidiaries Summary of Business Segment Data (Unaudited) Twelve months ended Three months ended December 31 December 31 (Dollars in millions) 2013 2012 2013 2012 Revenues: Commercial Airplanes $52,981 $49,127 $14,680 $14,161 Defense, Space & Security: Boeing Military Aircraft 15,936 16,019 4,395 4,037 Network & Space Systems 8,512 7,911 2,272 2,024 Global Services & Support 8,749 8,677 2,188 2,282 Total Defense, Space & Security 33,197 32,607 8,855 8,343 Boeing Capital 408 468 105 129 Other segment 102 106 22 27 Unallocated items and eliminations (65) (610) 123 (358) Total revenues $86,623 $81,698 $23,785 $22,302 Earnings from operations: Commercial Airplanes $5,795 $4,711 $1,506 $1,266 Defense, Space & Security: Boeing Military Aircraft 1,465 1,489 441 313 Network & Space Systems 719 562 233 138 Global Services & Support 1,051 1,017 280 300 Total Defense, Space & Security 3,235 3,068 954 751 Boeing Capital 107 88 9 (12) Other segment (156) (186) (99) 31 Unallocated items and eliminations (2,419) (1,391) (855) (412) Earnings from operations 6,562 6,290 1,515 1,624 Other income, net 56 62 15 23 Interest and debt expense (386) (442) (96) (112) Earnings before income taxes 6,232 5,910 1,434 1,535 Income tax expense (1,646) (2,007) (201) (557) Net earnings from continuing operations 4,586 3,903 1,233 978 Net loss on disposal of discontinued operations, net of taxes of $0 and $2 (1) (3) Net earnings $4,585 $3,900 $1,233 $978 Research and development expense, net: Commercial Airplanes $1,807 $2,049 $510 $411 Defense, Space & Security 1,215 1,189 323 321 Other 49 60 15 21 Total research and development expense, net $3,071 $3,298 $848 $753 Unallocated items and eliminations: Share-based plans ($95) ($81) ($21) ($17) Deferred compensation (238) (75) (73) (26) Capitalized interest (69) (70) (17) (17) Eliminations and other (703) (266) (421) (140) Sub-total (included in core operating earnings) (1,105) (492) (532) (200) Pension (1,374) (787) (329) (179) Postretirement 60 (112) 6 (33) Total unallocated items and eliminations ($2,419) ($1,391) ($855) ($412) The Boeing Company and Subsidiaries Operating and Financial Data (Unaudited) Twelve months ended Three months ended Deliveries December 31 December 31 Commercial Airplanes 2013 2012 2013 2012 737 440 415 110 105 747 24 31 8 10 767 21 26 4 6 777 98 83 25 21 787 65 (1) 46 (3) 25 23 (3) Total 648 601 172 165 Note: Deliveries under operating lease are identified by parentheses. Defense, Space &Security Boeing Military Aircraft F/A-18 Models 48 48 12 12 F-15E Eagle 14 8 11 C-17 Globemaster III 10 10 2 2 CH-47 Chinook 44 51 12 11 AH-64 Apache 37 19 6 6 P-8 Models 11 5 4 2 AEW&C 3 1 Network & Space Systems Commercial and Civil Satellites 3 3 2 Military Satellites 4 7 3 1 December 31 September 30 December 31 Contractual backlog (Dollars in billions) 2013 2013 2012 Commercial Airplanes $373.0 $344.3 $317.3 Defense, Space & Security: Boeing Military Aircraft 24.8 26.4 29.2 Network & Space Systems 9.8 9.9 10.1 Global Services & Support 15.0 14.6 15.8 Total Defense, Space & Security 49.6 50.9 55.1 Total contractual backlog $422.6 $395.2 $372.4 Unobligated backlog $18.3 $19.9 $17.9 Total backlog $440.9 $415.1 $390.3 Workforce 168,400 170,800 174,400 The Boeing Company and Subsidiaries Reconciliation of Non-GAAP Measures Core Operating Earnings, Core Operating Margin and Core Earnings Per Share Core Operating Margin and Increase in Core Operating Earnings Excluding A-12 Settlement Charge (Unaudited) The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin and core earnings per share as well as core operating margin and the increase in core operating earnings excluding the A-12 settlement charge with the most directly comparable GAAP financial measures, earnings from operations, operating margin and diluted earnings per share. See page 7 of this release for additional information on the use of these non-GAAP financial measures. Fourth Quarter Full Year Guidance 2013 2012 2013 2012 2014 Revenues $23,785 $22,302 $86,623 $81,698 GAAP Earnings From Operations $1,515 $1,624 $6,562 $6,290 GAAP Operating Margin 6.4% 7.3% 7.6% 7.7% Unallocated Pension/Postretirement Expense $323 $212 $1,314 $899 ~ $1,050 Core Operating Earnings (non-GAAP) $1,838 $1,836 $7,876 $7,189 Core Operating Margin (non-GAAP) 7.7% 8.2% 9.1% 8.8% A-12 Settlement Charge $406 - $406 - Core Operating Earnings Excluding A-12 Settlement Charge $2,244 $1,836 $8,282 $7,189 Core Operating Margin Excluding A-12 Settlement Charge (non-GAAP) 9.4% 8.2% 9.6% 8.8% Increase/(Decrease) in GAAP Earnings From Operations (7%) 4% Increase in Core Operating Earnings Excluding A-12 Settlement Charge (non-GAAP) 22% 15% GAAP Diluted Earnings Per Share $1.61 $1.28 $5.96 $5.11 $6.10 - 6.30 Unallocated Pension/Postretirement Expense(1) $0.27 $0.18 $1.11 $0.77 $0.90 Core Earnings Per Share (non-GAAP) $1.88 $1.46 $7.07 $5.88 $7.00 - 7.20 Weighted Average Diluted Shares (millions) 768.4 768.3 769.5 763.8 750 - 755 Increase in GAAP Earnings Per Share 26% 17% Increase in Core Earnings Per Share 29% 20%(1) Earnings per share impact is presented net of the federal statutory tax rate of 35.0 percent.SOURCE Boeing
