BOEING CO — Earnings Release 2014

Apr 23, 2014

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BOEING COMPANY - 1st Quarter Results

PR Newswire

London, April 23

              Boeing Reports Strong First-Quarter ResultsCore EPS (non-GAAP)\* of $1.76 on continued strong operating performance; GAAPEPS of $1.28Revenue increased 8 percent to $20.5 billion reflecting higher commercialdeliveriesOperating cash flow increased significantly to $1.1 billionRepurchased 19.4 million shares for $2.5 billionBacklog of $440 billion includes $19 billion of net orders during the quarter2014 core EPS guidance increased to between $7.15 and $7.35 to reflect a taxsettlementCHICAGO, April 23, 2014 --Table 1. Summary Financial Results                   First Quarter(Dollars in Millions, except per share data)         2014     2013     ChangeRevenues                                          $20,465  $18,893         8%Non-GAAP\*Core Operating Earnings                            $2,095   $1,867        12%Core Operating Margin                               10.2%     9.9%    0.3 PtsCore Earnings Per Share                             $1.76    $1.73         2%Operating Cash Flow Before Pension Contributions   $1,112     $524       112%GAAPEarnings From Operations                           $1,542   $1,528         1%Operating Margin                                     7.5%     8.1%  (0.6) PtsNet Earnings                                         $965   $1,106      (13)%Earnings Per Share                                  $1.28    $1.44      (11)%Operating Cash Flow                                $1,112     $524       112%\* Non-GAAP measures (core operating earnings, core operating margin and coreearnings per share) exclude certain components of pension and post retirementbenefit expense that management believes are not reflective of underlyingbusiness performance. Complete definitions of Boeing's non-GAAP measures are onpage 7, "Non-GAAP Measures Disclosures."The Boeing Company (NYSE: BA) reported first-quarter revenue increased 8percent to $20.5 billion on higher commercial volume (Table 1). Core earningsper share (non-GAAP) increased 14 percent\* to $1.76 when excluding a benefit of$0.19 per share for the 2012 research and development tax credit recorded inthe first quarter of 2013. First-quarter 2014 core operating earnings(non-GAAP) increased 12 percent to $2.1 billion and core operating margin(non-GAAP) increased to 10.2 percent reflecting continued strong operatingperformance. GAAP earnings from operations included previously announcednon-cash charges totaling $334 million ($0.29 per share) for retirement planchanges.Core earnings per share guidance for 2014 increased to between $7.15 and $7.35,from $7.00 to $7.20, to reflect the benefit of a tax settlement to berecognized in the second quarter of 2014. GAAP earnings per share guidance for2014 is reaffirmed at between $6.10 to $6.30 as the tax settlement benefit wasoffset by the retirement plan charges. GAAP pension expense guidance for 2014is now at approximately $3.2 billion, up from $3.1 billion, to reflect theretirement plan charges. The company reaffirmed its 2014 revenue, operatingcash flow and deliveries guidance."Disciplined execution across our production and development programs producedstrong first quarter results," said Boeing Chairman and Chief Executive OfficerJim McNerney. "We measurably increased revenue, core operating earnings andcash flow, and expanded core operating margins. This financial and operationalstrength enabled the return of more than $3 billion to shareholders in thequarter through share repurchase and an increased dividend, even as wecontinued to invest in our future.""Our outlook for the full year remains positive on the strength of demand forour fuel-efficient new commercial airplanes, our solid position in globaldefense, space and security markets, and our enterprise focus on meetingcustomer commitments, improving productivity and profitably delivering thegrowth in our sizable backlog," McNerney said.Table 2. Cash Flow                                  First Quarter(Millions)                                          2014     2013Operating Cash Flow Before Pension Contributions\*  $1,112    $524       Pension Contributions                            -       -Operating Cash Flow                                $1,112    $524  Less Additions to Property, Plant & Equipment     ($497)  ($521)Free Cash Flow\*                                      $615      $3Operating cash flow in the quarter was $1.1 billion, reflecting commercialairplane production rates, strong core operating performance and timing ofreceipts and expenditures (Table 2). During the quarter, the companyrepurchased 19.4 million shares for $2.5 billion, leaving $8.3 billionremaining under the current repurchase authorization expected to be completedover the next 2-3 years. The company also paid $0.5 billion in dividends in thequarter, reflecting an approximately 50 percent increase in dividends per sharecompared to the same period of the prior year.Table 3. Cash, Marketable Securities and Debt Balances    Quarter-End(Billions)                                                Q1 14  Q4 13Cash                                                      $6.9   $9.1Marketable Securities(1)                                  $5.3   $6.2   Total                                                 $12.2  $15.3Debt Balances:The Boeing Company, net of intercompany loans to BCC      $6.3   $7.0Boeing Capital Corporation, including intercompany loans  $2.6   $2.6   Total Consolidated Debt                                $8.9   $9.6(1) Marketable securities consists primarily of time deposits due within one yearclassified as "short-term investments."Cash and investments in marketable securities totaled $12.2 billion atquarter-end (Table 3), down from $15.3 billion at the beginning of the year,primarily due to the share repurchases and the pay-down of maturing debt. Debtwas $8.9 billion, down from $9.6 billion at the beginning of the year,primarily due to maturities.Total company backlog at quarter-end was a $440 billion, down slightly from thebeginning of the year, and included net orders for the quarter of $19 billion.Segment ResultsBoeing Commercial AirplanesTable 4. Boeing Commercial Airplanes  First Quarter(Dollars in Millions)                 2014     2013     ChangeCommercial Airplanes Deliveries        161      137        18%Revenues                           $12,737  $10,690        19%Earnings from Operations            $1,502   $1,219        23%Operating Margin                     11.8%    11.4%    0.4 PtsBoeing Commercial Airplanes first-quarter revenue increased to $12.7 billion onhigher 787 and 737 deliveries. First-quarter operating margin improved to 11.8percent reflecting the delivery volume and mix and lower period costs partiallyoffset by higher R&D (Table 4).During the quarter, the 787 program reached a 10 per month production rate andcompleted preliminary design review on the 787-10. The company selected theEverett, Washington site as the location for a new composite wing center forthe 777X. In April, the 737 program reached a production rate of 42 per month.Commercial Airplanes booked 235 net orders during the quarter. Backlog remainsstrong with over 5,100 airplanes valued at $374 billion.Boeing Defense, Space & SecurityTable 5. Defense, Space & Security    First Quarter(Dollars in Millions)                 2014    2013       ChangeRevenues(1)  Boeing Military Aircraft           $3,458  $3,980       (13)%  Network & Space Systems            $1,876  $1,960        (4)%  Global Services & Support          $2,299  $2,170          6%Total BDS Revenues                   $7,633  $8,110        (6)%Earnings from Operations(1)  Boeing Military Aircraft             $332    $427       (22)%  Network & Space Systems              $168    $156          8%  Global Services & Support            $278    $249         12%Total BDS Earnings from Operations     $778    $832        (6)%Operating Margin                      10.2%   10.3%   (0.1) Pts(1) During the first quarter of 2014, certain programs were realigned betweenBoeing Military Aircraft and Global Services & Support. See page 15 of thisrelease for additional information.Boeing Defense, Space & Security's first-quarter revenue was $7.6 billion withan operating margin of 10.2 percent (Table 5).Boeing Military Aircraft (BMA) first-quarter revenue declined to $3.5 billion,as the first quarter of 2013 included revenue associated with F-15 developmentmilestones and due to fewer P-8 deliveries in the first quarter of 2014.Operating margin was 9.6 percent, reflecting strong performance offset by apreviously announced C-17 inventory-related charge. During the quarter, BMA wasawarded a contract for 16 P-8A Poseidon aircraft from the U.S. Navy and acontract for 82 Apache Block III helicopters from the U.S. Army.Network & Space Systems (N&SS) first-quarter revenue was $1.9 billion,reflecting lower satellites volume, and operating margin increased to 9.0percent on strong performance. During the quarter, N&SS completed on-orbittesting of the first Inmarsat-5 satellite.Global Services & Support (GS&S) first-quarter revenue increased to $2.3billion, reflecting higher volume in maintenance, modifications and upgrades.Operating margin increased to 12.1 percent on improved performance inintegrated logistics. During the quarter, GS&S was awarded a contract toprovide maintenance training devices for the U.S. Navy's P-8A Poseidonaircraft.Backlog at Defense, Space & Security was $66 billion, of which 35 percentrepresents orders with international customers.Additional Financial InformationTable 6. Additional Financial Information                        First Quarter(Dollars in Millions)                                            2014     2013Revenues  Boeing Capital Corporation                                      $82     $105  Other segment                                                   $20      $27  Unallocated items and eliminations                              ($7)    ($39)Earnings from Operations  Boeing Capital Corporation                                      $44      $44  Other segment income/(expense)                                 ($62)    ($58)Unallocated items and eliminations excluding unallocated pension/postretirement expense                                 ($167)   ($170)Unallocated pension/postretirement expense                      ($553)   ($339)Other income, net                                                  $9       $9Interest and debt expense                                        ($92)    ($99)Effective tax rate                                               33.9%    23.1%At quarter-end, Boeing Capital Corporation's (BCC) net portfolio balance was$3.5 billion down from $3.9 billion at the beginning of the year. BCC'sdebt-to-equity ratio was 5.0-to-1.Unallocated items and eliminations increased in the first quarter of 2014primarily due to previously announced non-cash charges totaling $334 millionfor retirement plan changes. Total pension expense for the first quarter was$1,035 million, up from $791 million in the same period last year. Thecompany's income tax expense was $494 million in the quarter, compared to $332million in the same period of the prior year, as a $145 million benefit for the2012 research and development credit was reflected in the first quarter of2013.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)                           2014The Boeing Company        Revenue                                                    $87.5 - 90.5        Core Earnings Per Share\*                                   $7.15 - 7.35        GAAP Earnings Per Share                                    $6.10 - 6.30        Operating Cash Flow Before Pension Contributions\*               ~ $7        Operating Cash Flow (1)                                       ~ $6.25Boeing Commercial Airplanes        Deliveries (2)                                               715 - 725        Revenue                                                    $57.5 - 59.5        Operating Margin                                               ~ 10%Boeing Defense, Space & Security (revised for business realignment)        Revenue               Boeing Military Aircraft                              ~ $14.2               Network & Space Systems                                ~ $7.7               Global Services & Support                              ~ $8.6        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                                             ~ $0.05Research & Development                                                ~ $3.2Capital Expenditures                                                  ~ $2.5Pension Expense (3)                                                   ~ $3.2Effective Tax Rate (4)                                                 ~ 29%(1) After discretionary cash pension contributions of $0.75 billion and assumingnew aircraft financings under $0.5 billion(2) Assumes approximately 110 787 deliveries(3) Approximately $1.3 billion is expected to be recorded in unallocated itemsand eliminations(4) Assumes the extension of the research and development tax credit\* Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are onpage 7, "Non-GAAP Measures Disclosures."Boeing's core earnings per share guidance for 2014 increased to between $7.15and $7.35, from $7.00 to $7.20, to reflect the benefit of a tax settlement tobe recognized in the second quarter of 2014. GAAP earnings per share guidancefor 2014 is reaffirmed at between $6.10 and $6.30 as the tax settlement benefitwas offset by the retirement plan charges. Total GAAP pension expense guidancefor 2014 is now at approximately $3.2 billion, up from $3.1 billion to reflectthe retirement plan charges. The pension expense expected to be included inunallocated items and eliminations is approximately $1.3 billion, up from $1.1billion.Boeing Military Aircraft revenue for 2014 is now expected to be approximately$14.2 billion, down from $15.0 billion, and Global Support & Services revenueis now expected to be approximately $8.6 billion, up from $7.8 billion, bothreflecting a business realignment completed during the quarter.Boeing's effective tax rate is now expected to be approximately 29 percent in2014, down from approximately 31 percent, to reflect the benefit of the taxsettlement and continues to assume the extension of the research anddevelopment tax 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.Increase in Core Earnings Per Share Excluding First Quarter 2013 Benefit for2012 Research and Development Tax CreditThe company is disclosing the increase in core operating earnings per share inthe first quarter of 2014 over the first quarter of 2013 excluding the benefitfor the 2012 research and development tax credit recorded in the first quarterof 2013. Management believes it is useful to occasionally exclude certain itemsthat are not reflective of underlying performance and that can distort periodto period performance comparisons. Management uses similar measures forpurposes of evaluating and forecasting underlying business performance. Areconciliation between 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 budget and appropriation levels andacquisition priorities of the U.S. government; (5) our dependence on U.S.government contracts; (6) our reliance on fixed-price contracts; (7) ourreliance on cost-type contracts; (8) uncertainties concerning contracts thatinclude in-orbit incentive payments; (9) our dependence on our subcontractorsand suppliers, as well as the availability of raw materials, (10) changes inaccounting 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 governmentinvestigations; (14) customer and aircraft concentration in Boeing Capital'scustomer financing portfolio; (15) changes in our ability to obtain debt oncommercially reasonable terms and at competitive rates in order to fund ouroperations and contractual commitments; (16) realizing the anticipated benefitsof mergers, acquisitions, joint ventures/strategic alliances or divestitures;(17) the adequacy of our insurance coverage to cover significant riskexposures; (18) potential business disruptions, including those related tophysical security threats, information technology or cyber-attacks or naturaldisasters; (19) work stoppages or other labor disruptions; (20) significantchanges in discount rates and actual investment return on pension assets; (21)potential environmental liabilities; and (22) threats to the security of our orour customers' 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)                                                             Three months ended                                                                  March 31(Dollars in millions, except per share data)                   2014      2013Sales of products                                            $18,015   $16,318Sales of services                                              2,450     2,575Total revenues                                                20,465    18,893Cost of products                                             (15,258)  (13,728)Cost of services                                              (2,020)   (2,009)Boeing Capital interest expense                                  (18)      (19)Total costs and expenses                                     (17,296)  (15,756)                                                               3,169     3,137Income from operating investments, net                            59        45General and administrative expense                              (877)     (971)Research and development expense, net                           (809)     (705)Gain on dispositions, net                                                   22Earnings from operations                                       1,542     1,528Other income, net                                                  9         9Interest and debt expense                                        (92)      (99)Earnings before income taxes                                   1,459     1,438Income tax expense                                              (494)     (332)Net earnings from continuing operations                          965     1,106Net gain on disposal of discontinued operations, net of taxesNet earnings                                                    $965    $1,106Basic earnings per share from continuing operations            $1.30     $1.45Net gain on disposal of discontinued operations, net of taxesBasic earnings per share                                       $1.30     $1.45Diluted earnings per share from continuing operations          $1.28     $1.44Net gain on disposal of discontinued operations, net of taxesDiluted earnings per share                                     $1.28     $1.44Cash dividends paid per share                                  $0.73     $0.49Weighted average diluted shares (millions)                     754.1     768.7                       The Boeing Company and Subsidiaries                Consolidated Statements of Financial Position                                   (Unaudited)                                                               March 31  December 31(Dollars in millions, except per share data)                      2014      2013AssetsCash and cash equivalents                                        $6,942    $9,088Short-term and other investments                                  5,282     6,170Accounts receivable, net                                          7,341     6,546Current portion of customer financing, net                          256       344Deferred income taxes                                                15        14Inventories, net of advances and progress billings               44,941    42,912  Total current assets                                           64,777    65,074Customer financing, net                                           3,280     3,627Property, plant and equipment, net of accumulated depreciation of $15,281 and $15,070                                          10,263    10,224Goodwill                                                          5,046     5,043Acquired intangible assets, net                                   2,996     3,052Deferred income taxes                                             2,463     2,939Investments                                                       1,208     1,204Other assets, net of accumulated amortization of $478 and $448    1,542     1,500  Total assets                                                  $91,575   $92,663Liabilities and equityAccounts payable                                                $10,779    $9,498Accrued liabilities                                              12,219    14,131Advances and billings in excess of related costs                 21,112    20,027Deferred income taxes and income taxes payable                    6,732     6,267Short-term debt and current portion of long-term debt             1,660     1,563  Total current liabilities                                      52,502    51,486Accrued retiree health care                                       6,515     6,528Accrued pension plan liability, net                               9,676    10,474Non-current income taxes payable                                    166       156Other long-term liabilities                                         808       950Long-term debt                                                    7,275     8,072Shareholders' 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                                      4,441     4,415  Treasury stock, at cost - 281,510,590 and 264,882,461 shares  (20,028)  (17,671)  Retained earnings                                              33,929    32,964  Accumulated other comprehensive loss                           (8,883)   (9,894)    Total shareholders' equity                                   14,520    14,875    Noncontrolling interest                                         113       122    Total equity                                                 14,633    14,997    Total liabilities and equity                                $91,575   $92,663                      The Boeing Company and Subsidiaries                    Consolidated Statements of Cash Flows                                   (Unaudited)                                                              Three months ended                                                                   March 31(Dollars in millions)                                           2014      2013Cash flows - operating activities: Net earnings                                                   $965    $1,106 Adjustments to reconcile net earnings to net cash provided  by operating activities:   Non-cash items -    Share-based plans expense                                     52        58    Depreciation and amortization                                448       429    Investment/asset impairment charges, net                      29        26    Customer financing valuation benefit                         (23)       (3)    Gain on disposal of discontinued operations                   (1)    Gain on dispositions, net                                              (22)    Other charges and credits, net                                47        53    Excess tax benefits from share-based payment arrangements    (68)      (23)   Changes in assets and liabilities -    Accounts receivable                                         (792)     (437)    Inventories, net of advances and progress billings        (2,049)   (3,000)    Accounts payable                                           1,350       654    Accrued liabilities                                       (1,385)   (1,133)    Advances and billings in excess of related costs           1,085     1,833    Income taxes receivable, payable and deferred                455       214    Other long-term liabilities                                 (124)      (73)    Pension and other postretirement plans                       733       821    Customer financing, net                                      408        24    Other                                                        (18)       (3)      Net cash provided by operating activities                1,112       524Cash flows - investing activities:  Property, plant and equipment additions                       (497)     (521)  Property, plant and equipment reductions                        15        33  Acquisitions, net of cash acquired                                       (26)  Contributions to investments                                (2,737)   (2,955)  Proceeds from investments                                    3,625     2,655    Net cash provided/(used) by investing activities             406      (814)Cash flows - financing activities:  New borrowings                                                  51        15  Debt repayments                                               (757    (1,262)  Payments to noncontrolling interests                           (12)  Repayments of distribution rights and other asset   financing                                                      (3)     (138)  Stock options exercised, other                                 109        76  Excess tax benefits from share-based payment arrangements       68        23  Employee taxes on certain share-based payment arrangements     (84)      (52)  Common shares repurchased                                   (2,500)  Dividends paid                                                (540)     (367)    Net cash used by financing activities                     (3,668)   (1,705)Effect of exchange rate changes on cash and cash equivalents       4       (11)Net decrease in cash and cash equivalents                     (2,146)   (2,006)Cash and cash equivalents at beginning of year                 9,088    10,341Cash and cash equivalents at end of period                    $6,942    $8,335                      The Boeing Company and Subsidiaries                       Summary of Business Segment Data                                 (Unaudited)                                                           Three months ended                                                                March 31(Dollars in millions)                                        2014      2013Revenues:  Commercial Airplanes                                    $12,737   $10,690  Defense, Space & Security:    Boeing Military Aircraft                                3,458     3,980    Network & Space Systems                                 1,876     1,960    Global Services & Support                               2,299     2,170  Total Defense, Space & Security                           7,633     8,110  Boeing Capital                                               82       105  Other segment                                                20        27  Unallocated items and eliminations                           (7)      (39)Total revenues                                            $20,465   $18,893Earnings from operations:  Commercial Airplanes                                     $1,502    $1,219  Defense, Space & Security:    Boeing Military Aircraft                                  332       427    Network & Space Systems                                   168       156    Global Services & Support                                 278       249  Total Defense, Space & Security                             778       832  Boeing Capital                                               44        44  Other segment                                               (62)      (58)  Unallocated items and eliminations                         (720)     (509)Earnings from operations                                    1,542     1,528Other income, net                                               9         9Interest and debt expense                                     (92)      (99)Earnings before income taxes                                1,459     1,438Income tax expense                                           (494)     (332)Net earnings from continuing operations                       965     1,106Net gain on disposal of discontinued operations, net of taxesNet earnings                                                 $965    $1,106Research and development expense, net:  Commercial Airplanes                                       $529      $419  Defense, Space & Security                                   280       272  Other                                                                  14Total research and development expense, net                  $809      $705Unallocated items and eliminations:  Share-based plans                                          ($24)     ($31)  Deferred compensation                                         7       (56)  Capitalized interest                                        (18)      (17)  Eliminations and other                                     (132)      (66)    Sub-total (included in core operating earnings)          (167)     (170)  Pension                                                    (576)     (358)  Postretirement                                               23        19Total unallocated items and eliminations                    ($720)    ($509)               The Boeing Company and Subsidiaries                   Operating and Financial Data                            (Unaudited)                                             Three months endedDeliveries                                        March 31Commercial Airplanes                           2014      2013  737                                           115       102  747                                             4         6  767                                                       4  777                                            24        24  787                                            18         1  Total                                         161       137Defense, Space & SecurityBoeing Military Aircraft  F/A-18 Models                                  11        12  F-15E Eagle                                     4         3  C-17 Globemaster III                            3         3  CH-47 Chinook                                  17         9  AH-64 Apache                                   10        15  P-8 Models                                                2Global Services & Support  AEW&C                                           1Network & Space Systems  Commercial and Civil Satellites                           1                                          March 31  December 31Contractual backlog (Dollars in billions)     2014         2013   Commercial Airplanes                     $374.0       $373.0   Defense, Space & Security:      Boeing Military Aircraft                23.2         23.6      Network & Space Systems                  9.4          9.8      Global Services & Support               16.1         16.2   Total Defense, Space & Security            48.7         49.6Total contractual backlog                   $422.7       $422.6Unobligated backlog                          $17.1        $18.3Total backlog                               $439.8       $440.9Workforce                                  169,000      168,400                     The Boeing Company and Subsidiaries                     Reconciliation of Non-GAAP Measures  Core Operating Earnings, Core Operating Margin and Core Earnings Per Share Increase in Core EPS Excluding First Quarter 2013 Benefit for 2012 Research and                           Development Tax Credit                                (Unaudited)The tables provided below reconcile the non-GAAP financial measures coreoperating earnings, core operating margin and core earnings per share as wellas the increase in Core EPS Excluding First Quarter 2013 Benefit for 2012Research and Development Tax Credit with the most directly comparable GAAPfinancial measures, earnings from operations, operating margin and dilutedearnings per share. See page 7 of this release for additional information onthe use of these non-GAAP financial measures.                                                        First Quarter      Guidance                                                       2014       2013       2014Revenues                                             $20,465   $18,893GAAP Earnings From Operations                         $1,542    $1,528GAAP Operating Margin                                   7.5%      8.1%Unallocated Pension/Postretirement Expense              $553      $339     ~ $1,215Core Operating Earnings (non-GAAP)                    $2,095    $1,867Core Operating Margin (non-GAAP)                       10.2%      9.9%Increase/(Decrease) in GAAP Earnings From Operations      1%GAAP Diluted Earnings Per Share                        $1.28     $1.44   $6.10 - 6.30Unallocated Pension/Postretirement Expense(1)          $0.48     $0.29       $1.05Core Earnings Per Share (non-GAAP)                     $1.76     $1.73   $7.15 - 7.35First Quarter 2013 Benefit for 2012 Research and Development Tax Credit(2)                                 -     $0.19Core Earnings Per Share Excluding First Quarter 2013 Benefit for 2012 Research and Development Tax Credit                                            $1.76     $1.54Weighted Average Diluted Shares (millions)             754.1     768.7    750 - 755Increase in GAAP Earnings Per Share                     -11%Increase in Core Earnings Per Share                       2%Increase in Core Earnings Per Share Excluding First Quarter 2013 Benefit for 2012 Research and Development Tax Credit                                  14%(1) Earnings per share impact is presented net of the federal statutory tax rateof 35.0 percent.(2) Earnings per share impact of $145 million tax benefit in the first quarter of2013 due to the retroactive reinstatement of the 2012 research and developmenttax credit under the American Taxpayer Relief Act of 2012.                  The Boeing Company and Subsidiaries                 Defense, Space & Security Realignment                              (Unaudited)Effective during the first quarter of 2014, certain programs were realignedamong Defense, Space & Security segments. The Airborne Warning and ControlSystems and Airborne Early Warning and Control aircraft programs and the F-22Modernization program were realigned from Boeing Military Aircraft to GlobalServices & Support. Business segment data for 2013 has been adjusted as followsto reflect the realignment.                                  As Reported in 2013     As Reported in 2014(Dollars in millions)             Revenue    Earnings     Revenue    EarningsFirst Quarter 2013  Boeing Military Aircraft         $4,109        $430      $3,980        $427  Global Services & Support         2,041         246       2,170         249Second Quarter 2013  Boeing Military Aircraft          3,889         373       3,641         386  Global Services & Support         2,248         266       2,496         253Third Quarter 2013  Boeing Military Aircraft          3,543         221       3,438         220  Global Services & Support         2,272         259       2,377         260Fourth Quarter 2013  Boeing Military Aircraft          4,395         441       4,226         491  Global Services & Support         2,188         280       2,357         230Full Year 2013  Boeing Military Aircraft        $15,936      $1,465     $15,285      $1,524  Global Services & Support         8,749       1,051       9,400         992

SOURCE Boeing