OREANDA-NEWS. The Boeing Company [NYSE: BA] reported second-quarter revenue of $24.8 billion on strong commercial deliveries and services growth (Table 1). GAAP loss per share of $0.37 and core loss per share (non-GAAP)* of $0.44 reflect the previously announced 787 cost reclassification ($1.33 per share) and charges on the 747 program ($1.28 per share) and the KC-46 Tanker program ($0.62 per share), partially offset by solid execution and higher volume.

"The underlying operating performance of the company remains solid with our commercial and defense teams again delivering strong revenues and operating cash flow. Actions taken during the quarter that impacted our earnings were the right, proactive steps to reduce risk and strengthen our position for the future," said Chairman, President and Chief Executive Officer Dennis Muilenburg. "Our strong cash generation also supported our ongoing commitment to invest in product innovation and in our people, and return substantial cash to shareholders through stock repurchases and dividends."

"As we look forward to the second half of the year, we anticipate continued strong operating performance across our production and services programs on generally healthy demand for our broad portfolio of market-leading offerings. Our commercial airplane development programs remain on track and we have successfully completed the flight testing required for customer approval of key KC-46 production milestones."

"Overall our teams remain intensely focused on improving productivity and quality, building out our large and diverse backlog, investing in future growth, and delivering increasing value to all of our stakeholders."

GAAP earnings per share guidance for 2016 has been adjusted to between $6.40 and $6.60 from $8.45 and $8.65 and core earnings per share (non-GAAP)* guidance has been adjusted to between $6.10 and $6.30 from $8.15 and $8.35 to reflect the impact of the 787 R&D reclassification and the 747 and Tanker charges, solid performance and tax benefits.

 
                             

Table 2. Cash Flow

  

Second Quarter

  

First Half

(Millions)

  

2016

2015

  

2016

2015

Operating Cash Flow

    

$3,234

    

$3,297

      

$4,465

    

$3,385

  

Less Additions to Property, Plant & Equipment

    

($671)

    

($692)

      

($1,419)

    

($1,266)

  

Free Cash Flow*

    

$2,563

    

$2,605

      

$3,046

    

$2,119

  
   

*

Non-GAAP measures. Complete definitions of Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures Disclosures."     

Operating cash flow in the quarter was $3.2 billion, largely reflecting commercial airplane production rates and solid operating performance (Table 2). During the quarter, the company repurchased 15.3 million shares for $2.0 billion, leaving $8.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $691 million in dividends in the quarter, reflecting an approximately 20 percent increase in dividends per share compared to the same period of the prior year.

 
               

Table 3. Cash, Marketable Securities and Debt Balances

  

Quarter-End

(Billions)

  

Q2 16

Q1 16

Cash

    

$8.6

    

$7.9

  

Marketable Securities1

    

$0.7

    

$0.5

  

Total

    

$9.3

    

$8.4

  

Debt Balances:

      

The Boeing Company, net of intercompany loans to BCC

    

$8.7

    

$7.6

  

Boeing Capital, including intercompany loans

    

$2.3

    

$2.4

  

Total Consolidated Debt

    

$11.0

    

$10.0

  
   

1

Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $9.3 billion, up from $8.4 billion at the beginning of the quarter. Debt was $11.0 billion, up from the beginning of the quarter, primarily due to the issuance of new debt (Table 3).

Total company backlog at quarter-end was $472 billion, down from $480 billion at the beginning of the quarter, and included net orders for the quarter of $17 billion.

Segment Results

Commercial Airplanes

 
                                 

Table 4. Commercial Airplanes

  

Second Quarter

    

First Half

  

(Dollars in Millions)

  

2016

2015

Change

2016

2015

Change
               

Commercial Airplanes Deliveries

  

199

  

197

  

1%

  

375

  

381

  

(2)%
               

Revenues

    

$17,456

    

$16,877

  

3%

    

$31,855

    

$32,258

  

(1)%

Earnings/(Loss) from Operations

    

($973)

    

$1,206

  

(181)%

    

$60

    

$2,823

  

(98)%

Operating Margin

  

(5.6)%

  

7.1%

  

(12.7) Pts

  

0.2%

  

8.8%

  

(8.6) Pts

Commercial Airplanes second-quarter revenue increased 3 percent to $17.5 billion on higher volume and mix (Table 4). Second-quarter operating margin was negative 5.6 percent, reflecting previously announced R&D reclassification of $1,235 million on the 787 program, a pre-tax charge of $1,188 million on the 747 program, and a pre-tax charge of $354 million on the KC-46 Tanker program. The results also reflect higher planned R&D and solid execution. Second-quarter operating margin excluding the reclassification and charges (non-GAAP)* was 10.3%.

During the quarter, the 787 program reached a 12 per month delivery rate and the company opened the new 777X Composite Wing Center in Everett. The 737 program rolled out the first two 737 MAX production airplanes and has captured over 3,200 orders for the 737 MAX since launch, including an order for 100 737 MAX 200 airplanes from Vietjet during the quarter. The 737 MAX development program is progressing smoothly and entry into service is being accelerated.

Commercial Airplanes booked 152 net orders during the quarter. Backlog remains strong with nearly 5,700 airplanes valued at $417 billion.

Defense, Space & Security

   
                                 

Table 5. Defense, Space & Security

  

Second Quarter

    

First Half

  

(Dollars in Millions)

  

2016

2015

Change

2016

2015

Change

Revenues1

              

Boeing Military Aircraft

    

$2,979

    

$3,474

  

(14)%

    

$6,638

    

$6,200

  

7%

Network & Space Systems

    

$1,810

    

$1,938

  

(7)%

    

$3,545

    

$3,670

  

(3)%

Global Services & Support

    

$2,385

    

$2,132

  

12%

    

$4,947

    

$4,383

  

13%

Total BDS Revenues

    

$7,174

    

$7,544

  

(5)%

    

$15,130

    

$14,253

  

6%

Earnings from Operations1

              

Boeing Military Aircraft

    

$175

    

$121

  

45%

    

$509

    

$380

  

34%

Network & Space Systems

    

$153

    

$151

  

1%

    

$301

    

$318

  

(5)%

Global Services & Support

    

$265

    

$274

  

(3)%

    

$605

    

$591

  

2%

Total BDS Earnings from Operations

    

$593

    

$546

  

9%

    

$1,415

    

$1,289

  

10%

Operating Margin

  

8.3%

  

7.2%

  

1.1 Pts

  

9.4%

  

9.0%

  

0.4 Pts
   

1

During the first quarter of 2016, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.

Defense, Space & Security's second-quarter revenue was $7.2 billion. Second-quarter operating margin was 8.3 percent, reflecting the previously announced $219 million pre-tax charge recorded at Boeing Military Aircraft on the KC-46 Tanker program (Table 5).

Boeing Military Aircraft (BMA) second-quarter revenue was $3.0 billion, reflecting lower planned C-17 and Chinook deliveries. Operating margin was 5.9 percent, reflecting the KC-46 Tanker charge. During the quarter, BMA was awarded contracts for 24 Apache and 12 Chinook helicopters.

Network & Space Systems (N&SS) second-quarter revenue was $1.8 billion. Operating margin increased to 8.5 percent, reflecting performance and timing on United Launch Alliance launches.

Global Services & Support (GS&S) second-quarter revenue increased to $2.4 billion, reflecting higher volume in Aircraft Modernization & Sustainment. Operating margin was 11.1 percent largely reflecting contract mix. 

Backlog at Defense, Space & Security was $55 billion, of which 37 percent represents orders from international customers.

Additional Financial Information

   
                           

Table 6. Additional Financial Information

  

Second Quarter

 

First Half

(Dollars in Millions)

  

2016

2015

2016

2015

Revenues

          

Boeing Capital

    

$84

    

$115

    

$148

    

$201

  

Unallocated items, eliminations and other

    

$41

    

$7

    

$254

    

($20)

  

Earnings from Operations

          

Boeing Capital

    

$18

    

$11

    

$23

    

$31

  

Unallocated pension/postretirement

    

$69

    

($30)

    

$163

    

($143)

  

Other unallocated items and eliminations

    

($126)

    

($50)

    

($292)

    

($298)

  

Other income, net

    

$13

    

$15

    

$39

    

$3

  

Interest and debt expense

    

($73)

    

($75)

    

($146)

    

($136)

  

Effective tax rate

  

51.1%

  

31.6%

  

21.9%

  

31.5%

  

At quarter-end, Boeing Capital's net portfolio balance was $3 billion, down from the beginning of the quarter. Total pension expense for the second quarter was $463 million, down from $523 million in the same period of the prior year. Other unallocated items and eliminations decreased from the same period in the prior year primarily due to higher deferred compensation expense and elimination of intercompany profit. The effective tax rate for the second quarter was increased from the same period in the prior year primarily due to lower pre-tax income. During the quarter, the company adopted a new accounting standard for share-based compensation payments which resulted in a $54 million tax benefit ($0.08 per share).

Outlook

The company's 2016 updated financial and delivery guidance (Table 7) reflects the impact of the 787 R&D reclassification and the 747 and Tanker charges, solid performance and tax benefits.

 
       

Table 7. 2016 Financial Outlook

Current

  

Prior

(Dollars in Billions, except per share data)

Guidance

  

Guidance
       

The Boeing Company

      

Revenue

$93.0 - 95.0

  

$93.0 - 95.0

GAAP Earnings Per Share

$6.40 - 6.60

  

$8.45 - 8.65

Core Earnings Per Share*

$6.10 - 6.30

  

$8.15 - 8.35

Operating Cash Flow

~$10.0

  

~$10.0
       

Commercial Airplanes

      

Deliveries

740 - 745

  

740 - 745

Revenue

$64.0 - 65.0

  

$64.0 - 65.0

Operating Margin

4.5% - 5.0

  

~9.0%
       

Defense, Space & Security

      

Revenue

      

Boeing Military Aircraft

~$12.3

  

~$12.3

Network & Space Systems

~$7.3

  

~$7.3

Global Services & Support

~$9.4

  

~$9.4
       

Total BDS Revenue

$28.5 - 29.5

  

$28.5 - 29.5
       

Operating Margin

      

Boeing Military Aircraft

~9.5%

  

~10.0%

Network & Space Systems

~9.0%

  

~9.0%

Global Services & Support

~12.0%

  

~11.5%
       

Total BDS Operating Margin

>10.0%

  

>10.0%
       

Boeing Capital

      

Portfolio Size

Stable

  

Stable

Revenue

~$0.3

  

~$0.3

Pre-Tax Earnings

~$0.05

  

~$0.05
       

Research & Development

~ $4.8

  

~ $3.6

Capital Expenditures

~ $2.8

  

~ $2.8

Pension Expense 1

~ $2.1

  

~ $2.1

Effective Tax Rate

~ 23.0%

  

~ 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/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share

Core operating earnings/(loss) is defined as GAAP earnings/(loss) from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings/(loss) expressed as a percentage of revenue. Core earnings/(loss) per share is defined as GAAP diluted earnings/(loss) 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. Pension costs, comprising service and prior service costs computed in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP) are allocated to Commercial Airplanes. Pension costs allocated to BDS segments are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude 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.

Commercial Airplanes Operating Margin Excluding the Reclassification and Charges

Commercial Airplanes GAAP operating margin for the three months ended June 30, 2016 includes research and development expense of $1,235 million related to the reclassification of costs associated with two 787 flight test aircraft from program inventory, a reach-forward loss on the 747 program of $1,188 million, and a reach-forward loss recorded at Commercial Airplanes on the KC-46 Tanker program of $354 million. Management uses Commercial Airplanes operating margin excluding the reclassification and charges for the purpose of evaluating underlying business performance for the three months ended June 30, 2016. Management believes that this measure also helps investors assess overall trends in our operational performance and provide additional context for year over year financial results. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.

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.

The Boeing Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)
                         
 

Six months ended
June 30

Three months ended
June 30

(Dollars in millions, except per share data)

2016

  

2015

  

2016

  

2015

  

Sales of products

  

$42,069

    

$41,408

    

$22,184

    

$21,923

  

Sales of services

5,318

  

5,284

  

2,571

  

2,620

  

Total revenues

47,387

  

46,692

  

24,755

  

24,543

  
         

Cost of products

(37,210)

  

(35,627)

  

(20,265)

  

(19,247)

  

Cost of services

(4,180)

  

(4,186)

  

(2,044)

  

(2,086)

  

Boeing Capital interest expense

(32)

  

(33)

  

(16)

  

(17)

  

Total costs and expenses

(41,422)

  

(39,846)

  

(22,325)

  

(21,350)

  
 

5,965

  

6,846

  

2,430

  

3,193

  

Income from operating investments, net

151

  

129

  

97

  

50

  

General and administrative expense

(1,694)

  

(1,705)

  

(806)

  

(760)

  

Research and development expense, net

(3,044)

  

(1,569)

  

(2,127)

  

(800)

  

(Loss)/gain on dispositions, net

(9)

  

1

  

(13)

      

Earnings/(loss) from operations

1,369

  

3,702

  

(419)

  

1,683

  

Other income, net

39

  

3

  

13

  

15

  

Interest and debt expense

(146)

  

(136)

  

(73)

  

(75)

  

Earnings/(loss) before income taxes

1,262

  

3,569

  

(479)

  

1,623

  

Income tax (expense)/benefit

(277)

  

(1,123)

  

245

  

(513)

  

Net earnings/(loss)

  

$985

    

$2,446

    

($234)

    

$1,110

  
         

Basic earnings/(loss) per share

  

$1.52

    

$3.50

    

($0.37)

    

$1.61

  
         

Diluted earnings/(loss) per share

  

$1.51

    

$3.46

    

($0.37)

    

$1.59

  
         

Cash dividends paid per share

  

$2.18

    

$1.82

    

$1.09

    

$0.91

  
         

Weighted average diluted shares (millions)

654.9

  

706.6

  

636.3

**

698.9

  
   

**

As a result of incurring a net loss for the three months ended June 30, 2016, potential common shares of 6.7 million were excluded from diluted earnings per share.

The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited) 
             

(Dollars in millions, except per share data)

June 30
2016

  

December 31
2015

  

Assets

    

Cash and cash equivalents

  

$8,605

    

$11,302

  

Short-term and other investments

660

  

750

  

Accounts receivable, net

9,809

  

8,713

  

Current portion of customer financing, net

251

  

212

  

Inventories, net of advances and progress billings

44,182

  

47,257

  

Total current assets

63,507

  

68,234

  

Customer financing, net

2,909

  

3,358

  

Property, plant and equipment, net of accumulated depreciation of $16,641 and $16,286

12,533

  

12,076

  

Goodwill

5,128

  

5,126

  

Acquired intangible assets, net

2,544

  

2,657

  

Deferred income taxes

267

  

265

  

Investments

1,312

  

1,284

  

Other assets, net of accumulated amortization of $451 and $451

1,409

  

1,408

  

Total assets

  

$89,609

    

$94,408

  

Liabilities and equity

    

Accounts payable

  

$11,748

    

$10,800

  

Accrued liabilities

13,534

  

14,014

  

Advances and billings in excess of related costs

23,409

  

24,364

  

Short-term debt and current portion of long-term debt

1,168

  

1,234

  

Total current liabilities

49,859

  

50,412

  

Deferred income taxes

2,422

  

2,392

  

Accrued retiree health care

6,586

  

6,616

  

Accrued pension plan liability, net

18,200

  

17,783

  

Other long-term liabilities

2,048

  

2,078

  

Long-term debt

9,847

  

8,730

  

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

4,778

  

4,834

  

Treasury stock, at cost - 386,402,793 and 345,637,354 shares

(34,821)

  

(29,568)

  

Retained earnings

38,362

  

38,756

  

Accumulated other comprehensive loss

(12,795)

  

(12,748)

  

Total shareholders' equity

585

  

6,335

  

Noncontrolling interests

62

  

62

  

Total equity

647

  

6,397

  

Total liabilities and equity

  

$89,609

    

$94,408

  

The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)
             
 

Six months ended
June 30

(Dollars in millions)

2016

  

2015

  

Cash flows – operating activities:

    

Net earnings/(loss)

  

$985

    

$2,446

  

Adjustments to reconcile net earnings to net cash provided by operating activities:

    

Non-cash items – 

    

Share-based plans expense

97

  

94

  

Depreciation and amortization

890

  

912

  

Investment/asset impairment charges, net

50

  

74

  

Customer financing valuation benefit

(4)

  

(5)

  

Gain/(loss) on dispositions, net

9

  

(1)

  

Other charges and credits, net

141

  

140

  

Excess tax benefits from share-based payment arrangements

    

(124)

  

Changes in assets and liabilities – 

    

Accounts receivable

(503)

  

(313)

  

Inventories, net of advances and progress billings

3,004

  

(2,395)

  

Accounts payable

1,221

  

888

  

Accrued liabilities

(269)

  

(177)

  

Advances and billings in excess of related costs

(954)

  

195

  

Income taxes receivable, payable and deferred

(494)

  

482

  

Other long-term liabilities

(103)

  

(17)

  

Pension and other postretirement plans

181

  

1,244

  

Customer financing, net

275

  

19

  

Other

(61)

  

(77)

  

  Net cash provided by operating activities

4,465

  

3,385

  

Cash flows – investing activities:

    

Property, plant and equipment additions

(1,419)

  

(1,266)

  

Property, plant and equipment reductions

13

  

20

  

Acquisitions, net of cash acquired

    

(23)

  

Contributions to investments

(657)

  

(1,205)

  

Proceeds from investments

705

  

2,040

  

Other

8

  

22

  

  Net cash used by investing activities

(1,350)

  

(412)

  

Cash flows – financing activities:

    

New borrowings

1,323

  

761

  

Debt repayments

(267)

  

(846)

  

Stock options exercised

147

  

276

  

Excess tax benefits from share-based payment arrangements

    

124

  

Employee taxes on certain share-based payment arrangements

(79)

  

(90)

  

Common shares repurchased

(5,501)

  

(4,501)

  

Dividends paid

(1,408)

  

(1,264)

  

Other

(24)

      

  Net cash used by financing activities

(5,809)

  

(5,540)

  

Effect of exchange rate changes on cash and cash equivalents

(3)

  

(9)

  

Net decrease in cash and cash equivalents

(2,697)

  

(2,576)

  

Cash and cash equivalents at beginning of year

11,302

  

11,733

  

Cash and cash equivalents at end of period

  

$8,605

    

$9,157

  

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

                         
 

Six months ended
June 30

Three months ended
June 30

(Dollars in millions)

2016

  

2015

  

2016

  

2015

  

Revenues:

        

Commercial Airplanes

  

$31,855

    

$32,258

    

$17,456

    

$16,877

  

Defense, Space & Security:

        

Boeing Military Aircraft

6,638

  

6,200

  

2,979

  

3,474

  

Network & Space Systems

3,545

  

3,670

  

1,810

  

1,938

  

Global Services & Support

4,947

  

4,383

  

2,385

  

2,132

  

Total Defense, Space & Security

15,130

  

14,253

  

7,174

  

7,544

  

Boeing Capital

148

  

201

  

84

  

115

  

Unallocated items, eliminations and other

254

  

(20)

  

41

  

7

  

Total revenues

  

$47,387

    

$46,692

    

$24,755

    

$24,543

  

Earnings/(loss) from operations:

        

Commercial Airplanes

  

$60

    

$2,823

    

($973)

    

$1,206

  

Defense, Space & Security:

        

Boeing Military Aircraft

509

  

380

  

175

  

121

  

Network & Space Systems

301

  

318

  

153

  

151

  

Global Services & Support

605

  

591

  

265

  

274

  

Total Defense, Space & Security

1,415

  

1,289

  

593

  

546

  

Boeing Capital

23

  

31

  

18

  

11

  

Segment operating profit/(loss)

1,498

  

4,143

  

(362)

  

1,763

  

Unallocated items, eliminations and other

(129)

  

(441)

  

(57)

  

(80)

  

Earnings/(loss) from operations

1,369

  

3,702

  

(419)

  

1,683

  

Other income, net

39

  

3

  

13

  

15

  

Interest and debt expense

(146)

  

(136)

  

(73)

  

(75)

  

Earnings/(loss) before income taxes

1,262

  

3,569

  

(479)

  

1,623

  

Income tax (expense)/benefit

(277)

  

(1,123)

  

245

  

(513)

  

Net earnings/(loss)

  

$985

    

$2,446

    

($234)

    

$1,110

  
         

Research and development expense, net:

        

Commercial Airplanes

  

$2,548

    

$1,097

    

$1,877

    

$554

  

Defense, Space & Security

521

  

474

  

263

  

250

  

Other

(25)

  

(2)

  

(13)

  

(4)

  

Total research and development expense, net

  

$3,044

    

$1,569

    

$2,127

    

$800

  
         

Unallocated items, eliminations and other:

        

Share-based plans

  

($41)

    

($37)

    

($18)

    

($16)

  

Deferred compensation

(5)

  

(48)

  

(21)

  

10

  

Amortization of previously capitalized interest

(48)

  

(49)

  

(18)

  

(20)

  

Eliminations and other unallocated items

(198)

  

(164)

  

(69)

  

(24)

  

Sub-total (included in core operating earnings)

(292)

  

(298)

  

(126)

  

(50)

  

Pension

79

  

(209)

  

34

  

(57)

  

Postretirement

84

  

66

  

35

  

27

  

Total unallocated items, eliminations and other

  

($129)

    

($441)

    

($57)

    

($80)

  

The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)
                   

Deliveries

  

Six months ended
June 30

Three months ended
June 30

Commercial Airplanes

  

2016

  

2015

  

2016

  

2015

  

737

  

248

  

249

  

127

  

128

  

747

  

3

  

9

  

2

  

5

  

767

  

5

  

9

  

4

  

4

  

777

  

51

  

50

  

28

  

26

  

787

  

68

  

64

  

38

  

34

  

Total

  

375

  

381

  

199

  

197

  

Note: Deliveries under operating lease are identified by parentheses.
           

Defense, Space & Security

          

Boeing Military Aircraft

          

AH-64 Apache (New)

  

15

  

12

  

8

  

6

  

AH-64 Apache (Remanufactured)

  

18

  

23

  

7

  

13

  

C-17 Globemaster III

  

4

  

3

  

1

  

2

  

CH-47 Chinook (New)

  

10

  

21

  

7

  

15

  

CH-47 Chinook (Renewed)

  

16

  

5

  

7

  

1

  

F-15 Models

  

7

  

5

  

3

  

4

  

F/A-18 Models

  

14

  

20

  

6

  

9

  

P-8 Models

  

9

  

6

  

5

  

4

  
           

Global Services & Support

          

AEW&C

                  

C-40A

      

1

          
           

Network & Space Systems

          

Commercial and Civil Satellites

  

1

  

1

    

1

  

Military Satellites

  

1

  

1

  

1

  

1

  
           
 
                   

Contractual backlog (Dollars in billions)

      

June 30
2016

  

December 31
2015

  

Commercial Airplanes

        

$416.6

    

$431.4

  

Defense, Space & Security:

          

Boeing Military Aircraft

      

22.6

  

19.9

  

Network & Space Systems

      

6.9

  

7.4

  

Global Services & Support

      

16.9

  

17.9

  

Total Defense, Space & Security

      

46.4

  

45.2

  

Total contractual backlog

        

$463.0

    

$476.6

  

Unobligated backlog

        

$9.2

    

$12.7

  

Total backlog

        

$472.2

    

$489.3

  

Workforce

      

158,100

  

161,400

  
     

The Boeing Company and Subsidiaries

Reconciliation of Non-GAAP Measures

(Unaudited)

 

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, core earnings per share, and Commercial Airplanes operating margin excluding the reclassification and charges with the most directly comparable GAAP financial measures, earnings from operations, operating margin, diluted earnings per share and Commercial Airplanes operating margin. See page 7 of this release for additional information on the use of these non-GAAP financial measures.
                           

(Dollars in millions, except per share data)

Second Quarter

First Half

Guidance
 

2016

2015

2016

2015

2016

Revenues

  

$24,755

    

$24,543

    

$47,387

    

$46,692

    
           

GAAP Earnings/(Loss) From Operations

  

($419)

    

$1,683

    

$1,369

    

$3,702

    

Increase/(Decrease) in GAAP Earnings From Operations

(125%)

      

(63%)

        

GAAP Operating Margin

(1.7%)

  

6.9%

  

2.9%

  

7.9%

    
           

Unallocated Pension (Income)/Expense

  

($34)

    

$57

    

($79)

    

$209

    

Unallocated Other Postretirement Benefit Income

  

($35)

    

($27)

    

($84)

    

($66)

    

Unallocated Pension and Other Postretirement Benefit (Income)/Expense

  

($69)

    

$30

    

($163)

    

$143

  

~($300)

Core Operating Earnings/(Loss) (non-GAAP)

  

($488)

    

$1,713

    

$1,206

    

$3,845

    

Increase/(Decrease) in Core Operating Earnings (non-GAAP)

(128%)

      

(69%)

        

Core Operating Margin (non-GAAP)

(2.0%)

  

7.0%

  

2.5%

  

8.2%

    
                   

GAAP Diluted Earnings/(Loss) Per Share

  

($0.37)

    

$1.59

    

$1.51

    

$3.46

  

$6.40 - $6.60

Unallocated Pension (Income)/Expense

  

($0.05)

    

$0.09

    

($0.12)

    

$0.29

    

Unallocated Postretirement Benefit (Income)/Expense

  

($0.06)

    

($0.04)

    

($0.13)

    

($0.09)

  

($0.30)

Provision for deferred income taxes on adjustments (1)

  

$0.04

    

($0.02)

    

$0.09

    

($0.07)

    

Core Earnings/(Loss) Per Share (non-GAAP)

  

($0.44)

    

$1.62

    

$1.35

    

$3.59

  

$6.10 - $6.30
           

Weighted Average Diluted Shares (millions)

636.3

**

698.9

  

654.9

  

706.6

  

645 - 650

Increase/(Decrease) in GAAP Earnings Per Share

(123%)

    

(56%)

      

Increase/(Decrease) in Core Earnings Per Share (non-GAAP)

(127%)

    

(62%)

      
           
           
           

Commercial Airplanes Revenues

  

$17,456

          

GAAP Commercial Airplanes Earnings/(Loss) from Operations

  

($973)

          

GAAP Commercial Airplanes Operating margin

(5.6%)

          
           

Cost reclassification of two 787 flight test aircraft

  

$1,235

          

Reach-forward loss on 747 program

  

$1,188

          

Reach-forward loss at Commercial Airplanes on KC-46 Tanker program

  

$354

          

Commercial Airlines Earnings from Operations excluding the reclassification and charges (non-GAAP)

  

$1,804

          
           

Commercial Airplanes operating margin excluding the reclassification and charges (non-GAAP)

10.3%

          
   

(1)

The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments.

**

As a result of incurring a net loss for the three months ended June 30, 2016, potential common shares of 6.7 million were excluded from diluted earnings per share.