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Boeing Reports Strong First-Quarter Results

Companies mentioned in this article: Boeing

CHICAGO, April 23, 2014 /PRNewswire/ --

    Table 1. Summary Financial
     Results                             First Quarter
                                         -------------

    (Dollars in Millions, except per
     share data)                        2014         2013  Change


    Revenues                                                         8%

                                     $20,465      $18,893


    Non-GAAP*
    --------

    Core Operating Earnings                                         12%

                                      $2,095       $1,867

    Core Operating Margin               10.2%         9.9%     0.3 Pts

    Core Earnings Per Share                                          2%

                                       $1.76        $1.73

    Operating Cash Flow Before
     Pension Contributions                                         112%

                                      $1,112         $524

    GAAP
    ----

    Earnings From Operations                                         1%

                                      $1,542       $1,528

    Operating Margin                     7.5%         8.1%   (0.6) Pts

    Net Earnings                                                  (13)%

                                        $965       $1,106

    Earnings Per Share                                            (11)%

                                       $1.28        $1.44

    Operating Cash Flow                                            112%

                                      $1,112         $524
    ---                               ------         ----
    * 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 first-quarter revenue increased 8 percent to $20.5 billion on higher commercial volume (Table 1). Core earnings per 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 in the 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 operating performance. GAAP earnings from operations included previously announced non-cash charges totaling $334 million ($0.29 per share) for retirement plan changes.

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 be recognized in the second quarter of 2014. GAAP earnings per share guidance for 2014 is reaffirmed at between $6.10 to $6.30 as the tax settlement benefit was offset by the retirement plan charges. GAAP pension expense guidance for 2014 is now at approximately $3.2 billion, up from $3.1 billion, to reflect the retirement plan charges. The company reaffirmed its 2014 revenue, operating cash flow and deliveries guidance.

"Disciplined execution across our production and development programs produced strong first quarter results," said Boeing Chairman and Chief Executive Officer Jim McNerney. "We measurably increased revenue, core operating earnings and cash flow, and expanded core operating margins. This financial and operational strength enabled the return of more than $3 billion to shareholders in the quarter through share repurchase and an increased dividend, even as we continued to invest in our future."

"Our outlook for the full year remains positive on the strength of demand for our fuel-efficient new commercial airplanes, our solid position in global defense, space and security markets, and our enterprise focus on meeting customer commitments, improving productivity and profitably delivering the growth in our sizable backlog," McNerney said.

    Table 2. Cash Flow                        First Quarter
                                              -------------

    (Millions)                               2014       2013
    ---------                                ----       ----

    Operating 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         $3
    ---                                      ----        ---

Operating cash flow in the quarter was $1.1 billion, reflecting commercial airplane production rates, strong core operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 19.4 million shares for $2.5 billion, leaving $8.3 billion remaining under the current repurchase authorization expected to be completed over the next 2-3 years. The company also paid $0.5 billion in dividends in the quarter, reflecting an approximately 50 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)                      Q1 14             Q4 13
    ---------                       -----             -----

    Cash

                                             $6.9              $9.1

    Marketable Securities(1)

                                             $5.3              $6.2
                                             ----              ----

    Total

                                            $12.2             $15.3

    Debt Balances:

    The Boeing Company, net of
     intercompany loans to BCC

                                             $6.3              $7.0

    Boeing 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 year
     classified as "short-term
     investments."

Cash and investments in marketable securities totaled $12.2 billion at quarter-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. Debt was $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 the beginning of the year, and included net orders for the quarter of $19 billion.

Segment Results

Boeing Commercial Airplanes

    Table 4. Boeing Commercial
     Airplanes                      First Quarter
                                    -------------

    (Dollars in Millions)          2014         2013           Change


    Commercial Airplanes
     Deliveries                     161          137                    18%


    Revenues                                                            19%

                                $12,737      $10,690

    Earnings from Operations                                            23%

                                 $1,502       $1,219

    Operating Margin               11.8%        11.4%              0.4 Pts
    ----------------               ----         ----               -------

Boeing Commercial Airplanes first-quarter revenue increased to $12.7 billion on higher 787 and 737 deliveries. First-quarter operating margin improved to 11.8 percent reflecting the delivery volume and mix and lower period costs partially offset by higher R&D (Table 4).

During the quarter, the 787 program reached a 10 per month production rate and completed preliminary design review on the 787-10. The company selected the Everett, Washington site as the location for a new composite wing center for the 777X. In April, the 737 program reached a production rate of 42 per month.

Commercial Airplanes booked 235 net orders during the quarter. Backlog remains strong with over 5,100 airplanes valued at $374 billion.

Boeing Defense, Space & Security

    Table 5. Defense, Space &
     Security                       First Quarter
                                    -------------

    (Dollars in Millions)          2014       2013           Change
    --------------------           ----       ----           ------

    Revenues(1)

    Boeing Military Aircraft                                        (13)%

                                 $3,458     $3,980

    Network & Space Systems                                          (4)%

                                 $1,876     $1,960

    Global Services & Support                                          6%

                                 $2,299     $2,170
                                 ------     ------

    Total BDS Revenues                                               (6)%

                                 $7,633     $8,110

    Earnings from Operations(1)

    Boeing Military Aircraft                                        (22)%

                                   $332       $427

    Network & Space Systems                                            8%

                                   $168       $156

    Global Services & Support                                         12%

                                   $278       $249
                                   ----       ----

    Total BDS Earnings from
     Operations                                                      (6)%

                                   $778       $832

    Operating Margin               10.2%      10.3%            (0.1) Pts
    ----------------               ----       ----             ---------
    1 During the first quarter
     of 2014, certain programs
     were realigned between
     Boeing Military Aircraft
     and Global Services &
     Support. See page 15 of
     this release for
     additional information.

Boeing Defense, Space & Security's first-quarter revenue was $7.6 billion with an 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 development milestones and due to fewer P-8 deliveries in the first quarter of 2014. Operating margin was 9.6 percent, reflecting strong performance offset by a previously announced C-17 inventory-related charge. During the quarter, BMA was awarded a contract for 16 P-8A Poseidon aircraft from the U.S. Navy and a contract 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 9.0 percent on strong performance. During the quarter, N&SS completed on-orbit testing of the first Inmarsat-5 satellite.

Global Services & Support (GS&S) first-quarter revenue increased to $2.3 billion, reflecting higher volume in maintenance, modifications and upgrades. Operating margin increased to 12.1 percent on improved performance in integrated logistics. During the quarter, GS&S was awarded a contract to provide maintenance training devices for the U.S. Navy's P-8A Poseidon aircraft.

Backlog at Defense, Space & Security was $66 billion, of which 35 percent represents orders with international customers.

Additional Financial Information

    Table 6. Additional Financial Information                 First
                                                             Quarter

    (Dollars in Millions)                                2014       2013

    Revenues

    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

                                                                      $9

    Interest 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's debt-to-equity ratio was 5.0-to-1.

Unallocated items and eliminations increased in the first quarter of 2014 primarily due to previously announced non-cash charges totaling $334 million for retirement plan changes. Total pension expense for the first quarter was $1,035 million, up from $791 million in the same period last year. The company's income tax expense was $494 million in the quarter, compared to $332 million in the same period of the prior year, as a $145 million benefit for the 2012 research and development credit was reflected in the first quarter of 2013.

Outlook

The company's 2014 financial guidance (Table 7) reflects continued strong performance 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*            $7.15 - 7.35

            GAAP 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 (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                      ~ $0.05


    Research & Development                        ~ $3.2

    Capital Expenditures                          ~ $2.5

    Pension Expense (3)                           ~ $3.2

    Effective Tax Rate 4                               ~ 29%
    --------------------                                ----

    (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 $1.3 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 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 be recognized in the second quarter of 2014. GAAP earnings per share guidance for 2014 is reaffirmed at between $6.10 and $6.30 as the tax settlement benefit was offset by the retirement plan charges. Total GAAP pension expense guidance for 2014 is now at approximately $3.2 billion, up from $3.1 billion to reflect the retirement plan charges. The pension expense expected to be included in unallocated items and eliminations is approximately $1.3 billion, up from $1.1 billion.

Boeing Military Aircraft revenue for 2014 is now expected to be approximately $14.2 billion, down from $15.0 billion, and Global Support & Services revenue is now expected to be approximately $8.6 billion, up from $7.8 billion, both reflecting a business realignment completed during the quarter.

Boeing's effective tax rate is now expected to be approximately 29 percent in 2014, down from approximately 31 percent, to reflect the benefit of the tax settlement and continues to assume the extension of the research and development tax credit.

Non-GAAP Measures Disclosures

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company's ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:

Core Operating Earnings, Core Operating Margin and Core Earnings Per Share

Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and post-retirement expense. Unallocated pension and post-retirement expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.

Increase in Core Earnings Per Share Excluding First Quarter 2013 Benefit for 2012 Research and Development Tax Credit

The company is disclosing the increase in core operating earnings per share in the first quarter of 2014 over the first quarter of 2013 excluding the benefit for the 2012 research and development tax credit recorded in the first quarter of 2013. Management believes it is useful to occasionally exclude certain items that are not reflective of underlying performance and that can distort period to period performance comparisons. Management uses similar measures for purposes of evaluating and forecasting underlying business performance. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.

Operating Cash Flow Before Pension Contributions

Operating cash flow before pension contributions is defined as GAAP operating cash flow less pension contributions. Management believes operating cash flow before pension contributions provides additional insights into underlying business performance. Management uses operating cash flow before pension contributions as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and operating cash flow before pension contributions.

Free Cash Flow

Free cash flow is defined as GAAP operating cash flow less capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.

Caution Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials, (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital's customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers' information.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

    Contact:



    Investor Relations:                   Troy Lahr or
                                          Matt Welch
                                           (312)
                                          544-2140


    Communications:                       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              2013
    ------------                                      ----              ----

    Sales of products

                                                   $18,015           $16,318

    Sales of
     services                                        2,450             2,575
    ---------                                        -----             -----

    Total revenues                                  20,465            18,893


    Cost 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             3,137

    Income from
     operating
     investments,
     net                                                59                45

    General and
     administrative
     expense                                          (877)             (971)

    Research and
     development
     expense, net                                     (809)             (705)

    Gain on dispositions, net                                  22
    -------------------------

    Earnings from
     operations                                      1,542             1,528

    Other income,
     net                                                 9                 9

    Interest and
     debt expense                                      (92)              (99)
    -------------                                      ---               ---

    Earnings before
     income taxes                                    1,459             1,438

    Income tax
     expense                                          (494)             (332)
    ----------                                        ----              ----

    Net earnings
     from continuing
     operations                                        965             1,106

    Net gain on disposal of discontinued
     operations, net of taxes
    ------------------------------------

    Net earnings

                                                      $965            $1,106
    ===                                               ====            ======

    Basic earnings per share
     from continuing operations

                                                     $1.30             $1.45

    Net gain on disposal of discontinued
     operations, net of taxes
    ------------------------------------

    Basic earnings per share

                                                     $1.30             $1.45
    ===                                              =====             =====

    Diluted earnings per share
     from continuing operations

                                                     $1.28             $1.44

    Net gain on disposal of discontinued
     operations, net of taxes
    ------------------------------------

    Diluted earnings per share

                                                     $1.28             $1.44
    ===                                              =====             =====

    Cash dividends paid per
     share

                                                     $0.73             $0.49
    ===                                              =====             =====

    Weighted average diluted shares (millions)              768.7

                                                     754.1
    ===                                              =====

                                                                                      The Boeing Company and Subsidiaries

                                                                                 Consolidated Statements of Financial Position

                                                                                                  (Unaudited)


    (Dollars in millions, except per share data)                                                                               March 31  December 31
                                                                                                                                   2014         2013
                                                                                                                                   ----         ----

    Assets

    Cash and cash equivalents

                                                                                                                                 $6,942       $9,088

    Short-term and other investments                                                                                              5,282        6,170

    Accounts receivable, net                                                                                                      7,341        6,546

    Current portion of customer financing, net                                                                                      256          344

    Deferred income taxes                                                                                                            15           14

    Inventories, net of advances and progress billings                                                                           44,941       42,912
    --------------------------------------------------                                                                           ------       ------

    Total current assets                                                                                                         64,777       65,074

    Customer financing, net                                                                                                       3,280        3,627

    Property, plant and equipment, net of accumulated depreciation of $15,281 and $15,070                                        10,263       10,224

    Goodwill                                                                                                                      5,046        5,043

    Acquired intangible assets, net                                                                                               2,996        3,052

    Deferred income taxes                                                                                                         2,463        2,939

    Investments                                                                                                                   1,208        1,204

    Other assets, net of accumulated amortization of $478 and $448                                                                1,542        1,500
    --------------------------------------------------------------                                                                -----        -----

    Total assets

                                                                                                                                $91,575      $92,663
    ===                                                                                                                         =======      =======

    Liabilities and equity

    Accounts payable

                                                                                                                                $10,779       $9,498

    Accrued liabilities                                                                                                          12,219       14,131

    Advances and billings in excess of related costs                                                                             21,112       20,027

    Deferred income taxes and income taxes payable                                                                                6,732        6,267

    Short-term debt and current portion of long-term debt                                                                         1,660        1,563
    -----------------------------------------------------                                                                         -----        -----

    Total current liabilities                                                                                                    52,502       51,486

    Accrued retiree health care                                                                                                   6,515        6,528

    Accrued pension plan liability, net                                                                                           9,676       10,474

    Non-current income taxes payable                                                                                                166          156

    Other long-term liabilities                                                                                                     808          950

    Long-term debt                                                                                                                7,275        8,072

    Shareholders' equity:

    Common stock, par value $5.00 - 1,200,000,000 shares authorized;                                                              5,061        5,061
       1,012,261,159 shares issued

    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             2013
    -----------                                         ----             ----

    Cash 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              524
       -----------------                               -----              ---

    Cash 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           10,341
                                                       -----           ------

    Cash 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            2013
    -----------                                   ----            ----

    Revenues:

      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         $18,893
    ===                                        =======         =======

    Earnings 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           1,528

    Other income, net                                9               9

    Interest and debt
     expense                                       (92)            (99)
    -----------------                              ---             ---

    Earnings before
     income taxes                                1,459           1,438

    Income tax expense                            (494)           (332)
    ------------------                            ----            ----

    Net earnings from
     continuing
     operations                                    965           1,106

    Net gain on disposal of discontinued
     operations, net of taxes
    ------------------------------------

    Net earnings

                                                  $965          $1,106
    ===                                           ====          ======


    Research and development expense, net:

      Commercial Airplanes

                                                  $529            $419

      Defense, Space &
       Security                                    280             272

      Other                                              14
                                                        ---

    Total research and development
     expense, net

                                                  $809            $705
    ===                                           ====            ====


    Unallocated 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              19
                                                   ---             ---

    Total unallocated items and
     eliminations

                                                 ($720)          ($509)
    ===                                          =====           =====

       The Boeing Company and Subsidiaries

           Operating and Financial Data

                   (Unaudited)


    Deliveries                           Three months ended
                                              March 31
                                              --------

    Commercial Airplanes                 2014            2013
    --------------------                 ----            ----

    737                                   115             102

    747                                     4               6

    767                                                     4

    777                                    24              24

    787                                    18               1
                                                          ---

    Total                                 161             137
    =====                                 ===             ===



    Defense, Space & Security
    -------------------------

    Boeing 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                                              2


    Global Services & Support

    AEW&C                                   1


    Network & Space Systems

    Commercial and Civil
     Satellites                                             1




    Contractual backlog
     (Dollars in billions)

                                     March 31     December 31
                                         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            49.6
    ---                                  ----

    Total contractual backlog

                                       $422.7          $422.6
    ===                                ======          ======

    Unobligated backlog

                                        $17.1           $18.3
    ===                                 =====           =====

    Total backlog

                                       $439.8          $440.9
    ===                                ======          ======

    Workforce

                                      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 core operating earnings, core
     operating margin and core earnings per share as well as the increase in Core EPS Excluding First Quarter
     2013 Benefit for 2012 Research and Development Tax Credit 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.



                                                               First Quarter            Guidance
                                                               -------------            --------

                                                                   2014         2013                    2014
                                                                   ----         ----                    ----

    Revenues

                                                                $20,465      $18,893


    GAAP Earnings From Operations

                                                                 $1,542       $1,528

    GAAP Operating Margin                                           7.5%         8.1%


    Unallocated Pension/Postretirement Expense                                                      ~ $1,215

                                                                   $553         $339
                                                                   ----         ----

    Core Operating Earnings (non-GAAP)

                                                                 $2,095       $1,867

    Core Operating Margin (non-GAAP)                               10.2%         9.9%


    Increase/(Decrease) in GAAP Earnings From
     Operations                                                       1%


    GAAP Diluted Earnings Per Share                                                             $6.10 - 6.30

                                                                  $1.28        $1.44

    Unallocated Pension/Postretirement Expense(1)

                                                                  $0.48        $0.29                   $1.05
                                                                  -----        -----                   -----

    Core Earnings Per Share (non-GAAP)                                                          $7.15 - 7.35

                                                                  $1.76        $1.73

    First Quarter 2013 Benefit for 2012
     Research and Development Tax Credit(2)                           -        $0.19
                                                                    ---        -----

    Core Earnings Per Share Excluding First
     Quarter 2013 Benefit for 2012 Research
     and Development Tax Credit                                   $1.76        $1.54


    Weighted Average Diluted Shares (millions)                    754.1        768.7               750 - 755

    Increase 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 rate of 35.0
     percent.

    (2) Earnings per share impact
     of $145 million tax benefit
     in the first quarter of 2013
     due to the retroactive
     reinstatement of the 2012
     research and development tax
     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 realigned among Defense,
     Space & Security segments. The Airborne Warning and Control Systems and Airborne Early
     Warning and Control aircraft programs and the F-22 Modernization program were realigned
     from Boeing Military Aircraft to Global Services & Support. Business segment data for
     2013 has been adjusted as follows to reflect the realignment.



                             As Reported in            As Reported in
                                  2013                      2014
                            ---------------           ---------------

    (Dollars in
     millions)                  Revenue                  Earnings                  Revenue       Earnings
    -----------                 -------                  --------                  -------       --------


    First Quarter 2013

    Boeing Military
     Aircraft

                                        $4,109                     $430                   $3,980           $427

    Global Services &
     Support                             2,041                      246                    2,170            249


    Second Quarter 2013

    Boeing Military
     Aircraft                            3,889                      373                    3,641            386

    Global Services &
     Support                             2,248                      266                    2,496            253


    Third Quarter 2013

    Boeing Military
     Aircraft                            3,543                      221                    3,438            220

    Global Services &
     Support                             2,272                      259                    2,377            260


    Fourth Quarter 2013

    Boeing Military
     Aircraft                            4,395                      441                    4,226            491

    Global Services &
     Support                             2,188                      280                    2,357            230


    Full 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