Tuesday, September 23, 2014 Last update: 3:33 AM
FreshNews.com - All Company Technology News Since 1996

Boeing Reports Second-Quarter Results and Raises 2014 EPS Guidance

Companies mentioned in this article: Boeing

CHICAGO, July 23, 2014 /PRNewswire/ --

    Table 1. Summary
     Financial Results                                     First Half

                        Second Quarter
                        --------------

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

                                         2013                                  2013
                                                                              ----


    Revenues                            $21,815         1%            $42,510    $40,708           4%

                                $22,045


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

    Core Operating
     Earnings                            $2,028       (2)%             $4,086     $3,895           5%

                                 $1,991

    Core Operating
     Margin                        9.0%    9.3% (0.3) Pts               9.6%      9.6%     0.0 Pts

    Core Earnings Per
     Share                                $1.67        45%              $4.16      $3.40          22%

                                  $2.42

    Operating Cash Flow
     Before Pension
     Contributions                       $3,480      (48)%             $2,921     $4,004        (27)%

                                 $1,809

    GAAP
    ----

    Earnings From
     Operations                          $1,716         4%             $3,329     $3,244           3%

                                 $1,787

    Operating Margin               8.1%    7.9%   0.2 Pts               7.8%      8.0%   (0.2) Pts

    Net Earnings                         $1,088        52%             $2,618     $2,194          19%

                                 $1,653

    Earnings Per Share                    $1.41        59%              $3.50      $2.85          23%

                                  $2.24

    Operating Cash Flow                  $3,467      (48)%             $2,921     $3,991        (27)%

                                 $1,809
    ---                          ------
    * 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 second-quarter core earnings per share (non-GAAP) of $2.42, reflecting strong performance and favorable tax items (Table 1). Second-quarter 2014 results included a $272 million after-tax charge ($0.37 per share) on the KC-46A Tanker program reflecting the cost of additional engineering and systems installation work required to complete the Engineering and Manufacturing Development contract. Favorable tax items include the previously announced tax benefit of $116 million for the 2007-2008 tax settlement, as well as an additional tax benefit of $408 million in the second quarter.

Core earnings per share guidance for 2014 increased to between $7.90 and $8.10, from $7.15 to $7.35, reflecting the $408 million tax benefits, strong operating performance and the KC-46A Tanker charge. GAAP earnings per share guidance for 2014 increased to between $6.85 and $7.05.

"Strong operating performance across our production programs and services businesses drove revenue and earnings-per-share growth and healthy operating cash flow, which supported $1.5 billion in additional share repurchases in the quarter," said Boeing Chairman and Chief Executive Officer Jim McNerney. "We delivered our first 787-9 and our 8,000(th) 737, successfully completed a key missile defense intercept test, and delivered our 100(th) EA-18G Growler to the U.S. Navy."

"While challenges resolving engineering and systems installation issues on our tanker test aircraft are resulting in higher spending to maintain schedule, the issues are well understood and we remain on path to begin flight testing fully provisioned tankers the first part of next year," McNerney said.

"With 783 new commercial airplane orders to date this year and significant contracts in the quarter for military aircraft and satellites, our backlog remains large and diverse. Overall, our strong first-half financial performance, sustained focus on growth and productivity, and positive market outlook support our increased earnings guidance for the year," he said.

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

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

    Operating Cash Flow
     Before Pension
     Contributions*     $1,809           $3,480           $2,921    $4,004

    Pension
     Contributions                       ($13)                    ($13)
                                          ----                      ----

    Operating Cash Flow $1,809           $3,467           $2,921    $3,991

    Less Additions to
     Property, Plant &
     Equipment          ($449)          ($455)          ($946)   ($976)
                         -----            -----            -----     -----

    Free Cash Flow*     $1,360           $3,012           $1,975    $3,015
    --------------      ------           ------           ------    ------

Operating cash flow in the quarter was $1.8 billion, reflecting commercial airplane production rates, strong operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 11.4 million shares for $1.5 billion, leaving $6.8 billion remaining under the current repurchase authorization expected to be completed over approximately the next two 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)                                  Q2 14        Q1 14
    ---------                                   -----        -----

    Cash                                                $7.5        $6.9

    Marketable Securities(1)                            $3.8        $5.3
                                                        ----        ----

    Total                                              $11.3       $12.2

    Debt Balances:

    The Boeing Company, net of intercompany
     loans to BCC                                       $6.4        $6.3

    Boeing Capital, including intercompany
     loans                                              $2.5        $2.6
                                                        ----        ----

    Total Consolidated Debt                             $8.9        $8.9
    -----------------------                             ----        ----
    (1) Marketable securities consists
     primarily of time deposits due
     within one year classified as
     "short-term investments."

Cash and investments in marketable securities totaled $11.3 billion at quarter-end (Table 3), down from $12.2 billion at the beginning of the quarter, primarily due to the share repurchases. Debt was $8.9 billion, unchanged from the beginning of the quarter.

Total company backlog of $440 billion was unchanged from the beginning of the quarter, and included net orders for the quarter of $23 billion.

Segment Results
Commercial Airplanes

    Table 4.
     Commercial
     Airplanes

                       Second Quarter                        First Half
                       --------------                        ----------

    (Dollars in
     Millions)          2014             2013 Change                      2014     2013 Change


    Commercial
     Airplanes
     Deliveries          181              169             7%               342      306            12%


    Revenues         $14,304          $13,624             5%           $27,041  $24,314            11%

    Earnings from
     Operations       $1,550           $1,453             7%                                    14 %

                                                                      $3,052   $2,672

    Operating Margin   10.8%           10.7%       0.1 Pts             11.3%   11.0%        0.3Pts
    ----------------    ----             ----        -------              ----     ----         ------

Commercial Airplanes second-quarter revenue increased 5 percent to $14.3 billion on higher deliveries. Second-quarter operating margin was 10.8 percent, reflecting the delivery volume and strong performance offset by the $238 million pre-tax charge on the KC-46A Tanker program (Table 4). During the quarter, Commercial Airplanes delivered the first 787-9 Dreamliner and the 787 program received 330-minute ETOPS certification. In July, Emirates Airline and Qatar Airways finalized orders totaling 200 777X airplanes and Monarch Airlines announced a commitment to purchase 30 737 MAX airplanes.

Commercial Airplanes booked 264 net orders during the quarter. Backlog remains strong with over 5,200 airplanes valued at a record $377 billion.

Defense, Space & Security



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

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

    Revenues(1)

    Boeing Military
     Aircraft                      $3,523 $3,641               (3)%  $6,981   $7,621            (8)%

    Network & Space
     Systems                       $1,920 $2,049               (6)%  $3,796   $4,009            (5)%

    Global Services &
     Support                       $2,304 $2,496               (8)%  $4,603   $4,666            (1)%
                                   ------ ------                ---   ------   ------             ---

    Total BDS
     Revenues                      $7,747 $8,186               (5)% $15,380  $16,296            (6)%

    Earnings from
     Operations(1)

    Boeing Military
     Aircraft                        $165   $386              (57)%    $497     $813           (39)%

    Network & Space
     Systems                         $150   $137                 9%    $318     $293              9%

    Global Services &
     Support                         $267   $253                 6%    $545     $502              9%
                                     ----   ----                ---     ----     ----             ---

    Total BDS
     Earnings from
     Operations                      $582   $776              (25)%  $1,360   $1,608           (15)%

    Operating Margin                 7.5%  9.5%          (2.0)Pts    8.8%    9.9%       (1.1)Pts
    ----------------                  ---    ---           --------     ---      ---        --------
    1 During the first quarter
     of 2014, certain programs
     were realigned between
     Boeing Military Aircraft
     and Global Services &
     Support.

Defense, Space & Security's second-quarter revenue was $7.7 billion. Operating margin was 7.5 percent, reflecting the $187 million pre-tax charge recorded at BMA on the KC-46A Tanker program partially offset by strong operating performance (Table 5).

Boeing Military Aircraft (BMA) second-quarter revenue was $3.5 billion, reflecting fewer C-17 and P-8 deliveries partially offset by higher F-15 deliveries. Operating margin of 4.7 percent was impacted by the charge on the KC-46A Tanker program. During the quarter, BMA was awarded a contract for 44 E/A-18 and F/A-18 aircraft from the U.S. Navy.

Network & Space Systems (N&SS) second-quarter revenue was $1.9 billion, reflecting lower commercial satellites volume, and operating margin increased to 7.8 percent. During the quarter, N&SS completed a successful Missile Defense System intercept in flight test.

Global Services & Support (GS&S) second-quarter revenue was $2.3 billion, reflecting lower volume in maintenance, modifications and upgrades. Operating margin increased to 11.6 percent reflecting strong performance. During the quarter, GS&S was awarded a 5 year contract to provide support for Australia's Airborne Early Warning & Control (AEW&C) aircraft.

Backlog at Defense, Space & Security was $63 billion, of which 36 percent represents orders with international customers.

Additional Financial Information



    Table 6. Additional
     Financial
     Information

                         Second Quarter      First Half
                         --------------      ----------

    (Dollars in
     Millions)                          2014               2013     2014      2013

    Revenues

    Boeing Capital                       $90               $104     $172      $209

    Other segment                        $22                $27      $42       $54

    Unallocated items
     and eliminations                 ($118)            ($126)  ($125)   ($165)

    Earnings from
     Operations

    Boeing Capital                       $33                $19      $77       $63

    Other segment
     income/(expense)                  ($48)             ($43)  ($110)   ($101)

    Unallocated items
     and eliminations
     excluding
     unallocated
     pension/
     postretirement
     expense                          ($126)            ($177)  ($293)   ($347)

    Unallocated pension/
     postretirement
     expense                          ($204)            ($312)  ($757)   ($651)

    Other income, net                    $11                $13      $20       $22

    Interest and debt
     expense                           ($81)             ($96)  ($173)   ($195)

    Effective tax rate                  3.7%             33.4%   17.6%    28.6%
    ------------------                   ---               ----     ----      ----

At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion down from $3.5 billion at the beginning of the quarter.

Unallocated items and eliminations totaled $126 million at quarter end, down from $177 million in the same period of the prior year, primarily due to lower deferred compensation expense. Total pension expense for the second quarter was $693 million, down from $753 million in the same period of the prior year. The company's effective income tax rate was 3.7 percent at quarter end, down from 33.4 percent in the same period of the prior year. The second quarter 2014 effective income tax rate included a $265 million benefit for a tax basis adjustment, $143 million benefit for a 2009-2010 tax settlement and the previously announced benefit of $116 million for the 2007-2008 tax settlement.

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*                             $7.90 - 8.10

    GAAP Earnings Per Share                              $6.85 - 7.05

    Operating Cash Flow Before Pension
     Contributions*                                       ~ $7

    Operating Cash Flow (1)                             ~ $6.25


    Commercial Airplanes

    Deliveries (2)                                     715 - 725

    Revenue                                              $57.5 - 59.5

    Operating Margin                                            > 10%


    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                                   ~ 9.0%

    Network & Space Systems                                    ~ 8.5%

    Global Services & Support                                 ~ 11.0%


    Total BDS Operating Margin                                 ~ 9.5%


    Boeing Capital

    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                                        ~ 23%
    --------------------                                         ----
    (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 $7.90 and $8.10, from $7.15 to $7.35, reflecting the $408 million tax benefits, strong operating performance and the KC-46A Tanker charge. GAAP earnings per share guidance for 2014 increased to between $6.85 and $7.05.

Commercial Airplanes operating margin guidance increased to greater than 10 percent on strong operating performance.

Defense, Space & Security operating margin guidance is unchanged at approximately 9.5 percent. Boeing Military Aircraft operating margin guidance is lowered to approximately 9 percent. Global Services & Support operating margin guidance increased to approximately 11 percent reflecting strong performance.

Boeing's effective tax rate is now expected to be approximately 23 percent in 2014, down from approximately 29 percent, to reflect the additional tax benefits recorded in the second quarter 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.

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)




                         Six months ended Three months ended
                              June 30           June 30

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

    Sales of products

                                  $37,542             $35,556                      $19,527     $19,238

    Sales of services               4,968               5,152                        2,518       2,577
    -----------------               -----               -----                        -----       -----

    Total revenues                 42,510              40,708                       22,045      21,815


    Cost of products             (31,932)           (30,165)                    (16,674)   (16,437)

    Cost of services              (3,999)            (4,004)                     (1,979)    (1,995)

    Boeing Capital
     interest expense                (35)               (37)                        (17)       (18)
    -----------------                 ---                 ---                          ---         ---

    Total costs and
     expenses                    (35,966)           (34,206)                    (18,670)   (18,450)
    ---------------               -------             -------                      -------     -------

                                    6,544               6,502                        3,375       3,365

    Income from
     operating
     investments, net                 120                  88                           61          43

    General and
     administrative
     expense                      (1,795)            (1,900)                       (918)      (929)

    Research and
     development
     expense, net                 (1,542)            (1,468)                       (733)      (763)

    Gain on
     dispositions, net                  2                  22                            2
    ------------------                                                               ---

    Earnings from
     operations                     3,329               3,244                        1,787       1,716

    Other income, net                  20                  22                           11          13

    Interest and debt
     expense                        (173)              (195)                        (81)       (96)
    -----------------                ----                ----                          ---         ---

    Earnings before
     income taxes                   3,176               3,071                        1,717       1,633

    Income tax expense              (558)              (878)                        (64)      (546)
    ------------------               ----                ----                          ---        ----

    Net earnings from
     continuing
     operations                     2,618               2,193                        1,653       1,087

    Net gain on disposal
     of discontinued
     operations, net of
     taxes of $0, $0, $0
     and $0                                                1                                       1
    --------------------                                 ---                                     ---

    Net earnings

                                   $2,618              $2,194                       $1,653      $1,088
    ===                            ======              ======                       ======      ======

    Basic earnings per
     share from
     continuing
     operations

                                    $3.55               $2.88                        $2.26       $1.43

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

    Basic earnings per
     share

                                    $3.55               $2.88                        $2.26       $1.43
    ===                             =====               =====                        =====       =====

    Diluted earnings per
     share from
     continuing
     operations

                                    $3.50               $2.85                        $2.24       $1.41

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

    Diluted earnings per
     share                                                                                    $1.41

                                    $3.50               $2.85                        $2.24
    ===                             =====               =====                        =====

    Cash dividends paid
     per share                                                                               $0.485

                                    $1.46               $0.97                        $0.73
    ===                             =====               =====                        =====

    Weighted average
     diluted shares
     (millions)                     747.4               770.1                        740.1       771.8
    ================                =====               =====                        =====       =====

                                        The Boeing Company and Subsidiaries
                                   Consolidated Statements of Financial Position
                                                    (Unaudited)



    (Dollars in millions, except per share data)                                  June 30 December 31
                                                                                     2014         2013
                                                                                     ----         ----

    Assets

    Cash and cash equivalents

                                                                                   $7,533       $9,088

    Short-term and other investments                                                3,797        6,170

    Accounts receivable, net                                                        7,694        6,546

    Current portion of customer financing, net                                        237          344

    Deferred income taxes                                                              15           14

    Inventories, net of advances and progress billings                             46,251       42,912
    --------------------------------------------------                             ------       ------

    Total current assets                                                           65,527       65,074

    Customer financing, net                                                         3,180        3,627

    Property, plant and equipment, net of accumulated
     depreciation of $15,424 and $15,070                                           10,449       10,224

    Goodwill                                                                        5,139        5,043

    Acquired intangible assets, net                                                 3,004        3,052

    Deferred income taxes                                                           2,664        2,939

    Investments                                                                     1,196        1,204

    Other assets, net of accumulated amortization of
     $420 and $448                                                                  1,578        1,500
    ------------------------------------------------                                -----        -----

    Total assets

                                                                                  $92,737      $92,663
    ===                                                                           =======      =======

    Liabilities and equity

    Accounts payable

                                                                                  $11,060       $9,498

    Accrued liabilities                                                            13,222       14,131

    Advances and billings in excess of related costs                               21,244       20,027

    Deferred income taxes and income taxes payable                                  6,222        6,267

    Short-term debt and current portion of long-term
     debt                                                                           1,591        1,563
    ------------------------------------------------                                -----        -----

    Total current liabilities                                                      53,339       51,486

    Accrued retiree health care                                                     6,506        6,528

    Accrued pension plan liability, net                                             9,812       10,474

    Non-current income taxes payable                                                  740          156

    Other long-term liabilities                                                       864          950

    Long-term debt                                                                  7,292        8,072

    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                                                      4,524        4,415

    Treasury stock, at cost - 290,904,517 and
     264,882,461 shares                                                          (21,381)    (17,671)

    Retained earnings                                                              34,516       32,964

    Accumulated other comprehensive loss                                          (8,659)     (9,894)
    ------------------------------------                                           ------       ------

    Total shareholders' equity                                                     14,061       14,875

    Noncontrolling interests                                                          123          122
    ------------------------                                                          ---          ---

    Total equity                                                                   14,184       14,997

    Total liabilities and equity

                                                                                  $92,737      $92,663
    ===                                                                           =======      =======





                                      The Boeing Company and Subsidiaries
                                     Consolidated Statements of Cash Flows
                                                  (Unaudited)

                                                            Six months ended
                                                                 June 30


    (Dollars in millions)                                                   2014     2013
    --------------------                                                    ----     ----

    Cash flows - operating
     activities:

    Net earnings

                                                                          $2,618   $2,194

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

    Non-cash items -

    Share-based plans expense                                                101      107

    Depreciation and amortization                                            900      865

    Investment/asset impairment
     charges, net                                                             36       26

    Customer financing valuation
     benefit                                                                (26)     (5)

    Gain on disposal of discontinued
     operations                                                                      (1)

    Gain on dispositions, net                                                (2)    (22)

    Other charges and credits, net                                            87       31

    Excess tax benefits from share-
     based payment arrangements                                             (97)    (47)

    Changes in assets and
     liabilities -

    Accounts receivable                                                  (1,286)   (550)

    Inventories, net of advances and
     progress billings                                                   (3,402) (2,614)

    Accounts payable                                                       1,783      848

    Accrued liabilities                                                    (913)   (682)

    Advances and billings in excess
     of related costs                                                      1,217    1,472

    Income taxes receivable, payable
     and deferred                                                            394      608

    Other long-term liabilities                                             (88)    (60)

    Pension and other postretirement
     plans                                                                 1,118    1,638

    Customer financing, net                                                  466      188

    Other                                                                     15      (5)
    -----

    Net cash provided by operating
     activities                                                            2,921    3,991
    ------------------------------                                         -----    -----

    Cash flows - investing
     activities:

    Property, plant and equipment
     additions                                                             (946)   (976)

    Property, plant and equipment
     reductions                                                               17       44

    Acquisitions, net of cash
     acquired                                                              (163)    (26)

    Contributions to investments                                         (5,657) (7,045)

    Proceeds from investments                                              8,030    4,632

    Net cash provided/(used) by
     investing activities                                                  1,281  (3,371)
    ---------------------------                                            -----   ------

    Cash flows - financing
     activities:

    New borrowings                                                            85      531

    Debt repayments                                                        (854) (1,361)

    Payments to noncontrolling
     interests                                                              (12)

    Repayments of distribution
     rights and other asset
     financing                                                             (184)   (139)

    Stock options exercised, other                                           261      484

    Excess tax benefits from share-
     based payment arrangements                                               97       47

    Employee taxes on certain share-
     based payment arrangements                                             (88)    (57)

    Common shares repurchased                                            (3,998) (1,000)

    Dividends paid                                                       (1,071)   (735)
    --------------                                                        ------     ----

    Net cash used by financing
     activities                                                          (5,764) (2,230)
    --------------------------                                            ------   ------

    Effect of exchange rate changes
     on cash and cash equivalents                                              7     (37)
    -------------------------------                                          ---      ---

    Net decrease in cash and cash
     equivalents                                                         (1,555) (1,647)

    Cash and cash equivalents at
     beginning of year                                                     9,088   10,341
                                                                           -----   ------

    Cash and cash equivalents at end
     of period

                                                                          $7,533   $8,694
    ===                                                                   ======   ======





                                                    The Boeing Company and Subsidiaries
                                                     Summary of Business Segment Data
                                                                (Unaudited)


                           Six months ended June 30

                                                          Three months ended June
                                                                  30

    (Dollars in millions)                      2014            2013                   2014        2013
    --------------------                       ----            ----                   ----        ----

    Revenues:

    Commercial Airplanes

                                            $27,041         $24,314                $14,304     $13,624

    Defense, Space &
     Security:

    Boeing Military
     Aircraft                                 6,981           7,621                  3,523       3,641

    Network & Space
     Systems                                  3,796           4,009                  1,920       2,049

    Global Services &
     Support                                  4,603           4,666                  2,304       2,496
    -----------------                         -----           -----                  -----       -----

    Total Defense, Space &
     Security                                15,380          16,296                  7,747       8,186

    Boeing Capital                              172             209                     90         104

    Other segment                                42              54                     22          27

    Unallocated items and
     eliminations                             (125)          (165)                 (118)      (126)
                                               ----            ----                   ----        ----

    Total revenues

                                            $42,510         $40,708                $22,045     $21,815
    ===                                     =======         =======                =======     =======

    Earnings from
     operations:

    Commercial Airplanes

                                             $3,052          $2,672                 $1,550      $1,453

    Defense, Space &
     Security:

    Boeing Military
     Aircraft                                   497             813                    165         386

    Network & Space
     Systems                                    318             293                    150         137

    Global Services &
     Support                                    545             502                    267         253
    -----------------                           ---             ---                    ---         ---

    Total Defense, Space &
     Security                                 1,360           1,608                    582         776

    Boeing Capital                               77              63                     33          19

    Other segment                             (110)          (101)                  (48)       (43)

    Unallocated items and
     eliminations                           (1,050)          (998)                 (330)      (489)
    ---------------------                    ------            ----                   ----        ----

    Earnings from
     operations                               3,329           3,244                  1,787       1,716

    Other income, net                            20              22                     11          13

    Interest and debt
     expense                                  (173)          (195)                  (81)       (96)
    -----------------                          ----            ----                    ---         ---

    Earnings before income
     taxes                                    3,176           3,071                  1,717       1,633

    Income tax expense                        (558)          (878)                  (64)      (546)
    ------------------                         ----            ----                    ---        ----

    Net earnings from
     continuing operations                    2,618           2,193                  1,653       1,087

    Net gain on disposal
     of discontinued
     operations, net of
     taxes of $0, $0, $0
     and $0                                          1                                     1
    --------------------

    Net earnings

                                             $2,618          $2,194                 $1,653      $1,088
    ===                                      ======          ======                 ======      ======


    Research and
     development expense,
     net:

    Commercial Airplanes

                                               $970            $865                   $441        $446

    Defense, Space &
     Security                                   577             579                    297         307

    Other                                       (5)             24                    (5)         10
                                                ---             ---                    ---         ---

    Total research and
     development expense,
     net

                                             $1,542          $1,468                   $733        $763
    ===                                      ======          ======                   ====        ====


    Unallocated items and
     eliminations:

    Share-based plans

                                              ($44)          ($53)                 ($20)      ($22)

    Deferred compensation                      (19)          (102)                  (26)       (46)

    Amortization of
     previously
     capitalized interest                      (36)           (34)                  (18)       (17)

    Eliminations and other                    (194)          (158)                  (62)       (92)
    ----------------------                     ----            ----                    ---         ---

    Sub-total (included
     in core operating
     earnings)                                (293)          (347)                 (126)      (177)

    Pension                                   (804)          (689)                 (228)      (331)

    Postretirement                               47              38                     24          19
                                                ---             ---                    ---         ---

    Total unallocated
     items and
     eliminations

                                           ($1,050)         ($998)                ($330)     ($489)
    ===                                     =======           =====                  =====       =====


                                                                  The Boeing Company and Subsidiaries
                                                                     Operating and Financial Data
                                                                              (Unaudited)



    Deliveries                                             Six months ended                      Three months ended June
                                                                June 30                                   30
                                                           ----------------                   ------------------------

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

    737                                                   239                      218                             124       116

    747                                                     6                       12                               2         6

    767                                                     1                       12                               1         8

    777                                                    48                       47                              24        23

    787                                                    48                       17    (1)          30                16      (1)
                                                                                  ---

    Total                                                 342                      306                             181       169
    =====                                                 ===                      ===                             ===       ===

    Note: Deliveries under operating lease are identified by parentheses.


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

    Boeing Military Aircraft

    F/A-18 Models                                          23                       24                              12        12

    F-15E Eagle                                             8                        3                               4

    C-17 Globemaster III                                    5                        6                               2         3

    CH-47 Chinook                                          32                       17                              15         8

    AH-64 Apache                                           19                       20                               9         5

    P-8 Models                                              2                        5                               2         3


    Global Services & Support

    AEW&C                                                   2                                                         1


    Network & Space Systems

    Commercial and Civil Satellites                         2                        1                               2



    Contractual backlog
     (Dollars in billions)  June 30        March 31  December 31
                               2014             2014          2013
    ---                        ----             ----          ----

    Commercial Airplanes            $376.3                 $374.0  $373.0

    Defense, Space &
     Security:

    Boeing Military
     Aircraft                  23.8             23.2          23.6

    Network & Space Systems     9.6              9.4           9.8

    Global Services &
     Support                   16.3             16.1          16.2
                                               ----          ----

    Total Defense, Space &
     Security                  49.7             48.7          49.6
    ----------------------     ----             ----          ----

    Total contractual
     backlog                        $426.0                 $422.7  $422.6
    =================               ======                 ======  ======

    Unobligated backlog              $14.3                  $17.1   $18.3
    ===================              =====                  =====   =====

    Total backlog                   $440.3                 $439.8  $440.9
    =============                   ======                 ======  ======

    Workforce               169,300          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

                (Unaudited)

    The tables provided below reconcile
       the non-GAAP financial measures
        core operating earnings, core
     operating margin and core earnings
      per share 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.



                                           Second Quarter         First Half        Guidance
                                           --------------         ----------        --------

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

    Revenues

                                         $22,045          $21,815           $42,510    $40,708


    GAAP Earnings From Operations

                                          $1,787           $1,716            $3,329     $3,244

    GAAP Operating Margin                   8.1%            7.9%             7.8%      8.0%


    Unallocated Pension/Postretirement
     Expense                                                                                        ~ $1,200

                                            $204             $312              $757       $651
                                            ----             ----              ----       ----

    Core Operating Earnings (non-GAAP)

                                          $1,991           $2,028            $4,086     $3,895

    Core Operating Margin (non-GAAP)        9.0%            9.3%             9.6%      9.6%


    Increase/(Decrease) in GAAP Earnings
     From Operations                          4%                               3%


    GAAP Diluted Earnings Per Share                                                            $6.85 - $7.05

                                           $2.24            $1.41             $3.50      $2.85

    Unallocated Pension/Postretirement
     Expense(1)

                                           $0.18            $0.26             $0.66      $0.55             $1.05
                                           -----            -----             -----      -----             -----

    Core Earnings Per Share (non-GAAP)                                                         $7.90 - $8.10

                                           $2.42            $1.67             $4.16      $3.40


    Weighted Average Diluted Shares
     (millions)                            740.1            771.8             747.4      770.1             ~ 740

    Increase in GAAP Earnings Per Share      59%                              23%

    Increase in Core Earnings Per Share      45%                              22%

    1 Earnings per share impact
     is presented net of the
     federal statutory tax rate
     of 35.0 percent.

SOURCE Boeing