Boeing Earnings 2019-09-30

BA 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
BA	206,254	126,261	131,583	92,155	12,570	4,994	7,258	211,861	14%	29.2	4%
UTX	110,346	138,990	95,904	72,553	4,297	5,281	9,067	147,639	6%	16.3	4%
ASR	45,075	56,182	19,500	0	0	0	0	41,362			0%
HEI	17,614	2,960	1,140	1,991	791	345	506	18,195	40%	35.9	12%
TXT	11,978	14,796	9,460	13,286	2,276	1,205	1,988	11,121	17%	5.6	8%
AIR	1,590	1,683	774	2,127	340	-3	60	1,734	16%	28.8	-0%
AVAV	1,345	535	53	253	137	37	49	1,203	54%	24.4	7%
CAAP	1,040	3,845	2,623	0	0	0	0	1,040			0%
TGI	949	2,823		3,262	504	-227	26	2,348	15%	88.6	-8%
TATT	58	103	19	0	0	0	0	42			0%

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-442



	THE BOEING COMPANY

(Exact name of registrant as specified in its charter)



Delaware			91-0425694
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

100 N. Riverside Plaza,	Chicago,	IL	60606-1596
(Address of principal executive offices)			(Zip Code)



	(312)	544-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405/ of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $5.00 Par Value	BA	New York Stock Exchange

As of October 16, 2019, there were 562,791,233 shares of common stock, $5.00 par value, issued and outstanding.

THE BOEING COMPANY

FORM 10-Q

For the Quarter Ended September 30, 2019

INDEX



Part I. Financial Information (Unaudited)		Page

Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Equity	5
	Summary of Business Segment Data	7
	Note 1 - Basis of Presentation	8
	Note 2 - Acquisitions and Joint Ventures	9
	Note 3 - Earnings Per Share	9
	Note 4 - Income Taxes	10
	Note 5 - Inventories	11
	Note 6 - Contracts with Customers	11
	Note 7 - Customer Financing	12
	Note 8 - Investments	14
	Note 9 - Other Assets	14
	Note 10 - Leases	15
	Note 11 - Commitments & Contingencies	16
	Note 12 - Arrangements with Off-Balance Sheet Risk	20
	Note 13 - Debt	21
	Note 14 - Postretirement Plans	22
	Note 15 - Share-Based Compensation and Other Comprehensive Arrangements	23
	Note 16 - Shareholders' Equity	24
	Note 17 - Derivative Financial Instruments	25
	Note 18 - Fair Value Measurements	27
	Note 19 - Legal Proceedings	29
	Note 20 - Segment and Revenue Information	29
	Report of Independent Registered Public Accounting Firm	34

Forward-Looking Statements		35

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Consolidated Results of Operations and Financial Condition	37
	Commercial Airplanes	42
	Defense, Space & Security	45
	Global Services	49
	Boeing Capital	49
	Liquidity and Capital Resources	50
	Off-Balance Sheet Arrangements	52
	Contingent Obligations	52
	Non-GAAP Measures	53
	Critical Accounting Policies and Estimates	54
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	55

Part II. Other Information

Item 1.	Legal Proceedings	56

Item 1A.	Risk Factors	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	57

Item 4.	Mine Safety Disclosures	57

Item 5.	Other Information	57

Item 6.	Exhibits	58

Signature		59

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



(Dollars in millions, except per share data)	Nine months ended September 30						Three months ended September 30
	2019			2018			2019			2018
Sales of products		$50,514			$64,848			$17,195			$22,463
Sales of services	8,134			7,938			2,785			2,683
Total revenues	58,648			72,786			19,980			25,146

Cost of products	(46,584		)	(53,134		)	(14,674		)	(18,882		)
Cost of services	(6,752		)	(6,215		)	(2,241		)	(2,140		)
Boeing Capital interest expense	(49		)	(51		)	(15		)	(18		)
Total costs and expenses	(53,385		)	(59,400		)	(16,930		)	(21,040		)
	5,263			13,386			3,050			4,106
(Loss)/income from operating investments, net	(3		)	112			(8		)	32
General and administrative expense	(2,857		)	(3,345		)	(1,001		)	(1,154		)
Research and development expense, net	(2,470		)	(2,417		)	(778		)	(826		)
Gain/(loss) on dispositions, net	296			76			(4		)	69
Earnings from operations	229			7,812			1,259			2,227
Other income	334			63			121			12
Interest and debt expense	(480		)	(317		)	(203		)	(106		)
Earnings before income taxes	83			7,558			1,177			2,133
Income tax benefit/(expense)	291			(522		)	(10		)	230
Net earnings		$374			$7,036			$1,167			$2,363

Basic earnings per share		$0.66			$12.08			$2.07			$4.11

Diluted earnings per share		$0.66			$11.95			$2.05			$4.07

Weighted average diluted shares (millions)	570.4			588.9			569.2			580.8

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2019			2018			2019			2018
Net earnings		$374			$7,036			$1,167			$2,363
Other comprehensive income/(loss), net of tax:
Currency translation adjustments	(61		)	(55		)	(59		)	2
Unrealized gain on certain investments, net of tax of $0, ($1), $0 and $0	1			3
Unrealized (loss)/gain on derivative instruments:
Unrealized loss arising during period, net of tax of $30, $27, $25 and $1	(106		)	(97		)	(89		)	(4		)
Reclassification adjustment for (gains)/losses included in net earnings, net of tax of ($6), ($5), ($7) and ($3)	22			19			25			9
Total unrealized (loss)/gain on derivative instruments, net of tax	(84		)	(78		)	(64		)	5
Defined benefit pension plans and other postretirement benefits:
Amortization of prior service credits included in net periodic pension cost, net of tax of $18, $30, $5 and $10	(67		)	(106		)	(22		)	(35		)
Net actuarial gain arising during the period, net of tax of $0, $0, $0 and $0				1
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($97), ($182), ($32) and ($60)	350			657			117			219
Settlements and curtailments included in net income, net of tax of $0, ($3), $0 and $0				6
Pension and postretirement cost related to our equity method investments, net of tax of ($5), $1, ($3) and $0	17			(4		)	9			(1		)
Total defined benefit pension plans and other postretirement benefits, net of tax	300			554			104			183
Other comprehensive income/(loss), net of tax	156			424			(19		)	190
Comprehensive loss related to noncontrolling interests	(22		)	(12		)	(15		)	(2		)
Comprehensive income, net of tax		$508			$7,448			$1,133			$2,551

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Financial Position

(Unaudited)



(Dollars in millions, except per share data)	September 30 2019			December 31 2018
Assets
Cash and cash equivalents		$9,763			$7,637
Short-term and other investments	1,150			927
Accounts receivable, net	3,564			3,879
Unbilled receivables, net	11,078			10,025
Current portion of customer financing, net	166			460
Inventories	73,279			62,567
Other current assets	2,656			2,335
Total current assets	101,656			87,830
Customer financing, net	2,077			2,418
Property, plant and equipment, net of accumulated depreciation of $19,125 and $18,568	12,527			12,645
Goodwill	8,063			7,840
Acquired intangible assets, net	3,587			3,429
Deferred income taxes	296			284
Investments	1,117			1,087
Other assets, net of accumulated amortization of $561 and $503	3,275			1,826
Total assets		$132,598			$117,359
Liabilities and equity
Accounts payable		$15,101			$12,916
Accrued liabilities	19,224			14,808
Advances and progress billings	53,167			50,676
Short-term debt and current portion of long-term debt	4,354			3,190
Total current liabilities	91,846			81,590
Deferred income taxes	1,615			1,736
Accrued retiree health care	4,437			4,584
Accrued pension plan liability, net	14,590			15,323
Other long-term liabilities	3,621			3,059
Long-term debt	20,298			10,657
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	6,688			6,768
Treasury stock, at cost - 449,472,403 and 444,619,970 shares	(54,924		)	(52,348		)
Retained earnings	53,986			55,941
Accumulated other comprehensive loss	(14,927		)	(15,083		)
Total shareholders’ equity	(4,116		)	339
Noncontrolling interests	307			71
Total equity	(3,809		)	410
Total liabilities and equity		$132,598			$117,359

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



(Dollars in millions)	Nine months ended September 30
	2019			2018
Cash flows – operating activities:
Net earnings		$374			$7,036
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash items –
Share-based plans expense	160			150
Depreciation and amortization	1,643			1,531
Investment/asset impairment charges, net	106			63
Customer financing valuation adjustments	249			(3		)
Gain on dispositions, net	(296		)	(76		)
Other charges and credits, net	190			158
Changes in assets and liabilities –
Accounts receivable	315			10
Unbilled receivables	(1,053		)	(1,732		)
Advances and progress billings	2,355			3,457
Inventories	(9,565		)	(173		)
Other current assets	(224		)	(5		)
Accounts payable	1,626			1,181
Accrued liabilities	5,495			890
Income taxes receivable, payable and deferred	(989		)	(252		)
Other long-term liabilities	(577		)	1
Pension and other postretirement plans	(570		)	(89		)
Customer financing, net	391			(175		)
Other	144			403
Net cash (used)/provided by operating activities	(226		)	12,375
Cash flows – investing activities:
Property, plant and equipment additions	(1,387		)	(1,227		)
Property, plant and equipment reductions	334			117
Acquisitions, net of cash acquired	(492		)	(250		)
Contributions to investments	(1,439		)	(2,145		)
Proceeds from investments	967			1,369
Purchase of distribution rights	(20		)	(56		)
Other	(10		)	(5		)
Net cash used by investing activities	(2,047		)	(2,197		)
Cash flows – financing activities:
New borrowings	19,621			4,696
Debt repayments	(8,978		)	(4,029		)
Contributions from noncontrolling interests	7			35
Stock options exercised	51			70
Employee taxes on certain share-based payment arrangements	(241		)	(247		)
Common shares repurchased	(2,651		)	(8,415		)
Dividends paid	(3,473		)	(2,976		)
Net cash provided/(used) by financing activities	4,336			(10,866		)
Effect of exchange rate changes on cash and cash equivalents, including restricted	(27		)	(37		)
Net increase/(decrease) in cash & cash equivalents, including restricted	2,036			(725		)
Cash & cash equivalents, including restricted, at beginning of year	7,813			8,887
Cash & cash equivalents, including restricted, at end of period	9,849			8,162
Less restricted cash & cash equivalents, included in Investments	86			128
Cash and cash equivalents at end of period		$9,763			$8,034

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the nine months ended September 30, 2019 and 2018

(Unaudited)



	Boeing shareholders
(Dollars in millions, except per share data)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Total
Balance at January 1, 2018		$5,061		$6,804			($43,454	)		$49,618			($16,373	)		$57			$1,713
Net earnings									7,036						(12		)	7,024
Other comprehensive income, net of tax of ($133)												424						424
Share-based compensation and related dividend equivalents			167						(17		)							150
Treasury shares issued for stock options exercised, net			(37		)	107												70
Treasury shares issued for other share-based plans, net			(220		)	(19		)										(239		)
Common shares repurchased						(8,415		)										(8,415		)
Cash dividends declared ($3.42 per share)									(1,971		)							(1,971		)
Changes in noncontrolling interests															35			35
Balance at September 30, 2018		$5,061		$6,714			($51,781	)		$54,666			($15,949	)		$80			($1,209	)

Balance at January 1, 2019		$5,061		$6,768			($52,348	)		$55,941			($15,083	)		$71			$410
Net earnings									374						(22		)	352
Other comprehensive income, net of tax of ($60)												156						156
Share-based compensation and related dividend equivalents			176						(16		)							160
Treasury shares issued for stock options exercised, net			(42		)	82												40
Treasury shares issued for other share-based plans, net			(214		)	(7		)										(221		)
Common shares repurchased						(2,651		)										(2,651		)
Cash dividends declared ($4.11 per share)									(2,313		)							(2,313		)
Changes in noncontrolling interests															258			258
Balance at September 30, 2019		$5,061		$6,688			($54,924	)		$53,986			($14,927	)		$307			($3,809	)

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the three months ended September 30, 2019 and 2018

(Unaudited)



	Boeing shareholders
(Dollars in millions, except per share data)	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss			Non- controlling Interests			Total
Balance at July 1, 2018		$5,061		$6,676			($49,342	)		$52,303		($16,139	)		$67			($1,374	)
Net earnings									2,363					(2		)	2,361
Other comprehensive income, net of tax of ($52)											190						190
Share-based compensation and related dividend equivalents			52														52
Treasury shares issued for stock options exercised, net			(5		)	12											7
Treasury shares issued for other share-based plans, net			(9		)	(1		)									(10		)
Common shares repurchased						(2,450		)									(2,450		)
Changes in noncontrolling interests														15			15
Balance at September 30, 2018		$5,061		$6,714			($51,781	)		$54,666		($15,949	)		$80			($1,209	)

Balance at July 1, 2019		$5,061		$6,638			($54,932	)		$52,819		($14,908	)		$379			($4,943	)
Net earnings									1,167					(15		)	1,152
Other comprehensive (loss)/income, net of tax of ($12)											(19		)				(19		)
Share-based compensation and related dividend equivalents			56														56
Treasury shares issued for stock options exercised, net			(3		)												(3		)
Treasury shares issued for other share-based plans, net			(3		)	8											5
Changes in noncontrolling interests														(57		)	(57		)
Balance at September 30, 2019		$5,061		$6,688			($54,924	)		$53,986		($14,927	)		$307			($3,809	)

See Notes to the Condensed -Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	567	$206,254

10-Q	2019-10-23	Quarter: 2019-09-30
10-Q	2019-07-24	Quarter: 2019-06-30
10-Q	2019-04-24	Quarter: 2019-03-31
10-K	2019-02-08	Annual: 2018-12-31
10-Q	2018-10-24	Quarter: 2018-09-30
10-Q	2018-07-25	Quarter: 2018-06-30
10-Q	2018-04-25	Quarter: 2018-03-31
10-K	2018-02-12	Annual: 2017-12-31
10-Q	2017-10-25	Quarter: 2017-09-30
10-Q	2017-07-26	Quarter: 2017-06-30
10-Q	2017-04-26	Quarter: 2017-03-31
10-K	2017-02-08	Annual: 2016-12-31
10-Q	2016-10-26	Quarter: 2016-09-30
10-Q	2016-07-27	Quarter: 2016-06-30
10-Q	2016-04-27	Quarter: 2016-03-31
10-K	2016-02-10	Annual: 2015-12-31
10-Q	2015-10-21	Quarter: 2015-09-30
10-Q	2015-07-22	Quarter: 2015-06-30
10-Q	2015-04-22	Quarter: 2015-03-31
10-K	2015-02-12	Annual: 2014-12-31
10-Q	2014-10-22	Quarter: 2014-09-30
10-Q	2014-07-23	Quarter: 2014-06-30
10-Q	2014-04-23	Quarter: 2014-03-31
10-K	2014-02-14	Annual: 2013-12-31
10-Q	2013-10-23	Quarter: 2013-09-30
10-Q	2013-07-24	Quarter: 2013-06-30
10-Q	2013-04-24	Quarter: 2013-03-31
10-K	2013-02-11	Annual: 2012-12-31
10-Q	2012-10-24	Quarter: 2012-09-30
10-Q	2012-07-25	Quarter: 2012-06-30
10-Q	2012-04-25	Quarter: 2012-03-31
10-K	2012-02-09	Annual: 2011-12-31
10-Q	2011-10-26	Quarter: 2011-09-30
10-Q	2011-07-27	Quarter: 2011-06-30
10-Q	2011-04-27	Quarter: 2011-03-31
10-K	2011-02-09	Annual: 2010-12-31
10-Q	2010-10-20	Quarter: 2010-09-30
10-Q	2010-07-28	Quarter: 2010-06-30
10-Q	2010-04-21	Quarter: 2010-03-31
10-K	2010-02-08	Annual: 2009-12-31

8-K	2020-01-10	Officers, Other Events
8-K	2019-12-26	Officers, Exhibits
8-K	2019-12-22	Officers, Exhibits
8-K	2019-12-16	Other Events, Exhibits
8-K	2019-10-30	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-10-25	Officers, Amend Bylaw, Exhibits
8-K	2019-10-23	Earnings, Exhibits
8-K	2019-10-11	Other Events, Exhibits
8-K	2019-07-29	Other Events, Exhibits
8-K	2019-07-24	Earnings, Exhibits
8-K	2019-07-18	Earnings, Exhibits
8-K	2019-06-26	Other Events
8-K	2019-05-01	Officers, Exhibits
8-K	2019-04-30	Other Events, Exhibits
8-K	2019-04-29	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-04-29	Shareholder Vote
8-K	2019-04-24	Earnings, Exhibits
8-K	2019-04-05	Other Events, Exhibits
8-K	2019-02-26	Other Events, Exhibits
8-K	2019-02-13	Other Events, Exhibits
8-K	2019-01-30	Earnings, Exhibits
8-K	2019-01-24	Other Events
8-K	2018-12-17	Other Events, Exhibits
8-K	2018-10-29	Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K	2018-10-24	Earnings, Exhibits
8-K	2018-10-22	Amend Bylaw, Exhibits
8-K	2018-07-25	Earnings, Exhibits
8-K	2018-07-13	Other Events, Exhibits
8-K	2018-07-05	Other Events, Exhibits
8-K	2018-06-07	Enter Agreement, Exhibits
8-K	2018-04-30	Enter Agreement, Regulation FD, Exhibits
8-K	2018-04-30	Shareholder Vote
8-K	2018-04-25	Earnings, Exhibits
8-K	2018-02-21	Other Events, Exhibits
8-K	2018-01-31	Earnings, Exhibits

EX-10	a201909sep3010qexhibit10.htm
EX-15	a201909sep3010qexhibit15.htm
EX-31.1	a201909sep3010qexhibit311.htm
EX-31.2	a201909sep3010qexhibit312.htm
EX-32.1	a201909sep3010qexhibit321.htm
EX-32.2	a201909sep3010qexhibit322.htm