Fourth-Quarter and Full-Year 2012 Performance Review · –Income tax expense in the quarter was $557 million; fourth-quarter 2011 income tax expense included a favorable tax settlement

Copyright © 2013 Boeing. All rights reserved.

Fourth-Quarter and Full-Year 2012 Performance Review

Jim McNerney Chairman, President and Chief Executive Officer

Greg Smith Executive Vice President and Chief Financial Officer

January 30, 2013

Boeing | Investor Relations


2

Business Environment

Commercial up-cycle progressing; dynamic defense environment

Global economic growth continues at slow pace; uncertainties remain

Passenger traffic remains resilient; cargo traffic pressured

International defense growth opportunities; defense budget pressures in

U.S. and other developed markets

Commercial aviation remains long-term growth industry

Defense markets will trend with threat environment



3

Results reflect strong core operating performance

Strong commercial airplane orders capture; key defense wins

Production ramp-ups progressing to plan

Committed to working with FAA to return the 787 into service

Strong fundamental product-and-services strategies

Net orders of $114 billion; large diversified backlog at record $390 billion

2012 Summary

Strong results . . . production ramp-ups progressing to plan



Core Operating Earnings & Core EPS

4

Merits of core operating earnings & core EPS

Improves transparency into underlying

operating performance

Removes components of pension & post

retirement expense tied to market factors &

accounting differences

Components of pension & post-retirement (2013)

New measures improve transparency to operating performance

BCA PensionBDS Pension &

all post-retirement

Service Cost

Prior Service Cost

Interest Cost

Expected Return on

Assets

Actuarial Gains /

(Losses)

Curtailments /

Settlements

Non-

Operating

Operating

CAS

FAS/CAS Difference



Dollars in millions (except per share data)

2011 2012 2011 2012

GAAP Earnings from Operations $1,597 $1,629 $5,844 $6,311

Unallocated Pension & Post-retirement Expense 93 212 517 899

Core Operating Earnings (Non-GAAP) $1,690 $1,841 $6,361 $7,210

Tax adjustment at 35% $33 $74 $181 $315

GAAP Diluted Earnings Per Share $1.84 $1.28 $5.34 $5.11

Unallocated Pension & Post-retirement Expense 0.08 0.18 0.45 0.77

Core Earnings Per Share (Non-GAAP) $1.92 $1.46 $5.79 $5.88

Weighted Average Diluted Shares 757.1 768.3 753.1 763.8

4th Quarter Full Year

5

Reconciliation of GAAP to Core Measures

Removes volatility driven by market factors . . . better reflects core results

*

*

1 1

1 Includes a favorable tax settlement of $0.52 in 4Q11 and $0.53 in 2011

* Non-GAAP measures. Definitions, reconciliations, and further disclosures regarding non-GAAP measures are provided in the company’s earnings press release

dated January 30, 2013.

1 1



6

2012 Financial Results

2011 2012

Revenue $68.7B $81.7B

Core Operating Earnings $6.4B $7.2B

Core EPS $5.79 $5.88

Operating Cash Flow Before

Pension Contributions $4.6B $9.1B

*

*

*

1 A favorable tax settlement increased 2011 core EPS by $0.53



Strong core operating performance

1



$1.92

$1.46

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2011Q4 2012Q4

7

Fourth-Quarter Revenue and Earnings

Revenue

(Billions)

Core Earnings

per Share

$19.6

$22.3

$0

$5

$10

$15

$20

$25

2011Q4 2012Q4

Strong core operating performance on higher volume

1 Excluding a favorable tax settlement of $0.52 in 4Q11



*



Revenues & Operating Margins

Revenue (

bill

ions)

Marg

in

Strong performance across production and services programs

Delivered 165 airplanes in Q4; 601 in 2012

2012 orders valued at $70B with record backlog of $319B

– Won 394 net orders in Q4; 1,203 in 2012

– Surpassed 1,000 737 MAX firm orders since launch

737 broke the company’s annual record for orders and deliveries

Successful 747-8 Intercontinental EIS

Began major assembly on the 787-9

Disciplined execution of five production rate increases

787 production rate more than doubled in 2012

$10.7

$14.2

9.2% 8.9%

0%

5%

10%

15%

$0

$5

$10

$15

2011Q4 2012Q4

8

Focusing on execution, quality and productivity

Commercial Airplanes



Strong operating performance

Capturing new and follow-on business

– NASA contract for Space Launch System

– U.S. Government F-15 upgrade contract for an international customer

– U.S. Department of Defense C-17 aircraft sustainment contract

– U.S. Navy contract for 13 additional F/A-18E’s

Executing balanced defense and space portfolio

– Completed final design acceptance for AEW&C Wedgetail

– Delivered the first P-8I aircraft to the Indian Navy

– Completed Space Launch System Preliminary Design Review

– Started production of the first KC-46 Tanker Refueling Boom

2012 orders valued at $44B; Backlog of $71B

9

Defense, Space & Security

$8.5 $8.3

10.2% 9.0%

0%

5%

10%

15%

$0

$2

$4

$6

$8

$10

2011Q4 2012Q4

Revenues & Operating Margins

Revenue (

bill

ions)

Marg

in

AEW&C Wedgetail

Focusing on execution and productivity . . . capturing opportunities



10

Boeing Capital Corporation

– Supporting business units while prudently managing portfolio and risk

– Portfolio was $4.1 billion at year-end, unchanged in the quarter as new volume offset portfolio run-off

Other and Unallocated Expense

– Unallocated expense from core operations was $200 million in the quarter; $492 million in 2012

– Income tax expense in the quarter was $557 million; fourth-quarter 2011 income tax expense included

a favorable tax settlement of $397 million

Pension Plans

– 2012 Plan Results: ~12.7% asset return, 3.8% discount rate, 74% GAAP funded status

– Expense of $2.4 billion in 2012; ~$3.2 billion expected in 2013

– Funding of $1.6 billion in 2012; ~$1.5 billion of discretionary cash funding expected in 2013

Supporting businesses and managing risks

Other results



11

Cash Flow

Strong cash flow generation . . . proactively funding pension plan

Higher commercial airplane deliveries

Strong core operating performance

Timing of receipts and expenditures

Continued planned investments in 787

program

Disciplined cash management providing

strong liquidity

$ Billions 2011 2012

Net Earnings 4.0 3.9

Depreciation/non-cash 2.1 2.7

Working Capital 1 (1.5) 2.5


Pension Contributions*

4.6 9.1

Pension Contributions (0.6) (1.6)

Operating Cash Flow 4.0 7.5

Free Cash Flow* 2.3 5.8

1 Excluding pension contributions





12

$8.6 $7.9

$2.6 $2.5

$0

$2

$4

$6

$8

$10

$12

2012Q3 2012Q4

Boeing debt

BCC debt

4.6 3.2

6.6 10.3

$0

$2

$4

$6

$8

$10

$12

$14

2012Q3 2012Q4

Cash and Debt Balances

Strong liquidity with manageable debt levels

Billions Billions

Cash

Marketable Securities

S&P: A

Moody’s: A2

Fitch: A

$13.5

$11.2



13

Financial Guidance

2013

Revenue $82 - 85B

Core EPS $6.10 - $6.30


Pension Contributions > $8.0B

Continued strong operating performance

*

*



Note: 2013 guidance assumes no significant impact from the FAA directive.



14

This document 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 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.

Caution Concerning Forward-Looking Statements


Documents

Fourth-Quarter and Full-Year 2012 Performance Review · –Income tax expense in the quarter was $557 million; fourth-quarter 2011 income tax expense included a favorable tax settlement