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Fourth-Quarter and Full-Year 2008
Performance Review


Jim McNerney
Chairman, President and Chief Executive Officer

James...
2008 Summary
Boeing | Investor Relations


           Revenues and earnings down…
           affected by labor strike and ...
Business Environment
Boeing | Investor Relations


   Global economy weakening

   Challenging aircraft financing market

...
2008 Financial Results
Boeing | Investor Relations




                                                           2007    ...
Fourth-Quarter Revenue and Earnings
Boeing | Investor Relations

                                                         ...
Commercial Airplanes
 Boeing | Investor Relations

                                                                       ...
Integrated Defense Systems

Boeing | Investor Relations

                                                                 ...
Backlog at Record Level
Boeing | Investor Relations


    Billions                       BCA Backlog
                     ...
Other Results
Boeing | Investor Relations


  Boeing Capital Corporation
        – Supported business units while reducing...
Cash Flow
Boeing | Investor Relations


                                                                                 C...
Cash and Debt Balances
Boeing | Investor Relations


                                                                     ...
Financial Guidance
Boeing | Investor Relations




                                                                       ...
Walk - 2008 Actual to 2009 Guidance
Boeing | Investor Relations


               2008 Actual EPS                          ...
Forward-Looking Information Is Subject to
Risk and Uncertainty
Boeing | Investor Relations


      Certain statements in t...
Copyright © 2009 Boeing. All rights reserved.
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Boeing 4Q 2008 financial results

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Transcript of "Boeing 4Q 2008 financial results"

  1. 1. Fourth-Quarter and Full-Year 2008 Performance Review Jim McNerney Chairman, President and Chief Executive Officer James Bell Corporate President and Chief Financial Officer January 28, 2009 Copyright © 2009 Boeing. All rights reserved.
  2. 2. 2008 Summary Boeing | Investor Relations Revenues and earnings down… affected by labor strike and development program delays Working through development program challenges Resolved strike Well-diversified backlog at record level of $352 billion, up 8% for the year Strong fundamental product-and-services strategies Strong fundamental strategies… working through challenges Strong fundamental strategies… working through challenges 2 Copyright © 2009 Boeing. All rights reserved.
  3. 3. Business Environment Boeing | Investor Relations Global economy weakening Challenging aircraft financing market Diversified backlog provides relative strength in uncertain times Vigilant focus on improving competitiveness Longer-term, commercial aviation remains growth industry and defense markets will trend with threat environment Well-positioned for uncertain times Well-positioned for uncertain times 3 Copyright © 2009 Boeing. All rights reserved.
  4. 4. 2008 Financial Results Boeing | Investor Relations 2007 2008 Change $66.4B (8%) Revenues $60.9B $5.8B (32%) Operating Income $4.0B $5.28 (30%) Reported EPS $3.71 $9.6B NA Operating Cash Flow ($0.4B) Challenging year… affected by strike and charges Challenging year… affected by strike and charges 4 Copyright © 2009 Boeing. All rights reserved.
  5. 5. Fourth-Quarter Revenue and Earnings Boeing | Investor Relations Strike Billions per Share ~ $1.09 Strike $17.5 ~ $4.3B $18 $1.36 747 Charge $1.40 $0.61 Litigation Reserve $12.7 $0.09 $12 $0.90 Revenue EPS $6 $0.40 $0 ($0.10) 2007Q4 2008Q4 2007Q4 2008Q4 -$0.08 Strike and charges drove results Strike and charges drove results 5 Copyright © 2009 Boeing. All rights reserved.
  6. 6. Commercial Airplanes Boeing | Investor Relations Revenues & Operating Margins 4Q results impacted by IAM strike and 747 charge 20% $10 $8.9 15% Revenue (billions) $8 10% Delivered 375 airplanes in 2008… 50 in 4Q 5% $6 11.0% Margin 0% $4.6 -5% $4 Continued sales success -10% (21.1%) -15% $2 − Won 669 gross orders in 2008… 44 in 4Q -20% $0 -25% − Received 5,000th Next Generation 737 order -21.1% 2007Q4 2008Q4 − Backlog increased to $279 Billion Development programs: challenges and successes − Previously announced 747-8 and 787 schedule changes − Completed 787 wing box destructive testing − 787 maintenance program certified by FAA 737 NG Program surpasses 5,000 orders Focused on customers, productivity and growth Focused on customers, productivity and growth 6 Copyright © 2009 Boeing. All rights reserved.
  7. 7. Integrated Defense Systems Boeing | Investor Relations Revenues & Operating Margins Outstanding operating performance $10 15% $8.4 $8.0 Revenue (billions) Capturing new and follow-on business $8 Margin 10% 11.7% $6 – India selects P-8I maritime patrol aircraft 11.0% $4 – NATO consortium to acquire C-17s 5% $2 – Air Force awards C-17 support contract $0 0% 2007Q4 2008Q4 Executing well-balanced defense portfolio – GMD successful flight test – Airborne Laser completes major test milestone – Outstanding performance on production and support programs Acquisition of Federated Software and Digital Receiver Technology Robust backlog of $73 Billion P-8A Focused on execution…capturing opportunities Focused on execution…capturing opportunities 7 Copyright © 2009 Boeing. All rights reserved.
  8. 8. Backlog at Record Level Boeing | Investor Relations Billions BCA Backlog $352 $327 $350 IDS Backlog $300 $250 Boeing $250 backlog $205 ~ 5x 279 $200 255 annual $152 revenues 174 $150 124 65 $100 $50 87 81 76 72 73 $0 2004 2005 2006 2007 2008 Record backlog of $352 billion is foundation for future growth Record backlog of $352 billion is foundation for future growth 8 Copyright © 2009 Boeing. All rights reserved.
  9. 9. Other Results Boeing | Investor Relations Boeing Capital Corporation – Supported business units while reducing portfolio size and risk – Delivered pre-tax income of $26 million on $168 million in revenues – Contributed $32 million cash dividends to Boeing in Q4; $252 million in 2008 Other and Unallocated Expense – Other Segment expense of $59 million, down by $107 million – Unallocated expenses declined by $215 million, driven by lower pension expenses – Pre-tax (non-cash) pension expense decreased as expected to $113 million 2008 Pension Plan Performance – 2008 actual asset returns: -15%; Discount rate: 6.1%; Funded status: 83% – 2008 book equity reduction of approximately $8 billion – Lowering long-term expected rate of return to 8.0% Lower centralized costs… pension performance reflective of markets Lower centralized costs… pension performance reflective of markets 9 Copyright © 2009 Boeing. All rights reserved.
  10. 10. Cash Flow Boeing | Investor Relations Cash flow used to fund 2007 $ Billions 2008 operations and growth Net Earnings 4.1 2.7 − Working capital requirements for Depreciation/non-cash 1.8 1.8 strike and 787 development Working Capital 4.3 (4.4) Pension Contributions (0.6) Balanced cash deployment (0.5) 9.6 – Investment in growth Operating cash flow (0.4) Capital Expenditures (1.7) (1.7) – Repurchased 42.1 million shares for $2.9 billion and paid $1.2 Free cash flow* 7.9 (2.1) billion in dividends *Non-GAAP measure. Definitions, reconciliations, and further disclosures regarding these non-GAAP measures are provided in the company’s earnings press release dated January 28, 2009. Investing for future growth and shareholder return Investing for future growth and shareholder return 10 Copyright © 2009 Boeing. All rights reserved.
  11. 11. Cash and Debt Balances Boeing | Investor Relations S&P: A+ S&P: A+ Boeing debt Cash Moody’s: A2 Moody’s: A2 Billions Billions Marketable Securities BCC debt Fitch: A+ Fitch: A+ $8 $8 $7.2 $6 $6 4.2 $3.9 $3.7 $3.9 $3.6 $4 $3.6 $4 $2 $2 3.3 3.0 0.3 $0 $0 2008Q3 2008Q4 2008Q3 2008Q4 Strong liquidity… reduced debt levels Strong liquidity… reduced debt levels 11 Copyright © 2009 Boeing. All rights reserved.
  12. 12. Financial Guidance Boeing | Investor Relations 2009 $68B - $69B Revenues $5.05 - $5.35 Earnings Per Share >$2.5B Operating Cash Flow1 1 After $0.5 billion in pension-plan contributions and $1.0 billion in new aircraft financings in 2009 Will provide 2010 guidance later in the year Will provide 2010 guidance later in the year 12 Copyright © 2009 Boeing. All rights reserved.
  13. 13. Walk - 2008 Actual to 2009 Guidance Boeing | Investor Relations 2008 Actual EPS $3.71 Strike impact in 2008, not in 2009 ~1.63 2008 charges - 747, AEW&C, Legal 0.93 Higher pension expense in 2009 ~(0.25) Higher deferred compensation expense in 2009 ~(0.25) Lower interest income in 2009 ~(0.25) Other ~(0.35) - Cost ab sorption for delivery slides, productivity, mix, risk assessment 2009 Guidance issued on January 28, 2009 $5.05 - 5.35 13 Copyright © 2009 Boeing. All rights reserved.
  14. 14. Forward-Looking Information Is Subject to Risk and Uncertainty Boeing | Investor Relations Certain statements in this press release may be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “targets,” and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward- looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission: the effect of economic conditions in the United States and globally; the adequacy of coverage, by allowance for losses, of risks related to our non-U.S. accounts receivable being payable in U.S. dollars; the continued operation, viability and growth of Commercial Airplanes revenues and successful execution of our backlog in this segment; the effects of customers cancelling, modifying and/or rescheduling contractual orders; the timing and effects of decisions to complete or launch a Commercial Airplanes program; the ability to successfully develop and timely produce the 787 and 747-8 aircraft; the effect on our revenues of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting Boeing defense programs; our relationship with our union- represented workforce and the negotiation of collective bargaining agreements; the continuation of long-term trends in passenger traffic and revenue yields in the airline industry; the impact of volatile fuel prices and the airline industry’s response; the effect of declines in aircraft valuation; the impact on our revenues or operating results of airline bankruptcies; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which we are a party, and other contingencies; returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs; the amounts and effects of underinsured operations, including satellite launches; the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications related thereto; and the expected cash expenditures and charges associated with the exit of the Connexion by Boeing business. 14 Copyright © 2009 Boeing. All rights reserved.
  15. 15. Copyright © 2009 Boeing. All rights reserved.
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