Boeing 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 Boeing annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

THE BOEING COMPANY
2015 ANNUAL REPORT
Launching Our
Second Century

Table of contents

  • Page 1
    Launching Our Second Century THE BOEING COMPANY 2015 ANNUAL REPORT

  • Page 2
    ... Programs, Products and Services Shareholder Information Board of Directors Company Officers 1 2 8 12 13 123 124 132 133 134 Boeing is the world's largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems. The top U.S. exporter, Boeing...

  • Page 3
    ... history. Delivered an industry-record 762 commercial airplanes to further extend our market-share lead in deliveries. Delivered 186 military aircraft, along with 15,787 weapons systems and four satellites, as we continue to see solid support for our major programs in our defense, space and security...

  • Page 4
    ...REVIEW Thanks to the tremendous efforts of more than 160,000 employees and our global partners, Boeing extended its leadership of the aerospace industry in 2015 with record deliveries and revenues at Boeing Commercial Airplanes and solid sales and healthy margins in Boeing Defense, Space & Security...

  • Page 5
    ...reduce cost and ï¬,ow time in assembly. We are maturing this technology on the current production line before transitioning it to the 777X. In the highly competitive single-aisle market, the 737 family reached 588 net new orders and 495 deliveries in 2015, with a total program backlog at year-end of...

  • Page 6
    ... presidential aircraft. We also added to our leadership in space with A successful ï¬,ight software demonstration on the CST-100 spacecraft; A five-year contract extension to provide engineering support services, resources and personnel for International Space Station operations; NASA's completion...

  • Page 7
    ... 10 years. With proven products and services and a commitment to improved productivity and affordability, Boeing remains well positioned in global defense, space and security markets worth $3.0 trillion over the next decade. Total Backlog* $ in billions Commercial Airplane Deliveries Commercial...

  • Page 8
    ... ramp up commercial airplane production; Continue to strengthen our defense and space business; Deliver on our development programs; Drive world-class levels of productivity and performance to fund our investments in innovation and growth; and Attract, develop and retain the best team and talent...

  • Page 9
    ... testing refueling in early 2016. In 2015, Boeing and our employees and retirees invested $190 million, along with thousands of employees' volunteer hours, to help enhance lives and communities where we live and work around the world. As we expand operations and grow our businesses, we remain on...

  • Page 10
    ... 12,000 commercial airplanes in operation today, we Connect Connect people, products and ideas like never before. To further reduce greenhouse gas emissions, Boeing conducted Subsonic Ultra Green Aircraft Research studies, part of a NASA program to advance aerospace science for public benefit. The...

  • Page 11
    ...-based Midcourse Defense is the United States' only operational protection against long-range missile threats, meeting real-time requirements 24/7/365. The Boeing-led industry team ensures readiness through ground and ï¬,ight testing and keeps the system at pace with growing threats. Operated by the...

  • Page 12
    Through an innovative partnership with NASA's Commercial Crew Program, Boeing's CST-100 Starliner system is on a course to return human launch capabilities to the United States. The spacecraft will safely carry a mix of crew and cargo to the International Space Station and other low Earth orbit ...

  • Page 13
    ... the world a better place. The X-37B program is demonstrating a reliable, reusable unmanned space test platform for the Air Force. Its objectives include space experimentation, risk reduction and concept-ofoperations development for reusable space vehicle technologies that could become key enablers...

  • Page 14
    ... Development & Strategy and Chief Financial Officer Leanne G. Caret Executive Vice President; President and Chief Executive Officer, Boeing Defense, Space & Security Thomas J. Downey Senior Vice President, Communications Diana L. Sands Senior Vice President, Office of Internal Governance...

  • Page 15
    ... of February 4, 2016 was 662,503,822. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates information by reference to the registrant's definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2015.

  • Page 16
    ... 31, 2015 PART I Item Item Item Item Item Item PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Item 6. Selected Financial Data ...Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 17
    ... Airplanes segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents and technical advice to commercial and government customers worldwide. Defense, Space & Security Our BDS operations principally involve research, development, production...

  • Page 18
    ... provides customers with mission readiness through total support solutions. Our global services business sustains aircraft and systems with a full spectrum of products and services through integrated logistics, including supply chain management and engineering support; maintenance, modification...

  • Page 19
    ... for defense systems, new and derivative jet aircraft including both commercial and military, advanced space and other company-sponsored product development. These are expensed as incurred including amounts allocable as reimbursable overhead costs on U.S. government contracts. Our total research and...

  • Page 20
    ... airplane manufacturers by providing customers with greater value products, services, and support. We continue to leverage our extensive customer support services network which spans the life cycle of the airplane: aircraft acquisition, readying for service, maintenance and engineering, enhancing...

  • Page 21
    ... companies. Suppliers We are dependent upon the ability of a large number of suppliers and subcontractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs. While we maintain an extensive qualification and performance surveillance system to control...

  • Page 22
    ... Boeing. Forward-Looking Statements This report, as well as our Annual Report to Shareholders, quarterly reports, and other filings we make with the SEC, press releases and other written and oral communications, contains "forward-looking statements" within the meaning of the Private Securities...

  • Page 23
    ...reduce our revenues and limit our opportunity to generate profits from those customers. Our Commercial Airplanes business depends on our ability to maintain a healthy production system, achieve planned production rate targets, successfully develop new aircraft or new derivative aircraft, and meet or...

  • Page 24
    ... incorporate design changes into early build 787 aircraft, we may face further profitability pressures on this program. If our commercial airplanes fail to satisfy performance and reliability requirements, we could face additional costs and/or lower revenues. Developing and manufacturing commercial...

  • Page 25
    ... of existing contracts or programs. Any of these impacts could have a material effect on the results of the Company's operations, financial position and/or cash flows. In addition, as a result of the significant ongoing uncertainty with respect to both U.S. defense spending levels and the nature of...

  • Page 26
    ... costs to complete, which could result in a material charge or otherwise adversely affect our financial condition. Examples of significant BDS fixed-price development contracts include Commercial Crew, Saudi F-15, USAF KC-46A Tanker, and commercial and military satellites. We enter into cost-type...

  • Page 27
    ... program. Several factors determine accounting quantity, including firm orders, letters of intent from prospective customers and market studies. Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier...

  • Page 28
    ...competition among non-U.S. aircraft manufacturers and service providers in one or more of our market segments. In our BDS business, we anticipate that the effects of defense industry consolidation, fewer large and new programs and new priorities, including near and long-term cost competitiveness, of...

  • Page 29
    ... charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit guarantees, partner performance and indemnifications. Consolidations of joint ventures could also impact our reported results of operations or financial position. While we believe that...

  • Page 30
    ... be forced to bear substantial costs. For example, liabilities arising from the use of certain of our products, such as aircraft technologies, missile systems, border security systems, anti-terrorism technologies, and/or air traffic management systems may not be insurable on commercially reasonable...

  • Page 31
    ... could result in additional costs. For additional information relating to environmental contingencies, see Note 11 to our Consolidated Financial Statements. Unauthorized access to our or our customers' information and systems could negatively impact our business. We face certain security threats...

  • Page 32
    ... 31, 2015 for manufacturing, warehousing, engineering, administration and other productive uses, of which approximately 96% was located in the United States. The following table provides a summary of the floor space by business as of December 31, 2015: (Square feet in thousands) Commercial Airplanes...

  • Page 33
    ...quarter ended December 31, 2015: (Dollars in millions, except per share data) (a) (b) (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(2) Total Number of Shares Purchased...

  • Page 34
    ...term and other investments Total debt Customer financing assets Shareholders' equity Common shares outstanding (in millions) Contractual Backlog: Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support Total Defense, Space & Security...

  • Page 35
    ...We are a global market leader in design, development, manufacture, sale, service and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. We are one of the two major manufacturers of 100+ seat airplanes for the worldwide...

  • Page 36
    ... 2013 primarily reflect the timing of eliminations for intercompany aircraft deliveries. Earnings From Operations The following table summarizes Earnings from operations: (Dollars in millions) Years ended December 31, Commercial Airplanes Defense, Space & Security Boeing Capital Unallocated pension...

  • Page 37
    ...millions) Years ended December 31, Share-based plans Deferred compensation Eliminations and other Litigation settlements Sub-total (included in core operating earnings*) Pension Postretirement Pension and other postretirement benefit expense (excluded from core operating earnings*) Total unallocated...

  • Page 38
    ... 2015, 2014 and 2013, respectively. The components of net periodic benefit cost are shown in the following table: Pension 2014 $1,661 3,058 (4,169) 177 1,020 461 $2,208 Years ended December 31, Service cost Interest cost Expected return on plan assets Amortization of prior service costs Recognized...

  • Page 39
    ... 2013 primarily due to the tax benefits of $524 million recorded in the second quarter of 2014. For additional discussion related to Income Taxes, see Note 4 to our Consolidated Financial Statements. Total Costs and Expenses ("Cost of Sales") Cost of sales, for both products and services, consists...

  • Page 40
    ...on the 787-9. Backlog Our backlog at December 31 was as follows: (Dollars in millions) Contractual Backlog: Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support Total Defense, Space & Security Total contractual backlog Unobligated...

  • Page 41
    ...Results of Operations and Financial Condition Commercial Airplanes Business Environment and Trends Airline Industry Environment Global economic activity and global trade, which are the primary drivers of the demand for air travel, grew below the long-term average for the fourth year in a row in 2015...

  • Page 42
    ... and suppliers. With government support, Airbus has historically invested heavily to create a family of products to compete with ours. Regional jet makers Embraer and Bombardier, coming from the less than 100-seat commercial jet market, continue to develop larger and increasingly capable airplanes...

  • Page 43
    ... in millions) Years ended December 31, Revenues % of total company revenues Earnings from operations Operating margins Research and development Contractual backlog Unobligated backlog Revenues Commercial Airplanes revenues increased by $6,058 million or 10% in 2015 compared with 2014 and by $7,009...

  • Page 44
    ... during 2014 was due to net orders in excess of deliveries. The decrease in unobligated backlog during 2015 and 2014 was primarily due to the reclassification from unobligated to contractual backlog related to incremental funding of the existing multi-year contract for Commercial Airplanes' share of...

  • Page 45
    ... number of commercial jet aircraft deliveries plus undelivered firm orders. 737 2015 Program accounting quantities Undelivered units under firm orders Cumulative firm orders 2014 Program accounting quantities Undelivered units under firm orders Cumulative firm orders 2013 Program accounting...

  • Page 46
    ... of production challenges, change incorporation on early build aircraft, schedule delays, customer and supplier impacts and changes to price escalation factors has created significant pressure on program profitability and we continue to have near breakeven gross margins. If risks related to...

  • Page 47
    ... and planned initial delivery for major Commercial Airplanes derivatives and programs. Reflects models in development during 2015 We launched the 787-10 in June 2013 and the 777X in November 2013. Additional Considerations The development and ongoing production of commercial aircraft is extremely...

  • Page 48
    ... Revenues % of total company revenues Earnings from operations Operating margins Contractual backlog Unobligated backlog 2015 $30,388 32% $3,274 10.8% $45,187 $12,488 2014 $30,881 34% $3,133 10.1% $46,974 $14,939 2013 $33,197 38% $3,235 9.7% $49,681 $17,607 Since our operating cycle is long-term...

  • Page 49
    ... our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition. These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are...

  • Page 50
    Boeing Military Aircraft Results of Operations (Dollars in millions) Years ended December 31, Revenues % of total company revenues Earnings from operations Operating margins Contractual backlog Unobligated backlog Revenues BMA revenues in 2015 decreased by $18 million compared with 2014 primarily ...

  • Page 51
    ... Information Solutions (E&IS) and proprietary programs, partially offset by $257 million related to higher volume on the Commercial Crew and SLS programs. New-build satellite deliveries were as follows: Years ended December 31, Commercial and civil satellites Military satellites 2015 3 1 2014 5 2013...

  • Page 52
    ... Consolidated Financial Statements. Global Services & Support Results of Operations (Dollars in millions) Years ended December 31, Revenues % of total company revenues Earnings from operations Operating margins Contractual backlog Unobligated backlog 2015 $9,155 10% $1,230 13.4% $17,800 $358 2014...

  • Page 53
    ... and globally diverse sources. Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of service. Approximately 2,300 western-built commercial jet aircraft (9.5% of current world fleet) were parked at the end of 2015, including both in-production and...

  • Page 54
    .... Financial Position The following table presents selected financial data for BCC as of December 31: (Dollars in millions) Customer financing and investment portfolio, net Other assets, primarily cash and short-term investments Total assets Other liabilities, primarily deferred income taxes Debt...

  • Page 55
    ... investment in commercial airplane program inventory, primarily 787 inventory. Advances and progress billings increased by $0.4 billion in 2015, $6.9 billion in 2014 and $3.9 billion in 2013, primarily due to payments from Commercial Airplane customers. Discretionary contributions to our pension...

  • Page 56
    ... our commercial paper program, in the debt markets or our credit facilities. At December 31, 2015 and 2014, our pension plans were $17.9 billion and $17.3 billion underfunded as measured under GAAP. On an Employee Retirement Income Security Act (ERISA) basis our plans are more than 100% funded at...

  • Page 57
    ... tax matters. As of December 31, 2015, our net liability for income taxes payable, including uncertain tax positions, was $1,177 million. We are not able to reasonably estimate the timing of future cash flows related to uncertain tax positions. (2) Pension and Other Postretirement Benefits Pension...

  • Page 58
    ... customers outside of the U.S. to facilitate economic flow back and/or technology transfer to their businesses or government agencies as the result of their procurement of goods and/or services from us. These commitments may be satisfied by our placement of direct work or vendor orders for supplies...

  • Page 59
    ... share with the most directly comparable GAAP financial measures of earnings from operations, operating margins and diluted earnings per share. (Dollars in millions, except per share data) Years ended December 31, Revenues Earnings from operations, as reported Operating margins Unallocated pension...

  • Page 60
    ...fixed price development contracts are in a reach-forward loss position. Changes to estimated losses are recorded immediately in earnings. Program Accounting Program accounting requires the demonstrated ability to reliably estimate the relationship of sales to costs for the defined program accounting...

  • Page 61
    ... in operating margins for our Commercial Airplane segment would have a $650 million impact on operating earnings. The 747 is in a reach-forward loss position at December 31, 2015 while the 787 program had near breakeven margins during 2015. Absent changes in estimated revenues or costs, subsequent...

  • Page 62
    ... company-funded defined contribution retirement savings plan in 2016. Accounting rules require an annual measurement of our projected obligation and plan assets. These measurements are based upon several assumptions, including the discount rate and the expected long-term rate of asset return. Future...

  • Page 63
    ... fourth quarter of 2015, we agreed to sell aircraft maintenance manuals to Iran Air Tours. We generated no revenues or net profits during the fourth quarter of 2015 from these activities. These sales were authorized by a license from the U.S. Office of Foreign Assets Control ("OFAC"). Boeing applied...

  • Page 64
    ... Statements of Equity ...Summary of Business Segment Data ...Note 1 - Summary of Significant Accounting Policies ...Note 2 - Goodwill and Acquired Intangibles ...Note 3 - Earnings Per Share ...Note 4 - Income Taxes ...Note 5 - Accounts Receivable ...Note 6 - Inventories ...Note 7 - Customer...

  • Page 65
    ...per share data) Years ended December 31, Sales of products Sales of services Total revenues Cost of products Cost of services Boeing Capital interest expense Total costs and expenses Income from operating investments, net General and administrative expense Research and development expense, net (Loss...

  • Page 66
    ...cost) related to our equity method investments, net of tax ($2), $15, and ($13) Amortization of prior service cost included in net periodic pension cost, net of tax of ($22), ($12), and ($6) Prior service cost arising during the period, net of tax of ($496), $3, and $41 Total defined benefit pension...

  • Page 67
    ...of related costs Short-term debt and current portion of long-term debt Total current liabilities Deferred income taxes Accrued retiree health care Accrued pension plan liability, net Other long-term liabilities Long-term debt Shareholders' equity: Common stock, par value $5.00 - 1,200,000,000 shares...

  • Page 68
    ... Advances and billings in excess of related costs Income taxes receivable, payable and deferred Other long-term liabilities Pension and other postretirement plans Customer financing, net Other Net cash provided by operating activities Cash flows - investing activities: Property, plant and equipment...

  • Page 69
    ...per share data) Balance at January 1, 2013 Net earnings Other comprehensive income, net of tax of ($4,246) Share-based compensation and related dividend equivalents Excess tax pools Treasury shares issued for stock options exercised, net Treasury shares issued for other share-based plans, net Common...

  • Page 70
    ...) Years ended December 31, Revenues: Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support Total Defense, Space & Security Boeing Capital Unallocated items, eliminations and other Total revenues Earnings from operations: Commercial...

  • Page 71
    ... Years ended December 31, 2015, 2014 and 2013 (Dollars in millions, except per share data) Note 1 - Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The Consolidated Financial Statements included in this report have been prepared by management...

  • Page 72
    ...Our Commercial Airplanes segment predominantly uses program accounting to account for cost of sales related to its programs. Program accounting is applicable to products manufactured for delivery under production-type contracts where profitability is realized over multiple contracts and years. Under...

  • Page 73
    ... and flight operation services for commercial aircraft. Service revenue and associated cost of sales from pay-inadvance subscription fees are deferred and recognized as services are rendered. Financial Services Revenue We record financial services revenue associated with sales-type/finance leases...

  • Page 74
    ...our commercial airplane models. Collectively known as fleet support services, these activities and services include flight and maintenance training, field service support, engineering services, and technical data and documents. Fleet support activity begins prior to aircraft delivery as the customer...

  • Page 75
    ...average future service period of employees. The funded status of our pension and postretirement plans is reflected on the Consolidated Statements of Financial Position. Postemployment Plans We record a liability for postemployment benefits, such as severance or job training, when payment is probable...

  • Page 76
    ...commercial aircraft programs and long-term contracts include direct engineering, production and tooling and other non-recurring costs, and applicable overhead, which includes fringe benefits, production related indirect and plant management salaries and plant services, not in excess of estimated net...

  • Page 77
    ... We net advances and progress billings on long-term contracts against inventory in the Consolidated Statements of Financial Position. Advances and progress billings in excess of related inventory are reported in Advances and billings in excess of related costs. Precontract Costs We may, from time to...

  • Page 78
    ... trade names. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment. Our finite-lived acquired intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: developed technology, from 5 to 14 years; product...

  • Page 79
    ... portion of the gain or loss of a cash flow hedge is reported in earnings immediately. We have agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and international business requirements. These agreements are derivatives for accounting purposes but are not...

  • Page 80
    ... a market or using current published third-party aircraft valuations based on the type and age of the aircraft, adjusted for individual attributes and known conditions. Used aircraft acquired by the Commercial Airplanes segment are included in Inventories at the lower of cost or net realizable value...

  • Page 81
    ... defects in material and design. The majority of our warranties are issued by our Commercial Airplanes segment. Generally, aircraft sales are accompanied by a three to four-year standard warranty for systems, accessories, equipment, parts, and software manufactured by us or manufactured to certain...

  • Page 82
    ...the carrying amount of goodwill by reportable segment for the years ended December 31, 2015 and 2014 were as follows: Commercial Airplanes $2,108 45 (22) $2,131 6 (14) $2,123 Boeing Military Aircraft $964 Network & Space Systems $1,513 57 (4) $1,566 Global Services & Support $458 Balance at January...

  • Page 83
    ... During 2015 and 2014 we acquired $15 and $87 of finite-lived intangible assets, of which $0 and $24 related to non-cash investing and financing transactions. Note 3 - Earnings Per Share Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation...

  • Page 84
    ... condition was not met. (Shares in millions) Years ended December 31, Stock options Performance awards Performance-based restricted stock units Note 4 - Income Taxes The components of earnings before income taxes were: Years ended December 31, U.S. Non-U.S. Total 2015 $6,828 327 $7,155 2014...

  • Page 85
    ...641 $1,646 Net income tax payments were $1,490, $355 and $209 in 2015, 2014 and 2013, respectively. The following is a reconciliation of the U.S. federal statutory tax rate of 35% to our effective income tax rates: Years ended December 31, U.S. federal statutory tax Research and development credits...

  • Page 86
    ...733 266 (292) ($1,890) Inventory and long-term contract methods of income recognition Pension benefits Retiree health care benefits Fixed assets, intangibles and goodwill (net of valuation allowance $16 and $18) Other employee benefits Customer and commercial financing Accrued expenses and reserves...

  • Page 87
    ...the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant. The amounts of interest benefit included in the Consolidated Statements of Operations were not significant for the years ended December 31, 2015, 2014 and 2013...

  • Page 88
    ...,257 2014 $13,381 55,220 7,421 76,022 (29,266) $46,756 Long-term contracts in progress Commercial aircraft programs Commercial spare parts, used aircraft, general stock materials and other Inventory before advances and progress billings Less advances and progress billings Total Long-Term Contracts...

  • Page 89
    .... Commercial Aircraft Programs At December 31, 2015 and 2014, commercial aircraft programs inventory included the following amounts related to the 787 program: $34,656 and $33,163 of work in process (including deferred production costs of $28,510 and $26,149), $2,551 and $2,257 of supplier advances...

  • Page 90
    ... terms. As of December 31, 2015 and 2014, we had no material receivables that were greater than 30 days past due and we had no impaired customer financing receivables during 2015 and 2014. Income recognition is generally suspended for financing receivables at the date full recovery of income...

  • Page 91
    ... Aircraft ($115 and $127 accounted for as operating leases) MD-11 Aircraft (Accounted for as operating leases) Charges related to customer financing asset impairment for the years ended December 31 were as follows: 2015 $162 $162 2014 $139 45 $184 2013 $67 14 $81 Boeing Capital Other Boeing Total...

  • Page 92
    ...: 2016 $240 55 2017 $217 47 2018 $182 29 2019 $157 12 2020 $117 4 Minimum operating lease payments, net of sublease amounts Minimum capital lease payments Accounts payable related to purchases of property, plant and equipment were $502 and $299 for the years ended December 31, 2015 and 2014. 76

  • Page 93
    ... Network & Space Systems (N&SS) Commercial Airplanes, N&SS and Global Other Services & Support (GS&S) Total equity method investments Ownership Percentages 50% Investment Balance 2015 2014 $908 $916 322 $1,230 198 $1,114 Note 10 - Other Assets Sea Launch At December 31, 2015 and 2014, Other assets...

  • Page 94
    ...the current economic conditions in Russia and Ukraine, although we will continue to monitor the situation. Spirit AeroSystems As of December 31, 2015, Other assets included $140 of receivables related to an indemnification from Spirit AeroSystems, Inc. (Spirit), for costs incurred related to pension...

  • Page 95
    ... 31, 2015 and 2014. Beginning balance - January 1 Additions for current year deliveries Reductions for payments made Changes in estimates Ending balance - December 31 Commercial Aircraft Commitments In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we...

  • Page 96
    ...to Boeing under the inventory supply agreement was $120. See Note 6. C-17 Production of the C-17 aircraft ended in the fourth quarter of 2015. At December 31, 2015, one aircraft remained unsold, while our backlog includes international orders for four C-17 aircraft that are scheduled for delivery in...

  • Page 97
    ... of the cost and time required to complete the work. BDS fixed-price contracts with significant development work include Commercial Crew, Saudi F-15, USAF KC-46A Tanker and commercial and military satellites. The operational and technical complexities of these contracts create financial risk, which...

  • Page 98
    ...early build aircraft, schedule delays, customer and supplier impacts and changes to price escalation factors has created significant pressure on program profitability. If risks related to this program, including risks associated with planned production rate increases or introducing and manufacturing...

  • Page 99
    ... Armed Services Board of Contract Appeals (ASBCA) for a contract adjustment for the price of the two satellite missions. In September 2009, the USAF exercised its option for a third satellite mission. During the third quarter of 2010, ULA submitted a claim to the USAF to re-price the contract value...

  • Page 100
    ... by the underlying commercial aircraft and certain other assets. Current outstanding credit guarantees expire within the next five years. Industrial Revenue Bonds Industrial Revenue Bonds (IRB) issued by the City of Wichita and St. Louis County were used to finance the purchase and/or construction...

  • Page 101
    ... as Boeing Capital interest expense on our Consolidated Statements of Operations. Total Company interest payments were $488, $511 and $551 for the years ended December 31, 2015, 2014 and 2013, respectively. We have $4,980 currently available under credit line agreements, of which $2,465 is a 364-day...

  • Page 102
    ...163 150 300 $9,964 2014 $250 4,223 2,394 1,657 201 161 184 $9,070 BCC Other Boeing Total debt At December 31, 2015, $163 of debt (non-recourse debt, notes and capital lease obligations) was collateralized by customer financing assets totaling $295. Scheduled principal payments for debt and minimum...

  • Page 103
    ... earned benefits under defined benefit pension plans. Nonunion and the majority of union employees that had participated in defined benefit pension plans will transition to a company-funded defined contribution retirement savings plan in 2016. We fund our major pension plans through trusts. Pension...

  • Page 104
    ...Ending balance Change in plan assets Beginning balance at fair value Actual return/(loss) on plan assets Company contribution Plan participants' contributions Settlement payments Benefits paid Exchange rate adjustment Ending balance at fair value Amounts recognized in statement of financial position...

  • Page 105
    ... of each year and the net periodic benefit cost for the subsequent year. December 31, Discount rate: Pension Other postretirement benefits Expected return on plan assets Rate of compensation increase 2015 4.20% 3.80% 7.00% 4.00% 2014 3.90% 3.50% 7.00% 3.80% 2013 4.80% 4.20% 7.50% 4.00% 2015 $74,188...

  • Page 106
    ...-point change in assumed health care cost trend rates would have the following effect: Effect on total of service and interest cost Effect on postretirement benefit obligation Plan Assets Investment Strategy The overall objective of our pension assets is to earn a rate of return over time to...

  • Page 107
    ...2.0% for global equity and commodities at December 31, 2015 and 2014. Risk Management In managing the plan assets, we review and manage risk associated with funded status risk, interest rate risk, market risk, counterparty risk, liquidity risk and operational risk. Liability matching and asset class...

  • Page 108
    December 31, 2015 Total Fixed income securities: Corporate U.S. government and agencies Mortgage backed and asset backed Municipal Sovereign Other Derivatives: Assets Liabilities Cash equivalents and other short-term investments Equity securities: U.S. common and preferred stock (1) Non-U.S. common ...

  • Page 109
    ... inputs such as cost, operating results, discounted future cash flows and market based comparable data. For those investments reported on a one-quarter lagged basis (primarily LPs) we use NAVs, adjusted for subsequent cash flows and significant events. Real estate and real asset NAV valuations are...

  • Page 110
    ... comprised of approximately 60% equities and 40% debt securities. The index fund is valued using a market approach based on the quoted market price of an identical instrument (Level 1). The expected rate of return on these assets does not have a material effect on the net periodic benefit cost. 94

  • Page 111
    ... under the Employee Retirement Income Security Act (ERISA), as well as rules governing funding of our non-U.S. pension plans, are expected to be minimal in 2016. In 2016 we expect to make contributions to our pension plans of approximately $100. Estimated Future Benefit Payments The table...

  • Page 112
    ... is incentive compensation issued primarily to our executives. The share-based plans expense and related income tax benefit were as follows: Years ended December 31, Stock options Restricted stock units and other awards Share-based plans expense Income tax benefit Stock Options In February 2013, we...

  • Page 113
    ... estimate as a result of vesting terms and changes in the stock price. Restricted Stock Units In February 2015, 2014 and 2013, we granted to our executives 590,778, 695,651 and 1,375,414 restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of $154.64...

  • Page 114
    ... deferred compensation among 23 investment funds including a Boeing stock unit account. Total expense related to deferred compensation was $63, $44 and $238 in 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, the deferred compensation liability which is being marked to market...

  • Page 115
    ... used all authorized funds or is otherwise terminated. As of December 31, 2015 and 2014, there were 1,200,000,000 shares of common stock and 20,000,000 shares of preferred stock authorized. No preferred stock has been issued. Changes in Share Balances The following table shows changes in each class...

  • Page 116
    ...Primarily relates to amortization of actuarial losses for the years ended December 31, 2015, 2014, and 2013 totaling $1,038, $661, and $1,516 (net of tax of ($570), ($367), and ($849)), respectively. These are included in the net periodic pension cost of which a portion is allocated to production as...

  • Page 117
    ... of cash flow hedges, we expect to reclassify losses of $156 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months. Ineffectiveness related to our hedges recognized in Other income was insignificant for the years ended December 31, 2015 and 2014. We have...

  • Page 118
    ...basis and are categorized using the fair value hierarchy. December 31, 2015 Total Level 1 Level 2 Assets Money market funds Available-for-sale investments: Commercial paper Corporate notes U.S. government agencies Other Derivatives Total assets Liabilities Derivatives Total liabilities $4,504 $4,504...

  • Page 119
    ... third party publications, or on the expected net sales price for the aircraft. Property, plant and equipment, Other assets and Acquired intangible assets were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets. For Level 3 assets that...

  • Page 120
    ...time deposits and other deposits, commercial paper, money market funds, Accounts payable and long-term payables. The carrying values of those items, as reflected in the Consolidated Statements of Financial Position, approximate their fair value at December 31, 2015 and 2014. The fair value of assets...

  • Page 121
    ...financial position, results of operations or cash flows. Note 21 - Segment Information We operate in five principal segments: Commercial Airplanes; Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), and Global Services & Support (GS&S), collectively Defense, Space & Security; and Boeing...

  • Page 122
    ... directly from the segments' internal financial reporting used for corporate management purposes. Depreciation and Amortization Years ended December 31, Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support Total Defense, Space...

  • Page 123
    Capital Expenditures Years ended December 31, Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support Total Defense, Space & Security Unallocated items, eliminations and other Total 2015 $889 128 98 62 288 1,273 $2,450 2014 $698 175 ...

  • Page 124
    ... benefit costs are allocated to business segments based on CAS, which is generally based on benefits paid. Assets Segment assets are summarized in the table below. December 31, Commercial Airplanes Defense, Space & Security: Boeing Military Aircraft Network & Space Systems Global Services & Support...

  • Page 125
    ... and $143 as a result of the 2007-2008 and 2009-2010 federal tax audit settlements. We recorded charges related to defined benefit pension plan changes of $334 in the first quarter of 2014. We increased our quarterly dividend from $0.73 to $0.91 in December 2014 and to $1.09 in December 2015. 109

  • Page 126
    ... material respects, the financial position of The Boeing Company and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted...

  • Page 127
    ... company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control...

  • Page 128
    ... in Item 8 of this report and is incorporated by reference herein. (c) Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2015 that have materially affected or are reasonably likely...

  • Page 129
    ... Airplane Programs division of Commercial Airplanes from April 2011 to April 2013; and Director of Human Resources for the Surveillance and Engagement division of Boeing Military Aircraft from May 2009 to April 2011. Executive Vice President, President and Chief Executive Officer of Boeing Defense...

  • Page 130
    ... Operations since joining Boeing in June 2008. Mr. Keating served as Senior Vice President, Global Government Relations at Honeywell International Inc. from October 2002 to May 2008. Prior thereto, Mr. Keating was Chairman of the Board and Managing Partner of Timmons and Company (a Washington...

  • Page 131
    ... Relations at Raytheon Company. Prior to that, he held a number of positions at Boeing including CFO, Shared Services Group; Controller, Shared Services Group; Senior Director, Internal Audit; and leadership roles in supply chain, factory operations and program management. Chief Technology Officer...

  • Page 132
    ...to officers and other employees, directors and consultants. Each of these compensation plans was approved by our shareholders. The following table sets forth information regarding outstanding options and shares available for future issuance under these plans as of December 31, 2015: Number of shares...

  • Page 133
    ... to the Company's Current Report on Form 8-K dated November 4, 2015). Five-Year Credit Agreement, dated as of November 10, 2011, among The Boeing Company, the Lenders party thereto, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as joint lead arrangers and joint book managers, JPMorgan...

  • Page 134
    ...-Q for the quarter ended September 30, 2014). (vi) Management Contracts and Compensatory Plans (vii) (viii) Deferred Compensation Plan for Directors of The Boeing Company, as amended and restated effective January 1, 2008 (Exhibit 10.2 to the Company's Current Report on Form 8-K dated October 28...

  • Page 135
    ... Company's Current Report on Form 8-K dated June 22, 2015). (g) (h) (i) (j) (12) Computation of Ratio of Earnings to Fixed Charges. (14) Codes of Ethics. (i) The Boeing Company Code of Ethical Business Conduct for Members of the Board of Directors (www.boeing.com/resources/boeingdotcom/company...

  • Page 136
    ...99) Additional Exhibits. (i) (101) Commercial Program Method of Accounting (Exhibit (99)(i) to the 1997 Form 10K). Interactive Data Files. (101.INS) (101.SCH...Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the Company are not filed herewith. Pursuant...

  • Page 137
    ... to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 10, 2016. THE BOEING COMPANY (Registrant) By: /s/ Robert E. Verbeck Robert E. Verbeck - Senior...

  • Page 138
    ... Financial Officer and Executive Vice President, Business Development and Strategy (Principal Financial Officer) /s/ Lynn J. Good Lynn J. Good - Director /s/ Robert E. Verbeck Robert E. Verbeck - Senior Vice President, Finance and Corporate Controller (Principal Accounting Officer) /s/ Lawrence...

  • Page 139
    ...per share data 2015 2014 2013 2012 2011 Revenues Earnings from operations, as reported Operating margins Unallocated pension and other postretirement benefit expense Core operating earnings (non-GAAP) Core operating margins (non-GAAP) Diluted earnings per share, as reported Unallocated pension and...

  • Page 140
    Selected Programs, Products and Services Boeing Commercial Airplanes The Boeing 737-700 737-800 Raymond L. Conner, Vice Chairman, President and Chief Executive Of ficer Renton, Washington, USA The Boeing 737 is the world's best-selling family of commercial jetliners. Today's Next-Generation 737-700...

  • Page 141
    ... LED Boeing and its family of companies are committed to helping customers around the world maximize the value of their ï¬,eets and operations, giving them a competitive advantage in their markets. Commercial Aviation Services offers the industry's largest portfolio of customer support and services...

  • Page 142
    ... is a twin-engine aircraft that provides close-air support of ground forces. In 2007, Boeing was awarded a contract to design and manufacture replacement wings for Boeing is designing advanced concepts to reduce the cost of on-demand space access. Currently, a Phantom Works team is working with the...

  • Page 143
    ... for long-range transport of equipment, supplies and military troops. The C-17 is used extensively to support combat operations, disaster response, humanitarian relief and aeromedical evacuation missions. Through the end of 2015, Boeing delivered 271 C-17s including 48 for international customers in...

  • Page 144
    ..., and a 12-year design life providing long-term service and reduced operating costs. With more than 540 years of on-orbit GPS service to date, Boeing continues to develop affordable solutions for future GPS capabilities. network. Accomplishments for 2015 include a predevelopment research contract to...

  • Page 145
    Selected Programs, Products and Services Boeing Defense, Space & Security H-47 Chinook continued The Chinook heavy-lift helicopter continues to be a key asset throughout the world even 50 years after its first ï¬,ight. It is currently operated in 17 countries, with two additional countries on ...

  • Page 146
    ... all eight aircraft and is negotiating options for four additional P-8Is. Boeing sustainment support includes maintenance, support equipment, spares, training, field service engineering and technical publications. 2015 deliveries: 14* Patriot Advanced Capability-3 (PAC-3) Missile Seeker aimpoint...

  • Page 147
    ...customers with products and services to address their specific needs: training and learning, infrastructure support services, and logistics information management systems. The company provides electronic Using the combined assets of the Boeing Delta and Lockheed Martin Atlas launch vehicle programs...

  • Page 148
    ... also can access their accounts to view their account history, account statements and tax reporting documents; change their address; certify their tax identification number; replace checks; request duplicate statements; make additional investments; and download a variety of forms related to stock...

  • Page 149
    ..., President and Chief Executive Officer, The Boeing Company Boeing director since 2015 Committee: Special Programs (Chair) Susan C. Schwab Professor, University of Maryland School of Public Policy; Former U.S. Trade Representative Boeing director since 2010 Committees: Audit; Finance Randall...

  • Page 150
    ... Vice President, Office of Internal Governance and Administration Gregory D. Smith Chief Financial Officer Executive Vice President, Corporate Development & Strategy John J. Tracy Chief Technology Officer Senior Vice President, Engineering, Operations & Technology Robert E. Verbeck* Senior Vice...

  • Page 151
    ... people of Boeing are developing ways to protect the planet and create a better tomorrow. The Boeing Company Annual Report was printed with 100 percent certified wind-powered energy on Forestry Stewardship Council® certified paper that contains at least 10 percent post-consumer waste. Copyright...

  • Page 152
    The Boeing Company 100 North Riverside Plaza Chicago, IL 60606-1596 USA