The Boeing Company (BA)

Boeing (NYSE:BA) | Products & Business Segments

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The Boeing Company, together with its subsidiaries, is one of the world's largest aerospace companies and a leading manufacturer of commercial jet aircraft and defense, space and security systems. The company supports airlines and U.S. and allied government customers in 150 countries. Boeing's products and services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, as well as performance-based logistics and training. In 1916, Boeing was incorporated in Seattle by William Boeing (as Pacific Aero Products Co.) but renamed the Boeing Airplane Co. the following year. Today, the company is incorporated in Delaware with corporate offices located in Chicago.

Boeing operates in five principal business segments:

 

Commercial Airplanes
Boeing Defense, Space & Security (BDS)
      Boeing Military Aircraft (BMA)
      Network & Space Systems (N&SS)
      Global Services & Support (GS&S)
Boeing Capital Corporation (BCC)
• Other.



The following table highlights Boeing's sales from 2011 to 2013 by segment:
Boeing's Segment Sales



Boeing's "Other Segments" includes the unallocated activities of Engineering, Operations & Technology (EO&T) and Shared Services Group (SSG), as well as intercompany guarantees provided to BCC. EO&T provides Boeing with technical and functional capabilities, including information technology, research and development, test and evaluation, technology strategy development, environmental remediation management and intellectual property management.

On February 24, 2011, Boeing was awarded a contract from the U.S. Air Force to design, develop, manufacture and deliver 4 next generation aerial refueling tankers. The KC-46A Tanker is a derivative of the 767 commercial aircraft. This contract is a fixed-price incentive firm contract valued at $4.9 billion and involves highly complex designs. Changes to Boeing's estimated cost to perform the work could result in a material charge. This contract also contains production options. If all options under the contract are exercised, the company expects to deliver 179 aircraft for a total expected contract value of approximately $30 billion. For segment reporting purposes, backlog, revenues and costs are recorded in both the Commercial Airplanes and BMA segments.


Commercial Airplanes

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The Commercial Airplanes segment develops, produces and markets commercial jet aircraft and provides related support services, principally to the commercial airline industry worldwide. Boeing is a leading producer of commercial aircraft and offers a family of commercial jetliners designed to meet a broad spectrum of passenger and cargo requirements of domestic and non-U.S. airlines. This family of commercial jet aircraft in production includes the 737 narrow-body model and the 747, 767, 777 and 787 wide-body models. Development continues on the 787-9, 787-10 and 737 MAX derivatives. In November 2013, Boeing launched the 777X, which features a new composite wing, new engines and folding wing-tips all designed to deliver greater efficiency and significant fuel savings. The Commercial Airplanes segment also offers aviation services support, aircraft modifications, spares, training, maintenance documents and technical advice to commercial and government customers worldwide.

Boeing's primary commercial airplane manufacturing and assembly locations are Everett and Renton in Washington State and Charleston, South Carolina. In Everett, Boeing assembles the company's wide-body aircraft families: 747-8, 767, 777 and 787. In Renton, Boeing assembles its 737NG Family of narrow-body aircraft. In Charleston, Boeing fabricates and assembles the 787 aft fuselage sections and integrates these with the center fuselage.

     Financial results for Boeing's Commercial Airplanes segment were as follows:
Performance of Boeing's principal lines of business

Revenues in 2013 increased by $3,854 million or 8% compared with 2012 due to higher deliveries of new airplane.

Earnings from operations in 2013 increased by $1,084 million or 23% compared with 2012. Earnings increased by $842 million primarily driven by higher new airplane deliveries and lower research and development costs of $242 million due to lower spending on the 787 program partially offset by higher spending on the 737 MAX and 777X. Operating margins increased from 9.6% in 2012 to 10.9% in 2013 primarily due to higher deliveries and lower research and development costs partially offset by the dilutive impact of 787 deliveries.

     Deliveries of commercial aircraft by model: Boeing - deliveries of commercial aircraft


Boeing Defense, Space & Security (BDS)

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The BDS operations principally involve research, development, production, modification and support of the following products and related systems: global strike systems, including fighters, bombers, combat rotorcraft systems, weapons and unmanned systems; global mobility systems, including transport and tanker aircraft, rotorcraft transport and tilt-rotor systems; airborne surveillance and reconnaissance aircraft, including command and control, battle management and airborne anti-submarine aircraft; network and tactical systems, including information and battle management systems; intelligence and security systems; missile defense systems; space and intelligence systems, including satellites and commercial satellite launching vehicles; and space exploration. BDS focuses on providing affordable, best-of-industry solutions and brings value to customers through its ability to solve the most complex problems utilizing expertise in large-scale systems integration, knowledge of legacy platforms and development of common network-enabled solutions across all customers' domains.

BDS' primary customer is the United States Department of Defense (DoD) with 67%, 70%, 76% and 82% of BDS revenues being derived from this customer in 2013, 2012, 2011 and 2010, respectively. Other significant revenues were derived from the National Aeronautics and Space Administration (NASA) and international defense markets, civil markets and commercial satellite markets.

BDS consists of three capabilities-driven businesses: Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), and Global Services & Support (GS&S). Additionally, the Phantom Works group is an integrated team that works with the three businesses via product development, rapid prototyping and customer engagement through experimentation and enterprise technology investment strategies.

     Financial results for Boeing's BDS segment were as follows:
Performance of Boeing's principal lines of business

BDS revenues in 2013 increased by $590 million compared with 2012 due to higher revenues of $601 million and $72 million in the N&SS and GS&S segments, partially offset by lower revenues of $83 million in the BMA segment.

BDS earnings from operations in 2013 increased by $167 million compared with 2012 due to higher earnings of $157 million and $34 million in the N&SS and GS&S segments, partially offset by lower earnings of $24 million in the BMA segment. Included above are net favorable cumulative contract catch-up adjustments, which were $137 million lower in 2013 compared with 2012, primarily reflecting lower favorable adjustments in the BMA segment.



Boeing Military Aircraft


Boeing Military Aircraft (BMA) is engaged in the research, development, production and modification of manned and unmanned military weapons systems for the global strike, mobility and surveillance and engagement markets as well as related services. The major programs in this segment include for global strike: EA-18G Growler Airborne Electronic Attack Aircraft, F/A-18E/F Super Hornet, F-15 Strike Eagle, and Joint Direct Attack Munition; for vertical lift: AH-64 Apache, CH-47 Chinook, and V-22 Osprey; for unmanned airborne systems programs: ScanEagle; and for mobility, surveillance and engagement: Airborne Early Warning and Control (AEW&C), C-17 Globemaster III, P-8A Poseidon, India P8-I, and KC-46 Tanker.

During 2011, BMA production deliveries concluded on the F-22 Raptor and KC-767 International Tanker programs.

Financial results for BDS' BMA group were as follows:
Performance of Boeing's principal lines of business

BMA revenues in 2013 decreased by $83 million compared with 2012 primarily due to a reduction of $1,299 million related to fewer deliveries of AEW&C aircraft, and customer and delivery mix for the F/A-18 and C-17 programs. This reduction was partially offset by an increase of $1,168 million related to higher 2013 deliveries of P-8 aircraft and Apache rotorcraft, as well as non-recurring effort on several Chinook programs.

BMA earnings from operations in 2013 decreased by $24 million compared with 2012 primarily due to lower earnings on the AEW&C and higher 2012 earnings related to the initial revenues on the Saudi F-15 program. The lower earnings were partially offset by higher earnings on the P-8 and Apache program due to increased deliveries and higher revenues. Net favorable cumulative contract catch-up adjustments were $146 million lower in 2013 than in 2012, primarily driven by less favorable adjustments to the F-15 program and unfavorable adjustments to the AEW&C program. In the third quarter of 2013, Boeing decided to end production of C-17 aircraft in 2015. Also in the third quarter of 2013, Boeing recorded a charge of $64 million to write off inventory and accrue termination liabilities as a result of The Republic of Korea's announcement that it will restart its F-X fighter aircraft competition.

     Deliveries of new-build production aircraft, excluding remanufactures and modifications: Boeing - deliveries of military aircraft



Network & Space Systems


Network & Space Systems (N&SS) is engaged in the research, development, production and modification of the following products and related services: electronics and information solutions, including command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR), cyber and information solutions, and intelligence systems; strategic missile and defense systems; space and intelligence systems, including satellites and commercial satellite launch vehicles; and space exploration.

The major programs in this segment include for electronics and information systems: Family of Advanced Beyond Line-of-Sight Terminals (FAB-T); for strategic missile and defense systems: Ground-based Midcourse Defense (GMD); for space and intelligence systems: commercial, civil and military satellites, including the Global Positioning System (GPS) and Wideband Global SATCOM system; and for space exploration: International Space Station and Space Launch System (SLS).

During 2011, the Brigade Combat Team Modernization (BCTM) and Space Shuttle programs concluded.

This segment also includes Boeing's joint venture operations related to United Launch Alliance (ULA) and United Space Alliance (USA).

     Financial results for BDS' N&SS group were as follows:
Performance of Boeing's principal lines of business

N&SS revenues in 2013 increased by $601 million compared with 2012 primarily due to higher revenues of $364 million on the Space Launch System program awarded in the fourth quarter of 2012 and higher revenues of $329 million in commercial satellite programs. This increase was partially offset by lower revenues of $196 million on electronic and information solutions programs.

N&SS earnings from operations in 2013 increased by $157 million or 28% compared with 2012 primarily due to higher revenues and mix in civil and commercial satellite programs and the Space Launch Systems program. These increases were partially offset by lower earnings from Boeing's United Space Alliance (USA) joint venture reflecting a gain of $39 million recorded in the third quarter of 2012 related to the termination and settlement of USA's defined benefit pension plans. The impact of net favorable cumulative contract catch-up adjustments was not significant in 2013.

     Delta launch vehicle and new-build satellite deliveries were as follows: Boeing - deliveries of satellites and launch vehicles

Global Services & Support


Global Services & Support (GS&S) is engaged in the operations, maintenance, training, upgrades and logistics support functions for military platforms and operations. Included in this segment are the following activities: Integrated Logistics on platforms including AEW&C, AH-64, AV-8B, C-17, CH-47, F-15, F/A-18, F-22, GMD Operations and Support (O&S), KC-767 International Tanker and V-22; Maintenance, Modifications and Upgrades on platforms including A-10, B-1B, B-2, B-52, C-32, C-40, C-130, E-4B, E-6B, KC-10, KC-135, QF-16, T-38 and VC-25; Training Systems and Services on platforms including AH-64, C-17, F-15, F-16, F/A-18, P-8A and T-45; and Defense and Government Services including the Infrastructure and Range Services, Log C2 and LogNEC programs.

     Financial results for BDS' GS&S group were as follows:
Performance of Boeing's principal lines of business

GS&S revenues in 2013 increased by $72 million compared with 2012 primarily due to higher revenues on several Maintenance, Modification and Upgrade (MM&U) and Training Systems & Government Services (TSGS) programs, partially offset by decreases in several Integrated Logistics (IL) programs.

GS&S earnings from operations in 2013 increased by $34 million compared with 2012 primarily due to higher revenues and improved performance on several TSGS programs. Net favorable cumulative contract catch-up adjustments in 2013 were largely unchanged from 2012.




Boeing Capital Corporation Segment

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In the commercial aircraft market, BCC facilitates, arranges, structures and provides selective financing solutions for Boeing's Commercial Airplanes customers. In the space and defense markets, BCC primarily arranges and structures financing solutions for Boeing's BDS government customers. BCC's portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease and investments.

BCC's customer financing and investment portfolio at December 31 totaled $3,921 million and $4,066 million in 2013 and 2012, respectively. A substantial portion of BCC's portfolio is concentrated among certain U.S. commercial airline customers. BCC's portfolio is also concentrated by varying degrees across Boeing aircraft product types most notably out-of-production aircraft such as B717.

Company Information

Revenues ('13): $86,623M +6.0%

R&D ('13): $3,071M -6.9%

Net Profit ('13): $4,585M +17.6%

CAPEX ('13): $2,098M +23.2%

Boeing - OEM

Products News Subsidiaries Acquisitions Competitors Customers R&D Spending 5-Year Financials

Aerospace Sector:

   

Major Diversified OEM

Boeing Products:


Commercial wide-body jet aircraft; Commercial narrow-body jet aircraft; Commercial jet freighter aircraft; Commercial aircraft financing solutions; Fighter and attack aircraft; Bombers; Military transport and tanker aircraft; Military rotorcraft and tilt-rotor aircraft; Airborne surveillance and reconnaissance aircraft; Airborne command and control aircraft; Naval warfare aircraft; UAVs/UAS; Air-to-ground missiles (AGM); Smart bombs; Smart bomb kits; Missile defense systems; Network and tactical systems; Battle management systems; Intelligence and security systems; Space and intelligence systems; Satellites; Satellite launch vehicles; Space exploration services;

Boeing's Major U.S. Defense Programs:


| A-10 | DoD Prime ContractorAH-64 | DoD Prime ContractorAV-8B | DoD Prime ContractorB-1B | DoD Prime ContractorB-52 | DoD Prime ContractorC-17 | DoD Prime ContractorC-40 | DoD Prime ContractorCH-47 | DoD Prime ContractorE-3 |
| DoD Prime ContractorE-4B | DoD Prime ContractorE-6B | DoD Prime ContractorEELV | DoD Prime ContractorF-15 | DoD Prime ContractorF/A-18E/F | DoD Prime ContractorEA-18G |
| DoD Prime ContractorF-22 Raptor | DoD Prime ContractorGMD | GPS | DoD Prime ContractorHellfire | DoD Prime ContractorKC-10 | DoD Prime ContractorKC-46 | DoD Prime ContractorJDAM | DoD Prime ContractorJTRS |
| DoD Prime ContractorP-8A Poseidon | DoD Prime ContractorSmall Diameter Bomb | DoD Prime ContractorV-22 Osprey | DoD Prime ContractorWGS |

Boeing's Commercial Programs:


| Boeing: 737NG, 737 MAX (dev.), 747-8, 767, 777, 777X (dev.), 787 |

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