The Boeing Company 100 North Riverside Plaza Chicago, IL 60606-1596 Leading Ahead USA The Boeing Company 2014 Annual Report The Boeing Company Contents Boeing is the world’s largest aerospace Operational Highlights 1 company and leading manufacturer Message From Our Chairman 2 Engagement of commercial airplanes and defense, The Executive Council 8 space and security systems. The top U.S. exporter, Boeing supports airlines Form 10-K 9 and U.S. and allied government Non-GAAP Measures 122 customers in more than 150 countries. Our products and tailored services Selected Programs, Products and Services 123 include commercial and military air- craft, satellites, weapons, electronic Shareholder Information 132 and defense systems, launch systems, Board of Directors 133 advanced information and communica- Company Officers 134 tion systems, and performance-based logistics and training. With corporate offices in Chicago, Boeing employs more than 165,000 people across the United States and in more than 65 countries. In addition, our enterprise leverages the talents of hundreds of thousands of skilled people working for Boeing suppliers worldwide. Visit us at boeing. Visit us at boeing. com/investorrelations com/community to to view our annual view our Corporate reports and to find Citizenship Report additional information and other information about our financial about how Boeing is performance and working to improve Boeing business communities world- practices. wide. Cover image: Artist concept of Boeing’s CST-100, the next-generation Visit us at boeing. Visit us at boeing. human-rated space- com to learn more com/environment to craft for NASA’s Crew about Boeing and view our current Transportation Sys- how extraordinary Environment Report tem, shown approach- innovations in our and information on ing the International products and how the people of Space Station. services are helping Boeing are developing solve the world’s ways to protect the Photo above: In toughest problems. planet and create a 2014, the Boeing 787 better tomorrow. ecoDemonstrator test- ed more than 25 new technologies aimed at improving aviation’s environmental perfor- mance through every phase of flight. The Boeing Company Annual Report was printed with 100 percent certified wind-powered energy on Forestry Stewardship Council TM certified paper that contains at least 10 percent post-consumer waste. Copyright © 2015 Boeing. All rights reserved. Printed in the USA Operational Highlights Achieved record revenues of $90.8 bil- Maintained a Defense, Space & Security At Boeing, we lion, compared to $86.6 billion in 2013, backlog of $62 billion, 36 percent with aspire to be the while reporting record core operating international customers, with new earnings of $8.9 billion* and record core and follow-on business that included strongest, best earnings per share of $8.60*. U.S. Navy contracts for 16 P-8A Poseidons, and 44 E/A-18G Growler Added $152 billion in net new orders, and F/A-18 Super Hornet aircraft; a and best-integrated expanding our record company backlog U.S. Army contract for 82 Apache to $502 billion—more than five-and-a- aerospace-based Block III helicopters; and a $4.2 billion half times current annual revenues. NASA contract to build and fly the company in the Generated strong operating cash flow Crew Space Transportation vehicle. of $8.9 billion, and maintained healthy world—for today Achieved significant Commercial liquidity with cash and marketable Airplanes milestones, including securities of $13.1 billion. and tomorrow. deliveries of the first Boeing 787-9 Announced a further increase in Dreamliner™, the 8,000th 737 and dividends of 25 percent for 2015 and the 1,500th 747; start of part pro- authorized $12 billion for the largest duction for the first 737 MAX; and share repurchase authorization in ground-breaking of the new 777X company history. composite centers in Everett, Washington, and St. Louis. Further extended market-share leader- ship by delivering an industry record Reached key Defense, Space & Security 723 commercial airplanes, with all milestones, including first flight test for three Commercial Airplanes production the KC-46A Tanker program; delivery sites—Everett and Renton, Washington, of the 100th EA-18G Growler to the and North Charleston, South Carolina— U.S. Navy; completion of the first two setting new records for deliveries. all-electric–propulsion 702SP satellites; delivery of the sixth P-8I aircraft to India Delivered 179 military aircraft, along and eight P-8As to the U.S. Navy; and with 10,998 weapons systems and five delivery of the first of up to 215 U.S. Army satellites, despite extremely challenging Chinooks under a multiyear contract. defense, space and security markets. Booked a record 1,432 net new com- mercial airplane orders, expanding our largest-ever backlog to 5,789 airplanes valued at $440 billion. *Non-GAAP measures. See page 122. Financia l Highlights U.S. dollars in millions except per share data 2014 2013 2012 2011 2010 Revenues 90,762 86,623 81,698 68,735 64,306 Core operating earnings* 8,860 7,876 7,189 6,340 4,951 Core operating margins* 9.8% 9.1% 8.8% 9.2% 7.7% Core earnings per share* 8.60 7.07 5.88 5.79 4.45 Operating cash flow 8,858 8,179 7,508 4,023 2,952 Contractual backlog 487,092 422,661 372,355 339,657 303,955 Total backlog† 502,391 440,928 390,228 355,432 320,826 * Non-GAAP measures. See page 122. † Total backlog includes contractual and unobligated backlog. See pages 23-24 of the Form 10-K. 1 Letter to the Shareholders and Employees of The Boeing Company Our Legacy Bill Boeing founded our company 99 years ago this July with a passion for the emerging science of flight, an innovative spirit and a belief that he and his team could build a better airplane than anyone else. As we approach the start of our 100th year in business, we do so with renewed confidence in our capabilities, winning strategies for our markets and time-tested resolve to continue leading our industry through innovation inspired by our customers’ needs, and fueled by the talents, technologies and teamwork of our employees and global partners. W. James McNerney, Jr. Chairman and Chief Executive Officer 2 2014 Review company record and increased our record In the single-aisle market, we won more In 2014, Boeing delivered another strong backlog to nearly 5,800 airplanes worth than 1,000 combined orders for the year of growth and improved operational $440 billion. Operating margins were a Next-Generation 737 and 737 MAX for the performance. We set new records, healthy 10.7 percent, including strong per- third consecutive year. We also reached reached key milestones and significantly formance in our services business. our highest-ever 737 production rate of 42 per month, and launched the 737 MAX advanced initiatives that will fuel our The 787 program set a twin-aisle industry 200 with a 100-plane order from Ryanair. success for years to come. record with 114 deliveries at our planned The higher-capacity MAX 200 will increase production rate of 10 per month—the Higher commercial airplane deliveries airline revenue potential and have 20 per- highest ever for a twin-aisle jet—across drove revenue up 5 percent to a record cent better fuel efficiency per seat than our two final assembly sites in Everett, $90.8 billion. High demand for our market- today’s most efficient single-aisle airplanes. Washington, and North Charleston, South leading products and services produced Demand for the 737 MAX family remains Carolina. We also completed flight testing $152 billion in new orders, boosting total high with cumulative orders for more than and certification of the 787-9 and deliv- company backlog to a record $502 billion. 2,700 airplanes from 57 customers. ered the first 10 of these higher-capacity, Strong core operating performance longer-range 787 models. To profitably build out our backlog and companywide raised core earnings per create capacity for new orders, our plans With cumulative deliveries approaching share 22 percent to a record $8.60*. Core call for five additional production rate 250 airplanes and 30 customers, the operating earnings grew for the fifth con- increases. The 787 will rise to 12 per 787 fleet is averaging more than 500 secutive year to $8.9 billion*. Operating month in 2016 and to 14 per month by flights per day and has safely flown more cash flow also increased 8 percent to the end of the decade; 737 production than 39 million passengers since entering $8.9 billion. will increase to 47 per month in 2017 and service. Airlines flying the 787 have saved 52 per month in 2018; and the 767 will On these strong performance trends and 1.7 billion pounds of fuel and are opening move from 1.5 per month to two per our positive outlook, we announced in new routes between city pairs never month in 2016. December a 25 percent increase in the before connected by direct flights, thanks quarterly dividend and a new share- to its mix of fuel efficiency, range and Overall, we project demand for 36,770 repurchase authorization totaling passenger comfort. new airplanes over the next 20 years at a $12 billion—part of our commitment to total value of $5.2 trillion—a highly attrac- Additional twin-aisle milestones included: return increased value to shareholders tive market in which our superior products as we invest and grow. Achieving firm configuration of the and technologies have us poised for Boeing Commercial Airplanes had rev- 787-10. sustained growth in the years ahead. enues of $60 billion on an industry record Finalizing 220 orders for the new 777X.