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2016-Annual-Report.Pdf The Boeing Company 2016 Annual Report Creating Breakthroughs, Expanding Opportunities THE BOEING COMPANY 2015 ANNUAL REPORT Contents The Boeing Company Cover photo: The 737 MAX 8, seen on a test Operational Highlights 1 Boeing is the world’s largest aerospace company flight over Moses Lake, and leading manufacturer of commercial airplanes Wash., will fly farther and Chairman’s Message 2 offer operating costs that and defense, space and security systems. The top are 8 percent less than Connect, Protect, 5, 6, U.S. exporter, Boeing supports airlines and U.S. E xplore, Inspire 9, 10 its closest competitor. and allied government customers in more than The Executive Council 11 Photo above: The Bell 150 countries. Our products and tailored services Boeing V-22 Osprey is Business Highlights 12 include commercial and military aircraft, satellites, unlike any other aircraft. weapons, electronic and defense systems, launch It can take off and land Form 10-K 13 systems, advanced information and communication vertically and hover like a helicopter; once Caution Concerning 120 systems, and performance-based logistics and airborne, it can convert Forward-Looking Statements training. With corporate offices in Chicago, Boeing into a turboprop airplane Non-GAAP Measures 121 employs 148,000 people across the United States capable of high-speed, and in more than 65 countries. In addition, our high-altitude flight. Selected Programs, 122 Japan is the first interna- Products and Services enterprise leverages the talents of skilled people tional customer for the working for Boeing suppliers worldwide, including V-22, with nine tiltrotor Shareholder Information 130 1.5 million people at 13,600 U.S. companies. aircraft on contract. Board of Directors 131 Company Officers 132 At Boeing, our mission and purpose is to connect, protect, explore and inspire the world through aerospace innovation. Operational Highlights Achieved $94.6 billion in revenue, driven by helicopters and 22 P-8A Poseidon and four P-8I strong commercial airplane deliveries, services aircraft; contracts for low-rate initial production of growth and solid performance in our defense, 19 KC-46 Tanker aircraft; an award for a 702MP space and security business. Core operating satellite with new digital payload; and contracts earnings were $5.5 billion* with core earnings for F/A-18 spare parts and C-17 training. per share of $7.24*. Achieved significant Commercial Airplanes mile- Increased operating cash flow to a company stones, including completing the first flight of the record $10.5 billion and maintained strong liquidity 737 MAX 8, delivering the 500th 787 Dreamliner, with $10 billion in cash and marketable securities. and beginning final assembly of the first 787-10. Development of the new 777X progressed with the Repurchased 55 million shares for $7 billion, opening of the new 777X Composite Wing Center paid $2.8 billion in dividends, announced a further in Everett, Wash. 30 percent dividend increase and renewed a $14 billion share repurchase program. Achieved key defense, space and security mile- stones, including KC-46 test aircraft demonstrating Delivered 748 commercial airplanes, extending its aerial refueling capabilities; successfully our market leadership in airplane deliveries to a launching the first two of six Boeing-built Intelsat fifth consecutive year. Epic satellites; United Launch Alliance launching Delivered 178 military aircraft, along with 23,052 the eighth Wideband Global SATCOM satellite weapons systems and seven satellites, demon- with an upgraded digital payload; completing strating solid support for major programs in our digital flight deck upgrades on the first of 14 defense, space and security business. NATO Airborne Warning and Control System (AWACS) aircraft. Won $76 billion in net orders, including the largest services order in company history with Norwegian Announced the launch of our Boeing Global Air. Total company order backlog at year end Services business to strengthen our ability to exceeded $473 billion, including 5,700 commer- compete and win after-market support and cial airplanes valued at $416 billion. services business and to deliver new innovative service offerings. Maintained a solid defense, space and security order backlog of $57 billion, 37 percent of which Expanded international presence with new partner- comes from international customers. New and ships, including India engineering and technology follow-on business included domestic and inter- center, Skolkovo training and innovation center national contracts for 191 Apache and 12 Chinook and Tata Boeing Aerospace Limited. Financial Highlights 1 82952bo_txt.indd 1 3/7/17 8:15 PM 2 82952bo_txt.indd 2 3/7/17 8:15 PM To the Shareholders and Employees of The Boeing Company Inspired by our 2016 centennial, 2016 in Review Thanks to the hard work, dedication and ingenuity we have a bold vision for the of more than 148,000 employees and our U.S. and global partners, Boeing extended its broad future—an invigorated sense aerospace market leadership in 2016 by delivering on customer commitments, enhancing the safety, of what we can accomplish as quality and affordability of our work, and investing in our people, products and services while returning one team, One Boeing. Our significant value to shareholders. collective and abiding passion During the year, we generated strong revenue, solid core operating performance and record cash flows. for innovation, integrity and We also redoubled our focus on profitable long-term growth strategies, disciplined execution of our pro- technical excellence—along with duction and development programs, expanding our services business, and accelerating further quality our financial strength—is driving and productivity gains across the enterprise. exciting new breakthroughs and Total company revenue in 2016 was $94.6 billion, driven by strong commercial airplane deliveries, ser- expanding opportunities for us vices growth and solid performance in our defense, space and security business. We also won $76 billion and our customers to connect, in net new orders for our market-leading products and services, reinforcing our strong companywide protect, explore and inspire the backlog of $473 billion. world. It’s our turn to imagine Core earnings per share of $7.24* for the year reflected solid core operating performance compa- what comes next and bring it to nywide, offset by the reclassification of costs for two 787 Dreamliner flight-test airplanes, the impact of life—and we are up to the calling. decisions on 747 production rates, and higher costs on the KC-46 tanker and CST-100 development programs. Core operating earnings were nearly $5.5 billion*, and operating cash flow increased to a company-record $10.5 billion. Following through on our balanced cash deployment commitment, we repurchased 55 million shares of Boeing stock for $7 billion and paid $2.8 billion in dividends in 2016. In December, as a further sign of confidence in our long-term outlook, the Boeing board of directors authorized a new $14 billion share repurchase program and increased the quarterly dividend by 30 percent. Boeing Commercial Airplanes generated $65 bil- lion of revenue in 2016 and led the industry in deliveries for the fifth consecutive year with 748 air- planes. Booking 668 net new airplane orders worth $49 billion sustained a robust backlog of more than 5,700 airplanes valued at $416 billion—more than seven years of production at current rates. Full-year operating margins were 4.8 percent. Dennis A. Muilenburg, In the high-value twin-aisle airplane segment, we Chairman, President and extended our market and technology lead with key Chief Executive Officer milestones and steady progress on the 787 and Boeing delivered 18 P-8A Poseidon aircraft to the U.S. Navy and The Royal Australian Air Force in 2016. *Non-GAAP measures. See page 121. 3 82952bo_txt.indd 3 3/7/17 8:15 PM 777 programs. We delivered a record 137 787s from testing with launch customer Southwest Airlines. our production centers in Everett, Wash., and North With more than 3,600 orders from 83 customers Charleston, S.C., including the 500th Dreamliner around the world, the MAX is the fastest-selling overall, making the 787 the fastest twin-aisle jet in commercial airplane in Boeing history, and we history to hit that mark. Nearly 50 customers now continue to see capacity for additional orders as operate the 787 Dreamliner, and its game-changing large 737 operators announce their fleet expansion combination of range, size and fuel efficiency has and replacement plans. opened more than 130 new nonstop city-pairs that Despite a softening of near-term widebody demand previously were unserved by nonstop flights. The 787 that emerged in 2016 and our subsequent decisions stands on a strong foundation for long-term produc- to de-risk the 747 program and 777X transition with tion with a backlog of 700 orders and solid ongoing corresponding rate reductions, we remain strongly demand. Flight testing of the 787-10, our third and positive about our commercial airplanes business. largest Dreamliner model, will begin early this year, We are on track to steadily increase production over with first delivery in 2018. the next five years to more than 900 airplanes annu- Our next new twin-aisle airplane, the 777X, remains ally, based on previously announced rate increases. on track to enter service in 2020. In 2016, we opened The 737 production rate will rise from the current 42 new production facilities for the program in Everett, airplanes per month to 47 in the third quarter of 2017, Wash., and St. Louis, Mo., and began manufacturing followed by 52 per month in 2018 and 57 per month components for pre-production testing. With a cur- in 2019. On the strength of its commercial freighter rent backlog of 340 orders and commitments from and military tanker backlog, 767 production is slated seven customers, including a major win at Singapore to increase to 2.5 per month from 2 per month in the Airlines announced in February 2017, the 777X is fourth quarter of 2017.
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