01—Abstract
Summary
Summary of the 10-K filed February 10, 2016. Cited figures are marked; the original filing is the authoritative source.
Boeing's 2015 10-K filing reveals a year of robust revenue growth, driven primarily by its Commercial Airplanes segment.
Total revenues increased by 6% to $96.11 billiona, largely due to higher airplane deliveries and a favorable mix. The Defense, Space & Security (BDS) segment experienced a slight revenue decline. The company's earnings from operations remained stable year-over-year, impacted by a significant $885 million charge on the 747 program and increased charges related to the KC-46A Tanker contract.
Despite these charges, Boeing demonstrated strong cash flow from operations and continued its commitment to returning capital to shareholders through share repurchases and dividends. Key risks highlighted include the cyclical nature of the commercial airline industry, dependence on major customers, potential cost overruns on fixed-price contracts (particularly in the BDS segment), and pressures from international competition. Boeing's substantial backlog of $476.6 billionb at year-end 2015 provides a degree of revenue visibility, but program execution, production rate ramp-ups, and managing R&D investments for new aircraft derivatives like the 737 MAX and 777X remain critical focus areas for future performance.
02—Key points
Key Highlights
- Total revenues increased by 6% to $96.11 billion in 2015, primarily driven by a 10% increase in Commercial Airplanes revenue.
- Earnings from operations were $7.44 billion, slightly down from $7.47 billion in 2014, impacted by program charges.
- A significant $885 million charge was recognized on the 747 program in Q4 2015 due to reduced production rates and market pressures.
- The company recorded reach-forward losses totaling $835 million on the KC-46A Tanker contract in 2015.
- Contractual backlog stood at $476.6 billion at year-end 2015, a decrease from $487.1 billion in 2014, reflecting deliveries exceeding net orders.
- Boeing continued share repurchases, announcing a new $14 billion repurchase plan in December 2015.
- Pension and postretirement benefit costs were a significant factor, with unallocated pension expense decreasing substantially in 2015 due to lower amortization and curtailment charges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Boeing Co kept $0.05.
- Revenue$96.11B100.0%
- Cost of revenue−$82.09B85.4%
- Gross profit$14.03B14.6%
- Operating costs−$6.58B6.8%
- Operating income$7.44B7.7%
- Interest, other & tax−$2.27B2.4%
- Net income$5.18B5.4%
Where FY2015 revenue went
$96.11B- Cost of revenue: $82.09B, 85% of revenue
- Net income: $5.18B, 5.4% of revenue
- R&D: $3.33B, 3.5% of revenue
- Other operating costs: $3.25B, 3.4% of revenue
- Interest, other & tax: $2.27B, 2.4% of revenue
Kept 5.4% as net incomeNet income $5.18B · 5.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 10, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $96.11B$90.76B | +5.9% |
| Cost of Revenue | $82.09B$76.75B | +7.0% |
| Gross Profit | $14.03B$14.01B | +0.1% |
| R&D Expenses | $3.33B$3.05B | +9.3% |
| Operating Income | $7.44B$7.47B | −0.4% |
| Net Income | $5.18B$5.45B | −5.0% |
| EPS (Basic) | $7.52$7.47 | +0.7% |
| EPS (Diluted) | $7.44$7.38 | +0.8% |
| Shares Outstanding (Basic) | 688.00M728.90M | −5.6% |
| Shares Outstanding (Diluted) | 695.00M736.70M | −5.7% |
05—Questions
Frequently Asked Questions
What was Boeing's revenue performance in 2015, and which segments drove this performance?
In 2015, Boeing's total revenues increased by 6% to $96.11 billion. The Commercial Airplanes segment was the primary driver of this growth, with revenues increasing by 10% due to higher new airplane deliveries and a favorable mix. The Defense, Space & Security (BDS) segment saw a slight revenue decrease of 2%.
What were the major charges impacting Boeing's profitability in 2015?
Boeing's profitability was impacted by several significant charges in 2015. These included a $885 million reach-forward loss recognized on the 747 program due to reduced production rates and market pressures, and additional reach-forward losses of $835 million on the USAF KC-46A Tanker contract. These charges were partially offset by lower unallocated pension and other postretirement benefit expenses.
How did Boeing manage its capital and shareholder returns in 2015?
Boeing generated strong cash flow from operations ($9.4 billion in 2015). The company continued its practice of returning capital to shareholders, repurchasing approximately 46.7 million shares for $6.8 billion and paying $2.6 billion in dividends. A new $14 billion share repurchase plan was announced in December 2015.
What are the key risks and uncertainties mentioned in the filing that could affect Boeing's future performance?
Key risks highlighted include the cyclical nature of the commercial airline industry, dependence on major commercial airline customers, potential cost overruns on fixed-price contracts (especially in the BDS segment), increased competition from international manufacturers, and the uncertainty surrounding U.S. government defense spending. Additionally, the company faces risks related to production rate ramp-ups, incorporating design changes on new aircraft programs like the 787, and managing R&D for upcoming programs like the 777X and 737 MAX.
06—Continue