EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO    News Release

 

 

     

 

The Boeing Company

100 North Riverside Plaza

Chicago, IL 60606-1596

www.boeing.com

Boeing Reports Second-Quarter Financial Results, Reaffirms Guidance

 

•  

Second-quarter revenues steady at $17.0 billion

 

•  

Net income was $0.9 billion with EPS of $1.16 per share, including a previously disclosed charge of $0.22 per share

 

•  

First-half EPS grew 13 percent to $2.79 per share as revenue grew 2 percent to $33.0 billion

 

•  

Backlog at record $346 billion

 

•  

2008 and 2009 financial guidance reaffirmed

Table 1. Summary Financial Results

 

     2nd Quarter           First Half        

(Millions, except per share data)

    2008     2007     Change     2008     2007     Change  

Revenues

    $ 16,962     $ 17,028     (0 )%   $ 32,952     $ 32,393     2 %

Earnings From Operations

    $ 1,247     $ 1,506     (17 )%   $ 3,046     $ 2,815     8 %

Operating Margin

     7.4 %     8.8 %   (1.4 )Pts     9.2 %     8.7 %   0.5 Pts  

Reported Net Income

   $ 852     $ 1,050     (19 )%   $ 2,063     $ 1,927     7 %

Reported Earnings per Share

    $ 1.16     $ 1.35     (14 )%   $ 2.79     $ 2.48     13 %

Operating Cash Flow

    $ (251 )   $ 3,634     N.A.     $ 1,682     $ 4,362     (61 )%

CHICAGO, July 23, 2008 – The Boeing Company’s [NYSE: BA] second-quarter earnings per share decreased 14 percent to $1.16 per share, on revenue of $17.0 billion and an operating margin of 7.4 percent. Results were affected by the previously disclosed charge for the Airborne Early Warning & Control (AEW&C) program and lower profitability due to mix and timing in Commercial Airplanes, partially offset by lower centralized costs (Table 1).

For the first half of 2008, revenue grew 2 percent to $33.0 billion, operating margin grew to 9.2 percent, net income rose 7 percent to $2.1 billion, and earnings per share increased 13 percent to $2.79 per share, despite the AEW&C charge. Results reflected good performance in the company’s core businesses and lower unallocated costs.

Boeing reaffirmed its 2008 earnings per share guidance of between $5.70 and $5.85 as well as its 2009 earnings per share guidance of between $6.80 and $7.00.

 

1

“While we faced some challenges this quarter that affected our results, we remain confident in our outlook for the remainder of this year and 2009,” said Chairman, President and CEO Jim McNerney. “Strong global demand for our products and services, a record backlog, and a sustained focus on productivity improvement and execution will continue to drive growth and profitability for this company.”

Second-quarter operating cash flow was ($0.3) billion, reflecting a planned increase in working capital requirements, mostly inventory for 787 (Table 2). First-half operating cash flow was $1.7 billion, and free cash flow* was $0.9 billion. Total company backlog at quarter-end was $346 billion, up 6 percent year-to-date driven by commercial airplane orders.

Table 2. Cash Flow

 

     2nd Quarter     First Half  

(Millions)

    2008     2007     2008     2007  

Operating Cash Flow 1

    $ (251 )   $ 3,634     $ 1,682     $ 4,362  

Less Additions to Property, Plant & Equipment

    $ (398 )   $ (414 )   $ (807 )   $ (865 )
                                

Free Cash Flow*

    $ (649 )   $ 3,220     $ 875     $ 3,497  

 

1

Operating cash flow includes $517 in pension plan contributions in first half of 2008 and $523 in first half 2007, both mostly in 1Q.

*

Non-GAAP measure. A complete definition and reconciliation of Boeing’s use of non-GAAP measures, identified by an asterisk (*), is found on page 8, “Non-GAAP Measure Disclosure.”

Cash and investments in marketable securities totaled $10.2 billion at quarter-end, down from the end of the first quarter but essentially unchanged from the same period last year (Table 3). During the quarter, the company returned $1.2 billion to shareholders by repurchasing 11.0 million shares for $859 million and paying $300 million in dividends. Share repurchases in the first half totaled $2.1 billion for 26.6 million shares.

Table 3. Cash, Marketable Securities and Debt Balances

 

     Quarter-End

(Billions)

    2Q08    1Q08

Cash

    $ 5.6    $ 7.7

Marketable Securities1

    $ 4.6    $ 4.4
             

Total

    $ 10.2    $ 12.1

Debt Balances:

      

The Boeing Company

    $ 3.9    $ 3.9

Boeing Capital Corporation

    $ 4.3    $ 4.3
             

Total Consolidated Debt

    $ 8.2    $ 8.2

 

1

Marketable securities consists primarily of investments in high-quality fixed-income and asset-backed securities classified as “short-term investments” and “investments.” At June 30, 2008, it also includes time deposits of $1.2 billion and commercial paper of $0.2 billion classified as “short-term investments.” At March 31, 2008, it also included time deposits of $1.5 billion and commercial paper of $0.1 billion classified as “short-term investments.”

 

2

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes (BCA) second-quarter revenues were $8.6 billion, 2 percent below the same period last year, driven by customer and model mix and lower aircraft trading revenues, partially offset by higher delivery unit volume (Table 4). Operating earnings were $777 million versus $960 million in the year ago period due to customer and model mix, as well as timing of period expenses and infrastructure costs absorbed by the production programs due to the 787 schedule push-out announced in April.

Table 4. Commercial Airplanes Operating Results

 

     2nd Quarter           First Half        

(Millions, except deliveries & margin percent)

    2008     2007     Change     2008     2007     Change  

Commercial Airplanes Deliveries

      126       114     11 %     241       220     10 %

Revenues

    $ 8,567     $ 8,707     (2 )%   $ 16,728     $ 16,262     3 %

Earnings from Operations

    $ 777     $ 960     (19 )%   $ 1,760     $ 1,666     6 %

Operating Margins

      9.1 %     11.0 %   (1.9 )Pts     10.5 %     10.2 %   0.3 Pts  

For the first half, BCA revenues rose 3 percent to $16.7 billion on higher deliveries partially offset by lower aircraft trading volume and customer mix. Operating earnings grew 6 percent to $1.8 billion while margins expanded to 10.5 percent driven by higher deliveries and lower R&D, partially offset by higher period expenses, and the infrastructure cost absorption noted above.

BCA booked 187 gross orders during the quarter and 476 during the first half. Contractual backlog rose to a record $275 billion, increasing 8 percent year-to-date to nearly eight times BCA’s annual revenues.

Progress on the new 787 Dreamliner continues on the revised schedule announced in April. Having completed the power-on milestone, the program is in the final stages of assembly of the first airplane in preparation for flight test. While Boeing continues to address challenges associated with assembly of the initial airplanes, the program has achieved meaningful improvements in the completeness of structure and systems installation. The company completed its acquisition of a 50 percent equity interest in Global Aeronautica which will allow Boeing to exercise greater operational control of this key 787 integration facility. The risks that are always inherent in the latter stages of new airplane program production still remain. The company expects the first flight of the 787 to occur in the fourth quarter of 2008 with first delivery in the third quarter of 2009. To date, the program has won orders for 896 airplanes from 58 customers.

 

3

Integrated Defense Systems

Boeing Integrated Defense Systems (IDS) reported second-quarter revenue of $7.9 billion, virtually unchanged from last year. Operating earnings were $637 million and were affected by the previously disclosed $248 million charge on the AEW&C program. This charge reduced IDS operating margins by 3.2 points to 8.0 percent.

For the first half, IDS revenue declined slightly to $15.5 billion, operating earnings declined 9 percent to $1.5 billion and operating margins declined to 9.7 percent, reduced 1.6 points by the charge.

Table 5. Integrated Defense Systems Operating Results

 

     2nd Quarter           First Half        

(Millions, except margin percent)

    2008     2007     Change     2008     2007     Change  

Revenues

             

Precision Engagement & Mobility Systems

    $ 3,293     $ 3,416     (4 )%   $ 6,549     $ 6,743     (3 )%

Network & Space Systems

    $ 2,802     $ 2,902     (3 )%   $ 5,495     $ 5,680     (3 )%

Support Systems

    $ 1,839     $ 1,654     11 %   $ 3,465     $ 3,266     6 %
                                            

Total IDS Revenues

    $ 7,934     $ 7,972     (0 )%   $ 15,509     $ 15,689     (1 )%

Earnings (Loss) from Operations

             

Precision Engagement & Mobility Systems

    $ 160     $ 405     (60 )%   $ 549     $ 838     (34 )%

Network & Space Systems

    $ 237     $ 257     (8 )%   $ 504     $ 405     24 %

Support Systems

    $ 240     $ 193     24 %   $ 444     $ 396     12 %
                                            

Total IDS Earnings from Operations

    $ 637     $ 855     (25 )%   $ 1,497     $ 1,639     (9 )%

Operating Margins

      8.0 %     10.7 %   (2.7 )Pts     9.7 %     10.4 %   (0.7 )Pts

Precision Engagement & Mobility Systems, which was just renamed Boeing Military Aircraft, reported second-quarter revenues slightly lower at $3.3 billion because of fewer aircraft deliveries. Although overall production program performance was strong, the operating margins were 4.9 percent for the quarter due to the charge noted above which reduced margins by 7.5 points.

For the quarter, revenues in Network & Space Systems declined slightly to $2.8 billion on lower Proprietary volume. Operating margins of 8.5 percent were due to solid performance across the segment’s broad array of programs partially offset by lower Proprietary earnings. N&SS achieved significant milestones on several key programs in the quarter including Future Combat Systems’ successful completion of the Joint Expeditionary Force Experiment.

Support Systems again generated strong growth and profitability on its broad portfolio of services and logistics programs. Revenues rose 11 percent to $1.8 billion on growth in integrated logistics and aircraft modifications. Operating earnings rose 24 percent to $240 million, and the operating margin grew to 13.1 percent on solid program execution, productivity improvements and contract mix.

 

4

The IDS backlog at quarter-end was $71.3 billion, down from the beginning of the quarter reflecting current-period revenues that exceeded new orders. Significant new awards in the quarter included a follow-on Republic of Korea contract for F-15Ks , KC-135 Programmed Depot Maintenance and a significant Proprietary contract.

Boeing Capital Corporation

Boeing Capital Corporation (BCC) reported second-quarter pre-tax earnings of $45 million down from $70 million in the same period last year which included a larger portfolio (Table 6). In the Other segment, the company also increased aircraft financing reserves by $82 million. BCC’s portfolio balance at the end of the quarter was $6.2 billion, down from $6.5 billion at the beginning of the year primarily on normal portfolio run-off and depreciation. BCC contributed $39 million in cash dividends to Boeing during the quarter and $74 million in the first half. BCC’s debt-to-equity ratio remained steady at 5.0-to-1.

Table 6. Boeing Capital Corporation Operating Results

 

     2nd Quarter          First Half       

(Millions)

    2008    2007    Change     2008    2007    Change  

Revenues

    $ 179    $ 209    (14 )%   $ 364    $ 422    (14 )%

Pre-Tax Income

    $ 45    $ 70    (36 )%   $ 106    $ 143    (26 )%

Additional Information

The “Other” segment consists primarily of Boeing Engineering, Operations and Technology as well as certain results related to the consolidation of all business units. Other segment expense was $135 million in the second quarter, up from $66 million in the same period last year due to the increased aircraft financing reserves noted above.

Unallocated expense was $77 million, down from $313 million last year. Share-based plans expense was $118 million lower due to acceleration of expense in the year-ago quarter. Deferred compensation expense was $73 million lower due to changes in Boeing stock price and broad stock market conditions. Unallocated pension expense was lower by $65 million.

 

5

Total pension expense was $216 million, down from $251 million in the same quarter last year, of which $76 million was recorded in unallocated expense and the balance was recorded as expense in the business segments.

Outlook

The financial guidance issued in April is unchanged, other than an adjustment between IDS segment margins that is referenced below. The guidance reflects expectations for strong business performance in BCA and IDS, increasing commercial airplane deliveries, decreasing investment in new airplane development, and company-wide productivity gains.

Boeing’s 2008 revenue guidance is $67 billion to $68 billion. For 2009, the company expects revenues between $72 billion and $73 billion. Earnings-per-share guidance for 2008 is reaffirmed at $5.70 to $5.85 per share while EPS guidance for 2009 remains at $6.80 to $7.00 per share. For 2008 operating cash flow is expected to be greater than $2.5 billion, increasing to more than $6 billion in 2009.

Commercial Airplanes’ 2008 delivery guidance remains between 475 and 480 airplanes and is sold out. BCA revenue guidance for 2008 remains $34.5 billion to $35 billion, and operating margin guidance is approximately 11.5 percent, as the mix and expense timing issues experienced in the second quarter are addressed in the second half of the year. In 2009 BCA expects to deliver between 500 and 505 commercial airplanes – including approximately 25 Dreamliners – and is essentially sold out. BCA’s 2009 revenue is expected to grow to between $37 billion and $38 billion, accompanied by margins of approximately 11.5 percent. Boeing also expects to deliver more airplanes in 2010 than in 2009.

IDS revenue guidance for 2008 is $32 billion to $33 billion. Expected operating margins for IDS remain unchanged at approximately 10.5 percent, although the segment margins within IDS have been adjusted for 2008. For 2009, IDS expects revenue to grow to between $33.5 billion and $34.5 billion, with operating margins exceeding 10.5 percent.

Boeing’s 2008 R&D forecast is between $3.6 billion and $3.8 billion. R&D spending in 2009 is expected to decline to between $3.1 billion and $3.3 billion. Annual capital expenditures are expected to be approximately $1.8 billion in 2008 and approximately $1.7 billion in 2009.

 

6

The company’s non-cash pension expense is expected to be approximately $0.8 billion for 2008, falling to approximately $0.5 billion in 2009, although it may vary due to discount rates and investment returns. Discretionary cash funding of Boeing’s pension plans is expected to be approximately $0.5 billion in 2008 (contributed during the first quarter) and 2009, although the company will continue to evaluate making additional discretionary contributions to its pension plans.

Table 7. Financial Outlook

 

(Billions, except per share data)

    2008   2009

The Boeing Company

     

Revenues

    $67 - $68   $72 - $73

Earnings Per Share (GAAP)

    $5.70 - $5.85   $6.80 - $7.00

Operating Cash Flow1

    > $2.5   > $6

Boeing Commercial Airplanes

     

Deliveries

    475 - 480   500 - 505

Revenues

    $34.5 - $35   $37 - $38

Operating Margin

    ~ 11.5%   ~ 11.5%

Integrated Defense Systems

     

Revenues

     

Precision Engagement & Mobility Systems

    ~ $13.5   Moderate Growth

Network & Space Systems

    ~ $12   Moderate Growth

Support Systems

    ~ $7   Moderate Growth
        

Total IDS Revenues

    $32 - $33   $33.5 - $34.5

Operating Margin

     

Precision Engagement & Mobility Systems

    ~ 10.5%   Low Double Digit

Network & Space Systems

    ~ 9%   High Single Digit

Support Systems

    ~ 13%   Low Double Digit
        

Total IDS Operating Margin

    ~ 10.5%   > 10.5%

Boeing Capital Corporation

     

Portfolio Size

    Lower   Lower

Revenue

    ~ $0.7   ~ $0.6

Return on Assets

    ~ 1.5%   ~ 1.5%

Research & Development

    $3.6 - $3.8   $3.1 - $3.3

Capital Expenditures

    ~ $1.8   ~ $1.7

 

1

After pension contributions of $0.5 billion in the first quarter of 2008 and $0.5 billion forecast in 2009.

 

7

Non-GAAP Measure Disclosure

Management believes that the non-GAAP (Generally Accepted Accounting Principles) measures (indicated by an asterisk *) used in this report provide investors with important perspectives into the company’s ongoing business performance. The company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define the measures differently. The following definitions are provided:

Free Cash Flow

Free cash flow is defined as GAAP operating cash flow less capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow internally to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.

 

8

Forward-Looking Information Is Subject to Risk and Uncertainty

Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements in this press release include, among others, statements regarding future results as a result of our growth and productivity initiatives, our 2008 and 2009 financial outlook and the benefits of the IDS structure. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results and future trends may differ materially depending on a variety of factors, including the continued operation, viability and growth of major airline customers and non-airline customers (such as the U.S. Government); adverse developments in the value of collateral securing customer and other financings; the occurrence of any significant collective bargaining labor dispute; our successful execution of internal performance plans including our company-wide growth and productivity initiatives, production rate increases and decreases (including any reduction in or termination of an aircraft product), availability of raw materials, acquisition and divestiture plans, and other cost-reduction and productivity efforts; charges from any future SFAS No. 142 review; ability to meet development, production and certification schedules for the 787 program and the ability to meet scheduled deliveries of the 787 airplane; technical or quality issues in development programs (affecting schedule and cost estimates) or in the satellite industry; an adverse development in rating agency credit ratings or assessments; the actual outcomes of certain pending sales campaigns and U.S. and foreign government procurement activities, including the uncertainty associated with the procurement of tankers by the U.S. Department of Defense (DoD) and funding of the C-17 program; the cyclical nature of some of our businesses; unanticipated financial market changes which may impact pension plan assumptions; domestic and international competition in the defense, space and commercial areas; continued integration of acquired businesses; performance issues with key suppliers, subcontractors and customers; significant disruption to air travel worldwide (including future terrorist attacks); global trade policies; worldwide political stability; domestic and international economic conditions; price escalation; the outcome of political and legal processes, changing priorities or reductions in the U.S. Government or foreign government defense and space budgets; termination of government or commercial contracts due to unilateral government or customer action or failure to perform; legal, financial and governmental risks related to international transactions; legal and investigatory proceedings; tax settlements with the IRS and various states; U.S. Air Force review of previously awarded contracts; costs associated with the exit of the Connexion by Boeing business; and other economic, political and technological risks and uncertainties. Additional information regarding these factors is contained in our SEC filings, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.

# # #

Contact:

Investor Relations: Diana Sands or Rob Young (312) 544-2140

Communications: Todd Blecher (312) 544-2002

 

9

The Boeing Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

     Six months ended
June 30		     Three months ended
June 30		  

(Dollars in millions except per share data)

    2008     2007     2008     2007  

Sales of products

    $ 27,986     $ 28,016     $ 14,298     $ 14,787  

Sales of services

      4,966       4,377       2,664       2,241  
                                

Total revenues

      32,952       32,393       16,962       17,028  

Cost of products

      (22,425 )     (22,140 )     (11,637 )     (11,709 )

Cost of services

      (4,003 )     (3,583 )     (2,248 )     (1,827 )

Boeing Capital Corporation interest expense

      (119 )     (152 )     (57 )     (73 )
                                

Total costs and expenses

      (26,547 )     (25,875 )     (13,942 )     (13,609 )
                                
     6,405       6,518       3,020       3,419  

Income from operating investments, net

      123       89       65       50  

General and administrative expense

      (1,610 )     (1,804 )     (835 )     (976 )

Research and development expense, net

      (1,874 )     (1,988 )     (1,005 )     (989 )

Gain on dispositions/business shutdown, net

      2         2       2  
                                

Earnings from operations

      3,046       2,815       1,247       1,506  

Other income, net

      202       216       102       125  

Interest and debt expense

      (96 )     (92 )     (50 )     (46 )
                                

Earnings before income taxes

      3,152       2,939       1,299       1,585  

Income tax expense

      (1,095 )     (1,017 )     (448 )     (536 )
                                

Net earnings from continuing operations

      2,057       1,922       851       1,049  

Net gain on disposal of discontinued operations, net of taxes of $4, $4, $1, and $1

      6       5       1       1  
                                

Net earnings

    $ 2,063     $ 1,927     $ 852     $ 1,050  
                                

Basic earnings per share from continuing operations

    $ 2.82     $ 2.52     $ 1.18     $ 1.38  

Net gain on disposal of discontinued operations, net of taxes

      0.01       0.01      
                                

Basic earnings per share

    $ 2.83     $ 2.53     $ 1.18     $ 1.38  
                                

Diluted earnings per share from continuing operations

    $ 2.78     $ 2.47     $ 1.16     $ 1.35  

Net gain on disposal of discontinued operations, net of taxes

      0.01       0.01      
                                

Diluted earnings per share

    $ 2.79     $ 2.48     $ 1.16     $ 1.35  
                                

Cash dividends paid per share

    $ 0.80     $ 0.70     $ 0.40     $ 0.35  
                                

Weighted average diluted shares (millions)

      740.0       777.3       732.8       777.0  
                                

 

10

The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited)

 

(Dollars in millions except per share data)

    June 30
2008		     December 31
2007		  

Assets

     

Cash and cash equivalents

    $ 5,619     $ 7,042  

Short-term investments

      1,752       2,266  

Accounts receivable, net

      5,809       5,740  

Current portion of customer financing, net

      198       328  

Deferred income taxes

      2,414       2,341  

Inventories, net of advances and progress billings

      10,145       9,563  
                

Total current assets

      25,937       27,280  

Customer financing, net

      6,370       6,777  

Property, plant and equipment, net of accumulated depreciation of $12,313 and $11,915

      8,585       8,265  

Goodwill

      3,232       3,081  

Other acquired intangibles, net

      2,223       2,093  

Deferred income taxes

      276       197  

Investments

      4,017       4,111  

Pension plan assets, net

      6,445       5,924  

Other assets, net of accumulated amortization of $439 and $385

      1,425       1,258  
                
   $ 58,510     $ 58,986  
                

Liabilities and Shareholders’ Equity

     

Accounts payable and other liabilities

    $ 17,431     $ 16,676  

Advances and billings in excess of related costs

      12,682       13,847  

Income taxes payable

      416       253  

Short-term debt and current portion of long-term debt

      916       762  
                

Total current liabilities

      31,445       31,538  

Deferred income taxes

      1,433       1,190  

Accrued retiree health care

      7,159       7,007  

Accrued pension plan liability, net

      1,083       1,155  

Non-current income taxes payable

      1,148       1,121  

Other long-term liabilities

      408       516  

Long-term debt

      7,240       7,455  

Shareholders’ equity:

     

Common shares, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 and 1,012,261,159 shares issued

      5,061       5,061  

Additional paid-in capital

      4,093       4,757  

Treasury shares, at cost – 268,841,528 and 244,217,170

      (16,834 )     (14,842 )

Retained earnings

      22,669       21,376  

Accumulated other comprehensive loss

      (4,299 )     (4,596 )

ShareValue Trust shares – 31,690,733 and 31,362,850

      (2,096 )     (2,752 )
                

Total shareholders’ equity

      8,594       9,004  
                
   $ 58,510     $ 58,986  
                

 

11

The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

     Six months ended
June 30		  

(Dollars in millions)

    2008     2007  

Cash flows - operating activities:

     

Net earnings

    $ 2,063     $ 1,927  

Adjustments to reconcile net earnings to net cash provided by operating activities:

     

Non-cash items –

     

Share-based plans expense

      98       191  

Depreciation

      643       676  

Amortization of other acquired intangibles

      81       77  

Amortization of debt discount/premium and issuance costs

      4       6  

Customer financing valuation provision/(benefit)

      80       (35 )

Gain on disposal of discontinued operations

      (10 )     (9 )

Gain on dispositions/business shutdown, net

      (2 )  

Other charges and credits, net

      78       78  

Excess tax benefits from share-based payment arrangements

      (45 )     (107 )

Changes in assets and liabilities –

     

Accounts receivable

      (129 )     (761 )

Inventories, net of advances and progress billings

      (649 )     (428 )

Accounts payable and other liabilities

      616       842  

Advances and billings in excess of related costs

      (1,166 )     68  

Income taxes receivable, payable and deferred

      275       821  

Other long-term liabilities

      (149 )     (4 )

Pension and other postretirement plans

      (281 )     41  

Customer financing, net

      278       1,107  

Other

      (103 )     (128 )
                

Net cash provided by operating activities

      1,682       4,362  
                

Cash flows - investing activities:

     

Property, plant and equipment additions

      (807 )     (865 )

Property, plant and equipment reductions

      16       17  

Acquisitions, net of cash acquired

      (94 )     (75 )

Contributions to investments

      (5,606 )     (1,838 )

Proceeds from investments

      6,238       1,611  

Other

      (148 )     (62 )
                

Net cash used by investing activities

      (401 )     (1,212 )
                

Cash flows - financing activities:

     

New borrowings

      5       10  

Debt repayments

      (154 )     (893 )

Stock options exercised, other

      41       151  

Excess tax benefits from share-based payment arrangements

      45       107  

Common shares repurchased

      (2,064 )     (946 )

Dividends paid

      (606 )     (552 )
                

Net cash used by financing activities

      (2,733 )     (2,123 )
                

Effect of exchange rate changes on cash and cash equivalents

      29       11  
                

Net (decrease)/increase in cash and cash equivalents

      (1,423 )     1,038  

Cash and cash equivalents at beginning of year

      7,042       6,118  
                

Cash and cash equivalents at end of period

    $ 5,619     $ 7,156  
                

 

12

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

 

     Six months ended
June 30		     Three months ended
June 30		  

(Dollars in millions)

    2008     2007     2008     2007  

Revenues:

         

Commercial Airplanes

    $ 16,728     $ 16,262     $ 8,567     $ 8,707  

Integrated Defense Systems:

         

Precision Engagement and Mobility Systems

      6,549       6,743       3,293       3,416  

Network and Space Systems

      5,495       5,680       2,802       2,902  

Support Systems

      3,465       3,266       1,839       1,654  
                                

Total Integrated Defense Systems

      15,509       15,689       7,934       7,972  

Boeing Capital Corporation

      364       422       179       209  

Other

      227       157       152       81  

Accounting differences/eliminations

      124       (137 )     130       59  
                                

Total revenues

    $ 32,952     $ 32,393     $ 16,962     $ 17,028  
                                

Earnings from operations:

         

Commercial Airplanes

    $ 1,760     $ 1,666     $ 777       960  

Integrated Defense Systems:

         

Precision Engagement and Mobility Systems

      549       838       160       405  

Network and Space Systems

      504       405       237       257  

Support Systems

      444       396       240       193  
                                

Total Integrated Defense Systems

      1,497       1,639       637       855  

Boeing Capital Corporation

      106       143       45       70  

Other

      (185 )     (121 )     (135 )     (66 )

Unallocated expense

      (132 )     (512 )     (77 )     (313 )
                                

Earnings from operations

      3,046       2,815       1,247       1,506  

Other income, net

      202       216       102       125  

Interest and debt expense

      (96 )     (92 )     (50 )     (46 )
                                

Earnings before income taxes

      3,152       2,939       1,299       1,585  

Income tax expense

      (1,095 )     (1,017 )     (448 )     (536 )
                                

Net earnings from continuing operations

      2,057       1,922       851       1,049  

Net gain on disposal of discontinued operations, net of taxes of $4, $4, $1, and $1

      6       5       1       1  
                                

Net earnings

    $ 2,063     $ 1,927     $ 852     $ 1,050  
                                

Research and development expense:

         

Commercial Airplanes

    $ 1,403     $ 1,557     $ 770     $ 769  

Integrated Defense Systems:

         

Precision Engagement and Mobility Systems

      241       222       115       111  

Network and Space Systems

      154       143       78       73  

Support Systems

      74       49       41       25  
                                

Total Integrated Defense Systems

      469       414       234       209  

Other

      2       17       1       11  
                                

Total research and development expense

    $ 1,874     $ 1,988     $ 1,005     $ 989  
                                

Unallocated expense:

         

Share-based plans expense

    $ (45 )   $ (169 )   $ (15 )   $ (133 )

Deferred compensation expense

      81       (63 )     20       (53 )

Pension

      (143 )     (271 )     (76 )     (141 )

Post-retirement

      (40 )     (59 )     (20 )     (27 )

Capitalized interest

      (27 )     (23 )     (14 )     (14 )

Other

      42       73       28       55  
                                

Total

    $ (132 )   $ (512 )   $ (77 )   $ (313 )
                                

 

13

The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)

 

Deliveries

    Six months ended
June 30		    Three months ended
June 30
   2008    2007    2008    2007

Commercial Airplanes

            

737 Next-Generation

    187      169      100      86

747

    9      7      5      4

767

    6      6      3      3

777

    39      38      18      21
                         

Total

    241      220      126      114
                         

Integrated Defense Systems

            

Precision Engagement and Mobility Systems

            

F/A-18 Models

    21      22      11      11

F-15E Eagle

    4      3         3

C-17 Globemaster

    8      8      5      4

KC-767 Tanker

    2         

CH-47 Chinook

    4      6      2      1

T-45TS Goshawk

    3      5      2      3

AH-64 Apache

    1      8      1      4

C-40A Clipper

         2         1

Network and Space Systems

            

Commercial and Civil Satellites

    1      3         1

Contractual backlog (Dollars in billions)

         June 30
2008		    March 31
2008		    December 31
2007

Commercial Airplanes

       $ 274.5    $ 271.2    $ 255.2

Integrated Defense Systems:

            

Precision Engagement and Mobility Systems

         23.8      23.1      23.0

Network and Space Systems

         11.0      10.5      9.2

Support Systems

         10.7      10.8      9.6
                       

Total Integrated Defense Systems

         45.6      44.4      41.8
                       

Total contractual backlog

       $ 320.1    $ 315.6    $ 297.0
                       

Unobligated backlog

       $ 26.0    $ 30.6    $ 30.2
                       

Total backlog

       $ 346.1    $ 346.2    $ 327.2
                       

Workforce

         163,900      161,500      159,300
                       

 

14