Boeing Reports Second-Quarter Financial Results

— Second-quarter revenue rose 1 percent to $17.2 billion
— Earnings per share of $1.41 rose 22 percent
— Operating cash flow increased to $1.0 billion
— Backlog at $328 billion – nearly five times current annual revenues
— 787 side-of-body technical solution identified; schedule assessment ongoing 

CHICAGO, July 22 /PRNewswire-FirstCall/ –The Boeing Company’s (NYSE: BA) second-quarter earnings per share increased 22 percent to $1.41 per share, as revenues rose 1 percent to $17.2 billion, driven by growth in defense programs and strong performance in defense and commercial airplanes (Table 1). Year-ago results included a $0.22 per share charge on the Airborne Early Warning & Control (AEW&C) program.

 

    Table 1.  Summary Financial Results
Second Quarter              First Half
(Millions, except    -- ------------              ----------
per share data)      2009     2008    Change   2009     2008      Change
------------------    ----     ----             ----     ----
Revenues           $17,154  $16,962       1% $33,656  $32,952         2%
Earnings From
Operations         $1,529   $1,247      23%  $2,554   $3,046       (16%)
Operating Margin       8.9%     7.4%  1.5Pts      7.6%     9.2%  (1.6)Pts
Reported Net Income   $998     $852      17%  $1,608   $2,063       (22%)
Reported Earnings
per Share           $1.41    $1.16      22%   $2.27    $2.79       (19%)
Operating Cash Flow $1,001    ($251)     NA   $1,194   $1,682       (29%) 

Revenues for the first six months of 2009 rose 2 percent to $33.7 billion. Earnings for the first half declined to $2.27 per share, including a $0.38 first-quarter impact from reductions to future twin-aisle production rates and delivery price escalation forecasts. 

Earnings guidance for 2009 remains unchanged between $4.70 and $5.00 per share. The 787 program is currently assessing schedule and financial implications from the previously announced requirement to reinforce an area within the side-of-body joint. The company expects to issue a new 787 schedule during the third quarter, at which time earnings guidance will be reevaluated. 

“Our continued focus on productivity improvements and disciplined cash management drove solid overall results for the quarter,” said Boeing Chairman, President and Chief Executive Officer Jim McNerney. “While market and development program execution challenges remain with us, we are doing what’s necessary to emerge from the current economic environment as a stronger company that’s better positioned to grow and improve its financial performance over time.” 

Boeing’s quarterly operating cash flow was $1.0 billion, which includes continued investment in development programs and lower advances from commercial airplane orders (Table 2). For the first half of 2009, operating cash flow was $1.2 billion. Free cash flow* was $0.7 billion in the quarter and $0.5 billion in the first half. 

    Table 2.  Cash Flow
Second Quarter    First Half
--------------    ----------
(Millions)                                  2009   2008    2009    2008
----------                                  ----   ----    ----    ----
Operating Cash Flow (1)                   $1,001  ($251) $1,194  $1,682
Less Additions to Property, Plant &
Equipment                               ($294) ($398)  ($736)  ($807)
-----  -----   -----   -----
Free Cash Flow*                             $707  ($649)   $458    $875
----------------                            ----  -----    ----    ----
(1) Operating cash flow for the first half of 2008 includes a
$517 million contribution to pension plans.
* 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." 

Total company backlog at quarter-end was $328 billion, down 3 percent in the quarter, as the value of deliveries exceeded net orders during the period. 

Cash and investments in marketable securities totaled $5.0 billion at quarter-end, up 6 percent from the end of the first quarter (Table 3). Debt declined modestly due to maturities of Boeing Capital Corporation debt. The company did not acquire any of its shares in the second quarter. 

    Table 3.  Cash, Marketable Securities and Debt Balances
Quarter-End
-----------
(Billions)                            2Q09   1Q09
----------                            ----   ----
Cash                                  $4.6   $4.2
Marketable Securities (1)             $0.4   $0.5
----   ----
Total                              $5.0   $4.7
Debt Balances:
The Boeing Company                    $5.7   $5.7
Boeing Capital Corporation            $3.4   $3.6
----   ----
Total Consolidated Debt            $9.1   $9.3
--------------------------            ----   ----
(1) Marketable securities consists primarily of investment-grade
instruments classified as "short-term investments" and "investments." 

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes (BCA) second-quarter revenues decreased 2 percent to $8.4 billion on slightly lower airplane deliveries and lower volume in services. Operating earnings increased 5 percent and margins rose to 9.7 percent due to lower research and development expense partially offset by the lower services volume (Table 4). 

For the first half of 2009, revenues rose to $17.0 billion on increased airplane deliveries, partially offset by lower volume in services. Operating earnings fell by 30 percent to $1.2 billion while margins contracted to 7.3 percent, driven by the first-quarter charge on the 747 program related to pending reduction in twin-aisle production rates and unfavorable delivery price escalation forecasts. 

    Table 4. Commercial Airplanes Operating Results
(Millions, except    Second Quarter              First Half
deliveries & margin  --------------              ----------
percent)              2009    2008    Change    2009     2008     Change
---------------------  ----    ----              ----     ----
Commercial Airplanes
Deliveries             125     126     (1%)      246      241        2%
Revenues             $8,431  $8,567     (2%)  $16,985  $16,728        2%
Earnings from
Operations            $817    $777      5%    $1,234   $1,760      (30%)
Operating Margins       9.7%    9.1% 0.6Pts       7.3%    10.5% (3.2)Pts
-----------------       ---     ---  ------       ---     ----  -------- 

BCA booked 57 gross orders during the quarter while 52 others were removed from its order book. Contractual backlog was $257 billion, more than seven times BCA’s expected 2009 revenues. 

The 787 program has identified a technical solution to the previously announced requirement to reinforce an area within the side-of-body joint, and is currently evaluating alternative ways to implement that solution. The company expects to complete its assessment of the schedule and financial implications during the third quarter. Recent milestones include completion of gauntlet and low-speed taxi tests on the first flight test aircraft. The company also recently announced its agreement to acquire Vought’s South Carolina facility which supports the 787 program. Included in gross inventory for the company is approximately $7.9 billion of 787 work-in-process inventory, cash advances made to suppliers and tooling costs. The program had new orders for 13 airplanes during the quarter and cancelled orders for 41 others. Total firm orders are now 850 airplanes from 56 customers. 

Integrated Defense Systems

Boeing Integrated Defense Systems (IDS) second-quarter revenues rose 9 percent to $8.7 billion. Operating margins of 10.1 percent reflect strong performance across all defense segments (Table 5). 

For the first half of 2009, IDS revenues increased by 6 percent to $16.4 billion and earnings increased 6 percent, bringing operating margins to 9.7 percent. 

    Table 5.  Integrated Defense Systems Operating Results
Second Quarter             First Half
(Millions, except     --------------             ----------
margin percent)       2009    2008    Change   2009     2008    Change
------------------     ----    ----             ----     ----
Revenues
Boeing Military
Aircraft         $3,363  $3,265       3%  $6,373   $6,467      (1%)
Network & Space
Systems          $3,103  $2,804      11%  $5,781   $5,498       5%
Global Services &
Support          $2,184  $1,865      17%  $4,216   $3,544      19%
------  ------           ------   ------
Total IDS Revenues   $8,650  $7,934       9% $16,370  $15,509       6%
Earnings from
Operations
Boeing Military
Aircraft           $392    $157     150%    $674     $541      25%
Network & Space
Systems            $239    $237       1%    $446     $504     (12%)
Global Services &
Support            $245    $243       1%    $465     $452       3%
----    ----             ----     ----
Total IDS Earnings
from Operations       $876    $637      38%  $1,585   $1,497       6%
Operating Margins      10.1%    8.0% 2.1Pts      9.7%     9.7%  - Pts
----------------- 

Boeing Military Aircraft second-quarter revenue rose 3 percent to $3.4 billion and operating margin was 11.7 percent, reflecting higher rotorcraft volume and strong execution across its programs. The year-ago quarter included a charge on the AEW&C program. During the quarter the P-8A had its first flight, the KC-767 tanker achieved initial operational capability in Japan, and the Apache Block III manned aircraft demonstrated control of an unmanned aircraft system. On June 24, the Fiscal Year 2009 Supplemental Defense Spending bill was signed, authorizing funding for an additional eight C-17s for the U.S. Air Force. 

Network & Space Systems second-quarter revenues increased 11 percent primarily driven by growth in the Space and Intelligence Systems business. Operating margin was 7.7 percent reflecting strong performance across the segment’s array of programs, partially offset by a previously announced $35 million charge related to the Sea Launch bankruptcy filing. During the quarter, key flight milestones were achieved on Directed Energy programs as the Airborne Laser tracking system engaged an accelerating target and the Advanced Tactical Laser fired a high power laser successfully hitting a ground target. Also, the Joint Tactical Radio Station Ground Mobile Radio network demonstrated its scalability in a fielded environment. 

Global Services & Support (GS&S) revenues increased 17 percent on higher volume across its broad portfolio of services and logistics products. During the quarter, GS&S continued to generate double-digit operating margins of 11.2 percent. In this segment, the company was awarded contracts for unmanned Intelligence Surveillance Reconnaissance services, an armored-vehicle recovery system, and B-52 sustainment, modernization and upgrades. 

IDS’ backlog is $70.0 billion, more than two times expected 2009 revenues. New orders during the quarter included Chinooks for an international customer, A-10 sustainment and modernization, and multiple support and proprietary contracts. 

Boeing Capital Corporation

Boeing Capital Corporation (BCC) reported second-quarter pre-tax earnings of $36 million compared to $45 million in the same period last year due to higher reserves and impairments (Table 6). During the quarter, BCC’s portfolio balance rose to $6.3 billion (up from $6.0 billion at the end of the first quarter) on $429 million in new aircraft financings and other volume, partially offset by normal portfolio run-off through customer payments and depreciation. BCC contributed $10 million in cash dividends to the company during the quarter. BCC’s debt-to-equity ratio was unchanged at 5.0-to-1. 

    Table 6.  Boeing Capital Corporation Operating Results
Second Quarter           First Half
--------------           ----------
(Millions)                   2009   2008    Change  2009  2008   Change
----------                   ----   ----            ----  ----
Revenues                     $167   $179      (7%)  $330  $364     (9%)
Earnings from Operations      $36    $45     (20%)   $73  $106    (31%) 

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 $46 million in the second quarter, reduced from $135 million of expense in the same period last year which included $82 million for increased aircraft financing reserves that were recorded at the consolidated level. 

Unallocated expense was $154 million, up from $77 million in the same quarter last year driven by higher deferred compensation and share-based plans expenses, partially offset by lower unallocated pension expense. 

Total pension expense for the quarter was $207 million, as compared to $216 million in the same period last year. A total of $229 million was recognized in the operating segments in the quarter (up from $140 million in the same period last year), partially offset by a $22 million contribution to earnings in unallocated items.

Outlook

The 2009 financial guidance continues to reflect a challenging market environment as well as company plans to reduce discretionary spending and restructure various internal organizations to improve productivity. The company will reevaluate financial guidance upon completion of the 787 schedule assessment, and expects to issue 2010 financial guidance later in the year. 

Boeing’s 2009 revenue guidance is reaffirmed at $68 billion to $69 billion (Table 7). Earnings-per-share guidance for 2009 remains at $4.70 to $5.00 per share. Operating cash flow is still expected to be greater than $2.5 billion, including discretionary pension contributions of approximately $0.5 billion and an assumption of $1 billion for new commercial airplane financings. 

Commercial Airplanes’ 2009 delivery guidance remains at between 480 and 485 airplanes and is sold out. BCA’s 2009 revenue is unchanged at between $34 billion and $35 billion, and operating margin remains at between 8 percent and 8.5 percent. 

IDS guidance for 2009 remains unchanged with revenue between $33 billion and $34 billion and operating margins of approximately 10 percent. 

Boeing Capital Corporation continues to expect that the aircraft finance portfolio will increase modestly as the amount of new aircraft financing in 2009 will exceed normal portfolio runoff due to customer payments and depreciation. 

Boeing’s 2009 R&D forecast is between $3.6 billion and $3.8 billion. 2009 capital expenditures are expected to be approximately $1.4 billion. The company’s non-cash pension expense is expected to be approximately $0.9 billion in 2009. 

    Table 7.  Financial Outlook (1)
(Billions, except per share data)       2009
---------------------------------       ----
The Boeing Company
Revenues                           $68 - $69
Earnings Per Share (GAAP)        $4.70 - $5.00
Operating Cash Flow (2)              > $2.5
Boeing Commercial Airplanes
Deliveries                         480 - 485
Revenues                           $34 - $35
Operating Margin                    8% - 8.5%
Integrated Defense Systems
Revenues
Boeing Military Aircraft          ~ $14.0
Network & Space Systems           ~ $11.5
Global Services & Support          ~ $8.0
------
Total IDS Revenues                 $33 - $34
Operating Margin
Boeing Military Aircraft             ~ 10%
Network & Space Systems              ~  9%
Global Services & Support          ~ 11.5%
-------
Total IDS Operating Margin             ~ 10%
Boeing Capital Corporation
Portfolio Size                  Modest increase
Revenue                              ~ $0.6
Return on Assets                      > 1.0%
Research & Development              $3.6 - $3.8
Capital Expenditures                   ~ $1.4
--------------------                   ------
(1) The company will re-evaluate financial guidance upon
completion of the 787 schedule assessment.
(2) After pension contributions of $0.5 billion and assumed
$1 billion for new aircraft financings in 2009. 

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. 

Forward-Looking Information Is Subject to Risk and Uncertainty

Certain statements in this report may be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are 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, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission: the effect of economic conditions in the United States and globally; the impact on our accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values; the impact on our revenues and operating results of changes to indices included in indexed price escalation clauses included in our contracts with commercial airplane and defense customers; the successful execution of our Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers canceling, modifying and/or rescheduling contractual orders; the timing and effects of any decisions to increase or decrease the rate of commercial airplane production; the timing and effects of decisions to complete or launch a Commercial Airplanes program; the ability to successfully develop and timely produce the 787 and 747-8 aircraft; the ability of our suppliers and, as applicable, subcontractors to successfully and timely perform their obligations; the effect on our revenues of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting Boeing defense programs; our relationship with our union-represented workforce and the negotiation of collective bargaining agreements; the continuation of long-term trends in passenger and cargo traffic and revenue yields in the airline industry; the impact of volatile fuel prices and the airline industry’s response; the effect of declines in aircraft valuations; the impact on our revenues or operating results of airline bankruptcies; the availability of commercial and government financing and the extent to which we are called upon to fund outstanding financing commitments or satisfy other financing requests, and our ability to satisfy those requirements; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which we are a party, and other contingencies; returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs; our ability to access external capital resources to fund our operations; the amounts and effects of underinsured operations, including satellite launches; our ability to recover the proportionate amounts owed to us from the other Sea Launch partners; and the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications and guarantees related thereto. 

 

                       The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Six months ended  Three months ended
(Dollars in millions except per         June 30           June 30
share data)                         2009     2008     2009     2008
-------------------------------      ----     ----     ----     ----
Sales of products                 $28,131  $27,986  $14,296  $14,298
Sales of services                   5,525    4,966    2,858    2,664
-----------------                   -----    -----    -----    -----
Total revenues                     33,656   32,952   17,154   16,962
Cost of products                  (23,159) (22,425) (11,580) (11,637)
Cost of services                   (4,303)  (4,003)  (2,184)  (2,248)
Boeing Capital Corporation
interest expense                     (90)    (119)     (43)     (57)
--------------------------            ---     ----      ---      ---
Total costs and expenses          (27,552) (26,547) (13,807) (13,942)
------------------------          -------  -------  -------  -------
6,104    6,405    3,347    3,020
Income from operating
investments, net                     102      123       70       65
General and administrative
expense                           (1,716)  (1,610)    (925)    (835)
Research and development
expense, net                      (1,930)  (1,874)    (960)  (1,005)
(Loss)/gain on dispositions, net       (6)       2       (3)       2
--------------------------------      ---      ---      ---      ---
Earnings from operations            2,554    3,046    1,529    1,247
Other income, net                      11      202       47      102
Interest and debt expense            (137)     (96)     (80)     (50)
-------------------------            ----      ---      ---      ---
Earnings before income taxes        2,428    3,152    1,496    1,299
Income tax expense                   (816)  (1,095)    (499)    (448)
------------------                   ----   ------     ----     ----
Net earnings from continuing
operations                         1,612    2,057      997      851
Net (loss)/gain on disposal of
discontinued operations,
net of taxes of ($3), $4, $0,
and $1                             (4)       6        1        1
--------------------------------      ---      ---      ---      ---
Net earnings                       $1,608   $2,063     $998     $852
============                       ======   ======     ====     ====
Basic earnings per share from
continuing operations              $2.29    $2.82    $1.42    $1.18
Net (loss)/gain on disposal of
discontinued operations, net of
taxes                              (0.01)    0.01
--------------------------------    -----     ----    -----    -----
Basic earnings per share            $2.28    $2.83    $1.42    $1.18
========================            =====    =====    =====    =====
Diluted earnings per share from
continuing operations              $2.28    $2.78    $1.41    $1.16
Net (loss)/gain on disposal of
discontinued operations, net of
taxes                              (0.01)    0.01
--------------------------------    -----     ----    -----    -----
Diluted earnings per share          $2.27    $2.79    $1.41    $1.16
==========================          =====    =====    =====    =====
Cash dividends paid per share       $0.84    $0.80    $0.42    $0.40
=============================       =====    =====    =====    =====
Weighted average diluted shares
(millions)                         707.8    740.0    707.4    732.8
===============================     =====    =====    =====    =====
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
June 30  December 31
(Dollars in millions except per share data)           2009         2008
-------------------------------------------           ----         ----
Assets
Cash and cash equivalents                           $4,599       $3,268
Short-term investments                                 171           11
Accounts receivable, net                             6,588        5,602
Current portion of customer financing, net             463          425
Deferred income taxes                                1,099        1,046
Inventories, net of advances and
progress billings                                  17,200       15,612
--------------------------------                    ------       ------
Total current assets                        30,120       25,964
Customer financing, net                              5,969        5,857
Property, plant and equipment, net of accumulated
depreciation of $12,534 and $12,280                 8,808        8,762
Goodwill                                             3,688        3,647
Other acquired intangibles, net                      2,727        2,685
Deferred income taxes                                3,858        4,114
Investments                                          1,188        1,328
Pension plan assets, net                                21           16
Other assets, net of accumulated amortization
of $474 and $400                                    1,333        1,406
---------------------------------------------        -----        -----
$57,712      $53,779
=====================================              =======      =======
Liabilities and Shareholders' Equity
Accounts payable                                    $6,664       $5,871
Other accrued liabilities                           11,821       11,564
Advances and billings in excess of related costs    11,717       12,737
Income taxes payable                                   654           41
Short-term debt and current portion of
long-term debt                                        416          560
--------------------------------------                 ---          ---
Total current liabilities                   31,272       30,773
Accrued retiree health care                          7,336        7,322
Accrued pension plan liability, net                  8,553        8,383
Non-current income taxes payable                     1,182        1,154
Other long-term liabilities                            335          337
Long-term debt                                       8,700        6,952
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                       3,561        3,456
Treasury shares, at cost - 285,882,820
and 285,661,944                               (17,741)     (17,758)
Retained earnings                               23,668       22,675
Accumulated other comprehensive loss           (13,120)     (13,525)
ShareValue Trust shares -  29,089,996
and 28,460,769                                 (1,249)      (1,203)
-------------------------------------           ------       ------
Total Boeing shareholders' equity                  180       (1,294)
Noncontrolling interest                                154          152
-----------------------                                ---          ---
Total shareholders' equity                      334       (1,142)
---------------------------------                      ---       ------
$57,712      $53,779
=======      =======
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
June 30
(Dollars in millions)                               2009    2008
---------------------                               ----    ----
Cash flows - operating activities:
Net earnings                                  $1,608  $2,063
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Non-cash items -
Share-based plans expense                 121      98
Depreciation                              666     643
Amortization of other acquired
intangibles                               99      81
Amortization of debt discount/
premium and issuance costs                 4       4
Investment/asset impairment
charges, net                              50
Customer financing valuation
provision                                 12      80
Loss/(gain) on disposal of
discontinued operations                    7     (10)
Loss/(gain) on dispositions, net            6      (2)
Other charges and credits, net             78      78
Excess tax benefits from share-based
payment arrangements                      (5)    (45)
Changes in assets and liabilities -
Accounts receivable                    (1,215)   (129)
Inventories, net of advances and
progress billings                     (1,593)   (649)
Accounts payable                          804   1,022
Other accrued liabilities                 262    (406)
Advances and billings in excess of
related costs                         (1,030) (1,166)
Income taxes receivable, payable
and deferred                             921     275
Other long-term liabilities               (20)   (149)
Pension and other
postretirement plans                     586    (281)
Customer financing, net                  (262)    278
Other                                      95    (103)
----------------                                     ---    ----
Net cash provided by operating
activities                        1,194   1,682
----------------------------------------------     -----   -----
Cash flows - investing activities:
Property, plant and equipment additions         (736)   (807)
Property, plant and equipment reductions          23      16
Acquisitions, net of cash acquired               (47)    (94)
Contributions to investments                    (372) (5,606)
Proceeds from investments                        286   6,238
Purchase of distribution rights                         (148)
-----------------------------------                 ----    ----
Net cash used by investing
activities                         (846)   (401)
------------------------------------------          ----    ----
Cash flows - financing activities:
New borrowings                                 1,843       5
Debt repayments                                 (218)   (154)
Stock options exercised, other                     7      41
Excess tax benefits from share-based
payment arrangements                              5      45
Employee taxes on certain share-based
payment arrangements                            (17)
Common shares repurchased                        (50) (2,064)
Dividends paid                                  (610)   (606)
------------------                                  ----    ----
Net cash provided/(used) by
financing activities                960  (2,733)
-------------------------------------------          ---  ------
Effect of exchange rate changes on cash and
cash equivalents                                     23      29
-------------------------------------------          ---     ---
Net increase/(decrease) in cash and
cash equivalents                                  1,331  (1,423)
Cash and cash equivalents at beginning of year     3,268   7,042
----------------------------------------------     -----   -----
Cash and cash equivalents at end of period        $4,599  $5,619
==========================================        ======  ======
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Six months ended  Three months ended
June 30           June 30
(Dollars in millions)                 2009     2008     2009     2008
---------------------                 ----     ----     ----     ----
Revenues:
Commercial Airplanes            $16,985  $16,728   $8,431   $8,567
Integrated Defense Systems:
Boeing Military Aircraft       6,373    6,467    3,363    3,265
Network and Space Systems      5,781    5,498    3,103    2,804
Global Services and Support    4,216    3,544    2,184    1,865
---------------------------------    -----    -----    -----    -----
Total Integrated Defense
Systems                         16,370   15,509    8,650    7,934
Boeing Capital Corporation          330      364      167      179
Other                                74      227       35      152
Unallocated items and
eliminations                      (103)     124     (129)     130
------------------------              ----      ---     ----      ---
Total revenues                  $33,656  $32,952  $17,154  $16,962
=================                  =======  =======  =======  =======
Earnings from operations:
Commercial Airplanes             $1,234   $1,760     $817      777
Integrated Defense Systems:
Boeing Military Aircraft         674      541      392      157
Network and Space Systems        446      504      239      237
Global Services and Support      465      452      245      243
---------------------------------      ---      ---      ---      ---
Total Integrated Defense
Systems                          1,585    1,497      876      637
Boeing Capital Corporation           73      106       36       45
Other                               (69)    (185)     (46)    (135)
Unallocated items and
eliminations                      (269)    (132)    (154)     (77)
------------------------              ----     ----     ----      ---
Earnings from operations          2,554    3,046    1,529    1,247
Other income, net                    11      202       47      102
Interest and debt expense          (137)     (96)     (80)     (50)
----------------------------          ----      ---      ---      ---
Earnings before income taxes      2,428    3,152    1,496    1,299
Income tax expense                 (816)  (1,095)    (499)    (448)
---------------------                 ----   ------     ----     ----
Net earnings from continuing
operations                       1,612    2,057      997      851
Net (loss)/gain on disposal of
discontinued operations, net of
taxes of ($3), $4, $0, and $1       (4)       6        1        1
--------------------------------     ---      ---      ---      ---
Net earnings                     $1,608   $2,063     $998     $852
===============                     ======   ======     ====     ====
Research and development expense:
Commercial Airplanes             $1,370   $1,403     $659     $770
Integrated Defense Systems:
Boeing Military Aircraft         287      240      157      115
Network and Space Systems        185      154       99       78
Global Services and Support       84       75       50       41
---------------------------------      ---      ---      ---      ---
Total Integrated Defense
Systems                            556      469      306      234
Other                                 4        2       (5)       1
--------                               ---      ---      ---      ---
Total research and development
expense                         $1,930   $1,874     $960   $1,005
=================================   ======   ======     ====   ======
Unallocated items and eliminations:
Share-based plans expense         $(116)    $(45)    $(59)    $(15)
Deferred compensation expense       (46)      81      (69)      20
Pension                              45     (143)      22      (76)
Post-retirement                     (44)     (40)     (21)     (20)
Capitalized interest                (27)     (27)     (12)     (14)
Other                               (81)      42      (15)      28
--------                               ---      ---      ---      ---
Total                             $(269)   $(132)   $(154)    $(77)
========                             =====    =====    =====     ====
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Six months ended  Three months ended
Deliveries                                  June 30           June 30
----------                                  -------           -------
Commercial Airplanes                      2009    2008     2009      2008
--------------------                      ----    ----     ----      ----
737 Next-Generation                   190     187       99       100
747                                     6       9        2         5
767                                     6       6        3         3
777                                    44      39       21        18
---                                   ---     ---      ---       ---
Total                                  246     241      125       126
=========                                  ===     ===      ===       ===
--------------------------
Integrated Defense Systems
--------------------------
Boeing Military Aircraft
F/A-18 Models                          23      21       13        11
F-15E Eagle                             6       4        2
C-17 Globemaster                        7       8        4         5
KC-767 Tanker                           1       2
CH-47 Chinook                           1       4        1         2
T-45TS Goshawk                          4       3        2         2
AH-64 Apache                           13       1        8         1
Network and Space Systems
Delta IV - Commercial/International     1                1
Commercial and Civil Satellites         2       1        2
Military Satellites                     1
June 30 March 31 December 31
Contractual backlog (Dollars in billions)        2009     2009      2008
-----------------------------------------        ----     ----      ----
Commercial Airplanes                         $257.4   $266.0    $278.6
Integrated Defense Systems:
Boeing Military Aircraft                    28.2     28.2      25.7
Network and Space Systems                    8.0      8.9       8.9
Global Services and Support                 11.7     11.6      10.7
---------------------------------                 ----     ----      ----
Total Integrated Defense Systems               47.9     48.7      45.3
-----------------------------------               ----     ----      ----
Total contractual backlog                       $305.3   $314.7    $323.9
=========================                       ======   ======    ======
Unobligated backlog                              $22.5    $24.7     $28.2
===================                              =====    =====     =====
Total backlog                                   $327.8   $339.4    $352.1
=============                                   ======   ======    ======
Workforce                                      158,700  160,900   162,200
=========                                      =======  =======   =======

Source: Boeing