Boeing Reports Second-Quarter EPS of $1.35 and Raises 2007 Outlook.

- Second-quarter revenues rose 14 percent to $17.0 billion on higher airplane deliveries

- Net income grew to $1.1 billion and EPS increased to $1.35 per share on higher volume and productivity gains

- Operating cash flow increased 49 percent to $3.6 billion

- Backlog expanded to a record level of $279 billion

- 2007 revenue, EPS, and cash flow guidance increased on stronger commercial airplanes outlook, more than offsetting higher R&D forecast

Table 1. Summary Financial Results

(Millions, except 2nd Quarter Six Months per share data) 2007 2006 Change 2007 2006 Change

Revenues $17,028 $14,986 14% $32,393 $29,250 11% Earnings/(Loss) From Operations $1,506 ($48)(1) N.M. $2,815 $911 209% Operating Margin 8.8% (0.3%)(1) 9.1 Pts 8.7% 3.1% 5.6 Pts Reported Net Income/(Loss) $1,050 ($160)(1) N.M. $1,927 $532 262% Reported Earnings/(Loss) per Share $1.35 ($0.21)(1) N.M. $2.48 $0.69 259% Adjusted Earnings per Share * (2) $1.35 $0.56 141% $2.47 $1.43 73% Operating Cash Flow $3,634 $2,443 49% $4,362 $4,498 (3%)

(1) 2Q06 results include a legal settlement charge of $571, or $0.77 per share, and an AEW&C charge of $496, or $0.41 per share. (2) Adjusted EPS* excludes only the legal settlement and discontinued operations. * Non-GAAP measure. A complete definition and reconciliation of Boeing's use of non-GAAP measures, identified by an asterisk (*), is found on page 9, "Non-GAAP Measure Disclosure."

CHICAGO, July 25 /PRNewswire-FirstCall/ -- The Boeing Company's second-quarter net earnings increased to $1.1 billion, or $1.35 per share, compared to a loss of $160 million, or ($0.21) per share, after charges totaling $1.18 per share a year ago (Table 1). Second-quarter revenues grew 14 percent to $17.0 billion and earnings from operations rose to $1.5 billion, yielding an 8.8 percent operating margin.

Boeing increased its 2007 guidance for revenue, earnings per share and cash flow based on strength in its core businesses and company-wide growth and productivity efforts. These efforts more than offset an increased research and development forecast. Boeing reaffirmed its 2008 outlook.

"Our results and increased outlook reflect strong markets, preferred products and services, and a focus on execution, growth and productivity," said Boeing Chairman, President, and Chief Executive Officer Jim McNerney. "Our extensive productivity gains enable us to invest to protect key growth programs while still improving our financial performance. In short, we are taking on our challenges directly as we continue to realize this company's potential."

This year's second-quarter results reflect strong performance across the commercial airplane and defense businesses. Last year's results included charges of $571 million, or $0.77 per share, for a legal settlement and $496 million, or $0.41 per share, related to the Airborne Early Warning & Control (AEW&C) program. Excluding only the legal settlement, adjusted EPS* grew 141 percent, from $0.56 per share to $1.35 per share.

Second-quarter operating cash flow grew 49 percent to $3.6 billion, reflecting higher net earnings, aircraft financing prepayments and working capital management. Free cash flow* grew 53 percent to $3.2 billion after capital expenditures (Table 2).

 
  Table 2.  Cash Flow 
                                           2nd Quarter       Six Months 
  (Millions)                              2007     2006     2007     2006 
 
  Operating Cash Flow (1)                $3,634   $2,443   $4,362   $4,498 
    Less Additions to Property, Plant 
     & Equipment                          ($414)   ($333)   ($865)   ($745) 
  Free Cash Flow*                        $3,220   $2,110   $3,497   $3,753 
 
  (1) Operating cash flow includes a $523 contribution to pension plans in 
      first half of 2007 and $506 in first half 2006. 
 
 
 

For the first half of the year, revenues increased 11 percent to $32.4 billion. Earnings increased to $2.48 per share, a $1.79 per share increase over 2006 which included charges for the legal settlement and for AEW&C. Total company backlog at quarter-end reached a record $279 billion, up 27 percent in the last twelve months due to continued strength in commercial airplane orders and additional defense orders.

Cash and investments in marketable securities totaled $10.5 billion at June 30, up 30 percent from $8.1 billion at the end of the first quarter (Table 3). The company increased its share repurchases, spending $620 million for 6.5 million shares during the quarter, leaving $1.4 billion remaining under the current repurchase authorization. Consolidated debt was stable during the quarter.

 
  Table 3.  Cash, Marketable Securities and Debt Balances 
                                                           Quarter-End 
  (Billions)                                         2Q07              1Q07 
  Cash                                               $7.1              $4.8 
  Marketable Securities (1)                          $3.4              $3.3 
     Total                                          $10.5              $8.1 
 
  Debt Balances: 
  The Boeing Company                                 $3.9              $3.9 
  Boeing Capital Corporation                         $4.8              $4.8 
     Total Consolidated Debt                         $8.7              $8.7 
 
  (1) Marketable securities consists primarily of investments in 
      high-quality fixed-income and asset-backed securities classified as 
      "short-term investments" and "investments." 
 
 
  Segment Results 
  Commercial Airplanes 
 

Boeing Commercial Airplanes (BCA) second-quarter revenues increased 22 percent to $8.7 billion, on an 18 percent increase in deliveries to 114 airplanes as well as higher commercial aviation services revenue (Table 4). Operating earnings grew 34 percent to $960 million and operating margins expanded to 11.0 percent. Margins in the latest quarter reflect higher operating leverage and productivity improvements offset by planned R&D spending that was $243 million higher than in the second quarter of 2006. R&D spending in the second quarter was slightly lower than in the first quarter.

While R&D spending is still expected to be lower in the second half of this year than in the first six months, the decline will be less rapid than previously anticipated in order to meet commitments primarily on the 787 program. As a result, Boeing increased its R&D guidance for 2007. BCA expects its growth and productivity gains will more than offset the higher R&D forecast.

 
  Table 4. Commercial Airplanes Operating Results 
 
  (Millions, except 
   deliveries & margin      2nd Quarter      %       Six Months         % 
   percent)                2007    2006    Change   2007     2006     Change 
 
  Commercial Airplanes 
   Deliveries               114      97      18%      220      195      13% 
 
  Revenues               $8,707…