Boeing Reports Third-Quarter EPS of $1.44 and Updates Guidance.

- Third-quarter revenues rose 12 percent to $16.5 billion on higher commercial airplane deliveries and defense business growth

- Net income grew 61 percent to $1.1 billion and EPS increased to $1.44 per share

- Operating cash flow increased to $3.3 billion

- Backlog expanded to a record level of $295 billion

- Guidance increased for 2007 revenue, EPS and cash flow; 2008 guidance adjusted to reflect revised 787 delivery schedule

Table 1. Summary Financial Results

(Millions, except 3rd Quarter Nine Months per share data) 2007 2006(1) Change 2007 2006(1) Change

Revenues $16,517 $14,739 12% $48,910 $43,989 11% Earnings From Operations $1,499 $951 58% $4,314 $1,862 132% Operating Margin 9.1% 6.5% 2.6 Pts 8.8% 4.2% 4.6 Pts Reported Net Income $1,114 $694 61% $3,041 $1,226 148% Reported Earnings per Share $1.44 $0.89 62% $3.92 $1.57 150% Adjusted Earnings per Share * (2) $1.44 $1.11 30% $3.91 $2.53 55% Operating Cash Flow $3,329 $560 494% $7,691 $5,058 52%

(1) 3Q06 results include a charge of $280, or $0.22 per share to exit Connexion. Nine months 2006 results also include a legal settlement charge of $571, or $0.74 per share, and an AEW&C charge of $496, or $0.39 per share. (2) Adjusted EPS* for 3Q06 excludes only the Connexion charge. Nine-months results exclude only the legal settlement, the Connexion charge 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, Oct. 24 /PRNewswire-FirstCall/ -- The Boeing Company's third-quarter net earnings increased to $1.1 billion, or $1.44 per share, from $694 million, or $0.89 per share, in the same period last year (Table 1). Third-quarter revenues increased 12 percent to $16.5 billion while earnings from operations rose to $1.5 billion, yielding a 9.1 percent operating margin. Excluding last year's charge of $0.22 per share in the period to exit the Connexion business, adjusted earnings per share* rose 30 percent.

Boeing increased its 2007 guidance for revenue, earnings per share and cash flow due to core business performance and lower corporate costs, and now expects earnings per share this year to be between $5.05 and $5.15. The company's guidance now reflects the previously disclosed revision to the 787 delivery schedule, and the 2008 EPS outlook is reaffirmed.

"Our focus on growth and productivity is driving strong financial performance across our company," said Boeing Chairman, President and CEO Jim McNerney. "With our record backlog and healthy, growing markets, the tasks at hand are to execute our programs, continue expanding our business base, and become more efficient every day."

Third-quarter operating cash flow grew to $3.3 billion, reflecting increased operating earnings, continued strong commercial airplane orders, and a decrease in working capital. Free cash flow* grew to $2.9 billion after capital expenditures (Table 2).

 
  Table 2.  Cash Flow 
                                           3rd Quarter       Nine Months 
  (Millions)                              2007    2006      2007      2006 
 
  Operating Cash Flow (1)                $3,329    $560    $7,691    $5,058 
    Less Additions to Property, Plant 
     & Equipment                          ($417)  ($348)  ($1,282)  ($1,093) 
  Free Cash Flow*                        $2,912    $212    $6,409    $3,965 
 
  (1) Operating cash flow includes $563 pension plans contribution in first 
      nine months of 2007 and $520 in first nine months 2006. 
 
 
 
 

For the first nine months of the year revenues increased 11 percent to $48.9 billion and earnings per share more than doubled to $3.92 per share. The year-earlier period included charges for Connexion, a legal settlement and Airborne Early Warning and Control programs. Total company backlog as of September 30, 2007 reached a record $295 billion, up 29 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 $12.2 billion at September 30, up 16 percent from $10.5 billion at the end of the second quarter (Table 3). The company increased its share repurchases, spending $905 million for 9.1 million shares during the quarter, leaving $0.5 billion remaining under the current repurchase authorization. Consolidated debt decreased slightly on lower aircraft financing debt.

 
  Table 3.  Cash, Marketable Securities and Debt Balances 
                                                         Quarter-End 
  (Billions)                                        3Q07              2Q07 
  Cash                                              $8.9              $7.1 
  Marketable Securities (1)                         $3.3              $3.4 
     Total                                         $12.2             $10.5 
 
  Debt Balances: 
  The Boeing Company                                $3.9              $3.9 
  Boeing Capital Corporation                        $4.7              $4.8 
     Total Consolidated Debt                        $8.6              $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) third-quarter revenues increased 23 percent to $8.3 billion on a 9 percent increase in deliveries to 109 airplanes, as well as higher commercial aviation services revenue (Table 4). Operating earnings grew 46 percent to $945 million and operating margins expanded to 11.4 percent. Margins in the latest quarter primarily reflect higher operating leverage.

 
  Table 4. Commercial Airplanes Operating Results 
 
  (Millions, except 
   deliveries & margin      3rd Quarter               Nine Months 
   percent)                2007    2006    Change    2007     2006    Change 
 
  Commercial Airplanes 
   Deliveries               109     100       9%      329      295      12% 
 
  Revenues               $8,258  $6,693      23%  $24,520  $20,859      18% 
  Earnings from 
   Operations              $945    $646      46%   $2,611   $2,068      26% 
 
  Operating Margins       11.4%    9.7%  1.7 Pts    10.6%     9.9%  0.7 Pts 
 
 
 
 

For the first nine months of the year, BCA revenues rose 18 percent to $24.5 billion on a 12 percent increase in airplane deliveries. Operating earnings grew 26 percent to $2.6 billion and margins expanded to 10.6 percent, driven by higher delivery volume and services sales.

BCA booked 354 gross orders during the quarter and 903 in the first nine months. Its contractual backlog rose to a record $224 billion, increasing 46 percent in the last year to more than seven times BCA's 2006 revenues.

As previously disclosed, the…