Boeing Reports Second-Quarter Financial Results

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.

Contact:

Investor Relations:

Diana Sands or Rob Young

(312) 544-2140

Communications:

Todd Blecher

(312) 544-2002

Second-quarter financial presentation: http://www.boeing.com/companyoffices/financial/2009q2/2009q2.pdf

                       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
        =========                                                                            =======    =======      =======



 


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