Forward-Looking Statements

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "may," "will," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements.  Examples of forward-looking statements include, but are not limited to, statements we make regarding our guidance relating to 2010 and 2011 financial and operating performance, as well as any other statement that does not directly relate to any historical or current fact.  Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate.  These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements.  Among these factors are: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) risks attributable to our reliance on our commercial customers, our suppliers and the worldwide market; (3) risks related to our development programs, including the 787 and 747-8 commercial aircraft programs; (4) risks related to our dependence on U.S. government contracts; (5) our reliance on fixed-price contracts, which could subject us to losses in the event of cost overruns; (6) risks related to cost-type contracts; (7) uncertainties concerning contracts that include in-orbit incentive payments; (8) changes in accounting estimates; (9) significant changes in discount rates and actual investment return on pension assets; (10) work stoppages or other labor disruptions; (11) changes in the competitive landscape in the markets in which we operate; (12) risks related to our doing business in other countries, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) changes in the financial condition or regulatory landscape of the commercial airline industry as they relate to Boeing Capital Corporation; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) risks related to realizing the anticipated benefits of merger, acquisitions, joint ventures/strategic alliance or divestitures; (17) adequacy of our insurance coverage to cover significant risk exposures; and (18) potential business disruptions related to physical security threats, IT attacks or natural disasters.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.  Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to publicly update any forward-looking statement, except as required by law.

The Boeing Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

Six months ended

Three months ended

June 30

June 30

(Dollars in millions, except per share data)

2010

2009

2010

2009

Sales of products

$24,940

$28,131

$12,624

$14,296

Sales of services

5,849

5,525

2,949

2,858

Total revenues

30,789

33,656

15,573

17,154

Cost of products  

(19,937)

(23,159)

(10,115)

(11,580)

Cost of services

(4,665)

(4,303)

(2,384)

(2,184)

Boeing Capital Corporation interest expense

(82)

(90)

(41)

(43)

Total costs and expenses

(24,684)

(27,552)

(12,540)

(13,807)

6,105

6,104

3,033

3,347

Income from operating investments, net

113

102

54

70

General and administrative expense

(1,731)

(1,716)

(778)

(925)

Research and development expense, net

(2,001)

(1,930)

(1,001)

(960)

Loss on dispositions, net

(5)

(6)

(1)

(3)

Earnings from operations

2,481

2,554

1,307

1,529

Other income, net

33

11

35

47

Interest and debt expense

(254)

(137)

(132)

(80)

Earnings before income taxes

2,260

2,428

1,210

1,496

Income tax expense

(952)

(816)

(421)

(499)

Net earnings from continuing operations

1,308

1,612

789

997

Net (loss)/gain on disposal of discontinued operations,

  net of taxes of $1, $3, $1 and $0

(2)

(4)

(2)

1

Net earnings

$1,306

$1,608

$787

$998

Basic earnings per share from continuing operations

$1.78

$2.29

$1.07

$1.42

Net loss on disposal of discontinued operations, net of taxes

(0.01)

Basic earnings per share

$1.78

$2.28

$1.07

$1.42

Diluted earnings per share from continuing operations

$1.76

$2.28

$1.06

$1.41

Net loss on disposal of discontinued operations, net of taxes

(0.01)

Diluted earnings per share

$1.76

$2.27

$1.06

$1.41

Cash dividends paid per share

$0.84

$0.84

$0.42

$0.42

Weighted average diluted shares (millions)

741.9

707.8

742.9

707.4

The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited)

June 30

December 31

(Dollars in millions except per share data)

2010

2009

Assets

Cash and cash equivalents

$  4,468

$  9,215

Short-term and other investments

5,558

2,008

Accounts receivable, net

6,565

5,785

Current portion of customer financing, net

316

368

Deferred income taxes

1,052

966

Inventories, net of advances and progress billings

20,368

16,933

Total current assets

38,327

35,275

Customer financing, net

5,084

5,466

Property, plant and equipment, net of accumulated depreciation of $13,172 and $12,795

8,584

8,784

Goodwill

4,302

4,319

Other acquired intangibles, net

2,821

2,877

Deferred income taxes

2,379

3,062

Investments

1,008

1,030

Pension plan assets, net

27

16

Other assets, net of accumulated amortization of $480 and $492

1,223

1,224

Total assets

$ 63,755

$ 62,053

Liabilities and equity

Accounts payable

$ 6,960

$ 7,096

Other accrued liabilities

12,899

12,822

Advances and billings in excess of related costs

12,009

12,076

Income taxes payable

713

182

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

1,507

707

Total current liabilities

34,088

32,883

Accrued retiree health care

7,068

7,049

Accrued pension plan liability, net

6,466

6,315

Non-current income taxes payable

860

827

Other long-term liabilities

661

537

Long-term debt

11,439

12,217

Equity:

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

5,061

5,061

Additional paid-in capital

3,832

3,724

Treasury shares, at cost – 251,121,850 and 256,406,709

(15,582)

(15,911)

Retained earnings

23,409

22,746

Accumulated other comprehensive loss

(11,744)

(11,877)

ShareValue Trust shares – 29,948,920 and 29,563,324

(1,899)

(1,615)

Total Boeing shareholders’ equity

3,077

2,128

      Noncontrolling interest

96

97

      Total equity

3,173

2,225

      Total liabilities and equity

$ 63,755

$ 62,053

The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Six months ended

June 30

(Dollars in millions)

2010

2009

Cash flows - operating activities:

   Net earnings

$ 1,306

$ 1,608

   Adjustments to reconcile net earnings to net cash (used)/provided by operating activities:

     Non-cash items –

          Share-based plans expense

130

121

          Depreciation

743

666

          Amortization of other acquired intangibles

111

99

          Amortization of debt discount/premium and issuance costs

10

4

          Investment/asset impairment charges, net

20

50

          Customer financing valuation provision

5

12

          Loss on disposal of discontinued operations

3

7

          Loss on dispositions, net

5

6

          Other charges and credits, net

45

78

          Excess tax benefits from share-based payment arrangements

(15)

(5)

      Changes in assets and liabilities –

          Accounts receivable

(827)

(1,215)

          Inventories, net of advances and progress billings

(3,425)

(1,593)

          Accounts payable

(129)

804

          Other accrued liabilities

266

262

          Advances and billings in excess of related costs

(66)

(1,030)

          Income taxes receivable, payable and deferred

760

921

          Other long-term liabilities

255

(20)

          Pension and other postretirement plans

705

586

          Customer financing, net

279

(262)

          Other

(200)

95

               Net cash (used)/provided by operating activities

(19)

1,194

Cash flows - investing activities:

   Property, plant and equipment additions

(443)

(736)

   Property, plant and equipment reductions

22

23

   Acquisitions, net of cash acquired

(24)

(47)

   Contributions to investments

(7,101)

(372)

   Proceeds from investments

3,557

286

   Reimbursements of Sea Launch guarantee payments

40

   Receipt of economic development program funds

57

               Net cash used by investing activities

(3,892)

(846)

Cash flows - financing activities:

   New borrowings

26

1,843

   Debt repayments

(88)

(218)

   Repayments of distribution rights financing

(137)

   Stock options exercised, other

61

7

   Excess tax benefits from share-based payment arrangements

15

5

   Employee taxes on certain share-based payment arrangements

(18)

(17)

   Common shares repurchased

(50)

   Dividends paid

(637)

(610)

               Net cash (used)/provided by financing activities

(778)

960

Effect of exchange rate changes on cash and cash equivalents

(58)

23

Net (decrease)/increase in cash and cash equivalents

(4,747)

1,331

Cash and cash equivalents at beginning of year

9,215

3,268

Cash and cash equivalents at end of period

$ 4,468

$ 4,599

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

Six months ended

Three months ended

June 30

June 30

(Dollars in millions)

2010

2009

2010

2009

Revenues:

  Commercial Airplanes

$ 14,901

$ 16,985

$ 7,433

$ 8,431

  Boeing Defense, Space & Security:

     Boeing Military Aircraft

6,821

6,499

3,580

3,432

     Network & Space Systems

4,677

5,781

2,354

3,103

     Global Services & Support

4,098

4,090

2,049

2,115

  Total Boeing Defense, Space & Security

15,596

16,370

7,983

8,650

  Boeing Capital Corporation

324

330

162

167

  Other segment

80

74

44

35

  Unallocated items and eliminations

(112)

(103)

(49)

(129)

Total revenues

$ 30,789

$ 33,656

$ 15,573

$ 17,154

Earnings from operations:

  Commercial Airplanes

$  1,362

$  1,234

$  683

$  817

  Boeing Defense, Space & Security:

     Boeing Military Aircraft

623

685

356

397

     Network & Space Systems

341

446

167

239

     Global Services & Support

411

454

188

240

  Total Boeing Defense, Space & Security

1,375

1,585

711

876

  Boeing Capital Corporation

101

73

55

36

  Other segment

(122)

(69)

(72)

(46)

  Unallocated items and eliminations

(235)

(269)

(70)

(154)

Earnings from operations

2,481

2,554

1,307

1,529

Other income, net

33

11

35

47

Interest and debt expense

(254)

(137)

(132)

(80)

Earnings before income taxes

2,260

2,428

1,210

1,496

Income tax expense

(952)

(816)

(421)

(499)

Net earnings from continuing operations

1,308

1,612

789

997

Net (loss)/gain on disposal of discontinued operations,

  net of taxes of $1, $3, $1 and $0

(2)

(4)

(2)

1

Net earnings

$  1,306

$  1,608

$  787

$  998

Research and development expense, net:

  Commercial Airplanes

$  1,391

$  1,370

$  693

$  659

  Boeing Defense, Space & Security:

     Boeing Military Aircraft

320

310

158

171

     Network & Space Systems

221

185

115

99

     Global Services & Support

69

61

35

36

  Total Boeing Defense, Space & Security

610

556

308

306

  Other segment

4

(5)

Total research and development expense, net

$  2,001

$  1,930

$  1,001

$  960

Unallocated items and eliminations:

  Share-based plans expense

$  (90)

$  (116)

$  (43)

$  (59)

  Deferred compensation (expense)/income

(37)

(46)

44

(69)

  Pension

43

45

22

22

  Post-retirement

(24)

(44)

(13)

(21)

  Capitalized interest

(28)

(27)

(18)

(12)

  Other

(99)

(81)

(62)

(15)

Total

$  (235)

$  (269)

$  (70)

$  (154)

The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)

Six months ended

Three months ended

Deliveries

June 30

June 30

Commercial Airplanes

2010

2009

2010

2009

    737

181

190

95

99

    747

6

2

    767

6

6

3

3

    777

35

44

16

21

   Total

222

246

114

125

Boeing Defense, Space & Security

Boeing Military Aircraft

    F/A-18 Models

24

23

11

13

    F-15E Eagle

7

6

4

2

    C-17 Globemaster

6

7

3

4

    KC-767 Tanker

1

    CH-47 Chinook

8

1

6

1

    T-45TS Goshawk

4

2

    AH-64 Apache

9

13

5

8

    AEW&C

3

3

Network & Space Systems

    Delta IV

1

1

1

    Commercial and Civil Satellites

2

2

1

2

    Military Satellites

1

1

June 30

March 31

December 31

Contractual backlog (Dollars in billions)

2010

2010

2009

  Commercial Airplanes

$251.6

$250.4

$250.5

  Boeing Defense, Space & Security:

    Boeing Military Aircraft

26.6

27.5

26.4

    Network & Space Systems

7.5

8.5

7.7

    Global Services & Support

11.9

12.5

11.9

  Total Boeing Defense, Space & Security

46.0

48.5

46.0

Total contractual backlog

$297.6

$298.9

$296.5

Unobligated backlog

$14.7

$15.9

$19.1

Total backlog

$312.3

$314.8

$315.6

Workforce

159,900*

158,200*

157,100

*Note: Workforce data vary from those reported in 2009 and earlier. The new totals include all subsidiaries, some of which were excluded in prior years.