Boeing Reports First-Quarter Results

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

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," "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 dependence on U.S. government contracts; (4) our reliance on fixed-price contracts, which could subject us to losses in the event of cost overruns; (5) risks related to cost-type contracts; (6) uncertainties concerning contracts that include in-orbit incentive payments; (7) changes in accounting estimates; (8) significant changes in discount rates and actual investment return on pension assets; (9) work stoppages or other labor disruptions; (10) changes in the competitive landscape in the markets in which we operate; (11) risks related to our doing business in other countries, including sales to non-U.S. customers; (12) potential adverse developments in new or pending litigation and/or government investigations; (13) changes in the financial condition or regulatory landscape of the commercial airline industry as they relate to Boeing Capital Corporation; (14) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (15) risks related to realizing the anticipated benefits of merger, acquisitions, joint ventures/strategic alliance or divestitures; (16) adequacy of our insurance coverage to cover significant risk exposures; and (17) 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.

Contact:

Investor Relations:  Scott Fitterer or Rob Young (312) 544-2140

Communications:  Chaz Bickers (312) 544-2002

The Boeing Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)


Three months ended


March 31

(Dollars in millions, except per share data)

2010

2009

Sales of products

$12,316

$13,835

Sales of services

2,900

2,667

Total revenues

15,216

16,502




Cost of products  

(9,822)

(11,579)

Cost of services

(2,281)

(2,119)

Boeing Capital Corporation interest expense

(41)

(47)

Total costs and expenses

(12,144)

(13,745)


3,072

2,757

Income from operating investments, net

59

32

General and administrative expense

(953)

(791)

Research and development expense, net

(1,000)

(970)

Loss on dispositions, net

(4)

(3)

Earnings from operations

1,174

1,025

Other expense, net

(2)

(36)

Interest and debt expense

(122)

(57)

Earnings before income taxes

1,050

932

Income tax expense

(531)

(317)

Net earnings from continuing operations

519

615

Net loss on disposal of discontinued operations, net of taxes of $3


(5)

Net earnings

$519

$610




Basic earnings per share from continuing operations

$0.71

$0.88

Net loss on disposal of discontinued operations, net of taxes


(0.01)

Basic earnings per share

$0.71

$0.87




Diluted earnings per share from continuing operations

$0.70

$0.87

Net loss on disposal of discontinued operations, net of taxes


(0.01)

Diluted earnings per share

$0.70

$0.86

Cash dividends paid per share

$0.42

$0.42

Weighted average diluted shares (millions)

740.1

707.4



The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited)





March 31

December 31

(Dollars in millions except per share data)

2010

2009

Assets



Cash and cash equivalents

$4,517

$  9,215

Short-term investments

5,845

2,008

Accounts receivable, net

6,359

5,785

Current portion of customer financing, net

274

368

Deferred income taxes

1,030

966

Inventories, net of advances and progress billings

18,773

16,933

Total current assets

36,798

35,275

Customer financing, net

5,273

5,466




Property, plant and equipment, net of accumulated depreciation of
    $13,028 and $12,795

8,693

8,784

Goodwill

4,317

4,319

Other acquired intangibles, net

2,878

2,877

Deferred income taxes

2,754

3,062

Investments

1,030

1,030

Pension plan assets, net

21

16

Other assets, net of accumulated amortization of $441 and $492

1,206

1,224

Total assets

$ 62,970

$ 62,053

Liabilities and shareholders' equity



Accounts payable

7,469

$ 7,096

Other accrued liabilities

12,267

12,822

Advances and billings in excess of related costs

11,857

12,076

Income taxes payable

412

182

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

1,479

707

Total current liabilities

33,484

32,883

Accrued retiree health care

7,043

7,049

Accrued pension plan liability, net

6,392

6,315

Non-current income taxes payable

896

827

Other long-term liabilities

652

537

Long-term debt

11,464

12,217

Shareholders' 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

4,264

3,724

Treasury shares, at cost – 253,748,666 and 256,406,709

(15,744)

(15,911)

Retained earnings

23,265

22,746

Accumulated other comprehensive loss

(11,747)

(11,877)

ShareValue Trust shares – 29,747,123 and 29,563,324

(2,157)

(1,615)

Total Boeing shareholders’ equity

2,942

2,128

      Noncontrolling interest

97

97

      Total shareholders' equity

3,039

2,225

      Total liabilities and shareholders' equity

$ 62,970

$ 62,053



The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)





Three months ended


March 31

(Dollars in millions)

2010

2009

Cash flows - operating activities:



   Net earnings

$ 519

$ 610

   Adjustments to reconcile net earnings to net cash provided by operating activities:



     Non-cash items –



          Share-based plans expense

66

60

          Depreciation

350

335

          Amortization of other acquired intangibles

55

49

          Amortization of debt discount/premium and issuance costs

5

2

          Investment/asset impairment charges, net

15

21

          Customer financing valuation provision

12

9

          Loss on disposal of discontinued operations


8

          Loss on dispositions, net

4

3

          Other charges and credits, net

30

63

          Excess tax benefits from share-based payment arrangements

(8)

(5)

      Changes in assets and liabilities –



          Accounts receivable

(572)

(869)

          Inventories, net of advances and progress billings

(1,833)

(82)

          Accounts payable

225

644

          Other accrued liabilities

(136)

(169)

          Advances and billings in excess of related costs

(221)

(1,210)

          Income taxes receivable, payable and deferred

429

534

          Other long-term liabilities

246

(51)

          Pension and other postretirement plans

355

304

          Customer financing, net

221

21

          Other

(47)

(84)

               Net cash (used)/provided by operating activities

(285)

193

Cash flows - investing activities:



   Property, plant and equipment additions

(186)

(442)

   Property, plant and equipment reductions

3

25

   Acquisitions, net of cash acquired

(24)

(30)

   Contributions to investments

(4,744)

(200)

   Proceeds from investments

910

49

               Net cash (used) by investing activities

(4,041)

(598)

Cash flows - financing activities:



   New borrowings

19

1,827

   Debt repayments

(51)

(71)

   Repayments of distribution rights financing

(13)


   Stock options exercised, other

23


   Excess tax benefits from share-based payment arrangements

8

5

   Employee taxes on certain share-based payment arrangements

(15)

(15)

   Common shares repurchased


(50)

   Dividends paid

(318)

(305)

               Net cash (used)/provided by financing activities

(347)

1,391

Effect of exchange rate changes on cash and cash equivalents

(25)

(17)

Net (decrease)/increase in cash and cash equivalents

(4,698)

969

Cash and cash equivalents at beginning of year

9,215

3,268

Cash and cash equivalents at end of period

$ 4,517

$ 4,237



The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)



Three months ended


March 31

(Dollars in millions)

2010

2009

Revenues:



  Commercial Airplanes

$ 7,468

$ 8,554

  Boeing Defense, Space & Security:



     Boeing Military Aircraft

3,241

3,067

     Network & Space Systems

2,323

2,678

     Global Services & Support

2,049

1,975

  Total Boeing Defense, Space & Security

7,613

7,720

  Boeing Capital Corporation

162

163

  Other segment

36

39

  Unallocated items and eliminations

(63)

26

Total revenues

$ 15,216

$ 16,502




Earnings from operations:



  Commercial Airplanes

$  679

$  417

  Boeing Defense, Space & Security:



     Boeing Military Aircraft

267

288

     Network & Space Systems

174

207

     Global Services & Support

223

214

  Total Boeing Defense, Space & Security

664

709

  Boeing Capital Corporation

46

37

  Other segment

(50)

(23)

  Unallocated items and eliminations

(165)

(115)

Earnings from operations

1,174

1,025

  Other expense, net

(2)

(36)

  Interest and debt expense

(122)

(57)

Earnings before income taxes

1,050

932

  Income tax expense

(531)

(317)

Net earnings from continuing operations

519

615

  Net loss on disposal of discontinued operations, net of taxes of $3


(5)

Net earnings

$  519

$  610




Research and development expense, net:



  Commercial Airplanes

$  698

$  711

  Boeing Defense, Space & Security:



     Boeing Military Aircraft

162

139

     Network & Space Systems

106

86

     Global Services & Support

34

25

  Total Boeing Defense, Space & Security

302

250

  Other segment


9

Total research and development expense, net

$  1,000

$  970




Unallocated items and eliminations:



  Share-based plans expense

$  (47)

$  (57)

  Deferred compensation expense

(81)

23

  Pension

21

23

  Post-retirement

(11)

(23)

  Capitalized interest

(10)

(15)

  Other

(37)

(66)

Total

$  (165)

$  (115)



The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)






Three months ended

Deliveries

March 31

Commercial Airplanes

2010


2009

    737

86


91

    747



4

    767

3


3

    777

19


23

   Total

108


121





Boeing Defense, Space & Security




Boeing Military Aircraft




    F/A-18 Models

13


10

    F-15E Eagle

3


4

    C-17 Globemaster

3


3

    KC-767 Tanker



1

    CH-47 Chinook

2



    T-45TS Goshawk



2

    AH-64 Apache

4


5





Network & Space Systems




    Delta IV

1



    Commercial and Civil Satellites

1



    Military Satellites

1


1










March 31


December 31

Contractual backlog (Dollars in billions)

2010


2009

  Commercial Airplanes

$250.4


$250.5

  Boeing Defense, Space & Security:




    Boeing Military Aircraft

27.5


26.4

    Network & Space Systems

8.5


7.7

    Global Services & Support

12.5


11.9

  Total Boeing Defense, Space & Security

48.5


46.0

Total contractual backlog

$298.9


$296.5

Unobligated backlog

$15.9


$19.1

Total backlog

$314.8


$315.6

Workforce

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.




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