CHICAGO,
July 25 /PRNewswire-FirstCall/ -- The
Boeing Company's (NYSE: BA)
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 $7,113 22% $16,262 $14,166 15%
Earnings from
Operations $960 $719 34% $1,666 $1,422 17%
Operating Margins 11.0% 10.1% 0.9 Pts 10.2% 10.0% 0.2 Pts
For the first half of the year, BCA revenues rose 15 percent to
$16.3 billion on a 13 percent increase in airplane deliveries. Operating
earnings grew 17 percent to $1.7 billion and margins expanded to 10.2 percent,
driven by higher airplane deliveries and higher aircraft modification services
and spares sales.
BCA booked 360 gross orders during the quarter and 549 in the first half.
Its contractual backlog rose to a record $208 billion, increasing 47 percent
in the last year to more than seven times BCA's 2006 revenues.
Recent important milestones for the 787 Dreamliner program include rollout
of the first airplane and certification of the Dreamlifter aircraft. The
program has won 683 firm orders to date from 47 customers. The program is
performing the production, testing and integration activities that will lead
to its first flight, which is targeted to occur by the end of September.
Boeing continues to address and manage pressures with respect to supplier
performance, schedule and weight. While the risks inherent in the latter
stages of major airplane development programs remain, Boeing continues to
expect on-time delivery of the 787 in May 2008, in accordance with its
contractual obligations.
Integrated Defense Systems
Boeing Integrated Defense Systems (IDS) revenues rose 3 percent to
$8.0 billion on higher aircraft deliveries and higher volume in support
services, more than offsetting the loss of reported revenue from last year's
formation of the United Launch Alliance (ULA) joint venture. Operating
earnings grew to $854 million and operating margin expanded to 10.7 percent.
For the first half of the year, revenues increased 5 percent to
$15.7 billion generating higher operating earnings of $1.6 billion and
expanding operating margins to 10.4 percent. IDS results reflect higher
volume across all segments combined with productivity improvements, partially
offset by the ULA revenue exclusion.
Table 5. Integrated Defense Systems Operating Results
(Millions, except 2nd Quarter % Six Months %
margin percent) 2007 2006 Change 2007 2006 Change
Revenues
Precision
Engagement &
Mobility Systems $3,422 $3,344 2% $6,703 $6,435 4%
Network & Space
Systems $2,943 $2,937 0% $5,799 $5,682 2%
Support Systems $1,616 $1,493 8% $3,200 $2,843 13%
Total IDS Revenues $7,981 $7,774 3% $15,702 $14,960 5%
Earnings (Loss) from
Operations
Precision
Engagement &
Mobility Systems $406 ($15)(1) N.M. $828 $453(1) 83%
Network & Space
Systems $256 $108 137% $418 $259 61%
Support Systems $192 $216 (11%) $392 $414 (5%)
Total IDS Earnings
from Operations $854 $309 176% $1,638 $1,126 45%
Operating Margins 10.7% 4.0% 6.7 Pts 10.4% 7.5% 2.9 Pts
(1) A charge of $496 in 2Q06 due to increased costs on AEW&C reduced IDS
margins by 6.4 points in the quarter and 3.3 points for the first six
months, and reduced PE&MS margins by 14.8 points in the quarter and
7.7 points for the first six months.
Precision Engagement & Mobility Systems revenues grew 2 percent to
$3.4 billion on higher deliveries from the F-15 and Chinook programs,
partially offset by lower Apache revenues. Operating margin of 11.9 percent
was driven by higher earnings on tactical aircraft and rotorcraft programs,
partially offset by lower earnings on international tanker. Margins in last
year's second quarter were affected by the AEW&C charge.
Network & Space Systems achieved significant milestones on development
programs such as Future Combat Systems and Wideband Global SATCOM.
Second-quarter revenues were $2.9 billion despite the loss of reported revenue
from ULA. In the quarter, a commercial Delta launch and proprietary volume
offset this reduction. Operating margin grew to 8.7 percent in the quarter
reflecting strong performance across the segment's portfolio of programs.
Support Systems generated strong growth and profitability on its broad
business base during the quarter. Revenues increased 8 percent to
$1.6 billion and operating margin was 11.9 percent. The higher revenues
reflect increased volume on integrated logistics programs and international
support programs, while the margins were affected by a less favorable contract
mix.
IDS' backlog at quarter-end was $70.5 billion as progress continued on
large multi-year contracts.
Boeing Capital Corporation
Boeing Capital Corporation's (BCC) portfolio balance at the end of the
second quarter was $7.0 billion, down $0.9 billion from the end of the first
quarter of 2007 and down 18% from $8.5 billion a year ago on normal run-off,
prepayments, asset sales and depreciation. Revenues declined consistent with
portfolio reductions and the absence of asset sales from the year-ago period
(Table 6). BCC increased pre-tax earnings 13 percent to $70 million on lower
asset impairments and lower provisions for losses on receivables. BCC's
debt-to-equity ratio remained steady at 5.0-to-1.
Table 6. Boeing Capital Corporation Operating Results
2nd Quarter % Six Months %
(Millions) 2007 2006 Change 2007 2006 Change
Revenues $209 $243 (14%) $422 $480 (12%)
Pre-Tax Income $70 $62 13% $143 $132 8%
Additional Information
The "Other" segment consists primarily of Boeing Engineering, Operations
and Technology and the Connexion business (which was closed at the end of
2006), as well as certain results related to the consolidation of all business
units. Other segment expense was $30 million in the second quarter, a
significant improvement from $90 million of expense in the same period last
year which included Connexion.
Unallocated share-based-plans expense was $133 million, down from
$248 million in the same period of 2006 due to changes in the company's
long-term compensation plans implemented last year, despite higher stock price
appreciation. Pension expense for the quarter was $251 million, of which
$141 million was recorded in unallocated expense, and the balance was recorded
as expense at BCA and IDS. Boeing's pension plans are fully funded on a
projected benefit obligation basis, and there were no significant cash
contributions made during the quarter.
Outlook
The company's financial guidance summarized in Table 7 reflects strong
performance from core businesses, higher commercial airplane deliveries, and
company-wide productivity gains. Guidance is increased for 2007 revenue,
earnings per share, cash flow, and R&D. Guidance for 2008 is reaffirmed.
Boeing's 2007 revenue guidance is now approximately $65 billion, up from
$64.5 billion to $65 billion, and 2008 revenue guidance is reaffirmed at
$71 billion to $72 billion. Earnings-per-share guidance for 2007 is now
$4.80 to $4.95 per share, up from $4.55 to $4.75 per share. Guidance for 2008
EPS is reaffirmed at $5.55 per share to $5.75 per share. Operating cash flow
for 2007 is now expected to be greater than $6 billion versus prior guidance
of greater than $4 billion, and cash flow guidance for 2008 is reaffirmed at
greater than $7 billion.
Commercial Airplanes expects to deliver between 440 and 445 airplanes this
year, and is sold out. BCA revenue guidance for 2007 has been increased to
approximately $33 billion, from a range of $32.5 billion to $33 billion, and
operating margin guidance is increased to approximately 10.5 percent from
greater than 10 percent. Airplane deliveries in 2008 are expected to be
between 515 and 520 and are essentially sold out. Commercial Airplanes' 2008
revenue is expected to grow to between $39 billion and $40 billion,
accompanied by margin expansion to approximately 11 percent. The company
expects to deliver more airplanes in 2009 than in 2008.
IDS guidance for 2007 and 2008 is unchanged. Revenue this year is
expected to be approximately $31 billion, and operating margins are expected
to expand to approximately 11 percent. For 2008, IDS expects revenues to grow
to between $32 billion and $33 billion, with operating margins of
approximately 11 percent.
Boeing's research and development forecast for 2007 has been increased to
approximately $3.7 billion from between $3.2 billion and $3.4 billion. This
increase is due to higher spending than previously forecasted to maintain
schedule on the 787 development program. While R&D spending in 2008 is
expected to decline to between $2.8 billion and $3.0 billion, certain
development program challenges could push spending above that range. Annual
capital expenditures are expected to be approximately $1.6 billion in 2007 and
in 2008.
The company's non-cash pension expense is expected to be approximately
$1.1 billion for 2007 and approximately $0.9 billion for 2008. The company
expects pension expense to continue to decline after the guidance period with
2009 pension expense likely to be approximately half of the 2008 level.
Discretionary funding of Boeing's pension plans is expected to be
approximately $500 million per year in 2007 and 2008. The company has already
contributed approximately $500 million this year but will continue to evaluate
making additional discretionary contributions to its pension plans.
Table 7. Financial Outlook
(Billions, except per share data) 2007 2008
The Boeing Company
Revenues ~ $65 $71 - $72
Earnings Per Share (GAAP) $4.80 -$4.95 $5.55 - $5.75
Operating Cash Flow (1) > $6 > $7
Boeing Commercial Airplanes
Deliveries 440 - 445 515 - 520
Revenues ~ $33 $39 - $40
Operating Margin ~ 10.5 % ~ 11 %
Integrated Defense Systems
Revenues
Precision Engagement &
Mobility Systems ~ $13.5 Steady
Network & Space Systems ~ $11.0 Moderate Growth
Support Systems ~ $6.5 Moderate Growth
Total IDS Revenues ~ $31 $32 - $33
Operating Margin
Precision Engagement &
Mobility Systems ~ 12.5 % Low Double Digit
Network & Space Systems ~ 8 % High Single Digit
Support Systems ~ 13 % Low Double Digit
Total IDS Operating Margin ~ 11 % ~ 11 %
Boeing Capital Corporation
Portfolio Size Lower Lower
Revenue ~ $0.8 < $0.8
Return on Assets ~ 1.5 % > 1.0 %
Research & Development ~ $3.7 $2.8 - $3.0
Capital Expenditures ~ $1.6 ~ $1.6
(1) After forecast pension contributions of $0.5 billion in 2007 and
$0.5 billion in 2008.
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 measure. 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.
Adjusted Earnings per Share
Adjusted earnings per share is defined as GAAP diluted earnings per share
adjusted for certain significant charges or credits. Management believes
adjusted earnings per share is important to understanding the company's
on-going operations and provide additional insights into underlying business
performance. Significant charges or credits are described in the attachments
to this release which provide reconciliations between GAAP earnings per share
and adjusted earnings per share.
Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this report may constitute "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Words such as "expects," "intends," "plans," "projects," "believes,"
"estimates," and similar expressions are used to identify these
forward-looking statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are
difficult to predict. Forward-looking statements in this press release
include, among others, statements regarding future results as a result of our
growth and productivity initiatives, our 2007 and 2008 financial outlook and
the benefits of the IDS structure. Forward-looking statements are based upon
assumptions as to future events that may not prove to be accurate. Actual
outcomes and results may differ materially from what is expressed or
forecasted in these forward-looking statements. As a result, these statements
speak only as of the date they were 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. Our actual results and future
trends may differ materially depending on a variety of factors, including the
continued operation, viability and growth of major airline customers and
non-airline customers (such as the U.S. Government); adverse developments in
the value of collateral securing customer and other financings; the occurrence
of any significant collective bargaining labor dispute; our successful
execution of internal performance plans including our company-wide growth and
productivity initiatives, production rate increases and decreases (including
any reduction in or termination of an aircraft product), availability of raw
materials, acquisition and divestiture plans, and other cost-reduction and
productivity efforts; charges from any future SFAS No. 142 review; ability to
meet development, production and certification schedules for the 787 program;
technical or quality issues in development programs (affecting schedule and
cost estimates) or in the satellite industry; an adverse development in rating
agency credit ratings or assessments; the actual outcomes of certain pending
sales campaigns and the timely launch of the 787 program and U.S. and foreign
government procurement activities, including the uncertainty associated with
the procurement of tankers by the U.S. Department of Defense (DoD) and funding
of the C-17 program; the cyclical nature of some of our businesses;
unanticipated financial market changes which may impact pension plan
assumptions; domestic and international competition in the defense, space and
commercial areas; continued integration of acquired businesses; performance
issues with key suppliers, subcontractors and customers; significant
disruption to air travel worldwide (including future terrorist attacks);
global trade policies; worldwide political stability; domestic and
international economic conditions; price escalation; the outcome of political
and legal processes, changing priorities or reductions in the U.S. Government
or foreign government defense and space budgets; termination of government or
commercial contracts due to unilateral government or customer action or
failure to perform; legal, financial and governmental risks related to
international transactions; legal and investigatory proceedings; tax
settlements with the IRS and various states; U.S. Air Force review of
previously awarded contracts; costs associated with the exit of the Connexion
by Boeing business; and other economic, political and technological risks and
uncertainties. Additional information regarding these factors is contained in
our SEC filings, including, without limitation, our Annual Report on Form 10-K
for the year ended December 31, 2006 and our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2007.
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in millions Six months ended Three months ended
except per share data) June 30 June 30
2007 2006 2007 2006
Sales of products $28,016 $25,050 $14,787 $12,848
Sales of services 4,377 4,200 2,241 2,138
Total revenues 32,393 29,250 17,028 14,986
Cost of products (22,140) (20,439) (11,709) (10,821)
Cost of services (3,583) (3,477) (1,827) (1,691)
Boeing Capital Corporation interest
expense (152) (179) (73) (89)
Total costs and expenses (25,875) (24,095) (13,609) (12,601)
6,518 5,155 3,419 2,385
Income from operating investments, net 89 53 50 33
General and administrative expense (1,804) (2,243) (976) (1,162)
Research and development expense, net (1,988) (1,487) (989) (739)
Gain on dispositions/business
shutdown, net 4 2 6
Settlement with U.S. Department of
Justice, net of accruals (571) (571)
Earnings/(loss) from operations 2,815 911 1,506 (48)
Other income, net 216 192 125 106
Interest and debt expense (92) (136) (46) (67)
Earnings/(loss) before income taxes 2,939 967 1,585 (9)
Income tax expense (1,017) (435) (536) (151)
Net earnings/(loss) from continuing
operations 1,922 532 1,049 (160)
Net gain on disposal of discontinued
operations, net of taxes of $4 and $1 5 1
Net earnings/(loss) $1,927 $532 $1,050 $(160)
Basic earnings/(loss) per share from
continuing operations $2.52 $0.70 $1.38 $(0.21)
Net gain on disposal of discontinued
operations, net of taxes $0.01
Basic earnings/(loss) per share $2.53 $0.70 $1.38 $(0.21)
Diluted earnings/(loss) per share from
continuing operations $2.47 $0.69 $1.35 $(0.21)
Net gain on disposal of discontinued
operations, net of taxes $0.01
Diluted earnings/(loss) per share $2.48 $0.69 $1.35 $(0.21)
Cash dividends paid per share $0.70 $0.60 $0.35 $0.30
Weighted average diluted shares
(millions) 777.3 792.4 777.0 761.3
The numerator used to compute diluted
earnings per share is as follows:
Net earnings/(loss) $1,927 $532 $1,050 $(160)
Expense related to diluted shares 2 11 2
Total numerator $1,929 $543 $1,052 $(160)
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions except per share June 30 December 31
data) 2007 2006
Assets
Cash and cash equivalents $7,156 $6,118
Short-term investments 475 268
Accounts receivable, net 6,038 5,285
Current portion of customer financing, net 450 370
Deferred income taxes 2,924 2,837
Inventories, net of advances and
progress billings 8,480 8,105
Total current assets 25,523 22,983
Customer financing, net 7,227 8,520
Property, plant and equipment, net of
accumulated depreciation of $11,804
and $11,635 7,985 7,675
Goodwill 3,092 3,047
Other acquired intangibles, net 1,754 1,698
Deferred income taxes 918 1,051
Investments 4,104 4,085
Other assets, net of accumulated
amortization of $325 and $272 3,283 2,735
Total assets $53,886 $51,794
Liabilities and Shareholders' Equity
Accounts payable and other liabilities $17,174 $16,201
Advances and billings in excess of
related costs 11,546 11,449
Income taxes payable 846 670
Short-term debt and current portion
of long-term debt 561 1,381
Total current liabilities 30,127 29,701
Accrued retiree health care 7,684 7,671
Accrued pension plan liability 992 1,135
Non-current income taxes payable 732
Other long-term liabilities 400 391
Long-term debt 8,094 8,157
Shareholders' equity:
Common shares, par value $5.00 -
1,200,000,000 shares authorized;
Shares issued - 1,012,261,159 and
1,012,261,159 5,061 5,061
Additional paid-in capital 4,899 4,655
Treasury shares, at cost -
227,102,648 and 223,522,176 (13,131) (12,459)
Retained earnings 19,810 18,453
Accumulated other comprehensive loss (7,800) (8,217)
ShareValue Trust Shares -
31,132,608 and 30,903,026 (2,982) (2,754)
Total shareholders' equity 5,857 4,739
Total liabilities and shareholders'
equity $53,886 $51,794
The Boeing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)
Six months ended Three months ended
(Dollars in millions) June 30 June 30
2007 2006 2007 2006
Revenues:
Commercial Airplanes $16,262 $14,166 $8,707 $7,113
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 6,703 6,435 3,422 3,344
Network and Space Systems 5,799 5,682 2,943 2,937
Support Systems 3,200 2,843 1,616 1,493
Total Integrated Defense Systems 15,702 14,960 7,981 7,774
Boeing Capital Corporation 422 480 209 243
Other 144 158 72 71
Accounting
differences/eliminations (137) (514) 59 (215)
Total revenues $32,393 $29,250 $17,028 $14,986
Earnings from operations:
Commercial Airplanes $1,666 $1,422 $960 $719
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 828 453 406 (15)
Network and Space Systems 418 259 256 108
Support Systems 392 414 192 216
Total Integrated Defense Systems 1,638 1,126 854 309
Boeing Capital Corporation 143 132 70 62
Other (32) (151) (30) (90)
Unallocated expense (600) (1,047) (348) (477)
Settlement with U.S. Department
of Justice, net of accruals (571) (571)
Earnings/(loss) from operations 2,815 911 1,506 (48)
Other income, net 216 192 125 106
Interest and debt expense (92) (136) (46) (67)
Earnings/(loss) before income taxes 2,939 967 1,585 (9)
Income tax expense (1,017) (435) (536) (151)
Net earnings/(loss) from continuing
operations 1,922 532 1,049 (160)
Net gain on disposal of
discontinued operations, net of
taxes of $4 and $1 5 1
Net earnings/(loss) $1,927 $532 $1,050 $(160)
Research and development expense:
Commercial Airplanes $1,557 $1,056 $769 $526
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 220 201 110 98
Network and Space Systems 149 157 76 80
Support Systems 47 48 24 22
Total Integrated Defense Systems 416 406 210 200
Other 15 25 10 13
Total research and development
expense $1,988 $1,487 $989 $739
Six months ended Three months ended
June 30 June 30
Unallocated expense 2007 2006 2007 2006
Share-based plans expense $(169) $(443) $(133) $(248)
Deferred compensation expense (63) (147) (53) (38)
Pension (271) (180) (141) (78)
Post-retirement (59) (29) (27) (13)
Capitalized interest (23) (23) (14) (4)
Other (15) (225) 20 (96)
Total $(600) $(1,047) $(348) $(477)
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
(Dollars in millions) June 30
2007 2006
Cash flows - operating activities:
Net earnings $1,927 $532
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Non-cash items -
Share-based plans expense 191 452
Depreciation 676 714
Amortization of other
acquired intangibles 77 40
Amortization of debt
discount/premium and
issuance costs 6 10
Pension expense 503 317
Investment/asset
impairment charges, net 5 19
Customer financing valuation
(benefit)/provision (35) 2
Gain on disposal of
discontinued operations (9)
Gain on dispositions/business
shutdown, net (4)
Other charges and credits, net 73 76
Excess tax benefits from
share-based payment arrangements (107) (118)
Changes in assets and liabilities -
Accounts receivable (761) 621
Inventories, net of
advances and progress billings (380) 678
Accounts payable and other
liabilities 842 549
Advances and billings in
excess of related costs 68 338
Income taxes receivable,
payable and deferred 821 396
Other long-term liabilities (4) (16)
Pension contributions (523) (506)
Accrued retiree health care 13 69
Customer financing, net 1,107 398
Other (128) (69)
Net cash provided by
operating activities 4,362 4,498
Cash flows - investing activities:
Property, plant and equipment additions (865) (745)
Property, plant and equipment reductions 17 23
Acquisitions, net of cash acquired (75) (111)
Proceeds from dispositions 108
Contributions to investments (1,838) (1,047)
Proceeds from investments 1,611 1,126
Other (62)
Net cash used by
investing activities (1,212) (646)
Cash flows - financing activities:
New borrowings 10 1
Debt repayments (893) (627)
Stock options exercised, other 151 203
Excess tax benefits from share-based
payment arrangements 107 118
Common shares repurchased (946) (929)
Dividends paid (552) (481)
Net cash used by
financing activities (2,123) (1,715)
Effect of exchange rate changes on
cash and cash equivalents 11 18
Net increase in cash and cash equivalents 1,038 2,155
Cash and cash equivalents at
beginning of year 6,118 5,412
Cash and cash equivalents at end of period $7,156 $7,567
Non-cash investing and financing activities:
Capital lease obligations incurred $356
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Six months ended Three months ended
Deliveries June 30 June 30
Commercial Airplanes 2007 2006 2007 2006
717 5 (3) 3 (1)
737 Next-Generation 169 142 86 70
747 7 8 4 4
767 6 6 3 3
777 38 34 21 17
Total 220 195 114 97
Note: Commercial Airplanes deliveries by model include deliveries
under operating lease, which are identified by parentheses.
Integrated Defense Systems
Precision Engagement and Mobility
Systems
Chinook (New Builds) 6 1
Apache (New Builds) 8 14 4 5
F/A-18E/F 22 21 11 11
T-45TS 5 7 3 3
F-15 3 3
C-17 8 8 4 4
C-40 2 1 1 1
Network and Space Systems
Delta II 1 1 1 1
Delta IV 2 2
Commercial and Civil Satellites 3 1 1 1
Military Satellites
Contractual backlog (Dollars in June 30 March 31 December 31
billions) 2007 2007 2006
Commercial Airplanes $207.7 $188.4 $174.3
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 21.7 23.1 25.0
Network and Space Systems 9.1 8.9 8.0
Support Systems 9.7 9.8 9.3
Total Integrated Defense Systems 40.5 41.8 42.3
Total contractual backlog $248.2 $230.2 $216.6
Unobligated backlog $30.3 $32.1 $33.7
Total backlog $278.5 $262.3 $250.3
Workforce 157,100 155,000 154,000
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjusted Earnings Per Share
(Unaudited)
In addition to disclosing results that are determined in accordance with
U.S. generally accepted accounting principles (GAAP), the company also
discloses non-GAAP results that exclude certain significant charges or
credits that are important to an understanding of the company's ongoing
operations. The company provides reconciliations of its non-GAAP
financial reporting to the most comparable GAAP reporting. The company
believes that discussion of results excluding certain significant charges
or credits provides additional insights into underlying business
performance. Adjusted earnings per share is not a measure recognized
under GAAP. The determination of significant charges or credits may not
be comparable to similarly titled measures used by other companies and may
vary from quarter to quarter.
Dollars in millions except per share data Three months ended
June 30
2007 2006
GAAP Diluted earnings per share $1.35 ($0.21)
Global settlement with U.S. Department of
Justice 0.77 (a)
Adjusted earnings per share * "Core Earnings"
per share $1.35 $0.56
Weighted average diluted shares (millions) 777.0 761.3
(a) Represents the net earnings per share impact for the global settlement
of the Evolved Expendable Launch Vehicle (EELV) and Druyun matters
with the U.S. Department of Justice and reversal of a tax benefit of
$16, which was recorded on previous accruals of $44 at 37.3%. ($571
pre-tax charge) No tax benefit was recognized relating to the global
settlement.
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjusted Earnings Per Share
(Unaudited)
In addition to disclosing results that are determined in accordance with
U.S. generally accepted accounting principles (GAAP), the company also
discloses non-GAAP results that exclude certain significant charges or
credits that are important to an understanding of the company's ongoing
operations. The company provides reconciliations of its non-GAAP
financial reporting to the most comparable GAAP reporting. The company
believes that discussion of results excluding certain significant charges
or credits provides additional insights into underlying business
performance. Adjusted earnings per share is not a measure recognized
under GAAP. The determination of significant charges or credits may not
be comparable to similarly titled measures used by other companies and may
vary from quarter to quarter.
Dollars in millions except per share data Six months ended
June 30
2007 2006
GAAP Diluted earnings per share $2.48 $0.69
Global settlement with U.S. Department of
Justice 0.74 (a)
Net gain on Discontinued Operations,
Net of Taxes (0.01)(b)
Adjusted earnings per share * "Core Earnings"
per share $2.47 $1.43
Weighted average diluted shares (millions) 777.3 792.4
(a) Represents the net earnings per share impact for the global settlement
of the Evolved Expendable Launch Vehicle (EELV) and Druyun matters
with the U.S. Department of Justice and reversal of a tax benefit of
$16, which was recorded on previous accruals of $44 at 37.3%. ($571
pre-tax charge) No tax benefit was recognized relating to the global
settlement.
(b) Represents an after-tax adjustment to the 2004 sale of assets from
BCC's Commercial Financial Services to General Electric Capital
Corporation.
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