- Net income was $0.9 billion with EPS of $1.16 per share, including a previously disclosed charge of $0.22 per share
- First-half EPS grew 13 percent to $2.79 per share as revenue grew 2 percent to $33.0 billion
- Backlog at record $346 billion
- 2008 and 2009 financial guidance reaffirmed
Results
(Millions, except 2nd Quarter First Half
per share data) 2008 2007 Change 2008 2007 Change
Revenues $16,962 $17,028 (0%) $32,952 $32,393 2%
Earnings From
Operations $1,247 $1,506 (17%) $3,046 $2,815 8%
Operating Margin 7.4% 8.8% (1.4)Pts 9.2% 8.7% 0.5 Pts
Reported Net
Income $852 $1,050 (19%) $2,063 $1,927 7%
Reported Earnings
per Share $1.16 $1.35 (14%) $2.79 $2.48 13%
Operating Cash
Flow ($251) $3,634 N.A. $1,682 $4,362 (61%)
The Boeing Company's (NYSE:BA) second-quarter earnings per share decreased 14 percent to $1.16 per share, on revenue of $17.0 billion and an operating margin of 7.4 percent. Results were affected by the previously disclosed charge for the Airborne Early Warning & Control (AEW&C) program and lower profitability due to mix and timing in Commercial Airplanes, partially offset by lower centralized costs (Table 1).
For the first half of 2008, revenue grew 2 percent to $33.0 billion, operating margin grew to 9.2 percent, net income rose 7 percent to $2.1 billion, and earnings per share increased 13 percent to $2.79 per share, despite the AEW&C charge. Results reflected good performance in the company's core businesses and lower unallocated costs.
Boeing reaffirmed its 2008 earnings per share guidance of between $5.70 and $5.85 as well as its 2009 earnings per share guidance of between $6.80 and $7.00.
"While we faced some challenges this quarter that affected our results, we remain confident in our outlook for the remainder of this year and 2009," said Chairman, President and CEO Jim McNerney. "Strong global demand for our products and services, a record backlog, and a sustained focus on productivity improvement and execution will continue to drive growth and profitability for this company."
Second-quarter operating cash flow was ($0.3) billion, reflecting a planned increase in working capital requirements, mostly inventory for 787 (Table 2). First-half operating cash flow was $1.7 billion, and free cash flow* was $0.9 billion. Total company backlog at quarter-end was $346 billion, up 6 percent year-to-date driven by commercial airplane orders.
Table 2. Cash Flow 2nd Quarter First Half
(Millions) 2008 2007 2008 2007
Operating Cash Flow (1) ($251) $3,634 $1,682 $4,362
Less Additions to
Property, Plant &
Equipment ($398) ($414) ($807) ($865)
Free Cash Flow* ($649) $3,220 $875 $3,497
(1) Operating cash flow includes $517 in pension plan contributions in
first half of 2008 and $523 in first half 2007, both mostly in 1Q.
* Non-GAAP measure. A complete definition and reconciliation of Boeing's
use of non-GAAP measures, identified by an asterisk (*), is found on
page 8, "Non-GAAP Measure Disclosure."
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) 2008 2007 2008 2007
Sales of products $27,986 $28,016 $14,298 $14,787
Sales of services 4,966 4,377 2,664 2,241
Total revenues 32,952 32,393 16,962 17,028
Cost of products (22,425) (22,140) (11,637) (11,709)
Cost of services (4,003) (3,583) (2,248) (1,827)
Boeing Capital Corporation interest
expense (119) (152) (57) (73)
Total costs and expenses (26,547) (25,875) (13,942) (13,609)
6,405 6,518 3,020 3,419
Income from operating investments,
net 123 89 65 50
General and administrative expense (1,610) (1,804) (835) (976)
Research and development expense,
net (1,874) (1,988) (1,005) (989)
Gain on dispositions/business
shutdown, net 2 2 2
Earnings from operations 3,046 2,815 1,247 1,506
Other income, net 202 216 102 125
Interest and debt expense (96) (92) (50) (46)
Earnings before income taxes 3,152 2,939 1,299 1,585
Income tax expense (1,095) (1,017) (448) (536)
Net earnings from continuing
operations 2,057 1,922 851 1,049
Net gain on disposal of
discontinued operations,
net of taxes of $4, $4, $1, and
$1 6 5 1 1
Net earnings $2,063 $1,927 $852 $1,050
Basic earnings per share from
continuing operations $2.82 $2.52 $1.18 $1.38
Net gain on disposal of
discontinued operations, net of
taxes 0.01 0.01
Basic earnings per share $2.83 $2.53 $1.18 $1.38
Diluted earnings per share from
continuing operations $2.78 $2.47 $1.16 $1.35
Net gain on disposal of
discontinued operations, net of
taxes 0.01 0.01
Diluted earnings per share $2.79 $2.48 $1.16 $1.35
Cash dividends paid per share $0.80 $0.70 $0.40 $0.35
Weighted average diluted shares
(millions) 740.0 777.3 732.8 777.0
The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions except per June 30 December 31
share data) 2008 2007
Assets
Cash and cash equivalents $5,619 $7,042
Short-term investments 1,752 2,266
Accounts receivable, net 5,809 5,740
Current portion of customer
financing, net 198 328
Deferred income taxes 2,414 2,341
Inventories, net of advances and
progress billings 10,145 9,563
Total current assets 25,937 27,280
Customer financing, net 6,370 6,777
Property, plant and equipment,
net of accumulated depreciation
of $12,313 and $11,915 8,585 8,265
Goodwill 3,232 3,081
Other acquired intangibles, net 2,223 2,093
Deferred income taxes 276 197
Investments 4,017 4,111
Pension plan assets, net 6,445 5,924
Other assets, net of accumulated
amortization of $439 and $385 1,425 1,258
$58,510 $58,986
Liabilities and Shareholders'
Equity
Accounts payable and other
liabilities $17,431 $16,676
Advances and billings in excess
of related costs 12,682 13,847
Income taxes payable 416 253
Short-term debt and current
portion of long-term debt 916 762
Total current liabilities 31,445 31,538
Deferred income taxes 1,433 1,190
Accrued retiree health care 7,159 7,007
Accrued pension plan liability,
net 1,083 1,155
Non-current income taxes payable 1,148 1,121
Other long-term liabilities 408 516
Long-term debt 7,240 7,455
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 4,093 4,757
Treasury shares, at cost -
268,841,528 and 244,217,170 (16,834) (14,842)
Retained earnings 22,669 21,376
Accumulated other comprehensive
loss (4,299) (4,596)
ShareValue Trust shares -
31,690,733 and 31,362,850 (2,096) (2,752)
Total shareholders' equity 8,594 9,004
$58,510 $58,986
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
June 30
(Dollars in millions) 2008 2007
Cash flows - operating activities:
Net earnings $ 2,063 $ 1,927
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Non-cash items -
Share-based plans expense 98 191
Depreciation 643 676
Amortization of other acquired
intangibles 81 77
Amortization of debt discount/premium
and issuance costs 4 6
Customer financing valuation
provision/(benefit) 80 (35)
Gain on disposal of discontinued
operations (10) (9)
Gain on dispositions/business
shutdown, net (2)
Other charges and credits, net 78 78
Excess tax benefits from share-based
payment arrangements (45) (107)
Changes in assets and liabilities -
Accounts receivable (129) (761)
Inventories, net of advances and
progress billings (649) (428)
Accounts payable and other liabilities 616 842
Advances and billings in excess of
related costs (1,166) 68
Income taxes receivable, payable
and deferred 275 821
Other long-term liabilities (149) (4)
Pension and other postretirement plans (281) 41
Customer financing, net 278 1,107
Other (103) (128)
Net cash provided by operating
activities 1,682 4,362
Cash flows - investing activities:
Property, plant and equipment additions (807) (865)
Property, plant and equipment reductions 16 17
Acquisitions, net of cash acquired (94) (75)
Contributions to investments (5,606) (1,838)
Proceeds from investments 6,238 1,611
Other (148) (62)
Net cash used by investing activities (401) (1,212)
Cash flows - financing activities:
New borrowings 5 10
Debt repayments (154) (893)
Stock options exercised, other 41 151
Excess tax benefits from share-based
payment arrangements 45 107
Common shares repurchased (2,064) (946)
Dividends paid (606) (552)
Net cash used by financing activities (2,733) (2,123)
Effect of exchange rate changes on cash
and cash equivalents 29 11
Net (decrease)/increase in cash and
cash equivalents (1,423) 1,038
Cash and cash equivalents at beginning of year 7,042 6,118
Cash and cash equivalents at end of period $ 5,619 $ 7,156
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Six months ended Three months ended
June 30 June 30
(Dollars in millions) 2008 2007 2008 2007
Revenues:
Commercial Airplanes $16,728 $16,262 $8,567 $8,707
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 6,549 6,743 3,293 3,416
Network and Space Systems 5,495 5,680 2,802 2,902
Support Systems 3,465 3,266 1,839 1,654
Total Integrated Defense Systems 15,509 15,689 7,934 7,972
Boeing Capital Corporation 364 422 179 209
Other 227 157 152 81
Accounting
differences/eliminations 124 (137) 130 59
Total revenues $32,952 $32,393 $16,962 $17,028
Earnings from operations:
Commercial Airplanes $1,760 $1,666 $777 960
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 549 838 160 405
Network and Space Systems 504 405 237 257
Support Systems 444 396 240 193
Total Integrated Defense Systems 1,497 1,639 637 855
Boeing Capital Corporation 106 143 45 70
Other (185) (121) (135) (66)
Unallocated expense (132) (512) (77) (313)
Earnings from operations 3,046 2,815 1,247 1,506
Other income, net 202 216 102 125
Interest and debt expense (96) (92) (50) (46)
Earnings before income taxes 3,152 2,939 1,299 1,585
Income tax expense (1,095) (1,017) (448) (536)
Net earnings from continuing
operations 2,057 1,922 851 1,049
Net gain on disposal of
discontinued operations,
net of taxes of $4, $4, $1, and
$1 6 5 1 1
Net earnings $2,063 $1,927 $852 $1,050
Research and development expense:
Commercial Airplanes $1,403 $1,557 $770 $769
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 241 222 115 111
Network and Space Systems 154 143 78 73
Support Systems 74 49 41 25
Total Integrated Defense Systems 469 414 234 209
Other 2 17 1 11
Total research and development
expense $1,874 $1,988 $1,005 $989
Unallocated expense:
Share-based plans expense $(45) $(169) $(15) $(133)
Deferred compensation expense 81 (63) 20 (53)
Pension (143) (271) (76) (141)
Post-retirement (40) (59) (20) (27)
Capitalized interest (27) (23) (14) (14)
Other 42 73 28 55
Total $(132) $(512) $(77) $(313)
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Six months ended Three months ended
Deliveries June 30 June 30
Commercial Airplanes 2008 2007 2008 2007
737 Next-Generation 187 169 100 86
747 9 7 5 4
767 6 6 3 3
777 39 38 18 21
Total 241 220 126 114
Integrated Defense Systems
Precision Engagement and Mobility
Systems
F/A-18 Models 21 22 11 11
F-15E Eagle 4 3 3
C-17 Globemaster 8 8 5 4
KC-767 Tanker 2
CH-47 Chinook 4 6 2 1
T-45TS Goshawk 3 5 2 3
AH-64 Apache 1 8 1 4
C-40A Clipper 2 1
Network and Space Systems
Commercial and Civil Satellites 1 3 1
June 30 March 31 December 31
Contractual backlog (Dollars in
billions) 2008 2008 2007
Commercial Airplanes $274.5 $271.2 $255.2
Integrated Defense Systems:
Precision Engagement and
Mobility Systems 23.8 23.1 23.0
Network and Space Systems 11.0 10.5 9.2
Support Systems 10.7 10.8 9.6
Total Integrated Defense Systems 45.6 44.4 41.8
Total contractual backlog $320.1 $315.6 $297.0
Unobligated backlog $26.0 $30.6 $30.2
Total backlog $346.1 $346.2 $327.2
Workforce 163,900 161,500 159,300
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