Boeing Reports Q2 2005 Results; Updates Outlook

-- EPS guidance for 2005 increased

    CHICAGO, July 27 /PRNewswire-FirstCall/ --

    Financial Highlights:

     -- Earnings
        - Q2: $0.70 per share, after $0.09 charge for sale of Wichita and
              Tulsa operations
     -- Revenue
        - Q2: $15.0 billion
     -- Operating Cash Flow
        - Q2: $2.7 billion

    Selected Second-Quarter 2005 Operating Highlights:
    -- Integrated Defense Systems generated strong revenue growth and
       outstanding margins through excellent program execution; successfully
       completed major program milestones on FCS, P-8A (MMA), and the J-UCAS
       programs; delivered first AH-64 Apache Longbow to Israel; announced
       joint venture with Lockheed Martin for government launch business.
    -- Boeing Commercial Airplanes delivered strong performance on deliveries
       of 85 airplanes; captured 376 gross orders including key wins from
       customers around the world; concluded sale of Commercial Airplanes'
       operations in Wichita, KS and Tulsa, OK to Onex; finalized 787
       aerodynamic configuration - working toward firm configuration.
    -- Other Boeing businesses performed well as Boeing Capital continued to
       improve returns and reduce portfolio risk and Connexion by Boeing(SM)
       grew availability to more than 100 daily flights.

     Table 1.  Summary Financial Results

     (Millions, except per         2nd Quarter     %       Six Months      %
      share data)                2005     2004  Change   2005     2004  Change

     Revenues                  $15,028  $13,088   15%  $28,015  $25,991    8%
     Reported Net Income (Loss)   $566     $607   (7%)  $1,101   $1,230  (10%)
     Reported Earnings (Loss)
      per Share(1)               $0.70    $0.75   (7%)   $1.36    $1.52  (11%)

     Average Diluted Shares for
      EPS                        807.4    812.3          807.7    811.2

    (1) Second-quarter 2005 EPS includes a $0.09 per share charge for the sale
        of Commercial Airplanes' Wichita and Tulsa operations.  Second-quarter
        2004 EPS includes a $0.23 per share gain related to interest on a
        federal tax refund and $0.02 per share gain from the sale of Boeing
        Capital's commercial finance operations, which is reported as
        discontinued operations.  Six-month 2004 EPS also includes $0.12
        related to interest on federal tax refunds in the first quarter of

The Boeing Company (NYSE: BA) today reported second-quarter 2005 net income of $566 million, or $0.70 per share, on revenues of $15.0 billion. Strong operating results offset primarily non-cash charges totaling $0.09 per share related to the sale of the Commercial Airplanes' operations in Wichita and Tulsa to Onex. Second-quarter 2004 earnings of $0.75 per share included a $0.23 per share benefit from interest on a tax refund.

"Second-quarter results reflect Boeing's focus on strong execution and improved operational efficiency," said Jim McNerney, Boeing Chairman and CEO. "Integrated Defense Systems delivered solid revenue growth and excellent margins driven by strong performance across its broad portfolio of defense, space and intelligence programs. Commercial Airplanes grew revenues by twenty percent and generated solid operating margins while finalizing 376 orders and achieving key milestones on the 787 program. Our cash flow was outstanding and we continued our balanced strategy for cash deployment, including the authorization of a new share repurchase plan and repayment of maturing debt. Due to improving commercial markets and strong operating performance from the Boeing team, we are raising our financial outlook."

The Company's second-quarter earnings from operations increased 26 percent to $0.8 billion (see Table 2) as strong operating performance offset higher non-cash expenses for pensions and share-based plans.

     Table 2.  Earnings from Operations & Margins

     (Millions, except       2nd Quarter      %         Six Months        %
      margin percent)        2005   2004    Change     2005    2004     Change

     Earnings (Loss) from
      Operations             $810   $644      26%    $1,497  $1,468        2%

     Operating Margin        5.4%   4.9%  0.5 Pts      5.3%    5.6%  (0.3 Pts)

Pre-tax (non-cash) pension expense was $155 million, up $77 million or $0.06 per share, from the second quarter of 2004. Share-based-plans expense was $201 million, up $37 million or $0.03 per share, over the same period. Deferred stock compensation expense was $76 million, or $0.06 per share, as the Company's stock price rose 13 percent during the period.

The Company generated $2.7 billion of operating cash flow during the second quarter driven by strong performance in its core businesses. Free cash flow* was $2.2 billion for the quarter (see Table 3).

     Table 3.  Cash Flow
                                              2nd Quarter        Six Months
     (Millions)                              2005     2004     2005     2004

     Operating Cash Flow (1, 2)             $2,657   $1,254   $4,050   $1,190
        Less Property, Plant & Equipment,
         Additions                           ($480)   ($147)   ($787)   ($342)
     Free Cash Flow*                        $2,177   $1,107   $3,263     $848

    (1) After pension contributions totaling $1.0 billion in the second
        quarter of 2004.  The corresponding year-to-date pension contributions
        for 2005 and 2004 are  $0.5  billion  and  $2.0  billion,  respectively.
        (2)  The  presentation  of  operating  cash  flow  for  2004  has  been  adjusted  to
                include  customer  financing  transactions,  which  were  previously
                included  in  investing  cash  flow.    As  a  result,  2004  second  quarter  and
                2004  six  month  cash  flows  have  been  adjusted  downward  from  previously
                reported  numbers  by  $0.1  billion  and  $0.2  billion,  respectively.
          *    A  complete  definition  and  discussion  of  Boeing's  use  of  non-GAAP
                measures,  identified  by  an  asterisk  (*),  is  attached  at  the  end  of  the


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