Boeing Reports Second-Quarter Financial Results, Reaffirms Guidance

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 measures. 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.

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 2008 and 2009 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 and the ability to meet scheduled deliveries of the 787 airplane; 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 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, 2007 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.


                     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
 

Web site: http://www.boeing.com/



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