Boeing Reports Third-Quarter Financial Results

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 be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are 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, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission: the effect of economic conditions in the United States and globally; the impact on our accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values; the impact on our revenues and operating results of changes to indices included in indexed price escalation clauses included in our contracts with commercial airplane and defense customers; the successful execution of our Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers canceling, modifying and/or rescheduling contractual orders and advance payments; the timing and effects of any decisions to increase or decrease the rate of commercial airplane production; the timing and effects of decisions to complete or launch a Commercial Airplanes program; the ability to successfully develop and timely produce the 787 and 747-8 aircraft; the ability of our suppliers and, as applicable, subcontractors to successfully and timely perform their obligations; the effect on our revenues of political and legal processes, changing defense priorities, and associated budget reductions by U.S. and international government customers affecting Boeing defense programs; our relationship with our union-represented workforce and the negotiation of collective bargaining agreements; the impact of volatile fuel prices and the airline industry's response; the effect of trade and globalization on long-term growth in passenger and cargo traffic; the effect of world trade and credit availability on air cargo traffic; the effect of declines in aircraft valuations; the impact of airline traffic volumes and revenue yields on near-term global airline profitability; the impact on our revenues or operating results of airline bankruptcies; the availability of commercial and government financing and the extent to which we are called upon to fund outstanding financing commitments or satisfy other financing requests, and our ability to satisfy those requirements; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which we are a party, and other contingencies; returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs; our ability to access external capital resources to fund our operations; the amounts and effects of underinsured operations, including satellite launches; our ability to recover the proportionate amounts owed to us from the other Sea Launch partners; and the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications and guarantees related thereto.

    Contact:
    Investor Relations:    Diana Sands or Rob Young (312) 544-2140
    Communications:        (312) 544-2002

                        The Boeing Company and Subsidiaries
                       Consolidated Statements of Operations
                                    (Unaudited)
                                             Nine months     Three months
                                                ended            ended
                                             September 30      September 30
    (Dollars in millions, except
     per share data)                          2009     2008     2009     2008
    ----------------------------              ----     ----     ----     ----
    Sales of products                      $42,098  $40,393  $13,967  $12,407
    Sales of services                        8,246    7,852    2,721    2,886
    -----------------                        -----    -----    -----    -----
    Total revenues                          50,344   48,245   16,688   15,293

    Cost of products                       (35,432) (32,736) (12,273) (10,311)
    Cost of  services                                                (6,468)    (6,179)    (2,165)    (2,176)
        Boeing  Capital  Corporation
          interest  expense                                                  (132)        (173)          (42)          (54)
        --------------------------                                ----          ----            ---            ---
        Total  costs  and  expenses                              (42,032)  (39,088)  (14,480)  (12,541)
        ------------------------                              -------    -------    -------    -------
                                                                                          8,312        9,157        2,208        2,752
        Income  from  operating  investments,  net          186            195              84              72
        General  and  administrative  expense            (2,584)    (2,350)        (868)        (740)
        Research  and  development  expense,  net      (5,504)    (2,811)    (3,574)        (937)
        (Loss)/gain  on  dispositions,  net                        (7)              2              (1)
        --------------------------------                        --              --              --        -----
        Earnings/(loss)  from  operations                        403        4,193      (2,151)      1,147
        Other  income/(loss),  net                                          7            257              (4)            55
        Interest  and  debt  expense                                  (229)        (145)          (92)          (49)
        -------------------------                                  ----          ----            ---            ---
        Earnings/(loss)  before  income  taxes                181        4,305      (2,247)      1,153
        Income  tax  (expense)/benefit                            (129)    (1,565)          687          (470)
        ----------------------------                            ----      ------            ---          ----
        Net  earnings/(loss)
          from  continuing
          operations                                                                  52        2,740      (1,560)          683
        Net  (loss)/gain  on  disposal
          of  discontinued
          operations,  net  of
          taxes  of  $5,  ($10),  $2
          and  ($6)                                                                      (8)            18              (4)            12
        ---------------------------                                  --              --              --              --
        Net  earnings/(loss)                                                $44      $2,758    $(1,564)        $695
        ===================                                                ===      ======    =======          ====

        Basic  earnings/(loss)
          per  share  from
          continuing  operations                                      $0.08        $3.78      $(2.22)      $0.95
        Net  (loss)/gain  on  disposal
          of  discontinued
          operations,  net  of  taxes                                (0.01)        0.02        (0.01)        0.02
        ---------------------------                            -----          ----        -----          ----
        Basic  earnings/(loss)  per  share                    $0.07        $3.80      $(2.23)      $0.97
        ===============================                    =====        =====      ======        =====

        Diluted  earnings/(loss)  per  share
          from  continuing  operations                            $0.07        $3.74      ($2.22)      $0.94
        Net  (loss)/gain  on  disposal
          of  discontinued
          operations,  net  of  taxes                                (0.01)        0.02        (0.01)        0.02
        ---------------------------                            -----          ----        -----          ----
        Diluted  earnings/(loss)  per  share                $0.06        $3.76      $(2.23)      $0.96
        =================================                =====        =====      ======        =====
        Cash  dividends  paid  per  share                        $1.26        $1.20        $0.42        $0.40
        =============================                        =====        =====        =====        =====
        Weighted  average  diluted
          shares  (millions)                                              708.1        734.2        701.3        721.9
        ========================                                  =====        =====        =====        =====



                                            The  Boeing  Company  and  Subsidiaries
                                  Consolidated  Statements  of  Financial  Position
                                                                    (Unaudited)

                                                                                                      September  30    December  31
        (Dollars  in  millions  except  per  share  data)                  2009                  2008
        -------------------------------------------                  ----                  ----
        Assets
        Cash  and  cash  equivalents                                                    6,095              $3,268
        Short-term  investments                                                              351                      11
        Accounts  receivable,  net                                                      6,718                5,602
        Current  portion  of  customer  financing,  net                      341                    425
        Deferred  income  taxes                                                                741                1,046
        Inventories,  net  of  advances  and
          progress  billings                                                                15,981              15,612
        --------------------------------                                    ------              ------
                        Total  current  assets                                            30,227              25,964
        Customer  financing,  net                                                        5,923                5,857
        Property,  plant  and  equipment,  net  of
          accumulated  depreciation  of
          $12,742  and  $12,280                                                              8,912                8,762
        Goodwill                                                                                      4,293                3,647
        Other  acquired  intangibles,  net                                        2,920                2,685
        Deferred  income  taxes                                                            3,835                4,114
        Investments                                                                                1,120                1,328
        Pension  plan  assets,  net                                                            20                      16
        Other  assets,  net  of  accumulated
          amortization  of  $511  and  $400                                          1,417                1,406
        --------------------------------                                      -----                -----
                        Total  assets                                                          $58,667            $53,779
                        ============                                                          =======            =======
        Liabilities  and  shareholders'  equity
        Accounts  payable                                                                      7,053              $5,871
        Other  accrued  liabilities                                                  12,217              11,564
        Advances  and  billings  in  excess
          of  related  costs                                                                  11,792              12,737
        Income  taxes  payable                                                                    14                      41
        Short-term  debt  and  current
          portion  of  long-term  debt                                                      973                    560
        ---------------------------                                                    ---                    ---
                        Total  current  liabilities                                  32,049              30,773
        Accrued  retiree  health  care                                                7,344                7,322
        Accrued  pension  plan  liability,  net                                8,553                8,383
        Non-current  income  taxes  payable                                          998                1,154
        Other  long-term  liabilities                                                    535                    337
        Long-term  debt                                                                        10,065                6,952
        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                                          3,956                3,456
                Treasury  shares,  at  cost  -
                  285,761,457  and  285,661,944                                  (17,733)          (17,758)
                Retained  earnings                                                          22,104              22,675
                Accumulated  other  comprehensive  loss                  (12,821)          (13,525)
                ShareValue  Trust  shares  -
                  29,338,820  and  28,460,769                                        (1,595)            (1,203)
                --------------------------                                        ------              ------
                Total  Boeing  shareholders'  equity                          (1,028)            (1,294)
                      Noncontrolling  interest                                              151                    152
        ------------------------------                                              ---                    ---
                      Total  shareholders'  equity                                      (877)            (1,142)
        ---------------------------------                                      ----              ------
                      Total  liabilities  and
                        shareholders'  equity                                          $58,667            $53,779
        ============================                                          =======            =======



                                    The  Boeing  Company  and  Subsidiaries
                                  Consolidated  Statements  of  Cash  Flows
                                                            (Unaudited)

                                                                                                      Nine  months  ended
                                                                                                            September  30
        (Dollars  in  millions)                                                          2009        2008
        ---------------------                                                          ----        ----
        Cash  flows  -  operating  activities:
                Net  earnings                                                                      $44    $2,758
                Adjustments  to  reconcile  net
                  earnings  to  net  cash  provided
                  by  operating  activities:
                    Non-cash  items  -
                              Share-based  plans  expense                              180          159
                              Depreciation                                                    1,047          952
                              Amortization  of  other
                                acquired  intangibles                                      152          122
                              Amortization  of  debt  discount/
                                premium  and  issuance  costs                              7              8
                              Investment/asset
                                impairment  charges,  net                                  66            21
                              Customer  financing
                                valuation  provision                                          31            73
                              Loss/(gain)  on  disposal  of
                                discontinued  operations                                  13          (28)
                              Loss/(gain)  on  dispositions,  net                    7            (2)
                              Other  charges  and  credits,  net                    170            83
                              Excess  tax  benefits  from  share-based
                                payment  arrangements                                        (5)      (100)
                      Changes  in  assets  and  liabilities  -
                              Accounts  receivable                                        (818)      (145)
                              Inventories,  net  of  advances  and
                                progress  billings                                          (582)  (1,670)
                              Accounts  payable                                            1,169          742
                              Other  accrued  liabilities                          1,091        (570)
                              Advances  and  billings  in  excess
                                of  related  costs                                            (961)  (2,061)
                              Income  taxes  receivable,
                                payable  and  deferred                                      133          733
                              Other  long-term  liabilities                            (3)      (157)
                              Pension  and  other
                                postretirement  plans                                      819        (159)
                              Customer  financing,  net                                (204)        628
                              Other                                                                        35        (147)
        ----------------                                                                        --        ----
                                        Net  cash  provided  by
                                          operating  activities                        2,391      1,240
        -------------------------------------                        -----      -----
        Cash  flows  -  investing  activities:
                Property,  plant  and  equipment  additions              (965)  (1,229)
                Property,  plant  and
                  equipment  reductions                                                      25            16
                Acquisitions,  net  of  cash  acquired                        (639)      (490)
                Contributions  to  investments                                    (728)  (6,372)
                Proceeds  from  investments                                            606      8,399
                Payments  on  Sea  Launch  guarantees                          (448)
                Purchase  of  distribution  rights                                              (151)
        -----------------------------------                          ------        ----
                                        Net  cash  (used)/provided  by
                                          investing  activities                      (2,149)        173
        -------------------------------------------          ------          ---
        Cash  flows  -  financing  activities:
                New  borrowings                                                              3,772              5
                Debt  repayments                                                              (256)      (616)
                Repayments  of  distribution
                  rights  financing                                                                          (210)
                Stock  options  exercised,  other                                      8            43
                Excess  tax  benefits  from  share-based
                  payment  arrangements                                                        5          100
                Employee  taxes  on  certain  share-based
                  payment  arrangements                                                    (19)        (81)
                Common  shares  repurchased                                            (50)  (2,583)
                Dividends  paid                                                                (915)      (901)
        ------------------                                                                ----        ----
                                        Net  cash  provided/(used)  by
                                          financing  activities                        2,545    (4,243)
        -------------------------------------------            -----    ------
        Effect  of  exchange  rate  changes  on  cash
          and  cash  equivalents                                                              40          (26)
        ---------------------------------------                          --          ---
        Net  increase/(decrease)  in  cash
          and  cash  equivalents                                                        2,827    (2,856)
        Cash  and  cash  equivalents  at
          beginning  of  year                                                              3,268      7,042
        ----------------------------                                          -----      -----
        Cash  and  cash  equivalents  at  end  of  period            $6,095    $4,186
        ==========================================            ======    ======

        Non-cash  investing  and
          financing  activities:
              Purchase  of  distribution  rights                                $316        $180
        ==================================                                ====        ====



                                                The  Boeing  Company  and  Subsidiaries
                                                  Summary  of  Business  Segment  Data
                                                                        (Unaudited)

                                                                                              Nine  months          Three  months
                                                                                                    ended                      ended
                                                                                            September  30            September  30
        (Dollars  in  millions)                                          2009          2008          2009          2008
        ---------------------                                          ----          ----          ----          ----
        Revenues:
              Commercial  Airplanes                                $24,868    $23,674      $7,883      $6,946
              Integrated  Defense  Systems:
                    Boeing  Military  Aircraft                    10,324      10,169        3,951        3,702
                    Network  and  Space  Systems                    8,492        8,485        2,711        2,987
                    Global  Services  and  Support                6,298        5,352        2,082        1,808
        ---------------------------------                -----        -----        -----        -----
              Total  Integrated  Defense  Systems          25,114      24,006        8,744        8,497
              Boeing  Capital  Corporation                            496            535            166            171
              Other  segment                                                      125            527              51            300
              Unallocated  items  and  eliminations          (259)        (497)        (156)        (621)
        -------------------------------------          ----          ----          ----          ----
              Total  revenues                                            $50,344    $48,245    $16,688    $15,293
        =================                                            =======    =======    =======    =======

        Earnings/(loss)  from  operations:
              Commercial  Airplanes                                $(1,603)    $2,154    $(2,837)        $394
              Integrated  Defense  Systems:
                    Boeing  Military  Aircraft                      1,160            929            486            388
                    Network  and  Space  Systems                        698            806            252            302
                    Global  Services  and  Support                    612            616            147            164
        ---------------------------------                    ---            ---            ---            ---
              Total  Integrated  Defense  Systems            2,470        2,351            885            854
              Boeing  Capital  Corporation                            112            143              39              37
              Other  segment                                                    (105)        (233)          (36)          (48)
              Unallocated  items  and  eliminations          (471)        (222)        (202)          (90)
        -------------------------------------          ----          ----          ----            ---
        Earnings/(loss)  from  operations                        403        4,193      (2,151)      1,147
              Other  income/(loss),  net                                    7            257              (4)            55
              Interest  and  debt  expense                            (229)        (145)          (92)          (49)
        ----------------------------                            ----          ----            ---            ---
              Earnings/(loss)  before  income  taxes          181        4,305      (2,247)      1,153
              Income  tax  (expense)/benefit                      (129)    (1,565)          687          (470)
        -------------------------------                      ----      ------            ---          ----
              Net  earnings/(loss)  from
                continuing  operations                                      52        2,740      (1,560)          683
              Net  (loss)/gain  on  disposal
                of  discontinued
                operations,  net  of  taxes
                of  $5,  ($10),
                $2  and  ($6)                                                          (8)            18              (4)            12
        ------------------------------                            --              --              --              --
              Net  earnings/(loss)                                          $44      $2,758    $(1,564)        $695
        ======================                                          ===      ======    =======          ====

        Research  and  development  expense,  net:
              Commercial  Airplanes                                  $4,642      $2,108      $3,272          $705
              Integrated  Defense  Systems:
                    Boeing  Military  Aircraft                          430            361            143            121
                    Network  and  Space  Systems                        293            227            108              73
                    Global  Services  and  Support                    126            113              42              38
        ---------------------------------                    ---            ---              --              --
              Total  Integrated  Defense  Systems                849            701            293            232
              Other  segment                                                        13                2                9
        ----------------                                                        --              --              --          ----
              Total  research  and  development
                  expense,  net                                              $5,504      $2,811      $3,574          $937
        =================================              ======      ======      ======          ====

        Unallocated  items  and  eliminations:
              Share-based  plans  expense                          $(140)      $(115)        $(24)        $(70)
              Deferred  compensation  expense                    (134)          136            (88)            55
              Pension                                                                    69          (194)            24            (51)
              Post-retirement                                                  (61)          (60)          (17)          (20)
              Capitalized  interest                                        (42)          (38)          (15)          (11)
              Other                                                                    (163)            49            (82)              7
        --------                                                                    ----              --            ---              --
              Total                                                                  $(471)      $(222)      $(202)        $(90)
        ========                                                                  =====        =====        =====          ====



                                  The  Boeing  Company  and  Subsidiaries
                                        Operating  and  Financial  Data
                                                          (Unaudited)

                                                                                          Nine              Three
                                                                                        months            months
                                                                                          ended              ended
                                                                                    September      September
        Deliveries                                                                30                    30
        ----------                                                        ---------      ---------
        Commercial  Airplanes                                    2009    2008    2009    2008
        --------------------                                    ----    ----    ----    ----
                  737  Next-Generation                              280      254        90        67
                  747                                                                  6        13                      4
                  767                                                                10          8          4          2
                  777                                                                63        50        19        11
        ---------                                                              --        --        --        --
                Total                                                            359      325      113        84
        =========                                                            ===      ===      ===        ==

        --------------------------
        Integrated  Defense  Systems
        --------------------------
        Boeing  Military  Aircraft
                  F/A-18  Models                                            36        33        13        12
                  F-15E  Eagle                                                10        11          4          7
                  C-17  Globemaster                                      12        12          5          4
                  KC-767  Tanker                                              1          2
                  CH-47  Chinook                                              4          8          3          4
                  T-45TS  Goshawk                                            6          5          2          2
                  AH-64  Apache                                              20          2          7          1

        Network  and  Space  Systems
                  Delta  II                                                                    1                      1
                  Delta  IV                                                        1
                  Commercial  and  Civil  Satellites          2          1
                  Military  Satellites                                  3                      2



                                                                      September    June        March      December
        Contractual  backlog                              30              30              31                31
          (Dollars  in  billions)                        2009        2009          2009            2008
        ----------------------                        ----        ----          ----            ----
              Commercial  Airplanes                  $253.9    $257.4      $266.0        $278.6
              Integrated  Defense
                Systems:
                    Boeing  Military
                      Aircraft                                      26.1        28.2          28.2            25.7
                    Network  and
                      Space  Systems                              7.8          8.0            8.9              8.9
                    Global  Services
                      and  Support                                11.1        11.7          11.6            10.7
        ---------------------                          ----        ----          ----            ----
              Total  Integrated
                Defense  Systems                              45.0        47.9          48.7            45.3
        -------------------                              ----        ----          ----            ----
        Total  contractual  backlog              $298.9    $305.3      $314.7        $323.9
        =========================              ======    ======      ======        ======
        Unobligated  backlog                            $21.1      $22.5        $24.7          $28.2
        ===================                            =====      =====        =====          =====
        Total  backlog                                      $320.0    $327.8      $339.4        $352.1
        =============                                      ======    ======      ======        ======
        Workforce                                            158,300  158,700    160,900      162,200
        =========                                            =======  =======    =======      =======
 


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