Boeing Reports First-Quarter Results

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

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "should," "expects," "intends," "projects," "believes," "estimates," "targets," "anticipates," and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding our guidance relating to 2010 and 2011 financial and operating performance, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) risks attributable to our reliance on our commercial customers, our suppliers and the worldwide market; (3) risks related to our dependence on U.S. government contracts; (4) our reliance on fixed-price contracts, which could subject us to losses in the event of cost overruns; (5) risks related to cost-type contracts; (6) uncertainties concerning contracts that include in-orbit incentive payments; (7) changes in accounting estimates; (8) significant changes in discount rates and actual investment return on pension assets; (9) work stoppages or other labor disruptions; (10) changes in the competitive landscape in the markets in which we operate; (11) risks related to our doing business in other countries, including sales to non-U.S. customers; (12) potential adverse developments in new or pending litigation and/or government investigations; (13) changes in the financial condition or regulatory landscape of the commercial airline industry as they relate to Boeing Capital Corporation; (14) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (15) risks related to realizing the anticipated benefits of merger, acquisitions, joint ventures/strategic alliance or divestitures; (16) adequacy of our insurance coverage to cover significant risk exposures; and (17) potential business disruptions related to physical security threats, IT attacks or natural disasters.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to publicly update any forward-looking statement, except as required by law.

Contact:

Investor Relations: Scott Fitterer or Rob Young (312) 544-2140

Communications: Chaz Bickers (312) 544-2002

The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
	Three months ended
	March 31
(Dollars in millions, except per share data)	2010	2009
Sales of products	$12,316	$13,835
Sales of services	2,900	2,667
Total revenues	15,216	16,502

Cost of products	(9,822)	(11,579)
Cost of services	(2,281)	(2,119)
Boeing Capital Corporation interest expense	(41)	(47)
Total costs and expenses	(12,144)	(13,745)
	3,072	2,757
Income from operating investments, net	59	32
General and administrative expense	(953)	(791)
Research and development expense, net	(1,000)	(970)
Loss on dispositions, net	(4)	(3)
Earnings from operations	1,174	1,025
Other expense, net	(2)	(36)
Interest and debt expense	(122)	(57)
Earnings before income taxes	1,050	932
Income tax expense	(531)	(317)
Net earnings from continuing operations	519	615
Net loss on disposal of discontinued operations, net of taxes of $3		(5)
Net earnings	$519	$610

Basic earnings per share from continuing operations	$0.71	$0.88
Net loss on disposal of discontinued operations, net of taxes		(0.01)
Basic earnings per share	$0.71	$0.87

Diluted earnings per share from continuing operations	$0.70	$0.87
Net loss on disposal of discontinued operations, net of taxes		(0.01)
Diluted earnings per share	$0.70	$0.86
Cash dividends paid per share	$0.42	$0.42
Weighted average diluted shares (millions)	740.1	707.4

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

	March 31	December 31
(Dollars in millions except per share data)	2010	2009
Assets
Cash and cash equivalents	$4,517	$ 9,215
Short-term investments	5,845	2,008
Accounts receivable, net	6,359	5,785
Current portion of customer financing, net	274	368
Deferred income taxes	1,030	966
Inventories, net of advances and progress billings	18,773	16,933
Total current assets	36,798	35,275
Customer financing, net	5,273	5,466

Property, plant and equipment, net of accumulated depreciation of $13,028 and $12,795	8,693	8,784
Goodwill	4,317	4,319
Other acquired intangibles, net	2,878	2,877
Deferred income taxes	2,754	3,062
Investments	1,030	1,030
Pension plan assets, net	21	16
Other assets, net of accumulated amortization of $441 and $492	1,206	1,224
Total assets	$ 62,970	$ 62,053
Liabilities and shareholders' equity
Accounts payable	7,469	$ 7,096
Other accrued liabilities	12,267	12,822
Advances and billings in excess of related costs	11,857	12,076
Income taxes payable	412	182
Short-term debt and current portion of long-term debt	1,479	707
Total current liabilities	33,484	32,883
Accrued retiree health care	7,043	7,049
Accrued pension plan liability, net	6,392	6,315
Non-current income taxes payable	896	827
Other long-term liabilities	652	537
Long-term debt	11,464	12,217
Shareholders' equity:
Common shares, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued	5,061	5,061
Additional paid-in capital	4,264	3,724
Treasury shares, at cost – 253,748,666 and 256,406,709	(15,744)	(15,911)
Retained earnings	23,265	22,746
Accumulated other comprehensive loss	(11,747)	(11,877)
ShareValue Trust shares – 29,747,123 and 29,563,324	(2,157)	(1,615)
Total Boeing shareholders’ equity	2,942	2,128
Noncontrolling interest	97	97
Total shareholders' equity	3,039	2,225
Total liabilities and shareholders' equity	$ 62,970	$ 62,053

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

	Three months ended
	March 31
(Dollars in millions)	2010	2009
Cash flows - operating activities:
Net earnings	$ 519	$ 610
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash items –
Share-based plans expense	66	60
Depreciation	350	335
Amortization of other acquired intangibles	55	49
Amortization of debt discount/premium and issuance costs	5	2
Investment/asset impairment charges, net	15	21
Customer financing valuation provision	12	9
Loss on disposal of discontinued operations		8
Loss on dispositions, net	4	3
Other charges and credits, net	30	63
Excess tax benefits from share-based payment arrangements	(8)	(5)
Changes in assets and liabilities –
Accounts receivable	(572)	(869)
Inventories, net of advances and progress billings	(1,833)	(82)
Accounts payable	225	644
Other accrued liabilities	(136)	(169)
Advances and billings in excess of related costs	(221)	(1,210)
Income taxes receivable, payable and deferred	429	534
Other long-term liabilities	246	(51)
Pension and other postretirement plans	355	304
Customer financing, net	221	21
Other	(47)	(84)
Net cash (used)/provided by operating activities	(285)	193
Cash flows - investing activities:
Property, plant and equipment additions	(186)	(442)
Property, plant and equipment reductions	3	25
Acquisitions, net of cash acquired	(24)	(30)
Contributions to investments	(4,744)	(200)
Proceeds from investments	910	49
Net cash (used) by investing activities	(4,041)	(598)
Cash flows - financing activities:
New borrowings	19	1,827
Debt repayments	(51)	(71)
Repayments of distribution rights financing	(13)
Stock options exercised, other	23
Excess tax benefits from share-based payment arrangements	8	5
Employee taxes on certain share-based payment arrangements	(15)	(15)
Common shares repurchased		(50)
Dividends paid	(318)	(305)
Net cash (used)/provided by financing activities	(347)	1,391
Effect of exchange rate changes on cash and cash equivalents	(25)	(17)
Net (decrease)/increase in cash and cash equivalents	(4,698)	969
Cash and cash equivalents at beginning of year	9,215	3,268
Cash and cash equivalents at end of period	$ 4,517	$ 4,237

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

	Three months ended
	March 31
(Dollars in millions)	2010	2009
Revenues:
Commercial Airplanes	$ 7,468	$ 8,554
Boeing Defense, Space & Security:
Boeing Military Aircraft	3,241	3,067
Network & Space Systems	2,323	2,678
Global Services & Support	2,049	1,975
Total Boeing Defense, Space & Security	7,613	7,720
Boeing Capital Corporation	162	163
Other segment	36	39
Unallocated items and eliminations	(63)	26
Total revenues	$ 15,216	$ 16,502

Earnings from operations:
Commercial Airplanes	$ 679	$ 417
Boeing Defense, Space & Security:
Boeing Military Aircraft	267	288
Network & Space Systems	174	207
Global Services & Support	223	214
Total Boeing Defense, Space & Security	664	709
Boeing Capital Corporation	46	37
Other segment	(50)	(23)
Unallocated items and eliminations	(165)	(115)
Earnings from operations	1,174	1,025
Other expense, net	(2)	(36)
Interest and debt expense	(122)	(57)
Earnings before income taxes	1,050	932
Income tax expense	(531)	(317)
Net earnings from continuing operations	519	615
Net loss on disposal of discontinued operations, net of taxes of $3		(5)
Net earnings	$ 519	$ 610

Research and development expense, net:
Commercial Airplanes	$ 698	$ 711
Boeing Defense, Space & Security:
Boeing Military Aircraft	162	139
Network & Space Systems	106	86
Global Services & Support	34	25
Total Boeing Defense, Space & Security	302	250
Other segment		9
Total research and development expense, net	$ 1,000	$ 970

Unallocated items and eliminations:
Share-based plans expense	$ (47)	$ (57)
Deferred compensation expense	(81)	23
Pension	21	23
Post-retirement	(11)	(23)
Capitalized interest	(10)	(15)
Other	(37)	(66)
Total	$ (165)	$ (115)

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

	Three months ended
Deliveries	March 31
Commercial Airplanes	2010		2009
737	86		91
747			4
767	3		3
777	19		23
Total	108		121

Boeing Defense, Space & Security
Boeing Military Aircraft
F/A-18 Models	13		10
F-15E Eagle	3		4
C-17 Globemaster	3		3
KC-767 Tanker			1
CH-47 Chinook	2
T-45TS Goshawk			2
AH-64 Apache	4		5

Network & Space Systems
Delta IV	1
Commercial and Civil Satellites	1
Military Satellites	1		1


	March 31		December 31
Contractual backlog (Dollars in billions)	2010		2009
Commercial Airplanes	$250.4		$250.5
Boeing Defense, Space & Security:
Boeing Military Aircraft	27.5		26.4
Network & Space Systems	8.5		7.7
Global Services & Support	12.5		11.9
Total Boeing Defense, Space & Security	48.5		46.0
Total contractual backlog	$298.9		$296.5
Unobligated backlog	$15.9		$19.1
Total backlog	$314.8		$315.6
Workforce	158,200	*	157,100

*Note: Workforce data vary from those reported in 2009 and earlier. The new totals include all subsidiaries, some of which were excluded in prior years.

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