Boeing Reports First-Quarter Earnings

-- First-quarter net income was $0.6 billion with earnings per share of $0.86 which includes the previously announced $0.38 per share reduction from revised twin-aisle commercial airplane production rates and lower price escalation forecasts

-- Revenue rose 3 percent to $16.5 billion on higher commercial airplane deliveries and higher volume in defense

-- Operating cash flow was $0.2 billion

-- Backlog at $339 billion - nearly five times current annual revenues

-- 2009 earnings outlook reduced to reflect changes in commercial market; outlook for Integrated Defense Systems is reaffirmed on solid execution

CHICAGO , April 22 /PRNewswire-FirstCall/ -- The Boeing Company's (NYSE: BA) first-quarter 2009 earnings per share decreased 47 percent to $0.86 driven by the previously announced $0.38 per share impact from pending twin-aisle production rate changes and lower delivery price escalation forecasts in commercial airplanes (Table 1). The majority of this earnings impact was recorded as an increase in the reach-forward loss position of the 747 program.

Excluding the effects of a weakened commercial airplane market, solid execution on programs across Integrated Defense Systems and Commercial Airplanes underpinned the quarter's results. Results were also impacted by a less favorable delivery mix in defense and higher expense for research and development.

"The expanded global economic downturn is presenting unprecedented challenges in our commercial airplane markets," said Boeing Chairman, President, and Chief Executive Officer Jim McNerney . "We believe we are better positioned than most companies to withstand the ongoing pressures of this economy, and we are not hesitating to take necessary actions to preserve our financial strength and maintain our ability to invest and grow for the long term. Performance across the overwhelming majority of our programs remains solid, and we are making progress toward our milestones on the 787 and other important programs."

Boeing's quarterly revenue rose 3 percent to $16.5 billion while its operating cash flow was $0.2 billion reflecting continued investment in development programs and lower advances from commercial airplane orders. Free cash flow* was ($0.2) billion (Table 2).

Boeing lowered its 2009 earnings per share guidance to between $4.70 and $5.00 primarily due to the lower price escalation forecasts.

Total company backlog at quarter-end was $339 billion, down 4 percent in the quarter, driven by run-off of backlog through revenues, the lower price escalation forecast, and previously announced 787 cancellations, partially offset by new orders in IDS for C-17 and integrated logistics.

Cash and investments in marketable securities totaled $4.7 billion at quarter-end, up during the first quarter as a result of new debt issuance (Table 3). The company spent $50 million to acquire 1.2 million of its shares in the quarter.

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes (BCA) first-quarter revenues rose to $8.6 billion on a 5 percent increase in airplane deliveries partially offset by lower volume in services (Table 4). Operating earnings fell by 58 percent to $417 million while margins contracted to 4.9 percent, driven by the pending reduction in twin-aisle production rates and unfavorable delivery price escalation forecasts.

Margins on all programs were reduced by the lower price escalation forecasts, the decision to reduce 777 production rates for deliveries beginning in June 2010 , and postponing planned increases in 747-8 and 767 production. Because the 747 program is currently in a loss position, the reduced earnings associated with the factors above were recorded for the 747s delivered in the quarter as well as most units in the 747 backlog. That impact, somewhat offset by a refinement in cost estimates, resulted in the charge of $347 million, or $0.31 per share, that reduced BCA margins by 4.0 points.