The Boeing Company has reported a second-quarter net loss of $160 million, or $0.21 per share, which includes $1.15 per share of previously disclosed charges for a legal settlement and an international airborne surveillance program. The company also increased its 2007 earnings per share and revenue guidance to reflect the continuing strength of its commercial airplanes business.
Revenue for the second quarter rose 2 percent to $15.0 billion. In the year-ago quarter Boeing posted net earnings of $566 million, or $0.70 per share, on revenues of $14.7 billion. The year-ago revenue total included a $0.4 billion benefit from a customer’s buyout of several operating leases.
The charges disclosed on June 29 included $615 million for the global settlement with the U.S. Department of Justice, which yielded a net charge of $571 million after reserves, or $0.75 per share. Boeing will not claim a tax deduction for this payment. The company also disclosed it would record a charge for a reach-forward loss provision on an international Airborne Early Warning & Control (AEW&C) program; the charge recognized in the quarter was $496 million or $0.40 per share.
Because of the charges, which were partially offset by improvements in the commercial airplanes business and by lower pension expense, Boeing reduced its 2006 earnings per share guidance (provided on a GAAP basis) to between $2.40 and $2.55. Based on the strength of the commercial airplane business and companywide productivity improvements, the company’s 2007 earnings per share guidance was raised 15 cents per share to between $4.25 and $4.45 per share and its revenue guidance was increased $1 billion to between $64.5 billion and $65.5 billion. Additional details on financial guidance are provided below.
“Boeing’s outlook is strengthening due to sustained demand for our commercial airplanes, our steady but modestly growing defense business, and our companywide focus on growth and productivity,” said Boeing Chairman, President and Chief Executive Officer Jim McNerney. “This quarter’s charges overshadowed solid fundamentals that reflect our commitment to providing exceptional value for all our stakeholders.”
Operating cash flow remains very strong, totaling $2.4 billion in the second quarter. Free cash flow* was $2.1 billion after an investment of $0.3 billion in property, plant & equipment during the quarter (Table 2). For the first six months of 2006, operating cash flow increased 10 percent to $4.5 billion. Free cash flow* increased to $3.8 billion, 14 percent higher than last year due to strong operating and working capital performance.