This summary is based on the second quarter fiscal 2008 earnings call conducted by The Boeing Co. (BA: chart) on July 23, 2008.

Management:

- President and CEO: Jim McNerny
- Chief Financial Officer: James Bell
- Vice President of Investor Relations: Diana Sands
- Senior Vice President of Communications: Thomas J. Downey

Key Investors Issues

- Revenue of $17 billion was essentially flat in the quarter.
- Earnings declined 19% to $852 million or $1.16 per share from $1.1 billion or $1.35 a share in 2007
- Cash and investments in marketable investments amounted to $10.2 billion.

Half Year Highlights:

- Revenue increased 2% to $33 billion from $32 billion in 2007.
- Net income was up 7% to $2.1 billion or $2.19 a share.

Second Quarter Highlights

Revenue of $17 billion was essentially flat in the quarter, as higher support system volume was offset by lower BCA military aircraft and network and space revenues.

- Earnings declined 19% to $852 million or $1.16 per share with operating margins of 7.4% from $1.1 billion or $1.35 a share in 2007 due to an AW&C charge of 22 cents per share and lower profitability at BCA, partially offset by lower unallocated costs.
- Boeing used $250 million of operating cash flow reflection planned working capital increases primarily for the 787 program as it continues to build gross inventory.
- The firm repurchased 11 million shares for about $900 million and paid $300 million in dividends.
- The balance sheet and liquidity remain strong, with $10.2 billion dollars in cash and liquid investments, down sequentially due to planned working capital investment, share repurchases and dividends.

Segment Highlights:

- Commercial airplane revenues of $8.6 billion was slightly lower than the same period last year, driven by customer and product mix as well as lower aircraft trading revenues.
- While deliveries increased 11% to 126 airplanes, the mix was weighted more toward single-aisle aircraft.
- Operating margins decreased to $777 million with an operating margin of 9.1%.

Earnings were impacted by the delivery mix, higher period costs required to support 787 interest into service, and timing of expenditures in the commercial service business that supports its future growth.

- BCA earnings were also affected by higher absorption of the hard to vary infrastructure costs on the current production programs, due to the 787 schedule slide we announced in April.
- The 787 has enjoyed great sales success with 896 orders since launch from 58 customers.

- The defense business delivered margins of 8% on revenue of $7.9 billion as strong performance across the diversified portfolio of defense program was affected by the AW&C of $248 million.
- Precision engagement and mobility systems delivered 4.9% margins, including the AW&C charge.
- Network and space delivered solid 8.5% operating margins and support systems generated strong double digit margins of 13.1%.
- IDS continued to win new business by capturing the Korea F15-K follow-on contract, a significant proprietary award and the KC 135 duffel maintenance program during this quarter.

- Boeing Capital reported $82 million in additional reserves largely due to customer credit worthiness.
- The U.S. credit markets have weakened considerably, which is causing financing sources to diminish within this region, however, aircraft financing sources in other regions around the world remain solid.
- Ninety percent of the commercial backlog is with customers other than the U.S. airlines and 80% of it is eligible for XM bank financing.

Operational Highlights:

- The firm had a charge on the airborne early warning and control program due to the additional time required to complete and integrate the electronic warfare ground support systems.
- IDS orders included a follow-on contract from the Republic of Korea for F15-Ks and a significant proprietary award and the U.S. government approved funding for additional C-17s.
- IDS is also pursuing further growth opportunities through niche acquisitions and the firm announced an agreement to acquire in situ a pioneer and unmanned aircraft systems in the unmanned aircraft systems market.

On the Air Force tanker program, the Government Accountability Office sustained the firm’s protest on this program, affirming the assertion that the selection process was fundamentally flawed.

- The P8A programs successfully completed Power On testing, and the firm completed a key milestone on the FCS program where it tested the maturity of network systems in a realistic environment.
- The 787 program made steady progress during the quarter and is on track with the schedule announced in April.
- The firm also recently completed structural testing of the 787s horizontal stabilizer to over 150 percent of its limit load.
- The tests are validating the benefit of using composite materials, which offers significant strength at greater levels, while providing unrivaled efficiencies and lower maintenance requirement.