Boeing revenue grew 2 percent to $15 billion in the second quarter, raising expectations for the coming year despite a net loss for the quarter.
The $160 million loss was largely a result of the company's $615 million global settlement with the U.S. Department of Justice in cases concerning competition and the hiring of former Air Force acquisition official Darleen Druyun in 2002. During the second quarter, Boeing charged $571 million of that amount. The company also applied a reach-forward loss provision of $496 million on an international Airborne Early Warning & Control program.
Without the extra charges, Boeing would have earned $906 million, compared with $566 million in the second quarter a year ago. That result is perhaps sufficient reason to raise expectations for the coming year. In the second quarter, operating cash flow was $2.4 billion. Backlog climbed to a record $220 billion.
"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 CEO Jim McNerney. "This quarter's charges overshadowed solid fundamentals that reflect our commitment to providing exceptional value for all our stakeholders."
Boeing Commercial Airplanes revenue increased 10 percent to $7.1 billion. Airplane deliveries rose 14 percent to 97, as BCA increased production rates to support the 395 deliveries forecast for the full year. Operating earnings grew 51 percent and margins expanded to 10.1 percent, reflecting higher deliveries and continued productivity improvements.
In return for protection from criminal charges in the Druyun case and other cases regarding possession of a competitor's information, Boeing agreed to accept responsibility for the conduct of its employees, pay a monetary penalty of $50 million, continue its cooperation with federal investigators, and maintain an effective ethics and compliance program, with particular attention to the hiring of former government officials and the handling of competitor information. In addition to the $50 million monetary penalty, Boeing will pay $565 million to resolve potential civil claims asserted by the Department's Civil Division.
