KUALA LUMPUR, Oct 22 (Bernama) -- The Boeing Company reported a third-quarter net loss of US$1.6 billion, or US$2.23 per share, although revenue rose nine per cent to US$16.7 billion.

It said the results reflect the previously announced reclassification to research and development (R&D) of costs incurred through July for the first three 787 flight-test airplanes (US$2.46 per share), spending on those planes for August and September (US$0.14 per share), and the 747 jumbo jet charge (US$0.99 per share) which was partially offset by solid performance in other commercial airplane programs and the company's defence business.

Last year's strike and supplier production problems reduced the revenue a year ago by an estimated US$2.1 billion and earnings by an estimated US$0.60 per share, Boeing said in a statement.

Revenue for the first nine months of 2009 rose four per cent to US$50.3 billion due to higher commercial deliveries and growth in the defence segment, it explained.

Boeing also stated that earnings for the first nine months declined to US$0.06 per share, including the third-quarter impact described earlier and a first-quarter US$0.38 per share impact from reductions to future twin-aisle production rates and a lower delivery price escalation forecast for commercial airplanes.

According to Boeing, earnings guidance for 2009 has been adjusted to between US$1.35 and US$1.55 per share, from US$4.70 to US$5.00, to reflect the impact of the 787 and 747.

"The 787 cost reclassification and the 747 charge for increased costs and difficult market conditions clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defence business," said Boeing Chairman, President and Chief Executive Officer Jim McNerney.

"We look forward to getting the 787 and 747-8 in the air soon and moving forward with flight tests and certification for these two important programs," he added.

Boeing's quarterly operating cash flow was US$1.2 billion, which includes higher cash receipts than the year-ago period, partially offset by continued investment in development programs.

For the first nine months of 2009, operating cash flow was US$2.4 billion.

Free cash flow was US$1.0 billion in the quarter and US$1.4 billion for the year-to-date.

Cash and investments in marketable securities totaled US$6.6 billion as of September 30, up 31 per cent from the end of the second quarter.

The cash position was improved by the issuance of US$1.95 billion in debt partially offset by investing cash flows of US$1.0 billion for the purchase of 787 facilities in South Carolina and payment of Sea Launch guarantees.

The company did not acquire any of its shares in the quarter.

The 2009 financial guidance was updated to include the previously disclosed 787 cost reclassification and 747 charge.

Boeing's 2009 revenue guidance is thus reaffirmed at US$68 billion to US$69 billion.

Earnings-per-share guidance for 2009 has been reduced to between US$1.35 and US$1.55 per share from US$4.70 to US$5.00 per share for the 787 cost reclassification and 747 charge.

Operating cash flow guidance is reaffirmed at a greater than US$2.5 billion, including discretionary pension contributions of approximately US$0.5 billion and an assumption of US$0.8 billion for new commercial airplane financings.

The company will issue financial guidance for 2010 with its fourth-quarter 2009 results.

Commercial Airplanes' 2009 delivery guidance remains at between 480 and 485 and is sold out.

Boeing Commercial Airplanes' (BCA) 2009 revenue is unchanged at between US$34 billion and US$35 billion.

Boeing's Integrated Defense Systems (IDS) guidance for 2009 remains unchanged with revenue of between US$33 billion and US$34 billion and operating margins of approximately 10 percent.

Boeing Capital Corporation now expects that the aircraft finance portfolio will be stable as the amount of new aircraft financing in 2009 will approximate normal portfolio runoff due to customer payments and depreciation.

Boeing's 2009 R&D forecast is between US$6.6 billion and US$6.8 billion, up from US$3.6 billion to US$3.8 billion, driven by the 787 cost reclassification, an operating model adjustment to better balance BCA R&D efforts going forward, and higher IDS R&D.

Capital expenditure for 2009 is expected to be approximately US$1.3 billion, down from about US$1.4 billion.

The company's non-cash pension expense is expected to be approximately US$0.9 billion in 2009.

The third-quarter tax benefit related to the 787 cost reclassification and 747 charge was 30.6 percent, and the full-year tax benefit for both impacts is expected to be approximately 37 percent.

BCA third-quarter revenue increased 13 per cent to US$7.9 billion on higher deliveries partially offset by lower services volume, while last year's revenue were affected by a labour strike and supplier production problems.

The current period operating loss of US$2.8 billion reflects the previous 787 and 747 announcements as mentioned earlier.

R&D expense includes the US$2.5 billion reclassification of costs incurred through July on the first three 787 flight test airplanes and US$138 million of spending on it in August and September.

The 747 forward-loss of US$1.0 billion is due to increased production costs and difficult market conditions.

For the first nine months of 2009, revenue rose to US$24.9 billion on increased airplane deliveries, partially offset by lower volume in services.

Operating earnings fell to a loss of US$1.6 billion driven by the 787 and 747 impacts.

BCA booked 96 gross orders during the quarter while 17 others were removed from its order book.

Contractual backlog was US$254 billion, more than seven times BCA's expected 2009 revenues.

The 787 program has begun the previously announced reinforcement to an area within the side-of-body joint.

The first flight of the 787 remains on track to occur by the end of 2009, with first delivery scheduled for the fourth quarter of 2010.

The company also recently completed its acquisition of the 787 production facility in South Carolina from Vought.

Total firm orders are now 840 airplanes from 55 customers, including the previously disclosed ten-unit cancellations that occurred after quarter-end.

Operating margins were 10.1 per cent reflecting strong performance in Boeing Military Aircraft aas well as Network and Space Systems.

Boeing Military Aircraft (BMA) third-quarter revenue rose seven percent to US$4.0 billion and operating margins expanded to 12.3 percent, reflecting an improved delivery mix and strong execution across its programs.

Network and Space Systems third-quarter revenue was US$2.7 billion, primarily driven by lower volume on intelligence and security systems, missile defense, and combat systems.

The operating margin was 9.3 percent reflecting strong performance across the segment's array of programs partially offset by a less favorable contract mix.

During the quarter, key flight milestones were achieved on "Directed Energy" programs, and the company was awarded contracts to provide four of its new 702B satellite to Intelsat.

Global Services & Support (GS&S) revenue increased 15 percent on higher volume across its broad portfolio of services and logistics products.

During the quarter, GS&S operating margins were 7.1 percent driven by a contract adjustment and less favorable contract mix.

The IDS backlog is US$65.8 billion, nearly two times expected 2009 revenue.

The reduction in backlog was primarily due to termination of the manned ground vehicle portion of the Future Combat Systems contract, due to changing US defence priorities.

Boeing Capital Corporation (BCC) reported third-quarter pre-tax earnings of US$39 million compared to US$37 million in the same period last year.

During the quarter, BCC's portfolio balance declined slightly to US$6.1 billion, down from US$6.3 billion at the end of the second quarter, on normal portfolio run-off through customer payments and depreciation, partially offset by US$153 million in new aircraft financings and other volume.

BCC contributed US$48 million in cash dividends to the company during the quarter.

BCC's debt-to-equity ratio was unchanged at 5.0-to-1.

The "other" segment consists primarily of Boeing Engineering, Operations and Technology, as well as certain results related to the financial consolidation of all business units. Other segment expense was US$36 million in the third quarter.

Total pension expense for the quarter was US$230 million, as compared to US$176 million in the same period last year.

A total of US$254 million was recognised in the operating segments in the quarter (up from US$125 million in the same period last year), partially offset by a US$24 million contribution to earnings in unallocated items.

Unallocated expense was US$202 million driven by a higher deferred compensation expense partially offset by lower unallocated pension expense, up from US$90 million in the same quarter last year which included a more favorable insurance adjustment.

Interest expense for the quarter was US$92 million, up from US$49 million in the same period last year due to additional debt issued in 2009.

Other income (expense) decreased US$59 million driven by lower interest earned on cash balances.

-- BERNAMA