Updated from 7:46 a.m. EDT

Boeing

(BA) - Get Report

delivered a second-quarter hat trick of positives, beating Wall Street's revenue and earnings forecasts and raising its forecasts.

The company said earnings fell 7%, but only because the year-ago quarter was boosted by interest Boeing received on a tax refund. In the latest quarter, rising revenue and margins at the company's key defense and commercial airplane businesses were the main drivers of the company's results.

Boeing earned $566 million, or 70 cents a share, in the quarter, compared with earnings of $607 million, or 75 cents a share, last year. The latest quarter included a charge of 9 cents a share related to asset sales. The year-ago period had a 23-cent gain for the tax refund.

Sales were $15.03 billion in the latest quarter compared with $13.09 billion a year ago. Analysts surveyed by Thomson First Call were forecasting earnings of 61 cents a share on sales of $14.49 billion.

Shares were up $1.08, or 1.6%, at $67.43.

"Second-quarter results reflect Boeing's focus on strong execution and improved operational efficiency," said Jim McNerney, the former

3M

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chief who took the reins as Boeing's CEO at the beginning of the month.

"Integrated Defense Systems delivered solid revenue growth and excellent margins driven by strong performance across its broad portfolio of defense, space and intelligence programs," McNerney added in a statement. "Commercial Airplanes grew revenues by twenty percent and generated solid operating margins while finalizing 376 orders and achieving key milestones on the 787 program. Our cash flow was outstanding and we continued our balanced strategy for cash deployment, including the authorization of a new share repurchase plan and repayment of maturing debt."

The company said revenue grew 8% to $7.7 billion at its Integrated Defense Systems unit. Operating margins improved to 10.5% from 9.7% a year earlier, driven by double-digit margins in the Aircraft and Weapon Systems and Support Systems segments.

Boeing's commercial airplane unit broke its recent string of declining year-over-year revenue, as sales jumped 20% to $6.8 billion on increased plane deliveries. The unit's operating margin rose to 7.0% from 6.7% a year earlier.

During the latest quarter, the commercial airplane unit signed 376 firm orders. Boeing also made progress with its planned 787 Dreamliner. By the end of the quarter, orders and commitments for the fuel-efficient, lightweight plane totaled 252, including 143 firm orders and 109 additional commitments.

The company generated strong operating cash flow from its businesses, helping it to boost its cash balance to $4.9 billion at the end of the quarter from $3.3 billion at the end of the first quarter. Its cash hoard was also lifted by the sale during the quarter of the company's commercial airplane facilities in Wichita, Kan., and Tulsa, Okla.

For all of 2005, Boeing now sees earnings of $2.75 to $2.85 a share, above its previous estimate of $2.40 to $2.60 a share. It affirmed its 2005 revenue estimate of $58 billion. The Thomson First Call consensus projections are for a profit of $2.58 a share and a top line of $57.68 billion. For 2006, Boeing sees core earnings of $3 to $3.20 a share, vs. the consensus of $3.25.