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BOEING REPORTS LOSS BUT SHARES RISE ON NEWS

23 Apr 03. Boeing Co., battered by the severe downturn in commercial aviation, reported Wednesday it lost $478m in the first quarter after taking nearly $1bn in charges reflecting the slump and the depressed value of its acquisitions. The bright spot was the defense business, which surpassed the airplane unit with revenues of $6.3bn, up 18 percent. Boeing said military aircraft, weapons and aerospace support programs should continue to grow.

Wall Street appeared unperturbed by the news and the shares rose indicating that the worse is soon to be over. Shares in the company, which slipped to an eight-year closing low of $25.06 on March 31, rose 17 cents to $27.97 in midday trading on the New Excluding those items, per-share earnings were 42 cents a share, or 10 cents higher than the consensus estimate of analysts surveyed by Thomson First Call.

The company also said 2003 profits will be less than previously expected despite robust results from its defense business.

The net loss amounted to 60 cents a share, compared with a loss of $1.25bn, or $1.54 a share, a year earlier when the company also recorded a hefty accounting change.

First-quarter results were weighed down by non-cash goodwill charges totalling $977m after taxes. Of that total, $818m was for the reduced worth of companies Boeing bought and $159m was for writedowns in its finance portfolio, reflecting the decline in airline customers’ credit ratings, jet collateral values and a steep fall in aircraft lease rates.

But revenues fell 11 percent to $12.3bn from $13.8bn. Charges aside, Boeing attributed its decrease in operating income to its lower-than-planned 71 aircraft deliveries in the quarter and less pension income. It said it expects to deliver 280 airplanes for the year, which would be its lowest total since 1996. Boeing revised its estimate for adjusted 2003 earnings to the $1.70-$1.90
range, down from $1.90-$2.10. The consensus analyst forecast tracked by Thomson First Call was $1.86.

Integrated Defense Systems delivered strong revenue growth and excellent operating performance in the quarter. Revenues increased 18 percent to $6.3bn, up from $5.3bn in the first quarter of 2002. Reported operating earnings of $31m include the charge for goodwill impairment of $572m. Excluding this charge, adjusted earnings from operations* rose 49 percent to $603 million compared with the first quarter of 2002. Higher deliveries at Aircraft and Weapon Systems, revenue and margin growth at Network Systems and Support Systems, and improved performance at Launch and Orbital Systems all contributed to an outstanding quarter.

Integrated Defense Systems results are summarized below and reflect the new segment reporting structure effective January 1, 2003, as previously disclosed.

Aircraft and Weapon Systems again delivered strong financial results. Revenues for the quarter rose 22 percent to almost $2.7bn on higher C-17, F/A-18, and JDAM deliveries. Performance remained excellent with operating margins at 14.2 percent, up from 13.3 percent in 2002, and included continuing investment in the 767 tanker program.

Network Systems results for the first quarter reflect continuing strong growth in homeland security, intelligence, and DOD network-centric programs as revenues rose 23 percent to $2.0bn. Operating margins totalled 6.9 percent, similar to the first quarter of 2002.

Support Systems delivered strong growth with revenues up 26 percent to nearly $1.0bn on significant increases in tactical and transport aircraft spares and modernization. The revenue growth and excellent operating performance drove operating margins up sharply to 11.3 percent from 6.7 percent in the first quarter of 2002. Unfavourable performance on a modernization and upgrade contract affected 2002 results.

Excluding the charge for goodwill impairment, Launch and Orbital Systems adjusted operating losses narrowed significantly to $

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