30 Jan 03. The Boeing Company (NYSE: BA – News) reported net earnings of $590m, or $0.73 per share, for the fourth quarter of 2002 on revenues of $13.7bn. Reported net earnings for 2002 totalled $492m, or $0.61 per share, on revenues of $54.1bn. This includes a $1.8bn ($2.26 per share) non-cash charge recognized in the first quarter for a change in accounting for goodwill.
Net earnings for all of 2002, excluding non-recurring items and the change in accounting, totalled $2.299bn, or $2.84 per share. The impact of all non-recurring items in 2002 was favorable and netted to $0.03 per share, including $0.02 per share in the fourth quarter. Non-recurring items for 2002 and 2001 and the accounting change are detailed at the end of this release.
“In 2002 several of our businesses successfully confronted the severe downturn in commercial aviation, while our Integrated Defense Systems business established itself as a market leader in integrated battlespace solutions and homeland security,” said Boeing Chairman and Chief Executive
Officer Phil Condit. “Although we faced some noteworthy challenges, Boeing’s balanced portfolio of businesses generated solid cash and profitability, and positioned the company for significant opportunities.”As shown below, operating margins for 2002 excluding non-recurring items were 7.2 percent and reflect solid overall operating performance, focused research and development and continued investment for long-term growth. Operating earnings were down as a result of decreased commercial airplane deliveries, increased customer financing charges and higher commercial satellite production costs.
Integrated Defense Systems: On July 10, 2002, Boeing announced the merger of its Military Aircraft and Missiles Systems, and Space and Communications businesses into Integrated Defense Systems. In 2002, the combined revenues of these segments increased 9.4 percent to $25.0bn, (2001: $22.8bn). Combined earnings from operations totalled about $2.0bn in each year as profit growth on missile defense, integrated battlespace and platform programs was offset by commercial satellite losses, as well as higher investment in 767 tanker and 737 airborne early warning and control programs.
Beginning in the first quarter of 2003 the company will no longer report results for Military Aircraft and Missile Systems, and Space and Communications. The company will enhance transparency by reporting consolidated Integrated Defense Systems results and the results of its four reporting segments: 1) Aircraft and Weapon Systems; 2) Network Systems; 3) Launch and Orbital Systems; and 4) Support Systems. Military Aircraft and Missile Systems: Military Aircraft and Missile Systems again delivered strong financial results. Full year revenues rose 12 percent to almost $14 billion on higher C-17, F-15, F/A-18, and JDAM deliveries coupled with aerospace support volume growth. Operating performance continued to be excellent as annual margins, excluding non-recurring items, reached 11.2 percent.
Military aircraft revenues for the quarter rose 10 percent to $3.8bn also driven by higher deliveries and aerospace support growth. Margins, excluding non- recurring items, were slightly lower in the quarter at 10.3 percent driven by increasing investment in the 767 tanker program. Major international and domestic program wins increased contractual backlog by 20 percent in 2002 to $21.1bn, (2001:$17.6bn). Space and Communications: Space and Communications results for 2002 reflect continued strong growth and performance in missile defense and integrated battlespace markets, offset by poor commercial space market conditions, commercial satellite factory cost and schedule performance, and increased investment to complete 737 Airborne Early Warning and Control (AEW&C) system design.
Space and Communications revenues in 2002 increased almost 6 percent to $11.0bn on missile defense and integrated battlespace growth offset by