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EARNINGS RESILIENCE

BOEING, L-3, NORTHROP GRUMMAN AND RAYTHEON REPORT EARNINGS RESILIENCE

Boeing, L-3, Northrop Grumman and Raytheon reported earnings in line with expectations, reflecting the current U.S. Defense Budget uncertainties and Sequestration effects. All showed resilience in spite of these uncertainties.

Boeing

29 Jan 14. Fourth-Quarter 2013
* Core EPS (non-GAAP)* rose 29 percent to $1.88 on strong operating performance; GAAP EPS of $1.61
* Revenue increased 7 percent to $23.8bn reflecting higher deliveries
Full Year 2013
* Core EPS increased 20 percent to a record $7.07 on record revenue of $86.6bn; GAAP EPS of $5.96
* Operating cash flow before pension contributions* grew to $9.7bn; GAAP operating cash flow of $8.2bn
* Backlog grew to a record $441bn, including $135bn of net orders during the year
Outlook for 2014
* 2014 Core EPS guidance of between $7.00 and $7.20; GAAP EPS guidance of between $6.10 and $6.30
* Revenue guidance of between $87.5 and $90.5bn with commercial deliveries of between 715 and 725

“Strong fourth-quarter results underscored an outstanding full year of core operating performance that drove record revenue and earnings and increased returns to shareholders,” said Boeing Chairman and Chief Executive Officer Jim McNerney. “Our Commercial Airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response. Our Defense, Space & Security unit overcame a tough operating environment to record expanded revenue, earnings and margins while executing to our commitments on the KC-46A tanker and developing and delivering important new capabilities to customers, such as the P-8 maritime aircraft and the Inmarsat-5 satellite,” said McNerney.

“For 2014, we remain focused on maintaining our commercial airplanes market leadership, strengthening and repositioning our defense, space and security business and continuing to meet the needs of our customers by improving productivity, executing to development plans and delivering our unmatched portfolio of innovative aerospace products and services.”

Boeing Commercial Airplanes

Boeing Commercial Airplanes fourth-quarter revenue increased to $14.7 bn and full-year revenue increased to a record $53 bn on higher delivery volume. Fourth-quarter operating margin improved to 10.3 percent and full-year operating margin grew to 10.9 percent on the higher volume, favorable delivery mix and continued strong operating performance.

During the quarter, the company launched the 777X with 259 orders and commitments. During the year, the 787 program completed first flight of the 787-9, successfully launched the 787-10 and began operating at a 10 per month production rate in final assembly. The 737 program delivered at a record production rate of 38 per month and has won nearly 1,800 firm orders for the 737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered. In January 2014, the company reached an eight-year contract extension through 2024 with the International Association of Machinists & Aerospace Workers District 751 (IAM).
Commercial Airplanes booked 465 net orders during the quarter and 1,355 during the year. Backlog remains strong with 5,080 airplanes valued at a record $374 bn.

Boeing Defense, Space & Security

Boeing Defense, Space & Security’s fourth-quarter revenue increased 6 percent to $8.9bn, while operating margin increased to 10.8 percent. For the full year, revenue increased 2 percent to $33.2bn, while operating margin increased to 9.7 percent.

Boeing Military Aircraft (BMA) fourth-quarter revenue increased to $4.4bn, reflecting higher deliveries. Operating margin increased to 10.0 percent, reflecting the higher deliveries and strong performance. During the quarter, BMA achieved Initial Operating Capability (IOC) on

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