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The Boeing Company

26 Jan 11. The Boeing Company (NYSE: BA) reported fourth-quarter net income of $1.2bn, or $1.56 per share, on revenue of $16.6bn. The results reflect solid performance across the company’s core programs, a favorable tax settlement (+$0.50 per share), and a special one-time contribution to
Boeing’s charitable trust (-$0.05 per share).

Net income for the full year was $3.3bn, or $4.45 per share, on revenue of $64.3bn, which included the $0.45 per share net impact of the favourable tax settlement and the charitable trust contribution. First-quarter 2010 included a $0.20 per share tax charge on health care legislation. Earnings per share for 2009 of $1.84 included a combined
$3.58 per share impact due to the 787 R&D reclassification and 747
charges.

Earnings guidance for 2011 has been established at between $3.80 and $4.00 per share reflecting solid core performance, higher pension expense, the revised 787 schedule and the current defense contracting environment.

“Boeing delivered strong operating performance and exceptional cash generation from core production and services businesses in 2010, which helped mitigate the impact of development program challenges,” said Jim McNerney, Boeing chairman, president and chief executive officer. “We’re entering 2011 well-positioned for growth, with a large order book, increasing global demand for commercial airplanes, greater clarity around our domestic defense outlook, and significant international defense sales opportunities. Our focus for the year is to deliver the 787 and 747-8; manage disciplined increases in commercial airplane production rates and drive improved competitiveness and financial performance throughout the business.”

Boeing’s quarterly operating cash flow was $1.1bn, reflecting strong operating performance while continuing to invest in development programs. For the full year, operating cash flow was $3.0bn. Free cash flow* was $0.7bn in the quarter and $1.8bn for the year.

Cash and investments in marketable securities totalled $10.5bn at year-end, up 5 percent in the quarter. Debt was essentially unchanged in the quarter, and the company did not acquire any of its shares.

Total company backlog at year-end was $321bn, unchanged from the prior quarter and up 2 percent from the prior year.

Segment Results

Commercial Airplanes

Boeing Commercial Airplanes fourth-quarter revenue decreased by 11 percent to $8.2bn on lower expected 777 and 747 airplane deliveries. Operating margin was 7.7 percent, reflecting the lower deliveries and higher R&D and other period costs.

For the full year, revenue decreased by 7 percent to $31.8bn on the lower expected 777 and 747 airplane deliveries. Commercial Airplanes operating earnings were $3.0bn on higher planned R&D spending. The prior-year results were impacted by the reclassification of 787 R&D costs of $2.7bn and 747 charges totalling $1.4bn. Commercial Airplanes booked 180 gross orders during the quarter while 22 orders were removed from its order book. This contrasts with the year-ago period when net orders were 62 airplanes. For the full year, net orders were 530 airplanes. Contractual backlog remains strong with 3,443 airplanes valued at $256bn.

The 787 program experienced an in-flight electrical incident on a test flight in November. As disclosed last week, first delivery is now expected in the third quarter of 2011 and includes the time required to produce, install and test updated software and new electrical power distribution panels in the flight test and production airplanes. Total firm orders for the 787 at year-end were 847 airplanes from 57 customers.

Flight testing of the 747-8 Freighter progressed during the quarter, and the first two Intercontinental passenger models had electrical power successfully turned on. Delivery of the first 747-8 Freighter is planned for mid-2011.

Boeing

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