Boeing Reports Strong First Quarter EPS of $0.89, Excluding Non-Recurring Items; Reaffirms Positive Outlook
First Quarter Highlights:
- Reported net earnings of $762 million, ($0.89 per share diluted)
excluding non-recurring items
- Achieved operating margins of 9.2 percent
- Produced strong free cash flow of $850 million
- Reached agreement with IRS resulting in a one-time R&D tax credit of
$343 million and interest income totaling $210 million
- Delivered 122 commercial jet airplanes
- Completed JSF X-32A flight testing; achieved successful first flight of
STOVL JSF X-32B demonstrator
- Successfully launched 702 series satellite for XM Radio on Sea Launch
- Announced the first Delta IV commercial launch customer
- Definitized agreements to lease four C-17 military airlifters to the UK
- Announced corporate re-architecture to support growth and value
strategies
- Unveiled Boeing's sonic cruiser airplane for the 21st century and
focused the Commercial Airplanes long-range product strategy
Summary Financial Results:
(In millions, except per share data)
1st Quarter
2001 2000* %Change
Revenues $13,293 $9,910 34%
Net earnings $1,237 $418
Non-recurring amounts $475 $59
Earnings w/o non-recurring items $762 $359 112%
Earnings per share (diluted) $1.45 $0.48
Non-recurring items $0.56 $0.07
EPS w/o non-recurring items $0.89 $0.41 117%
Diluted Shares for EPS 852.2 878.0
* Reflects 1Q00 work stoppage impact
Apr 20, 2001, 01:00 ET from The Boeing Company
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SEATTLE, April 20 /PRNewswire Interactive News Release/ --
The Boeing Company (NYSE: BA) reported strong financial results for the first
quarter with net earnings of $762 million or $0.89 per share on
$13.3 billion of revenue. These results exclude a $475 million non-recurring
earnings tax benefit. Net earnings including the non-recurring tax benefit
totaled $1,237 million, or $1.45 per share. Operating earnings and margins
totaled $1.2 billion and 9.2 percent, respectively. Total backlog at the end
of the quarter was up slightly to $153 billion, of which $124 billion is
contractually committed.
(Photo: http://www.newscom.com/cgi-bin/prnh/20001004/BOEINGLOGO )
The company generated $850 million of free cash flow (operating cash flow
less capital expenditures) in the quarter. Ending cash and short-term
investment balances were nearly $1.6 billion. Consolidated debt at the end of
the period totaled $8.9 billion, of which $4.6 billion is attributable to
Boeing Capital Corporation.
General and administrative expenses attributable to deferred stock
compensation decreased $55 million, resulting in a favorable 0.4 percent
operating margin impact and $0.04 impact on earnings per share. This is a
result of the decrease in Boeing's share price over the quarter.
Financial results for the quarter reflect continued solid operating
performance across the company's core businesses. Overall financial results
were up significantly versus the first quarter of 2000, which was impacted by
a 40-day work stoppage by engineers and technicians. The February 28, 2001
Puget Sound earthquake did not have a material financial impact.
During the quarter the company took key actions that reflect its ongoing
transformation. On March 21, the company elevated the leaders of its
three largest businesses to chief executive officers and announced plans for a
new, leaner and strategically focused world headquarters. On March 29, Boeing
Commercial Airplanes unveiled plans to focus its new product development
efforts on a longer-range sonic cruiser airplane able to fly at
near-supersonic speeds and having the potential to change the way the world
flies.
"We are off to a great start for 2001," said Phil Condit, Boeing chairman
and chief executive officer. "I am extremely pleased with our quarterly
operating results as they reflect our continuing focus on running healthy core
businesses and achieving strong operating performance. I am also very
encouraged by our continuing transformation and the strategic potential
represented by both the corporate re-architecture and our 'new frontier'
opportunities. These activities illustrate our collective determination to
seize worldwide growth opportunities and generate shareholder value."
Commercial Airplanes: First quarter Commercial Airplanes segment revenues
totaled $8.4 billion, up 63 percent compared to the first three months of
2000, which was impacted by the work stoppage. Commercial Airplanes delivered
122 jet airplanes during the quarter compared to 75 during the first quarter
of 2000. Segment operating earnings and margins totaled $860 million and
10.2 percent, respectively, driven by continued operating improvements as well
as delivery mix.
During the quarter Commercial Airplanes announced plans to focus its
product development activities on a faster, longer-range sonic cruiser
airplane, highlighting Commercial Airplanes' commitment to innovation and
customer focus. Commercial Airplanes will team with its customers to ensure
that the design of the new airplane provides the most value to the industry,
and initial customer response has been enthusiastic.
Contractual backlog at the end of the quarter was $88.6 billion. As
expected, demand for new airplanes moderated when compared to the strong
levels experienced in the latter half of 2000. Commercial Airplanes received
120 gross orders during the quarter versus 128 in the first quarter of 2000.
Based on its current assessment that the U.S. economy will experience a
"soft landing," the Commercial Airplanes delivery outlook is stable. The 2001
delivery forecast is nearly sold out, and the 2002 delivery forecast is more
than 80 percent sold.
Military Aircraft and Missile Systems: Military Aircraft and Missile
Systems revenues for first quarter totaled $2.4 billion compared to
$2.8 billion a year ago. Revenues decreased primarily as a result of fewer
F-15, C-17 and F/A-18 deliveries versus first quarter of 2000. Overall
operating performance continued to be solid as segment earnings and operating
margins totaled $246 million and 10.1 percent, respectively, compared to
$294 million and 10.3 percent during the first quarter of 2000.
Major events during the quarter included significant progress on the Joint
Strike Fighter program. On February 5, the Boeing JSF X-32A concept
demonstrator completed flight testing after its 66th flight, meeting all
government test objectives and demonstrating additional capabilities. On
March 29, the Boeing JSF X-32B demonstrator successfully completed its first
flight, entering a four month test program to validate the Boeing approach to
short-takeoff and vertical landing (STOVL) flight. Subsequent to the quarter,
on April 13, the X-32B completed the first STOVL flight of the entire Joint
Strike Fighter program.
Contractual backlog at the end of the quarter increased 19 percent to
$20.4 billion compared to $17.1 billion at the end of 2000.
Space and Communications: Space and Communications reported first quarter
revenues of $2.2 billion, up 35 percent compared to the $1.7 billion revenues
reported for the first three months of 2000. The increase in revenues
reflects Space and Communications' growing business base, primarily Boeing
Satellite Systems.
First quarter operating earnings totaled $84 million. Operating margins
increased slightly to 3.7 percent versus 3.6 percent during the first quarter
of 2000 as the company continued to invest in developing its Delta IV launch
vehicle.
During the quarter operational integration of Boeing Satellite Systems
(formerly Hughes space and communication businesses) was largely completed.
Other milestones include the successful completion of extended duration
testing on the RS-68 engine for the Delta IV, the announcement of the first
Delta IV commercial launch customer and the successful launch of a Boeing
Satellite Systems 702 satellite by Sea Launch.
Contractual backlog at the end of the quarter increased 10 percent to
$15.1 billion compared to $13.7 billion at the end of 2000.
Financing Segment: Customer and Commercial Financing, which consists
primarily of Boeing Capital Corporation, had first quarter revenues totaling
$206 million on total assets of $7.1 billion. Operating income, excluding
interest expense, relating to financing segment activities totaled
$142 million. Financing related interest costs totaled $74 million, and
earnings before income taxes totaled $68 million. Major events for first
quarter included a well received $750 million 10-year Boeing Capital
Corporation bond issue as well as the definitization of lease terms under
which the United Kingdom Royal Air Force will lease four C-17 Globemaster III
airlifters. Initial deliveries of the leased airlifters are scheduled for
May 2001.
Non-Recurring Item (Taxes): In March 2001 the company reached final
agreement with the Internal Revenue Service, primarily regarding previously
filed claims for refund of research and development tax credits. These claims
dealt primarily with historical fixed-price development program expenses
incurred by McDonnell Douglas from 1986 to 1992. The agreement with the IRS
resulted in financial recognition during the quarter of $343 million of tax
credit and $210 million ($132 million after-tax) of related interest income.
The net earnings and EPS impact of this agreement totaled $475 million and
$0.56, respectively, during the quarter. A pro-forma summary of the earnings
impact on the quarter is included below.
Tax Settlement Impact - Income
($ millions, except EPS)
Excluding Tax Including Tax Tax Settlement
Settlement Settlement Impact
Earnings from operations $1,218 $1,218
Other income, principally
interest 25 235 $210
Interest and debt expense (148) (148)
Earnings before income taxes 1,095 1,305
Income Taxes (334) (69) 265*
Accounting Change 1 1
Net earnings $762 $1,237 $475
Earnings per share
(852.2M shares) $0.89 $1.45 $0.56
Effective Income Tax Rate 30.5% 5.3% (25.2%)
*$343 million tax credit less $78 million taxes (37.1% marginal rate) due
on $210 million interest income
Outlook: The company's financial guidance for 2001 and 2002 is shown
below. The outlook remains consistent with that previously provided. "I am
pleased to report that we can reaffirm our guidance reflecting a solid
financial outlook," said Mike Sears, senior vice president and chief financial
officer. "As promised, we continue to execute well on our core businesses,
invest for future growth and competitiveness, and maintain significant balance
sheet strength."
For 2001, the company expects revenues of approximately $57 billion and an
operating margin greater than 8.5 percent. The company also expects to
generate $3 billion to $4 billion of free cash flow. This estimate includes
the second quarter impact of paying approximately $900 million in taxes which
come due as a result of completing activities under a long-term government
contract.
Guidance for 2002 reflects expected growth in revenues to greater than
$62 billion, while the operating margin is expected to improve to more than
9 percent. Free cash flow is expected to exceed $4 billion. The company
estimates annual commercial airplane deliveries in 2001 and 2002 to
approximate 530 each year.
The company expects aggregate research and development expenses to be in
the range of 3.0 percent to 3.5 percent of sales.
Financial Outlook
2001 2002
Revenue (in billions) $57 >$62
Operating margins (%) >8.5% >9.0%
Free cash flow (in billions) $3.0-$4.0 >$4.0
Change in Segment Financial Reporting: Beginning this quarter, segment
results have been realigned to reflect the business and management structure
of the company. Revenue and operating income for each of the core business
units as well as the customer and commercial financing segment are now
reported on a stand-alone basis. Results for the company's other businesses,
including Phantom Works, Connexion(SM) by Boeing and Air Traffic Management,
have been combined into a single "Other" grouping. Comparable prior periods
have been restated.
Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this release contain "forward-looking" information
that involves risk and uncertainty, including projections for new products
(including, without limitation, the "sonic cruiser"), deliveries, realization
of technical and market benefits from acquisitions, revenues, operating
margins, free cash flow, taxes, research and development expenses, and other
trend projections. This forward-looking information is based upon a number of
assumptions including assumptions regarding global economic, passenger and
freight growth; current and future markets for the Company's products and
services; demand for the Company's products and services; performance of
internal plans, including, without limitation, plans for productivity gains,
reductions in cycle time and improvements in design processes, production
processes and asset utilization; product performance; customer financing;
customer, supplier and subcontractor performance; customer model selections;
favorable outcomes of certain pending sales campaigns and U.S. and foreign
government procurement actions; supplier contract negotiations; price
escalation; government policies and actions; successful negotiation of
contracts with the Company's labor unions; regulatory approvals; and
successful execution of acquisition and divestiture plans. Actual future
results and trends may differ materially depending on a variety of factors,
including the Company's successful execution of internal performance plans,
including continued research and development, production rate increases and
decreases, production system initiatives, timing of product deliveries and
launches, supplier contract negotiations, asset management plans, acquisition
and divestiture plans, procurement plans, and other cost-reduction efforts;
the actual outcomes of certain pending sales campaigns and U.S. and foreign
government procurement activities; acceptance of new products and services;
product performance risks; the cyclical nature of some of the Company's
businesses; volatility of the market for certain products and services;
domestic and international competition in the defense, space and commercial
areas; continued integration of acquired businesses; uncertainties associated
with regulatory certifications of the Company's commercial aircraft by the
U.S. Government and foreign governments; other regulatory uncertainties;
collective bargaining labor disputes; performance issues with key suppliers,
subcontractors and customers; governmental export and import policies; factors
that result in significant and prolonged disruption to air travel worldwide;
global trade policies; worldwide political stability; domestic and
international economic conditions; price escalation trends; the outcome of
political and legal processes, including uncertainty regarding government
funding of certain programs; changing priorities or reductions in the U.S.
Government or foreign government defense and space budgets; termination of
government contracts due to unilateral government action or failure to
perform; legal, financial and governmental risks related to international
transactions; legal proceedings; and other economic, political and
technological risks and uncertainties. Additional information regarding these
factors is contained in the Company's SEC filings, including, without
limitation, the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions except per share data) Three months ended
March 31
2001 2000
Sales and other operating revenues $13,293 $9,910
Cost of products and services 11,070 8,547
2,223 1,363
Equity in income (loss) from joint ventures 22 31
General and administrative expense 523 490
Research and development expense 422 288
Share-based plans expense 82 60
Earnings from operations $1,218 $556
Other income, principally interest 235 149
Interest and debt expense (148) (103)
Earnings before income taxes $1,305 $602
Income taxes 69 184
Net earnings before cumulative effect
of accounting change $1,236 $418
Cumulative effect of accounting changes, net 1 --
Net earnings $1,237 $418
Basic earnings per share $1.48 $.48
Diluted earnings per share $1.45 $.48
Cash dividends per share $.17 $.14
Average diluted shares (millions) 852.2 878.0
Excluding the share-based plans:
Net Earnings $1,288 $456
Diluted earnings per share $1.51 $.52
Note: All references to earnings per share in the text of this press
release refer to diluted earnings per share.
The Boeing Company and Subsidiaries
Consolidated Statements of Position
(Dollars in millions except per share data) March 31 December 31
2001 2000
(Unaudited)
Assets
Cash and cash equivalents $1,552 $1,010
Accounts receivable 4,524 4,928
Current portion of customer and
commercial financing 926 995
Deferred income taxes 2,153 2,137
Inventories, net of advances and
progress billings 8,016 6,794
Total current assets 17,171 15,864
Customer and commercial financing 6,185 5,964
Property, plant and equipment, net 8,712 8,814
Goodwill and acquired intangibles, net 5,247 5,214
Prepaid pension expense 5,080 4,845
Deferred income taxes -- 60
Other assets 1,403 1,267
$43,798 $42,028
Liabilities and Shareholders' Equity
Accounts payable and other liabilities $12,169 $11,979
Advances in excess of related costs 3,943 3,517
Income taxes payable 1,336 1,561
Short-term debt and current portion
of long-term debt 658 1,232
Total current liabilities 18,106 18,289
Deferred income taxes 38 --
Accrued retiree health care 5,182 5,152
Long-term debt 8,238 7,567
Minority interest in subsidiaries 16 --
Shareholders' equity:
Common shares, par value $5.00 -
1,200,000,000 shares authorized;
Shares issued - 1,011,870,159 and
1,011,870,159 5,059 5,059
Additional paid-in capital 2,381 2,693
Treasury shares, at cost -
137,604,401 and 136,385,222 (6,307) (6,221)
Retained earnings 13,327 12,090
Accumulated other comprehensive income (26) (2)
Unearned compensation (6) (7)
ShareValue Trust shares -
39,266,086 and 39,156,280 (2,210) (2,592)
Total shareholders' equity 12,218 11,020
$43,798 $42,028
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions) Three months ended
March 31
2001 2000
Cash flows - operating activities:
Net earnings $1,237 $418
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Share-based plans 82 60
Depreciation 315 323
Amortization of goodwill and intangibles 69 29
Customer and commercial financing
valuation provision 4 1
Changes in assets and liabilities -
Short-term investments -- 1
Accounts receivable 404 31
Inventories, net of advances
and progress billings (1,227) (1,435)
Accounts payable and other liabilities 343 (211)
Advances in excess of related costs 426 36
Income taxes payable and deferred (128) 15
Other (488) (274)
Accrued retiree health care 53 45
Net cash provided (used) by
operating activities 1,090 (961)
Cash flows - investing activities:
Customer financing and properties
on lease, additions (470) (397)
Customer financing and properties
on lease, reductions 264 1,011
Property, plant and
equipment, net additions (240) (205)
Proceeds from dispositions 68 17
Net cash provided (used) by
investing activities (378) 426
Cash flows - financing activities:
New borrowings 850 125
Debt repayments (770) (104)
Common shares purchased (131) (104)
Stock options exercised, other 29 19
Dividends paid (148) (127)
Net cash used by financing activities (170) (191)
Net increase (decrease) in cash
and cash equivalents 542 (726)
Cash and cash equivalents at
beginning of year 1,010 3,354
Cash and cash equivalents at end
of 1st quarter $1,552 $2,628
The Boeing Company and Subsidiaries
Business Segment Data
(Unaudited)
(Dollars in millions) Three months ended
March 31
2001 2000
Revenues:
Commercial Airplanes $8,443 $5,171
Military Aircraft and Missiles 2,427 2,846
Space and Communications 2,246 1,659
Customer and Commercial Financing 206 167
Other 71 61
Accounting differences / eliminations (100) 6
Operating revenues $13,293 $9,910
Earnings from operations:
Commercial Airplanes $860 $259
Military Aircraft and Missiles 246 294
Space and Communications 84 60
Customer and Commercial Financing 142 107
Other (51) 2
Accounting differences / eliminations 25 (48)
Share-based plans (82) (60)
Unallocated expense (6) (58)
Earnings from operations $1,218 $556
Other income, principally interest $235 $149
Interest and debt expense (148) (103)
Earnings before income taxes $1,305 $602
Income Taxes 69 184
Net earnings before cumulative effect of
accounting change $1,236 $418
Effective income tax rate 5.3% 30.5%
Research and development:
Commercial Airplanes $195 $103
Military Aircraft and Missiles 53 61
Space and Communications 123 124
Other 51
Total research and development expense $422 $288
The Boeing Company and Subsidiaries
Operating and Financial Data
Deliveries 1st Quarter
Commercial Airplanes 2001 2000
717 7(1) 3(1)
737 -- 2
737 Next-Generation 72* 39
747 7 4**
757 8 10
767 10 5
777 16 10
MD-11 2 2
Total 122 75
Military Aircraft and Missiles
C-17 2 3
F-15 -- 4
F/A-18 C/D -- 6
F/A-18 E/F 7 4
T-45TS 4 4
CH-47 2 1
Apache 2 2
Space and Communications
Delta II -- 2
Delta III -- --
Satellites 1 --
* Includes one C-40 Aircraft
** Includes one ABL 747
Note:Commercial Airplanes deliveries by model include deliveries under
operating lease, which are identified by parentheses.
March 31 December 31
Contractual backlog (Dollars in billions) 2001 2000
Commercial Airplanes $88.6 $89.8
Military Aircraft and Missiles 20.4 17.1
Space and Communications 15.1 13.7
Total contractual backlog $124.1 $120.6
Unobligated backlog $29.2 $31.3
Workforce 199,000 198,000
SOURCE The Boeing Company
SEATTLE, April 20 /PRNewswire Interactive News Release/ --
The Boeing Company (NYSE: BA) reported strong financial results for the first
quarter with net earnings of $762 million or $0.89 per share on
$13.3 billion of revenue. These results exclude a $475 million non-recurring
earnings tax benefit. Net earnings including the non-recurring tax benefit
totaled $1,237 million, or $1.45 per share. Operating earnings and margins
totaled $1.2 billion and 9.2 percent, respectively. Total backlog at the end
of the quarter was up slightly to $153 billion, of which $124 billion is
contractually committed.
(Photo: http://www.newscom.com/cgi-bin/prnh/20001004/BOEINGLOGO )
The company generated $850 million of free cash flow (operating cash flow
less capital expenditures) in the quarter. Ending cash and short-term
investment balances were nearly $1.6 billion. Consolidated debt at the end of
the period totaled $8.9 billion, of which $4.6 billion is attributable to
Boeing Capital Corporation.
General and administrative expenses attributable to deferred stock
compensation decreased $55 million, resulting in a favorable 0.4 percent
operating margin impact and $0.04 impact on earnings per share. This is a
result of the decrease in Boeing's share price over the quarter.
Financial results for the quarter reflect continued solid operating
performance across the company's core businesses. Overall financial results
were up significantly versus the first quarter of 2000, which was impacted by
a 40-day work stoppage by engineers and technicians. The February 28, 2001
Puget Sound earthquake did not have a material financial impact.
During the quarter the company took key actions that reflect its ongoing
transformation. On March 21, the company elevated the leaders of its
three largest businesses to chief executive officers and announced plans for a
new, leaner and strategically focused world headquarters. On March 29, Boeing
Commercial Airplanes unveiled plans to focus its new product development
efforts on a longer-range sonic cruiser airplane able to fly at
near-supersonic speeds and having the potential to change the way the world
flies.
"We are off to a great start for 2001," said Phil Condit, Boeing chairman
and chief executive officer. "I am extremely pleased with our quarterly
operating results as they reflect our continuing focus on running healthy core
businesses and achieving strong operating performance. I am also very
encouraged by our continuing transformation and the strategic potential
represented by both the corporate re-architecture and our 'new frontier'
opportunities. These activities illustrate our collective determination to
seize worldwide growth opportunities and generate shareholder value."
Commercial Airplanes: First quarter Commercial Airplanes segment revenues
totaled $8.4 billion, up 63 percent compared to the first three months of
2000, which was impacted by the work stoppage. Commercial Airplanes delivered
122 jet airplanes during the quarter compared to 75 during the first quarter
of 2000. Segment operating earnings and margins totaled $860 million and
10.2 percent, respectively, driven by continued operating improvements as well
as delivery mix.
During the quarter Commercial Airplanes announced plans to focus its
product development activities on a faster, longer-range sonic cruiser
airplane, highlighting Commercial Airplanes' commitment to innovation and
customer focus. Commercial Airplanes will team with its customers to ensure
that the design of the new airplane provides the most value to the industry,
and initial customer response has been enthusiastic.
Contractual backlog at the end of the quarter was $88.6 billion. As
expected, demand for new airplanes moderated when compared to the strong
levels experienced in the latter half of 2000. Commercial Airplanes received
120 gross orders during the quarter versus 128 in the first quarter of 2000.
Based on its current assessment that the U.S. economy will experience a
"soft landing," the Commercial Airplanes delivery outlook is stable. The 2001
delivery forecast is nearly sold out, and the 2002 delivery forecast is more
than 80 percent sold.
Military Aircraft and Missile Systems: Military Aircraft and Missile
Systems revenues for first quarter totaled $2.4 billion compared to
$2.8 billion a year ago. Revenues decreased primarily as a result of fewer
F-15, C-17 and F/A-18 deliveries versus first quarter of 2000. Overall
operating performance continued to be solid as segment earnings and operating
margins totaled $246 million and 10.1 percent, respectively, compared to
$294 million and 10.3 percent during the first quarter of 2000.
Major events during the quarter included significant progress on the Joint
Strike Fighter program. On February 5, the Boeing JSF X-32A concept
demonstrator completed flight testing after its 66th flight, meeting all
government test objectives and demonstrating additional capabilities. On
March 29, the Boeing JSF X-32B demonstrator successfully completed its first
flight, entering a four month test program to validate the Boeing approach to
short-takeoff and vertical landing (STOVL) flight. Subsequent to the quarter,
on April 13, the X-32B completed the first STOVL flight of the entire Joint
Strike Fighter program.
Contractual backlog at the end of the quarter increased 19 percent to
$20.4 billion compared to $17.1 billion at the end of 2000.
Space and Communications: Space and Communications reported first quarter
revenues of $2.2 billion, up 35 percent compared to the $1.7 billion revenues
reported for the first three months of 2000. The increase in revenues
reflects Space and Communications' growing business base, primarily Boeing
Satellite Systems.
First quarter operating earnings totaled $84 million. Operating margins
increased slightly to 3.7 percent versus 3.6 percent during the first quarter
of 2000 as the company continued to invest in developing its Delta IV launch
vehicle.
During the quarter operational integration of Boeing Satellite Systems
(formerly Hughes space and communication businesses) was largely completed.
Other milestones include the successful completion of extended duration
testing on the RS-68 engine for the Delta IV, the announcement of the first
Delta IV commercial launch customer and the successful launch of a Boeing
Satellite Systems 702 satellite by Sea Launch.
Contractual backlog at the end of the quarter increased 10 percent to
$15.1 billion compared to $13.7 billion at the end of 2000.
Financing Segment: Customer and Commercial Financing, which consists
primarily of Boeing Capital Corporation, had first quarter revenues totaling
$206 million on total assets of $7.1 billion. Operating income, excluding
interest expense, relating to financing segment activities totaled
$142 million. Financing related interest costs totaled $74 million, and
earnings before income taxes totaled $68 million. Major events for first
quarter included a well received $750 million 10-year Boeing Capital
Corporation bond issue as well as the definitization of lease terms under
which the United Kingdom Royal Air Force will lease four C-17 Globemaster III
airlifters. Initial deliveries of the leased airlifters are scheduled for
May 2001.
Non-Recurring Item (Taxes): In March 2001 the company reached final
agreement with the Internal Revenue Service, primarily regarding previously
filed claims for refund of research and development tax credits. These claims
dealt primarily with historical fixed-price development program expenses
incurred by McDonnell Douglas from 1986 to 1992. The agreement with the IRS
resulted in financial recognition during the quarter of $343 million of tax
credit and $210 million ($132 million after-tax) of related interest income.
The net earnings and EPS impact of this agreement totaled $475 million and
$0.56, respectively, during the quarter. A pro-forma summary of the earnings
impact on the quarter is included below.
Tax Settlement Impact - Income
($ millions, except EPS)
Excluding Tax Including Tax Tax Settlement
Settlement Settlement Impact
Earnings from operations $1,218 $1,218
Other income, principally
interest 25 235 $210
Interest and debt expense (148) (148)
Earnings before income taxes 1,095 1,305
Income Taxes (334) (69) 265*
Accounting Change 1 1
Net earnings $762 $1,237 $475
Earnings per share
(852.2M shares) $0.89 $1.45 $0.56
Effective Income Tax Rate 30.5% 5.3% (25.2%)
*$343 million tax credit less $78 million taxes (37.1% marginal rate) due
on $210 million interest income
Outlook: The company's financial guidance for 2001 and 2002 is shown
below. The outlook remains consistent with that previously provided. "I am
pleased to report that we can reaffirm our guidance reflecting a solid
financial outlook," said Mike Sears, senior vice president and chief financial
officer. "As promised, we continue to execute well on our core businesses,
invest for future growth and competitiveness, and maintain significant balance
sheet strength."
For 2001, the company expects revenues of approximately $57 billion and an
operating margin greater than 8.5 percent. The company also expects to
generate $3 billion to $4 billion of free cash flow. This estimate includes
the second quarter impact of paying approximately $900 million in taxes which
come due as a result of completing activities under a long-term government
contract.
Guidance for 2002 reflects expected growth in revenues to greater than
$62 billion, while the operating margin is expected to improve to more than
9 percent. Free cash flow is expected to exceed $4 billion. The company
estimates annual commercial airplane deliveries in 2001 and 2002 to
approximate 530 each year.
The company expects aggregate research and development expenses to be in
the range of 3.0 percent to 3.5 percent of sales.
Financial Outlook
2001 2002
Revenue (in billions) $57 >$62
Operating margins (%) >8.5% >9.0%
Free cash flow (in billions) $3.0-$4.0 >$4.0
Change in Segment Financial Reporting: Beginning this quarter, segment
results have been realigned to reflect the business and management structure
of the company. Revenue and operating income for each of the core business
units as well as the customer and commercial financing segment are now
reported on a stand-alone basis. Results for the company's other businesses,
including Phantom Works, Connexion(SM) by Boeing and Air Traffic Management,
have been combined into a single "Other" grouping. Comparable prior periods
have been restated.
Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this release contain "forward-looking" information
that involves risk and uncertainty, including projections for new products
(including, without limitation, the "sonic cruiser"), deliveries, realization
of technical and market benefits from acquisitions, revenues, operating
margins, free cash flow, taxes, research and development expenses, and other
trend projections. This forward-looking information is based upon a number of
assumptions including assumptions regarding global economic, passenger and
freight growth; current and future markets for the Company's products and
services; demand for the Company's products and services; performance of
internal plans, including, without limitation, plans for productivity gains,
reductions in cycle time and improvements in design processes, production
processes and asset utilization; product performance; customer financing;
customer, supplier and subcontractor performance; customer model selections;
favorable outcomes of certain pending sales campaigns and U.S. and foreign
government procurement actions; supplier contract negotiations; price
escalation; government policies and actions; successful negotiation of
contracts with the Company's labor unions; regulatory approvals; and
successful execution of acquisition and divestiture plans. Actual future
results and trends may differ materially depending on a variety of factors,
including the Company's successful execution of internal performance plans,
including continued research and development, production rate increases and
decreases, production system initiatives, timing of product deliveries and
launches, supplier contract negotiations, asset management plans, acquisition
and divestiture plans, procurement plans, and other cost-reduction efforts;
the actual outcomes of certain pending sales campaigns and U.S. and foreign
government procurement activities; acceptance of new products and services;
product performance risks; the cyclical nature of some of the Company's
businesses; volatility of the market for certain products and services;
domestic and international competition in the defense, space and commercial
areas; continued integration of acquired businesses; uncertainties associated
with regulatory certifications of the Company's commercial aircraft by the
U.S. Government and foreign governments; other regulatory uncertainties;
collective bargaining labor disputes; performance issues with key suppliers,
subcontractors and customers; governmental export and import policies; factors
that result in significant and prolonged disruption to air travel worldwide;
global trade policies; worldwide political stability; domestic and
international economic conditions; price escalation trends; the outcome of
political and legal processes, including uncertainty regarding government
funding of certain programs; changing priorities or reductions in the U.S.
Government or foreign government defense and space budgets; termination of
government contracts due to unilateral government action or failure to
perform; legal, financial and governmental risks related to international
transactions; legal proceedings; and other economic, political and
technological risks and uncertainties. Additional information regarding these
factors is contained in the Company's SEC filings, including, without
limitation, the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions except per share data) Three months ended
March 31
2001 2000
Sales and other operating revenues $13,293 $9,910
Cost of products and services 11,070 8,547
2,223 1,363
Equity in income (loss) from joint ventures 22 31
General and administrative expense 523 490
Research and development expense 422 288
Share-based plans expense 82 60
Earnings from operations $1,218 $556
Other income, principally interest 235 149
Interest and debt expense (148) (103)
Earnings before income taxes $1,305 $602
Income taxes 69 184
Net earnings before cumulative effect
of accounting change $1,236 $418
Cumulative effect of accounting changes, net 1 --
Net earnings $1,237 $418
Basic earnings per share $1.48 $.48
Diluted earnings per share $1.45 $.48
Cash dividends per share $.17 $.14
Average diluted shares (millions) 852.2 878.0
Excluding the share-based plans:
Net Earnings $1,288 $456
Diluted earnings per share $1.51 $.52
Note: All references to earnings per share in the text of this press
release refer to diluted earnings per share.
The Boeing Company and Subsidiaries
Consolidated Statements of Position
(Dollars in millions except per share data) March 31 December 31
2001 2000
(Unaudited)
Assets
Cash and cash equivalents $1,552 $1,010
Accounts receivable 4,524 4,928
Current portion of customer and
commercial financing 926 995
Deferred income taxes 2,153 2,137
Inventories, net of advances and
progress billings 8,016 6,794
Total current assets 17,171 15,864
Customer and commercial financing 6,185 5,964
Property, plant and equipment, net 8,712 8,814
Goodwill and acquired intangibles, net 5,247 5,214
Prepaid pension expense 5,080 4,845
Deferred income taxes -- 60
Other assets 1,403 1,267
$43,798 $42,028
Liabilities and Shareholders' Equity
Accounts payable and other liabilities $12,169 $11,979
Advances in excess of related costs 3,943 3,517
Income taxes payable 1,336 1,561
Short-term debt and current portion
of long-term debt 658 1,232
Total current liabilities 18,106 18,289
Deferred income taxes 38 --
Accrued retiree health care 5,182 5,152
Long-term debt 8,238 7,567
Minority interest in subsidiaries 16 --
Shareholders' equity:
Common shares, par value $5.00 -
1,200,000,000 shares authorized;
Shares issued - 1,011,870,159 and
1,011,870,159 5,059 5,059
Additional paid-in capital 2,381 2,693
Treasury shares, at cost -
137,604,401 and 136,385,222 (6,307) (6,221)
Retained earnings 13,327 12,090
Accumulated other comprehensive income (26) (2)
Unearned compensation (6) (7)
ShareValue Trust shares -
39,266,086 and 39,156,280 (2,210) (2,592)
Total shareholders' equity 12,218 11,020
$43,798 $42,028
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions) Three months ended
March 31
2001 2000
Cash flows - operating activities:
Net earnings $1,237 $418
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Share-based plans 82 60
Depreciation 315 323
Amortization of goodwill and intangibles 69 29
Customer and commercial financing
valuation provision 4 1
Changes in assets and liabilities -
Short-term investments -- 1
Accounts receivable 404 31
Inventories, net of advances
and progress billings (1,227) (1,435)
Accounts payable and other liabilities 343 (211)
Advances in excess of related costs 426 36
Income taxes payable and deferred (128) 15
Other (488) (274)
Accrued retiree health care 53 45
Net cash provided (used) by
operating activities 1,090 (961)
Cash flows - investing activities:
Customer financing and properties
on lease, additions (470) (397)
Customer financing and properties
on lease, reductions 264 1,011
Property, plant and
equipment, net additions (240) (205)
Proceeds from dispositions 68 17
Net cash provided (used) by
investing activities (378) 426
Cash flows - financing activities:
New borrowings 850 125
Debt repayments (770) (104)
Common shares purchased (131) (104)
Stock options exercised, other 29 19
Dividends paid (148) (127)
Net cash used by financing activities (170) (191)
Net increase (decrease) in cash
and cash equivalents 542 (726)
Cash and cash equivalents at
beginning of year 1,010 3,354
Cash and cash equivalents at end
of 1st quarter $1,552 $2,628
The Boeing Company and Subsidiaries
Business Segment Data
(Unaudited)
(Dollars in millions) Three months ended
March 31
2001 2000
Revenues:
Commercial Airplanes $8,443 $5,171
Military Aircraft and Missiles 2,427 2,846
Space and Communications 2,246 1,659
Customer and Commercial Financing 206 167
Other 71 61
Accounting differences / eliminations (100) 6
Operating revenues $13,293 $9,910
Earnings from operations:
Commercial Airplanes $860 $259
Military Aircraft and Missiles 246 294
Space and Communications 84 60
Customer and Commercial Financing 142 107
Other (51) 2
Accounting differences / eliminations 25 (48)
Share-based plans (82) (60)
Unallocated expense (6) (58)
Earnings from operations $1,218 $556
Other income, principally interest $235 $149
Interest and debt expense (148) (103)
Earnings before income taxes $1,305 $602
Income Taxes 69 184
Net earnings before cumulative effect of
accounting change $1,236 $418
Effective income tax rate 5.3% 30.5%
Research and development:
Commercial Airplanes $195 $103
Military Aircraft and Missiles 53 61
Space and Communications 123 124
Other 51
Total research and development expense $422 $288
The Boeing Company and Subsidiaries
Operating and Financial Data
Deliveries 1st Quarter
Commercial Airplanes 2001 2000
717 7(1) 3(1)
737 -- 2
737 Next-Generation 72* 39
747 7 4**
757 8 10
767 10 5
777 16 10
MD-11 2 2
Total 122 75
Military Aircraft and Missiles
C-17 2 3
F-15 -- 4
F/A-18 C/D -- 6
F/A-18 E/F 7 4
T-45TS 4 4
CH-47 2 1
Apache 2 2
Space and Communications
Delta II -- 2
Delta III -- --
Satellites 1 --
* Includes one C-40 Aircraft
** Includes one ABL 747
Note:Commercial Airplanes deliveries by model include deliveries under
operating lease, which are identified by parentheses.
March 31 December 31
Contractual backlog (Dollars in billions) 2001 2000
Commercial Airplanes $88.6 $89.8
Military Aircraft and Missiles 20.4 17.1
Space and Communications 15.1 13.7
Total contractual backlog $124.1 $120.6
Unobligated backlog $29.2 $31.3
Workforce 199,000 198,000
SOURCE The Boeing Company
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