Boeing Reports Fourth Quarter

CHICAGO, Jan. 30, 2003 - The Boeing Company [NYSE: BA] reported net earnings of $590 million, or $0.73 per share, for the fourth quarter of 2002 on revenues of $13.7 billion. Reported net earnings for 2002 totaled $492 million, or $0.61 per share, on revenues of $54.1 billion. This includes a $1.8 billion ($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, totaled $2,299 million, 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.”

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.

Fourth quarter 2002 earnings from operations, excluding non-recurring items, fell slightly from the comparable period in 2001. Commercial Airplanes earnings decreased on lower deliveries partly offset by production efficiencies, while Military Aircraft and Missile Systems earnings were up on higher deliveries. Space and Communications earnings were down as commercial satellite losses offset growth and performance on other programs. Non-recurring items favorably impacted earnings from operations by a total of $36 million as Commercial Airplanes reversed previously recognized pre-tax charges related to the events of Sept. 11. This is the result of better than expected performance on valuation allowances, vendor penalties, and severance costs. Earnings from operations and margins for the fourth quarters of 2002 and 2001 are summarized below:


Deferred stock compensation pre-tax expense decreased $9 million during the quarter due to the decline in the company’s stock price from September 30 through December 31. This resulted in a $0.01 benefit to earnings per share. Pre-tax expense for share-based plans totaled $114 million and reduced earnings per share by $0.09. Netted together, consolidated stock compensation expenses lowered fourth quarter earnings per share by a total of $0.08.

Cash flow continued to reflect operating and financial strength in 2002. The company generated $3.4 billion in free cash flow in 2002, up 25 percent from 2001.

Excluding $340 million of cash used to fund pension plans in 2002, free cash flow totaled $3.7 billion. This compared with just over $2.7 billion in 2001 after excluding pension contributions of $19 million. Cash and short-term investment balances at year-end 2002 totaled $2.3 billion, up from $1.7 billion at the end of the third quarter and $0.6 billion at the end of 2001.

Consolidated debt at year-end totaled $14.4 billion, up from $12.3 billion at the end of 2001. The Boeing Company ended the year with $4.4 billion of debt outstanding, similar to 2001. Boeing Capital Corporation debt increased to $9.4 billion to fund portfolio growth, and non-recourse customer financing remained at about $0.6 billion.

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