Boeing 1999 Third Quarter Earnings Demonstrate Continued Improvement - Up $130 Million
SEATTLE --- The Boeing Company reported third quarter net earnings of $477 million, or $.52 per share, up $130 million over the same period in 1998. Revenues for the quarter were $13.3 billion, a four percent increase over the same period in 1998. Third quarter net earnings included, on an after-tax basis, a gain of $59 million, or $.07 per share, associated with the sale of Boeing Information Services, a non-core business, and a gain of $41 million, or $.04 per share, associated with receipt and subsequent sale of shares resulting from an initial public offering of an insurer. In addition, the quarter included a charge of $141 million, or $.15 per share associated with long-lead inventory on the F-15 fighter program. Boeing's third quarter earnings for the comparable period in 1998 were $347 million, or $.36 per share, which included certain non-recurring tax benefits of $57 million, or $.06 per share. Excluding these non-recurring items, third quarter earnings per share were $.56 and $.30 for 1999 and 1998 respectively, an increase of 87 percent year-over-year. Net margins for the quarter rose to 3.6 percent, compared to 2.7 percent for the same period in 1998. Earnings for the first nine months of 1999 were $1,647 million, or $1.76 per share, compared to $655 million, or $.67 per share, for the first nine months of 1998. Revenues for the nine month period were $42.8 billion, up 10 percent when compared to the first nine months of 1998. Net margins for the first nine months of 1999 were 3.8 percent compared to 1.7 percent in the first nine months of last year. Free cash flow, operating cash flow less capital expenditures, was very strong at $.8 billion for the third quarter and $2.3 billion for the nine months, reflecting continued improved performance. The company additionally generated $0.3 billion of cash during the quarter from the disposition of non-core businesses and assets. Cash and short-term investments were $2.8 billion after repurchasing 38.8 million shares for $1.7 billion during the first nine months of 1999. To date, the company has repurchased 74 million shares, or approximately one-half of the 15 percent authorized by the Board of Directors in August 1998. "Boeing continued on its flight plan in the third quarter. We won considerable new business. We are realizing significant performance improvement in production and are confident in our ability to deliver about 620 commercial airplanes this year,'' said Boeing Chairman and Chief Executive Officer Phil Condit. "Due in part to the improved Asian economy, we are able to maintain the 747 production rate at two per month through 2000. We also entered into new business opportunities which, when combined with some key contract wins, clearly indicate the exciting future of this company.'' Condit cited as examples the large, multi-year National Reconnaissance Office future imagery architecture contract, the opening of a new tactical aircraft modification and support facility in Jacksonville, Fla., and the global inventory network launched with British Airways. "The National Reconnaissance Office contract establishes our leadership position in the area of space imaging. Our ability to unseat a long-term incumbent demonstrates the strength of our merger with McDonnell Douglas and the acquisition of Rockwell's aerospace and defense businesses. This powerful combination opens up new opportunities across the board for Boeing going forward,'' Condit said. Commercial Airplanes: Commercial Airplanes operating earnings for the third quarter of 1999 were $501 million on revenues of $8.5 billion, compared with a loss of $142 million on revenues of $7.8 billion for the same period in 1998, all based on the unit cost of airplanes delivered. The 142 jet airplanes delivered in the third quarter brought Boeing's total for the first nine months of the year to 455, compared with 368 in the first nine months of 1998. The overall operating margin in the segment was 5.9 percent for the third quarter of 1999, compared with a negative 1.8 percent for the same period last year. Significant cost improvement on Next-Generation 737 and 777 more than offset a less favorable model mix. Military Aircraft and Missiles: Military Aircraft and Missiles earned $102 million on revenues of $2.8 billion in the third quarter, compared to $370 million of earnings on revenues of $3.2 billion during the same period last year. The segment's operating margin was 3.7 percent for the quarter, down from 11.5 percent in the comparable period for 1998. Increased deliveries of the C-17 were offset by fewer F-15 deliveries and a non-recurring pretax charge of $225 million related to long-lead inventory for the F-15 fighter program. The defense appropriations conference committee recently approved additional U.S. Air Force F-15 procurement. Boeing's tactical aircraft, transport, rotorcraft, and missile programs have received strong support in the Department of Defense fiscal year 2000 budget process. Space and Communications: Space and Communications earned $137 million on revenues of $1.7 billion, compared to a loss of $8 million on revenues of $1.6 billion for the same period in 1998. The segment operating margin for the third quarter was 8.2 percent, compared with negative .5 percent for the same period in 1998, which included higher research and development expense primarily related to the Delta IV launch vehicle, and joint venture development costs for the Sea Launch program. This year's third quarter included a pretax gain of approximately $95 million on the sale of Boeing Information Services. Managing for Value: Announced during the first quarter of this year, the Boeing Managing for Value program is designed to develop a company-wide culture to continuously improve financial performance and growth. This effort is focused on achieving long-term shareholder returns in the top quartile of S&P 500 companies. In July, Boeing announced the Value Scorecard that includes four public performance metrics, as well as guidance on top-level financial results. "We are making progress in driving a value-oriented discipline deep into the organization so that we are using a common language, common methodologies and a common way of operating and measuring results,'' Chief Financial Officer Debby Hopkins reported. "We are on track with our commitments for improving inventory turns, facility consolidations, overhead cost management and supplier base consolidation.'' Based on current schedules and plans for 1999, which include commercial airplane deliveries in the range of 620, consolidated revenues are projected to be approximately $58 billion. The company's operating margin is now projected to be in the range of 5.5% - 6.0%, an increase from the previous projection for the full year, due to improved performance. Free cash flow is currently projected to be greater than $3.0 billion for 1999, an increase of $.5 billion from the previous projection, also reflecting the company's strong performance. Based on current schedules and plans for 2000, commercial aircraft deliveries are projected to be in a range of 480, and consolidated revenues are projected to be in the range of $49 billion. The company's operating margin for 2000 is projected to be in the range of 5.5% - 6.5%, also an increase from the previous projection. Free cash flow is currently projected to be greater than $2.5 billion for 2000, an increase of $.5 billion from the previous projection.
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Boeing 1999 Third Quarter Earnings Demonstrate Continued Improvement - Up $130 Million
