Boeing Q4 Net Income More Than Doubles Over Previous Year

Boeing Commercial Airplanes' contractual backlog rose 37 percent during the quarter and 89 percent for the full year to $124 billion, reflecting 388 gross orders during the quarter - including 18 that launched the 747-8 program - and 1,029 for the year. From the 787 Dreamliner program launch to the end of 2005, 27 customers had booked a total of 379 orders and commitments for the new airplane, including 291 firm orders.

Revenues for the fourth quarter increased 8 percent to $5.9 billion on higher airplane deliveries, a favorable model mix and higher spares revenue (Table 4). Operating margins were 5.6 percent, reflecting higher revenues partially offset by planned increases in research and development expense. The tanker and 717 related items mentioned above led to a negative operating margin for 2004's fourth quarter. Airplane deliveries totaled 73 units, eight fewer than originally planned due to residual effects of the September labor strike, which reduced results by an estimated 8 cents in the quarter.

For the year, revenues rose 8 percent to $22.7 billion on higher deliveries, increased spares and services sales, and higher used aircraft sales. Deliveries for the year totaled 290 airplanes. Operating earnings grew 90 percent to $1.4 billion.


    Table 4. Commercial Airplanes Operating Results

    (Millions, except
     deliveries &
     margin percent)  4th Quarter        %         Full Year          %
                     2005      2004    Change    2005       2004    Change

    Commercial
     Airplanes
     Deliveries         73        67        9%      290       285        2%

    Revenues        $5,856    $5,398        8%  $22,651   $21,037        8%
    Earnings (Loss)
     from Operations  $330     ($149)     N.M.   $1,432      $753       90%

    Operating Margins 5.6%     (2.8%)  8.4 Pts     6.3%      3.6%   2.7 Pts


    Integrated Defense Systems

Boeing Integrated Defense Systems (IDS) revenues increased 7 percent in the quarter to $8.1 billion due to strong growth in Aircraft & Weapon Systems and Support Systems segments (Table 5). Operating margins increased to 11.4 percent from 8.9 percent driven by double-digit performance in these segments. A strike at IDS's launch business and lower revenue from proprietary programs reduced fourth-quarter revenue by nearly $700 million below previous expectations.

For the year, IDS achieved record revenue, earnings and margins. Revenues rose 1 percent to $30.8 billion, operating earnings rose 33 percent to $3.9 billion, and operating margins increased to 12.6 percent, up from 9.6 percent a year ago. Full year operating earnings include a pre-tax gain of $569 million from the sale of Rocketdyne, without which IDS's operating margin would have been an industry-leading 10.8%.

Aircraft & Weapon Systems revenues increased 18 percent to $3.1 billion for the quarter, primarily due to the delivery mix and timing of C-17 and other aircraft programs. Operating margins were 16.5 percent driven by strong performance across key programs including C-17, F/A-18 and Rotorcraft.

Network Systems revenues declined to $2.9 billion on lower volume on Ground-based Midcourse Defense, Homeland Security and Proprietary programs that was partially offset by increased activity in Future Combat Systems (FCS) and Airborne Command & Control programs. Operating margins fell to 5.7 percent, as lower missile defense and Airborne Early Warning & Control earnings from revised cost and fee estimates offset higher earnings from programs with increased revenues identified above.


    Table 5. Integrated Defense Systems Operating Results

    (Millions, except    4th Quarter        %        Full Year            %
     margin percent)   2005      2004     Change   2005      2004      Change
    Revenues
      Aircraft and
       Weapon Systems $3,099    $2,627      18%   $11,444   $11,394       0%
      Network Systems $2,890    $2,942      (2%)  $11,264   $11,221       0%
      Support Systems $1,588    $1,391      14%    $5,342    $4,881       9%
      Launch and
       Orbital Systems  $548      $667     (18%)   $2,741    $2,969      (8%)
    Total IDS
     Revenues         $8,125    $7,627       7%   $30,791   $30,465       1%

    Earnings (Loss)
     from Operations
      Aircraft and
       Weapon Systems   $511      $291      76%    $1,707    $1,636       4%
      Network Systems   $165      $276     (40%)     $638      $969     (34%)
      Support Systems   $225      $184      22%      $765      $662      16%
      Launch and
       Orbital Systems   $23      ($76)    N.M.      $780     ($342)    N.M.
    Total IDS Earnings
     (Loss) from
     Operations         $924      $675      37%    $3,890    $2,925      33%

    Operating Margins  11.4%      8.9%  2.5 Pts     12.6%      9.6%  3.0 Pts

Support Systems revenues rose 14 percent to $1.6 billion driven by increased volume in Integrated Support Services for Special Operations Forces, C-17, C-130 and F-15K. Operating margins were 14.2 percent, up from 13.2 percent during the same period in 2004.

Launch and Orbital Systems revenues declined 18 percent to $0.5 billion due primarily to the strike affecting the launch business during the quarter. Operating margins rose to 4.2 percent due to higher contract values for Delta IV launch contracts in 2005 and revised cost and fee estimates in 2004.

As previously announced, IDS is reorganizing into 3 new business segments. This new structure will more effectively address evolving customer requirements for capability-driven solutions and improve productivity.

IDS's total backlog continues to be the largest in the industry at $77.6 billion. Contractual backlog grew to $37.9 billion, up from $35.5 billion at the end of the third quarter. Unobligated backlog was $39.7 billion at the end of the fourth quarter. Total IDS backlog, comprised of contractual and unobligated, was down 1 percent from the end of the third quarter and down 10 percent from a year earlier.

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