Boeing Reports Strong 2009 Revenue & Cash Flow on Solid Core Performance

Boeing Military Aircraft (BMA) fourth-quarter revenue rose 19 percent to $3.7 billion and operating margin was 9.5 percent, reflecting higher aircraft deliveries, improved delivery mix and strong execution across its programs, partially offset by higher costs on the AEW&C program which reduced BMA margins by 3.5 points.  During the quarter, BMA delivered 32 aircraft, the EA-18G was approved for full-rate production, and the C-17 won new international orders.

Network & Space Systems fourth-quarter revenue was $2.4 billion, reduced primarily by lower volume on combat systems and missile defense.  Operating margin was 5.9 percent reflecting solid performance across the segment's array of programs partially offset by a write-down of Delta II inventory and a contract settlement in satellites.  During the quarter, the Brigade Combat Team Modernization Increment 1 was approved to enter low rate initial production.

Global Services & Support (GS&S) revenue increased 19 percent on higher volume across its broad portfolio of services and logistics products.  During the quarter, GS&S operating margins were 13.8 percent driven by strong operating performance.  In this segment, the KC-135 Programmed Depot Maintenance contract award was reinstated, and the company was awarded several Department of Energy Smart Grid grants.

Backlog at Defense, Space & Security is $64.8 billion, approximately two times expected 2010 revenue.  The reduction in backlog was driven by run-off of multi-year contracts that exceeded additions to backlog and by termination of a portion of the Brigade Combat Team Modernization contract due to changing US defense priorities.

Boeing Capital Corporation

Boeing Capital Corporation (BCC) reported fourth-quarter pre-tax earnings of $14 million compared to $19 million in the same period last year (Table 6).  During the quarter, BCC's portfolio balance declined slightly to $5.7 billion, down from $6.0 billion at the beginning of the year and from $6.1 billion at the end of the third quarter, on customer payments and depreciation.  BCC contributed $93 million in cash dividends to the company during the full year.  BCC's debt-to-equity ratio increased to 5.8-to-1.  

Table 6.  Boeing Capital Corporation Operating Results

Fourth Quarter

Full Year

(Dollars in Millions)














Earnings from Operations







Additional Information

The "Other" segment consists primarily of Boeing Engineering, Operations and Technology, as well as certain results related to the financial consolidation of all business units.  Other segment expense was $47 million in the fourth quarter, down from $74 million in the same period last year.

Total pension expense for the fourth quarter was $223 million, as compared to $113 million in the same period last year.  A total of $264 million was recognized in the operating segments in the quarter (up from $99 million in the same period last year), partially offset by a $41 million contribution to earnings in unallocated items.  The company made a discretionary contribution of 29.2 million shares of Boeing common stock, valued at $1.5 billion, to its pension plans during the quarter.  

Unallocated expense was $123 million, up from $101 million in the same quarter last year, driven by higher deferred compensation expense partially offset by lower unallocated pension expense and intersegment eliminations.  

Interest expense for the quarter was $110 million, up from $57 million in the same period last year due to additional debt issued in 2009.  Other income/(expense) decreased $23 million driven by lower interest earned on cash balances.


The company's 2010 financial guidance reflects solid operating performance amid lower volumes, higher pension expense and continued investment in development programs (Table 7).

Boeing's 2010 revenue guidance is $64 billion to $66 billion and reflects previously announced production rate reductions on 777 and reduced scope on Army modernization and missile defense.  Earnings guidance for 2010 of $3.70 to $4.00 per share reflects the lower revenue and includes some consideration for development program and market risks.  Operating cash flow is expected to be approximately zero in 2010, including less than $100 million of pension contributions, as the company continues to build inventory on key development programs.

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