How did the September 11th attacks impact Boeing's financial performance in 2001?

The September 11th attacks had a significant negative impact, particularly on the Commercial Airplanes segment. Boeing recorded $935 million in 'special charges' related to the attacks, which included employee severance, a forward loss on the 717 program due to reduced demand, used aircraft valuation write-downs, inventory adjustments, vendor penalties, and adverse exposures under guarantee commitments. These charges impacted the segment's profitability and overall company earnings.

What is the significance of the acquisitions made in 2000?

Boeing made several significant acquisitions in 2000, including the Hughes space and communications businesses for approximately $3.85 billion and Jeppesen Sanderson, Inc. for $1.52 billion. These acquisitions significantly expanded Boeing's presence in the space and communications sector and its information services capabilities. They also resulted in a substantial increase in goodwill and acquired intangible assets on the balance sheet.

What is the outlook for Boeing's Commercial Airplanes segment given the post-9/11 environment?

The Commercial Airplanes segment experienced a significant downturn in demand following the September 11th attacks. Boeing projected lower commercial aircraft deliveries for 2002 and 2003. While the company believes air travel growth and airline revenue will gradually return to pre-September 11 levels, the recovery is expected to be gradual, with airlines slowly expanding routes and frequencies. This environment led to downward revisions in production plans and financial projections for the segment.

What is the company's financial position and liquidity outlook?

Boeing maintained a strong financial position, with $633 million in cash and cash equivalents at the end of 2001. The company also had significant credit facilities available. The events of September 11th did negatively impact liquidity, leading Boeing to utilize its commercial paper program for the first time. However, management expressed confidence that internally generated liquidity and access to capital resources would be sufficient to meet commitments and strategic opportunities.

BA/BA-PA 10-K FY2001 Annual Report — Revenue, Net Income, EPS

Summary

The Boeing Company's 2001 10-K filing reveals a company navigating a challenging year marked by the significant impact of the September 11th terrorist attacks on the commercial aviation sector. Despite these headwinds, Boeing's diversified business segments, including military aircraft and space/communications, demonstrated resilience. The company reported total sales of $58.2 billion for 2001, an increase from the previous year, primarily driven by strong performance in its Military Aircraft and Missile Systems and Space and Communications segments. However, the Commercial Airplanes segment experienced a notable downturn, reflecting reduced airline demand and resulting in substantial "special charges" related to events of September 11th, including severance costs, forward losses on the 717 program, and inventory write-downs. Financially, the company managed its liquidity well, though it utilized commercial paper facilities for the first time. The filing also details significant acquisitions in 2000, notably Hughes space and communications businesses, which contributed to increased goodwill and intangible assets. Investors should note the pending adoption of new accounting standards for goodwill, which is expected to result in a significant pretax charge in 2002. The company's backlog remained substantial, though it saw a decrease from the prior year, reflecting the broader market conditions.

Key Highlights

1Total sales reached $58.2 billion in 2001, up from $51.3 billion in 2000, driven by strength in military and space segments.
2The Commercial Airplanes segment faced significant challenges post-September 11th, leading to $935 million in "special charges" impacting earnings.
3The company's backlog decreased to $106.6 billion at the end of 2001 from $120.6 billion in 2000, reflecting reduced commercial aircraft orders.
4Acquisitions, particularly the Hughes space and communications businesses in 2000, significantly increased goodwill and intangible assets.
5Research and development expenses remained substantial, totaling $1.94 billion in 2001, focused on new commercial and military programs.
6Boeing Capital Corporation, the financing subsidiary, saw increased revenues, supported by higher volumes in commercial aircraft financing.
7The company anticipates a significant pretax charge between $2.1 billion and $2.6 billion in 2002 due to the adoption of new goodwill accounting standards (SFAS No. 142).

BOEING CO Annual Report, Year Ended Dec 31, 2001

Summary

Key Highlights

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