01—Abstract
Summary
Summary of the 10-Q filed May 7, 2002. Cited figures are marked; the original filing is the authoritative source.
Boeing Company's first quarter 2002 report shows a net loss of $1.25 billiona, primarily due to a significant cumulative effect of an accounting change related to the adoption of SFAS No. 142 for goodwill and other intangible assets, resulting in a $1.83 billion charge.
Excluding this one-time accounting impact, the company would have reported a net profit. Despite the reported net loss, operational revenues increased by 4% year-over-year to $13.8 billionb, driven by growth in the Military Aircraft and Missile Systems segment and stable performance in Commercial Airplanes, though commercial aircraft deliveries were down. The company also recorded additional charges related to the September 11th terrorist attacks, impacting its net results.
However, the company's backlog remains strong at $110.2 billionc, indicating future revenue potential. Investors should note the impact of the SFAS No. 142 adoption and the ongoing assessment of September 11th related costs.
02—Key points
Key Highlights
- Reported a net loss of $1.25 billion for Q1 2002, heavily influenced by an $1.83 billion cumulative effect from adopting SFAS No. 142 (Goodwill and Other Intangible Assets).
- Revenue increased 4% to $13.8 billion, driven by a 22% rise in Military Aircraft and Missile Systems segment revenue.
- Commercial Airplanes segment revenue remained relatively stable at $8.3 billion, despite a decrease in aircraft deliveries, due to a favorable mix of aircraft sold.
- The company recorded an additional $34 million charge related to the September 11th terrorist attacks, impacting operating results.
- Contractual backlog of unfilled orders stood strong at $110.2 billion as of March 31, 2002, up from $106.6 billion at the end of 2001.
- Adopted SFAS No. 142, changing accounting for goodwill from amortization to an impairment-only approach, which resulted in a significant non-cash charge.
03—Questions
Frequently Asked Questions
What caused the significant net loss in the first quarter of 2002?
The primary driver of the net loss was the adoption of SFAS No. 142, which requires companies to change their accounting for goodwill. This led to a one-time, non-cash charge of $1.83 billion recognized as a cumulative effect of an accounting change, significantly impacting the reported net loss.
How did the September 11th attacks continue to affect Boeing in the first quarter of 2002?
Boeing recorded an additional $34 million charge related to the September 11th attacks. This charge consisted of $12 million for guarantee commitments and $22 million for decreased valuations of used airplanes. The company continues to assess potential future costs related to these events.
What is the significance of the company's strong backlog?
The contractual backlog of unfilled orders was $110.2 billion at the end of the first quarter of 2002. This robust backlog indicates significant future revenue streams and provides a degree of visibility and stability for the company's operations, particularly in its Commercial Airplanes and Military Aircraft segments.
How has the adoption of SFAS No. 142 impacted the company's financial statements beyond the one-time charge?
The adoption of SFAS No. 142 means that goodwill is no longer amortized. Instead, it is tested for impairment. This change also led to a significant goodwill impairment charge of $2.41 billion recognized upon adoption. The company's financial statements reflect a substantial decrease in goodwill on the balance sheet.
04—Continue