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Boeing Profit Up on Tax Refund, Defense Growth

January 30, 2004|Peter Pae | Times Staff Writer

Boeing Co., bolstered by a huge tax refund and a surge in demand for military equipment and services, reported Thursday sharply higher fourth-quarter earnings.

The better-than-expected results came as Boeing's new chief executive, Harry Stonecipher, said he was spending considerable time at the Pentagon and on Capitol Hill trying to restore the company's reputation amid the ethics scandals that have shaken the world's largest aerospace company in the last year.

"I'm trying to deal with this perception that we're a bunch of crooks," said Stonecipher, as he presided over his first earnings report after taking over the top post last month. A former Boeing president, Stonecipher came out of retirement after the scandals prompted CEO Philip Condit to resign abruptly Dec. 1.

"I'm telling them that if they have a problem with us we want to know what it is," Stonecipher said. "And we're going to work on every one."

Last fall, Boeing fired its chief financial officer, Mike Sears, and a former Air Force official, Darleen Druyun, for allegedly discussing job opportunities at the company while Druyun still was working at the Pentagon as one of its top acquisition officials.

Boeing also came under scrutiny after it admitted that an employee obtained proprietary documents from the firm's archrival, Lockheed Martin Corp., as Boeing bid on a multibillion-dollar rocket contract, which it eventually won.

After months of unsavory revelations, Thursday's earnings report provided a welcome relief for the company. Boeing, headquartered in Chicago, is the largest private employer in Southern California with about 36,000 employees who mostly work on defense-related projects.

Fueled mainly by growth in defense contracts, Boeing's fourth-quarter net income surged 88% to $1.1 billion, or $1.37 a share, from $590 million, or 73 cents a share, in the year-earlier quarter.

After excluding the $1.1-billion pretax refund, a partial settlement with the Internal Revenue Service, Boeing posted earnings of 50 cents a share, topping the consensus estimate of analysts by 3 cents. Fourth-quarter revenue was down 4% to $13.2 billion from $13.6 billion.

The gains in Boeing's defense business offset a continuing slump in commercial aircraft sales. Last year European rival Airbus sold more commercial jets than Boeing for the first time, as Boeing sold 100 fewer planes than in the previous year.

Meanwhile, revenue and operating profit continued to rise at Boeing's defense unit, which for the first time accounted for the majority of the company's earnings.

In the fourth quarter, operating profit from defense-related businesses rose 8% to $603 million from $559 million as revenue rose 3% to $7.5 billion.

Boeing shares rose 76 cents to $42.30 on the New York Stock Exchange.

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