Management’s Discussion and Analysis

Management’s Discussion and Analysis

Deliveries of selected production units, including deliveries under operating lease, which are identified by the number in parentheses, were as follows:

2001

2000

1999

C-17

F/A-18E/F

F/A-18C/D

AH-64 Apache

T-45

CH-47 Chinook

737 C-40A

F-15

14(4)
36
–
7
15
11
4
–

13
26
16
8
16
7
–
5

11
13
25
11
12
14
–
35

Military Aircraft and Missile Systems segment revenues for 2002 are projected to be in the $13 billion range. Segment business trends are discussed in the Military Aircraft and Missile Systems Business Environment and Trends section.

Space and Communications Space and Communications segment revenues were $10.4 billion in 2001, compared with $8.0 billion in 2000 and $6.8 billion in 1999. The segment remains broadly diversified. The principal contributors to 2001 Space and Communications segment revenues included Integrated Defense Systems at approximately 24% of revenues, Boeing Satellite Systems at 19%, Missile Defense at 17% and the International Space Station at approximately 11%. Other significant contributors included Space Shuttle Flight Operations and Main Engine, AWACS (Airborne Warning and Control System), and Delta space launch services.

Deliveries of selected production units were as follows:

2001

2000

1999

Delta II

Delta III

BSS Satellites

767 AWACS

–

Space and Communications segment revenues for 2002 are projected to be in the $11 billion range. The greatest growth is expected in the Missile Defense sector, with Boeing being named lead for overall Missile Defense System Integration. Growth is also expected to continue in the Integrated Defense System sector, and the 737 Airborne Early Warning & Control (AEW&C) program. Segment business trends are discussed in the Space and Communications Business Environment and Trends section.

Customer and Commercial Financing Operating revenues in the Customer and Commercial Financing segment, which consists primarily of the wholly owned subsidiary Boeing Capital Corporation, were $863 million in 2001, compared with $728 million in 2000 and $686 million in 1999. The major revenue components include commercial aircraft financing and commercial equipment leasing. The increase in 2001 relates principally to the higher volume of commercial aircraft financing.

Based on current schedules and plans, the Company projects total 2002 revenues to be approximately $54 billion.

Earnings

Net earnings of $2,827 million for 2001 were $699 million higher than 2000 earnings. The increase in net earnings principally reflected increased operating earnings associated with the increase in revenue for 2001. Net earnings in 2001 were significantly impacted by $935 million pretax special charges ($633 million after tax) related to the events of September 11, 2001, which are discussed in the operating earnings section. The increase in net earnings for 2001 over 2000 also reflects the in-process research and development expense of $557 million ($348 million after tax) that was recognized in 2000, of which $500 million was associated with the acquisition of the Hughes space and communications businesses which were renamed Boeing Satellite Systems.

Earnings before income taxes were $3,564 million for 2001, compared with $2,999 million in 2000. In addition to the change in operating earnings discussed below, other income decreased $68 million in 2001, to $318 million in 2001 from $386 million in 2000. The decrease in other income in 2001 principally reflects lower interest income from cash, but was partially offset by higher interest income associated with federal income tax audit settlements ($210 million in 2001, compared with $73 million in 2000). Other income in 2000 also included a $42 million gain on sale of a long-held equity investment. Interest and debt expense increased $205 million in 2001, to $650 million in 2001 from $445 million in 2000. The increased interest expense resulted from increased debt, primarily associated with the increased customer and commercial financing activities of Boeing Capital Corporation. Interest expense is expected to increase concurrent with increasing future financing activity.

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