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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-2436320
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
|
|
|
|
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For the Three
Months Ended
|
|
For the Six
Months Ended |
||||||||||||
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July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
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($ in millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
1,803.3
|
|
|
$
|
1,520.7
|
|
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$
|
3,531.8
|
|
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$
|
2,962.9
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
1,525.9
|
|
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1,690.2
|
|
|
2,993.2
|
|
|
2,927.3
|
|
||||
Selling, general and administrative
|
54.4
|
|
|
54.1
|
|
|
114.9
|
|
|
98.4
|
|
||||
Impact from severe weather event
|
—
|
|
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6.3
|
|
|
—
|
|
|
15.1
|
|
||||
Research and development
|
6.8
|
|
|
8.6
|
|
|
13.1
|
|
|
16.1
|
|
||||
Total operating costs and expenses
|
1,587.1
|
|
|
1,759.2
|
|
|
3,121.2
|
|
|
3,056.9
|
|
||||
Operating income (loss)
|
216.2
|
|
|
(238.5
|
)
|
|
410.6
|
|
|
(94.0
|
)
|
||||
Interest expense and financing fee amortization
|
(20.8
|
)
|
|
(17.3
|
)
|
|
(56.2
|
)
|
|
(34.9
|
)
|
||||
Interest income
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
||||
Other income (expense), net
|
5.8
|
|
|
1.3
|
|
|
7.0
|
|
|
(8.6
|
)
|
||||
Income (loss) before income taxes and equity in net income (loss) of affiliate
|
201.3
|
|
|
(254.5
|
)
|
|
361.6
|
|
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(137.4
|
)
|
||||
Income tax (provision) benefit
|
(58.1
|
)
|
|
45.0
|
|
|
(65.0
|
)
|
|
9.3
|
|
||||
Income (loss) before equity in net income (loss) of affiliate
|
143.2
|
|
|
(209.5
|
)
|
|
296.6
|
|
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(128.1
|
)
|
||||
Equity in net income (loss) of affiliate
|
0.2
|
|
|
0.1
|
|
|
0.4
|
|
|
(0.1
|
)
|
||||
Net income (loss)
|
$
|
143.4
|
|
|
$
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(209.4
|
)
|
|
$
|
297.0
|
|
|
$
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(128.2
|
)
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Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
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1.01
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|
|
$
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(1.47
|
)
|
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$
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2.09
|
|
|
$
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(0.90
|
)
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Diluted
|
$
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1.01
|
|
|
$
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(1.47
|
)
|
|
$
|
2.07
|
|
|
$
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(0.90
|
)
|
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For the Three
Months Ended
|
|
For the Six
Months Ended |
||||||||||||
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July 3,
2014 |
|
June 27,
2013 |
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July 3,
2014 |
|
June 27,
2013 |
||||||||
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($ in millions)
|
||||||||||||||
Net income (loss)
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$
|
143.4
|
|
|
$
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(209.4
|
)
|
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$
|
297.0
|
|
|
$
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(128.2
|
)
|
Changes in other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension, SERP, and Retiree medical adjustments, net of tax effect of zero and $0.2 for each of the three months ended, respectively, and zero and $0.2 for the six months ended, respectively
|
—
|
|
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0.1
|
|
|
—
|
|
|
0.4
|
|
||||
Unrealized foreign exchange gain (loss) on intercompany loan, net of tax effect of $0.5 and zero for the three months ended and $0.4 and $1.0 for the six months ended, respectively
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1.7
|
|
|
0.1
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|
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1.5
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|
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(3.2
|
)
|
||||
Foreign currency translation adjustments
|
8.3
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|
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0.6
|
|
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8.7
|
|
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(9.9
|
)
|
||||
Total other comprehensive income (loss)
|
10.0
|
|
|
0.8
|
|
|
10.2
|
|
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(12.7
|
)
|
||||
Total comprehensive income (loss)
|
$
|
153.4
|
|
|
$
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(208.6
|
)
|
|
$
|
307.2
|
|
|
$
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(140.9
|
)
|
|
July 3,
2014 |
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December 31,
2013 |
||||
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($ in millions)
|
||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
381.6
|
|
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$
|
420.7
|
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Accounts receivable, net
|
729.1
|
|
|
550.8
|
|
||
Inventory, net
|
1,875.4
|
|
|
1,842.6
|
|
||
Deferred tax asset - current
|
26.3
|
|
|
26.9
|
|
||
Other current assets
|
25.3
|
|
|
103.2
|
|
||
Total current assets
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3,037.7
|
|
|
2,944.2
|
|
||
Property, plant and equipment, net
|
1,793.0
|
|
|
1,803.3
|
|
||
Pension assets
|
270.1
|
|
|
252.6
|
|
||
Other assets
|
120.6
|
|
|
107.1
|
|
||
Total assets
|
$
|
5,221.4
|
|
|
$
|
5,107.2
|
|
Current liabilities
|
|
|
|
|
|
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Accounts payable
|
$
|
654.8
|
|
|
$
|
753.7
|
|
Accrued expenses
|
258.5
|
|
|
220.6
|
|
||
Profit sharing
|
50.4
|
|
|
38.4
|
|
||
Current portion of long-term debt
|
9.9
|
|
|
16.8
|
|
||
Advance payments, short-term
|
71.4
|
|
|
133.5
|
|
||
Deferred revenue, short-term
|
27.0
|
|
|
19.8
|
|
||
Deferred grant income liability - current
|
9.4
|
|
|
8.6
|
|
||
Other current liabilities
|
153.6
|
|
|
144.2
|
|
||
Total current liabilities
|
1,235.0
|
|
|
1,335.6
|
|
||
Long-term debt
|
1,150.4
|
|
|
1,150.5
|
|
||
Advance payments, long-term
|
750.6
|
|
|
728.9
|
|
||
Pension/OPEB obligation
|
73.2
|
|
|
69.8
|
|
||
Deferred grant income liability - non-current
|
104.6
|
|
|
108.2
|
|
||
Deferred revenue and other deferred credits
|
29.2
|
|
|
30.9
|
|
||
Other liabilities
|
216.3
|
|
|
202.3
|
|
||
Equity
|
|
|
|
|
|
||
Preferred stock, par value $0.01, 10,000,000 shares authorized, no shares issued
|
—
|
|
|
—
|
|
||
Common stock, Class A par value $0.01, 200,000,000 shares authorized, 132,215,419 and 120,946,429 shares issued, respectively
|
1.3
|
|
|
1.2
|
|
||
Common stock, Class B par value $0.01, 150,000,000 shares authorized, 8,988,344 and 23,851,694 shares issued, respectively
|
0.1
|
|
|
0.2
|
|
||
Additional paid-in capital
|
1,028.1
|
|
|
1,025.0
|
|
||
Accumulated other comprehensive (loss)
|
(44.4
|
)
|
|
(54.6
|
)
|
||
Retained earnings
|
805.7
|
|
|
508.7
|
|
||
Treasury stock, at cost (4,000,000 and zero shares, respectively)
|
(129.2
|
)
|
|
—
|
|
||
Total shareholders’ equity
|
1,661.6
|
|
|
1,480.5
|
|
||
Noncontrolling interest
|
0.5
|
|
|
0.5
|
|
||
Total equity
|
1,662.1
|
|
|
1,481.0
|
|
||
Total liabilities and equity
|
$
|
5,221.4
|
|
|
$
|
5,107.2
|
|
|
For the Six
Months Ended
|
||||||
|
July 3,
2014 |
|
June 27,
2013 |
||||
|
($ in millions)
|
||||||
Operating activities
|
|
|
|
|
|
||
Net income (loss)
|
$
|
297.0
|
|
|
$
|
(128.2
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
|
|
|
|
||
Depreciation expense
|
83.5
|
|
|
78.5
|
|
||
Amortization expense
|
5.7
|
|
|
2.7
|
|
||
Amortization of deferred financing fees
|
18.7
|
|
|
3.1
|
|
||
Accretion of customer supply agreement
|
0.5
|
|
|
0.2
|
|
||
Employee stock compensation expense
|
8.0
|
|
|
12.0
|
|
||
Excess tax benefit of share-based payment arrangements
|
(2.3
|
)
|
|
(0.4
|
)
|
||
(Gain) from hedge contracts
|
(1.3
|
)
|
|
(1.4
|
)
|
||
(Gain) loss from foreign currency transactions
|
(5.7
|
)
|
|
10.1
|
|
||
Loss on disposition of assets
|
—
|
|
|
0.4
|
|
||
Deferred taxes
|
1.9
|
|
|
(40.0
|
)
|
||
Long-term tax provision
|
—
|
|
|
0.6
|
|
||
Pension and other post retirement benefits, net
|
(12.8
|
)
|
|
(6.7
|
)
|
||
Grant income
|
(3.9
|
)
|
|
(3.3
|
)
|
||
Equity in net (income) loss of affiliate
|
(0.4
|
)
|
|
0.1
|
|
||
Changes in assets and liabilities
|
|
|
|
|
|
||
Accounts receivable
|
(172.4
|
)
|
|
(184.3
|
)
|
||
Inventory, net
|
(73.6
|
)
|
|
276.2
|
|
||
Accounts payable and accrued liabilities
|
(53.7
|
)
|
|
27.1
|
|
||
Profit sharing/deferred compensation
|
11.9
|
|
|
8.1
|
|
||
Advance payments
|
(40.4
|
)
|
|
(19.4
|
)
|
||
Income taxes receivable/payable
|
121.8
|
|
|
(31.0
|
)
|
||
Deferred revenue and other deferred credits
|
6.3
|
|
|
5.0
|
|
||
Other
|
20.7
|
|
|
4.9
|
|
||
Net cash provided by operating activities
|
209.5
|
|
|
14.3
|
|
||
Investing activities
|
|
|
|
|
|
||
Purchase of property, plant and equipment
|
(89.6
|
)
|
|
(119.3
|
)
|
||
Purchase of property, plant and equipment - severe weather event (see Note 4)
|
—
|
|
|
(15.7
|
)
|
||
Proceeds from sale of assets
|
0.4
|
|
|
0.1
|
|
||
Consolidation of variable interest entity
|
—
|
|
|
2.5
|
|
||
Net cash (used in) investing activities
|
(89.2
|
)
|
|
(132.4
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Proceeds from issuance of bonds
|
300.0
|
|
|
—
|
|
||
Principal payments of debt
|
(11.9
|
)
|
|
(4.0
|
)
|
||
Payments on bonds
|
(300.0
|
)
|
|
—
|
|
||
Excess tax benefit of share-based payment arrangements
|
2.3
|
|
|
0.4
|
|
||
Debt issuance and financing costs
|
(20.8
|
)
|
|
—
|
|
||
Purchase of treasury stock
|
(129.2
|
)
|
|
—
|
|
||
Net cash (used in) financing activities
|
(159.6
|
)
|
|
(3.6
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
0.2
|
|
|
(2.0
|
)
|
||
Net (decrease) in cash and cash equivalents for the period
|
(39.1
|
)
|
|
(123.7
|
)
|
||
Cash and cash equivalents, beginning of period
|
420.7
|
|
|
440.7
|
|
||
Cash and cash equivalents, end of period
|
$
|
381.6
|
|
|
$
|
317.0
|
|
|
July 3,
2014 |
|
December 31,
2013 |
||||
Trade receivables
(1)(2)(3)
|
$
|
722.4
|
|
|
$
|
544.2
|
|
Other
|
7.0
|
|
|
6.8
|
|
||
Less: allowance for doubtful accounts
|
(0.3
|
)
|
|
(0.2
|
)
|
||
Accounts receivable, net
|
$
|
729.1
|
|
|
$
|
550.8
|
|
|
(1)
|
Includes unbilled receivables of
$30.7
and
$33.5
at July 3, 2014 and December 31, 2013, respectively.
|
(2)
|
Includes
$135.1
held in retainage by a customer at July 3, 2014 and December 31, 2013.
|
(3)
|
Includes
$5.2
and
$24.6
of withheld payments by a customer pending completion of retrofit work at July 3, 2014 and December 31, 2013, respectively.
|
|
July 3,
2014
|
|
December 31,
2013
|
||||
Raw materials
|
$
|
259.9
|
|
|
$
|
240.2
|
|
Work-in-process
|
994.7
|
|
|
1,057.8
|
|
||
Finished goods
|
41.6
|
|
|
43.7
|
|
||
Product inventory
|
1,296.2
|
|
|
1,341.7
|
|
||
Capitalized pre-production
|
434.2
|
|
|
486.2
|
|
||
Deferred production
|
1,847.9
|
|
|
1,661.2
|
|
||
Forward loss provision
|
(1,702.9
|
)
|
|
(1,646.5
|
)
|
||
Total inventory, net
|
$
|
1,875.4
|
|
|
$
|
1,842.6
|
|
|
July 3, 2014
|
||||||||||||||||||||||
|
Product Inventory
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Inventory
|
|
Non-Recurring
|
|
Capitalized Pre-
Production
|
|
Deferred
Production
|
|
Forward Loss
Provision
(1) (2)
|
|
Total Inventory,
net July 3, 2014
|
||||||||||||
B747
(3)
|
$
|
92.2
|
|
|
$
|
0.1
|
|
|
$
|
2.6
|
|
|
$
|
(1.5
|
)
|
|
$
|
(33.9
|
)
|
|
$
|
59.5
|
|
B787
|
224.5
|
|
|
0.2
|
|
|
128.0
|
|
|
567.2
|
|
|
(606.0
|
)
|
|
313.9
|
|
||||||
Boeing - All other platforms
(4)
|
388.7
|
|
|
4.0
|
|
|
6.6
|
|
|
(33.6
|
)
|
|
(17.3
|
)
|
|
348.4
|
|
||||||
A350
|
180.4
|
|
|
42.7
|
|
|
76.8
|
|
|
535.2
|
|
|
(121.0
|
)
|
|
714.1
|
|
||||||
Airbus - All other platforms
|
91.6
|
|
|
—
|
|
|
—
|
|
|
12.5
|
|
|
—
|
|
|
104.1
|
|
||||||
G280
(5)
|
51.1
|
|
|
—
|
|
|
4.5
|
|
|
279.4
|
|
|
(335.0
|
)
|
|
—
|
|
||||||
G650
|
93.3
|
|
|
—
|
|
|
175.8
|
|
|
411.3
|
|
|
(450.8
|
)
|
|
229.6
|
|
||||||
Rolls-Royce
(6)
|
24.5
|
|
|
—
|
|
|
39.9
|
|
|
74.5
|
|
|
(138.9
|
)
|
|
—
|
|
||||||
Sikorsky
|
—
|
|
|
9.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.2
|
|
||||||
Bombardier C-Series
|
6.4
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
9.3
|
|
||||||
Aftermarket
|
40.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40.3
|
|
||||||
Other platforms
(7)
|
46.1
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47.0
|
|
||||||
Total
|
$
|
1,239.1
|
|
|
$
|
57.1
|
|
|
$
|
434.2
|
|
|
$
|
1,847.9
|
|
|
$
|
(1,702.9
|
)
|
|
$
|
1,875.4
|
|
|
December 31, 2013
|
||||||||||||||||||||||
|
Product Inventory
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Inventory
|
|
Non-Recurring
|
|
Capitalized Pre-
Production
|
|
Deferred
Production
|
|
Forward Loss
Provision
(1) (2)
|
|
Total Inventory,
net December 31,
2013
|
||||||||||||
B747
(3)
|
$
|
96.4
|
|
|
$
|
0.1
|
|
|
$
|
4.4
|
|
|
$
|
1.0
|
|
|
$
|
(37.2
|
)
|
|
$
|
64.7
|
|
B787
|
263.9
|
|
|
14.7
|
|
|
158.2
|
|
|
597.3
|
|
|
(606.0
|
)
|
|
428.1
|
|
||||||
Boeing - All other platforms
(4)
|
421.4
|
|
|
11.5
|
|
|
7.0
|
|
|
(21.7
|
)
|
|
(18.6
|
)
|
|
399.6
|
|
||||||
A350
|
166.7
|
|
|
42.5
|
|
|
76.5
|
|
|
388.8
|
|
|
(120.8
|
)
|
|
553.7
|
|
||||||
Airbus - All other platforms
|
83.2
|
|
|
—
|
|
|
—
|
|
|
18.8
|
|
|
—
|
|
|
102.0
|
|
||||||
G280
(5)
|
46.9
|
|
|
—
|
|
|
4.9
|
|
|
233.7
|
|
|
(285.5
|
)
|
|
—
|
|
||||||
G650
|
59.2
|
|
|
—
|
|
|
192.7
|
|
|
373.3
|
|
|
(450.8
|
)
|
|
174.4
|
|
||||||
Rolls-Royce
(6)
|
15.8
|
|
|
—
|
|
|
42.5
|
|
|
69.3
|
|
|
(127.6
|
)
|
|
—
|
|
||||||
Sikorsky
|
—
|
|
|
5.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.4
|
|
||||||
Bombardier C-Series
|
9.1
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
9.8
|
|
||||||
Aftermarket
|
37.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.0
|
|
||||||
Other platforms
(7)
|
67.1
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67.9
|
|
||||||
Total
|
$
|
1,266.7
|
|
|
$
|
75.0
|
|
|
$
|
486.2
|
|
|
$
|
1,661.2
|
|
|
$
|
(1,646.5
|
)
|
|
$
|
1,842.6
|
|
|
(1)
|
Forward loss charges taken since January 1, 2012 on blocks that have not closed.
|
(2)
|
Forward loss charges taken through December 31, 2011 were reflected within capitalized pre-production and inventory for the respective programs and are therefore not reflected as part of the Forward Loss Provision figure presented. The cumulative forward loss charges, net of contract liabilities, reflected within capitalized pre-production and inventory were
$3.0
,
$177.6
and
$29.0
for the A350 XWB, G280 and Sikorsky programs, respectively.
|
(3)
|
Forward loss charges recorded in prior periods on the fuselage portion of the B747 program exceeded the total inventory balance for the fuselage portion of the program. The excess of charge over program inventory is classified as a contract liability and reported in other current liabilities. The total contract liability was
$7.2
and
$3.9
as of July 3, 2014 and December 31, 2013, respectively.
|
(4)
|
Forward loss charges recorded in prior periods on the propulsion portion of the B767 program exceeded the inventory balance for the propulsion portion of the program. The excess of charge over program inventory is classified as a contract liability and reported in other current liabilities. The total contract liability was
$7.1
and
$5.8
as of July 3, 2014 and December 31, 2013, respectively.
|
(5)
|
Forward loss charges recorded in prior periods on the G280 program exceeded the total inventory balance. The excess of charge over program inventory is classified as a contract liability and reported in other current liabilities. The total contract liability was
$25.0
and
$74.2
as of July 3, 2014 and December 31, 2013, respectively.
|
(6)
|
Forward loss charges recorded in prior periods on the Rolls-Royce BR725 program exceeded the total inventory balance. The excess of the charge over program inventory is classified as a contract liability and reported in other current liabilities. The total contract liability was
$25.4
and
$36.7
as of July 3, 2014 and December 31, 2013, respectively.
|
(7)
|
Includes over-applied and under-applied overhead.
|
Balance, December 31, 2013
|
$
|
486.2
|
|
Charges to costs and expenses
|
(53.4
|
)
|
|
Capitalized costs
|
1.4
|
|
|
Balance, July 3, 2014
|
$
|
434.2
|
|
Balance, December 31, 2013
|
$
|
1,661.2
|
|
Charges to costs and expenses
|
(197.3
|
)
|
|
Capitalized costs
|
376.8
|
|
|
Exchange rate
|
7.2
|
|
|
Balance, July 3, 2014
|
$
|
1,847.9
|
|
Model
|
|
Contract Block
Quantity
|
|
Orders
(1)
|
||
B787
|
|
500
|
|
|
869
|
|
A350 XWB
|
|
400
|
|
|
742
|
|
G280
|
|
250
|
|
|
144
|
|
G650
|
|
350
|
|
|
160
|
|
Rolls-Royce
|
|
350
|
|
|
135
|
|
|
(1)
|
Orders are from the published firm-order backlogs of Airbus and Boeing. For all other programs, orders represent purchase orders received from OEMs and are not reflective of OEM sales backlog. Orders reported are total block orders, including delivered units.
|
Model
|
|
Current Block
Deliveries
|
|
B787
|
|
228
|
|
A350 XWB
|
|
18
|
|
Business/Regional Jets
|
|
284
|
|
|
July 3,
2014
|
|
December 31,
2013
|
||||
Land
|
$
|
18.4
|
|
|
$
|
17.9
|
|
Buildings (including improvements)
|
583.8
|
|
|
566.0
|
|
||
Machinery and equipment
|
1,126.5
|
|
|
1,084.0
|
|
||
Tooling
|
814.8
|
|
|
801.6
|
|
||
Capitalized software
|
199.8
|
|
|
172.2
|
|
||
Construction-in-progress
|
100.9
|
|
|
130.2
|
|
||
Total
|
2,844.2
|
|
|
2,771.9
|
|
||
Less: accumulated depreciation
|
(1,051.2
|
)
|
|
(968.6
|
)
|
||
Property, plant and equipment, net
|
$
|
1,793.0
|
|
|
$
|
1,803.3
|
|
|
July 3,
2014
|
|
December 31,
2013
|
||||
Intangible assets
|
|
|
|
|
|
||
Patents
|
$
|
1.9
|
|
|
$
|
1.9
|
|
Favorable leasehold interests
|
6.3
|
|
|
6.3
|
|
||
Customer relationships
|
29.7
|
|
|
28.7
|
|
||
Total intangible assets
|
37.9
|
|
|
36.9
|
|
||
Less: Accumulated amortization - patents
|
(1.4
|
)
|
|
(1.3
|
)
|
||
Accumulated amortization - favorable leasehold interest
|
(3.3
|
)
|
|
(3.1
|
)
|
||
Accumulated amortization - customer relationships
|
(29.7
|
)
|
|
(27.8
|
)
|
||
Intangible assets, net
|
3.5
|
|
|
4.7
|
|
||
Deferred financing
|
|
|
|
|
|
||
Deferred financing costs
|
101.2
|
|
|
80.5
|
|
||
Less: Accumulated amortization - deferred financing costs
(1)
|
(74.9
|
)
|
|
(56.3
|
)
|
||
Deferred financing costs, net
|
26.3
|
|
|
24.2
|
|
||
Other
|
|
|
|
|
|
||
Goodwill - Europe
|
3.2
|
|
|
3.0
|
|
||
Equity in net assets of affiliates
|
1.9
|
|
|
1.4
|
|
||
Customer supply agreement
(2)
|
37.2
|
|
|
37.6
|
|
||
Other
|
48.5
|
|
|
36.2
|
|
||
Total
|
$
|
120.6
|
|
|
$
|
107.1
|
|
|
(1)
|
Includes charges related to debt extinguishment.
|
(2)
|
Under an agreement with our customer Airbus, certain payments accounted for as consideration given by the Company to Airbus are being amortized as a reduction to net revenues.
|
|
July 3,
2014
|
|
December 31,
2013
|
||||
B737
|
$
|
17.5
|
|
|
$
|
18.7
|
|
B787
|
578.9
|
|
|
600.2
|
|
||
A350 XWB
|
235.2
|
|
|
243.9
|
|
||
Airbus — All other platforms
|
5.6
|
|
|
7.3
|
|
||
Gulfstream
|
19.1
|
|
|
22.0
|
|
||
Other
|
21.9
|
|
|
21.0
|
|
||
Total advance payments and deferred revenue/credits
|
$
|
878.2
|
|
|
$
|
913.1
|
|
Balance, December 31, 2013
|
$
|
116.8
|
|
Grant liability amortized
|
(0.7
|
)
|
|
Grant income recognized
|
(3.3
|
)
|
|
Exchange rate
|
1.2
|
|
|
Total asset value related to deferred grant income, July 3, 2014
|
$
|
114.0
|
|
Balance, December 31, 2013
|
$
|
120.3
|
|
Amortization
|
(2.6
|
)
|
|
Exchange rate
|
1.2
|
|
|
Total asset value related to deferred grant income, July 3, 2014
|
$
|
118.9
|
|
Level 1
|
Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.
|
|
Fair Value Measurements
|
||||||||||||||||||||||
|
July 3, 2014
|
|
At July 3, 2014 using
|
||||||||||||||||||||
Description
|
Total Carrying
Amount in
Balance Sheet
|
|
Assets
Measured at
Fair Value
|
|
Liabilities
Measured at Fair
Value
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Money Market Fund
|
$
|
208.4
|
|
|
$
|
208.4
|
|
|
$
|
—
|
|
|
$
|
208.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest Rate Swaps
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
Fair Value Measurements
|
||||||||||||||||||||||
|
December 31, 2013
|
|
At December 31, 2013 using
|
||||||||||||||||||||
Description
|
Total Carrying
Amount in
Balance Sheet
|
|
Assets
Measured at
Fair Value
|
|
Liabilities
Measured at Fair
Value
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Money Market Fund
|
$
|
293.3
|
|
|
$
|
293.3
|
|
|
$
|
—
|
|
|
$
|
293.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest Rate Swaps
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
|
July 3, 2014
|
|
December 31, 2013
|
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
||||||||
Senior secured term loan (including current portion)
|
$
|
537.1
|
|
|
$
|
536.5
|
|
(1)
|
$
|
538.2
|
|
|
$
|
541.9
|
|
(1)
|
Senior unsecured notes due 2017
|
—
|
|
|
—
|
|
(1)
|
296.4
|
|
|
309.0
|
|
(1)
|
||||
Senior unsecured notes due 2020
|
300.0
|
|
|
323.4
|
|
(1)
|
300.0
|
|
|
323.4
|
|
(1)
|
||||
Senior unsecured notes due 2022
|
299.4
|
|
|
305.4
|
|
(1)
|
—
|
|
|
—
|
|
(1)
|
||||
Malaysian loan
|
8.7
|
|
|
7.4
|
|
(2)
|
10.0
|
|
|
8.5
|
|
(2)
|
||||
Total
|
$
|
1,145.2
|
|
|
$
|
1,172.7
|
|
|
$
|
1,144.6
|
|
|
$
|
1,182.8
|
|
|
|
(1)
|
Level 1 Fair Value hierarchy
|
(2)
|
Level 2 Fair Value hierarchy
|
|
|
|
|
|
|
|
|
Effective
|
|
Fair Value,
|
|||||
Notional Amount
|
|
Expires
|
|
Variable Rate
|
|
Fixed Rate
(1)
|
|
Fixed Rate
(2)
|
|
July 3, 2014
|
|||||
$
|
225.0
|
|
|
July 2014
|
|
1 Month LIBOR
|
|
1.37
|
%
|
|
N/A
|
|
$
|
(0.1
|
)
|
|
(1)
|
The fixed rate represents the rate at which interest is paid by the Company pursuant to the terms of its interest rate swap agreement.
|
(2)
|
As of July 3, 2014, the interest rate swap is no longer effective and therefore the effective fixed rate is not applicable.
|
|
Other Liability Derivatives
|
||||||
|
July 3, 2014
|
|
December 31, 2013
|
||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
||
Interest rate swaps
|
|
|
|
|
|
||
Current
|
$
|
0.1
|
|
|
$
|
1.4
|
|
Total derivatives designated as hedging instruments
|
0.1
|
|
|
1.4
|
|
||
Total derivatives
|
$
|
0.1
|
|
|
$
|
1.4
|
|
|
July 3, 2014
|
|
December 31, 2013
|
||||||||||||
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
Government and Corporate Debt
Securities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortized cost
|
$
|
0.7
|
|
|
$
|
2.8
|
|
|
$
|
0.5
|
|
|
$
|
3.1
|
|
Unrealized gains
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Unrealized losses
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||
Fair value
|
$
|
0.7
|
|
|
$
|
2.8
|
|
|
$
|
0.5
|
|
|
$
|
3.1
|
|
|
Amortized
Cost
|
|
Approximate
Fair Value
|
||||
Within One Year
|
$
|
0.7
|
|
|
$
|
0.7
|
|
One to Five Years
|
0.9
|
|
|
0.9
|
|
||
Five to Ten Years
|
—
|
|
|
—
|
|
||
After Ten Years
|
1.9
|
|
|
1.9
|
|
||
Total
|
$
|
3.5
|
|
|
$
|
3.5
|
|
|
July 3, 2014
|
|
December 31, 2013
|
||||||||||
|
Current
|
Noncurrent
|
|
Current
|
Noncurrent
|
||||||||
Senior secured term loan
|
$
|
5.5
|
|
$
|
531.6
|
|
|
$
|
5.5
|
|
$
|
532.7
|
|
Senior notes due 2017
|
—
|
|
—
|
|
|
—
|
|
296.4
|
|
||||
Senior notes due 2020
|
—
|
|
300.0
|
|
|
—
|
|
300.0
|
|
||||
Senior notes due 2022
|
—
|
|
299.4
|
|
|
—
|
|
—
|
|
||||
Malaysian term loan
|
3.2
|
|
5.5
|
|
|
3.0
|
|
7.0
|
|
||||
Present value of capital lease obligations
|
1.1
|
|
13.7
|
|
|
1.1
|
|
14.2
|
|
||||
Other
|
0.1
|
|
0.2
|
|
|
7.2
|
|
0.2
|
|
||||
Total
|
$
|
9.9
|
|
$
|
1,150.4
|
|
|
$
|
16.8
|
|
$
|
1,150.5
|
|
|
|
Defined Benefit Plans
|
||||||||||||||
|
|
For the Three
Months Ended
|
|
For the Six
Months Ended
|
||||||||||||
Components of Net Periodic Pension
Income
|
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
Interest cost
|
|
11.9
|
|
|
11.3
|
|
|
24.8
|
|
|
23.0
|
|
||||
Expected return on plan assets
|
|
(18.7
|
)
|
|
(21.0
|
)
|
|
(41.0
|
)
|
|
(42.3
|
)
|
||||
Amortization of net loss
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
5.9
|
|
||||
Net periodic pension income
|
|
$
|
(6.8
|
)
|
|
$
|
(5.0
|
)
|
|
$
|
(16.2
|
)
|
|
$
|
(9.6
|
)
|
|
|
Other Benefits
|
||||||||||||||
|
|
For the Three
Months Ended
|
|
For the Six
Months Ended
|
||||||||||||
Components of Other Benefit Expense
|
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
Service cost
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
1.1
|
|
|
$
|
1.3
|
|
Interest cost
|
|
0.7
|
|
|
0.5
|
|
|
1.4
|
|
|
1.1
|
|
||||
Special termination benefits
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Net periodic other benefit expense
|
|
$
|
2.0
|
|
|
$
|
1.1
|
|
|
$
|
3.4
|
|
|
$
|
2.4
|
|
•
|
75%
of the LTIA is service-based restricted stock that will vest in equal installments over a
three
-year period.
|
•
|
25%
of the LTIA is market-based restricted stock that will vest in the third year contingent upon total shareholder return (TSR) compared to the Company’s peers.
|
|
For the Three Months Ended
|
||||||||||||||||||||
|
July 3, 2014
|
|
June 27, 2013
|
||||||||||||||||||
|
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to common shareholders
|
$
|
142.6
|
|
|
140.8
|
|
|
$
|
1.01
|
|
|
$
|
(207.3
|
)
|
|
141.3
|
|
|
$
|
(1.47
|
)
|
Income allocated to participating securities
|
0.8
|
|
|
0.8
|
|
|
|
|
|
(2.1
|
)
|
|
1.4
|
|
|
|
|
||||
Net income (loss)
|
$
|
143.4
|
|
|
|
|
|
|
|
|
$
|
(209.4
|
)
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted potential common shares
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
||||
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
$
|
143.4
|
|
|
142.4
|
|
|
$
|
1.01
|
|
|
$
|
(209.4
|
)
|
|
141.3
|
|
|
$
|
(1.47
|
)
|
|
For the Six Months Ended
|
||||||||||||||||||||
|
July 3, 2014
|
|
June 27, 2013
|
||||||||||||||||||
|
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to common shareholders
|
$
|
295.0
|
|
|
141.2
|
|
|
$
|
2.09
|
|
|
$
|
(126.9
|
)
|
|
141.1
|
|
|
$
|
(0.90
|
)
|
Income allocated to participating securities
|
2.0
|
|
|
1.0
|
|
|
|
|
(1.3
|
)
|
|
1.5
|
|
|
|
|
|||||
Net income (loss)
|
$
|
297.0
|
|
|
|
|
|
|
|
|
$
|
(128.2
|
)
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted potential common shares
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
||||
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
$
|
297.0
|
|
|
143.2
|
|
|
$
|
2.07
|
|
|
$
|
(128.2
|
)
|
|
141.1
|
|
|
$
|
(0.90
|
)
|
|
For the Six Months Ended
|
|
For the Twelve Months Ended
|
||||
|
July 3, 2014
|
|
December 31, 2013
|
||||
Pension
|
$
|
(52.7
|
)
|
|
$
|
(52.7
|
)
|
SERP/Retiree medical
|
3.1
|
|
|
3.1
|
|
||
Foreign currency impact on long term intercompany loan
|
(0.7
|
)
|
|
(2.2
|
)
|
||
Currency translation adjustment
|
5.9
|
|
|
(2.8
|
)
|
||
Total accumulated other comprehensive (loss)
|
$
|
(44.4
|
)
|
|
$
|
(54.6
|
)
|
Balance, December 31, 2013
|
$
|
68.7
|
|
Charges to costs and expenses
|
22.8
|
|
|
Exchange rate
|
0.1
|
|
|
Balance, July 3, 2014
|
$
|
91.6
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||||||||||
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
KDFA bond
|
$
|
0.8
|
|
|
$
|
0.8
|
|
|
$
|
1.8
|
|
|
$
|
1.7
|
|
Rental and miscellaneous income
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||
Foreign currency gains (loss)
|
4.9
|
|
|
0.5
|
|
|
5.1
|
|
|
(10.4
|
)
|
||||
Total
|
$
|
5.8
|
|
|
$
|
1.3
|
|
|
$
|
7.0
|
|
|
$
|
(8.6
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuselage Systems
|
$
|
905.0
|
|
|
$
|
732.1
|
|
|
$
|
1,763.3
|
|
|
$
|
1,450.0
|
|
Propulsion Systems
|
460.5
|
|
|
418.6
|
|
|
910.7
|
|
|
793.9
|
|
||||
Wing Systems
|
438.3
|
|
|
368.6
|
|
|
852.5
|
|
|
711.9
|
|
||||
All Other
|
(0.5
|
)
|
|
1.4
|
|
|
5.3
|
|
|
7.1
|
|
||||
|
$
|
1,803.3
|
|
|
$
|
1,520.7
|
|
|
$
|
3,531.8
|
|
|
$
|
2,962.9
|
|
Segment Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuselage Systems
(1)
|
$
|
132.2
|
|
|
$
|
155.0
|
|
|
$
|
274.2
|
|
|
$
|
281.4
|
|
Propulsion Systems
(2)
|
86.2
|
|
|
85.0
|
|
|
166.4
|
|
|
153.4
|
|
||||
Wing Systems
(3)
|
71.0
|
|
|
(402.3
|
)
|
|
121.0
|
|
|
(381.8
|
)
|
||||
All Other
|
0.2
|
|
|
1.8
|
|
|
0.3
|
|
|
3.4
|
|
||||
|
289.6
|
|
|
(160.5
|
)
|
|
561.9
|
|
|
56.4
|
|
||||
Corporate SG&A
(4)
|
(54.4
|
)
|
|
(54.1
|
)
|
|
(114.9
|
)
|
|
(98.4
|
)
|
||||
Impact from severe weather event
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
(15.1
|
)
|
||||
Research and development
(5)
|
(6.8
|
)
|
|
(8.6
|
)
|
|
(13.1
|
)
|
|
(16.1
|
)
|
||||
Unallocated cost of sales
(6)
|
(12.2
|
)
|
|
(9.0
|
)
|
|
(23.3
|
)
|
|
(20.8
|
)
|
||||
Total operating income (loss)
|
$
|
216.2
|
|
|
$
|
(238.5
|
)
|
|
$
|
410.6
|
|
|
$
|
(94.0
|
)
|
|
(1)
|
For the six months ended July 3, 2014, net of
$0.9
forward loss charge recorded on the Bell V280 helicopter program. Also includes favorable cumulative catch-up adjustments of
$2.7
and
$8.6
for the three and six months ended July 3, 2014, respectively. Inclusive of
$5.0
forward loss charge recorded for B747-8 for the second quarter of 2013 and
$27.8
and
$32.5
favorable cumulative catch-up adjustments related to the three and six months ended June 27, 2013, respectively.
|
(2)
|
Includes favorable cumulative catch-up adjustments of
$5.0
and
$8.3
for the three and six months ended July 3, 2014, respectively. Inclusive of
$4.0
forward loss charge and
$8.4
reduction of forward loss charge due to change in estimate recorded for the B767 and Rolls-Royce BR725 programs, respectively, for the second quarter of 2013 and
$11.5
and
$18.7
favorable cumulative catch-up adjustments for the three and six months ended June 27, 2013, respectively.
|
(3)
|
For the six months ended July 3, 2014, net of
$0.3
forward loss charge recorded on the G280 wing program. Also includes favorable cumulative catch-up adjustments of
$11.7
and
$13.3
for the three and six months ended July 3, 2014, respectively. Inclusive of $
22.0
and
$37.3
forward loss charge recorded for the B787 wing program for the three and six months ended June 27, 2013, respectively; $
191.5
forward loss charge for the second quarter of 2013 for the G280 program; and
$234.2
forward loss charge recorded in the second quarter of 2013 for the G650 program. Also includes
$1.3
and
$0.5
favorable cumulative catch-up adjustments related to the three and six months ended June 27, 2013, respectively.
|
(4)
|
For the three months ended June 27, 2013, corporate SG&A of
$1.8
,
$0.9
and
$1.2
was reclassified from segment operating income for the Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation. For the six months ended June 27, 2013, corporate SG&A of
$4.1
,
$2.1
and
$2.4
was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(5)
|
For the three months ended June 27, 2013, research and development of
$3.2
,
$2.5
and
$0.9
was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation. For the six months ended June 27, 2013, research and development of
$5.9
,
$4.4
and
$2.0
was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(6)
|
Includes
$11.6
and
$22.6
of warranty reserve for the three and six month periods ended July 3, 2014, respectively. Includes
$9.2
and
$19.2
of warranty reserve and
$(0.2)
and
$1.6
related to early retirement incentives for the three and six month periods ended June 27, 2013, respectively.
|
(i)
|
Holdings, as the parent company;
|
(ii)
|
Spirit, as the subsidiary issuer of the 2017 Notes, the 2020 Notes, and the 2022 Notes;
|
(iii)
|
The Subsidiary Guarantors, on a combined basis, as guarantors of the 2017 Notes, the 2020 Notes, and the 2022 Notes;
|
(iv)
|
The Company’s subsidiaries, other than the Subsidiary Guarantors, which are not guarantors of the 2017 Notes, the 2020 Notes, and the 2022 Notes (the “Subsidiary Non-Guarantors”), on a combined basis;
|
(v)
|
Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Holdings, the Subsidiary Guarantors and the Subsidiary Non-Guarantors, (b) eliminate the investments in the Company’s subsidiaries and (c) record consolidating entries; and
|
(vi)
|
Holdings and its subsidiaries on a consolidated basis.
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
1,660.5
|
|
|
$
|
100.0
|
|
|
$
|
209.7
|
|
|
$
|
(166.9
|
)
|
|
$
|
1,803.3
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
—
|
|
|
1,421.0
|
|
|
97.2
|
|
|
174.6
|
|
|
(166.9
|
)
|
|
1,525.9
|
|
||||||
Selling, general and administrative
|
(0.4
|
)
|
|
49.6
|
|
|
0.8
|
|
|
4.4
|
|
|
—
|
|
|
54.4
|
|
||||||
Research and development
|
—
|
|
|
6.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
||||||
Total operating costs and expenses
|
(0.4
|
)
|
|
1,477.4
|
|
|
98.0
|
|
|
179.0
|
|
|
(166.9
|
)
|
|
1,587.1
|
|
||||||
Operating income
|
0.4
|
|
|
183.1
|
|
|
2.0
|
|
|
30.7
|
|
|
—
|
|
|
216.2
|
|
||||||
Interest expense and financing fee amortization
|
—
|
|
|
(20.6
|
)
|
|
—
|
|
|
(2.7
|
)
|
|
2.5
|
|
|
(20.8
|
)
|
||||||
Interest income
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
0.1
|
|
||||||
Other income, net
|
—
|
|
|
0.8
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
5.8
|
|
||||||
Income before income taxes and equity in net income (loss) of affiliate and subsidiaries
|
0.4
|
|
|
165.9
|
|
|
2.0
|
|
|
33.0
|
|
|
—
|
|
|
201.3
|
|
||||||
Income tax benefit (provision) benefit
|
0.3
|
|
|
(51.2
|
)
|
|
(0.8
|
)
|
|
(6.4
|
)
|
|
—
|
|
|
(58.1
|
)
|
||||||
Income before equity in net income (loss) of affiliate and subsidiaries
|
0.7
|
|
|
114.7
|
|
|
1.2
|
|
|
26.6
|
|
|
—
|
|
|
143.2
|
|
||||||
Equity in net income (loss) of affiliate
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
0.2
|
|
||||||
Equity in net income (loss) of subsidiaries
|
142.5
|
|
|
27.8
|
|
|
—
|
|
|
—
|
|
|
(170.3
|
)
|
|
—
|
|
||||||
Net income (loss)
|
143.4
|
|
|
142.5
|
|
|
1.2
|
|
|
26.8
|
|
|
(170.5
|
)
|
|
143.4
|
|
||||||
Other comprehensive income (loss)
|
10.0
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
(10.0
|
)
|
|
10.0
|
|
||||||
Comprehensive income (loss)
|
$
|
153.4
|
|
|
$
|
142.5
|
|
|
$
|
1.2
|
|
|
$
|
36.8
|
|
|
$
|
(180.5
|
)
|
|
$
|
153.4
|
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
1,378.5
|
|
|
$
|
42.6
|
|
|
$
|
181.3
|
|
|
$
|
(81.7
|
)
|
|
$
|
1,520.7
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
1,577.5
|
|
|
35.8
|
|
|
158.6
|
|
|
(81.7
|
)
|
|
1,690.2
|
|
||||||
Selling, general and administrative
|
0.1
|
|
|
48.2
|
|
|
0.6
|
|
|
5.2
|
|
|
—
|
|
|
54.1
|
|
||||||
Impact from severe weather event
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
||||||
Research and development
|
—
|
|
|
8.2
|
|
|
0.1
|
|
|
0.3
|
|
|
—
|
|
|
8.6
|
|
||||||
Total operating costs and expenses
|
0.1
|
|
|
1,640.2
|
|
|
36.5
|
|
|
164.1
|
|
|
(81.7
|
)
|
|
1,759.2
|
|
||||||
Operating (loss) income
|
(0.1
|
)
|
|
(261.7
|
)
|
|
6.1
|
|
|
17.2
|
|
|
—
|
|
|
(238.5
|
)
|
||||||
Interest expense and financing fee amortization
|
—
|
|
|
(17.0
|
)
|
|
—
|
|
|
(3.0
|
)
|
|
2.7
|
|
|
(17.3
|
)
|
||||||
Interest income
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
—
|
|
||||||
Other income (expense), net
|
—
|
|
|
0.9
|
|
|
(0.1
|
)
|
|
0.5
|
|
|
—
|
|
|
1.3
|
|
||||||
(Loss) income before income taxes and equity in net (loss) income of affiliate and subsidiaries
|
(0.1
|
)
|
|
(275.1
|
)
|
|
6.0
|
|
|
14.7
|
|
|
—
|
|
|
(254.5
|
)
|
||||||
Income tax (provision) benefit
|
(0.1
|
)
|
|
49.5
|
|
|
(2.2
|
)
|
|
(2.2
|
)
|
|
—
|
|
|
45.0
|
|
||||||
(Loss) income before equity in net (loss) income of affiliate and subsidiaries
|
(0.2
|
)
|
|
(225.6
|
)
|
|
3.8
|
|
|
12.5
|
|
|
—
|
|
|
(209.5
|
)
|
||||||
Equity in net (loss) income of affiliate
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
||||||
Equity in net (loss) income of subsidiaries
|
(209.3
|
)
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
192.9
|
|
|
—
|
|
||||||
Net (loss) income
|
(209.4
|
)
|
|
(209.2
|
)
|
|
3.8
|
|
|
12.6
|
|
|
192.8
|
|
|
(209.4
|
)
|
||||||
Other comprehensive income (loss)
|
0.8
|
|
|
0.2
|
|
|
—
|
|
|
0.8
|
|
|
(1.0
|
)
|
|
0.8
|
|
||||||
Comprehensive (loss) income
|
$
|
(208.6
|
)
|
|
$
|
(209.0
|
)
|
|
$
|
3.8
|
|
|
$
|
13.4
|
|
|
$
|
191.8
|
|
|
$
|
(208.6
|
)
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
3,274.1
|
|
|
$
|
187.0
|
|
|
$
|
415.5
|
|
|
$
|
(344.8
|
)
|
|
$
|
3,531.8
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
2,798.8
|
|
|
182.1
|
|
|
357.1
|
|
|
(344.8
|
)
|
|
2,993.2
|
|
||||||
Selling, general and administrative
|
1.1
|
|
|
103.5
|
|
|
1.4
|
|
|
8.9
|
|
|
—
|
|
|
114.9
|
|
||||||
Research and development
|
—
|
|
|
12.5
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
13.1
|
|
||||||
Total operating costs and expenses
|
1.1
|
|
|
2,914.8
|
|
|
183.5
|
|
|
366.6
|
|
|
(344.8
|
)
|
|
3,121.2
|
|
||||||
Operating (loss) income
|
(1.1
|
)
|
|
359.3
|
|
|
3.5
|
|
|
48.9
|
|
|
—
|
|
|
410.6
|
|
||||||
Interest expense and financing fee amortization
|
—
|
|
|
(55.8
|
)
|
|
—
|
|
|
(5.5
|
)
|
|
5.1
|
|
|
(56.2
|
)
|
||||||
Interest income
|
—
|
|
|
5.2
|
|
|
—
|
|
|
0.1
|
|
|
(5.1
|
)
|
|
0.2
|
|
||||||
Other income, net
|
—
|
|
|
1.7
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
7.0
|
|
||||||
(Loss) income before income taxes and equity in net (loss) income of affiliates and subsidiaries
|
(1.1
|
)
|
|
310.4
|
|
|
3.5
|
|
|
48.8
|
|
|
—
|
|
|
361.6
|
|
||||||
Income tax benefit (provision) benefit
|
0.2
|
|
|
(67.8
|
)
|
|
(1.3
|
)
|
|
3.9
|
|
|
—
|
|
|
(65.0
|
)
|
||||||
(Loss) income before equity in net (loss) income of affiliates and subsidiaries
|
(0.9
|
)
|
|
242.6
|
|
|
2.2
|
|
|
52.7
|
|
|
—
|
|
|
296.6
|
|
||||||
Equity in net (loss) income of affiliates
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
(0.4
|
)
|
|
0.4
|
|
||||||
Equity in net (loss) income of subsidiaries
|
297.5
|
|
|
54.8
|
|
|
—
|
|
|
—
|
|
|
(352.3
|
)
|
|
—
|
|
||||||
Net (loss) income
|
297.0
|
|
|
297.4
|
|
|
2.2
|
|
|
53.1
|
|
|
(352.7
|
)
|
|
297.0
|
|
||||||
Other comprehensive (loss) income
|
10.2
|
|
|
—
|
|
|
—
|
|
|
10.2
|
|
|
(10.2
|
)
|
|
10.2
|
|
||||||
Comprehensive (loss) income
|
$
|
307.2
|
|
|
$
|
297.4
|
|
|
$
|
2.2
|
|
|
$
|
63.3
|
|
|
$
|
(362.9
|
)
|
|
$
|
307.2
|
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
2,690.6
|
|
|
$
|
91.1
|
|
|
$
|
347.0
|
|
|
$
|
(165.8
|
)
|
|
$
|
2,962.9
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
2,703.3
|
|
|
81.0
|
|
|
308.8
|
|
|
(165.8
|
)
|
|
2,927.3
|
|
||||||
Selling, general and administrative
|
1.1
|
|
|
85.7
|
|
|
1.5
|
|
|
10.1
|
|
|
—
|
|
|
98.4
|
|
||||||
Impact from severe weather event
|
—
|
|
|
15.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.1
|
|
||||||
Research and development
|
—
|
|
|
15.2
|
|
|
0.1
|
|
|
0.8
|
|
|
—
|
|
|
16.1
|
|
||||||
Total operating costs and expenses
|
1.1
|
|
|
2,819.3
|
|
|
82.6
|
|
|
319.7
|
|
|
(165.8
|
)
|
|
3,056.9
|
|
||||||
Operating (loss) income
|
(1.1
|
)
|
|
(128.7
|
)
|
|
8.5
|
|
|
27.3
|
|
|
—
|
|
|
(94.0
|
)
|
||||||
Interest expense and financing fee amortization
|
—
|
|
|
(34.4
|
)
|
|
—
|
|
|
(5.6
|
)
|
|
5.1
|
|
|
(34.9
|
)
|
||||||
Interest income
|
—
|
|
|
5.2
|
|
|
—
|
|
|
—
|
|
|
(5.1
|
)
|
|
0.1
|
|
||||||
Other income (expense), net
|
—
|
|
|
1.7
|
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
(8.6
|
)
|
||||||
(Loss) income before income taxes and equity in net (loss) income of affiliates and subsidiaries
|
(1.1
|
)
|
|
(156.2
|
)
|
|
8.5
|
|
|
11.4
|
|
|
—
|
|
|
(137.4
|
)
|
||||||
Income tax (provision) benefit
|
(0.1
|
)
|
|
14.4
|
|
|
(3.2
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
9.3
|
|
||||||
(Loss) income before equity in net (loss) income of affiliate and subsidiaries
|
(1.2
|
)
|
|
(141.8
|
)
|
|
5.3
|
|
|
9.6
|
|
|
—
|
|
|
(128.1
|
)
|
||||||
Equity in net (loss) of affiliate
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
||||||
Equity in net (loss) income of subsidiaries
|
(126.9
|
)
|
|
15.0
|
|
|
—
|
|
|
—
|
|
|
111.9
|
|
|
—
|
|
||||||
Net (loss) income
|
(128.2
|
)
|
|
(126.8
|
)
|
|
5.3
|
|
|
9.5
|
|
|
112.0
|
|
|
(128.2
|
)
|
||||||
Other comprehensive (loss) income
|
(12.7
|
)
|
|
0.4
|
|
|
—
|
|
|
(13.1
|
)
|
|
12.7
|
|
|
(12.7
|
)
|
||||||
Comprehensive (loss) income
|
$
|
(140.9
|
)
|
|
$
|
(126.4
|
)
|
|
$
|
5.3
|
|
|
$
|
(3.6
|
)
|
|
$
|
124.7
|
|
|
$
|
(140.9
|
)
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
350.9
|
|
|
$
|
—
|
|
|
$
|
30.7
|
|
|
$
|
—
|
|
|
$
|
381.6
|
|
Accounts receivable, net
|
—
|
|
|
833.5
|
|
|
19.5
|
|
|
232.2
|
|
|
(356.1
|
)
|
|
729.1
|
|
||||||
Inventory, net
|
—
|
|
|
1,315.7
|
|
|
215.1
|
|
|
344.6
|
|
|
—
|
|
|
1,875.4
|
|
||||||
Deferred tax asset - current
|
—
|
|
|
26.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.3
|
|
||||||
Other current assets
|
—
|
|
|
21.3
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
25.3
|
|
||||||
Total current assets
|
—
|
|
|
2,547.7
|
|
|
234.6
|
|
|
611.5
|
|
|
(356.1
|
)
|
|
3,037.7
|
|
||||||
Property, plant and equipment, net
|
—
|
|
|
1,289.8
|
|
|
309.4
|
|
|
193.8
|
|
|
—
|
|
|
1,793.0
|
|
||||||
Pension assets
|
—
|
|
|
246.2
|
|
|
—
|
|
|
23.9
|
|
|
—
|
|
|
270.1
|
|
||||||
Investment in subsidiary
|
900.2
|
|
|
281.5
|
|
|
—
|
|
|
—
|
|
|
(1,181.7
|
)
|
|
—
|
|
||||||
Equity in net assets of subsidiaries
|
761.9
|
|
|
175.1
|
|
|
—
|
|
|
—
|
|
|
(937.0
|
)
|
|
—
|
|
||||||
Other assets
|
—
|
|
|
435.7
|
|
|
80.0
|
|
|
24.9
|
|
|
(420.0
|
)
|
|
120.6
|
|
||||||
Total assets
|
$
|
1,662.1
|
|
|
$
|
4,976.0
|
|
|
$
|
624.0
|
|
|
$
|
854.1
|
|
|
$
|
(2,894.8
|
)
|
|
$
|
5,221.4
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
—
|
|
|
$
|
582.6
|
|
|
$
|
239.6
|
|
|
$
|
188.6
|
|
|
$
|
(356.0
|
)
|
|
$
|
654.8
|
|
Accrued expenses
|
—
|
|
|
230.1
|
|
|
0.8
|
|
|
27.6
|
|
|
—
|
|
|
258.5
|
|
||||||
Profit sharing
|
—
|
|
|
48.1
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
50.4
|
|
||||||
Current portion of long-term debt
|
—
|
|
|
5.7
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
|
9.9
|
|
||||||
Advance payments, short-term
|
—
|
|
|
71.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71.4
|
|
||||||
Deferred revenue, short-term
|
—
|
|
|
24.7
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
27.0
|
|
||||||
Deferred grant income liability - current
|
—
|
|
|
—
|
|
|
8.1
|
|
|
1.3
|
|
|
—
|
|
|
9.4
|
|
||||||
Other current liabilities
|
—
|
|
|
151.6
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
153.6
|
|
||||||
Total current liabilities
|
—
|
|
|
1,114.2
|
|
|
248.5
|
|
|
228.3
|
|
|
(356.0
|
)
|
|
1,235.0
|
|
||||||
Long-term debt
|
—
|
|
|
1,133.2
|
|
|
80.0
|
|
|
277.2
|
|
|
(340.0
|
)
|
|
1,150.4
|
|
||||||
Advance payments, long-term
|
—
|
|
|
750.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750.6
|
|
||||||
Pension/OPEB obligation
|
—
|
|
|
73.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73.2
|
|
||||||
Deferred grant income liability - non-current
|
—
|
|
|
—
|
|
|
71.6
|
|
|
33.0
|
|
|
—
|
|
|
104.6
|
|
||||||
Deferred revenue and other deferred credits
|
—
|
|
|
21.5
|
|
|
—
|
|
|
7.7
|
|
|
—
|
|
|
29.2
|
|
||||||
Other liabilities
|
—
|
|
|
270.6
|
|
|
—
|
|
|
25.7
|
|
|
(80.0
|
)
|
|
216.3
|
|
||||||
Total equity
|
1,662.1
|
|
|
1,612.7
|
|
|
223.9
|
|
|
282.2
|
|
|
(2,118.8
|
)
|
|
1,662.1
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,662.1
|
|
|
$
|
4,976.0
|
|
|
$
|
624.0
|
|
|
$
|
854.1
|
|
|
$
|
(2,894.8
|
)
|
|
$
|
5,221.4
|
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
359.2
|
|
|
$
|
—
|
|
|
$
|
61.5
|
|
|
$
|
—
|
|
|
$
|
420.7
|
|
Accounts receivable, net
|
—
|
|
|
643.3
|
|
|
15.3
|
|
|
214.5
|
|
|
(322.3
|
)
|
|
550.8
|
|
||||||
Inventory, net
|
—
|
|
|
1,340.2
|
|
|
208.7
|
|
|
293.7
|
|
|
—
|
|
|
1,842.6
|
|
||||||
Deferred tax asset-current
|
—
|
|
|
25.2
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
26.9
|
|
||||||
Other current assets
|
—
|
|
|
100.7
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
103.2
|
|
||||||
Total current assets
|
—
|
|
|
2,468.6
|
|
|
224.0
|
|
|
573.9
|
|
|
(322.3
|
)
|
|
2,944.2
|
|
||||||
Property, plant and equipment, net
|
—
|
|
|
1,308.0
|
|
|
305.3
|
|
|
190.0
|
|
|
—
|
|
|
1,803.3
|
|
||||||
Pension assets
|
—
|
|
|
231.1
|
|
|
—
|
|
|
21.5
|
|
|
—
|
|
|
252.6
|
|
||||||
Investment in subsidiary
|
1,026.3
|
|
|
281.5
|
|
|
—
|
|
|
—
|
|
|
(1,307.8
|
)
|
|
—
|
|
||||||
Equity in net assets of subsidiaries
|
454.7
|
|
|
119.4
|
|
|
—
|
|
|
—
|
|
|
(574.1
|
)
|
|
—
|
|
||||||
Other assets
|
—
|
|
|
422.4
|
|
|
80.0
|
|
|
24.2
|
|
|
(419.5
|
)
|
|
107.1
|
|
||||||
Total assets
|
$
|
1,481.0
|
|
|
$
|
4,831.0
|
|
|
$
|
609.3
|
|
|
$
|
809.6
|
|
|
$
|
(2,623.7
|
)
|
|
$
|
5,107.2
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
—
|
|
|
$
|
666.5
|
|
|
$
|
224.2
|
|
|
$
|
185.2
|
|
|
$
|
(322.2
|
)
|
|
$
|
753.7
|
|
Accrued expenses
|
—
|
|
|
189.9
|
|
|
0.5
|
|
|
30.2
|
|
|
—
|
|
|
220.6
|
|
||||||
Profit sharing
|
—
|
|
|
35.7
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
38.4
|
|
||||||
Current portion of long-term debt
|
—
|
|
|
12.9
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
|
16.8
|
|
||||||
Advance payments, short-term
|
—
|
|
|
133.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
133.5
|
|
||||||
Deferred revenue, short-term
|
—
|
|
|
15.7
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
19.8
|
|
||||||
Deferred grant income liability - current
|
—
|
|
|
—
|
|
|
7.3
|
|
|
1.3
|
|
|
—
|
|
|
8.6
|
|
||||||
Other current liabilities
|
—
|
|
|
137.1
|
|
|
—
|
|
|
7.1
|
|
|
—
|
|
|
144.2
|
|
||||||
Total current liabilities
|
—
|
|
|
1,191.3
|
|
|
232.0
|
|
|
234.5
|
|
|
(322.2
|
)
|
|
1,335.6
|
|
||||||
Long-term debt
|
—
|
|
|
1,131.4
|
|
|
80.0
|
|
|
278.6
|
|
|
(339.5
|
)
|
|
1,150.5
|
|
||||||
Advance payments, long-term
|
—
|
|
|
728.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
728.9
|
|
||||||
Pension/OPEB obligation
|
—
|
|
|
69.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.8
|
|
||||||
Deferred grant income liability - non-current
|
—
|
|
|
—
|
|
|
75.6
|
|
|
32.6
|
|
|
—
|
|
|
108.2
|
|
||||||
Deferred revenue and other deferred credits
|
—
|
|
|
22.7
|
|
|
—
|
|
|
8.2
|
|
|
—
|
|
|
30.9
|
|
||||||
Other liabilities
|
—
|
|
|
245.6
|
|
|
—
|
|
|
36.7
|
|
|
(80.0
|
)
|
|
202.3
|
|
||||||
Total equity
|
1,481.0
|
|
|
1,441.3
|
|
|
221.7
|
|
|
219.0
|
|
|
(1,882.0
|
)
|
|
1,481.0
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,481.0
|
|
|
$
|
4,831.0
|
|
|
$
|
609.3
|
|
|
$
|
809.6
|
|
|
$
|
(2,623.7
|
)
|
|
$
|
5,107.2
|
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
$
|
297.0
|
|
|
$
|
86.1
|
|
|
$
|
18.1
|
|
|
$
|
(23.9
|
)
|
|
$
|
(167.8
|
)
|
|
$
|
209.5
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchase of property, plant and equipment
|
—
|
|
|
(68.1
|
)
|
|
(18.1
|
)
|
|
(3.4
|
)
|
|
—
|
|
|
(89.6
|
)
|
||||||
Proceeds from sale of assets
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||
Investment in equity of subsidiaries
|
129.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129.2
|
)
|
|
—
|
|
||||||
Equity in net assets of subsidiaries
|
(297.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
297.0
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
2.3
|
|
|
—
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
||||||
Net cash (used in) investing activities
|
(167.8
|
)
|
|
(65.4
|
)
|
|
(18.1
|
)
|
|
(5.7
|
)
|
|
167.8
|
|
|
(89.2
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proceeds from issuance of bonds
|
—
|
|
|
300.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300.0
|
|
||||||
Principal payments of debt
|
—
|
|
|
(10.0
|
)
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
(11.9
|
)
|
||||||
Collection on (repayment of) intercompany debt
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
||||||
Payments on bonds
|
—
|
|
|
(300.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300.0
|
)
|
||||||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
2.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
||||||
Debt issuance and financing costs
|
—
|
|
|
(20.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.8
|
)
|
||||||
Purchase of treasury stock
|
(129.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129.2
|
)
|
||||||
Net cash (used in) financing activities
|
(129.2
|
)
|
|
(29.0
|
)
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
(159.6
|
)
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||||
Net (decrease) in cash and cash equivalents for the period
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(30.8
|
)
|
|
—
|
|
|
(39.1
|
)
|
||||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
359.2
|
|
|
—
|
|
|
61.5
|
|
|
—
|
|
|
420.7
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
350.9
|
|
|
$
|
—
|
|
|
$
|
30.7
|
|
|
$
|
—
|
|
|
$
|
381.6
|
|
|
Holdings
|
|
Spirit
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
$
|
(128.2
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
6.3
|
|
|
$
|
10.1
|
|
|
$
|
128.2
|
|
|
$
|
14.3
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchase of property, plant and equipment
|
—
|
|
|
(107.6
|
)
|
|
(6.3
|
)
|
|
(5.4
|
)
|
|
—
|
|
|
(119.3
|
)
|
||||||
Purchase of property, plant and equipment - severe weather event
|
—
|
|
|
(15.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.7
|
)
|
||||||
Proceeds from the sale of assets
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Equity in net assets of subsidiaries
|
128.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(128.2
|
)
|
|
—
|
|
||||||
Other
|
—
|
|
|
3.4
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
2.5
|
|
||||||
Net cash provided by (used in) investing activities
|
128.2
|
|
|
(119.8
|
)
|
|
(6.3
|
)
|
|
(6.3
|
)
|
|
(128.2
|
)
|
|
(132.4
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal payments of debt
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
||||||
Collection on (repayment of) intercompany debt
|
—
|
|
|
6.0
|
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
—
|
|
||||||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||
Net cash provided by (used in) financing activities
|
—
|
|
|
4.4
|
|
|
—
|
|
|
(8.0
|
)
|
|
—
|
|
|
(3.6
|
)
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
(2.0
|
)
|
||||||
Net (decrease) in cash and cash equivalents for the period
|
—
|
|
|
(117.5
|
)
|
|
—
|
|
|
(6.2
|
)
|
|
—
|
|
|
(123.7
|
)
|
||||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
369.1
|
|
|
—
|
|
|
71.6
|
|
|
—
|
|
|
440.7
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
251.6
|
|
|
$
|
—
|
|
|
$
|
65.4
|
|
|
$
|
—
|
|
|
$
|
317.0
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||
|
July 3,
2014 |
|
June 27,
2013 |
|
Percentage
Change
to Prior Year
|
|
July 3,
2014 |
|
June 27,
2013 |
|
Percentage
Change
to Prior Year
|
||||||||||
|
($ in millions)
|
|
|
|
($ in millions)
|
|
|
||||||||||||||
Net revenues
|
$
|
1,803.3
|
|
|
$
|
1,520.7
|
|
|
19
|
%
|
|
$
|
3,531.8
|
|
|
2,962.9
|
|
|
19
|
%
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
1,525.9
|
|
|
1,690.2
|
|
|
(10
|
)%
|
|
2,993.2
|
|
|
2,927.3
|
|
|
2
|
%
|
||||
Selling, general and administrative
|
54.4
|
|
|
54.1
|
|
|
1
|
%
|
|
114.9
|
|
|
98.4
|
|
|
17
|
%
|
||||
Impact from severe weather event
|
—
|
|
|
6.3
|
|
|
(100
|
)%
|
|
—
|
|
|
15.1
|
|
|
(100
|
)%
|
||||
Research and development
|
6.8
|
|
|
8.6
|
|
|
(21
|
)%
|
|
13.1
|
|
|
16.1
|
|
|
(19
|
)%
|
||||
Operating income (loss)
|
216.2
|
|
|
(238.5
|
)
|
|
191
|
%
|
|
410.6
|
|
|
(94.0
|
)
|
|
537
|
%
|
||||
Interest expense and financing fee amortization
|
(20.8
|
)
|
|
(17.3
|
)
|
|
20
|
%
|
|
(56.2
|
)
|
|
(34.9
|
)
|
|
61
|
%
|
||||
Interest income
|
0.1
|
|
|
—
|
|
|
100
|
%
|
|
0.2
|
|
|
0.1
|
|
|
100
|
%
|
||||
Other income (expense), net
|
5.8
|
|
|
1.3
|
|
|
346
|
%
|
|
7.0
|
|
|
(8.6
|
)
|
|
181
|
%
|
||||
Income (loss) before income taxes and equity in net income (loss) of affiliate
|
201.3
|
|
|
(254.5
|
)
|
|
179
|
%
|
|
361.6
|
|
|
(137.4
|
)
|
|
363
|
%
|
||||
Income tax (provision) benefit
|
(58.1
|
)
|
|
45.0
|
|
|
(229
|
)%
|
|
(65.0
|
)
|
|
9.3
|
|
|
(799
|
)%
|
||||
Income (loss) before equity in net income (loss) of affiliate
|
143.2
|
|
|
(209.5
|
)
|
|
168
|
%
|
|
296.6
|
|
|
(128.1
|
)
|
|
332
|
%
|
||||
Equity in net income (loss) of affiliate
|
0.2
|
|
|
0.1
|
|
|
100
|
%
|
|
0.4
|
|
|
(0.1
|
)
|
|
500
|
%
|
||||
Net income (loss)
|
$
|
143.4
|
|
|
$
|
(209.4
|
)
|
|
168
|
%
|
|
$
|
297.0
|
|
|
$
|
(128.2
|
)
|
|
332
|
%
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
Model
|
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||
B737
|
|
130
|
|
|
115
|
|
|
255
|
|
|
221
|
|
B747
|
|
4
|
|
|
4
|
|
|
9
|
|
|
10
|
|
B767
|
|
3
|
|
|
5
|
|
|
6
|
|
|
11
|
|
B777
|
|
26
|
|
|
25
|
|
|
52
|
|
|
49
|
|
B787
|
|
33
|
|
|
14
|
|
|
64
|
|
|
31
|
|
Total Boeing
|
|
196
|
|
|
163
|
|
|
386
|
|
|
322
|
|
A320 Family
(1)
|
|
121
|
|
|
131
|
|
|
249
|
|
|
260
|
|
A330/340
|
|
30
|
|
|
30
|
|
|
60
|
|
|
57
|
|
A350
|
|
5
|
|
|
1
|
|
|
7
|
|
|
3
|
|
A380
|
|
7
|
|
|
10
|
|
|
14
|
|
|
17
|
|
Total Airbus
|
|
163
|
|
|
172
|
|
|
330
|
|
|
337
|
|
Business/Regional Jets
|
|
33
|
|
|
19
|
|
|
68
|
|
|
39
|
|
Total
|
|
392
|
|
|
354
|
|
|
784
|
|
|
698
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Prime Customer
|
|
July 3,
2014 |
|
June 27,
2013 |
|
July 3,
2014 |
|
June 27,
2013 |
||||||||
|
|
($ in millions)
|
|
($ in millions)
|
||||||||||||
Boeing
|
|
$
|
1,503.7
|
|
|
$
|
1,306.5
|
|
|
$
|
2,976.4
|
|
|
$
|
2,533.2
|
|
Airbus
|
|
190.2
|
|
|
142.7
|
|
|
338.8
|
|
|
282.4
|
|
||||
Gulfstream
|
|
54.2
|
|
|
19.8
|
|
|
104.4
|
|
|
50.6
|
|
||||
Sikorsky
|
|
4.7
|
|
|
5.4
|
|
|
8.1
|
|
|
7.9
|
|
||||
Other
|
|
50.5
|
|
|
46.3
|
|
|
104.1
|
|
|
88.8
|
|
||||
Total net revenues
|
|
$
|
1,803.3
|
|
|
$
|
1,520.7
|
|
|
$
|
3,531.8
|
|
|
$
|
2,962.9
|
|
|
Three Months Ended
|
||||||
|
July 3,
2014 |
|
June 27,
2013 |
||||
|
($ in millions)
|
||||||
Segment Revenues
|
|
|
|
|
|
||
Fuselage Systems
|
$
|
905.0
|
|
|
$
|
732.1
|
|
Propulsion Systems
|
460.5
|
|
|
418.6
|
|
||
Wing Systems
|
438.3
|
|
|
368.6
|
|
||
All Other
|
(0.5
|
)
|
|
1.4
|
|
||
|
$
|
1,803.3
|
|
|
$
|
1,520.7
|
|
Segment Operating Income (Loss)
|
|
|
|
|
|
||
Fuselage Systems (1)
|
$
|
132.2
|
|
|
$
|
155.0
|
|
Propulsion Systems (2)
|
86.2
|
|
|
85.0
|
|
||
Wing Systems (3)
|
71.0
|
|
|
(402.3
|
)
|
||
All Other
|
0.2
|
|
|
1.8
|
|
||
|
289.6
|
|
|
(160.5
|
)
|
||
Corporate SG&A (4)
|
(54.4
|
)
|
|
(54.1
|
)
|
||
Impact from severe weather event
|
—
|
|
|
(6.3
|
)
|
||
Research and development (5)
|
(6.8
|
)
|
|
(8.6
|
)
|
||
Unallocated cost of sales (6)
|
(12.2
|
)
|
|
(9.0
|
)
|
||
Total operating income (loss)
|
$
|
216.2
|
|
|
$
|
(238.5
|
)
|
|
(1)
|
Includes a favorable cumulative catch-up adjustments of $2.7 million for the three months ended July 3, 2014. Inclusive of $5.0 million forward loss charge recorded for B747-8 and a $27.8 million favorable cumulative catch-up adjustment for the three months ended June 27, 2013.
|
(2)
|
Includes favorable cumulative catch-up adjustments of $5.0 million for the three months ended July 3, 2014. Inclusive of $4.0 million forward loss charge and $8.4 million reduction of forward loss charge due to change in estimate recorded for the B767 and Rolls-Royce BR725 programs, respectively, and a $11.5 million favorable cumulative catch-up adjustment for the three months ended June 27, 2013.
|
(3)
|
For the three months ended July 3, 2014, includes favorable cumulative catch-up adjustments of $11.7 million. Includes forward loss charges recorded of $22.0 million, 191.5 million, and 234.2 million for the B787, G280, and G650 wing programs, respectively, for the three months ended June 27, 2013. Also includes a $1.3 million favorable cumulative catch-up adjustment for the three months ended June 27, 2013.
|
(4)
|
For the three months ended June 27, 2013, corporate SG&A of $1.8 million, $0.9 million, and $1.2 million was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(5)
|
For the three months ended June 27, 2013, research and development of $3.2 million, $2.5 million, and $0.9 million was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(6)
|
Includes $11.6 million of warranty reserve for the three months ended July 3, 2014. Includes $9.2 million of warranty reserve and $(0.2) million related to early retirement incentives for the three months ended June 27, 2013.
|
|
Six Months Ended
|
||||||
|
July 3,
2014 |
|
June 27,
2013 |
||||
|
($ in millions)
|
||||||
Segment Revenues
|
|
|
|
|
|
||
Fuselage Systems
|
$
|
1,763.3
|
|
|
$
|
1,450.0
|
|
Propulsion Systems
|
910.7
|
|
|
793.9
|
|
||
Wing Systems
|
852.5
|
|
|
711.9
|
|
||
All Other
|
5.3
|
|
|
7.1
|
|
||
|
$
|
3,531.8
|
|
|
$
|
2,962.9
|
|
Segment Operating Income (Loss)
|
|
|
|
|
|
||
Fuselage Systems (1)
|
$
|
274.2
|
|
|
$
|
281.4
|
|
Propulsion Systems (2)
|
166.4
|
|
|
153.4
|
|
||
Wing Systems (3)
|
121.0
|
|
|
(381.8
|
)
|
||
All Other
|
0.3
|
|
|
3.4
|
|
||
|
561.9
|
|
|
56.4
|
|
||
Corporate SG&A (4)
|
(114.9
|
)
|
|
(98.4
|
)
|
||
Impact from severe weather event
|
—
|
|
|
(15.1
|
)
|
||
Research and development (5)
|
(13.1
|
)
|
|
(16.1
|
)
|
||
Unallocated cost of sales (6)
|
(23.3
|
)
|
|
(20.8
|
)
|
||
Total operating income (loss)
|
$
|
410.6
|
|
|
$
|
(94.0
|
)
|
|
(1)
|
For the six months ended July 3, 2014, net of forward loss charge of $0.9 million on the Bell V280 helicopter program. Also includes favorable cumulative catch-up adjustments of $8.6 million for the six months ended July 3, 2014. Inclusive of $5.0 million forward loss charge recorded for B747-8 and a $32.5 million favorable cumulative catch-up adjustment for the six months ended June 27, 2013.
|
(2)
|
Includes favorable cumulative catch-up adjustments of $8.3 for the six months ended July 3, 2014. Inclusive of $4.0 million forward loss charge and $8.4 million reduction of forward loss charge due to change in estimate recorded for the B767 and Rolls-Royce BR725 programs, respectively, and an $18.7 million favorable cumulative catch-up adjustment for the six months ended June 27, 2013.
|
(3)
|
For the six months ended July 3, 2014, net of $0.3 million forward loss charge recorded on the G280 wing program. Also includes favorable cumulative catch-up adjustments of $13.3 million for the six months ended July 3, 2014. Inclusive of $37.3 million forward loss charge recorded for the B787 wing program, $191.5 million forward loss charge for the G280 program, and $234.2 million forward loss charge for the G650 program as well as a $0.5 million favorable cumulative catch-up adjustment for the six months ended June 27, 2013.
|
(4)
|
For the six months ended June 27, 2013, corporate SG&A of $4.1 million, $2.1 million, and $2.4 million was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(5)
|
For the six months ended June 27, 2013, research and development of $5.9 million, $4.4 million, and $2.0 million was reclassified from segment operating income for Fuselage, Propulsion, and Wing Systems, respectively, to conform to current year presentation.
|
(6)
|
Includes $22.6 million of warranty reserve for the six months ended July 3, 2014. Includes $19.2 million of warranty reserve and $1.6 million related to early retirement incentives for the six months ended June 27, 2013.
|
|
For the six months ended
|
||||||
|
July 3, 2014
|
|
June 27, 2013
|
||||
|
($ in millions)
|
||||||
Net income
|
$
|
297.0
|
|
|
$
|
(128.2
|
)
|
Adjustments to reconcile net income
|
91.9
|
|
|
55.9
|
|
||
Changes in working capital
|
(179.4
|
)
|
|
86.6
|
|
||
Net cash provided by operating activities
|
209.5
|
|
|
14.3
|
|
||
Net cash (used in) investing activities
|
(89.2
|
)
|
|
(132.4
|
)
|
||
Net cash (used in) financing activities
|
(159.6
|
)
|
|
(3.6
|
)
|
||
Effect of exchange rate change on cash and cash equivalents
|
0.2
|
|
|
(2.0
|
)
|
||
Net (decrease) in cash and cash equivalents for the period
|
(39.1
|
)
|
|
(123.7
|
)
|
||
Cash and cash equivalents, beginning of period
|
420.7
|
|
|
440.7
|
|
||
Cash and cash equivalents, end of period
|
$
|
381.6
|
|
|
$
|
317.0
|
|
•
|
our ability to continue to grow our business and execute our growth strategy, including the timing, execution, and profitability of new and maturing programs;
|
•
|
our ability to perform our obligations and manage costs related to our new and maturing commercial, business aircraft and military development programs and the related recurring production;
|
•
|
margin pressures and the potential for additional forward losses on new and maturing programs;
|
•
|
our ability to accommodate, and the cost of accommodating, announced increases in the build rates of certain aircraft;
|
•
|
the effect on business and commercial aircraft demand and build rates of the following factors: changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market, expanding conflicts or political unrest in the Middle East or Asia and the impact of continuing instability in global financial and credit markets;
|
•
|
customer cancellations or deferrals as a result of global economic uncertainty;
|
•
|
the success and timely execution of key milestones such as certification and first delivery of Airbus' A350 XWB aircraft program, receipt of necessary regulatory approvals and customer adherence to their announced schedules;
|
•
|
our ability to successfully negotiate future pricing under our supply agreements with Boeing;
|
•
|
our ability to enter into profitable supply arrangements with additional customers;
|
•
|
the ability of all parties to satisfy their performance requirements under existing supply contracts with Boeing and Airbus, our two major customers, and other customers and the risk of nonpayment by such customers;
|
•
|
any adverse impact on Boeing’s and Airbus’ production of aircraft resulting from cancellations, deferrals or reduced orders by their customers or from labor disputes or acts of terrorism;
|
•
|
any adverse impact on the demand for air travel or our operations from the outbreak of diseases or epidemic or pandemic outbreaks;
|
•
|
returns on pension plan assets and the impact of future discount rate changes on pension obligations;
|
•
|
our ability to borrow additional funds or refinance debt;
|
•
|
our ability to sell all or any portion of our Oklahoma sites on terms acceptable to us;
|
•
|
competition from commercial aerospace original equipment manufacturers and other aerostructures suppliers;
|
•
|
the effect of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad;
|
•
|
any reduction in our credit ratings;
|
•
|
the cost and availability of raw materials and purchased components;
|
•
|
our ability to recruit and retain highly-skilled employees and our relationships with the unions representing many of our employees;
|
•
|
spending by the U.S. and other governments on defense;
|
•
|
the possibility that our cash flows and borrowing facilities may not be adequate for our additional capital needs or for payment of interest on and principal of our indebtedness;
|
•
|
our exposure under our existing senior secured revolving credit facility to higher interest payments should interest rates increase substantially;
|
•
|
the effectiveness of any interest rate hedging programs;
|
•
|
the effectiveness of our internal control over financial reporting;
|
•
|
the outcome or impact of ongoing or future litigation, claims and regulatory actions; and
|
•
|
our exposure to potential product liability and warranty claims.
|
•
|
Establish a more comprehensive review and approval procedure, with increased Corporate oversight for the G280 and G650 programs at our Tulsa business unit.
|
•
|
Enhance analysis and review of cost estimates related to supply chain cost, labor and the bill of material for the G280 and G650 programs at our Tulsa business unit.
|
•
|
Increase Corporate oversight of changes to EAC assumptions specifically regarding estimates of production units for the G280 and G650 programs at our Tulsa business unit.
|
•
|
Enhance analysis and review of the bill of materials and its impact on cost estimates for the A350 XWB Section 15 recurring program.
|
•
|
negative effects on our reported results of operations from disposition-related charges, amortization expenses related to intangibles, and charges for impairment of long-term assets;
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Sanjay Kapoor
|
|
Senior Vice President and Chief Financial
|
|
August 1, 2014
|
Sanjay Kapoor
|
|
Officer (Principal Financial Officer)
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Mark J. Suchinski
|
|
Vice President and Corporate Controller (Principal Accounting Officer)
|
|
August 1, 2014
|
Mark J. Suchinski
|
|
|
|
|
A.
|
Boeing and Seller have entered into an agreement SBP-MS-65530-0016 (SBP), GTA-BCA-65530-0016 (“GTA”) and AA-65530-0016 (AA) and all attachments and amendments thereto “Sustaining Contract” for Seller to provide product for current model aircraft and derivatives of those models.
|
B.
|
Seller currently supplies Products to Boeing under the Sustaining Contract in support of the current production 737 model aircraft.
|
C.
|
Boeing is seeking to develop, design and manufacture an aircraft currently designated as the 737 MAX to be sold under the 737-7, 737-8 and 737-9 designations (the “737 MAX Program”).
|
D.
|
Boeing and Seller entered into interim pricing agreements documented under Contract Change Notice(s) (CCN) 6818 and 8015 against the Sustaining Contract for a portion of the costs incurred for design, stress and manufacturing engineering for fuselage, wing, thrust reverser and pylon Statements of Work (SOW) through December 31, 2013, the remainder of such costs the parties wish to account for in Section 2.2 of this MOA.
|
E.
|
Boeing and Seller entered into an interim pricing agreement documented under CCN 7586 against the Sustaining Contract for a portion of the costs incurred for the [*****] Thrust Reverser Statement of Work, the remainder of such costs the Parties wish to account for in Sections 2.2 and 10.0 of this MOA.
|
F.
|
Boeing and Seller wish to establish non-recurring pricing based upon the provisions of the Sustaining Contract and this MOA in support of Boeing’s 737 MAX Program for the 737-7, 737-8 and 737-9 MAX models.
|
1.0
|
APPLICABILITY AND DEFINITIONS
|
1.
|
Applicability
|
1.
|
This MOA pertains only to the 737 MAX Program and does not alter any existing agreements relating to other items in the Sustaining Contract.
|
2.
|
This MOA only pertains to the non-recurring pricing for the 737 MAX Program.
|
3.
|
Capitalized terms used herein but not otherwise defined shall have the meaning set forth in the Sustaining Contract.
|
2.
|
Definitions
|
1.
|
“Amended Type Certification” (ATC) means the date upon which type certificate amendment is received from the applicable regulatory body for the modified aircraft design.
|
2.
|
“Baseline Statement of Work (BSOW)”: The total requirements set forth in Section 3.0 and Section 4.0 including any referenced Boeing specifications, documents, designs or manuals.
|
3.
|
[*****]: The statement of work relating the titanium inner-wall for the aircraft described in the BSOW, which the Parties anticipate at this time to be performed by [*****].
|
4.
|
“Initial Tooling”: All Tooling required for the first 737-8 Shipset unit and/or Engine Development Program (EDP) hardware, and such term shall subsequently apply to the 737-9 and 737-7.
|
5.
|
“Non-Recurring-Non-Tooling Work”: Any Nonrecurring Work relating to the BSOW, other than Non-Recurring Tooling Work, including, but not limited to, design engineering, stress engineering, project manufacturing engineering, process manufacturing engineering, First Article Inspection, other IPT, and NC programming.
|
6.
|
“Non-Recurring Tooling Work”: Any Nonrecurring Work relating to Tooling under the BSOW, including, but not limited to, tool design, tool fabrication, assembly tooling, integration tooling, detail tooling, and rotable tooling, but replacement of Tooling at end of useful life is not included and is not dispositioned as part of this MOA. Non-Recurring Tooling Work includes Tooling work performed by Seller’s vendors.
|
7.
|
“[*****] Amount ([*****] Amount)”: As applicable, the Initial Tooling [*****] Amount or the Rate Tooling [*****] Amount, in each case as set forth in Exhibit A.
|
8.
|
“Rate Tooling”: All Tooling, other than the Initial Tooling, required to support the build rate for the 737-8 aircraft.
|
2.0
|
TERM AND CCN RECONCILIATION
|
1.
|
Effectiveness
|
2.
|
CCN Reconciliation
|
3.0
|
NON-RECURRING-NON-TOOLING STATEMENT OF WORK
|
1.
|
In performance of the BSOW, Spirit shall perform to the applicable requirements and obligations set forth in the following documents In accordance with the delegated engineering requirements contained in the Sustaining Contract:
|
1.
|
The work depicted in the current revision of the 737 MAX Configuration Control Document (CCD) [*****] for 737-8, [*****] for 737-7, and [*****] for 737-9 Fuselage, Propulsion, and Wing Statements of Work;
|
2.
|
Fuselage Structures System Requirements and Objectives (SR&O) 737 MAX Document [*****], Structures Fuselage Criteria Document [*****], Propulsion Specification Documents [*****],[*****],[*****]; and
|
3.
|
The 737-8 Engineering Bill of Material (BOM) submitted by Seller, and listed in Exhibit [B].
|
4.
|
In the event Seller is unable to comply with any requirement, Boeing and Seller’s engineering representatives will work together to define a mutually agreeable solution.
|
2.
|
Program Schedule Baseline: Program baseline schedules as contained in Exhibit D.
|
3.
|
The Parties agree the documents set forth in this Section 3 are the versions existing as of June 2013.
|
4.0
|
NON-RECURRING TOOLING STATEMENT OF WORK
|
1.
|
The Tooling Baseline consists of:
|
1.
|
CCD [*****], with proposed revisions, submitted with letter [*****];
|
2.
|
The 737-8 Engineering Bill of Material (BOM) submitted by Seller, associated with CCD [*****], as set forth in Exhibit [B];
|
3.
|
The Tooling List submitted by Seller, associated with CCD [*****] as set forth in Exhibit [C]; and
|
4.
|
The August 1, 2013 version of the 737MAX Baseline Master Phasing Plan MPP, Rev B, initially dated June 28, 2012, as set forth in Exhibit [D].
|
2.
|
For the avoidance of doubt, the BSOW referenced here is for the 737 MAX-8 Non-Recurring Work. Pricing, ground rules, statements of work, unique terms and non-recurring price for the other 737 MAX minor models will be subsequently agreed and incorporated into this MOA at a later date
|
5.0
|
PAYMENT FOR NON-RECURRING-NON-TOOLING WORK
|
1.
|
Payment
|
1.
|
Boeing will reimburse Seller for all costs incurred less any rebates and discounts in performance of the Non-Recurring-Non-Tooling Work up to [*****], including, but not limited to, [*****], all as set forth in Exhibit [E].
|
2.
|
Seller will invoice its costs incurred less any rebates and discounts in performance of the Non-Recurring-Non-Tooling Work up to Amended Type Certification for 737-7, -8, -9, [*****], for the [*****] period preceding the month of invoice, and for other agreed to costs that have not been previously invoiced. ([*****] invoice to be submitted upon signature of this MOA).
|
3.
|
Boeing will pay such invoices per the terms of the Sustaining Contract net [*****] calendar days after receipt of valid invoice and supporting data as defined in Exhibit [E] along with a monthly description of significant accomplishments and work completed for the fuselage, wing, thrust reverser and pylon statements of work. Seller will provide separate invoices for Fuselage, Wing, Thrust Reverser and Pylon.
|
2.
|
Rates
|
3.
|
Cost Allocation
|
6.0
|
PAYMENT FOR NON-RECURRING TOOLING WORK
|
1.
|
Payment
|
1.
|
Boeing will reimburse Seller for all actual costs incurred less any rebates and discounts in performance of the Non-Recurring Tooling Work including, but not limited to, [*****] as set forth in Exhibit [F] submittal form]; up to the [*****] identified in Exhibit [A] for Initial Tooling and Rate Tooling by -7, -8, -9 and by minor model. The [*****] Amount in Exhibit [A] shall be deemed to be reduced by [*****] respectively until all Certified Tool Lists (CTLs) are submitted and approved. Upon submittal of all CTL records associated with each [*****]
|
2.
|
Seller will invoice its costs for the Non-Recurring Tooling Work, [*****], for the [*****] period preceding the month of invoice, and for other agreed to costs that have not been previously invoiced.
|
3.
|
Boeing will pay such invoices per the terms of the Sustaining Contract net [*****] calendar days after receipt of valid invoice and supporting data as defined in Exhibit [F], Seller will provide separate invoices for Fuselage, Wing, Thrust Reverser and Pylon work.
|
2.
|
Rates
|
3.
|
Invoicing Requirements for Non-Recurring Tooling Work
|
4.
|
Incentive Fee
|
1.
|
Upon submittal of all CTL’s associated with each [*****] Amount set forth in Exhibit A [*****], if Seller’s actual costs incurred in the completion of such work are less than the [*****] Amount, and taking into account any adjustments to such [*****] Amount pursuant to Section 8.0 (Changes), then Boeing shall pay to Seller, in addition to the amounts due under Section 6.1 (Payment), an incentive fee equal to [*****] as amended from time to time and agreed to between the parties per Section 6.7 [*****].
|
2.
|
If an incentive is earned in accordance with 6.4.1, Boeing will provide a purchase order within [*****]. Upon receipt of valid invoice from Seller, Boeing will pay such invoices per the terms of the Sustaining Contract net [*****] calendar days.
|
5.
|
Schedule
|
6.
|
Capacity
|
7.
|
[*****] Amount Adjustments
|
1.
|
If it is determined additional Tooling that is not driven by BSOW Change is required in excess of that set forth in the BSOW, all additional Tooling costs incurred to meet the requirements of initial build and rate to [*****] APM will be assumed by Seller and the [*****] Amount shall not be adjusted.
|
2.
|
If it is determined Seller can accomplish the requirements with less Tooling than that set forth in the BSOW, the [*****] Amount shall not be adjusted and the cost savings shall be administered in accordance with Section 6.4 (Incentive Fee).
|
3.
|
For the sake of clarity, any Change from BSOW requested or driven by Boeing during the duration defined for Initial Changes shall constitute an Initial Change resulting in a commensurate adjustment to the [*****] Amount in accordance with Section 8.0 (Changes).
|
7.0
|
BUDGET TRACKING, MONTHLY ACTUALS, AND INVOICE RECONCILIATION
|
1.
|
Monthly Actuals
|
2.
|
Budget Tracking
|
1.
|
In conjunction with submittals of costs incurred, Seller will provide to Boeing its projected expenditures in connection with the performance of the Non-Recurring-Non-Tooling Work for the succeeding [*****] period, in the form of the template set forth in Exhibit [E].
|
2.
|
At the end of [*****], Boeing will issue its budget forecast for the Non-Recurring-Non-Tooling Work for the succeeding [*****] period.
|
3.
|
The Parties agree that regardless of any variances between such budgets and Seller’s costs, Boeing will continue to pay Seller in accordance with Section 5.1.
|
4.
|
Weekly reporting requirements
|
5.
|
Budget Management
|
3.
|
Schedule Performance Monitoring
|
1.
|
Boeing and Seller will utilize the Event Tracking And Control (‘‘ETAC”) reporting system to track design/stress engineering performance.
|
2.
|
Boeing and Seller will utilize the Spirit Compliance And Tracking (“SCAT”) system to track non-define performance.
|
4.
|
Invoice Reconciliation
|
1.
|
In the event that Boeing disputes any Seller invoice, including without limitation, the invoice set forth in Section 2.2 above, Boeing will pay Seller the invoiced amount by the applicable deadline, in accordance with Section 5.1 or 6.1 (Payment), as applicable, but may review Seller’s books, records and documentation relating to the disputed amounts, provided that such review is conducted at reasonable times at Seller’s facility and that the scope of such review will not extend to any books, records, documentation or other information that is not necessary to support such disputed amounts. As a result of such review, any mutually agreed payment adjustments will be made in [*****]. Should the Parties fail to come to mutual agreement within [*****] of notification pursuant to Section 7.4.3, the Parties will resolve such disputes per GTA section 33.0.
|
2.
|
The Parties recognize that Seller may in some instances have confidentiality obligations to third parties which limit the amount or nature of data that can be provided in invoice reconciliation. In such event, the Parties shall work together to determine a mutually agreeable solution which enables the provision of supporting data in Section 7.4.1 in a manner that is in compliance with Seller’s confidentiality obligation to third parties.
|
3.
|
Boeing will have [*****] from the date the invoice is received to notify Seller of any exception to the actual costs listed in such invoice, otherwise the invoice will be deemed accepted.
|
8.0
|
CHANGES
|
1.
|
In the event of any Change to the BSOW, directed by Boeing prior to Amended Type Certification as applicable to each MAX minor model (an “Initial Change”):
|
1.
|
The Parties will negotiate a schedule adjustment and any applicable adjustment to an [*****] Amount in accordance with Section 8.3 of this MOA.
|
2.
|
Costs associated with any revisions to the BSOWs that constitute a Change under Section 6 of the SBP and fall within the time period designated for Initial Changes, shall be addressed in accordance with 5.1.1 of this MOA for Non-Recurring-Non-Tooling Work and 6.1.1 for Non-Recurring Tooling Work.
|
2.
|
For clarification purposes, the change provisions of this MOA, rather than the change provisions in Section 7.0 of the SBP, will govern with respect to Initial Changes (provided, that the term “Change” as used herein, shall have the same meaning as that defined in the SBP, except as modified by this MOA), and equitable price adjustment with respect to Initial Changes will not be subject to the price thresholds described in Section 7.0 of the SBP. For each MAX minor model, Changes following the Initial Change period for such minor model shall be governed by the Sustaining Contract. For the avoidance of doubt Section 6.0 of the SBP shall apply except for the reference to Section 7.0 contained therein.
|
3.
|
Change Negotiation Process
|
1.
|
Following receipt of a direction from Boeing that constitutes a Change under this MOA, Seller will provide updated scope of work documents to Boeing, along with pricing submittals, identifying the associated cost and/or schedule impacts.
|
2.
|
Within [*****] of receipt of such proposal, Boeing shall make a settlement offer to Seller. Following receipt of Boeing’s settlement offer, if the Parties are unable to reach agreement on an equitable adjustment within [*****], the negotiations shall be elevated to Senior Contracts Management for resolution.
|
3.
|
Upon settlement the [*****] Amounts and/or schedule, this MOA will be adjusted by Contract Change Notice (CCN) for all adjustments agreed in writing between the parties.
|
9.0
|
WEIGHT
|
1.
|
Seller acknowledges the importance of an end item weight for the Products it delivers to Boeing and agrees to follow diligent weight reduction practices during the design process.
|
2.
|
Based on the BSOW, Seller will provide non-binding Advisory Weight Guidelines (AWG) for the Seller provided dry products. No weight requirement, (such as those referenced in any requirement document) other than the AWG are applicable.
|
3.
|
Such AWGs do not constitute a weight requirement, and failure to achieve such AWGs shall not constitute a breach under this MOA or the SBP
|
4.
|
These AWGs are for the end item level and are for production units only.
|
5.
|
In addition, the above AWGs require that adjustments to AWG values be assessed in conjunction with Initial Changes having a weight impact.
|
6.
|
Seller will provide Status Weight reporting and Actual Weight reporting once monthly via agreed to format.
|
10.0
|
[*****] STATEMENT OF WORK
|
1.
|
The Parties continue to evaluate the transfer of the [*****] Statement of Work from Seller to Boeing.
|
2.
|
Until such time as the transfer agreement has been executed, Seller will invoice Boeing [*****] for payments made to [*****] pursuant to the [*****] Statement of Work, and Boeing will pay such invoices net [*****] days after receipt thereof. For the avoidance of doubt, Seller will not duplicate such amounts in any invoice submitted pursuant to Section 5.1 or 6.1.
|
3.
|
In the event the Parties are unable to reach a transfer agreement by [*****] Boeing and Seller will negotiate additional payment provisions or inclusion of the [*****] Statement of Work into this MOA.
|
11.0
|
PROPULSION ENGINE DEVELOPMENT PLAN (EDP) AND TEST HARDWARE
|
1.
|
The parties will negotiate pricing for EDP Hardware and test hardware by [*****].
|
12.0
|
INCENTIVES: NON-RECURRING-NON-TOOLING
|
13.0
|
MISCELLANEOUS
|
1.
|
This MOA including all Exhibits and Attachments contain the entire agreement between Seller and Boeing about the subject matter hereof and supersedes all previous proposals, understandings, commitments, or representations whatsoever, oral or written for said effort. This MOA may be changed only in writing by authorized representatives of Seller and
|
2.
|
The Parties will update Attachment 9 to include the 737 MAX, and Attachment 4 of the SBP to include the 737 MAX under Section B.1 and incorporate this MOA as a separate attachment to the SBP.
|
3.
|
The Parties will amend the Product Support and Assurance Document (PSAD) D6-83315 to incorporate the 737-7, -8, -9 models in Section 8.3.1 (a) “Warranty for Products”.
|
4.
|
The D6-83323 Document denoting the 737 NG roles, responsibilities, and accountability for the 737 NG will apply to Seller’s engineering responsibility for the 737 MAX Products and nothing contained herein is intended to modify such allocation of roles, responsibilities and accountability for 737 MAX Products. For the avoidance of doubt, and despite reference to D6-83323 herein, the D6-83323 shall remain of lower precedence to the SBP, GTA, Purchase contract, and Order as specified in Section 13 (Order of Precedence) of the SBP.
|
BOEING
THE BOEING COMPANY
/s/ John Bayer
Signature:
Printed Name: John Bayer
Title: Procurement Agent
Date: April 7, 2014
|
SELLER
Spirit AeroSystems, Inc.
/s/ Matthew Calhoun
Signature:
Printed Name: Matthew Calhoun
Title: Manager, Boeing Sustaining Contracts
Date: 4/7/2014
|
737-8
[*****]
Amounts
|
Fuselage, Wing, and Propulsion End Items (All SOW)
|
Initial Tooling [*****] Amount
|
[*****]
|
Rate Tooling [*****] Amount
|
[*****]
|
737-9
[*****]
Amounts
|
Fuselage, Wing, and Propulsion End Items (All SOW)
|
Initial Tooling [*****] Amount
|
To be negotiated per section 6.3
|
Rate Tooling [*****] Amount
|
To be negotiated per section 6.3
|
737-7
[*****]
Amounts
|
Fuselage, Wing, and Propulsion End Items (All SOW)
|
Initial Tooling [*****] Amount
|
To be negotiated per section 6.3
|
Rate Tooling [*****] Amount
|
To be negotiated per section 6.3
|
737 MAX 8 -
Baseline Master Phasing Plan (Rev B)
|
Rev A Baselined:2-9-12
Rev B Baselined:6-28-12
Status as of:8-1-13
|
|||||||
Baselined 6-28-12 Rev B
|
Show
|
Offer/Launch
[*****]
|
PRR/3RR
[*****]
|
Firm Config
[*****]
|
CPR
[*****]
|
PRR
[*****]
|
Integ Prod Test
[*****]
|
E18
[*****]
|
Gated Process Deliverables
|
[*****]
|
|||||||
Business Case/Cost
|
||||||||
Integrated Schedule/Plan
|
||||||||
Requirements & SOW
Requirements
Aerodynamics & Loads
Configuration
Product Integration
Structures
Systems
Propulsion
Payloads
Test
Regulatory Admin
Services & Support
|
||||||||
Supplier/Partner
|
||||||||
Production Sys Readiness
|
737 MAX 8 Airframe | Tier 2 Schedule
|
Responsible:D. Stoll
Status Date:3-13-14
Baselined:7-26-12
|
||||||
|
Offer/Launch
[*****]
|
PRR/3RR
[*****]
|
Firm Config
[*****]
|
CPR
[*****]
|
PRR
[*****]
|
Integ Prod Test
[*****]
|
E1S
[*****]
|
Gated Process
Deliverables
|
[*****]
|
||||||
Program
|
|||||||
Program
|
|||||||
|
|||||||
'- Airframe Renton
- Gated Process (Keith Luschei) - Airframe Renton - Gated Process (Keith Luschei) - NRPD (Bruce Dahl) - Test (Rob Welch) - Spatial Integration (Petra Critchfield) - Wing & Emp (Johnson, Krishan, Welch) Propulsion and Loads Reference Milestones - Winglet (Brian Johnson) - Landing Gear (Rick Gessner) (PA-Jeff Gochenour) - Landing Gear (Rick Gessner) |
737 MAX 8 Airframe | Tier 2 Schedule
|
Responsible:D. Stoll
Status Date:3-13-14
Baselined:7-26-12
|
||||||
|
Offer/Launch
[*****]
|
PRR/3RR
[*****]
|
Firm Config
[*****]
|
CPR
[*****]
|
PRR
[*****]
|
Integ Prod Test
[*****]
|
E1S
[*****]
|
Gated Process
Deliverables
|
[*****]
|
||||||
'- Forward Access Door
(PA-Brian Ogden) (Ron Wittle)
- Equipment/TE
(Olson, Brennan)
- ME
(John Evoy)
- Cert
(Candice Duffer)
- Spirit Integration
(Mike McKeever)
- Spirit Fuse
(Jenny Drouhard/ Tracy Russell)
- Spirit Fuse
(Jenny Drouhard/ Tracy Russell)
- Spirit Wing Tulsa
(Cathy Diver/ Tracy Russell)
- Spirit Wing Tulsa
(Cathy Diver/ Tracy Russell)
- Spirit SM
(PA-John Bayer) |
Summary Totals Page
737 MAX Non-Recurring Actuals
Cumulative through Date Month/Year
|
|||||
|
|
|
|
|
|
Hours
|
Fuselage
|
Pylon
|
TR
|
Wing
|
Total
|
Design Eng
|
|
|
|
|
|
Stress Eng
|
|
|
|
|
|
Project ME
|
|
|
|
|
|
Design Eng - Subcontract
|
|
|
|
|
|
Stress Eng - Subcontract
|
|
|
|
|
|
Process ME
|
|
|
|
|
|
NC
|
|
|
|
|
|
IPT
|
|
|
|
|
|
QA
|
|
|
|
|
|
Total Hours
|
|
|
|
|
|
Avg Rate
|
|||||
Design Eng
|
|
|
|
|
|
Stress Eng
|
|
|
|
|
|
Project ME
|
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
|
Process ME
|
|
|
|
|
|
NC
|
|
|
|
|
|
IPT
|
|
|
|
|
|
QA
|
|
|
|
|
|
Cost
|
|||||
Design Eng
|
|
|
|
|
|
Stress Eng
|
|
|
|
|
|
Project ME
|
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
|
Process ME
|
|
|
|
|
|
NC
|
|
|
|
|
|
IPT
|
|
|
|
|
|
QA
|
|
|
|
|
|
Total Cost
|
|
|
|
|
|
737 MAX Non-Recurring Actuals - Total
Date (Month/Year)
|
||||
Hours
|
Month
|
Month
|
Month
|
Month
|
Design Eng
|
|
|
|
|
Stress Eng
|
|
|
|
|
Project ME
|
|
|
|
|
Design Eng - Subcontract
|
|
|
|
|
Stress Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Total Hours
|
|
|
|
|
Avg Rate
|
||||
Design Eng
|
|
|
|
|
Stress Eng
|
|
|
|
|
Project ME
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Cost
|
||||
Design Eng
|
|
|
|
|
Stress Eng
|
|
|
|
|
Project ME
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Total Cost
|
|
|
|
|
737 MAX Non-Recurring Actuals - (BY IPT)
Month, Year
|
||||
Hours
|
Month
|
Month
|
Month
|
Month
|
Design Eng.
|
|
|
|
|
Stress Eng.
|
|
|
|
|
Project ME
|
|
|
|
|
Design Eng - Subcontract
|
|
|
|
|
Stress Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Total Hours
|
|
|
|
|
Avg Rate
|
||||
Design Eng
|
|
|
|
|
Stress Eng
|
|
|
|
|
Project ME
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Cost
|
||||
Design Eng
|
|
|
|
|
Stress Eng
|
|
|
|
|
Project ME
|
|
|
|
|
Eng - Subcontract
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
QA
|
|
|
|
|
Total Cost
|
|
|
|
|
Actuals by IPT
Date Month/Year
|
||||
Hours
|
Month
|
Month
|
Month
|
Month
|
Design Engr
|
|
|
|
|
Stress Engr
|
|
|
|
|
Project ME
|
|
|
|
|
Offload DE
|
|
|
|
|
Offload SE
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
Tool Design
|
|
|
|
|
Tool Fab
|
|
|
|
|
Total Fuselage Hours
|
|
|
|
|
Dollars
|
Month
|
Month
|
Month
|
Month
|
Design Engr
|
|
|
|
|
Stress Engr
|
|
|
|
|
Project ME
|
|
|
|
|
Define Offload
|
|
|
|
|
Process ME
|
|
|
|
|
NC
|
|
|
|
|
IPT
|
|
|
|
|
Tool Design
|
|
|
|
|
Tool Fab
|
|
|
|
|
Total Fuselage Dollars
|
|
|
|
|
|
[*****]
|
[*****]
|
[*****]
|
[*****]
|
Dollars with G&A
|
Month
|
Month
|
Month
|
Month
|
Design Engr
|
0
|
0
|
0
|
0
|
Stress Engr
|
0
|
0
|
0
|
0
|
Project ME
|
0
|
0
|
0
|
0
|
Define Offload
|
0
|
0
|
0
|
0
|
Process ME
|
0
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0
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0
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0
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NC
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0
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0
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0
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0
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IPT
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0
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0
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0
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0
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Tool Design
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0
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0
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0
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0
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Tool Fab
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0
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0
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0
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0
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Total Fuselage Dollars
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0
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0
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0
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0
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[*****]
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[*****]
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[*****]
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[*****]
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737 MAX STRUT SUPPLIER ACCOUNTABLE TOOLS-SAMPLE
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|||||
Tool Number
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Unit
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Lifetime Serial
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Open/Closed
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Estimated Close Date
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Cost
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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A.
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Award Fee Plan
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B.
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Award Fee Pool
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•
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[*****] payable if [*****] Non-Recurring-Non-Tooling cost target is met,
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•
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[*****] through [*****] of [*****]
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•
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[*****] payable if overall Non-Recurring-Non-Tooling cost target is achieved through 737-7 ATC. Value to be provided after [*****].
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•
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[*****] payable for ETAC releases [*****] on time
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•
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[*****] payable for ETAC releases [*****] on time
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C.
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Award Fee Plan Changes
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D.
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Contract Termination
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E.
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Award Fee Allocation and Payment Record
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F.
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Payment of Award Fee
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A.
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WHEREAS, Boeing and Spirit are party to the Special Business Provisions (“SBP”) MS-65530-0016, dated June 16, 2005; and other documents incorporated therein by reference, including the General Terms Agreement (“GTA”) BCA-65530-0016, and amendments and attachments to such agreements (collectively the “Sustaining Contract”);
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B.
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WHEREAS, the Parties wish to establish pricing as referenced In SBP Section 4.1 for the time period set forth in this Agreement for the Products set forth on SBP Attachment 1 (the “Recurring Products”) that Spirit currently supplies to Boeing in support of current Program Airplanes covered under the Sustaining Contract, based upon the provisions of the Sustaining Contract and this Agreement;
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C.
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WHEREAS, the Parties wish to establish a mechanism to work together to implement cost reduction ideas; and
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D.
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WHEREAS, the Parties desire to implement a production rate of 47 airplanes per month (“APM”) for the 737 Program.
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Article 1.
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PRICING FOR RECURRING PRODUCTS
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1.
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Pricing Period
. The Unit Billing Prices as agreed to in this Agreement shall be effective as of April 1, 2014 through December 31, 2015 (the “Pricing Period”).
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2.
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Recurring Price
. For purposes of Section 4.0 (Pricing) of the SBP, during the Pricing Period the Unit Billing Prices for Recurring Products shall be calculated as follows. The Parties will follow the process set forth in SBP Attachment 20 to generate the Unit Billing Prices using the Base Prices (as set forth in the SBP Attachment 1 that are in place as of the Effective Date) for Recurring Products, which shall be adjusted using the [*****], and which shall remain subject to adjustment pursuant to SBP Sections 6 and 7 (but not SBP Section 7.6). For purposes of calculating the Unit Billing
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3.
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Retroactive Adjustment
. Upon execution of this Agreement, the Parties agree to waive any retroactive debits or credits that would be due to either party either under SBP Section 4.1.1 (Interim Extension Pricing) or under Spirit Letter 052013-2013-0011-JDR and any related correspondence as a result of the Unit Billing Prices established in accordance with this Agreement, for payments made to Spirit, or Invoices received by Boeing, from June 1, 2013 through March 31, 2014. Any invoices on or after the Effective Date shall be at the Unit Billing Prices set forth in this Agreement.
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4.
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Extension Pricing Proposal
. The Parties agree to commence negotiations in [*****] for pricing beyond the Pricing Period (“Follow-on Pricing”). As part of such negotiations, the Parties shall agree on the duration of the Follow-on Pricing. Both Parties agree to negotiate in good faith to reach agreement on Follow-on Pricing by [*****]. If the Parties fail to reach agreement for Follow-on Pricing by [*****], the Parties shall use the Unit Billing Price calculated as the then current Attachment 1 Base Price at FOB date (inclusive of SOW adds and deletes, i.e. PRR changes, adjustments based on implementation of cost reduction activities under Cost Reduction Project Agreements, work transfers, etc.) reduced by the [*****] as adjusted by the indices and adjustment methodology set forth in SBP Section 4.1.1, as an interim payment mechanism (the “Interim Payment Mechanism”) to be applied to Recurring Products delivered following the end of the Pricing Period, but before agreement on Follow-on Pricing. The Interim Payment Mechanism shall apply until such time as the Parties agree on Follow-on Pricing.
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1.
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Working Together
. The Parties agree to cooperate and work together to implement cost reduction ideas agreed to by both Boeing and Spirit. This Agreement supersedes (i) the Letter of Agreement between Boeing and Spirit dated August 2, 2013 and (ii) for the duration of the Pricing Period, SBP Section 7.6. For each agreed to cost reduction idea, the Parties shall enter into a written agreement (each, a “Cost Reduction Project Agreement”) setting forth: (a) the cost reduction idea in detail; (b) the steps required to implement such idea; (c) the Party responsible for each step; (d) the timeline associated with such implementation; (e) the non-recurring costs to be incurred by each Party and the documentation reasonably necessary to substantiate the non-recurring costs of each Party; (f) the method for defining and measuring the cost savings, (g) the process for recapture of each Party’s non-recurring costs; and (h) how the cost savings will be allocated among the Parties after each Party’s recapture of its non-recurring costs.
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2.
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Cost Reduction Focus
. In order to track the progress of cost reduction implementation efforts, the Parties agree to conduct executive reviews [*****] beginning [*****] and on or about [*****] thereafter. These reviews shall track progress of items including, but not limited to, total number of cost reduction ideas, total number of implemented ideas, and total savings captured by both Parties to-date.
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3.
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Nonrecurring Costs
. Nonrecurring costs required to implement cost reduction ideas, as set forth in the applicable Cost Reduction Project Agreement, shall be shared by both Parties as outlined below.
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4.
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Recurring Savings
. The amount of cost savings realized from completed cost reduction projects shall be as set forth in the applicable Cost Reduction Project Agreement. Any such cost savings shall be applied on a case-by-case basis [*****] in accordance with the terms of the applicable Cost Reduction Project Agreement. In general, Boeing’s portion of the recurring adjustment as agreed to between the Parties in the applicable Cost Reduction Project Agreement shall be applied to the [*****] between the Parties [*****] to the Parties’ nonrecurring investments.
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1.
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Working Together
. The Parties agree to implement a rate increase of 47 APM on the 737 Program in the most cost effective and efficient manner anticipated in [*****] or as otherwise agreed between the Parties. The Parties recognize that achieving rate increases requires coordination and collaboration across various roles and responsibilities between the Parties. The Parties agree to update Attachment 15 following execution of this Agreement to reflect 47 APM as the maximum production rate for the 737 Program and to reflect any associated model mix constraints. Until such time as the Parties amend SBP Attachment 15 to reflect a new minor model mix constraint associated with 47 APM on the 737 Program, the minor model mix constraints existing prior to such amendment shall continue to apply. For the avoidance of doubt, nothing in this Agreement other than the maximum rate established herein shall affect either Party’s rights or obligations under the Memorandum of Agreement titled “Encompassing a Revision to Special
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2.
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Property, Plant & Equipment
. Spirit shall be responsible to fund all Property, Plant & Equipment costs (PP&E) required to implement a production rate of 47 APM on the 737 Program.
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3.
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Rate Tooling
. Boeing shall be responsible to pay for all Tooling, in accordance with the terms of the SBP, that the Parties agree is required to implement a production rate of 47 APM on the 737 Program at the prices mutually agreed to by the Parties.
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4.
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Protection Rates Above 47 AP
. The Parties agree that nothing herein contains any agreement relating to any rate investment or protection rates for production rates above 47 APM. For the avoidance of doubt, nothing in this Agreement shall affect either Party’s rights or obligations under the Memorandum of Agreement titled “Encompassing a Revision to Special Business Provisions MS-65530-0016, Attachment 15, Maximum Production Rate and Model Mix Constraint Matrix between the Parties” dated November 9, 2007.
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Article 5.
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ORDER OF PRECEDENCE
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Article 6.
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COMPLIANCE WITH LAINIS
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Article 7.
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ENTIRE AGREEMENT
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Article 8.
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EFFECTIVE DATE
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SPIRIT AEROSYSTEMS, INC.
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THE BOEING COMPANY
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BY:
/s/ Jim D. Reed
TYPED NAME:
Jim D. Reed
TITLE:
VP Contracts, Pricing & Estimating
DATE:
April 8, 2014
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BY:
/s/ Yvonne Tu
TYPED NAME:
Yvonne Tu
TITLE:
Procurement Agent
DATE:
April 8, 2014
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/s/ Larry A. Lawson
|
|
Larry A. Lawson
|
|
President and Chief Executive Officer
|
|
/s/ Sanjay Kapoor
|
|
Sanjay Kapoor
|
|
Senior Vice President and Chief Financial Officer
|
|
/s/ Larry A. Lawson
|
|
Larry A. Lawson
|
|
President and Chief Executive Officer
|
|
/s/ Sanjay Kapoor
|
|
Sanjay Kapoor
|
|
Senior Vice President and Chief Financial Officer
|