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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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Emerging Growth Company
o
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Page
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|
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For the Three
Months Ended
|
|
For the Six
Months Ended |
||||||||||||
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June 29,
2017 |
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June 30,
2016 |
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June 29,
2017 |
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June 30,
2016 |
||||||||
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($ in millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
1,826.1
|
|
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$
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1,829.9
|
|
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$
|
3,520.2
|
|
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$
|
3,511.5
|
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Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
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1,847.0
|
|
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1,672.0
|
|
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3,259.8
|
|
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3,031.0
|
|
||||
Selling, general and administrative
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46.1
|
|
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70.2
|
|
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98.0
|
|
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120.2
|
|
||||
Impact of severe weather event
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9.1
|
|
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—
|
|
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19.9
|
|
|
—
|
|
||||
Research and development
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6.7
|
|
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4.4
|
|
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11.7
|
|
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10.5
|
|
||||
Total operating costs and expenses
|
1,908.9
|
|
|
1,746.6
|
|
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3,389.4
|
|
|
3,161.7
|
|
||||
Operating (loss) income
|
(82.8
|
)
|
|
83.3
|
|
|
130.8
|
|
|
349.8
|
|
||||
Interest expense and financing fee amortization
|
(10.2
|
)
|
|
(23.9
|
)
|
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(19.7
|
)
|
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(35.3
|
)
|
||||
Other income (expense), net
|
1.2
|
|
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(6.2
|
)
|
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2.7
|
|
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(8.4
|
)
|
||||
Income before income taxes and equity in net income of affiliate
|
(91.8
|
)
|
|
53.2
|
|
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113.8
|
|
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306.1
|
|
||||
Income tax benefit (provision)
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35.0
|
|
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(8.6
|
)
|
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(29.0
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)
|
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(90.5
|
)
|
||||
Income before equity in net income of affiliate
|
(56.8
|
)
|
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44.6
|
|
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84.8
|
|
|
215.6
|
|
||||
Equity in net income of affiliate
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
0.8
|
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||||
Net (loss) income
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$
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(56.8
|
)
|
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$
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44.8
|
|
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$
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84.9
|
|
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$
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216.4
|
|
(Loss) earnings per share
|
|
|
|
|
|
|
|
|
|
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||||
Basic
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$
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(0.48
|
)
|
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$
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0.35
|
|
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$
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0.71
|
|
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$
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1.66
|
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Diluted
|
$
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(0.48
|
)
|
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$
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0.35
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|
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$
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0.71
|
|
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$
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1.65
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Dividends declared per common share
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$
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0.10
|
|
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$
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—
|
|
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$
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0.20
|
|
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$
|
—
|
|
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For the Three
Months Ended
|
|
For the Six
Months Ended |
||||||||||||
|
June 29,
2017 |
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June 30,
2016 |
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June 29,
2017 |
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June 30,
2016 |
||||||||
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($ in millions)
|
||||||||||||||
Net income
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$
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(56.8
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)
|
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$
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44.8
|
|
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$
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84.9
|
|
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$
|
216.4
|
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Changes in other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension, SERP, and Retiree medical adjustments, net of tax effect of $0.8 and ($0.2) for the three months ended, respectively, and $1.0 and ($0.4) for the six months ended, respectively
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(0.5
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)
|
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0.2
|
|
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(0.9
|
)
|
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1.0
|
|
||||
Unrealized foreign exchange loss on intercompany loan, net of tax effect of ($0.4) and $0.8 for three months ended, respectively, and ($0.6) and $1.1 for the six months ended, respectively
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1.6
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|
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(3.2
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)
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2.6
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|
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(4.4
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)
|
||||
Foreign currency translation adjustments
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14.7
|
|
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(23.4
|
)
|
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18.1
|
|
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(31.0
|
)
|
||||
Total other comprehensive income (loss)
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15.8
|
|
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(26.4
|
)
|
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19.8
|
|
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(34.4
|
)
|
||||
Total comprehensive income
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$
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(41.0
|
)
|
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$
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18.4
|
|
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$
|
104.7
|
|
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$
|
182.0
|
|
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June 29,
2017 |
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December 31,
2016 |
||||
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($ in millions)
|
||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
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$
|
696.9
|
|
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$
|
697.7
|
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Restricted cash
|
4.4
|
|
|
—
|
|
||
Accounts receivable, net
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824.3
|
|
|
660.5
|
|
||
Inventory, net
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1,325.7
|
|
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1,515.3
|
|
||
Other current assets
|
106.5
|
|
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36.9
|
|
||
Total current assets
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2,957.8
|
|
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2,910.4
|
|
||
Property, plant and equipment, net
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1,991.4
|
|
|
1,991.6
|
|
||
Pension assets
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300.1
|
|
|
282.3
|
|
||
Other assets
|
213.2
|
|
|
220.9
|
|
||
Total assets
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$
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5,462.5
|
|
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$
|
5,405.2
|
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Current liabilities
|
|
|
|
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|
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Accounts payable
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$
|
726.0
|
|
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$
|
579.7
|
|
Accrued expenses
|
246.5
|
|
|
216.2
|
|
||
Profit sharing
|
41.3
|
|
|
101.4
|
|
||
Current portion of long-term debt
|
26.6
|
|
|
26.7
|
|
||
Advance payments, short-term
|
153.9
|
|
|
199.3
|
|
||
Deferred revenue and other deferred credits, short-term
|
71.7
|
|
|
312.1
|
|
||
Deferred grant income liability - current
|
20.3
|
|
|
14.4
|
|
||
Other current liabilities
|
551.4
|
|
|
94.4
|
|
||
Total current liabilities
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1,837.7
|
|
|
1,544.2
|
|
||
Long-term debt
|
1,060.6
|
|
|
1,060.0
|
|
||
Advance payments, long-term
|
280.8
|
|
|
342.0
|
|
||
Pension/OPEB obligation
|
41.6
|
|
|
43.9
|
|
||
Deferred revenue and other deferred credits
|
114.6
|
|
|
146.8
|
|
||
Deferred grant income liability - non-current
|
49.8
|
|
|
63.4
|
|
||
Other liabilities
|
265.6
|
|
|
276.1
|
|
||
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, 118,346,113 and 121,642,556 shares issued and outstanding, respectively
|
1.2
|
|
|
1.2
|
|
||
Additional paid-in capital
|
1,076.8
|
|
|
1,078.9
|
|
||
Accumulated other comprehensive loss
|
(167.1
|
)
|
|
(186.9
|
)
|
||
Retained earnings
|
2,186.8
|
|
|
2,113.9
|
|
||
Treasury stock, at cost (27,580,982 and 23,936,092 shares, respectively)
|
(1,286.4
|
)
|
|
(1,078.8
|
)
|
||
Total stockholders’ equity
|
1,811.3
|
|
|
1,928.3
|
|
||
Noncontrolling interest
|
0.5
|
|
|
0.5
|
|
||
Total equity
|
1,811.8
|
|
|
1,928.8
|
|
||
Total liabilities and equity
|
$
|
5,462.5
|
|
|
$
|
5,405.2
|
|
|
For the Six Months Ended
|
||||||
|
June 29,
2017 |
|
June 30,
2016 |
||||
|
($ in millions)
|
||||||
Operating activities
|
|
|
|
|
|
||
Net income
|
$
|
84.9
|
|
|
$
|
216.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
||
Depreciation expense
|
105.5
|
|
|
98.9
|
|
||
Amortization expense
|
—
|
|
|
0.1
|
|
||
Amortization of deferred financing fees
|
1.7
|
|
|
14.7
|
|
||
Accretion of customer supply agreement
|
5.1
|
|
|
2.4
|
|
||
Employee stock compensation expense
|
11.0
|
|
|
28.9
|
|
||
Loss from interest rate swap
|
1.5
|
|
|
—
|
|
||
(Gain) loss from foreign currency transactions
|
(3.4
|
)
|
|
11.2
|
|
||
Loss on impairment and disposition of assets
|
6.5
|
|
|
3.1
|
|
||
Deferred taxes
|
3.0
|
|
|
25.4
|
|
||
Pension and other post-retirement benefits, net
|
(21.7
|
)
|
|
0.8
|
|
||
Grant liability amortization
|
(8.8
|
)
|
|
(5.4
|
)
|
||
Equity in net income of affiliate
|
(0.1
|
)
|
|
(0.8
|
)
|
||
Changes in assets and liabilities
|
|
|
|
|
|||
Accounts receivable
|
(156.5
|
)
|
|
(224.1
|
)
|
||
Inventory, net
|
438.9
|
|
|
184.9
|
|
||
Accounts payable and accrued liabilities
|
179.7
|
|
|
39.5
|
|
||
Profit sharing/deferred compensation
|
(60.2
|
)
|
|
(16.1
|
)
|
||
Advance payments
|
(106.6
|
)
|
|
(70.4
|
)
|
||
Income taxes receivable/payable
|
(60.6
|
)
|
|
(29.9
|
)
|
||
Deferred revenue and other deferred credits
|
(271.5
|
)
|
|
28.0
|
|
||
Other
|
185.6
|
|
|
1.2
|
|
||
Net cash provided by operating activities
|
334.0
|
|
|
308.8
|
|
||
Investing activities
|
|
|
|
|
|
||
Purchase of property, plant and equipment
|
(88.1
|
)
|
|
(104.7
|
)
|
||
Proceeds from sale of assets
|
0.2
|
|
|
—
|
|
||
Net cash used in investing activities
|
(87.9
|
)
|
|
(104.7
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Proceeds from issuance of bonds
|
—
|
|
|
299.8
|
|
||
Principal payments of debt
|
(1.8
|
)
|
|
(9.8
|
)
|
||
Payments on term loan
|
(6.3
|
)
|
|
—
|
|
||
Payments on bonds
|
—
|
|
|
(213.6
|
)
|
||
Taxes paid related to net share settlement awards
|
(13.1
|
)
|
|
(14.3
|
)
|
||
Debt issuance and financing costs
|
(0.9
|
)
|
|
(13.7
|
)
|
||
Proceeds from financing under the New Markets Tax Credit Program
|
7.6
|
|
|
—
|
|
||
Purchase of treasury stock
|
(207.6
|
)
|
|
(317.6
|
)
|
||
Change in restricted cash
|
(4.4
|
)
|
|
(86.4
|
)
|
||
Dividends Paid
|
(24.0
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(250.5
|
)
|
|
(355.6
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3.6
|
|
|
(5.3
|
)
|
||
Net decrease in cash and cash equivalents for the period
|
(0.8
|
)
|
|
(156.8
|
)
|
||
Cash and cash equivalents, beginning of period
|
697.7
|
|
|
957.3
|
|
||
Cash and cash equivalents, end of period
|
$
|
696.9
|
|
|
$
|
800.5
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||||||||||
Changes in Estimates
|
|
June 29, 2017
|
|
June 30, 2016
|
|
June 29, 2017
|
|
June 30, 2016
|
||||||||
Favorable (Unfavorable) Cumulative Catch-up Adjustment by Segment
|
|
|
|
|
|
|
|
|
||||||||
Fuselage
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
16.2
|
|
Propulsion
|
|
6.1
|
|
|
(8.8
|
)
|
|
3.8
|
|
|
(0.7
|
)
|
||||
Wing
|
|
17.5
|
|
|
9.8
|
|
|
22.0
|
|
|
19.1
|
|
||||
Total Favorable Cumulative Catch-up Adjustment
|
|
$
|
24.3
|
|
|
$
|
1.0
|
|
|
$
|
29.1
|
|
|
$
|
34.6
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Forward Loss) and Changes in Estimates on Loss Programs by Segment
|
|
|
|
|
|
|
|
|
||||||||
Fuselage
|
|
$
|
(231.7
|
)
|
|
$
|
(134.5
|
)
|
|
$
|
(237.6
|
)
|
|
$
|
(131.4
|
)
|
Propulsion
|
|
(48.0
|
)
|
|
(2.4
|
)
|
|
(48.0
|
)
|
|
6.5
|
|
||||
Wing
|
|
(73.8
|
)
|
|
1.2
|
|
|
(72.0
|
)
|
|
4.2
|
|
||||
Total Forward Loss
|
|
$
|
(353.5
|
)
|
|
$
|
(135.7
|
)
|
|
$
|
(357.6
|
)
|
|
$
|
(120.7
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Total Change in Estimate
|
|
$
|
(329.2
|
)
|
|
$
|
(134.7
|
)
|
|
$
|
(328.5
|
)
|
|
$
|
(86.1
|
)
|
EPS Impact (diluted per share based upon statutory rates)
|
|
$
|
(1.75
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(1.73
|
)
|
|
$
|
(0.41
|
)
|
|
June 29,
2017 |
|
December 31,
2016 |
||||
Trade receivables
|
$
|
813.1
|
|
|
$
|
647.3
|
|
Other
|
12.0
|
|
|
18.4
|
|
||
Less: allowance for doubtful accounts
|
(0.8
|
)
|
|
(5.2
|
)
|
||
Accounts receivable, net
|
$
|
824.3
|
|
|
$
|
660.5
|
|
|
June 29,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
293.9
|
|
|
$
|
281.9
|
|
Work-in-process
|
767.6
|
|
|
790.7
|
|
||
Finished goods
|
28.0
|
|
|
30.9
|
|
||
Product inventory
|
1,089.5
|
|
|
1,103.5
|
|
||
Capitalized pre-production
(1)
|
90.7
|
|
|
103.5
|
|
||
Deferred production
(2)
|
656.1
|
|
|
717.4
|
|
||
Forward loss provision
(3)
|
(510.6
|
)
|
|
(409.1
|
)
|
||
Total inventory, net
|
$
|
1,325.7
|
|
|
$
|
1,515.3
|
|
|
(1)
|
For the period ended June 29, 2017
$76.5
and
$10.1
on the A350 XWB and Rolls-Royce BR725 programs, respectively. For the period ended December 31, 2016, includes
$83.7
and
$15.2
on the A350 XWB and Rolls-Royce BR725 programs, respectively.
|
(2)
|
For the period ended June 29, 2017,
$646.2
and
$122.3
on the A350 XWB and Rolls-Royce BR725 programs, respectively. For the period ended December 31, 2016,
$657.2
and
$114.6
on the A350 XWB and Rolls-Royce BR725 programs, respectively.
|
(3)
|
For the period ended June 29, 2017,
($261.9)
,
($141.2)
, and
($98.6)
on the A350 XWB, Rolls-Royce BR725, and B787 programs, respectively. For the period ended December 31, 2016,
($255.8)
and
($140.8)
on the A350 XWB and Rolls-Royce BR725 programs, respectively. The forward loss charge recorded on the B787 program in the second quarter of 2017 exceeded the program's inventory balance. The excess of the charge over the program's inventory was classified as a contract liability and reported in other current liabilities on the balance sheet in the amount of
$254.2
as of June 29, 2017. Includes a
$2.1
reclassification between Work-in-process and Forward loss provision as of December 31, 2016.
|
Model
|
|
Current Block Deliveries
|
|
Contract Block
Quantity
|
||
A350 XWB
|
|
180
|
|
|
800
|
|
Rolls-Royce BR725
|
|
289
|
|
|
350
|
|
|
June 29,
2017 |
|
December 31,
2016 |
||||
Land
|
$
|
15.5
|
|
|
$
|
14.9
|
|
Buildings (including improvements)
|
663.2
|
|
|
642.5
|
|
||
Machinery and equipment
(1)
|
1,409.1
|
|
|
1,373.9
|
|
||
Tooling
|
992.6
|
|
|
982.4
|
|
||
Capitalized software
(1)
|
262.0
|
|
|
261.9
|
|
||
Construction-in-progress
|
236.4
|
|
|
193.7
|
|
||
Total
|
3,578.8
|
|
|
3,469.3
|
|
||
Less: accumulated depreciation
|
(1,587.4
|
)
|
|
(1,477.7
|
)
|
||
Property, plant and equipment, net
|
$
|
1,991.4
|
|
|
$
|
1,991.6
|
|
|
|
June 29,
2017 |
|
December 31,
2016 |
||||
Intangible assets
|
|
|
|
|
|
||
Patents
|
$
|
1.9
|
|
|
$
|
1.9
|
|
Favorable leasehold interests
|
6.3
|
|
|
6.3
|
|
||
Total intangible assets
|
8.2
|
|
|
8.2
|
|
||
Less: Accumulated amortization - patents
|
(1.8
|
)
|
|
(1.8
|
)
|
||
Accumulated amortization - favorable leasehold interest
|
(4.4
|
)
|
|
(4.2
|
)
|
||
Intangible assets, net
|
2.0
|
|
|
2.2
|
|
||
Deferred financing
|
|
|
|
|
|
||
Deferred financing costs
|
39.5
|
|
|
38.5
|
|
||
Less: Accumulated amortization - deferred financing costs
|
(33.0
|
)
|
|
(32.2
|
)
|
||
Deferred financing costs, net
|
6.5
|
|
|
6.3
|
|
||
Other
|
|
|
|
|
|
||
Goodwill - Europe
|
2.4
|
|
|
2.3
|
|
||
Equity in net assets of affiliates
|
4.5
|
|
|
4.4
|
|
||
Supply agreements
(1)
|
11.1
|
|
|
17.0
|
|
||
Restricted cash - collateral requirements
|
19.9
|
|
|
19.9
|
|
||
Deferred Tax Asset - non-current
|
126.6
|
|
|
128.8
|
|
||
Other
|
40.2
|
|
|
40.0
|
|
||
Total
|
$
|
213.2
|
|
|
$
|
220.9
|
|
|
(1)
|
Under two agreements, certain payments accounted for as consideration paid by the Company to a customer and a supplier are being amortized as reductions to net revenues.
|
|
June 29,
2017 |
|
December 31,
2016 |
||||
B787
|
$
|
522.7
|
|
|
$
|
834.8
|
|
Boeing - All other programs
|
8.9
|
|
|
18.6
|
|
||
A350 XWB
|
57.0
|
|
|
116.7
|
|
||
Airbus — All other programs
|
1.8
|
|
|
2.2
|
|
||
Other
|
30.6
|
|
|
27.9
|
|
||
Total advance payments and deferred revenue/credits
|
$
|
621.0
|
|
|
$
|
1,000.2
|
|
Balance, December 31, 2016
|
$
|
77.8
|
|
Grant liability amortized
|
(8.8
|
)
|
|
Exchange rate
|
1.1
|
|
|
Total deferred grant income liability, June 29, 2017
|
$
|
70.1
|
|
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.
|
|
|
June 29, 2017
|
|
December 31, 2016
|
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
||||||||
Senior unsecured term loan A (including current portion)
|
$
|
479.2
|
|
|
$
|
473.2
|
|
(2)
|
$
|
485.2
|
|
|
$
|
484.8
|
|
(2)
|
Senior unsecured notes due 2022
|
294.3
|
|
|
306.5
|
|
(1)
|
293.8
|
|
|
307.0
|
|
(1)
|
||||
Senior unsecured notes due 2026
|
297.1
|
|
|
300.6
|
|
(1)
|
296.9
|
|
|
292.4
|
|
(1)
|
||||
Malaysian loan
|
—
|
|
|
—
|
|
(2)
|
1.0
|
|
|
0.9
|
|
(2)
|
||||
Total
|
$
|
1,070.6
|
|
|
$
|
1,080.3
|
|
|
$
|
1,076.9
|
|
|
$
|
1,085.1
|
|
|
|
(1)
|
Level 1 Fair Value hierarchy
|
(2)
|
Level 2 Fair Value hierarchy
|
|
June 29, 2017
|
|
December 31, 2016
|
||||||||||
|
Current
|
Noncurrent
|
|
Current
|
Noncurrent
|
||||||||
Senior unsecured term loan A
|
$
|
24.9
|
|
$
|
454.3
|
|
|
$
|
24.9
|
|
$
|
460.3
|
|
Senior notes due 2022
|
—
|
|
294.3
|
|
|
—
|
|
293.8
|
|
||||
Senior notes due 2026
|
—
|
|
297.1
|
|
|
—
|
|
296.9
|
|
||||
Malaysian term loan
|
—
|
|
—
|
|
|
1.0
|
|
—
|
|
||||
Present value of capital lease obligations
|
1.7
|
|
14.9
|
|
|
0.8
|
|
9.0
|
|
||||
Total
|
$
|
26.6
|
|
$
|
1,060.6
|
|
|
$
|
26.7
|
|
$
|
1,060.0
|
|
|
|
Defined Benefit Plans
|
||||||||||||||
|
|
For the Three
Months Ended
|
|
For the Six
Months Ended
|
||||||||||||
Components of Net Periodic Pension Expense/(Income)
|
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
||||||||
Service cost
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
Interest cost
|
|
9.3
|
|
|
11.4
|
|
|
18.9
|
|
|
23.1
|
|
||||
Expected return on plan assets
|
|
(18.1
|
)
|
|
(19.8
|
)
|
|
(36.4
|
)
|
|
(39.3
|
)
|
||||
Amortization of net loss
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
2.4
|
|
||||
Special termination benefits
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.9
|
|
||||
Net periodic pension (income) expense
|
|
$
|
(8.5
|
)
|
|
$
|
(6.4
|
)
|
|
$
|
(17.0
|
)
|
|
$
|
(2.3
|
)
|
|
(1)
|
Special termination benefits related to early retirement incentives offered as part of a voluntary retirement plan in the first quarter of 2016.
|
|
|
Other Benefits
|
||||||||||||||
|
|
For the Three
Months Ended
|
|
For the Six
Months Ended
|
||||||||||||
Components of Other Benefit Expense
|
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
||||||||
Service cost
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
0.9
|
|
Interest cost
|
|
0.3
|
|
|
0.5
|
|
|
0.6
|
|
|
1.1
|
|
||||
Amortization of prior service cost
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
||||
Amortization of net gain
|
|
(0.5
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
||||
Special termination benefits
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
||||
Net periodic other benefit (income) expense
|
|
$
|
(0.2
|
)
|
|
$
|
0.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
4.6
|
|
|
(1)
|
Special termination benefits related to early retirement incentives offered as part of a voluntary retirement plan in the first quarter of 2016.
|
|
For the Three Months Ended
|
||||||||||||||||||||
|
June 29, 2017
|
|
June 30, 2016
|
||||||||||||||||||
|
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income available to common stockholders
|
$
|
(56.8
|
)
|
|
118.2
|
|
|
$
|
(0.48
|
)
|
|
$
|
44.8
|
|
|
128.6
|
|
|
$
|
0.35
|
|
Income allocated to participating securities
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
0.1
|
|
|
|
|
||||
Net (loss) income
|
$
|
(56.8
|
)
|
|
|
|
|
|
|
|
$
|
44.8
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted potential common shares
|
|
|
|
—
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
||||
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income
|
$
|
(56.8
|
)
|
|
118.2
|
|
|
$
|
(0.48
|
)
|
|
$
|
44.8
|
|
|
129.3
|
|
|
$
|
0.35
|
|
|
For the Six Months Ended
|
||||||||||||||||||||
|
June 29, 2017
|
|
June 30, 2016
|
||||||||||||||||||
|
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to common shareholders
|
$
|
84.8
|
|
|
118.8
|
|
|
$
|
0.71
|
|
|
$
|
216.2
|
|
|
130.1
|
|
|
$
|
1.66
|
|
Income allocated to participating securities
|
0.1
|
|
|
0.1
|
|
|
|
|
|
0.2
|
|
|
0.1
|
|
|
|
|
||||
Net income
|
$
|
84.9
|
|
|
|
|
|
|
|
|
$
|
216.4
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted potential common shares
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
||||
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
84.9
|
|
|
119.8
|
|
|
$
|
0.71
|
|
|
$
|
216.4
|
|
|
130.9
|
|
|
$
|
1.65
|
|
|
As of
|
|
As of
|
||||
|
June 29, 2017
|
|
December 31, 2016
|
||||
Pension
|
$
|
(98.5
|
)
|
|
$
|
(98.5
|
)
|
SERP/Retiree medical
|
19.6
|
|
|
20.5
|
|
||
Foreign currency impact on long term intercompany loan
|
(16.5
|
)
|
|
(19.1
|
)
|
||
Currency translation adjustment
|
(71.7
|
)
|
|
(89.8
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(167.1
|
)
|
|
$
|
(186.9
|
)
|
Balance, December 31, 2016
|
$
|
163.7
|
|
Charges to costs and expenses
|
3.8
|
|
|
Payouts
|
(3.0
|
)
|
|
Exchange rate
|
0.6
|
|
|
Balance, June 29, 2017
|
$
|
165.1
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||||||||||
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
||||||||
Kansas Development Finance Authority bond
|
$
|
0.7
|
|
|
$
|
0.8
|
|
|
$
|
1.7
|
|
|
$
|
1.9
|
|
Rental and miscellaneous income
|
(1.5
|
)
|
|
—
|
|
|
(1.4
|
)
|
|
0.1
|
|
||||
Interest income
|
1.5
|
|
|
0.9
|
|
|
2.5
|
|
|
1.7
|
|
||||
Foreign currency losses
|
0.5
|
|
|
(7.9
|
)
|
|
(0.1
|
)
|
|
(12.1
|
)
|
||||
Total
|
$
|
1.2
|
|
|
$
|
(6.2
|
)
|
|
$
|
2.7
|
|
|
$
|
(8.4
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
||||||||
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuselage Systems
(1)
|
$
|
938.2
|
|
|
$
|
923.6
|
|
|
$
|
1,855.1
|
|
|
$
|
1,799.4
|
|
Propulsion Systems
|
436.5
|
|
|
481.7
|
|
|
842.8
|
|
|
920.3
|
|
||||
Wing Systems
|
450.5
|
|
|
424.2
|
|
|
819.5
|
|
|
784.7
|
|
||||
All Other
(1)
|
0.9
|
|
|
0.4
|
|
|
2.8
|
|
|
7.1
|
|
||||
|
$
|
1,826.1
|
|
|
$
|
1,829.9
|
|
|
$
|
3,520.2
|
|
|
$
|
3,511.5
|
|
Segment Operating (Loss) Income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuselage Systems
(1) (2)
|
$
|
(80.2
|
)
|
|
$
|
21.0
|
|
|
$
|
70.2
|
|
|
$
|
198.7
|
|
Propulsion Systems
(2)
|
41.0
|
|
|
74.3
|
|
|
114.7
|
|
|
173.4
|
|
||||
Wing Systems
(2)
|
30.8
|
|
|
64.8
|
|
|
89.3
|
|
|
123.6
|
|
||||
All Other
(1)
|
(0.6
|
)
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
1.1
|
|
||||
|
(9.0
|
)
|
|
159.7
|
|
|
273.5
|
|
|
496.8
|
|
||||
Corporate SG&A
|
(46.1
|
)
|
|
(70.2
|
)
|
|
(98.0
|
)
|
|
(120.2
|
)
|
||||
Impact of severe weather event
|
(9.1
|
)
|
|
—
|
|
|
(19.9
|
)
|
|
—
|
|
||||
Research and development
|
(6.7
|
)
|
|
(4.4
|
)
|
|
(11.7
|
)
|
|
(10.5
|
)
|
||||
Unallocated cost of sales
(3)
|
(11.9
|
)
|
|
(1.8
|
)
|
|
(13.1
|
)
|
|
(16.3
|
)
|
||||
Total Operating (Loss) Income
|
$
|
(82.8
|
)
|
|
$
|
83.3
|
|
|
$
|
130.8
|
|
|
$
|
349.8
|
|
|
(1)
|
Includes a reclassification of
$8.2
of revenues and
$1.7
of operating income from the Other segment to the Fuselage Systems segment for the three months ended
June 30, 2016
and
$10.2
of revenues and
$2.1
of operating income from the Other segment to the Fuselage Systems segment for the six months ended
June 30, 2016
.
|
(2)
|
Includes forward losses, changes in estimates on loss programs, and cumulative catch-up adjustments. These changes in estimates are further detailed in Note 3, Changes in Estimates.
|
(3)
|
Includes
$0.5
and
$2.0
of warranty expense for the three months ended
June 29, 2017
and
June 30, 2016
, respectively and
$1.7
and
$4.3
for the six months ended June 29, 2017 and June 30, 2016, respectively. Also includes a charge for excess purchases and purchase commitments of
$11.5
for the three and six months ended June 29, 2017 and
$11.8
related to early retirement incentives for the six months ended
June 30, 2016
.
|
(i)
|
Holdings, as the parent company and parent guarantor to the A&R Credit Agreement, as further detailed in Note 12, Debt;
|
(ii)
|
Spirit, as the subsidiary issuer of the 2022 Notes and the 2026 Notes;
|
(iii)
|
The Company’s subsidiaries (“Non-Guarantor Subsidiaries”) on a combined basis;
|
(iv)
|
Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Holdings and the Non-Guarantor Subsidiaries, (b) eliminate the investments in the Company’s subsidiaries, and (c) record consolidating entries; and
|
(v)
|
Holdings and its subsidiaries on a consolidated basis.
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
1,608.0
|
|
|
$
|
380.5
|
|
|
$
|
(162.4
|
)
|
|
$
|
1,826.1
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
1,678.9
|
|
|
330.5
|
|
|
(162.4
|
)
|
|
1,847.0
|
|
|||||
Selling, general and administrative
|
3.3
|
|
|
39.2
|
|
|
3.6
|
|
|
—
|
|
|
46.1
|
|
|||||
Impact of severe weather event
|
—
|
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|||||
Research and development
|
—
|
|
|
6.5
|
|
|
0.2
|
|
|
—
|
|
|
6.7
|
|
|||||
Total operating costs and expenses
|
3.3
|
|
|
1,733.7
|
|
|
334.3
|
|
|
(162.4
|
)
|
|
1,908.9
|
|
|||||
Operating (loss) income
|
(3.3
|
)
|
|
(125.7
|
)
|
|
46.2
|
|
|
—
|
|
|
(82.8
|
)
|
|||||
Interest expense and financing fee amortization
|
—
|
|
|
(10.1
|
)
|
|
(1.6
|
)
|
|
1.5
|
|
|
(10.2
|
)
|
|||||
Other income (expense), net
|
—
|
|
|
2.2
|
|
|
0.5
|
|
|
(1.5
|
)
|
|
1.2
|
|
|||||
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
|
(3.3
|
)
|
|
(133.6
|
)
|
|
45.1
|
|
|
—
|
|
|
(91.8
|
)
|
|||||
Income tax benefit (provision)
|
1.4
|
|
|
43.2
|
|
|
(9.6
|
)
|
|
—
|
|
|
35.0
|
|
|||||
(Loss) income before equity in net income of affiliate and subsidiaries
|
(1.9
|
)
|
|
(90.4
|
)
|
|
35.5
|
|
|
—
|
|
|
(56.8
|
)
|
|||||
Equity in net income of affiliate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity in net income of subsidiaries
|
(54.9
|
)
|
|
35.5
|
|
|
—
|
|
|
19.4
|
|
|
—
|
|
|||||
Net income
|
(56.8
|
)
|
|
(54.9
|
)
|
|
35.5
|
|
|
19.4
|
|
|
(56.8
|
)
|
|||||
Other comprehensive income (loss)
|
15.8
|
|
|
15.8
|
|
|
16.2
|
|
|
(32.0
|
)
|
|
15.8
|
|
|||||
Comprehensive income (loss)
|
$
|
(41.0
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
51.7
|
|
|
$
|
(12.6
|
)
|
|
$
|
(41.0
|
)
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
1,651.9
|
|
|
$
|
364.9
|
|
|
$
|
(186.9
|
)
|
|
$
|
1,829.9
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
1,533.8
|
|
|
325.1
|
|
|
(186.9
|
)
|
|
1,672.0
|
|
|||||
Selling, general and administrative
|
2.4
|
|
|
63.5
|
|
|
4.3
|
|
|
—
|
|
|
70.2
|
|
|||||
Research and development
|
—
|
|
|
4.4
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|||||
Total operating costs and expenses
|
2.4
|
|
|
1,601.7
|
|
|
329.4
|
|
|
(186.9
|
)
|
|
1,746.6
|
|
|||||
Operating (loss) income
|
(2.4
|
)
|
|
50.2
|
|
|
35.5
|
|
|
—
|
|
|
83.3
|
|
|||||
Interest expense and financing fee amortization
|
—
|
|
|
(23.7
|
)
|
|
(2.1
|
)
|
|
1.9
|
|
|
(23.9
|
)
|
|||||
Other income (expense), net
|
—
|
|
|
3.6
|
|
|
(7.9
|
)
|
|
(1.9
|
)
|
|
(6.2
|
)
|
|||||
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
|
(2.4
|
)
|
|
30.1
|
|
|
25.5
|
|
|
—
|
|
|
53.2
|
|
|||||
Income tax benefit (provision)
|
0.7
|
|
|
(5.7
|
)
|
|
(3.6
|
)
|
|
—
|
|
|
(8.6
|
)
|
|||||
(Loss) income before equity in net income of affiliate and subsidiaries
|
(1.7
|
)
|
|
24.4
|
|
|
21.9
|
|
|
—
|
|
|
44.6
|
|
|||||
Equity in net income of affiliate
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
0.2
|
|
|||||
Equity in net income of subsidiaries
|
46.3
|
|
|
21.9
|
|
|
—
|
|
|
(68.2
|
)
|
|
—
|
|
|||||
Net income
|
44.8
|
|
|
46.3
|
|
|
22.1
|
|
|
(68.4
|
)
|
|
44.8
|
|
|||||
Other comprehensive (loss) income
|
(26.4
|
)
|
|
(26.4
|
)
|
|
(26.8
|
)
|
|
53.2
|
|
|
(26.4
|
)
|
|||||
Comprehensive income (loss)
|
$
|
18.4
|
|
|
$
|
19.9
|
|
|
$
|
(4.7
|
)
|
|
$
|
(15.2
|
)
|
|
$
|
18.4
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
3,128.1
|
|
|
$
|
713.6
|
|
|
$
|
(321.5
|
)
|
|
$
|
3,520.2
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
2,951.8
|
|
|
629.5
|
|
|
(321.5
|
)
|
|
3,259.8
|
|
|||||
Selling, general and administrative
|
4.9
|
|
|
86.0
|
|
|
7.1
|
|
|
—
|
|
|
98.0
|
|
|||||
Impact of severe weather event
|
—
|
|
|
19.9
|
|
|
—
|
|
|
—
|
|
|
19.9
|
|
|||||
Research and development
|
—
|
|
|
10.6
|
|
|
1.1
|
|
|
—
|
|
|
11.7
|
|
|||||
Total operating costs and expenses
|
4.9
|
|
|
3,068.3
|
|
|
637.7
|
|
|
(321.5
|
)
|
|
3,389.4
|
|
|||||
Operating (loss) income
|
(4.9
|
)
|
|
59.8
|
|
|
75.9
|
|
|
—
|
|
|
130.8
|
|
|||||
Interest expense and financing fee amortization
|
—
|
|
|
(19.6
|
)
|
|
(3.2
|
)
|
|
3.1
|
|
|
(19.7
|
)
|
|||||
Other income (expense), net
|
—
|
|
|
5.8
|
|
|
—
|
|
|
(3.1
|
)
|
|
2.7
|
|
|||||
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
|
(4.9
|
)
|
|
46.0
|
|
|
72.7
|
|
|
—
|
|
|
113.8
|
|
|||||
Income tax benefit (provision)
|
1.9
|
|
|
(17.2
|
)
|
|
(13.7
|
)
|
|
—
|
|
|
(29.0
|
)
|
|||||
(Loss) income before equity in net income of affiliate and subsidiaries
|
(3.0
|
)
|
|
28.8
|
|
|
59.0
|
|
|
—
|
|
|
84.8
|
|
|||||
Equity in net income of affiliate
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||||
Equity in net income of subsidiaries
|
87.8
|
|
|
59.0
|
|
|
—
|
|
|
(146.8
|
)
|
|
—
|
|
|||||
Net income
|
84.9
|
|
|
87.8
|
|
|
59.1
|
|
|
(146.9
|
)
|
|
84.9
|
|
|||||
Other comprehensive (loss) income
|
19.8
|
|
|
19.8
|
|
|
20.7
|
|
|
(40.5
|
)
|
|
19.8
|
|
|||||
Comprehensive income (loss)
|
$
|
104.7
|
|
|
$
|
107.6
|
|
|
$
|
79.8
|
|
|
$
|
(187.4
|
)
|
|
$
|
104.7
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
3,162.4
|
|
|
$
|
675.8
|
|
|
$
|
(326.7
|
)
|
|
$
|
3,511.5
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
—
|
|
|
2,748.2
|
|
|
609.5
|
|
|
(326.7
|
)
|
|
3,031.0
|
|
|||||
Selling, general and administrative
|
3.9
|
|
|
107.7
|
|
|
8.6
|
|
|
—
|
|
|
120.2
|
|
|||||
Research and development
|
—
|
|
|
9.4
|
|
|
1.1
|
|
|
—
|
|
|
10.5
|
|
|||||
Total operating costs and expenses
|
3.9
|
|
|
2,865.3
|
|
|
619.2
|
|
|
(326.7
|
)
|
|
3,161.7
|
|
|||||
Operating (loss) income
|
(3.9
|
)
|
|
297.1
|
|
|
56.6
|
|
|
—
|
|
|
349.8
|
|
|||||
Interest expense and financing fee amortization
|
—
|
|
|
(35.1
|
)
|
|
(4.1
|
)
|
|
3.9
|
|
|
(35.3
|
)
|
|||||
Other income (expense), net
|
—
|
|
|
7.5
|
|
|
(12.0
|
)
|
|
(3.9
|
)
|
|
(8.4
|
)
|
|||||
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
|
(3.9
|
)
|
|
269.5
|
|
|
40.5
|
|
|
—
|
|
|
306.1
|
|
|||||
Income tax benefit (provision)
|
1.2
|
|
|
(84.3
|
)
|
|
(7.4
|
)
|
|
—
|
|
|
(90.5
|
)
|
|||||
(Loss) income before equity in net income of affiliate and subsidiaries
|
(2.7
|
)
|
|
185.2
|
|
|
33.1
|
|
|
—
|
|
|
215.6
|
|
|||||
Equity in net income of affiliate
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
(0.8
|
)
|
|
0.8
|
|
|||||
Equity in net income of subsidiaries
|
218.3
|
|
|
33.1
|
|
|
—
|
|
|
(251.4
|
)
|
|
—
|
|
|||||
Net income
|
216.4
|
|
|
218.3
|
|
|
33.9
|
|
|
(252.2
|
)
|
|
216.4
|
|
|||||
Other comprehensive (loss) income
|
(34.4
|
)
|
|
(34.4
|
)
|
|
(35.6
|
)
|
|
70.0
|
|
|
(34.4
|
)
|
|||||
Comprehensive income (loss)
|
$
|
182.0
|
|
|
$
|
183.9
|
|
|
$
|
(1.7
|
)
|
|
$
|
(182.2
|
)
|
|
$
|
182.0
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
649.5
|
|
|
$
|
47.4
|
|
|
$
|
—
|
|
|
$
|
696.9
|
|
Restricted cash
|
—
|
|
|
4.4
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|||||
Accounts receivable, net
|
—
|
|
|
819.8
|
|
|
341.2
|
|
|
(336.7
|
)
|
|
824.3
|
|
|||||
Inventory, net
|
—
|
|
|
903.0
|
|
|
422.7
|
|
|
—
|
|
|
1,325.7
|
|
|||||
Other current assets
|
—
|
|
|
99.9
|
|
|
6.6
|
|
|
—
|
|
|
106.5
|
|
|||||
Total current assets
|
—
|
|
|
2,476.6
|
|
|
817.9
|
|
|
(336.7
|
)
|
|
2,957.8
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,468.7
|
|
|
522.7
|
|
|
—
|
|
|
1,991.4
|
|
|||||
Pension assets, net
|
—
|
|
|
285.2
|
|
|
14.9
|
|
|
—
|
|
|
300.1
|
|
|||||
Investment in subsidiary
|
1,811.8
|
|
|
644.6
|
|
|
—
|
|
|
(2,456.4
|
)
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
389.1
|
|
|
122.7
|
|
|
(298.6
|
)
|
|
213.2
|
|
|||||
Total assets
|
$
|
1,811.8
|
|
|
$
|
5,264.2
|
|
|
$
|
1,478.2
|
|
|
$
|
(3,091.7
|
)
|
|
$
|
5,462.5
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
—
|
|
|
$
|
648.1
|
|
|
$
|
414.6
|
|
|
$
|
(336.7
|
)
|
|
$
|
726.0
|
|
Accrued expenses
|
—
|
|
|
211.3
|
|
|
35.2
|
|
|
—
|
|
|
246.5
|
|
|||||
Profit sharing
|
—
|
|
|
39.6
|
|
|
1.7
|
|
|
—
|
|
|
41.3
|
|
|||||
Current portion of long-term debt
|
—
|
|
|
25.8
|
|
|
0.8
|
|
|
—
|
|
|
26.6
|
|
|||||
Advance payments, short-term
|
—
|
|
|
153.9
|
|
|
—
|
|
|
—
|
|
|
153.9
|
|
|||||
Deferred revenue and other deferred credits, short-term
|
—
|
|
|
70.4
|
|
|
1.3
|
|
|
—
|
|
|
71.7
|
|
|||||
Deferred grant income liability - current
|
—
|
|
|
—
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
|||||
Other current liabilities
|
—
|
|
|
539.4
|
|
|
12.0
|
|
|
—
|
|
|
551.4
|
|
|||||
Total current liabilities
|
—
|
|
|
1,688.5
|
|
|
485.9
|
|
|
(336.7
|
)
|
|
1,837.7
|
|
|||||
Long-term debt
|
—
|
|
|
1,051.5
|
|
|
207.1
|
|
|
(198.0
|
)
|
|
1,060.6
|
|
|||||
Advance payments, long-term
|
—
|
|
|
280.8
|
|
|
—
|
|
|
—
|
|
|
280.8
|
|
|||||
Pension/OPEB obligation
|
—
|
|
|
41.6
|
|
|
—
|
|
|
—
|
|
|
41.6
|
|
|||||
Deferred grant income liability - non-current
|
—
|
|
|
—
|
|
|
49.8
|
|
|
—
|
|
|
49.8
|
|
|||||
Deferred revenue and other deferred credits
|
—
|
|
|
111.6
|
|
|
3.0
|
|
|
—
|
|
|
114.6
|
|
|||||
Other liabilities
|
—
|
|
|
358.5
|
|
|
7.7
|
|
|
(100.6
|
)
|
|
265.6
|
|
|||||
Total equity
|
1,811.8
|
|
|
1,731.7
|
|
|
724.7
|
|
|
(2,456.4
|
)
|
|
1,811.8
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,811.8
|
|
|
$
|
5,264.2
|
|
|
$
|
1,478.2
|
|
|
$
|
(3,091.7
|
)
|
|
$
|
5,462.5
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
680.1
|
|
|
$
|
17.6
|
|
|
$
|
—
|
|
|
$
|
697.7
|
|
Accounts receivable, net
|
—
|
|
|
785.0
|
|
|
249.4
|
|
|
(373.9
|
)
|
|
660.5
|
|
|||||
Inventory, net
|
—
|
|
|
1,058.8
|
|
|
456.5
|
|
|
—
|
|
|
1,515.3
|
|
|||||
Other current assets
|
—
|
|
|
29.0
|
|
|
7.9
|
|
|
—
|
|
|
36.9
|
|
|||||
Total current assets
|
—
|
|
|
2,552.9
|
|
|
731.4
|
|
|
(373.9
|
)
|
|
2,910.4
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,462.3
|
|
|
529.3
|
|
|
—
|
|
|
1,991.6
|
|
|||||
Pension assets, net
|
—
|
|
|
268.1
|
|
|
14.2
|
|
|
—
|
|
|
282.3
|
|
|||||
Investment in subsidiary
|
1,928.8
|
|
|
544.4
|
|
|
—
|
|
|
(2,473.2
|
)
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
398.9
|
|
|
101.4
|
|
|
(279.4
|
)
|
|
220.9
|
|
|||||
Total assets
|
$
|
1,928.8
|
|
|
$
|
5,226.6
|
|
|
$
|
1,376.3
|
|
|
$
|
(3,126.5
|
)
|
|
$
|
5,405.2
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
—
|
|
|
$
|
527.0
|
|
|
$
|
426.6
|
|
|
$
|
(373.9
|
)
|
|
$
|
579.7
|
|
Accrued expenses
|
—
|
|
|
192.8
|
|
|
23.4
|
|
|
—
|
|
|
216.2
|
|
|||||
Profit sharing
|
—
|
|
|
97.2
|
|
|
4.2
|
|
|
—
|
|
|
101.4
|
|
|||||
Current portion of long-term debt
|
—
|
|
|
25.1
|
|
|
1.6
|
|
|
—
|
|
|
26.7
|
|
|||||
Advance payments, short-term
|
—
|
|
|
199.3
|
|
|
—
|
|
|
—
|
|
|
199.3
|
|
|||||
Deferred revenue and other deferred credits, short-term
|
—
|
|
|
310.8
|
|
|
1.3
|
|
|
—
|
|
|
312.1
|
|
|||||
Deferred grant income liability - current
|
—
|
|
|
—
|
|
|
14.4
|
|
|
—
|
|
|
14.4
|
|
|||||
Other current liabilities
|
—
|
|
|
94.2
|
|
|
0.2
|
|
|
—
|
|
|
94.4
|
|
|||||
Total current liabilities
|
—
|
|
|
1,446.4
|
|
|
471.7
|
|
|
(373.9
|
)
|
|
1,544.2
|
|
|||||
Long-term debt
|
—
|
|
|
1,052.5
|
|
|
206.9
|
|
|
(199.4
|
)
|
|
1,060.0
|
|
|||||
Advance payments, long-term
|
—
|
|
|
342.0
|
|
|
—
|
|
|
—
|
|
|
342.0
|
|
|||||
Pension/OPEB obligation
|
—
|
|
|
43.9
|
|
|
—
|
|
|
—
|
|
|
43.9
|
|
|||||
Deferred grant income liability - non-current
|
—
|
|
|
—
|
|
|
63.4
|
|
|
—
|
|
|
63.4
|
|
|||||
Deferred revenue and other deferred credits
|
—
|
|
|
143.4
|
|
|
3.4
|
|
|
—
|
|
|
146.8
|
|
|||||
Other liabilities
|
—
|
|
|
349.5
|
|
|
6.6
|
|
|
(80.0
|
)
|
|
276.1
|
|
|||||
Total equity
|
1,928.8
|
|
|
1,848.9
|
|
|
624.3
|
|
|
(2,473.2
|
)
|
|
1,928.8
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,928.8
|
|
|
$
|
5,226.6
|
|
|
$
|
1,376.3
|
|
|
$
|
(3,126.5
|
)
|
|
$
|
5,405.2
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
255.7
|
|
|
$
|
78.3
|
|
|
$
|
—
|
|
|
$
|
334.0
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchase of property, plant and equipment
|
—
|
|
|
(76.2
|
)
|
|
(11.9
|
)
|
|
—
|
|
|
(88.1
|
)
|
|||||
Proceeds from sale of assets
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||
Net cash used in investing activities
|
—
|
|
|
(76.0
|
)
|
|
(11.9
|
)
|
|
—
|
|
|
(87.9
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments of debt
|
—
|
|
|
(0.6
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
(1.8
|
)
|
|||||
Payment on term loan
|
—
|
|
|
(6.3
|
)
|
|
|
|
|
—
|
|
|
(6.3
|
)
|
|||||
Proceeds (payments) from intercompany debt
|
—
|
|
|
39.0
|
|
|
(39.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Taxes paid related to net share settlement of awards
|
—
|
|
|
(13.1
|
)
|
|
—
|
|
|
—
|
|
|
(13.1
|
)
|
|||||
Debt issuance and financing costs
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|||||
Proceeds from financing under the New Markets Tax Credit Program
|
—
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
|||||
Proceeds (payments) from subsidiary for purchase of treasury stock
|
207.6
|
|
|
(207.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase of treasury stock
|
(207.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(207.6
|
)
|
|||||
Change in restricted cash
|
—
|
|
|
(4.4
|
)
|
|
—
|
|
|
—
|
|
|
(4.4
|
)
|
|||||
Proceeds (payments) from subsidiary for dividends paid
|
24.0
|
|
|
(24.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Dividends Paid
|
(24.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.0
|
)
|
|||||
Net cash used in financing activities
|
—
|
|
|
(210.3
|
)
|
|
(40.2
|
)
|
|
—
|
|
|
(250.5
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|||||
Net (decrease) increase in cash and cash equivalents for the period
|
—
|
|
|
(30.6
|
)
|
|
29.8
|
|
|
—
|
|
|
(0.8
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
680.1
|
|
|
17.6
|
|
|
—
|
|
|
697.7
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
649.5
|
|
|
$
|
47.4
|
|
|
$
|
—
|
|
|
$
|
696.9
|
|
|
Holdings
|
|
Spirit
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
246.3
|
|
|
$
|
62.5
|
|
|
$
|
—
|
|
|
$
|
308.8
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchase of property, plant and equipment
|
—
|
|
|
(79.2
|
)
|
|
(25.5
|
)
|
|
—
|
|
|
(104.7
|
)
|
|||||
Net cash used in investing activities
|
—
|
|
|
(79.2
|
)
|
|
(25.5
|
)
|
|
—
|
|
|
(104.7
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of bonds
|
—
|
|
|
299.8
|
|
|
—
|
|
|
—
|
|
|
299.8
|
|
|||||
Principal payments of debt
|
—
|
|
|
(8.3
|
)
|
|
(1.5
|
)
|
|
—
|
|
|
(9.8
|
)
|
|||||
Payments on bonds
|
—
|
|
|
(213.6
|
)
|
|
—
|
|
|
—
|
|
|
(213.6
|
)
|
|||||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds (payments) from intercompany debt
|
—
|
|
|
50.5
|
|
|
(50.5
|
)
|
|
—
|
|
|
—
|
|
|||||
Debt issuance and financing costs
|
—
|
|
|
(13.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|||||
Taxes paid related to net share settlement of awards
|
—
|
|
|
(14.3
|
)
|
|
—
|
|
|
—
|
|
|
(14.3
|
)
|
|||||
Proceeds (payments) from subsidiary for purchase of treasury stock
|
317.6
|
|
|
(317.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase of treasury stock
|
(317.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(317.6
|
)
|
|||||
Change in restricted cash
|
—
|
|
|
(86.4
|
)
|
|
—
|
|
|
—
|
|
|
(86.4
|
)
|
|||||
Net cash used in financing activities
|
—
|
|
|
(303.6
|
)
|
|
(52.0
|
)
|
|
—
|
|
|
(355.6
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
(5.3
|
)
|
|||||
Net decrease in cash and cash equivalents for the period
|
—
|
|
|
(136.5
|
)
|
|
(20.3
|
)
|
|
—
|
|
|
(156.8
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
894.2
|
|
|
63.1
|
|
|
—
|
|
|
957.3
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
757.7
|
|
|
$
|
42.8
|
|
|
$
|
—
|
|
|
$
|
800.5
|
|
•
|
The ongoing activities of the VIE, collecting and remitting interest and fees, and NMTC compliance were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIE;
|
•
|
Contractual arrangements obligate the Company to comply with NMTC rules and regulations and provide various other guarantees to the Investment Fund and CDEs;
|
•
|
Chase lacks a material interest in the underlying economics of the project; and
|
•
|
The Company is obligated to absorb losses of the VIE.
|
•
|
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 under our new and maturing commercial, business aircraft and military development programs, and the related recurring production;
|
•
|
our ability to accurately estimate and manage performance, costs and revenue under our contracts, including our ability to achieve certain cost reductions with respect to the B787 program;
|
•
|
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 aircraft demand and build rates of changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia;
|
•
|
customer cancellations or deferrals as a result of global economic uncertainty or otherwise;
|
•
|
the effect of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange rates;
|
•
|
the success and timely execution of key milestones such as the receipt of necessary regulatory approvals and customer adherence to their announced schedules;
|
•
|
our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers;
|
•
|
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 our two major customers, Boeing and Airbus, 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;
|
•
|
our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions;
|
•
|
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;
|
•
|
competition from commercial aerospace OEMs 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;
|
•
|
the effect of potential changes in tax law, such as those outlined in recent proposals on U.S. Tax Reform;
|
•
|
any reduction in our credit ratings;
|
•
|
our dependence on our suppliers, as well as 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 the A&R Credit Agreement may not be adequate for our additional capital needs or for payment of interest on and principal of our indebtedness;
|
•
|
our exposure under our Revolver 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;
|
•
|
our exposure to potential product liability and warranty claims; and
|
•
|
our ability to successfully negotiate and execute with Boeing Definitive Documentation, as defined in the MOU to implement the MOU on or before the Term Date.
|
•
|
Reducing uncertainty on future pricing for aircraft under the B787 and legacy program contracts;
|
•
|
Strengthening our relationship with Boeing and further aligning the parties for mutual success;
|
•
|
Enabling us to spend additional time focusing on operations, growth, and achieving cost reductions without the overhang of the parties' pricing disagreements;
|
•
|
Providing for investments on production rate increases for the B737 program; and
|
•
|
Preserving our ability to meet our long-term cash flow goals.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
|
||||||||
|
($ in millions)
|
|
($ in millions)
|
|
||||||||||||
Net revenues
|
$
|
1,826.1
|
|
|
$
|
1,829.9
|
|
|
$
|
3,520.2
|
|
|
$
|
3,511.5
|
|
|
Cost of sales
|
1,847.0
|
|
|
1,672.0
|
|
|
3,259.8
|
|
|
3,031.0
|
|
|
||||
Gross profit
|
(20.9
|
)
|
|
157.9
|
|
|
260.4
|
|
|
480.5
|
|
|
||||
Selling, general and administrative
|
46.1
|
|
|
70.2
|
|
|
98.0
|
|
|
120.2
|
|
|
||||
Impact of severe weather event
|
9.1
|
|
|
—
|
|
|
19.9
|
|
|
—
|
|
|
||||
Research and development
|
6.7
|
|
|
4.4
|
|
|
11.7
|
|
|
10.5
|
|
|
||||
Operating (loss) income
|
(82.8
|
)
|
|
83.3
|
|
|
130.8
|
|
|
349.8
|
|
|
||||
Interest expense and financing fee amortization
|
(10.2
|
)
|
|
(23.9
|
)
|
|
(19.7
|
)
|
|
(35.3
|
)
|
|
||||
Other income (expense), net
|
1.2
|
|
|
(6.2
|
)
|
|
2.7
|
|
|
(8.4
|
)
|
|
||||
(Loss) income before income taxes and equity in net income of affiliate
|
(91.8
|
)
|
|
53.2
|
|
|
113.8
|
|
|
306.1
|
|
|
||||
Income tax provision
|
35.0
|
|
|
(8.6
|
)
|
|
(29.0
|
)
|
|
(90.5
|
)
|
|
||||
(Loss) income before equity in net income of affiliate
|
(56.8
|
)
|
|
44.6
|
|
|
84.8
|
|
|
215.6
|
|
|
||||
Equity in net income of affiliate
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
0.8
|
|
|
||||
Net (loss) income
|
$
|
(56.8
|
)
|
|
$
|
44.8
|
|
|
$
|
84.9
|
|
|
$
|
216.4
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
Model
|
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
B737
|
|
136
|
|
128
|
|
262
|
|
258
|
B747
|
|
2
|
|
2
|
|
3
|
|
5
|
B767
|
|
7
|
|
7
|
|
13
|
|
13
|
B777
|
|
19
|
|
25
|
|
40
|
|
51
|
B787
|
|
36
|
|
36
|
|
68
|
|
69
|
Total Boeing
|
|
200
|
|
198
|
|
386
|
|
396
|
A320 Family
|
|
152
|
|
145
|
|
306
|
|
292
|
A330/340
|
|
19
|
|
17
|
|
39
|
|
33
|
A350 XWB
|
|
23
|
|
20
|
|
47
|
|
34
|
A380
|
|
4
|
|
6
|
|
8
|
|
13
|
Total Airbus
|
|
198
|
|
188
|
|
400
|
|
372
|
Business/Regional Jets
|
|
26
|
|
22
|
|
48
|
|
37
|
Total
|
|
424
|
|
408
|
|
834
|
|
805
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Prime Customer
|
|
June 29,
2017 |
|
June 30,
2016 |
|
June 29,
2017 |
|
June 30,
2016 |
||||||||
|
|
($ in millions)
|
|
($ in millions)
|
||||||||||||
Boeing
|
|
$
|
1,409.2
|
|
|
$
|
1,459.7
|
|
|
$
|
2,756.3
|
|
|
$
|
2,847.0
|
|
Airbus
|
|
316.9
|
|
|
272.7
|
|
|
596.4
|
|
|
503.8
|
|
||||
Other
|
|
102.4
|
|
|
97.5
|
|
|
169.9
|
|
|
160.7
|
|
||||
Total net revenues
|
|
$
|
1,828.5
|
|
|
$
|
1,829.9
|
|
|
$
|
3,522.6
|
|
|
$
|
3,511.5
|
|
|
Three Months Ended
|
||||||
|
June 29,
2017 |
|
June 30,
2016 |
||||
|
($ in millions)
|
||||||
Segment Revenues
|
|
|
|
|
|
||
Fuselage Systems
(1)
|
$
|
938.2
|
|
|
$
|
923.6
|
|
Propulsion Systems
|
436.5
|
|
|
481.7
|
|
||
Wing Systems
|
450.5
|
|
|
424.2
|
|
||
All Other
(1)
|
0.9
|
|
|
0.4
|
|
||
|
$
|
1,826.1
|
|
|
$
|
1,829.9
|
|
Segment Operating (Loss) Income
|
|
|
|
|
|
||
Fuselage Systems
(1)
|
$
|
(80.2
|
)
|
|
$
|
21.0
|
|
Propulsion Systems
|
41.0
|
|
|
74.3
|
|
||
Wing Systems
|
30.8
|
|
|
64.8
|
|
||
All Other
(1)
|
(0.6
|
)
|
|
(0.4
|
)
|
||
|
(9.0
|
)
|
|
159.7
|
|
||
Corporate SG&A
|
(46.1
|
)
|
|
(70.2
|
)
|
||
Impact of severe weather event
|
(9.1
|
)
|
|
—
|
|
||
Research and development
|
(6.7
|
)
|
|
(4.4
|
)
|
||
Unallocated cost of sales
(2)
|
(11.9
|
)
|
|
(1.8
|
)
|
||
Total operating (loss) income
|
$
|
(82.8
|
)
|
|
$
|
83.3
|
|
|
(1)
|
Includes a reclassification of
$8.2
million of revenues and
$1.7
million of operating income from the All Other segment to the Fuselage Systems segment for the three months ended
June 30, 2016
.
|
(2)
|
Includes
$0.5
million and
$2.0
million of warranty expense for the three months ended
June 29, 2017
and
June 30, 2016
, respectively. Also includes a charge for excess purchases and purchase commitments of $11.5 million for the three months ended June 29, 2017.
|
|
Six Months Ended
|
||||||
|
June 29,
2017 |
|
June 30,
2016 |
||||
|
($ in millions)
|
||||||
Segment Revenues
|
|
|
|
|
|
||
Fuselage Systems
(1)
|
$
|
1,855.1
|
|
|
$
|
1,799.4
|
|
Propulsion Systems
|
842.8
|
|
|
920.3
|
|
||
Wing Systems
|
819.5
|
|
|
784.7
|
|
||
All Other
(1)
|
2.8
|
|
|
7.1
|
|
||
|
$
|
3,520.2
|
|
|
$
|
3,511.5
|
|
Segment Operating Income
|
|
|
|
|
|
||
Fuselage Systems
(1)
|
$
|
70.2
|
|
|
$
|
198.7
|
|
Propulsion Systems
|
114.7
|
|
|
173.4
|
|
||
Wing Systems
|
89.3
|
|
|
123.6
|
|
||
All Other
(1)
|
(0.7
|
)
|
|
1.1
|
|
||
|
273.5
|
|
|
496.8
|
|
||
Corporate SG&A
|
(98.0
|
)
|
|
(120.2
|
)
|
||
Research and development
|
(11.7
|
)
|
|
(10.5
|
)
|
||
Unallocated cost of sales
(2)
|
(13.1
|
)
|
|
(16.3
|
)
|
||
Total operating income
|
$
|
130.8
|
|
|
$
|
349.8
|
|
|
(1)
|
Includes a reclassification of $10.2 million of revenues and $2.1 million of operating income from the All Other segment to the Fuselage Systems segment for the six months ended June 29, 2017.
|
(2)
|
Includes $1.7 million and $4.3 million of warranty expense for the six months ended June 29, 2017 and June 30, 2016, respectively. Also includes a charge for excess purchases and purchase commitments of $11.5 million for the six months ended June 29, 2017 and $11.8 million related to early retirement incentives for the six months ended June 30, 2016.
|
|
For the six months ended
|
||||||
|
June 29, 2017
|
|
June 30, 2016
|
||||
|
($ in millions)
|
||||||
Net cash provided by operating activities
|
$
|
334.0
|
|
|
$
|
308.8
|
|
Net cash used in investing activities
|
(87.9
|
)
|
|
(104.7
|
)
|
||
Net cash used in financing activities
|
(250.5
|
)
|
|
(355.6
|
)
|
||
Effect of exchange rate change on cash and cash equivalents
|
3.6
|
|
|
(5.3
|
)
|
||
Net decrease in cash and cash equivalents for the period
|
(0.8
|
)
|
|
(156.8
|
)
|
||
Cash and cash equivalents, beginning of period
|
697.7
|
|
|
957.3
|
|
||
Cash and cash equivalents, end of period
|
$
|
696.9
|
|
|
$
|
800.5
|
|
Period
(1)
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Repurchased Under the Plans or Programs
(2)
|
||||||
|
($ in millions other than per share amounts)
|
||||||||||||
|
|
|
|
|
|
|
|
||||||
March 31, 2017 - May 4 2017
|
338,850
|
|
|
|
$53.9033
|
|
|
338,850
|
|
|
|
$500.2
|
|
May 5, 2017 - June 1, 2017
|
430,670
|
|
|
|
$55.1614
|
|
|
430,670
|
|
|
|
$476.5
|
|
June 2, 2017 - June 29, 2017
|
1,467,993
|
|
|
|
$57.2393
|
|
|
1,467,993
|
|
|
|
$392.4
|
|
Total
|
2,237,513
|
|
|
|
$56.3342
|
|
|
2,237,513
|
|
|
|
$392.4
|
|
(1)
|
Our fiscal months often differ from the calendar months except for the month of December, as our fiscal year ends on December 31. For example, May 4, 2017 was the last day of our April 2017 fiscal month.
|
(2)
|
On November 1, 2016, the Company announced that our Board of Directors authorized a new share repurchase program for the purchase of up to $600.0 million of our class A common stock. On July 25, 2017, the Company increased the existing share repurchase program by up to an additional $400.0 million of our class A common stock, resulting in a total program authorization of $1.0 billion. We have repurchased approximately $208.0 million shares out of this authorization and, accordingly, have $792.0 million remaining in the authorization.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Sanjay Kapoor
|
|
Executive Vice President and Chief Financial
|
|
August 4, 2017
|
Sanjay Kapoor
|
|
Officer (Principal Financial Officer)
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Mark J. Suchinski
|
|
Vice President and Corporate Controller (Principal Accounting Officer)
|
|
August 4, 2017
|
Mark J. Suchinski
|
|
|
|
|
777X
[*****]
Tooling Category
|
Total
[*****]
Amount
|
IDAS Configuration
|
Initial Tooling [*****] (Fuselage, Wing, and Propulsion) Amount
|
$[*****]
|
[*****]
|
Fuselage Rate Tooling [*****] Amount
|
Value will be mutually agreed to at a later date
|
|
Propulsion Rate Tooling [*****] Amount
|
Value will be mutually agreed to at a later date
|
|
Wing Rate Tooling [*****] Amount
|
Value will be mutually agreed to at a later date
|
|
THE BOEING COMPANY
|
SPIRIT AEROSYSTEMS
,
INC.
|
BOEING COMMERCIAL AIRPLANES
|
|
Signature:
/s/ Kaitlin R. O’Connell
|
Signature:
/s/ Calleen M. Greer
|
Printed Name:
Kaitlin R. O’Connell
|
Printed Name:
Calleen M. Greer
|
Title:
Procurement Agent
|
Title:
Contract Specialist
|
Date:
06/22/2017
|
Date:
06/21/2017
|
A.
|
Boeing and Spirit (the “Seller”) are parties to the Special Business Provisions MS-65530-0016, dated June 16, 2005 (the “
SBP
”), and the General Terms Agreement BCA-65530-0016, dated June 17, 2005 (the “
GTA
”) (collectively, the “Sustaining Agreement”), and including any Amendments to the GTA and the SBP.
|
B.
|
The Parties seek to amend Attachment 27 to the SBP as contemplated below.
|
1)
|
SBP Attachment 27 Section 3.1.1 is hereby amended and restated to provide: “The work depicted in the current revision of the 737 MAX Configuration Control Document (CCD)
[*****]
for 737-8,
[*****]
and
[*****]
for 737-7,
[*****]
for 737-9,
[*****]
for 737 MAX 200,
[*****]
for 737 MAX BBJ8,
[*****]
for MAX BBJ7, and
[*****]
for BBJ9 Fuselage, Propulsion and Wing Statements of Work.”
|
2)
|
SBP Attachment 27 Section 3.1.1.1 is hereby added as follows: “Fuselage Structures Design Decision Memo
[*****]
for 737-7 Tailskid design and build on the first 737-7 MAX shipset (currently planned to be line unit
[*****]
).”
|
3)
|
SBP Attachment 27 Section 3.3 is hereby amended and restated to provide: “
The Parties agree the documents set forth in this Section 3 are the versions existing as of [date of last amendment].”
|
4)
|
SBP Attachment 27 Section 5.1.1 is hereby amended and restated to provide: “
Boeing
will re
i
mburse
Seller
for
[*****]
in
performance
of
the Non
-
Recurr
i
ng
-
Non
-
Tooling
Work up to Amend
e
d Type
Certification
for
737-7,
-
8,
-9, MAX 200
, BBJ8, BBJ7, BBJ9, or minor model, including
,
but not
li
mited to
,
[*****]
.”
|
5)
|
SBP Attachment 27
Section 5.1.2 is hereby amended and restated to provide:
“Seller will invoice its
costs
incurred less any
r
ebates and d
i
scounts
i
n performance of the
Non-Recurr
i
ng
-
Non
-
Tooling Work up to Amended
Type
C
e
rtification
for
737
-
7
,
-
8
,
-9
,
MAX 200
, BBJ8, BBJ7, and BBJ9
on
a
[*****]
bas
i
s, in
[*****]
,
for the
[*****]
month period preceding the month of invoice
,
and for other agreed to
costs that
have not been previous
l
y invoiced
.
(
[*****]
invoice to be subm
i
tted
upon
s
i
gnat
u
re of this MOA).
|
6)
|
SBP Attachment 9 is updated to include reference to this Amendment 29.
|
a.
|
Except as specifically set forth herein, all provisions of the SBP shall remain unchanged and in full force and effect.
|
b.
|
In the event of a conflict between the terms of this Amendment 29 and provisions of the SBP, GTA, or the Administrative Agreement, this Amendment 29 shall take precedence.
|
c.
|
This Amendment shall be governed by the internal laws of the State of Washington without reference to any rules governing conflict of laws.
|
The Boeing Company
|
Spirit AeroSystems, Inc.
.
|
|
|
By:
s/ David J. Blaylock
|
By:
/s/ Eric Bossler
|
Name:
David J. Blaylock
|
Name:
Eric Bossler
|
Date:
July 20, 2017
|
Date:
July 20, 2017
|
Title:
Procurement Agent
|
Title:
Contract Specialist
|
A.
|
The Parties have been in discussions regarding pricing and other terms and conditions pertaining to the 737NG, 737 MAX -7, -8, and -9, 747, 767, 777, and 787 programs (the “Programs”).
|
B.
|
The Parties wish to memorialize their agreement on these matters in this MOU, subject to negotiation and execution of definitive documentation reflecting the terms set forth below.
|
1.
|
Capitalized terms
. Capitalized terms used and not otherwise defined in this MOU will have the meanings ascribed thereto in SBP MS-65530-0016 (“Sustaining SBP”), SBP MS-65530-0019 (“787 SBP”), GTA BCA-65530-0016 (“Sustaining GTA”), GTA BCA-65520-0032 (“787 GTA), AA-65530-0010, 787 Interim Price Agreement MOA, AA-65520-0026, as applicable (collectively, the “Contracts”).
|
2.
|
Definitive Documentation
.
The Parties will negotiate and execute in good faith on or before September 29, 2017 such amendments to the Contracts and other agreements (the “Definitive Documentation”) as are necessary or desirable to implement the terms and conditions set forth in this agreement. The Definitive Documentation will supersede this MOU in its entirety.
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3.
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Payment Terms
. Payment terms from Boeing to Spirit are
[*****]
for the Contracts effective no later than
[*****]
except as otherwise stated herein. Spirit will take commercially reasonable efforts to have supplier financing in place by
[*****]
. Should the Parties enter into an interim pricing period, payment terms
[*****]
remain in effect during interim pricing period, beginning
[*****]
, while the Parties negotiate follow-up pricing.
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4.
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787 Pricing and Other Terms and Conditions
.
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a)
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The 787 SBP Attachment 1 pricing for the applicable line units is set forth in Table 1 below:
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787 Pricing
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Minor Model
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LN 501 to
[*****]
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LN
[*****]
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LN
[*****]
to 1405
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787-8
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[*****]
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[*****]
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[*****]
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787-9
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[*****]
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[*****]
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[*****]
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787-10
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[*****]
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[*****]
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[*****]
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b)
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The pricing set forth in Table 1 is based upon the configuration of the applicable shipset as of July 1, 2017.
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c)
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Pricing for line units 1406 and beyond will be negotiated by the Parties, and the Parties will begin negotiating twenty-four (24) months prior to the scheduled delivery date for line unit 1405.
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d)
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[*****]
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e)
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The
[*****]
in 787 SBP Attachment 27 Section II.A will be amended to provide
[*****]
for 787 line units
[*****]
. 787 SBP Attachment 27 Section II.A will be updated to reflect 787 minor models -8, -9 and -10.
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f)
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Boeing will assist Spirit regarding supply chain cost reduction opportunities on the 787 program, including providing Engineering resources as enablement.
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g)
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Boeing will provide champion factory performance metrics for 787 section 48.
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h)
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Spirit will implement a 787 production rate of
[*****]
APM
[*****]
from when Boeing directs such a production increase following execution of Definitive Documentation. Boeing will pay Spirit
[*****]
within
[*****]
following issuance of such direction to increase rate. Boeing will accelerate deliveries of Boeing Furnished Material, also referred to as Partner Managed Inventory (“PMI”), as reasonably necessary to support Spirit’s start of
[*****]
APM.
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i)
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For 787 PMI, the Parties will work together in good faith to implement a scheduling and ordering method that aligns PMI delivery with the planned day of consumption as reflected in Spirit’s internal Master Schedule. Boeing and Spirit agree to work together to establish a mutually agreeable Supply Chain extract from ERP for PMI data.
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5.
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737NG and 737 MAX-7, -8, and -9 Pricing and Other Terms and Conditions (excludes P-8 Fuselage)
.
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a)
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The Recurring Shipset Price for the 737 NG and 737 MAX-7, -8, and -9 aircraft from
[*****]
through December 31, 2022 is determined as set forth in Table 2 below. Annual discounts shall take effect for deliveries after January 1
st
of each year. The discounts in Table 2 are not additive / cumulative and are tied to achieving rate
[*****]
in
[*****]
and rate
[*****]
in
[*****]
and holding. In the event Boeing does not achieve and hold rate
[*****]
, the Table 2
[*****]
discount shall apply until Boeing does so. In the event Boeing achieves and holds rate
[*****]
but does not achieve and hold rate
[*****]
, the Table 2
[*****]
discount shall apply until Boeing does so.
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Program
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[*****]
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2017
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2018
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2019
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2020
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2021
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2022
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737 NG/MAX Annual Discount
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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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[*****]
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b)
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Pricing for 737NG and 737MAX-7, -8, -9 beyond January 1, 2023 will be negotiated by the Parties, and the Parties will begin negotiating twenty-four (24) months prior to January 1, 2023. Such pricing will take into account market dynamics, productivity improvements and other cost reductions resulting from increases in rate above
[*****]
APM, if Boeing is then producing at such rates.
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•
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Rates at or above
[*****]
APM:
[*****]
discount (starting January 1, 2023); then
[*****]
discount (starting
[*****]
)
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•
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Rates from
[*****]
APM and less than
[*****]
APM:
[*****]
discount (starting January 1, 2023); then
[*****]
discount (starting
[*****]
)
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•
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Rates less than
[*****]
APM:
[*****]
discount (starting January 1, 2023)
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c)
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The transfer price of the
[*****]
provided by Boeing to Spirit pursuant to Sustaining SBP Attachment 16 will be reduced by the values set forth above in Section 5 (b) during the pricing period and during the interim pricing period if follow on pricing is not agreed by January 1, 2023.
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d)
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The
[*****]
MAX delta price in Section 5(a) above reflects all changes through MAX configuration IWS “
[*****]
”. All 737-8 changes after
[*****]
approved through ATC will be negotiated collectively by
[*****]
. This delta price excludes the Composite Inner Wall (CIW) price adjustment. The 737 MAX -10, -8200 and other current and future Derivatives are excluded; the Parties will negotiate a delta price separately for the MAX -10 based on the agreed-to MAX -9 configuration and price and the MAX -8200 based on the agreed-to MAX -8 configuration and price.
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e)
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The Parties will reconcile the pricing set forth above in this Section 5 with the interim pricing paid by Boeing to Spirit for 737NG and 737 MAX-8 shipsets between
[*****]
through execution of the Definitive Documentation. The applicable Parties will make applicable payments within
[*****]
following execution of the Definitive Documentation.
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f)
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[*****]
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g)
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[*****]
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h)
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Upon execution of the Definitive Documentation, Spirit will increase its production rate on the 737 program to
[*****]
and then
[*****]
APM in accordance with Boeing’s direction and in accordance with Sustaining SBP Section 7.5.
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6.
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747, 767 (excluding Tanker), and 777 Pricing
.
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a)
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The Recurring Shipset Price for the 747, 767, and 777 aircraft from
[*****]
through December 31, 2022 is determined as set forth below.
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b)
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The Recurring Shipset Price for unsold units calculated pursuant to Section 6(a) above for 777-300 ER, 200LR, and 777 Freighter is reduced at the time of delivery to Boeing by
[*****]
, and not to exceed
[*****]
in the aggregate, for the number of shipsets equal to the number of unsold aircraft as of the Effective Date. Boeing to provide an initial skyline view of the unsold aircraft to Spirit as of the Effective Date, to be updated semiannually. No price reductions will occur prior to
[*****]
.
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c)
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The Parties will reconcile the pricing set forth above with the interim pricing paid by Boeing to Spirit for 747, 767, and 777 shipsets between
[*****]
through execution of the Definitive Documentation. The applicable Party will make this payment within
[*****]
following execution of the Definitive Documentation.
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d)
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777X is excluded from this MOU.
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a)
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Pricing for 747, 767 (excluding Tanker), and 777 beyond January 1, 2023 will be negotiated by the Parties, and the Parties will begin negotiating twenty-four (24) months prior to January 1, 2023.
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b)
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At the conclusion of the pricing period, interim pricing shall be determined using the last buy pricing in 2022 as the baseline, and escalated or de-escalated based on the indices set forth in Sustaining SBP Section 4.1.1 as modified herein.
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7.
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Labor Index
. All references in the Sustaining SBP to BLS Labor Index
[*****]
will be
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8.
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Material Index
. All references in the Sustaining SBP to BLS Material Index
[*****]
will be amended to refer to BLS Material Index
[*****]
(or its replacement).
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9.
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Advanced Aerostructures
. The Parties will study advanced aerostructures for future generation aircraft. To be announced publicly on a mutually agreeable basis.
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10.
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Supply Chain Strategy / Transfer of Work (TOW).
Boeing will not unreasonably withhold, condition, or delay approvals for Spirit TOW.
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11.
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[*****]
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12.
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Expiration
. This MOU will automatically expire and be null and void from its inception on September 29, 2017 if the Definitive Documentation has not then been executed.
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13.
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Governing Law
. This MOU will be governed by the laws of the state of Washington, exclusive of Washington’s conflict of laws principles.
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14.
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Assignment
. This MOU cannot be assigned in whole or in part without the prior written consent of Boeing.
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15.
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No Admission of Liability; No Precedential Value
. The Parties acknowledge that this MOU reflects a compromise resolution by the Parties of certain claims
and that nothing contained in this MOU constitutes or will be construed as an acknowledgement or admission of liability or absence of liability in any way on the part of the Parties, each of which expressly denies any liability or wrongdoing in connection with such claims, and the Parties agree not to issue any public statement or comment to the contrary. The Parties agree that this MOU and the
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16.
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Confidential Treatment
. The information contained herein is confidential business information. The Parties will limit the disclosure of this MOU’s contents to employees with a need to know and who understand that they are not to disclose its contents to any other person or entity without the prior written consent of the other Party. Notwithstanding the above, the Parties may file this agreement with the SEC, if legally required to do so, but must give the other Party 24 hours advance notice and seek confidential treatment as appropriate after providing such Party the opportunity to provide comments. Nothing in this section shall prevent either Party from making reasonable disclosures during the course of its earnings calls.
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17.
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Investigation
. Each Party has made such investigation of the facts pertaining to this MOU and of all the matters pertaining hereto as it deems necessary. Each Party has read this MOU and understands its contents.
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18.
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Interpretation
. Each Party has had the opportunity to draft, review, and edit this MOU. Accordingly, no presumption for or against either Party arising out of drafting all or any part of this MOU will be applied in any action relating to or arising from this MOU; and the Parties hereby waive the benefit of any statute or common law rule providing that in cases of uncertainty language of a contract should be interpreted against the Party who caused the uncertainty to exist.
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BOEING
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SELLER
.
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The Boeing Company
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Spirit AeroSystems, Inc.
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Boeing Commercial Airplanes
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/s/ Peter Johnson
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/s/ Thomas C. Gentile III
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Name:
Peter Johnson
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Name: Thomas C. Gentile III
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Title: Director Supplier Management
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Title: President and Chief Executive Officer
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Date: 1 August 2017
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Date: 1 August 2017
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/s/ Thomas C. Gentile III
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Thomas C. Gentile III
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President and Chief Executive Officer
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/s/ Sanjay Kapoor
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Sanjay Kapoor
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Executive Vice President and Chief Financial Officer
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/s/ Thomas C. Gentile III
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Thomas C. Gentile III
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President and Chief Executive Officer
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/s/ Sanjay Kapoor
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Sanjay Kapoor
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Executive Vice President and Chief Financial Officer
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