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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 21, 1997
THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-442 91-0425694
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
7755 East Marginal Way South
Seattle, Washington
(address of principal executive offices)
Registrant's telephone number, including area code: (206) 655-2121
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On July 21, 1997, Boeing issued a press release with respect to
its results of operations for the second quarter of fiscal 1997. A copy of
this press release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
EXHIBIT
NO. DESCRIPTION
99.1 Press Release issued by Boeing on July 21, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: July 22, 1997 THE BOEING COMPANY
By: /s/Theodore J. Collins
----------------------
Senior Vice President and
General Counsel
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith:
EXHIBIT
NO. DESCRIPTION
99.1 Press Release issued by Boeing on July 21, 1997.
EXHIBIT 99.1
BOEING REPORTS 1997 2ND QUARTER RESULTS
Six Months Ended
2nd Quarter June 30,
----------- --------
1997 1996 1997 1996
---- ---- ---- ----
($ in millions except per share data)
Before SVT accounting:
Sales $9,289 $6,275 $16,607 $10,568
Net earnings $399 $468 $712 $587
Earnings per share $.55 $.68 $.99 $.85
Average shares 721.2 692.0* 721.1 690.7*
(millions)
After SVT accounting:
Sales $9,289 $6,275 $16,607 $10,568
Net earnings $334 $468 $711 $587
Earnings per share $.48 $.68 $1.02 $.85
Average shares 695.0 692.0* 694.9 690.7*
(millions)
*Adjusted for 2 for 1 stock split effective June 6, 1997 SVT = ShareValue
Trust (see ShareValue Trust Accounting discussion below)
SEATTLE, July 21, 1997 - The Boeing Company reported sales of $9.3 billion
and net earnings of $399 million or $.55 per share for the second quarter
of 1997, before the ShareValue Trust accounting impact. Comparable figures
for the same period of 1996 were sales of $6.3 billion and net earnings of
$468 million or $.68 per share. The 1996 second quarter net earnings
include $176 million, or $.25 per share, from the favorable settlement of
various defense and space segment contract issues and recognition of tax
benefits related to prior years' investment tax credits.
The higher sales and net earnings for the second quarter of 1997 compared
with 1996, excluding the contract settlements and prior years' investment
tax credits, were primarily attributed to the significantly higher level of
commercial aircraft deliveries and the inclusion in 1997 of the operations
of the defense and space units acquired from Rockwell International
Corporation in December 1996. Partially offsetting the increased income
associated with
<PAGE>
the higher sales in 1997 were higher research and development expense,
joint venture development expense in the defense and space business units,
and a higher effective income tax rate.
Six-month 1997 sales were $16.6 billion and net earnings were $712 million
or $.99 per share, before ShareValue Trust accounting. Comparable figures
for 1996 were sales of $10.6 billion and net earnings of $587 million or
$.85 per share. The first-half 1996 earnings included income of $176
million or $.25 per share for the settlement of certain defense and space
contract issues and the recognition of prior years' investment tax credits.
Second quarter 1997 results after the ShareValue Trust accounting were net
earnings of $334 million or $.48 per share after recognition of an
after-tax charge of $65 million associated with the market value increase
in the Company stock held by the ShareValue Trust. First-half 1997 results
after the ShareValue Trust accounting were $711 million or $1.02 per share,
reflecting a nominal $1 million after-tax charge for the increase in the
market value of the approximately 26 million shares of Company stock held
by the ShareValue Trust between January 1 and June 30, 1997.
The Company recently announced planned 1998 production rates for its
commercial aircraft programs. At the beginning of 1997, commercial aircraft
production was 22.5 aircraft per month. Production is currently over 30
aircraft per month, and is scheduled to increase to 43 per month by the
second quarter of 1998. Production will continue to be adjusted to reflect
customer orders. Total jet aircraft deliveries for the year are currently
projected to be in the 340-350 range.
Phil Condit, Boeing chairman and chief executive officer, noted that the
rapid production rate buildup has resulted in a substantial increase in
employment, material, and fabrication demand at the Company and its
suppliers. Skill training requirements and parts shortages have created
out- of-sequence work at Company facilities and at supplier locations.
Overtime in engineering and production areas continues at high levels. As a
result, the commercial aircraft business is experiencing a near-term
decline in productivity. For the longer term, progress continues to be made
in developing and implementing design and production systems to improve
efficiency and reduce cycle times.
Research and development expense for the first half of 1997 was $735
million or $138 million higher than in the comparable period of 1996. Full
development of the 767-
<PAGE>
400ER, a stretched version of the 767-300ER, commenced with the Delta
Airlines order for first delivery in the year 2000. Increased efforts have
been focused on the 757-300, a stretched derivative of the 757-200, which
will be delivered to launch customer Condor-Flugdienst in early 1999. The
757-300 will have the shortest design-to-delivery and delivery-cycle time
of any Boeing derivative aircraft program. Development continues on
schedule for the 737 derivatives (737-600,-700,-800). Certification and
first delivery of the 737-700 and the 737-800 are planned for the fourth
quarter of 1997 and first quarter of 1998, respectively. In addition, the
Defense & Space Group, including the business units acquired from Rockwell,
had a higher level of development spending on commercial space and
communication activities compared with prior periods.
Condit noted that the aerospace and defense units acquired from Rockwell
International Corporation have integrated well with the Boeing Defense &
Space Group. The acquired operations will contribute over $2.5 billion to
1997 revenues.
The Group's largest program, International Space Station Alpha, projected
to represent approximately $1.4 billion of 1997 revenues, has experienced
some technical, schedule and funding difficulties. Operational capability
is now scheduled for August 1999. However, key hardware elements and
testing are on track to support the first U.S. launch scheduled for July
1998. The station, being built by Boeing with international participants,
will represent a state-of- the-art earth-orbiting scientific laboratory
dedicated to zero-gravity research.
Other Defense & Space Group notable events during the second quarter
included the unveiling of the F-22 fighter aircraft at Lockheed Martin's
final assembly plant in Marietta, Georgia. Built by the team of Boeing,
Lockheed Martin, and Pratt & Whitney, the F-22 is regarded as the most
advanced fighter in the world. The roll-out aircraft is the first of nine
F-22As being built under the current Engineering and Manufacturing
Development contract. By the end of the second quarter, commitments for 32
Bell Boeing 609 Civil Tiltrotor aircraft had been received by the Bell
Boeing joint venture. The Bell Boeing 609 will carry six to nine passengers
at twice the speed and three to five times the range of a helicopter, with
the same vertical takeoff and landing capabilities.
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OPERATING AND FINANCIAL DATA
Commercial Aircraft Deliveries:
2nd Quarter Six Months
----------- ----------
1997 1996 1997 1996
---- ---- ---- ----
737 35 23 60 38
747 12 8 22 11
757 12 12 24 19
767 12 12 23 19
777 21 7 31 15
--- --- --- ---
Total 92 62 160 102
=== === === ===
Six Months Ended
June 30,
--------
1997 1996
---- ----
($ in millions)
Revenues -
Commercial aircraft $12,551 $7,738
Defense and space 4,056 2,830
Research & development
expense 735 597
Goodwill amortization 42
Operating earnings 974 638
ShareValue Trust
pretax charge 2
Interest and debt expense 119 75
Corporate investment income 165 128
Pretax earnings 1,018 691
Net earnings $711 $587
Effective income tax rate 30.2% 15.0%
Net earnings before ShareValue
Trust accounting $712 $587
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Total revenues for 1997 are projected to be in the $34 billion range,
compared with $22.7 billion in 1996. The overall operating earnings margin,
exclusive of research and development expense and joint venture development
costs expensed as incurred ($40 million in 1997, compared with $10 million
in 1996), was 10.5% for the first half of 1997, compared with 10.7% for the
same period in 1996, excluding the impact of the settlement of contract
issues. The 1997 margin has been impacted by the model mix of commercial
aircraft deliveries that included 31 777s in the first six months of 1997,
compared with 15 777s in the first half of 1996, as well as increased
pricing pressure and near-term production problems associated with
increased commercial aircraft production rates. Margins for the balance of
1997 are expected to be somewhat lower due to 777 deliveries and the
initial deliveries of the 737-700 in the fourth quarter. With regard to the
777 and 737-700 programs, new commercial jet aircraft programs normally
have lower operating profit margins due to initial tooling amortization and
higher unit production costs in the early years of a program.
Based on current programs and schedules, research and development expense
for the full year 1997 is projected to be in the $1.4 billion range,
compared with $1.2 billion in 1996.
Corporate investment income was $37 million higher in the first half of
1997 than in the same period in 1996 due primarily to a substantially
greater cash and short-term investment balance. Interest and debt expense
was $44 million higher due to the acquisition debt assumed.
The higher effective income tax rate for the first half of 1997, compared
with the same period of 1996, was primarily due to the recognition of a
one-time tax benefit of $95 million related to prior years' investment tax
credits in the first half of 1996. Without the investment tax credit
benefit, the effective income tax rate would have been 28.8% for the first
half of 1996, compared with 30.2% for the first half of 1997. The effective
tax rate for the first half of 1997 reflects the current estimated
annualized rate for 1997.
ShareValue Trust Accounting
The ShareValue Trust is a 12-year irrevocable trust that holds Boeing
common stock, receives dividends, and distributes to employees appreciation
in value above a 3%
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per annum threshold rate of return. In accordance with generally accepted
accounting principles, the change in the potential distributable
appreciation is reflected in earnings on a quarterly basis and shares of
the Trust are not considered outstanding for financial reporting purposes.
Because the Trust is fully funded and is solely responsible for making any
potential distributions, the Company supplementally discloses earnings and
earnings per share excluding the ShareValue Trust accounting impact, while
recognizing the shares held by the Trust as outstanding. Since inception of
the Trust in July 1996, the distributable appreciation charged or credited
to earnings on an after-tax basis is as follows:
<PAGE>
Quarter Cumulative
------------------
($ in millions)
---------------
1996
3rd quarter $3 $3
4th quarter 84 87
1997
1st quarter (64) 23
2nd quarter 65 88
Comparative Balances:
June 30, March 31, Dec. 31,
1997 1997 1996
-------------------------------
($ in billions)
Cash & short-term
investments $6.4 $5.5 $5.3
Long-term debt 3.9 4.0 4.0
Customer financing .7 .8 .8
Inventories -
Gross 18.2 17.9 16.5
Net 7.5 7.3 6.9
Contractual backlog -
Commercial aircraft $77.8 $79.8 $79.2
Defense and space 9.0 9.4 8.5
----- ----- -----
$86.8 $89.2 $87.7
===== ===== =====
Not included in contractual backlog are purchase options and announced
orders for which definitive contracts have not been executed, including
significant announced orders from American, Delta, and Continental
Airlines. U.S. Government and foreign military backlog is limited to
amounts obligated to contracts. Unobligated amounts under U.S. Government
contracts not included in backlog at June 30, 1997, total $10.6 billion,
compared with $9.2 billion at March 31, 1997, and $9.0 billion at December
31, 1996.
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<PAGE>
Forward-looking information is subject to risk and
uncertainty
Forward-looking statements such as projections of future deliveries, sales,
margins, research and development and effective tax rates are subject to
risk and uncertainties that could cause actual results to differ materially
from those contemplated in the forward-looking statements. Among these are
the risks and uncertainties identified under the heading "Forward-Looking
Information Is Subject to Risk and Uncertainty" accompanying "Management's
Discussion and Analysis of Results of Operation, Financial Condition and
Business Environment" in the Boeing 1996 Annual Report to Shareholders and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the report on Form 10-Q for the first quarter of 1997.
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C1549
Contact: Paul Binder
(206) 655-6123
