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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 10, 1998
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Date of Report
(Date of earliest event reported)
THE BOEING COMPANY
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-442 91-0425694
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
7755 East Marginal Way South
Seattle, Washington 98108
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(Address of Principal Executive Offices, Including Zip Code)
(206) 655-2121
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On March 20, 1998, The Boeing Company ("Boeing") issued a news release
announcing a plan to streamline facilities, focus manufacturing and assembly
operations and eliminate redundant laboratories, resulting in a 15 percent
decrease in facilities and reduction of 8,200 employees. A copy of this news
release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
On March 24, 1998, Boeing issued a news release reporting its progress
on the 7-series production-recovery efforts and confirming that it plans to
deliver about 550 airplanes in 1998. A copy of this news release is attached
hereto as Exhibit 99.2 and is incorporated herein by reference.
On April 6, 1998, Boeing issued a news release announcing that it
delivered 108 commercial jet transports during the first quarter of 1998, ending
March 31. A copy of this news release is attached hereto as Exhibit 99.3 and is
incorporated herein by reference.
On April 10, 1998, Boeing issued a news release announcing that it would
take a special first-quarter pre-tax charge to earnings of $350 million. A copy
of this news release is attached hereto as Exhibit 99.4 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:
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EXHIBIT NO. DESCRIPTION
<S> <C>
99.1 News Release issued by The Boeing Company on March 20, 1998.
99.2 News Release issued by The Boeing Company on March 24, 1998.
99.3 News Release issued by The Boeing Company on April 6, 1998.
99.4 News Release issued by The Boeing Company on April 10, 1998.
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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.
THE BOEING COMPANY
Dated: April 10, 1998
By /s/ Theodore J. Collins
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Name: Theodore J. Collins
Title: Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 News Release issued by The Boeing Company on March 20, 1998.
99.2 News Release issued by The Boeing Company on March 24, 1998.
99.3 News Release issued by The Boeing Company on April 6, 1998.
99.4 News Release issued by The Boeing Company on April 10, 1998.
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EXHIBIT 99.1
BOEING OUTLINES FACILITIES PLAN
SEATTLE, MARCH 20, 1998--The Boeing Company today announced a plan to streamline
facilities, focus manufacturing and assembly operations, and eliminate redundant
laboratories. By the end of the year 2000, these phased actions, along with
other business initiatives, are expected to result in a decrease in facilities
of approximately 18 million square feet, or more than 15 percent. The employment
impact of the facility actions and the previously announced discontinuation of
the MD-80 and MD-90 jetliner programs is a reduction of approximately 8,200
people. This does not include previously announced intentions (Dec. 16, 1997) to
reduce commercial airplane employment by 12,000 beginning in the second half of
1998.
"As a result of the merger with McDonnell Douglas and acquisition of Rockwell's
aerospace and defense operations, we are strategically realigning the use of our
facilities to provide better value to our customers and shareholders," said Phil
Condit, Boeing chairman and chief executive officer. "These actions are in
addition to ongoing initiatives to improve productivity and reduce costs."
Condit noted that the decisions announced today will not require the company to
take a one-time special charge against earnings. "These planned actions will
help keep the company competitive for new business opportunities," Condit said.
The resulting net savings within the Information, Space & Defense Systems
segment will largely accrue to the U.S. government customer on future contracts.
"We will concentrate investments in facilities, technology and people in keeping
with our core competencies," Condit stated. "This will enhance our business base
and provide continuing opportunities for our employees.
"We have determined what, where and how our products will be made. We are
establishing key Program Management Centers, responsible for overall management
of Boeing product lines; Assembly, Integration & Test Centers, responsible for
final assembly, systems integration and testing of products; and Strategic
Manufacturing Centers, responsible for producing components or serving as
centers of excellence for specific manufacturing processes," Condit said. He
noted these centers will be or have been established within the existing
operating group structure.
In addition, Boeing will close duplicate laboratories and facilities, and form
key partnerships with critical suppliers.
Boeing acquired the aerospace defense operations of Rockwell in December 1996
and merged with McDonnell Douglas on Aug. l, 1997. Boeing is the world's largest
aerospace company with 238,000 employees worldwide.
The attached fact sheets detail the impact by geographical area and outline the
changes by the company's three operating groups.
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EXHIBIT 99.2
BOEING COMMERCIAL AIRPLANE GROUP UPDATES PRODUCTION STATUS
SEATTLE, MARCH 24, 1998--Boeing Commercial Airplane Group today reported its
progress on the 7-series production-recovery efforts.
The company also confirmed that it plans to deliver approximately 550 airplanes
in 1998, with approximately 110 of those deliveries occurring in the first
quarter.
"Gains have been made in our factory operations, particularly for the wide-body
aircraft, but we are not out of the woods yet," said Ron Woodard, president of
Boeing Commercial Airplane Group. "Recovery plans are inherently challenging,
and we are now at one of the riskiest points in our plan as we increase
production rates on the Next-Generation 737 as well as the 747, 757 and 777.
There is still a risk that the challenges to our production system--particularly
on the Next-Generation 737--could result in additional delivery delays, and
although we can't rule that out, we're working very hard to keep that from
happening."
The Next-Generation 737 program has encountered changes driven by
regulatory-certification requirements and flight-test results. As noted earlier,
this had led to significant retrofit efforts and some delivery delays, and
complicates the company's ability at this time to significantly improve key
measurements for this program. The company is assessing the financial impact of
these ongoing production problems.
Woodard added, "While we continue to focus on these near-term issues, our
commitment is to return to long-term production health and improved productivity
in 1998."
As previously announced, Boeing plans to accelerate Next-Generation 737
production from seven to 14 airplanes per month and increase 757 production from
four to five airplanes per month during the second quarter of 1998. In the third
quarter, the company will increase 747 production from four to five airplanes a
month. Also in the third quarter, as a result of customer demand, the 777
production rate will return to seven per month from five per month.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND
UNCERTAINTY
Certain statements in the financial discussion and analysis by management
contain "forward-looking" information that involves risk and uncertainty,
including projections for deliveries, sales, research and development expense
and other trend projections. Actual future results and trends may differ
materially depending on a variety of factors, including the Company's successful
execution of internal performance plans, future integration of McDonnell Douglas
Corporation; product-performance risk associated with regulatory certifications
of the Company's commercial aircraft by the U.S. Government and foreign
governments; other regulatory uncertainties; collective-bargaining labor
disputes; performance issues with key suppliers and subcontractors; government
export and import policies; factors that result in
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significant prolonged disruption to air travel worldwide; global trade policies;
worldwide political stability and economic growth; changing priorities or
reductions in the U.S. Government defense and space budgets; termination of
government contracts due to unilateral government action or failure to perform;
and legal proceedings.
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EXHIBIT 99.3
BOEING REPORTS FIRST QUARTER DELIVERIES
SEATTLE, APRIL 6, 1998--The Boeing Company announced today that it delivered 108
commercial jet transports during the first quarter of 1998, ending March 31. The
deliveries during the three-month period consisted of 34 737-300/400/500s, 12
Next-Generation 737s, 12 747s, 11 757s, 10 767s, 20 777s, 2 MD-80s, 4 MD-90s and
3 MD-11s.
Expected deliveries for the full year 1998 continue to be about 550 airplanes.
Contact:
Larry McCracken (206) 655-6123
http://www.boeing.com
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EXHIBIT 99.4
BOEING ANNOUNCES IT WILL TAKE A FIRST QUARTER CHARGE FOR NEXT-GENERATION
737 PROGRAM PRODUCTION PROBLEMS
SEATTLE, APRIL 9, 1998 -- Phil Condit, Boeing chairman and chief executive
officer, announced today that first quarter earnings will include a $350 million
pretax charge to earnings on the Next-Generation 737 program. Excluding the
forward loss on the Next-Generation 737 program, pretax earnings of $400-$450
million are projected for the first quarter. Boeing's first quarter earnings
will be released on April 22.
The charge represents an increase to the previously recognized forward loss
amount of $700 million for the Next-Generation 737 program. The forward loss is
the amount by which the estimated production costs exceed the estimated revenue
for the first 400 units of the program.
Condit noted that several factors contributed to the additional charge. As
previously reported, changes to the aircraft resulting from flight test and
certification requirements caused the retrofit activity to be more extensive
than originally anticipated. The incorporation of these changes in all
Next-Generation 737 production aircraft, as well as reduction of out-of-sequence
work and process flow risk, will require more resources and overtime as the
Next-Generation 737 production rate increases. In addition, changes in the
projected mix of the models offered, coupled with a lower price-escalation
trend, reduced revenue estimates for the first 400 units.
Performance to the production recovery plan for the Next-Generation 737 program
during upcoming rate increases will determine whether further charges are
necessary. The production rate will increase in the second quarter of 1998 from
7 aircraft per month to 14 per month and then to 21 per month late in 1998.
Cost and schedule performance on other commercial aircraft models continues to
be close to recovery plans, although the lower price-escalation trend also
affects the company's forecast of revenues for all commercial aircraft programs.
Production rate increases are planned for the 757 in the second quarter, the 747
in the third quarter, and the 777 in the third quarter of 1998.
"The management and operational complexities, on an industrywide basis, of the
rapid production rate buildup that resulted in abnormally high parts shortages
and out-of-sequence work in the second half of 1997 cannot be reversed quickly.
We are making progress and focusing our energies to get back to full production
health in 1998 on all of our commercial programs," Condit said. "Our order book
remains strong. We have announced orders for more than 850 Next-Generation 737
aircraft, with 15 delivered through the end of March 1998. In total, we have
unfilled announced orders for more than 1,750 commercial aircraft. These orders,
plus the strong Information, Space & Defense Systems backlog, present us with
solid opportunities in the next several years."
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FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND
UNCERTAINTY
Certain statements in the financial discussion and analysis by management
contain "forward-looking" information that involves risk and uncertainty,
including projections for deliveries, sales, research and development expense
and other trend projections. Actual future results and trends may differ
materially depending on a variety of factors, including the Company's successful
execution of internal performance plans; future integration of McDonnell Douglas
Corporation; product-performance risk associated with regulatory certifications
of the Company's commercial aircraft by the U.S. Government and foreign
governments; other regulatory uncertainties, collective-bargaining labor
disputes; performance issues with key suppliers and subcontractors; government
export and import policies; factors that result in significant prolonged
disruption to air travel worldwide; global trade policies; worldwide political
stability and economic growth; changing priorities or reductions in the U.S.
Government defense and space budgets; termination of government contracts due to
unilateral government action or failure to perform; and legal proceedings.
###
C1595
Contact: Larry McCracken
(206) 655-6123
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