- Second Quarter 2008 Revenues grew 11 percent to $1.1 billion
WICHITA, Kan., July 31 /PRNewswire-FirstCall/ -- Spirit AeroSystems
Holdings, Inc. (NYSE:SPR) reported second quarter 2008 financial
results reflecting revenue and earnings growth across the company
as ship set deliveries for large commercial aircraft increased and
lower period expenses were realized. Spirit's second quarter 2008
revenues increased to $1.1 billion, up 11 percent from the same
period last year. Operating income increased 33 percent to $136
million, up from $102 million in the same period a year ago as
revenues increased and research and development costs and SG&A
expenses declined. Net income was $86 million, or $0.62 per fully
diluted share, up 27 percent from $68 million, or $0.49 per fully
diluted share, in the same period of 2007 (Table 1). Table 1.
Summary Financial Results ($'s in Millions, except per 2nd Quarter
Six Months share data) 2008 2007 Change 2008 2007 Change Revenues
$1,062 $959 11% $2,099 $1,913 10% Operating Income $136 $102 33%
$266 $206 29% Operating Income as a % of Revenues 12.8% 10.6% 220
BPS 12.7% 10.8% 190 BPS Net Income $86 $68 27% $172 $138 25% Net
Income as a % of Revenues 8.1% 7.1% 100 BPS 8.2% 7.2% 100 BPS
Earnings per Share (Fully diluted) $0.62 $0.49 27% $1.23 $0.99 24%
Fully Diluted Weighted Avg Share Count (Millions) 139.8 139.2 139.8
139.2 "We delivered a record 270 ship sets to our customers in the
second quarter while we rebalanced 787 production, made progress on
new development programs, and won new business," said President and
Chief Executive Officer Jeff Turner. "Revenues increased and
company-wide operating margins and net income expanded as we
continue to execute our business plan and improve performance
across the company," Turner continued. "We have made good progress
in establishing the Spirit brand across the aerospace industry in
our three years as an independent company. The recent A350 XWB
wins, along with our new business jet and defense programs,
demonstrate the value we bring to the industry in terms of
aerostructures design, manufacturing, and product support
capability," Turner added. "Additionally, we are pleased to be
expanding Spirit's U.S. operations by establishing a new design and
manufacturing facility in the State of North Carolina. This
facility will provide Spirit the capacity and capability to execute
new programs and serve as an important base for future growth." "As
for the outlook of the commercial aerospace market," Turner
maintained, "we absolutely believe that we operate in a global
market which will continue to see strong long-term growth. While
today's countervailing market forces create some uncertainty about
the near-term, our backlog continues to expand and our strategy is
squarely focused on being the market leader in terms of total value
creation for our customers and our shareholders over the
long-term." Spirit's backlog during the quarter increased 9 percent
from $27.5 billion to $29.9 billion, as combined 2008 year-to-date
net orders for 962 aircraft at Boeing and Airbus outpaced their
combined deliveries of 486 aircraft. Spirit's backlog is calculated
based on contractual prices for products and volumes from the
published firm order backlogs of Boeing and Airbus along with firm
orders from other customers. Spirit updated its contract
profitability estimates during the second quarter of 2008,
resulting in a $4 million favorable cumulative catch-up adjustment
reflected mainly in the Fuselage Systems segment, compared to a $3
million favorable cumulative catch-up adjustment for the second
quarter of 2007 reflected mainly in the Propulsion Systems segment.
Cash flow from operations was $7 million for the second quarter of
2008, compared to $14 million for the second quarter of 2007, as
the company received additional cash advances from Boeing
associated with the 787 program; continued to invest in new
development programs; and made cash tax payments of $82 million
(Table 2). Table 2. Cash Flow and Liquidity 2nd Quarter Six Months
($'s in Millions) 2008 2007 2008 2007 Cash Flow from Operations $7
$14 $78 $65 Purchases of Property, Plant & Equipment ($54)
($72) ($119) ($159) June 26, December 31, Liquidity 2008 2007 Cash
$147 $133 Current Portion of Long-term Debt plus Long-term Debt
$595 $595 Cash balances at the end of the second quarter were $147
million, up $14 million from year-end 2007. Debt balances at the
end of the second quarter were $595 million, unchanged from
year-end 2007 as term loan borrowings associated with Spirit
Malaysia were offset by planned debt payments. The company repaid
$75 million in outstanding borrowings against its credit line on
April 2, 2008. At the end of the second quarter of 2008, $636
million of the $650 million revolving credit facility was undrawn.
Approximately $14 million of the credit facility continues to be
used for financial letters of credit. The company's long-term
credit ratings remain unchanged with a BB rating at Standard &
Poor's and a Ba3 rating at Moody's. 2008 Outlook Spirit revenue
guidance for the full-year 2008 remains unchanged and is expected
to be approximately $4.4 billion based on 2008 Boeing delivery
guidance of 475-480 aircraft, 2008 Airbus delivery guidance of
approximately 470 aircraft, and internal Spirit forecasts for other
products as well as revenue associated with non-recurring
development work. Fully diluted earnings per share guidance for
2008 has increased to between $2.35 and $2.45 to reflect improved
performance in the first half of 2008 and current expectations for
the second half of 2008. Cash flow from operations full-year
guidance is unchanged and is expected to be approximately $400
million. Capital expenditures guidance for 2008 is unchanged and is
expected to be approximately $275 million (Table 3). Table 3.
Financial Outlook 2008 Guidance Revenues ~$4.4 billion Earnings Per
Share (Fully Diluted) $2.35 - $2.45 Effective Tax Rate (% Pre-Tax
Earnings) ~33%* Cash Flow From Operations ~$400 million Capital
Expenditures ~$275 million Capital Reimbursement ~$116 million *
Effective tax rate guidance assumes the benefit of a retroactive
extension to the U.S. research tax credit. Cautionary Statement
Regarding Forward-Looking Statements This press release contains
"forward-looking statements." Forward-looking statements reflect
our current expectations or forecasts of future events.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "intend," "estimate," "believe," "project,"
"continue," "plan," "forecast," or other similar words. These
statements reflect management's current view with respect to future
events and are subject to risks and uncertainties, both known and
unknown. Our actual results may vary materially from those
anticipated in forward-looking statements. We caution investors not
to place undue reliance on any forward-looking statements.
Important factors that could cause actual results to differ
materially from forward-looking statements include, but are not
limited to, our ability to continue to grow our business and
execute our growth strategy; the build rates of certain Boeing
aircraft including, but not limited to, the B737 program, the B747
program, the B767 program and the B777 program, and build rates of
the Airbus A320 and A380 programs; the success and timely
progression of Boeing's new B787 and Airbus' new A350 aircraft
programs, including receipt of necessary regulatory approvals; our
ability to enter into supply arrangements with additional customers
and the ability of all parties to satisfy their performance
requirements under existing supply contracts with Boeing, Airbus,
and other customers; any adverse impact on Boeing's and Airbus'
production of aircraft resulting from cancellations or reduced
orders by their customers; the impact of continuing high oil prices
on the commercial aviation market; future levels of business in the
aerospace and commercial transport industries; competition from
original equipment manufacturers and other aerostructures
suppliers; the effect of governmental laws, such as U.S. export
control laws, the Foreign Corrupt Practices Act, environmental laws
and agency regulations, both in the U.S. and abroad; the effect of
new commercial and business aircraft development programs, and the
resulting timing and resource requirements that may be placed on
us; 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 United States and other
governments on defense; the outcome or impact of ongoing or future
litigation and regulatory actions; and our exposure to potential
product liability claims. These factors are not exhaustive, and new
factors may emerge or changes to the foregoing factors may occur
that could impact our business. Except to the extent required by
law, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Appendix Segment Results Fuselage
Systems Fuselage Systems segment revenues for the second quarter of
2008 were $493 million, up almost 10 percent over the same period
last year, as deliveries to Boeing increased. Operating margin for
the second quarter of 2008 was 18.7 percent, compared to 18.3
percent in the second quarter of 2007, as productivity gains on the
737 program generated a favorable cumulative catch-up adjustment
and more than offset higher R&D spending in the current
quarter. Propulsion Systems Propulsion Systems segment revenues for
the second quarter of 2008 were $297 million, up 14.5 percent over
the same period last year as deliveries to Boeing increased.
Operating margin for the second quarter of 2008 was 16.6 percent
compared to 17.0 percent in the second quarter of 2007, as
favorable cumulative catch-up adjustments in the prior year quarter
were not repeated in the current quarter. Wing Systems Wing Systems
segment revenues for the second quarter of 2008 were $264 million,
up 7.7 percent over the same period last year, as deliveries to
Boeing increased. Operating margin for the second quarter of 2008
was 12.4 percent compared to 11.6 percent in the second quarter of
2007, reflecting improved operating efficiencies and lower R&D
expenses. Table 4. Segment Reporting ($'s in Millions, except
margin 2nd Quarter Six Months percent) 2008 2007 Change 2008 2007
Change Segment Revenues Fuselage Systems $493.4 $449.7 9.7% $985.4
$894.9 10.1% Propulsion Systems $296.9 $259.2 14.5% $571.6 $519.6
10.0% Wing Systems $264.4 $245.4 7.7% $526.7 $486.6 8.2% All Other
$7.4 $4.5 64.4% $14.8 $11.8 25.4% Total Segment Revenues $1,062.1
$958.8 10.8% $2,098.5 $1,912.9 9.7% Segment Earnings from
Operations Fuselage Systems $92.4 $82.1 12.5% $181.5 $165.1 9.9%
Propulsion Systems $49.3 $44.0 12.0% $93.8 $84.3 11.3% Wing Systems
$32.9 $28.4 15.8% $65.4 $51.6 26.7% All Other ($0.3) $0.7 (142.9%)
$0.1 $1.5 (93.3%) Total Segment Operating Earnings $174.3 $155.2
12.3% $340.8 $302.5 12.7% Unallocated Corporate SG&A Expense
($38.0) ($51.9) (26.8%) ($74.1) ($94.4) (21.5%) Unallocated
Research & Development Expense ($0.2) ($1.2) (83.3%) ($0.4)
($2.2) (81.8%) Total Earnings from Operations $136.1 $102.1 33.3%
$266.3 $205.9 29.3% Segment Operating Earnings as % of Revenues
Fuselage Systems 18.7% 18.3% 40 BPS 18.4% 18.4% - Propulsion
Systems 16.6% 17.0% (40) BPS 16.4% 16.2% 20 BPS Wing Systems 12.4%
11.6% 80 BPS 12.4% 10.6% 180 BPS All Other (4.1%) 15.6% (1,970) BPS
0.7% 12.7% (1,200) BPS Total Segment Operating Earnings as % of
Revenues 16.4% 16.2% 20 BPS 16.2% 15.8% 40 BPS Total Operating
Earnings as % of Revenues 12.8% 10.6% 220 BPS 12.7% 10.8% 190 BPS
Spirit Ship Set Deliveries (One Ship Set equals One Aircraft) 2007
Spirit AeroSystems Deliveries 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2007 B737 83 85 84 79 331 B747 5 4 5 4 18 B767 3 4 3 3 13 B777 21
21 21 20 83 B787* 0 1 0 0 1 Total 112 115 113 106 446 A320 Family
93 84 91 91 359 A330/340 22 21 22 20 85 A380 0 0 2 3 5 Total 115
105 115 114 449 Hawker 850XP 16 15 17 20 68 Total Spirit 243 235
245 240 963 * Full-Revenue Units Only, Does not include Static and
Fatigue test units 2008 Spirit AeroSystems Deliveries 1st Qtr 2nd
Qtr YTD 2008 B737 93 95 188 B747 4 7 11 B767 3 3 6 B777 20 22 42
B787* 1 1 2 Total 121 128 249 A320 Family 95 95 190 A330/340 24 21
45 A380 4 2 6 Total 123 118 241 Hawker 850XP 15 24 39 Total Spirit
259 270 529 * Full-Revenue Units Only, Does not include Static and
Fatigue test units Spirit AeroSystems Holdings, Inc. Condensed
Consolidated Statements of Operations (unaudited) For the Three For
the Six Months Ended Months Ended June 26, June 28, June 26, June
28, 2008 2007 2008 2007 ($ in millions, except per share data) Net
Revenues $1,062.1 $958.8 $2,098.5 $1,912.9 Operating costs and
expenses: Cost of sales 874.5 788.7 1,731.8 1,583.5 Selling,
general and administrative 40.9 54.3 80.0 99.4 Research and
development 10.6 13.7 20.4 24.1 Total Costs and Expenses 926.0
856.7 1,832.2 1,707.0 Operating Income 136.1 102.1 266.3 205.9
Interest expense and financing fee amortization (10.5) (9.5) (19.6)
(18.4) Interest income 5.0 7.2 10.7 14.8 Other income, net 0.2 1.8
1.6 3.8 Income From Continuing Operations Before Income Taxes 130.8
101.6 259.0 206.1 Income tax provision (44.4) (33.6) (87.4) (68.3)
Net Income $86.4 $68.0 $171.6 $137.8 Earnings per share Basic $0.63
$0.50 $1.25 $1.04 Shares 137.0 134.9 136.9 132.3 Diluted $0.62
$0.49 $1.23 $0.99 Shares 139.8 139.2 139.8 139.2 Spirit AeroSystems
Holdings, Inc. Condensed Consolidated Balance Sheets (unaudited)
June 26, December 31, 2008 2007 ($ in millions) Current assets Cash
and cash equivalents $147.4 $133.4 Accounts receivable, net 234.3
159.9 Current portion of long-term receivable 110.8 109.5
Inventory, net 1,652.8 1,342.6 Prepaids 15.3 14.2 Other current
assets 74.9 83.2 Total current assets 2,235.5 1,842.8 Property,
plant and equipment, net 1,028.8 963.8 Long-term receivable 50.8
123.0 Pension assets 341.2 318.7 Other assets 89.6 91.6 Total
assets $3,745.9 $3,339.9 Current liabilities Accounts payable
$404.9 $362.6 Accrued expenses 172.3 182.6 Current portion of
long-term debt 8.9 16.0 Advance payments, short-term 159.8 67.6
Deferred revenue, short-term 40.0 42.3 Other current liabilities
13.8 3.9 Total current liabilities 799.7 675.0 Long-term debt 586.2
579.0 Advance payments, long-term 745.1 653.4 Other liabilities
171.4 165.9 Shareholders' equity Preferred stock, par value $0.01,
10,000,000 shares authorized, no shares issued and outstanding - -
Common stock, Class A par value $0.01, 200,000,000 shares
authorized, 103,201,380 and 102,693,058 issued and outstanding,
respectively 1.0 1.0 Common stock, Class B par value $0.01,
150,000,000 shares authorized, 36,713,632 and 36,826,434 shares
issued and outstanding, respectively 0.4 0.4 Additional paid-in
capital 931.9 924.6 Accumulated other comprehensive income 113.9
117.7 Retained earnings 396.3 222.9 Total shareholders' equity
1,443.5 1,266.6 Total liabilities and shareholders' equity $3,745.9
$3,339.9 Spirit AeroSystems Holdings, Inc. Condensed Consolidated
Statements of Cash Flows (unaudited) For the Six For the Six Months
Ended Months Ended June 26, 2008 June 28, 2007 ($ in millions)
Operating activities Net Income $171.6 $137.8 Adjustments to
reconcile net income to net cash provided by operating activities
Depreciation expense 57.8 43.7 Amortization expense 4.6 3.8
Accretion of long-term receivable (9.3) (10.8) Employee stock
compensation expense 7.5 21.0 Excess tax benefit from share-based
payment arrangements - (34.5) Loss from the ineffectiveness of
hedge contracts 0.6 - Gain (Loss) on disposition of assets (0.4)
0.1 Deferred taxes 0.5 13.7 Pension and other post-retirement
benefits, net (14.3) (14.6) Changes in assets and liabilities
Accounts receivable (52.9) (44.9) Inventory, net (310.2) (212.4)
Accounts payable and accrued liabilities 43.3 28.4 Customer
advances 183.9 54.2 Income taxes payable 10.3 38.5 Deferred revenue
and other deferred credits 0.3 36.2 Other (14.9) 4.4 Net cash
provided by operating activities 78.4 64.6 Investing Activities
Purchase of property, plant and equipment (119.4) (159.2) Proceeds
from sale of assets 1.7 0.2 Long-term receivable 56.5 11.4
Financial derivatives 0.8 2.5 Investment in joint venture (1.0) -
Net cash (used in) investing activities (61.4) (145.1) Financing
Activities Proceeds from revolving credit facility 75.0 - Payments
on revolving credit facility (75.0) - Proceeds from issuance of
debt 9.4 - Proceeds from government grants 1.4 - Principal payments
of debt (7.9) (10.8) Debt issuance costs (6.8) - Excess tax benefit
from share-based payment arrangements - 34.5 Executive stock
repurchase - (1.0) Net cash provided by (used in) financing
activities (3.9) 22.7 Effect of exchange rate changes on cash and
cash equivalents 0.9 0.5 Net increase (decrease) in cash and cash
equivalents for the period 14.0 (57.3) Cash and cash equivalents,
beginning of the period 133.4 184.3 Cash and cash equivalents, end
of the period $147.4 $127.0 DATASOURCE: Spirit AeroSystems
Holdings, Inc. CONTACT: Investor Relations, Phil Anderson,
+1-316-523-1797, or Media, Debbie Gann, +1-316-526-3910, both of
Spirit AeroSystems Holdings, Inc. Web site:
http://www.spiritaero.com/
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