- Full-year 2009 revenues of $4.079 billion; Operating income of
$303 million - Full-year 2009 fully diluted earnings per share of
$1.37 per share; Fourth quarter results include ($0.17) per share
primarily related to unfavorable contract adjustments impacting
737/747 accounting block closure and lower CH-53K profitability -
Cash and cash equivalents were $369 million at year-end - Total
backlog of approximately $28.0 billion - 2010 Guidance: Revenue
between $4.0 - $4.2 billion and fully diluted earnings per share
between $1.50 and $1.70 per share WICHITA, Kan., Feb. 4
/PRNewswire-FirstCall/ -- Spirit AeroSystems Holdings, Inc.
(NYSE:SPR) reported fourth quarter and full-year 2009 financial
results reflecting fourth quarter revenue and earnings growth but
an overall decline in full-year earnings. Full-year 2009 ship set
deliveries for large commercial aircraft increased from 2008
resulting in higher revenues, while full-year income declined as a
result of charges recorded in the second quarter, unfavorable
contract adjustments in the fourth quarter, and challenges on
certain development programs. The current quarter results reflect a
pre-tax $34 million, or $0.17 per share, unfavorable cumulative
catch-up adjustment charge associated with changes in contract
profitability estimates. These estimates related primarily to
higher than forecasted costs on contract blocks completed in
December 2009 and higher than expected costs on the Sikorsky CH-53K
program. Table 1. Summary Financial Results (unaudited)
----------------------------------------------- ($ in millions, 4th
Quarter Twelve Months except per share ----------- -------------
data) 2009 2008 Change 2009 2008 Change ----------------- ---- ----
------ ---- ---- ------ Revenues $1,078 $646 67% $4,079 $3,772 8%
Operating Income $85 $28 201% $303 $406 (25%) Operating Income as a
% of Revenues 7.9% 4.4% 350 BPS 7.4% 10.8% (340) BPS Net Income $50
$20 153% $192 $265 (28%) Net Income as a % of Revenues 4.6% 3.1%
150 BPS 4.7% 7.0% (230) BPS Earnings per Share (Fully Diluted)
$0.36 $0.14 157% $1.37 $1.91 (28%) Fully Diluted Weighted Avg Share
Count 140.2 139.2 139.8 139.2 Spirit's fourth quarter 2009 revenues
increased to $1.078 billion, up 67 percent from the same period
last year, primarily due to schedule recovery from the Machinists'
strike at Boeing which negatively impacted fourth quarter 2008
deliveries. Full-year 2009 revenues grew 8 percent to $4.079
billion, up from $3.772 billion in 2008 as total deliveries for
large commercial aircraft increased in 2009. (Table 1) Operating
income increased to $85 million in the fourth quarter of 2009, up
from $28 million in the same period a year ago, as current year
deliveries to Boeing more than doubled following recovery from the
2008 Machinists' strike at Boeing. Full-year 2009 operating income
decreased to $303 million, down from $406 million in 2008, due
primarily to charges recorded in the second quarter and unfavorable
contract adjustments in the fourth quarter of 2009. Fourth quarter
net income was $50 million, or $0.36 per fully diluted share
compared to $20 million, or $0.14 per fully diluted share, for the
same period in 2008. Full-year 2009 net income was $192 million, or
$1.37 per fully diluted share compared to $265 million, or $1.91
per fully diluted share, for 2008. "For Spirit, 2009 financial
results were disappointing. In a year marked by continued strong
demand for our core products and by important milestones, the
company's profitability was well below our expectations. During the
year we encountered challenges on new programs and faced cost
pressures on our core programs as we recovered from the IAM strike
at Boeing early in the year and began transitioning resources
between programs late in the year," said President and Chief
Executive Officer Jeff Turner. "Looking through the challenges, the
core business continues to perform and we made progress on our
development programs," Turner added. Four of Spirit's new programs
entered the flight test phase in the fourth quarter of 2009.
Programs now in the flight test development phase include the
Boeing 787, the Gulfstream G250, the Gulfstream G650, and the
Rolls-Royce BR725. Additionally, we have two more programs
scheduled to enter flight test this year. "It's truly exciting to
be a part of the progress our customers are making and to be a part
of the next generation of large commercial and business jet
products," Turner continued. "Our core business delivered a record
number of ship sets to customers as we concluded our initial
contract accounting blocks on the 737 and 747 programs. While we
made good progress over the last four years on improving costs and
efficiencies, we didn't achieve all of the anticipated improvements
in the current contract blocks as we began transitioning resources
from declining volume programs to increasing volume programs.
Continued productivity improvement across the core business remains
a high priority, as is a continued focus on execution and managing
design evolution for new programs while meeting our customer
requirements," Turner stated. "The long-term outlook for commercial
aerospace remains attractive," Turner said, "placing our company in
a strong competitive position to generate long-term value for our
shareholders. Over the next twenty-four months we will focus on
improving profitability and successfully completing many of our
development program efforts while driving long-term value for our
customers, employees, and shareholders." Spirit's backlog at the
end of the 2009 was $28.0 billion, down 1 percent for the quarter
and 12 percent from year-end 2008, as 2009 Airbus and Boeing
deliveries exceeded orders. Spirit calculates its backlog based on
contractual prices for products and volumes from the published firm
order backlogs of Airbus and Boeing, along with firm orders from
other customers. Spirit updated its contract profitability
estimates during the fourth quarter of 2009, resulting in a pre-tax
$34 million ($0.17 per share) unfavorable cumulative catch-up
adjustment. Approximately $26 million pre-tax ($0.13 per share) is
mainly associated with the 737 and 747 contract accounting block
closure adjustments. Additionally, the Sikorsky CH-53K program,
which is in the Systems Development and Demonstration (SDD) phase,
accounted for $8 million ($0.04 per share) of charge due to
additional costs supporting a weight improvement plan. Cash flow
from operations was $197 million for the fourth quarter and ($14)
million for the full-year 2009, compared to $64 million for the
fourth quarter and $211 million for the full-year 2008. The
company's cash flow shift is primarily driven by the combined
change in customer advances and deferred revenue partially offset
by lower net inventory values, increased accounts payable, and
lower accounts receivable. (Table 2) Table 2. Cash Flow and
Liquidity 4th Quarter Twelve Months ----------- ------------- ($ in
millions) 2009 2008 2009 2008 --------------- ---- ---- ---- ----
Cash Flow from Operations $197 $64 ($14) $211 Purchases of
Property, Plant & Equipment ($70) ($61) ($228) ($236) December
31, December 31, Liquidity 2009 2008 ---- ---- Cash $369 $217 Total
Debt $894 $588 Cash balances at the end of the year were $369
million, up $152 million from a year ago, largely reflecting the
proceeds generated from the issuance of the $300 million senior
unsecured notes in the third quarter of 2009, and receipt of
planned non-recurring contract payments associated with our
development programs, partially offset by continued investment in
our new programs. At the end of the fourth quarter of 2009, the
company's $729 million revolving credit facility remained undrawn.
The facility will step down to $409 million in capacity in June
2010, with approximately $17 million of the credit facility
reserved for financial letters of credit. Debt balances at the end
of the fourth quarter were $894 million, up $306 million from the
end of 2008, reflecting the associated debt for the unsecured
notes. The company's credit ratings remained unchanged at the end
of the fourth quarter of 2009 with a BB rating at Standard &
Poor's and a Ba3 rating at Moody's. 2010 Outlook Spirit revenue
guidance for the full-year 2010 is expected to be between $4.0 and
$4.2 billion based on Boeing's 2010 delivery guidance of 460 - 465
aircraft; anticipated B787 deliveries; expected Airbus deliveries
in 2010 of approximately 480 - 490 aircraft; internal Spirit
forecasts for non-OEM production activity and other customers; and
foreign exchange rates consistent with fourth quarter 2009 levels.
Fully diluted earnings per share guidance for 2010 is expected to
be between $1.50 and $1.70 per share reflecting margin headwind in
the next contract accounting blocks driven by volume and model mix,
increased depreciation expense, lower pension income, and increased
interest expense. Cash flow from operations, less capital
expenditures, is expected to be approximately ($250) million use of
cash in the aggregate, with capital expenditures of approximately
$325 million. Capital expenditures in 2010 include approximately
$100 million of tooling associated with the Airbus A350 XWB
program. Cash flow from operations, less capital expenditures, is
expected to be significantly improved in 2011. (Table 3) Risk to
our financial guidance includes: reduced demand for our core
products; higher than forecasted costs to develop new programs; our
ability to achieve anticipated productivity and cost improvements;
resolution of certain 787 assertions; and labor negotiations. Table
3. Financial Outlook 2009 Actual 2010 Guidance
--------------------------- ----------- ------------- Revenues $4.1
billion $4.0 - $4.2 billion Earnings Per Share (Fully Diluted)
$1.37 $1.50 - $1.70 Cash Flow From Operations ($14) million*
Capital Expenditures $228 million* Customer Reimbursement $115
million N/A ---------------------- ------------- --- * ($250M) with
~ $325 million of Capital Expenditures 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, or the
negative thereof, unless the context requires otherwise. These
statements reflect management's current views 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 those reflected in such forward-looking
statements and that should be considered in evaluating our outlook
include, but are not limited to, the following: our ability to
continue to grow our business and execute our growth strategy,
including the timing and execution of new programs; our ability to
perform our obligations and manage costs related to our new
commercial and business aircraft development programs; reduction in
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, which could be negatively impacted by continuing weakness
in the global economy and economic challenges facing commercial
airlines, and by a lack of business and consumer confidence and the
impact of continuing instability in the global financial and credit
markets; declining business jet manufacturing rates and customer
cancellations or deferrals as a result of the weakened global
economy; the success and timely execution of key milestones such as
first flight, certification, and delivery of Boeing's new B787 and
Airbus' new A350 XWB (Xtra Wide-Body) aircraft programs, including
receipt of necessary regulatory approvals and customer adherence to
their announced schedules; 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 and Airbus, our two major customers,
and other customers and the risk of nonpayment by such customers;
any adverse impact on Boeing's and Airbus' production of aircraft
resulting from cancellations, deferrals or reduced orders by their
customers or from labor disputes or acts of terrorism; any adverse
impact on the demand for air travel or our operations from the
outbreak of diseases such as the influenza outbreak caused by the
H1N1 virus, avian influenza, severe acute respiratory syndrome or
other epidemic or pandemic outbreaks; returns on pension plan
assets and impact of future discount rate changes on pension
obligations; our ability to borrow additional funds or refinance
debt; 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 cost and availability of raw materials and purchased
components; our ability to successfully extend or renegotiate our
primary collective bargaining contracts with our labor unions; our
ability to recruit and retain highly skilled employees and our
relationships with the unions representing many of our employees;
spending by the U.S. and other governments on defense; the
possibility that our cash flows and borrowing facilities may not be
adequate for our additional capital needs or for payment of
interest on and principal of our indebtedness; our exposure under
our revolving credit facility to higher interest payments should
interest rates increase substantially; the outcome or impact of
ongoing or future litigation and regulatory actions; and our
exposure to potential product liability and warranty 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 fourth quarter of 2009 were $506.0 million, up
75.6 percent over the same period last year, as deliveries in the
prior year quarter were negatively impacted by the Machinists'
strike at Boeing. Operating margin for the fourth quarter of 2009
was 11.5 percent which includes an unfavorable cumulative catch-up
adjustment of $21 million. The fourth quarter of 2008 realized an
operating margin of 11.3 percent and an unfavorable cumulative
catch-up adjustment of $8 million. Propulsion Systems Propulsion
Systems segment revenues for the fourth quarter of 2009 were $257.9
million, up 53.0 percent over the same period last year as
deliveries in the prior year quarter were negatively impacted by
the Machinists' strike at Boeing. Operating margin for the fourth
quarter of 2009 was 9.8 percent, down from 12.6 percent in the
fourth quarter of 2008, as an unfavorable cumulative catch-up
adjustment of $8 million and lower aftermarket sales were realized
during the quarter. During the fourth quarter of 2008, the segment
realized an unfavorable $7 million cumulative catch-up adjustment.
Wing Systems Wing Systems segment revenues for the fourth quarter
of 2009 were $311.5 million, up 71.1 percent over the same period
last year as increased deliveries to Airbus and Boeing more than
offset fewer Hawker 850XP deliveries. Operating margin for the
fourth quarter of 2009 was 10.7 percent which includes an
unfavorable cumulative catch-up adjustment of $5 million. The
fourth quarter of 2008 realized significantly lower operating
margin of 4.1 percent largely due to an unfavorable cumulative
catch-up adjustment of $12 million. Table 4. Segment Reporting
(unaudited) (unaudited) 4th Quarter Twelve Months
------------------------ ----------------------- ($ in millions)
2009 2008 Change 2009 2008 Change --------------- ---- ---- ------
---- ---- ------ Segment Revenues Fuselage Systems $506.0 $288.2
75.6% $2,003.6 $1,758.4 13.9% Propulsion Systems $257.9 $168.6
53.0% $1,030.0 $1,031.7 (0.2%) Wing Systems $311.5 $182.1 71.1%
$1,024.4 $955.6 7.2% All Other $2.3 $7.2 (68.1%) $20.5 $26.1
(21.5%) ---- ---- ----- ----- ----- ----- Total Segment Revenues
$1,077.7 $646.1 66.8% $4,078.5 $3,771.8 8.1% Segment Earnings from
Operations Fuselage Systems $58.2 $32.6 78.5% $287.6 $287.6 0.0%
Propulsion Systems $25.4 $21.3 19.2% $122.6 $162.2 (24.4%) Wing
Systems $33.4 $7.4 351.4% $20.7 $99.7 (79.2%) All Other ($0.4) $0.2
(300.0%) ($1.4) $0.3 (566.7%) ----- ---- ------ ----- ---- ------
Total Segment Operating Earnings $116.6 $61.5 89.6% $429.5 $549.8
(21.9%) Unallocated Corporate SG&A Expense ($29.8) ($32.0)
(6.9%) ($122.7) ($141.7) (13.4%) Unallocated Research &
Development Expense ($1.9) ($1.3) 46.2% ($3.5) ($2.4) 45.8% -----
----- ---- ----- ----- ---- Total Earnings from Operations $84.9
$28.2 201.1% $303.3 $405.7 (25.2%) Segment Operating Earnings as %
of Revenues Fuselage Systems 11.5% 11.3% 20 BPS 14.4% 16.4%
(200)BPS Propulsion Systems 9.8% 12.6% (280)BPS 11.9% 15.7%
(380)BPS Wing Systems 10.7% 4.1% 660 BPS 2.0% 10.4% (840)BPS All
Other (17.4%) 2.8% (2,020)BPS (6.8%) 1.1% (790)BPS ----- ---
---------- ---- --- ------- Total Segment Operating Earnings as %
of Revenues 10.8% 9.5% 130 BPS 10.5% 14.6% (410)BPS Total Operating
Earnings as % of Revenues 7.9% 4.4% 350 BPS 7.4% 10.8% (340)BPS
Spirit Ship Set Deliveries (One Ship Set equals One Aircraft) 2008
Spirit AeroSystems Deliveries 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2008 ------- ------- ------- ------- ---------- B737 93 95 87 42
317 B747 4 7 4 1 16 B767 3 3 3 1 10 B777 20 22 18 8 68 B787 1 1 1 -
3 --- --- --- --- --- Total 121 128 113 52 414 A320 Family 95 95 90
87 367 A330/340 24 21 23 22 90 A380 4 2 4 6 16 --- --- --- --- ---
Total 123 118 117 115 473 Hawker 850XP 15 24 24 28 91 --- --- ---
--- --- Total Spirit 259 270 254 195 978 === === === === === 2009
Spirit AeroSystems Deliveries 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2009 ------- ------- ------- ------- ---------- B737 74 96 93 87
350 B747 3 1 3 4 11 B767 3 3 3 3 12 B777 21 21 21 19 82 B787 2 2 2
5 11 --- --- --- --- --- Total 103 123 122 118 466 A320 Family 105
101 94 108 408 A330/340 26 23 28 23 100 A380 - 2 5 4 11 --- --- ---
--- --- Total 131 126 127 135 519 Hawker 850XP 18 13 6 7 44 --- ---
--- --- --- Total Spirit 252 262 255 260 1,029 === === === ===
===== Spirit AeroSystems Holdings, Inc. Condensed Consolidated
Statements of Operations (unaudited) For the Three Months Ended For
the Twelve Months Ended ------------------------
--------------------------- December 31, December 31, December 31,
December 31, 2009 2008 2009 2008 ----------- -----------
------------ ------------ ($ in millions, except per share data)
Net Revenues $1,077.7 $646.1 $4,078.5 $3,771.8 Operating costs and
expenses: Cost of sales 944.2 567.1 3,581.4 3,163.2 Selling,
general and administrative 33.5 35.5 137.1 154.5 Research and
development 15.1 15.3 56.7 48.4 ---- ---- ---- ---- Total Operating
Costs and Expenses 992.8 617.9 3,775.2 3,366.1 Operating Income
84.9 28.2 303.3 405.7 Interest expense and financing fee
amortization (14.5) (9.7) (43.6) (39.2) Interest income 0.8 3.5 7.0
18.6 Other income, net 0.9 (2.1) 6.1 (1.2) --- ---- --- ---- Income
Before Income Taxes and Equity in Net Income of Affiliate 72.1 19.9
272.8 383.9 Income tax provision (22.1) (0.1) (80.9) (118.5) -----
---- ----- ------ Income Before Equity in Net Loss of Affiliate
50.0 19.8 191.9 265.4 Equity in net loss of affiliate - - (0.2) -
--- --- ---- --- Net Income $50.0 $19.8 $191.7 $265.4 ===== =====
====== ====== Earnings per share Basic $0.36 $0.14 $1.39 $1.94
Shares 137.2 137.0 138.3 137.0 Diluted $0.36 $0.14 $1.37 $1.91
Shares 140.2 139.2 139.8 139.2 Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets (unaudited) December 31,
December 31, 2009 2008 ------------ ------------ ($ in millions)
Current assets Cash and cash equivalents $369.0 $216.5 Accounts
receivable, net 160.4 149.3 Current portion of long-term receivable
- 108.9 Inventory, net 2,206.9 1,882.0 Other current assets 116.6
76.6 ----- ---- Total current assets 2,852.9 2,433.3 Property,
plant and equipment, net 1,279.3 1,068.3 Pension assets 171.2 60.1
Other assets 170.4 198.6 ----- ----- Total assets $4,473.8 $3,760.3
======== ======== Current liabilities Accounts payable $441.3
$316.9 Accrued expenses 165.5 161.8 Current portion of long-term
debt 9.1 7.1 Advance payments, short-term 237.4 138.9 Deferred
revenue, short-term 107.1 110.5 Other current liabilities 21.8 8.1
---- --- Total current liabilities 982.2 743.3 Long-term debt 591.1
580.9 Bond payable, long-term 293.6 - Advance payments, long-term
727.5 923.5 Deferred revenue and other deferred credits 46.0 58.6
Pension/OPEB obligation 62.6 47.3 Other liabilities 197.0 109.2
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,
105,064,247 and 103,209,466 issued and outstanding, respectively
1.0 1.0 Common stock, Class B par value $0.01, 150,000,000 shares
authorized, 35,669,740 and 36,679,760 shares issued and
outstanding, respectively 0.4 0.4 Additional paid-in capital 949.8
939.7 Noncontrolling interest 0.5 0.5 Accumulated other
comprehensive loss (59.7) (134.2) Retained earnings 681.8 490.1
----- ----- Total shareholders' equity 1,573.8 1,297.5 -------
------- Total liabilities and shareholders' equity $4,473.8
$3,760.3 ======== ======== Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited) For the
Twelve Months Ended --------------------------- December 31,
December 31, 2009 2008 ------------- ------------- ($ in millions)
Operating activities Net income $191.7 $265.4 Adjustments to
reconcile net income to net cash provided (used in) by operating
activities Depreciation expense 123.0 122.4 Amortization expense
10.8 9.4 Accretion of long-term receivable (6.5) (16.2) Employee
stock compensation expense 10.1 15.7 Loss from the ineffectiveness
of hedge contracts - 0.4 Amortization of bond discount 0.2 - (Gain)
loss from foreign currency transactions (4.5) 6.8 Loss on
disposition of assets 0.1 0.3 Deferred taxes 28.7 (2.8) Pension and
other post-retirement benefits, net 2.2 (28.0) Grant income (1.9) -
Equity in net income of affiliate 0.2 - Changes in assets and
liabilities Accounts receivable (8.2) 15.3 Inventory, net (320.7)
(570.0) Accounts payable and accrued liabilities 125.7 (38.6)
Advance payments (97.5) 341.4 Deferred revenue and other deferred
credits (14.8) 93.7 Other (52.5) (4.5) ----- ---- Net cash provided
by (used in) operating activities (13.9) 210.7 ----- -----
Investing activities Purchase of property, plant and equipment
(228.2) (235.8) Long-term receivable 115.4 116.1 Other 0.4 (0.1)
--- ---- Net cash (used in) investing activities (112.4) (119.8)
------ ------ Financing activities Proceeds from revolving credit
facility 300.0 175.0 Payments on revolving credit facility (300.0)
(175.0) Proceeds from issuance of debt 6.9 10.3 Proceeds from
issuance of bonds 293.4 - Proceeds from government grants 0.7 15.9
Principal payments of debt (7.6) (15.9) Debt issuance and financing
costs (17.3) (6.8) ----- ---- Net cash provided by financing
activities 276.1 3.5 ----- --- Effect of exchange rate changes on
cash and cash equivalents 2.7 (11.3) --- ----- Net increase
(decrease) in cash and cash equivalents for the period 152.5 83.1
Cash and cash equivalents, beginning of the period 216.5 133.4
----- ----- Cash and cash equivalents, end of the period $369.0
$216.5 ====== ====== DATASOURCE: Spirit AeroSystems Holdings, Inc.
CONTACT: Investor Relations, Alan Hermanson, +1-316-523-7040, or
Media, Debbie Gann, +1-316-526-3910, both of Spirit AeroSystems
Holdings, Inc. Web Site: http://www.spiritaero.com/
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