Spirit AeroSystems Recognizes Third Quarter Charges For Certain New
Programs; Announces Settlement of Severe Weather Related Insurance
Claim
WICHITA, Kan., Oct. 25, 2012 /PRNewswire/ -- Spirit AeroSystems
Holdings, Inc. [NYSE: SPR] today announced that it expects to
record pre-tax charges of approximately $184
million on the 787 program; $163
million on the G650 Wing program; $151 million on the BR725 (Engine Nacelle Package
for the G650); $88 million on the
G280 Wing program; and $4 million on
other combined programs. These combined forward loss charges total
approximately $590 million, and will
be included in the company's third quarter 2012 financial
results.
"The execution of our diversification and growth strategy has
proven very complex," said Jeff
Turner, President and Chief Executive Officer, "as we
rapidly expanded our customer-base, manufacturing sites, and
product design capabilities, while managing multiple development
programs with significant design changes and schedule delays. It is
unfortunate that we have struggled on these development efforts. As
we move forward our focus is on applying our lessons learned in
strong program management, change control, and shop floor
disciplines to drive performance on these programs and continue the
solid performance on our core production programs," Turner
concluded.
During the third quarter, the company continued to increase
production rates and progress to full-rate production on a number
of newly type-certified programs. The company no longer expects to
achieve cost targets sufficient to maintain zero-profit margin
contracts due to increasing supply chain, factory support, and
labor costs. The cash use associated with the additional contract
costs will occur over the majority of remaining contract
deliveries. The current contract accounting shipments are expected
to be delivered by 2018.
To address the charges in the quarter, the company successfully
obtained the required lender consent to amend its senior secured
loan and credit facility to adjust the senior secured leverage
ratio through the first quarter of 2013 and the other financial
covenant ratios through the second quarter of 2013, after which
time the financial covenant ratios will revert back to pre-amended
ratios. The amendment is expected to become effective on or about
October 26, 2012. No event of default
has occurred.
Separately, the company reached a final settlement with insurers
for all claims relating to the April 14,
2012 severe weather event at its Wichita, Kan. facility. The settlement amount
of approximately $235 million
reflects claims lower than previously estimated (approximately
$400 million) and resolves all
property damage, clean-up, recovery, and business interruption
costs. The settlement amount less current quarter expenses will be
recognized as a gain in the third quarter 2012. The cash settlement
of $130 million ($235 million less the $105
million cash advance received in the second quarter 2012) is
expected in the fourth quarter 2012.
President and Chief Executive Officer Jeff Turner and Senior Vice President and Chief
Financial Officer Phil Anderson will
participate in a conference call presentation to securities
analysts to review these announcements today at 11:00 a.m. Central time.
That presentation will be broadcast online at
http://www.spiritaero.com/investor.aspx and presentation materials
are available on our website at the same location. A replay of the
presentation will be available at the same location after the
call's conclusion.
Individuals are urged to check the website in advance to ensure
their devices are configured for the audio stream.
The company will update its 2012 financial guidance when it
reports third quarter 2012 results on Nov.
1, 2012.
On the web: http://www.spiritaero.com
About Spirit AeroSystems, Inc.
Spirit AeroSystems,
with headquarters in Wichita,
Kan., USA, is one of the world's largest non-OEM designers
and manufacturers of aerostructures for commercial aircraft. In
addition to its Wichita and
Chanute facilities in Kansas, Spirit has locations in Tulsa and McAlester,
Okla.; Kinston, N.C.;
Nashville, Tenn; Prestwick,
Scotland; Preston, England; Subang, Malaysia; and Saint-Nazaire, France. In the U.S., Spirit's core products
include fuselages, pylons, nacelles and wing components.
Additionally, Spirit provides aftermarket customer support
services, including spare parts, maintenance/repair/overhaul, and
fleet support services in North
America, Europe and
Asia. Spirit Europe produces wing components for a host of
customers, including Airbus.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking
statements concerning future business operations. Actual results or
circumstances may vary materially from those indicated or implied
in this press release as a result of certain risks and
uncertainties, including our ability to continue to grow our
business and execute our growth strategy, including the timing,
execution, and profitability of new programs; our ability to
perform our obligations and manage costs related to our new
commercial and business aircraft development programs and the
related recurring production; margin pressures and the potential
for additional forward-losses on aircraft development programs; the
accuracy or completeness of our assessment of damage and costs of
restoration and recovery from the severe weather event that hit our
Wichita, Kan. facility on
April 14, 2012; as well as other
risks and uncertainties, including but not limited to those
detailed in Spirit AeroSystems Holdings, Inc. Securities and
Exchange Commission filings.
SOURCE Spirit AeroSystems Holdings, Inc.