Spirit AeroSystems Holdings, Inc. Reports Significant Growth in Revenue and Earnings; Appointed to Boeing's Global Tanker Team



    
    - First quarter EPS increased 163 percent to $0.50 as net income grew to
    $70 million

    - Revenue grew 42 percent to $954 million; Operating earnings more than
    doubled to $104 million

    - Won new aftermarket business on 777 Thrust Reversers; Chosen by Boeing
to
    provide Next Generation 737 and 777 nacelle component repair and overhaul
    services; Selected to be on Boeing's Global Tanker Team

    - 2007 guidance reaffirmed, reflecting strength of the commercial
aerospace
    market

    Table 1. Summary Financial Results 1st Quarter ($ in millions, except per
    share data) 2007 2006(1) Change

    Revenues $954 $671 42% Operating Income $104 $51 104% Operating Income as
a
    % of Revenues 10.9% 7.5% 340 BPS Net Income $70 $23 204% Net Income as a %
    of Revenues 7.3% 3.4% 390 BPS Earnings per Share (Fully diluted) $0.50
    $0.19 163% Fully Diluted Weighted Avg Share Count (Million) 139.0 117.5

    (1) Excludes Spirit Europe acquired on April 1, 2006
    

    WICHITA, Kan., April 26 /CNW/ -- Spirit AeroSystems Holdings, Inc. (NYSE:  
SPR) reported significant increases in its first quarter financial results and
reaffirmed its 2007 financial guidance, reflecting strong commercial aerospace
markets globally and continued execution of the company's strategy.
    Spirit's first quarter net income rose over 200 percent to $70 million
from $23 million a year ago, and fully diluted earnings per share rose 163
percent to $0.50 per share from $0.19 per share last year. Revenue for the
quarter increased 42 percent to $954 million from $671 million, and the
company's operating margins rose to 10.9 percent from 7.5 percent last year.
First quarter 2007 results include Spirit Europe which was acquired on April
1, 2006. Spirit Europe's revenue for the first quarter 2007 was $127 million.
    "Solid overall performance combined with increased production volume and
productivity improvements drove this quarter's results," said President and
Chief Executive Officer Jeff Turner. "Revenues increased, operating margins
improved and we continue to make good progress on the 787 program," Turner
added. "We are pleased to make progress in our aftermarket business and to be
selected to Boeing's Global Tanker Team that is offering the KC-767 Advanced
Tanker to the United States Air Force. Boeing's selection of Pratt & Whitney
4062 engines for the program and our sole source supplier agreement with
Boeing for thrust reversers on Pratt & Whitney's engines adds potential growth
to our propulsion business and provides potential increased demand for engine
pylons and forward fuselages for the KC-767 program. Looking forward, we
expect to deliver financial performance that reflects the strength of our
design and manufacturing capabilities, the talent of our people, and the
application of industry leading technology."
    The company continued to build momentum in its aftermarket business
during the month of April with an initial agreement to provide overhaul
services and rotables leasing to Cathay Pacific on up to 10 sets of Trent 800
Thrust Reversers. Additionally, Spirit was designated by Boeing as a provider
of nacelle component repair and overhaul services for Boeing 777 and Next
Generation 737 airplanes.
    Spirit's backlog during the quarter increased from $19.2 billion to $19.9
billion, as combined net orders for 323 aircraft at Boeing and Airbus out
paced their combined deliveries of 221 aircraft. Spirit's backlog is
calculated based on contractual prices for products and expected delivery
volumes from the published firm order backlogs of both Boeing and Airbus.
    During the first quarter, Spirit updated its contract profitability
estimates resulting in a favorable change in contract estimates of $6 million.
Almost all of the estimate changes are reflected in the Wing Systems segment
and were driven by favorable cost trends within the current contract blocks.
Because Spirit recognizes changes in contract estimates utilizing the
cumulative catch up method of accounting under Statement of Position 81-1,
approximately $1 million of the favorable adjustment relates to revenues
recognized in 2005, and approximately $5 million relates to revenues
recognized in 2006. Largely offsetting the favorable cumulative catch up
adjustment in the quarter were certain adjustments at Spirit Europe, including
a contract loss provision also recorded in the Wing Systems segment. First
quarter 2006 results included a $34 million favorable cumulative catch up
adjustment.
    Cash flow from operations for the first quarter 2007 was $50 million
reflecting planned increases in working capital primarily for the 787 as the
airplane enters production. Cash flow from operations declined 44 percent from
the prior year period due to the $71 million reduction in customer advances in
the first quarter of 2007. Investments in capital expenditures totaled $88
million in the quarter (Table 2). Over half of the investment in property,
plant and equipment supported the start-up of the 787 program.
    Cash balances at the end of the quarter were $157 million, down from year
end 2006 levels reflecting planned investment in Spirit's core businesses.
Debt balances at the end of the first quarter were $615 million, down slightly
from the year end level.


    Table 2. Cash Flow and Liquidity

    
                                                              1st Quarter
    ($ in millions)
                                                           2007       2006(1)

    Cash Flow from Operations                               $50          $90
    Purchases of Property, Plant & Equipment               ($88)        ($94)

    Liquidity                                           March 29  December 31
                                                           2007         2006

    Cash                                                   $157         $184
    Current Portion of Long-term Debt plus Long-term Debt  $615         $618

    (1) Excludes Spirit Europe acquired on April 1, 2006

    OUTLOOK
    
    The company's financial guidance for 2007 is reaffirmed. The company is
forecasting solid growth in 2007 that reflects strong operating performance
across business segments and higher commercial airplane deliveries.
    Spirit's 2007 revenue is expected to be between $4.0 billion and $4.1
billion, approximately 25 percent higher than 2006, as increased market demand
for large commercial transport aircraft from Boeing and Airbus drives
additional shipset deliveries. This revenue projection is based on previously
issued 2007 Boeing and Airbus delivery guidance of 440-445 and 440-450
aircraft, respectively, and includes the initial deliveries to Boeing of
Spirit products on the 787 program as well as a full year of revenue from
Spirit Europe (Table 3).

    
    Table 3.  Financial Outlook
                                                       2007 Guidance

    Revenues                                           $4.0B - $4.1B
    Operating Income                                   $400M - $420M
    Operating Income as a % of Revenues                 9.8% - 10.5%

    Depreciation and Amortization                      $120M - $125M

    Earnings Per Share (Fully Diluted)                 $1.80 - $1.90

    Effective Tax Rate                                     ~34%

    Cash Flow from Operations*                           + / - $280M
    Capital Expenditures                                 + / - $300M
    Customer Reimbursement of Capital Expenditures       ~ $45M

    Research & Development Expense                        + / - $60M

    Average Fully Diluted Shares Outstanding               141M

    * Includes $40-$50 million of customer advances for capital expenditures
    

    Spirit's operating margins are expected to be between 9.8 percent and
10.5 percent as benefits from higher volumes, cost reduction and productivity
initiatives, as well as lower R&D and stock compensation expenses expand
operating margins vs. 2006 actual results. Spirit's 2007 fully diluted EPS
guidance is between $1.80 and $1.90 per share.
    Cash flow from operations is expected to be +/- $280 million, which
includes additional working capital spending for the new 787 program. Fiscal
2007 capital expenditures are expected to be +/- $300 million. Approximately
50 percent of the capital expenditures will be utilized to complete the
installation of production capacity for the new 787 program. Spirit
anticipates approximately $45 million of customer reimbursement to partially
offset these capital expenditures.
    Depreciation and amortization expenses are forecasted to be between $120
and $125 million as new capital equipment is placed into service.

    
    Cautionary Statement Regarding Forward-Looking Statements
    
    This press release includes forward-looking statements that reflect the
plans and expectations of Spirit AeroSystems Holdings, Inc. To the extent that
statements in this press release do not relate to historical or current facts,
they constitute forward-looking statements. Forward-looking statements can
generally be identified by the use of forward-looking terminology such as
"may," "will," "expect," "intend," "estimate," "anticipate," "believe,"
"project," "continue," or other similar words. These statements reflect Spirit
AeroSystems Holdings, Inc.'s current view with respect to future events and
are subject to risks and uncertainties, both known and unknown. Such risks and
uncertainties may cause the actual results of Spirit AeroSystems Holdings,
Inc. to vary materially from those anticipated in forward-looking statements,
and therefore we caution investors not to place undue reliance on them.
Potential risks and uncertainties include, but are not limited to: our
customers' aircraft build rates; the ability to enter into supply arrangements
with additional customers and satisfy performance requirements under existing
contracts; any adverse impact on our customers' production of aircraft; the
success and timely progression of our customers' new programs including, but
not limited to The Boeing Company's 787 aircraft program; 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; the effect of new commercial and business
aircraft development programs; the cost and availability of raw materials; the
ability to recruit and retain highly skilled employees and relationships with
unions; spending by the United States and other governments on defense; the
continuing ability to operate successfully as a stand alone company; the
outcome of ongoing or future litigation and regulatory actions; and exposure
to potential product liability claims. Additional information as to factors
that may cause actual results to differ materially from our forward-looking
statements can be found in Spirit AeroSystems Holdings, Inc.'s filings with
the United States Securities and Exchange Commission. Spirit AeroSystems
Holdings, Inc. undertakes no obligation and does not intend to update publicly
any forward-looking statements after the date of this press release, except as
required by law.

    Appendix

    Segment Results

    
    Fuselage Systems
    
    Fuselage Systems segment revenue for the first quarter was $445 million,
up 26 percent over the same period last year as deliveries on the 737 and 777
programs increased. Revenues in the first quarter 2006 were negatively
impacted by the IAM strike at Boeing which occurred in September of 2005.
Fuselage Systems posted double-digit segment operating margins of 18.6 percent
for the first quarter 2007, up from 17.0 percent in the same period of 2006 as
R&D expense on the 787 program declined; higher production rates were
realized; and 737 model-mixes shifted to longer aircraft types.

    
    Propulsion Systems
    
    Propulsion Systems segment revenue for the first quarter was $260
million, up 20 percent over the same period last year as deliveries increased
in support of primary customer production volume. Propulsion Systems posted
improved double-digit segment operating margins of 15.5 percent for the first
quarter 2007, up from 13.8 percent in the same period of 2006 as R&D expense
on the 787 program declined and higher production rates were realized.

    
    Wing Systems
    
    Wing Systems segment revenue for the first quarter was $241 million, up
from $92 million over the same period last year. Spirit Europe was acquired on
April 1, 2006, and contributed $127 million to the first quarter 2007
revenues. Wing Systems posted segment operating margins of 9.6 percent for the
first quarter 2007, up from 6.0 percent in the same period of 2006 as R&D
expense on the 787 program declined and favorable cost trends generated
favorable changes in contract estimates that were largely offset by certain
adjustments, including a loss provision at Spirit Europe, during the first
quarter 2007.

    
    Table 4.    Segment Reporting
                                                           1st Quarter
    ($ in millions, except margin percent)             2007    2006(1) Change

    Segment Revenues
     Fuselage Systems                               $445.2    $353.7    25.9%
     Propulsion Systems                             $260.4    $216.5    20.3%
     Wing Systems                                   $241.2     $92.0   162.2%
     All Other                                        $7.3      $8.6   (15.1%)
    Total Segment Revenues                          $954.1    $670.8    42.2%

    Segment Earnings from Operations
     Fuselage Systems                                $83.0     $60.1    38.1%
     Propulsion Systems                              $40.3     $29.8    35.2%
     Wing Systems                                    $23.2      $5.5   321.8%
     All Other                                        $0.8      $0.5    60.0%
    Total Segment Operating Earnings                $147.3     $95.9    53.6%

    Unallocated Corporate SG&A Expense              ($42.5)   ($43.4)    2.1%
    Unallocated Research & Development Expense       ($1.0)    ($1.9)   47.4%
    Total Earnings from Operations                  $103.8     $50.6   105.1%

    Segment Operating Earnings as % of Revenues
     Fuselage Systems                                 18.6%     17.0%  160 BPS
     Propulsion Systems                               15.5%     13.8%  170 BPS
     Wing Systems                                      9.6%      6.0%  360 BPS
     All Other                                        11.0%      5.8%  520 BPS
    Total Segment Operating Earnings as % of Revenues 15.4%     14.3%  110 BPS

    Total Operating Earnings as % of Revenues         10.9%      7.5%  340 BPS

    (1) Excludes Spirit Europe acquired on April 1, 2006



                      Spirit AeroSystems Holdings, Inc.
         Condensed Consolidated Statements of Operations (unaudited)

                                           For the Three       For the Three
                                            Months Ended        Months Ended
                                           March 29, 2007      March 30, 2006
                                        ($ in millions, except per share data)


    Net Revenues                                    $954.1            $670.8
    Operating costs and expenses:
      Cost of sales                                  794.8             533.0
      Selling, general and administrative             45.1              44.8
      Research and development                        10.4              42.4
        Total Costs and Expenses                     850.3             620.2
        Operating Income                             103.8              50.6
    Interest expense and financing fee
     amortization                                     (8.9)            (11.2)
    Interest income                                    7.7               7.1
    Other income, net                                  2.0               1.4
        Income From Continuing Operations
        Before Income Taxes                          104.6              47.9
    Income tax provision                             (34.8)            (25.4)
        Net Income                                   $69.8             $22.5

    Earnings per share
    Basic                                            $0.54             $0.20
    Diluted                                          $0.50             $0.19



                        Spirit AeroSystems Holdings, Inc.
                     Condensed Consolidated Balance Sheets


                                             March 29, 2007  December 31, 2006
                                               (unaudited)
                                                       ($ in millions)
    Current assets
    Cash and cash equivalents                       $157.3            $184.3
    Accounts receivable,net                          256.8             200.2
    Other receivable                                  32.6              43.0
    Inventory, net                                   947.0             882.2
    Income tax receivable                              --               21.7
    Other current assets                              78.1              89.1
         Total current assets                      1,471.8           1,420.5
    Property, plant and equipment, net               841.0             773.8
    Long-term receivable                             196.4             191.5
    Pension assets                                   215.4             207.3
    Other assets                                     115.5             129.1
         Total assets                             $2,840.1          $2,722.2

    Current liabilities
    Accounts payable                                $357.6            $339.1
    Accrued expenses                                 185.8             198.5
    Current portion of long-term debt                 24.9              23.9
    Other current liabilities                         21.2               8.2
         Total current liabilities                   589.5             569.7
    Long-term debt                                   590.2             594.3
    Advance payments                                 600.5             587.4
    Other liabilities                                124.6             111.8
    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, 68,159,104 and
     63,345,834 issued and outstanding,
     respectively                                      0.7               0.6
    Common stock, Class B par value
     $0.01, 150,000,000 shares
     authorized, 71,446,595 and
     71,351,347 shares issued and
     outstanding, respectively                         0.7               0.7
    Additional paid-in capital                       867.2             858.7
    Accumulated other comprehensive income            70.4              72.5
    Accumulated deficit                               (3.7)            (73.5)
         Total shareholders' equity                  935.3             859.0
         Total liabilities and
          shareholders' equity                    $2,840.1          $2,722.2



                        Spirit AeroSystems Holdings, Inc.
           Condensed Consolidated Statements of Cash Flow (unaudited)

                                               For the Three     For the Three
                                               Months Ended       Months Ended
                                              March 29, 2007    March 30, 2006
                                                       ($ in millions)
    Operating activities
    Net income                                       $69.8             $22.5
    Adjustments to reconcile net income
     to net cash provided by operating
     activities
         Depreciation expense                         20.9              16.7
         Amortization expense                          1.9               1.1
         Accretion of long-term
          receivable                                  (5.5)             (5.0)
         Employee stock compensation
          expense                                      6.6              13.4
         Loss on disposition of assets                 0.1                --
         Deferred  taxes                               6.0               2.3
         Pension, net                                 (8.1)             (3.2)

    Changes in assets and liabilities,
     net of acquisition
         Accounts receivable                         (54.3)            (75.4)
         Inventory, net                              (63.6)            (26.5)
         Other current assets                         10.3               4.4
         Accounts payable and accrued
          liabilities                                (11.5)             26.0
         Customer advances                            29.2             100.0
         Income taxes payable                         23.8              11.0
         Deferred revenue and other
          deferred credits                             9.4              14.7
         Other                                        15.1             (12.0)
            Net cash provided by
             operating activities                     50.1              90.0

    Investing Activities
    Purchase of property, plant and
     equipment                                       (87.5)            (93.8)
    Reimbursement of capital expenditures             11.4                --
    Financial derivatives                              1.1                --
            Net cash (used in) investing
             activities                              (75.0)            (93.8)

    Financing Activities
    Principal payments of debt                        (4.6)             (1.8)
    Pool of windfall tax benefits                      2.5                --
    Executive stock investments                         --               0.5
            Net cash (used in) financing
             activities                               (2.1)             (1.3)
    Effect of exchange rate changes on
     cash and cash equivalents                          --                --
            Net (decrease) in cash and
             cash equivalents for the
             period                                  (27.0)             (5.1)
    Cash and cash equivalents, beginning
     of the period                                   184.3             241.3
    Cash and cash equivalents, end of the
     period                                         $157.3            $236.2

    




For further information:

For further information: Investor Relations, Phil Anderson, 
+1-316-523-1797, or Media, Sam Marnick, +1-316-523-3330, both of Spirit 
AeroSystems Holdings, Inc. Web Site: http://www.spiritaero.com


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