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Delaware | 3728 | 20-2436320 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code No.) | (I.R.S. Employer Identification No.) |
Joel I. Greenberg, Esq. Mark S. Kingsley, Esq. Kaye Scholer LLP 425 Park Avenue New York, New York 10022 (212) 836-8000 | Gloria Farha Flentje, Esq. General Counsel Spirit AeroSystems, Inc. 3801 South Oliver Wichita, Kansas 67210 (316) 526-9000 | William J. Whelan, III, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 (212) 474-1000 |
Proposed Maximum | Proposed Maximum | |||||||||||
Title of Each Class of | Amount to be | Offering Price Per | Aggregate Offering | Amount of | ||||||||
Securities to be Registered | Registered | Unit | Price | Registration Fee(1) | ||||||||
Class A Common Stock, par value $0.01 per share(2) | 10,416,667 shares | $25.00 | $260,416,675(3) | $27,864.58 | ||||||||
Class A Common Stock, par value $0.01 per share(4) | 49,479,167 shares(5) | $25.00 | $1,236,979,175(3) | $132,356.77 | ||||||||
(1) | The registrant previously paid a registration fee of $53,500 in connection with the filing of the initial Registration Statement on June 30, 2006. Accordingly, the registrant is remitting the balance of the filing fee of $106,721.35 in connection with this filing. |
(2) | Shares to be sold by the registrant. |
(3) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) of the Securities Act of 1933, as amended. |
(4) | Shares to be sold by the selling stockholders. |
(5) | Includes 7,812,500 shares that the underwriters have the option to purchase solely to cover over-allotments, if any. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Proceeds | ||||||||||||||||
Underwriting | to Spirit | Proceeds to | ||||||||||||||
Price to | Discounts and | AeroSystems | Selling | |||||||||||||
Public | Commissions | Holdings, Inc. | Stockholders | |||||||||||||
Per Share | $ | $ | $ | $ | ||||||||||||
Total | $ | $ | $ | $ |
Credit Suisse | Goldman, Sachs & Co. | Morgan Stanley |
Banc of America Securities LLC | GMP Securities L.P. | RBC Capital Markets | ||
Citigroup | Jefferies Quarterdeck | Scotia Capital | ||
Cowen and Company | Lehman Brothers | UBS Investment Bank | ||
Deutsche Bank Securities | Merrill Lynch & Co. | Westwind Partners |
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EX-3.1: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION | ||||||||
EX-3.2: AMENDED AND RESTATED BY-LAWS | ||||||||
EX-10.12: UNION EQUITY PARTICIPATION PLAN | ||||||||
EX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP | ||||||||
EX-23.2: CONSENT OF DELOITTE & TOUCHE LLP |
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• | Summary | |
• | Capitalization | |
• | Unaudited Pro Forma Consolidated Financial Information | |
• | Selected Consolidated Financial Information and Other Data | |
• | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
• | Business | |
• | Executive Compensation | |
• | Certain Relationships and Related Party Transactions | |
• | Consolidated Financial Statements and Footnotes | |
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• | 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; | |
• | our ability to enter into supply arrangements with additional customers and to satisfy performance requirements under existing supply contracts with Boeing and Airbus; | |
• | any adverse impact on Boeing’s production of aircraft resulting from reduced orders by Boeing’s customers; | |
• | the success and timely progression of Boeing’s new B787 aircraft program, including receipt of necessary regulatory approvals; | |
• | 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, environmental laws and agency regulation, in the U.S. and abroad; | |
• | the effect of new commercial and business aircraft development programs, their timing and resource requirements that may be placed on us; | |
• | the cost and availability of raw materials; | |
• | 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; | |
• | our continuing ability to operate successfully as a stand alone company; | |
• | the outcome or impact of ongoing or future litigation and regulatory actions; and | |
• | our exposure to potential product liability claims. |
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Class A common stock offered by us | 10,416,667 shares | |
Class A common stock offered by the selling stockholders | 41,666,667 shares | |
Common stock outstanding after this offering | 52,083,334 shares of class A common stock and 75,673,868 shares of class B common stock | |
Voting rights of class A common stock | Our class A common stock is entitled to one vote per share. Our class B common stock, which is not being offered in this offering but votes together with our class A common stock as a single class, is entitled to ten votes per share (reducing to one vote per share under certain limited circumstances). Our class B common stock, which is convertible into shares of our class A common stock on a1-for-1 basis, is identical to our class A common stock in all other respects. | |
Use of proceeds | We estimate that the net proceeds from the sale of shares of our class A common stock in this offering will be approximately $229 million. We will not receive any proceeds from the sale of shares by the selling stockholders. | |
We intend to use the net proceeds from this offering to repay approximately $100 million of debt under our senior secured credit facility and to pay approximately $129 million of the obligations which will become due upon the closing of the offering under our Union Equity Participation Plan. See “Use of Proceeds.” | ||
Dividend policy | We currently do not intend to pay cash dividends and, under conditions in which our cash is below specified levels, are prohibited from doing so under credit agreements governing our credit facilities. | |
Risk factors | See “Risk Factors” on page 11 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our class A common stock. | |
Proposed NYSE symbol | “SPR” |
• | no exercise by the underwriters of their option to purchase additional shares; | |
• | the anticipated3-for-1 stock split of our common stock that will occur immediately prior to the consummation of this offering; | |
• | the exclusion of 5,006,829 shares of class A common stock to be issued pursuant to our Union Equity Participation Plan (5,020,496 shares if the underwriters’ over-allotment option is exercised in full) as a result of the closing of this offering (which shares will be issued on or prior to March 15, 2007); | |
• | the exclusion of 6,939,979 shares issued to certain members of our management and to certain directors of Spirit which are subject to vesting requirements under our benefit plans; and | |
• | the exclusion of 860,224 Units of phantom stock issued pursuant to our Supplemental Executive Retirement Plan. | |
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Spirit Holdings | Predecessor | ||||||||||||||||||||||||||||
Unaudited Pro Forma As | |||||||||||||||||||||||||||||
Adjusted for this Offering | Period | ||||||||||||||||||||||||||||
Period from | from | ||||||||||||||||||||||||||||
June 17, | Six | Period from | January 1, | ||||||||||||||||||||||||||
Six Months | 2005 | Months | June 17, | 2005 | Fiscal Year Ended | ||||||||||||||||||||||||
Ended | through | Ended | 2005 through | through | |||||||||||||||||||||||||
June 29, | December 29, | June 29, | December 29, | June 16, | December 31, | December 31, | |||||||||||||||||||||||
2006(1) | 2005(1) | 2006 | 2005 | 2005 | 2004 | 2003 | |||||||||||||||||||||||
(restated) | (restated) | ||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||
Net sales/total cost transferred | $ | 1,526 | $ | 1,208 | $ | 1,526 | $ | 1,208 | $ | N/A | $ | N/A | $ | N/A | |||||||||||||||
Costs of sales/products transferred | 1,249 | 1,057 | 1,249 | 1,057 | 1,164 | 2,074 | 2,064 | ||||||||||||||||||||||
SG&A, R&D, other period costs(2) | 170 | 219 | 170 | 218 | 91 | 173 | 144 | ||||||||||||||||||||||
Total costs and expenses | 1,419 | 1,276 | 1,419 | 1,275 | 1,254 | 2,247 | 2,208 | ||||||||||||||||||||||
Operating income (loss) | 107 | (68 | ) | 108 | (67 | ) | N/A | N/A | N/A | ||||||||||||||||||||
Interest expense and financing fee amortization | (23 | ) | (25 | ) | (19 | ) | (22 | ) | N/A | N/A | N/A | ||||||||||||||||||
Interest income | 14 | 16 | 14 | 16 | N/A | N/A | N/A | ||||||||||||||||||||||
Other income (loss), net | 3 | 1 | 3 | 1 | N/A | N/A | N/A | ||||||||||||||||||||||
Net income (loss) before taxes | 101 | (76 | ) | 106 | 71 | N/A | N/A | N/A | |||||||||||||||||||||
Provision for income taxes | (49 | ) | (14 | ) | (49 | ) | (14 | ) | N/A | N/A | N/A | ||||||||||||||||||
Net income (loss) | $ | 52 | $ | (90 | ) | $ | 57 | $ | (85 | ) | N/A | N/A | N/A | ||||||||||||||||
Basic weighted average number of common shares outstanding | 113.9 | 113.5 | 133.2 | 132.6 | N/A | N/A | N/A | ||||||||||||||||||||||
Basic net income (loss) per share applicable to common stock | $ | 0.46 | $ | (0.80 | ) | $ | 0.43 | $ | (0.64 | ) | N/A | N/A | N/A | ||||||||||||||||
Diluted weighted average number of common shares outstanding | 120.9 | 113.5 | 135.9 | 132.6 | N/A | N/A | N/A | ||||||||||||||||||||||
Diluted net income (loss) per share applicable to common stock | $ | 0.43 | $ | (0.80 | ) | $ | 0.42 | $ | (0.64 | ) | N/A | N/A | N/A | ||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||
EBITDA | $ | 126 | $ | (38 | ) | $ | 127 | $ | (25 | ) | N/A | N/A | N/A | ||||||||||||||||
Capital expenditures | $ | 180 | $ | 145 | $ | 180 | $ | 145 | $ | 48 | $ | 54 | $ | 43 | |||||||||||||||
Balance Sheet Data (end of period)(3): | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 126 | $ | 241 | $ | 101 | N/A | $ | 1 | $ | 3 | $ | 4 | ||||||||||||||||
Working capital(4) | $ | 598 | $ | 436 | $ | 598 | N/A | $ | 431 | $ | 481 | $ | 474 | ||||||||||||||||
Total assets | $ | 2,109 | $ | 1,657 | $ | 2,080 | N/A | $ | 1,020 | $ | 1,044 | $ | 1,093 | ||||||||||||||||
Total long-term debt | $ | 707 | $ | 710 | $ | 607 | N/A | N/A | N/A | N/A | |||||||||||||||||||
Shareholders’ equity | $ | 424 | $ | 326 | $ | 374 | N/A | N/A | N/A | N/A | |||||||||||||||||||
Reconciliation of Net Income to EBITDA: | |||||||||||||||||||||||||||||
Net income (loss) | $ | 52 | $ | (90 | ) | $ | 57 | $ | (85 | ) | N/A | N/A | N/A | ||||||||||||||||
Income taxes | 49 | 14 | 49 | 14 | N/A | N/A | N/A | ||||||||||||||||||||||
Interest expense and financing fee amortization | 23 | 25 | 19 | 22 | N/A | N/A | N/A | ||||||||||||||||||||||
Interest income | (14 | ) | (16 | ) | (14 | ) | (16 | ) | |||||||||||||||||||||
Depreciation and amortization(5) | 16 | 29 | 16 | 29 | 40 | 91 | 97 | ||||||||||||||||||||||
EBITDA(6) | $ | 126 | $ | (38 | ) | $ | 127 | $ | (36 | ) | N/A | N/A | N/A | ||||||||||||||||
Adjusted EBITDA(7) | $ | 203 | $ | 74 | $ | 204 | $ | 76 | N/A | N/A | N/A | ||||||||||||||||||
(1) | See Note 2 of the restated consolidated financial statements for further information regarding the restatement. |
(2) | Includes non-cash stock compensation expense of $26 million, $35 million, $16 million, $21 million, $22 million, $23 million and $13 million for the respective periods starting with the six months ended June 29, 2006. |
(3) | Each $1.00 increase or decrease in the assumed initial public offering price of $24.00 per share, the midpoint of the range on the cover of the prospectus, would increase or decrease, as applicable, our pro forma cash and cash equivalents, working capital, total assets and total stockholders’ equity by approximately $10 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions payable by us. |
(4) | Ending balance of accounts receivable, inventory and accounts payable on net basis. |
(5) | Excludes financing fee amortization. |
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(6) | “EBITDA” represents net income before interest expense, interest income, income tax provision and depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined in accordance with U.S. GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. We present EBITDA because we believe it is a useful indicator of our operating performance. Our management uses EBITDA principally as a measure of our operating performance and believes that EBITDA is useful to investors because it is frequently used by investors and other interested parties to evaluate a company’s operating performance in industries similar to ours without regard to items such as interest and debt expense, income tax expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, accounting methods, book value of assets, capital structure and the method by which assets are acquired. In addition, we believe that the investment community uses EBITDA to compare companies with different capital structures in capital intensive industries such as the aerospace industry. Our management uses EBITDA as a measure of our ability to service indebtedness and for planning purposes, including the preparation of our annual operating budget (including planned capital expenditures and working capital requirements) and financial projections. EBITDA, as presented, may not be comparable to similarly titled measures of other companies. |
EBITDA does not represent and should not be considered as an alternative to results of operations under U.S. GAAP and has significant limitations as an analytical tool. Although we use EBITDA as a measure to assess the performance of our business, the use of EBITDA is limited because it excludes certain material costs. For example, it does not include interest expense, which is a necessary element of our costs and ability to generate revenue, because we have borrowed money in order to finance our operations. Because we use capital assets, depreciation expense is a necessary element of our costs and ability to generate revenue. EBITDA also does not include the payment of taxes, which is also a necessary element of our operations. Because EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Because of these limitations management does not view EBITDA in isolation or as a primary performance measure and also uses other measures, such as net income, net sales, bookings and operating income, to measure operating performance. |
(7) | The following table shows certain items which are included in EBITDA. We believe this table, when reviewed in connection with our presentation of EBITDA, provides another useful tool to our management and investors for measuring comparative operating performance between time periods and among companies. In addition to EBITDA, our management assesses the adjustments presented in this table when preparing our annual operating budget and financial projections. Furthermore, these adjustments are also significant elements of the adjusted EBITDA calculation used by our senior lenders in determining whether we are in default under certain covenants in our senior secured credit facility. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. |
Spirit Holdings | ||||||||||
Period from | ||||||||||
Six Months | June 17, 2005 | |||||||||
Ended June 29, | through | |||||||||
2006 | December 29, 2005 | |||||||||
(restated) | (restated) | |||||||||
(Dollars in millions) | ||||||||||
EBITDA | $ | 126 | $ | (38 | ) | |||||
B787 development costs(a) | 64 | 76 | ||||||||
Transition expense(b) | 13 | 36 | ||||||||
Subtotal | 77 | 112 | ||||||||
Adjusted EBITDA | $ | 203 | $ | 74 | ||||||
(a) | Represents B787 research and development costs which are expensed and defined as an allowable addback for the purpose of calculating EBITDA in the credit agreement governing one of Spirit’s credit facilities. Boeing and Airbus implement new aircraft programs infrequently and at such times, it is necessary for us to make a significant investment in non-recurring research and development to ensure that we have the necessary expertise to complete our portion of the content of the program. | |
(b) | Represents non-recurring costs associated with establishing a stand alone business. |
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• | changes in regulatory requirements; | |
• | domestic and foreign government policies, including requirements to expend a portion of program funds locally and governmental industrial cooperation requirements; | |
• | fluctuations in foreign currency exchange rates; | |
• | the complexity and necessity of using foreign representatives and consultants; | |
• | uncertainties and restrictions concerning the availability of funding credit or guarantees; | |
• | imposition of tariffs or embargoes, export controls and other trade restrictions; | |
• | the difficulty of management and operation of an enterprise spread over various countries; | |
• | compliance with a variety of foreign laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and | |
• | economic and geopolitical developments and conditions, including international hostilities, acts of terrorism and governmental reactions, inflation, trade relationships and military and political alliances. |
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• | We did not maintain effective internal control over the quarterly closing and consolidation process, including the account reconciliation and review process and accuracy of certain accounts receivable transactions. Specifically, controls over the reconciliation of the accounts receivable subsidiary ledger to its associated general ledger balances, application of certain cash payments from customers and the investigation and resolution of customer payment discrepancies were ineffective to appropriately record certain accounts receivable transactions. This control deficiency resulted in adjustments to the accounts receivable, revenue and cash accounts. If not remediated, this deficiency could result in a material misstatement of accounts receivable or related accounts. | |
• | We did not maintain effective controls over our income tax provision and the related balance sheet accounts. Specifically, controls over the accuracy of the income tax provision and related deferred tax accounts as well as our related financial statement disclosures in accordance with SFAS No. 109,Accounting for Income Taxes, were ineffective to appropriately apply SFAS No. 109 in evaluating our required valuation allowance and establishing the tax basis of the acquired assets and assumed liabilities of the Boeing Acquisition. This control deficiency resulted in adjustments to the deferred tax, valuation allowance and income tax provision accounts as well as our related SFAS No. 109 financial statement disclosures. | |
• | We did not maintain effective controls over the accuracy and completeness of our interim financial statements of our Tulsa, Oklahoma facility. Specifically, there were ineffective controls over the |
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reconciliation of certain general ledger accounts and the aggregation and reporting of those accounts into our financial statements which could have resulted in a material misstatement in our financial statements. |
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• | demands on management related to the increase in size after the transaction; | |
• | the diversion of management’s attention from the management of daily operations to the integration of operations; | |
• | difficulties in the assimilation and retention of employees; | |
• | difficulties in the assimilation of different cultures and practices, as well as in the assimilation of geographically dispersed operations and personnel, who may speak different languages; | |
• | difficulties combining operations that use different currencies or operate under different legal structures; | |
• | difficulties in the integration of departments, systems (including accounting systems), technologies, books and records and procedures, as well as in maintaining uniform standards, controls (including internal accounting controls), procedures and policies; and | |
• | constraints (contractual or otherwise) limiting our ability to consolidate, rationalize and/or leverage supplier arrangements to achieve integration. |
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• | our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or other general corporate purposes may be impaired; | |
• | we must use a significant portion of our cash flow for payments on our debt, which will reduce the funds available to us for other purposes; | |
• | we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; | |
• | our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt; and | |
• | our ability to borrow additional funds or to refinance debt may be limited. |
• | incur additional debt or issue our preferred stock; | |
• | pay dividends or make distributions to our stockholders; | |
• | repurchase or redeem our capital; | |
• | make investments; | |
• | incur liens; | |
• | enter into transactions with our stockholders and affiliates; | |
• | sell certain assets; | |
• | acquire the assets of, or merge or consolidate with, other companies; and | |
• | incur restrictions on the ability of our subsidiaries to make distributions or transfer assets to us. |
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• | multi-vote shares of common stock, which are owned by the Onex entities and management stockholders; | |
• | advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and | |
• | the authority of the board of directors to issue, without stockholder approval, up to 10 million shares of preferred stock with such terms as the board of directors may determine and an additional 65,302,819 shares of class A common stock (not including shares reserved for issuance upon conversion of outstanding shares of class B common stock) and an additional 67,386,153 shares of class B common stock (not including shares issued but subject to vesting requirements under our benefit plans). | |
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• | actual or anticipated fluctuations in our operating results; | |
• | changes in aerostructures pricing; | |
• | our competitors’ and customers’ announcements of significant contracts, acquisitions or strategic investments; | |
• | changes in our growth rates or our competitors’ and customers’ growth rates; | |
• | the timing or results of regulatory submissions or actions with respect to our business; | |
• | our inability to raise additional capital; | |
• | conditions of the aerostructure industry or in the financial markets or economic conditions in general; and | |
• | changes in stock market analyst recommendations regarding our class A common stock, other comparable companies or the aerospace industry generally. |
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• | breaches by Boeing of its representations, warranties, covenants and agreements contained in the Asset Purchase Agreement; | |
• | damages relating to separating the portion of Boeing’s Wichita facilities not acquired by us from the portion acquired by us; | |
• | damages relating to noncompliance with certain laws by Boeing prior to closing; | |
• | liability for defective manufacture of products shipped by Boeing prior to closing; | |
• | certain environmental liabilities, as more fully described under “Business — Environmental Matters;” and | |
• | tax liabilities for periods prior to closing. |
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• | approximately $100 million to repay debt outstanding under our Term Loan B under our senior secured credit facility; and | |
• | the balance to pay a portion of the obligations which will become due upon the closing of this offering under our Union Equity Participation Plan. | |
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• | our consolidated capitalization on an actual basis, | |
• | our consolidated capitalization on a pro forma basis to give effect to the sale of 10,416,667 shares of class A common stock by us in this offering at an assumed initial public offering price of $24.00 per share, the midpoint of the range on the cover of the prospectus, and the application of those proceeds as described in “Use of Proceeds.” | |
As of June 29, 2006 | ||||||||||
Actual | Pro Forma(1) | |||||||||
(restated) | ||||||||||
(Dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
Long-term debt, including current portion: | ||||||||||
Revolving credit facility(2) | $ | — | $ | — | ||||||
Term loan | 694.8 | 594.8 | ||||||||
Capital leases and other debt | 26.1 | 26.1 | ||||||||
Total senior debt | 720.9 | 620.9 | ||||||||
Subordinated secured delayed draw credit facility | — | — | ||||||||
Total debt | $ | 720.9 | $ | 620.9 | ||||||
Shareholders’ equity | ||||||||||
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized; nil shares issued and outstanding | — | — | ||||||||
Class A common stock, $0.01 par value per share, 200,000,000 shares authorized; nil shares issued and outstanding, actual; 52,083,334 shares issued and outstanding, as adjusted | — | 0.5 | ||||||||
Class B common stock, $0.01 par value per share, 150,000,000 shares authorized; 123,885,279 shares issued and outstanding, actual; 75,673,868 shares issued and outstanding, as adjusted | 1.2 | 0.8 | ||||||||
Additional paid-in capital | 437.4 | 666.3 | ||||||||
Accumulated other comprehensive income | 23.0 | 23.0 | ||||||||
Accumulated deficit | (38.1 | ) | (38.1 | ) | ||||||
Total shareholders’ equity | 423.5 | 652.5 | ||||||||
Total capitalization | $ | 1,144.4 | $ | 1,273.4 | ||||||
(1) | Each $1.00 increase or decrease in the assumed initial public offering price of $24.00 per share, the midpoint of the range on the cover of the prospectus, would increase or decrease, as applicable, the amount of pro forma additionalpaid-in capital, total stockholders’ equity and total capitalization by approximately $10 million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions payable by us. |
(2) | The revolving credit facility provides for availability of borrowings and issuances of letters of credit for up to $175.0 million. As of June 29, 2006, we had $175.0 million of availability under the revolving credit facility, net of $0.3 million of letters of credit outstanding. |
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Assumed initial public offering price per share | $ | 24.00 | |||||||
Pro forma net tangible book value per share at June 29, 2006 | $ | 3.01 | |||||||
Increase in pro forma net tangible book value per share attributable to new investors | 1.10 | ||||||||
Pro forma adjusted net tangible book value per share after this offering | 4.11 | ||||||||
Dilution per share to new investors | $ | 19.89 | |||||||
Shares Purchased | Total Consideration | ||||||||||||||||||||
Average Price | |||||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | |||||||||||||||||
Existing stockholders | 123,885,279 | (1) | 92.2 | % | $ | 379,696,240 | 60.3 | % | $ | 3.06 | |||||||||||
New investors | 10,416,667 | 7.8 | % | $ | 250,000,008 | 39.7 | % | $ | 24.00 | ||||||||||||
Total | 134,301,946 | 100 | % | $ | 629,696,248 | $ | 100 | % | |||||||||||||
(1) | Includes 10,247,595 shares of class B common stock subject to vesting requirements under our benefit plans of which 3,307,616 shares of class B common stock will vest on the offering. |
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• | the pro forma consolidated balance sheet as of June 29, 2006, assuming this offering occurred on June 29, 2006 and the proceeds were applied as described in “Use of Proceeds;” | |
• | the pro forma consolidated statement of operations for the six months ended June 29, 2006, assuming this offering occurred on January 1, 2005 and the proceeds were applied as described in “Use of Proceeds;” and | |
• | the pro forma consolidated statement of operations for the fiscal year ended December 29, 2005 assuming the Boeing Acquisition, this offering and the application of proceeds as described in “Use of Proceeds” all occurred on January 1, 2005. |
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Pro Forma | |||||||||||||
Adjustments | |||||||||||||
for the | Pro Forma | ||||||||||||
June 29, | Offering | June 29, | |||||||||||
2006(a) | Transactions | 2006 | |||||||||||
(restated) | |||||||||||||
(Dollars in millions) | |||||||||||||
Current Assets: | |||||||||||||
Cash and cash equivalents | $ | 125.7 | $ | (25.0 | )(b) | $ | 100.7 | ||||||
Accounts receivable, net | 263.7 | — | 263.7 | ||||||||||
Inventories, net | 613.4 | — | 613.4 | ||||||||||
Prepaid and other assets | 17.3 | — | 17.3 | ||||||||||
Total current assets | 1,020.1 | (25.0 | ) | 995.1 | |||||||||
Property, plant and equipment, net | 624.7 | — | 624.7 | ||||||||||
Other assets | 464.3 | (4.5 | )(c) | 459.8 | |||||||||
Total assets | $ | 2,109.1 | $ | (29.5 | ) | $ | 2,079.6 | ||||||
Current Liabilities: | |||||||||||||
Accounts payable and accrued expenses | $ | 441.0 | $ | — | $ | 441.0 | |||||||
Current maturities of debt | 14.2 | — | 14.2 | ||||||||||
Income taxes | 23.3 | — | 23.3 | ||||||||||
Stock issuance liability | — | 120.2 | (d) | 120.2 | |||||||||
Total current liabilities | 478.5 | 120.2 | 598.7 | ||||||||||
Long-term debt | 706.7 | (100.0 | )(e) | 606.7 | |||||||||
Advance payments | 400.0 | — | 400.0 | ||||||||||
Other liabilities | 100.4 | — | 100.4 | ||||||||||
Shareholders’ Equity: | |||||||||||||
Common stock, $0.01 par value, 350,000,000 shares authorized | 1.2 | 0.1 | (f) | 1.3 | |||||||||
Additional paid-in capital | 437.4 | 228.9 | (f) | 666.3 | |||||||||
Accumulated other comprehensive income | 23.0 | — | 23.0 | ||||||||||
Accumulated deficit | (38.1 | ) | (278.7 | )(g) | (316.8 | ) | |||||||
Total shareholders’ equity | 423.5 | (49.7 | ) | 373.8 | |||||||||
Total liabilities and shareholders’ equity | $ | 2,109.1 | $ | (29.5 | ) | $ | 2,079.6 | ||||||
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Pro Forma | Pro Forma | ||||||||||||
Six Months | Adjustments for | Six Months | |||||||||||
Ended June 29, | the Offering | Ended June 29, | |||||||||||
2006(a) | Transactions(g) | 2006 | |||||||||||
(restated) | |||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||
Net sales | $ | 1,526.2 | $ | — | $ | 1,526.2 | |||||||
Cost of sales | 1,249.0 | — | 1,249.0 | ||||||||||
Selling, general and administrative | 100.1 | (1.0 | )(h) | 99.1 | |||||||||
Research and development | 70.5 | — | 70.5 | ||||||||||
Total costs and expenses | 1,419.6 | (1.0 | ) | 1,418.6 | |||||||||
Operating income | 106.6 | 1.0 | 107.6 | ||||||||||
Interest expense and financing fee amortization | (22.9 | ) | 4.2 | (e) | (18.7 | ) | |||||||
Interest income | 14.0 | — | 14.0 | ||||||||||
Other income, net | 2.9 | — | 2.9 | ||||||||||
Income before income taxes | 100.6 | 5.2 | 105.8 | ||||||||||
Provision for income taxes | (48.4 | ) | — | (i) | (48.4 | ) | |||||||
Net income | $ | 52.2 | $ | 5.2 | $ | 57.4 | |||||||
Net income per share, basic | $ | 0.46 | $ | 0.04 | (j) | $ | 0.43 | (j) | |||||
Shares used in per share calculation, basic | 113.9 | 133.2 | 133.2 | ||||||||||
Net income per share, diluted | $ | 0.43 | $ | 0.04 | (j) | $ | 0.42 | (j) | |||||
Shares used in per share calculation, diluted | 120.9 | 135.9 | 135.9 |
(a) | See Note 2 of our restated consolidated financial statements for further information regarding the restatement. | |
(b) | Cash and cash equivalents | |
The pro forma adjustment to Cash and cash equivalents is attributable to the following items: | ||
Pro Forma | |||||
June 29, 2006 | |||||
Net proceeds from offering | $ | 229.0 | |||
Cash portion of Union Equity Participation Plan payout | (150.0 | ) | |||
Prepayment of long-term debt | (100.0 | ) | |||
Termination of intercompany agreement with Onex Partners Manager, L.P. | (4.0 | ) | |||
Total pro forma adjustment to Cash and cash equivalents | $ | (25.0 | ) |
(c) | The pro forma adjustment to Other assets reflects a write-off of the imputed present value of Spirit’s proportionate share of the subordinated delayed draw credit facility with Boeing for $3.6 million less $1.1 million of accumulated amortization. See “Liquidity and Capital Resources”. This adjustment also includes a $2.0 million write-off of a proportionate share of deferred financing fees associated with the $100.0 million prepayment oflong-term debt. | |
(d) | The pro forma adjustment to Stock issuance liability represents the value on the date of the offering of the stock portion of the Union Equity Participation Plan payout (5,006,829 x $24.00) that would be recorded as a liability until the date the shares are actually issued which would be approximately four months after the offering date. | |
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(e) | The pro forma adjustment to Interest expense primarily reflects a $3.9 million interest expense savings associated with the repayment of approximately $100 million of Term Loan B under the Senior Secured Credit Facilities (assuming interest at LIBOR plus applicable margin, as described in “Use of Proceeds” as well as the assumed interest rates used in calculating the Pro forma Acquisition Adjustments). If interest rates were to change by 0.125%, the total interest would increase (decrease) by approximately $0.4 million for the six months ended June 29, 2006. In addition, the interest expense adjustment reflects the elimination of the structure under which Spirit borrows from an indirect subsidiary of Onex Wind, as outlined in “Certain Relationships and Related Party Transactions — Other Related Party Transactions and Business Relationships”. This adjustment also reflects $0.3 million of deferred financing fees that have been written off proportionate to the debt pre-payment. | |
(f) | The pro forma adjustment to Common stock and Additional paid-in capital reflects the increase in shares from the offering (10,416,667 shares issued or $0.1 million increase in Common stock and $229.0 million in Additional paid-in capital based on net proceeds of $21.98 per share). | |
(g) | Accumulated deficit | |
Pro Forma | |||||
June 29, 2006 | |||||
Stock compensation charge for Union Equity Participation Plan | $ | (270.2 | ) | ||
Termination of intercompany agreement with Onex Partners Manager, L.P. | (4.0 | ) | |||
Writeoff of deferred financing fees proportionate to debt prepayment | (2.0 | ) | |||
Writeoff of Boeing delayed draw credit facility (see discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”) | (2.5 | ) | |||
Total pro forma adjustment to Accumulated deficit | $ | (278.7 | ) |
As these adjustments are non-recurring in nature, they have not been included in the Pro-Forma Consolidated Statement of Operations. | ||
(h) | The pro forma adjustment to Selling, general and administrative represents service fee credits of $1.0 million that will not be incurred by the Company after termination of the outstanding intercompany agreement with Onex Partners Manager, L.P. | |
(i) | As of June 29, 2006, the Company continued to have full valuation allowance of its deferred tax asset therefore the pro forma adjustments would have no impact on Provision for income taxes. | |
(j) | Included in the Net income (loss) per share calculation are the 10,416,667 shares from this offering and the 5,006,829 shares for the Union Equity Participation Plan, both assumed to have been issued. | |
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• | adjustments for revenues recorded as a stand alone business, based on actual deliveries for the period prior to the Boeing Acquisition with pricing as determined under our supply agreements with Boeing, rather than as a captive division whose costs are absorbed; | |
• | adjustments to compensation and benefits as a result of new union wage rates, incentive programs and benefit plans that became effective at the time of the Boeing Acquisition; | |
• | adjustments to interest, depreciation and amortization expense resulting from the $700 million Term Loan B, valuation of the assets under purchase accounting and the allocation of negative goodwill; and | |
• | adjustments for certain costs, including service fees payable to Onex, taxes and the recalculation of accreted income related to Spirit’s non-interest bearing long-term receivable from Boeing in the aggregate amount of $277 million. |
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Spirit Holdings | |||||||||||||||||||||||||
Predecessor | Predecessor | Actual Results | |||||||||||||||||||||||
Actual Results | Pro Forma | Period From | Spirit Holdings | ||||||||||||||||||||||
Period From | Period From | February 7, 2005 | Pro Forma | ||||||||||||||||||||||
January 1, 2005 | Pro Forma Adjustments | January 1, 2005 | through | Year Ended | |||||||||||||||||||||
through | through | December 29, | December 29, | ||||||||||||||||||||||
June 16, 2005 (a) | Acquisition (b) | Labor (c) | June 16, 2005 | 2005(1)(2) | 2005 | ||||||||||||||||||||
(restated) | |||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||||||||||||
Net sales(3) | $ | — | $ | 1,165.3 | $ | — | $ | 1,165.3 | $ | 1,207.6 | $ | 2,372.9 | |||||||||||||
Cost of sales (Spirit Holdings)/ | |||||||||||||||||||||||||
Cost of products transferred (Predecessor) | 1,163.9 | (141.3 | ) | (31.4 | ) | 991.2 | 1,056.4 | 2,047.6 | |||||||||||||||||
Provision of energy services, net | (0.2 | ) | — | — | (0.2 | ) | (0.2 | ) | |||||||||||||||||
SG&A, R&D, other period costs(4) | 90.7 | 97.9 | — | 188.6 | 219.0 | 407.6 | |||||||||||||||||||
Operating income (loss) | (1,254.4 | ) | 1,208.7 | 31.4 | (14.3 | ) | (67.8 | ) | (82.1 | ) | |||||||||||||||
Interest expense and financing fee amortization | — | (19.9 | ) | (19.9 | ) | (25.5 | ) | (45.4 | ) | ||||||||||||||||
Interest income | — | — | — | — | 15.4 | 15.4 | |||||||||||||||||||
Other income, net | — | 8.2 | — | 8.2 | 1.3 | 9.5 | |||||||||||||||||||
Provision for income taxes | — | (17.4 | ) | — | (17.4 | ) | (13.7 | ) | (31.1 | ) | |||||||||||||||
Net income (loss) | $ | (1,254.4 | ) | $ | 1,179.6 | $ | 31.4 | $ | (43.4 | ) | $ | (90.3 | ) | $ | (133.7 | ) | |||||||||
Net loss per share, basic | N/A | N/A | N/A | N/A | $ | (0.80 | ) | $ | (1.01 | ) | |||||||||||||||
Shares used in per share calculation, basic | N/A | N/A | N/A | N/A | 113.5 | 132.6 | |||||||||||||||||||
Net loss per share, diluted | N/A | N/A | N/A | N/A | $ | (0.80 | ) | $ | (1.01 | ) | |||||||||||||||
Shares used in per share calculation, diluted | N/A | N/A | N/A | N/A | 113.5 | 132.6 |
(1) | Spirit Holdings was formed on February 7, 2005 as a holding company of Spirit. Spirit’s operations commenced on June 17, 2005, following the closing of the Boeing Acquisition. |
(2) | See Note 2 of our restated consolidated financial statements for further information regarding the restatement. |
(3) | For purposes of the Pro Forma Net Sales adjustment for the period from January 1, 2005 through June 16, 2005, sales were recorded upon the transfer of airplane units to Boeing. After the Boeing Acquisition, we adopted the use of contract accounting for profit recognition. The pro forma statement of operations data presented for the period from January 1, 2005 through June 16, 2005 does not include an adjustment to convert Boeing Wichita’s historical accounting methodology to contract accounting. |
(4) | Included in actual SG&A, R&D, other period costs is the non-cash stock compensation charge of $22.1 million for the period ended June 16, 2005 and $34.7 million for the period from February 7, 2005 through December 29, 2005. |
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Pro Forma Adjustment for the | |||||||||||||
Spirit Holdings Pro | Offering Transactions Period | Pro Forma as Adjusted | |||||||||||
Forma Year Ended | From January 1, 2005 through | Year Ended | |||||||||||
December 29, 2005(a) | December 29, 2005(b) | December 29, 2005 | |||||||||||
Net sales | $ | 2,372.9 | $ | — | $ | 2,372.9 | |||||||
Cost of sales/products transferred | 2,047.4 | — | 2,047.4 | ||||||||||
SG&A, R&D, other period costs | 407.6 | (2.0 | )(c) | 405.6 | |||||||||
Operating income (loss) | (82.1 | ) | 2.0 | (80.1 | ) | ||||||||
Interest expense and financing fee amortization | (45.4 | ) | 7.1 | (d) | (38.3 | ) | |||||||
Interest income | 15.4 | — | 15.4 | ||||||||||
Other income, net | 9.5 | — | 9.5 | ||||||||||
Provision for (recovery of) income taxes | (31.1 | ) | — | (31.1 | ) | ||||||||
Net income (loss) | (133.7 | ) | 9.1 | (124.6 | ) | ||||||||
Net income (loss) per share, basic | $ | (1.01 | ) | $ | 0.07 | (e) | $ | (0.94 | )(e) | ||||
Shares used in per share calculation, basic | 132.6 | 132.6 | 132.6 | ||||||||||
Net income (loss) per share, diluted | $ | (1.01 | ) | $ | 0.07 | (e) | $ | (0.94 | )(e) | ||||
Shares used in per share calculation, diluted | 132.6 | 132.6 | 132.6 |
(a) | Includes the Predecessor pro forma adjustments for the Boeing Acquisition and Labor for the period from January 1, 2005 through June 16, 2005. |
(b) | Costs associated with the offering that are excluded from the pro forma income statement due to their non-recurring nature: |
Stock compensation charge for Union Equity Participation Plan | $ | (270.2 | ) | ||
Termination of intercompany agreement with Onex Partners Manager, L.P. | (4.0 | ) | |||
Writeoff of deferred financing fees proportionate to debt prepayment | (2.0 | ) | |||
Writeoff of Boeing delayed draw credit facility (see discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”) | (2.5 | ) | |||
Total non-recurring adjustments | $ | (278.7 | ) |
(c) | The pro forma adjustment to SG&A, R&D, other period costs represents a service fee of $2.0 million for the period ended December 29, 2005 that will not be incurred by the Company after termination of the outstanding intercompany agreement with Onex Partners Manager, L.P. |
(d) | The pro forma adjustment to Interest expense reflects a $4.0 million interest expense savings associated with the repayment of approximately $100 million of Term Loan B under the Senior Secured Credit Facilities (assuming interest at LIBOR plus applicable margin, as described in “Use of Proceeds”). In addition, the interest expense adjustment reflects the elimination of the structure under which Spirit borrows from an indirect subsidiary of Onex Wind, as outlined in “Certain Relationships and Related Party Transactions — Other Related Party Transactions and Business Relationships”. This adjustment also reflects $0.3 million of deferred financing fees that have been written off proportionate to the debt prepayment. |
(e) | Included in the Net income (loss) per share calculations are the 10,416,667 shares from this offering and the 5,006,829 shares for the Union Equity Participation Plan, both assumed to have been issued. |
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The historical financial data is presented to reflect the operation of Boeing Wichita as a cost center of BCA, not a separate legal entity. Historically, Boeing Wichita was an internal supplier of parts and assemblies for the B737, B747, B757, B767 and B777 airplane programs of BCA, with few sales to third party customers. Boeing Wichita included the manufacturing operations of BCA located in Wichita, Kansas; Tulsa, Oklahoma and McAlester, Oklahoma along with certain shared assets and operations of Boeing’s Shared Services Group. This historical financial information reflects the actual financial statements of Boeing Wichita. Certain amounts have been allocated from Boeing’s consolidated financial statements. | |
Pursuant to the Asset Purchase Agreement, Spirit acquired Boeing Wichita (including the assumption of certain liabilities). Boeing Wichita is the predecessor entity of Spirit Holdings for the periods prior to the Boeing Acquisition. The historical financial statements for the period from January 1, 2005 through June 16, 2005 present the associated historical assets, liabilities and operating costs of Boeing Wichita. | |
Since Boeing Wichita was operated as a cost center, costs incurred and allocated to Boeing Wichita were absorbed by BCA and revenues were not recorded in Boeing Wichita’s historical financial statements. Cost of products transferred includes manufacturing labor, material and non-labor and site overhead costs. Fringe benefit costs are allocated to the cost of products transferred through the fringe rate as a percentage of labor dollars. Fringe costs include elements such as vacation, holiday, sick leave, medical, pension and postretirement medical, as described in the notes to our historical financial statements. Costs administered by Boeing are not allocated to the cost of products transferred. | |
Transactions with Boeing were conducted on a non-cash basis, and generally involved performance under intra-company arrangements between Boeing Wichita and Boeing. | |
Certain costs were incurred by Boeing on behalf of Boeing Wichita. To the extent practical, these costs were discretely transferred to Boeing Wichita, but in some cases, an allocation methodology was used to transfer the costs to Boeing Wichita. Management believes that these allocations are reasonable, but may not be indicative of costs that would have been incurred had Boeing Wichita been operated on a stand alone basis. These costs fall into the following three major categories and all such costs have been included in Boeing Wichita’s historical financial statements. | |
First, the historical financial statements include costs directly related to the activities of Boeing Wichita, which were incurred by Boeing and transferred to Boeing Wichita for administrative purposes, including payroll, accounts payable, travel and employee benefits such as pension costs, and medical coverage. These costs are primarily included in cost of products transferred and the balance is included in SG&A, R&D and other period costs. | |
Second, costs incurred by Boeing on behalf of Boeing Wichita represented the purchase of parts from Boeing that are incorporated into the products of Boeing Wichita. The cost of these parts is treated the same as the cost of parts acquired from third parties and is included in cost of products transferred. | |
Third, costs incurred by Boeing on behalf of Boeing Wichita are either general and administrative or relate to support services provided by Boeing for the benefit of Boeing Wichita. These costs, except for those identified as general and administrative, are included in cost of products transferred. |
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The Boeing Acquisition represents the impact of the following items: | |
(i) Net Sales. |
The adjustments to produce total net sales are outlined as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
Program Revenue at Supply Agreement Prices(1) | $ | 1,073.3 | |||
Other Sales at Supply Agreement Prices(1) | 47.4 | ||||
B787 Revenue(1) | 21.3 | ||||
Spares Sales at Supply Agreement Prices(1) | 33.7 | ||||
Amortization of Intangibles and Depreciation of Tooling Related to Exclusivity Agreement(2) | (10.4 | ) | |||
Total Revenue | $ | 1,165.3 | |||
(1) | This adjustment reflects the application of the contractually-determined pricing from our supply agreements with Boeing to the actual products and services transferred to Boeing during the period from January 1, 2005 through June 16, 2005. See “Business — Our Relationship with Boeing.” |
(2) | This adjustment reflects the reduction of revenue related to the amortization of intangibles and tooling depreciation in accordance with Emerging Issues Task Force, or EITF, No. 01-3,Accounting in a Business Combination for Deferred Revenue of an Acquireeand EITF No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). |
(ii) Cost of Sales/ Costs of Products Transferred. |
The adjustments to cost of products transferred are as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
B787 Reclassification(1) | $ | (56.2 | ) | ||
G&A Reclassification(2) | (38.3 | ) | |||
Capitalized Tooling(3) | (18.5 | ) | |||
Depreciation Expense(4) | (28.3 | ) | |||
Total | $ | (141.3 | ) | ||
(1) | Cost of products transferred has been reduced by $56.2 million to reflect the reclassification of certain B787-related cost of products transferred as SG&A to conform to Spirit’s classification. Historically, Boeing Wichita included these expenses in cost of products transferred. Spirit classifies these expenses as SG&A. |
(2) | Cost of products transferred has been reduced by $38.3 million to eliminate costs associated with accounting, human resources, payroll, security and other period expenses that were historically recorded by Boeing Wichita as a cost of products transferred. These costs were reclassified as SG&A to conform to Spirit’s classification. |
(3) | Cost of products transferred has been reduced by $18.5 million to eliminate the costs associated with tooling expenses. Historically, Boeing Wichita expensed certain tooling assets. Spirit capitalized these tooling assets after the closing of the Boeing Acquisition. |
(4) | Cost of products transferred was reduced for depreciation expense of $28.3 million due to the lower asset values resulting from the Boeing Acquisition, including the recognition and allocation of negative goodwill. |
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(iii) SG&A, R&D and Other Period Costs. |
SG&A, R&D and other period costs are outlined as follows: |
1/1/2005- | |||||
6/16/2005 | |||||
B787 Reclassification(1) | $ | 56.2 | |||
SG&A Reclassification(2) | 38.3 | ||||
Other(3) | 3.4 | ||||
Total | $ | 97.9 | |||
(1) | SG&A has been increased by $56.2 million to reflect the reclassification of certain B787-related cost of products transferred as SG&A to conform to Spirit’s classification of costs. Historically, Boeing Wichita included these costs in cost of products transferred. Spirit classifies these expenses as SG&A. |
(2) | SG&A has been adjusted by $38.3 million to add costs associated with accounting, human resources, payroll, security and other period costs that were reclassified from costs of products transferred to SG&A to conform to Spirit’s classification of costs. |
(3) | Other period costs were increased by $3.4 million, including (a) amortization of favorable leasehold interest and other identified intangibles resulting from the Boeing Acquisition and (b) the Onex service fee ($2 million on an annual basis, prorated for five and a half months). |
(iv) Interest Expense and Financing Fee Amortization. The pro forma adjustments to interest expense and financing fee amortization are based on the borrowings to finance the Boeing Acquisition as presented below: |
1/1/2005- | ||||
6/16/2005 | ||||
Term Loan B(1) | $ | 17.5 | ||
Amortization of Loan Fees(2) | 2.4 | |||
Interest Expense and Financing Fee Amortization | $ | 19.9 | ||
(1) | The Term Loan B’s interest rate was determined as LIBOR plus 225 basis points. The following rates were used for calculating the interest for the Term Loan B during the months set forth below: |
Interest | ||||
Rate | ||||
January 2005 | 5.00 | % | ||
February 2005 | 5.17 | % | ||
March 2005 | 5.37 | % | ||
April 2005 | 5.46 | % | ||
May 2005 | 5.59 | % | ||
June 2005 | 5.68 | % |
The effect of a 0.125% change in the interest rate on the Term Loan B would increase or decrease annual pro forma interest expense by $0.8 million. |
(2) | Deferred financing amortization expense for the period from January 1, 2005 through June 16, 2005 is based on monthly amortization of deferred financing fees incurred due to the debt borrowed to fund the Boeing Acquisition. |
(v) Other Income and Expense, Net. Other income and expense, net has been adjusted to account for the estimated accretion income related to Spirit’s non-interest bearing long-term receivable from Boeing in the aggregate amount of $277 million payable in 2007, 2008 and 2009 attributable to the acquisition of title of various tooling and other capital assets. |
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(vi) Income Taxes. The pro forma tax adjustment of $17.4 million to income taxes reflects the tax effect of the pro forma adjustment to operating income. Tax expense was based on the following assumptions: (1) all actual temporary and permanent book versus tax differences as recognized by Spirit Holdings in the post-Boeing Acquisition period in 2005 were applied to the pre-Boeing Acquisition period in 2005 and (2) 100% of the actual valuation allowance recorded on net deferred tax assets utilized by Spirit in the post-Boeing Acquisition period in 2005 was assumed to be consistent with valuation allowance on net deferred tax assets for the pre-Boeing Acquisition period in 2005. |
New union wage rates took effect upon, and pension, health and welfare benefits, post-retirement and incentive plans were adjusted as a result of, the Boeing Acquisition. The historical costs incurred have been adjusted by $11.6 million as a result of wage changes and $19.8 million as a result of fringe rate changes. The wage reduction adjustment was calculated using the average number of union employees as of each of January 1, 2005 and June 16, 2005 and the difference between the actual wage rates in effect as of each of January 1, 2005 and June 30, 2005. | |
Actual fringe rates as a percentage of labor incurred by us for the period from June 17, 2005 through December 29, 2005 were applied to the lower base labor cost to calculate the fringe rate adjustment. |
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Spirit Holdings | Predecessor | ||||||||||||||||||||||||||||
Period from | Period from | ||||||||||||||||||||||||||||
Six Months | June 17, 2005 | January 1, | Fiscal Year Ended | ||||||||||||||||||||||||||
Ended | through | 2005 through | |||||||||||||||||||||||||||
June 29, | December 29, | June 16, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
2006(1) | 2005(1) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||||||
(restated) | (restated) | ||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Statement of Income Data: | |||||||||||||||||||||||||||||
Net sales | $ | 1,526.2 | $ | 1,207.6 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Cost of sales | 1,249.0 | 1,056.4 | $ | 1,163.9 | $ | 2,074.3 | $ | 2,063.9 | $ | 2,350.7 | $ | 2,945.0 | |||||||||||||||||
Selling, general & administrative expenses(2) | 100.1 | 140.7 | 79.7 | 155.1 | 116.7 | 135.1 | 138.1 | ||||||||||||||||||||||
Research & development | 70.5 | 78.3 | 11.0 | 18.1 | 17.3 | 18.5 | 21.9 | ||||||||||||||||||||||
Special charges(3) | — | — | — | — | 10.3 | — | 49.0 | ||||||||||||||||||||||
Operating income (loss) | 106.6 | (67.8 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Interest expense and financing fee amortization | (22.9 | ) | (25.5 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Interest income | 14.0 | 15.4 | — | — | — | — | — | ||||||||||||||||||||||
Other income, net | 2.9 | 1.3 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Income (loss) before income taxes | 100.6 | (76.6 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Provision for income taxes | (48.4 | ) | (13.7 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Net income (loss) | $ | 52.2 | $ | (90.3 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
Net income (loss) per share, basic | $ | 0.46 | $ | (0.80 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
Shares used in per share calculation, basic | 113.9 | 113.5 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Net income (loss) per share, diluted | $ | 0.43 | $ | (0.80 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
Shares used in per share calculation, diluted | 120.9 | 113.5 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||
Cash flow provided by (used in) operating activities | $ | 212.6 | $ | 223.8 | $ | (1,177.8 | ) | $ | (2,164.9 | ) | $ | (2,081.8 | ) | $ | (2,281.8 | ) | $ | (3,034.3 | ) | ||||||||||
Cash flow used in investing activities | $ | (323.4 | ) | $ | (1,030.3 | ) | $ | (48.2 | ) | $ | (54.4 | ) | $ | (43.3 | ) | $ | (50.4 | ) | $ | (61.3 | ) | ||||||||
Cash flow provided by (used in) financing activities | $ | (4.9 | ) | $ | 1,047.8 | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
Capital expenditures | $ | (180.0 | ) | $ | (144.6 | ) | $ | (48.2 | ) | $ | (54.4 | ) | $ | (43.3 | ) | $ | (50.4 | ) | $ | (61.3 | ) |
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Spirit Holdings | Predecessor | ||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||
June 29, | December 29, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||
2006(1) | 2005(1) | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||
(restated) | (restated) | ||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||||||||
Cash & cash equivalents(4) | $ | 125.7 | $ | 241.3 | $ | 3.0 | $ | 3.6 | $ | 1.3 | $ | 1.7 | |||||||||||||
Accounts receivable, net | $ | 263.7 | $ | 98.8 | $ | 2.0 | $ | 2.0 | $ | 1.6 | $ | 1.6 | |||||||||||||
Inventories | $ | 613.4 | $ | 510.7 | $ | 524.6 | $ | 529.4 | $ | 535.1 | $ | 683.9 | |||||||||||||
Property, plant & equipment, net | $ | 624.7 | $ | 518.8 | $ | 511.0 | $ | 555.3 | $ | 611.8 | $ | 667.1 | |||||||||||||
Total assets | $ | 2,109.1 | $ | 1,656.6 | $ | 1,043.6 | $ | 1,093.3 | $ | 1,153.1 | $ | 1,358.1 | |||||||||||||
Total debt | $ | 720.9 | $ | 721.6 | N/A | N/A | N/A | N/A | |||||||||||||||||
Long-term debt | $ | 706.7 | $ | 710.0 | �� | N/A | N/A | N/A | N/A | ||||||||||||||||
Shareholders’ equity | $ | 423.5 | $ | 325.8 | N/A | N/A | N/A | N/A |
(1) | See Note 2 of the restated consolidated financial statements for further information regarding the restatement. |
(2) | Includes non-cash stock compensation expenses of $26.3 million, $34.7 million, $22.1 million, $23.3 million, $12.9 million, $9.1 million and $7.2 million for the respective periods starting with the six months ended June 29, 2006. |
(3) | In 2001, a special charge was allocable to Boeing Wichita in connection with the terrorist attacks of September 11, 2001. In 2003, a charge was allocable to Boeing Wichita in connection with the close-out of the Boeing B757 program. |
(4) | Prior to the Boeing Acquisition, the Predecessor was part of Boeing’s cash management system, and consequently, had no separate cash balance. Therefore, at December 31, 2004, December 31, 2003, December 31, 2002 and December 31, 2001, the Predecessor had negligible cash on the balance sheet. |
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Period from | Period from | |||||||||||||||||||||||||||||||||||
June 17, 2005 | Period from | June 30, 2006 | ||||||||||||||||||||||||||||||||||
through | December 30, | through | For the years ending December 31, | |||||||||||||||||||||||||||||||||
December 29, | 2005 through | December 31, | ||||||||||||||||||||||||||||||||||
2005 | June 29, 2006 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Total | ||||||||||||||||||||||||||||
As previously reported(1) | 4.2 | 7.3 | 7.1 | 4.1 | 2.5 | 1.3 | 0.4 | — | 26.9 | |||||||||||||||||||||||||||
As restated | 34.7 | 26.3 | 28.0 | 25.5 | 14.6 | 8.0 | 2.9 | 0.2 | 140.2 | |||||||||||||||||||||||||||
Difference | 30.5 | 19.0 | 20.9 | 21.4 | 12.1 | 6.7 | 2.5 | 0.2 | 113.3 | |||||||||||||||||||||||||||
(1) | Beyond the period ending June 29, 2006, the presented figures represent the estimated future spread of the original calculated fair values. The values presented for the period from June 17, 2005 through December 29, 2005 and the period from December 30, 2005 through June 29, 2005 are the amounts that were previously presented in the statements of cash flows. |
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2001 | 2002 | 2003 | 2004 | 2005 | 2006 | ||||||||||||||||||||
Boeing | 527 | 381 | 281 | 285 | 290 | 395 | |||||||||||||||||||
Airbus | 325 | 303 | 305 | 320 | 378 | 430 | |||||||||||||||||||
Total | 852 | 684 | 586 | 605 | 668 | 825 | |||||||||||||||||||
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Revenue and Profit Recognition |
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Inventory |
Income Taxes |
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Pensions and Other Post-Retirement Benefits |
Stock Compensation Plans |
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(Dollars in millions) | ||||||
Cash payment to Boeing | $ | 904 | ||||
Direct costs of the acquisition | 20 | |||||
Less: | ||||||
Consideration to be returned from Boeing for sale of capital assets | (203 | ) | ||||
Consideration to be returned from Boeing for transition costs | (30 | ) | ||||
Working capital settlement | (19 | ) | ||||
Total consideration | $ | 672 | ||||
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Fair value | Pro rata allocation | Book value, | |||||||||||
June 16, | of excess of fair | June 16, | |||||||||||
2005 | value over cost | 2005 | |||||||||||
(Dollars in millions) | |||||||||||||
Cash | $ | 1.3 | $ | 1.3 | |||||||||
Accounts receivable | 0.3 | 0.3 | |||||||||||
Inventories | 479.2 | 479.2 | |||||||||||
Other current assets | 0.3 | 0.3 | |||||||||||
Property, plant and equipment | 902.3 | $ | (671.2 | ) | 231.1 | ||||||||
Intangible assets | 85.2 | (67.9 | ) | 17.3 | |||||||||
Other assets | 6.8 | 6.8 | |||||||||||
Pension asset | 101.2 | 101.2 | |||||||||||
Accounts payable and accrued liabilities | (130.2 | ) | (130.2 | ) | |||||||||
Pension and post-retirement liabilities | (35.0 | ) | (35.0 | ) | |||||||||
Net assets acquired | $ | 1,411.4 | $ | (739.1 | ) | $ | 672.3 | ||||||
Cash payment to BAE Systems | $ | 139.1 | ||
Direct costs of the acquisition | 3.6 | |||
Working capital settlement | 3.0 | |||
Total consideration | $ | 145.7 | ||
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Pro rata | ||||||||||||
Allocation of | ||||||||||||
Excess of | ||||||||||||
Fair Value | Fair Value | Book Value | ||||||||||
April 1, 2006 | Over Cost | April 1, 2006 | ||||||||||
Cash | $ | 0.3 | $ | $ | 0.3 | |||||||
Accounts receivable | 61.3 | 61.3 | ||||||||||
Inventories | 45.7 | 45.7 | ||||||||||
Other current assets | — | — | ||||||||||
Property, plant and equipment | 90.3 | (15.4 | ) | 74.9 | ||||||||
Intangible assets (customer relationships) | 40.8 | (7.0 | ) | 33.8 | ||||||||
Currency hedge assets | 11.1 | 11.1 | ||||||||||
Accounts payable and accrued liabilities | (57.8 | ) | (57.8 | ) | ||||||||
Pension liabilities | (19.1 | ) | (19.1 | ) | ||||||||
Warranty liabilities | (2.8 | ) | (2.8 | ) | ||||||||
Currency hedge liabilities | (1.7 | ) | (1.7 | ) | ||||||||
Net assets acquired | $ | 168.1 | $ | (22.4 | ) | $ | 145.7 | |||||
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• | Recognize the funded status of our defined benefit plans in our consolidated financial statements. | |
• | Recognize as a component of other compensation income any actuarial gains and losses and prior service costs and credits that arise during the period but are not immediately recognized as components of net periodic benefit cost. | |
• | Measure defined benefit plan assets and obligations as of our fiscal year end. | |
• | Disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the subsequent fiscal year that arise from delayed recognition of gains or losses, prior to service costs or credits, and transition asset or obligation. | |
Accounting Changes and Pronouncements |
• | change from discrete unit or block costing to the use of long-term contract accounting; | |
• | reclassification of certain costs from cost of sales to selling, general and administrative costs, or SG&A; | |
• | change from accelerated depreciation methods for most personal property to straight line depreciation methods for all property, plant and equipment; | |
• | implementation of accounting for new activities that were not performed by or otherwise recognized by the Predecessor; and | |
• | establishment of a lower dollar threshold for capitalization of internal use software. |
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Spirit Holdings | Predecessor | ||||||||||||||||||||
Period From | |||||||||||||||||||||
Six Months | June 17, | Period From | |||||||||||||||||||
Ended | 2005 through | January 1, 2005 | Year Ended | Year Ended | |||||||||||||||||
June 29, | December 29, | through | December 31, | December 31, | |||||||||||||||||
2006 | 2005 | June 16, 2005 | 2004 | 2003 | |||||||||||||||||
(restated) | (restated) | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Net sales | $ | 1,526.2 | $ | 1,207.6 | N/A | N/A | N/A | ||||||||||||||
Cost of sales (Spirit Holdings)/cost of products transferred (Predecessor) | 1,249.0 | 1,056.4 | 1,163.9 | 2,074.3 | 2,063.9 | ||||||||||||||||
SG&A, R&D, other period costs(a) | 170.6 | 219.0 | 90.7 | 173.2 | 144.3 | ||||||||||||||||
Operating income (loss) | $ | 106.6 | $ | (67.8 | ) | N/A | N/A | N/A | |||||||||||||
Interest expense and financing fee amortization | (22.9 | ) | (25.5 | ) | N/A | N/A | N/A | ||||||||||||||
Interest income | 14.0 | 15.4 | N/A | N/A | N/A | ||||||||||||||||
Other income, net | 2.9 | 1.3 | N/A | N/A | N/A | ||||||||||||||||
Provision for income taxes | (48.4 | ) | (13.7 | ) | N/A | N/A | N/A | ||||||||||||||
Net income (loss) | $ | 52.2 | $ | (90.3 | ) | N/A | N/A | N/A | |||||||||||||
(a) | Includes non-cash stock compensation expense of $26 million, $35 million, $22 million, $23 million and $13 million respectively for the periods starting with the six months ended June 29, 2006. | |
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Six Months Ended June 29, 2006 as Compared to Five and One-Half Months Ended June 16, 2005 |
Spirit Holdings | Predecessor | |||||||||
Six Months | Five and One- | |||||||||
Ended | Half Months | |||||||||
June 29, 2006 | Ended | |||||||||
(restated) | June 16, 2005 | |||||||||
(Dollars in millions) | ||||||||||
Net sales | $ | 1,526.2 | N/A | |||||||
Cost of sales (Spirit Holdings)/cost of products transferred | ||||||||||
(Predecessor) | 1,249.0 | $ | 1,163.9 | |||||||
SG&A, R&D, other period costs | 170.6 | 90.7 | ||||||||
Operating income | $ | 106.6 | N/A | |||||||
Interest expense and financing fee amortization | (22.9 | ) | N/A | |||||||
Interest income | 14.0 | — | ||||||||
Other income, net | 2.9 | N/A | ||||||||
Provision for income taxes | (48.4 | ) | N/A | |||||||
Net income | $ | 52.2 | N/A | |||||||
(Dollars in | |||||
millions) | |||||
(restated) | |||||
Segment Revenues | |||||
Fuselage Systems | $ | 768.2 | |||
Propulsion Systems | 441.7 | ||||
Wing Systems | 299.1 | ||||
All Other | 17.2 | ||||
Total | $ | 1,526.2 | |||
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Spirit Holdings | Predecessor | |||||||||
Five and One- | ||||||||||
Six Months | Half Months | |||||||||
Ended | Ended | |||||||||
Model | June 29, 2006(1) | June 16, 2005 | ||||||||
B737 | 141 | 114 | ||||||||
B747 | 6 | 8 | ||||||||
B767 | 6 | 6 | ||||||||
B777 | 30 | 25 | ||||||||
A320 | 81 | — | ||||||||
A330/340 | 33 | — | ||||||||
A380 | 5 | — | ||||||||
Raytheon Hawker 800XP | 12 | — | ||||||||
Total | 314 | 153 | ||||||||
(1) | Deliveries of the Airbus and Raytheon products began on April 1, 2006 with the acquisition of BAE Aerostructures. |
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(Dollars in | |||||
millions) | |||||
(restated) | |||||
Segment Operating Income | |||||
Fuselage Systems | $ | 125.5 | |||
Propulsion Systems | 59.1 | ||||
Wing Systems | 19.0 | ||||
All Other | 2.1 | ||||
Total segment operating income | 205.7 | ||||
Unallocated corporate expenses | (99.1 | ) | |||
Operating income | $ | 106.6 | |||
Year Ended December 29, 2005 as Compared to Year Ended December 31, 2004 |
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Combined | Predecessor | ||||||||
Period From | Period From | ||||||||
January 1, 2005 to | January 1, 2004 to | ||||||||
Model | December 29, 2005 | December 31, 2004 | |||||||
B737 | 233 | 201 | |||||||
B747 | 15 | 13 | |||||||
B757 | 0 | 9 | |||||||
B767 | 11 | 10 | |||||||
B777 | 49 | 37 | |||||||
Total | 308 | 270 | |||||||
Period from June 17, 2005 through December 29, 2005 |
(Dollars in | |||||
millions) | |||||
(restated) | |||||
Segment Revenues | |||||
Fuselage Systems | $ | 637.7 | |||
Propulsion Systems | 372.2 | ||||
Wing Systems | 170.0 | ||||
All Other | 27.7 | ||||
Total | $ | 1,207.6 | |||
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Spirit Holdings | |||||
Period From | |||||
June 17, 2005 through | |||||
Model | December 29, 2005 | ||||
B737 | 119 | ||||
B747 | 7 | ||||
B767 | 5 | ||||
B777 | 24 | ||||
Total | 155 | ||||
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(Dollars in | |||||
millions) | |||||
(restated) | |||||
Segment Operating Income (loss) | |||||
Fuselage Systems | $ | 43.7 | |||
Propulsion Systems | 24.5 | ||||
Wing Systems | 5.1 | ||||
All Other | (1.2 | ) | |||
Total segment operating income | $ | 72.1 | |||
Unallocated corporate expenses | (139.9 | ) | |||
Operating loss | $ | (67.8 | ) | ||
Period from January 1, 2005 through June 16, 2005 as Compared to Year Ended December 31, 2004 |
Predecessor | ||||||||
Period From | ||||||||
January 1, 2005 through | Year Ended | |||||||
June 16, 2005 | December 31, 2004 | |||||||
(Dollars in millions) | ||||||||
Cost of products transferred | $ | 1,163.9 | $ | 2,074.3 | ||||
SG&A, R&D, other period costs | $ | 90.7 | $ | 173.2 | ||||
SG&A, R&D, other period costs as a percentage of cost of products transferred | 7.8 | % | 8.3 | % |
Year Ended December 31, 2004 as Compared to Year Ended December 31, 2003 |
Predecessor | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(Dollars in millions) | ||||||||
Cost of products transferred | $ | 2,074.3 | $ | 2,063.9 | ||||
SG&A, R&D, other period costs | $ | 173.2 | $ | 144.3 |
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Predecessor | |||||||||
Period From | Period From | ||||||||
January 1, 2004 to | January 1, 2003 to | ||||||||
Model | December 31, 2004 | December 31, 2003 | |||||||
B737 | 201 | 169 | |||||||
B747 | 13 | 18 | |||||||
B757 | 9 | 14 | |||||||
B767 | 10 | 16 | |||||||
B777 | 37 | 38 | |||||||
Total | 270 | 255 | |||||||
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Six Months Ended June 29, 2006 |
Period from June 17, 2005 through December 29, 2005 |
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Contractual Obligations |
2012 and | |||||||||||||||||||||||||||||||||
Contractual Obligations | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | After | Total | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||
Principal Payment on Term Loan B(1) | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 661.5 | $ | — | $ | 696.5 | |||||||||||||||||
Non-Cancelable Operating Lease Payments(2) | 2.3 | 2.3 | 2.3 | 1.2 | 1.2 | 0.6 | — | 9.9 | |||||||||||||||||||||||||
Non-Cancelable Capital Lease Payments(3) | 6.3 | 6.4 | 6.9 | 5.5 | — | — | — | 25.1 | |||||||||||||||||||||||||
Interest on Debt(4) | 45.1 | 44.7 | 44.2 | 43.7 | 43.3 | 21.5 | — | 242.5 | |||||||||||||||||||||||||
Purchase Obligations(5) | 63.0 | 10.8 | — | — | — | — | — | 73.8 | |||||||||||||||||||||||||
Other Contractual Obligations(6) | 2.0 | 2.5 | 3.0 | 3.0 | 3.0 | 3.0 | 4.5 | 21.0 | |||||||||||||||||||||||||
Total | $ | 125.7 | $ | 73.7 | $ | 63.4 | $ | 60.4 | $ | 54.5 | $ | 686.6 | $ | 4.5 | $ | 1,068.8 | |||||||||||||||||
(1) | Does not include repayment of B787 advances to Boeing, which is reflected in our balance sheet as a long-term liability. |
(2) | Reflects our renewal of a building lease on July 1, 2006 for five years. |
(3) | Treats the financing of software license purchases as a capital lease. |
(4) | Interest on our debt was calculated for all years using the effective rate as of December 29, 2005 of 6.51%. |
(5) | Purchase obligations represent property, plant and equipment commitments at December 29, 2005. Although we also have significant other purchase obligations, most commonly in the form of purchase orders, the timing of these purchases is often variable rather than specific and the payments made by our customers in accordance with our long-term contracts, including advance payments, substantially reimburse the payments due. Accordingly, these obligations are not included in the table. |
(6) | Represents service fees payable to Onex Partners Manager, L.P., a wholly-owned subsidiary of Onex, or Onex Manager, pursuant to an agreement which we expect will terminate upon consummation of this offering for a cost of $4 million. |
2012 and | ||||||||||||||||||||||||||||||||
Contractual Obligations | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | After | Total | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Principal Payment on Term Loan B | $ | 5.9 | $ | 5.9 | $ | 5.9 | $ | 5.9 | $ | 5.9 | $ | 5.9 | $ | 561.1 | $ | 596.5 |
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• | an effective fixed interest rate of 6.59% from June 2005 to July 2008 on $100 million of the Term Loan B; | |
• | an effective fixed interest rate of 6.65% from June 2005 to July 2009 on $300 million of the Term Loan B; and | |
• | an effective fixed interest rate of 6.72% from June 2005 to July 2010 on $100 million of the Term Loan B. |
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• | We did not maintain effective internal control over the quarterly closing and consolidation process, including the account reconciliation and review process and accuracy of certain accounts receivable transactions. Specifically, controls over the reconciliation of the accounts receivable subsidiary ledger to its associated general ledger balances, application of certain cash payments from customers and the investigation and resolution of customer payment discrepancies were ineffective to appropriately record certain accounts receivable transactions. This control deficiency resulted in adjustments to the accounts receivable, revenue and cash accounts. If not remediated, this deficiency would result in a material misstatement of accounts receivable and related accounts. | |
• | We did not maintain effective controls over our income tax provision and the related balance sheet accounts. Specifically, controls over the accuracy of the income tax provision and related deferred tax accounts as well as the Company’s related financial statement disclosures in accordance with SFAS No. 109 were ineffective to appropriately apply SFAS No. 109 in evaluating its required valuation allowance and establishing the tax basis of the acquired assets and assumed liabilities of the Boeing Acquisition. This control deficiency resulted in adjustments to the deferred tax, valuation allowance and income tax provision accounts as well as our related SFAS No. 109 financial statement disclosures. | |
• | We did not maintain effective controls over the accuracy and completeness of our interim financial statements of our Tulsa, Oklahoma facility. Specifically, there were ineffective controls over the reconciliation of certain general ledger accounts and the aggregation and reporting of those accounts into our financial statements which could have resulted in a material misstatement in our financial statements. |
• | During 2005 and the first quarter of 2006, we remediated the material weakness associated with our quarterly closing and reconciliation process and accounts receivable accounting by strengthening supervisory reviews by management personnel and implementing monthly procedures to reconcile our |
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accounts receivable subsidiary ledger to our associated general ledger accounts. Additionally, we developed monitoring procedures to identify customer payment discrepancies and implemented cash application and collection activities to investigate and resolve such discrepancies. This remediation required us to add additional resources within our billing, cash application and collection departments. | ||
• | During 2005, we remediated the material weakness associated with our income tax accounting in accordance with SFAS No. 109. This remediation included hiring competent resources to staff a tax department (including an experienced tax director), developing a complete and accurate tax balance sheet and performing periodic income tax provision, deferred tax and valuation allowance estimates and supporting calculations. Additionally, our tax and accounting departments periodically review and evaluate our estimated effective income tax rate, realizability of deferred tax assets, valuation allowance requirements and the tax implications of significant and non-recurring transactions to ensure complete and accurate reporting and disclosures under SFAS No. 109. | |
• | During 2005, we remediated the material weakness associated with the financial consolidation of our Tulsa, Oklahoma facility. This remediation included expanding the capabilities of Tulsa finance resources by training existing Tulsa staff and hiring additional finance resources, developing and implementing corporate oversight and monitoring procedures, performing detailed account reconciliation and developing reporting templates to ensure a complete and accurate consolidation of the financial statements of the Tulsa facility into our consolidated financial statements. |
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(1) fails to deliver products as required by the Supply Agreement; | |
(2) fails to provide certain “assurances of performance” required by the Supply Agreement; | |
(3) breaches the provisions of the Supply Agreement relating to intellectual property and proprietary information; | |
(4) participates in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate foreign regulatory agency; | |
(5) defaults under certain requirements to maintain a system of quality assurance; | |
(6) fails to comply with other obligations under the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing); | |
(7) is unable to pay its debts as they become due, dissolves or declares bankruptcy; or | |
(8) breaches the assignment provisions of the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing). |
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(1) fails to deliver products as required by the B787 Supply Agreement; | |
(2) breaches the provisions of the B787 Supply Agreement relating to intellectual property and proprietary information; | |
(3) participates in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate foreign regulatory agency; | |
(4) defaults under certain requirements to maintain a system of quality assurance; | |
(5) fails to comply with other obligations under the B787 Supply Agreement (which breach continues for more than 15 days after notice is received from Boeing); | |
(6) is unable to pay its debts as they become due, dissolves or declares bankruptcy; | |
(7) fails to comply with U.S. export control laws; or | |
(8) breaches the assignment provisions of the B787 Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing). |
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Product | Description | Aircraft Platform | |||
Fuselage Systems | |||||
Forward Fuselage | Forward section of fuselage which houses flight deck, passenger cabin and cargo area | B737, B747, B767, B777, B787 | |||
Other Fuselage Sections | Mid-section and other sections of the fuselage and certain other structural components, including floor beams | B737, B747, B777, Raytheon Hawker 800XP | |||
Propulsion Systems | |||||
Nacelles (including Thrust Reversers) | Aerodynamic structure surrounding engine | B737, B747, B767, B777 | |||
Struts/Pylons | Structure that connects engine to the wing | B737, B747, B767, B777, B787 | |||
Wing Systems | |||||
Flight Control Surfaces | Flaps and slats | B737, B777, A320 family | |||
Empennages | Horizontal stabilizer and vertical fin spar assemblies | B737, Raytheon Hawker 800XP | |||
Wing Structures | Wing framework which consists mainly of spars, ribs, fixed leading edge, stringers, trailing edges and flap track beams | B737, B747, B767, B777, B787, A320 family, A330, A340, A380 |
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Product | Description | Military Platform | ||
Low Observables | Radar absorbent and translucent materials | UCAS, Various | ||
Other Military | Fabrication, bonding and assembly in support of various platforms | AWACS, AC-130U Gunship, V-22 and E-6 | ||
Other Military | Fabrication, testing, tooling, processing, engineering analysis, training | Various |
Product | Description | Aircraft Platform(1) | ||
Spares | Provides replacement parts and components support | B737, B747, B767, B777, A320 | ||
Maintenance, Repair and Overhaul | FAA certified repair station that provides complete on-site nacelle repair and overhaul; maintains global partnerships to support MRO services | B737, B777 |
(1) | The company also has the opportunity to produce spares for certainout-of-production aircraft and is under contract to provide spares for the B787 and A380. |
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• | composites design and manufacturing processes; | |
• | leading mechanized and automated assembly and fastening techniques; | |
• | large scale skin fabrication using both metallic and composite materials; | |
• | chemical etching and metal bonding expertise; | |
• | monolithic structures technology; and | |
• | precision metal forming producing complex contoured shapes in sheet metal and extruded aluminum. |
Engineering |
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Research and Development |
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Approximate | ||||||||
Location | Primary Use | Square Footage | Owned/Leased | |||||
United States | ||||||||
Wichita, Kansas | Main Manufacturing Facility/Offices/Warehouse | 10.8 million | Owned*/Leased* | |||||
Tulsa, Oklahoma | Manufacturing Facility | 1.6 million | Leased | |||||
Tulsa, Oklahoma | Offices/Warehouse | 108,455 | Leased | |||||
McAlester, Oklahoma | Manufacturing Facility | 135,000 | Owned | |||||
United Kingdom | ||||||||
Prestwick, Scotland | Manufacturing Facility | 1.1 million | Owned | |||||
Samlesbury, England | Offices | 15,919 | Leased |
* | A portion of the Wichita facility is owned and a portion is leased. |
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United States |
United Kingdom |
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Name | Age | Position | ||||
Jeffrey L. Turner | 55 | Director, President and Chief Executive Officer | ||||
Ulrich (Rick) Schmidt | 57 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Ronald C. Brunton | 58 | Executive Vice President and Chief Operating Officer | ||||
H. David Walker | 55 | Senior Vice President Sales and Marketing | ||||
Gloria Farha Flentje | 63 | Vice President, General Counsel and Secretary | ||||
Janet S. Nicolson | 50 | Senior Vice President, Human Resources | ||||
John Lewelling | 46 | Senior Vice President, Strategy and Information Technology | ||||
Richard Buchanan | 56 | Vice President/General Manager of Fuselage Structures/Systems Business Unit | ||||
Michael G. King | 50 | Vice President/General Manager of the Propulsion Structures and Systems Business Unit | ||||
Neil McManus | 40 | Vice President and Managing Director, Spirit AeroSystems (Europe) Limited | ||||
Donald R. Carlisle | 53 | Vice President/General Manager of Aerostructures Business Unit | ||||
Ivor (Ike) Evans | 64 | Director | ||||
Paul Fulchino | 60 | Director | ||||
Richard Gephardt | 65 | Director | ||||
Robert Johnson | 59 | Director | ||||
Ronald Kadish | 58 | Director | ||||
Cornelius (Connie Mack) McGillicuddy, III | 65 | Director | ||||
Seth Mersky | 47 | Director | ||||
Francis Raborn | 62 | Director | ||||
Nigel Wright | 43 | Director |
Executive Officers |
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Key Employees |
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Directors |
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Annual Compensation | Restricted | ||||||||||||||||||||
Other Annual | Stock | ||||||||||||||||||||
Name and Principal Position(1) | Year | Salary(2) | Bonus(3) | Compensation(4) | Awards(5) | ||||||||||||||||
Jeffrey L. Turner | 2005 | $ | 142,885 | $ | 771,542 | (6) | $ | 2,446,498 | (7) | $ | 15,787,090 | (8) | |||||||||
Chief Executive Officer | |||||||||||||||||||||
Ulrich (Rick) Schmidt | 2005 | $ | 133,077 | (9) | $ | 276,210 | (10) | $ | 6,555,500 | (11) | $ | 13,804,569 | (12) | ||||||||
Executive Vice President and Chief Financial Officer | |||||||||||||||||||||
Ronald C. Brunton | 2005 | $ | 94,443 | $ | 388,887 | (13) | $ | 656,181 | (14) | $ | 4,239,791 | (15) | |||||||||
Executive Vice President and Chief Operating Officer | |||||||||||||||||||||
Donald R. Carlisle | 2005 | $ | 80,502 | $ | 346,602 | (16) | $ | 385,826 | (17) | $ | 2,455,588 | (18) | |||||||||
Vice President/General Manager of the Aerostructures Business Unit | |||||||||||||||||||||
Michael G. King | 2005 | $ | 77,681 | $ | 243,217 | (19) | $ | 328,091 | (20) | $ | 2,117,217 | (21) | |||||||||
Vice President/General Manager of the Propulsion Structures and Systems Business Unit |
(1) | Represents each person’s principal position with Spirit in fiscal 2005. | |
(2) | Represents base salary received from June 17, 2005 through December 29, 2005. | |
(3) | Bonus information reflects amounts earned in the fiscal year ended December 29, 2005, although such amounts may have been paid in the first quarter of 2006. | |
(4) | In accordance with the rules of the SEC, other annual compensation disclosed in this table does not include various perquisites and other personal benefits received by a named executive officer that, in the aggregate, do not exceed the lesser of $50,000 or 10% of such officer’s total annual salary and bonus disclosed in this table. | |
(5) | Restricted stock awards granted in accordance with our Short Term Incentive Plan, Long-Term Incentive Plan and Executive Incentive Plan will be paid to plan participants only at the time and to the extent they acquire an interest in such shares. See “Benefit Plans.” | |
(6) | Represents a (a) $200,000 discretionary cash bonus and (b) $571,542 cash payment under our Cash Incentive Plan. | |
(7) | Includes $2,432,769 representing the dollar value of the difference between the price paid by Mr. Turner for 228,675 units of phantom stock (converted from his Supplemental Employee Retirement Plan balance) and 131,325 shares of class B common stock, and the fair market value of such shares at the date of purchase. | |
(8) | Represents (a) 74,550 shares of class B common stock with a value on the date of grant of $1,256,012 that are scheduled to vest on February 17, 2007 in accordance with our Long-Term Incentive Plan and (b) 1,440,000 shares of class B common stock with a value on the date of grant of $14,531,078 that may vest upon the occurrence of certain liquidity events in accordance with our Executive Incentive Plan. | |
(9) | Mr. Schmidt became an Executive Vice President and Chief Financial Officer on September 12, 2005. | |
(10) | Represents a (a) $50,000 discretionary cash bonus and (b) $226,210 cash payment under our Short Term Incentive Plan. |
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(11) | Includes (a) $2,326,868 representing the dollar value of the difference between the price paid by Mr. Schmidt for 300,000 shares of class B common stock and the fair market value of such shares at the date of purchase; (b) a one-time cash payment to Mr. Schmidt of which $1,717,365 was paid in September 2005 and $2,382,635 was paid in January 2006 in lieu of foregone executive compensation from The Goodrich Corporation, his former employer; and (c) costs associated with the executive’s relocation to Wichita, Kansas. |
(12) | Represents (a) 29,505 shares of class B common stock with a value on the date of grant of $497,098 that are scheduled to vest on February 17, 2007 in accordance with our Short Term Incentive Plan and (b) 1,200,000 shares of class B common stock with a value on the date of grant of $13,307,471 that may vest upon the occurrence of certain liquidity events in accordance with our Executive Incentive Plan. |
(13) | Represents a (a) $200,000 discretionary cash bonus and (b) $188,887 cash payment under our Short Term Incentive Plan. |
(14) | Represents the dollar value of the difference between the price paid by Mr. Brunton for 90,000 shares of class B common stock and the fair market value of such shares at the date of purchase. |
(15) | Represents (a) 24,636 shares of class B common stock with a value on the date of grant of $415,065 that are scheduled to vest on February 17, 2007 in accordance with our Short Term Incentive Plan and (b) 360,000 shares of class B common stock with a value on the date of grant of $3,824,726 that may vest upon the occurrence of certain liquidity events in accordance with our Executive Incentive Plan. |
(16) | Represents a (a) $250,000 discretionary cash bonus and (b) $96,602 cash payment under our Short Term Incentive Plan. |
(17) | Represents the dollar value of the difference between the price paid by Mr. Carlisle for 28,200 units of phantom stock (converted from his Supplemental Employee Retirement Plan balance) and 24,300 shares of class B common stock, and the fair market value of such shares at the date of purchase. |
(18) | Represents (a) 12,600 shares of class B common stock with a value on the date of grant of $212,284 that are scheduled to vest on February 17, 2007 in accordance with our Short Term Incentive Plan and (b) 210,000 shares of class B common stock with a value on the date of grant of $2,243,305 that may vest upon the occurrence of certain liquidity events in accordance with our Executive Incentive Plan. |
(19) | Represents a (a) $150,000 discretionary cash bonus and (b) $93,217 cash payment under our Short Term Incentive Plan. |
(20) | Represents the dollar value of the difference between the price paid by Mr. King for 33,537 units of phantom stock (converted from his Supplemental Employee Retirement Plan balance) and 11,463 shares of class B common stock, and the fair market value of such shares at the date of purchase. |
(21) | Represents (a) 12,159 shares of class B common stock with a value on the date of grant of $204,854 that are scheduled to vest on February 17, 2007 in accordance with our Short Term Incentive Plan and (b) 180,000 shares of class B common stock with a value on the date of grant of $1,912,363 that may vest upon the occurrence of certain liquidity events in accordance with our Executive Incentive Plan. |
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Executive Incentive Plan |
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Supplemental Executive Retirement Plan |
Short Term Incentive Plan |
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Long-Term Incentive Plan |
Cash Incentive Plan |
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Director Stock Plan |
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Number and Type | Aggregate | ||||||||
Name | of Shares | Purchase Price | Date(s) of Purchase | ||||||
5% Holders | |||||||||
Onex Corporation(1) | 112,500,000 shares of class B common stock | $ | 375,000,000 | June 16, 2005 | |||||
Onex Partners LP | 63,164,653 shares of class B common stock | $ | 210,548,841 | June 16, 2005 | |||||
Onex American Holdings II LLC(2) | 45,545,913 shares of class B common stock | $ | 151,819,709 | June 16, 2005 | |||||
Wind Executive Investco LLC(2) | 2,807,304 shares of class B common stock | $ | 9,357,679 | June 16, 2005 | |||||
Onex U.S. Principals LP(2) | 982,131 shares of class B common stock | $ | 3,273,771 | June 16, 2005 |
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Aggregate Value | |||||||||||||
Number and Type | Aggregate | of Shares | |||||||||||
Name | of Shares(3) | Purchase Price | upon Issuance(4) | Dates of Issuance | |||||||||
Executive Officers | |||||||||||||
Jeffrey Turner | 1,645,875 shares of class B | $ | 437,750 | $ | 17,196,526 | June 17, 2005 | |||||||
common stock | August 1, 2006 | ||||||||||||
February 17, 2006 | |||||||||||||
Rick Schmidt | 1,529,505 shares of class B | $ | 1,000,000 | $ | 17,131,436 | August 3, 2005 | |||||||
common stock | February 17, 2006 | ||||||||||||
Ronald C. Brunton | 474,636 shares of class B | $ | 300,000 | $ | 5,195,972 | July 18, 2005 | |||||||
common stock | February 17, 2006 | ||||||||||||
H. David Walker | 315,651 shares of class B | $ | 200,000 | $ | 3,948,270 | September 13, 2005 | |||||||
common stock | February 17, 2006 | ||||||||||||
Gloria Farha Flentje | 222,042 shares of class B | $ | 109,780 | $ | 2,446,249 | July 18, 2005 | |||||||
common stock | August 1, 2005 | ||||||||||||
February 17, 2006 | |||||||||||||
Janet S. Nicolson | 300,000 shares of class B common stock | $ | 200,000 | $ | 4,626,860 | December 30, 2005 | |||||||
John Lewelling | 450,000 shares of class B common stock | $ | 300,000 | $ | 7,620,823 | February 20, 2006 | |||||||
Richard Buchanan | 162,642 shares of class B | $ | 100,000 | $ | 1,806,627 | July 18, 2005 | |||||||
common stock | February 17, 2006 | ||||||||||||
Michael King | 203,622 shares of class B | $ | 38,210 | $ | 2,239,002 | July 18, 2005 | |||||||
common stock | February 17, 2006 | ||||||||||||
Neil McManus | 90,750 shares of class B common stock | $ | 139,150 | $ | 1,961,784 | July 31, 2006 | |||||||
Donald Carlisle | 246,900 shares of class B | $ | 81,000 | $ | 2,716,811 | July 18, 2005 | |||||||
common stock | August 1, 2005 | ||||||||||||
February 17, 2006 | |||||||||||||
Non-Officer Directors | |||||||||||||
Ivor Evans | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Paul Fulchino | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Richard Gephardt | 120,000 shares of class B common stock | — | $ | 1,798,395 | December 15, 2005 | ||||||||
Robert Johnson | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Ronald Kadish | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Connie Mack, III | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Seth Mersky(5) | 88,605 shares of class B common stock | $ | 295,350 | $ | 295,350 | June 16, 2005 | |||||||
Francis Raborn | 45,000 shares of class B common stock | — | $ | 674,398 | December 15, 2005 | ||||||||
Nigel Wright(6) | 122,018 shares of class B common stock | $ | 406,725 | $ | 406,725 | June 16, 2005 |
(1) | Includes the following: (i) 63,164,652 shares of class B common stock issued to Onex Partners LP; (ii) 45,545,913 shares of class B common stock issued to Onex American Holdings II LLC; (iii) 2,807,304 shares of class B common stock issued to Wind Executive Investco LLC; and (iv) 982,131 shares of class B common stock issued to Onex U.S. Principals LP. Onex Corporation may be deemed to own beneficially the shares of class B common stock held by (a) Onex Partners LP, through Onex’ ownership of all of the common stock of Onex Partners GP, Inc., the general |
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partner of Onex Partners GP LP, the general partner of Onex Partners LP; (b) Onex American Holdings II LLC, through Onex’ ownership of all of the equity of Onex American Holdings II LLC; (c) Wind Executive Investco LLC, through Onex’ ownership of Onex American Holdings II LLC which owns all of the voting power of Wind Executive Investco LLC; and (d) Onex U.S. Principals LP through Onex’ ownership of all of the equity of Onex American Holdings GP LLC, the general partner of Onex U.S. Principals LP. | |
(2) | On August 3, 2005 Onex Spirit Co-Invest LP acquired (i) 15,678,637 shares of class B common stock from Onex American Holdings II LLC (ii) 966,381 shares of class B common stock from Wind Executive Investco LLC and (iii) 338,087 shares of class B common stock from Onex U.S. Principals LP. |
(3) | Includes shares of class B common stock which are subject to vesting requirements under our benefit plans. |
(4) | As determined in accordance with SFAS No. 123(R). |
(5) | Represents 88,605 shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Mersky by reason of his pecuniary interest in Onex Partners LP. |
(6) | Represents 122,018 shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Wright by reason of his pecuniary interest in Onex Partners LP. |
Aggregate | ||||||||||||
Name | Number of Units | Conversion Price(1) | Date of Conversion | |||||||||
Jeffrey L. Turner | 228,675 | $ | 3.33 | 6/17/05 | ||||||||
Donald R. Carlisle | 28,200 | $ | 3.33 | 7/15/05 | ||||||||
Michael G. King | 33,537 | $ | 3.33 | 7/15/05 | ||||||||
Gloria Farha Flentje | 12,066 | $ | 3.33 | 7/15/05 |
(1) | Value of accrued Boeing SERP benefit converted into Units. |
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• | each person known by us to own beneficially 5% or more of our class A or class B common stock, | |
• | each of our directors; | |
• | each of our named executive officers; | |
• | all of our directors and executive officers as a group; and | |
• | each selling stockholder. |
Shares Beneficially Owned After Offering | ||||||||||||||||||||||||||||||||||||||||||||
Shares Being Sold in Offering | ||||||||||||||||||||||||||||||||||||||||||||
Before Offering | ||||||||||||||||||||||||||||||||||||||||||||
Assuming the | Assuming the Underwriters’ Over-Allotment | Assuming the Underwriters’ Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Number of | Assuming the | Underwriters | Option is Not Exercised | Option is Exercised in Full | ||||||||||||||||||||||||||||||||||||||||
Shares | Underwriters | Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Beneficially | Percentage of | Percentage | Over-Allotment | Option is | Percentage of | Percentage | Percentage of | Percentage | ||||||||||||||||||||||||||||||||||||
Name of Beneficial | Owned(1) | Class/All | of Voting | Option is Not | Exercised in | Number of | Class/All | of Voting | Number of | Class/All | of Voting | |||||||||||||||||||||||||||||||||
Owner | (2)(3) | Common Stock | Power | Exercised | Full | Shares | Common Stock | Power | Shares | Common Stock | Power | |||||||||||||||||||||||||||||||||
Five Percent Stockholders | ||||||||||||||||||||||||||||||||||||||||||||
Onex Corporation(4) | 112,500,000 class B | 98.7 | % | 98.7 | % | 38,037,169 | 45,169,138 | 74,462,831 class B | 98.4%/58.3% | 92.1% | 67,330,862 class B | 98.3%/52.4% | 90.4% | |||||||||||||||||||||||||||||||
Onex Partners LP(5) | 63,164,653 class B | 55.4 | % | 55.4 | % | 21,356,486 | 25,360,829 | 41,808,167 class B | 55.2%/32.7% | 51.7% | 37,803,824 class B | 55.2%/29.4% | 50.8% | |||||||||||||||||||||||||||||||
Onex American Holdings II LLC(6) | 29,867,276 class B | 26.2 | % | 26.2 | % | 10,098,371 | 11,991,816 | 19,768,905 class B | 26.1%/15.5% | 24.4% | 17,875,460 class B | 26.1%/13.9% | 24.0% | |||||||||||||||||||||||||||||||
Onex Spirit Co- Invest LP(9) | 16,983,104 class B | 14.9 | % | 14.9 | % | 5,742,126 | 6,818,775 | 11,240,978 class B | 14.9%/8.8% | 13.9% | 10,164,329 class B | 14.8%/7.9% | 13.6% | |||||||||||||||||||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Turner(10)(11) | 131,325 class B | * | * | 531,277 | 630,891 | 86,926 class B | */* | * | 78,594 class B | */* | * | |||||||||||||||||||||||||||||||||
Ulrich Schmidt(10)(11)(12) | 300,000 class B | * | * | 507,162 | 602,255 | 198,570 class B | */* | * | 179,545 class B | */* | * | |||||||||||||||||||||||||||||||||
Ronald C. Brunton(10)(11) | 90,000 class B | * | * | 152,148 | 180,676 | 59,572 class B | */* | * | 53,864 class B | */* | * | |||||||||||||||||||||||||||||||||
Donald R. Carlisle(10)(11) | 24,300 class B | * | * | 79,219 | 94,073 | 16,084 class B | */* | * | 14,542 class B | */* | * | |||||||||||||||||||||||||||||||||
Michael G. King(10)(11) | 11,463 class B | * | * | 64,735 | 76,873 | 7,588 class B | */* | * | 6,860 class B | */* | * | |||||||||||||||||||||||||||||||||
Ivor Evans(10) | — | * | * | 15,215 | 18,068 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Paul Fulchino(10) | — | * | * | 15,215 | 18,068 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Richard Gephardt(10) | — | * | * | — | — | 40,573 class B | */* | * | 48,180 class B | */* | * | |||||||||||||||||||||||||||||||||
Robert Johnson(10) | — | * | * | 15,215 | 18,068 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Ronald Kadish(10) | — | * | * | 15,215 | 18,068 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Connie Mack, III(10) | — | * | * | 15,215 | 18,068 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Seth Mersky(13) | 120,510 class B | * | * | 40,745 | 48,385 | 79,765 class B | */* | * | 72,125 class B | */* | * | |||||||||||||||||||||||||||||||||
Francis Raborn(10) | — | * | * | — | — | 15,215 class B | */* | * | 18,068 class B | */* | * | |||||||||||||||||||||||||||||||||
Nigel Wright(14) | 232,166 class B | * | * | 78,497 | 93,215 | 153,669 class B | */* | * | 138,950 class B | */* | * | |||||||||||||||||||||||||||||||||
All directors and executive officers as a group (20 persons) | 1,200,848 class B | 1.0 | % | 1.0 | % | 2,007,581 | 2,384,005 | 881,315 class B | 1.2%/* | 1.1% | 821,375 class B | 1.2%/* | 1.1% | |||||||||||||||||||||||||||||||
Other Selling Stockholders | ||||||||||||||||||||||||||||||||||||||||||||
Wind Executive Investco LLC(7) | 1,840,923 class B | 1.6 | % | 1.6 | % | 622,431 | 739,137 | 1,218,492 class B | 1.6%/1.0% | 1.5% | 1,101,786 class B | 1.6%/* | 1.5% | |||||||||||||||||||||||||||||||
Onex U.S. Principals LP(8) | 644,044 class B | * | * | 217,756 | 258,585 | 426,288 class B | */* | * | 385,459 class B | */* | * |
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Shares Beneficially Owned After Offering | ||||||||||||||||||||||||||||||||||||||||||||
Shares Being Sold in Offering | ||||||||||||||||||||||||||||||||||||||||||||
Before Offering | ||||||||||||||||||||||||||||||||||||||||||||
Assuming the | Assuming the Underwriters’ Over-Allotment | Assuming the Underwriters’ Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Number of | Assuming the | Underwriters | Option is Not Exercised | Option is Exercised in Full | ||||||||||||||||||||||||||||||||||||||||
Shares | Underwriters | Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Beneficially | Percentage of | Percentage | Over-Allotment | Option is | Percentage of | Percentage | Percentage of | Percentage | ||||||||||||||||||||||||||||||||||||
Name of Beneficial | Owned(1) | Class/All | of Voting | Option is Not | Exercised in | Number of | Class/All | of Voting | Number of | Class/All | of Voting | |||||||||||||||||||||||||||||||||
Owner | (2)(3) | Common Stock | Power | Exercised | Full | Shares | Common Stock | Power | Shares | Common Stock | Power | |||||||||||||||||||||||||||||||||
Susan L. Bacon(10)(11) | — | * | * | 22,274 | 26,450 | 1 class B | */* | * | 1 class B | */* | * | |||||||||||||||||||||||||||||||||
David P. Bartz(10)(11) | 2,007 class B | * | * | 20,965 | 24,896 | 1,329 class B | */* | * | 1,201 class B | */* | * | |||||||||||||||||||||||||||||||||
Radhe S. Bhagat(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Don A. Blake(10)(11) | 7,500 class B | * | * | 22,822 | 27,101 | 4,965 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Sheri B. Boyer(10)(11) | 15,138 class B | * | * | 65,978 | 78,349 | 10,020 class B | */* | * | 9,059 class B | */* | * | |||||||||||||||||||||||||||||||||
Richard R. Buchanan(10)(11) | 30,000 class B | * | * | 50,716 | 60,225 | 19,857 class B | */* | * | 17,955 class B | */* | * | |||||||||||||||||||||||||||||||||
Rodney C. Cheatham(10)(11) | — | * | * | 10,761 | 12,779 | 21,065 class B | */* | * | 25,013 class B | */* | * | |||||||||||||||||||||||||||||||||
Jeffrey V. Clark(10)(11) | 11,337 class B | * | * | 32,234 | 38,278 | 7,504 class B | */* | * | 6,785 class B | */* | * | |||||||||||||||||||||||||||||||||
James Cocca(10)(11) | 9,000 class B | * | * | 15,215 | 18,068 | 5,957 class B | */* | * | 5,386 class B | */* | * | |||||||||||||||||||||||||||||||||
Timothy A. Cosgrove(10)(11) | — | * | * | 14,201 | 16,863 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Lois I. Covey(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Kerry D. Crisp(10)(11) | 30,000 class B | * | * | 50,716 | 60,225 | 19,857 class B | */* | * | 17,955 class B | */* | * | |||||||||||||||||||||||||||||||||
D. Randolph Davis(10)(11) | 6,522 class B | * | * | 11,026 | 13,093 | 4,317 class B | */* | * | 3,903 class B | */* | * | |||||||||||||||||||||||||||||||||
Richard L. Davis(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Curtis W. Demuth(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Frederick J. Dodds(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Simon Ellery(10)(11) | 4,539 class B | * | * | 1,038 | 1,233 | 9,640 class B | */* | * | 10,596 class B | */* | * | |||||||||||||||||||||||||||||||||
David E. Finneran(10)(11) | — | * | * | 28,401 | 33,726 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Gloria F. Flentje(10)(11) | 32,934 class B | * | * | 71,994 | 85,493 | 21,800 class B | */* | * | 19,711 class B | */* | * | |||||||||||||||||||||||||||||||||
Simon Foster(10)(11) | 4,539 class B | * | * | 1,038 | 1,233 | 9,640 class B | */* | * | 10,596 class B | */* | * | |||||||||||||||||||||||||||||||||
Mary E. French(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Michael C. Germann(10)(11) | 37,500 class B | * | * | 63,395 | 75,282 | 24,822 class B | */* | * | 22,443 class B | */* | * | |||||||||||||||||||||||||||||||||
Thomas A. Greenwood(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Carolyn A. Harms(10)(11) | 5,766 class B | * | * | 83,095 | 98,675 | 3,817 class B | */* | * | 3,451 class B | */* | * | |||||||||||||||||||||||||||||||||
Mark E. Hoffman(10)(11) | 7,500 class B | * | * | 10,143 | 12,045 | 7,500 class B | */* | * | 7,500 class B | */* | * | |||||||||||||||||||||||||||||||||
Jeffrey D. Jabara(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Vernell Jackson(10)(11) | — | * | * | 130,312 | 154,745 | 1 class B | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Joseph W. Jarrett(10)(11) | 6,000 class B | * | * | 10,144 | 12,046 | 3,971 class B | */* | * | 3,590 class B | */* | * | |||||||||||||||||||||||||||||||||
Marci L. Johnson(10)(11) | 15,000 class B | * | * | 25,359 | 30,114 | 9,928 class B | */* | * | 8,976 class B | */* | * | |||||||||||||||||||||||||||||||||
Larry S. Knott(10)(11) | 21,000 class B | * | * | 35,501 | 42,157 | 13,900 class B | */* | * | 12,569 class B | */* | * | |||||||||||||||||||||||||||||||||
John A. Lewelling(10)(11) | 90,000 class B | * | * | 152,148 | 180,676 | 59,572 class B | */* | * | 53,864 class B | */* | * |
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Shares Beneficially Owned After Offering | ||||||||||||||||||||||||||||||||||||||||||||
Shares Being Sold in Offering | ||||||||||||||||||||||||||||||||||||||||||||
Before Offering | ||||||||||||||||||||||||||||||||||||||||||||
Assuming the | Assuming the Underwriters’ Over-Allotment | Assuming the Underwriters’ Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Number of | Assuming the | Underwriters | Option is Not Exercised | Option is Exercised in Full | ||||||||||||||||||||||||||||||||||||||||
Shares | Underwriters | Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Beneficially | Percentage of | Percentage | Over-Allotment | Option is | Percentage of | Percentage | Percentage of | Percentage | ||||||||||||||||||||||||||||||||||||
Name of Beneficial | Owned(1) | Class/All | of Voting | Option is Not | Exercised in | Number of | Class/All | of Voting | Number of | Class/All | of Voting | |||||||||||||||||||||||||||||||||
Owner | (2)(3) | Common Stock | Power | Exercised | Full | Shares | Common Stock | Power | Shares | Common Stock | Power | |||||||||||||||||||||||||||||||||
Samantha Marnick(10)(11) | 6,522 class B | * | * | 11,026 | 13,093 | 4,317 class B | */* | * | 3,903 class B | */* | * | |||||||||||||||||||||||||||||||||
Robert M. Mayle(10)(11) | 15,000 class B | * | * | 33,473 | 39,749 | 9,928 class B | */* | * | 8,977 class B | */* | * | |||||||||||||||||||||||||||||||||
Lana K. Mccutchen(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Victor R. Mcmullen(10)(11) | 5,196 class B | * | * | 22,043 | 26,176 | 3,440 class B | */* | * | 3,110 class B | */* | * | |||||||||||||||||||||||||||||||||
George H. Miller(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Ricky L. Morriss(10)(11) | — | * | * | 39,084 | 46,412 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Michael E. Nelson(10)(11) | 3,000 class B | * | * | 5,071 | 6,022 | 1,986 class B | */* | * | 1,796 class B | */* | * | |||||||||||||||||||||||||||||||||
Janet S. Nicolson(10)(11) | 60,000 class B | * | * | 101,432 | 120,451 | 39,714 class B | */* | * | 35,909 class B | */* | * | |||||||||||||||||||||||||||||||||
John A. Pilla(10)(11) | 19,200 class B | * | * | 54,128 | 64,277 | 12,709 class B | */* | * | 11,491 class B | */* | * | |||||||||||||||||||||||||||||||||
Adam M. Pogue(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Douglas H. Reece(10)(11) | 15,000 class B | * | * | 25,359 | 30,114 | 9,928 class B | */* | * | 8,976 class B | */* | * | |||||||||||||||||||||||||||||||||
Kimberly E. Scanlan(10)(11) | 28,500 class B | * | * | 48,180 | 57,214 | 18,865 class B | */* | * | 17,057 class B | */* | * | |||||||||||||||||||||||||||||||||
Kip C. Schmidt(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Ulrich Schmidt, as Trustee of the Ulrich Schmidt Revocable Trust(10)(11) | 300,000 class B | * | * | 507,162 | 602,255 | 198,570 class B | */* | * | 179,545 class B | */* | * | |||||||||||||||||||||||||||||||||
Mike Schwamman(10)(11) | 2,610 class B | * | * | 4,412 | 5,239 | 1,728 class B | */* | * | 1,563 class B | */* | * | |||||||||||||||||||||||||||||||||
Douglas L. Scott(10)(11) | 2,037 class B | * | * | 29,090 | 34,544 | 1,348 class B | */* | * | 1,219 class B | */* | * | |||||||||||||||||||||||||||||||||
Suzanne K. Scott(10)(11) | 8,073 class B | * | * | 31,131 | 36,968 | 5,343 class B | */* | * | 4,831 class B | */* | * | |||||||||||||||||||||||||||||||||
Clark Sellens(10)(11) | 3,261 class B | * | * | 1,491 | 1,771 | 6,180 class B | */* | * | 6,727 class B | */* | * | |||||||||||||||||||||||||||||||||
Brian L. Skelton(10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Dana M. Smith(10)(11) | 7,596 class B | * | * | 43,142 | 51,231 | 5,027 class B | */* | * | 4,545 class B | */* | * | |||||||||||||||||||||||||||||||||
Keith O. Smith(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
David Stewart(10)(11) | 4,539 class B | * | * | 519 | 616 | 10,159 class B | */* | * | 11,213 class B | */* | * | |||||||||||||||||||||||||||||||||
Thomas S. Turkle(10)(11) | 7,500 class B | * | * | 16,736 | 19,874 | 4,965 class B | */* | * | 4,489 class B | */* | * | |||||||||||||||||||||||||||||||||
Forrest E. Urban(10)(11) | 6,153 class B | * | * | 12,224 | 14,516 | 4,072 class B | */* | * | 3,682 class B | */* | * | |||||||||||||||||||||||||||||||||
James M. Urso(10)(11) | 13,317 class B | * | * | 45,076 | 53,528 | 8,814 class B | */* | * | 7,969 class B | */* | * | |||||||||||||||||||||||||||||||||
Jerry D. Vaughan(10)(11) | 10,500 class B | * | * | 17,751 | 21,079 | 6,950 class B | */* | * | 6,284 class B | */* | * | |||||||||||||||||||||||||||||||||
Anthony J. Veith(10)(11) | — | * | * | 24,124 | 28,647 | 1 class B | */* | * | 1 class B | */* | * | |||||||||||||||||||||||||||||||||
H. David Walker(10)(11) | 60,000 class B | * | * | 101,432 | 120,451 | 39,714 class B | */* | * | 35,909 class B | */* | * | |||||||||||||||||||||||||||||||||
Tod J. Wawzysko(10)(11) | 11,058 class B | * | * | 64,598 | 76,710 | 7,320 class B | */* | * | 6,618 class B | */* | * | |||||||||||||||||||||||||||||||||
Rodney A. Webber (10)(11) | 7,500 class B | * | * | 12,679 | 15,056 | 4,964 class B | */* | * | 4,489 class B | */* | * |
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Shares Beneficially Owned After Offering | ||||||||||||||||||||||||||||||||||||||||||||
Shares Being Sold in Offering | ||||||||||||||||||||||||||||||||||||||||||||
Before Offering | ||||||||||||||||||||||||||||||||||||||||||||
Assuming the | Assuming the Underwriters’ Over-Allotment | Assuming the Underwriters’ Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Number of | Assuming the | Underwriters | Option is Not Exercised | Option is Exercised in Full | ||||||||||||||||||||||||||||||||||||||||
Shares | Underwriters | Over-Allotment | ||||||||||||||||||||||||||||||||||||||||||
Beneficially | Percentage of | Percentage | Over-Allotment | Option is | Percentage of | Percentage | Percentage of | Percentage | ||||||||||||||||||||||||||||||||||||
Name of Beneficial | Owned(1) | Class/All | of Voting | Option is Not | Exercised in | Number of | Class/All | of Voting | Number of | Class/All | of Voting | |||||||||||||||||||||||||||||||||
Owner | (2)(3) | Common Stock | Power | Exercised | Full | Shares | Common Stock | Power | Shares | Common Stock | Power | |||||||||||||||||||||||||||||||||
Daniel H. Wheeler(10)(11) | 36,903 class B | * | * | 73,336 | 87,087 | 24,427 class B | */* | * | 22,086 class B | */* | * | |||||||||||||||||||||||||||||||||
Ellston O. White(10)(11) | 15,000 class B | * | * | 25,359 | 30,114 | 9,928 class B | */* | * | 8,976 class B | */* | * | |||||||||||||||||||||||||||||||||
Chris Wilkinson(10)(11) | 5,673 class B | * | * | 1,297 | 1,540 | 12,048 class B | */* | * | 13,244 class B | */* | * | |||||||||||||||||||||||||||||||||
Allen R. Williams(10)(11) | 3,000 class B | * | * | 5,071 | 6,022 | 1,986 class B | */* | * | 1,796 class B | */* | * | |||||||||||||||||||||||||||||||||
Michael L. Williams(10)(11) | 25,002 class B | * | * | 89,599 | 106,399 | 16,549 class B | */* | * | 14,963 class B | */* | * | |||||||||||||||||||||||||||||||||
Sherrie A. Williams(10)(11) | 2,067 class B | * | * | 11,248 | 13,357 | 1,368 class B | */* | * | 1,237 class B | */* | * | |||||||||||||||||||||||||||||||||
David E. Wiseman(10)(11) | 3,000 class B | * | * | 29,416 | 34,932 | 1,985 class B | */* | * | 1,794 class B | */* | * | |||||||||||||||||||||||||||||||||
Kenneth L. Wright(10)(11) | — | * | * | 28,401 | 33,726 | — | */* | * | — | */* | * | |||||||||||||||||||||||||||||||||
Peter H. Wu(10)(11) | 37,500 class B | * | * | 63,395 | 75,282 | 24,822 class B | */* | * | 22,443 class B | */* | * |
* | Represents beneficial ownership of less than 1%. |
(1) | The amounts and percentages of our common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of such securities as to which such person has an economic interest. | |
(2) | On each matter submitted to the stockholders for their vote, our class A common stock is entitled to one vote per share and our class B common stock is entitled to ten votes per share, reducing to one vote per share under certain limited circumstances. Except as required by law, our class A and class B common stock vote together on all matters submitted to stockholders for their vote. | |
(3) | Each share of class B common stock may be converted at any time at the option of the holder into one share of class A common stock. Accordingly, each beneficial owner of shares of class B common stock is deemed the beneficial owner of the same number of shares of class A common stock. See “Description of Capital Stock — Common Stock — Conversion Rights.” | |
(4) | Includes the following: (i) 63,164,653 shares of class B common stock held by Onex Partners LP; (ii) 29,867,276 shares of class B common stock held by Onex American Holdings II LLC; (iii) 1,840,923 shares of class B common stock held by Wind Executive Investco LLC; (iv) 644,044 shares of class B common stock held by Onex U.S. Principals LP; and (v) 16,983,104 shares of class B common stock held by Onex SpiritCo-Invest LP. Onex Corporation may be deemed to own beneficially the shares of class B common stock held by (a) Onex Partners LP, through Onex’ ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex Partners LP; (b) Onex American Holdings II LLC, through Onex’ ownership of all of the equity of Onex American Holdings II LLC; (c) Wind Executive Investco LLC, through Onex’ ownership of Onex American Holdings II LLC which owns all of the voting power of Wind Executive Investco LLC; (d) Onex U.S. Principals LP through Onex’ ownership of all of the equity of Onex American Holdings GP LLC, the general partner of Onex U.S. Principals LP and (e) Onex Spirit Co-Invest LP, through Onex’ ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex Spirit Co-Invest LP. Mr. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, owns shares representing a majority of the voting rights of the shares of Onex Corporation and as such may be deemed to own beneficially all of the shares of our class B common stock owned beneficially by Onex Corporation. Mr. Schwartz disclaims such beneficial ownership. The address for Onex Corporation is 161 Bay Street, Toronto, Ontario M5J 2S1, Canada. | |
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(5) | All of the shares of class B common stock owned by Onex Partners LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex Partners LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(6) | All of the shares of class B common stock owned by Onex American Holdings II LLC may be deemed owned beneficially by Onex Corporation. The address for Onex American Holdings II LLC is 421 Leader Street, Marion, Ohio 43302. | |
(7) | All of the shares of class B common stock owned by Wind Executive Investco LLC may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Wind Executive Investco LLC is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(8) | All of the shares of class B common stock owned by Onex U.S. Principals LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex U.S. Principals LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. | |
(9) | All of the shares of class B common stock owned by Onex Spirit Co-Invest LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex Spirit Co-Invest LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. |
(10) | The address of these stockholders is c/o Spirit AeroSystems Holdings, Inc., 3801 South Oliver, Wichita, Kansas 67210. |
(11) | Number of Shares Beneficially Owned Before Offering excludes shares of Class B common stock which may vest on the consummation of this offering. All columns exclude shares of class B common stock which will remain subject to vesting under our Executive Incentive Plan following the consummation of this offering. See “Management — Benefit Plans — Executive Incentive Plan.” |
(12) | Represents shares of class B common stock owned by Ulrich Schmidt, as Trustee of the Ulrich Schmidt Revocable Trust, which may be deemed to be beneficially owned by Ulrich Schmidt. |
(13) | Represents (i) shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Mersky by reason of his pecuniary interest in Onex Partners LP and (ii) shares of class B common stock owned by Onex Spirit Co-Invest LP which may be deemed beneficially owned by Mr. Mersky by reason of his pecuniary interest in Onex Spirit Co-Invest LP. Mr. Mersky disclaims beneficial ownership of the shares of class B common stock owned by Onex Partners LP and Onex Spirit Co-Invest LP. Mr. Mersky’s address is c/o Onex Corporation, 161 Bay Street, Toronto, Ontario, M5J 2S1, Canada. |
(14) | Represents (i) shares of class B common stock owned by Onex Partners LP which may be deemed beneficially owned by Mr. Wright by reason of his pecuniary interest in Onex Partners LP and (ii) shares of class B common stock owned by Onex Spirit Co-Invest LP which may be deemed beneficially owned by Mr. Wright by reason of his pecuniary interest in Onex Spirit Co-Invest LP. Mr. Wright disclaims beneficial ownership of the shares of class B common stock owned by Onex Partners LP and Onex Spirit Co-Invest LP. Mr. Wright’s address is c/o Onex Corporation, 161 Bay Street, Toronto, Ontario, M5J 2S1, Canada. |
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• | 200,000,000 shares of class A common stock, par value $0.01 per share, | |
• | 150,000,000 shares of class B common stock, par value $0.01 per share, and | |
• | 10,000,000 shares of preferred stock, par value $0.01 per share. |
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Class B Common Stock |
Undesignated Preferred Stock |
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Advance Notice Requirements for Stockholder Proposals and Directors Nominations |
Call of Special Meetings |
Filling of Board Vacancies; Removal |
Stockholder Action by Written Consent |
Delaware “Business Combination” Statute |
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Amendments to our Certificate of Incorporation and By-laws |
• | any breach of the director’s duty of loyalty to us or our stockholders, | |
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, | |
• | the payment of unlawful dividends and unlawful repurchase or redemption of our capital stock prohibited by the DGCL, and | |
• | any transaction from which the director derived any improper personal benefits. |
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• | a U.S. citizen or individual resident in the United States; | |
• | a corporation, or other entity treated as a corporation created or organized under the laws of the United States or any political subdivision thereof; | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust (i) if a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all of the substantial interests of such trust or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. |
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• | the gain is U.S. trade or business income, in which case such gain generally will be taxed in the same manner as gains of U.S. persons, and such gains may also be subject to the branch profits tax in the case of a corporateNon-U.S. Holder; | |
• | theNon-U.S. Holder is an individual who is present in the United States for more than 182 days in the taxable year of the disposition and who meets certain other requirements, in which case such holder generally will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange, retirement or other disposition of the common stock) exceed capital losses allocable to U.S. sources; or | |
• | we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that theNon-U.S. Holder held our common stock (the “applicable period”). |
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• | 75,889,308 shares issuable upon conversion of our currently outstanding class B common stock will be eligible for sale beginning 180 days after the date of this prospectus subject to an extension in certain circumstances, | |
• | 42,697 shares held by one of our executive officers will be eligible for sale under Rule 144 commencing July 31, 2007, or, if earlier, after the shares are registered under the Securities Act, and | |
• | 5,006,829 shares which will be issued to certain of our union-represented employees on or prior to March 15, 2007 pursuant to a registration statement on Form S-8 will be eligible for sale upon issuance thereof. | |
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• | 1% of the number of shares of our class A common stock then outstanding, which will equal approximately 520,833 shares immediately after this offering (approximately 598,958 shares if the underwriters’ over- allotment option is exercised in full), and | |
• | the average weekly trading volume of our class A common stock during the four calendar weeks preceding the filing of the Form 144 with respect to such sale. |
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Underwriter | Number of Shares | ||||
Credit Suisse Securities (USA) LLC | |||||
Goldman, Sachs & Co. | |||||
Morgan Stanley & Co. Incorporated | |||||
Banc of America Securities LLC. | |||||
Citigroup Global Markets Inc. | |||||
Cowen and Company, LLC | |||||
Deutsche Bank Securities Inc. | |||||
Griffiths McBurney Corp. as Agent Affiliate of GMP Securities L.P. | |||||
Jefferies & Company, Inc. | |||||
Lehman Brothers Inc. | |||||
Merrill Lynch, Pierce, Fenner, & Smith Incorporated | |||||
RBC Capital Markets Corporation | |||||
Scotia Capital (USA) Inc. | |||||
UBS Securities LLC | |||||
Westwind Partners (USA) Inc. | |||||
Total | 52,083,334 | ||||
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Per Share | Total | |||||||||||||||
Without | With | Without | With | |||||||||||||
Over-allotment | Over-allotment | Over-allotment | Over-allotment | |||||||||||||
Underwriting Discounts and Commissions paid by us | $ | $ | $ | $ | ||||||||||||
Expenses payable by us | $ | $ | $ | $ | ||||||||||||
Underwriting Discounts and Commissions paid by selling stockholders | $ | $ | $ | $ | ||||||||||||
Expenses payable by the selling stockholders | $ | $ | $ | $ |
• | the sale of shares to the underwriters; | |
• | shares acquired in the open market by a person other than us; |
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• | transfers of shares to a family member or trust of a non-Onex related stockholder, provided the transferee agrees to be bound by the restrictions in the immediately preceding paragraph and no filing by any party (transferor or transferee) under the Exchange Act will be required or will be voluntarily made in connection with such transfer (other than a filing pursuant to Section 13(d) or 13(g) or a filing on a Form 3, 4 or 5 after the expiration of the lock-up period); | |
• | transfers of shares to us upon the termination of the stockholder’s employment with us; | |
• | transfers or distributions of shares between Onex related entities, provided the transferee agrees to be bound by the restrictions in the immediately preceding paragraph and no filing by any party (transferor or transferee) under the Exchange Act will be required or will be voluntarily made in connection with such transfer (other than a filing pursuant to Section 13(d) or 13(g) of the Exchange Act or a filing on Form 3, 4 or 5 under the Exchange Act); or | |
• | shares acquired in the directed share program by a person other than us (we have agreed to ensure that holders of such shares acquired in the directed share program will not sell, transfer, assign, pledge or otherwise dispose of such shares for a period of three months after the registration statement of which this prospectus is a part becomes effective). |
• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
• | Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. | |
• | Syndicate covering transactions involve purchases of the class A common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over- allotment option, resulting in a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
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• | Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the class A common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. | |
• | In passive market making, market makers in the class A common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our class A common stock until the time, if any, at which a stabilizing bid is made. |
• | our record of operations; | |
• | our current financial condition; | |
• | our future prospects; | |
• | our markets; | |
• | the economic conditions in and future prospects for the industry in which we compete; | |
• | our management; and | |
• | currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. |
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• | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than€43,000,000 and (3) an annual net turnover of more than€50,000,000, as shown in its last annual or consolidated accounts; | |
• | to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or | |
• | in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling with Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and | |
• | it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the class A common stock in, from or otherwise involving the United Kingdom. |
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• | the purchaser is entitled under applicable provincial securities laws to purchase shares of class A common stock without the benefit of a prospectus qualified under those securities laws; | |
• | where required by law, that the purchaser is purchasing as principal and not as agent; | |
• | the purchaser has reviewed the text above under Resale Restrictions; and | |
• | the purchaser acknowledges and consents to the provision of specified information concerning its purchase of shares of class A common stock to the regulatory authority that by law is entitled to collect the information. |
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Page | ||||
Consolidated Financial Statements (restated) of Spirit AeroSystems Holdings, Inc. for the periods ended June 29, 2006 (unaudited) and from February 7, 2005 (date of inception) through December 29, 2005 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 - F-43 | ||||
Financial Statements of Wichita Division (a business unit of The Boeing Company) as of June 16, 2005 and December 31, 2004, and for the period from January 1, 2005 through June 16, 2005, and for the years ended December 31, 2004 and 2003 | ||||
F-44 | ||||
F-45 | ||||
F-46 | ||||
F-47 - F-58 |
F-1
Table of Contents
Spirit AeroSystems Holdings, Inc.
PricewaterhouseCoopers LLP
F-2
Table of Contents
Period from | ||||||||||
Six months | February 7, 2005 | |||||||||
ended | (date of inception) | |||||||||
June 29, | through | |||||||||
2006 | December 29, 2005 | |||||||||
(restated) | (restated) | |||||||||
(Unaudited) | ||||||||||
($ in millions, except | ||||||||||
per share data) | ||||||||||
Net revenues | $ | 1,526.2 | $ | 1,207.6 | ||||||
Operating costs and expenses | ||||||||||
Cost of sales | 1,249.0 | 1,056.4 | ||||||||
Selling, general and administrative | 100.1 | 140.7 | ||||||||
Research and development | 70.5 | 78.3 | ||||||||
Total costs and expenses | 1,419.6 | 1,275.4 | ||||||||
Operating income (loss) | 106.6 | (67.8 | ) | |||||||
Interest expense and financing fee amortization | (22.9 | ) | (25.5 | ) | ||||||
Interest income | 14.0 | 15.4 | ||||||||
Other income, net | 2.9 | 1.3 | ||||||||
Income (loss) from continuing operations before income taxes | 100.6 | (76.6 | ) | |||||||
Provision for income taxes | (48.4 | ) | (13.7 | ) | ||||||
Net income (loss) | $ | 52.2 | $ | (90.3 | ) | |||||
Earnings (loss) per share | ||||||||||
Basic | $ | 0.46 | $ | (0.80 | ) | |||||
Diluted | $ | 0.43 | $ | (0.80 | ) |
F-3
Table of Contents
June 29, | December 29, | ||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
(Unaudited) | |||||||||
($ in millions) | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 125.7 | $ | 241.3 | |||||
Accounts receivable — net | 263.7 | 98.8 | |||||||
Inventories — net | 613.4 | 510.7 | |||||||
Prepaid expenses | 14.4 | 10.2 | |||||||
Deferred tax assets — current | 2.9 | 1.1 | |||||||
Total current assets | 1,020.1 | 862.1 | |||||||
Property, plant and equipment, net | 624.7 | 518.8 | |||||||
Long-term receivable | 222.6 | 212.5 | |||||||
Other assets | 241.7 | 63.2 | |||||||
Total assets | $ | 2,109.1 | $ | 1,656.6 | |||||
Current liabilities | |||||||||
Accounts payable | $ | 279.4 | $ | 173.7 | |||||
Accrued expenses | 161.6 | 125.6 | |||||||
Current portion of long-term debt | 14.2 | 11.6 | |||||||
Income taxes | 23.3 | 0.6 | |||||||
Total current liabilities | 478.5 | 311.5 | |||||||
Long-term debt | 706.7 | 710.0 | |||||||
Advance payments | 400.0 | 200.0 | |||||||
Other liabilities | 97.5 | 108.2 | |||||||
Deferred tax liability — non-current | 2.9 | 1.1 | |||||||
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, no shares issued and outstanding | — | — | |||||||
Common stock, Class B par value $0.01; 150,000,000 shares authorized, 123,885,279 (unaudited) and 122,670,336 shares issued and outstanding, respectively | 1.2 | 1.2 | |||||||
Additional paid-in capital | 437.4 | 410.7 | |||||||
Accumulated other comprehensive income | 23.0 | 4.2 | |||||||
Accumulated deficit | (38.1 | ) | (90.3 | ) | |||||
Total shareholders’ equity | 423.5 | 325.8 | |||||||
Total liabilities and shareholders’ equity | $ | 2,109.1 | $ | 1,656.6 | |||||
F-4
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Class B | Accumulated | |||||||||||||||||||||||||||
Common Stock | Other | |||||||||||||||||||||||||||
Additional | Comprehensive | Accumulated | Comprehensive | |||||||||||||||||||||||||
Shares | Amount | Paid-in Capital | Income | Deficit | Total | Income/(Loss) | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Initial capitalization — February 7, 2005 | 100 | (1) | — | — | ||||||||||||||||||||||||
Cancellation of shares(1) | (100 | ) | — | — | ||||||||||||||||||||||||
Equity issuance to investors | 112,500,000 | 1.1 | 368.9 | 370.0 | ||||||||||||||||||||||||
Net loss (restated) | (90.3 | ) | (90.3 | ) | (90.3 | ) | ||||||||||||||||||||||
Unrealized gain on cash flow hedges | 4.2 | 4.2 | 4.2 | |||||||||||||||||||||||||
Employee equity awards (restated) | 8,476,464 | 0.1 | 18.5 | 18.6 | ||||||||||||||||||||||||
Non-employee equity awards (restated) | 435,000 | — | 0.6 | 0.6 | ||||||||||||||||||||||||
Equity issuances to management (restated) | 1,258,872 | — | 13.7 | 13.7 | ||||||||||||||||||||||||
Supplemental executive retirement plan conversion (restated) | — | — | 9.0 | 9.0 | ||||||||||||||||||||||||
Balance — December 29, 2005 (restated) | 122,670,336 | $ | 1.2 | $ | 410.7 | $ | 4.2 | $ | (90.3 | ) | $ | 325.8 | $ | (86.1 | ) | |||||||||||||
Net income (restated) (unaudited) | 52.2 | 52.2 | 52.2 | |||||||||||||||||||||||||
Unrealized gain on cash flow hedges (restated) (unaudited) | 13.1 | 13.1 | 13.1 | |||||||||||||||||||||||||
Employee equity awards (restated) (unaudited) | 1,064,943 | — | 21.4 | 21.4 | ||||||||||||||||||||||||
Non-employee equity awards (restated) (unaudited) | — | — | 2.9 | 2.9 | ||||||||||||||||||||||||
Equity issuances to management (restated) (unaudited) | 150,000 | — | 2.4 | 2.4 | ||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | 5.7 | 5.7 | 5.7 | ||||||||||||||||||||||
Balance — June 29, 2006 (restated) (unaudited) | 123,885,279 | $ | 1.2 | $ | 437.4 | $ | 23.0 | $ | (38.1 | ) | $ | 423.5 | $ | (15.1 | ) | |||||||||||||
(1) | Issued as common stock without designation as to class. Shares were cancelled as of June 16, 2005. |
F-5
Table of Contents
Period from | ||||||||||
February 7, 2005 | ||||||||||
Six Months | (Date of Inception) | |||||||||
Ended | through | |||||||||
June 29, 2006 | December 29, 2005 | |||||||||
(restated) | (restated) | |||||||||
(Unaudited) | ||||||||||
($ in millions) | ||||||||||
Operating activities | ||||||||||
Net income (loss) | $ | 52.2 | $ | (90.3 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||
Depreciation expense | 14.2 | 28.6 | ||||||||
Amortization expense | 4.0 | 3.3 | ||||||||
Accretion of long-term receivable | (10.1 | ) | (9.7 | ) | ||||||
Stock compensation expense | 26.3 | 34.7 | ||||||||
Changes in assets and liabilities, net of acquisition | ||||||||||
Accounts receivable | (101.2 | ) | (88.4 | ) | ||||||
Inventories | (53.2 | ) | (31.4 | ) | ||||||
Other current assets | (3.6 | ) | 1.3 | |||||||
Accounts payable and accrued liabilities | 92.8 | 163.4 | ||||||||
Customer advance from Boeing | 200.0 | 200.0 | ||||||||
Other | (8.8 | ) | 12.3 | |||||||
Net cash provided by operating activities | 212.6 | 223.8 | ||||||||
Investing Activities | ||||||||||
Financial derivatives | 2.0 | — | ||||||||
Purchase of property, plant and equipment | (180.0 | ) | (144.6 | ) | ||||||
Acquisition of business, net of cash acquired | (145.4 | ) | (885.7 | ) | ||||||
Net cash used in investing activities | (323.4 | ) | (1,030.3 | ) | ||||||
Financing Activities | ||||||||||
Proceeds from issuance of debt | — | 700.0 | ||||||||
Debt issuance costs | — | (21.4 | ) | |||||||
Payments on debt | (5.4 | ) | (5.0 | ) | ||||||
Equity contributions from shareholders | — | 370.0 | ||||||||
Executive stock investments | 0.5 | 4.2 | ||||||||
Net cash (used in) provided by financing activities | (4.9 | ) | 1,047.8 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 0.1 | — | ||||||||
Net (decrease) increase in cash and cash equivalents for the period | (115.6 | ) | 241.3 | |||||||
Cash and cash equivalents, beginning of period | 241.3 | — | ||||||||
Cash and cash equivalents, end of period | $ | 125.7 | $ | 241.3 | ||||||
Supplemental Information | ||||||||||
Interest paid | $ | 24.6 | $ | 28.1 | ||||||
Income taxes paid | $ | 17.8 | $ | 8.5 | ||||||
Appreciation of financial instruments | $ | 13.1 | $ | 4.2 | ||||||
Property acquired through capital leases | $ | 4.0 | $ | 26.7 |
F-6
Table of Contents
1. | Nature of Business |
2. | Restatement of Previously Reported Financial Statements |
F-7
Table of Contents
Period from | Period from | Period from | ||||||||||||||||||||||||||||||||||
June 17, | December 30, | June 30, | ||||||||||||||||||||||||||||||||||
2005 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||
through | through | through | For the years ending December 31, | |||||||||||||||||||||||||||||||||
December 29, | June 29, | December 31, | ||||||||||||||||||||||||||||||||||
2005 | 2006 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Total | ||||||||||||||||||||||||||||
As previously reported(1) | 4.2 | 7.3 | 7.1 | 4.1 | 2.5 | 1.3 | 0.4 | — | 26.9 | |||||||||||||||||||||||||||
As restated | 34.7 | 26.3 | 28.0 | 25.5 | 14.6 | 8.0 | 2.9 | 0.2 | 140.2 | |||||||||||||||||||||||||||
Difference | 30.5 | 19.0 | 20.9 | 21.4 | 12.1 | 6.7 | 2.5 | 0.2 | 113.3 | |||||||||||||||||||||||||||
(1) | Beyond the period ending June 29, 2006, the presented figures represent the estimated future spread of the original calculated fair values. The values presented for the period from June 17, 2005 through December 29, 2005 and the period from December 30, 2005 through June 29, 2005 are the amounts that were previously presented in the statements of cash flows. |
Six Months Ended June 29, | Period from February 7, 2005 | ||||||||||||||||
2006 (Unaudited) | through December 29, 2005 | ||||||||||||||||
As Previously | As Previously | ||||||||||||||||
Reported | As Restated | Reported | As Restated | ||||||||||||||
Net revenues | $ | 1,525.4 | $ | 1,526.2 | $ | 1,208.4 | $ | 1,207.6 | |||||||||
Cost of sales | $ | 1,249.0 | $ | 1,249.0 | $ | 1,056.8 | $ | 1,056.4 | |||||||||
Selling, general and administrative | $ | 81.1 | $ | 100.1 | $ | 110.2 | $ | 140.7 | |||||||||
Operating income (loss) | $ | 124.8 | $ | 106.6 | $ | (36.9 | ) | $ | (67.8 | ) | |||||||
Interest expense and financing fee amortization | $ | (23.3 | ) | $ | (22.9 | ) | $ | (25.1 | ) | $ | (25.5 | ) | |||||
Income (loss) from continuing operations before income taxes | $ | 118.4 | $ | 100.6 | $ | (45.3 | ) | $ | (76.6 | ) | |||||||
Provision for income taxes | $ | (43.4 | ) | $ | (48.4 | ) | $ | (13.9 | ) | $ | (13.7 | ) | |||||
Net income (loss) | $ | 75.0 | $ | 52.2 | $ | (59.2 | ) | $ | (90.3 | ) | |||||||
Earnings (loss) per share | |||||||||||||||||
Basic(a) | $ | 0.65 | $ | 0.46 | $ | (0.52 | ) | $ | (0.80 | ) | |||||||
Diluted(a) | $ | 0.54 | $ | 0.43 | $ | (0.52 | ) | $ | (0.80 | ) |
(a) | The previously reported numbers have been adjusted for 3-for-1 stock split. | |
F-8
Table of Contents
Six Months Ended June 29, | Period from February 7, 2005 | ||||||||||||||||
2006 (Unaudited) | through December 29, 2005 | ||||||||||||||||
As Previously | As Previously | ||||||||||||||||
Reported | As Restated | Reported | As Restated | ||||||||||||||
Accounts receivable — net | $ | 263.7 | $ | 263.7 | $ | 99.6 | $ | 98.8 | |||||||||
Inventory — net | $ | 613.5 | $ | 613.4 | $ | 505.7 | $ | 510.7 | |||||||||
Prepaids — net | $ | 14.8 | $ | 14.4 | $ | 10.6 | $ | 10.2 | |||||||||
Deferred tax asset — current | $ | 4.6 | $ | 2.9 | $ | 2.3 | $ | 1.1 | |||||||||
Total current assets | $ | 1,022.3 | $ | 1,020.1 | $ | 859.5 | $ | 862.1 | |||||||||
Other assets | $ | 241.5 | $ | 241.7 | $ | 63.5 | $ | 63.2 | |||||||||
Total assets | $ | 2,111.1 | $ | 2,109.1 | $ | 1,654.3 | $ | 1,656.6 | |||||||||
Accounts payable | $ | 279.4 | $ | 279.4 | $ | 168.7 | $ | 173.7 | |||||||||
Accrued expenses | $ | 162.3 | $ | 161.6 | $ | 126.3 | $ | 125.6 | |||||||||
Income Taxes | $ | 19.7 | $ | 23.3 | $ | 0.8 | $ | 0.6 | |||||||||
Total current liabilities | $ | 475.6 | $ | 478.5 | $ | 307.4 | $ | 311.5 | |||||||||
Other liabilities | $ | 96.3 | $ | 97.5 | $ | 108.2 | $ | 108.2 | |||||||||
Deferred tax liability — non-current | $ | 4.6 | $ | 2.9 | $ | 2.3 | $ | 1.1 | |||||||||
Additional paid-in capital | $ | 388.7 | $ | 438.2 | $ | 381.0 | $ | 411.5 | |||||||||
Retained earnings/(accumulative deficit) | $ | 15.8 | $ | (38.1 | ) | $ | (59.2 | ) | $ | (90.3 | ) | ||||||
Total shareholders’ equity | $ | 427.9 | $ | 423.5 | $ | 326.4 | $ | 325.8 | |||||||||
Total liabilities and shareholders’ equity | $ | 2,111.1 | $ | 2,109.1 | $ | 1,654.3 | $ | 1,656.6 |
Six Months Ended June 29, | Period from February 7, 2005 | |||||||||||||||||
2006 (Unaudited) | through December 29, 2005 | |||||||||||||||||
As Previously | As Previously | |||||||||||||||||
Reported | As Restated | Reported | As Restated | |||||||||||||||
Net income (loss) | $ | 75.0 | $ | 52.2 | $ | (59.2 | ) | $ | (90.3 | ) | ||||||||
Amortization expense | $ | 4.4 | $ | 4.0 | $ | 3.0 | $ | 3.3 | ||||||||||
Stock compensation expense | $ | 7.3 | $ | 26.3 | $ | 4.2 | $ | 34.7 | ||||||||||
Accounts receivable | $ | (100.4 | ) | $ | (101.2 | ) | $ | (89.2 | ) | $ | (88.4 | ) | ||||||
Inventories | $ | (58.2 | ) | $ | (53.2 | ) | $ | (26.4 | ) | $ | (31.4 | ) | ||||||
Other current assets | $ | (4.1 | ) | $ | (3.6 | ) | $ | (0.3 | ) | $ | 1.3 | |||||||
Accounts payable and accrued liabilities | $ | 94.0 | $ | 92.8 | $ | 159.3 | $ | 163.4 | ||||||||||
Other | $ | (9.5 | ) | $ | (8.8 | ) | $ | 13.5 | $ | 12.3 | ||||||||
Net cash provided by operating activities | $ | 212.6 | $ | 212.6 | $ | 223.8 | $ | 223.8 |
3. | Summary of Significant Accounting Policies |
Unaudited Interim Results |
F-9
Table of Contents
Basis of Presentation |
Acquisition of Spirit |
Cash payment to Boeing | $ | 903.9 | ||||
Direct costs of the acquisition | 20.2 | |||||
Less: | ||||||
Consideration to be returned from Boeing for sale of capital assets | (202.8 | ) | ||||
Consideration to be returned from Boeing for transition costs | (30.0 | ) | ||||
Working capital settlement | (19.0 | ) | ||||
Total consideration | $ | 672.3 | ||||
F-10
Table of Contents
F-11
Table of Contents
Pro-rata | |||||||||||||
Fair | Allocation of | Book | |||||||||||
Value, | Excess of | Value, | |||||||||||
June 16, | Fair Value | June 16, | |||||||||||
2005 | Over Cost | 2005 | |||||||||||
Cash | $ | 1.3 | $ | — | $ | 1.3 | |||||||
Accounts receivable | 0.3 | 0.3 | |||||||||||
Inventories | 479.2 | 479.2 | |||||||||||
Other current assets | 0.3 | 0.3 | |||||||||||
Property, plant and equipment | 902.3 | (671.2 | ) | 231.1 | |||||||||
Intangible assets | 85.2 | (67.9 | ) | 17.3 | |||||||||
Other assets | 6.8 | 6.8 | |||||||||||
Pension asset | 101.2 | 101.2 | |||||||||||
Accounts payable and accrued liabilities | (130.2 | ) | (130.2 | ) | |||||||||
Pension and post-retirement liabilities | (35.0 | ) | (35.0 | ) | |||||||||
Net assets acquired | $ | 1,411.4 | $ | (739.1 | ) | $ | 672.3 | ||||||
Acquisition of BAE Aerostructures |
F-12
Table of Contents
Cash payment to BAE Systems | $ | 139.1 | ||
Direct costs of the acquisition | 3.6 | |||
Working capital settlement | 3.0 | |||
Total consideration | $ | 145.7 | ||
Pro-rata | ||||||||||||
Allocation of | ||||||||||||
Excess of | ||||||||||||
Fair Value | Fair Value | Book Value | ||||||||||
April 1, 2006 | Over Cost | April 1, 2006 | ||||||||||
Cash | $ | 0.3 | $ | — | $ | 0.3 | ||||||
Accounts receivable | 61.3 | 61.3 | ||||||||||
Inventories | 45.7 | 45.7 | ||||||||||
Other current assets | — | — | ||||||||||
Property, plant and equipment | 90.3 | (15.4 | ) | 74.9 | ||||||||
Intangible assets (customer relationships) | 40.8 | (7.0 | ) | 33.8 | ||||||||
Currency hedge assets | 11.1 | 11.1 | ||||||||||
Accounts payable and accrued liabilities | (57.8 | ) | (57.8 | ) | ||||||||
Pension liabilities | (19.1 | ) | (19.1 | ) | ||||||||
Warranty liabilities | (2.8 | ) | (2.8 | ) | ||||||||
Currency hedge liabilities | (1.7 | ) | (1.7 | ) | ||||||||
Net assets acquired | $ | 168.1 | $ | (22.4 | ) | $ | 145.7 | |||||
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Period from | ||||||||
June 17, | ||||||||
Six Months | 2005 | |||||||
Ended | through | |||||||
June 29, | December 29, | |||||||
2006 | 2005 | |||||||
Net sales | $ | 1,622.6 | $ | 1,394.7 | ||||
Cost of sales | $ | 1,340.5 | $ | 1,240.7 | ||||
Net income (loss) | $ | 54.7 | $ | (95.4 | ) |
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2006 | $ | 8.7 | ||
2007 | 13.9 | |||
2008 | 13.9 | |||
2009 | 8.9 | |||
2010 | 2.0 |
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Estimated Useful life | ||||
Land improvements | 20 years | |||
Buildings | 40 years | |||
Machinery and equipment | 3-11 years | |||
Tooling — Airplane program — B787 | 5-20 years | |||
Tooling — Airplane program — all others | 2-10 years |
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• | Recognize the funded status of the Company’s defined benefit plans in its consolidated financial statements. | |
• | Recognize as a component of other comprehensive income any actuarial gains and losses and prior service costs and credits that arise during the period but are not immediately recognized as components of net periodic benefit cost. | |
• | Measure defined benefit plan assets and obligations as of the Company’s fiscal year end. | |
• | Disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the subsequent fiscal year that arise from delayed recognition of gains or losses, prior to service costs or credits, and transition asset or obligation. | |
4. | Inventories |
June 29, | December 29, | ||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
(Unaudited) | |||||||||
Raw materials | $ | 194.2 | $ | 119.1 | |||||
Work-in-progress | 419.2 | 391.6 | |||||||
Total inventories | $ | 613.4 | $ | 510.7 | |||||
Company | ||||
Inventory | ||||
(restated) | ||||
B737 | $ | 243.8 | ||
B747 | 60.9 | |||
B767 | 16.2 | |||
B777 | 126.5 | |||
Other in-process inventory related to long-term contracts and other programs(1) | 63.3 | |||
Balance December 29, 2005 | $ | 510.7 | ||
(1) | Contracted non-recurring services for certain derivative aircraft programs to be paid by OEM, plus miscellaneous otherwork-in-progress. |
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5. | Property, Plant and Equipment |
June 29, | December 29, | ||||||||
2006 | 2005 | ||||||||
(Unaudited) | |||||||||
Land (including improvements) | $ | 18.5 | $ | 18.8 | |||||
Buildings | 100.0 | 116.0 | |||||||
Machinery and equipment | 100.2 | 121.8 | |||||||
Tooling | 137.3 | 121.6 | |||||||
Construction in progress | 311.6 | 169.2 | |||||||
Total | 667.6 | 547.4 | |||||||
Less: accumulated depreciation | (42.9 | ) | (28.6 | ) | |||||
Property, plant and equipment, net | $ | 624.7 | $ | 518.8 | |||||
6. | Long-Term Receivable |
2007 | $ | 45.5 | |||
2008 | 116.1 | ||||
2009 | 115.4 | ||||
Total | $ | 277.0 | |||
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7. | Other Assets |
June 29, | December 29, | ||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
(Unaudited) | |||||||||
Intangible assets | |||||||||
Patents | $ | 2.0 | $ | 3.5 | |||||
Favorable leasehold interests | 15.4 | 27.3 | |||||||
Customer relationships | 35.2 | — | |||||||
Total intangible assets | 52.6 | 30.8 | |||||||
Less: accumulated amortization | (2.5 | ) | (1.3 | ) | |||||
Intangible assets, net | 50.1 | 29.5 | |||||||
Deferred financing costs, net | 20.1 | 22.4 | |||||||
Fair value of derivative instruments | 31.0 | 6.9 | |||||||
Pension asset | 128.5 | — | |||||||
Other | 12.0 | 4.4 | |||||||
Total | $ | 241.7 | $ | 63.2 | |||||
2006 | $ | 3.4 | ||
2007 | $ | 4.5 | ||
2008 | $ | 4.5 | ||
2009 | $ | 4.5 | ||
2010 | $ | 4.5 |
8. | Financial Instruments |
Effective | Fair Value, | |||||||||||||||
Principal | Variable | Fixed | Fixed | December 29, | ||||||||||||
Amount | Expires | Rate | Rate | Rate | 2005 | |||||||||||
$100 | July 2008 | LIBOR | 4.24 | % | 6.59 | % | $ | 1.2 | ||||||||
$300 | July 2009 | LIBOR | 4.30 | % | 6.65 | % | $ | 4.2 | ||||||||
$100 | July 2010 | LIBOR | 4.37 | % | 6.72 | % | $ | 1.5 |
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9. | Debt |
Credit Agreement |
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Boeing Delayed Draw Term Loan Facility |
F-24
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Principal Repayments |
As of | ||||||||
June 29, | ||||||||
2006 | ||||||||
2006 | $ | 5.2 | ||||||
2007 | $ | 7.0 | ||||||
2008 | $ | 7.0 | ||||||
2009 | $ | 7.0 | ||||||
2010 | $ | 7.0 | ||||||
Thereafter | $ | 661.5 |
10. | Pension and Other Post-Retirement Benefits |
Multi-Employer Pension Plan |
Defined Contribution Plans |
Defined Benefit Pension Plans |
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Other Post-Retirement Benefit Plans |
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Obligations and Funded Status |
Other | |||||||||
Defined Benefit | Post-Retirement | ||||||||
Pension Plans | Benefit Plans | ||||||||
Change in benefit obligation | |||||||||
Benefit obligation, beginning of period | $ | — | $ | — | |||||
Acquisitions | 583.8 | 31.8 | |||||||
Service cost | — | 1.0 | |||||||
Interest cost | 17.4 | 0.9 | |||||||
Amendments | — | — | |||||||
Actuarial losses | (58.1 | ) | (2.5 | ) | |||||
Benefit obligation, end of period | $ | 543.1 | $ | 31.2 | |||||
Change in plan assets | |||||||||
Fair value of plan assets, beginning of period | $ | — | $ | — | |||||
Acquisitions | 525.0 | — | |||||||
Actual return on plan assets | 24.4 | — | |||||||
Fair value of plan assets, end of period | $ | 549.4 | $ | — | |||||
Reconciliation of funded status | |||||||||
Funded status — assets minus obligation | $ | 6.3 | $ | (31.2 | ) | ||||
Unrecognized actuarial loss (gain) | (59.0 | ) | (2.4 | ) | |||||
Net amount recognized | $ | (52.7 | ) | $ | (33.6 | ) | |||
Amounts recognized in the financial statements | |||||||||
Prepaid benefit cost | $ | — | $ | — | |||||
Accrued benefit liability | (52.7 | ) | (33.6 | ) | |||||
Accumulated other comprehensive income | — | — | |||||||
Net amount recognized | $ | (52.7 | ) | $ | (33.6 | ) | |||
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Other | ||||||||
Defined Benefit | Post-Retirement | |||||||
Pension Plans | Benefit Plans | |||||||
Assumptions used to determine benefit obligation for the period ended December 29, 2005 | ||||||||
Discount rate | 6 percent | 5.75 percent | ||||||
Expected return | 8.25 percent | N/A | ||||||
Salary increases | N/A | N/A | ||||||
Medical assumptions | ||||||||
Trend assumed for next year | N/A | 10 percent | ||||||
Ultimate trend rate | N/A | 5 percent | ||||||
Year that ultimate trend rate is reached | N/A | 2011 | ||||||
Components of benefit (income) expense | ||||||||
Service cost | $ | — | $ | 1.0 | ||||
Interest cost | 17.4 | 0.9 | ||||||
Expected return on plan assets | (23.5 | ) | — | |||||
Net benefit (income) expense | $ | (6.1 | ) | $ | 1.9 | |||
Assumptions used to determine benefit expense for the period ended December 29, 2005 | ||||||||
Discount rate | 5.5 percent | 5.25 percent | ||||||
Expected return | 8.25 percent | N/A | ||||||
Salary increases | N/A | N/A | ||||||
Medical assumptions | ||||||||
Trend assumed for next year | N/A | 11.0 percent | ||||||
Ultimate trend rate | N/A | 5.0 percent | ||||||
Year that ultimate trend rate is reached | N/A | 2011 |
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Asset Category | |||||
Equity securities — U.S. | 55% | ||||
Equity securities — International | 7% | ||||
Debt securities | 37% | ||||
Other | 1% | ||||
Total | 100% | ||||
Other Post- | ||||||||
Retirement | ||||||||
Pension Plans | Benefit Plans | |||||||
2006 | $ | 1.4 | $ | — | ||||
2007 | $ | 2.7 | $ | — | ||||
2008 | $ | 4.4 | $ | 0.1 | ||||
2009 | $ | 6.6 | $ | 0.2 | ||||
2010 | $ | 9.2 | $ | 0.2 | ||||
2011-2015 | $ | 101.7 | $ | 13.8 |
11. | Capital Stock |
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12. | Stock Compensation |
Executive Incentive Plan |
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Table of Contents
Shares | Value | |||||||
(Thousands) | (restated) | |||||||
(Millions) | ||||||||
Executive Incentive Plan | ||||||||
Nonvested at February 7, 2005 (date of inception) | — | $ | — | |||||
Granted during period | 8,476 | 90.8 | ||||||
Vested during period | — | — | ||||||
Forfeited during period | — | — | ||||||
Nonvested at December 29, 2005 | 8,476 | $ | 90.8 | |||||
Granted during period (unaudited) | 600 | 9.8 | ||||||
Vested during period (unaudited) | — | — | ||||||
Forfeited during period (unaudited) | — | — | ||||||
Nonvested at June 29, 2006 (unaudited) | 9,076 | $ | 100.6 | |||||
Board of Directors Stock Awards |
F-31
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Shares | Value | |||||||
(Thousands) | (restated) | |||||||
(Millions) | ||||||||
Board of Directors Stock Grants | ||||||||
Nonvested at February 7, 2005 (date of inception) | — | $ | — | |||||
Granted during period | 390 | 5.8 | ||||||
Vested during period | — | — | ||||||
Forfeited during period | — | — | ||||||
Nonvested at December 29, 2005 | 390 | $ | 5.8 | |||||
Granted during period (unaudited) | — | — | ||||||
Vested during period (unaudited) | — | — | ||||||
Forfeited during period (unaudited) | — | — | ||||||
Nonvested at June 29, 2006 (unaudited) | 390 | $ | 5.8 | |||||
Short Term Incentive Plan |
Shares | Value | |||||||
(Thousands) | (restated) | |||||||
(Millions) | ||||||||
Short Term Incentive Plan | ||||||||
Nonvested at December 29, 2005 | — | — | ||||||
Granted during period (unaudited) | 465 | $ | 7.8 | |||||
Vested during period (unaudited) | — | — | ||||||
Exercised during period (unaudited) | — | — | ||||||
Forfeited during period (unaudited) | — | — | ||||||
Nonvested at June 29, 2006 (unaudited) | 465 | $ | 7.8 | |||||
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Union Equity Participation Plan |
SARs | Value | |||||||
(Thousands) | (Millions) | |||||||
Union Equity Participation Plan | ||||||||
Nonvested at February 7, 2005 (date of inception) | — | — | ||||||
Granted during period | 14,553 | — | ||||||
Vested during period | — | — | ||||||
Exercised during period | — | — | ||||||
Forfeited during period | — | — | ||||||
Nonvested at December 29, 2005 | 14,553 | — | ||||||
Granted during period (unaudited) | — | — | ||||||
Vested during period (unaudited) | — | — | ||||||
Exercised during period (unaudited) | — | — | ||||||
Forfeited during period (unaudited) | — | — | ||||||
Nonvested at June 29, 2006 (unaudited) | 14,553 | — | ||||||
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Table of Contents
13. | Income Taxes |
June | |||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
Income taxes estimated to be payable currently | |||||||||
U.S. federal | $ | 40.3 | $ | 9.1 | |||||
U.S. state and local | 0.2 | — | |||||||
Foreign | — | — | |||||||
Total payable currently | 40.5 | 9.1 | |||||||
Income taxes estimated to be payable — long term | |||||||||
U.S. federal | 7.8 | 7.2 | |||||||
U.S. state and local | 0.1 | — | |||||||
Foreign | — | — | |||||||
Total payable — long term | 7.9 | 7.2 | |||||||
Deferred income tax expense (credit) — net | |||||||||
U.S. federal | — | (2.3 | ) | ||||||
U.S. state and local | — | (0.3 | ) | ||||||
Foreign | — | — | |||||||
Total deferred | — | (2.6 | ) | ||||||
Total provision for income taxes | $ | 48.4 | $ | 13.7 | |||||
June | |||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
Tax expense/(benefit) at U.S. federal statutory income tax rate | $ | 35.3 | $ | (26.8 | ) | ||||
State and local tax benefit | (1.1 | ) | (3.9 | ) | |||||
Change in valuation allowance | 15.7 | 41.5 | |||||||
Other | (0.3 | ) | — | ||||||
Qualified Production Activity Deduction (IRC 199) | (1.5 | ) | (0.5 | ) | |||||
Foreign tax rate differential | (0.1 | ) | — | ||||||
Stock compensation | 0.4 | 3.4 | |||||||
Total provision for income taxes | $ | 48.4 | $ | 13.7 | |||||
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June | |||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
Long-term contract methods of income recognition | $ | 43.4 | $ | 28.2 | |||||
Post-retirement benefits other than pensions | 13.4 | 12.8 | |||||||
Pension and other employee benefit plans | 20.5 | 20.2 | |||||||
Employee compensation accruals | 26.5 | 15.8 | |||||||
Depreciation and amortization | (34.8 | ) | (28.3 | ) | |||||
Interest swap contracts | (7.4 | ) | (2.6 | ) | |||||
Other | 2.1 | 1.0 | |||||||
Gross deferred tax asset | 63.7 | 47.1 | |||||||
Valuation Allowances | (63.7 | ) | (47.1 | ) | |||||
Net deferred tax asset | $ | — | $ | — | |||||
June | |||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
Current deferred tax assets | $ | 4.8 | $ | 3.1 | |||||
Current deferred tax liabilities | (1.9 | ) | (2.0 | ) | |||||
Net current deferred tax asset | 2.9 | 1.1 | |||||||
Non-current deferred tax assets | 39.3 | 29.8 | |||||||
Non-current deferred tax liabilities | (42.2 | ) | (30.9 | ) | |||||
Net non-current deferred tax liability | $ | (2.9 | ) | $ | (1.1 | ) | |||
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14. | Earnings (Loss) per Share Calculation |
Period from | ||||
February 7, 2005 | ||||
(Date of Inception) | ||||
through | ||||
December 29, 2005 | ||||
(restated) | ||||
(In millions, except | ||||
per share data) | ||||
Basic & Diluted Loss per Share Calculation | ||||
Net loss | $ | (90.3 | ) | |
Weighted average shares outstanding | 113.5 | |||
Basic & diluted loss per share | $ | (0.80 | ) | |
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Six Month | ||||
Period Ended | ||||
June 29, 2006 | ||||
(restated) | ||||
(Unaudited) | ||||
(In millions, except | ||||
per share data) | ||||
Basic Earnings per Share Calculation | ||||
Net income | $ | 52.2 | ||
Weighted average shares outstanding | 113.9 | |||
Basic earnings per share | $ | 0.46 | ||
Diluted Earnings per Share Calculation | ||||
Net income | $ | 52.2 | ||
Weighted average shares outstanding | 113.9 | |||
Effect of dilutive non-vested grants outstanding | 7.0 | |||
Total weighted average shares outstanding | 120.9 | |||
Diluted earnings per share | $ | 0.43 | ||
15. | Related Party Transactions |
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16. | Commitments, Contingencies and Guarantees |
Litigation |
Age Discrimination Litigation |
Commitments |
Capital | ||||||||||||||||
Present | ||||||||||||||||
Operating | Value | Interest | Total | |||||||||||||
2006 | $ | 4.7 | $ | 6.3 | $ | 1.3 | $ | 7.6 | ||||||||
2007 | $ | 5.3 | $ | 6.4 | $ | 0.6 | $ | 7.0 | ||||||||
2008 | $ | 6.5 | $ | 6.9 | $ | 1.1 | $ | 8.0 | ||||||||
2009 | $ | 6.8 | $ | 5.5 | $ | 0.2 | $ | 5.7 | ||||||||
2010 | $ | 5.2 | $ | — | $ | — | $ | — | ||||||||
2011 and thereafter | $ | 11.1 | $ | — | $ | — | $ | — |
Service and Product Warranties |
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Table of Contents
Guarantees |
Indemnification |
Environmental |
F-39
Table of Contents
Bonds |
F-40
Table of Contents
17. | Significant Concentrations of Risk |
Economic Dependence |
Labor Force |
18. | Supplemental Balance Sheet Information |
June 29, | December 29, | ||||||||
2006 | 2005 | ||||||||
(restated) | (restated) | ||||||||
(Unaudited) | |||||||||
Accrued expenses | |||||||||
Accrued wages and bonuses | $ | 75.6 | $ | 21.9 | |||||
Accrued fringe benefits | 64.1 | 65.1 | |||||||
Accrued interest | 9.7 | 9.2 | |||||||
Other | 12.2 | 29.4 | |||||||
Total | $ | 161.6 | $ | 125.6 | |||||
Other liabilities | |||||||||
Pension obligation | 19.3 | 52.7 | |||||||
Post-employment benefit obligation | 36.5 | 33.6 | |||||||
Other | 41.7 | 21.9 | |||||||
Total | $ | 97.5 | $ | 108.2 | |||||
19. | Segment Information |
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F-42
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Period from | |||||||||
Six Months | February 7, 2005 | ||||||||
Ended | (Date of | ||||||||
June 29, | Inception) through | ||||||||
2006 | December 29, 2005 | ||||||||
(restated) | (restated) | ||||||||
(Unaudited) | |||||||||
Segment Revenues | |||||||||
Fuselage Systems | $ | 768.2 | $ | 637.7 | |||||
Propulsion Systems | 441.7 | 372.2 | |||||||
Wing Systems | 299.1 | 170.0 | |||||||
All Other | 17.2 | 27.7 | |||||||
$ | 1,526.2 | $ | 1,207.6 | ||||||
Segment Operating Income | |||||||||
Fuselage Systems | $ | 125.5 | $ | 43.7 | |||||
Propulsion Systems | 59.1 | 24.5 | |||||||
Wing Systems | 19.0 | 5.1 | |||||||
All Other | 2.1 | (1.2 | ) | ||||||
205.7 | 72.1 | ||||||||
Unallocated corporate SG&A | (99.1 | ) | (138.9 | ) | |||||
Unallocated research and development | — | (1.0 | ) | ||||||
Total operating income (loss) | $ | 106.6 | $ | (67.8 | ) | ||||
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Seattle, Washington
F-44
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June 16, | December 31, | |||||||||
2005 | 2004 | |||||||||
(Amounts in millions) | ||||||||||
ASSETS: | ||||||||||
Cash | $ | 0.8 | $ | 3.0 | ||||||
Accounts receivable | 0.4 | 2.0 | ||||||||
Inventories | 487.6 | 524.6 | ||||||||
Long-term assets | 3.2 | 3.0 | ||||||||
Property, plant, and equipment — net | 528.4 | 511.0 | ||||||||
Total assets | 1,020.4 | 1,043.6 | ||||||||
LIABILITIES: | ||||||||||
Accounts payable | 57.4 | 45.7 | ||||||||
Accrued expenses | 2.0 | 6.1 | ||||||||
Employee vacation | 40.3 | 47.5 | ||||||||
Accrued employee-related expenses | 7.9 | 8.4 | ||||||||
KIESC minority interest | 0.5 | 0.5 | ||||||||
Total liabilities | 108.1 | 108.2 | ||||||||
NET ASSETS | $ | 912.3 | $ | 935.4 | ||||||
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Period From | ||||||||||||||
January 1, 2005 | Year Ended | Year Ended | ||||||||||||
Through | December 31, | December 31, | ||||||||||||
June 16, 2005 | 2004 | 2003 | ||||||||||||
(Amounts in millions) | ||||||||||||||
COST OF PRODUCTS TRANSFERRED: | ||||||||||||||
Labor | $ | 326.6 | $ | 688.8 | $ | 733.9 | ||||||||
Material | 503.0 | 885.1 | 821.6 | |||||||||||
Overhead and nonlabor | 334.3 | 500.4 | 508.4 | |||||||||||
Total cost of products transferred | 1,163.9 | 2,074.3 | 2,063.9 | |||||||||||
PROVISION OF ENERGY SERVICES — Net | (0.2 | ) | — | — | ||||||||||
PERIOD EXPENSES: | ||||||||||||||
General and administrative | 79.7 | 155.1 | 116.7 | |||||||||||
Internal application development | 11.0 | 18.1 | 17.3 | |||||||||||
757 production phase out | — | — | 10.3 | |||||||||||
Total period expenses | 90.7 | 173.2 | 144.3 | |||||||||||
TOTAL INCURRED AND ALLOCATED COSTS OF THE WICHITA DIVISION | $ | 1,254.4 | $ | 2,247.5 | $ | 2,208.2 | ||||||||
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Table of Contents
1. | BASIS OF PRESENTATION |
The Wichita Division (“Division”), which is not a separate legal entity, is operated as a cost center within the Boeing Commercial Airplanes Group (“BCA”) of The Boeing Company (“Boeing”). The Division includes the manufacturing operations of BCA located in Wichita, Kansas; Tulsa, Oklahoma, and McAlester, Oklahoma, along with certain assets and operations of the Shared Services Group (“SSG”) of Boeing. The Division has historically been an internal supplier of parts and assemblies to the 737, 747, 757, 767, and 777 Airplane Programs of BCA, with very few sales to third-party customers. The Division has also been selected as a supplier to the 787 Airplane Program currently under development by Boeing. These financial statements, hereafter referred to as the “Financial Statements,” reflect the standalone financial statements of the Division. Certain amounts in these financial statements have been allocated from Boeing’s financial statements. Allocations are generally based on the specific identification of costs, assets and liabilities, as well as on headcount and direct labor dollars where specific attribution is not practical. The General and Administrative (“G&A”) expense included in these statements is an allocation of Boeing Corporate (“Corporate”), SSG and BCA G&A expense (collectively “Boeing G&A”). | |
Management believes these allocations are reasonable, but may not be indicative of costs that would have been incurred had the Division been operated as a standalone business. | |
Most support function costs represent allocations to the Division. However, there is a portion of these support functions that occur at the Division, for example, general management, human resources, and finance that provide support directly to product-related organizations. | |
Boeing entered into an Asset Purchase Agreement (“APA”) dated February 22, 2005, as revised June 15, 2005, to sell the Division to Mid-Western Aircraft Systems, Inc. (“Mid-Western”), an indirect majority-owned subsidiary of Onex Partners L.P. The accompanying financial statements have been prepared with reference to this agreement and present assets and liabilities as well as a statement of cost center activities. The accompanying financial statements may not be indicative of the conditions that would have existed or the results of operations if the Division had been operated as a standalone company during the periods presented. | |
On June 16, 2005, Boeing completed the sale of substantially all of the assets at BCA’s facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma under the APA toMid-Western, which was subsequently named Spirit Aerosystems, Inc. (Spirit). Transaction consideration given to Boeing included cash of approximately $900, together with the transfer of certain liabilities and the establishment of long-term supply agreements. All assets and liabilities presented in these financial statements were included in the sale. | |
Statements of cash flows have not been presented as the Division participated in Boeing’s centralized cash management systems and all its cash management activities were funded by Boeing. Other than cash on hand to meet immediate cash requirements the Division’s cash flow information is estimated in Note 9 using a change in net working capital. | |
Transactions with Boeing — Transactions with Boeing were conducted on a noncash basis, and generally involved performance under intracompany arrangements between the Division and Boeing. | |
Certain costs were incurred by Boeing on the Division’s behalf. To the extent practical, these costs are discretely transferred to the Division, but in some cases an allocation methodology is used to transfer |
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the costs to the Division. These costs fall into three major categories and all such costs have been included in these financial statements. | |
The first category represents costs directly related to the activities of the Division, which were incurred by Boeing and transferred to the Division for administrative purposes including payroll, accounts payable, travel and employee benefits such as pension costs, and medical coverage. These costs are primarily included in “Cost of Products Transferred” and the balance included in “Period Expenses.” | |
A second category of costs incurred by Boeing on the Division’s behalf represented the purchase of parts from Boeing that are incorporated into the products of the Division. The cost of these parts is treated the same as the cost of parts acquired from third parties and is included in “Cost of Products Transferred.” | |
The third category of costs incurred by Boeing on the Division’s behalf are either general and administrative or relate to support services provided by Boeing for the benefit of the Division. These costs, except for those identified as G&A, are included in “Cost of Products Transferred.” These allocated costs are described in detail below. The following table reconciles total G&A and Internal Application Development (“IAD”) reported on the Statement of Cost Center Activity to the detailed cost tables that follow. IAD costs are certain costs incurred at the Division to improve processes or internal applications rather than product. |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
Incurring Org and Description | 6/16/2005 | 2004 | 2003 | |||||||||
Allocated WHQ — G&A | $ | 15.9 | $ | 31.2 | $ | 31.7 | ||||||
Allocated WHQ — Share-Based Plans | 20.1 | 19.4 | 8.9 | |||||||||
Allocated WHQ — Share-Value Trust | 2.0 | 3.9 | 4.0 | |||||||||
Allocated BCA G&A | 26.7 | 53.2 | 46.9 | |||||||||
SSG G&A included in SSG Support Allocations (below) | 5.5 | 29.6 | 30.0 | |||||||||
Division Incurred — G&A | 9.5 | 17.8 | (4.8 | ) | ||||||||
Total Division G&A Expense | $ | 79.7 | $ | 155.1 | $ | 116.7 | ||||||
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
Incurring Org and Description | 6/16/2005 | 2004 | 2003 | |||||||||
Division Incurred — IAD (A period expense on the Statement of Cost Center Activity) | $ | 17.3 | $ | 18.1 | $ | 11.0 | ||||||
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Support Allocations — Boeing provides certain services to the Division and pays for certain expenditures on its behalf. The following table summarizes and describes the approximate amounts billed to the Division. |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
Incurring Org and Description | 6/16/2005 | 2004 | 2003 | |||||||||
BCA — CAD/ CAM and Other | $ | 4.9 | $ | 4.3 | $ | 2.1 | ||||||
SSG — Workplace Services | 114.6 | 233.4 | 212.9 | |||||||||
SSG — Information Technology Services | 25.1 | 46.3 | 54.3 | |||||||||
SSG — Administrative Services | 21.2 | 41.9 | 42.8 | |||||||||
Total Support Allocations (including SSG G&A) | 165.8 | 325.9 | 312.1 | |||||||||
Less SSG G&A Allocations included in Cost Allocation Table (1) above | 5.5 | 29.6 | 30.0 | |||||||||
Total SSG Costs and BCA CAD/ CAM and Other included in Division Cost of Products Transferred | $ | 160.3 | $ | 296.3 | $ | 282.1 | ||||||
BCA Computer Aided Design (“CAD”), BCA Computer Aided Manufacturing (“CAM”), and other cost allocated include calibration and certification costs and computer-aided design costs. | |
SSG costs (including an element of SSG-incurred G&A) were allocated to the Division based on SSG’s cost collection and cost allocation processes which are primarily based on pooling of common costs and allocating pooled costs based on a measure of usage. SSG Workplace Services includes the cost of providing facilities, food, mail and in-plant transportation services, security and fire protection, technical services and safety, health, and environmental affairs. SSG Information Technology Services includes business systems and computing and network operations. SSG Administrative Services includes external transportation services, enterprise human resource management, payroll services and learning, training, and development. An estimate of the SSG G&A included in the above support allocations were recorded by the Division as period expense in accordance with established Boeing-wide practice. The remaining SSG-related amounts as well as the BCA CAD/CAM allocations were included in the Overhead and nonlabor portion of Cost of Products Transferred. | |
In 2005, SSG revised its methodology for allocating G&A costs. As a result of the revision, the January 1 through June 16, 2005 SSG G&A Allocations amount recorded was $5.5 rather than $14.8. | |
Period Expenses Incurred at the Division — These costs are not inventoriable costs and therefore are not included in Costs of Products Transferred. |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
Incurring Org and Description | 6/16/2005 | 2004 | 2003 | |||||||||
Division Incurred — G&A (Included in Table (1)) | $ | 9.5 | $ | 17.8 | $ | (4.8 | ) | |||||
Division Incurred — IAD (Included in Table (2)) | 11.0 | 18.1 | 17.3 | |||||||||
Total | $ | 20.5 | $ | 35.9 | $ | 12.5 | ||||||
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Division G&A costs are incurred at the Division and include salaries and costs associated with G&A-type functions such as site financial accounting. IAD costs are costs incurred at the Division to improve processes or internal applications rather than products. | |
Period Expense Incurred by Boeing not Billed or Incurred at the Division — For purposes of these statements, certain costs have been allocated to the Division. These costs have not been billed to or incurred by, nor is the Division obligated to pay for these costs in the past or in the future. These allocations are conducted on a noncash basis and generally involve the performance of corporate-wide functions that have no direct relationship to the Division’s cost center activities. These costs are included in the total Division G&A expense (see Table 1). |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
Incurring Org and Description | 6/16/2005 | 2004 | 2003 | |||||||||
Corporate — G&A | $ | 15.9 | $ | 31.2 | $ | 31.7 | ||||||
Corporate — Share-Based Plans | 20.1 | 19.4 | 8.9 | |||||||||
Corporate — Share-Value Trust | 2.0 | 3.9 | 4.0 | |||||||||
BCA — G&A | 26.7 | 53.2 | 46.9 | |||||||||
Total Period Expense incurred by Boeing not billed or incurred | $ | 64.7 | $ | 107.7 | $ | 91.5 | ||||||
Corporate costs allocated include centralized services such as government affairs, legal, tax, office of internal governance, international relations, communications and advertising, CEO and staff, investor relations, and miscellaneous liability, property, and foreign insurances. Corporate Share-Based plans and Share-Value Trust are described in Note 8 below. | |
BCA G&A costs allocated include business operations, sales and marketing, contracts, finance, communications, and BCA office of the president. |
2. | Significant Accounting Policies |
Principles of Consolidation — The consolidated financial statements of the Division include the accounts of the majority-owned interest in Kansas Industrial Energy Supply Company (“KIESC”). The KIESC (formerly known as Wichita Gas Utility) arrangement has been in place since 1980. It was formed to purchase gas directly from the gas suppliers rather than through the city of Wichita. The current arrangement gives participants in KIESC more control over their cost. The agreement between the participating companies is titled“Tenants-in-Common Management Agreement.” It designates the arrangement as a tenancy in common and stipulates that nothing in the agreement should be construed as creating a joint venture, association, or partnership. All assets are owned in common. Nothing can be severed in a way that hurts the other tenants. Each tenant is prohibited from selling or assigning their interest to another party without the approval of the other tenants. The Division owned 79% of all outstanding interests and considered that a controlling share. 100% of KIESC’s results have been consolidated in these financial statements. Accordingly, the Division’s intercompany profits, transactions, and balances have been eliminated with the consolidation of KIESC. The result of KIESC income and expense is shown as Provision of Energy Services, Net. 77.77% of KIESC was sold on June 16, 2005 in connection with the transaction, with the remainder |
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retained by Boeing to support Boeing’s remaining operations in Wichita, Kansas. KIESC’s net assets are shown below: |
Period | ||||||||
1/1/2005 | ||||||||
Through | ||||||||
Incurring Org and Description | 6/16/2005 | 12/31/04 | ||||||
KIESC Total Net Assets | $ | 2.7 | $ | 2.2 | ||||
Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that directly affect the amounts reported in the financial statements. Actual results could differ from those estimates. | |
Cost of Products Transferred — As a cost center to the BCA Airplane Programs, the Division does not have sales to parties other than Boeing. For purposes of these financial statements, the Division recognizes cost of products transferred in an amount equal to the cost assigned. Through May 31, 2005, the Wichita Site Cost of Products Transferred was recognized when completed parts and assemblies were received or the scheduled receipt date occurred at BCA Airplane Program’s Final Assembly Areas. On June 1, 2005 this treatment changed to reflect the provisions of the supply agreement that was to be implemented post-divestiture. From June 1, 2005 to June 16, 2005, the Wichita Site Cost of Products Transferred was recognized when completed parts and assemblies were shipped from the Wichita plant. The Tulsa and McAlester Sites Cost of Products Transferred is recognized when completed parts and assemblies are shipped from the site. Costs of Products Transferred also includes costs assigned to programs as incurred, for support of non-recurring activities performed on behalf of the programs. Non-recurring support refers to activities like design or design and build of tooling. 787 design activities included in Division Cost of Products Transferred totals $65.6 for the period from January 1, 2005 through June 16, 2005. | |
Cost of Products Transferred consists of material, labor, nonlabor, and site overhead, which includes fringe benefits, production-related indirect and plant management salaries, and plant services. Labor cost includes direct and indirect labor, related fringe costs, and labor bonuses. Fringe benefit allocations are based on a rate applied to labor dollars. The rate includes elements such as vacation, holiday, sick leave, medical, pension, and postretirement medical. | |
Nonlabor costs included in overhead include cost of shop supplies, travel, software licensing, equipment depreciation, perishable tools, and cost allocations (see “Transactions with Boeing” above). | |
Cash — Cash primarily consists of balances maintained by the Division’s consolidated interest in KIESC. The Division participates in Boeing’s centralized cash management systems. Accordingly, the financial statements exclude cash, debt, interest income, and interest expense maintained in the centralized cash management systems. | |
Accounts Receivable — Accounts receivable consist of amounts on KIESC books due from third parties and are stated at the amount billed to customers, plus any accrued and unpaid interest. An allowance is provided for based upon a review of outstanding receivables, historical collection information, and existing economic conditions. | |
Inventories — Inventories consist of raw materials and work in process (“WIP”). Finished goods are shipped immediately upon completion. Costs of raw materials and component parts that are identified |
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as obsolete or surplus, including a provision for anticipated amounts, are included as a cost of products transferred. | |
The Division’s Wichita site in-process inventories are stated at the cost of products based on the stage of completion within production. The individual elements of inventory (e.g., raw material, WIP, and production stores) are valued using a standard cost methodology with any resulting variances to the standard allocated monthly to cost of products transferred. | |
The Division’s Tulsa/McAlester sites in-process inventories are stated at the cost of products based on the stage of completion within production. Raw materials are valued based on an average cost method. Commercial Airplane Program’s WIP inventory is valued based on total actual incurred costs for a block of aircraft, less the billed amount. The billed amount is calculated based on the average unit cost of an end-item (e.g., 737 Slats/ Flaps) for a block of aircraft based on the Estimate at Completion. | |
Long-Term Assets — Long-term assets consists of amounts on the KIESC books for investments in marketable securities. KIESC has the positive intent and ability to hold these until maturity. They are valued at historical cost, adjusted for amortization of premiums and accretion of discounts computed by the level-yield method. | |
Property, Plant, and Equipment — Property, plant, and equipment are recorded at cost, including applicable construction-period interest, less accumulated depreciation, and are depreciated principally over the following estimated useful lives: new buildings and land improvements, from 10 to 40 years; and new machinery and equipment, from 3 to 20 years. The principal methods of depreciation are as follows: buildings and land improvements, 150% declining balance; and machinery and equipment,sum-of-the-years’ digits. The Division periodically evaluates the appropriateness of remaining depreciable lives assigned to long-lived assets subject to a management plan for disposition. | |
The Division reviews long-lived assets, which includes property, plant, and equipment, for impairments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets held for sale are stated at the lower of cost or fair value, less cost to sell. Long-lived assets held for use are subject to an impairment assessment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset. | |
757 Production Phase Out — On October 16, 2003, Boeing announced that production of the 757 would end with the final aircraft to be produced in late 2004. This resulted in a Division charge to Period Expenses incurred for the year ended December 31, 2003, of $10.3, $3.5 related to vendor penalties and $6.8 related to obsolete and excess inventory. The vendor penalties are expected to be settled in cash by the end of 2006. The related liabilities are excluded from the Statement of Assets and Liabilities as they were not assumed in the acquisition. | |
Income Taxes — Boeing does not allocate income tax expense and related assets and liabilities to the Division. In accordance with the APA, the Statement of Net Assets and Liabilities does not include assets and liabilities related to income tax. Accordingly, the Statement of Cost Center Activity does not reflect the effect of income taxes. | |
Leases — The Division has entered into contracts, having noncancelable lease terms in excess of one year, for operating leases requiring future rental payments. |
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Pension and Postretirement Benefits Plan — The Division participates in various pension plans sponsored by Boeing which cover substantially all employees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
Boeing also provides certain other postretirement benefit plans other than pensions which consist principally of health care coverage for eligible retirees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
Share-Based Plans — Division employees participate in certain of Boeing’s share-based compensation plans. In these financial statements, the share-based plan expenses are accounted for under SFAS 123R,Share-Based Payment (“SFAS 123R”) as of January 1, 2005, and under SFAS No. 123,Accounting for Stock-Based Compensation, for periods prior to January 1, 2005. |
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 151,Inventory Costs — an amendment of ARB No. 43. This Standard requires abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) to be recognized as current period charges. Additionally, it requires that fixed production overhead costs be allocated to inventory based on the normal capacity of the production facility. The provisions of this Standard apply prospectively and are effective for inventory costs incurred after January 1, 2006. While the Division believes this Standard will not have a material effect on its financial statements, the impact of adopting these new rules is dependent on events that could occur in future periods, and as such, an estimate of the impact cannot be determined until the event occurs in future periods. |
4. | INVENTORIES |
Inventories are summarized as follows for the periods ending: |
Period | ||||||||
1/1/2005 | ||||||||
Through | ||||||||
6/16/2005 | 12/31/2004 | |||||||
Raw materials | $ | 213.5 | $ | 209.1 | ||||
Work in process | 274.1 | 315.5 | ||||||
Inventories | $ | 487.6 | $ | 524.6 | ||||
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5. | PROPERTY, PLANT, AND EQUIPMENT |
Period | ||||||||
1/1/2005 | ||||||||
Through | ||||||||
6/16/2005 | 12/31/2004 | |||||||
Land | $ | 5.0 | $ | 7.4 | ||||
Buildings | 709.5 | 718.2 | ||||||
Machinery and equipment | 1,331.7 | 1,371.8 | ||||||
Construction in progress | 63.5 | 15.1 | ||||||
Less accumulated depreciation | (1,581.3 | ) | (1,601.5 | ) | ||||
Property, plant, and equipment — net | $ | 528.4 | $ | 511.0 | ||||
Depreciation expense, which is included in Cost of Products Transferred, is as follows for the periods ending: |
Period | ||||||||||||
1/1/2005 | Year | |||||||||||
Through | Year Ended | Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Depreciation expense | $ | 40.3 | $ | 90.7 | $ | 97.4 | ||||||
Interest capitalized as construction-period property, plant, and equipment costs is as follows for the periods ending: |
Period | ||||||||||||
1/1/2005 | Year | |||||||||||
Through | Year Ended | Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Interest capitalized | $ | 2.1 | $ | 4.9 | $ | 3.2 | ||||||
6. | COMMITMENTS |
Lease — Minimum future rental commitments under operating leases having noncancelable lease terms in excess of one year aggregated approximately $18.7 at June 16, 2005 and are payable as follows: |
Future Minimum Payments | ||||
6/17/05-12/31/05 | $ | 3.0 | ||
2006 | 4.3 | |||
2007 | 2.4 | |||
2008 | 2.2 | |||
2009 | 1.4 | |||
2010 | 0.6 | |||
Thereafter | 4.8 |
Period | ||||||||||||
1/1/2005 | Year | |||||||||||
Through | Year Ended | Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Total rent expense | $ | 4.3 | $ | 9.7 | $ | 9.8 | ||||||
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7. | PENSION AND POSTRETIREMENT BENEFITS |
The Division participates in various pension and postretirement plans sponsored by Boeing which cover substantially all employees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
The amounts below represent total Boeing balances. Note that Boeing uses a September 30 measurement date for its pension plans. |
Year Ended | Year Ended | |||||||
9/30/05 | 9/30/04 | |||||||
Pension plan assets | $ | 43,484 | $ | 38,977 | ||||
Pension plan benefit obligation | 45,183 | 42,781 |
Boeing also provides certain other postretirement benefits other than pensions which consist principally of health care coverage for eligible retirees. Discrete, detailed information concerning costs of these plans is not available for the Division but is part of the Overhead and nonlabor costs allocated by Boeing and included in the Cost of Products Transferred. The assets and obligations under these plans are not separately identifiable for the Division. | |
The amounts below represent total Boeing balances. Note that Boeing uses a September 30 measurement date for its postretirement plans. |
Year Ended | Year Ended | |||||||
9/30/05 | 9/30/04 | |||||||
Postretirement benefits plan assets | $ | 82 | $ | 72 | ||||
Postretirement benefit obligation | 8,057 | 8,135 |
8. | SHARE-BASED PLANS |
Share-Based Plans — The following is a discussion of share-based compensation plans. Qualifying Division employees may retain eligibility under provisions of these plans going forward. Under the provisions of the APA, Boeing will retain these obligations. Division employees participate in certain of Boeing’s share-based compensation plans. In these financial statements, the share-based plan expenses are accounted for under SFAS 123R, as of January 1, 2005, using the modified prospective method, and under SFAS No. 123 for periods prior to January 1, 2005. The share-based plans are described below. Share-based plan expense allocated to the Division is included in the Statement of Cost Center Activity as a Period Expense classified as G&A. | |
Performance Shares — Performance Shares are stock units that are convertible to Boeing common stock contingent upon Boeing’s stock price performance. If, at any time up to five years after award, Boeing’s stock price reaches and maintains a price equal to 161.0% of the Boeing’s stock issue price at the date of the award (representing a growth rate of 10% compounded annually for five years), 25% of the Performance Shares awarded are convertible to Boeing common stock. Likewise, at stock prices equal to 168.5%, 176.2%, 184.2%, 192.5%, and 201.1% of the Boeing stock price at the date of award, the cumulative portions of awarded Performance Shares convertible to Boeing common stock are 40%, 55%, 75%, 100%, and 125%, respectively. Performance Shares awards not converted to Boeing common stock expire five years after the date of the award; however, the Compensation Committee of the Boeing Board of Directors may, at its discretion, allow vesting of up to 100% of the target Performance Shares if Boeing’s total shareholder return (stock price appreciation plus dividends) during the five-year performance period exceeds the average total shareholder return of the S&P 500 over the same period. |
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Beginning with the 2003 grants, all new Performance Shares awarded are subject to different terms and conditions from those issued prior to 2003. If at any time up to five years after award Boeing’s stock price reaches and maintains for 20 consecutive days a price equal to a cumulative growth rate of 40% above the grant price, 15% of the Performance Shares awarded are convertible to common stock. Likewise, at cumulative growth rates above the grant price equal to 50%, 60%, 70%, 80%, 90%, 100%, 110%, 120%, and 125%, the cumulative portion of awarded shares convertible to Boeing common stock are 30%, 45%, 60%, 75%, 90%, 100%, 110%, 120%, and 125%, respectively. Performance Share awards not converted to Boeing common stock expire five years after the date of the award. In the event all stock price hurdles have not been met at the end of the performance period, unvested shares may vest based on Boeing’s Total Shareholder Return (“TSR”) performance relative to the S&P 500. If less than 125% of the grant has vested at the end of the five-year performance period, an award formula will be applied to the initial grant based on the percentile rank of Boeing’s TSR relative to the S&P 500. This can result in a vesting of the Performance Shares award up to a total of 125% and only applies if (1) Boeing’s total shareholder return during the five-year performance period meets or exceeds the median total shareholder return of the S&P 500 over the same period and (2) total shareholder return is in excess of the five-year Treasury Bill rate at the start of the five-year period. The Division was allocated share-based expense amounts calculated based on SFAS No. 123 for Performance Share awards granted to employees of the Division. The allocated share-based plans expense, which is included in Period Expense as G&A in the Statement of Cost Center Activity, was approximately as follows: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Performance shares | $ | 17.1 | $ | 18.5 | $ | 8.3 | ||||||
ShareValue Trust — The ShareValue Trust, established effective July 1, 1996, is a14-year irrevocable trust that holds Boeing common stock, receives dividends, and distributes to employees appreciation in value above a 3% per annum threshold rate of return. As of December 31, 2004, the Trust held 38,982,205 shares of Boeing common stock, split between two funds, “fund 1” and “fund 2.” | |
The Division was allocated ShareValue Trust expense based upon headcount at the Division. The allocated ShareValue Trust expense, which is included in Period Expenses as G&A in the Statement of Cost Center Activity, was approximately as follows: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Share-value trust | $ | 2.0 | $ | 3.9 | $ | 4.0 | ||||||
Other Share-Based Compensation — Boeing offers employees stock awards, at no cost to the employee, under its Career Shares, Learning Together, and Engineering Technical Fellows stock programs. Additionally, Boeing common stock is issued or interest is accrued to certain Boeing employees electing deferrals under certain share-based compensation or salary deferral plans. The Division was allocated Other Share-Based Compensation expense based upon headcount at the |
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Division. The allocated Other Share-Based Compensation expense, which is included in Period Expenses as G&A in the Statement of Cost Center Activity, was approximately as follows: |
Period | ||||||||||||
1/1/2005 | ||||||||||||
Through | Year Ended | Year Ended | ||||||||||
6/16/2005 | 2004 | 2003 | ||||||||||
Other share-based plan totals | $ | 3.0 | $ | 0.9 | $ | 0.6 | ||||||
9. | CASH FLOW INFORMATION |
As a cost center, the Division’s cash funding activities were managed and funded by Corporate. The Division’s cash impacts are estimated below using a change in net working capital approach: |
Period | |||||||||||||||
1/1/2005 | |||||||||||||||
Through | Year Ended | Year Ended | |||||||||||||
6/16/2005 | 2004 | 2003 | |||||||||||||
Cash flow from operating activities: | |||||||||||||||
Intercompany cost of products transferred | $ | (1,163.9 | ) | $ | (2,074.3 | ) | $ | (2,063.9 | ) | ||||||
Period expenses | (90.7 | ) | (173.2 | ) | (144.3 | ) | |||||||||
Net energy services | 0.2 | 0.0 | 0.0 | ||||||||||||
Depreciation | 40.3 | 90.7 | 97.4 | ||||||||||||
Changes in working capital: | |||||||||||||||
Cash (KIESC) | (2.2 | ) | (0.6 | ) | 2.3 | ||||||||||
Accounts receivable | 1.6 | 0.0 | (0.4 | ) | |||||||||||
Inventories | 37.0 | 4.8 | 5.7 | ||||||||||||
Prepaid expenses | 0.0 | 0.3 | (0.2 | ) | |||||||||||
Accounts payable | 11.7 | (11.5 | ) | 14.6 | |||||||||||
Accrued expenses | (4.1 | ) | (1.9 | ) | 3.5 | ||||||||||
Employee vacation | (7.2 | ) | 0.8 | 0.4 | |||||||||||
Accrued employee related expenses | (0.5 | ) | — | 3.1 | |||||||||||
Net cash used by operating activities | (1,177.8 | ) | (2,164.9 | ) | (2,081.8 | ) | |||||||||
Investing activities: | |||||||||||||||
Capital expenditures | (48.2 | ) | (54.4 | ) | (43.3 | ) | |||||||||
Net cash impact | $ | (1,226.0 | ) | $ | (2,219.3 | ) | $ | (2,125.1 | ) | ||||||
10. | SIGNIFICANT CONCENTRATIONS OF RISK |
For all of the periods covered by these financial statements, all of the Division’s product transfers were to Boeing Programs. The Division is subject to both operational and external business environment risks. Operational risks that can disrupt the ability to make timely delivery of commercial jet aircraft components and assemblies and meet contractual commitments include execution of internal performance plans, product performance risks associated with regulatory certifications by the U.S. government, other regulatory uncertainties, collective bargaining disputes, performance issues with key suppliers and subcontractors, and the cost and availability of energy resources, such as electrical power. Aircraft programs, particularly new aircraft models, face the additional risk of pricing pressures and cost management issues inherent in the design and production of complex products. |
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External business environment risks include adverse governmental import and export policies, factors that result in significant and prolonged disruption to air travel worldwide, and other factors that affect the economic viability of the commercial airline industry. Examples of factors relating to external business environment risks include the volatility of aircraft fuel prices, global trade policies, worldwide political stability and economic growth, acts of aggression that impact the perceived safety of commercial flight, escalation trends inherent in pricing, and a competitive industry structure which results in market pressure to reduce product prices. As of June 16, 2005, the principal collective bargaining agreements were with the International Association of Machinists and Aerospace Workers (IAM) representing 51% of the Division employees; the Society of Professional Engineering Employees (SPEEA) representing 34% of the Division employees; The United Automobile, Aerospace, and Agricultural Implement Workers of America representing 9% of the Division employees. At the end of June 16, 2005, all Division employees left the Boeing payroll as a result of the sale of the Division to Mid-Western and are no longer working under the terms and conditions of the Boeing labor agreements. Employees who transferred to Mid-Western were covered by their labor agreements or employment practices, if no labor agreement was in place. |
11. | CONTINGENCIES |
The Division is subject to federal and state requirements for protection of the environment, including those for discharge of hazardous materials and remediation of contaminated sites. The costs incurred and expected to be incurred have not had, and are not expected to have, a material adverse impact. | |
The provisions of the APA specifically exclude the assumption of environmental liabilities relating to conditions existing on or prior to June 16, 2005 and also exclude liabilities arising from any environmental proceedings pending as of June 16, 2005, as well as any proceeding commenced after June 16, 2005 to the extent arising out of or relating to any act or omission occurring on or prior to the closing date. | |
Also, the provisions of the APA specifically exclude liabilities arising out of any proceedings pending as of June 16, 2005 or that arise after June 16, 2005 to the extent the matter relates to an act or omission that occurred prior to June 16, 2005. |
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Item 13. | Other Expenses of Issuance and Distribution |
Securities and Exchange Commission registration fee | $ | 160,221 | |||
NASD filing fee | 50,500 | ||||
NYSE listing fee | * | ||||
Accounting fees and expenses | 1,400,000 | ||||
Legal fees and expenses | 2,500,000 | ||||
Printing costs | 500,000 | ||||
Transfer agent and registrar fees | * | ||||
Miscellaneous fees and expenses | 300,000 | ||||
Total | $ | * |
* | To be provided by amendment |
Item 14. | Indemnification of Directors and Officers |
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Item 15. | Recent Sales of Unregistered Securities |
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Item 16. | Exhibits and Financial Data Schedules |
(a) | Exhibits |
1.1 | Form of Underwriting Agreement** | |||
2.1 | Asset Purchase Agreement, dated as of February 22, 2005, between Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and The Boeing Company* | |||
2.2 | First Amendment to Asset Purchase Agreement, dated June 15, 2005, between Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and The Boeing Company* | |||
3.1 | Form of Second Amended and Restated Certificate of Incorporation of Spirit AeroSystems Holdings, Inc. | |||
3.2 | Form of Second Amended and Restated By-Laws of Spirit AeroSystems Holdings, Inc. | |||
4.1 | Form of Class A Common Stock Certificate** | |||
4.2 | Form of Class B Common Stock Certificate** | |||
4.3 | Investor Stockholders Agreement, dated June 16, 2005, among Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Onex Partners LP and the stockholders listed on the signature pages thereto* | |||
4.4 | Registration Agreement, dated June 16, 2005, among Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and the persons listed on Schedule A thereto* | |||
5.1 | Opinion of Kaye Scholer LLP with respect to legality of securities being registered** | |||
10.1 | Employment Agreement, dated June 16, 2005, between Jeffrey L. Turner and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).* | |||
10.2 | Employment Agreement, dated August 3, 2005, between Ulrich Schmidt and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).* | |||
10.3 | Employment Agreement, dated September 13, 2005, between Spirit AeroSystems, Inc. and H. David Walker.* |
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10.4 | Employment Agreement, dated December 28, 2005, between Spirit AeroSystems, Inc. and John Lewelling.* | |||
10.5 | Employment Agreement, dated December 30, 2005, between Spirit AeroSystems, Inc. and Janet S. Nicolson.* | |||
10.6 | Employment Agreement, dated March 20, 2006, between Spirit AeroSystems (Europe) Limited and Neil McManus.* | |||
10.7 | Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) Executive Incentive Plan* | |||
10.8 | Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) Supplemental Executive Retirement Plan* | |||
10.9 | Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) Short Term Incentive Plan* | |||
10.10 | Spirit AeroSystems Holdings, Inc. Long-Term Incentive Plan* | |||
10.11 | Spirit AeroSystems Holdings, Inc. Cash Incentive Plan* | |||
10.12 | Spirit AeroSystems Holdings, Inc. Union Equity Participation Plan | |||
10.13 | Spirit AeroSystems Holdings, Inc. Director Stock Plan* | |||
10.14 | Form of Indemnification Agreement* | |||
10.15 | Intercompany Agreement, dated June 30, 2005, by and among Onex Partners Manager L.P. and Spirit AeroSystems, Inc.* | |||
10.16 | Consulting Agreement, dated as of February 25, 2005, between Gephardt and Associates LLC and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).* | |||
10.17 | Amended and Restated Credit Agreement, dated as of July 20, 2005, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, the guarantors party thereto, Citicorp North America, Inc. and the other lenders party thereto.* | |||
10.18 | Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of December 11, 2005, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, the guarantors party thereto, Citicorp North America, Inc. and the other lenders party thereto.* | |||
10.19 | Amendment No. 2 to the Amended and Restated Credit Agreement, dated as of March 31, 2006, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, the guarantors party thereto, Citicorp North America, Inc. and the other lenders party thereto.* | |||
10.20 | Security Agreement, dated as of June 16, 2005, made by Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, 3101447 Nova Scotia Company, Onex Wind Finance LLC and Citicorp North America, Inc., as collateral agent.* | |||
10.21 | Credit Agreement, dated as of June 16, 2005, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, 3101447 Nova Scotia Company, the other guarantor party thereto, and The Boeing Company.* | |||
10.22 | Security Agreement, dated as of June 16, 2005, made by Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Spirit AeroSystems Finance, Inc. (f/k/a Mid-Western Aircraft Finance, Inc.), Onex Wind Finance LP, 3101447 Nova Scotia Company, Onex Wind Finance LLC and The Boeing Company, as agent.* | |||
10.23 | Special Business Provisions (Sustaining), dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).*† | |||
10.24 | General Terms Agreement (Sustaining and others), dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).*† | |||
10.25 | Hardware Material Services General Terms Agreement, dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.).*† |
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10.26 | Ancillary Know-How Supplemental License Agreement between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), entered into as of June 16, 2005.*† | |||
10.27 | Sublease Agreement, dated as of June 16, 2005, among The Boeing Company, Boeing IRB Asset Trust and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc).* | |||
21.1 | Subsidiaries of Spirit AeroSystems Holdings, Inc.* | |||
23.1 | Consent of PricewaterhouseCoopers LLP | |||
23.2 | Consent of Deloitte & Touche LLP | |||
23.3 | Consent of Kaye Scholer LLP (included in Exhibit 5.1)** | |||
23.4 | Consent of Ivor (Ike) Evans to be named as Director Nominee* | |||
23.5 | Consent of Paul Fulchino to be named as Director Nominee* | |||
23.6 | Consent of Richard Gephardt to be named as Director Nominee* | |||
23.7 | Consent of Robert Johnson to be named as Director Nominee* | |||
23.8 | Consent of Ronald Kadish to be named as Director Nominee* | |||
23.9 | Consent of Cornelius (Connie Mack) McGillicuddy, III to be named as Director Nominee* | |||
23.10 | Consent of Francis Raborn to be named as Director Nominee* | |||
23.11 | Consent of Jeffrey L. Turner to be named as Director Nominee* | |||
24.1 | Powers of Attorney of the directors of Spirit AeroSystems Holdings, Inc. (included in the signature page to the registration statement)* |
* | Previously filed |
** | To be filed by amendment |
† | Confidential treatment requested. Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission. |
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Charged to | Write-offs | Balance | ||||||||||||||
June 17, | Costs and | Net of | December 29, | |||||||||||||
2005 | Expenses | Recoveries | 2005 | |||||||||||||
($ in millions) | ||||||||||||||||
Tax valuation | $ | 5.6 | $ | 41.5 | — | $ | 47.1 | |||||||||
Inventory — obsolete and surplus | 15.9 | 0.9 | — | 16.8 | ||||||||||||
Warranties | — | 0.9 | — | 0.9 | ||||||||||||
Allowance for doubtful accounts | — | 0.6 | — | 0.6 |
Item 17. | Undertakings |
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. | |
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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SPIRIT AEROSYSTEMS HOLDINGS, INC. |
By: | /s/ Ulrich Schmidt |
Ulrich Schmidt | |
Chief Financial Officer |
Signature | Title | Date | ||||
* | President and Chief Executive Officer (Principal Executive Officer) | October 28, 2006 | ||||
/s/ Ulrich Schmidt | Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | October 28, 2006 | ||||
* | Corporate Controller (Principal Accounting Officer) | October 28, 2006 | ||||
* | Director | October 28, 2006 | ||||
* | Director | October 28, 2006 | ||||
*By: | /s/ Ulrich Schmidt Attorney-in-fact |
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