##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 2009
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission File Number 333-112528
 Vought Aircraft Industries, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    75-2884072(State of Incorporation)
    
    (I.R.S. Employer Identification Number)201 East John Carpenter Freeway, Tower 1, Suite 900Irving, Texas
    
    75062(Address of Principal executive offices)
    
    (Zip Code)
 (972) 946-2011
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   þ
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1 Interim Unaudited Condensed Consolidated Financial Statements
    
    
    4Consolidated Balance Sheets
    
    
    4Consolidated Statements of Operations
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to the Interim Unaudited Condensed Consolidated Financial
Statements
    
    
    7Item 2 Managements Discussion And Analysis Of Financial Condition And
Results Of Operations
    
    
    32Item 3 Quantitative And Qualitative Disclosures About Market Risk
    
    
    48Item 4 Controls And Procedures
    
    
    49PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    50Item 1A Risk Factors
    
    
    50Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 3 Defaults Upon Senior Securities
    
    
    50Item 4 Submission of Matters to a Vote of Security Holders
    
    
    50Item 5 Other Information
    
    
    50Item 6 Exhibits
    
    
    51Signatures
    
    
    52EX-10.1EX-31.1EX-32.1EX-32.1EX-32.2
  2




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Cautionary Statement Regarding Forward Looking Statements
   
    
    global and domestic financial market and economic conditions;
    
    market risks related to the refinancing of our indebtedness;
    
    competition;
    
    operating risks and the amounts and timing of revenues and expenses;
    
    project delays or cancellations;
    
    product liability claims;
    
    global and domestic market or business conditions and fluctuations in demand for our
products and services;
    
    the impact of recent and future federal and state regulatory proceedings and changes,
including changes in environmental and other laws and regulations to which we are subject,
as well as changes in the application of existing laws and regulations;
    
    political, legal, regulatory, governmental, administrative and economic conditions and
developments in the United States and internationally;
    
    the effect of and changes in economic conditions in the areas in which we operate;
    
    returns on pension assets and impacts of future discount rate changes on pension
obligations;
    
    environmental constraints on operations and environmental liabilities arising out of
past or present operations;
    
    current and future litigation;
    
    the direct or indirect impact on our companys business resulting from terrorist
incidents or responses to such incidents, including the effect on the availability of and
premiums on insurance; and
    
    weather and other natural phenomena.
 3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Vought Aircraft Industries, Inc.
 
 Consolidated Balance Sheets
 (dollars in millions, except par value per share ) (unaudited)
 September 27,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    150.4
    
    
    $
    86.7Restricted cash
    
    
    43.7
    
    
    
    Trade and other receivables
    
    
    127.1
    
    
    
    138.5Inventories
    
    
    479.0
    
    
    
    311.8Assets related to discontinued operations
    
    
    
    
    
    
    460.7Other current assets
    
    
    5.6
    
    
    
    4.7Total current assets
    
    
    805.8
    
    
    
    1,002.4Property, plant and equipment, net
    
    
    272.8
    
    
    
    279.2Goodwill
    
    
    404.8
    
    
    
    404.8Identifiable intangible assets, net
    
    
    22.1
    
    
    
    27.2Debt origination costs, net and other assets
    
    
    6.2
    
    
    
    14.0Total assets
    
    $
    1,511.7
    
    
    $
    1,727.6Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    126.4
    
    
    $
    148.5Accrued and other liabilities
    
    
    81.8
    
    
    
    57.5Accrued payroll and employee benefits
    
    
    46.9
    
    
    
    48.1Accrued post-retirement benefits-current
    
    
    42.2
    
    
    
    42.0Accrued pension-current
    
    
    0.6
    
    
    
    0.3Current portion of long-term bank debt
    
    
    5.9
    
    
    
    5.9Liabilities related to discontinued operations
    
    
    
    
    
    
    156.7Accrued contract liabilities
    
    
    112.4
    
    
    
    141.1Total current liabilities
    
    
    416.2
    
    
    
    600.1Long-term liabilities:Accrued post-retirement benefits
    
    
    368.5
    
    
    
    405.3Accrued pension
    
    
    658.1
    
    
    
    710.7Long-term bank debt, net of current portion
    
    
    316.6
    
    
    
    594.0Long-term bond debt
    
    
    270.0
    
    
    
    270.0Other non-current liabilities
    
    
    79.0
    
    
    
    81.6Total liabilities
    
    
    2,108.4
    
    
    
    2,661.7Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized, 24,818,806 and
24,798,382 issued and outstanding at
September 27, 2009 and December 31, 2008,
respectively
    
    
    0.3
    
    
    
    0.3Additional paid-in capital
    
    
    422.2
    
    
    
    420.5Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    (1.6
    )Accumulated deficit
    
    
    (220.7
    )
    
    
    (501.3
    )Accumulated other comprehensive loss
    
    
    (796.9
    )
    
    
    (852.0
    )Total stockholders equity (deficit)
    
    $
    (596.7
    )
    
    $
    (934.1
    )Total liabilities and stockholders equity (deficit)
    
    $
    1,511.7
    
    
    $
    1,727.6
 See accompanying notes
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Vought Aircraft Industries, Inc.
 
 Consolidated Statements of Operations
 (unaudited, in millions)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    446.7
    
    
    $
    477.3
    
    
    $
    1,322.3
    
    
    $
    1,362.0Costs and expensesCost of sales
    
    
    376.0
    
    
    
    407.1
    
    
    
    1,109.5
    
    
    
    1,089.1Selling, general and
administrative expenses
    
    
    30.2
    
    
    
    34.9
    
    
    
    101.2
    
    
    
    126.1Total costs and expenses
    
    
    406.2
    
    
    
    442.0
    
    
    
    1,210.7
    
    
    
    1,215.2Operating income
    
    
    40.5
    
    
    
    35.3
    
    
    
    111.6
    
    
    
    146.8Other income (expense)Interest income
    
    
    0.2
    
    
    
    1.3
    
    
    
    0.6
    
    
    
    2.3Other gain (loss)
    
    
    
    
    
    
    1.6
    
    
    
    
    
    
    
    48.7Equity in loss of joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Interest expense
    
    
    (20.6
    )
    
    
    (17.4
    )
    
    
    (44.5
    )
    
    
    (49.6
    )Income before income taxes
    
    
    20.1
    
    
    
    20.8
    
    
    
    67.7
    
    
    
    147.6Income tax expense
    
    
    0.9
    
    
    
    0.2
    
    
    
    0.9
    
    
    
    0.2Income from continuing operations
    
    
    19.2
    
    
    
    20.6
    
    
    
    66.8
    
    
    
    147.4Income (loss) from discontinued
operations,
net of tax
    
    
    219.4
    
    
    
    (5.0
    )
    
    
    213.8
    
    
    
    (23.8
    )Net income
    
    $
    238.6
    
    
    $
    15.6
    
    
    $
    280.6
    
    
    $
    123.6
 See accompanying notes
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Vought Aircraft Industries, Inc.
 
 Consolidated Statements of Cash Flows
 (unaudited, in millions)
 Nine Months EndedSeptember 27,
    
    
    September 28,2009
    
    
    2008Operating activitiesNet income
    
    $
    280.6
    
    
    $
    123.6Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    55.7
    
    
    
    50.1Stock compensation expense
    
    
    1.2
    
    
    
    2.2Equity in losses of joint venture
    
    
    
    
    
    
    0.6(Gain) Loss from asset disposals
    
    
    41.7
    
    
    
    (50.1
    )Changes in current assets and liabilities:Trade and other receivables
    
    
    1.8
    
    
    
    (81.6
    )Inventories
    
    
    (169.6
    )
    
    
    (32.2
    )Other current assets
    
    
    (0.9
    )
    
    
    0.4Accounts payable, trade
    
    
    (28.4
    )
    
    
    (36.8
    )Accrued payroll and employee benefits
    
    
    (0.6
    )
    
    
    (0.4
    )Accrued and other liabilities
    
    
    24.9
    
    
    
    (10.0
    )Accrued contract liabilities
    
    
    (41.3
    )
    
    
    (33.0
    )Other assets and liabilitieslong-term
    
    
    (35.8
    )
    
    
    (79.8
    )Net cash provided by (used in) operating activities
    
    
    129.3
    
    
    
    (147.0
    )Investing activitiesCapital expenditures
    
    
    (28.2
    )
    
    
    (41.7
    )Proceeds from sale of assets
    
    
    289.2
    
    
    
    55.0Net cash provided by (used in) investing activities
    
    
    261.0
    
    
    
    13.3Financing activitiesProceeds from short-term bank debt
    
    
    135.0
    
    
    
    153.0Payments on short-term bank debt
    
    
    (135.0
    )
    
    
    (153.0
    )Proceeds from long-term bank debt
    
    
    75.0
    
    
    
    184.6Payments on long-term bank debt
    
    
    (357.9
    )
    
    
    (2.0
    )Changes in restricted cash
    
    
    (43.7
    )
    
    
    Proceeds from sale of common stock
    
    
    
    
    
    
    0.1Net cash provided by (used in) financing activities
    
    
    (326.6
    )
    
    
    182.7Net increase (decrease) in cash and cash equivalents
    
    
    63.7
    
    
    
    49.0Cash and cash equivalents at beginning of period
    
    
    86.7
    
    
    
    75.6Cash and cash equivalents at end of period
    
    $
    150.4
    
    
    $
    124.6
 See accompanying notes
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Vought Aircraft Industries, Inc.
 
 Notes to the Interim Unaudited Condensed Consolidated Financial Statemen
 Period Ending September 27, 2009
 Note 1  Organization and Basis of Presentation
       7




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Note 2-Recent Accounting Pronouncements
    Ô
   8




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Note 3- Discontinued Operations
   July 30,
    
    
    December 31,2009
    
    
    2008($ in millions)Trade and other receivables
    
    $
    9.7
    
    
    $
    0.1Inventories
    
    
    135.0
    
    
    
    132.6Property, plant and equipment, net
    
    
    197.5
    
    
    
    205.1Goodwill (allocated)
    
    
    122.9
    
    
    
    122.9$
    465.1
    
    
    $
    460.7Accounts payable
    
    
    22.2
    
    
    
    28.5Accrued and other liabilities
    
    
    5.8
    
    
    
    6.2Accrued payroll and employee benefits
    
    
    1.2
    
    
    
    0.6Accrued contract liabilities
    
    
    47.7
    
    
    
    60.3Other non-current liabilities
    
    
    59.2
    
    
    
    61.1$
    136.1
    
    
    $
    156.7
 9




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Three Months Ended
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008($ in millions)
    
    
    ($ in millions)Revenue
    
    $
    297.6
    
    
    $
    
    
    
    $
    316.2
    
    
    $
    21.4Cost of sales
    
    
    (22.6
    )
    
    
    
    
    
    
    (41.2
    )
    
    
    (21.4
    )Selling, general and
administrative expenses
    
    
    (0.4
    )
    
    
    (5.0
    )
    
    
    (6.0
    )
    
    
    (23.8
    )Loss on sale of 787 business
    
    
    (39.8
    )
    
    
    
    
    
    
    (39.8
    )
    
    
    Income tax expense
    
    
    (15.4
    )
    
    
    
    
    
    
    (15.4
    )
    
    
    Income (loss) from
discontinued operations,
net of tax
    
    $
    219.4
    
    
    $
    (5.0
    )
    
    $
    213.8
    
    
    $
    (23.8
    )
 Note 4  Inventories
   September 27,
    
    
    December 31,2009
    
    
    2008(in millions)Production costs of contracts in process
    
    $
    724.9
    
    
    $
    553.2Finished goods
    
    
    3.0
    
    
    
    2.9Less: unliquidated progress payments
    
    
    (248.9
    )
    
    
    (244.3
    )Total inventories
    
    $
    479.0
    
    
    $
    311.8
  Note 5  Goodwill and Intangible Assets
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Note 5  Goodwill and Intangible Assets
 Intangibles  Goodwill and Other
 (in millions)Goodwill prior to allocation
    
    $
    527.7Allocation to 787 business
    
    
    122.9Goodwill after allocation
    
    $
    404.8
    September 27,
    
    
    December 31,2009
    
    
    2008(in millions)Programs and contracts
    
    $
    137.3
    
    
    $
    137.3Less: accumulated amortization
    
    
    (115.2
    )
    
    
    (110.1
    )Identifiable intangible assets, net
    
    $
    22.1
    
    
    $
    27.2
 11




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(in millions)2009
    
    $
    1.72010
    
    
    4.82011
    
    
    2.12012
    
    
    2.12013
    
    
    2.1Thereafter
    
    
    9.3Total remaining amortization of identifiable intangible
assets
    
    $
    22.1
 12




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Note 6  Pension and Other Post-retirement Benefits
  Pension BenefitsThree Months Ended
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Components of net periodic benefit cost
(income):Service cost
    
    $
    4.9
    
    
    $
    4.1
    
    
    $
    13.6
    
    
    $
    13.6Interest cost
    
    
    28.9
    
    
    
    29.0
    
    
    
    86.3
    
    
    
    83.8Expected return on plan assets
    
    
    (31.5
    )
    
    
    (31.0
    )
    
    
    (94.2
    )
    
    
    (93.1
    )Amortization of net (gain) loss
    
    
    11.0
    
    
    
    10.4
    
    
    
    32.2
    
    
    
    24.2Amortization of prior service cost
    
    
    3.1
    
    
    
    3.0
    
    
    
    9.3
    
    
    
    8.9Prior service costs recognized -
curtailment
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    Plan settlement or curtailment (gain) loss
    
    
    
    
    
    
    0.2
    
    
    
    4.6
    
    
    
    0.2Special termination benefits
    
    
    0.5
    
    
    
    
    
    
    
    0.5
    
    
    
    Net periodic benefit cost
    
    $
    16.9
    
    
    $
    15.7
    
    
    $
    54.1
    
    
    $
    37.6Defined contribution plans cost
    
    $
    5.1
    
    
    $
    4.5
    
    
    $
    14.7
    
    
    $
    13.8
 Other Post-retirement BenefitsThree Months Ended
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Components of net periodic benefit
cost (income):Service cost
    
    $
    0.6
    
    
    $
    1.3
    
    
    $
    2.5
    
    
    $
    3.8Interest cost
    
    
    5.5
    
    
    
    7.2
    
    
    
    18.2
    
    
    
    22.1Amortization of net (gain) loss
    
    
    0.7
    
    
    
    (1.2
    )
    
    
    1.4
    
    
    
    1.5Amortization of prior service cost
    
    
    (6.5
    )
    
    
    (5.9
    )
    
    
    (19.0
    )
    
    
    (15.1
    )Prior service costs recognized -
curtailment
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    Plan settlement or curtailment
(gain) loss
    
    
    
    
    
    
    
    
    
    
    3.4
    
    
    
    Special termination benefits
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    Net periodic benefit cost
    
    $
    0.5
    
    
    $
    1.4
    
    
    $
    6.5
    
    
    $
    12.3
  
    
    During February and April of 2008, two of our union represented groups ratified new
collective bargaining agreements. Those agreements each provide for a freeze in pension
benefit accruals, effective December 31, 2008, for bargaining unit employees who, as of
December 31, 2007, had less than 16 years of bargaining unit seniority. Employees subject
to the pension freeze and any employees hired on or after March 1, 2008 for the first
group and April 1, 2008 for the second group, receive a defined contribution benefit. The
agreements provided for a one-time retirement incentive program offered to eligible
employees during 2008. The agreements also provide for certain modifications to the
retiree medical benefits for bargaining unit retirees and eliminated retiree medical
coverage for any bargaining unit employees hired on or after January 1, 2008.
 13




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
    
    In September 2008, we announced amendments to medical plans for two groups of
non-represented, current retirees. Effective January 1, 2009, medical coverage for
participants in those two groups is eliminated at age 65 and replaced with a fixed monthly
stipend.
    
    The aforementioned changes in 2008 led to remeasurement of affected plans assets and
obligations as of March 31, 2008, which resulted in a $14.9 million increase in unfunded
liability for the affected pension plans and a $44.1 million decrease in liability for the
affected OPEB plans. These impacts were recorded in the nine month period ended September
28, 2008.
    
    During January of 2009, the IAM-represented employees at our Nashville facility
ratified a new collective bargaining agreement. That agreement provides for certain
benefit changes, including a freeze in pension benefit accruals, effective June 30, 2009,
for bargaining unit employees who, as of that date, had less than 16 years of bargaining
unit seniority. Employees subject to the pension freeze, and any bargaining unit
employees hired on or after September 29, 2008, receive a defined contribution benefit.
The agreement provides for a one-time company paid retirement incentive program offered to
eligible employees during 2009 and certain modifications to retiree medical benefits for
bargaining unit retirees. These changes led to a remeasurement of the affected plans
assets and obligations as of January 31, 2009, which increased our unfunded liability for
the pension plan by $1.5 million, decreased our liability for the OPEB plan by $32.7
million and led to the immediate recognition of $9.6 million of net non-recurring charges
due to a curtailment.
    
    In September 2009, we announced amendments to medical plans for groups of
non-represented, current retirees. Effective January 1, 2010, medical coverage for
participants in two groups is eliminated at age 65 and replaced with a fixed monthly
stipend. We estimate that those changes will not have a material impact on our
obligations under our other post-retirement benefit plans.
  Note 7- Commitments
 Warranty Reserve.
 14




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:
 WarrantyReserve($ in millions)Balance at December 31, 2007
    
    $
    7.2Warranty costs incurred
    
    
    (0.6
    )Provisions for warranties
    
    
    9.5Balance at December 31, 2008
    
    $
    16.1Warranty costs incurred
    
    
    (1.4
    )Provisions for warranties
    
    
    0.5Balance at September 27, 2009
    
    $
    15.2Consolidated Balance Sheet classificationAccrued and other liabilities
    
    
    1.4Other non-current liabilities
    
    
    13.8
 Note 8- Environmental Contingencies
    15




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EnvironmentalLiability($ in millions)Balance at December 31, 2007
    
    $
    3.8Environmental costs incurred
    
    
    (0.6
    )Balance at December 31, 2008
    
    
    3.2Environmental costs incurred
    
    
    (0.4
    )Balance at September 27, 2009
    
    $
    2.8Consolidated Balance Sheet classificationAccrued and other liabilities
    
    
    0.5Other non-current liabilities
    
    
    2.3
 Note 9- Other Non-Current Liabilities
  September 27,
    
    
    December 31,2009
    
    
    2008(in millions)Deferred income from the sale of
Hawthorne facility (a)
    
    $
    12.6
    
    
    $
    11.6State of Texas grant monies (b)
    
    
    32.9
    
    
    
    35.0Accrued workers compensation
    
    
    15.7
    
    
    
    14.9Accrued warranties
    
    
    13.8
    
    
    
    15.6Other
    
    
    4.0
    
    
    
    4.5Total other non-current liabilities
    
    $
    79.0
    
    
    $
    81.6
 
 (a)
    
    In July 2005, we sold our Hawthorne facility and concurrently signed an agreement
to lease back a certain portion of the facility from July 2005 to December 2010, with
two additional five-year renewal options. Due to certain contractual obligations, which
required our continuing involvement in the facility, this transaction was initially
recorded as a financing transaction and not as a sale. The cash received in July 2005 of
$52.6 million was recorded as a deferred liability on our balance sheet in other
non-current liabilities.During the fiscal year ended December 31, 2008, we increased the deferred liability
balance for a $3.0 million refund from escrow. Additionally, we determined that certain
contractual obligations related to the portion of the facility which we have vacated were
completed and we recognized $44.0 million of the deferred income balance. We also wrote
off the fixed assets related to this portion of the facility resulting in a $1.6 million
gain that was recorded in our Consolidated Statement of Operations for the three month
period ended September 28, 2008. The $12.6 million liability related to the portion of
the Hawthorne facility that we continue to lease will remain on our balance sheet until
the related contractual obligations are fulfilled or the obligations expire.(b)
    
    We reclassified $2.1 million related to the Texas grant to the Accrued and Other
Liabilities caption in our Consolidated Balance Sheet due to a potential repayment of
grant funds in 2010 based on the agreement. The amount of liability reclassified is an
estimate of amounts that may be due in 2010. 16




---



##### Table of Contents



Note 10- Income Taxes
 Income Taxes
    Note 11  Stockholders Equity
  2001 Stock Option Plan
  17




---



##### Table of Contents



WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    TermOptions
    
    
    Price
    
    
    (in Years)Outstanding at December 31, 2008
    
    
    547,100
    
    
    $
    15.35Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    (26,900
    )
    
    
    11.16Exercised
    
    
    
    
    
    
    Outstanding at September 27, 2009
    
    
    520,200
    
    
    $
    15.56
    
    
    
    2.9Vested or expected to vest (a)
    
    
    520,200
    
    
    $
    15.56
    
    
    
    2.9Exercisable at September 27, 2009
    
    
    456,360
    
    
    $
    14.91
    
    
    
    2.9
 
 (a)
    
    Represents outstanding options reduced by expected forfeitures. Expected forfeitures assumed
for this plan were zero. Shares Held in Rabbi Trust
  2006 Incentive Plan
  18




---



##### Table of Contents



Stock Appreciation Rights (SARs)
  WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    TermSARs
    
    
    Price
    
    
    (in Years)Outstanding at December 31, 2008
    
    
    908,450
    
    
    $
    10.00
    
    
    
    7.9Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    (41,047
    )
    
    
    10.00Exercised
    
    
    (15,563
    )
    
    
    10.00Outstanding at September 27, 2009
    
    
    851,840
    
    
    $
    10.00
    
    
    
    7.2Vested or expected to vest (a)
    
    
    738,685
    
    
    
    10.00Exercisable at September 27, 2009
    
    
    588,562
    
    
    
    10.00
    
    
    
    7.2
 
 (a)
    
    Represents outstanding SARs reduced by expected forfeitures.  Restricted Stock Units (RSUs)
  19




---



##### Table of Contents



Grant-dateRSUs
    
    
    Fair-ValueOutstanding at December 31, 2008
    
    
    622,925
    
    
    $
    10.65Granted
    
    
    7,500
    
    
    
    9.76Forfeited or expired
    
    
    (16,820
    )
    
    
    15.35Exercised
    
    
    
    
    
    
    Outstanding at September 27, 2009
    
    
    613,605
    
    
    $
    10.51Vested or expected to vest (a)
    
    
    553,140Vested at September 27, 2009
    
    
    196,394
    
    
    $
    11.89
 
 (a)
    
    Represents outstanding RSUs reduced by expected forfeitures. Restricted Shares
  Note 12  Stock-Based Compensation
 Compensation  Stock Compensation
 Stock Compensation ExpenseThree Months Ended
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Stock Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Rabbi Trust
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Stock appreciation rights (SARs)
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.6Restricted stock units (RSUs)
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.9
    
    
    
    1.4Restricted shares
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2Stock compensation expense, gross
    
    
    0.5
    
    
    
    0.8
    
    
    
    0.9
    
    
    
    2.2Change in forfeiture estimate
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Stock compensation expense, net
    
    $
    0.5
    
    
    $
    0.8
    
    
    $
    1.2
    
    
    $
    2.2
 20




---



##### Table of Contents



Stock Options
 Compensation  Stock Compensation
 Shares Held in Rabbi Trust
  Stock Appreciation Rights (SARs)
 Compensation -
Stock Compensation
  Restricted Stock Units (RSUs)
 Compensation  Stock Compensation
 21




---



##### Table of Contents



Restricted Shares
  Note 13  Investment in Joint Venture
   Note 14  Long-Term Debt
     22




---



##### Table of Contents



Note 15- Related Party Transactions
  23




---



##### Table of Contents



Note 16- Guarantor Subsidiaries
  24




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
September 27, 2009
(dollars in millions, except par value per share) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    150.3
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    150.4Restricted cash
    
    
    43.7
    
    
    
    
    
    
    
    
    
    
    
    43.7Trade and other receivables
    
    
    119.5
    
    
    
    7.6
    
    
    
    
    
    
    
    127.1Intercompany receivable
    
    
    20.9
    
    
    
    8.3
    
    
    
    (29.2
    )
    
    
    Inventories
    
    
    462.1
    
    
    
    16.9
    
    
    
    
    
    
    
    479.0Other current assets
    
    
    5.0
    
    
    
    0.6
    
    
    
    
    
    
    
    5.6Total current assets
    
    
    801.5
    
    
    
    33.5
    
    
    
    (29.2
    )
    
    
    805.8Property, plant and equipment, net
    
    
    263.9
    
    
    
    8.9
    
    
    
    
    
    
    
    272.8Goodwill
    
    
    341.1
    
    
    
    63.7
    
    
    
    
    
    
    
    404.8Identifiable intangible assets, net
    
    
    22.1
    
    
    
    
    
    
    
    
    
    
    
    22.1Debt origination costs, net and other
assets
    
    
    6.1
    
    
    
    0.1
    
    
    
    
    
    
    
    6.2Investment in affiliated company
    
    
    78.3
    
    
    
    
    
    
    
    (78.3
    )
    
    
    Total assets
    
    $
    1,513.0
    
    
    $
    106.2
    
    
    $
    (107.5
    )
    
    $
    1,511.7Liabilities and stockholders equity
(deficit)Current liabilities:Accounts payable, trade
    
    $
    122.0
    
    
    
    4.4
    
    
    
    
    
    
    $
    126.4Intercompany payable
    
    
    8.3
    
    
    
    20.9
    
    
    
    (29.2
    )
    
    
    Accrued and other liabilities
    
    
    80.6
    
    
    
    1.2
    
    
    
    
    
    
    
    81.8Accrued payroll and employee benefits
    
    
    45.5
    
    
    
    1.4
    
    
    
    
    
    
    
    46.9Accrued post-retirement benefits-current
    
    
    42.2
    
    
    
    
    
    
    
    
    
    
    
    42.2Accrued pension-current
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Current portion of long-term bank debt
    
    
    5.9
    
    
    
    
    
    
    
    
    
    
    
    5.9Accrued contract liabilities
    
    
    112.4
    
    
    
    
    
    
    
    
    
    
    
    112.4Total current liabilities
    
    
    417.5
    
    
    
    27.9
    
    
    
    (29.2
    )
    
    
    416.2Long-term liabilities:Accrued post-retirement benefits
    
    
    368.5
    
    
    
    
    
    
    
    
    
    
    
    368.5Accrued pension
    
    
    658.1
    
    
    
    
    
    
    
    
    
    
    
    658.1Long-term bank debt, net of current
portion
    
    
    316.6
    
    
    
    
    
    
    
    
    
    
    
    316.6Long-term bond debt
    
    
    270.0
    
    
    
    
    
    
    
    
    
    
    
    270.0Other non-current liabilities
    
    
    79.0
    
    
    
    
    
    
    
    
    
    
    
    79.0Total liabilities
    
    
    2,109.7
    
    
    
    27.9
    
    
    
    (29.2
    )
    
    
    2,108.4Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized,
24,818,806 issued and outstanding at
September 27, 2009
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Additional paid-in capital
    
    
    422.2
    
    
    
    80.3
    
    
    
    (80.3
    )
    
    
    422.2Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Accumulated deficit
    
    
    (220.7
    )
    
    
    (2.0
    )
    
    
    2.0
    
    
    
    (220.7
    )Accumulated other comprehensive loss
    
    
    (796.9
    )
    
    
    
    
    
    
    
    
    
    
    (796.9
    )Total stockholders equity (deficit)
    
    $
    (596.7
    )
    
    $
    78.3
    
    
    $
    (78.3
    )
    
    $
    (596.7
    )Total liabilities and stockholders equity
(deficit)
    
    $
    1,513.0
    
    
    $
    106.2
    
    
    $
    (107.5
    )
    
    $
    1,511.7
 25




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
December 31, 2008
($ in millions, except share amounts) (unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    86.6
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    86.7Trade and other receivables
    
    
    131.1
    
    
    
    7.4
    
    
    
    
    
    
    
    138.5Intercompany receivable
    
    
    21.1
    
    
    
    8.3
    
    
    
    (29.4
    )
    
    
    Inventories
    
    
    297.7
    
    
    
    14.1
    
    
    
    
    
    
    
    311.8Assets related to discontinued operations
    
    
    460.7
    
    
    
    
    
    
    
    
    
    
    
    460.7Other current assets
    
    
    4.2
    
    
    
    0.5
    
    
    
    
    
    
    
    4.7Total current assets
    
    
    1,001.4
    
    
    
    30.4
    
    
    
    (29.4
    )
    
    
    1,002.4Property, plant and equipment, net
    
    
    271.2
    
    
    
    8.0
    
    
    
    
    
    
    
    279.2Goodwill
    
    
    341.1
    
    
    
    63.7
    
    
    
    
    
    
    
    404.8Identifiable intangible assets, net
    
    
    27.2
    
    
    
    
    
    
    
    
    
    
    
    27.2Debt origination costs, net and other
assets
    
    
    12.9
    
    
    
    1.1
    
    
    
    
    
    
    
    14.0Investment in affiliated company
    
    
    76.4
    
    
    
    
    
    
    
    (76.4
    )
    
    
    Total assets
    
    $
    1,730.2
    
    
    $
    103.2
    
    
    $
    (105.8
    )
    
    $
    1,727.6Liabilities and stockholders equity
(deficit)Current liabilities:Accounts payable, trade
    
    $
    144.5
    
    
    $
    4.0
    
    
    $
    
    
    
    $
    148.5Intercompany payable
    
    
    8.3
    
    
    
    21.1
    
    
    
    (29.4
    )
    
    
    Accrued and other liabilities
    
    
    57.4
    
    
    
    0.1
    
    
    
    
    
    
    
    57.5Accrued payroll and employee benefits
    
    
    46.5
    
    
    
    1.6
    
    
    
    
    
    
    
    48.1Accrued post-retirement benefits-current
    
    
    42.0
    
    
    
    
    
    
    
    
    
    
    
    42.0Accrued pension-current
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Current portion of long-term bank debt
    
    
    5.9
    
    
    
    
    
    
    
    
    
    
    
    5.9Liabilities related to discontinued
operations
    
    
    156.7
    
    
    
    
    
    
    
    
    
    
    
    156.7Accrued contract liabilities
    
    
    141.1
    
    
    
    
    
    
    
    
    
    
    
    141.1Total current liabilities
    
    
    602.7
    
    
    
    26.8
    
    
    
    (29.4
    )
    
    
    600.1Long-term liabilities:Accrued post-retirement benefits
    
    
    405.3
    
    
    
    
    
    
    
    
    
    
    
    405.3Accrued pension
    
    
    710.7
    
    
    
    
    
    
    
    
    
    
    
    710.7Long-term bank debt, net of current
portion
    
    
    594.0
    
    
    
    
    
    
    
    
    
    
    
    594.0Long-term bond debt
    
    
    270.0
    
    
    
    
    
    
    
    
    
    
    
    270.0Other non-current liabilities
    
    
    81.6
    
    
    
    
    
    
    
    
    
    
    
    81.6Total liabilities
    
    
    2,664.3
    
    
    
    26.8
    
    
    
    (29.4
    )
    
    
    2,661.7Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized, 24,798,382
issued and outstanding at December 31,
2008
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Additional paid-in capital
    
    
    420.5
    
    
    
    80.3
    
    
    
    (80.3
    )
    
    
    420.5Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Accumulated deficit
    
    
    (501.3
    )
    
    
    (3.9
    )
    
    
    3.9
    
    
    
    (501.3
    )Accumulated other comprehensive loss
    
    
    (852.0
    )
    
    
    
    
    
    
    
    
    
    
    (852.0
    )Total stockholders equity (deficit)
    
    $
    (934.1
    )
    
    $
    76.4
    
    
    $
    (76.4
    )
    
    $
    (934.1
    )Total liabilities and stockholders equity
(deficit)
    
    $
    1,730.2
    
    
    $
    103.2
    
    
    $
    (105.8
    )
    
    $
    1,727.6
 26




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##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended September 27, 2009
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    431.4
    
    
    $
    18.0
    
    
    $
    (2.7
    )
    
    $
    446.7Costs and expensesCost of sales
    
    
    363.0
    
    
    
    15.7
    
    
    
    (2.7
    )
    
    
    376.0Selling, general and
administrative expenses
    
    
    28.8
    
    
    
    1.4
    
    
    
    
    
    
    
    30.2Total costs and expenses
    
    
    391.8
    
    
    
    17.1
    
    
    
    (2.7
    )
    
    
    406.2Operating income
    
    
    39.6
    
    
    
    0.9
    
    
    
    
    
    
    
    40.5Other income (expense)Interest income
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Other gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    (20.6
    )
    
    
    
    
    
    
    
    
    
    
    (20.6
    )Equity in income (loss) of
consolidated subsidiaries
    
    
    0.9
    
    
    
    
    
    
    
    (0.9
    )
    
    
    Income (loss) before income taxes
    
    
    20.1
    
    
    
    0.9
    
    
    
    (0.9
    )
    
    
    20.1Income tax expense
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Income (loss) from continuing
operations
    
    
    19.2
    
    
    
    0.9
    
    
    
    (0.9
    )
    
    
    19.2Income (loss) from discontinued
operations,
net of tax
    
    
    219.4
    
    
    
    
    
    
    
    
    
    
    
    219.4Net income (loss)
    
    $
    238.6
    
    
    $
    0.9
    
    
    $
    (0.9
    )
    
    $
    238.6
 Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended September 28, 2008
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    466.7
    
    
    $
    15.4
    
    
    $
    (4.8
    )
    
    $
    477.3Costs and expensesCost of sales
    
    
    398.1
    
    
    
    13.8
    
    
    
    (4.8
    )
    
    
    407.1Selling, general and
administrative expenses
    
    
    33.5
    
    
    
    1.4
    
    
    
    
    
    
    
    34.9Total costs and expenses
    
    
    431.6
    
    
    
    15.2
    
    
    
    (4.8
    )
    
    
    442.0Operating income (loss)
    
    
    35.1
    
    
    
    0.2
    
    
    
    
    
    
    
    35.3Other income (expense)Interest income
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1.3Other gain (loss)
    
    
    1.6
    
    
    
    
    
    
    
    
    
    
    
    1.6Interest expense
    
    
    (17.4
    )
    
    
    
    
    
    
    
    
    
    
    (17.4
    )Equity in income (loss) of
consolidated subsidiaries
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )
    
    
    Income (loss) before income taxes
    
    
    20.8
    
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    20.8Income taxes
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Income (loss) from continuing
operations
    
    
    20.6
    
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    20.6Income (loss) from discontinued
operations,
net of tax
    
    
    (5.0
    )
    
    
    
    
    
    
    
    
    
    
    (5.0
    )Net income (loss)
    
    $
    15.6
    
    
    $
    0.2
    
    
    $
    (0.2
    )
    
    $
    15.6
 27




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##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Nine Months Ended September 27, 2009
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    1,278.8
    
    
    $
    53.7
    
    
    $
    (10.2
    )
    
    $
    1,322.3Costs and expensesCost of sales
    
    
    1,071.8
    
    
    
    47.9
    
    
    
    (10.2
    )
    
    
    1,109.5Selling, general and
administrative expenses
    
    
    97.3
    
    
    
    3.9
    
    
    
    
    
    
    
    101.2Total costs and expenses
    
    
    1,169.1
    
    
    
    51.8
    
    
    
    (10.2
    )
    
    
    1,210.7Operating income
    
    
    109.7
    
    
    
    1.9
    
    
    
    
    
    
    
    111.6Other income (expense)Interest income
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Other gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    (44.5
    )
    
    
    
    
    
    
    
    
    
    
    (44.5
    )Equity in income (loss) of
consolidated subsidiaries
    
    
    1.9
    
    
    
    
    
    
    
    (1.9
    )
    
    
    Income (loss) before income taxes
    
    
    67.7
    
    
    
    1.9
    
    
    
    (1.9
    )
    
    
    67.7Income tax expense
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Income (loss) from continuing
operations
    
    
    66.8
    
    
    
    1.9
    
    
    
    (1.9
    )
    
    
    66.8Income (loss) from discontinued
operations,
net of tax
    
    
    213.8
    
    
    
    
    
    
    
    
    
    
    
    213.8Net income (loss)
    
    $
    280.6
    
    
    $
    1.9
    
    
    $
    (1.9
    )
    
    $
    280.6
 Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Nine Months Ended September 28, 2008
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    1,325.4
    
    
    $
    52.5
    
    
    $
    (15.9
    )
    
    $
    1,362.0Costs and expensesCost of sales
    
    
    1,058.9
    
    
    
    46.1
    
    
    
    (15.9
    )
    
    
    1,089.1Selling, general and
administrative expenses
    
    
    121.8
    
    
    
    4.3
    
    
    
    
    
    
    
    126.1Total costs and expenses
    
    
    1,180.7
    
    
    
    50.4
    
    
    
    (15.9
    )
    
    
    1,215.2Operating income (loss)
    
    
    144.7
    
    
    
    2.1
    
    
    
    
    
    
    
    146.8Other income (expense)Interest income
    
    
    2.3
    
    
    
    
    
    
    
    
    
    
    
    2.3Other loss
    
    
    48.7
    
    
    
    
    
    
    
    
    
    
    
    48.7Equity in loss of joint venture
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Interest expense
    
    
    (49.6
    )
    
    
    
    
    
    
    
    
    
    
    (49.6
    )Equity in income (loss) of
consolidated subsidiaries
    
    
    2.1
    
    
    
    
    
    
    
    (2.1
    )
    
    
    Income (loss) before income taxes
    
    
    147.6
    
    
    
    2.1
    
    
    
    (2.1
    )
    
    
    147.6Income taxes
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Income (loss) from continuing
operations
    
    
    147.4
    
    
    
    2.1
    
    
    
    (2.1
    )
    
    
    147.4Income (loss) from discontinued
operations,
net of tax
    
    
    (23.8
    )
    
    
    
    
    
    
    
    
    
    
    (23.8
    )Net income (loss)
    
    $
    123.6
    
    
    $
    2.1
    
    
    $
    (2.1
    )
    
    $
    123.6
 28




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##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Cash Flow Statement
Nine Months Ended September 27, 2009
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activitiesNet income (loss)
    
    $
    280.6
    
    
    $
    1.9
    
    
    $
    (1.9
    )
    
    $
    280.6Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    54.5
    
    
    
    1.2
    
    
    
    
    
    
    
    55.7Stock compensation expense
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    1.2(Gain)/Loss from asset disposals
    
    
    41.7
    
    
    
    
    
    
    
    
    
    
    
    41.7Income from investments in consolidated
subsidiaries
    
    
    (1.9
    )
    
    
    
    
    
    
    1.9
    
    
    
    Changes in current assets and liabilities:Trade and other receivables
    
    
    2.0
    
    
    
    (0.2
    )
    
    
    
    
    
    
    1.8Intercompany accounts receivable
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )
    
    
    Inventories
    
    
    (166.8
    )
    
    
    (2.8
    )
    
    
    
    
    
    
    (169.6
    )Other current assets
    
    
    (0.8
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.9
    )Accounts payable, trade
    
    
    (28.8
    )
    
    
    0.4
    
    
    
    
    
    
    
    (28.4
    )Intercompany accounts payable
    
    
    
    
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    Accrued payroll and employee benefits
    
    
    (0.4
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.6
    )Accrued and other liabilities
    
    
    23.8
    
    
    
    1.1
    
    
    
    
    
    
    
    24.9Accrued contract liabilities
    
    
    (41.3
    )
    
    
    
    
    
    
    
    
    
    
    (41.3
    )Other assets and liabilitieslong-term
    
    
    (36.8
    )
    
    
    1.0
    
    
    
    
    
    
    
    (35.8
    )Net cash provided by (used in) operating activities
    
    
    127.2
    
    
    
    2.1
    
    
    
    
    
    
    
    129.3Investing activitiesCapital expenditures
    
    
    (26.1
    )
    
    
    (2.1
    )
    
    
    
    
    
    
    (28.2
    )Proceeds from sale of assets
    
    
    289.2
    
    
    
    
    
    
    
    
    
    
    
    289.2Net cash provided by (used in) investing activities
    
    
    263.1
    
    
    
    (2.1
    )
    
    
    
    
    
    
    261.0Financing activitiesProceeds from short-term bank debt
    
    
    135.0
    
    
    
    
    
    
    
    
    
    
    
    135.0Payments on short-term bank debt
    
    
    (135.0
    )
    
    
    
    
    
    
    
    
    
    
    (135.0
    )Proceeds from long-term bank debt
    
    
    75.0
    
    
    
    
    
    
    
    
    
    
    
    75.0Payments on long-term bank debt
    
    
    (357.9
    )
    
    
    
    
    
    
    
    
    
    
    (357.9
    )Changes in restricted cash
    
    
    (43.7
    )
    
    
    
    
    
    
    
    
    
    
    (43.7
    )Net cash provided by (used in) financing activities
    
    
    (326.6
    )
    
    
    
    
    
    
    
    
    
    
    (326.6
    )Net increase in cash and cash equivalents
    
    
    63.7
    
    
    
    
    
    
    
    
    
    
    
    63.7Cash and cash equivalents at beginning of period
    
    
    86.6
    
    
    
    0.1
    
    
    
    
    
    
    
    86.7Cash and cash equivalents at end of period
    
    $
    150.3
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    150.4
 29




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##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Cash Flow Statement
Nine Months Ended September 28, 2008
(in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activitiesNet income (loss)
    
    $
    123.6
    
    
    $
    2.1
    
    
    $
    (2.1
    )
    
    $
    123.6Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    48.9
    
    
    
    1.2
    
    
    
    
    
    
    
    50.1Stock compensation expense
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    2.2Equity in losses of joint venture
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6(Gain)/Loss from asset disposals
    
    
    (50.1
    )
    
    
    
    
    
    
    
    
    
    
    (50.1
    )Income from investments in consolidated
subsidiaries
    
    
    (2.1
    )
    
    
    
    
    
    
    2.1
    
    
    
    Changes in current assets and liabilities:Trade and other receivables
    
    
    (81.4
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (81.6
    )Intercompany accounts receivable
    
    
    0.8
    
    
    
    (1.2
    )
    
    
    0.4
    
    
    
    Inventories
    
    
    (32.4
    )
    
    
    0.2
    
    
    
    
    
    
    
    (32.2
    )Other current assets
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.4Accounts payable, trade
    
    
    (36.2
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    (36.8
    )Intercompany accounts payable
    
    
    1.2
    
    
    
    (0.8
    )
    
    
    (0.4
    )
    
    
    Accrued payroll and employee benefits
    
    
    (0.8
    )
    
    
    0.4
    
    
    
    
    
    
    
    (0.4
    )Accrued and other liabilities
    
    
    (9.8
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (10.0
    )Accrued contract liabilities
    
    
    (33.0
    )
    
    
    
    
    
    
    
    
    
    
    (33.0
    )Other assets and liabilitieslong-term
    
    
    (79.8
    )
    
    
    
    
    
    
    
    
    
    
    (79.8
    )Net cash provided by (used in) operating activities
    
    
    (147.8
    )
    
    
    0.8
    
    
    
    
    
    
    
    (147.0
    )Investing activitiesCapital expenditures
    
    
    (40.5
    )
    
    
    (1.2
    )
    
    
    
    
    
    
    (41.7
    )Proceeds from sale of joint venture
    
    
    55.0
    
    
    
    
    
    
    
    
    
    
    
    55.0Net cash provided by (used in) investing activities
    
    
    14.5
    
    
    
    (1.2
    )
    
    
    
    
    
    
    13.3Financing activitiesProceeds from short-term bank debt
    
    
    153.0
    
    
    
    
    
    
    
    
    
    
    
    153.0Payments on short-term bank debt
    
    
    (153.0
    )
    
    
    
    
    
    
    
    
    
    
    (153.0
    )Proceeds from Incremental Facility
    
    
    184.6
    
    
    
    
    
    
    
    
    
    
    
    184.6Payments on long-term bank debt
    
    
    (2.0
    )
    
    
    
    
    
    
    
    
    
    
    (2.0
    )Proceeds from sale of common stock
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Net cash provided by (used in) financing activities
    
    
    182.7
    
    
    
    
    
    
    
    
    
    
    
    182.7Net increase
(decrease) in cash and cash equivalents
    
    
    49.4
    
    
    
    (0.4
    )
    
    
    
    
    
    
    49.0Cash and cash equivalents at beginning of period
    
    
    75.1
    
    
    
    0.5
    
    
    
    
    
    
    
    75.6Cash and cash equivalents at end of period
    
    $
    124.5
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    124.6
 30




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##### Table of Contents



Note 17- Fair Value Measurements
 Fair Value Measurements and Disclosures
 
    
    Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for
identical assets or liabilities.
    
    Level 2: Inputs, other than quoted prices that are observable for the asset or
liability, either directly or indirectly. These include quoted prices for similar assets
or liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.
    
    Level 3: Unobservable inputs that reflect the reporting entitys own assumptions.
   Note 18- Comprehensive Income (Loss)
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Income from continuing operations
    
    $
    19.2
    
    
    $
    20.6
    
    
    $
    66.8
    
    
    $
    147.4Comprehensive income (loss), net of taxPension
    
    
    14.1
    
    
    
    13.6
    
    
    
    40.0
    
    
    
    18.4OPEB
    
    
    (5.8
    )
    
    
    (7.1
    )
    
    
    15.1
    
    
    
    30.5Total comprehensive income from
continuing operations
    
    
    27.5
    
    
    
    27.1
    
    
    
    121.9
    
    
    
    196.3Income (loss) from discontinuing
operations, net of tax
    
    
    219.4
    
    
    
    (5.0
    )
    
    
    213.8
    
    
    
    (23.8
    )Total comprehensive income, net of tax
    
    $
    246.9
    
    
    $
    22.1
    
    
    $
    335.7
    
    
    $
    172.5
 Note 19- Fixed Assets
  31




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion and analysis of our results of operations, financial
condition and liquidity in conjunction with our interim unaudited condensed consolidated financial
statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of
the information contained in this discussion and analysis including information with respect to our
plans and strategies for our business, statements regarding the industry outlook, our expectations
regarding the future performance of our business, and the other non-historical statements contained
herein are forward-looking statements. See Cautionary Statement Regarding Forward-Looking
Statements. You should also review the Risk Factors section of this Quarterly Report on Form
10-Q and our Annual Report on Form 10-K for the year ended December 31, 2008 for a discussion of
important factors that could cause actual results to differ materially from the results described
herein or implied by such forward-looking statements.
 Overview
      32




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##### Table of Contents



Commercial Aircraft.
 Military Aircraft.
 Business Jet Aircraft.
  33




---



##### Table of Contents



Basis of Presentation
  Revenue and Profit Recognition.
 
    
    Under the cost-to-cost method, progress toward completion is measured as the ratio of
total costs incurred to our estimate of total costs at completion. We recognize costs as
incurred. Profit is determined based on our estimated profit margin on the contract
multiplied by our progress toward completion. Revenue represents the sum of our costs and
profit on the contract for the period.
    
    Under the units-of-delivery method, revenue on a contract is recorded as the units are
delivered and accepted during the period at an amount equal to the contractual selling
price of those units. The costs recorded on a contract under the units-of-delivery method
are equal to the total costs at completion divided by the total units to be delivered. As
our contracts can span multiple years, we often segment the contracts into production lots
for the purposes of accumulating and allocating cost. Profit is recognized as the
difference between revenue for the units delivered and the estimated costs for the units
delivered.
    Cost of sales.
 Selling, general and administrative expenses.
 34




---



##### Table of Contents



Interest expense, net.
 Other income (loss).
 Equity in loss of joint venture.
 Income tax benefit (expense).
 Income (loss) from discontinued operations, net of tax.
 35




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##### Table of Contents



Results of Operations
 Three Months
    
    
    Three Months
    
    
    
    
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    
    
    
    
    Ended
    
    
    EndedSeptember 27, 2009
    
    
    September 28, 2008
    
    
    $ Change
    
    
    September 27, 2009
    
    
    September 28, 2008
    
    
    $ Change(in millions)Revenue:Commercial
    
    $
    226.3
    
    
    $
    248.7
    
    
    $
    (22.4
    )
    
    $
    642.5
    
    
    $
    679.9
    
    
    $
    (37.4
    )Military
    
    
    168.3
    
    
    
    144.8
    
    
    
    23.5
    
    
    
    476.1
    
    
    
    440.2
    
    
    
    35.9Business Jet
    
    
    52.1
    
    
    
    83.8
    
    
    
    (31.7
    )
    
    
    203.7
    
    
    
    241.9
    
    
    
    (38.2
    )Total revenue
    
    $
    446.7
    
    
    $
    477.3
    
    
    $
    (30.6
    )
    
    $
    1,322.3
    
    
    $
    1,362.0
    
    
    $
    (39.7
    )Costs and expenses:Cost of sales
    
    
    376.0
    
    
    
    407.1
    
    
    
    (31.1
    )
    
    
    1,109.5
    
    
    
    1,089.1
    
    
    
    20.4Selling, general
and administrative
    
    
    30.2
    
    
    
    34.9
    
    
    
    (4.7
    )
    
    
    101.2
    
    
    
    126.1
    
    
    
    (24.9
    )Total costs and expenses
    
    $
    406.2
    
    
    $
    442.0
    
    
    $
    (35.8
    )
    
    $
    1,210.7
    
    
    $
    1,215.2
    
    
    $
    (4.5
    )Operating income
    
    
    40.5
    
    
    
    35.3
    
    
    
    5.2
    
    
    
    111.6
    
    
    
    146.8
    
    
    
    (35.2
    )Interest expense, net
    
    
    (20.4
    )
    
    
    (16.1
    )
    
    
    (4.3
    )
    
    
    (43.9
    )
    
    
    (47.3
    )
    
    
    3.4Other gain/(loss)
    
    
    
    
    
    
    1.6
    
    
    
    (1.6
    )
    
    
    
    
    
    
    48.7
    
    
    
    (48.7
    )Equity in loss of joint
venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    0.6Income tax expense
    
    
    (0.9
    )
    
    
    (0.2
    )
    
    
    (0.7
    )
    
    
    (0.9
    )
    
    
    (0.2
    )
    
    
    (0.7
    )Income from continuing
operations
    
    $
    19.2
    
    
    $
    20.6
    
    
    $
    (1.4
    )
    
    $
    66.8
    
    
    $
    147.4
    
    
    $
    (80.6
    )Income (loss) from
discontinued
operations, net of tax
    
    
    219.4
    
    
    
    (5.0
    )
    
    
    224.4
    
    
    
    213.8
    
    
    
    (23.8
    )
    
    
    237.6Net income
    
    $
    238.6
    
    
    $
    15.6
    
    
    $
    223.0
    
    
    $
    280.6
    
    
    $
    123.6
    
    
    $
    157.0
 Comparison of Results of Operations for the Three Months Ended September 27, 2009 and September 28,
2008
 Revenues
 
    
    Commercial revenue decreased $22.4 million, or 9%, primarily due to a $20.4 million
decrease in sales resulting from the completion of one of our Airbus programs in the
second quarter of 2009.
    
    Military revenue increased $23.5 million, or 16% mainly due increased deliveries
for the V-22 and C-130 programs as well as higher spares deliveries for C-17.
    
    Business Jet revenue decreased $31.7 million, or 38%, primarily due to reduced
delivery rates directed by our customers.
 Operating income
 Interest expense, net
 36




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##### Table of Contents



Income (loss) from discontinued operations, net of tax
 Comparison of Results of Operations for the Nine Months Ended September 27, 2009 and September 28,
2008
 Revenues
 
    
    Commercial revenue decreased $37.4 million, or 6%, primarily due to a $42.5 million
decrease in sales resulting from the completion of one of our Airbus programs in the
second quarter of 2009
    
    Military revenue increased $35.9 million, or 8%, primarily due to increased
deliveries on the V-22 program, C-130 program and spares deliveries for the C-17
program.
    
    Business Jet revenue decreased $38.2 million, or 16%, primarily due to reduced
delivery rates directed by our customers.
 Operating income
 Interest expense, net
 Other gain (loss)
 Income (loss) from discontinued operations, net of tax
 37




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##### Table of Contents



Critical Accounting Policies
  Revenue Recognition
 Revenue -
Construction-Type and Production-Type Contracts
 
    
    Under the cost-to-cost method, progress toward completion is measured as the ratio of
total costs incurred to our estimate of total costs at completion. We recognize costs as
incurred. Profit is determined based on our estimated profit margin on the contract
multiplied by our progress toward completion. Revenue represents the sum of our costs and
profit on the contract for the period.
    
    Under the units-of-delivery method, revenue on a contract is recorded as the units are
delivered and accepted during the period at an amount equal to the contractual selling
price of those units. The costs recorded on a contract under the units-of-delivery method
are equal to the total costs at completion divided by the total units to be delivered. As
our contracts can span multiple years, we often segment the contracts into production lots
for the purposes of accumulating and allocating cost. Profit is recognized as the
difference between revenue for the units delivered and the estimated costs for the units
delivered.
   38




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##### Table of Contents



September 27,
    
    
    December 31,2009
    
    
    2008(in millions)Advances and progress billings
    
    $
    96.0
    
    
    $
    126.8Forward loss
    
    
    6.7
    
    
    
    6.4Other
    
    
    9.7
    
    
    
    7.9Total accrued contract liabilities
    
    $
    112.4
    
    
    $
    141.1
 Goodwill
 Intangibles  Goodwill and Other
   Post-Retirement Plans
   39




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Compensation  Retirement Benefits
 Recent Accounting Pronouncements
   40




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Ô
   Liquidity and Capital Resources
    41




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Updated toreflectAs previously
    
    
    Treasuryreported in the
    
    
    Department10-K
    
    
    changes(in Millions)Projected contributions2009
    
    
    84.7
    
    
    
    78.82010
    
    
    165.8
    
    
    
    98.12011
    
    
    191.7
    
    
    
    217.12012
    
    
    174.7
    
    
    
    166.82013
    
    
    151.6
    
    
    
    153.8Total 2009-2013
    
    $
    768.5
    
    
    $
    714.6
     42




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Credit Agreements and Debt Covenants
   43




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Non-GAAP Financial Measures.
 44




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##### Table of Contents



Reconciliation of Non-GAAP Measure  Adjusted EBITDA
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net cash provided by (used in) operating activities
    
    $
    224.4
    
    
    $
    (109.3
    )
    
    $
    129.3
    
    
    $
    (147.0
    )Interest expense, net
    
    
    20.5
    
    
    
    16.1
    
    
    
    43.9
    
    
    
    47.3Income tax expense (benefit)
    
    
    0.9
    
    
    
    0.2
    
    
    
    0.9
    
    
    
    0.2Stock compensation expense
    
    
    (0.5
    )
    
    
    (0.8
    )
    
    
    (1.2
    )
    
    
    (2.2
    )Equity in losses of joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Gain (loss) from asset sales and other losses
    
    
    (39.8
    )
    
    
    1.6
    
    
    
    (41.7
    )
    
    
    50.1Non-cash interest expense
    
    
    (8.4
    )
    
    
    (1.8
    )
    
    
    (12.1
    )
    
    
    (4.1
    )787 tooling amortization
    
    
    0.3
    
    
    
    
    
    
    
    1.1
    
    
    
    0.8Changes in operating assets and liabilities
    
    
    74.7
    
    
    
    141.4
    
    
    
    249.9
    
    
    
    273.4EBITDA
    
    $
    272.1
    
    
    $
    47.4
    
    
    $
    370.1
    
    
    $
    217.9Investment
in Boeing 787 and sale of 787 business  (1)
    
    
    (216.9
    )
    
    
    6.0
    
    
    
    (213.8
    )
    
    
    28.0Unusual charges & other non-recurring program costs (2)
    
    
    4.0
    
    
    
    1.7
    
    
    
    14.6
    
    
    
    5.7(Gain) Loss on disposal of property, plant and equipment (3)
    
    
    
    
    
    
    (1.5
    )
    
    
    1.9
    
    
    
    (50.1
    )Pension & OPEB curtailment and non-cash expense (4)
    
    
    
    
    
    
    
    
    
    
    9.6
    
    
    
    Other (5)
    
    
    (0.6
    )
    
    
    1.3
    
    
    
    2.7
    
    
    
    3.7Adjusted EBITDA
    
    $
    58.6
    
    
    $
    54.9
    
    
    $
    185.1
    
    
    $
    205.2
 
 (1)
    
    Investment in Boeing 787 and sale of 787 businessThe Boeing 787 program, described elsewhere in this quarterly
report, required substantial start-up costs in prior periods as we built a new facility in
South Carolina and invested in new manufacturing technologies dedicated to the program.
These start-up investment costs were expensed in our financial statements over several
periods due to their magnitude and timing. As a result of the sale of our 787 business to
Boeing, we settled outstanding contractual matters with Boeing and recognized a loss on the
sale of the related assets and liabilities of the business. Our credit agreement excludes
all gains or losses recognized on the sale of assets and it excludes our significant start-up
investment in the Boeing 787 program because it represented an unusual significant investment
in a major new program that was not indicative of ongoing core operations. Accordingly, the
impact of the settlement of contractual matters, loss on the sale of the assets and
liabilities and the investment that was expensed during the period was excluded from the
calculation of Adjusted EBITDA. Also included is our loss in our joint venture with Global
Aeronautica. Our share of Global Aeronauticas net loss was $0.6 million for the nine month
period ended September 28, 2008, respectively. On June 10, 2008, we sold our equity interest
in Global Aeronautica to Boeing and as a result our adjusted EBITDA calculations for the
periods presented above were not impacted by this joint venture. For more information,
please refer to Note 13  Investment in Joint Venture to our interim unaudited condensed
consolidated financial statements.(2)
    
    Unusual charges and other non-recurring program costsOur senior credit agreement
excludes our expenses for unusual events in our operations and non-recurring costs that are
not indicative of ongoing core operating performance, and accordingly the charges that have
been expensed during the period are added back to Adjusted EBITDA. 45




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For the three month periods ended September 27, 2009 and September 28, 2008, we incurred $1.3
million and $1.7 million, respectively, of non-recurring costs primarily related to a
facilities rationalization initiative. For the nine month periods ended September 27, 2009
and September 28, 2008, we incurred $8.2 million and $5.7 million, respectively, of
non-recurring costs primarily related to a facilities rationalization initiative.Additionally, for the nine month period ended September 27, 2009, we reversed $(0.5) million
in non-recurring program costs related to the strike at our Nashville, Tennessee facility
because the actual strike-related costs incurred on those programs were lower than the
original estimates. During the nine month period ended September 27, 2009, we also
recognized $1.8 million of non-recurring costs related to the suspension of the Cessna
Citation Columbus  Model 850 business jet program.During the three and nine month periods ended September 27, 2009, we recognized $2.7 million
and $5.1 million, respectively, of non-recurring costs related to Information Systems
implementation initiatives.(3)
    
    (Gain) Loss on disposal of property, plant and equipment (PP&E) and other assets  On
occasion, where the asset is no longer needed for our business and ceases to offer sufficient
value or utility to justify our retention of the asset, we choose to sell PP&E at a loss.
These losses reduce our results of operations for the period in which the asset was sold.
Similarly, in some cases, we sell assets at an amount in excess of book value. Our credit
agreement provides that those gains and losses are reflected as an adjustment in calculating
Adjusted EBITDA.(4)
    
    Pension and other post-retirement benefits curtailment and non-cash expense related to
the Compensation  Retirement Benefitstopic of the ASCThe credit agreement allows us to
remove non-cash benefit expenses, so to the extent that the recorded expense exceeds the cash
contributions to the plan it is reflected as an adjustment in calculating Adjusted EBITDA.
During the nine month period ended September 27, 2009, we recognized $9.6 million curtailment
resulting from the new IAM collective bargaining agreement. For more information, please
refer to Note 6  Pension and Other Post-Retirement Benefits to our interim unaudited
condensed consolidated financial statements.(5)
    
    OtherIncludes non-cash stock expense and related party management fees. Our credit
agreement provides that these expenses are reflected as an adjustment in calculating Adjusted
EBITDA.   
    
    it does not reflect our cash expenditures, or future requirements, for all contractual
commitments;
    
    it does not reflect our significant interest expense, or the cash requirements
necessary to service our indebtedness;
    
    it does not reflect cash requirements for the payment of income taxes when due;
    
    it does not reflect working capital requirements;
    
    although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future and Adjusted
EBITDA does not reflect any cash requirements for such replacements; and
 46




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
    
    it does not reflect the impact of earnings or charges resulting from matters we
consider not to be indicative of our ongoing operations, but may nonetheless have a
material impact on our results of operations.
  Cash Flow Summary
 For the Nine Months EndedSeptember 27,
    
    
    September 28,2009
    
    
    2008
    
    
    Change(in millions)Net income (loss)
    
    $
    280.6
    
    
    $
    123.6
    
    
    $
    157.0Non-cash items
    
    
    98.6
    
    
    
    2.8
    
    
    
    95.8Changes in working capital
    
    
    (249.9
    )
    
    
    (273.4
    )
    
    
    23.5Net cash provided by (used in) operating activities
    
    
    129.3
    
    
    
    (147.0
    )
    
    
    276.3Net cash provided by (used in) investing activities
    
    
    261.0
    
    
    
    13.3
    
    
    
    247.7Net cash provided by (used in) financing activities
    
    
    (326.6
    )
    
    
    182.7
    
    
    
    (509.3
    )Net increase (decrease) in cash and cash
equivalents
    
    
    63.7
    
    
    
    49.0
    
    
    
    14.7Cash and cash equivalents at beginning of period
    
    
    86.7
    
    
    
    75.6
    
    
    
    11.1Cash and cash equivalents at end of period
    
    $
    150.4
    
    
    $
    124.6
    
    
    $
    25.8
    Off-Balance Sheet Arrangements
  47




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        Interest Rate Risks
   48




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Foreign Currency Risks
  Utility Price Risks
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Our Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  49




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PART II. OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  50




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ITEM 6.
    
    EXHIBITS
 (a) Exhibits
 (10.1)*
    
    Asset Purchase Agreement between Vought Aircraft Industries, Inc.
and Boeing Commercial Airplanes Charleston South Carolina, Inc.
(formerly known as BCACSC, Inc.), a wholly owned subsidiary of The
Boeing Company, dated July 6, 2009.(31.1)*
    
    Certification of Chief Executive Officer pursuant to Section 302
of Sarbanes-Oxley Act of 2002.(31.2)*
    
    Certification of Chief Financial Officer pursuant to Section 302
of Sarbanes-Oxley Act of 2002.(32.1)*
    
    Certification of Chief Executive Officer pursuant to Section 906
of Sarbanes-Oxley Act of 2002.(32.2)*
    
    Certification of Chief Financial Officer pursuant to Section 906
of Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 51




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##### Table of Contents



SIGNATURES
  Vought Aircraft Industries, Inc.

(Registrant)November 10, 2009

(Date)
    
    /s/ KEITH HOWE

Vice President and Chief Financial OfficerNovember 10, 2009

(Date)
    
    /s/ MARK JOLLY

Principal Accounting Officer
 52