##### 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 March 28, 2010
 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.
  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




---



##### 



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
    
    
    27Item 3
    
    Quantitative And
Qualitative Disclosures About Market Risk
    
    
    39Item 4
    
    Controls And
Procedures
    
    
    41PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    42Item 1A
    
    Risk Factors
    
    
    42Item 2
    
    Unregistered Sales
of Equity Securities and Use of Proceeds
    
    
    42Item 3
    
    Defaults Upon Senior Securities
    
    
    42Item 5
    
    Other Information
    
    
    42Item 6
    
    Exhibits
    
    
    43Signatures
    
    
    44EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



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




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 Vought Aircraft Industries, Inc.
Consolidated Balance Sheets
($ in millions, except share amounts)
 March 28,2010
    
    
    December 31,(unaudited)
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    149.7
    
    
    $
    116.0Restricted cash
    
    
    43.4
    
    
    
    43.8Trade and other receivables
    
    
    159.5
    
    
    
    127.9Inventories
    
    
    453.4
    
    
    
    511.3Other current assets
    
    
    10.1
    
    
    
    8.5Total current assets
    
    
    816.1
    
    
    
    807.5Property, plant and equipment, net
    
    
    273.1
    
    
    
    275.9Goodwill
    
    
    404.8
    
    
    
    404.8Identifiable intangible assets, net
    
    
    18.6
    
    
    
    20.4Other non-current assets
    
    
    0.9
    
    
    
    1.3Total assets
    
    $
    1,513.5
    
    
    $
    1,509.9Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    171.1
    
    
    $
    140.9Accrued and other liabilities
    
    
    59.8
    
    
    
    68.3Accrued payroll and employee benefits
    
    
    44.5
    
    
    
    46.9Accrued post-retirement benefits-current
    
    
    37.5
    
    
    
    37.4Accrued pension-current
    
    
    3.3
    
    
    
    3.5Current portion of long-term bank debt
    
    
    320.4
    
    
    
    319.8Accrued contract liabilities
    
    
    40.0
    
    
    
    74.2Total current liabilities
    
    
    676.6
    
    
    
    691.0Long-term liabilities:Accrued post-retirement benefits
    
    
    363.5
    
    
    
    364.9Accrued pension
    
    
    595.2
    
    
    
    612.2Long-term bond debt
    
    
    270.0
    
    
    
    270.0Other non-current liabilities
    
    
    74.2
    
    
    
    75.3Total liabilities
    
    
    1,979.5
    
    
    
    2,013.4Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized, 24,818,900 and
24,818,806 issued and outstanding at March 28,
2010 and December 31, 2009, respectively
    
    
    0.3
    
    
    
    0.3Additional paid-in capital
    
    
    423.2
    
    
    
    422.8Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    (1.6
    )Accumulated deficit
    
    
    (146.2
    )
    
    
    (173.0
    )Accumulated other comprehensive loss
    
    
    (741.7
    )
    
    
    (752.0
    )Total stockholders equity (deficit)
    
    $
    (466.0
    )
    
    $
    (503.5
    )Total liabilities and stockholders equity (deficit)
    
    $
    1,513.5
    
    
    $
    1,509.9
 See accompanying notes
 4




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidated Statements of Operations
(unaudited, $ in millions)
 For the Three Months EndedMarch 28,
    
    
    March 29,2010
    
    
    2009Revenue
    
    $
    470.5
    
    
    $
    390.3Costs and expensesCost of sales
    
    
    391.5
    
    
    
    324.8Selling, general and
administrative expenses
    
    
    39.7
    
    
    
    28.5Total costs and expenses
    
    
    431.2
    
    
    
    353.3Operating income
    
    
    39.3
    
    
    
    37.0Other income (expense)Interest income
    
    
    0.1
    
    
    
    0.2Interest expense
    
    
    (12.6
    )
    
    
    (15.0
    )Income before income taxes
    
    
    26.8
    
    
    
    22.2Income tax expense
    
    
    
    
    
    
    Income (loss) from continuing
operations
    
    $
    26.8
    
    
    $
    22.2Income (loss) from
discontinued operations
    
    
    
    
    
    
    (4.3
    )Net Income
    
    $
    26.8
    
    
    $
    17.9
 See accompanying notes
 5




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidated Statements of Cash Flows
(unaudited, $ in millions)
 Three Months EndedMarch 28,
    
    
    March 29,2010
    
    
    2009Operating activitiesNet income
    
    $
    26.8
    
    
    $
    17.9Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    12.9
    
    
    
    15.9Stock compensation expense
    
    
    2.7
    
    
    
    0.5Changes in current assets and liabilities:Trade and other receivables
    
    
    (31.6
    )
    
    
    (9.6
    )Inventories
    
    
    57.9
    
    
    
    (66.1
    )Other current assets
    
    
    (2.6
    )
    
    
    (3.7
    )Accounts payable, trade
    
    
    30.2
    
    
    
    12.1Accrued payroll and employee benefits
    
    
    (2.4
    )
    
    
    (1.7
    )Accrued and other liabilities
    
    
    (10.9
    )
    
    
    Accrued contract liabilities
    
    
    (34.2
    )
    
    
    (36.7
    )Other assets and liabilitieslong-term
    
    
    (8.8
    )
    
    
    (1.6
    )Net cash provided by (used in) operating activities
    
    
    40.0
    
    
    
    (73.0
    )Investing activitiesCapital expenditures
    
    
    (6.7
    )
    
    
    (8.3
    )Net cash used in investing activities
    
    
    (6.7
    )
    
    
    (8.3
    )Financing activitiesProceeds from short-term bank debt
    
    
    
    
    
    
    135.0Proceeds from long-term bank debt
    
    
    
    
    
    
    25.0Changes in restricted cash
    
    
    0.4
    
    
    
    Net cash provided by (used in) financing activities
    
    
    0.4
    
    
    
    160.0Net increase (decrease) in cash and cash equivalents
    
    
    33.7
    
    
    
    78.7Cash and cash equivalents at beginning of period
    
    
    116.0
    
    
    
    86.7Cash and cash equivalents at end of period
    
    $
    149.7
    
    
    $
    165.4
 See accompanying notes
 6




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Notes to the Interim Unaudited Condensed Consolidated Financial Statemen  Period Ending March 28, 2010
 Note 1  Organization and Basis of Presentation
       7




---



##### Table of Contents



Note 2
 Recent Accounting Pronouncements
   Note 3  Discontinued Operations
   March 29,2009($ in millions)Revenue
    
    $
    12.3Operating income
    
    
    (4.3
    )Income (loss) from discontinued operations, net of tax
    
    $
    (4.3
    )
 8




---



##### Table of Contents



Note 4  Inventories
   March 28,
    
    
    December 31,2010
    
    
    2009($ in millions)Production costs of contracts in
process
    
    $
    630.7
    
    
    $
    659.1Finished goods
    
    
    2.4
    
    
    
    3.1Less: unliquidated progress
payments
    
    
    (179.7
    )
    
    
    (150.9
    )Total inventories
    
    $
    453.4
    
    
    $
    511.3
 Note 5  Goodwill and Intangible Assets
 Intangibles  Goodwill and Other
    March 28,
    
    
    December 31,2010
    
    
    2009($ in millions)Programs and contracts
    
    $
    137.3
    
    
    $
    137.3Less: accumulated amortization
    
    
    (118.7
    )
    
    
    (116.9
    )Identifiable intangible assets, net
    
    $
    18.6
    
    
    $
    20.4
 9




---



##### Table of Contents



($ in millions)2010
    
    $
    3.02011
    
    
    2.12012
    
    
    2.12013
    
    
    2.12014
    
    
    2.1Thereafter
    
    
    7.2Total remaining amortization of identifiable
intangible assets
    
    $
    18.6
 Note 6  Pension and Other Post-retirement Benefits
  Pension Benefits
    
    
    Other Post-retirement BenefitsThree Months Ended
    
    
    Three Months EndedMarch 28,
    
    
    March 29,
    
    
    March 28,
    
    
    March 29,2010
    
    
    2009
    
    
    2010
    
    
    2009($ in millions)Components of net periodic benefit
cost (income):Service cost
    
    $
    4.4
    
    
    $
    4.0
    
    
    $
    0.9
    
    
    $
    1.0Interest cost
    
    
    28.7
    
    
    
    28.2
    
    
    
    5.3
    
    
    
    6.4Expected return on plan assets
    
    
    (31.9
    )
    
    
    (31.4
    )
    
    
    
    
    
    
    Amortization of net (gain) loss
    
    
    13.1
    
    
    
    9.8
    
    
    
    1.1
    
    
    
    0.4Amortization of prior service cost
    
    
    3.1
    
    
    
    3.1
    
    
    
    (7.0
    )
    
    
    (6.1
    )Prior service cost recognized -
curtailment
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    (0.2
    )Plan settlement or curtailment
(gain)/loss
    
    
    
    
    
    
    4.6
    
    
    
    
    
    
    
    3.4Net periodic benefit cost
    
    $
    17.4
    
    
    $
    20.1
    
    
    $
    0.3
    
    
    $
    4.9Defined contribution plan cost
    
    $
    5.3
    
    
    $
    4.6
  
    
    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.
 10




---



##### Table of Contents



Note 7  Commitments
 Warranty Reserve.
 :
 WarrantyReserve($ in millions)Balance at December 31, 2008
    
    $
    16.1Warranty costs incurred
    
    
    (1.5
    )Provisions for warranties
    
    
    (1.2
    )Balance at December 31, 2009
    
    $
    13.4Warranty costs incurred
    
    
    (1.0
    )Provisions for warranties
    
    
    Balance at March 28, 2010
    
    $
    12.4Consolidated Balance Sheet classificationAccrued and other liabilities
    
    
    4.5Other non-current liabilities
    
    
    7.9
 Note 8- Environmental Contingencies
   11




---



##### Table of Contents



EnvironmentalLiability($ in millions)Balance at December 31, 2008
    
    $
    3.2Environmental costs incurred
    
    
    (0.8
    )Balance at December 31, 2009
    
    
    2.4Environmental costs incurred
    
    
    (0.2
    )Balance at March 28, 2010
    
    $
    2.2Consolidated Balance Sheet classificationAccrued and other liabilities
    
    
    0.6Other non-current liabilities
    
    
    1.6
 Note 9  Other Non-Current Liabilities
  March 28,
    
    
    December 31,2010
    
    
    2009($ in millions)Deferred income from the sale of
Hawthorne facility (a)
    
    $
    12.6
    
    
    $
    12.6State of Texas grant monies
    
    
    33.1
    
    
    
    34.1Deferred workers compensation
    
    
    17.7
    
    
    
    16.5Accrued warranties
    
    
    7.9
    
    
    
    8.9Other
    
    
    2.9
    
    
    
    3.2Total other non-current liabilities
    
    $
    74.2
    
    
    $
    75.3
 
 (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 2008, 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
during the fiscal year ended December 31, 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 repaid $0.9 million related to the Texas grant during the three month period
ended March 28, 2010. Additionally, we reclassified $1.0 million related to the Texas
grant to the Accrued and Other Liabilities caption in our Consolidated Balance Sheet due
to a potential repayment of a portion of the grant funds in 2011. 12




---



##### Table of Contents



Note
10  Income Taxes
 Income Taxes
   Note 11  Stockholders Equity
  2001 Stock Option Plan
  13




---



##### Table of Contents



WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    TermOptions
    
    
    Price
    
    
    (in Years)Outstanding at December 31, 2009
    
    
    520,200
    
    
    $
    15.56Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    (5,710
    )
    
    
    10.00Exercised
    
    
    
    
    
    
    Outstanding at March 28, 2010
    
    
    514,490
    
    
    $
    15.62
    
    
    
    2.4Vested or expected to vest (a)
    
    
    514,490
    
    
    $
    15.62Exercisable at March 28, 2010
    
    
    451,560
    
    
    $
    14.96
    
    
    
    2.4
 
 (a)
    
    Represents outstanding options reduced by expected forfeitures. Expected forfeitures assumed
for this plan were zero. Shares Held in Rabbi Trust
  2006 Incentive Plan
  14




---



##### Table of Contents



Stock Appreciation Rights (SARs)
  WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    TermSARs
    
    
    Price
    
    
    (in Years)Outstanding at December
31, 2009
    
    
    976,840
    
    
    $
    10.00
    
    
    
    7.3Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding at March 28, 2010
    
    
    976,840
    
    
    $
    10.00
    
    
    
    7.1Vested or expected to vest (a)
    
    
    976,840
    
    
    
    10.00Exercisable at March 28, 2010
    
    
    801,479
    
    
    
    10.00
    
    
    
    6.7
 
 (a)
    
    Represents outstanding SARs reduced by expected forfeitures.  Restricted Stock Units (RSUs)
   Grant-dateRSUs
    
    
    Fair-ValueOutstanding at December 31, 2009
    
    
    617,105
    
    
    $
    10.50Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding at March 28, 2010
    
    
    617,105
    
    
    $
    10.50Vested or expected to vest (a)
    
    
    617,105Exercisable at March 28, 2010
    
    
    260,976
    
    
    $
    11.73
 
 (a)
    
    Represents outstanding RSUs reduced by expected forfeitures. 15




---



##### Table of Contents



Note 12  Stock-Based Compensation
 Compensation  Stock Compensation
 Stock Compensation ExpenseThree Months EndedMarch 28, 2010
    
    
    March 29, 2009($ in millions)Stock Options
    
    $
    
    
    
    $
    Rabbi Trust
    
    
    2.3
    
    
    
    Stock appreciation rights (SARs)
    
    
    0.1
    
    
    
    0.1Restricted stock units (RSUs)
    
    
    0.1
    
    
    
    0.3Restricted shares
    
    
    
    
    
    
    0.1Stock compensation expense, gross
    
    $
    2.5
    
    
    $
    0.5Change in forfeiture estimate
    
    
    0.2
    
    
    
    Stock compensation expense, net
    
    $
    2.7
    
    
    $
    0.5
  Stock Options
 Compensation  Stock Compensation
 Shares Held in Rabbi Trust
  16




---



##### Table of Contents



Stock Appreciation Rights (SARs)
 Compensation 
Stock Compensation
  Restricted Stock Units (RSUs)
 Compensation  Stock Compensation
 Note 13- Comprehensive Income
  For the Three Months EndedMarch 28,
    
    
    March 29,2010
    
    
    2009($ in millions)Net income
    
    $
    26.8
    
    
    $
    17.9Other comprehensive income (loss), net of taxPension
    
    
    16.2
    
    
    
    11.4OPEB
    
    
    (5.9
    )
    
    
    27.0Total other comprehensive income
    
    $
    37.1
    
    
    $
    56.3
 17




---



##### Table of Contents



Note 14  Debt
         18




---



##### Table of Contents



Note 15- Related Party Transactions
     19




---



##### Table of Contents



Note 16- Guarantor Subsidiaries
  20




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
March 28, 2010
($ in millions, except share amounts) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    149.6
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    149.7Restricted cash
    
    
    43.4
    
    
    
    
    
    
    
    
    
    
    
    43.4Trade and other receivables
    
    
    152.8
    
    
    
    6.7
    
    
    
    
    
    
    
    159.5Intercompany receivable
    
    
    12.2
    
    
    
    8.7
    
    
    
    (20.9
    )
    
    
    Inventories
    
    
    439.6
    
    
    
    13.8
    
    
    
    
    
    
    
    453.4Other current assets
    
    
    9.5
    
    
    
    0.6
    
    
    
    
    
    
    
    10.1Total current assets
    
    
    807.1
    
    
    
    29.9
    
    
    
    (20.9
    )
    
    
    816.1Property, plant and equipment, net
    
    
    265.1
    
    
    
    8.0
    
    
    
    
    
    
    
    273.1Goodwill
    
    
    341.1
    
    
    
    63.7
    
    
    
    
    
    
    
    404.8Identifiable intangible assets, net
    
    
    18.6
    
    
    
    
    
    
    
    
    
    
    
    18.6Other non-current assets
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Investment in affiliated company
    
    
    81.4
    
    
    
    
    
    
    
    (81.4
    )
    
    
    Total assets
    
    $
    1,514.2
    
    
    $
    101.6
    
    
    $
    (102.3
    )
    
    $
    1,513.5Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    165.6
    
    
    $
    5.5
    
    
    $
    
    
    
    $
    171.1Intercompany payable
    
    
    8.7
    
    
    
    12.2
    
    
    
    (20.9
    )
    
    
    Accrued and other liabilities
    
    
    58.5
    
    
    
    1.3
    
    
    
    
    
    
    
    59.8Accrued payroll and employee benefits
    
    
    43.3
    
    
    
    1.2
    
    
    
    
    
    
    
    44.5Accrued post-retirement benefits-current
    
    
    37.5
    
    
    
    
    
    
    
    
    
    
    
    37.5Accrued pension-current
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    3.3Current portion of long-term bank debt
    
    
    320.4
    
    
    
    
    
    
    
    
    
    
    
    320.4Accrued contract liabilities
    
    
    40.0
    
    
    
    
    
    
    
    
    
    
    
    40.0Total current liabilities
    
    
    677.3
    
    
    
    20.2
    
    
    
    (20.9
    )
    
    
    676.6Long-term liabilities:Accrued post-retirement benefits
    
    
    363.5
    
    
    
    
    
    
    
    
    
    
    
    363.5Accrued pension
    
    
    595.2
    
    
    
    
    
    
    
    
    
    
    
    595.2Long-term bond debt
    
    
    270.0
    
    
    
    
    
    
    
    
    
    
    
    270.0Other non-current liabilities
    
    
    74.2
    
    
    
    
    
    
    
    
    
    
    
    74.2Total liabilities
    
    
    1,980.2
    
    
    
    20.2
    
    
    
    (20.9
    )
    
    
    1,979.5Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized, 24,818,806 issued
and outstanding at March 29, 2009
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Additional paid-in capital
    
    
    423.2
    
    
    
    80.3
    
    
    
    (80.3
    )
    
    
    423.2Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Accumulated equity (deficit)
    
    
    (146.2
    )
    
    
    1.1
    
    
    
    (1.1
    )
    
    
    (146.2
    )Accumulated other comprehensive loss
    
    
    (741.7
    )
    
    
    
    
    
    
    
    
    
    
    (741.7
    )Total stockholders equity (deficit)
    
    $
    (466.0
    )
    
    $
    81.4
    
    
    $
    (81.4
    )
    
    $
    (466.0
    )Total liabilities and stockholders equity
(deficit)
    
    $
    1,514.2
    
    
    $
    101.6
    
    
    $
    (102.3
    )
    
    $
    1,513.5
 21




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
December 31, 2009
($ in millions, except par value per share)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    115.2
    
    
    $
    0.8
    
    
    $
    
    
    
    $
    116.0Restricted cash
    
    
    43.8
    
    
    
    
    
    
    
    
    
    
    
    43.8Trade and other receivables
    
    
    120.9
    
    
    
    7.0
    
    
    
    
    
    
    
    127.9Intercompany receivable
    
    
    15.7
    
    
    
    8.2
    
    
    
    (23.9
    )
    
    
    Inventories
    
    
    497.9
    
    
    
    13.4
    
    
    
    
    
    
    
    511.3Other current assets
    
    
    7.9
    
    
    
    0.6
    
    
    
    
    
    
    
    8.5Total current assets
    
    
    801.4
    
    
    
    30.0
    
    
    
    (23.9
    )
    
    
    807.5Property, plant and equipment, net
    
    
    267.5
    
    
    
    8.4
    
    
    
    
    
    
    
    275.9Goodwill
    
    
    341.1
    
    
    
    63.7
    
    
    
    
    
    
    
    404.8Identifiable intangible assets, net
    
    
    20.4
    
    
    
    
    
    
    
    
    
    
    
    20.4Other non-current assets
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1.3Investment in affiliated company
    
    
    79.9
    
    
    
    
    
    
    
    (79.9
    )
    
    
    Total assets
    
    $
    1,511.6
    
    
    $
    102.1
    
    
    $
    (103.8
    )
    
    $
    1,509.9Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    137.3
    
    
    $
    3.6
    
    
    $
    
    
    
    $
    140.9Intercompany payable
    
    
    8.2
    
    
    
    15.7
    
    
    
    (23.9
    )
    
    
    Accrued and other liabilities
    
    
    66.8
    
    
    
    1.5
    
    
    
    
    
    
    
    68.3Accrued payroll and employee benefits
    
    
    45.5
    
    
    
    1.4
    
    
    
    
    
    
    
    46.9Accrued post-retirement benefits-current
    
    
    37.4
    
    
    
    
    
    
    
    
    
    
    
    37.4Accrued pension-current
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    3.5Current portion of long-term bank debt
    
    
    319.8
    
    
    
    
    
    
    
    
    
    
    
    319.8Accrued contract liabilities
    
    
    74.2
    
    
    
    
    
    
    
    
    
    
    
    74.2Total current liabilities
    
    
    692.7
    
    
    
    22.2
    
    
    
    (23.9
    )
    
    
    691.0Long-term liabilities:Accrued post-retirement benefits
    
    
    364.9
    
    
    
    
    
    
    
    
    
    
    
    364.9Accrued pension
    
    
    612.2
    
    
    
    
    
    
    
    
    
    
    
    612.2Long-term bond debt
    
    
    270.0
    
    
    
    
    
    
    
    
    
    
    
    270.0Other non-current liabilities
    
    
    75.3
    
    
    
    
    
    
    
    
    
    
    
    75.3Total liabilities
    
    
    2,015.1
    
    
    
    22.2
    
    
    
    (23.9
    )
    
    
    2,013.4Stockholders equity (deficit):Common stock, par value $.01 per share;
50,000,000 shares authorized, 24,818,806
issued and outstanding at December 31,
2009
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Additional paid-in capital
    
    
    422.8
    
    
    
    80.3
    
    
    
    (80.3
    )
    
    
    422.8Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Accumulated deficit
    
    
    (173.0
    )
    
    
    (0.4
    )
    
    
    0.4
    
    
    
    (173.0
    )Accumulated other comprehensive loss
    
    
    (752.0
    )
    
    
    
    
    
    
    
    
    
    
    (752.0
    )Total stockholders equity (deficit)
    
    $
    (503.5
    )
    
    $
    79.9
    
    
    $
    (79.9
    )
    
    $
    (503.5
    )Total liabilities and stockholders equity
(deficit)
    
    $
    1,511.6
    
    
    $
    102.1
    
    
    $
    (103.8
    )
    
    $
    1,509.9
 22




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended March 28, 2010
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    455.7
    
    
    $
    18.5
    
    
    $
    (3.7
    )
    
    $
    470.5Costs and expensesCost of sales
    
    
    379.4
    
    
    
    15.8
    
    
    
    (3.7
    )
    
    
    391.5Selling, general and administrative expenses
    
    
    38.5
    
    
    
    1.2
    
    
    
    
    
    
    
    39.7Total costs and expenses
    
    
    417.9
    
    
    
    17.0
    
    
    
    (3.7
    )
    
    
    431.2Operating income
    
    
    37.8
    
    
    
    1.5
    
    
    
    
    
    
    
    39.3Other income (expense)Interest income
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Interest expense
    
    
    (12.6
    )
    
    
    
    
    
    
    
    
    
    
    (12.6
    )Equity in income (loss) of consolidated
subsidiaries
    
    
    1.5
    
    
    
    
    
    
    
    (1.5
    )
    
    
    Income (loss) before income taxes
    
    
    26.8
    
    
    
    1.5
    
    
    
    (1.5
    )
    
    
    26.8Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    26.8
    
    
    $
    1.5
    
    
    $
    (1.5
    )
    
    $
    26.8
 Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended March 29, 2009
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    377.0
    
    
    $
    17.0
    
    
    $
    (3.7
    )
    
    $
    390.3Costs and expensesCost of sales
    
    
    313.4
    
    
    
    15.1
    
    
    
    (3.7
    )
    
    
    324.8Selling, general and administrative expenses
    
    
    27.3
    
    
    
    1.2
    
    
    
    
    
    
    
    28.5Total costs and expenses
    
    
    340.7
    
    
    
    16.3
    
    
    
    (3.7
    )
    
    
    353.3Operating income
    
    
    36.3
    
    
    
    0.7
    
    
    
    
    
    
    
    37.0Other income (expense)Interest income
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Interest expense
    
    
    (15.0
    )
    
    
    
    
    
    
    
    
    
    
    (15.0
    )Equity in income (loss) of consolidated
subsidiaries
    
    
    0.7
    
    
    
    
    
    
    
    (0.7
    )
    
    
    Income (loss) before income taxes
    
    
    22.2
    
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    22.2Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from continuing operations
    
    
    22.2
    
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    22.2Income (loss) from discontinued operations, net
of tax
    
    
    (4.3
    )
    
    
    
    
    
    
    
    
    
    
    (4.3
    )Net income (loss)
    
    $
    17.9
    
    
    $
    0.7
    
    
    $
    (0.7
    )
    
    $
    17.9
 23




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Cash Flow Statement
Three Months Ended March 28, 2010
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activitiesNet income (loss)
    
    $
    26.8
    
    
    $
    1.5
    
    
    $
    (1.5
    )
    
    $
    26.8Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    12.5
    
    
    
    0.4
    
    
    
    
    
    
    
    12.9Stock compensation expense
    
    
    2.7
    
    
    
    
    
    
    
    
    
    
    
    2.7Income from investments in consolidated subsidiaries
    
    
    (1.5
    )
    
    
    
    
    
    
    1.5
    
    
    
    Changes in current assets and liabilities:Trade and other receivables
    
    
    (31.9
    )
    
    
    0.3
    
    
    
    
    
    
    
    (31.6
    )Intercompany accounts receivable
    
    
    3.5
    
    
    
    (0.5
    )
    
    
    (3.0
    )
    
    
    Inventories
    
    
    58.3
    
    
    
    (0.4
    )
    
    
    
    
    
    
    57.9Other current assets
    
    
    (2.6
    )
    
    
    
    
    
    
    
    
    
    
    (2.6
    )Accounts payable, trade
    
    
    28.3
    
    
    
    1.9
    
    
    
    
    
    
    
    30.2Intercompany accounts payable
    
    
    0.5
    
    
    
    (3.5
    )
    
    
    3.0
    
    
    
    Accrued payroll and employee benefits
    
    
    (2.2
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (2.4
    )Accrued and other liabilities
    
    
    (10.7
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (10.9
    )Accrued contract liabilities
    
    
    (34.2
    )
    
    
    
    
    
    
    
    
    
    
    (34.2
    )Other assets and liabilitieslong-term
    
    
    (8.8
    )
    
    
    
    
    
    
    
    
    
    
    (8.8
    )Net cash provided by (used in) operating activities
    
    
    40.7
    
    
    
    (0.7
    )
    
    
    
    
    
    
    40.0Investing activitiesCapital expenditures
    
    
    (6.7
    )
    
    
    
    
    
    
    
    
    
    
    (6.7
    )Net cash used in investing activities
    
    
    (6.7
    )
    
    
    
    
    
    
    
    
    
    
    (6.7
    )Financing activitiesChanges in restricted cash
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Net cash provided by (used in) financing activities
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Net increase in cash and cash equivalents
    
    
    34.4
    
    
    
    (0.7
    )
    
    
    
    
    
    
    33.7Cash and cash equivalents at beginning of period
    
    
    115.2
    
    
    
    0.8
    
    
    
    
    
    
    
    116.0Cash and cash equivalents at end of period
    
    $
    149.6
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    149.7
 24




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Cash Flow Statement
Three Months Ended March 29, 2009
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activitiesNet income (loss)
    
    $
    17.9
    
    
    $
    0.7
    
    
    $
    (0.7
    )
    
    $
    17.9Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    15.5
    
    
    
    0.4
    
    
    
    
    
    
    
    15.9Stock compensation expense
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    0.5Income from investments in
consolidated subsidiaries
    
    
    (0.7
    )
    
    
    
    
    
    
    0.7
    
    
    
    Changes in current assets and
liabilities:Trade and other receivables
    
    
    (8.5
    )
    
    
    (1.1
    )
    
    
    
    
    
    
    (9.6
    )Intercompany accounts receivable
    
    
    (1.4
    )
    
    
    (0.6
    )
    
    
    2.0
    
    
    
    Inventories
    
    
    (65.0
    )
    
    
    (1.1
    )
    
    
    
    
    
    
    (66.1
    )Other current assets
    
    
    (3.6
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (3.7
    )Accounts payable, trade
    
    
    10.7
    
    
    
    1.4
    
    
    
    
    
    
    
    12.1Intercompany accounts payable
    
    
    0.6
    
    
    
    1.4
    
    
    
    (2.0
    )
    
    
    Accrued payroll and employee
benefits
    
    
    (1.4
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (1.7
    )Accrued and other liabilities
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    
    
    
    
    Accrued contract liabilities
    
    
    (36.7
    )
    
    
    
    
    
    
    
    
    
    
    (36.7
    )Other assets and
liabilities  long-term
    
    
    (2.6
    )
    
    
    1.0
    
    
    
    
    
    
    
    (1.6
    )Net cash provided by (used in)
operating activities
    
    
    (74.8
    )
    
    
    1.8
    
    
    
    
    
    
    
    (73.0
    )Investing activitiesCapital expenditures
    
    
    (6.5
    )
    
    
    (1.8
    )
    
    
    
    
    
    
    (8.3
    )Net cash used in investing activities
    
    
    (6.5
    )
    
    
    (1.8
    )
    
    
    
    
    
    
    (8.3
    )Financing activitiesProceeds from short-term bank debt
    
    
    135.0
    
    
    
    
    
    
    
    
    
    
    
    135.0Proceeds from long-term bank debt
    
    
    25.0
    
    
    
    
    
    
    
    
    
    
    
    25.0Net cash provided by (used in)
financing activities
    
    
    160.0
    
    
    
    
    
    
    
    
    
    
    
    160.0Net increase in cash and cash
equivalents
    
    
    78.7
    
    
    
    
    
    
    
    
    
    
    
    78.7Cash and cash equivalents at
beginning of period
    
    
    86.6
    
    
    
    0.1
    
    
    
    
    
    
    
    86.7Cash and cash equivalents at end of
period
    
    $
    165.3
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    165.4
 25




---



##### 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  Subsequent Events
  26




---



##### 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, 2009 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
      27




---



##### Table of Contents



Commercial Aircraft.
 Military Aircraft.
 Business Jet Aircraft.
   28




---



##### 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.
 29




---



##### Table of Contents



Selling, general and administrative expenses.
 Interest expense, net.
 Income tax benefit (expense).
 Income (loss) from discontinued operations, net of tax.
 Results of Operations
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 28, 2010
    
    
    March 29, 2009
    
    
    $ Change($ in millions)Revenue:Commercial
    
    $
    229.9
    
    
    $
    168.5
    
    
    $
    61.4Military
    
    
    172.9
    
    
    
    146.2
    
    
    
    26.7Business Jet
    
    
    67.7
    
    
    
    75.6
    
    
    
    (7.9
    )Total revenue
    
    $
    470.5
    
    
    $
    390.3
    
    
    $
    80.2Costs and expenses:Cost of sales
    
    
    391.5
    
    
    
    324.8
    
    
    
    66.7Selling, general
and administrative
    
    
    39.7
    
    
    
    28.5
    
    
    
    11.2Total costs and expenses
    
    $
    431.2
    
    
    $
    353.3
    
    
    $
    77.9Operating income
    
    
    39.3
    
    
    
    37.0
    
    
    
    2.3Interest expense, net
    
    
    (12.5
    )
    
    
    (14.8
    )
    
    
    2.3Income tax expense
    
    
    
    
    
    
    
    
    
    
    Income from continuing
operations
    
    $
    26.8
    
    
    $
    22.2
    
    
    $
    4.6Income from
discontinued
operations, net of tax
    
    
    
    
    
    
    (4.3
    )
    
    
    4.3Net income
    
    $
    26.8
    
    
    $
    17.9
    
    
    $
    8.9
 30




---



##### Table of Contents



Comparison of Results of Operations for the Three Months Ended March 28, 2010 and March 29, 2009
 Revenues
 
    
    Commercial revenue increased $61.4 million, or 36%, primarily due to increased
sales for the 747-8 program.
    
    Military revenue increased $26.7 million, or 18% mainly due increased deliveries
for the V-22 and C-130 programs as well as higher spares deliveries for the C-17
program.
    
    Business Jet revenue decreased $7.9 million, or 10%, primarily due to the absence
in 2010 of non-recurring sales for the Cessna Citation Columbus 850.
 Operating income
 Interest expense, net
 Income (loss) from discontinued operations, net of tax
 Critical Accounting Policies
  31




---



##### Table of Contents



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.
    March 28,
    
    
    December 31,2010
    
    
    2009($ in millions)Advances and progress billings
    
    $
    34.2
    
    
    $
    59.4Forward loss
    
    
    
    
    
    
    1.7Other
    
    
    5.8
    
    
    
    13.1Total accrued contract
liabilities
    
    $
    40.0
    
    
    $
    74.2
 32




---



##### Table of Contents



Goodwill
 Intangibles  Goodwill and Other
   Post-Retirement Plans
     33




---



##### Table of Contents



Compensation  Retirement Benefits
 Recent Accounting Pronouncements
   Liquidity and Capital Resources
   34




---



##### Table of Contents



35




---



##### Table of Contents



Credit Agreements and Debt Covenants
    36




---



##### Table of Contents



Non-GAAP Financial Measures.
  Reconciliation of Non-GAAP Measure  Adjusted EBITDA
 For the Three Months EndedMarch 28,
    
    
    March 29,2010
    
    
    2009Net cash provided by (used in) operating activities
    
    $
    40.0
    
    
    $
    (73.0
    )Interest expense, net
    
    
    12.5
    
    
    
    14.8Income tax expense (benefit)
    
    
    
    
    
    
    Stock compensation expense
    
    
    (2.7
    )
    
    
    (0.5
    )Non-cash interest expense
    
    
    (1.6
    )
    
    
    (1.8
    )787 tooling amortization
    
    
    
    
    
    
    0.5Changes in operating assets and liabilities
    
    
    2.4
    
    
    
    107.3EBITDA
    
    $
    50.6
    
    
    $
    47.3Non-recurring investment in Boeing 787 (1)
    
    
    
    
    
    
    3.1Unusual charges & other non-recurring program
costs (2)
    
    
    6.9
    
    
    
    7.2Pension & OPEB curtailment and non-cash expense (3)
    
    
    
    
    
    
    9.6Other (4)
    
    
    3.2
    
    
    
    1.0Adjusted EBITDA
    
    $
    60.7
    
    
    $
    68.2
 
 (1)
    
    Investment in Boeing 787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. Our credit agreement 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
investment that was expensed during the period was excluded from the calculation of Adjusted
EBITDA. 37




---



##### Table of Contents



(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.For the three month periods ended March 28, 2010 and March 29, 2009, we incurred $3.9 million
and $3.1 million, respectively, of non-recurring costs primarily related to a facilities
rationalization initiative and $3.0 million and $0.3 million of non-recurring costs related
to Information Systems implementation initiatives. Additionally, for the three month
period ended March 29, 2009, we recognized an additional $3.8 million in non-recurring
program costs related to the strike at our Nashville facility.(3)
    
    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 three month period ended March 29, 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.(4)
    
    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
 
    
    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.
 38




---



##### Table of Contents



Cash Flow Summary
 For the Three Months EndedMarch 28,
    
    
    March 29,2010
    
    
    2009
    
    
    Change($ in millions)Net income
    
    $
    26.8
    
    
    $
    17.9
    
    
    $
    8.9Non-cash items
    
    
    15.6
    
    
    
    16.4
    
    
    
    (0.8
    )Changes in working capital
    
    
    (2.4
    )
    
    
    (107.3
    )
    
    
    104.9Net cash provided by (used in) operating activities
    
    
    40.0
    
    
    
    (73.0
    )
    
    
    113.0Net cash used in investing activities
    
    
    (6.7
    )
    
    
    (8.3
    )
    
    
    1.6Net cash provided by financing activities
    
    
    0.4
    
    
    
    160.0
    
    
    
    (159.6
    )Net increase in cash and cash equivalents
    
    
    33.7
    
    
    
    78.7
    
    
    
    (45.0
    )Cash and cash equivalents at beginning of period
    
    
    116.0
    
    
    
    86.7
    
    
    
    29.3Cash and cash equivalents at end of period
    
    $
    149.7
    
    
    $
    165.4
    
    
    $
    (15.7
    )
    Off-Balance Sheet Arrangements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  39




---



##### Table of Contents



Interest Rate Risks
   40




---



##### Table of Contents



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
  41




---



##### Table of Contents



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 5.
    
    OTHER INFORMATION
 Compensatory Arrangements of Certain Officers.
  Change in Control Severance Agreements
  42




---



##### Table of Contents



Transaction Bonus Letters
   
 ITEM 6.
    
    EXHIBITS
 (a) Exhibits
 (10.1)*
    
    Transaction Bonus letter agreement between Vought Aircraft
Industries, Inc. and Elmer Doty dated May 6, 2010.(10.2)*
    
    Transaction Bonus letter agreement between Vought Aircraft
Industries, Inc. and Keith Howe dated May 6, 2010.(10.3)*
    
    Transaction Bonus letter agreement between Vought Aircraft
Industries, Inc. and Steve Davis dated May 6, 2010.(10.4)*
    
    Transaction Bonus letter agreement between Vought Aircraft
Industries, Inc. and Kevin McGlinchey dated May 6, 2010.(10.5)*
    
    Transaction Bonus letter agreement between Vought Aircraft
Industries, Inc. and Ronald Muckley dated May 6, 2010.(10.6)*
    
    Change in Control Severance agreement between Vought Aircraft
Industries, Inc. and Kevin McGlinchey dated May 6, 2010.(10.7)*
    
    Change in Control Severance agreement between Vought Aircraft
Industries, Inc. and Ronald Muckley dated May 6, 2010.(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 43




---



##### Table of Contents



SIGNATURES
  Vought Aircraft Industries, Inc.(Registrant)May 7, 2010
    
    /s/ KEITH HOWE(Date)
    
    Vice President and Chief Financial OfficerMay 7, 2010
    
    /s/ MARK JOLLY(Date)
    
    Principal Accounting Officer 44