##### 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 29, 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




---



##### 



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
    
    
    26Item 3 Quantitative And Qualitative Disclosures About Market Risk
    
    
    40Item 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 4 Submission of Matters to a Vote of Security Holders
    
    
    42Item 5 Other Information
    
    
    43Item 6 Exhibits
    
    
    43Signatures
    
    
    44EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



Cautionary Statement Regarding Forward Looking Statements
   
    
    global and domestic financial market conditions and the results of financing efforts;
    
    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 29,2009
    
    
    December 31,(unaudited)
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    165.4
    
    
    $
    86.7Trade and other receivables
    
    
    148.2
    
    
    
    138.6Inventories
    
    
    510.5
    
    
    
    444.4Other current assets
    
    
    8.4
    
    
    
    4.7Total current assets
    
    
    832.5
    
    
    
    674.4Property, plant and equipment, net
    
    
    479.4
    
    
    
    484.3Goodwill
    
    
    527.7
    
    
    
    527.7Identifiable intangible assets, net
    
    
    25.5
    
    
    
    27.2Debt origination costs, net and other assets
    
    
    11.7
    
    
    
    14.0Total assets
    
    $
    1,876.8
    
    
    $
    1,727.6Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    189.1
    
    
    $
    177.0Accrued and other liabilities
    
    
    63.2
    
    
    
    63.7Accrued payroll and employee benefits
    
    
    47.0
    
    
    
    48.7Accrued post-retirement benefits-current
    
    
    42.2
    
    
    
    42.0Accrued pension-current
    
    
    0.6
    
    
    
    0.3Current portion of long-term bank debt
    
    
    140.9
    
    
    
    5.9Accrued contract liabilities
    
    
    164.7
    
    
    
    201.4Total current liabilities
    
    
    647.7
    
    
    
    539.0Long-term liabilities:Accrued post-retirement benefits
    
    
    373.6
    
    
    
    405.3Accrued pension
    
    
    701.7
    
    
    
    710.7Long-term bank debt, net of current portion
    
    
    619.7
    
    
    
    594.0Long-term bond debt
    
    
    270.0
    
    
    
    270.0Other non-current liabilities
    
    
    141.4
    
    
    
    142.7Total liabilities
    
    
    2,754.1
    
    
    
    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 March 29,
2009 and December 31, 2008, respectively
    
    
    0.3
    
    
    
    0.3Additional paid-in capital
    
    
    421.0
    
    
    
    420.5Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    (1.6
    )Accumulated deficit
    
    
    (483.4
    )
    
    
    (501.3
    )Accumulated other comprehensive loss
    
    
    (813.6
    )
    
    
    (852.0
    )Total stockholders equity (deficit)
    
    $
    (877.3
    )
    
    $
    (934.1
    )Total liabilities and stockholders equity (deficit)
    
    $
    1,876.8
    
    
    $
    1,727.6
 See accompanying notes
 4




---



##### Table of Contents



Vought Aircraft Industries, Inc.
 
 Consolidated Statements of Operations
 (unaudited, $ in millions)
 For the Three Months EndedMarch 29,
    
    
    March 30,2009
    
    
    2008Revenue
    
    $
    402.6
    
    
    $
    425.4Costs and expensesCost of sales
    
    
    332.4
    
    
    
    326.3Selling, general and administrative expenses
    
    
    37.5
    
    
    
    54.3Total costs and expenses
    
    
    369.9
    
    
    
    380.6Operating income
    
    
    32.7
    
    
    
    44.8Other income (expense)Interest income
    
    
    0.2
    
    
    
    0.1Other loss
    
    
    
    
    
    
    Equity in loss of joint venture
    
    
    
    
    
    
    (0.4
    )Interest expense
    
    
    (15.0
    )
    
    
    (15.8
    )Income before income taxes
    
    
    17.9
    
    
    
    28.7Income tax expense
    
    
    
    
    
    
    Net income
    
    $
    17.9
    
    
    $
    28.7
 See accompanying notes
 5




---



##### Table of Contents



Vought Aircraft Industries, Inc.
 
 Consolidated Statements of Cash Flows
 (unaudited, $ in millions)
 Three Months EndedMarch 29,
    
    
    March 30,2009
    
    
    2008Operating activitiesNet income
    
    $
    17.9
    
    
    $
    28.7Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    15.9
    
    
    
    16.0Stock compensation expense
    
    
    0.5
    
    
    
    0.6Equity in losses of joint venture
    
    
    
    
    
    
    0.4Loss from asset disposals
    
    
    
    
    
    
    0.3Changes in current assets and liabilities:Trade and other receivables
    
    
    (9.6
    )
    
    
    (57.0
    )Inventories
    
    
    (66.1
    )
    
    
    4.3Other current assets
    
    
    (3.7
    )
    
    
    (4.4
    )Accounts payable, trade
    
    
    12.1
    
    
    
    (1.5
    )Accrued payroll and employee benefits
    
    
    (1.7
    )
    
    
    (4.9
    )Accrued and other liabilities
    
    
    
    
    
    
    (8.9
    )Accrued contract liabilities
    
    
    (36.7
    )
    
    
    19.8Other assets and liabilitieslong-term
    
    
    (1.6
    )
    
    
    (8.6
    )Net cash provided by (used in) operating activities
    
    
    (73.0
    )
    
    
    (15.2
    )Investing activitiesCapital expenditures
    
    
    (8.3
    )
    
    
    (19.0
    )Net cash used in investing activities
    
    
    (8.3
    )
    
    
    (19.0
    )Financing activitiesProceeds from short-term bank debt
    
    
    135.0
    
    
    
    138.0Payments on short-term bank debt
    
    
    
    
    
    
    (138.0
    )Proceeds from long-term bank debt
    
    
    25.0
    
    
    
    Net cash provided by (used in) financing activities
    
    
    160.0
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    78.7
    
    
    
    (34.2
    )Cash and cash equivalents at beginning of period
    
    
    86.7
    
    
    
    75.6Cash and cash equivalents at end of period
    
    $
    165.4
    
    
    $
    41.4
 See accompanying notes
 6




---



##### Table of Contents



Vought Aircraft Industries, Inc.
 
 Notes to the Interim Unaudited Condensed Consolidated Financial Statemen
 Period Ending March 29, 2009
 Note 1  Organization and Basis of Presentation
      7




---



##### Table of Contents



Note 2  Recent Accounting Pronouncements
 Business Combinations
 Employers Disclosures about Postretirement
Benefit Plan Assets
 Note 3  Inventories
   March 29,
    
    
    December 31,2009
    
    
    2008($ in millions)Production costs of contracts in process
    
    $
    1,140.8
    
    
    $
    998.1Finished goods
    
    
    2.4
    
    
    
    2.9Less: unliquidated progress payments
    
    
    (632.7
    )
    
    
    (556.6
    )Total inventories
    
    $
    510.5
    
    
    $
    444.4
 Note 4  Goodwill and
Intangible Assets
  8




---



##### Table of Contents



Note 4  Goodwill and Intangible Assets
 SFAS 142 Goodwill and Other Intangible Assets
    March 29,
    
    
    December 31,2009
    
    
    2008($ in millions)Programs and contracts
    
    $
    137.3
    
    
    $
    137.3Less: accumulated amortization
    
    
    (111.8
    )
    
    
    (110.1
    )Identifiable intangible assets, net
    
    $
    25.5
    
    
    $
    27.2
  ($ in millions)2009
    
    $
    5.12010
    
    
    4.82011
    
    
    2.12012
    
    
    2.12013
    
    
    2.1Thereafter
    
    
    9.3Total remaining amortization of identifiable intangible assets
    
    $
    25.5
 9




---



##### Table of Contents



Note 5  Pension and Other Post-retirement Benefits
  Pension Benefits
    
    
    Other Post-retirement BenefitsThree Months Ended
    
    
    Three Months EndedMarch 29,
    
    
    March 30,
    
    
    March 29,
    
    
    March 30,2009
    
    
    2008
    
    
    2009
    
    
    2008($ in millions)Components of net periodic benefit cost (income):Service cost
    
    $
    4.0
    
    
    $
    4.8
    
    
    $
    1.0
    
    
    $
    1.3Interest cost
    
    
    28.2
    
    
    
    27.3
    
    
    
    6.4
    
    
    
    7.7Expected return on plan assets
    
    
    (31.4
    )
    
    
    (31.1
    )
    
    
    
    
    
    
    Amortization of net (gain) loss
    
    
    9.8
    
    
    
    6.9
    
    
    
    0.4
    
    
    
    1.3Amortization of prior service cost
    
    
    3.1
    
    
    
    3.0
    
    
    
    (6.1
    )
    
    
    (3.8
    )Prior service cost recognized  curtailment
    
    
    1.8
    
    
    
    
    
    
    
    (0.2
    )
    
    
    Plan settlement or curtailment (gain)/loss
    
    
    4.6
    
    
    
    
    
    
    
    3.4
    
    
    
    Net periodic benefit cost
    
    $
    20.1
    
    
    $
    10.9
    
    
    $
    4.9
    
    
    $
    6.5Defined contribution plan cost
    
    $
    4.6
    
    
    $
    4.7
  
    
    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, received a defined contribution benefit. The
agreements provided for a one-time retirement incentive program offered to eligible
employees during 2008. The agreements also provided 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.
    
    Also, during the three months ended March 30, 2008, we announced amendments to medical
plans for two groups of non-represented, current retirees. Effective January 1, 2008,
medical coverage for participants in those two groups is eliminated at age 65 and replaced
with a fixed monthly stipend.
    
    The aforementioned 2008 changes 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 pension plans and a $44.1 million decrease in liability for the OPEB plans
remeasured. These impacts were recorded in the three month period ended June 29, 2008.
 
 10




---



##### Table of Contents




    
    During January of 2009, our 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 have 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, will 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 our pension plans by $1.5 million, decreased our liability for the
OPEB plans by $32.7 million and led to the immediate recognition of $9.6 million of net
non-recurring charges due to a curtailment.
  Note 6 Commitments
 Warranty Reserve.
 :
 WarrantyReserve($ 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
    
    
    (0.5
    )Provisions for warranties
    
    
    0.1Balance at March 29, 2009
    
    $
    15.7Consolidated Balance Sheet classificationAccrued and other liabilities
    
    $
    1.5Other non-current liabilities
    
    $
    14.2
 Note 7 Environmental Contingencies
  11




---



##### Table of Contents



EnvironmentalLiability($ in millions)Balance at December 31, 2007
    
    $
    3.8Environmental costs incurred
    
    
    (0.6
    )Balance at December 31, 2008
    
    
    3.2Environmental costs incurred
    
    
    (0.2
    )Balance at March 29, 2009
    
    $
    3.0Consolidated Balance Sheet classificationAccrued and other liabilities
    
    $
    0.6Other non-current liabilities
    
    $
    2.4
 12




---



##### Table of Contents



Note 8 Other Non-Current Liabilities
  March 29,
    
    
    December 31,2009
    
    
    2008($ in millions)Deferred income from the sale of Hawthorne facility (a)
    
    $
    11.6
    
    
    $
    11.6State of South Carolina grant monies (b)
    
    
    60.3
    
    
    
    61.0State of Texas grant monies
    
    
    35.0
    
    
    
    35.0Deferred workers compensation
    
    
    16.0
    
    
    
    14.9Accrued warranties
    
    
    14.2
    
    
    
    15.6Other
    
    
    4.3
    
    
    
    4.6Total other non-current liabilities
    
    $
    141.4
    
    
    $
    142.7
 
 (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 $11.6 million liability related to the portion of
the Hawthorne facility that we still lease will remain on our balance sheet until the
related contractual obligations are fulfilled or the obligations expire.(b)
    
    With the activation of the South Carolina plant in June 2006, we began
recognizing a portion of the State of South Carolina grant monies as a reduction of
depreciation expense, which amounted to $0.7 million and $0.8 million for the three
months ended March 29, 2009 and March 30, 2008, respectively. Additionally, during the
three month period ended March 30, 2008, we made a required distribution of state grant
proceeds of $2.4 million to our former joint venture, Global Aeronautica. See Note 12 
Investment in Joint Venture. Note 9 Income Taxes
 Accounting for Uncertainty in Income Taxes
 13




---



##### Table of Contents



Note 10  Stockholders Equity
  2001 Stock Option Plan
   WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualExercise
    
    
    TermOptions
    
    
    Price
    
    
    (in Years)Outstanding at December 31, 2008
    
    
    547,100
    
    
    $
    15.35Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    (3,700
    )
    
    
    10.00Exercised
    
    
    
    
    
    
    Outstanding at March 29, 2009
    
    
    543,400
    
    
    $
    15.38
    
    
    
    3.4Vested or expected to vest (a)
    
    
    543,400
    
    
    $
    15.38
    
    
    
    3.4Exercisable at March 29, 2009
    
    
    476,830
    
    
    $
    14.74
    
    
    
    3.3
 Shares Held in Rabbi Trust
  14




---



##### Table of Contents



2006 Incentive Plan
  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
    
    
    (5,187
    )
    
    
    10.00Exercised
    
    
    (15,563
    )
    
    
    10.00Outstanding at March 29, 2009
    
    
    887,700
    
    
    $
    10.00
    
    
    
    7.7Vested or expected to vest (a)
    
    
    744,648
    
    
    
    10.00Exercisable at March 29, 2009
    
    
    614,832
    
    
    
    10.00
    
    
    
    7.7
 
 (a)
    
    Represents outstanding SARs reduced by expected forfeitures.  Restricted Stock Units (RSUs)
  15




---



##### Table of Contents



Grant-dateRSUs
    
    
    Fair-ValueOutstanding at December 31, 2008
    
    
    622,925
    
    
    $
    10.65Granted
    
    
    2,500
    
    
    
    11.96Forfeited or expired
    
    
    (9,687
    )
    
    
    15.10Exercised
    
    
    
    
    
    
    Outstanding at March 29, 2009
    
    
    615,738
    
    
    $
    10.58Vested or expected to vest (a)
    
    
    543,725Exercisable at March 29, 2009
    
    
    177,008
    
    
    $
    10.64
 
 (a)
    
    Represents outstanding RSUs reduced by expected forfeitures. Restricted Shares
  16




---



##### Table of Contents



Note 11  Stock-Based Compensation
  Stock Compensation ExpenseThree Months EndedMarch 29, 2009
    
    
    March 30, 2008($ in millions)Stock Options
    
    $
    
    
    
    $
    Stock appreciation rights (SARs)
    
    
    0.1
    
    
    
    0.2Restricted stock units (RSUs)
    
    
    0.3
    
    
    
    0.3Restricted shares
    
    
    0.1
    
    
    
    0.1Total stock compensation expense
    
    $
    0.5
    
    
    $
    0.6
  Stock Options
 SFAS 123(R) Share-based Payment
 SARs
   17




---



##### Table of Contents



RSUs
  Restricted Shares
  Note 12  Investment in Joint Venture
   Note 13  Long-Term Debt
     18




---



##### Table of Contents



Note 14 Related Party Transactions
     Note 15 Guarantor Subsidiaries
  19




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
March 29, 2009
($ in millions, except share amounts) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    165.3
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    165.4Trade and other receivables
    
    
    139.7
    
    
    
    8.5
    
    
    
    
    
    
    
    148.2Intercompany receivable
    
    
    22.5
    
    
    
    8.9
    
    
    
    (31.4
    )
    
    
    Inventories
    
    
    495.3
    
    
    
    15.2
    
    
    
    
    
    
    
    510.5Other current assets
    
    
    7.8
    
    
    
    0.6
    
    
    
    
    
    
    
    8.4Total current assets
    
    
    830.6
    
    
    
    33.3
    
    
    
    (31.4
    )
    
    
    832.5Property, plant and equipment, net
    
    
    470.0
    
    
    
    9.4
    
    
    
    
    
    
    
    479.4Goodwill
    
    
    464.0
    
    
    
    63.7
    
    
    
    
    
    
    
    527.7Identifiable intangible assets, net
    
    
    25.5
    
    
    
    
    
    
    
    
    
    
    
    25.5Debt origination costs, net and other assets
    
    
    11.6
    
    
    
    0.1
    
    
    
    
    
    
    
    11.7Investment in affiliated company
    
    
    77.1
    
    
    
    
    
    
    
    (77.1
    )
    
    
    Total assets
    
    $
    1,878.8
    
    
    $
    106.5
    
    
    $
    (108.5
    )
    
    $
    1,876.8Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable, trade
    
    $
    183.7
    
    
    $
    5.4
    
    
    $
    
    
    
    $
    189.1Intercompany payable
    
    
    8.9
    
    
    
    22.5
    
    
    
    (31.4
    )
    
    
    Accrued and other liabilities
    
    
    63.0
    
    
    
    0.2
    
    
    
    
    
    
    
    63.2Accrued payroll and employee benefits
    
    
    45.7
    
    
    
    1.3
    
    
    
    
    
    
    
    47.0Accrued post-retirement benefits-current
    
    
    42.2
    
    
    
    
    
    
    
    
    
    
    
    42.2Accrued pension-current
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Current portion of long-term bank debt
    
    
    140.9
    
    
    
    
    
    
    
    
    
    
    
    140.9Accrued contract liabilities
    
    
    164.7
    
    
    
    
    
    
    
    
    
    
    
    164.7Total current liabilities
    
    
    649.7
    
    
    
    29.4
    
    
    
    (31.4
    )
    
    
    647.7Long-term liabilities:Accrued post-retirement benefits
    
    
    373.6
    
    
    
    
    
    
    
    
    
    
    
    373.6Accrued pension
    
    
    701.7
    
    
    
    
    
    
    
    
    
    
    
    701.7Long-term bank debt, net of current portion
    
    
    619.7
    
    
    
    
    
    
    
    
    
    
    
    619.7Long-term bond debt
    
    
    270.0
    
    
    
    
    
    
    
    
    
    
    
    270.0Other non-current liabilities
    
    
    141.4
    
    
    
    
    
    
    
    
    
    
    
    141.4Total liabilities
    
    
    2,756.1
    
    
    
    29.4
    
    
    
    (31.4
    )
    
    
    2,754.1Stockholders 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
    
    
    421.0
    
    
    
    80.3
    
    
    
    (80.3
    )
    
    
    421.0Shares held in rabbi trust
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.6
    )Accumulated deficit
    
    
    (483.4
    )
    
    
    (3.2
    )
    
    
    3.2
    
    
    
    (483.4
    )Accumulated other comprehensive loss
    
    
    (813.6
    )
    
    
    
    
    
    
    
    
    
    
    (813.6
    )Total stockholders equity (deficit)
    
    $
    (877.3
    )
    
    $
    77.1
    
    
    $
    (77.1
    )
    
    $
    (877.3
    )Total liabilities and stockholders equity (deficit)
    
    $
    1,878.8
    
    
    $
    106.5
    
    
    $
    (108.5
    )
    
    $
    1,876.8
 20




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Balance Sheet
December 31, 2008
($ in millions, except share amounts)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    86.6
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    86.7Trade and other receivables
    
    
    131.2
    
    
    
    7.4
    
    
    
    
    
    
    
    138.6Intercompany receivable
    
    
    21.1
    
    
    
    8.3
    
    
    
    (29.4
    )
    
    
    Inventories
    
    
    430.3
    
    
    
    14.1
    
    
    
    
    
    
    
    444.4Other current assets
    
    
    4.2
    
    
    
    0.5
    
    
    
    
    
    
    
    4.7Total current assets
    
    
    673.4
    
    
    
    30.4
    
    
    
    (29.4
    )
    
    
    674.4Property, plant and equipment, net
    
    
    476.3
    
    
    
    8.0
    
    
    
    
    
    
    
    484.3Goodwill
    
    
    464.0
    
    
    
    63.7
    
    
    
    
    
    
    
    527.7Identifiable 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
    
    $
    173.0
    
    
    $
    4.0
    
    
    $
    
    
    
    $
    177.0Intercompany payable
    
    
    8.3
    
    
    
    21.1
    
    
    
    (29.4
    )
    
    
    Accrued and other liabilities
    
    
    63.6
    
    
    
    0.1
    
    
    
    
    
    
    
    63.7Accrued payroll and employee benefits
    
    
    47.1
    
    
    
    1.6
    
    
    
    
    
    
    
    48.7Accrued post-retirement benefits-current
    
    
    42.0
    
    
    
    
    
    
    
    
    
    
    
    42.0Accrued pension-current
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Current portion of long-term bank debt
    
    
    5.9
    
    
    
    
    
    
    
    
    
    
    
    5.9Accrued contract liabilities
    
    
    201.4
    
    
    
    
    
    
    
    
    
    
    
    201.4Total current liabilities
    
    
    541.6
    
    
    
    26.8
    
    
    
    (29.4
    )
    
    
    539.0Long-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
    
    
    142.7
    
    
    
    
    
    
    
    
    
    
    
    142.7Total 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
 21




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended March 29, 2009
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    389.3
    
    
    $
    17.0
    
    
    $
    (3.7
    )
    
    $
    402.6Costs and expensesCost of sales
    
    
    321.0
    
    
    
    15.1
    
    
    
    (3.7
    )
    
    
    332.4Selling, general and administrative expenses
    
    
    36.3
    
    
    
    1.2
    
    
    
    
    
    
    
    37.5Total costs and expenses
    
    
    357.3
    
    
    
    16.3
    
    
    
    (3.7
    )
    
    
    369.9Operating income
    
    
    32.0
    
    
    
    0.7
    
    
    
    
    
    
    
    32.7Other income (expense)Interest income
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Other loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    (15.0
    )
    
    
    
    
    
    
    
    
    
    
    (15.0
    )Equity in income (loss) of consolidated
subsidiaries
    
    
    0.7
    
    
    
    
    
    
    
    (0.7
    )
    
    
    Income (loss) before income taxes
    
    
    17.9
    
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    17.9Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    17.9
    
    
    $
    0.7
    
    
    $
    (0.7
    )
    
    $
    17.9
 Vought Aircraft Industries, Inc.
Consolidating Statement of Operations
Three Months Ended March 30, 2008
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalsRevenue
    
    $
    413.0
    
    
    $
    17.5
    
    
    $
    (5.1
    )
    
    $
    425.4Costs and expensesCost of sales
    
    
    315.6
    
    
    
    15.8
    
    
    
    (5.1
    )
    
    
    326.3Selling, general and administrative expenses
    
    
    53.1
    
    
    
    1.2
    
    
    
    
    
    
    
    54.3Total costs and expenses
    
    
    368.7
    
    
    
    17.0
    
    
    
    (5.1
    )
    
    
    380.6Operating income (loss)
    
    
    44.3
    
    
    
    0.5
    
    
    
    
    
    
    
    44.8Other income (expense)Interest income
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Equity in loss of joint venture
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    (0.4
    )Interest expense
    
    
    (15.8
    )
    
    
    
    
    
    
    
    
    
    
    (15.8
    )Equity in income (loss) of consolidated
subsidiaries
    
    
    0.5
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Income (loss) before income taxes
    
    
    28.7
    
    
    
    0.5
    
    
    
    (0.5
    )
    
    
    28.7Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    28.7
    
    
    $
    0.5
    
    
    $
    (0.5
    )
    
    $
    28.7
 22




---



##### 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
    
    
    
    
    
    
    
    
    
    
    
    0.5Equity in losses of joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from asset disposals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income 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
 23




---



##### Table of Contents



Vought Aircraft Industries, Inc.
Consolidating Cash Flow Statement
Three Months Ended March 30, 2008
($ in millions) (Unaudited)
 Guarantor
    
    
    IntercompanyVought
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activitiesNet income (loss)
    
    $
    28.7
    
    
    $
    0.5
    
    
    $
    (0.5
    )
    
    $
    28.7Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    15.6
    
    
    
    0.4
    
    
    
    
    
    
    
    16.0Stock compensation expense
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Equity in losses of joint venture
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Loss from asset disposals
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Income from investments in consolidated subsidiaries
    
    
    (0.5
    )
    
    
    
    
    
    
    0.5
    
    
    
    Changes in current assets and liabilities:Trade and other receivables
    
    
    (54.8
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    (57.0
    )Intercompany accounts receivable
    
    
    (2.7
    )
    
    
    (1.2
    )
    
    
    3.9
    
    
    
    Inventories
    
    
    4.3
    
    
    
    
    
    
    
    
    
    
    
    4.3Other current assets
    
    
    (4.4
    )
    
    
    
    
    
    
    
    
    
    
    (4.4
    )Accounts payable, trade
    
    
    (1.6
    )
    
    
    0.1
    
    
    
    
    
    
    
    (1.5
    )Intercompany accounts payable
    
    
    1.2
    
    
    
    2.7
    
    
    
    (3.9
    )
    
    
    Accrued payroll and employee benefits
    
    
    (5.1
    )
    
    
    0.2
    
    
    
    
    
    
    
    (4.9
    )Accrued and other liabilities
    
    
    (8.8
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (8.9
    )Accrued contract liabilities
    
    
    19.8
    
    
    
    
    
    
    
    
    
    
    
    19.8Other assets and liabilitieslong-term
    
    
    (8.6
    )
    
    
    
    
    
    
    
    
    
    
    (8.6
    )Net cash provided by (used in) operating activities
    
    
    (15.6
    )
    
    
    0.4
    
    
    
    
    
    
    
    (15.2
    )Investing activitiesCapital expenditures
    
    
    (18.2
    )
    
    
    (0.8
    )
    
    
    
    
    
    
    (19.0
    )Net cash used in investing activities
    
    
    (18.2
    )
    
    
    (0.8
    )
    
    
    
    
    
    
    (19.0
    )Financing activitiesProceeds from short-term bank debt
    
    
    138.0
    
    
    
    
    
    
    
    
    
    
    
    138.0Payments on short-term bank debt
    
    
    (138.0
    )
    
    
    
    
    
    
    
    
    
    
    (138.0
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (33.8
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    (34.2
    )Cash and cash equivalents at beginning of period
    
    
    75.1
    
    
    
    0.5
    
    
    
    
    
    
    
    75.6Cash and cash equivalents at end of period
    
    $
    41.3
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    41.4
 24




---



##### Table of Contents



Note 16 Fair Value Measurements
  
    
    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 17 Comprehensive Income (Loss)
  For the Three Months EndedMarch 29,
    
    
    March 30,2009
    
    
    2008($ in millions)Net income
    
    $
    17.9
    
    
    $
    28.7Other comprehensive income (loss), net of taxPension
    
    
    11.4
    
    
    
    9.9OPEB
    
    
    27.0
    
    
    
    (2.5
    )Total other comprehensive income
    
    $
    56.3
    
    
    $
    36.1
 25




---



##### 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
      26




---



##### Table of Contents



Commercial Aircraft.
 Military Aircraft.
 Business Jet Aircraft.
 Recent Developments
  27




---



##### 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.
 28




---



##### Table of Contents



Interest expense, net.
 Other income (loss).
 Equity in loss of joint venture.
 Income tax benefit (expense).
 Results of Operations
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 29, 2009
    
    
    March 30, 2008
    
    
    $ Change($ in millions)Revenue:Commercial
    
    $
    180.8
    
    
    $
    215.2
    
    
    $
    (34.4
    )Military
    
    
    146.2
    
    
    
    137.9
    
    
    
    8.3Business Jet
    
    
    75.6
    
    
    
    72.3
    
    
    
    3.3Total revenue
    
    $
    402.6
    
    
    $
    425.4
    
    
    $
    (22.8
    )Costs and expenses:Cost of sales
    
    
    332.4
    
    
    
    326.3
    
    
    
    6.1Selling, general and administrative
    
    
    37.5
    
    
    
    54.3
    
    
    
    (16.8
    )Total costs and expenses
    
    $
    369.9
    
    
    $
    380.6
    
    
    $
    (10.7
    )Operating income
    
    
    32.7
    
    
    
    44.8
    
    
    
    (12.1
    )Interest expense, net
    
    
    (14.8
    )
    
    
    (15.7
    )
    
    
    0.9Other (loss)
    
    
    
    
    
    
    
    
    
    
    Equity in loss of joint venture
    
    
    
    
    
    
    (0.4
    )
    
    
    0.4Income tax expense
    
    
    
    
    
    
    
    
    
    
    Net Income
    
    $
    17.9
    
    
    $
    28.7
    
    
    $
    (10.8
    )
 Comparison of Results of Operations for the Three Months Ended March 29, 2009 and March 30, 2008
 Revenues
 
    
    Commercial revenue decreased $34.4 million, or 16% primarily due to decreased sales
for the Boeing 747 program due to the completion of production for the 747-400 model
and the transition to the new 747-8 model.
    
    Military revenue increased $8.3 million, or 6%, primarily due to increased
deliveries on the H-60 and timing of deliveries for the C-17 program.
 29




---



##### Table of Contents




    
    Business Jet revenue increased $3.3 million, or 5%, primarily due to increased
deliveries to Gulfstream and increased non-recurring revenue on the Cessna Columbus 
Model 850 program.
 Operating income
 Interest expense, net
 Critical Accounting Policies
  Revenue Recognition
 Accounting for Performance of
Construction-Type and Certain 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.
 30




---



##### Table of Contents



March 29,
    
    
    December 31,2009
    
    
    2008($ in millions)Advances and progress billings
    
    $
    156.1
    
    
    $
    187.1Forward loss
    
    
    
    
    
    
    6.4Other
    
    
    8.6
    
    
    
    7.9Total accrued contract liabilities
    
    $
    164.7
    
    
    $
    201.4
 Goodwill
 SFAS 142 SFAS 142
   31




---



##### Table of Contents



Post-Retirement Plans
      Employers Accounting for Defined Benefit Pension and Other
Postretirement Plansan Amendment of FASB Statements No. 87, 88, 106 and 132(R)
 32




---



##### Table of Contents



Recent Accounting Pronouncements
 Business Combinations
 Employers Disclosures about Postretirement
Benefit Plan Assets
 Liquidity and Capital Resources
     33




---



##### Table of Contents



Projected Pension Plan Contributions
 Updated toAs previously
    
    
    reflect Treasuryreported in the
    
    
    Department10-K
    
    
    changes(in Millions)Projected contributions2009
    
    
    84.7
    
    
    
    82.22010
    
    
    165.8
    
    
    
    98.12011
    
    
    191.7
    
    
    
    217.12012
    
    
    174.7
    
    
    
    166.82013
    
    
    151.6
    
    
    
    153.8Total 2009-2013
    
    $
    768.5
    
    
    $
    718.0
     34




---



##### Table of Contents



Credit Agreements and Debt Covenants
  35




---



##### Table of Contents



Non-GAAP Financial Measures.
 36




---



##### Table of Contents



Reconciliation of Non-GAAP Measure  Adjusted EBITDA
 For the Three Months EndedMarch 29,
    
    
    March 30,2009
    
    
    2008Net cash provided by (used in) operating activities
    
    $
    (73.0
    )
    
    $
    (15.2
    )Interest expense, net
    
    
    14.8
    
    
    
    15.7Stock compensation expense
    
    
    (0.5
    )
    
    
    (0.6
    )Equity in losses of joint venture
    
    
    
    
    
    
    (0.4
    )Loss from asset sales and other losses
    
    
    
    
    
    
    (0.3
    )Non-cash interest expense
    
    
    (1.8
    )
    
    
    (0.8
    )787 tooling amortization
    
    
    0.5
    
    
    
    Changes in operating assets and liabilities
    
    
    107.3
    
    
    
    61.2EBITDA
    
    $
    47.3
    
    
    $
    59.6Non-recurring investment in Boeing 787 (1)
    
    
    3.1
    
    
    
    16.5Unusual charges & other non-recurring program costs (2)
    
    
    7.2
    
    
    
    1.9(Gain) loss on disposal of property, plant and equipment (3)
    
    
    
    
    
    
    0.3Pension & OPEB curtailment and non-cash expense (4)
    
    
    9.6
    
    
    
    Other (5)
    
    
    1.0
    
    
    
    1.0Adjusted EBITDA
    
    $
    68.2
    
    
    $
    79.3
 
 (1)
    
    Non recurring investment in Boeing 787The Boeing 787 program, described elsewhere in
this quarterly report, is a significant new program for our operations, and has required
substantial start-up costs in recent 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 are expensed in our financial statements over several periods due to their
magnitude and timing. We expect that our current start-up costs in the Boeing 787 program
will decline significantly as the start-up phase of the program and our current related
contractual commitments will be substantially completed during the next few months. In the
future, subject to potential program modifications by our customer, including development of
derivatives and delivery rate increases, we could have additional start-up costs required.
Our credit agreement excludes our significant start-up investment in the Boeing 787 program
because it represents an unusual significant investment in a major new program that is not
indicative of ongoing core operations, and accordingly the investment that has been expensed
during the period is added back to Adjusted EBITDA. Also included is our loss in our joint
venture with Global Aeronautica. Our share of Global Aeronauticas net loss was $0.4 million
for the three month period ended March 30, 2008. On June 10, 2008, we sold our entire equity
interest in Global Aeronautica to Boeing and as a result our adjusted EBITDA calculation for
the three month period ended March 29, 2009 was not impacted by this joint venture. For more
information, please refer to Note 12  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. 37




---



##### Table of Contents



For the three month periods ended March 29, 2009 and March 30, 2008, we incurred $3.1 million
and $1.9 million, respectively, of non-recurring costs primarily related to a facilities
rationalization initiative. 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 and $0.3 million related to Information Systems implementation
costs.(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
FAS 87 and FAS 106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 5  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
    
    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 29,
    
    
    March 30,2009
    
    
    2008
    
    
    Change($ in millions)Net income (loss)
    
    $
    17.9
    
    
    $
    28.7
    
    
    $
    (10.8
    )Non-cash items
    
    
    16.4
    
    
    
    17.3
    
    
    
    (0.9
    )Changes in working capital
    
    
    (107.3
    )
    
    
    (61.2
    )
    
    
    (46.1
    )Net cash used in operating activities
    
    
    (73.0
    )
    
    
    (15.2
    )
    
    
    (57.8
    )Net cash used in investing activities
    
    
    (8.3
    )
    
    
    (19.0
    )
    
    
    10.7Net cash provided by financing activities
    
    
    160.0
    
    
    
    
    
    
    
    160.0Net increase (decrease) in cash and cash equivalents
    
    
    78.7
    
    
    
    (34.2
    )
    
    
    112.9Cash and cash equivalents at beginning of period
    
    
    86.7
    
    
    
    75.6
    
    
    
    11.1Cash and cash equivalents at end of period
    
    $
    165.4
    
    
    $
    41.4
    
    
    $
    124.0
    Off-Balance Sheet Arrangements
  39




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  42




---



##### Table of Contents



ITEM 5. OTHER INFORMATION
 Item 5.02. Departure of Certain Directors or Certain Officers; Appointment of Certain Officers.
    
 ITEM 6. EXHIBITS
 (a) Exhibits
 (10.1)*
    
    Employment agreement between Vought Aircraft Industries, Inc. and Mark Jolly dated February 4, 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 43




---



##### Table of Contents



SIGNATURES
 
 Vought Aircraft Industries, Inc.(Registrant)May 7, 2009

(Date)
    
    
    
    /s/ KEITH HOWE

Vice President and Chief Financial OfficerMay 7, 2009

(Date)
    
    
    
    /s/ MARK JOLLY

Principal Accounting Officer
 44