Vought Reports Fourth Quarter, Year-End 2007 Financial Results

Business Wire, March 13, 2008

2007 Highlights Compared to 2006:

* Revenue was up 5 percent to $1.625.5 million

* Operating income improved $77.8 million

* Adjusted EBITDA increased by $92.9 million

DALLAS -- Vought Aircraft Industries, Inc.:

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1 Non-GAAP measure. A complete definition and reconciliation of non-GAAP measures, identified by the number 1, is provided later in the release.

Vought Aircraft Industries, Inc. today reported financial results for its fourth quarter and year ending Dec. 31, 2007.

Fourth Quarter Results

Revenue for the three months ended Dec. 31, 2007 was $394.9 million, a decrease of $22.7 million or 5 percent, compared with revenue of $417.6 million for the same period last year. Increased commercial and business jet revenue resulting from increased deliveries and price adjustments was offset by decreased military revenue due to nonrecurring items recorded in 2006.

* Commercial revenue increased by $11.3 million or 6 percent due to increased deliveries and price adjustments.

* Military revenue decreased $36.3 million or 22 percent, primarily due to the absence of nonrecurring revenue recorded in 2006 on the Global Hawk program and the completion of other small military programs. This was partially offset by a $14.9 million increase in revenue for the H-60 program due to higher deliveries.

* Business jet revenue increased by approximately $2.3 million or 3 percent primarily due to price adjustments.

Funded backlog increased 3 percent to $3.4 billion at the end of the quarter compared to $3.3 billion for the same period last year, primarily due to increased orders for military programs. Vought's calculation of backlog includes only funded orders, which causes backlog to be substantially lower than the estimated aggregate dollar value of contracts and may not be comparable to others in the industry.

Operating income for the fourth quarter of 2007 was $18.9 million, an increase of $7.7 million compared to the same period last year. Net Income for the fourth quarter of 2007 was $3.1 million, compared to a net loss of $6.3 million for the same period last year. These improvements are due to improved margins for many of programs resulting from cost reduction initiatives, operational improvements, increased prices and higher delivery rates. These improvements were partially offset by continued investment in the 787 program.

Adjusted EBITDA1, as defined in the company's senior secured credit agreement, was $69.9 million for the fourth quarter of 2007, compared to $58.5 million for the same period last year. The $11.4 million increase is driven by improved program margins as discussed above.

Vought generated $33.1 million of Free Cash Flow1 for the fourth quarter of 2007 compared to $75.2 million in 2006. The decrease of $42.1 million is primarily due to continued investment in the 787 program, which resulted in higher inventory balances in the fourth quarter, as well as lower customer advances during the fourth quarter of 2007. Net cash expenditures for the 787 program were $106.2 million for the fourth quarter of 2007 including start-up, capital and production costs.

"Vought's performance continued to improve in 2007. Our financial results demonstrate the sustainability of improvements driven by our operational excellence initiatives," said Vought's President and Chief Executive Officer Elmer Doty. "We continue to drive manufacturing improvements across all of our programs, with a particular focus on our start-up efforts."

Year Ended Results

Revenue for the year ended Dec. 31, 2007 was $1,625.5 million, an increase of $74.6 million or 5 percent, compared with revenue of $1,550.9 million for the same period last year. Excluding $99.0 million of customer settlements recorded in the second quarter of 2006, revenue increased $173.6 million or 12 percent.

* Commercial revenue increased by $95.2 million or 14 percent, due to both increased deliveries and price adjustments. Excluding the second quarter 2006 settlements of $70.0 million, commercial revenue increased $165.2 million or 26 percent.

* Military revenue decreased $30.9 million or 6 percent. Increases of $69.1 million due primarily to higher delivery rates for the H-60 program and timing of deliveries for the C-17 program were offset by a decrease of $100.0 million for non-recurring revenue for the C-5, Global Hawk and 767 tanker programs during 2006 and the completion of other small military programs.

* Business jet revenue increased by approximately $10.3 million or 4 percent primarily due to increased deliveries and price adjustments. Excluding the second quarter 2006 settlements of $29.0 million, business jet revenue increased $39.3 million or 15 percent.

Net income for the year ended Dec. 31, 2007 was $46.3 million, compared to a net loss of $36.7 million for the same period last year. The $83.0 million improvement was primarily due to higher revenue and improved program margins resulting from cost reduction efforts, operational improvements, price increases and higher delivery rates.