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Spirit AeroSystems Holdings, Inc. Reports Fourth Quarter and Full-Year 2007 Financial Results; Full-Year Revenues Grow 20 Percent; Operating Income and EPS In-line With Company Guidance

02/07/2008

- Fourth quarter 2007 revenues grew 15 percent to $980 million; Full-year 2007 Revenues grew 20 percent to $3.9 billion

- 2007 Operating Income grew to $419 million yielding 10.9 percent operating margins, up from 2006 operating margins of negative 1.8 percent

- Full-year 2007 Earnings Per Share grew to $2.13 per share

- Total backlog increased 38 percent from 2006 to $26.5 billion

- Recently selected by Textron's Cessna to provide fuselage and empennage for new Large Cabin Citation business jet

Company Release - 2/7/2008 7:30 AM ET

WICHITA, Kan., Feb. 7 /PRNewswire-FirstCall/ -- Spirit AeroSystems Holdings, Inc. (NYSE: SPR) reported fourth quarter and full-year 2007 financial results in-line with its 2007 operating income and fully diluted earnings per share guidance, citing strong global demand for large commercial aircraft and improved operating efficiencies across the business.

    Table 1.  Summary Financial Results

    ($'s in Millions, except             4th Quarter          Twelve Months
     per share data)                 2007  2006*  Change   2007   2006* Change

    Revenues                        $980    $852   15%   $3,861  $3,208   20%
    Operating Income/(Loss)         $107   ($240)          $419    ($56)
    Operating Income/(Loss) as a
     % of Revenues                  10.9%  (28.2%)         10.9%   (1.8%)
    Net Income/(Loss)                $76    ($69)          $297     $17
    Net Income/(Loss) as a
     % of Revenues                   7.7%   (8.1%)          7.7%    0.5%
    Earnings/(Loss) per Share
     (Fully diluted)               $0.54  ($0.58)         $2.13   $0.14
    Fully Diluted Weighted Avg
     Share Count (Millions)        139.6   120.4          139.3   122.0

    * Results include costs associated with the company's Initial Public
      Offering and the reversal of tax valuation reserves during the fourth
      quarter of 2006.


Spirit's fourth quarter revenues increased to $980 million, up 15 percent from the same period last year while full-year 2007 revenues grew 20 percent to $3.9 billion, up from $3.2 billion. (Table 1)

Operating income increased to $107 million in the fourth quarter 2007, up from an operating loss of $240 million in the same period a year ago. Fourth quarter 2007 operating income includes $5 million, or $0.02 per fully diluted share, of expense related to the company's evaluation of Airbus' European manufacturing sites. 2006 fourth quarter operating loss includes $330 million of expense associated with the company's initial public offering (IPO) which occurred in November 2006. Full-year 2007 operating income grew to $419 million yielding 10.9 percent operating margins for the year including $5 million or $0.02 per fully diluted share of expense related to the company's evaluation of Airbus sites and $9.6 million, or $0.05 per fully diluted share, of expense related to the company's follow-on stock offering in May 2007. 2006 full-year operating loss was $56 million and included $330 million of expense associated with the company's initial public offering.

Spirit's fourth quarter 2007 net income was $76 million, or $0.54 per fully diluted share, up from a net loss of $69 million in the same period of 2006. Full-year net income for 2007 grew to $297 million, or $2.13 per fully diluted share, up from $17 million, or $0.14 per fully diluted share for full-year 2006.

IPO-related costs reduced 2006 net income by $209 million, or $1.74 per fully diluted share in the fourth quarter, and $1.71 per fully diluted share for the full-year 2006 as weighted average share counts for the quarter and the full year varied. Partially offsetting the IPO costs in 2006 was the release of a previously established tax valuation allowance of $75 million, or $0.62 per fully diluted share in the fourth quarter, and $42 million, or $0.34 per fully diluted share for the full-year 2006.

"I am pleased with the progress our company has made in 2007," said President and Chief Executive Officer Jeff Turner. "In our first full year as a public company and our second full year as a stand alone business, we successfully implemented our strategy as we executed our backlog and developed new products. We gained new customers in new markets while expanding the company's global design and manufacturing footprint. We made solid progress establishing the Spirit brand globally while demonstrating our commitment to grow the business consistent with long-term value creation," Turner continued. "Cessna's recent selection of Spirit as the supplier for the fuselage and empennage on the new Cessna Large Cabin Citation business jet demonstrates the value we bring to the industry and our customers," Turner added. "I continue to be pleased with our ongoing efforts on the 787 program. Specifically, our structures' design and build efforts are progressing well as we continue to work with our supply chain to prepare for higher rate production. As we move into 2008 and beyond, we expect to continue to diversify our business while working to deliver strong financial performance."

Spirit's backlog during the quarter increased 13 percent from $23.5 billion to $26.5 billion, as combined net orders for 1,070 aircraft at Boeing and Airbus outpaced their combined deliveries of 235 aircraft. Spirit's backlog is calculated based on contractual prices for products and volumes from the published firm order backlogs of Boeing, Airbus, and other customers.

Spirit updated its contract profitability estimates during the fourth quarter of 2007 which resulted in a $3.5 million favorable cumulative catch-up adjustment. Comparatively, fourth quarter 2006 results included a $22 million favorable cumulative catch-up adjustment. For full-year 2007, approximately $13 million of favorable changes in contract estimates were recognized which related to 2005 and 2006 revenues. For the full-year 2006, approximately $59 million of favorable changes in contract estimates were recognized related to 2005 revenues.

Cash flow from operations was $73 million for the fourth quarter and $180 million for full-year 2007 as the company continued to invest in the 787 program and other development programs. Spirit did not achieve its previously issued 2007 cash flow from operations guidance due to inventory build beyond expectations and delays in completing negotiations for certain contractual matters. Investments in capital expenditures totaled $288 million for the year as the company made planned investments in property, plant and equipment to increase production rates and support the start-up of the 787 program. (Table 2)

    Table 2.  Cash Flow and Liquidity
                                           4th Quarter     Twelve Months
    ($'s in Millions)                     2007     2006    2007     2006

    Cash Flow from Operations             $73     ($52)    $180     $274
    Purchases of Property, Plant &
     Equipment                           ($60)   ($110)   ($288)   ($343)

                                                          As of    As of
                                                         Dec 31,   Dec 31,
    Liquidity                                              2007     2006

    Cash                                                   $133     $184
    Current Portion of Long-term Debt
     plus Long-term Debt                                   $595     $618


Cash balances at the end of the year were $133 million, down $51 million from a year ago, reflecting planned investment in Spirit's core business, primarily for the 787 program. Spirit has an existing $400 million revolving credit facility with a group of banks of which $388 million was available to the company at year-end 2007. Debt balances at the end of the fourth quarter were $595 million, down $23 million from year-end 2006.

2008 Outlook

Spirit previously issued 2008 revenue guidance of approximately $4.7 billion, or 21 percent higher than 2007 revenues. The projection was based on previously issued 2008 Boeing delivery guidance of 480-490 aircraft and internal Spirit forecasts for Airbus and other products. Spirit's revenue guidance assumed delivery of approximately forty-five 787 ship sets from Spirit to Boeing. On January 16, 2008, Boeing announced an additional three month schedule shift in first flight and shifted first delivery to early 2009. Presently, Spirit and Boeing are jointly assessing the impact of this announcement on Spirit's 2008 787 deliveries to Boeing. A reduction in Spirit's 2008 787 ship set deliveries would likely result in lower than forecasted revenues and earnings for the year. Major focus areas for Spirit on the 787 program continue to be solidifying the supply base, accommodating engineering changes, and timely receipt of systems and wiring for installation. (Table 3)

    Table 3.  Financial Outlook
                                  2007 Actual    2008 Guidance    Change

    Revenues                         $3.9B          ~$4.7B         ~21%

    Earnings Per Share
     (Fully Diluted)                 $2.13       $2.30 - $2.40    8% - 13%

    Effective Tax Rate
     (% Pre-Tax Earnings)            29.3%        33% - 34%*     370 - 470 BPS

    * Effective tax rate guidance among other factors, assumes the benefit of
      an extension to the U.S. research tax credit.


Assuming a $4.7 billion revenue base, earnings per share for 2008 are expected to be between $2.30 and $2.40 per share as increased volumes on large commercial aircraft programs and improved operating efficiencies increase profitability.

Discussions between Spirit and Boeing concerning the impact of 787 schedule shifts to Spirit's 2008 cash flow are continuing. The company expects to provide cash flow guidance upon completion of the discussions. Spirit is also evaluating alternatives for securing additional financing to meet potential liquidity needs.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements that reflect the plans and expectations of Spirit AeroSystems Holdings, Inc. To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project," "continue," or other similar words. These statements reflect Spirit AeroSystems Holdings, Inc.'s current view with respect to future events and are subject to risks and uncertainties, both known and unknown. Such risks and uncertainties may cause the actual results of Spirit AeroSystems Holdings, Inc. to vary materially from those anticipated in forward-looking statements, and therefore we caution investors not to place undue reliance on them. Potential risks and uncertainties include, but are not limited to: our customers' aircraft build rates; the ability to enter into supply arrangements with additional customers and satisfy performance requirements under existing contracts; any adverse impact on our customers' production of aircraft; the success and timely progression of our customers' new programs including, but not limited to The Boeing Company's 787 aircraft program; future levels of business in the aerospace and commercial transport industries; competition from original equipment manufacturers and other aerostructures suppliers; the effect of governmental laws; the effect of new commercial and business aircraft development programs; the cost and availability of raw materials; the ability to recruit and retain highly skilled employees and relationships with unions; spending by the United States and other governments on defense; the continuing ability to operate successfully as a stand alone company; the outcome of ongoing or future litigation and regulatory actions; exposure to potential product liability claims; and our ability to obtain adequate financing on acceptable terms to meet our capital needs. Additional information as to factors that may cause actual results to differ materially from our forward-looking statements can be found in Spirit AeroSystems Holdings, Inc.'s filings with the United States Securities and Exchange Commission. Spirit AeroSystems Holdings, Inc. undertakes no obligation and does not intend to update publicly any forward-looking statements after the date of this press release, except as required by law.

                                   Appendix

    Segment Results
    Fuselage Systems

Fuselage Systems segment revenues for the fourth quarter of 2007 were $462 million, up 17 percent over the same period last year as deliveries to Boeing increased, revenue milestones on the CH-53K Helicopter were achieved, and non-recurring work statement revenues increased. Full-year 2007 revenues were $1.8 billion, up 14 percent from full-year 2006 on higher production volume and increased non-recurring work statement. Operating margins for the fourth quarter of 2007 were 16.1 percent reflecting increased R&D expense on new programs and inefficiencies due to supply chain disruption which resulted in a negative $4 million cumulative catch-up adjustment. Fuselage Systems posted full-year 2007 operating margins of 17.7 percent. Fourth quarter and full-year 2006 segment operating margins were significantly impacted by IPO-related expenses. Adjusted segment operating margins are presented in the company's fourth quarter and full-year 2006 financial news release issued on February 8, 2007.

Propulsion Systems

Propulsion Systems segment revenues for the fourth quarter of 2007 were $265 million, up 21 percent over the same period last year as deliveries to Boeing and non-recurring revenues increased. Full-year 2007 revenues were $1.1 billion, up 20 percent from full-year 2006 on higher production volume and non-recurring work statement increases. Operating margins for the fourth quarter of 2007 were 16.6 percent reflecting continued strong performance across programs. Propulsion Systems posted full-year 2007 operating margins of 16.4 percent. Fourth quarter and full-year 2006 segment operating margins were significantly impacted by IPO-related expenses. Adjusted segment operating margins are presented in the company's fourth quarter and full-year 2006 financial news release issued on February 8, 2007.

Wing Systems

Wing Systems segment revenues for the fourth quarter of 2007 were $247 million, up 8 percent over the same period last year as deliveries to Boeing and Airbus increased. Full-year 2007 revenues were $986 million, up 37 percent from full-year 2006. 2007 full-year revenues increased on higher production volume and include a full-year of revenues from Spirit Europe which was acquired on April 1, 2006. Operating margins for the fourth quarter of 2007 were 14.6 percent reflecting expected supply chain benefits from global sourcing and improved factory performance which resulted in a favorable $5 million cumulative catch-up adjustment and reduced R&D expense for new programs. Wing Systems posted full-year 2007 operating margins of 11.3 percent. Fourth quarter and full-year 2006 segment operating margins were significantly impacted by IPO-related expenses. Adjusted segment operating margins are presented in the company's fourth quarter and full-year 2006 financial news release issued on February 8, 2007.

    Table 4.  Segment Reporting

    ($'s in Millions,              4th Quarter              Twelve Months
     except margin percent)  2007   2006    Change      2007   2006(1)  Change

    Segment Revenues
       Fuselage Systems    $461.5   $395.9   16.6%  $1,790.7  $1,570.0  14.1%
       Propulsion Systems  $265.1   $218.9   21.1%  $1,063.6    $887.7  19.8%
       Wing Systems        $247.4   $229.0    8.0%    $985.5    $720.3  36.8%
       All Other             $6.4     $8.0  (20.0%)    $21.0     $29.7 (29.3%)
    Total Segment
     Revenues              $980.4   $851.8   15.1%  $3,860.8  $3,207.7  20.4%

    Segment
     Earnings/(Loss) from
     Operations
       Fuselage Systems     $74.4   ($95.8)    NM     $317.6    $112.5    NM
       Propulsion Systems   $44.0   ($66.7)    NM     $174.2     $33.7    NM
       Wing Systems         $36.2   ($18.8)    NM     $111.3     $11.8    NM
       All Other             $0.7     $1.0     NM       $2.5      $4.3    NM
    Total Segment
     Operating
     Earnings/(Loss)       $155.3  ($180.3)    NM     $605.6    $162.3    NM

    Unallocated Corporate
     SG&A Expense          ($47.3)  ($61.9)    NM    ($181.6)  ($216.5)   NM
    Unallocated Research &
     Development Expense    ($1.3)    $1.8     NM      ($4.8)    ($2.1)   NM
    Total Earnings/(Loss)
     from Operations       $106.7  ($240.4)    NM     $419.2    ($56.3)   NM

    Segment Operating
     Earnings as % of
     Revenues
       Fuselage Systems     16.1%   (24.2%)    NM       17.7%     7.2%    NM
       Propulsion Systems   16.6%   (30.5%)    NM       16.4%     3.8%    NM
       Wing Systems         14.6%    (8.2%)    NM       11.3%     1.6%    NM
       All Other            10.9%    12.5%     NM       11.9%    14.5%    NM
    Total Segment
     Operating
     Earnings/(Loss) as
     % of Revenues          15.8%   (21.2%)    NM       15.7%     5.1%    NM

    Total Operating
     Earnings/(Loss) as
     % of Revenues          10.9%   (28.2%)    NM       10.9%    (1.8%)   NM


    (1) Includes Spirit Europe since acquisition on April 1, 2006 and costs
        associated with the company's Initial Public Offering and the reversal
        of tax valuation reserves during the fourth quarter of 2006.



                           Spirit Ship Set Deliveries
                         (BASED ON FUSELAGE DELIVERIES)

                      2006 Spirit AeroSystems Deliveries

                  1st Qtr    2nd Qtr  3rd Qtr   4th Qtr   Total 06
    B737               64         77       84        77        302
    B747                3          3        3         4         13
    B767                3          3        3         3         12
    B777               14         16       16        19         65
    Total              84         99      106       103        392

    A320                0         81       74        86        241
    A330/340            0         33       17        23         73
    A380                0          4        0         0          4
    Total(1)            0        118       91       109        318

    Hawker 850XP(1)     0         12       15        24         51

    Total Spirit       84        229      212       236        761

    (1) Deliveries associated with Airbus and Hawker products were acquired
        with Spirit Europe on April 1, 2006.


                      2007 Spirit AeroSystems Deliveries

                  1st Qtr    2nd Qtr  3rd Qtr   4th Qtr   Total 07
    B737               83         85       84        79        331
    B747                5          4        5         4         18
    B767                3          4        3         3         13
    B777               21         21       21        20         83
    B787*               0          1        0         0          1
    Total             112        115      113       106        446

    A320               93         84       91        91        359
    A330/340           22         21       22        20         85
    A380                0          0        2         3          5
    Total             115        105      115       114        449

    Hawker 850XP       16         15       17        20         68

    Total Spirit      243        235      245       240        963

    * Full-Revenue Units Only, Does not include Static and Fatigue test
      units



                        Spirit AeroSystems Holdings, Inc.
                     Consolidated Statements of Income (Loss)

                                       For the Three         For the Twelve
                                       Months Ended           Months Ended
                                  December     December    December  December
                                  31, 2007     31, 2006    31, 2007  31, 2006
                                 (unaudited) (unaudited) (unaudited) (audited)
                                       ($ in millions, except per share data)

    Net Revenues                     $980.4      $851.8    $3,860.8  $3,207.7
     Operating costs and
      expenses:
     Cost of sales                    809.0     1,007.6     3,197.2   2,934.3
     Selling, general and
      administrative                   49.8        65.0       192.1     225.0
     Research and development          14.9        19.6        52.3     104.7
        Total Costs and Expenses      873.7     1,092.2     3,441.6   3,264.0
        Operating Income (Loss)       106.7      (240.4)      419.2     (56.3)
     Interest expense and financing
      fee amortization                 (8.7)      (15.3)      (36.8)    (50.1)
     Interest income                    6.2         8.1        29.0      29.0
     Other income, net                  3.3         2.3         8.4       5.9
        Income From Continuing
         Operations Before Income
         Taxes                        107.5      (245.3)      419.8     (71.5)
     Income tax provision             (32.0)      175.9      (122.9)     88.3
        Net Income (Loss)             $75.5      $(69.4)     $296.9     $16.8

    Earnings (loss) per share
    Basic                             $0.55      $(0.58)      $2.21     $0.15
    Shares                            136.7       120.4       134.5     115.6

    Diluted                           $0.54      $(0.58)      $2.13     $0.14
    Shares                            139.6       120.4       139.3     122.0



                        Spirit AeroSystems Holdings, Inc.
                          Consolidated Balance Sheets

                                                  December 31,    December 31,
                                                     2007             2006
                                                  (unaudited)       (audited)
                                                         ($ in millions)
    Current assets
    Cash and cash equivalents                       $133.4            $184.3
    Accounts receivable, net                         159.9             200.2
    Other receivable                                 109.5              43.0
    Inventory, net                                 1,343.2             882.2
    Prepaid expenses                                  14.2              20.8
    Income tax receivable                              9.6              21.7
    Deferred tax asset - current                      67.3              68.3
    Other current assets                               6.3               -
         Total current assets                      1,843.4           1,420.5
    Property, plant and equipment, net               963.8             773.8
    Long-term receivable                             123.0             191.5
    Pension assets                                   318.7             207.3
    Deferred tax asset - non-current                  30.5              39.1
    Other assets                                      61.1              90.0
         Total assets                             $3,340.5          $2,722.2

    Current liabilities
    Accounts payable                                $362.6            $339.1
    Accrued expenses                                 163.9             157.4
    Profit sharing/ deferred comp                     18.7              28.5
    Current portion of long-term debt                 16.0              23.9
    Deferred revenue liability                       109.9              20.8
    Income taxes payable                               2.5               -
    Other short-term liabilities                       1.4               -
         Total current liabilities                   675.0             569.7
    Long-term debt                                   579.0             594.3
    Advance payments                                 653.4             587.4
    Pension/ OPEB obligation                          43.0              53.7
    Deferred tax liability                            23.7               -
    Other liabilities                                 99.2              58.1
    Shareholders' equity
    Preferred stock, par value $0.01,
     10,000,000 shares authorized, no
     shares issued and outstanding                     -                 -
    Common stock, Class A par value
     $0.01, 200,000,000 shares
     authorized, 102,693,058 and
     63,345,834 issued and outstanding,
     respectively                                      1.0               0.6
    Common stock, Class B par value
     $0.01, 150,000,000 shares
     authorized, 36,826,434 and
     71,351,347 shares issued and
     outstanding, respectively                         0.4               0.7
    Additional paid-in capital                       924.6             858.7
    Accumulated other comprehensive income           118.3              72.5
    Retained earnings / (deficit)                    222.9             (73.5)
         Total shareholders' equity                1,267.2             859.0
         Total liabilities and
          shareholders' equity                    $3,340.5          $2,722.2



                        Spirit AeroSystems Holdings, Inc.
                      Consolidated Statements of Cash Flows

                                                    For the          For the
                                                     Twelve           Twelve
                                                     Months           Months
                                                     Ended            Ended
                                                    December         December
                                                    31, 2007         31, 2006
                                                  (unaudited)       (audited)
                                                         ($ in millions)
    Operating activities
    Net Income                                      $296.9             $16.8
    Adjustments to reconcile net income
     to net cash provided by operating
     activities
       Depreciation expense                           97.4              52.8
       Amortization expense                            7.6              12.0
       Accretion of long-term receivable             (21.1)            (22.0)
       Employee stock compensation expense            33.0             182.3
       Excess tax benefits from share-
        based payment arrangements                   (34.0)            (15.3)
       Gain/loss from foreign currency
        transactions                                  (2.1)              -
       Gain/Loss on disposition of assets              1.0               0.9
       Deferred taxes                                  9.1            (109.8)
       Pension income, net                           (20.2)            (23.5)

    Changes in assets and liabilities,
     net of acquisition
       Accounts receivable                            20.5             (41.9)
       Inventory, net                               (458.9)           (318.6)
       Other current assets                            6.6             (10.5)
       Accounts payable and accrued liabilities       24.9             149.4
       Profit sharing/deferred compensation           (9.8)              5.5
       Customer advances                             123.4             400.0
       Income taxes payable                           45.9              (7.9)
       Deferred revenue and other deferred
        credits                                       70.4               -
       Other                                         (10.5)              3.4
           Net cash provided by
            operating activities                     180.1             273.6

    Investing Activities
    Purchase of property, plant and equipment       (288.2)           (343.2)
    Proceeds from sale of assets                       0.3               0.3
    Acquisition of business, net of cash
     acquired                                          -              (145.4)
    Capital expense reimbursement                     45.5               -
    Financial derivatives                              3.3               4.7
    Other                                              -                10.0
           Net cash (used in) investing
            activities                              (239.1)           (473.6)

    Financing Activities
    Proceeds from short-term debt                      -                85.0
    Payments on short-term debt                        -               (85.0)
    Principal payments of debt                       (24.7)           (124.0)
    Excess tax benefits from share-based
     payment arrangements                             34.0              15.3
    Equity issuance costs                              -               249.3
    Debt issuance costs                                -                (0.8)
    Executive stock
     investments/(repurchases)                      (1.0)                1.1
           Net cash provided by
            financing activities                     8.3               140.9
    Effect of exchange rate changes on
     cash and cash equivalents                      (0.2)                2.1
           Net (decrease) in cash and
            cash equivalents for the period        (50.9)              (57.0)
    Cash and cash equivalents, beginning
     of the period                                 184.3               241.3
    Cash and cash equivalents, end of the
     period                                       $133.4              $184.3

SOURCE Spirit AeroSystems Holdings, Inc.

Contact: investors, Phil Anderson, +1-316-523-1797, or media, Sam Marnick, +1-316-523-3330, both of Spirit AeroSystems Holdings, Inc.
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