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As filed with the Securities and Exchange Commission on July 17, 2008

Registration No. 333-150977



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


VOUGHT AIRCRAFT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware   3728   80-0183704
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (IRS Employer
Identification No.)

201 East John Carpenter Freeway
Tower 1, Suite 900
Irving, TX 75062
(972) 946-2011
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

ELMER L. DOTY
President and Chief Executive Officer
201 East John Carpenter Freeway
Tower 1, Suite 900
Irving, TX 75062
(972) 946-2011
(Name, address, including zip code, and telephone number, including area code, of agent for service)


    Copies to:    
MARC D. JAFFE, ESQ.
PATRICK H. SHANNON, ESQ.
JASON M. LICHT, ESQ.

Latham & Watkins LLP
555 11th Street, NW, Suite 1000
Washington, DC 20004
(202) 637-2200
  KEVIN P. MCGLINCHEY, ESQ.
Vought Aircraft Industries, Inc.
201 East John Carpenter Freeway
Tower 1, Suite 900
Irving, TX 75062
(972) 946-2011
  JOHN H. COBB, ESQ.
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005-1413
(212) 530-5100

         Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.    o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                                      

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                                      

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                                      

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company o

         The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




The information contained in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling stockholders are soliciting offers to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated July 17, 2008

PROSPECTUS

                           Shares

GRAPHIC

VOUGHT AIRCRAFT HOLDINGS, INC.

Common Stock


This is the initial public offering of the common stock of Vought Aircraft Holdings, Inc. We are offering                     shares of our common stock and the selling stockholders identified in this prospectus are offering                     shares. We will not receive any proceeds from the sale of shares held by the selling stockholders. No public market currently exists for our common stock.

We intend to apply to list our common stock on The New York Stock Exchange under the symbol "VTC." We anticipate that the initial public offering price will be between $        and $        per share.

Investing in our common stock involves risks. See "Risk Factors"
beginning on page 16 of this prospectus.

 
  Per Share
  Total
Price to the public   $     $  
Underwriting discounts and commissions   $     $  
Proceeds to us (before expenses)   $     $  
Proceeds to selling stockholders (before expenses)   $     $  

We and the selling stockholders have granted the underwriters a 30-day option to purchase an additional                   and                   shares of common stock, respectively, on the same terms and conditions set forth above if the underwriters sell more than                         shares of common stock in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares on or about                     , 2008.


LEHMAN BROTHERS   GOLDMAN, SACHS & CO.   JPMORGAN

                     , 2008


 

[INSIDE FRONT COVER]

 

[Artwork to come]



TABLE OF CONTENTS

 
  Page
Prospectus Summary   1
Risk Factors   16
Special Note Regarding Forward-Looking Statements   34
Use of Proceeds   35
Dividend Policy   35
Capitalization   36
Dilution   37
Selected Consolidated Financial Data   39
Management's Discussion and Analysis of Financial Condition and Results of Operations   41
Business   64
Management   79
Compensation Discussion and Analysis   86
Certain Relationships and Related Transactions   100
Principal and Selling Stockholders   103
Description of Capital Stock   105
Shares Eligible for Future Sale   108
Certain United States Federal Income Tax Considerations to Non-U.S. Holders   110
Underwriting   114
Industry and Market Data   121
Legal Matters   121
Experts   121
Where You Can Find More Information   121
Index to Financial Statements   F-1

        You should rely only on the information contained in this prospectus and any free-writing prospectuses that we authorize to be distributed to you. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock, and we have no duty to update this information. Our business, financial conditions, results of operations and prospects may have changed since that date.

        Unless otherwise indicated, information contained in this prospectus concerning the aerospace industry and the related market, including our general expectations and market position, market opportunity and market share, is based on information from independent industry analysts and third party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third party sources, as well as our own management's experience in the industry, and are based on assumptions made by us based on such data and our knowledge of such industry and markets, which we believe to be reasonable. None of the sources cited in this prospectus has consented to the inclusion of any data from its reports, nor have we sought their consent. Our estimates have not been verified by any independent source, and we have not independently verified any third party information. In addition, while we believe information regarding our market position, market opportunity and market share included in this prospectus is generally reliable, such information is inherently imprecise. Such data involves risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors."

        Until and including                    , 2008, 25 days after the commencement of this offering, all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section describing the risks of investing in our common stock under the caption "Risk Factors" and our consolidated financial statements and related notes included elsewhere in this prospectus before making an investment decision. Some of the statements in this summary constitute forward-looking statements. For more information, please see "Special Note Regarding Forward-Looking Statements." Except as otherwise indicated or unless the context requires otherwise, the terms "Vought," the "Company," "we," "our" and "us" refer to Vought Aircraft Holdings, Inc. together with each of its subsidiaries after giving effect to the merger described in the first bullet of the second paragraph on page 10 of this prospectus.


Our Company

Overview

        We are a leading global manufacturer of aerostructure products for commercial, military and business jet aircraft. We develop and manufacture a wide range of complex aerostructures such as fuselages, wing and tail assemblies, engine nacelles, flight control surfaces as well as helicopter cabins. Our diverse and long-standing customer base consists of the leading aerospace original equipment manufacturers, or OEMs, including Airbus, Bell Helicopter, Boeing, Cessna, Gulfstream, Hawker Beechcraft, Lockheed Martin, Northrop Grumman and Sikorsky, as well as the U.S. Air Force. We believe that our new product and program development expertise, engineering and composite capabilities, the importance of the products we supply and the advanced manufacturing capabilities we offer make us a critical partner to our customers. We collaborate with our customers and use the latest technologies to address their needs for complex, highly engineered aerostructure components and subsystems. Our products are used on many of the largest and longest running programs in the aerospace industry, including the Airbus 330/340, Boeing 747, 767, 777 and C-17 Globemaster III, Lockheed Martin C-130, Gulfstream IV and V families of aircraft, as well as significant derivative aircraft programs such as the 747-8. We are also a key supplier to our customers on newer platforms, which we believe have high growth potential, such as the Boeing 787 Dreamliner, Global Hawk unmanned aerial vehicle ("UAV"), V-22 Osprey, H-60 series of helicopters, which we refer to as Black Hawk, and the KC-45A military tanker program.

        We have a diverse revenue base with sales to the commercial, military and business jet markets representing 49%, 33% and 18% of our 2007 total revenues, respectively. Most of our 2007 revenues were generated under long-term contracts and nearly 90% of our 2007 revenues were generated on programs on which we are the sole-source provider. Our customers typically place orders well in advance of required deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was approximately $3.4 billion and $3.9 billion at December 31, 2007 and March 30, 2008, respectively. Our calculation of backlog includes only firm orders from our OEM customers for commercial and business jet programs and funded orders for government programs, which causes our backlog to be substantially lower than the estimated aggregate dollar value of our contracts and may not be comparable to others in the industry.

        We have significant technological and engineering expertise with the latest generation of composite materials, which we believe was a key factor in our selection as one of the primary structural partners for the 787. The 787 is Boeing's new composite commercial wide body program and we play a key role in this program as the designer and supplier of a significant portion of the 787 fuselage. Since the 787 program was launched in April 2004, Boeing has received over 890 orders from more than 50 customers worldwide, making it the fastest-selling new commercial aircraft in history.

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        The following table summarizes our major programs.

Customer / Aircraft

  Main Products
  Sole-Source(1)
  Year Program
Commenced(2)

    Commercial Aircraft        
Airbus            
  A330/340   Upper skin panel assemblies, center spar and midrear spar, mid and outboard leading edge assemblies   ü   1988
  A340-500/600   Upper skin panel, stringers, center spar and midrear spar, mid and outboard leading edge assemblies   ü   1998
Boeing            
  747   Fuselage panels and empennage (vertical stabilizer, horizontal stabilizer, aft body section)   ü   1966
  767   Wing center section, horizontal stabilizer and aft fuselage section   ü   1980
  777   Inboard flaps, spoilers and spare requirements   ü   1993
  787   Composite aft fuselage and integrated systems   ü   2005
    Military Aircraft        
Airbus/Boeing            
  KC-45A(3)   Comparable to products provided for the A330/767, respectively   ü    
Bell/Boeing            
  V-22 Osprey   Fuselage skin panels, empennage (sole-source) and ramp door assemblies       1993
Boeing            
  C-17 Globemaster III   Empennage and nacelle components   ü   1983
Lockheed Martin            
  C-130J Hercules   Empennage   ü   1953
Northrop Grumman            
  E-2 Hawkeye   Bond assemblies, detail fabrication and machine parts for outer wing panels and fuselage   ü   2000
  Global Hawk   Integrated composite wing   ü   1999
Sikorsky            
  H-60 Black Hawk   Cabin structure       2004
U.S. Air Force            
  C-5 Galaxy   Flaps, slats, elevators, wing tips and panels   ü   2002
    Business Jet Aircraft        
Cessna            
  Citation X   Upper and lower wing skin assemblies   ü   1992
Gulfstream            
  Gulfstream IV Family   Nacelle components and wing boxes   ü   1983
  Gulfstream V Family   Integrated wings   ü   1993
Hawker Beechcraft            
  Hawker 800   Nacelle components   ü   1981

(1)
Indicates programs where we are currently the sole provider of the structures we provide for that program.

(2)
Indicates approximate year in which we began supporting the program.

(3)
The work we perform on the KC-45A is expected to be through either our commercial agreement with Airbus on the A330 or our commercial agreement with Boeing on the 767. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments."

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Industry Overview

        We estimate that the global market for aerostructures generated approximately $28 billion of total sales in 2007. Demand for the aerostructures we produce is largely driven by aircraft build rates, which are, in turn, driven by demand for new aircraft. This demand is influenced by market and economic trends within the commercial, military and business jet markets. The following provides an overview of the major growth drivers and current trends in each of these markets.

    Commercial Aircraft.  Demand for new commercial aircraft is driven by many factors, including general economic conditions, passenger and cargo air traffic, airline profitability, the introduction of new aircraft models, and the availability and profile of used aircraft. The primary manufacturers of large commercial aircraft are Airbus and Boeing, both of which have projected that the number of commercial and freighter aircraft in service will more than double from 2006 to 2026. The order book, which was reported by the commercial OEMs to be more than 7,450 aircraft as of December 31, 2007, suggests that deliveries will continue at historically high levels well into the next decade. According to Airline Monitor, net orders for commercial aircraft from Boeing and Airbus reached an all-time high of 2,863 in 2007, up 55% from 1,848 in 2006. Airline Monitor estimates that total deliveries of Boeing and Airbus commercial aircraft will increase 13% from 2007 levels to 1,005 in 2008 and average over 1,100 aircraft per year over the next five years. Furthermore, deliveries of wide body aircraft (Boeing 747, 767, 777 and 787 and Airbus A330/A340 and A380), which represented 94% of our revenue from the commercial market in 2007, are forecasted to grow at a compound annual growth rate, or CAGR, of approximately 11% over the next five years.

    Military Aircraft.  Demand for new military aircraft in the U.S. is driven by the national defense budget, procurement funding decisions, geopolitical conditions worldwide and current operational use of the existing fleet. In February 2008, President Bush proposed a $183.8 billion Fiscal Year (FY) 2009 procurement defense budget, which represents an increase of approximately 17% from the FY 2007 procurement defense budget, not including emergency supplemental appropriations. Due to the current and anticipated pace of military operations in the Middle East and the U.S. military's need to more rapidly repair or replace its existing fleet of equipment, we expect that spending for defense procurement should remain robust for at least the next several years. We are well positioned as a key supplier on some of the most important military aircraft platforms such as the C-17, Black Hawk, Global Hawk and V-22 Osprey.

    Business Jet Aircraft.  Demand for new business jet aircraft is driven by long-term economic expansion, corporate profitability, the increasing inconvenience of commercial airline travel, growing international acceptance and demand for business jet travel, increased fractional ownership and the introduction of new aircraft models. 2007 was a record year for business jet shipment and billings. According to the General Aviation Manufacturers Association, business jet deliveries increased 28% to 1,138 in 2007 from 886 in 2006. With aggregate orders during 2006 and 2007 exceeding 3,000 aircraft, we believe business jet deliveries will remain strong over the next several years. Honeywell Aerospace, in its 2007 Business Aviation Outlook, estimates that business jet deliveries will average greater than 1,300 aircraft per year over the next five years. As a major supplier to the top-selling Gulfstream IV and V families of aircraft, Citation X and Hawker 800 programs, we believe we are well positioned in key segments of the business jet market.

        In addition to the trends discussed above, we believe that the continuing escalation of fuel prices will drive demand for more fuel efficient aircraft, such as the 787, and therefore support continued strong demand for our products. We also expect the use of lighter composite structures in aircraft production, including those we manufacture, to continue to grow as both OEMs and airlines focus on

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lowering overall aircraft weight to reduce fuel consumption as well as reducing other operating costs. For example, the 787, as measured by weight, is comprised of approximately 50% composite materials as compared to older generation Boeing and Airbus commercial aircraft, which generally contain less than 15% composite materials. We believe the Airbus A350-XWB, which is scheduled for introduction in 2013, will also be comprised of at least 50% composite materials.

        We believe aircraft OEMs sourced approximately 50% of their aerostructure needs from independent providers in 2007. We believe this percentage will increase in the future as commercial, military and business jet OEMs increasingly rely on independent providers who have a proven track record and the required technical expertise to provide more of the OEM's design, engineering and manufacturing needs.


Competitive Strengths

        Our competitive strengths include:

        Leading, Diversified Position in the Growing Aerostructures Market.    We are a leading global manufacturer of aerostructures with a diverse mix of programs serving the commercial, military and business jet markets. Of our $1,625.5 million in total revenue for 2007, $794.5 million, $530.0 million and $301.0 million were derived from sales to the commercial, military and business jet markets, respectively. We manufacture aerostructures for Boeing and Airbus, the world's leading commercial aircraft OEMs. We also provide aerostructures for a variety of military aircraft platforms utilized by all branches of the U.S. military, including transport, tanker, surveillance, rotor aircraft and UAVs. Our business jet customers include some of the largest business jet aircraft manufacturers worldwide such as Cessna, Gulfstream and Hawker Beechcraft.

        Sole-Source Provider on High Volume, Long-Lived Commercial Platforms.    We are a market leader on many long-lived commercial programs and are well positioned to capitalize on future growth in these established programs and other new program launches. Approximately 86% of our 2007 revenues from commercial programs were generated on programs on which we are the sole-source provider. We have a long history of new program development and have played a key role in the development of many of today's most important commercial legacy platforms including the 747, 767, 777 and A330/340 since their inceptions in 1966, 1980, 1993 and 1988, respectively. The success of these and other legacy programs provides a strong foundation for our business and positions us well for future growth on new programs and derivatives that are currently in development. For example, we have extended our participation in the 747 program with the new 747-8 derivative, which is currently under development. We also have a significant role in the design and manufacturing of the 787, which is expected to be a long-lived program with multiple derivative models.

        Strong Incumbent Position on Key Long-Lived Military Programs.    We have a long history serving a diverse range of military aircraft programs, with particular strength in fixed-wing transport and rotor aircraft. We are the sole-source provider for all of the structures that we provide under our military programs other than the Black Hawk program. We have been a key supplier to the C-130 program since its inception in 1953 and the C-17 Globemaster III since its inception in 1983. We are also a key provider on newer military programs with high growth potential such as the V-22 Osprey, Global Hawk and Black Hawk. Our key customers in the military market are Boeing, Bell Helicopter, Lockheed Martin, Northrop Grumman, Sikorsky and the U.S. Air Force.

        Attractive Business Model.    Our business model has several attractive features, including:

    Strong, Stable Cash Flow From Legacy Programs.  Revenue from legacy aircraft programs, such as the C-17, 747, 767, 777 and A330/340, which require only moderate capital expenditures to support current delivery rates, provides us with a source of strong, recurring cash flow.

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    Significant Revenue Visibility.  Most of our 2007 revenues were generated under long-term contracts and nearly 90% of our 2007 revenues were generated from programs on which we are the sole-source provider. Our customers typically place orders well in advance of required deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was approximately $3.4 billion and $3.9 billion at December 31, 2007 and March 30, 2008, respectively.

    Opportunity to Participate on Next Generation Aircraft.  Our long history with our customers and our engineering, design and technology expertise positions us to be a key aerostructures provider for new aircraft, such as the 787, and to provide aerostructures on future derivatives of existing programs, such as the 747-8. We believe we are well positioned to compete for new business on next generation commercial wide body, narrow body, regional jet, business jet and military programs.

        Advanced Manufacturing and Technical Capabilities.    We are a leading global manufacturer of some of the largest and most technologically advanced parts and assemblies for a diverse range of aircraft. Our capabilities include precision assembly techniques, automated assembly processes and large-bed machining and the fabrication of large composite fiber reinforced parts. As a key program partner on the 787 program, we have enhanced our industry-leading capability in the design, manufacturing and integration of complex composite structures. Our systems integration capabilities and ability to support challenging new aircraft schedules with cost-effective design and manufacturing solutions makes us a preferred partner for our OEM customers. These advanced capabilities are integral to our ability to continue to create innovative products and services for current and next generation aircraft programs.

        High Barriers to Entry with High Switching Costs for Customers.    It would be challenging for new competitors to enter the aerostructures market due to the significant time and capital expenditures necessary to develop the capabilities to design, manufacture, test and certify aerostructure parts and assemblies. When competing for contract awards, new entrants would be required to make substantial up-front investment as well as develop and demonstrate sophisticated manufacturing expertise and experienced-based industry and aircraft program knowledge. Furthermore, aerostructure manufacturers must have extensive certifications and approvals from customers and government regulators, such as the Defense Contract Management Agency and the FAA. Additionally, due to the risk of serious production delays from switching suppliers and the high cost of additional testing and certification, we believe that OEMs are unlikely to change an aerostructure supplier after initial manufacturing contracts have been awarded.

        Strong and Experienced Management Team.    We have an experienced and proven management team with an average of over 23 years of aerospace and defense industry experience. This management team has been responsible for the successful revenue growth and cost reduction initiatives that have driven our increased productivity and profitability over the past two years.


Business Strategy

        We intend to capitalize on our position as a leading global aerostructures manufacturer and on the expected long-term growth in the commercial, military and business jet markets. Specifically, we intend to:

        Enhance our Position as a Strategic and Valued Partner to our Customers.    We will focus on strengthening our customer relationships and expanding our market opportunities by partnering with our OEM customers on their current and future aircraft platforms. We strive to be our customers' most valued partner through excellence in our product and process technologies and by providing access to modern and efficient production facilities. We expect to continue to improve our manufacturing

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efficiencies, continually making operational and process upgrades to maintain the highest standards of quality and on-time delivery.

        Leverage Our Long History and Expertise Across Our Diverse Markets.    We intend to increase our sales to new and existing customers across the commercial, military and business jet markets by capitalizing on opportunities on existing platforms as well as on future derivative and next generation programs. We believe that we are well positioned to win additional business given the breadth of our customer relationships, capabilities and experience, and our quality of service and support.

    Legacy Programs:  With deliveries of mature commercial and business jet programs forecast to increase over the next several years, we believe we have the capability to accommodate higher production rates from our customers. We also believe we have the capability to meet the future production needs of our military OEM customers and the U.S. Air Force.

    Derivative Programs:  We intend to utilize our incumbent position on existing programs to provide aerostructures on future derivative programs such as the Boeing 747-8 and any future derivative programs of the 787.

    Next Generation Programs:  Next generation aircraft programs will rely to a greater extent on streamlined assembly methods, advances in composite materials and increased outsourcing. We believe we are well positioned to participate in these programs, which will include next generation versions of U.S. military aircraft, narrow and wide body commercial aircraft and business jets. We believe we have developed certain distinguishing capabilities through our historical and current military programs, including the C-17, Global Hawk and V-22, which we intend to leverage in our pursuit of future military business.

        Continue to Provide Advanced Products and Technologies.    We place a high priority on the ongoing technological development and application of our products and services. Our commitment to innovation is evidenced by the significant investment we have made in new program initiatives such as the investment in our composite fabrication and advanced manufacturing capabilities. We believe this important investment has made us an industry leader in technology and new product development, strengthened our customer relationships and positions us to generate new business on existing and future programs.

        Continue Operational Improvements.    We will continue to implement the best operational practices that have already resulted in significant operational improvements with respect to safety, quality, schedule performance and productivity, which have contributed to increased profitability over the last two years. These best operational practices are institutionalized as part of what we refer to as the Vought Operating System, which is now implemented in all of our facilities to drive operational improvements.

        Selectively Pursue Acquisitions.    We intend to selectively pursue acquisition opportunities that fit our business strategy, in particular opportunities that will further enhance and diversify our program portfolio as well as provide further technological differentiation.


Recent Developments

Program Developments

        On January 22, 2008, we signed a five-year contract with Sikorsky Aircraft Corp. to manufacture cabin structures for three variants of the H-60 Black Hawk helicopter program. The estimated contract value is approximately $600 million for deliveries through 2012.

        On March 3, 2008, the U.S. Air Force announced that the Northrop Grumman/EADS entrant was selected for the KC-45A tanker program, the replacement for the KC-135, and that the KC-45A will be

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based on a modified version of the Airbus A330 airframe. On March 11, 2008, Boeing filed a protest regarding the Air Force's decision to select the A330 airframe over Boeing's entrant in the contract competition, which is based on a modified version of Boeing's commercial 767 airframe. On June 18, 2008, the Government Accountability Office, or GAO, found in Boeing's favor on a number of issues related to its protest and, on June 18, 2008, Defense Secretary Robert Gates announced that the Air Force would reopen the bidding process on the contract. To the extent that the KC-45A will be based on modified versions of either the A330 or the 767 commercial airframe, we do not expect our results of operations will be materially affected by the ultimate selection of either over the other because we provide aerostructures for both of these commercial aircraft.

        On April 2, 2008, we signed a multi-year contract with Bell Helicopter to manufacture the empennage, ramp and ramp door for the V-22 Osprey. We estimate the contract value to be approximately $400 million for deliveries through 2013.

        On April 9, 2008, Boeing announced that initial deliveries of the 787 program have been rescheduled to the third quarter of 2009 rather than early 2009. Subsequent to this announcement Boeing provided us an updated delivery schedule, which reduces the number of deliveries we will make to them in the near-term. See "Risk Factors — Our business depends, in large part, on the future sales of the Boeing 787 program and further delays in the delivery schedule and renegotiation of contract terms for the 787 program could have a material adverse effect on our financial condition, results of operations and cash flows."

        On April 11, 2008, Boeing announced they would authorize their suppliers to initiate orders for long lead materials for 20 C-17 aircraft in addition to the 10 previously authorized. To date we have received authorization from Boeing to initiate long lead orders for a total of 15 aircraft. Additionally, on June 30, 2008, President Bush signed a bill to provide funding for 15 additional C-17 aircraft. See "Risk Factors — A decline in the U.S. defense budget or change in funding priorities may reduce demand for our customer's military aircraft and reduce our sales of products used on military aircraft."

        On May 19, 2008, we announced the signing of a contract with Cessna for engineering design, tooling and production of the wing for its new Citation Columbus 850 business jet. The contract is a life of program contract and has a potential value of more than $1 billion through 2020. The Citation Columbus is a large cabin, intercontinental aircraft with a target range of 4,000 nautical miles at Mach .80 carrying eight passengers.

Senior Credit Facilities

        On May 6, 2008, we entered into a joinder agreement whereby the lenders thereunder agreed to fund an incremental facility (the "Incremental Facility"), pursuant to which we borrowed an additional $200.0 million of term loans under our existing senior credit facilities. We received proceeds, net of fees and expenses, of approximately $184.8 million from the Incremental Facility, which we expect to use for general corporate purposes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources."


Our Principal Equity Investor—The Carlyle Group

        Prior to this offering, private equity investment funds affiliated The Carlyle Group, or Carlyle, owned approximately 90% of our fully diluted equity. Upon the completion of this offering, Carlyle entities will beneficially own an aggregate of approximately    % of our common stock and    % of our combined voting power, in each case on a fully diluted basis. See "Principal and Selling Stockholders." Since, upon the completion of this offering, affiliates of Carlyle will hold more than 50% of our voting power, Carlyle will have the ability to control the outcome of matters on which stockholders have the right to vote, including the election and removal of directors, as well as the ability to participate in decisions relating to the business of our company.

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        Carlyle is a global private equity firm with $81.1 billion under management and current investments in more than 200 companies. Carlyle invests globally in buyouts, venture and growth capital, real estate and leveraged finance, with a presence in North America, Asia, Europe, Australia, South America, and North Africa. Its investments focus principally on the aerospace and defense, automotive and transportation, consumer and retail, energy and power, financial services, healthcare, industrial, real estate, technology and business services, telecommunications and media industries. Since 1987, the firm has invested $43.0 billion of equity in 774 transactions. Carlyle employs more than 1,000 people in 21 countries.



Company Information

        Our heritage as an aircraft manufacturer extends to the company founded in 1917 by aviation pioneer Chance Milton Vought. From 1994 to 2000, we operated as Northrop Grumman's commercial aircraft division. Vought was formed in 2000 in connection with Carlyle's acquisition of Northrop Grumman's aerostructures business. In July 2003, we purchased The Aerostructures Corporation, with manufacturing sites in Nashville, Tennessee; Brea, California; and Everett, Washington. In 2007 and the first quarter of 2008, our results of operations improved significantly as compared to the prior four years during which we recognized significant net losses. These improvements in our results of operations have been primarily driven by the introduction of our current management team and our focus on improving our operational performance, our cost structure, including a significant work force reduction initiated in 2006, the discontinuation of a facility consolidation program initiated in 2004 by the previous management team, which failed to produce its anticipated benefits, and improving our pricing and payment terms on key contracts.

        We are a Delaware corporation with our principal executive offices located at 201 East John Carpenter Freeway, Tower 1, Suite 900, Irving, TX 75062, and we perform production work at sites throughout the United States, including California, Texas, Georgia, Tennessee, Florida, South Carolina and Washington. Our telephone number at our principal executive offices is (972) 946-2011. Our website address is www.voughtaircraft.com. Information contained on our website is not part of this prospectus and is not incorporated in this prospectus by reference.

        Vought Aircraft Holdings, Inc., a Delaware corporation, was incorporated on May 12, 2008. Following the consummation of the merger described in the first bullet of the second paragraph on page 10, we will become the parent corporation of Vought Aircraft Industries, Inc., or VAI. All historical financial data presented in this prospectus is of VAI, the stock of which will be our only asset after giving effect to the merger described above.

8



THE OFFERING

Common stock offered by us                     Shares

Common stock offered by the selling stockholders

 

                  Shares

Common stock to be outstanding after the offering

 

                  Shares

Option to purchase additional shares

 

The underwriters have an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to                   shares of common stock from us and                   shares of common stock from the selling stockholders at the public offering price less underwriting discounts and commissions.

Use of proceeds

 

Based on an assumed initial public offering price of $        per share, which is the midpoint of the range set forth on the cover of this prospectus, we estimate that our net proceeds from this offering will be approximately $         million. We intend to use approximately $         million of the net proceeds from this offering to repay borrowings under our senior credit facilities, which bear interest at a variable rate (7.09% at March 30, 2008) and mature on December 22, 2011, and for working capital and general corporate purposes. Affiliates of certain of the underwriters of this offering were lenders under our senior credit facilities and may from time to time hold portions of those facilities. Accordingly, certain of the underwriters may receive net proceeds from this offering in connection with the repayment of those facilities. See "Underwriting — Relationships." We will not receive any proceeds from the sale of common stock to be sold by the selling stockholders in this offering. See "Use of Proceeds."

Dividend policy

 

We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions and other factors deemed relevant by our Board of Directors.

Proposed New York Stock Exchange symbol

 

We intend to apply to list our common stock on The New York Stock Exchange under the symbol "VTC."

Risk factors

 

Investing in our common stock involves certain risks. See the risk factors described under the heading "Risk Factors" beginning on page 16 of this prospectus and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.

9


        The number of shares of common stock to be outstanding after this offering is based on 24,783,756 shares of common stock outstanding as of March 30, 2008. Unless otherwise indicated, the number of shares of common stock to be outstanding after this offering disclosed in this prospectus excludes:

    646,470 shares of common stock issuable upon the exercise of stock options outstanding as of March 30, 2008, which have a weighted average exercise price of $14.66 per share;

    598,421 shares of our common stock issuable upon conversion of outstanding restricted stock units as of March 30, 2008, granted under our stock option and equity incentive awards plans;

    549,742 shares of our common stock issuable upon exercise of the 946,700 stock appreciation rights outstanding at March 30, 2008, based on a fair market value of $23.85 per share; and

    1,914,177 shares of common stock reserved for future issuance under our stock option and equity incentive award plans.

        Except as otherwise indicated, all information contained in this prospectus:

    gives effect to the merger of a wholly owned subsidiary of Vought Aircraft Holdings, Inc. with VAI, such that VAI will become a wholly owned subsidiary of Vought Aircraft Holdings, Inc. and all holders of capital stock of VAI will become holders of capital stock of Vought Aircraft Holdings, Inc.;

    gives effect to the recomposition of the Board of Directors of Vought Aircraft Holdings, Inc. and the replacement of its executive officers, such that after giving effect to the merger described above, the current directors and officers of VAI will hold the same positions in Vought Aircraft Holdings, Inc.;

    gives effect to a    -for-    stock split of our common stock to be effected immediately prior to the completion of this offering;

    gives effect to amendments to our certificate of incorporation and bylaws that will become effective upon the completion of this offering;

    assumes an initial public offering price of $        per share, the midpoint of the range set forth on the cover of this prospectus; and

    assumes no exercise of the underwriters' option to purchase                  additional shares of our common stock.

        All historical financial data presented in this prospectus is of VAI, the stock of which will be our only asset after giving effect to the merger described above.

10



SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

        We derived the summary consolidated financial data presented below for each of the three years ended December 31, 2005, 2006 and 2007 from VAI's audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data presented below for the three months ended April 1, 2007 and March 30, 2008, have been derived from VAI's interim unaudited condensed consolidated financial statements included elsewhere in this prospectus. VAI's historical results are not necessarily indicative of future operating results. Certain prior period amounts have been reclassified to conform to the current year presentation. See Note 5 to VAI's annual consolidated financial statements for a further discussion of the reclassifications. You should read the information set forth below in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and VAI's consolidated financial statements and their related notes included elsewhere in this prospectus.

 
   
   
   
  Three Months Ended
 
 
  Year Ended December 31,
 
 
  April 1, 2007
  March 30, 2008
 
 
  2005
  2006
  2007
 
 
  (dollars in millions, except per share data)
 
Statement of Operations:                                
Revenue   $ 1,297.2   $ 1,550.9   $ 1,625.5   $ 380.7   $ 425.4  
Costs and expenses:                                
  Cost of sales     1,231.8     1,274.2     1,269.3     292.5     326.3  
  Selling, general and administrative expenses(1)     234.2     236.0     246.7     54.0     54.3  
  Impairment charge     5.9     9.0              
   
 
 
 
 
 
    Total costs and expenses     1,471.9     1,519.2     1,516.0     346.5     380.6  
   
 
 
 
 
 
Operating income (loss)     (174.7 )   31.7     109.5     34.2     44.8  
Other expenses:                                
  Interest expense, net(2)(3)     51.3     63.1     59.0     14.6     15.7  
  Other loss     0.3     0.5     0.1     0.1      
  Equity in loss of joint venture(4)     3.4     6.7     4.0     0.3     0.4  
   
 
 
 
 
 
Income (loss) before income taxes     (229.7 )   (38.6 )   46.4     19.2     28.7  
Income tax expense (benefit)         (1.9 )   0.1          
   
 
 
 
 
 
Net income (loss)   $ (229.7 ) $ (36.7 ) $ 46.3   $ 19.2   $ 28.7  
   
 
 
 
 
 
Earnings Per Share:                                
Basic   $ (9.30 ) $ (1.49 ) $ 1.87   $ 0.78   $ 1.15  
Diluted     (9.30 )   (1.49 )   1.84     0.77     1.11  
Weighted Average Shares Outstanding:                                
Basic     24.7     24.6     24.7     24.6     25.0  
Diluted     24.7     24.6     25.2     24.9     25.9  

Cash Flow Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cash flow provided by (used in) operating activities   $ (65.0 ) $ 172.8   $ 34.2   $ 19.8   $ (15.2 )
Cash flow used in investing activities     (152.1 )   (102.7 )   (49.6 )   (22.0 )   (19.0 )
Cash flow provided by (used in) financing activities     98.3     13.2     (2.4 )   (1.2 )    
Capital expenditures     147.1     115.4     57.4     17.5     19.0  

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
EBITDA(5)   $ (110.4 ) $ 80.1   $ 166.1   $ 48.1   $ 59.6  
Adjusted EBITDA(6)     180.1     184.5     277.4     74.2     79.3  

11


        The pro forma, as adjusted balance sheet data set forth below gives effect to the net proceeds to us from the sale of                    shares of our common stock in this offering at an assumed initial public offering price of $        per share, the midpoint of the range set forth on the cover of this prospectus, the use of a portion of our net proceeds from this offering to repay borrowings under our senior credit facilities as described in "Use of Proceeds" and the additional borrowings of $200.0 million under our Incremental Facility as if each had occurred on March 30, 2008.

 
  As of March 30, 2008
 
  Actual
  Pro Forma,
As Adjusted

 
  (in millions)
Balance Sheet Data:            
Cash and cash equivalents   $ 41.4   $  
Accounts receivable, net     138.4      
Inventories, net     358.5      
Property, plant and equipment, net     513.3      
Total assets     1,645.2      
Total debt     683.0      
Stockholders' deficit     (629.1 )    

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) the as adjusted amount of each of cash and cash equivalents, total assets, total debt and stockholders' equity (deficit) by $      , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts commissions and estimated offering expenses payable by us.


(1)
During the fourth quarter of 2005, we recorded stock compensation income of $6.4 million included in general and administrative expenses to reflect the impact of an estimated decrease in the fair value of our common stock related to non-recourse notes previously issued to officers for stock purchases and decreased deferred compensation liability. In 2006, 2007 and the three months ended April 1, 2007 and March 30, 2008, we recorded stock compensation expense of $3.0 million, $5.2 million, $0.7 million and $0.6 million, respectively. See the notes to our consolidated financial statements included elsewhere in this prospectus for a further discussion on stock-based compensation.

(2)
On a pro forma basis assuming the additional borrowings of $200.0 million of term loans under our Incremental Facility had occurred on January 1, 2007 and as adjusted to give effect to the use of approximately $         million of our net proceeds from this offering to repay borrowings under our senior credit facilities, interest expense, net would have been $            for the year ended January 1, 2007 and $            for the three months ended March 30, 2008. See "Use of Proceeds."

(3)
Interest expense, net, reflects interest income and expense, and includes the effects of interest rate swaps and amortization of capitalized debt origination costs.

(4)
In April 2005, we entered into a joint venture agreement with Alenia for a 50% equity interest in Global Aeronautica, LLC ("Global Aeronautica"). Global Aeronautica integrates major components of the fuselage and performs related testing activities for the 787. On March 26, 2008, we entered into an agreement to sell our entire equity interest in Global Aeronautica to Boeing. This sale was consummated on June 10, 2008 and, as a result, we will record a one-time gain on the sale for the period ended June 29, 2008 and, thereafter, our results of operations will no longer be impacted by this joint venture.

(5)
EBITDA is a non-GAAP financial measure that represents net income (loss) before interest, taxes, depreciation and amortization. We present EBITDA because we believe it is a useful indicator of

12


    our operating performance. Our management believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to measure a company's operating performance without regard to items such as interest and debt expense, income tax expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, accounting methods, book value of assets, capital structure and the method by which assets are acquired. We also believe EBITDA is useful to our management and investors as a measure of comparative operating performance between periods and among companies as it more clearly reflects changes in our financial results driven by what we believe are the most important operational factors, including changes in the prices we charge and margins we earn on sales to our customers and the effectiveness of our efforts to cut operational costs and achieve operational efficiencies. Changes in these factors over time and from period to period may be less apparent in financial measures calculated in accordance with GAAP, such as net income (loss), because such financial measures include our significant interest, depreciation and amortization expense, which have fluctuated materially over time and from period to period, but which are unaffected by pricing or operational improvements.

    The use of EBITDA as an analytical tool has limitations and you should not consider it in isolation, or as a substitute for analysis of our results of operations as reported in accordance with GAAP. Some of these limitations are:

    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; and

    although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements.

    Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as an alternative to net income or cash flow from operations determined in accordance with GAAP. Management compensates for these limitations by not viewing EBITDA in isolation, and specifically by using other GAAP measures, such as net income (loss), revenue and operating income (loss), to measure our operating performance. Our calculation of EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

    The following table is a reconciliation of net income (loss) to EBITDA:

 
  For the Years Ended
  Three Months Ended
 
  December 31,
2005

  December 31,
2006

  December 31,
2007

  April 1,
2007

  March 30,
2008

 
  (in millions)
Net income (loss)   $ (229.7 ) $ (36.7 ) $ 46.3   $ 19.2   $ 28.7
  Interest expense, net(a)     47.4     59.3     56.0     13.8     14.9
  Income tax expense (benefit)         (1.9 )   0.1        
  Depreciation and amortization(a)     71.9     59.4     63.7     15.1     16.0
   
 
 
 
 
EBITDA   $ (110.4 ) $ 80.1   $ 166.1   $ 48.1   $ 59.6
   
 
 
 
 

    (a)
    For the purposes of calculating EBITDA we reflect Interest Expense, net excluding amortization of debt origination cost which is reflected in Depreciation and amortization.

13


(6)
Adjusted EBITDA is a non-GAAP financial measure that our management uses to assess our compliance with the covenants in our senior credit agreement, our ongoing ability to meet our obligations and manage our levels of indebtedness. Adjusted EBITDA is calculated in accordance with our senior credit agreement and includes adjustments that are material to our operations but that our management does not consider reflective of our ongoing core operations.

    Pursuant to our senior credit agreement Adjusted EBITDA is calculated by making adjustments to our net income (loss) to eliminate the effect of our (1) net income tax expense, (2) net interest expense, (3) any amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness, (4) depreciation and amortization expense, (5) any extraordinary, unusual or non-recurring expenses or losses (including, losses on sales of assets outside of the ordinary course of business, non-recurring expenses associated with the 787 program and certain expenses associated with our facilities consolidation efforts) net of any extraordinary, unusual or non-recurring income or gains, (6) any other non-cash charges, expenses or losses, restructuring and integration costs, (7) stock-option based compensation expenses and (8) all fees and expenses paid pursuant to our Management Agreement with Carlyle. See "Certain Relationships and Related Transactions."

    We believe that each of the adjustments made in order to calculate Adjusted EBITDA is meaningful to investors because it gives them the ability to assess our compliance with the covenants in our senior credit agreement, our ongoing ability to meet our obligations and manage our levels of indebtedness.

    The use of Adjusted EBITDA as an analytical tool has limitations and you should not consider it in isolation, or as a substitute for analysis of our results of operations as reported in accordance with GAAP. Some of these limitations are:

    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.

    Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as an alternative to net income or cash flow from operations determined in accordance with GAAP. Management compensates for these limitations by not viewing Adjusted EBITDA in isolation, and specifically by using other GAAP measures, such as cash flow provided by (used in) operating activities and capital expenditures, to measure our liquidity. Our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

14


    The following table is a reconciliation of net cash provided by (used in) operating activities to Adjusted EBITDA.

 
  For the Years Ended
  For the
Three Months Ended

 
 
  December 31,
2005

  December 31,
2006

  December 31,
2007

  April 1,
2007

  March 30,
2008

 
 
  (in millions)
 
Net cash provided by (used in) operating activities   $ (65.0 ) $ 172.8   $ 34.2   $ 19.8   $ (15.2 )
  Interest expense, net     51.3     63.1     59.0     14.6     15.7  
  Income tax expense (benefit)         (1.9 )   0.1          
  Stock compensation expense     6.4     (3.0 )   (5.2 )   (0.7 )   (0.6 )
  Equity in losses of joint venture     (3.4 )   (6.7 )   (4.0 )   (0.3 )   (0.4 )
  Loss from asset sales and other losses     (12.7 )   (11.4 )   (1.8 )   (0.4 )   (0.3 )
  Debt amortization costs     (3.1 )   (3.1 )   (3.1 )   (0.8 )   (0.8 )
  Changes in operating assets and liabilities     (83.9 )   (129.7 )   86.9     15.9     61.2  
   
 
 
 
 
 
EBITDA   $ (110.4 ) $ 80.1   $ 166.1   $ 48.1   $ 59.6  
   
 
 
 
 
 
  Non-recurring investment in Boeing 787(a)     65.8     90.1     95.9     23.8     16.5  
  Unusual charges & other non-recurring program costs(a)     158.4     1.3     6.1     0.6     1.9  
  Loss on disposal of property, plant and equipment(a)     11.9     10.7     1.9     0.4     0.3  
  Pension & OPEB curtailment and non-cash expense(a)     50.9     (3.4 )            
  Other(a)     3.5     5.7     7.4     1.3     1.0  
   
 
 
 
 
 
Adjusted EBITDA   $ 180.1   $ 184.5   $ 277.4   $ 74.2   $ 79.3  
   
 
 
 
 
 

(a)
For a description of these adjustments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Non-GAAP Financial Measures."

15



RISK FACTORS

        Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and all other information contained in this prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus, before investing in our common stock. If any of the following risks materialize, our business, financial condition or results of operations could be materially harmed. In that case, the trading price of our common stock could decline, and you may lose some or all of your investment.

Risks Relating to Our Business and Our Industry

Our commercial business is cyclical and sensitive to the profitability of the commercial airline and cargo industries. Our business is, in turn, affected by general economic conditions and global safety considerations.

        We compete in the aerostructures sector of the aerospace industry. While our direct customers are aircraft manufacturers, such as Boeing and Airbus, our business is indirectly affected by the financial condition of the commercial airlines and airfreight companies generally and other economic factors that affect the demand for air transportation. Specifically, our commercial business is dependent on the demand from passenger airlines and airfreight companies for the production of new aircraft by our customers.

        This demand for aircraft is dependent on and influenced by a number of factors including:

    global economic growth, which is a primary factor that both Boeing and Airbus use to forecast future production requirements;

    the ability of the industry to obtain financing for the development of new aircrafts, which is both dependent upon industry profitability and load factors as well as the conditions of the credit market, which can adversely affect the cost and availability of financing for new aircrafts;

    air cargo requirements and airline load factors, which are driven by global economy and international trade volume;

    age and efficiency of the global fleet of active and stored fleet aircraft;

    general public attitudes towards air travel, which have been adversely impacted by events that tend to dramatically and quickly influence the market such as the September 11, 2001 terrorist attacks and later, the SARS outbreak in Asia;

    higher fuel prices, which may impact the airline and cargo industry's short-term profitability as well as drive more rapid fleet renewal to take advantage of newer, more efficient aircraft technologies; and

    fluctuations in the global demand for air travel.

We operate in a highly competitive business environment.

        Competition in the aerostructures segment of the aerospace industry is intense and concentrated. We face substantial competition from the operating units of some of our largest customers, including Airbus, Boeing, Gulfstream, Lockheed Martin, Northrop Grumman, Hawker Beechcraft and Sikorsky. These OEMs may choose not to outsource production of aerostructures due to, among other things, their own direct labor and overhead considerations, capacity utilization at their own facilities and desire to retain critical or core skills. Consequently, traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce a part in-house or to outsource.

16


        We also face competition from non-OEM suppliers in each of our product areas. Our principal competitors among aerostructures suppliers include Alenia Aeronautica, Stork Aerospace, Fuji Heavy Industries, Mitsubishi Heavy Industries, GKN Westland Aerospace (U.K.), Kawasaki Heavy Industries, Goodrich Corp., and Spirit AeroSystems. Some of our competitors have greater resources than us, and therefore may be able to adapt more quickly to new or emerging technologies and changes in customer requirements, or devote greater resources to the promotion and sale of their products than we can. Providers of aerostructures have traditionally competed on the basis of cost, technology, quality and service. We believe that developing and maintaining a competitive advantage will require continued investment in product development, engineering, supply chain management and sales and marketing, and we may not have enough resources to make the necessary investments to do so. For these reasons, we may not be able to compete successfully in this market or against such competitors. See "Business — Competition."

Large customer concentration may negatively impact revenue, results of operations and cash flows.

        For the years ended December 31, 2005, 2006 and 2007, approximately 84%, 81% and 86% of our revenue, respectively, resulted from sales to Airbus, Boeing and Gulfstream for their commercial and military programs. Additionally, for the years ended December 31, 2005, 2006 and 2007, sales to these customers accounted for the approximate respective percentages of our revenues indicated: (1) Boeing (56%, 55% and 57%, respectively); (2) Airbus (14%, 10% and 13%, respectively) and (3) Gulfstream (14%, 16% and 16%, respectively). Accordingly, any significant reduction in purchases by Airbus, Boeing or Gulfstream would have a material adverse effect on our financial condition, results of operations and cash flows.

Our fixed-price contracts may commit us to unfavorable terms.

        For the year ended December 31, 2007, over 95% of our revenues were derived from fixed-price contracts under which we have agreed to provide structures for a price determined on the date we entered into the contract. Several factors may cause the costs we incur in fulfilling these contracts to vary substantially from our original estimates, and we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on these contracts. In a fixed-price contract, we must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts. Because our ability to terminate contracts is generally limited, we may not be able to terminate our performance requirements under these contracts at all or without substantial liability and, therefore, in the event we are sustaining reduced profits or losses, we could continue to sustain these reduced profits or losses for the duration of the contract term. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-price contract may reduce the profitability of a fixed-price contract or cause significant losses.

        Although we believe that we have recorded adequate provisions in our consolidated financial statements for losses on our fixed-price contracts, as required under accounting principles generally accepted in the United States, our contract loss provisions may not be adequate to cover all actual future losses, which may have a material adverse effect on our financial condition, results of operations and cash flows.

We incur risk associated with new programs that are critical to our future profitability.

        Our recently established programs involving new technologies, such as Boeing 787, typically carry risks associated with design responsibility, development of new production tools, hiring and training of qualified personnel, increased capital and funding commitments, delays in the program schedule, failure of other suppliers to our customer to perform and meet their obligations, ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, ability of

17



the customer to meet its contractual obligations to us, delays in negotiations of certain contractual matters and our ability to accurately estimate costs associated with such programs, which may have a material adverse effect on our financial condition, results of operations and cash flows. In addition to the foregoing risks, our programs covering work moved to us from other companies, such as Sikorsky H-60, carry risks associated with the transfer of technology, knowledge and tooling.

        The success of our business will depend, in large part, on the success of our new programs, such as those mentioned above. We have made and will continue to make significant investments in new programs. However, insufficient demand for those new aircraft, or technological problems or significant delays in the regulatory certification process or manufacturing and delivery schedule for such aircraft, could have a material adverse effect on our financial condition, results of operations and cash flows.

Failure to, or delays in, renegotiation with our customers to finalize or update contract terms or pricing could materially impact our operations.

        Our level of success as an aerostructure supplier is largely dependent on our ability to negotiate favorable contract terms with our customers. Typically, we enter fixed-price contracts with pricing that is determined based on an estimate of our costs and expected margin. However, the actual costs incurred for some projects exceed these estimates. If we are unable to quickly identify loss contracts and renegotiate the pricing or contract terms in a timely manner or at all, our level of profitability could be significantly impacted.

Our business depends, in large part, on the future sales of the Boeing 787 program and further delays in the delivery schedule and renegotiation of contract terms for the 787 program could have a material adverse effect on our financial condition, results of operations and cash flows.

        On April 9, 2008, Boeing announced that initial deliveries of the 787 program have been rescheduled to the third quarter of 2009 rather than early 2009, primarily due to slower than expected completion of work, unanticipated rework and to allow for extra time in their testing schedule. Subsequent to this announcement Boeing has provided us an updated delivery schedule and has requested that we reduce the number of deliveries we make to them in the near-term which has forced us to slow down our production. Boeing is working closely with its customers to minimize the impact of these unexpected delivery delays. This schedule change will reduce our forecasted revenues and negatively impact our future cash flows. If we are unable to effectively manage our costs, work with our suppliers and Boeing to mitigate the impact of this schedule change, or if Boeing makes any additional changes to our schedule, our financial condition, results of operations and cash flows could be materially adversely affected.

        In addition, we continue to negotiate with Boeing regarding the settlement of certain contractual matters related to the 787 program including the recovery of compensation for engineering and other program changes as provided for under our contract with Boeing. If we are unable to reach an acceptable agreement with Boeing, in a timely manner, our ability to participate in future derivatives of the 787 program or additional contract modifications requested by Boeing would be limited and our financial condition, results of operations and cash flows could be materially adversely affected.

Current market conditions could impact our ability to access new capital to meet our liquidity needs associated with certain new and derivative programs.

        The capital markets are currently experiencing disruptions, which may have an adverse impact on our ability to access new capital. Current conditions in the debt and equity capital markets include reduced liquidity and increased credit risk premiums for market participants. These conditions increase the cost and reduce the availability of capital and may continue or worsen in the future. Our need for additional working capital is highly dependent upon our participation in new and derivative programs,

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which can have significant start-up costs. Under certain of these programs, our customers provide funding commitments to in part address these costs. However, to the extent that these funding commitments are inadequate or not available, we may need to seek additional funding from our current customers or other third party sources to participate in these programs. However, there can be no assurance that we will be able to obtain adequate additional funding, if any, which could have a material adverse effect on our ability to participate in these programs.

Financial market conditions may adversely affect our benefit plan assets and materially impact our statement of financial position.

        Our benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments in real estate and other alternative investments. The current market value of all of these investment categories may be adversely affected by external events and the movements and volatility in the financial markets including such events as the current credit and real estate market conditions. In December 2007, we adopted the recognition and disclosure provisions of SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R). This standard requires employers that sponsor defined benefit plans to recognize the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability in its balance sheet and to recognize changes in that funded status in the year in which the changes occur. The funded status is measured as the difference between the fair value of the plan's assets and the projected benefit obligation (PBO). As of December 31, 2007, obligations under those plans exceeded the fair value of the assets of the plans by $361.9 million. See Note 14 to our annual consolidated financial statements included elsewhere in this prospectus. A dramatic decrease in the fair value of our plan assets resulting from movements in the financial markets may increase the under-funded status of our plans recorded in our statement of financial position and result in additional cash funding requirements to meet the minimum required funding levels.

A decline in the U.S. defense budget or change of funding priorities may reduce demand for our customers' military aircraft and reduce our sales of products used on military aircraft.

        The U.S. defense budget has fluctuated in recent years, at times resulting in reduced demand for new aircraft and, to a lesser extent, spare parts. In addition, foreign military sales are affected by U.S. Government regulations, foreign government regulations and political uncertainties in the United States and abroad. The U.S. defense budget may continue to fluctuate, and sales of defense related items to foreign governments may decrease. A decline in defense spending could reduce demand for our customers' military aircraft, and thereby reduce sales of our products used on military aircraft.

        We face the risk that the C-17 program could be completed in 2009 after the end of the current contract. However, on June 30, 2008, President Bush signed a bill to provide funding for 15 additional C-17 aircraft. Boeing has also announced that it will provide funding to its suppliers for the production of 30 C-17 aircraft. We have received authorization from Boeing to initiate orders for long lead material for 15 of the 30 aircraft. For 2007, the C-17 program provided the majority of our military revenue and a significant portion of our total revenue. The loss of the C-17 program and the failure to win additional work to replace the C-17 program could materially reduce our cash flow and results of operations.

Any significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue.

        We are highly dependent on the availability of essential raw materials such as carbon fiber, aluminum and titanium, and purchased engineered component parts from our suppliers, many of which are available only from single customer-approved sources. Moreover, we are dependent upon the ability

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of our suppliers to provide raw materials and components that meet our specifications, quality standards and delivery schedules. Our suppliers' failure to provide expected raw materials or component parts could require us to identify and enter into contracts with alternate suppliers that are acceptable to both us and our customers, which could result in significant delays, expenses, increased costs and management distraction and adversely affect production schedules and contract profitability.

        We have from time to time experienced limited interruptions of supply, and we may experience a significant interruption in the future. Our continued supply of raw materials and component parts are subject to a number of risks including:

    the destruction of our suppliers' facilities or their distribution infrastructure;

    a work stoppage or strike by our suppliers' employees;

    the failure of our suppliers to provide raw materials or component parts of the requisite quality;

    the failure of essential equipment at our suppliers' plants;

    the failure or shortage of supply of raw materials to our suppliers;

    contractual amendments and disputes with our suppliers; and

    geopolitical conditions in the global supply base.

        In addition, some contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject to termination on a relatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions, and substantial increases in prices could increase our operating costs, which, as a result of our fixed price contracts, we may not be able to recoup through increases in the prices of our products. For example, we, as well as our supply base, have recently experienced delays in the receipt of and price increases on industrial metals. Through 2008, we forecast that these raw material price increases will slow considerably. However, based upon market shift conditions and industry analysis we expect price increases to return in 2009 and beyond due to increased infrastructure demand in China and Russia, and increased aluminum and titanium usage in an ever-wider range of global products. Additionally, we generally do not employ forward contracts or other financial instruments to hedge commodity price risk. Our suppliers may discontinue provision of products to us at attractive prices or at all, and we may not be able to obtain such products in the future from these or other providers on the scale and within the time periods we require. Furthermore, substitute raw materials or component parts may not meet the strict specifications and quality standards we and our customers demand, or that the U.S. Government requires. If we are not able to obtain key products on a timely basis and at an affordable cost, or we experience significant delays or interruptions of their supply, revenues from sales of products that use these supplies will decrease.

        We are also dependent upon third party suppliers, including Northrop Grumman Information Technology and Perot Systems, to supply us with the majority of the information technology services used to operate our facilities. If these suppliers could no longer supply us with information technology services and we are required to secure another supplier, we might not be able to do so on comparable terms, or at all, which could adversely affect production schedules and contract profitability.

We may be subject to work stoppages at our facilities or those of our principal customers, which could seriously impact the profitability of our business.

        District Lodge 96 of the International Association of Machinists and Aerospace Workers was certified as the representative for approximately 200 employees located in North Charleston, South Carolina on November 8, 2007. Negotiations for their initial contract began on January 24, 2008 and are ongoing. Moreover, the collective bargaining agreement with one of our unions, covering approximately 1,000 employees, is due to expire in September 2008.

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        We last experienced a labor strike at our Nashville, Tennessee plant in 1989 and a work interruption at our Dallas, Texas plant in 1985. We believe we have constructive working relationships with our unions and have been successful in negotiating collective bargaining agreements in the past. However, there can be no assurance that we will reach an agreement on a timely basis. If our unionized workers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant adverse disruption of our operations and we may be prevented from completing production of our aircraft structures. See "Business — Employees."

        Additionally, aircraft manufacturers, airlines and aerospace suppliers have unionized work forces. Strikes, work stoppages or slowdowns experienced by aircraft manufacturers, airlines or aerospace suppliers could reduce our customers' demand for additional aircraft structures or prevent us from timely completion of our aircraft structures. In turn, this could have a material adverse effect on our financial condition, results of operations and cash flows.

We are exposed to fluctuations in foreign currency exchange rates and interest rates, as well as inflation and other economic factors in the countries in which we operate.

        Our contracted business with foreign suppliers subjects us to risks associated with fluctuations in foreign currency exchange rates and interest rates in the countries where our suppliers are located. While the purchase prices and payment terms under these contracts are denominated in U.S. dollars, which reduces the impact of the currently weakening U.S. dollar during the life on the contract, the weakening U.S. dollar may force us to renegotiate contract terms with our foreign suppliers to avoid losing these contracts, which could have a material adverse effect on our results of operations, financial position and cash flows.

The price volatility of energy costs may adversely affect our profitability.

        Our revenues depend on the margin above fixed and variable expenses, including energy costs, at which we are able to sell our products. We have exposure to utility price risks as a result of the volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, which affect our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets. We have entered into fixed price contracts at certain of our manufacturing locations for a portion of their energy usage for periods of up to three years, however, these contracts only reduce the risk to us during the contract period, and future volatility in the supply and pricing of energy and natural gas could have a material adverse effect on our results of operations, financial position and cash flows.

Commercial airlines have been and, as a result, we may be materially adversely affected by high fuel prices.

        Due to the competitive nature of the airline industry, airlines may be unable to pass on increased fuel prices to customers by increasing fares. Fluctuations in the global supply of crude oil and the possibility of changes in government policy on jet fuel production, transportation and marketing make it impossible to predict the future availability of jet fuel. In the event there is an outbreak or escalation of hostilities or other conflicts or significant disruptions in oil production or delivery in oil-producing areas or elsewhere, there could be reductions in the production or importation of crude oil and significant increases in the cost of fuel. If there were major reductions in the availability of jet fuel or significant increases in its cost, or if current high prices are sustained for a significant period of time, commercial airlines will face increased operating costs, which could result in decreases in net income from either lower margins or, if airlines increase ticket fares, less revenue from reduced airline travel. Decreases in airline profits or the widening of current airline losses could decrease the demand for new commercial aircraft, resulting in delays of or decreases in deliveries of commercial aircraft utilizing our aerostructures and, as a result, our financial condition, results of operations and cash flows could be materially adversely affected.

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We are subject to regulation of our technical data and goods exports.

        Use of foreign suppliers and sale to foreign customers may subject us to the requirements of the U.S. Export Administration Regulations and the International Trafficking in Arms Regulations. Failure to comply with these regulations may result in significant fines and loss of the right to export goods. In addition, restrictions may be placed on the export of technical data and goods in the future as a result of changing geo-political conditions, which could have a material adverse effect on our financial condition, results of operations and cash flows.

The construction of aircraft is heavily regulated and failure to comply with applicable laws could reduce our sales or require us to incur additional costs to achieve compliance, which could reduce our results of operations.

        The FAA prescribes standards and qualification requirements for aerostructures, including virtually all commercial airline and general aviation products, and licenses component repair stations within the U.S. Comparable agencies regulate these matters in other countries. We are subject to both the FAA regulations and the regulations of comparable agencies in the foreign countries in which we conduct business. If we fail to qualify for or obtain a required license for one of our products or services or lose a qualification or license previously granted, the sale of the subject product or service would be prohibited by law until such license is obtained or renewed. In addition, designing new products to meet existing regulatory requirements and retrofitting installed products to comply with new regulatory requirements can be expensive and time consuming.

        From time to time, the FAA or comparable agencies in other countries propose new regulations or changes to existing regulations. These new changes or regulations generally cause an increase in costs of compliance. To the extent the FAA, or comparable agencies in other countries implement regulatory changes, we may incur significant additional costs to achieve compliance.

Our operations depend on our manufacturing facilities throughout the U.S., which are subject to physical and other risks that could disrupt production.

        Our manufacturing facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity. We maintain property damage and business interruption insurance at the levels typical in our industry, however, a major catastrophe, such as an earthquake, hurricane, flood, tornado or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant delays in shipments of products and the loss of sales and customers and we may not have insurance to adequately compensate us for any of these events.

The U.S. Government is a significant customer of our largest customers and we and they are subject to specific U.S. Government contracting rules and regulations.

        We are a significant provider of aerostructures to military aircraft manufacturers. The military aircraft manufacturers' business, and by extension, our business, is affected by the U.S. Government's continued commitment to programs under contract with our customers. The terms of defense contracts with the U.S. Government generally permit the government to terminate contracts partially or completely, either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery of unrecovered costs incurred or committed, settlement expenses and profit on the work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. On contracts where the price is based on cost, the U.S. Government may review our costs and performance, as well as our accounting and general business practices. Based on the results of such audits, the U.S. Government may adjust our contract-related costs and fees, including allocated indirect costs. In addition, under

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U.S. Government purchasing regulations, some of our costs, including most financing costs, portions of research and development costs, and certain marketing expenses may not be subject to reimbursement. We bear the potential risk that the U.S. Government may unilaterally suspend our customers or us from new contracts pending the resolution of alleged violations of procurement laws or regulations. Sales to the U.S. Government are also subject to changes in the government's procurement policies in advance of design completion. An unexpected termination of, or suspension from, a significant government contract, a reduction in expenditures by the U.S. Government for aircraft using our products, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume of contracts awarded to us, or substantial cost overruns could have a material adverse effect on our financial condition, results of operations and cash flows.

We depend on key personnel and may not be able to retain those employees or recruit additional qualified personnel.

        Our success depends in large part on continued employment of senior management and key personnel who can effectively operate our business, including our engineers and other skilled professionals. Competition for such employees has intensified in recent years and may become even more intense in the future. Our ability to implement our business plan is dependent on our ability to hire and retain technically skilled workers. If any of these employees leave us and we fail to effectively manage a transition to new personnel, or if we fail to attract and retain qualified and experienced professionals, our financial condition, results of operations and cash flows could be materially adversely affected.

We are subject to environmental regulation and our ongoing operations may expose us to environmental liabilities.

        Our operations, like those of other companies engaged in similar businesses, are subject to federal, state and local environmental, health and safety laws and regulations. We may be subject to potentially significant fines or penalties, including criminal sanctions, if we fail to comply with these requirements. We have made, and will continue to make, capital and other expenditures in order to comply with these laws and regulations. Although we believe that we are currently in substantial compliance with these laws and regulations, the aggregate amount of future clean-up costs and other environmental liabilities could become material.

        Pursuant to certain environmental laws, a current or previous owner or operator of a contaminated site may be held liable for the entire cost of investigation, removal or remediation of hazardous materials at such property, whether or not the owner or operator knew of, or was responsible for, the presence of any hazardous materials. Persons who arrange for the disposal or treatment of hazardous materials may also be held liable for such costs at a disposal or treatment site, regardless of whether the affected site is owned or operated by them. Contaminants have been detected at some of our present and former sites, principally in connection with historical operations, and investigations and/or clean-ups have been undertaken by us or by former owners of the sites. We also receive inquiries and notices of potential liability with respect to offsite disposal facilities from time to time. Although we are not aware of any sites for which material obligations exist, the discovery of additional contaminants or the imposition of additional clean-up obligations could result in significant liability. See "Business —Environmental Matters."

Any product liability claims in excess of insurance may require us to dedicate cash flow from operations to pay such claims and damage our reputation impacting our ability to obtain future business.

        Our operations expose us to potential liability for personal injury or death as a result of the failure of aerostructures designed or manufactured by us or our suppliers. While we believe that our liability insurance is adequate to protect us from these liabilities, our insurance may not cover all liabilities.

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Additionally, insurance coverage may not be available in the future at a cost acceptable to us. Any material liability not covered by insurance or for which third-party indemnification is not available could require us to dedicate a substantial portion of our cash flows to make payments on these liabilities. No such product liability claim is pending or has been threatened against us, however, there is a potential risk that product liability claims could be filed against us in the future.

        An accident caused by a component designed or manufactured by us or one of our suppliers could also damage our reputation for quality products. We believe our customers consider safety and reliability as key criteria in selecting a provider of aerostructures. If an accident were caused by one of our components, or if our satisfactory record of safety and reliability were compromised, our ability to retain and attract customers our results of operations, financial position and cash flows could be materially adversely affected.

Significant consolidation by aerospace industry suppliers could adversely affect our business.

        The aerospace industry has recently experienced consolidation among suppliers. Suppliers have consolidated and formed alliances to broaden their product and integrated system offerings and achieve critical mass. This supplier consolidation is in part attributable to aircraft manufacturers more frequently awarding long-term sole-source or preferred supplier contracts to the most capable suppliers, thus reducing the total number of suppliers. When we act as suppliers to the aerospace industry, this consolidation has caused us to compete against certain competitors with greater financial resources, market penetration and purchasing power. When we purchase component parts and services from suppliers to manufacture our products, consolidation reduces price competition between our suppliers, which could diminish incentives for our suppliers to reduce prices. If this consolidation were to continue, our operating costs could increase and it may become more difficult for us to be successful in obtaining new customers.

High switching costs may substantially limit our ability to obtain business that is currently under contract with other suppliers.

        Once a contract is awarded by an OEM to an aerostructures supplier, the OEM and the supplier are typically required to spend significant amounts of time and capital on design, manufacture, testing and certification of tooling and other equipment. For an OEM to change suppliers during the life of an aircraft program, further testing and certification would be necessary, and the OEM would be required either to move the tooling and equipment used by the existing supplier for performance under the existing contract, which may be expensive and difficult or impossible, or to manufacture new tooling and equipment. Accordingly, any change of suppliers would likely result in production delays and additional costs to both the OEM and the new supplier. These high switching costs may make it more difficult for us to bid competitively against existing suppliers and less likely that an OEM will be willing to switch suppliers during the life of an aircraft program, which could materially adversely affect our ability to obtain new work on existing aircraft programs.

We are subject to the requirements of the National Industrial Security Program Operating Manual for our facility security clearance, which is a prerequisite for our ability to perform on classified contracts for the U.S. Government.

        A Department of Defense, or DoD, facility security clearance is required in order to be awarded and perform on classified contracts for the DoD and certain other agencies of the U.S. Government. We have obtained clearance at appropriate levels that require stringent qualifications, and we may be required to seek higher level clearances in the future. We cannot assure you that we will be able to maintain our security clearance. If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform our present classified contracts and we would not be able

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to enter into new classified contracts, which could adversely affect our revenues and results of operations.

We do not own most of the intellectual property and tooling used in our business.

        Our business depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our contracts with our OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated if we violate certain of these restrictions. Our loss of a contract with an OEM customer and the related license rights to use an OEMs' intellectual property or tooling would materially adversely affect our business. In addition, we must honor our contractual commitments to our other customers related to intellectual property and comply with infringement laws in the use of intellectual property. In the event we obtain new business from new or existing customers, we will need to pay particular attention to these contractual commitments and any other restrictions on our use of intellectual property to make sure that we will not be using intellectual property improperly in the performance of such new business. In the event we use any such intellectual property improperly, we could be subject to an infringement claim by the owner or licensee of such intellectual property. In the future, our entry into new markets may require obtaining additional license grants from OEMs and/or from other third parties. If we are unable to negotiate additional license rights on acceptable terms (or at all) from OEMs and/or other third parties as the need arises, our ability to enter new markets may be materially restricted. In addition, we may be subject to restrictions in future licenses granted to us that may materially restrict our use of third party intellectual property.

Future terrorist attacks may have a material adverse impact on our business.

        Following the September 11, 2001 terrorist attacks, passenger traffic on commercial flights was significantly lower than prior to the attacks and many commercial airlines reduced their operating schedules. Overall, the terrorist attacks resulted in billions of dollars in losses to the airline industry. Any future acts of terrorism and any allied military response to such acts could result in further acts of terrorism and additional hostilities, including possible retaliatory attacks on sovereign nations, as well as financial, economic and political instability. While the precise effects of any such terrorist attack, military response or instability on our industry and our business is difficult to determine, it could result in further reductions in the use of commercial aircraft. If demand for new aircraft and spare parts decreases, demand for certain of our products would also decrease.

We may be unable to satisfy commitments related to grants received.

        We have received grants from state governments associated with the construction of our 787 facility in South Carolina and the employment level in our Texas facilities. These grants require that we satisfy certain requirements related to levels of expenditures and/or employment levels. Our failure to satisfy any of these commitments could result in the incurrence of penalties or in the requirement to repay all or part of the grants. For example, in March 2005 we were awarded a $35 million Texas Enterprise Fund grant to assist in increasing employment levels at our Texas facilities. To the extent that we fail to achieve and maintain these employment levels, we may be required to repay some or all of the $35 million grant over a ten-year period beginning in 2010.

Any future business combinations, acquisitions or mergers expose us to risks, including the risk that we may not be able to successfully integrate these businesses or achieve expected operating synergies.

        We periodically consider strategic transactions. We evaluate acquisitions, joint ventures, alliances or co-production programs as opportunities arise and we may be engaged in varying levels of negotiations with potential competitors at any time. We may not be able to effect transactions with strategic alliance, acquisition or co-production program candidates on commercially reasonable terms, or at all. If we

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enter into these transactions, we also may not realize the benefits we anticipate. In addition, we may not be able to obtain additional financing for these transactions. The integration of companies that have previously been operated separately involves a number of risks. Consummating any acquisitions, joint ventures, alliances or co-production programs could result in the incurrence of additional debt and related interest expense, as well as unforeseen contingent liabilities.

The price volatility of energy costs may adversely affect our profitability.

        Our revenues depend on the margin above fixed and variable expenses, including energy costs, at which we are able to sell our products. We have exposure to utility price risks as a result of the volatility in costs of fuel, principally natural gas, and other utility services, principally electricity, which affect our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our control, such as supply and demand for fuel and utility services in both local and regional markets. We have entered into fixed price contracts at certain of our manufacturing locations for a portion of their energy usage for periods of up to three years, however, these contracts only reduce the risk to us during the contract period, and future volatility in the supply and pricing of energy and natural gas could have a material adverse effect on our results of operations, financial position and cash flows.

Risks Relating to Our Indebtedness

Our substantial indebtedness could prevent us from fulfilling our obligations under our outstanding senior notes and our senior credit facilities.

        We have a significant amount of indebtedness. On a pro forma, as adjusted basis assuming the completion of this offering, the application of the proceeds to us thereof as described in "Use of Proceeds" and the additional borrowings of $200.0 million under our Incremental Facility had occurred on March 30, 2008, our total indebtedness would be approximately $       million. Additionally, as of March 30, 2008, we had $46.1 million of issued and undrawn letters of credit outstanding under the $75 million synthetic letters of credit portion of our senior credit facilities.

        Our substantial indebtedness could have important consequences for us and investors in our securities. For example, it could:

    make it more difficult for us to satisfy our obligations with respect to our outstanding debt;

    increase our vulnerability to general adverse economic and industry conditions;

    require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;

    limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

    restrict us from making strategic acquisitions or exploiting business opportunities;

    place us at a competitive disadvantage compared to our competitors that have less debt; and

    limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds, dispose of assets or pay cash dividends.

        In addition, a substantial portion of our debt bears interest at variable rates. If market interest rates increase, variable-rate indebtedness will create higher debt service requirements and it may become necessary for us to dedicate a larger portion of our cash flow to service such indebtedness. To the extent we have not entered into hedging arrangements, we are exposed to cash flow risk due to changes in interest rates with respect to the entire $         million of variable-rate indebtedness under

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our senior credit facilities at March 30, 2008 on a pro forma, as adjusted basis assuming the completion of this offering, the application of the proceeds to us thereof as described in "Use of Proceeds" and the additional borrowings of $200.0 million under our Incremental Facility had occurred on March 30, 2008.

        As of March 30, 2008, on a pro forma, as adjusted basis assuming the completion of this offering, the application of the proceeds to us thereof as described in "Use of Proceeds" and the additional borrowings of $200.0 million under our Incremental Facility had occurred on March 30, 2008, a one-percentage point increase in interest rates on our variable-rate indebtedness would decrease our annual pre-tax income for the year ended December 31, 2007 by approximately $       million.

We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

        Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

        Our business may not generate sufficient cash flow from operations or future borrowings may not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. Depending on prevailing economic and financial conditions, including those of the debt capital markets, competition and other factors, we may not be able to refinance any of our indebtedness, including our senior credit facilities and our outstanding senior notes on or before maturity, on commercially reasonable terms or at all.

Despite our current indebtedness levels, we may still be able to incur substantially more debt, which would further increase the risks associated with our substantial leverage described above.

        We may incur substantial additional indebtedness in the future. As of March 30, 2008, we had $150 million of additional borrowings available under our six-year revolving loan. Additionally, as of March 30, 2008, we had an additional $28.9 million available under the synthetic letters of credit portion of our senior credit facilities. If new indebtedness is added to our current indebtedness levels, the related risks that we face would be magnified.

Restrictive covenants in our senior credit facilities and our outstanding senior notes may restrict our ability to pursue our business strategies.

        The indenture governing our senior notes and the credit agreement governing our senior credit facilities limit our ability, among other things, to:

    incur additional indebtedness or contingent obligations;

    pay dividends or make distributions to our stockholders;

    repurchase or redeem our stock;

    make investments;

    grant liens;

    make capital expenditures;

    enter into transactions with our stockholders and affiliates;

    engage in sale and leaseback transactions;

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    sell assets; and

    acquire the assets of, or merge or consolidate with, other companies.

        The restrictive covenants mentioned above may restrict our ability to pursue our business strategies.

Financial ratios and tests in our senior credit facilities may further increase the risks associated with the restrictive covenants described above.

        In addition to the covenants described above, our senior credit facilities require us to maintain certain financial ratios and tests. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources." Events beyond our control can affect our ability to meet these financial ratios and tests. Our failure to comply with these obligations could cause an event of default under our senior credit facilities. If an event of default occurs, our lenders could elect to declare all amounts outstanding and accrued and unpaid interest under our senior credit facilities to be immediately due and the lenders thereafter could foreclose upon the assets securing the senior credit facilities. In that event, we may not have sufficient assets to repay all of our obligations, including our outstanding senior notes. We may incur additional indebtedness in the future that may contain financial or other covenants more restrictive than those applicable to our senior credit facilities or our outstanding senior notes.

Risks Relating to This Offering and Ownership of Our Common Stock

An active trading market for our common stock may not develop, trading in our shares of common stock may be limited or cease to exist, and you may not be able to sell your common stock at or above the initial public offering price.

        Prior to this offering, there has been no public market for our common stock. Although we intend to apply to list our common stock on The New York Stock Exchange, an active and liquid trading market for shares of our common stock may never develop or be sustained following this offering. If no trading market develops, or if trading in our shares of common stock becomes limited or ceases to exist, securities analysts may not initiate or maintain research coverage of our company, which could further depress the market for our common stock. As a result, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.

If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.

        The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts. The price of our stock could decline if one or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering.

        The initial public offering price for our common stock will be determined through negotiations with the underwriters. This initial public offering price may vary significantly from the market price of our common stock after the offering. Some of the factors that may cause the market price of our common stock to fluctuate include:

    fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

28


    changes in estimates of our financial results or recommendations by securities analysts;

    failure of any of our products to achieve or maintain market acceptance;

    potential future delays on new programs;

    changes in market valuations of similar companies;

    success of competitive products;

    changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

    announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;

    regulatory developments in the United States, foreign countries or both;

    litigation involving our company, our general industry or both;

    additions or departures of key personnel;

    investors' general perception of us; and

    changes in general political, economic, industry and market conditions.

        In addition, if the market for aerospace stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

A significant portion of our total outstanding shares of common stock may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

        Sales of a large number of shares of our common stock in the public market, or the availability of a large number of shares for sale, could adversely affect the market price of our common stock and could impair our ability to raise funds in subsequent stock offerings. After this offering, we will have                shares of common stock outstanding based on the number of shares outstanding as of March 30, 2008. All of the shares sold in this offering will be freely tradable unless held by an affiliate of ours. Of the remaining          shares,         shares are held by existing stockholders who are subject to lock-up agreements with the underwriters, which, subject to certain exceptions, prohibit the sale of shares for 180 days after the date of this prospectus, as described under "Shares Eligible for Future Sale — Lock-up Agreements." After these agreements expire, these shares will be eligible for sale in the public market subject to volume and other restrictions under Rule 144 and 701 under the Securities Act of 1933, which we refer to as the Securities Act, as described under "Shares Eligible for Future Sale — Sales of Restricted Securities."

        We also intend to register all shares of common stock that we may issue under our employee benefit plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to applicable vesting requirements, the lock-up agreements and Rules 144 and 701 under the Securities Act. See "Shares Eligible for Future Sale — Rule 701."

29


You will incur immediate and substantial dilution in the net tangible book value of your shares as a result of this offering.

        If you purchase common stock in this offering, you will incur immediate and substantial dilution of $       per share, representing the difference between the assumed initial public offering price of $       per share and our adjusted net tangible book value per share after giving effect to this offering. Moreover, we issued options in the past to acquire common stock at prices significantly below the initial public offering price. To the extent outstanding options, restricted stock units and stock appreciation rights are ultimately exercised, you will incur further dilution.

We are controlled by affiliates of Carlyle, whose interests may conflict with yours.

        Immediately following this offering, affiliates of Carlyle and our directors and members of our senior management will own approximately          shares of our common stock or      % of the combined voting power of our outstanding common stock. Accordingly, Carlyle may have the power to control the outcome of matters on which stockholders are entitled to vote. These include the election and removal of directors, the adoption or amendment of our certificate of incorporation and bylaws, possible mergers, corporate control contests and significant corporate transactions. Through its control of our Board of Directors, Carlyle will also have the ability to appoint or replace our senior management and cause us to issue additional shares of our common stock or repurchase common stock, declare dividends or take other actions. Carlyle may make decisions regarding our Company and business that are opposed to other stockholders' interests or with which they disagree. Carlyle may also delay or prevent a change of control of us, even if that a change of control would benefit our other stockholders, which could deprive our stockholders of the opportunity to receive a premium for their common stock. The significant concentration of stock ownership and voting power may adversely affect the trading price of our common stock due to investors' perception that conflicts of interest may exist or arise. To the extent that the interests of our public stockholders are harmed by the actions of Carlyle, the price of our common stock may be harmed.

        Additionally, Carlyle is in the business of making investments in companies and currently holds, and may from time to time in the future acquire, controlling interests in businesses engaged in aerospace industries that complement or directly or indirectly compete with certain portions of our business. Further, if it pursues such acquisitions in the aerospace industry, those acquisition opportunities may not be available to us. We urge you to read the discussions under the headings "Principal and Selling Stockholders" and "Certain Relationships and Related Transactions" for further information about the equity interests held by Carlyle and members of our senior management.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        We cannot specify with certainty the particular uses of a portion of the net proceeds we will receive from this offering. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in "Use of Proceeds." Accordingly, you will have to rely upon the judgment of our management with respect to the use of the proceeds, with only limited information concerning management's specific intentions. Our management may spend a portion of the net proceeds from this offering in ways that our stockholders may not desire or that may not yield a favorable return. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

30


Provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

        Provisions of our amended and restated certificate of incorporation and amended and restated bylaws to be effective upon consummation of this offering may delay or prevent an acquisition of us or a change in our management. In particular, our amended and restated certificate of incorporation and amended and restated bylaws, as applicable, among other things, may:

    provide that special meetings of the stockholders may be called only by the Chairman of our Board of Directors, our Chief Executive Officer or our Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors of our Board of Directors;

    establish procedures with respect to stockholder proposals and stockholder nominations, including requiring advance written notice of a stockholder proposal or director nomination;

    divide our Board of Directors into three classes. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors;

    not include a provision for cumulative voting in the election of directors. Under cumulative voting, a minority stockholder holding a sufficient number of shares may be able to ensure the election of one or more directors. The absence of cumulative voting may have the effect of limiting the ability of minority stockholders to effect changes in the our Board of Directors and, as a result, may have the effect of deterring a hostile takeover or delaying or preventing changes in control or management of our company;

    provide that vacancies on our Board of Directors may be filled by a majority of directors in office, although less than a quorum, and not by the stockholders;

    require that the vote of holders of 662/3% of the voting power of the outstanding shares entitled to vote generally in the election of directors is required to amend various provisions of our amended and restated certificate of incorporation and amended and restated bylaws, including those enumerated above; and

    provide that our Board of Directors has the power to alter, amend or repeal the bylaws without stockholder approval.

        The existence of any of the foregoing provisions or similar provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

        See "Description of Capital Stock" for additional information on the anti-takeover measures applicable to us.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our common stock.

        We have never paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as our Board of Directors may consider relevant. If we do not pay dividends, our common stock may

31



be less valuable because a return on your investment will only occur if our stock price increases. See "Dividend Policy."

We will be a "controlled company" within the meaning of New York Stock Exchange rules and, as a result, will qualify for and will rely on exemptions from certain corporate governance requirements.

        Upon the completion of this offering, affiliates of Carlyle will continue to control a majority of the voting power of our outstanding common stock and we will be a "controlled company" within the meaning of New York Stock Exchange corporate governance standards. Under New York Stock Exchange rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a "controlled company" and may elect not to comply with certain New York Stock Exchange corporate governance requirements, including the requirements that:

    a majority of the board of directors consist of independent directors;

    the nominating and corporate governance committee be entirely composed of independent directors with a written charter addressing the committee's purpose and responsibilities;

    the compensation committee be entirely composed of independent directors with a written charter addressing the committee's purpose and responsibilities; and

    there be an annual performance evaluation of the nominating and corporate governance and compensation committees.

        Following this offering, we intend to elect to be treated as a controlled company and thus utilize these exemptions, including the exemption for a board of directors composed of a majority of independent directors. In addition, although we will have adopted charters for our audit, nominating and corporate governance and compensation committees and intend to conduct annual performance evaluations for these committees, none of these committees will be composed entirely of independent directors immediately following the completion of this offering. We will rely on the phase-in rules of the Securities and Exchange Commission and The New York Stock Exchange with respect to the independence of our audit committee. These rules permit us to have an audit committee that has one member that is independent upon the effectiveness of the registration statement of which this prospectus forms a part, a majority of members that are independent within 90 days thereafter and all members that are independent within one year thereafter. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of New York Stock Exchange corporate governance requirements.

We may be adversely affected if we are unable to maintain effective internal control over financial reporting. Additionally, as a result of our operating as a public company, our management will be required to devote substantial time to new compliance initiatives, which may divert management's attention from the growth and operation of the business.

        We have undergone a comprehensive effort to comply with Section 404 of the Sarbanes-Oxley Act of 2002, which requires us to provide a report from management to our shareholders on our internal control over financial reporting that includes an assessment of the effectiveness of these controls. Additionally, we are required to deliver an attestation report from an independent registered public accounting firm on their assessment of the operating effectiveness of our internal controls. Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of these inherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud. If we cannot maintain adequate internal control over financial reporting or implement required new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we

32



could suffer harm to our reputation, fail to meet our public reporting requirements on a timely basis, or be unable to properly report on our business and the results of our operations, and we could be subject to sanctions or investigations by The New York Stock Exchange, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources. Additionally, any of these contingencies could cause the market price of our common stock to decline.

        For the period ended March 30, 2008, our management determined that we had a material weakness related to our financial close and reporting process. This material weakness related to the timely review and adjustment of purchase accounting reserves, which if not identified could have led to a material misstatement in our financial statements. Our remaining purchase accounting reserves were immaterial at March 30, 2008. As a result, we do not believe that our internal control over financial reporting continues to be affected by the identified material weakness. However, we cannot assure you that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional significant deficiencies or material weaknesses that could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting required under Sarbanes-Oxley.

        Additionally, rules implemented by the Securities and Exchange Commission and The New York Stock Exchange, impose a number of requirements on public companies, including provisions regarding corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will make some activities more time-consuming and costly. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, the committees of our Board of Directors or as executive officers.

33



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Some of the statements made in this prospectus are forward-looking statements. These forward looking statements are based upon our current expectations and projections about future events. When used in this prospectus, the words "believe," "anticipate," "intend," "estimate," "expect," "should," "may" and similar expressions, or the negative of such words and expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. The forward-looking statements in this prospectus are primarily located in the material set forth under the headings "Prospectus Summary," "Risk Factors," "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business," but are found in other locations as well. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. You should read this prospectus completely and with the understanding that actual future results may be materially different from what we expect. We will not update forward-looking statements even though our situation may change in the future.

        Specific factors that might cause actual results to differ from our expectations or may affect the value of our common stock include, but are not limited to:

    significant considerations and risks discussed in this prospectus;

    global and domestic financial market conditions and the results of financing efforts;

    competition;

    operating risks and the amounts and timing of revenues and expenses;

    project delays or cancellations;

    global and domestic market or business conditions and fluctuations in demand;

    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;

    the effect of and changes in economic conditions in the areas in which we operate;

    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.

34



USE OF PROCEEDS

        Based upon an assumed initial public offering price of $      per share, the midpoint of the range set forth on the cover page of this prospectus, we estimate that our net proceeds from the sale of            shares of our common stock in this offering, after deducting underwriting discounts and commissions and estimated offering costs of approximately $         million payable by us, will be approximately $         million. A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) the net proceeds to us from this offering by $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. Any change in the initial public offering price will not have a material effect on our use of proceeds. We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholders.

        We currently intend to use:

    approximately $         million of our net proceeds from this offering to repay borrowings under our senior credit facilities, which bear interest at a variable rate (7.09% at March 30, 2008) and mature on December 22, 2011; and

    the balance of our net proceeds from this offering for working capital and other general corporate purposes.

        Affiliates of certain of the underwriters of this offering were lenders under our senior credit facilities and may from time to time hold portions of those facilities. Accordingly, certain of the underwriters may receive net proceeds from this offering in connection with the repayment of those facilities. See "Underwriting — Relationships."


DIVIDEND POLICY

        We have never paid or declared a dividend on our common stock, and we do not expect to pay dividends on our common stock for the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used for the operation and growth of our business. Our ability to pay dividends to holders of our common stock is limited as a practical matter by our senior credit facilities and the indenture governing our outstanding senior notes. Any future determination to pay dividends on our common stock is subject to the discretion of our Board of Directors and will depend upon various factors, including our results of operations, financial condition, liquidity requirements, restrictions that may be imposed by applicable law and our contracts, and other factors deemed relevant by our Board of Directors.

35



CAPITALIZATION

        The following table sets forth our cash and cash equivalents and our capitalization as of March 30, 2008:

    on an actual basis; and

    on a pro forma, as adjusted basis assuming the additional borrowings of $200.0 million of term loans under our Incremental Facility had occurred on March 30, 2008 and as adjusted to give effect to (i) the sale of                    shares of common stock that we are offering at an assumed initial public offering price of $        per share, the midpoint of the range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the use of approximately $         million of our net proceeds from this offering to repay borrowings under our senior credit facilities, which bear interest at a variable rate (7.09% at March 30, 2008) and mature on December 22, 2011.

        Our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with the consolidated financial statements and the related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds" included elsewhere in this prospectus.

 
  As of March 30, 2008
 
  Actual
  Pro Forma,
As Adjusted(1)

 
  (dollars in millions)
Cash and cash equivalents   $ 41.4   $  
   
 
Long-term debt, excluding current portion:            
Senior Credit Facilities(2)     409.0      
Senior Notes     270.0      
   
 
    Total long-term debt, excluding current portion(3)     679.0      
   
 
Stockholders' equity (deficit):            
  Undesignated preferred stock, $0.01 par value per share, no shares authorized, no shares issued and outstanding, actual;             shares authorized, no shares issued and outstanding, as adjusted          
  Common stock, $0.01 par value per share, 50,000,000 shares authorized, 24,783,756 shares issued and outstanding, actual;             shares issued and outstanding, as adjusted     0.3      
  Additional paid-in capital     418.0      
  Shares held in rabbi trust     (1.6 )    
  Accumulated deficit     (566.3 )    
  Accumulated other comprehensive income (loss)     (479.5 )    
   
 
    Total stockholders' equity (deficit)     (629.1 )    
   
 
    Total capitalization   $ 49.9   $  
   
 

(1)
A $1.00 increase (decrease) in the assumed initial public offering price of $        per share, which is the midpoint of the range on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, long-term debt, additional paid-in capital, stockholders' equity (deficit) and total capitalization by approximately $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

(2)
Additionally, as of March 30, 2008, we had $46.1 million of issued and undrawn letters of credit outstanding under the $75 million synthetic letters of credit portion of our senior credit facilities.

(3)
The current portion of total long-term debt was $4.0 million as of March 30, 2008, and the pro forma, as adjusted current portion was $         million as of March 30, 2008.

36



DILUTION

        If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of common stock and the net tangible book value or deficiency per share of common stock immediately after this offering. Net tangible book value or deficiency per share represents the amount of our total tangible assets less our total liabilities, divided by the number of shares of common stock outstanding at that date.

        Our net tangible book deficiency as of March 30, 2008 was $         million, or $        per share of common stock.

        On a pro forma basis assuming the additional borrowings of $200.0 million of loans under our Incremental Facility had occurred on March 30, 2008 and as adjusted to give effect to (i) the sale of                    shares of common stock that we are offering at an assumed initial public offering price of $        per share, the midpoint of the range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the use of our net proceeds from this offering as described in "Use of Proceeds," our pro forma as adjusted net tangible book deficiency as of March 30, 2008 was approximately $         million, or approximately $        per share. This represents an immediate increase in net tangible book value of $        per share of our common stock to our existing stockholders and an immediate dilution of $        per share of our common stock to new investors purchasing shares of common stock in this offering. The following table illustrates the per share dilution without giving effect to the option to purchase additional shares granted to the underwriters:

 
  Per share
Assumed initial public offering price   $  
  Net tangible book value (deficiency) as of March 30, 2008      
  Increase in net tangible book value attributable to investors in this offering      
Pro forma as adjusted net tangible book value after giving effect to this offering      
   
Dilution in net tangible book value to new investors   $  
   

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) the pro forma as adjusted net tangible book value per share after this offering by approximately $            and dilution per share to new investors by approximately $            , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The following table summarizes on a pro forma as adjusted basis, as of March 30, 2008, the differences between the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by our existing stockholders and by new investors, based upon an assumed initial public offering price of $        per share, which is the midpoint of the range listed on the cover page of this prospectus, and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Shares purchased
  Total consideration
   
 
  Average price per share
 
  Number
  Percent
  Amount
  Percent
Existing stockholders         %         %  
Investors in the offering         %         %  
   
 
 
 
 
  Total       100 % $     100 %  
   
 
 
 
 

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        The preceding discussion and table assume no exercise of outstanding stock options, restricted units or stock appreciation rights as of March 30, 2008. As of March 30, 2008, there were outstanding options to purchase a total of 646,470 shares of common stock at a weighted average exercise price of $14.66 per share, stock appreciation rights outstanding exercisable for 549,742 shares of common stock based on a fair market value of $23.85 per share and restricted stock units convertible into 598,421 shares of common stock. To the extent any of these options are exercised, there will be further dilution to new investors.

        If the underwriters' option to purchase additional shares is exercised in full, the following will occur:

    the as adjusted number of shares of common stock held by existing stockholders will decrease to                    , or approximately        %, of the total number of shares of our common stock outstanding after this offering; and

    the number of shares of common stock held by new investors will increase to                    , or approximately        %, of the total number of shares of our common stock outstanding after this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

        You should read the selected consolidated financial data with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and VAI's audited consolidated financial statements and the accompanying notes. The selected consolidated financial data as of December 31, 2006 and 2007 and for the fiscal years ended December 31, 2005, 2006 and 2007 have been derived from VAI's audited consolidated financial statements included elsewhere in this prospectus, which have been audited by Ernst & Young LLP, an independent registered public accounting firm. The selected consolidated financial data as of December 31, 2003, 2004 and 2005 and for the fiscal years ended December 31, 2003 and 2004 have been derived from audited consolidated financial statements not included in this prospectus. The selected consolidated financial data presented below for the three months ended April 1, 2007 and March 30, 2008, have been derived from VAI's interim unaudited condensed consolidated financial statements included elsewhere in this prospectus. The stock of VAI will be our only asset after giving effect to the merger described herein.

        Certain prior period amounts have been reclassified to conform to the current year presentation. See Note 5 to VAI's annual consolidated financial statements included elsewhere in this prospectus for a further discussion of the reclassifications. The selected consolidated financial information set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with, and is qualified in its entirety by, the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in VAI's consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

 
   
   
   
   
   
  Three Months Ended
 
 
  Year Ended December 31,
 
 
  April 1, 2007
  March 30, 2008
 
 
  2003(1)
  2004
  2005
  2006
  2007
 
 
  (dollars in millions, except per share data)
   
   
 
Statement of Operations:                                            
Revenue   $ 1,208.8   $ 1,214.7   $ 1,297.2   $ 1,550.9   $ 1,625.5   $ 380.7   $ 425.4  
Costs and expenses:                                            
  Cost of sales     1,056.0     1,078.0     1,231.8     1,274.2     1,269.3     292.5     326.3  
  Selling, general and administrative expenses(2)     190.9     223.1     234.2     236.0     246.7     54.0     54.3  
  Impairment charge         26.0     5.9     9.0              
   
 
 
 
 
 
 
 
    Total costs and expenses     1,246.9     1,327.1     1,471.9     1,519.2     1,516.0     346.5     380.6  
   
 
 
 
 
 
 
 
Operating income (loss)     (38.1 )   (112.4 )   (174.7 )   31.7     109.5     34.2     44.8  
Other expenses:                                            
  Interest expense, net(3)     30.0     42.8     51.3     63.1     59.0     14.6     15.7  
  Other loss             0.3     0.5     0.1     0.1      
  Equity in loss of joint venture(4)             3.4     6.7     4.0     0.3     0.4  
   
 
 
 
 
 
 
 
Income (loss) before income taxes     (68.1 )   (155.2 )   (229.7 )   (38.6 )   46.4     19.2     28.7  
Income tax expense (benefit)     2.3     (0.2 )       (1.9 )   0.1          
   
 
 
 
 
 
 
 
Net income (loss)   $ (70.4 ) $ (155.0 ) $ (229.7 ) $ (36.7 ) $ 46.3   $ 19.2   $ 28.7  
   
 
 
 
 
 
 
 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Basic   $ (3.32 ) $ (6.28 ) $ (9.30 ) $ (1.49 ) $ 1.87   $ 0.78   $ 1.15  
Diluted     (3.32 )   (6.28 )   (9.30 )   (1.49 )   1.84     0.77     1.11  
Weighted Average Shares Outstanding:                                            
Basic     21.2     24.7     24.7     24.6     24.7     24.6     25.0  
Diluted     21.2     24.7     24.7     24.6     25.2     24.9     25.9  

Cash Flow Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cash flow provided by (used in) operating activities(5)   $ 98.8   $ (59.8 ) $ (65.0 ) $ 172.8   $ 34.2   $ 19.8   $ (15.2 )
Cash flow used in investing activities     (217.8 )   (70.6 )   (152.1 )   (102.7 )   (49.6 )   (22.0 )   (19.0 )
Cash flow provided by (used in) financing activities(5)     156.8     152.9     98.3     13.2     (2.4 )   (1.2 )    
Capital expenditures     34.6     69.6     147.1     115.4     57.4     17.5     19.0  

39


 
 
  Year Ended December 31,
   
 
 
  As of March 30,
2008

 
 
  2003(1)
  2004
  2005
  2006
  2007
 
 
  (dollars in millions)

   
 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Cash and cash equivalents   $ 106.4   $ 128.9   $ 10.1   $ 93.4   $ 75.6   $ 41.4  
  Accounts receivable, net     114.5     123.2     90.8     82.1     81.4     138.4  
  Inventories, net     197.3     279.3     340.1     337.8     362.8     358.5  
  Property, plant and equipment, net     414.1     407.7     485.1     530.4     507.0     513.3  
  Total assets     1,499.7     1,589.0     1,561.8     1,658.7     1,620.9     1,645.2  
  Total debt(6)     570.4     697.9     693.0     688.3     683.0     683.0  
  Stockholders' deficit     (322.9 )   (554.5 )   (773.0 )   (693.3 )   (665.8 )   (629.1 )

(1)
Includes Aerostructures Corporation's consolidated results of operations from July 2, 2003, the effective date of our acquisition of Aerostructures Corporation.

(2)
During the fourth quarter of 2005, we recorded stock compensation income of $6.4 million included in general and administrative expenses to reflect the impact of an estimated decrease in the fair value of our common stock related to non-recourse notes previously issued to officers for stock purchases and decreased deferred compensation liability. In 2003, 2006, 2007 and the three months ended April 1, 2007 and March 30, 2008, we recorded stock compensation expense of $11.1 million, $3.0 million, $5.2 million, $0.7 million and $0.6 million, respectively. See notes to our consolidated financial statements included elsewhere in this prospectus for a further discussion on stock-based compensation.

(3)
Interest expense, net, reflects interest income and expense, and includes the effects of interest rate swaps and amortization of capitalized debt origination costs.

(4)
In April 2005, we entered into a joint venture agreement with Alenia for a 50% equity interest in Global Aeronautica. Global Aeronautica integrates major components of the fuselage and performs related testing activities for the 787. On March 26, 2008, we entered into an agreement to sell our entire equity interest in Global Aeronautica to Boeing. This sale was consummated on June 10, 2008 and, as a result, we will record a one-time gain on the sale for the period ended June 29, 2008 and thereafter our results of operations will no longer be impacted by this joint venture.

(5)
Amounts previously disclosed for 2004 have been updated to reflect a reclassification of $35 million in grants received from the State of Texas from operating activities to financing activities.

(6)
Total debt as of December 31, 2003, 2004, 2005 and 2006 includes $4.5 million, $2.9 million, $2.0 million and $1.3 million, respectively, of capital leases. As of December 31, 2007 and March 30, 2008, we had no capital leases.

40



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 consolidated financial statements and the related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, 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 "Special Note Regarding Forward-Looking Statements." You should also review the "Risk Factors" section of this prospectus 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

        We are a leading global manufacturer and developer of aerostructures serving commercial, military and business jet aircraft. Our products are used on many of the largest and longest running programs in the aerospace industry. We are also a key supplier on newer platforms with high growth potential. We generate the largest portion of our revenues from the commercial aircraft market; however, as shown in the following table, we are diversified across our markets with each of the military and business jet markets providing significant portions of our revenues during each of the past three years.

 
  Year Ended December 31, 2005
  Year Ended December 31, 2006
  Year Ended December 31, 2007
 
 
  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

 
 
  (in millions)
 
Market:                                
    Commercial   $ 602.7   46 % $ 699.3   45 % $ 794.5   49 %
    Military     471.7   36 %   560.9   36 %   530.0   33 %
    Business jets     222.8   18 %   290.7   19 %   301.0   18 %
   
     
     
     
  Total revenue   $ 1,297.2       $ 1,550.9       $ 1,625.5      
   
     
     
     

        Our customer base consists of the leading aerospace OEMs, including Airbus, Bell Helicopter, Boeing, Cessna, Gulfstream, Hawker Beechcraft, Lockheed Martin, Northrop Grumman and Sikorsky, as well as the U.S. Air Force. However, as shown in the following table, during the past three years, we generated over 80% of our revenues from our three largest customers, Airbus, Boeing and Gulfstream.

 
  Year Ended December 31, 2005
  Year Ended December 31, 2006
  Year Ended December 31, 2007
 
 
  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

 
 
  (in millions)
 
Customer:                                
    Boeing   $ 728.9   56 % $ 857.9   55 % $ 926.6   57 %
    Airbus     186.3   14 %   161.8   10 %   206.2   13 %
    Gulfstream     183.9   14 %   248.4   16 %   259.1   16 %
   
     
     
     
  Total   $ 1,099.1       $ 1,268.1       $ 1,391.9      
   
     
     
     

41


        Although the majority of our revenues are generated by sales into the U.S. market, as shown on the following table, a significant portion of our revenues are generated by sales to OEMs located outside of the United States.

 
  Year Ended December 31, 2005
  Year Ended December 31, 2006
  Year Ended December 31, 2007
 
 
  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

  Revenue
  Percent
of Total
Revenue

 
 
  (in millions)
 
Market:                                
    United States   $ 1,094.0   84 % $ 1,387.5   89 % $ 1,419.3   87 %
    International     203.2   16 %   163.4   11 %   206.2   13 %
   
     
     
     
  Total revenue   $ 1,297.2       $ 1,550.9       $ 1,625.5      
   
     
     
     

        Most of our 2007 revenues were generated under long-term contracts and nearly 90% of our 2007 revenues were generated on programs on which we are the sole-source provider. Our customers typically place orders well in advance of required deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was approximately $2.4 billion, $3.3 billion, $3.4 billion and $3.9 billion at December 31, 2005, 2006, 2007 and March 30, 2008, respectively. Our calculation of backlog includes only firm orders for commercial and business jet programs and funded orders for government programs, which causes our backlog to be substantially lower than the estimated aggregate dollar value of our contracts and may not be comparable to others in the industry. Our backlog may fluctuate at any given time depending on whether we have received significant new firm orders, funded orders or authorizations to proceed before the date of measurement. For example, our military funded orders or authorizations to proceed generally are awarded when the Department of Defense budget for the relevant year has been approved, resulting in a significant increase in backlog at that time.

        For our commercial and business jet aircraft programs, changes in the economic environment and the financial condition of airlines may cause our customers to increase or decrease deliveries, adjusting firm orders that would affect our backlog. For our military aircraft programs, the Department of Defense and other government agencies have the right to terminate both our contracts and/or our customers' contracts either for default or, if the government deems it to be in its best interest, for convenience.

        The market for our commercial, military and business jet programs has historically been cyclical. While the commercial, military and business jet markets are currently experiencing a period of increasing production, as discussed below our business could be adversely affected by significant changes in the U.S. or global economy or changes to the current needs of the U.S. military.

        Commercial Aircraft.    Sales to the commercial aircraft market are directly and significantly affected by the financial health of the commercial airline industry, passenger and cargo air traffic, the introduction of new aircraft models, and the availability and profile of used aircraft. During the past three years we have benefited by increased demand for our commercial aircraft products with related revenues increasing at a CAGR of approximately 15% from 2005 to 2007. We expect to continue to benefit from this increased demand for our commercial aircraft products in future periods with our principal commercial aircraft customers, Airbus and Boeing, both projecting that the number of commercial and freighter aircraft in service will more than double from 2006 to 2026. We also expect deliveries of wide body aircraft, which represented 94% of our revenue from the commercial market in 2007, to grow at a CAGR of approximately 11% over the next five years. Although the commercial aerospace industry is in a cycle of increased production, our business could be adversely affected by

42



significant changes in the U.S. or global economy that affect the commercial airline industry, including high fuel prices and disruption of the global credit markets.

        We expect that our commercial programs will also be materially affected during upcoming periods by our investments in, and deliveries under, our 787 program. We continue to make significant investments in our 787 program and expect the program to contribute to our revenue growth in the future. On April 9, 2008, Boeing announced that initial deliveries of the 787 program had been rescheduled to the third quarter of 2009 rather than early 2009. Subsequent to this announcement Boeing provided us an updated delivery schedule, which reduces the number of deliveries we will make to them in the near term. We believe we will be able to effectively manage our costs, work with our suppliers and Boeing to mitigate the impact of this schedule change. However, future delays could have a material adverse effect on our financial condition, results of operations and cash flows.

        Military Aircraft.    Sales to the military aircraft market are driven by national defense spending, procurement funding decisions, global geopolitical conditions and current operational use of the existing military aircraft fleet. The revenues generated by our military aircraft programs increased at a CAGR of approximately 6% from 2005 to 2007. In February 2008, President Bush proposed a $183.8 billion Fiscal Year (FY) 2009 procurement defense budget, which represents an increase of approximately 17% from the FY 2007 procurement budget, not including emergency supplemental appropriations. Due to the current and anticipated pace of military operations in the Middle East and the U.S. military's need to more rapidly repair or replace its existing fleet of equipment, we expect that spending for defense procurement should remain robust for at least the next several years. We believe that this will result in continued growth in our rotorcraft programs since they are some of the key equipment being used in the Middle East. Historically, the majority of our military revenue and a significant portion of our total revenue have been generated from our C-17 program. We currently have firm orders from Boeing to support C-17 production through 2009. In addition, Boeing has announced that it will provide funding to its suppliers for the production of an additional 30 C-17 aircraft. We have received authorization from Boeing to initiate orders for long lead material for 15 of the 30 aircraft. Additionally, on June 30, 2008, President Bush signed a bill to provide funding for 15 additional C-17 aircraft. However, our business could be adversely impacted if the U.S. Congress does not fund additional C-17 aircraft and Boeing decides not to fund beyond their current commitment.

        Business Jet Aircraft.    Sales to the business jet market are driven by long-term economic expansion, the increasing inconvenience of commercial airline travel, growing international acceptance and demand for business jet travel, increased fractional ownership and the introduction of new aircraft models. During the past three years we have benefited by increased demand for our business jet products with related revenues increasing at a CAGR of approximately 16% from 2005 to 2007. We believe business jet deliveries will remain strong over the next several years. As a major supplier to the top-selling Gulfstream IV and V families of aircraft, Citation X and Hawker 800 programs, we believe we are well positioned in key segments of the business jet market. Nevertheless, the business jet industry is subject to many of the same risks as the commercial jet industry and our business could be adversely affected by significant changes in the U.S. or global economy.

Recent Developments

Program Developments

        On January 22, 2008, we signed a five-year contract with Sikorsky Aircraft Corp. to manufacture cabin structures for three variants of the H-60 Black Hawk helicopter program. The estimated contract value is approximately $600 million for deliveries through 2012.

        On March 3, 2008, the U.S. Air Force announced that the Northrop Grumman/EADS entrant was selected for the KC-45A tanker program, the replacement for the KC-135, and that the KC-45A will be

43



based on a modified version of the Airbus A330 airframe. On March 11, 2008, Boeing filed a protest regarding the Air Force's decision to select the A330 airframe over Boeing's entrant in the contract competition, which is based on a modified version of Boeing's commercial 767 airframe. On June 18, 2008, the GAO found in Boeing's favor on a number of issues related to its protest and, on June 18, 2008, Defense Secretary Robert Gates announced that the Air Force would reopen the bidding process on the contract. To the extent that the KC-45A will be based on modified versions of either the A330 or the 767 commercial airframe, we do not expect our results of operations will be materially affected by the ultimate selection of either over the other because we provide aerostructures for both of these commercial aircraft.

        On April 2, 2008, we signed a multi-year contract with Bell Helicopter to manufacture the empennage, ramp and ramp door for the V-22 Osprey. We estimate the contract value to be approximately $400 million for deliveries through 2013.

        On April 9, 2008, Boeing announced the rescheduling of their initial deliveries of the 787 program to the third quarter of 2009 rather than early 2009. Subsequent to this announcement Boeing provided us an updated delivery schedule reducing the number of deliveries we will make to them through 2009. See "Risk Factors — Our business depends, in large part, on the future sales of the Boeing 787 program and further delays in the delivery schedule and renegotiation of contract terms for the 787 program could have a material adverse effect on our financial condition, results of operations and cash flows."

        On April 11, 2008, Boeing announced they would authorize their suppliers to initiate orders for long lead materials for 20 C-17 aircraft in addition to the 10 previously authorized. To date we have received authorization from Boeing to initiate long lead orders for a total of 15 aircraft. Additionally, on June 30, 2008, President Bush signed a bill to provide funding for 15 additional C-17 aircraft. See "Risk Factors — A decline in the U.S. defense budget or change in funding priorities may reduce demand for our customer's military aircraft and reduce our sales of products used on military aircraft."

        On May 19, 2008, we announced the signing of a contract with Cessna for engineering design, tooling and production of the wing for its new Citation Columbus 850 business jet. The contract is a life of program contract and has a potential value of more than $1 billion through 2020. The Citation Columbus is a large cabin, intercontinental aircraft with a target range of 4,000 nautical miles at Mach .80 carrying eight passengers.

Senior Credit Facilities

        On May 6, 2008, we borrowed an additional $200.0 million of term loans under our Incremental Facility. We received proceeds, net of fees and expenses, of approximately $184.8 million from the Incremental Facility. We expect to use the remaining amount for general corporate purposes. See "— Liquidity and Capital Resources."

Basis of Presentation

        The following provides a brief description of some of the items that appear in our financial statements and general factors that impact these items.

        Revenue and Profit Recognition.    We record revenue and profit on our long-term contracts using a percentage of completion method with units-of-delivery as our basis to measure progress toward completing the contract. Under this method of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire period of performance, which can exceed one year. As our contracts can span multiple years, we often segment the contracts into production lots for the purposes of accumulating and allocating cost. Under the units-of-delivery percentage of completion method, revenue on a contract is recorded as the units are delivered and accepted during the period at

44



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. Profit is recognized as the difference between revenue for the units delivered and the estimated costs for the units delivered. The estimated profit margin is calculated separately for each production lot within the overall contract. For example, on our production contracts, as a unit is delivered and accepted by our customer, we recognize revenue based on that unit's negotiated price, costs based on the total estimated costs at completion divided by the total units to be delivered and profit based on our estimated margin for the related production lot.

        Amounts representing contract change orders or claims are only included in revenue when such change orders or claims have been settled with our customer and to the extent that units have been delivered. Additionally, some of our contracts contain terms or provisions, such as price re-determination or price escalation, which are included in our estimate of contract value when the amounts can be reliably estimated and their realization is reasonably assured.

        The impact of revisions in estimates is recognized on the cumulative catch-up basis in the period in which such revisions are made. Changes in our estimates of contract value or profit can impact revenue and/or cost of sales. For example, in the case of a customer settlement of a pending change order or claim, we may recognize additional revenue and/or margin depending on the production lot's stage of completion. Provisions for anticipated losses on contracts are recorded in the period in which they become evident ("forward losses").

        For a further discussion of our revenue recognition policy, see "— Critical Accounting Policies and Estimates — Revenue and Profit Recognition."

        Cost of sales.    Cost of sales includes direct production costs such as labor (including fringe benefits), material costs, manufacturing and engineering overhead and production tooling costs. Examples of costs included in overhead are costs related to quality assurance, information technology, indirect labor and fringe benefits, depreciation and amortization and other support costs such as supplies and utilities.

        Selling, general and administrative expenses.    Selling, general and administrative expenses include expenses for executive management, program management, business management, human resources, accounting, treasury, and legal. The major cost elements of selling, general and administrative expenses include salary and wages, fringe benefits, stock compensation expense, travel and supplies. In addition, these expenses include period expenses for non-recurring program development, such as the 787 start up costs, research and development, and other non-recurring activities, as well as costs that are not allowed under U.S. Government contract terms.

        Interest expense, net.    Interest expense, net reflects interest income and expense, and includes the effects of interest rate swaps and the amortization of capitalized debt origination costs.

        Other loss.    Other loss represents miscellaneous items unrelated to our core operations.

        Equity in (loss) of joint venture.    Equity in (loss) of joint venture reflects our share of the loss from Global Aeronautica since its formation in April 2005. On March 26, 2008, we entered into an agreement to sell our entire equity interest in Global Aeronautica to Boeing. This transaction was consummated on June 10, 2008 and, as a result, we will record a one-time gain on the sale for the period ended June 29, 2008 and thereafter our results of operations will no longer be impacted by this joint venture.

45


Results of Operations

        In 2007 and the first quarter of 2008, our results of operations improved significantly as compared to the prior four years during which we recognized significant net losses. These improvements in our results of operations have been primarily driven by the introduction of our current management team and our focus on improving our operational performance, our cost structure, including a significant work force reduction initiated in 2006, the discontinuation of a facility consolidation program initiated in 2004 by the previous management team, which failed to produce its anticipated benefits, and improving our pricing and payment terms on key contracts.

 
   
   
   
   
   
   
  Three Months Ended
 
 
  Year Ended December 31, 2005(1)
  Year Ended December 31, 2006
  Year Ended December 31, 2007
 
 
  April 1, 2007
  March 30, 2008
 
 
  Amount
  Percent
of Total
Revenue

  Amount
  Percent
of Total
Revenue

  Amount
  Percent
of Total
Revenue

  Amount
  Percent
of Total
Revenue

  Amount
  Percent
of Total
Revenue

 
 
  (dollars in millions)
 
Revenue:                                                    
  Commercial   $ 602.7   46 % $ 699.3   45 % $ 794.5   49 % $ 193.8   51 % $ 215.2   51 %
  Military     471.7   36 %   560.9   36 %   530.0   33 %   114.5   30 %   137.9   32 %
  Business Jets     222.8   18 %   290.7   19 %   301.0   18 %   72.4   19 %   72.3   17 %
   
     
     
     
     
     
Total revenue   $ 1,297.2       $ 1,550.9       $ 1,625.5       $ 380.7       $ 425.4      
Costs and expenses:                                                    
  Cost of sales     1,231.8   95 %   1,274.2   82 %   1,269.3   78 %   292.5   77 %   326.3   77 %
  Selling, general and administrative     234.2   18 %   236.0   15 %   246.7   15 %   54.0   14 %   54.3   13 %
  Asset/intangible impairment charge     5.9         9.0                              
   
     
     
     
     
     
Total costs and expenses   $ 1,471.9   113 % $ 1,519.2   98 % $ 1,516.0   93 % $ 346.5   91 % $ 380.6   89 %
Operating income (loss)     (174.7 ) 13 %   31.7   2 %   109.5   7 %   34.2   9 %   44.8   11 %
Interest expense, net     (51.3 )       (63.1 )       (59.0 )       (14.6 )       (15.7 )    
Other (loss)     (0.3 )       (0.5 )       (0.1 )       (0.1 )            
Equity in (loss) of joint venture     (3.4 )       (6.7 )       (4.0 )       (0.3 )       (0.4 )    
Income taxes             1.9         (0.1 )                    
   
     
     
     
     
     
Net Income (loss)   $ (229.7 )     $ (36.7 )     $ 46.3       $ 19.2       $ 28.7      
   
     
     
     
     
     

(1)
Certain prior period amounts have been reclassified to conform with the current year presentation. See Note 5 to our annual consolidated financial statements included elsewhere in this prospectus for further explanation.

Three Months Ended March 30, 2008 Compared to Three Months Ended April 1, 2007

        Revenue.    Revenue for the three month period ended March 30, 2008 was $425.4 million, an increase of $44.7 million or 12%, compared with the same period in the prior year. When comparing the first quarter of 2008 with the same period in the prior year:

    Commercial revenue increased $21.4 million or 11%. Revenue for our Boeing programs increased $11.1 million primarily due to non-recurring sales for the 747-8 program and initial deliveries on the 787 program. In addition, revenue for our Airbus programs increased $10.3 million primarily due to higher sales for the A330 program.

    Military revenue increased $23.4 million or 20%, primarily due to higher delivery rates on the H-60 program and timing of deliveries for the Global Hawk program.

    Business Jet revenue remained flat during the period with immaterial fluctuations on a program by program basis.

        Cost of sales.    Cost of sales was 77% of revenue for each of the three month periods ended March 30, 2008 and April 1, 2007. During the first quarter of 2008, we released purchase accounting reserves of $22.6 million for the 747 program to reflect the scheduled completion of the deliveries for the 747-400 model. Offsetting this benefit was increased costs for the C-17 program primarily

46



attributable to our transition from a multi-year agreement to a single-year agreement on a going-forward basis under the C-17 program as single-year agreements typically carry increased costs.

        Selling, general and administrative expenses.    Selling, general and administrative expenses ("SG&A") remained relatively consistent during each of the three month periods ended March 30, 2008 and April 1, 2007. Non-recurring costs related to the 787 and other programs decreased by $6.2 million for the three month period ended March 30, 2008. However, this decrease was offset by a $1.2 million increase in amortization due to acceleration of the useful life of an intangible asset to reflect the completion of the deliveries for the 747-400 model and a $5.3 million increase in labor and other general administrative costs.

        Operating income (loss).    Operating income for the three month period ended March 30, 2008 was $44.8 million, compared to operating income of $34.2 million for the same period in 2007. The increase in operating income was due to increased revenue in the commercial and military markets and higher program margins on the 747 program due to the release of $22.6 million of purchase accounting reserves discussed above. This was primarily offset by lower margins on the C-17 program as it transitions from a multi-year agreement to a single-year agreement.

        Interest expense, net.    Interest expense, net for the three month period ended March 30, 2008 was $15.7 million, an increase of $1.1 million compared with $14.6 million for the same period in 2006. Interest expense increased primarily due to higher borrowings on the revolving portion of the senior secured credit facilities during the three month period ended March 30, 2008 compared with no revolver borrowings during the same period in the 2007. As of March 30, 2008, there were no borrowings under the revolving portion of our senior secured credit facilities.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

        Revenue.    Revenue for the year ended December 31, 2007 was $1,625.5 million, an increase of $74.6 million, or 5%, compared with revenue of $1,550.9 million for the prior year. When comparing the current and prior year:

    Commercial revenue increased by $95.2 million, or 14%, primarily due to price adjustments and increased delivery rates. Boeing program revenue increased $120.8 million and the Airbus program revenue increased $44.4 million. These increases were partially offset by the $70.0 million of customer settlements recorded for the year ended December 31, 2006 with no corresponding contributions to revenue for the year ended December 31, 2007.

    Military revenue decreased $30.9 million, or 6%. Increases of $69.1 million primarily due 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 of non-recurring revenue for the C-5, Global Hawk and 767 tanker programs recognized during the year ended December 31, 2006 and the completion of other small military programs.

    Business Jet revenue increased by $10.3 million, or 4%, primarily due to increased delivery rates and price adjustments of $39.3 million, which were partially offset by $29.0 million of customer settlements recorded in the year ended December 31, 2006 with no corresponding contributions to revenue in the year ended December 31, 2007.

        Cost of sales.    Cost of sales for the year ended December 31, 2007 was 78% of revenue compared to 82% of revenue for the comparable period in the prior year. Excluding the impact of the customer settlements recorded in 2006, cost of sales as a percentage of revenue in 2006 were 84%. The improvement is primarily due to margin improvements from price adjustments of approximately $42.4 million and cost reductions of approximately $61.0 million, partially offset by increased losses of $9.5 million on certain programs including the H-60 program.

47


        Selling, general and administrative expenses.    Selling, general and administrative expenses ("SG&A") for the year ended December 31, 2007 were $246.7 million, an increase of $10.7 million, or 5%, compared with SG&A expenses of $236 million in the prior year. The increase is primarily due to higher 787 program period costs of $15.6 million offset by $4.9 million of decreased labor, fringe and other general and administrative costs.

        Operating income (loss).    Operating income for the year ended December 31, 2007 was $109.5 million, compared to $31.7 million in the prior year. The increase in operating income of $77.8 million, or 245%, is primarily related to an increase in revenue and improved margins discussed above, partially offset by investment in the Boeing 787 program and the losses recorded the H-60 program.

        Interest expense, net.    Interest expense, net for the year ended December 31, 2007 was $59.0 million, a decrease of $4.1 million, or 6%, compared with $63.1 million for the same period in the prior year. Interest expense decreased due to the lower borrowings under our short-term revolver partially offset by a higher variable interest rate on our outstanding long-term bank debt.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

        Revenue.    Revenue for the year ended December 31, 2006 were $1,550.9 million, an increase of $253.7 million, or 20%, compared with revenue of $1,297.2 million for the prior year. When comparing the current and prior year:

    Commercial revenue increased approximately $96.6 million, or 16%, in 2006. This increase was primarily due to the recognition of $70 million in revenue related to customer settlements in the second quarter of 2006, and increased revenue of $60.3 million resulting from increased aircraft delivery rates on the Boeing 777, 767, and 747, partially offset by decreased revenue of $28.4 million due to reduced delivery rates on the Airbus A319 and A340.

    Military revenue increased approximately $89.2 million, or 19%, in 2006 primarily due to increased revenue of $58.2 million on the Global Hawk and $22.3 million on the H-60 programs resulting from increased delivery rates.

    Business Jet revenue increased approximately $67.9 million, or 30%, due primarily to a $29 million of customer settlements finalized in the second quarter and $35.1 million due to an increase in delivery rates for our Gulfstream programs, partially offset by a decrease of $12.5 million due to the completion of the Embraer program.

        Cost of sales.    Cost of sales as a percentage of revenue was 82% for the year ended December 31, 2006, compared with 95% for the same period in the prior year. The decrease in the cost of sales percentage was caused primarily by the absence of one-time facility consolidation and disruption expenses of $158.4 million recorded in 2005 that were not incurred in 2006, partially offset by costs recognized related to customer settlements and losses recorded on the Airbus and H-60 programs in 2006.

        Selling, general and administrative expenses.    Selling, general and administrative expenses for the year ended December 31, 2006 were $236.0 million, an increase of $1.8 million, or 1%, compared with selling, general and administrative expenses of $234.2 million for the prior year. The increase in expenses was primarily due to increases of $19.0 million in Boeing 787 investment and $9.0 million in stock compensation expense, offset by decreases of approximately $13.0 million in headcount reductions and approximately $12.0 million in net periodic costs associated with our pension and other post-retirement benefit plans.

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        Asset impairment charge.    The asset impairment charge increased $3.1 million, or 53%, compared to the prior period due to an impairment charge of $9.0 million on certain fixed assets that were originally acquired as part of the consolidation effort.

        Operating income (loss).    Operating income for the year ended December 31, 2006 was $31.7 million, compared to an operating loss of $(174.7) million for the same period in the prior year. The positive change in operating income of $206.4 million is primarily due to the absence of facility consolidation expenses of $158.4 million recorded in 2005 that were not incurred in 2006, favorable customer settlements and increased revenue combined with our cost reduction efforts and reduced benefit costs. These favorable changes were partially offset by losses on the Airbus and H-60 programs.

        Interest expense, net.    Interest expense, net for the year ended December 31, 2006 was $63.1 million, an increase of $11.8 million, or 23%, compared with $51.3 million for the prior year. Interest expense, net, increased primarily due to the increase in our borrowing levels under the revolving credit agreement, combined with higher variable interest rates than in the prior year.

Liquidity and Capital Resources

        Liquidity is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. The primary sources of our liquidity include cash flow from operations and borrowing capacity through our credit facility and the long-term capital markets. Our liquidity requirements and working capital needs depend on a number of factors, including the level of delivery rates under our contracts, the level of developmental expenditures related to new programs, growth and contractions in the business cycles, contributions to our pension plans as well as interest and debt payments. Our liquidity requirements fluctuate from period to period as a result of changes in the rate and amount of our investments in our programs, changes in delivery rates under existing contracts and production associated with new contracts. In upcoming periods, our 787 program will be a key driver of our liquidity and working capital requirements as we continue our investment in, and increase our production rate under, that program. On April 9, 2008, Boeing announced that initial deliveries of the 787 program had been rescheduled to the third quarter of 2009 rather than early 2009. Subsequent to this announcement Boeing provided us an updated delivery schedule, which reduces the number of deliveries we will make to them in the near term. We believe we will be able to effectively manage our costs, work with our suppliers and Boeing to mitigate the impact of this schedule change on our financial position. However, future delays could have a material adverse effect on our financial condition, results of operations and cash flows.

        For certain aircraft programs, milestone or advance payments finance working capital, which helps to improve our liquidity. In addition, we may, in the ordinary course of business, settle outstanding claims with customers or suppliers or we may receive payments for previously unnegotiated change orders. Settlement of pending claims can have a significant impact on our results of operations and cash flows. We recently reached an interim settlement regarding certain pending claims related to our 787 program. These claims related to non-recurring costs we incurred in developing the program as well as increases in our expected production costs due to aircraft design changes. In addition, we received advance payments of approximately $122.0 million from Boeing in March 2008, which will be liquidated as shipments occur. We are continuing our discussions with Boeing on future pricing considerations with an objective of resolving such considerations in a timely manner.

        We believe that cash flow from operations, cash and cash equivalents on hand and funds available under the revolving portion of our credit facility will provide adequate funds for our ongoing working capital and capital expenditure needs and near term debt service obligations to allow us to meet our current contractual commitments for at least the next twelve months. Our ability to refinance our indebtedness or obtain additional sources of financing will be affected by economic conditions and financial, business and other factors, some of which are beyond our control. Management has

49



implemented and continues to implement cost savings initiatives that we expect should have a positive impact on the future cash flows needed to satisfy our long-term cash requirements.

        On July 2, 2003, we issued $270.0 million of 8% Senior Notes due 2011 ("Senior Notes") with interest payable on January 15 and July 15 of each year, beginning January 15, 2004. We may redeem the notes in full or in part by paying premiums specified in the indenture governing our outstanding Senior Notes. The notes are senior unsecured obligations guaranteed by all of our existing and future domestic subsidiaries.

        We entered into $650 million of senior secured credit facilities pursuant to a credit agreement dated December 22, 2004. Our senior secured credit facilities are comprised of a $150 million six year revolving loan ("Revolver"), a $75 million synthetic letter of credit facility and a $425 million seven year term loan B. The term loan amortizes at $1.0 million per quarter with a final payment at the maturity date of December 22, 2011.

        On May 6, 2008, we entered into a joinder agreement whereby the lenders thereunder agreed to fund the Incremental Facility, pursuant to which we borrowed an additional $200.0 million of term loans under our existing senior credit facilities. We received proceeds, net of fees and expenses, of approximately $184.8 million from the Incremental Facility, which we expect to use for general corporate purposes.

        After the incurrence of the indebtedness under the Incremental Facility, $612.0 million is outstanding under our senior credit facilities. The interest rates per annum applicable to the Incremental Facility are, at our option, the ABR or Eurodollar Rate plus, in each case, an applicable margin equal to 3.00% for ABR loans and 4.00% for Eurodollar Rate loans, subject to a Eurodollar Rate floor of 3.50%.

        Except for amortization and interest rate, the terms of the Incremental Facility, including mandatory prepayments, representations and warranties, covenants and events of default, are the same as those applicable to the existing term loans under our senior credit facilities and all references to our senior credit facilities shall include the Incremental Facility. The term loans under the Incremental Facility will be repayable in equal quarterly installments of $470,000 starting in September 2008, with the balance due on December 22, 2011.

        As of March 30, 2008, we had no borrowings outstanding under the Revolver. We had long-term debt of approximately $683.0 million, which included $413.0 million incurred under our senior credit facilities and $270.0 million of Senior Notes. Additionally, as described above, on May 6, 2008, we incurred an additional $200.0 million under our senior credit facilities. In addition, we had $46.1 million in outstanding letters of credit under the $75 million synthetic facility.

        Under the credit agreement, we have the option to convert up to $25 million of the letter of credit facility to outstanding term loans, which would also be subject to the same terms and conditions as the outstanding term loans made as of December 2004. We are obligated to pay an annual commitment fee on the unused portion of our senior credit facilities of 0.5% or less, based on our leverage ratio.

        Credit Agreements and Debt Covenants.    The agreements governing our debt contain customary affirmative and negative covenants for facilities of this type, including limitations on our indebtedness, liens, investments, distributions, mergers and acquisitions, dispositions of assets, subordinated debt transactions with affiliates and mandatory prepayments in the event of certain asset dispositions, debt incurrence and equity sales. The credit agreement also includes the requirement that we maintain certain financial covenants including a leverage ratio, the requirement to maintain minimum interest coverage ratios, as defined in the agreement, and places a limitation on our capital spending levels. The Senior Notes indenture also contains various restrictive covenants, including covenants that restrict the incurrence of additional indebtedness unless the debt is otherwise permitted under the indenture. As of

50



March 30, 2008, we were in compliance with the covenants in the indenture governing our outstanding Senior Notes.

        Our $850 million senior credit facilities (including our incremental facility) are material to our financial condition and results of operations because those facilities are our primary source of liquidity for working capital. The indenture governing our outstanding Senior Notes is material to our financial condition because it governs a significant portion of our long-term capitalization while restricting our ability to conduct our business.

        Our senior credit facilities use Adjusted EBITDA to determine our compliance with two financial maintenance covenants. See "Non-GAAP Financial Measures" below for a discussion of Adjusted EBITDA and reconciliation of that non-GAAP financial measure to net cash provided by (used in) operating activities. We are required not to permit our consolidated total leverage ratio, or the ratio of funded indebtedness (net of cash) at the end of each quarter to Adjusted EBITDA for the twelve months ending on the last day of that quarter, to exceed 4.25:1.00 for fiscal periods ending during 2008, 4.00:1.00 for fiscal 2009, 3.75:1.00 for fiscal 2010 and 3.50:1.00 thereafter. We also are required not to permit our consolidated net interest coverage ratio, or the ratio of Adjusted EBITDA for the twelve months ending on the last day of a quarter to our consolidated net interest expense for the twelve months ending on the same day, to be less than 3.50:1.00 for periods ending during 2008 and thereafter. Each of these covenants is tested quarterly, and our failure to comply could result in a default and, potentially, an event of default under our senior credit facilities. If not cured or waived, an event of default could result in acceleration of this indebtedness. Our credit facilities also use Adjusted EBITDA to determine the interest rates on our borrowings, which are based on the consolidated total leverage ratio described above. Changes in our leverage ratio may result in increases or decreases in the interest rate margin applicable to loans under our senior credit facilities. Accordingly, a change in our Adjusted EBITDA could increase or decrease our cost of funds. Our total leverage ratio and net interest coverage ratio for the three month period ended March 30, 2008 were 2.27:1.00 and 5.18:1.00, respectively. The incremental facility, pursuant to which we borrowed an additional $200.0 million of term loans, did not have a material impact on the results of these ratios.

        The indenture governing our outstanding Senior Notes contains a covenant that restricts our ability to incur additional indebtedness unless, among other things, we can comply with a fixed charge coverage ratio. We may incur additional indebtedness only if, after giving pro forma effect to that incurrence, our ratio of Adjusted EBITDA to total consolidated debt less cash on hand for the four fiscal quarters ending as of the most recent date for which internal financial statements are available meet certain levels or we have availability to incur such indebtedness under certain baskets in the indenture. Accordingly, Adjusted EBITDA is a key factor in determining how much additional indebtedness we may be able to incur from time to time to operate our business.

        Non-GAAP Financial Measures.    Periodically we disclose to investors Adjusted EBITDA, which is a non-GAAP financial measure that our management uses to assess our compliance with the covenants in our senior credit agreement, our ongoing ability to meet our obligations and manage our levels of indebtedness. Adjusted EBITDA is calculated in accordance with our senior credit agreement and includes adjustments that are material to our operations but that our management does not consider reflective of our ongoing core operations. Pursuant to our senior credit agreement, Adjusted EBITDA is calculated by making adjustments to our net income (loss) to eliminate the effect of our (1) net income tax expense, (2) net interest expense, (3) any amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness, (4) depreciation and amortization expense, (5) any extraordinary, unusual or non-recurring expenses or losses (including losses on sales of assets outside of the ordinary course of business, non-recurring expenses associated with the 787 program and certain expenses associated with our facilities consolidation efforts) net of any extraordinary, unusual or non-recurring income or gains, (6) any other non-cash charges, expenses or losses, restructuring and integration costs, (7) stock-option based compensation expenses and (8) all fees and expenses paid pursuant to our Management Agreement with Carlyle. See "Certain Relationships and Related Transactions."

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        Adjusted EBITDA for the years ended December 31, 2005, 2006, 2007 and the three months ended April 1, 2007 and March 30, 2008 was $180.1 million, $184.5 million, $277.4 million, $74.2 million and $79.3 million, respectively. The following table is a reconciliation of net cash provided by (used in) operating activities to Adjusted EBITDA:

 
  For the Years Ended
  For the
Three Months Ended

 
 
  December 31,
2005

  December 31,
2006

  December 31,
2007

  April 1,
2007

  March 30,
2008

 
 
  (in millions)
 
Net cash provided by (used in) operating activities   $ (65.0 ) $ 172.8   $ 34.2   $ 19.8   $ (15.2 )
  Interest expense, net     51.3     63.1     59.0     14.6     15.7  
  Income tax expense (benefit)         (1.9 )   0.1          
  Stock compensation expense     6.4     (3.0 )   (5.2 )   (0.7 )   (0.6 )
  Equity in losses of joint venture     (3.4 )   (6.7 )   (4.0 )   (0.3 )   (0.4 )
  Loss from asset sales and other losses     (12.7 )   (11.4 )   (1.8 )   (0.4 )   (0.3 )
  Debt amortization costs     (3.1 )   (3.1 )   (3.1 )   (0.8 )   (0.8 )
  Changes in operating assets and liabilities     (83.9 )   (129.7 )   86.9     15.9     61.2  
   
 
 
 
 
 
EBITDA   $ (110.4 ) $ 80.1   $ 166.1   $ 48.1   $ 59.6  
   
 
 
 
 
 
  Non-recurring investment in Boeing 787(1)     65.8     90.1     95.9     23.8     16.5  
  Unusual charges & other non-recurring program costs(2)     158.4     1.3     6.1     0.6     1.9  
  Loss on disposal of property, plant and equipment(3)     11.9     10.7     1.9     0.4     0.3  
  Pension & OPEB curtailment and non-cash expense(4)     50.9     (3.4 )            
  Other(5)     3.5     5.7     7.4     1.3     1.0  
   
 
 
 
 
 
Adjusted EBITDA   $ 180.1   $ 184.5   $ 277.4   $ 74.2   $ 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 recognized 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 $3.4 million, $6.7 million and $4.0 million for the years ended December 31, 2005, 2006 and 2007, respectively, and $0.3 million and $0.4 million for the three month periods ended April 1, 2007 and March 30, 2008, respectively. On June 10, 2008, we completed the sale of our entire equity interest in Global Aeronautica to Boeing and, as a result, we will record a one-time gain on the sale for the period ended June 29, 2008 and thereafter our

52


    results of operations will no longer be 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—During 2005, we recorded expenses and related disruption charges of approximately $158.4 million related to our facilities consolidation and restructuring initiative, which were included as an adjustment in the calculation of Adjusted EBITDA. The site consolidation initiative was discontinued in early 2006, with additional charges in 2006 of approximately $8.0 million. We do not expect to incur any additional significant charges related to this plan. Our credit agreement excludes the consolidation and restructuring initiative because it represents an unusual event in our operations that is not indicative of ongoing core operating performance, and accordingly the charges that have been expensed during the period are added back to Adjusted EBITDA.

    In addition, for the year ended December 31, 2006, $24.9 million of unusual expenses related to the H-60 program and $8.0 million of restructuring charges described above was offset by $31.6 million of customer settlement income. The net, $1.3 million, of these unusual items was deducted from Adjusted EBITDA.

    In 2007, we incurred $6.1 million of non-recurring costs related to a facilities rationalization initiative. We did not record any non-recurring costs related to this initiative during 2006 and 2005.

    For the three month periods ended April 1, 2007 and March 30, 2008, we incurred $0.6 million and $1.9 million, respectively, of non-recurring costs related to a facilities rationalization initiative.

    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.

(3)
Loss on disposal of property, plant and equipment ("PP&E")—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. Our credit agreement provides that those losses are reflected as an adjustment in calculating Adjusted EBITDA.

(4)
Pension and other post-employment benefits curtailment and non-cash expense related to FAS 87 and FAS 106—Our 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.

(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.

        We believe that each of the adjustments made in order to calculate Adjusted EBITDA is meaningful to investors because it gives them the ability to assess our compliance with the covenants in our senior credit agreement, our ongoing ability to meet our obligations and manage our levels of indebtedness.

        The use of Adjusted EBITDA as an analytical tool has limitations and you should not consider it in isolation, or as a substitute for analysis of our results of operations as reported in accordance with GAAP. Some of these limitations are:

    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;

53


    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.

        Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as an alternative to net income or cash flow from operations determined in accordance with GAAP. Management compensates for these limitations by not viewing Adjusted EBITDA in isolation, and specifically by using other GAAP measures, such as cash flow provided by (used in) operating activities and capital expenditures, to measure our liquidity. Our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

Cash Flow Summary

 
   
   
   
  Three Months Ended
 
 
  Year Ended December 31,
 
 
  April 1,
2007

  March 30,
2008

 
 
  2005
  2006
  2007
 
 
  (in millions)
 
Net income (loss)   $ (229.7 ) $ (36.7 ) $ 46.3   $ 19.2   $ 28.7  
Non-cash items     80.8     79.8     74.8     16.5     17.3  
Changes in working capital     83.9     129.7     (86.9 )   (15.9 )   (61.2 )
   
 
 
 
 
 
Net cash provided by (used in) operating activities     (65.0 )   172.8     34.2     19.8     (15.2 )
Net cash used in investing activities     (152.1 )   (102.7 )   (49.6 )   (22.0 )   (19.0 )
Net cash provided by (used in) financing activities     98.3     13.2     (2.4 )   (1.2 )    
   
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents     (118.8 )   83.3     (17.8 )   (3.4 )   (34.2 )
Cash and cash equivalents at beginning of year     128.9     10.1     93.4     93.4     75.6  
   
 
 
 
 
 
Cash and cash equivalents at end of year   $ 10.1   $ 93.4   $ 75.6   $ 90.0   $ 41.4  
   
 
 
 
 
 

Three Months Ended March 30, 2008 Compared to Three Months Ended April 1, 2007

        Net cash used in operating activities for the three month period ended March 30, 2008 was $15.2 million, a change of $35.0 million compared to net cash provided by operating activities of $19.8 million for the three month period ended April 1, 2007. The change primarily resulted from timing of payments received from customers, increased accounts receivable related to the 747-8 program and increased working capital requirements for the 787 program.

        Net cash used in investing activities has primarily been for capital expenditures. Net cash used for investing activities for the three months ended March 30, 2008 was $19.0 million, a decrease of $3.0 million or 14% compared to $22.0 million for the same period in 2007. This reduction is primarily due to decreases in capital spending for the 787 program.

        There was no net cash used in financing activities for the three months ended March 30, 2008. This increase of $1.2 million compared to the same period in 2007 was primarily due to the timing of the $1.0 million quarterly debt payment in 2007 versus 2008.

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Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

        Net cash provided by operating activities for the year ended December 31, 2007 was $34.2 million, a decrease of $138.6 million or 80% compared to net cash provided by operating activities of $172.8 million for the prior year. The decrease compared to the prior year was primarily due to cash received from customer settlements and advances during 2006 partially offset by improved operating results in 2007. The decrease in cash related to changes in working capital was due mainly to customer settlements of approximately $99 million and an increase in advances and progress payments of approximately $133 million in 2006.

        Cash used in investing activities generally has been used for capital expenditures. Net cash used for capital expenditures for the year ended December 31, 2007 was $57.4 million, a decrease of $58.0 million or 50% compared to $115.4 million for the prior year. The decrease reflects lower capital spending for the 787 program and the related construction for the South Carolina site compared to 2006 investment levels.

        Cash used in financing activities for the year ended December 31, 2007 was $2.4 million, a decrease of $15.6 million compared to net cash provided by financing activities of $13.2 million for the prior year. The decrease was primarily due to $17.4 million of cash received in 2006 for government grants related to our North Charleston, South Carolina facility whereas only $2.1 million was received in 2007. As of December 31, 2007, there were no outstanding borrowings under our Revolver, leaving borrowing capacity of $150.0 million available.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

        Net cash provided by operating activities for the year ended December 31, 2006 was $172.8 million, an increase of $237.8 million compared to net cash used by operating activities of $65.0 million for the prior year. The increase compared to the prior year was primarily due to cash received from customer settlements and advances during 2006 in addition to improved operating results.

        The increase in cash related to changes in working capital is due mainly to large customer settlements and advances received throughout the year. The non-cash items were relatively unchanged from the prior period as depreciation expense decreased from December 31, 2006 compared to December 31, 2005 partially offset by an increase in the equity loss in our joint venture and increased stock compensation expense of $9.4 million.

        Cash used in investing activities generally has been for capital expenditures. Net cash used for capital expenditures for the year ended December 31, 2006 was $115.4 million, a decrease of $31.7 million or 22% compared to $147.1 million for the prior year. The decrease reflects decreases in capital spending for the 787 program and the related construction for the South Carolina site compared to 2005 investment levels.

        Cash provided by financing activities for the year ended December 31, 2006 was $13.2 million, a decrease of $85.1 million or 87% compared to net cash provided by financing activities of $98.3 million for the prior year. The decrease was primarily due to the 2005 receipt of $52.6 million from the Hawthorne facility sale, as well as the decrease in cash received from governmental grants of $34.8 million. As of December 31, 2006, there were no outstanding borrowings under our Revolver, leaving borrowing capacity of $150.0 million available.

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Contractual Obligations

        The following table summarizes the scheduled maturities of financial obligations and expiration dates of commitments as of December 31, 2007:

 
  2008
  2009
  2010
  2011
  2012
  Thereafter
  Total
 
  (in millions)
Senior credit facilities(1)   $ 4.0   $ 4.0   $ 4.0   $ 401.0   $   $   $ 413.0
8% senior notes due 2011                 270.0             270.0
Operating leases     21.0     19.9     18.4     8.1     3.0     3.5     73.9
Purchase obligations(2)     1,027.7     132.7     8.8     2.5             1,171.7
   
 
 
 
 
 
 
Total   $ 1,052.7   $ 156.6   $ 31.2   $ 681.6   $ 3.0   $ 3.5   $ 1,928.6
   
 
 
 
 
 
 

(1)
In addition to the obligations in the table, at December 31, 2007, we had contractual interest payment obligations as follows: (a) variable interest rate payments on $413 million outstanding under our amended senior secured credit facilities based upon LIBOR plus the applicable margin, which correlated to an interest rate of 7.34% at December 31, 2007, and (b) $21.6 million per year on the 8% senior notes due 2011. These amounts do not reflect obligations under the Incremental Facility.

(2)
Includes contractual obligations for which we are committed to purchase goods and services as of December 31, 2007. The most significant of these obligations relate to raw material and parts supply contracts for our manufacturing programs and these amounts are primarily comprised of open purchase order commitments to vendors and subcontractors. Many of these agreements provide us the ability to alter or cancel orders and require our suppliers to mitigate the change. Even where purchase orders specify determinable prices, quantities and delivery timeframes, generally the purchase obligations remain subject to frequent modification and therefore are highly variable. As a result, we regularly experience significant fluctuations in the aggregate amount of purchase obligations, and the amount reflected in the table above may not be indicative of our purchase obligations over time. The ultimate liability for these obligations may be reduced based upon modification or termination provisions included in some of our purchase contracts, the costs incurred to date by vendors under these contracts or by recourse under normal termination clauses in firm contracts with our customers.

        In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at December 31, 2007 as detailed in the following table. Our other post-retirement benefits are not required to be funded in advance, so benefit payments are paid as they are incurred. Our expected net contributions and payments are included in the table below:

 
  Pension
Benefits

  Other
Post-
retirement
Benefits

 
  (in millions)
Benefit obligation at December 31, 2007   $ 1,813.9   $ 529.2
Plan assets at December 31, 2007     1,452.0    

Projected contributions

 

 

 

 

 

 
    2008     125.9     48.7
    2009     69.4     50.2
    2010     59.5     49.3
    2011     54.2     48.6
    2012     44.9     47.4
   
 
  Total 2008-2012   $ 353.9   $ 244.2
   
 

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        Current plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees.

Off Balance Sheet Arrangements

        None.

Inflation

        A majority of our sales are conducted pursuant to long-term contracts that set fixed unit prices and some of which provide for price adjustment through escalation clauses. The effect of inflation on our sales and earnings is minimal because the selling prices of those contracts, established for deliveries in the future, generally reflect estimated costs to be incurred in these future periods. Our estimated costs take into account the anticipated rate of inflation for the duration of the relevant contract.

        Our supply base contracts are conducted on a fixed price basis in U.S. dollars. In some cases our supplier arrangements contain escalation adjustment provisions based on accepted industry indices, with appropriate forecasting incorporated in program financial estimates. Raw materials price escalation has been mitigated through existing long-term agreements, which remain in place for several more years. Our expectations are that the continued demand for these materials will continue to put additional pressures on pricing for the foreseeable future. Strategic cost reduction plans will continue to focus on mitigating the affects of this demand curve on our operations.

Quantitative and Qualitative Disclosures About Market Risk

        As a result of our operating and financing activities, we are exposed to various market risks that may affect our consolidated results of operations and financial position. These market risks include fluctuations in interest rates, which impact the amount of interest we must pay on our variable-rate debt. Other than the interest rate swaps described below, financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments and trade accounts receivable.

        Trade accounts receivable include amounts billed and currently due from customers, amounts currently due but unbilled, certain estimated contract changes, claims in negotiation that are probable of recovery, and amounts retained by the customer pending contract completion. We continuously monitor collections and payments from customers. Based upon historical experience and any specific customer collection issues that have been identified, we record a provision for estimated credit losses, as deemed appropriate.

        While such credit losses have historically been within our expectations, we cannot guarantee that we will continue to experience the same credit loss rates in the future.

        We maintain cash and cash equivalents with various financial institutions and perform periodic evaluations of the relative credit standing of those financial institutions. We have not experienced any losses in such accounts and believe that we are not exposed to any significant credit risk on cash and cash equivalents.

        Some raw materials and operating supplies are subject to price and supply fluctuations caused by market dynamics. Our strategic sourcing initiatives are focused on mitigating the impact of commodity price risk. We have long-term supply agreements with a number of our major suppliers. We, as well as our supply base, are experiencing delays in the receipt of and price increases on metallic raw materials. Through 2008, we forecast that these raw material price increases will slow considerably. However, based upon market shift conditions and industry analysis we expect price increases to return in 2009 and beyond due to increased infrastructure demand in China and Russia, and increased aluminum and titanium usage in an ever wider range of global products. We generally do not employ forward

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contracts or other financial instruments to hedge commodity price risk, however, we are reviewing a full range of business options focused on strategic risk management for all raw material commodities.

        Our suppliers' failure to provide acceptable raw materials, components, kits and subassemblies would adversely affect our production schedules and contract profitability. We maintain an extensive qualification and performance surveillance system to control risk associated with such supply base reliance. We are dependent on third parties for all information technology services. To a lesser extent, we also are exposed to fluctuations in the prices of certain utilities and services, such as electricity, natural gas, chemical processing and freight. We utilize a range of long-term agreements and strategic aggregated sourcing to optimize procurement expense and supply risk in these categories.

Interest Rate Risks

        From time to time, we may enter into interest rate swap agreements or other financial instruments in the normal course of business for purposes other than trading. These financial instruments are used to mitigate interest rate or other risks, although to some extent they expose us to market risks and credit risks.

        We control the credit risks associated with these instruments through the evaluation of the creditworthiness of the counter parties. In the event that a counter party fails to meet the terms of a contract or agreement then our exposure is limited to the current value, at that time, of the interest rate differential, not the full notional or contract amount. Management believes that such contracts and agreements have been executed with creditworthy financial institutions. As such, we consider the risk of nonperformance to be remote.

        Management has performed sensitivity analyses to determine how market rate changes will affect the fair value of the market risk sensitive hedge positions and all other debt that we will bear. Such an analysis is inherently limited in that it represents a singular, hypothetical set of assumptions. Actual market movements may vary significantly from our assumptions. Fair value sensitivity is not necessarily indicative of the ultimate cash flow or earnings effect we would recognize from the assumed market rate movements. We are exposed to cash flow risk due to changes in interest rates with respect to the entire $612.0 million of variable rate debt under our senior credit facilities. After giving pro forma effect to our borrowings under the Incremental Facility, a one-percentage point increase in interest rates on our variable rate debt as of March 30, 2008 would decrease our annual pre-tax income by approximately $6.1 million. While there was no debt outstanding under our six-year revolving credit facility at March 30, 2008, any future borrowings would be subject to the same type of variable rate risks. All of our remaining debt is at fixed rates; therefore, changes in market interest rates under these instruments would not significantly impact our cash flows or results of operations.

        In the past, we have entered into interest rate swap agreements to reduce the impact of changes in interest rates on its floating rate debt. Under these agreements, we exchanged floating rate interest payments for fixed rate payments periodically over the term of the swap agreements. We may continue to manage market risk with respect to interest rates by entering into hedge agreements, as we have done in the past.

Foreign Currency Risks

        We are subject to limited risks associated with foreign currency exchange rates due to our contracted business with foreign customers and suppliers. As purchase prices and payment terms under the relevant contracts are denominated in U.S. dollars, our exposure to losses directly associated with changes in foreign currency exchange rates is not material. However, because the strength of the U.S. dollar has declined significantly in relation to many foreign currencies, some of our foreign suppliers have experienced exchange-rate related losses. If the U.S. dollar does not strengthen or if it continues

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to decline, we may be forced by our foreign suppliers and customers to renegotiate the terms of their respective contracts, which could have a significant impact to our margins and results of operations.

Utility Price Risks

        We have exposure to utility price risks as a result of volatility in the cost and supply of energy and in natural gas prices. To minimize this risk, we have entered into fixed price contracts at certain of our manufacturing locations for a portion of their energy usage for periods of up to three years. Although these contracts would reduce the risk to us during the contract period, future volatility in the supply and pricing of energy and natural gas could have an impact on our consolidated results of operations. A 1% increase (decrease) in our monthly average utility costs during 2007 would have increased (decreased) our cost of sales by approximately $0.3 million for the year ended December 31, 2007.

Critical Accounting Policies and Estimates

        Our discussion and analysis of our financial position and results of operations are based upon our consolidated financial statements included elsewhere in this prospectus, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses. Although we evaluate our estimates, which are based on the most current and best available information and on various other assumptions that are believed to be reasonable under the circumstances, on an ongoing basis, actual results may differ from these estimates under different assumptions or conditions. We believe the following items are the critical accounting policies and most significant estimates and assumptions used in the preparation of our financial statements. These accounting policies conform to the accounting policies contained in the consolidated financial statements included elsewhere in this prospectus.

        Accounting Estimates.    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes and, in particular, estimates of contract costs and revenues used in the earnings recognition process. We have recorded all estimated contract losses that are reasonably estimable and probable. To enhance reliability in our estimates, we employ a rigorous estimating process that is reviewed and updated at least on a quarterly basis. However, actual results could differ from those estimates.

        Revenue and Profit Recognition.    The majority of our sales are made pursuant to written contractual arrangements or "contracts" to design, develop and manufacture aerostructures to the specifications of the customer under firm fixed-price contracts. These contracts are within the scope of the American Institute of Certified Public Accountants Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, (SOP 81-1) and revenue and profits on contracts are recognized using percentage-of-completion methods of accounting. Revenue and profits are recognized on production contracts as units are delivered and accepted by the customer (the "units-of-delivery" method). Under the percentage-of-completion method of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire period of performance, which can exceed one year. Amounts representing contract change orders or claims are included in revenue only when such change orders or claims have been settled with our customer and to the extent that units have been delivered.

        Additionally, some contracts contain provisions, price re-determination or cost and/or performance incentives. Such amounts or incentives are included in contract value when the amounts can be reliably estimated and their realization is reasonably assured. The impact of revisions in profit estimates is

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recognized on a cumulative catch-up basis in the period in which the revisions are made. Provisions for anticipated losses on contracts are recorded in the period in which they become evident ("forward losses") and are first offset against costs that are included in inventory, with any remaining amount reflected in accrued contract liabilities in accordance with SOP 81-1. Revisions in contract estimates, if significant, can materially affect our results of operations and cash flows, as well as our valuation of inventory. Furthermore, certain contracts are combined or segmented for revenue recognition in accordance with SOP 81-1.

        Advance payments and progress payments received on contracts-in-process are first offset against related contract costs that are included in inventory, with any remaining amount reflected in current liabilities.

        Accrued contract liabilities consisted of the following:

 
  December 31,
2007

  March 30,
2008

 
  (in millions)
Advances and progress billings   $ 182.9   $ 232.6
Forward loss     18.3     12.6
Other     29.2     5.0
   
 
  Total accrued contract liability   $ 230.4   $ 250.2
   
 

        Accounting for the revenue and profit on a contract requires estimates of (1) the contract value or total contract revenue, (2) the total costs at completion, which is equal to the sum of the actual incurred costs to date on the contract and the estimated costs to complete the contract's scope of work and (3) the measurement of progress towards completion. The estimated profit or loss on a contract is equal to the difference between the total contract value and the estimated total costs at completion. Under the units-of-delivery percentage of completion 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 profit recorded on a contract under the units-of-delivery method is equal to the estimated total profit margin for the contract stated as a percentage of contract revenue multiplied by the revenue recorded on the contract during the period. Adjustments to original estimates for a contract's revenues, estimated costs at completion and estimated total profit are often required as work progresses under a contract, as experience is gained, and as more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications occur. These estimates are also sensitive to the assumed rate of production. Generally, the longer it takes to complete the contract quantity, the more relative overhead that contract will absorb.

        Although fixed-price contracts, which may extend several years into the future, generally permit us to keep unexpected profits if costs are less than projected, we also bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract. In a fixed-price contract, we must fully absorb cost overruns, not withstanding the difficulty of estimating all of the costs we will incur in performing these contracts and in projecting the ultimate level of revenue that may otherwise be achieved. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed price contract may reduce the profitability of a fixed price contract or cause a loss. We believe we have recorded adequate provisions in the financial statements for expected losses on fixed-price contracts, but we cannot be certain that the contract loss provisions will be adequate to cover all actual future losses.

        As mentioned above, the vast majority of our revenue is related to the sale of manufactured end item products and spare parts. Any revenue related to the provision of services is accounted for separately and is not material to our results of operations.

        Inventories.    Inventoried costs primarily relate to work in process and represent accumulated contract costs less the portion of such costs allocated to delivered items. Accumulated contract costs

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include direct production costs, manufacturing and engineering overhead, production tooling costs, and certain general and administration expenses.

        In accordance with industry practice, inventoried costs are classified as a current asset and include amounts related to contracts having production cycles longer than one year; therefore, a portion thereof will not be realized within one year. See Note 5 to our consolidated financial statements included elsewhere in this prospectus.

        Goodwill.    Goodwill is tested for impairment at least annually, by reporting unit in accordance with the provisions of SFAS 142. Under SFAS 142, the first step of the goodwill impairment test used to identify potential impairment compares the fair value of a reporting unit with its carrying value. We have concluded that we are a single reporting unit. Accordingly, all assets and liabilities are used to determine our carrying value. Since we currently have an accumulated deficit, there have been no impairment charges recognized in 2005, 2006, 2007 or the three months ended March 30, 2008.

        For this testing we use an independent valuation firm to assist in the estimation of enterprise fair value using standard valuation techniques such as discounted cash flow, market multiples and comparable transactions. The discounted cash flow fair value estimates are based on management's projected future cash flows and the estimated weighted average cost of capital. The estimated weighted average cost of capital is based on the risk-free interest rate and other factors such as equity risk premiums and the ratio of total debt and equity capital.

        We must make assumptions regarding estimated future cash flows and other factors used by the independent valuation firm to determine the fair value. If these estimates or the related assumptions change, we may be required to record non-cash impairment charges for goodwill in the future.

        Post-Retirement Plans.    The liabilities and net periodic cost of our pension and other post-retirement plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, the expected long-term rate of asset return, the assumed average rate of compensation increase and rate of growth for medical costs. The actuarial assumptions used to calculate these costs are reviewed annually. Assumptions are based upon management's best estimates, after consulting with outside investment advisors and actuaries, as of the annual measurement date.

        The assumed discount rate utilized is based on a point in time estimate as of our December 31 annual measurement date. This rate is determined based upon on a review of yield rates associated with long-term, high quality corporate bonds as of the measurement date and use of models that discount projected benefit payments using the spot rates developed from the yields on selected long-term, high quality corporate bonds. The effect of changing the discount rate 25 basis points is shown in Note 14 to our consolidated financial statements included elsewhere in this prospectus.

        The assumed expected long-term rate of return on assets is the weighted average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the Projected Benefit obligation ("PBO"). The expected average long-term rate of return on assets is based principally on the counsel of our outside investment advisors and was projected at 8.5% in 2005, 2006 and 2007. This rate is based on actual historical returns and anticipated long-term performance of individual asset classes with consideration given to the related investment strategy. This rate is utilized principally in calculating the expected return on plan assets component of the annual pension expense. To the extent the actual rate of return on assets realized over the course of a year differs from the assumed rate, that year's annual pension expense is not affected. The gain or loss reduces or increases future pension expense over the average remaining service period of active plan participants expected to receive benefits.

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        The assumed average rate of compensation increase represents the average annual compensation increase expected over the remaining employment periods for the participating employees. This rate is estimated to be 4% and is utilized principally in calculating the PBO and annual pension expense.

        In addition to our defined benefit pension plans, we provide certain healthcare and life insurance benefits for certain eligible retired employees. Such benefits are unfunded as of December 31, 2007. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meet specified age and years of service requirements. Election to participate for some employees must be made at the date of retirement. Qualifying dependents at the date of retirement are also eligible for medical coverage. Current plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees. From time to time, we have made changes to the benefits provided to various groups of plan participants. Premiums charged to most retirees for medical coverage prior to age 65 are based on years of service and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also have provisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, schedules of reasonable fees, preferred provider networks, coordination of benefits with other plans, and a Medicare carve-out. A one-percentage point shift in the medical trend rate would have the effect shown in Note 14 to our consolidated financial statements included elsewhere in this prospectus.

        In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 158, Employer's Accounting for Defined Benefit Pension and Other Post-retirement Plans—an Amendment of FASB Statements No. 87, 88, 106 and 132(R) ("SFAS 158"). SFAS 158 requires an employer that is a business entity and sponsors one or more single employer benefit plans to recognize the funded status of the benefit obligation in our statement of financial position. The funded status is measured as the difference between the fair value of the plan's assets and the projected benefit obligation (PBO) or accumulated post-retirement benefit obligation (APBO) of the plan using a December 31 measurement date. We have implemented SFAS 158 in our financial statements for the year ended December 31, 2007. In order to recognize the funded status, we determined the fair value of the plan assets. The majority of our plan assets are publicly traded investments that were valued based on the December 31, 2007 publicly quoted market price. Investments that are not publicly traded were valued based on the most current version of available financial information and internal due diligence was performed to assess whether the valuation process was reasonable.

Accounting Changes and Pronouncements

        In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. We adopted SFAS No. 157 for our financial assets and liabilities on January 1, 2008 and it has not materially affected our financial statements. The FAS 157 requirements for certain non-financial assets and liabilities have been deferred until the first quarter of 2009 in accordance with Financial Accounting Standards Board Staff Position (FSP) 157-2. See Note 15 to our interim unaudited condensed consolidated financial statements for a summary of the assets and liabilities that are measured at fair value as of March 30, 2008.

        In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 expands the use of fair value measurement by permitting entities to choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. We adopted SFAS No. 159 on January 1, 2008 and did not elect the fair value option. Thus, it had no material impact on our financial statements.

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        In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)), which replaces SFAS No. 141. SFAS No. 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, any non-controlling interest in the acquiree, and any goodwill acquired to be measured at their fair value at the acquisition date. The Statement also establishes disclosure requirements that will enable users to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for acquisitions occurring in fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) will have an impact on accounting for business combinations that occur after the adoption date.

        In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS No. 161). SFAS No. 161 requires entities to provide greater transparency through additional disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of SFAS No. 161 is not expected to have a material impact on our financial statements as we currently do not participate in derivative or hedging instruments.

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BUSINESS

Overview

        We are a leading global manufacturer of aerostructure products for commercial, military and business jet aircraft. We develop and manufacture a wide range of complex aerostructures such as fuselages, wing and tail assemblies, engine nacelles, flight control surfaces as well as helicopter cabins. Our diverse and long-standing customer base consists of the leading aerospace original equipment manufacturers, or OEMs, including Airbus, Bell Helicopter, Boeing, Cessna, Gulfstream, Hawker Beechcraft, Lockheed Martin, Northrop Grumman and Sikorsky, as well as the U.S. Air Force. We believe that our new product and program development expertise, engineering and composite capabilities, the importance of the products we supply and the advanced manufacturing capabilities we offer make us a critical partner to our customers. We collaborate with our customers and use the latest technologies to address their needs for complex, highly engineered aerostructure components and subsystems. Our products are used on many of the largest and longest running programs in the aerospace industry, including the Airbus 330/340, Boeing 747, 767, 777 and C-17 Globemaster III, Lockheed Martin C-130, Gulfstream IV and V families of aircraft, as well as significant derivative aircraft programs such as the 747-8. We are also a key supplier to our customers on newer platforms, which we believe have high growth potential, such as the Boeing 787 Dreamliner, Global Hawk UAV, V-22 Osprey, the Black Hawk series of helicopters and the KC-45A military tanker program.

        We have a diverse revenue base with sales to the commercial, military and business jet markets representing 49%, 33% and 18% of our 2007 total revenues, respectively. Most of our 2007 revenues were generated under long-term contracts and nearly 90% of our 2007 revenues were generated on programs on which we are the sole-source provider. Our customers typically place orders well in advance of required deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was approximately $3.4 billion and $3.9 billion at December 31, 2007 and March 30, 2008, respectively. Our calculation of backlog includes only firm orders from our OEM customers for commercial and business jet programs and funded orders for government programs, which causes our backlog to be substantially lower than the estimated aggregate dollar value of our contracts and may not be comparable to others in the industry.

        We have significant technological and engineering expertise with the latest generation of composite materials, which we believe was a key factor in our selection as one of the primary structural partners for the 787 program. The 787 program is Boeing's new composite commercial wide body program and we play a key role in this program as the designer and supplier of a significant portion of the 787 fuselage. Since the 787 program was launched in April 2004, Boeing has received over 890 orders from more than 50 customers worldwide, making it the fastest-selling new commercial aircraft in history.

Market Opportunity

        We estimate that the global market for aerostructures generated approximately $28 billion of total sales in 2007. Demand for the aerostructures we produce is largely driven by aircraft build rates, which are, in turn, driven by demand for new aircraft. This demand is influenced by market and economic trends within the commercial, military and business jet markets. The following provides an overview of the major growth drivers and current trends in each of these markets.

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    Commercial Aircraft Market

        The commercial aircraft market can be categorized by aircraft size and seating as follows:

    Large wide-body aircraft with twin aisles (more than 200 seats).  This category includes the Boeing 747, 767, 777 and 787 and the Airbus A330/340 and A380, as well as the A350XWB, planned for entry into service in 2013.

    Smaller narrow-body aircraft with single aisles (excluding regional aircraft) (100 to 200 seats).  This category includes the Boeing 737 and the Airbus A320 family (A318/319/320/321).

    Regional jets (approximately 40 to 110 seats).  This category includes the Bombardier CRJ Series and the Embraer ERJ 135, 140 and 145 aircraft. Embraer also produces larger (70-108 seats) regional aircraft such as the ERJ 170/175 and ERJ 190/195.

        Demand for new commercial aircraft is driven by many factors, including general economic conditions, passenger and cargo air traffic, airline profitability, the introduction of new aircraft models, and the availability and profile of used aircraft. The primary manufacturers of large commercial aircraft are Airbus and Boeing, both of which have projected that the number of commercial and freighter aircraft in service will more than double from 2006 to 2026. While Boeing and Airbus generally agree in the magnitude of the growth in the market, the manufacturers differ in their projections of numbers of aircraft and in their views of the size and type of aircraft that will be delivered over that timeframe. The long-term growth projections used in their latest forecasts are:

 
  Annual Passenger Growth
  Annual Cargo Growth
 
Airbus   4.8 % 6.0 %
Boeing   5.0 % 6.1 %

        The order book, which was reported by the commercial OEMs to be more than 7,450 aircraft as of December 31, 2007, suggests that deliveries will continue at historically high levels well into the next decade. According to Airline Monitor, net orders for commercial aircraft from Boeing and Airbus reached an all-time high of 2,863 in 2007, up 55% from 1,848 in 2006. Airline Monitor estimates that total deliveries of Boeing and Airbus commercial aircraft will increase 13% from 2007 levels to 1,005 in 2008 and average over 1,100 aircraft per year over the next five years. Furthermore, deliveries of wide body aircraft (Boeing 747, 767, 777 and 787 and Airbus A330/A340 and A380), which represented 94% of our revenue from the commercial market in 2007, are forecasted to grow at a CAGR of approximately 11% over the next five years.

    Military Aircraft Market

        The military aircraft market can be categorized as follows:

    Transport Aircraft or Cargo Aircraft—This aircraft category is characterized by the capability to transport troops, equipment and humanitarian aid into generally short and roughly prepared airfields or to perform airdrops of troops and equipment when landing is not an option. There are generally three classes of cargo aircraft: large cargo aircraft, such as the C-17 Globemaster III, C-5 Galaxy and AN124; medium cargo aircraft, such as the C-130J Hercules and the Airbus A400M, which is under development; and small cargo aircraft, such as the C-23 Sherpa and the C-27 Spartan.

    UAVs—Currently this class of aircraft is generally used for observation and command and control. Increasingly important in the U.S. military strategy, the use of this class of aircraft is broadening into weapons delivery and air combat. Examples include Global Hawk, the Predator and the Hunter.

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    Rotorcraft—The missions of the rotorcraft fleet are broad and varied and are critical to the war efforts in Iraq and Afghanistan. The critical missions that rotorcraft serve include intra-theatre cargo delivery, troop transport and rapid insertion, observation and patrol, ground attack and search and rescue. All models are seeing heavy use in Iraq and Afghanistan and, as a result, the delivery rates are increasing on most models due to the wear and damage the aircraft are experiencing. Examples include the H-60 (Black Hawk and variants), V-22 Osprey, CH-47 Chinook and the AH-64 Apache.

    Fighter and Attack AircraftFighter aircraft are used in air-to-air combat and provide air superiority over the battle space. This role enables other friendly aircraft to perform their missions. Attack aircraft are used to support ground troops in close air support roles and penetrating attacks. This category includes the F-22A Raptor, F-35 Lightning II, F-15E Eagle, A-10 Thunderbolt II and the F/A-18 Super Hornet.

    Aerial Tanker AircraftTankers used to deliver fuel to other aircraft while airborne are essential to the effective use of combat and support aircraft. On March 3, 2008, the U.S. Air Force announced that the Northrop Grumman/EADS entrant was selected for the KC-45A tanker program, the replacement for the KC-135, and that the modernization will be based on a modified version of the Airbus A330 airframe. On March 11, 2008, Boeing filed a protest regarding the Air Force's decision to select the A330 airframe over Boeing's entrant in the contract competition, which is based on a modified version of Boeing's commercial 767 airframe. On June 18, 2008, the GAO found in Boeing's favor on a number of issues related to its protest and, on June 18, 2008, Defense Secretary Robert Gates announced that the Air Force would reopen the bidding process on the contract. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments."

        Demand for new military aircraft in the U.S. is driven by the national defense budget, procurement funding decisions, geopolitical conditions worldwide and current operational use of the existing fleet. In February 2008, President Bush proposed a $183.8 billion Fiscal Year (FY) 2009 procurement defense budget, which represents an increase of approximately 17% from the FY 2007 procurement defense budget, not including emergency supplemental appropriations. Due to the current and anticipated pace of military operations in the Middle East and the U.S. military's need to more rapidly repair or replace its existing fleet of equipment, we expect that spending for defense procurement should remain robust for at least the next several years. We are well positioned as a key supplier on some of the most important military aircraft platforms such as the C-17, Black Hawk, Global Hawk and V-22 Osprey.

    Business Jet Aircraft Market

        The business jet market includes personal, business jet aircraft with a worldwide fleet today exceeding 14,000 aircraft. There are currently more than 40 different models of business jets in production or development, ranging from Very Light Jets (VLJ) seating four passengers to trans-continental business jets that carry up to 19 passengers. The business jet market is generally classified into three major segments: Light (which include VLJ, Entry and Light jets with sale prices ranging from approximately $1 million to $10 million per aircraft), Medium (which include Light-Mid, Medium and Super-Mid jets with sale prices ranging from approximately $10 million to $20 million per aircraft), and Heavy (which include Heavy, Long Range and Ultra Long Range jets with sale prices ranging from approximately $20 million to $45 million per aircraft).

        The U.S. Air Force also operates a fleet of business jet aircraft for use by the executive and legislative branches of government as well as the U.S. joint command leadership. In addition, many foreign governments provide business jet aircraft to high-ranking officials.

        Demand for new business jet aircraft is driven by long-term economic expansion, corporate profitability, the increasing inconvenience of commercial airline travel, growing international acceptance

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and demand for business jet travel, increased fractional ownership and the introduction of new aircraft models. 2007 was a record year for business jet shipment and billings. According to the General Aviation Manufacturers Association, business jet deliveries increased 28% to 1,138 in 2007 from 886 in 2006. With aggregate orders during 2006 and 2007 exceeding 3,000 aircraft, we believe business jet deliveries will remain strong over the next several years. Honeywell Aerospace, in its 2007 Business Aviation Outlook, estimates that business jet deliveries will average greater than 1,300 aircraft per year over the next five years. As a major supplier to the top-selling Gulfstream IV and V families of aircraft, Citation X and Hawker 800 programs, we believe we are well positioned in key segments of the business jet market.

Competitive Strengths

        Our competitive strengths include:

        Leading, Diversified Position in the Growing Aerostructures Market.    We are a leading global manufacturer of aerostructures with a diverse mix of programs serving the commercial, military and business jet markets. Of our $1,625.5 million in total revenue for 2007, $794.5 million, $530.0 million and $301.0 million were derived from sales to the commercial, military and business jet markets, respectively. We manufacture aerostructures for Boeing and Airbus, the world's leading commercial aircraft OEMs. We also provide aerostructures for a variety of military aircraft platforms utilized by all branches of the U.S. military, including transport, tanker, surveillance, rotor aircraft and UAVs. Our business jet customers include some of the largest business jet aircraft manufacturers worldwide such as Cessna, Gulfstream and Hawker Beechcraft.

        Sole-Source Provider on High Volume, Long-Lived Commercial Platforms.    We are a market leader on many long-lived commercial programs and are well positioned to capitalize on future growth in these established programs and other new program launches. Approximately 86% of our 2007 revenues from commercial programs were generated on programs on which we are the sole-source provider. We have a long history of new program development and have played a key role in the development of many of today's most important commercial legacy platforms including the 747, 767, 777 and A330/340 since their inceptions in 1966, 1980, 1993 and 1988, respectively. The success of these and other legacy programs provides a strong foundation for our business and positions us well for future growth on new programs and derivatives that are currently in development. For example, we have extended our participation in the 747 program with the new 747-8 derivative, which is currently under development. We also have a significant role in the design and manufacturing of the 787, which is expected to be a long-lived program with multiple derivative models.

        Strong Incumbent Position on Key Long-Lived Military Programs.    We have a long history serving a diverse range of military aircraft programs, with particular strength in fixed-wing transport and rotor aircraft. We are the sole-source provider for all of the structures that we provide under our military programs other than the Black Hawk program. We have been a key supplier to the C-130 program since its inception in 1953 and the C-17 Globemaster III since its inception in 1983. We are also a key provider on newer military programs with high growth potential such as the V-22 Osprey, Global Hawk and Black Hawk. Our key customers in the military market are Boeing, Bell Helicopter, Lockheed Martin, Northrop Grumman, Sikorsky and the U.S. Air Force.

        Attractive Business Model.    Our business model has several attractive features, including:

    Strong, Stable Cash Flow From Legacy Programs.  Revenue from legacy aircraft programs, such as the C-17, 747, 767, 777 and A330/340, which require only moderate capital expenditures to support current delivery rates, provides us with a source of strong, recurring cash flow.

    Significant Revenue Visibility.  Most of our 2007 revenues were generated under long-term contracts and nearly 90% of our 2007 revenues were generated from programs on which we are

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      the sole-source provider. Our customers typically place orders well in advance of required deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was approximately $3.4 billion and $3.9 billion at December 31, 2007 and March 30, 2008, respectively.

    Opportunity to Participate on Next Generation Aircraft.  Our long history with our customers and our engineering, design and technology expertise positions us to be a key aerostructures provider for new aircraft, such as the 787, and to provide aerostructures on future derivatives of existing programs, such as Boeing's 747-8. We believe we are well positioned to compete for new business on next generation commercial wide body, narrow body, regional jet, business jet and military programs.

        Advanced Manufacturing and Technical Capabilities.    We are a leading global manufacturer of some of the largest and most technologically advanced parts and assemblies for a diverse range of aircraft. Our capabilities include precision assembly techniques, automated assembly processes and large-bed machining and the fabrication of large composite fiber reinforced parts. As a key program partner on the 787 program, we have enhanced our industry-leading capability in the design, manufacturing and integration of complex composite structures. Our systems integration capabilities and ability to support challenging new aircraft schedules with cost-effective design and manufacturing solutions makes us a preferred partner for our OEM customers. These advanced capabilities are integral to our ability to continue to create innovative products and services for current and next generation aircraft programs.

        High Barriers to Entry with High Switching Costs for Customers.    It would be challenging for new competitors to enter the aerostructures market due to the significant time and capital expenditures necessary to develop the capabilities to design, manufacture, test and certify aerostructure parts and assemblies. When competing for contract awards, new entrants would be required to make substantial up-front investment as well as develop and demonstrate sophisticated manufacturing expertise and experienced-based industry and aircraft program knowledge. Furthermore, aerostructure manufacturers must have extensive certifications and approvals from customers and government regulators, such as the Defense Contract Management Agency and the FAA. Additionally, due to the risk of serious production delays from switching suppliers and the high cost of additional testing and certification, we believe that OEMs are unlikely to change an aerostructure supplier after initial manufacturing contracts have been awarded.

        Well Positioned in the Military Aircraft Market.    We serve a broad spectrum of the military aircraft market, with particular strength in fixed-wing transport and rotor aircraft. Currently, we provide aerostructures for many military transport programs, including the Boeing C-17 Globemaster III, as well as the important rotorcraft military segment, with Bell/Boeing V-22 Osprey tilt rotor transport and the H-60 helicopter.

        Strong and Experienced Management Team.    We have an experienced and proven management team with an average of over 23 years of aerospace and defense industry experience. This management team has been responsible for the successful revenue growth and cost reduction initiatives that have driven our increased productivity and profitability over the past two years.

Our Business Strategy

        We intend to capitalize on our position as a leading global aerostructures manufacturer and on the expected long-term growth in the commercial, military and business jet markets. Specifically, we intend to:

        Enhance our Position as a Strategic and Valued Partner to our Customers.    We will focus on strengthening our customer relationships and expanding our market opportunities by partnering with our OEM customers on their current and future aircraft platforms. We strive to be our customers' most

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valued partner through excellence in our product and process technologies and by providing access to modern and efficient production facilities. We expect to continue to improve our manufacturing efficiencies, continually making operational and process upgrades to maintain the highest standards of quality and on-time delivery.

        Leverage Our Long History and Expertise Across Our Diverse Markets.    We intend to increase our sales to new and existing customers across the commercial, military and business jet markets by capitalizing on opportunities both on existing platforms as well as on future derivative and next generation programs. We believe that we are well positioned to win additional business given the breadth of our customer relationships, capabilities and experience, and our quality of service and support.

    Legacy Programs:  With deliveries of mature commercial and business jet programs forecast to increase over the next several years, we believe we have the capability to accommodate higher production rates from our customers. We also believe we have the capability to meet the future production needs of our military OEM customers and the U.S. Air Force.

    Derivative Programs:  We intend to utilize our incumbent position on existing programs to provide aerostructures on future derivative programs such as the Boeing 747-8 and any future derivative programs of the 787.

    Next Generation Programs:  Next generation aircraft programs will rely to a greater extent on streamlined assembly methods, advances in composite materials and increased outsourcing. We believe we are well positioned to participate in these programs, which will include next generation versions of the U.S. military tanker, narrow and wide body commercial aircraft and business jets. We believe we have developed certain distinguishing capabilities through our historical and current military programs, including the C-17, Global Hawk and V-22, which we intend to leverage in our pursuit of future military business.

        Continue to Provide Advanced Products and Technologies.    We place a high priority on the ongoing technological development and application of our products and services. Our commitment to innovation is evidenced by the significant investment we have made in new program initiatives such as the investment in our composite fabrication and advanced manufacturing capabilities. We believe this important investment has made us an industry leader in technology and new product development, strengthened our customer relationships and positions us to generate new business on existing and future programs.

        Continue Operational Improvements.    We will continue to implement the best operational practices that have already resulted in significant operational improvements with respect to safety, quality, schedule performance and productivity, which have contributed to increased profitability over the last two years. These best operational practices are institutionalized as part of what we refer to as the Vought Operating System, which is now implemented in all of our facilities to drive operational improvements.

        Selectively Pursue Acquisitions.    We intend to selectively pursue acquisition opportunities that fit our business strategy, in particular opportunities that will further enhance and diversify our program portfolio as well as provide further technological differentiation.

Products and Programs

        We design, manufacture and supply both metal and composite aerospace structural assemblies including the following:

    fuselage sections (including upper and lower ramp assemblies, skin panels, aft sections, and pressure bulkheads);

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    complete integrated fuselage barrels;

    wings and wing assemblies (including skin panels, spars, and leading edges);

    empennages (tail assemblies, including horizontal and vertical stabilizers, horizontal and vertical leading edge assemblies, elevators and rudders);

    nacelles and nacelle components (the structures around engines, including fan cowls, inlet cowls, pylons and exhaust nozzles);

    rotorcraft cabins and substructures;

    detail parts (metallic and composite); and

    control surfaces (including flaps, ailerons, rudders, spoilers and elevators).

    Commercial Aircraft Products

        We produce a wide range of commercial aircraft products and participate in a number of major commercial programs for a variety of customers.

        We are one of the largest independent manufacturers of aerostructures for Boeing. We have more than 40 years of commercial aircraft experience with Boeing. Additionally, we are one of the largest U.S. manufacturers of aerostructures for Airbus and have almost 20 years of commercial aircraft experience with the various Airbus entities.

        The following table summarizes the major commercial programs that we currently have under long-term contract by customer and product, indicating in each case whether we are a sole-source provider and the approximate year in which we began supporting the program.

Customer / Aircraft

  Main Products
  Sole-Source(1)
  Year Program
Commenced(2)

Airbus            
  A330/340   Upper skin panel assemblies, center spar and midrear spar, mid and outboard leading edge assemblies   ü   1988
  A340-500/600   Upper skin panel, stringers, center spar and midrear spar, mid and outboard leading edge assemblies   ü   1998
Boeing            
  747   Fuselage panels and empennage (vertical stabilizer, horizontal stabilizer, aft body section)   ü   1966
  767   Wing center section, horizontal stabilizer and aft fuselage section   ü   1980
  777   Inboard flaps, spoilers and spare requirements   ü   1993
  787   Composite aft fuselage and integrated systems   ü   2005

(1)
Indicates programs where we are currently the sole provider of the structures we provide for that program.

(2)
Indicates approximate year in which we began supporting the program.

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    Military Aircraft Products

        We produce a broad array of products for military organizations both in the United States and around the world. In the United States, we provide aerostructures for a variety of military platforms, including transport, rotorcraft and unmanned aircraft utilized by all four branches of the U.S. military. The following table summarizes the major military programs that we currently have under long-term contract by customer and product, indicating in each case whether we are a sole-source provider and the approximate year in which we began supporting the program.

Customer / Aircraft

  Main Products
  Sole-Source(1)
  Year Program
Commenced(2)

Airbus/Boeing            
  KC-45A(3)   Comparable to products provided for the A330/767, respectively   ü    
Bell/Boeing            
  V-22 Osprey   Fuselage skin panels, empennage (sole-source) and ramp door assemblies       1993
Boeing            
  C-17 Globemaster III   Empennage and nacelle components   ü   1983
Lockheed Martin            
  C-130J Hercules   Empennage   ü   1953
Northrop Grumman            
  E-2 Hawkeye   Bond assemblies, detail fabrication and machine parts for outer wing panels and fuselage   ü   2000
  Global Hawk   Integrated composite wing   ü   1999
Sikorsky            
  H-60 Black Hawk   Cabin structure       2004
U.S. Air Force            
  C-5 Galaxy   Flaps, slats, elevators, wing tips and panels   ü   2002

(1)
Indicates programs where we are currently the sole provider of the structures we provide for that program.

(2)
Indicates approximate year in which we began supporting the program.

(3)
The work we perform on the KC-45A is expected to be through either our commercial agreement with Airbus on the A330 or our commercial agreement with Boeing on the 767. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments."

    Business Jet Aircraft Products

        Our customers in this market include primary business jet aircraft manufacturers such as Cessna, Gulfstream, and Hawker Beechcraft. We believe we are the largest aerostructures supplier to Gulfstream for their G350, G450, G500, and G550 models.

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        The following table summarizes the major business jet programs that we currently have under long-term contract by customer and product, indicating in each case whether we are a sole-source provider and the approximate year in which we began supporting the program.

Customer / Aircraft

  Main Products
  Sole-Source(1)
  Year Program
Commenced(2)

Cessna            
  Citation X   Upper and lower wing skin assemblies   ü   1992
Gulfstream            
  Gulfstream IV Family   Nacelle components and wing boxes   ü   1983
  Gulfstream V Family   Integrated wings   ü   1993
Hawker Beechcraft            
  Hawker 800   Nacelle components   ü   1981

(1)
Indicates programs where we are currently the sole provider of the structures we provide for that program.

(2)
Indicates approximate year in which we began supporting the program.

Customers

        We generate a large proportion of our revenues from three large customers. The following table reports the total revenue from these customers relative to our total revenue.

 
  Year Ended
December 31, 2005

  Year Ended
December 31, 2006

  Year Ended
December 31, 2007

 
Customers

  Revenue
  Percentage
of Total
Revenue

  Revenue
  Percentage
of Total
Revenue

  Revenue
  Percentage
of Total
Revenue

 
 
  (in millions)

 
Boeing   $ 728.9   56 % $ 857.9   55 % $ 926.6   57 %
Airbus     186.3   14 %   161.8   10 %   206.2   13 %
Gulfstream     183.9   14 %   248.4   16 %   259.1   16 %
   
 
 
 
 
 
 
  Total     1,099.1   84 %   1,268.1   81 %   1,391.9   86 %
   
 
 
 
 
 
 
Total revenue   $ 1,297.2   100 % $ 1,550.9   100 % $ 1,625.5   100 %
   
 
 
 
 
 
 

        Although the majority of our revenues are generated by sales into the U.S. market, as shown on the following table, a significant portion of our revenues are generated by sales to OEMs located outside of the United States.

 
  Year Ended
December 31, 2005

  Year Ended
December 31, 2006

  Year Ended
December 31, 2007

 
Revenue Source

  Revenue
  Percentage
of Total
Revenue

  Revenue
  Percentage
of Total
Revenue

  Revenue
  Percentage
of Total
Revenue

 
 
  (in millions)

 
United States   $ 1,094.0   84 % $ 1,387.5   89 % $ 1,419.3   87 %
International(1)     203.2   16 %   163.4   11 %   206.2   13 %
   
 
 
 
 
 
 
Total revenue   $ 1,297.2   100 % $ 1,550.9   100 % $ 1,625.5   100 %
   
 
 
 
 
 
 

(1)
Our primary international customer is Airbus.

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Raw Materials, Purchased Parts and Suppliers

        We depend on the availability of raw materials, component parts and subassemblies from our suppliers and subcontractors. Our suppliers' ability to provide timely and quality raw materials, components, kits and subassemblies affects our production schedules and contract profitability. We maintain an extensive qualification and performance surveillance system to control risk associated with this reliance on the supply chain. Additionally, while certain of our current suppliers of raw material and components are the only suppliers used by our company at this time, we believe we can obtain such raw materials and components from other sources of supply, if necessary. However, certain of our contracts require that our suppliers be approved by our customers, which could result in significant delays or expenses in switching suppliers.

        Our strategic sourcing initiatives seek to find ways of mitigating the inflationary pressures of the marketplace. In recent years, these inflationary pressures have affected the market for raw materials. We forecast that in the short term, the raw materials price increases experienced in recent years will slow considerably. However, we expect that in 2009 and beyond, due to demand pressure as OEM's deliver on the recently accumulated order backlogs, prices increases may again escalate. The weakening U.S. dollar is also subjecting our supply chain, specifically our foreign suppliers, to decreased contract realization rates as the purchase prices and payment terms of our contracts with suppliers are denominated in U.S. dollars. These factors may force us to renegotiate with our suppliers and customers to avoid a significant impact to our margins and results of operations.

        These macro-economic pressures may increase our operating costs with consequential risk to our cash flow and profitability. As a rule, we don't employ forward contracts or other financial instruments to hedge commodity price risk, although we continuously explore supply chain risk mitigation strategies.

        We are exposed to fluctuations in prices of utilities and services (electricity, natural gas, chemical processing and freight). We seek to minimize these risks through use of long term agreements and aggregated sourcing.

        We also depend on third parties for most of our information technology requirements necessary to run our business.

Research and Development and Specialized Engineering Services

        Our scientists, engineers and other personnel have capabilities and expertise in structural design, stress analysis, fatigue and damage tolerance, testing, systems engineering, factory support, product support, tool design, inspection and systems installation design. The costs incurred relating to independent research and development for the years ended December 31, 2005, 2006 and 2007, were $4.4 million, $3.4 million and $4.4 million, respectively, recorded in selling, general and administrative expenses in our income statement. We work jointly with our customers and the supply base to insure that our investments complement the needs of our industry, rather than duplicate what our stakeholders are developing.

Intellectual Property

        We have a number of patents related to our processes and products. While in the aggregate our patents are of material importance to our business, we believe that no single patent or group of patents is of material importance to our business as a whole. We also rely on trade secrets, confidentiality agreements, unpatented knowledge, creative product development and continuing technological advancement to maintain our competitive position.

        Additionally, our business depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our contracts with our OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated if we violate certain of these restrictions. Our loss of a contract with an OEM customer and the related

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license rights to use an OEM's intellectual property or tooling would materially adversely affect our business.

Competition

        In the production and sale of aerospace structural assemblies, we compete with numerous U.S. and international companies on a worldwide basis. Primary competition comes from internal work completed by the operating units of OEMs including Airbus, Boeing, Gulfstream, Lockheed Martin, Northrop Grumman, Sikorsky and Raytheon. We also face competition from independent aerostructures suppliers in the U.S. and overseas who, like us, provide services and products to the OEMs. Our principal competitors among independent aerostructures suppliers include: Alenia Aeronautica, Stork Aerospace, Fuji Heavy Industries, Mitsubishi Heavy Industries, GKN Westland Aerospace (U.K.), Kawasaki Heavy Industries, Goodrich Corp., and Spirit AeroSystems.

        OEMs may choose not to outsource production of aerostructures due to, among other things, their own direct labor and overhead considerations, capacity utilization at their own facilities and desire to retain critical or core skills. Consequently, traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce a part in-house or to outsource.

        However, when OEMs choose to outsource, they typically do so for one or more of the following reasons:

    lower cost;

    capacity limitations;

    a business need or desire to utilize other's unique engineering and design capabilities;

    a desire to share the required upfront investment;

    risk sharing; and

    strategic reasons in support of sales.

        Our ability to compete for large structural assembly contracts depends upon:

    our underlying cost structure that enables a competitive price;

    the readiness and availability of our facilities, equipment and personnel to undertake and nimbly implement the programs;

    our engineering and design capabilities;

    our ability to manufacture or rapidly procure both metal and composite structures; and

    our ability to support our customer's needs for strategic work placement.

Government Regulation

        The commercial and business jet aerospace industry is highly regulated in the United States by the FAA and by similar organizations in other markets. As a producer of major aerostructures for commercial and business jet aircraft, our production activities are performed under the auspices of the applicable FAA type certificate held by the prime manufacturer for which we produce product. In addition to qualifying our production and quality systems to our customer's requirements, we are also certified in Stuart, Florida by the FAA to repair and overhaul damaged parts for delivery and reinstallation on commercial and business jet aircraft.

        Our Quality Management System has been certified as compliant with AS9100 (which is the general system standard for aerospace manufacturers, based on and including the requirements of ISO 9001), and we hold an industry registration certificate to that standard through an accredited

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registrar. Our special production processes are certified in compliance to industry manufacturing, quality and processing requirements, as defined and controlled by the PRI/Nadcap accreditation program.

        The military aerospace industry is highly regulated by the U.S. Department of Defense. The Defense Contract Management Agency has certified us to provide products to the U.S. military. We are subject to review by the Defense Contract Management Agency whether we contract directly with the U.S. Government or provide aerostructures to an OEM that contracts directly with the U.S. Government. The U.S. Government contracts held by us and our customers are subject to unique procurement and administrative rules based on laws and regulations. U.S. Government contracts are, by their terms, subject to termination by the U.S. Government either for its convenience or default by the contractor. In addition, U.S. Government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds for a given program on a yearly basis, even though contract performance may take many years. Consequently, at the outset of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress for future years.

        In addition, use of foreign suppliers and sale to foreign customers, such as Airbus, and foreign governments may subject us to the requirements of the U.S. Export Administration Regulations and the International Trafficking in Arms Regulations.

Employees

        As of March 30, 2008, we employed 6,578 people. Of those employees, 3,421, or 52%, are represented by five separate unions.

    Local 848 of the United Automobile, Aerospace and Agricultural Implement Workers of America represents 2,219 of the employees located in Dallas and Grand Prairie, Texas. This union contract, which covers the majority of our production and maintenance employees at our Dallas and Grand Prairie, Texas facilities, is in effect through October 3, 2010.

    Aero Lodge 735 of the International Association of Machinists and Aerospace Workers represents 923 of the employees located in Nashville, Tennessee. This union contract is in effect through September 27, 2008.

    Local 220 of the International Brotherhood of Electrical Workers represents 47 employees located in Dallas, Texas. The union contract is in effect until May 3, 2010.

    Local 263 of the Security, Police and Fire Professionals of America (formerly United Plant Guard Workers of America) represents 24 employees located in Dallas, Texas. This union contract is in effect through February 19, 2012.

    District Lodge 96 of the International Association of Machinists and Aerospace Workers was certified as the representative for 208 employees located in North Charleston, South Carolina on November 3, 2007. Negotiations for the initial contract began January 24, 2008 and are ongoing.

        We believe we have constructive working relationships with our unions and have been successful in negotiating collective bargaining agreements in the past. We have not suffered an interruption of business as a result of a labor dispute since 1989, which occurred at the Nashville, Tennessee facility. However, there can be no assurance that in the future we will reach an agreement on a timely basis or that we will not experience a work stoppage or labor disruption that could significantly adversely affect our operations. From time to time, unions have sought and may continue to seek to organize employees at some of our facilities. We cannot predict the impact of any additional unionization of our workforce.

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Backlog

        A significant majority of our revenues are generated through long-term sole-source supply agreements with our OEM customers. Orders under these supply agreements are typically made well in advance of deliveries, which gives us considerable visibility with respect to our future revenues. These advance orders also generally create a significant backlog for us, which was $3.4 billion and $3.9 billion at December 31, 2007 and March 30, 2008, respectively. Our calculation of backlog includes only firm orders for commercial and business jet programs and funded orders for government programs, which causes our backlog to be substantially lower than the estimated aggregate dollar value of our contracts and may not be comparable to others in the industry. Our backlog may fluctuate at any given time depending on whether we have received significant new firm orders, funded orders or authorizations to proceed before the date of measurement. For example, our military funded orders or authorizations to proceed generally are awarded when the Department of Defense budget for the relevant year has been approved, resulting in a significant increase in backlog at that time.

        Certain factors should be considered when evaluating our backlog. For our commercial and business jet aircraft programs, changes in the economic environment and the financial condition of airlines may cause our customers to increase or decrease deliveries, adjusting firm orders that would affect our backlog. For our military aircraft programs, the Department of Defense and other government agencies have the right to terminate both our contracts and/or our customers' contracts either for default or, if the government deems it to be in its best interest, for convenience.

Environmental Matters

        Our manufacturing operations are subject to various federal, state and local environmental laws and regulations, including those related to pollution, air emissions and the protection of human health and the environment. We routinely assess compliance and continuously monitor our obligations with respect to these requirements. Based upon these assessments and other available information, we believe that our manufacturing facilities are in substantial compliance with all applicable existing federal, state and local environmental laws and regulations and we do not expect environmental costs to have a material adverse effect on us. The operation of manufacturing plants entails risk in these areas and there can be no assurance that we will not incur material costs or liabilities in the future that could adversely affect us. For example, such costs or liabilities could arise due to changes in the existing law or its interpretations, or newly discovered contamination.

        Under federal and state environmental laws, owners and operators of contaminated properties can be held responsible for up to 100% of the costs to remediate contamination, regardless of whether they caused such contamination. Our facilities have been previously owned and operated by other entities and remediation is currently taking place at several facilities in connection with contamination that occurred prior to our ownership. In particular, we acquired several of our facilities from Northrop Grumman in July of 2000, including the Hawthorne, California facility, the Stuart, Florida facility, the Milledgeville, Georgia facility and two Texas facilities. Of those facilities, remediation projects are underway in Hawthorne, Stuart, Milledgeville and Dallas.

        The acquisition agreement between Northrop Grumman and us transferred certain pre-existing (as of July 24, 2000) environmental liabilities to us. We are liable for the first $7.5 million and 20% of the amount between $7.5 million and $30 million for environmental costs incurred relating to pre-existing matters as of July 24, 2000. Pre-existing environmental liabilities exceeding our $12 million liability limit remain the responsibility of Northrop Grumman under the terms of the acquisition agreement, to the extent they are identified within 10 years from the acquisition date.

        Thereafter, to the extent environmental remediation is required for hazardous materials including asbestos, urea formaldehyde foam insulation or lead-based paints, used as construction materials in, on, or otherwise affixed to structures or improvements on property acquired from Northrop Grumman, we would be responsible. We currently have no material outstanding or unasserted asbestos, urea formaldehyde foam insulation or lead-based paints liabilities including on property acquired from Northrop Grumman.

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        We acquired the Nashville, Tennessee facility from Textron Inc. in 1996. In connection with that acquisition, Textron agreed to indemnify up to $60 million against any pre-closing environmental liabilities with regard to claims made within ten years of the date on which the facility was acquired, including with respect to a solid waste landfill located onsite that was closed pursuant to a plan approved by the Tennessee Division of Solid Waste Management. Although that indemnity was originally scheduled to expire in August 2006, we believe that the agreement may continue to provide for indemnification for certain pre-closing environmental liabilities incurred beyond that expiration date. While there are no currently pending environmental claims related to the Nashville, Tennessee facility, there is no assurance that environmental claims will not arise in the future or that we will receive any indemnity from Textron.

        As of March 30, 2008, our balance sheet included an accrued liability of $3.7 million for accrued environmental liabilities.

Properties

        Our corporate offices and principal corporate support activities are located in Irving and Dallas, Texas. We own and lease manufacturing facilities located throughout the United States. We currently have manufacturing facilities in Texas, California, Tennessee, Georgia, Washington, Florida and South Carolina. General information about our principal manufacturing facilities is presented in the chart below.

Site

  Square Footage
  Ownership
  Functions
Dallas, TX:            

Jefferson Street

 

28,878

 

Owned

 

High speed wind tunnel.

Jefferson Street

 

4,927,292

 

Leased

 

Design capabilities; test labs; fabrication of parts and structures; assembly and production of wings, horizontal and vertical tail sections, fuselage, empennage, and cabin structures.

Irving, TX

 

16,168

 

Leased

 

VAI corporate office.

Grand Prairie, TX

 

804,456

 

Leased

 

Manufacturing of empennage assemblies, doors, skin polishing, automated fastening.

Hawthorne, CA

 

1,382,096

 

Leased

 

Production of fuselage panels and main deck cargo doors; reconfigurable tooling, precision assembly and automated fastening.

Torrance, CA

 

84,654

 

Leased

 

Fuselage panel processing facility.

Nashville, TN

 

2,170,497

 

Owned

 

Design capabilities; wing, wing assembly and control surface manufacturing and assembly facilities.

Stuart, FL

 

519,690

 

Leased

 

Manufacturing of composite and metal aircraft assemblies and manufacturing of commercial aircraft doors.

Brea, CA

 

90,000

 

Leased

 

Manufacturing of wing skins, fuselage panels, bulkheads, floor beams, spars, stringers, landing gear and subassemblies.

Everett, WA

 

153,000

 

Leased

 

Manufacturing of wing skins, fuselage panels, bulkheads, floor beams, spars, stringers, landing gear and subassemblies.

Milledgeville, GA

 

566,168

 

Owned

 

Composite fabrication and component assembly.

North Charleston, SC

 

384,533

 

Owned

 

Fabrication and assembly of composite fuselage structures.

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Legal Proceedings

        In the normal course of business, we are party to various lawsuits, legal proceedings and claims arising out of our business. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. Nevertheless, we believe that the outcome of these proceedings, even if determined adversely, would not have a material adverse effect on our business, financial condition or results of operations.

        We operate in a highly regulated industry that subjects us to various audits, reviews and investigations by several U.S. governmental entities. Currently, we are not aware of any significant on-going audits, reviews or investigations that we believe would materially impact our results of operations or financial condition.

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MANAGEMENT

Directors and Executive Officers

        Set forth below are the names, ages and positions of our directors and executive officers as of the date of this prospectus. Following the completion of this offering, our Board of Directors will be divided into three classes with members of each class of directors serving for staggered three-year terms or until such person's successor is duly elected or qualified. Officers are appointed by the Board of Directors until a successor is elected and qualified or until resignation, removal or death. No family relationship exists between any of our directors or executive officers.

Name

  Age
  Position
Elmer L. Doty   53   President, Chief Executive Officer, Director
Keith B. Howe   50   Vice President and Chief Financial Officer
Stephen A. Davis   54   Vice President, Commercial Aerostructures
Kevin P. McGlinchey   42   Vice President, General Counsel and Secretary
Dennis J. Orzel   53   Vice President, Integrated Aerosystems
Joyce E. Romero   49   Vice President, 787
Thomas F. Stubbins   55   Vice President, Human Resources
Peter J. Clare   43   Director
C. David Cush   48   Director
Allan M. Holt   56   Director
John P. Jumper   63   Director
Ian Massey   57   Director
Adam J. Palmer   35   Director
Daniel P. Schrage   64   Director
David L. Squier   62   Director (Chairman of the Board of Directors)
Samuel R. White   65   Director

        Elmer L. Doty has served as our President and Chief Executive Officer and as a member of our Board of Directors since February 2006. Mr. Doty most recently served as the Vice President & General Manager of BAE Systems ("BAE") Ground Systems Division, a position he held since July 2005, when BAE acquired United Defense Inc. ("UDI"). Mr. Doty had served in the identical position with UDI since April 2001, with the additional duties of an executive officer of UDI. Prior to that time, he had served in other senior executive positions with UDI and its predecessor company FMC Corporation.

        Keith B. Howe has served as our Vice President and Chief Financial Officer since January 2007. His responsibilities include all financial and business management functions, including creation and implementation of financial strategy, control and accounting policy, treasury, risk management and insurance, budget, and financial and economic planning and analysis. Prior to joining the Company, Mr. Howe served as President and General Manager of the Armament Systems Division of BAE, a position he held since July 2005, when BAE acquired UDI. Mr. Howe had served in a substantially comparable position with UDI since January 2002 and, prior to that time, had served as the unit's Deputy General Manager from October 1998 to December 2001 and as its Controller from September 1996 to October 1998. Prior to that time, Mr. Howe served in a number of senior financial executive positions with UDI.

        Stephen A. Davis has served as our Vice President, Commercial Aerostructures since January 2008. His responsibilities include all aspects of manufacturing operations and program management for major commercial customers, including manufacturing, marketing, business development and business management. Prior to that, Mr. Davis had served as Vice President, Programs since April 2006 with responsibility for all aspects of program management for both commercial and military customers, including marketing, business development, business management and design engineering. Prior to that,

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he was General Manager of Boeing Commercial Business, a position he held since December 2005, and had responsibility for leading the Company's Boeing Commercial Programs. Previously, Mr. Davis was Vice President of Boeing and Gulfstream Commercial Programs and prior to that assignment, in August 2000, he served as part of Northrop Grumman's Aerostructures business segment as Vice President of Fabrication at the Dallas, Texas site. He joined our company in January 1980 and has held positions of increasing responsibility since that time.

        Kevin P. McGlinchey has served as our Vice President, General Counsel and Secretary since September 2006. His responsibilities include leadership of the legal, internal audit and corporate governance organizations. Mr. McGlinchey has been with Vought and its predecessor company since 1995, when he joined the corporate legal staff of the Northrop Grumman. Since that time, he has held positions of increasing responsibility with the legal departments of Northrop Grumman and later with Vought, serving most recently as Deputy General Counsel and Assistant Corporate Secretary. He is a member of the bar in Texas, Pennsylvania and the District of Columbia.

        Dennis J. Orzel has served as our Vice President, Integrated Aerosystems since January 2008. His responsibilities include all aspects of manufacturing operations and program management for military and some commercial customers, including manufacturing, marketing, business development and business management. In addition, he is responsible for the implementation of Lean Manufacturing and Six Sigma as core strategies in driving operational improvements. Prior to that, Mr. Orzel has served as Vice President of Manufacturing Operations since he joined Vought in August 2006. In that role, he oversaw manufacturing operations for Vought including the implementation of Lean Manufacturing and Six Sigma as core strategies in driving operational improvements. Prior to joining Vought, Mr. Orzel served since March 2003 as Vice President for Operations and Distribution for the Transportation Division of Exide Technologies Corporation, where he was responsible for production planning, manufacturing, distribution, transportation and logistics. At Exide, he led efforts to restructure the operational footprint, reduce finished goods inventory and increase plant productivity through the utilizations of lean tools and methodologies. Prior to that, Mr. Orzel was the General Manager of the Turbine Module Center at Pratt and Whitney Aircraft Division of United Technologies.

        Joyce E. Romero has served as our Vice President, 787 since October 2007. Her responsibilities include all aspects of manufacturing operations and program management for the Boeing 787 program. Ms. Romero joined Vought from Boeing Commercial Airplanes, where she had served as director of 787 North American Supply Chain Integration since June 2007. Prior to that, Ms. Romero was President of Boeing Canada Operations Ltd. and General Manager of Boeing Winnipeg since 2006. As General Manager, Ms. Romero led a production site responsible for more than 1,000 composite parts and assemblies for Boeing 737, 747, 767, 777 and 787 aircraft. The Winnipeg site is the largest aerospace composite manufacturer in Canada and the country's third largest aerospace facility. Before assuming the position in Winnipeg, Ms. Romero was Director of Boeing's Salt Lake City components manufacturing site since 2005, where she was responsible for manufacturing operations, including fabrication and assembly of parts for airplane production as well as out-of-production spares for Commercial Aviation Services. Prior to that, Ms Romero spent more than 10 years supporting Boeing military programs, including spares acquisition and component repair for the C-17 Globemaster III and B-1B Lancer aircraft, managing the Operational Support Center, the AOG (Aircraft on Ground) organization, and operation of the Product Support Warehouse and Distribution system.

        Thomas F. Stubbins has served as our Vice President, Human Resources and has led the Human Resources organization since April 2004. His responsibilities include oversight of human resources strategy and policies including benefits design, compensation, succession planning and organizational development. Previously, Mr. Stubbins served as the Company's Director of Human Resources and Administration since 2000. He has been with Vought and its predecessor companies since 1980 serving positions of increasing responsibility in the Human Resources and Administration organization.

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        Peter J. Clare has served as a member of our Board of Directors since February 2005. Mr. Clare is currently a Partner and Managing Director of Carlyle, as well as head of Carlyle's Global Aerospace/Defense/Government Services group. Mr. Clare has been with Carlyle since 1992 and currently serves on the boards of directors of ARINC, Wesco Holdings, Inc. and Sequa Corporation.

        C. David Cush has served as a member of our Board of Directors since May 2007. Mr. Cush has a broad background in airline sales, operations and finance. In December 2007, Mr. Cush was appointed President and CEO of Virgin America. Prior to that time, he served as Senior Vice President of Global Sales for American Airlines, responsible for all sales activities worldwide. Previous positions with American include vice president of the company's St. Louis Hub and vice president of International Planning and Alliances. Mr. Cush also spent approximately two years with Aerolineas Argentinas, where he had been chief operating officer from November 1998 to March 2000.

        Allan M. Holt has served as a member of our Board of Directors since 2000. Mr. Holt has been a Partner and Managing Director of Carlyle since 1991 and he is currently co-head of the U.S. Buyout group focusing on opportunities in the Aerospace/Defense/Government Services, Automotive & Transportation, Consumer, Healthcare, Industrial, Technology and Telecom/Media sectors. Prior to joining Carlyle, Mr. Holt spent three and a half years with Avenir Group, Inc., an investment and advisory group that acquired equity positions in small and medium-sized companies and provided active management support to its acquired companies. He also serves on the boards of directors of Fairchild Imaging, Inc., HD Supply, Sequa Corporation and SS&C Technologies, Inc.

        John P. Jumper has served as a member of our Board of Directors since June 2006. Mr. Jumper retired from the United States Air Force in 2005 after a distinguished 39-year military career. In his last position as Chief of Staff he served as the senior military officer in the Air Force leading more than 700,000 military, civilian, Air National Guard and Air Force Reserve men and women. As Chief of Staff he was a member of the Joint Chiefs of Staff providing military advice to the Secretary of Defense, the National Security Council and the President. From 2000 to 2001 Mr. Jumper served as Commander, Air Combat Command. During the 1999 war in Kosovo and Serbia he commanded U.S. Air Forces in Europe and Allied Air Forces Central Europe. In earlier assignments he served on the Joint Staff and as Senior Military Assistant to Secretary of Defense Dick Cheney and Secretary Les Aspin. He also commanded an F-16 fighter squadron and two fighter wings, accumulating more than 5,000 flying hours including more than 1,400 combat hours in Vietnam and Iraq. He currently serves on the boards of directors of Goodrich Corporation, TechTeam Global, Jacobs Engineering, SAIC and Somanetics, as well as on the non-profit board of directors of the Air Force Association and the Air Force Village Charitable Foundation and the George C. Marshall Foundation.

        Ian Massey has served as a member of our Board of Directors since 2001. Mr. Massey has been a qualified management accountant since 1979. In September 2001, Mr. Massey joined Republic Financial Corporation as President of the Aircraft and Portfolio Group and was subsequently promoted to Executive Vice-President in 2004 with added responsibility for the Private Equity Group of the company and Marketing & Communications. From January 1980 to December 1990, Mr. Massey served in a variety of financial positions with British Aerospace in the UK. From January 1991 to February 2001, Mr. Massey was Financial Controller of Airbus Industrie having been appointed by its Supervisory Board in January 1991. Mr. Massey joined the board of directors of Pinnacle Airlines as a director in January 2006.

        Adam J. Palmer has served as a member of our Board of Directors since 2000. Mr. Palmer has been a Partner of Carlyle since 2005, and since 2004 has served as a Managing Director of Carlyle, focused on U.S. buyout opportunities in the aerospace, defense and information technology sectors. Prior to joining Carlyle in 1996, Mr. Palmer was with Lehman Brothers focusing on mergers, acquisitions and financings for defense electronics and information services companies. Mr. Palmer also serves on the boards of directors of Sequa Corporation and Wesco Holdings, Inc.

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        Daniel P. Schrage has served as a member of our Board of Directors since June 2006. Dr. Schrage serves as Professor of Aerospace Engineering and Director of the Center for Excellence in Rotorcraft Technology (CERT) and Director of the Center for Aerospace Systems Engineering (CASE) at the Georgia Institute of Technology. Prior to becoming a professor at Georgia Tech, Dr. Schrage was an engineer, manager, and senior executive with the U.S. Army Aviation Systems Command from 1974-1984. During this period he served as the Director for Advanced Systems, Chief of Structures and Aeromechanics, Vibration and Dynamics Engineer and was directly involved with the design, development, and production of all of the Army's current helicopter systems, including the UH-60 Black Hawk, the AH-64 Apache, CH-47 Chinook, and the OH-58D Kiowa Warrior. Dr. Schrage also served for 11 years as an Army Aviator and commander with combat experience in Southeast Asia. Dr. Schrage serves as the co-director of a small business partnership, Affordable Business Designs, LLC (ASD).

        David L. Squier has served as a member of our Board of Directors since 2000. In March 2006, Mr. Squier was elected as Chairman of the Board. Mr. Squier has been a consultant and advisor to Carlyle since 2000. He retired from Howmet Corporation in October 2000 where he served as President and Chief Executive Officer since 1992. As Chief Executive Officer, he was responsible for the operations of an organization with more than $1.5 billion in annual sales and some 29 manufacturing facilities in five nations. He is the chairman of the board of directors of United Components, Inc. In addition, Mr. Squier serves on the boards of directors of Sequa Corporation, Firth Rixson, plc and Wesco Aircraft Hardware Corp. Mr. Squier served on the board of directors of Howmet Corporation from 1987 until his retirement in 2000.

        Samuel R. White has served as a member of our Board of Directors since 2000. Mr. White has been retired since 2000. Formerly, he served as Director of Procurement and International Business Operations for the Boeing Company from 1990 to 2000. In his former position, he oversaw the procurement of major structure end items and assemblies from suppliers throughout the world. He also played an integral role in the development of Boeing Commercial's global procurement strategy. From 1990 to 2000, Mr. White led the strategic process at Boeing for procurement of all major structures on a global basis.

Board of Directors

        Our Board of Directors consists of ten directors. We intend to appoint an additional                director within 12 months of the completion of this offering, increasing the total size of our Board of Directors to 11 directors.

        Following the completion of this offering, the Board of Directors will be divided into three classes with members of each class of directors serving for staggered three-year terms. The Board of Directors will consist of four Class I directors (Messrs.             ,            ,             and            ), four Class II directors (Messrs.             ,            ,             and            ) and three Class III directors (Messrs.             ,            and            ), whose initial terms will expire at the annual meetings of stockholders held in 2009, 2010 and 2011, respectively. Our classified board could have the effect of making it more difficult for a third party to acquire control of us.

        Our amended and restated certificate of incorporation that will become effective upon the completion of this offering will provide that the authorized number of directors may be changed only by resolution of the Board of Directors. Any additional directorships resulting from an increase in the number of directors will be distributed between the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of the Board of Directors may have the effect of delaying or preventing changes in our control or management.

        Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon the completion of this offering will provide that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the votes that all our

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stockholders would be entitled to cast in an annual election of directors. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

        We intend to avail ourselves of the "controlled company" exception under New York Stock Exchange rules, which eliminates the requirements that a company has a majority of independent directors on its board of directors and that its compensation and nominating and corporate governance committees be composed entirely of independent directors.

Board Committees

        We are a "controlled company" as that term is set forth in Section 303A of The New York Stock Exchange Listed Company Manual because more than 50% of our voting power is held by affiliates of Carlyle. Under New York Stock Exchange rules, a "controlled company" may elect not to comply with certain New York Stock Exchange corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that the nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, (3) the requirement that the compensation committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. After completion of this offering more than 50% of our voting power will continue to be held by affiliates of Carlyle, and we intend to elect to be treated as a controlled company and thus avail ourselves of these exemptions. As a result, although we will have adopted charters for our audit, nominating and corporate governance and compensation committees and intend to conduct annual performance evaluations of these committees, our Board of Directors may not consist of a majority of independent directors nor may our nominating and corporate governance and compensation committees consist of independent directors. Accordingly, so long as we are a "controlled company," you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the The New York Stock Exchange.

        Upon the completion of this offering, the standing committees of our Board of Directors will include the audit committee, the governance and nominating committee and the compensation committee, each of which is described below.

    Audit Committee

        Our audit committee is responsible for, among other things, making recommendations concerning the engagement of our independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees, and reviewing the adequacy of our internal accounting controls. The audit committee is comprised of Messrs. Massey, Palmer and White. Mr. Massey serves as the chairman of the audit committee. The audit committee operates pursuant to a charter that was approved by our Board of Directors. Within one year after consummation of this offering, the audit committee will be comprised entirely of independent directors.

        Our Board of Directors has adopted a written charter for the audit committee, which will be available on our website upon the completion of this offering.

    Governance and Nominating Committee

        Our governance and nominating committee is responsible for assisting the Board of Directors in selecting new directors, evaluating the overall effectiveness of the Board of Directors, and reviewing

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developments in corporate governance compliance. The governance and nominating committee is comprised of Messrs. Clare, Cush, Jumper and Schrage.

        If we continue to be a "controlled company" after this offering, we will be exempt from, and consequently will not be required to comply with, New York Stock Exchange rules requiring that our governance and nominating committee be composed solely of independent directors. However, in accordance with New York Stock Exchange rules, if we cease to be a "controlled company" after this offering, we will be required to appoint additional independent directors to our Board of Directors within 12 months after we cease to be a "controlled company" so that a majority of our directors will be independent as such term is defined under New York Stock Exchange rules. All of our governance and nominating committee members will also be required to be independent as such term is defined under New York Stock Exchange rules.

        Our Board of Directors has adopted a written charter for the governance and nominating committee, which will be available on our website upon the completion of this offering.

    Compensation Committee

        The compensation committee is responsible for determining compensation for our executive officers and administering our equity based compensation plans and other compensation programs. The compensation committee is also charged with establishing, periodically re-evaluating and, where appropriate, adjusting and administering policies concerning compensation of management personnel, including the Chief Executive Officer and all of our other executive officers. The compensation committee is comprised of Messrs. Squier, Clare and Palmer.

        If we continue to be a "controlled company" after this offering, we will be exempt from, and consequently will not be required to comply with, New York Stock Exchange rules requiring that our compensation committee be composed solely of independent directors. However, in accordance with New York Stock Exchange rules, if we cease to be a "controlled company" after this offering, we will be required to appoint another independent directors to our Board of Directors within 12 months after we cease to be a "controlled company" so that a majority of our directors will be independent as such term is defined under New York Stock Exchange rules. All of our compensation committee members will also be required to be independent as such term is defined under New York Stock Exchange rules.

        Our Board of Directors has adopted a written charter for the compensation committee, which will be available on our website upon the completion of this offering.

Code of Ethics

        The audit committee and our Board of Directors have adopted a code of ethics (within the meaning of Item 406(b) of Regulation S-K) that applies to the Board of Directors, Chief Executive Officer, Chief Financial Officer and Controller. Our Board of Directors believes that these individuals must set an exemplary standard of conduct for our company, particularly in the areas of accounting, internal accounting control, auditing and finance. The code of ethics sets forth ethical standards the designated officers must adhere to. The code of ethics has been posted to the Company's website www.voughtaircraft.com.

Compensation Committee Interlocks and Insider Participation

        None of the members of our compensation committee at any time has been one of our executive officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of our Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or compensation committee.

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Limitation of Liability and Indemnification of Officers and Directors

        As permitted by Section 102 of the Delaware General Corporation Law, upon consummation of this offering, we expect that our amended and restated certificate of incorporation and amended and restated bylaws will limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as directors. The duty of care generally requires that when acting on behalf of the corporation, directors exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:

    any breach of the director's duty of loyalty to us or our stockholders;

    any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

    any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends; or

    any transaction from which the director derived an improper personal benefit.

        These limitations of liability do not alter liability under the federal securities laws and do not affect the availability of equitable remedies such as injunction or rescission. As permitted by Section 145 of the Delaware General Corporation Law, upon consummation of this offering, we expect that our amended and restated certificate of incorporation and amended and restated bylaws will authorize us to indemnify our officers, directors and other agents to the fullest extent permitted under Delaware law and provide that:

    we may indemnify our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions;

    we may advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; and

    the rights provided in our amended and restated bylaws are not exclusive.

        We expect to enter into indemnification agreements with each of our executive officers and directors, which are in addition to and may be broader than the indemnification provided for in our charter documents. These agreements are expected to provide that we will indemnify each of our directors to the fullest extent permitted by law and advance expenses to each indemnitee in connection with any proceeding in which indemnification is available.

        We also maintain general liability insurance that covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers and intend to obtain a policy of directors and officers liability insurance that will be effective upon the completion of this offering that will also cover certain liabilities arising under the Securities Act of 1933, as amended. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling the registrant pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

        These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder's investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the indemnification agreements and the insurance are necessary to attract and retain talented and experienced directors and officers.

        At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which any of them is seeking indemnification from us, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification.

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COMPENSATION DISCUSSION AND ANALYSIS

Objectives and Philosophy of Executive Compensation

    Role of the Compensation Committee

        The compensation committee was established for the purpose of overseeing our compensation programs and strategies, management development and successorship plans and strategies, and for administering the our equity-based compensation plans. With respect to executive compensation, the responsibilities of the compensation committee include:

    approving the compensation policies and approving all elements of compensation for our executive officers (including base pay, annual incentive compensation, and long-term incentives);

    administering our equity-based compensation plans;

    approving goals and objectives relevant to the compensation of our Chief Executive Officer and evaluating our Chief Executive Officer's performance in light of those objectives; and

    reviewing our management development and succession planning practices and strategies.

        The compensation committee is supported by our human resources organization, which prepares recommendations regarding executive compensation for the compensation committee's consideration. Because individual performance plays a significant role in the setting of executive compensation, the compensation committee also receives input from our President and Chief Executive Officer regarding the performance of those executives reporting to him.

        The compensation committee is comprised of Messrs. Squier (chair), Clare and Palmer. Each of the current members of the compensation committee served on the committee for the entirety of 2007.

    Objectives of the Executive Compensation Program

        Performance (as measured by the overall performance of our company and an individual's contribution to that performance) is the cornerstone of our overall compensation program. We seek to provide pay and benefits that are externally competitive and internally equitable, supportive of the achievement of our business objectives, and reflective of both our company's performance and the individual executive officer's contribution to that performance. Our executive compensation program supports this overall compensation philosophy, with an additional focus placed on ensuring the retention of key individuals. More specifically, the goals of our executive compensation programs are to:

    attract and retain strong business leaders;

    pay competitively within the aerospace industry for total compensation; and

    motivate the executive team by linking pay to our company's performance and the individual executive officer's contribution to that performance.

        In establishing annual total compensation for the executive officers, the compensation committee reviews base salary, annual incentive compensation, and annual total compensation against executive compensation surveys compiled by PricewaterhouseCoopers, an outside compensation consultant retained directly by the compensation committee for the purpose of providing aggregate pooled survey data and other consulting services to the committee with regard to executive compensation. Surveys used for this purpose reflect the aggregate pooled data regarding compensation levels and practices for individuals holding comparable positions at an array of companies, with annual revenues comparable to ours, in the aerospace industry (when available) as well as durable goods manufacturing, general manufacturing and general industry, which we believe are strongly related to the aerospace industry in

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each case. In 2007, we did not benchmark our executive officers' compensation against a specific group of comparable companies.

        In general, the compensation committee's philosophy is to provide annual total cash compensation to our executive officers (i.e., base salary and annual incentive compensation) at levels equal to or slightly above market for instances in which our company's annual and individual performance targets have been achieved. Individual variations from the market reflect differences in an individual officer's experience, internal equity considerations and/or individual performance. Executive officer compensation is reviewed with respect to these factors on an annual basis, and may be adjusted up or down accordingly in connection with any promotion or significant change in an executive officer's responsibilities.

Elements of Executive Compensation

        Our executive compensation program is comprised of the following components:

        Annual Compensation

    Base Salary

    Annual Incentive Bonus

        Long-term Compensation

    Equity-Based Awards

    Other Benefits

    Annual Compensation

        Base Salary.    Base salaries for executive officers are determined in relation to a market value established for each executive position. These market values are developed through the use of compensation surveys compiled by PricewaterhouseCoopers, the outside executive compensation consultant retained by the compensation committee, and are based upon data derived from the aerospace industry (when available) as well as durable goods manufacturing, general manufacturing and general industry, adjusted for company size, comparing executives with comparable responsibilities at other companies within these industries. Base salaries are set within an established range in relation to that market value (typically between 85% and 115% of the market rate) in recognition of the particular competencies, skills, experience and performance of the particular individual, as well as consideration of the significance of the individual executive's assigned role as it relates to our business objectives and internal equity considerations. In general, base salaries for executives are targeted at or near the 50th percentile of the market value. However, individual salaries may be above or below the 50th percentile due to business or industry trends or other individual factors such as experience, internal equity, and sustained individual performance. Base salaries for executive officers are reviewed on an annual basis and at the time of promotion, hiring, or as necessary as the result of a significant change in responsibilities.

        Annual Incentive Bonus.    Incentive bonus compensation is designed to align the compensation of individual executives with the achievement of our company's specified annual business objectives, and to motivate and reward individual performance in support of those objectives. To that end, the annual bonus awarded to an individual executive is determined by the application of both a business performance factor (BPF) and an individual strategic performance factor (SPF). Performance with respect to the BPF is measured by our company's performance against one or more predetermined business objectives. BPF objectives are established each year and reflect a significant measure of our company's performance.

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        Typically, the BPF will be comprised of one or more financial measures that reflect the key areas of focus for the executive team during the upcoming year and that are indicative of the performance that our bonus program seeks to reward. Performance with respect to the SPF is determined based upon a subjective evaluation of the executive's individual performance including an assessment of the executive's performance with respect to individual objectives that are established annually and are designed to align the executive's performance with key objectives of the business within that individual officer's area of responsibility. An individual officer's SPF factor is determined as part of the officer's annual performance evaluation. The rating for each factor in a given year may range from 0 to 2.0, depending upon the degree to which the particular BPF and SPF objectives were met. In order to ensure that our executive officers focus on the achievement of our company's key performance objectives, a significant portion of their bonuses determined by the achievement of our overall objectives as reflected by the BPF.

        Annual incentive bonuses are awarded as a percentage of each officer's annual base salary, with an individual annual bonus target percentage established for each individual executive officer. The program is designed to provide a payout at the target level when the applicable performance objectives are achieved, with either no payout or payout at a reduced level when those objectives are not achieved or are achieved below target level and with a maximum bonus opportunity equal to two-times the amount of the target payout. The target-level and maximum bonus opportunities for each of the named executive officers for 2007 are set forth on the Grants of Plan-Based Awards table. In order to ensure that the bonus amounts are truly reflective of performance during the year, the compensation committee has the discretion to make appropriate adjustments in the application of the BPF to address situations in which the occurrence of unusual events during the course of the year has a significant impact on the application of the BPF and where the BPF would, if unadjusted, fail to accurately reflect company performance.

        For 2007, 70% of the annual incentive bonus for our executive officers was determined based upon our company's performance against two BPF objectives. Specifically 50% of the 2007 bonus was based upon our company's ability to meet a pre-determined cash-flow objective as measured against our company's year-end cash balance and 20% of the bonus was based upon our company's ability to meet a pre-determined earnings target. The remaining portion of an individual officer's bonus was based upon the subjective assessment of the individual officer's performance as reflected in the SPF rating. The SPF rating for each executive officer resulted from an assessment of each executive's individual performance during the year including an assessment of the executive's performance against individual performance objectives within the executive's area of responsibility designed to support the financial or operational performance or other strategic objectives of the business. The specific performance targets established with respect to each of the BPF measures of our company's performance were designed such that achievement of a BPF factor of 1.0 represented a significant management challenge and the target performance associated with achievement of that rating would reflect substantial improvement in our company's performance with respect to this measure as compared to 2006. Our performance that exceeded this target would be reflected by a BPF factor above 1.0, with the maximum BPF factor of 2.0 designed to reflect a level of performance that the management team would have substantial difficulty achieving. The cash-flow target for 2007 would have been achieved (and a corresponding BPF rating of 1.0 would have been assigned for this measure) if we achieved a positive cash balance net of any outstanding borrowings under our six-year revolving loan at year end. The earnings target would have been achieved (and a corresponding BPF rating of 1.0 would have been assigned for this measure) if we achieved $100 million of EBIT in 2007. As a result of our company's performance against each of the designated objectives, the BPF for 2007 was determined to be 1.5 with respect to the cash-flow measure and 1.27 with respect to the earnings measure.

        Taken together, the annual compensation paid to the executive officers in the form of annual base pay and annual incentive bonus is designed to provide those officers with total annual compensation

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that is competitive, internally equitable, and aligned with both individual performance and our company's performance against key management objectives in a given year.

    Long-Term Compensation

        Equity-Based Awards.    Our executive officers are eligible to receive long-term incentives in the form of equity-based awards, including stock options, stock appreciation rights, or SARs, and restricted stock units, or RSUs. These awards are designed to attract, retain and motivate key executive personnel and to align management decision-making with our long-term strategic objectives and long-term performance, thereby aligning executives' interests with those of our stockholders.

        We have granted stock options with an exercise price no less than the fair market value of our common stock on the date of the option grant. The compensation committee specifies in the option agreement the term of the stock options, at what time or times each option may be exercised, including the period of time after disability, death or other termination of employment during which options that have become exercisable may be exercised. Each SAR granted allows the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant in shares of our common stock. The compensation committee determines the terms of the SARs granted, including when such rights become exercisable. Each RSU is a contingent right to receive a share of our restricted common stock in the future in accordance with terms and conditions established by the compensation committee. The compensation committee determines the number of RSUs granted to any employee and the conditions under which the RSUs will vest. The compensation committee imposes vesting conditions based on continuous employment and/or the achievement of specific performance goals. RSUs that do not vest are forfeited.

        Equity-based awards are not awarded to executives on an annual basis, but rather have been granted to our executive officers from time to time, when, in the opinion of the compensation committee, existing outstanding awards were insufficient to properly support these objectives. To that end, in 2006, we adopted the Vought Aircraft Industries, Inc. 2006 Incentive Award Plan (the "2006 Incentive Plan"). In conjunction with the adoption of the 2006 Incentive Plan, during 2006 we awarded to certain executives, including those named executive officers who were serving in their roles during 2006, a combination of SARs and RSUs. In general, those awards were granted at a ratio of approximately 3.5 SARs for every 1 RSU (before taking into consideration then-outstanding equity awards). This ratio was selected in order to ensure that a significant portion of the potential value of the grant was dependent upon an increase in the value of our common stock (reflected by the SARs component), thereby aligning the equity awards with the long-term interest of our shareholders, while a smaller component of the award provided compensation in the form of full-value share grants (the RSU component) to more greatly reward current performance subject to continued performance.

        Subsequent to the adoption of the 2006 Incentive Plan, individual equity awards have been made from time to time in conjunction with a particular executive's hiring, promotion or significant increase in responsibilities, or to reward unique individual performance achievements. This includes awards granted to those of our executive who were hired during 2007, including Mr. Howe. The amount of any executive's equity-based award is determined by reference to the executive's responsibilities, the executive's potential for contributing to our company's success and the amount of any outstanding awards previously granted to the individual. In order to further align these incentives with our near-term financial performance, the SARs awarded in 2007, which are scheduled to vest on December 31, 2012, are subject to accelerated vesting in four equal annual installments in the event that we achieve certain adjusted EBIT Margin financial objectives, the attainment of which is challenging but we believe is reasonably achievable. The RSUs are scheduled to vest in four equal annual installments based upon our attainment of the same performance objectives applicable to the SARs. In order to provide an appropriate retention incentive, both awards of SARs and RSUs are subject to forfeiture in the event of an employee's voluntary termination or termination for cause prior

89



to exercise of the SARs or payment of the shares. The financial target for the purpose of vesting SAR and RSU awards that were eligible to vest based on the January 1, 2007 through December 31, 2007 performance period was an adjusted EBIT Margin of 5%. "Adjusted EBIT Margin" means our consolidated earnings before interest and taxes, as reflected on our consolidated financial statements for 2007, but excluding any non-recurring items, divided by our consolidated gross revenues, excluding non-recurring items. Because our performance for the 2007 performance period exceeded that target, all awards eligible for vesting in 2007 based upon the achievement of that target were vested.

        In addition, Mr. Howe's employment agreement provided that we would work with Mr. Howe to develop a compensation package, subject to the approval of the compensation committee, designed to compensate him for pension benefits forfeited by Mr. Howe as the result of his termination of employment with his prior employer. In satisfaction of that obligation, Mr. Howe was granted an award of 113,766 RSUs that will become fully vested upon the first to occur of December 3, 2012 or a change of control of the Company (as defined in the Plan). This award is subject to forfeiture in the event that Mr. Howe should voluntarily terminate his employment or be terminated for cause (as defined in his employment agreement) prior to the vesting of the award.

        As previously reported, in early 2007, Mr. Davis received an award of 22,400 SARs and 6,400 RSUs as the result of his achievement in late 2006 of certain specified business objectives within the scope of his then-assigned responsibilities.

        Awards under our equity plans are typically granted at regularly scheduled meetings of the compensation committee (or, in the case of grants made to directors, regularly scheduled meetings of our Board of Directors), or in conjunction with the hiring of new executives. We do not grant discounted options or SARs; rather, all option and SARs awards are granted with exercise prices at no less than the fair market value of the underlying shares at the time of the grant. The exercise price for SARs granted in 2007 was based upon an independent, third party appraisal of the fair market value of our common stock, which was obtained specifically for that purpose.

    Other Benefits

        In order to assist our executives in fully utilizing the benefits and other compensation made available to them under our executive compensation programs, we currently offer our executive officers, on a taxable basis; reimbursement of amounts expended for financial services, including financial planning and tax preparation. In recognition of the fact that their positions as executive officers may expose our executives to an increased potential for personal liability claims asserted against them, we offer our executive officers supplemental personal liability insurance coverage. Because we believe strongly that the health of our executive team contributes directly to their effectiveness and longevity, we provide our executive officers with a comprehensive annual physical. In order to defray the costs to our executive officers associated with any relocation that may be required in connection with the performance of their assigned duties, we provide relocation assistance, which may include temporary housing, transportation, and reimbursement of other relocation expenses. The costs to us associated with providing all of these benefits to Ms. Hargus and Messrs. Doty, Howe, Davis, Orzel and Stubbins in 2007 are reflected in the "Other" column of the following All Other Compensation Table.

        We also provide our executive officers with customary benefits, such as 401(k), medical, dental, life insurance and disability coverage under the same benefit plans and under the same terms and conditions applicable generally to most of our non-represented employees. Like most of our non-represented employees, executive officers that were hired prior to October 10, 2005 also participate in our defined benefit retirement plans, on the same terms and conditions as other non-represented employees. Like other participants in those plans, those executive officers who participated in those plans, but who had attained fewer than 16 years of seniority under the plans as of December 31, 2007, ceased to accrue benefits under the defined benefit plans effective December 31, 2007. Executives participating in our tax-qualified defined benefit retirement plan also participated during 2007 in our

90



non-qualified defined benefit plan, which, when combined with benefits payable under the qualified plan, is designed to provide our executives with a benefit that is, in the aggregate, substantially equal to the amounts that would have been payable under the qualified plan in the absence of applicable IRS limits regarding the compensation that may be covered under the qualified plan or the maximum benefits payable under the qualified plan. The accruals of benefits under that non-qualified plan were frozen as of December 31, 2007 for all plan participants, including those executive officers who participated in the plan during 2007. Like most other similarly situated, non-represented employees, executive officers who are not eligible to accrue benefits under our defined benefit plans receive an additional defined contribution benefit contributed to our Savings and Investment Plan in an amount equal to 3% of eligible compensation in lieu of participation in the defined benefit plans.

Severance Arrangements

        In order to help secure the focus of certain of our executive officers on their assigned duties, we have entered into employment agreements with each of Messrs. Doty, Howe, Davis and Orzel. These agreements each provide for the payment of severance in the event that such executive's employment is terminated by us without "cause" or the executive resigns for "good reason," as those terms are defined in the respective agreements. Each executive's severance consists of a payment of one year's base salary and one year's medical insurance premiums for the executive and his spouse and dependents. Those agreements currently extend through December 31, 2008 in the case of Messrs. Doty and Howe and October 31, 2009 in the case of Messrs. Davis and Orzel. Each of these agreements is subject to automatic annual extension for successive one-year periods unless timely notice of non-renewal is provided. In order to further protect our company's interests, each agreement also includes certain non-competition and non-solicitation provisions, applicable for a period of 12 months following the termination of employment.

Effect of a Change in Control

        We do not have change of control agreements in place covering our executive officers, nor do the employment arrangements for any executive officers provide for any additional benefits in connection with the occurrence of a change in control. The 2006 Incentive Award Plan provides that, if a change in control occurs and a participant's SARs and RSUs awards do not remain outstanding and are not converted, assumed, or replaced by a successor entity, then immediately prior to the change in control, such awards outstanding under the plan shall become fully exercisable and all forfeiture restrictions on such awards shall lapse. We included this acceleration provision to ensure that executive's awards, which comprise a significant component of their compensation and constitute a material inducement for such executives to remain employed by us, would entitle the executives to an equitable payment or substitution in the event such awards were no longer available following the occurrence of a corporate transaction.

        The agreements governing awards of RSUs granted to our executive officers provide that any then-vested awards shall become payable upon the occurrence of a change in control. In addition, the agreement governing awards of RSUs to Mr. Doty as well as the agreement governing one of the awards to Mr. Howe provide for the vesting and payment of those awards upon the occurrence of a change in control.

        In 2000, we adopted a deferred compensation plan in order to permit then-current executives to make a one-time deferral of certain retention bonuses payable to those executives upon their completion of a one-year retention period. No other deferrals have been made pursuant to the plan since 2000. The terms of each participant's deferral provided that amounts deferred would be payable upon the occurrence of a change in control of our company as defined therein. We have only one current executive officer who is a participant in the deferred compensation plan and his account balances under the plan is included in the following Deferred Compensation Table.

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Summary Compensation Table for 2007

        The table below shows the before-tax compensation for all individuals who served as our Chief Executive Officer or Principal Financial Officer during 2007 as well as the next three highest compensated executive officers. The table also includes one individual who served as our Interim Principal Financial Officer until January 16, 2007. These individuals are sometimes referred to as the named executive officers.

 
   
   
   
  Long-term Compensation
   
   
 
  Annual Compensation
   
   
   
   
   
   
Name and Principal Position

  Stock
Awards(3)

  Option
Awards/SARs(4)

  Non-Equity
Plan Incentive
Compensation(5)

  Change in
Pension
Value(6)

  All other
Compensation(7)

  Total
Compensation

  Year
  Salary
  Bonus(2)
Elmer L. Doty
President, Chief Executive Officer and Director
  2007
2006
  $
564,967
448,105
 
  $
680,516
113,419
  $
325,677
625,302
  $
738,599
985,063
  N/A
N/A
  $
74,301
600,359
  $
2,384,060
2,772,248
Keith B. Howe
Executive Vice President and Chief Financial Office Officer
  2007     305,000   200,000     231,917     217,490     319,688   N/A     82,880     1,356,975
Wendy G. Hargus
Treasurer and Interim
Principal Financial Officer(1)
  2007
2006
    205,612
200,044
 
    47,466
91,416
    32,468
62,530
    114,756
155,234
  N/A
N/A
    16,229
8,954
    416,531
518,178
Stephen A. Davis
Vice President, Commercial
Aerostructures
  2007
2006
    244,163
209,642
 
    49,505
29,253
    95,868
58,154
    200,781
244,472
  335,174
107,594
    11,183
9,555
    936,674
658,670
Dennis J. Orzel
Vice President, Integrated
Aerosystems
  2007
2006
    269,855
101,160
 
50,000
    47,466
91,416
    90,909
175,084
    193,709
148,174
  N/A
N/A
    234,341
15,618
    836,280
581,452
Thomas F. Stubbins
Vice President, Human Resources
  2007
2006
    187,725
170,040
 
    35,600
68,562
    61,186
115,156
    98,122
131,951
  307,394
53,582
    11,635
12,725
    701,662
552,016

(1)
Ms. Hargus served as the Company's Interim Principal Financial Officer prior to the employment of Mr. Howe on January 16, 2007.

(2)
The amount in this column with respect to Mr. Howe consists of a bonus in the amount of $200,000 paid to Mr. Howe at the time of his commencement of employment in accordance with the terms of his employment agreement.

    The amount in this column with respect to Mr. Orzel consists of a bonus in the amount of $50,000 paid to Mr. Orzel pursuant to his offer of employment in 2006.

(3)
The amounts in this column reflect amounts recognized for financial statement reporting purposes for the years ended December 31, 2007 and 2006 in accordance with FAS 123R for restricted stock units, disregarding any estimates of forfeitures related to service-based vesting requirements. The assumptions used in calculating these amounts are set forth in Note 17 to our annual consolidated financial statements included elsewhere in this prospectus. The RSUs awarded to Mr. Davis and 25,000 of the 138,766 RSUs awarded to Mr. Howe in 2007 are eligible to vest in four equal annual installments based upon our company's ability to achieve certain specified financial objectives. In the event that these performance objectives are not achieved, the shares associated with that installment will be forfeited. Once vested, such units are eligible to be paid upon the first to occur of: (i) a change in control (which would not include this offering); (ii) January 2, 2014; or (iii) the participant's termination due to death or disability. These awards are subject to forfeiture in the event of an employee's voluntary termination or termination for cause (as defined) prior to payment. The remaining RSUs awarded to Mr. Howe in 2007, convertible into a total of 113,766 shares, will become fully vested on the first to occur of December 3, 2012 or a change of control of the Company (as defined), and are subject to forfeiture in the event Mr. Howe should voluntarily terminate his employment or be terminated for cause (as defined) prior to the vesting of the award.

(4)
The amounts in this column reflect amounts recognized for financial statement reporting purposes for the fiscal years ended December 31, 2007 and 2006 in accordance with FAS 123(R) for stock appreciation rights and stock options, disregarding any estimates of forfeitures related to service-based vesting requirements. The assumptions used in calculating these amounts are set forth in Note 17 to our consolidated financial statements included elsewhere in this prospectus. In general, the SARs are scheduled to vest on December 31, 2012, and are subject to accelerated vesting, in four equal annual

92


    installments, in the event that certain of our performance objectives are met as of December 31 of such year. All awards are subject to forfeiture in the event of an employee's voluntary termination or termination for cause (as defined) prior to exercise.

(5)
The amounts in this column represent the annual incentive bonus earned by executives for 2007 and 2006.

(6)
The amounts in this column reflect the actuarial increase in present value of the executive officer's benefits under our qualified and non-qualified defined benefit plans determined using interest rate and mortality rate assumptions consistent with those used in the preparation of our consolidated financial statements. See Note 14 to our consolidated financial statements include elsewhere in this prospectus. Ms. Hargus and Messrs. Doty, Howe and Orzel do not participate in the plans as they were each hired after October 10, 2005 when the plans were closed to new participants.

(7)
The amounts in this column include all other compensation as detailed in the following All Other Compensation Table.

All Other Compensation Table

 
  Year
  Financial Planning
  Executive Relocation(1)
  Contribution to Savings Plan(2)
  Other(3)
  Total Other Compensation
Elmer L. Doty   2007
2006
  $
14,682
15,228
  $
31,709
526,475
  $
15,750
9,600
  $
12,160
49,056
  $
74,301
600,359
Keith B. Howe   2007     6,200     43,110     11,781     21,789     82,880
Wendy G. Hargus   2007
2006
   
   
    15,732
8,424
    497
530
    16,229
8,954
Stephen A. Davis   2007
2006
   
   
    8,031
3,000
    3,152
6,555
    11,183
9,555
Dennis J. Orzel   2007
2006
    675
    148,827
7,762
    11,250
4,451
    73,589
3,405
    234,341
15,618
Thomas F. Stubbins   2007
2006
    300
345
   
    8,980
3,000
    2,355
9,380
    11,635
12,725

(1)
For the year ended December 31, 2007, the amount in this column for Mr. Doty is comprised of temporary living expenses and transportation totaling $31,709. For the year ended December 31, 2006, the amount in this column for Mr. Doty includes three lump sum payments in the amounts of $175,000, $175,000 and $100,000, which were payable to Mr. Doty during the course of 2006 in connection with his relocation to Texas pursuant to the terms of his employment agreement. In addition, Mr. Doty was provided with temporary living expenses and transportation totaling $76,475. These amounts were provided pursuant to the terms of our employment agreement with Mr. Doty in connection with Mr. Doty's relocation to Texas.

    For the year ended December 31, 2007, the amount in this column for Mr. Howe consists of temporary living expenses and transportation totaling $43,110. These amounts were provided pursuant to the terms of our employment agreement with Mr. Howe in connection with Mr. Howe's relocation to Texas.

    For the year ended December 31, 2007, the amount in this column for Mr. Orzel consists of temporary living expenses and transportation totaling $148,827. For the year ended December 31, 2006, the amount in this column consisted of temporary living expenses and transportation totaling $7,762. These amounts were provided in connection with Mr. Orzel's relocation to Texas.

(2)
The amounts included for Ms. Hargus and Messrs. Doty, Howe and Orzel include contributions made to the savings plan in lieu of their participation in our defined benefit plan.

(3)
For the year ended December 31, 2007, this column includes $757 personal liability umbrella and $11,403 tax gross up of temporary living and transportation expense payments with respect to Mr. Doty. For the year ended December 31, 2006, this column includes the following elements of compensation with respect to Mr. Doty: $716 personal liability umbrella, $42,694 tax gross up of temporary living and transportation expenses payments and $2,054 executive physical. In addition,

93


    this column includes the following amounts for previously offered elements discontinued during the course of 2006: $2,154 car allowance, $772 supplemental health care premium, and $666 supplemental accidental death and dismemberment premium.

    For the year ended December 31, 2007, this column includes the following elements of compensation with respect to Mr. Howe: $491 personal liability umbrella, $12,953 tax gross up of temporary living and transportation expenses payments and $8,345 executive physical.

    For the year ended December 31, 2007, this column includes $497 personal liability umbrella with respect to Ms. Hargus. For the year ended December 31, 2006, this column includes $530 personal liability umbrella with respect to Ms. Hargus.

    For the year ended December 31, 2007, this column includes the following elements of compensation with respect to Mr. Davis: $757 personal liability umbrella and $2,395 executive physical. For the year ended December 31, 2006, this column includes the following elements of compensation with respect to Mr. Davis: $783 personal liability umbrella. In addition, this column includes the following amounts for previously offered elements discontinued during the course of 2006: $3,524 car allowance, $772 supplemental health care premium, $666 supplemental accidental death and dismemberment premium and $810 reimbursement of a club membership.

    For the year ended December 31, 2007, this column includes the following elements of compensation with respect to Mr. Orzel: $757 personal liability umbrella and $72,832 tax gross up of temporary living and transportation expenses payments. For the year ended December 31, 2006, this column includes the following elements of compensation with respect to Mr. Orzel: $300 payment resulting from his election to opt out of certain employee benefits, $313 personal liability umbrella and $2,792 tax gross up of certain transportation and temporary living expenses.

    For the year ended December 31, 2007, this column includes the following elements of compensation with respect to Mr. Stubbins: $757 personal liability umbrella and $1,598 executive physical. For the year ended December 31, 2006, this column includes the following elements of compensation with respect to Mr. Stubbins: $783 personal liability umbrella and $2,144 executive physical. In addition, this column includes the following amounts for previously offered elements discontinued during the course of 2006: $3,520 car allowance, $772 supplemental health care premium, $666 supplemental accidental death and dismemberment premium and $1,495 organizational dues.

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Grants of Plan-Based Awards

        The table below details the grants of plan based awards made to our named executive officers in 2007.

 
   
  Estimated Possible Payout Under
Non-Equity Plan Award(1)

   
   
   
   
 
   
  Estimated
Future Payout
Under Equity
Award Plan(2)

   
   
   
Name

  Grant
Date

  All Other
Stock

  Exercise Price
of SAR

  Fair Value
on Grant
Date

  Threshold
  Target
  Maximum
Elmer L. Doty
    Incentive Bonus
 
2/8/2007
 
$

 
$

566,410
 
$

1,132,820
 
 
 
$

 
$


Keith B. Howe
    Incentive Bonus
    SARs
    RSUs
    RSUs

 


2/8/2007
2/8/2007
2/8/2007
5/3/2007

 

 






 

 


234,375



 

 


468,750



 



87,500
25,000
113,766

 






 

 



10.00


 

 



418,250
219,750
1,000,003

Wendy G. Hargus
    Incentive Bonus

 


2/8/2007

 

 



 

 


82,322

 

 


164,644

 



 



 

 



 

 



Stephen A. Davis
    Incentive Bonus
    SARs
    RSUs

 


2/8/2007
2/8/2007
2/8/2007

 

 





 

 


132,660


 

 


265,320


 



22,400
6,400

 





 

 



10.00

 

 



104,608
56,256

Dennis J. Orzel
    Incentive Bonus

 


2/8/2007

 

 



 

 


148,550

 

 


297,100

 



 



 

 



 

 



Thomas A. Stubbins
    Incentive Bonus

 


2/8/2007

 

 



 

 


75,247

 

 


150,494

 



 



 

 



 

 



(1)
The amounts in these columns represent the threshold, target and maximum bonuses for which each of the named executives were eligible to receive for 2007 under our annual incentive program, as further described in "—Elements of Executive Compensation, Annual Compensation, Annual Bonus." Executives are not entitled to a threshold payout under the program. The actual amounts awarded to the named executives for 2007 were paid in February 2007, and are reflected in the "Non-Equity Plan Incentive Compensation" column in the preceding Summary Compensation Table for 2007.

(2)
The grants of SARs and RSUs listed in this table were made under the 2006 Incentive Plan. The SARs awarded to Mr. Howe and to Mr. Davis in 2007 are scheduled to vest on December 31, 2012, and are subject to accelerated vesting, in four annual installments, beginning on December 31, 2007, in the event that certain of our performance objectives are met. The RSUs awarded to Mr. Davis and 25,000 of the 138,766 RSUs awarded to Mr. Howe in 2007 are eligible to vest in four equal annual installments based upon our company's ability to achieve certain specified financial objectives. In the event that these performance objectives are not achieved, the shares associated with that installment will be forfeited. Once vested, such units are eligible to be paid upon the first to occur of: (i) a change in control (which would not include this offering); (ii) January 2, 2014 or (iii) the participant's termination due to death or disability. These awards are subject to forfeiture in the event of an employee's voluntary termination or termination for cause (as defined) prior to payment. The remaining RSUs awarded to Mr. Howe in 2007 convertible into a total of 113,766 shares will become fully vested on the first to occur of December 3, 2012 or a change of control of the Company (as defined), and are subject to forfeiture in the event Mr. Howe should voluntarily terminate his employment or be terminated for cause (as defined) prior to the vesting of the award.

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Outstanding Equity Awards at Fiscal Year End

        The table below details the stock options and SARs that were unexercised as of December 31, 2007 and unvested RSUs that were unvested as of December 31, 2007, which had been granted to each of our named executive officers.

 
  Option Awards
  Stock Awards
Name

  Number of
Securities
Underlying
Unexercised
Options/SARs
Exercisable

  Number of
Securities
Underlying
Unexercised
Options/SARs
Unexercisable

  Options/SARs
Exercise
Price

  Options/SARs
Expiration
Date

  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
Not Vested

  Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or Other Rights
Not Vested(1)

Elmer L. Doty   125,000   125,000   $ 10.00   11/02/16   200,000   $ 4,770,000
Keith B. Howe   21,875
  65,625
    10.00
  02/08/17
  18,750
113,176
    447,188
2,699,248
Wendy G. Hargus   45,000
12,500
 
12,500
    10.00
10.00
  12/30/15
11/02/16
 
10,000
   
238,500
Stephen A. Davis   25,800
25,800
1,000
11,200
11,200
  4,200
4,200

11,200
11,200
    10.00
10.00
10.00
10.00
10.00
  03/21/11
08/08/11
07/29/12
11/02/16
02/08/17
 


3,200
3,200
   


76,320
76,320
Dennis J. Orzel   35,000   35,000     10.00   11/02/16   10,000     238,500
Thomas A. Stubbins   4,300
500
10,400
22,700
  700

5,600
22,700
    10.00
10.00
32.33
10.00
  03/21/11
07/29/12
04/26/14
11/02/16
 


7,500
   


178,875

(1)
The market value of unearned shares was based upon the most recent valuation of our company stock, see Note 16 to our consolidated financial statements included elsewhere in this prospectus.

Stock Option/SAR Exercise and Fiscal Year End Values

        No stock options or stock appreciation rights were exercised during the year ended December 31, 2007 by the named executive officers.

Pension Benefits

        The following table details the accrued benefits for each of our named executive officers as of December 31, 2007, that participate in our defined benefit plans.

Name

  Plan Name
  Years
Credited
Service

  Present
Value of
Accumulated
Benefits

  Payments
in 2007

Stephen A. Davis   Retirement Plan
Excess Plans
  27.9682
27.9682
  $
1,020,112
1,165,294
 
Thomas A. Stubbins   Retirement Plan
Excess Plans
  27.6000
27.6000
    946,568
221,481
 

        The values reflected in the "Present Value of Accumulated Benefits" column of the Pension Benefits Table are equal to the actuarial present value of each officer's accrued benefit under the applicable plan as of December 31, 2007 using the same actuarial factors and assumptions used for financial statement reporting purposes, except that retirement age is assumed to be the earliest age at

96



which an officer is eligible for an unreduced benefit under the applicable plan. These assumptions are described in Note 14 to our consolidated financial statements included elsewhere in this prospectus.

        Employees hired on or after October 10, 2005, including Ms. Hargus and Messrs. Doty, Howe and Orzel, do not participate in the plans. In lieu of participation in the plans, those officers each receive a defined contribution equal to 3% of eligible compensation made to their account in our Savings and Investment Plan. Those contribution amounts are reflected in the "Contribution to Savings Plan" column of the All Other Compensation Table.

        On September 26, 2007, we announced that the accrual of benefits under these plans will be frozen as of December 31, 2007 for all participants who, as of that date, had accumulated fewer than 16 years of credited service under the plans. Following that date, all executive officers who are no longer eligible to accrue a benefit under the plans will receive the above-described defined contribution benefit. Messrs. Stubbins and Davis who each have accumulated more than 16 years of credited service under the Plan as of December 31, 2007, were not affected by the freeze in the accrual of benefits under the plans.

        A benefit payable under the Vought Aircraft Industries, Inc. Retirement Plan (the "Retirement Plan") is, in general, a function of the participant's average eligible compensation for the highest three years out of the most recent consecutive ten years of service ("Average Annual Compensation") and the participant's years of credited benefit service under the plan. Eligible compensation for the purpose of the plan generally includes base salary as well as annual incentive compensation. The current plan formula provides for an accrual rate of 1.5% of the participant's Average Annual Compensation with a reduced accrual rate of 1% for Average Annual Compensation below 50% of the Social Security taxable wage base. Benefits accrued under certain prior plan formulas are subject to offsets, including offsets for Social Security benefits. Retirement benefits are limited to 50% of Average Annual Compensation, unless a greater benefit was accrued as of January 1, 1995. Benefits under the Retirement Plan may be supplemented by benefits under one of two non-qualified defined benefit plans maintained by us: the Vought Aircraft Industries, Inc. ERISA 1 Excess Plan and the Vought Aircraft Industries, Inc. ERISA 2 Excess Plan (collectively, the "Excess Plans"). The Excess Plans are designed to provide a benefit which, when combined with the amounts payable under the Retirement Plan, is substantially equal to the amount that otherwise would have been payable under the Retirement Plan in the absence of the IRS limits regarding the compensation that may be covered by the Retirement Plan or the maximum benefits payable thereunder. Benefit accruals for all participants under the Excess Plans, including those executive officers who participated in the plans during 2007, were frozen as of December 31, 2007.

        The Retirement Plan contains the following material terms:

    A participant has a fully vested benefit under the plan after completing five years of vesting service.

    A participant is eligible for an unreduced benefit upon reaching the earlier of age 65; or at least age 55 with a combination of age and years of benefit service totaling 85.

    A participant is eligible for a subsidized early retirement benefit after reaching age 55 with at least 10 years of benefit service.

    A participant laid off before reaching age 55 may elect an early retirement to begin as early as age 55 if the individual has a combination of age and years of benefit service totaling 75 on the date of lay off, or if the participant is age 53 and has 10 or more years of vesting service at the time of layoff.

    The normal form of benefit is a life annuity for unmarried participants and a joint and 50% survivor annuity for married participants.

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    Participants may elect out of the normal form of benefit and may elect to receive the benefit through one of a variety of actuarially equivalent optional forms.

    There is no lump sum form of payment available (except for benefits with a lump sum value smaller than $7,500).

        The Excess Plans contain the following material terms:

    A participant's benefit under the Excess Plans is calculated in the same manner as under the Retirement Plan, except without giving effect to the applicable IRS limits on eligible compensation and benefit amount. Such benefit is reduced by the amount of any benefit payable under the Retirement Plan.

    The normal form of benefit under the plan is a lump sum payable 13 months following termination of employment, with a monthly payment payable in the form of a joint and 100% survivor annuity until the lump sum is paid.

    For benefits accrued after January 1, 2005, the lump sum payout is the only available form.

        Mr. Stubbins is the only current named executive officer eligible for an early retirement under the plans and Mr. Davis is eligible, as of December 31, 2007, to commence an early retirement as early as age 55 if his employment is terminated as the result of a lay-off.

Deferred Compensation

        The following table details the outstanding account balances for our named executive officers under our deferred compensation plan and aggregate earnings on those amounts in 2007. The plan was established in 2000 to permit a one-time deferral by then-current executive officers of a retention bonus payable to those executives following the completion of a one-year retention period. The balances in each individual's account are credited with earnings or losses as if such amounts were invested in our common stock. Balances under the plan are payable upon the occurrence of a change in control as defined in the plan. We have one named executive officer who participates in the plan.

Name

  Executive contributions in last FY
  Registrants contributions in last FY
  Aggregate earnings in last FY
  Aggregate withdrawal/ distributions
  Aggregate balance at last FY
Stephen A. Davis   $   $   $ 240,749   $   $ 381,266

Compensation of Directors

        The following table details the fees paid to our Board of Directors for the period ending December 31, 2007.

Name

  Fees
  Stock Awards(1)
  Total Compensation
Peter J. Clare   $   $   $
C. David Cush(2)         37,500     37,500
Allan M. Holt            
John P. Jumper     37,500     12,500     50,000
Ian Massey(3)     25,000     25,000     50,000
Adam J. Palmer            
Daniel P. Schrage     25,000     25,000     50,000
David L. Squier(4)         50,000     50,000
Samuel R. White(5)         50,000     50,000

(1)
Each of these stock awards granted in 2007 vested over the course of 2007.

(2)
Mr. Cush was elected to the Board of Directors on May 11, 2007.

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(3)
Mr. Massey also holds unexercised options for 5,000 shares of common stock.

(4)
Mr. Squier also holds unexercised options for 5,000 shares of common stock.

(5)
Mr. White also holds unexercised options for 5,000 shares of common stock.

        For 2007, our outside directors, Messrs. Massey, White, Squier, Jumper, Cush and Schrage were each eligible to receive compensation of $12,500 per calendar quarter of service on our Board of Directors, with such compensation provided in the form of cash or restricted stock at the election of the director. We use the term outside directors to refer to the members of our Board of Directors who are not currently officers of our company or Carlyle. All of the directors, including these outside directors, are also reimbursed for reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the Board of Directors and committee meetings and other work associated with their service on the Board of Directors. We do not maintain medical, dental or retirement benefits plans for these outside directors. The remaining directors, Messrs. Holt, Palmer, Clare and Doty, are employed by either Carlyle or our company, and are not separately compensated for their service as directors.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Transactions

        Carlyle Partners III, L.P. ("CPIII") and affiliates owned approximately 90% of Vought on a fully diluted basis and Carlyle Partners II, L.P. ("CPII") and affiliates owned approximately 96% of Aerostructures on a fully diluted basis when Vought and Aerostructures entered into the agreement and plan of merger. Both CPIII and CPII are affiliates of TC Group, L.L.C., which generally does business under the name of The Carlyle Group. Subsequent to the consummation of the transactions associated with the Aerostructures acquisition, private equity investment funds affiliated with Carlyle own approximately 90% of our fully diluted equity and, therefore, Carlyle has the power, subject to certain exceptions, to control our affairs and policies. They also control the election of directors, the appointment of management, the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions.

Management Consulting Agreement

        We have entered into a management consulting agreement with TC Group L.L.C., which is an affiliate of TCG Holdings, L.L.C. The agreement allows us to avail ourselves of TC Group L.L.C.'s expertise in areas such as financial transactions, acquisitions and other matters that relate to our business, administration and policies. TC Group L.L.C. receives an annual fee of $2.0 million for its management services and advice and is also reimbursed for its out-of-pocket expenses related to these activities. TC Group L.L.C. also serves, in return for additional fees, as our financial advisor or investment banker for mergers, acquisitions, dispositions and other strategic and financial activities. Fees are mutually agreed upon by us and TC Group L.L.C. for investment banking and advisory services. The fee is paid on a success basis only. Historically, these fees have been less than 1% of related transaction value. Such fees may vary in the future. TC Group L.L.C. received transaction fees of $3.5 million and $2.5 million in 2004 and 2003, respectively, for investment banking and advisory services.

Stockholders Rights Agreement

        The Company and private equity investment funds affiliated with Carlyle are parties to a stockholders rights agreement. The agreement provides that three members of our Board of Directors will be designated by certain affiliates of Carlyle. The parties agree to vote their shares in favor of such affiliates' designees for director.

Certain Related Party Transactions

        Upon the retirement of Tom Risley, our former Chief Executive Officer, during the first quarter of 2006, we entered into a consulting agreement with Mr. Risley for a minimum fee of $36,000 plus expenses, with a total payout plus expenses not to exceed $200,000. The total fees and expenses incurred under that agreement were $43,800 through the expiration of that agreement on February 28, 2007.

        Since 2002, we have had an ongoing commercial relationship with Wesco Aircraft Hardware Corp. ("Wesco"), a distributor of aerospace hardware and provider of inventory management services. Wesco currently provides aerospace hardware to us pursuant to long-term contracts. The most recent of these agreements was entered into on December 19, 2007 in connection with the expiration of one of our pre-existing long-term contracts with Wesco, and following a competitive re-procurement of that work package. On September 29, 2006, affiliates of Carlyle (which is our controlling stockholder) acquired a majority stake in Wesco, and as a result, Wesco and we are now under common control of Carlyle

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through its affiliated funds. In addition, three of our directors, Messrs. Squier, Clare and Palmer, also serve on the board of directors of Wesco. Carlyle will indirectly benefit from their economic interest in Wesco from its contractual relationships with us. The total amount paid to Wesco pursuant to our contracts with Wesco for the year ended December 31, 2007 was approximately $16.9 million.

        Indebtedness of Management.    We adopted an Employee Stock Purchase Plan, which provides certain employees and independent directors the opportunity to purchase shares of our stock at its estimated fair value. Certain employee stock purchases are eligible for financing by our company through stockholder notes. On October 24, 2000, 227,605 shares were sold for notes at a price of $10 per share, with such purchases financed through the issuance of certain promissory notes. Those stockholder loans, including interest at 6.09%, were scheduled to become payable after seven years, or upon specified events occurring. During 2001, 5,000 shares were sold for notes at a price of $10 per share. All amounts outstanding under the notes as of December 31, 2006 were paid in full in accordance with their terms during 2007.

Review, Approval or Ratification of Transactions with Related Persons

        Our Board of Directors intends to adopt written policies and procedures consistent with the following terms for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a "related person," has a direct or indirect material interest.

        If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a "related person transaction," the related person must report the proposed related person transaction to our general counsel. Any proposed related person transaction would be reviewed and, if deemed appropriate, approved by a committee of our Board of Directors. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the committee will review, and, in its discretion, may ratify the related person transaction. The policy will also permit the chairman of the committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.

        A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the committee after full disclosure of the related person's interest in the transaction. As appropriate for the circumstances, the committee will review and consider:

    the related person's interest in the related person transaction;

    the approximate dollar value of the amount involved in the related person transaction;

    the approximate dollar value of the amount of the related person's interest in the transaction without regard to the amount of any profit or loss;

    whether the transaction was undertaken in the ordinary course of our business;

    whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party;

    the purpose of, and the potential benefits to us of, the transaction; and

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    any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

        The committee may approve or ratify the transaction only if the committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, our best interests. The committee may also impose any conditions on the related person transaction that it deems appropriate.

        In addition to the transactions that are excluded by the instructions to SEC's related person transaction disclosure rule, the policy adopted by our Board of Directors will also state that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

    interests arising solely from the related person's position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity and (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction and (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction; and

    a transaction that is specifically contemplated by provisions of our certificate of incorporation or bylaws.

        The policy will provide that transactions involving compensation of executive officers shall be reviewed and approved by the compensation committee in the manner specified in its charter.

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PRINCIPAL AND SELLING STOCKHOLDERS

        Set forth below is certain information as of May 1, 2008 regarding the beneficial ownership of our common stock by:

    any person (or group of affiliated persons) we know to be the beneficial owner of more than 5% of our common stock;

    each of our executive officers;

    each of our directors; and

    all current directors and executive officers as a group.

        In accordance with SEC rules, beneficial ownership includes any shares for which a person or entity has sole or shared voting power or investment power and any shares for which the person or entity has the right to acquire beneficial ownership within 60 days. Except as noted below, we believe that the persons named in the table have sole voting and investment power with respect to the shares of common stock set forth opposite their names. Percentage of beneficial ownership is based on 24,783,756 shares of common stock outstanding as of May 1, 2008, and with respect to shares beneficially owned after this offering,                    shares of common stock to be issued in this offering, assuming no exercise of the underwriters' option to purchase additional shares.

        Unless otherwise indicated, the business address of each holder is c/o Vought Aircraft Industries, Inc., 9314 West Jefferson Boulevard M/S 49R-06, Dallas, Texas 75211.

 
   
   
   
   
   
   
  Shares Beneficially Owned After the Offering with Sale of Additional Shares
 
  Shares Beneficially Owned Prior to the Offering
   
  Shares Beneficially Owned After the Offering
  Additional
Shares to
be Sold at
Underwriters'
Option

 
  Shares to
be Sold
in the
Offering

Name of Beneficial Owner

  Number
  Percent
  Number
  Percent
  Number
  Percent
Beneficial Owners of 5% or More of Our Outstanding Common Stock                                
TCG Holdings, L.L.C.(1)   24,197,870   97.6 %                      

Executive Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Elmer L. Doty(2)   84,940   *                        
Stephen A. Davis(3)   73,601   *                        
Wendy G. Hargus(4)   52,259   *                        
Keith B. Howe(5)   12,704   *                        
Kevin P. McGlinchey(6)   20,947   *                        
Dennis Orzel(7)   20,325   *                        
Thomas A. Stubbins(8)   28,383   *                        
Joyce E.