You are on page 1of 28

Company Update

Elmer Doty
President and CEO

Keith Howe
Chief Financial Officer

Forward Looking Statements
Except for statements of historical fact, the statements
contained in this document are “forward-looking statements”
as such term is defined in the private securities litigation
reform act of 1995.
These forward-looking statements include statements
regarding intent, belief or current expectations of the
company and its management. Such forward-looking
statements are not guarantees of future performance and
involve a number of risks and uncertainties that may cause
the company’s actual results to differ materially from those
indicated by such forward-looking statements.

Slide 2

Agenda ƒ Company Update ƒ 787 Program ƒ 2006 Financial Overview Slide 3 .

777 flaps. C-130. 787 fuselage structures. Northrop. H60 cabin subassemblies Business jet: Gulfstream G450. 737 doors • Airbus: A319/320. G550 wings • ƒ Recent history: • Company struggled in adapting to post-9/11 commercial production • rates while starting up 787 and other new programs Recovery well underway – now positioning for future growth Slide 4 . Textron • ƒ Our key products: • Boeing: 747.Company Update ƒ Who We Are: • Major developer and producer of structural assemblies for commercial and military aircraft A rich cultural history from LTV. 767. Grumman. A330/340 wing and control surface subassemblies • Military: C-17. V-22 empennage and other structures.

Status of Recovery Efforts ƒ Structural moves to restore operating cash flow: • Annual overhead costs reduced by $100M+ – Company wide staff above shop floor reduced 25%+ – Pension and benefits closer to industry average – Tighter focus on budgets and spending controls • Many contract issues have been fixed – Resulting in $35M+ a year from higher prices ƒ Operational excellence program is underway • Safety: Injury rate has improved 18% • Quality: Defect rate has improved 19% • Cost efficiency: Cost per hour has improved 20% ƒ 787. 747-8 program execution are on track Slide 5 .

747-8 747-8ramp rampup. up.55 Balance Balanceexpected expectedto toshift shiftas asC17 C17declines declinesand and787.Current Revenue Mix Business Jets 19% Military 36% Boeing-Airbus 45% $2006 Revenue $1. Slide 6 .55B $1. 787.

Slide 7 . trend.Boeing-Airbus Unit Delivery Forecast 1400 Annual Deliveries 1200 1000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Airline Monitor Given Givenforecast forecastfor for787 787and and747-8 747-8we wecould couldfare fare better betterin in2011-2015 2011-2015than thanthis thistrend.

Slide 8 Vought Aircraft Industries. PROPRIETARY . Inc. production.C17 Status ƒ FY07 Budget: • Total of 22 aircraft (our production thru mid-2009) ƒ FY08 Budget: • Zero new aircraft in President’s Budget Request • Boeing has ordered cancellation of long-leads • Talk of some aircraft in FY08 Congressional markup ƒ Expect in FY09: • Zero new aircraft in President’s Budget Request Potential PotentialC5A C5Areplacement replacementprogram programor or commercial commercialsales salescould couldextend extendproduction.

flow. 747-8 – Forecast for each continues to grow • Support tanker procurement (767. Slide 9 . A330) • Manage through C17 closeout – Facility rationalization necessary ƒ Continue to streamline business execution • Drive from cost-plus-defense to commercial-best-practice systems – Focused implementation of Vought Operating System and Lean Six Sigma • Intelligent management of vertical integration and sourcing ƒ Selective pursuit of new platform starts with OEM’s • 787-like broadly-based partnering opportunities Through Through2007 2007our ourprimary primaryfocus focuswill willremain remainon on increasing increasingoperational operationalcash cashflow.Longer Term ƒ Transition through major market shifts • Start up 787.

787 Update Slide 10 .

SC Airport .Vought Global Aeronautica Charleston.

Teammate Work Scope Alenia Alenia 47 KHI 48 FHI Aft Fuselage Flown to Boeing Everett for Final Assembly Assembles. Installs & Integrates Systems & Validates Mid Fuselage Vought/Alenia Joint Venture Slide 12 .

Major Supply Chain Routing 787 Final Integration Alenia Global Aeronautica Mitsubishi Kawasaki Fuji Vought Slide 13 .

Alenia Sections Preparing for Delivery Slide 14 .

Automatic Fiber Placement Slide 15 .

Section 47 at Automatic Riveter Slide 16 .

Section 48 Slide 17 .

Financial Overview 2006 .

500 Includes Includesonly onlyfunded fundedorders orders Represents 2-3 years of Represents 2-3 years ofdeliveries deliveries Commercial Commercialup updue duetoto787 787 Business Jets up due to Business Jets up due toGV GVrate rateincrease increase Military down due to reduced C17 Military down due to reduced C17 1.500 3.500 2.000 2.367 $866 (135) 193 $924 67% -19% 52% 39% Funded Backlog Balance •• •• •• •• •• 3.000 1.152 576 563 $3.291 2006 B/(W) 2005 2005 $1.286 711 371 $2.000 500 2002 2003 Commercial Slide 19 2004 Bus Jets 2005 Military 2006 .Funded Backlog is up 39% Year Ended ($ Millions) 2006 Backlog Boeing/Airbus Military Business Jets Total $2.

238 234 1.519 1.283 236 1.2006 Performance ($ Millions) Sales Cost of Sales SG&A Total Cost of Sales Year Ended 2006 B/(W) 2006 2005 2005 $1.297 $254 1.472 (45) (2) (47) Operating Income 32 (175) 207 Net Income/(Loss) ($37) ($230) $193 Higher program margins and lower costs are improving our profitability Slide 20 .551 $1.

297 2006 B/(W) 2005 $27 89 39 $155 4% 19% 17% 12% Positive Positivecontributing contributingfactors: factors: ¾¾Commercial Commercial ••Increased Increased747.H-60 H-60and andC5 C5 ¾¾Business BusinessJets Jets ••Increased Increaseddeliveries deliveriesfor forGulfstream Gulfstreamprograms programs Slide 21 . Hawk. 747.767 767and and777 777deliveries deliveriespartially partiallyoffset offsetby bylower lowerAirbus Airbusdeliveries deliveries ¾¾Military Military ••Increased Increasedproduction productionfor forthree threeprograms: programs: Global GlobalHawk.452 2005 $603 472 223 $1.Ongoing Sales (excluding settlements) Year Ended ($ Millions) 2006 Ongoing: Boeing/Airbus Military Business Jets Total $629 561 262 $1.

Forward Losses have stabilized ($ Millions) Forward Loss Additions Q106 Q206 Q306 Q406 $25 $7 $8 ($4) Forward Loss Burndown ($18) ($15) ($17) ($16) Net Change $7 ($8) ($9) ($20) Ending Balance $71 $63 $54 $34 •• Burn Burndown downshould shouldcontinue continueatat$15-20 $15-20million millionper perquarter quarter •• Improved Improvedperformance performanceresulted resultedininQ4 Q4forward forwardloss lossreversals reversalsofof($4M) ($4M)for forseveral several programs programs Slide 22 .

2006 Adjusted EBITDA ($ Millions) 2006 Net Income ($37) Interest.9% $188 $129 12. net Income taxes 59 (2) $21 EBIT Depreciation and Amortization 59 EBITDA % M argin Adjustments Non-recurring investment in Boeing 787 Unusual charges .5% 13.2% -8.Non-cash expense and curtailment Other Total Adjusted EBITDA % M argin Total Adjusted EBITDA. excluding effects of non-cash benefits % M argin Slide 23 Year Ended 2006 B/(W) 2005 2005 ($230) 47 0 ($182) 72 $193 12 (2) $203 (13) $80 ($110) $190 5. non-recurring program and other Impairment charge and loss on disposal of property plant and equipment Pension & OPEB .Plant consolidation.0% 24 (157) (1) (54) 2 $5 -2.1% 10.7 pts 90 1 11 (3) 6 $185 66 158 12 51 4 $180 11.9% 13.1 pts .0 pts $59 2.

inventory and capital) Capital Expenditures (excluding 787) ($100) Year end cash position increased due to operational improvements and customer settlements Slide 24 .2006 Sources and Uses of Cash ($ Millions) $200 82 $150 $100 26 93 Other Year End 2006 (47) 58 $50 (35) 10 $0 Year End 2005 ($50) Cash from Operations (excluding Q2 settlements and 787) Q2 Settlements 787 (net of advances. settlements.

2006 Cash from Operations ($ Millions) Year Ended Net Operating Activities Capital Expenditures Free Cash Flow Q2 Settlements Free Cash Flow from Ongoing Operations 2006 $173 (115) $57 (82) ($25) 2005 ($65) (147) ($212) ($212) B/(W) than Prior Year $238 32 $270 (82) $188 •• Improved Improvedcash cashfrom fromoperations operationsdue duetotoimproved improvedprogram program performance and customer settlements and advances performance and customer settlements and advances •• 2006 2006improvements improvementsoffset offsetby by$17M $17Mofofincreased increasedcash cashusage usagefor for benefit benefitplans plansand and$24M $24Mofofincreased increased787 787period periodcosts costs Slide 25 .

Supplemental Financial Data .

net Income taxes EBITDA 2005 2006 B/(W) 2005 ($126) 2006 B/(W) 2005 2006 ($230) 47 ($182) 72 ($110) $193 12 (2) $203 (13) $190 Year Ended 2006 B/(W) 2005 2005 $160 $173 ($65) 41 115 147 $201 $57 ($212) $238 32 $270 .GAAP Reconciliations ($ Millions) Q4 2006 Net Income ($16) $9 16 (2) 14 - 2 (2) $8 ($1) $9 $21 15 17 (2) 59 $23 $16 $7 $80 30 25 5 90 66 24 2 2 (2) 4 14 1 5 (6) (13) 0 (8) 10 1 11 (3) 6 158 12 51 4 (157) (1) (54) 2 $180 $4 EBIT Depreciation and Amortization Debt Covenant Adjustments and Description: Non-recurring investment in Boeing 787 Unusual charges — Plant consolidation & other non-recurring program costs and settlements Asset impairment & Loss on Sale of property. plant and equipment Pension & OPEB curtailment and non-cash expense related to FAS 87 & FAS 106 Other Total Adjusted EBITDA 2006 $59 $56 $3 ($37) 59 (2) $185 Q4 2006 Net cash provided by (used in) operating activities ($63) 22 63 $75 Revised as of 4/4/07 Slide 27 2005 $97 Less: Capital Expenditures Free Cash Flow Year Ended 2006 B/(W) 2005 2005 ($6) Interest.