UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 2728, ~~2009~~2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-112528

Vought Aircraft Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware		75-2884072
(State of Incorporation)		(I.R.S. Employer Identification Number)
201 East John Carpenter Freeway, Tower 1, Suite 900
Irving, Texas		75062
(Address of Principal executive offices)		(Zip Code)


201 East John Carpenter Freeway, Tower 1, Suite 900
Irving, Texas		75062

(Address of Principal executive offices)		(Zip Code)

(972) 946-2011
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No 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 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ (Do not check if a smaller reporting company) Smaller ~~Reporting~~reporting ~~Company~~company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of the registrant’s common stock, $0.01 par value per share, at ~~November~~May 107, ~~2009~~2010 was 24,818,~~806~~900.

TABLE OF CONTENTS

	~~Page~~		Page
~~PART I — FINANCIAL INFORMATION~~	PART I — FINANCIAL INFORMATION
Item 1 Interim Unaudited Condensed Consolidated Financial Statements		4
Item 1	Interim Unaudited Condensed Consolidated Financial Statements			4
~~Consolidated Balance Sheets~~	Consolidated Balance Sheets	4		4
~~Consolidated Statements of Operations~~	Consolidated Statements of Operations	5		5
~~Consolidated Statements of Cash Flows~~	Consolidated Statements of Cash Flows	6		6
~~Notes to the Interim Unaudited Condensed Consolidated Financial Statements~~	Notes to the Interim Unaudited Condensed Consolidated Financial Statements	7		7
Item 2 Management’s Discussion And Analysis Of Financial Condition And Results Of Operations		32
Item 2	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations			27
Item 3 Quantitative And Qualitative Disclosures About Market Risk		48
Item 3	Quantitative And Qualitative Disclosures About Market Risk			39
Item 4 Controls And Procedures		49
Item 4	Controls And Procedures			41
~~PART II — OTHER INFORMATION~~	PART II — OTHER INFORMATION
Item 1. Legal Proceedings		50
Item 1.	Legal Proceedings			42
Item 1A Risk Factors		50
Item 1A	Risk Factors			42
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 3 Defaults Upon Senior Securities		50
Item 3	Defaults Upon Senior Securities			42
Item 4 Submission of Matters to a Vote of Security Holders		50
Item 5	Other Information			42
Item 5 Other Information		50
Item 6	Exhibits			43
Item 6 Exhibits		51
	Signatures			44
Signatures		52
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-31.1
EX-31.2
EX-32.1
EX-32.1
EX-32.2

Cautionary Statement Regarding Forward Looking Statements

Some of the statements made in this Quarterly Report on Form 10-Q are forward-looking statements. These forward looking statements are based upon our current expectations and projections about future events. When used in this quarterly report, 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 quarterly report are primarily located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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 quarterly report 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 include, but are not limited to:

	•		global and domestic financial market and economic conditions;

	•		market risks related to the refinancing of our indebtedness;

	•		competition;

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

	•		project delays or cancellations;

	•		product liability claims;

	•		global and domestic market or business conditions and fluctuations in demand for our products and services;

	•		the impact of recent and future federal and state regulatory proceedings and changes, including changes in environmental and other laws and regulations to which we are subject, as well as changes in the application of existing laws and regulations;

	•		political, legal, regulatory, governmental, administrative and economic conditions and developments in the United States and internationally;

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

	•		returns on pension assets and impacts of future discount rate changes on pension obligations;

	•		environmental constraints on operations and environmental liabilities arising out of past or present operations;

	•		current and future litigation;

	•		the direct or indirect impact on our company’s business resulting from terrorist incidents or responses to such incidents, including the effect on the availability of and premiums on insurance; and

	•		weather and other natural phenomena.

PART I — FINANCIAL INFORMATION

ITEM 1. INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Vought Aircraft Industries, Inc. Consolidated Balance Sheets ($ in millions, except share amounts)

Consolidated Balance Sheets


	March 28,
	2010			December 31,
	(unaudited)			2009
Assets
Current assets:
Cash and cash equivalents	$	149.7		$	116.0
Restricted cash		43.4			43.8
Trade and other receivables		159.5			127.9
Inventories		453.4			511.3
Other current assets		10.1			8.5

Total current assets		816.1			807.5

Property, plant and equipment, net		273.1			275.9
Goodwill		404.8			404.8
Identifiable intangible assets, net		18.6			20.4
Other non-current assets		0.9			1.3

Total assets	$	1,513.5		$	1,509.9


Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable, trade	$	171.1		$	140.9
Accrued and other liabilities		59.8			68.3
Accrued payroll and employee benefits		44.5			46.9
Accrued post-retirement benefits-current		37.5			37.4
Accrued pension-current		3.3			3.5
Current portion of long-term bank debt		320.4			319.8
Accrued contract liabilities		40.0			74.2

Total current liabilities		676.6			691.0

Long-term liabilities:
Accrued post-retirement benefits		363.5			364.9
Accrued pension		595.2			612.2
Long-term bond debt		270.0			270.0
Other non-current liabilities		74.2			75.3

Total liabilities		1,979.5			2,013.4

Stockholders’ equity (deficit):
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,900 and 24,818,806 issued and outstanding at March 28, 2010 and December 31, 2009, respectively		0.3			0.3
Additional paid-in capital		423.2			422.8
Shares held in rabbi trust		(1.6	)		(1.6	)
Accumulated deficit		(146.2	)		(173.0	)
Accumulated other comprehensive loss		(741.7	)		(752.0	)

Total stockholders’ equity (deficit)	$	(466.0	)	$	(503.5	)

Total liabilities and stockholders’ equity (deficit)	$	1,513.5		$	1,509.9

(dollars in millions, except par value per share ) (unaudited)

	September 27,			December 31,
	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	150.4		$	86.7
Restricted cash		43.7			—
Trade and other receivables		127.1			138.5
Inventories		479.0			311.8
Assets related to discontinued operations		—			460.7
Other current assets		5.6			4.7
Total current assets		805.8			1,002.4
Property, plant and equipment, net		272.8			279.2
Goodwill		404.8			404.8
Identifiable intangible assets, net		22.1			27.2
Debt origination costs, net and other assets		6.2			14.0
Total assets	$	1,511.7		$	1,727.6
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable, trade	$	126.4		$	148.5
Accrued and other liabilities		81.8			57.5
Accrued payroll and employee benefits		46.9			48.1
Accrued post-retirement benefits-current		42.2			42.0
Accrued pension-current		0.6			0.3
Current portion of long-term bank debt		5.9			5.9
Liabilities related to discontinued operations		—			156.7
Accrued contract liabilities		112.4			141.1
Total current liabilities		416.2			600.1
Long-term liabilities:
Accrued post-retirement benefits		368.5			405.3
Accrued pension		658.1			710.7
Long-term bank debt, net of current portion		316.6			594.0
Long-term bond debt		270.0			270.0
Other non-current liabilities		79.0			81.6
Total liabilities		2,108.4			2,661.7
Stockholders’ equity (deficit):
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,806 and 24,798,382 issued and outstanding at September 27, 2009 and December 31, 2008, respectively		0.3			0.3
Additional paid-in capital		422.2			420.5
Shares held in rabbi trust		(1.6	)		(1.6	)
Accumulated deficit		(220.7	)		(501.3	)
Accumulated other comprehensive loss		(796.9	)		(852.0	)
Total stockholders’ equity (deficit)	$	(596.7	)	$	(934.1	)
Total liabilities and stockholders’ equity (deficit)	$	1,511.7		$	1,727.6

See accompanying notes

Vought Aircraft Industries, Inc. Consolidated Statements of Operations (unaudited, $ in millions)

Consolidated Statements of Operations


	For the Three Months Ended
	March 28,			March 29,
	2010			2009
Revenue	$	470.5		$	390.3

Costs and expenses

Cost of sales		391.5			324.8
Selling, general and administrative expenses		39.7			28.5

Total costs and expenses		431.2			353.3


Operating income		39.3			37.0

Other income (expense)
Interest income		0.1			0.2
Interest expense		(12.6	)		(15.0	)

Income before income taxes		26.8			22.2
Income tax expense		—			—

Income (loss) from continuing operations	$	26.8		$	22.2
Income (loss) from discontinued operations		—			(4.3	)

Net Income	$	26.8		$	17.9

(unaudited, in millions)

	For the Three Months Ended						For the Nine Months Ended
	September 27,			September 28,			September 27,			September 28,
	2009			2008			2009			2008
Revenue	$	446.7		$	477.3		$	1,322.3		$	1,362.0
Costs and expenses
Cost of sales		376.0			407.1			1,109.5			1,089.1
Selling, general and administrative expenses		30.2			34.9			101.2			126.1
Total costs and expenses		406.2			442.0			1,210.7			1,215.2
Operating income		40.5			35.3			111.6			146.8
Other income (expense)
Interest income		0.2			1.3			0.6			2.3
Other gain (loss)		—			1.6			—			48.7
Equity in loss of joint venture		—			—			—			(0.6	)
Interest expense		(20.6	)		(17.4	)		(44.5	)		(49.6	)
Income before income taxes		20.1			20.8			67.7			147.6
Income tax expense		0.9			0.2			0.9			0.2
Income from continuing operations		19.2			20.6			66.8			147.4
Income (loss) from discontinued operations, net of tax		219.4			(5.0	)		213.8			(23.8	)
Net income	$	238.6		$	15.6		$	280.6		$	123.6

See accompanying notes

Vought Aircraft Industries, Inc. Consolidated Statements of Cash Flows (unaudited, $ in millions)

Consolidated Statements of Cash Flows


	Three Months Ended
	March 28,			March 29,
	2010			2009
Operating activities
Net income	$	26.8		$	17.9
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		12.9			15.9
Stock compensation expense		2.7			0.5
Changes in current assets and liabilities:
Trade and other receivables		(31.6	)		(9.6	)
Inventories		57.9			(66.1	)
Other current assets		(2.6	)		(3.7	)
Accounts payable, trade		30.2			12.1
Accrued payroll and employee benefits		(2.4	)		(1.7	)
Accrued and other liabilities		(10.9	)		—
Accrued contract liabilities		(34.2	)		(36.7	)
Other assets and liabilities—long-term		(8.8	)		(1.6	)

Net cash provided by (used in) operating activities		40.0			(73.0	)
Investing activities
Capital expenditures		(6.7	)		(8.3	)

Net cash used in investing activities		(6.7	)		(8.3	)
Financing activities
Proceeds from short-term bank debt		—			135.0
Proceeds from long-term bank debt		—			25.0
Changes in restricted cash		0.4			—

Net cash provided by (used in) financing activities		0.4			160.0

Net increase (decrease) in cash and cash equivalents		33.7			78.7
Cash and cash equivalents at beginning of period		116.0			86.7

Cash and cash equivalents at end of period	$	149.7		$	165.4

(unaudited, in millions)

	Nine Months Ended
	September 27,			September 28,
	2009			2008
Operating activities
Net income	$	280.6		$	123.6
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		55.7			50.1
Stock compensation expense		1.2			2.2
Equity in losses of joint venture		—			0.6
(Gain) Loss from asset disposals		41.7			(50.1	)
Changes in current assets and liabilities:
Trade and other receivables		1.8			(81.6	)
Inventories		(169.6	)		(32.2	)
Other current assets		(0.9	)		0.4
Accounts payable, trade		(28.4	)		(36.8	)
Accrued payroll and employee benefits		(0.6	)		(0.4	)
Accrued and other liabilities		24.9			(10.0	)
Accrued contract liabilities		(41.3	)		(33.0	)
Other assets and liabilities—long-term		(35.8	)		(79.8	)
Net cash provided by (used in) operating activities		129.3			(147.0	)
Investing activities
Capital expenditures		(28.2	)		(41.7	)
Proceeds from sale of assets		289.2			55.0
Net cash provided by (used in) investing activities		261.0			13.3
Financing activities
Proceeds from short-term bank debt		135.0			153.0
Payments on short-term bank debt		(135.0	)		(153.0	)
Proceeds from long-term bank debt		75.0			184.6
Payments on long-term bank debt		(357.9	)		(2.0	)
Changes in restricted cash		(43.7	)		—
Proceeds from sale of common stock		—			0.1
Net cash provided by (used in) financing activities		(326.6	)		182.7
Net increase (decrease) in cash and cash equivalents		63.7			49.0
Cash and cash equivalents at beginning of period		86.7			75.6
Cash and cash equivalents at end of period	$	150.4		$	124.6

See accompanying notes

Vought Aircraft Industries, Inc. Notes to the Interim Unaudited Condensed Consolidated Financial Statements Period Ending March 28, 2010

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Period Ending September 27, 2009

Note 1 — Organization and Basis of Presentation

Vought Aircraft Industries, Inc. (“Vought”) and its wholly owned subsidiaries, VAC Industries, Inc., Vought Commercial Aircraft Company and Contour Aerospace Corporation (“Contour”) are herein referred to collectively as “we” or the “Company.” We are a leading global manufacturer of aerostructure products for commercial, military and business jet aircraft. We have a long history of developing and manufacturing 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 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.

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 The Carlyle Group’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. 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 and Washington.

~~The~~ On ~~accompanying~~March 23, ~~interim~~2010, ~~unaudited~~we ~~condensed~~entered ~~consolidated~~into ~~financial~~a ~~statements~~merger ~~have~~agreement ~~been prepared in accordance~~ with ~~accounting~~Triumph ~~principles~~Group, ~~generally~~Inc. ~~accepted~~pursuant ~~in the United States for~~to ~~interim~~which ~~financial~~we ~~information~~will ~~and~~be ~~with~~acquired ~~the~~by ~~instructions to Form 10-Q and Article 10 of Regulation S-X~~Triumph. ~~Accordingly,~~It ~~they~~is doanticipated ~~not~~that ~~include~~in ~~all~~connection ofwith ~~the~~that ~~information and footnotes required by~~transaction ~~generally~~all ~~accepted accounting principles. In the opinion~~ of ~~management,~~our ~~the~~currently ~~accompanying~~outstanding ~~interim unaudited~~material ~~condensed~~indebtedness ~~consolidated~~will ~~financial~~be ~~statements~~repaid ~~contain~~in ~~all~~full. ~~adjustments~~Triumph ~~(consisting~~is ofa ~~normal~~public ~~recurring~~company ~~adjustments)~~listed ~~considered~~on ~~necessary~~the ~~for~~NYSE aunder ~~fair presentation of~~ the ~~results~~ticker ofsymbol ~~operations for~~“TGI,” ~~interim periods. The results of operations for the three~~ and ~~nine~~is ~~month~~a ~~periods~~designer, ~~ended~~engineer, ~~September 27~~manufacturer, ~~2009~~repairer ~~are~~and ~~not~~over ~~necessarily~~hauler ~~indicative~~ of ~~the~~aircraft ~~results~~components ~~that~~and ~~may be expected for the year ending December 31, 2009~~accessories. ~~These~~The ~~interim~~details ~~unaudited~~of ~~condensed consolidated financial statements~~this ~~should~~merger beagreement ~~read~~are infurther ~~conjunction~~described ~~with the financial statements and the notes thereto included~~ in ~~our Annual~~Note ~~Report~~14 on— ~~Form 10-K for the year ended December 31, 2008, filed with the U~~Debt.~~S. Securities and~~ ~~Exchange Commission (“SEC”) on March 13, 2009.~~

As The aaccompanying ~~result~~interim ofunaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the ~~sale~~United ofStates for interim financial information and with the ~~assets~~instructions to Form 10-Q and ~~operations~~Article 10 of ~~our~~Regulation S-X. ~~787~~Accordingly, ~~business~~they ~~conducted~~do atnot ~~North~~include all of the information and footnotes required by generally ~~Charleston~~accepted accounting principles. In the opinion of management, ~~South~~the ~~Carolina~~accompanying interim unaudited condensed consolidated financial statements contain all adjustments (~~“787~~consisting ~~business”~~of normal recurring adjustments) onconsidered ~~July 30,~~necessary ~~2009,~~for a fair presentation of the ~~balances~~results ~~and~~of ~~activities~~operations for interim periods. The results of operations for the ~~787~~ ~~business~~three ~~have~~month ~~been~~period ~~segregated~~ended ~~and~~March 28, ~~reported~~2010 asare ~~discontinued~~not necessarily ~~operations~~indicative of the results that may be expected for ~~all~~the ~~periods~~year ending December 31, 2010. ~~presented~~These ~~except~~interim unaudited condensed consolidated financial statements should be read in conjunction with ~~respect~~the tofinancial statements and the ~~Consolidated~~notes ~~Statements~~thereto ofincluded ~~Cash~~in ~~Flows.~~our ~~For~~Annual ~~further~~Report ~~details,~~on Form 10-K for ~~see~~the ~~Note~~year 3ended —December 31, ~~Discontinued~~2009, ~~Operations~~filed with the U.S. Securities and Exchange Commission (“SEC”) on March 25, 2010.

As a result of the sale of the assets and operations of our 787 business conducted at North Charleston, South Carolina (“787 business”) on July 30, 2009, the activities of the 787 business have been segregated and reported as discontinued operations for the three month period ended March 29, 2009 except with respect to the Consolidated Statements of Cash Flows. For further details, see Note 3 — Discontinued Operations.

It is our practice to close our books and records based on a thirteen-week quarter, which can lead to different period end dates for comparative purposes. The interim financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods, as our fiscal year ends on December 31.

The consolidated balance sheet at December 31, 2008 presented herein has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

~~Note~~ The ~~2-Recent~~consolidated ~~Accounting~~balance ~~Pronouncements~~sheet at December 31, 2009 presented herein has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

InNote ~~December 2007, the FASB issued an accounting standard that provides revised guidance on how~~2 ~~acquirors~~— ~~recognize~~Recent and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. This standard also expands required disclosures surrounding the nature and financial effects of business combinations. We adopted the guidance of this accounting standard, currently included in the Business Combinations Topic of the Accounting ~~Standards Codification (ASC) on January 1, 2009.~~Pronouncements ~~We considered the provisions of this accounting standard with respect to the sale of our 787 business (as discussed in Note 3 — Discontinued Operations).~~

In December 2009, the Financial Accounting Standards Board (“FASB”) issued anAccounting Standards ~~accounting~~Update ~~standard~~No. 2009-17, ~~that~~“Consolidations ~~requires~~(Topic ~~enhanced~~810) ~~disclosures~~— ~~about~~Improvements ~~the~~to ~~plan~~Financial ~~assets~~Reporting ofby aEnterprises ~~company’s~~Involved ~~defined~~with ~~benefit~~Variable ~~pension~~Interest ~~and~~Entities” ~~other~~(“ASU ~~postretirement plans~~2009-17”). ~~The~~ASU ~~enhanced~~2009-17 ~~disclosures~~changes ~~are~~how a ~~intended~~reporting toentity ~~provide~~determines ~~users~~when ofan ~~financial~~entity ~~statements~~that ~~with~~is ainsufficiently ~~greater~~capitalized ~~understanding~~or ~~of:~~is ~~(1) how~~not controlled ~~investment~~through ~~allocation~~voting ~~decisions~~(or ~~are~~similar ~~made,~~rights) ~~including~~should ~~the~~be ~~factors~~consolidated. ~~that~~The ~~are~~determination ~~pertinent~~of towhether ana reporting ~~understanding~~entity ofis ~~investment~~required ~~policies~~to ~~and~~consolidate ~~strategies;~~another ~~(2) the~~entity ~~major~~is ~~categories~~based ofon, ~~plan~~among ~~assets; (3)~~ other things, the ~~inputs~~other entity’s purpose and ~~valuation~~design ~~techniques~~and ~~used~~the reporting entity’s ability to ~~measure~~direct the ~~fair~~activities ~~value~~ of ~~plan~~the other ~~assets;~~entity ~~(4)~~ that most significantly impact the ~~effect~~ ofother ~~fair~~entity’s ~~value~~economic ~~measurements~~performance. ~~using~~ASU ~~significant~~2009-17 requires ~~unobservable~~a ~~inputs~~reporting ~~(Level~~entity 3)to onprovide ~~changes~~additional ~~in plan~~disclosures ~~assets~~about ~~for~~its ~~the~~involvement ~~period;~~with variable interest entities and ~~(5)~~ any significant ~~concentrations~~changes ofin risk ~~within~~exposure ~~plan~~due ~~assets~~to that involvement. WeA reporting ~~adopted~~entity is required to disclose how its involvement with a variable interest entity affects the reporting ~~provisions~~entity’s offinancial ~~this~~statements. ~~accounting~~ASU ~~standard~~2009-17 onis ~~January~~effective for fiscal years beginning after November 115, 2009, and ~~will~~interim ~~provide~~periods ~~the~~within ~~required enhanced~~those ~~disclosures~~fiscal ~~for~~years. ~~our~~We ~~pension~~adopted ~~plan~~ASU ~~assets~~2009-17 inas ~~our~~of January 1, ~~2009~~2010, ~~annual~~and ~~report~~its application had no impact on ~~Form~~our ~~10-K~~interim, unaudited, condensed, consolidated financial statements.

In ~~May~~January ~~2009~~2010, the FASB issued anAccounting ~~accounting~~Standards ~~standard~~Update ~~that~~No. 2010-06, ~~requires an entity to recognize in~~“Improving ~~the~~Disclosures ~~financial~~about ~~statements~~Fair ~~the~~Value ~~effects~~Measurements” of(“ASU ~~all~~2010-06”), ~~subsequent~~which ~~events~~provides ~~that~~amendments ~~provide~~to ~~additional~~Fair ~~evidence~~Value ~~about~~Measurements ~~conditions~~and ~~that~~Disclosures ~~existed~~— atOverall ~~the~~subtopic ~~date~~ of the ~~balance sheet~~ASC. ~~For~~ASU ~~nonrecognized~~2010-06 ~~subsequent events~~requires ~~that must be disclosed to keep the financial statements from being misleading, an entity is~~additional ~~required~~disclosures toand ~~disclose~~clarifications ~~the nature~~ of ~~the~~existing ~~event~~disclosures asfor ~~well~~recurring asand annonrecurring ~~estimate~~fair ~~of its financial effect, or a~~value ~~statement that such an estimate cannot be made~~measurements. ~~In addition, this accounting standard requires an entity to disclose the date through which subsequent events have been evaluated.~~ We adopted this ~~accounting~~ ~~standard~~update for our fiscal ~~period~~year ~~ending~~beginning ~~June~~January 281, ~~2009~~2010. ~~and~~ASU ~~we have evaluated subsequent~~2010-06 ~~events~~did ~~through~~not ~~the~~have ~~date~~a ofmaterial ~~issuance~~impact ofon our interim, unaudited, condensed, consolidated financial statements ~~on November 10, 2009~~. ~~No material subsequent events have occurred since September 27,~~ ~~2009.~~

InNote ~~June 2009,~~3 ~~the~~— ~~FASB~~Discontinued ~~issued an accounting standard that establishes the FASB Accounting~~Operations Standards CodificationÔ (the Codification) as the source of authoritative U.S. generally accepted accounting principles (US GAAP). We adopted this accounting standard for our fiscal period ending September 27, 2009.

~~Following~~ On ~~the~~July 30, ~~Codification~~2009, ~~the~~we ~~FASB~~sold ~~will~~the ~~not~~assets ~~issue~~and ~~new~~operations ~~standards in the form~~ of ~~Statements, FASB~~our ~~Staff~~787 ~~Positions~~business orconducted ~~Emerging~~at ~~Issues~~North Charleston, ~~Task~~South ~~Force~~Carolina ~~Abstracts.~~to ~~Instead,~~a itwholly ~~will~~owned ~~issue~~subsidiary ~~Accounting Standards~~of ~~Updates~~The ~~(ASUs),~~Boeing ~~which~~Company. ~~will~~Concurrent ~~serve~~with tothe closing ~~update~~of the ~~Codification~~transaction, ~~provide~~we ~~background information~~entered ~~about~~into ~~the~~an ~~accounting~~agreement ~~guidance~~terminating and ~~provide~~resolving ~~the~~rights ~~basis~~and obligations ~~for~~under ~~conclusions on~~ the ~~changes~~existing ~~to the~~787 ~~Codification~~supply agreement. ~~GAAP~~We isare ~~not~~currently ~~intended~~providing certain transition services to beBoeing ~~changed~~pursuant asto a ~~result~~transition ofservices ~~the~~agreement. ~~Codification,~~The ~~but~~transition itservices ~~will~~provided to ~~change~~Boeing ~~the~~are ~~way~~temporary ~~the~~and ~~accounting~~non-production ~~guidance~~related ~~is organized~~ and ~~presented.~~thus Asnot adeemed ~~result,~~direct ~~these~~cash ~~changes~~flows ~~have~~of the aCharleston ~~significant~~787 ~~impact~~business. onThe ~~how~~transition weservices ~~reference~~are ~~GAAP~~included inas ~~our~~a ~~financial~~component ~~statements~~of ~~and in our accounting~~continuing ~~policies~~operations ~~for~~and ~~financial~~are ~~statements~~expected ~~issued~~to ~~for~~be ~~interim~~completed ~~and~~in ~~annual~~the ~~periods~~next ~~ending after September~~ 15~~, 2009~~ months.

In We ~~this~~reclassified ~~quarterly~~the ~~report,~~results ~~the~~of ~~Company~~operations ~~has~~related ~~begun~~to ~~the~~our ~~process~~787 ofBusiness ~~implementing~~to the ~~statement~~income by(loss) ~~removing~~from ~~references~~discontinued tooperations, ~~FASB~~net ~~statement~~of ~~numbers~~tax caption in our Consolidated Statements of Operations for the ~~footnotes~~three ~~that~~month ~~follow~~period ~~and~~ended ~~explaining~~March 29, ~~the adherence~~2009. toThe ~~authoritative~~following ~~accounting~~table ~~guidance~~summarizes inthe ~~plain~~components ~~English~~of income (loss) from discontinued operations, ~~where~~net ~~appropriate.~~of tax:


	March 29,
	2009
	($ in millions)
Revenue	$	12.3
Operating income		(4.3	)
Income (loss) from discontinued operations, net of tax	$	(4.3	)

Note 3- Discontinued Operations

On July 6, 2009, we entered into an agreement to sell the assets and operations of our 787 business conducted at North Charleston, South Carolina to Boeing Commercial Airplanes Charleston South Carolina, Inc., a wholly owned subsidiary of The Boeing Company. The transaction was completed on July 30, 2009. Concurrent with the closing of the transaction, we entered into an agreement terminating the existing 787 supply agreement releasing claims and resolving rights and obligations, including obligations incurred or created as a result of ordinary course performance of the 787 supply agreement. Going forward, under a newly negotiated contract, we will manufacture certain components for the 787 program as well as provide engineering services to Boeing pursuant to an engineering services agreement. We also will provide certain transition services to Boeing pursuant to a transition services agreement. The transition services provided to Boeing are temporary and non-production related and thus not deemed direct cash flows of the 787 business. The transition services are included as a component of continuing operations and are expected to be completed in the next 12-18 months.

We received total cash proceeds of approximately $590 million as consideration for the transaction, of which approximately $9.3 million was used to pay costs associated with the transaction. The cash proceeds were allocated based on the estimated relative fair value of each component of the transaction. As a result of that allocation, we have recorded a $39.8 million loss on the sale of the 787 business and revenue of $291.4 million related to the settlement of contractual matters incurred in the ordinary course of business as income from discontinued operations in the three and nine month periods ended September 27, 2009. The following table represents the assets of the 787 business as of July 30, 2009 and December 31, 2008. The balances as of December 31, 2008 have been reclassified to the assets related to discontinued operations and liabilities related to discontinued operations captions in our December 31, 2008 Consolidated Balance Sheet.

	July 30,		December 31,
	2009		2008
	($ in millions)
Trade and other receivables	$	9.7	$	0.1
Inventories		135.0		132.6
Property, plant and equipment, net		197.5		205.1
Goodwill (allocated)		122.9		122.9
	$	465.1	$	460.7
Accounts payable		22.2		28.5
Accrued and other liabilities		5.8		6.2
Accrued payroll and employee benefits		1.2		0.6
Accrued contract liabilities		47.7		60.3
Other non-current liabilities		59.2		61.1
	$	136.1	$	156.7

We also reclassified the results of operations related to our 787 Business to the income (loss) from discontinued operations, net of tax caption in our Consolidated Statements of Operations for all periods presented. The following table summarizes the components of income (loss) from discontinued operations, net of tax:

	Three Months Ended						Nine Months Ended
	September 27,			September 28,			September 27,			September 28,
	2009			2008			2009			2008
	($ in millions)						($ in millions)
Revenue	$	297.6		$	—		$	316.2		$	21.4
Cost of sales		(22.6	)		—			(41.2	)		(21.4	)
Selling, general and administrative expenses		(0.4	)		(5.0	)		(6.0	)		(23.8	)
Loss on sale of 787 business		(39.8	)		—			(39.8	)		—
Income tax expense		(15.4	)		—			(15.4	)		—
Income (loss) from discontinued operations, net of tax	$	219.4		$	(5.0	)	$	213.8		$	(23.8	)

Note 4 — Inventories

Costs included in inventory consist of all direct production costs, manufacturing and engineering overhead, production tooling costs and certain general and administrative expenses.

Inventories consisted of the following:

	September 27,			December 31,
	March 28,			December 31,
	2009			2008
	2010			2009
	(in millions)
	($ in millions)
Production costs of contracts in process	$	~~724~~630.97		$	~~553~~659.21
Finished goods		32.04			23.91
Less: unliquidated progress payments		(~~248~~179.97	)		(~~244~~150.39	)
Total inventories	$	~~479~~453.04		$	~~311~~511.83

The increase in our inventory balance from December 31, 2008 to September 27, 2009 primarily relates to our investment to support the ramp-up of 747-8 production.

Our inventory balance as of December 31, 2008 was impacted by the release of purchase accounting reserves of $22.6 million for the Boeing 747 program to reflect the updated timeline for the completion of the deliveries for the 747-400 model. They were released from inventory and accrued contract liabilities to income through the Cost of Sales caption in our Consolidated Statement of Operations, increasing our reported income for the first quarter of 2008. Additionally, we accelerated the useful life of an intangible asset associated with the 747 program for the same reason. Refer to Note 5 — Goodwill and Intangible Assets for disclosure of the impact of the change in useful life.

Note 5 — Goodwill and Intangible Assets

Goodwill is tested for impairment, at least annually, in accordance with the provisions of the Intangibles — Goodwill and Other topic of the ASC. Under this topic, 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 the Company is a single reporting unit. Accordingly, all assets and liabilities are used to determine our carrying value. In connection with the sale of our 787 business on July 30, 2009 (discussed in Note 3 - Discontinued Operations), a portion of our goodwill balance was allocated to that business based on the relative fair value of its assets. Subsequently, we performed an interim impairment test of our remaining Goodwill balance and determined the balance is not impaired. The following table represents a summary of the change in the Goodwill balance as a result of the aforementioned allocation:

	(in millions)
Goodwill prior to allocation	$	527.7
Allocation to 787 business		122.9
Goodwill after allocation	$	404.8

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.

Identifiable intangible assets consisted of the following:

	September 27,			December 31,
	March 28,			December 31,
	2009			2008
	2010			2009
	(in millions)
	($ in millions)
Programs and contracts	$	137.3		$	137.3
Less: accumulated amortization		(~~115~~118.27	)		(~~110~~116.19	)
Identifiable intangible assets, net	$	2218.16		$	2720.24

119

~~During~~ The the nine month period ended September 28, 2008, we made a change to the estimated useful life of an intangible asset associated with our 747 program to reflect a change in the estimated period during which the remaining deliveries of the 747-400 model would be made. This change in estimate resulted in an additional $1.2 million recorded to selling, general and administrative expenses during the nine month period ended September 28, 2008. Including this change, scheduled remaining amortization of identifiable intangible assets as of ~~September~~March 2728, ~~2009 is~~2010 is as follows:

	(in millions)
	($ in millions)
2009	$	1.7
2010	$	3.0
2010		4.8
2011		2.1
2012		2.1
2013		2.1
Thereafter		9.3
2014		2.1
Total remaining amortization of identifiable intangible assets	$	22.1
Thereafter		7.2
Total remaining amortization of identifiable intangible assets	$	18.6

Note 6 — Pension and Other Post-retirement Benefits

The components of net periodic benefit cost for our pension plans and other post-retirement benefit plans were as follows:

	Pension Benefits						Other Post-retirement Benefits
	Three Months Ended						~~Nine~~Three Months Ended
	September 27,			September 28,			September 27,			September 28,
	March 28,			March 29,			March 28,			March 29,
	2009			2008			2009			2008
	2010			2009			2010			2009
	(in millions)
				($ in millions)
Components of net periodic benefit cost (income):
Service cost	$	4.94		$	4.10		$	130.69		$	131.60
Interest cost		28.97			2928.02			865.3			836.84
Expected return on plan assets		(31.59	)		(31.04	)		~~(94.2~~—	)		~~(93.1~~—	)
Amortization of net (gain) loss		1113.01			109.48			321.21			240.24
Amortization of prior service cost		3.1			3.01			9(7.30	)		8(6.91	)
Prior service costs recognized - curtailment		—			—			1.8			—
Prior service cost recognized - curtailment		—			1.8			—			(0.2	)
Plan settlement or curtailment (gain) loss		—			0.2			4.6			0.2
Plan settlement or curtailment (gain)/loss		—			4.6			—			3.4
Special termination benefits		0.5			—			0.5			—
Net periodic benefit cost	$	17.4		$	20.1		$	0.3		$	4.9
Net periodic benefit cost	$	16.9		$	15.7		$	54.1		$	37.6
Defined contribution plan cost	$	5.3		$	4.6
Defined contribution plans cost	$	5.1		$	4.5		$	14.7		$	13.8

	Other Post-retirement Benefits
	Three Months Ended						Nine Months Ended
	September 27,			September 28,			September 27,			September 28,
	2009			2008			2009			2008
	(in millions)
Components of net periodic benefit cost (income):
Service cost	$	0.6		$	1.3		$	2.5		$	3.8
Interest cost		5.5			7.2			18.2			22.1
Amortization of net (gain) loss		0.7			(1.2	)		1.4			1.5
Amortization of prior service cost		(6.5	)		(5.9	)		(19.0	)		(15.1	)
Prior service costs recognized - curtailment		—			—			(0.2	)		—
Plan settlement or curtailment (gain) loss		—			—			3.4			—
Special termination benefits		0.2			—			0.2			—
Net periodic benefit cost	$	0.5		$	1.4		$	6.5		$	12.3

We periodically experience events or take actions that affect our benefit plans. Some of these events or actions require remeasurements and result in special charges. The following summarizes the key events that affect our net periodic benefit cost and obligations:

• During ~~February~~January ~~and April~~ of ~~2008~~2009, ~~two~~the ofIAM-represented ~~our~~employees ~~union~~at ~~represented~~our ~~groups~~Nashville facility ratified a new collective bargaining ~~agreements~~agreement. ~~Those~~That ~~agreements~~agreement ~~each~~provides ~~provide~~ for certain benefit changes, including a freeze in pension benefit accruals, effective ~~December~~June 3130, ~~2008~~2009, for bargaining unit employees who, as of ~~December~~that 31date, ~~2007,~~ had less than 16 years of bargaining unit seniority. Employees subject to the pension freeze and any bargaining unit employees hired on or after ~~March~~September 129, 2008 ~~for the first group and April 1~~, ~~2008 for the second group,~~ receive a defined contribution benefit. The ~~agreements~~agreement ~~provided~~provides for a one-time company paid retirement incentive program offered to eligible employees during ~~2008.~~2009 ~~The~~and ~~agreements also provide for~~ certain modifications to ~~the~~ retiree medical benefits for bargaining unit retirees. ~~and~~These ~~eliminated~~changes ~~retiree~~led ~~medical~~to ~~coverage~~a ~~for~~remeasurement ~~any~~of ~~bargaining~~the ~~unit~~affected ~~employees~~plans’ ~~hired~~assets onand orobligations ~~after~~as of January 31, 2009, which increased our unfunded liability for the pension plan by $1.5 million, ~~2008~~decreased our liability for the OPEB plan by $32.7 million and led to the immediate recognition of $9.6 million of net non-recurring charges.

1310

•Note In September 2008, we announced amendments to medical plans for two groups of non-represented, current retirees. Effective January 1, 2009, medical coverage for participants in those two groups is eliminated at age 65 and replaced with a fixed monthly stipend. • The aforementioned changes in 2008 led to remeasurement of affected plans’ assets and obligations as of March 31, 2008, which resulted in a $14.9 million increase in unfunded liability for the affected pension plans and a $44.1 million decrease in liability for the affected OPEB plans. These impacts were recorded in the nine month period ended September 28, 2008. • During January of 2009, the IAM-represented employees at our Nashville facility ratified a new collective bargaining agreement. That agreement provides for certain benefit changes, including a freeze in pension benefit accruals, effective June 30, 2009, for bargaining unit employees who, as of that date, had less than 16 years of bargaining unit seniority. Employees subject to the pension freeze, and any bargaining unit employees hired on or after September 29, 2008, receive a defined contribution benefit. The agreement provides for a one-time company paid retirement incentive program offered to eligible employees during 2009 and certain modifications to retiree medical benefits for bargaining unit retirees. These changes led to a remeasurement of the affected plans’ assets and obligations as of January 31, 2009, which increased our unfunded liability for the pension plan by $1.5 million, decreased our liability for the OPEB plan by $32.7 ~~million~~— and led to the immediate recognition of $9.6 million of net non-recurring charges due to a curtailment. • In September 2009, we announced amendments to medical plans for groups of non-represented, current retirees. Effective January 1, 2010, medical coverage for participants in two groups is eliminated at age 65 and replaced with a fixed monthly stipend. We estimate that those changes will not have a material impact on our obligations under our other post-retirement benefit plans.Commitments

Due to the actions taken by the U.S. Treasury Department earlier in 2009 expanding the permissible yield curves that can be used for the discount rate, our required pension contributions for the fiscal year ended December 31, 2009 total $78.8 million, as compared to $84.7 million, as disclosed in our 2008 annual report on Form 10-K.

Note 7- Commitments

Warranty Reserve. We have established a reserve to provide for the estimated future cost of warranties on our delivered products. We periodically review the reserve and adjustments are made accordingly. A provision for warranties on products delivered is made on the basis of our historical experience and specific warranty issues. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship. The majority of our agreements include a three-year warranty, although certain programs have warranties up to 20 years.

14 The following table is a roll-forward of amounts accrued for warranty reserve included in Current and Long-term liabilities:


	Warranty
	Reserve
	($ in millions)
Balance at December 31, 2008	$	16.1
Warranty costs incurred		(1.5	)
Provisions for warranties		(1.2	)

Balance at December 31, 2009	$	13.4

Warranty costs incurred		(1.0	)
Provisions for warranties		—

Balance at March 28, 2010	$	12.4


Consolidated Balance Sheet classification
Accrued and other liabilities		4.5
Other non-current liabilities		7.9

During the year ended December 31, 2008, we increased our provisions for warranty by $9.5 million. Of that increase, $8.2 million was attributable to specific warranty issues identified during 2008. The following table is a roll-forward of amounts accrued for warranty reserve included in Current and Long-term liabilities:

	Warranty
	Reserve
	($ in millions)
Balance at December 31, 2007	$	7.2
Warranty costs incurred		(0.6	)
Provisions for warranties		9.5
Balance at December 31, 2008	$	16.1
Warranty costs incurred		(1.4	)
Provisions for warranties		0.5
Balance at September 27, 2009	$	15.2
Consolidated Balance Sheet classification
Accrued and other liabilities		1.4
Other non-current liabilities		13.8

Note 8- Environmental Contingencies

We accrue environmental liabilities when we determine we are responsible for remediation ~~costs,~~ ~~it is probable that a liability has been incurred~~ costs and such ~~liability~~ amounts are reasonably estimable. When only a range of amounts is ~~estimated~~established and no amount within the range is more probable than another, the minimum amount in the range is recorded in other current and non-current liabilities.

The acquisition agreement between Northrop Grumman Corporation and Vought 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 $30.0 million for environmental costs incurred relating to pre-existing matters as of July 24, 2000. Pre-existing environmental liabilities at the formerly Northrop Grumman Corporation sites exceeding our $12.0 million liability limit remain the responsibility of Northrop Grumman Corporation 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 Corporation, we would be responsible. We have no material outstanding or unasserted asbestos, urea formaldehyde foam insulation or lead-based ~~paint~~ paints liabilities, including on property acquired from Northrop Grumman Corporation.

~~We acquired the Nashville, Tennessee facility from Textron Inc. in 1996. In connection with~~11 that acquisition, Textron agreed to indemnify us for up to $60.0 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 indemnification for certain pre-closing environmental liabilities incurred beyond that expiration date. While there are no currently pending environmental claims relating to the Nashville facility, there is no assurance that environmental claims will not arise in the future, or that such claims will be subject to indemnification.

The following is a roll-forward of amounts accrued for environmental liabilities included in Current and Long-term liabilities:

	Environmental
	Liability
	($ in millions)
Balance at December 31, 2007	$	3.8
Balance at December 31, 2008	$	3.2
Environmental costs incurred		(0.68	)
Balance at December 31, 2008		3.2
Balance at December 31, 2009		2.4
Environmental costs incurred		(0.42	)
Balance at September 27, 2009	$	2.8
Balance at March 28, 2010	$	2.2
Consolidated Balance Sheet classification
Accrued and other liabilities		0.56
Other non-current liabilities		21.36

Note 9- — Other Non-Current Liabilities

Other non-current liabilities consisted of the following:

	September 27,		December 31,
	March 28,		December 31,
	2009		2008
	2010		2009
	(in millions)
	($ in millions)
Deferred income from the sale of Hawthorne facility (a)	$	12.6	$	1112.6
State of Texas grant monies (b)		32.9		35.0
State of Texas grant monies		33.1		34.1
Accrued worker’s compensation		15.7		14.9
Deferred worker’s compensation		17.7		16.5
Accrued warranties		137.89		158.69
Other		42.09		43.52
Total other non-current liabilities	$	7974.02	$	8175.63

(a)		In July 2005, we sold our Hawthorne facility and concurrently signed an agreement to lease back a certain portion of the facility from July 2005 to December 2010, with two additional five-year renewal options. Due to certain contractual obligations, which required our continuing involvement in the facility, this transaction was initially recorded as a financing transaction and not as a sale. The cash received in July 2005 of $52.6 million was recorded as a deferred liability on our balance sheet in other non-current liabilities.
		During the fiscal year ended December 31, 2008, we increased the deferred liability balance for a $3.0 million refund from escrow. Additionally, we determined that certain contractual obligations related to the portion of the facility which we have vacated were completed and we recognized $44.0 million of the deferred income balance. We also wrote off the fixed assets related to this portion of the facility resulting in a $1.6 million gain that was recorded in our Consolidated Statement of Operations for the three month period ended September 28, 2008. The $12.6 million liability related to the portion of the Hawthorne facility that we continue to lease will remain on our balance sheet until the related contractual obligations are fulfilled or the obligations expire.
		During 2008, we determined that certain contractual obligations related to the portion of the facility which we have vacated were completed and we recognized $44.0 million of the deferred income balance. We also wrote off the fixed assets related to this portion of the facility resulting in a $1.6 million gain that was recorded in our Consolidated Statement of Operations during the fiscal year ended December 31, 2008. The $12.6 million liability related to the portion of the Hawthorne facility that we continue to lease will remain on our balance sheet until the related contractual obligations are fulfilled or the obligations expire.
(b)		We ~~reclassified~~repaid $20.9 million related to the Texas grant during the three month period ended March 28, 2010. Additionally, we reclassified $1.0 million related to the Texas grant to the Accrued and Other Liabilities caption in our Consolidated Balance Sheet due to a potential repayment of ~~grant~~a ~~funds~~portion inof ~~2010 based on~~ the ~~agreement.~~grant ~~The~~funds ~~amount of liability reclassified is an estimate of amounts that may be due~~ in ~~2010~~2011.

1612

Note 10- — Income Taxes

The Income Taxes topic of the ASC prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. This interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. WeOur ~~filed an automatic change of accounting method request in the 2008 federal income tax return to amend an uncertain tax position. After giving effect to this adjustment, our~~ unrecognized tax benefit position as of ~~September~~December 2731, 2009 was $1.68 million. ~~A similar~~and ~~adjustment~~there has not been ~~recorded~~a tomaterial ~~reflect~~change ~~the revised deferred tax assets. Due~~ to ~~the valuation~~that ~~allowance~~position onduring the ~~net~~three ~~deferred~~months ended ~~tax asset~~March 28, ~~there was no P&L impact associated with the change in the recorded unrecognized tax position during the period~~2010.

~~During~~ On ~~the~~March 23, ~~nine~~2010 ~~month~~the ~~periods~~Patient ~~ended~~Protection ~~September 27,~~and ~~2009~~Affordable ~~and~~Care ~~September 28,~~Act ~~2008,~~was wesigned ~~incurred~~into alaw, which ~~$0.9 million~~was ~~and~~amended ~~$0.2 million~~on ~~expense~~March 30, ~~respectively,~~2010 ~~related~~by to the ~~alternative~~Health ~~minimum~~Care ~~tax (“AMT”),~~and ~~which~~Education ~~arose~~Reconciliation ~~because~~Act of a2010. ~~limitation~~These Acts oninclude ~~the~~provisions ~~amount~~that ofeliminate ~~net~~a ~~operating~~future ~~losses~~tax ~~available~~deduction related to Medicare Part D subsidies ~~offset~~received ~~projected~~on ~~taxable~~or ~~income~~after January 1, 2013. ~~Other~~This ~~than~~change ~~AMT,~~in wetax ~~have~~law did not ~~recorded~~require aan ~~federal~~adjustment ~~income~~to tax ~~provision~~expense ~~for any period presented~~ because the ~~amount~~Company ~~provided~~has ~~for~~recorded ~~federal~~a ~~income~~full ~~taxes~~valuation ~~are~~allowance ~~offset~~against bythe ~~reductions~~deferred intax ~~our~~asset ~~valuation~~adjusted ~~allowance~~by the enacted legislation.

~~Tax~~ We ~~incurred~~file ~~from~~income ~~the~~tax ~~sale~~returns ofin the ~~787~~U.S. ~~business~~federal ~~reported~~jurisdiction asand ~~discontinued~~various ~~operations~~state ~~totaled $15~~jurisdictions.~~4 million,~~ We ofare ~~which~~subject ~~$9.1 related~~ to ~~federal~~examination ~~income~~by ~~tax~~the ~~and~~Internal ~~$6.3~~Revenue ~~related~~Service toin ~~state~~the ~~income~~U.S. federal tax. jurisdiction ~~During~~for the ~~nine~~2000-2009 ~~month~~tax ~~period~~years. ~~ended~~We ~~September 27,~~are ~~2008,~~also wesubject ~~utilized~~to ~~approximately~~examination ~~$508.6~~ in ~~federal~~various state jurisdictions for ~~net~~the ~~operating~~2000-2009 ~~loss~~tax ~~carryforwards~~years, none of which ~~$453.4 million~~were ~~related~~individually tomaterial. ~~the~~State ~~sale~~tax ofliabilities ~~the~~will ~~787 business.~~be Weadjusted ~~have~~to ~~$104.6 million~~account offor ~~remaining~~changes in federal ~~net~~taxable ~~operating~~income, ~~loss~~as ~~carryforwards~~well ~~that~~as ~~expire~~any adjustments in ~~2028~~subsequent years, as those years are ultimately resolved with the IRS.

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are subject to examination by the Internal Revenue Service in the U.S. federal tax jurisdiction for the 2000-2008 tax years. We are also subject to examination in various state jurisdictions for the 2000-2008 tax years, none of which were individually material. State tax liabilities will be adjusted to account for changes in federal taxable income, as well as any adjustments in subsequent years, as those years are ultimately resolved with the IRS.

Note 11 — Stockholders’ Equity

As of ~~September~~March 2728, ~~2009~~2010, we maintained a stock option plan and an incentive award plan under which we have issued share-based awards to our employees and our directors.

2001 Stock Option Plan

During 2001, we adopted the Amended and Restated 2001 Stock Option Plan of Vought ~~Aircraft~~ Aircraft Industries, Inc., under which 1,500,000 shares of common stock were reserved for issuance for the purpose of providing incentives to employees and directors (the “2001 Stock Option Plan”). ~~Options~~ Options granted under the plan generally vest within 10 years, but were subject to accelerated ~~vesting~~ vesting based on the ability to meet company performance targets. The incentive options granted to ~~our~~ our employees are intended to qualify as “incentive stock options” under Section 422 of the ~~Internal~~ Internal Revenue Code. At ~~September~~March 2728, ~~2009,~~2010 options granted and outstanding from the 2001 Stock Option Plan to employees and directors amounted to ~~520~~514,~~200~~490 shares of which ~~456~~451,~~360~~560 are vested and exercisable.

1713

A summary of stock option activity for the ~~nine~~three month period ended ~~September~~March 2728, ~~2009~~2010 is as follows:

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual
				Exercise		Term
	Options			Price		(in Years)
Outstanding at December 31, 2008		547,100		$	15.35
Outstanding at December 31, 2009		520,200		$	15.56
Granted		—			—
Forfeited or expired		(265,~~900~~710	)		1110.1600
Exercised		—			—
Outstanding at September 27, 2009		520,200		$	15.56		2.9
Outstanding at March 28, 2010		514,490		$	15.62		2.4
Vested or expected to vest (a)		~~520~~514,~~200~~490		$	15.5662		~~2.9~~
Exercisable at September 27, 2009		456,360		$	14.91		2.9
Exercisable at March 28, 2010		451,560		$	14.96		2.4


(a)		Represents outstanding options reduced by expected forfeitures. Expected forfeitures assumed for this plan were zero.

Shares Held in Rabbi Trust

A rabbi trust is a grantor trust, typically established to fund deferred compensation for management. In 2000, we established a rabbi trust in connection with certain income deferrals made at that time by a number of our then-executives. Shares of company stock were contributed to the rabbi trust in order to fund the obligations to those executives in connection with those deferrals. Our stock held in the trust is recorded at historical cost, and the corresponding deferred compensation liability is recorded at the current fair value of our common stock. Common stock held in the rabbi trust is classified in equity as “Shares held in rabbi trust.” During the three month period ended ~~September~~March 2728, ~~2009~~2010, no activity occurred in the rabbi trust account and 158,322 shares remain held in the rabbi trust.

2006 Incentive Plan

During 2006, we adopted the Vought Aircraft Industries, Inc. 2006 Incentive Award Plan (the “2006 Incentive Plan”), under which 2,000,000 shares of common stock are reserved for issuance for the purposes of providing awards to employees and directors. Since inception, these awards have been issued in the form of stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and restricted shares.

1814

Stock Appreciation Rights (SARs)

A summary of SARs activity for the ~~nine~~three month period ended ~~September~~March 2728, ~~2009~~2010 is as follows:

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual
				Exercise		Term
	SARs			Price		(in Years)
Outstanding at December 31, 2008		908,450		$	10.00		7.9
Outstanding at December 31, 2009		976,840		$	10.00		7.3
Granted		—			—
Forfeited or expired		~~(41,047~~—	)		~~10.00~~—
Exercised		~~(15,563~~—	)		~~10.00~~—
Outstanding at September 27, 2009		851,840		$	10.00		7.2
Outstanding at March 28, 2010		976,840		$	10.00		7.1
Vested or expected to vest (a)		~~738~~976,~~685~~840			10.00
Exercisable at September 27, 2009		588,562			10.00		7.2
Exercisable at March 28, 2010		801,479			10.00		6.7


(a)		Represents outstanding SARs reduced by expected forfeitures.

During the ~~nine~~year ~~month period~~ ended ~~September~~December 2731, 2009, the exercise of SARs resulted in the issuance of 1,614 shares of common stock. No SARs were exercised during the three month period ended March 28, 2010.

Restricted Stock Units (RSUs)

RSUs are awards of stock units that can be converted into common stock. In general, the awards are eligible to vest over a four-year period if certain performance goals are met. No RSUs will vest if the performance goals are not met. Certain awards, granted to the CEO and CFO, vest on the first occurrence of a change in control or a date specified by the agreement.

19 A summary of RSUs activity for the three months ended March 28, 2010 is as follows:


			Grant-date
	RSUs		Fair-Value
Outstanding at December 31, 2009		617,105	$	10.50
Granted		—		—
Forfeited or expired		—		—
Exercised		—		—

Outstanding at March 28, 2010		617,105	$	10.50

Vested or expected to vest (a)		617,105

Exercisable at March 28, 2010		260,976	$	11.73

A summary of RSUs activity for the nine months ended September 27, 2009 is as follows:

				Grant-date
	RSUs			Fair-Value
Outstanding at December 31, 2008		622,925		$	10.65
Granted		7,500			9.76
Forfeited or expired		(16,820	)		15.35
Exercised		—			—
Outstanding at September 27, 2009		613,605		$	10.51
Vested or expected to vest (a)		553,140
Vested at September 27, 2009		196,394		$	11.89


(a)		Represents outstanding RSUs reduced by expected forfeitures.

~~Restricted Shares~~15

During the nine month period ended September 27, 2009, we granted 18,810 restricted shares to outside directors as compensation for their services. These restricted shares vested during 2009. The restricted shares were valued based on the estimated fair value of our common stock on the date of issuance.

Note 12 — Stock-Based Compensation

As described in Note 11 — Stockholders’ Equity, we maintain a stock option plan and an incentive award plan under which we have issued equity-based awards to our employees and our directors. During 2009 and 2008, in accordance with the Compensation — Stock Compensation topic of the ASC, we recognized total compensation expense for all awards as follows:

			Stock Compensation Expense
	Three Months Ended				Nine Months Ended
	September 27,		September 28,		September 27,			September 28,
	2009		2008		2009			2008
	(in millions)
Stock Options	$	—	$	—	$	—		$	—
Rabbi Trust		—		—		(0.5	)		—
Stock appreciation rights (SARs)		0.1		0.2		0.3			0.6
Restricted stock units (RSUs)		0.3		0.5		0.9			1.4
Restricted shares		0.1		0.1		0.2			0.2
Stock compensation expense, gross		0.5		0.8		0.9			2.2
Change in forfeiture estimate		—		—		0.3			—
Stock compensation expense, net	$	0.5	$	0.8	$	1.2		$	2.2

Note 12 — Stock-Based Compensation

As described in Note 11 — Stockholders’ Equity, we maintain a stock option plan and an incentive award plan under which we have issued equity-based awards to our employees and our directors. During 2010 and 2009, in accordance with the Compensation — Stock Compensation topic of the ASC, we recognized total compensation expense for all awards as follows:


	Stock Compensation Expense
	Three Months Ended
	March 28, 2010		March 29, 2009
	($ in millions)
Stock Options	$	—	$	—
Rabbi Trust		2.3		—
Stock appreciation rights (SARs)		0.1		0.1
Restricted stock units (RSUs)		0.1		0.3
Restricted shares		—		0.1

Stock compensation expense, gross	$	2.5	$	0.5

Change in forfeiture estimate		0.2		—

Stock compensation expense, net	$	2.7	$	0.5

The terms and assumptions used in calculating stock compensation expense for each category of equity-based awards are included below.

Stock Options

Stock options have been granted for a fixed number of shares to employees and directors with an exercise price equal to no less than the fair value of the shares at the date of grant. No stock options have been granted since 2005. Under the “modified prospective” method of the Compensation — Stock Compensation topic of the ASC, we were required to value our stock options under the fair value method and expense these amounts over the stock options’ remaining vesting period. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. No additional stock options have been granted since our application of the modified prospective method. The amount of stock compensation expense recorded for stock options during the three ~~and nine~~ month ~~periods~~ period ended ~~September~~March 2728, ~~2009~~2010 and ~~September~~March 2829, ~~2008~~2009 was immaterial.

Shares Held in Rabbi Trust

During the ~~nine~~three month period ended ~~September~~March 2728, ~~2009~~2010, we ~~reversed previously~~ recorded additional stock ~~compensation~~ compensation expense, included in general and administrative expense, to reflect the impact of an estimated increase ~~decrease~~ in the fair value of our common stock. This ~~decrease~~increase in value resulted in an increase to our accrued payroll and employee benefits line item on our balance sheet.

Stock Appreciation Rights (SARs)

SARs have been granted to employees and directors with an exercise price equal to no less ~~than~~ than the fair value of the shares at the date of grant. The fair value of each SAR is estimated on ~~the~~ the date of grant using the Black-Scholes valuation model and based on a number of assumptions including expected term, volatility and interest rates. Because we do not have publicly traded equity or reliable historical data to estimate the expected term of the SARs, we used a temporary “simplified method” to estimate our expected term. Based on the guidance of the Compensation -— Stock Compensation topic of the ASC, expected volatility was derived from an index of historical volatilities from several companies that conduct business in the aerospace industry. The risk free interest rate is based on the U.S. treasury yield curve on the date of grant for the expected term of the option. Our estimated forfeiture rate was 26% as of ~~September~~March 2829, ~~2008~~2009 but was adjusted to 22% during the three month period ended June 28, 2009. WeDuring ~~continued~~the tothree ~~utilize~~month aperiod ~~22%~~ended ~~forfeiture~~March 28. ~~rate~~2010, ~~during~~we adjusted the ~~three~~forfeiture ~~month~~rate ~~period~~to ~~ended~~assume ~~September 27~~no further forfeitures. As a result, ~~2009~~we recorded $0.1 million of additional stock compensation expense related to SARs.

No SARs were granted during the ~~nine~~three month periods ended ~~September~~March 2728, ~~2009~~2010 and ~~September~~March 2829, ~~2008.~~ 2009. As of ~~September~~March 2728, ~~2009~~2010, we had $0.15 million of unrecognized compensation expense remaining as a result of the grants made in prior years.

Restricted Stock Units (RSUs)

The value of each RSU awarded is based on the estimated fair value of our common stock on the date of issuance in accordance with the Compensation — Stock Compensation topic of the ASC. Because we do not have publicly traded equity, we use an independent third party valuation firm to compute the fair market value of our common stock. Our estimated forfeiture rate was 26% as of ~~September~~March 2829, ~~2008~~2009 but was adjusted to 22% during the three month period ended June 28, 2009. WeDuring ~~continued~~the tothree ~~utilize~~month aperiod ~~22%~~ended March 28. 2010, we adjusted the forfeiture rate ~~during~~to ~~the~~assume ~~three~~no ~~month~~further forfeitures. ~~period~~As ~~ended~~a ~~September 27~~result, ~~2009~~we recorded $0.1 million additional compensation expense related to ~~However~~RSUs. Additionally, no forfeiture rate was used in our calculation of the grants to the CEO and CFO that vest upon the first occurrence of a change in control or a date specified in the agreement, due to our assumption that they will remain employed until the vesting of these awards. As of ~~September~~March 2728, ~~2009~~ 2010, we had $0.97 million of unrecognized compensation expense remaining.

21Note 13- Comprehensive Income

Comprehensive income consisted of the following:


	For the Three Months Ended
	March 28,			March 29,
	2010			2009
	($ in millions)
Net income	$	26.8		$	17.9
Other comprehensive income (loss), net of tax
Pension		16.2			11.4
OPEB		(5.9	)		27.0

Total other comprehensive income	$	37.1		$	56.3

~~Restricted~~Note ~~Shares~~14 — Debt

~~The restricted~~ Our ~~shares~~total ~~granted~~outstanding ~~during~~debt ~~the~~as ~~nine~~of ~~month~~March 28, ~~period~~2010 ~~ended~~was $590.4 million which included $320.4 ~~September~~million incurred under our senior credit facilities and $270.0 ~~27,~~million ~~2009~~of ~~vested~~8% ~~during~~Senior ~~2009~~Notes due 2011 (“Senior Notes”). ~~Those~~The ~~shares~~$320.4 million ~~were~~balance ~~valued~~under ~~based~~our senior credit facilities reflected on the Consolidated ~~estimated~~Balance ~~fair~~Sheet ~~value~~includes $322.2 million in outstanding term loans, net of ~~our~~$1.8 million ~~common~~of ~~stock~~unamortized original issue discount. The following paragraphs include further details on the components ~~date~~ of ~~issuance~~the Long-term debt balances in our Consolidated Balance Sheet.

~~Note~~ On 13July 2, —2003, ~~Investment~~we issued $270.0 million of Senior Notes with interest payable on January 15 and July 15 of each year, beginning January 15, 2004. We may redeem the notes in ~~Joint~~full ~~Venture~~or in part as 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. The fair value of our Senior Notes was approximately $271.9 million and $269.7 million as of March 28, 2010 and December 31, 2009, respectively, based on quoted market prices.

In April 2005, we entered into a joint venture agreement with Alenia North America (“Alenia”), a subsidiary of Finmeccanica SpA, to form a limited liability company called Global Aeronautica, LLC (“Global Aeronautica”), which integrates major components of the fuselage and performs related testing activities for the Boeing 787 program. We and Alenia, each had a 50% interest in Global Aeronautica.

On June 10, 2008, we sold our equity interest in Global Aeronautica to Boeing for $55.0 million in cash and as a result, recorded a $47.1 million gain on the sale during the fiscal year ended December 31, 2008. Our results of operations are no longer impacted by this joint venture.

Note 14 — Long-Term Debt

Our total outstanding long-term debt as of September 27, 2009 was $592.5 million which included $322.5 million incurred under our senior credit facilities and $270.0 million of 8% Senior Notes due 2011 (“Senior Notes”). The $322.5 million balance under our senior credit facilities reflected on the Consolidated Balance Sheet includes $325.2 million in outstanding term loans, net of $2.7 million of unamortized original issue discount. The following paragraphs include further details on the components of the Long-term debt balances in our Consolidated Balance Sheet.

On July 2, 2003, we issued $270.0 million of 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. The fair value of our Senior Notes was approximately $267.3 million and $183.6 million as of September 27, 2009 and December 31, 2008, respectively, based on quoted market prices.

We entered into $650.0 million of senior credit facilities pursuant to a credit agreement dated December 22, 2004 (“Credit Agreement”). Upon issuance, our senior credit facilities were comprised of a $150.0 million six year revolving loan (“Revolver”), a $75.0 million synthetic letter of credit facility and a $425.0 million seven year term loan B. Initially, the seven year term loan B amortized at $1.0 million per quarter with a final payment at the maturity date of December 22, 2011.

On May 6, 2008, we borrowed an additional $200.0 million of term loans pursuant to our existing senior credit facilities (the “Incremental Facility”). We received net proceeds of approximately $184.6 million from the Incremental Facility net of a $10.0 million original issue discount and $5.4 million of debt origination costs, to be used for general corporate purposes. The interest rates per annum applicable to the Incremental Facility were, at our option, the ABR or Eurodollar Base Rate plus, in each case, an applicable margin equal to 3.00% for ABR loans and 4.00% for Eurodollar Base Rate loans, subject to a Eurodollar Base Rate floor of 3.50%. During the three month period ended September 27, 2009, we paid down $355.0 million of outstanding term loans including a portion of the Incremental Facility. Additionally, we expensed $5.7 million of debt issuance costs and original issue discount related to the pay down of the Incremental Facility. Our effective interest ~~rates~~rate on the Incremental Facility for the three ~~and nine~~ month periods ended ~~September~~ March 28, ~~2009 were 38.4% and 15.2%, respectively. However, excluding the impact of $5.7~~ ~~million~~2010 ~~of debt issuance costs~~ and ~~original issue discount~~March 29, ~~the~~2009 ~~effective~~was ~~interest rates were~~ 12.30% and 10.51% ~~for the three and nine month periods ended September 28, 2009,~~ respectively.

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

On January 31, 2009, under the terms of our credit agreement, we exercised our option to convert $25.0 million of the synthetic letter of credit facility to a term loan. The $25.0 million term loan is subject to the same terms and conditions as the outstanding term loans made as of December 2004. As a result, our limit under the synthetic letter of credit facility was reduced to $50.0 million.

On July 30, 2009 we entered into an Amendment to our Credit Agreement (“Amendment”) which modified the Credit Agreement to allow the sale of our 787 business (discussed in Note 3 -— Discontinued Operations) and provided for use of cash proceeds from the transaction to (i) pay down $355.0 million of term loans outstanding and (ii) repay outstanding amounts on our revolver of $135.0 million and to permanently reduce revolving commitments under the Credit Agreement to $100.0 million. The Amendment converted the synthetic letter of credit facility under the Credit Agreement into additional term loan of $50.0 million, a portion of which is used as cash collateral for letters of credit previously issued under the synthetic letter of credit facility. As of March ~~September 27~~28, ~~2009~~2010, the cash restricted as collateral for outstanding letters of credit was $43.7 4 million. The Amendment increased the interest rate on all loans to London Interbank Offering Rate (LIBOR) plus a margin of 4.00%, with a minimum LIBOR floor of 3.50%.

Under the terms of the senior credit facility, we are required to prepay or refinance any amounts outstanding of our $270.0 million Senior Notes by the last business day of 2010 or we must repay the aggregate amount of loans outstanding at that time under the senior credit facility unless a lender waives such prepayment (so long as a majority of our lenders (voting on a class basis) agree to such waiver). We may not be able to refinance the Senior Notes on commercially reasonable terms or at all. This risk could impair our ability to fund our operations, limit our ability to expand our business or increase our interest expense, which could have a material adverse effect on our financial results.

In August 2009, Barclay’s Bank PLC replaced Lehman Commercial Paper, Inc. as the administrative and collateral agent under our existing senior credit facilities.

Under the terms of the senior credit facility, we are required to prepay or refinance any amounts outstanding of our $270.0 million Senior Notes by the last business day of 2010 or we must repay the aggregate amount of loans outstanding at that time under the senior credit facility unless a lender waives such prepayment (so long as a majority of our lenders (voting on a class basis) agree to such waiver). Because of the requirement to refinance the Senior Notes, the amounts outstanding under our senior credit facility have been classified as a current liability as of March 28, 2010.

On March 23, 2010, we entered into a merger agreement with Triumph Group, Inc. pursuant to which we will be acquired by Triumph. It is anticipated that in connection with that transaction all of our currently outstanding material indebtedness will be repaid in full. The consummation of the acquisition is subject to, among other things, approval of Triumph’s stockholders and other customary closing conditions, which may not be satisfied. In the event that the anticipated acquisition is not completed and such indebtedness remains outstanding, we plan to refinance our senior credit facility or the Senior Notes prior to the last business day of 2010. There are no assurances that we will be able to refinance on commercially reasonable terms or at all. This creates an uncertainty about our ability to continue as a going concern. Notwithstanding this, the consolidated financial statements and related notes have been prepared assuming that we will continue as a going concern.

Note 15- Related Party Transactions

A management agreement between us and our controlling stockholder, The Carlyle Group, requires us to pay an annual fee of $2.0 million for various management services. We incurred fees of $0.5 million ~~and $1.5 million~~ pursuant to this management agreement for the three ~~and nine~~ month periods ended ~~September~~March 2728, ~~2009~~2010 and ~~September~~ March 2829, ~~2008~~2009, respectively. The Carlyle Group also serves, in return for additional fees, as our financial advisor for mergers, acquisitions, dispositions and other strategic and financial activities. ~~In connection with the sale of our 787 business~~ ~~(discussed in Note 3 — Discontinued Operations), we have paid approximately $3.0 million to The Carlyle Group during the three months ended September 27, 2009.~~

23 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. On September 29, 2006, The Carlyle Group acquired a majority stake in Wesco, and as a result, we are both now under common control of The Carlyle Group through its affiliated funds. In addition, four of our directors, Messrs. Squier, Clare, Palmer and Jumper, also serve on the board of directors of Wesco. The Carlyle Group may 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 three month periods ended March 28, 2010 and March 29, 2009 was approximately $8.1 million and $5.1 million, respectively.

In connection with the sale of our 787 business (discussed in Note 3 — Discontinued Operations), two of our agreements with Wesco were assigned to a subsidiary of Boeing. Approximately $1.0 million was paid to Wesco under those agreements for the three month period ending March 29, 2009.

We also have an ongoing commercial relationship with Gardner Group Ltd (“Gardner Group”), a supplier of metallic aerostructure details, equipment and engine components to the global aviation industry. Gardner Group currently provides aerospace parts to us. The most recent agreement with the Gardner Group was entered into on November 5, 2007. During 2008 and most of 2009, The Carlyle Group held a majority equity interest in the Gardner Group. As a result, the Gardner Group and our company were both under common control of The Carlyle Group through its affiliated funds during those periods. The Carlyle Group may have indirectly benefited from their economic interest in Gardner Group from its contractual relationships with us. The total amount paid to Gardner Group pursuant to our contracts with Gardner Group for the three month period ended March 29, 2009 was $0.2 million.

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. On September 29, 2006, The Carlyle Group acquired a majority stake in Wesco, and as a result, we are both now under common control of The Carlyle Group through its affiliated funds. In addition, four of our directors, Messrs. Squier, Clare, Palmer and Jumper, also serve on the board of directors of Wesco. The Carlyle Group may 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 three month periods ended September 27, 2009 and September 28, 2008 was approximately $8.0 million and $6.0 million, respectively. Approximately, $19.8 million and $21.1 million was paid to Wesco pursuant to our contracts with Wesco for the nine month periods ended September 27, 2009 and September 28, 2008.

As a result of a competitive procurement, in September 2009, we entered into an agreement with Wesco on a long-term contract to provide hardware requirements for various programs. That agreement extends through November 2014 with an estimated contract value of approximately $175.0 million.

In connection with the sale of our 787 business (discussed in Note 3 — Discontinued Operations), two of our agreements with Wesco were assigned to a subsidiary of Boeing. Approximately $3.2 million and $4.3 million was paid to Wesco under those agreements for the nine month periods ending September 27, 2009 and September 28, 2008, respectively.

We also have an ongoing commercial relationship with Gardner Group Ltd (“Gardner Group”), a supplier of metallic aerostructure details, equipment and engine components to the global aviation industry. Gardner Group currently provides aerospace parts to us. The most recent agreement with the Gardner Group was entered into on November 5, 2007. On November 3, 2008, The Carlyle Group acquired a majority equity interest in the Gardner Group, and as a result, the Gardner Group and our company are both now under common control of The Carlyle Group through its affiliated funds. The Carlyle Group may indirectly benefit from their economic interest in Gardner Group from its contractual relationships with us. The total amount paid to Gardner Group pursuant to our contracts with Gardner Group for the three and nine month periods ended September 27, 2009 was $0.7 million and $1.1 million, respectively.

Note 16- Guarantor Subsidiaries

The 8% Senior Notes due 2011 are fully and unconditionally and jointly and severally guaranteed, on a senior unsecured basis, by our 100% owned subsidiaries. In accordance with criteria established under Rule 3-10(f) of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), summarized financial information of Vought and its guarantor subsidiaries is presented below:

2420

Vought Aircraft Industries, Inc. Consolidating Balance Sheet ~~September~~March 2728, ~~2009~~2010 (~~dollars~~$ in millions, except ~~par value per~~ share amounts) (Unaudited)

				Guarantor			Intercompany
	Vought			Subsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	~~150~~149.36		$	0.1		$	—		$	~~150~~149.47
Restricted cash		43.74			—			—			43.74
Trade and other receivables		~~119~~152.58			7.6.7			—			~~127~~159.15
Intercompany receivable		2012.92			8.37			(2920.29	)		—
Inventories		~~462~~439.16			1613.98			—			~~479~~453.04
Other current assets		59.05			0.6			—			510.61
Total current assets		~~801~~807.51			3329.59			(2920.29	)		~~805~~816.81
Property, plant and equipment, net		~~263~~265.91			8.90			—			~~272~~273.81
Goodwill		341.1			63.7			—			404.8
Identifiable intangible assets, net		2218.16			—			—			2218.16
Debt origination costs, net and other assets		6.1			0.1			—			6.2
Other non-current assets		0.9			—			—			0.9
Investment in affiliated company		7881.34			—			(7881.34	)		—
Total assets	$	1,~~513~~514.02		$	~~106~~101.26		$	(~~107~~102.53	)	$	1,~~511~~513.75
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable, trade	$	~~122~~165.06		$	45.45		$	—		$	~~126~~171.41
Intercompany payable		8.37			2012.92			(2920.29	)		—
Accrued and other liabilities		8058.65			1.23			—			8159.8
Accrued payroll and employee benefits		4543.53			1.42			—			4644.95
Accrued post-retirement benefits-current		4237.25			—			—			4237.25
Accrued pension-current		03.63			—			—			03.63
Current portion of long-term bank debt		5320.94			—			—			5320.94
Accrued contract liabilities		~~112~~40.40			—			—			~~112~~40.40
Total current liabilities		~~417~~677.53			2720.92			(2920.29	)		~~416~~676.26
Long-term liabilities:
Accrued post-retirement benefits		~~368~~363.5			—			—			~~368~~363.5
Accrued pension		~~658~~595.12			—			—			~~658~~595.12
Long-term bank debt, net of current portion		316.6			—			—			316.6
Long-term bond debt		270.0			—			—			270.0
Other non-current liabilities		7974.02			—			—			7974.02
Total liabilities		21,~~109~~980.72			2720.92			(2920.29	)		21,~~108~~979.45
Stockholders’ equity (deficit):
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,806 issued and outstanding at September 27, 2009		0.3			—			—			0.3
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,806 issued and outstanding at March 29, 2009		0.3			—			—			0.3
Additional paid-in capital		~~422~~423.2			80.3			(80.3	)		~~422~~423.2
Shares held in rabbi trust		(1.6	)		—			—			(1.6	)
Accumulated deficit		(220.7	)		(2.0	)		2.0			(220.7	)
Accumulated equity (deficit)		(146.2	)		1.1			(1.1	)		(146.2	)
Accumulated other comprehensive loss		(~~796~~741.97	)		—			—			(~~796~~741.97	)
Total stockholders’ equity (deficit)	$	(~~596~~466.70	)	$	7881.34		$	(7881.34	)	$	(~~596~~466.70	)
Total liabilities and stockholders’ equity (deficit)	$	1,~~513~~514.02		$	~~106~~101.26		$	(~~107~~102.53	)	$	1,~~511~~513.75

2521

Vought Aircraft Industries, Inc. Consolidating Balance Sheet December 31, ~~2008~~2009 ($ in millions, except ~~share~~par ~~amounts)~~value ~~(unaudited~~per share)

				Guarantor			Intercompany
	Vought			Subsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	86115.62		$	0.18		$	—		$	86116.70
Trade and other receivables		131.1			7.4			—			138.5
Restricted cash		43.8			—			—			43.8
Intercompany receivable		21.1			8.3			(29.4	)		—
Trade and other receivables		120.9			7.0			—			127.9
Inventories		297.7			14.1			—			311.8
Intercompany receivable		15.7			8.2			(23.9	)		—
Assets related to discontinued operations		460.7									460.7
Inventories		497.9			13.4			—			511.3
Other current assets		47.29			0.56			—			48.75
Total current assets		~~1,001~~801.4			30.40			(2923.49	)		~~1,002~~807.45
Property, plant and equipment, net		~~271~~267.25			8.04			—			~~279~~275.29
Goodwill		341.1			63.7			—			404.8
Identifiable intangible assets, net		2720.24			—			—			2720.24
Debt origination costs, net and other assets		12.9			1.1			—			14.0
Other non-current assets		1.3			—			—			1.3
Investment in affiliated company		7679.49			—			(7679.49	)		—
Total assets	$	1,~~730~~511.26		$	~~103~~102.21		$	(~~105~~103.8	)	$	1,~~727~~509.69
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable, trade	$	~~144~~137.53		$	43.06		$	—		$	~~148~~140.59
Intercompany payable		8.32			2115.17			(2923.49	)		—
Accrued and other liabilities		5766.48			0.1.5			—			5768.53
Accrued payroll and employee benefits		4645.5			1.64			—			4846.19
Accrued post-retirement benefits-current		4237.04			—			—			4237.04
Accrued pension-current		0.3.5			—			—			0.3.5
Current portion of long-term bank debt		5319.98			—			—			5319.98
Liabilities related to discontinued operations		156.7									156.7
Accrued contract liabilities		74.2			—			—			74.2
Accrued contract liabilities		141.1			—			—			141.1
Total current liabilities		692.7			22.2			(23.9	)		691.0
Total current liabilities		602.7			26.8			(29.4	)		600.1
Long-term liabilities:
Accrued post-retirement benefits		~~405~~364.39			—			—			~~405~~364.39
Accrued pension		~~710~~612.72			—			—			~~710~~612.72
Long-term bank debt, net of current portion		594.0			—			—			594.0
Long-term bond debt		270.0			—			—			270.0
Other non-current liabilities		8175.63			—			—			8175.63
Total liabilities		2,~~664~~015.31			2622.82			(2923.49	)		2,~~661~~013.74
Stockholders’ equity (deficit):
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,798,382 issued and outstanding at December 31, 2008		0.3			—			—			0.3
Common stock, par value $.01 per share; 50,000,000 shares authorized, 24,818,806 issued and outstanding at December 31, 2009		0.3			—			—			0.3
Additional paid-in capital		~~420~~422.58			80.3			(80.3	)		~~420~~422.58
Shares held in rabbi trust		(1.6	)		—			—			(1.6	)
Accumulated deficit		(~~501~~173.30	)		(30.94	)		30.94			(~~501~~173.30	)
Accumulated other comprehensive loss		(~~852~~752.0	)		—			—			(~~852~~752.0	)
Total stockholders’ equity (deficit)	$	(~~934~~503.15	)	$	7679.49		$	(7679.49	)	$	(~~934~~503.15	)
Total liabilities and stockholders’ equity (deficit)	$	1,~~730~~511.26		$	~~103~~102.21		$	(~~105~~103.8	)	$	1,~~727~~509.69

2622

Vought Aircraft Industries, Inc. Consolidating Statement of Operations Three Months Ended ~~September~~March 2728, ~~2009~~2010 ($ in millions) (Unaudited)

				Guarantor		Intercompany
	Vought			Subsidiaries		Eliminations			Totals
Revenue	$	~~431~~455.47		$	18.05	$	(23.7	)	$	~~446~~470.75
Costs and expenses
Cost of sales		~~363~~379.04			15.78		(23.7	)		~~376~~391.05
Selling, general and administrative expenses		2838.85			1.42		—			3039.27
Total costs and expenses		~~391~~417.89			17.10		(23.7	)		~~406~~431.2
Operating income		3937.68			01.95		—			4039.53
Other income (expense)
Interest income		0.21			—		—			0.21
Other gain		—			—		—			—
Interest expense		(12.6	)		—		—			(12.6	)
Interest expense		(20.6	)		—		—			(20.6	)
Equity in income (loss) of consolidated subsidiaries		1.5			—		(1.5	)		—
Equity in income (loss) of consolidated subsidiaries		0.9			—		(0.9	)		—
Income (loss) before income taxes		26.8			1.5		(1.5	)		26.8
Income (loss) before income taxes		20.1			0.9		(0.9	)		20.1
Income tax expense		—			—		—			—
Income tax expense		0.9			—		—			0.9
Net income (loss)	$	26.8		$	1.5	$	(1.5	)	$	26.8
Income (loss) from continuing operations		19.2			0.9		(0.9	)		19.2
Income (loss) from discontinued operations, net of tax		219.4			—		—			219.4
Net income (loss)	$	238.6		$	0.9	$	(0.9	)	$	238.6

Vought Aircraft Industries, Inc. Consolidating Statement of Operations Three Months Ended ~~September~~March 2829, ~~2008~~2009 ($ in millions) (Unaudited)

				Guarantor		Intercompany
	Vought			Subsidiaries		Eliminations			Totals
Revenue	$	~~466~~377.70		$	1517.40	$	(43.87	)	$	~~477~~390.3
Costs and expenses
Cost of sales		~~398~~313.14			1315.81		(43.87	)		~~407~~324.18
Selling, general and administrative expenses		3327.53			1.42		—			3428.95
Total costs and expenses		~~431~~340.67			1516.23		(43.87	)		~~442~~353.03
Operating income (loss)		35.1			0.2		—			35.3
Operating income		36.3			0.7		—			37.0
Other income (expense)
Interest income		10.32			—		—			10.32
Other gain (loss)		1.6			—		—			1.6
Interest expense		(15.0	)		—		—			(15.0	)
Interest expense		(17.4	)		—		—			(17.4	)
Equity in income (loss) of consolidated subsidiaries		0.7			—		(0.7	)		—
Equity in income (loss) of consolidated subsidiaries		0.2			—		(0.2	)		—
Income (loss) before income taxes		22.2			0.7		(0.7	)		22.2
Income (loss) before income taxes		20.8			0.2		(0.2	)		20.8
Income tax expense		—			—		—			—
Income taxes		0.2			—		—			0.2
Income (loss) from continuing operations		22.2			0.7		(0.7	)		22.2
Income (loss) from continuing operations		20.6			0.2		(0.2	)		20.6
Income (loss) from discontinued operations, net of tax		(4.3	)		—		—			(4.3	)
Income (loss) from discontinued operations, net of tax		(5.0	)		—		—			(5.0	)
Net income (loss)	$	17.9		$	0.7	$	(0.7	)	$	17.9
Net income (loss)	$	15.6		$	0.2	$	(0.2	)	$	15.6

2723

Vought Aircraft Industries, Inc. Consolidating ~~Statement~~Cash ofFlow ~~Operations~~Statement ~~Nine~~Three Months Ended ~~September~~March 2728, ~~2009~~2010 ($ in millions) (Unaudited)

				Guarantor			Intercompany
	Vought			Subsidiaries			Eliminations			~~Totals~~Total
Revenue	$	1,278.8		$	53.7		$	(10.2	)	$	1,322.3
Operating activities
Costs and expenses
Net income (loss)	$	26.8		$	1.5		$	(1.5	)	$	26.8
Cost of sales		1,071.8			47.9			(10.2	)		1,109.5
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Selling, general and administrative expenses		97.3			3.9			—			101.2
Depreciation and amortization		12.5			0.4			—			12.9
Total costs and expenses		1,169.1			51.8			(10.2	)		1,210.7
Stock compensation expense		2.7			—			—			2.7
Operating income		109.7			1.9			—			111.6
Income from investments in consolidated subsidiaries		(1.5	)		—			1.5			—
Other income (expense)
Changes in current assets and liabilities:
Interest income		0.6			—			—			0.6
Trade and other receivables		(31.9	)		0.3			—			(31.6	)
Other gain		—			—			—			—
Intercompany accounts receivable		3.5			(0.5	)		(3.0	)		—
Interest expense		(44.5	)		—			—			(44.5	)
Inventories		58.3			(0.4	)		—			57.9
Equity in income (loss) of consolidated subsidiaries		1.9			—			(1.9	)		—
Other current assets		(2.6	)		—			—			(2.6	)
Income (loss) before income taxes		67.7			1.9			(1.9	)		67.7
Accounts payable, trade		28.3			1.9			—			30.2
Income tax expense		0.9			—			—			0.9
Intercompany accounts payable		0.5			(3.5	)		3.0			—
Income (loss) from continuing operations		66.8			1.9			(1.9	)		66.8
Accrued payroll and employee benefits		(2.2	)		(0.2	)		—			(2.4	)
Income (loss) from discontinued operations, net of tax		213.8			—			—			213.8
Accrued and other liabilities		(10.7	)		(0.2	)		—			(10.9	)
Net income (loss)	$	280.6		$	1.9		$	(1.9	)	$	280.6
Accrued contract liabilities		(34.2	)		—			—			(34.2	)
Other assets and liabilities—long-term		(8.8	)		—			—			(8.8	)
Net cash provided by (used in) operating activities		40.7			(0.7	)		—			40.0
Investing activities
Capital expenditures		(6.7	)		—			—			(6.7	)
Net cash used in investing activities		(6.7	)		—			—			(6.7	)
Financing activities
Changes in restricted cash		0.4			—			—			0.4
Net cash provided by (used in) financing activities		0.4			—			—			0.4
Net increase in cash and cash equivalents		34.4			(0.7	)		—			33.7
Cash and cash equivalents at beginning of period		115.2			0.8			—			116.0
Cash and cash equivalents at end of period	$	149.6		$	0.1		$	—		$	149.7

~~Vought Aircraft Industries, Inc.~~24 ~~Consolidating Statement of Operations Nine Months Ended September 28, 2008 (in millions) (Unaudited)~~

				Guarantor		Intercompany
	Vought			Subsidiaries		Eliminations			Totals
Revenue	$	1,325.4		$	52.5	$	(15.9	)	$	1,362.0
Costs and expenses
Cost of sales		1,058.9			46.1		(15.9	)		1,089.1
Selling, general and administrative expenses		121.8			4.3					126.1
Total costs and expenses		1,180.7			50.4		(15.9	)		1,215.2
Operating income (loss)		144.7			2.1		—			146.8
Other income (expense)
Interest income		2.3			—		—			2.3
Other loss		48.7			—		—			48.7
Equity in loss of joint venture		(0.6	)		—		—			(0.6	)
Interest expense		(49.6	)		—		—			(49.6	)
Equity in income (loss) of consolidated subsidiaries		2.1			—		(2.1	)		—
Income (loss) before income taxes		147.6			2.1		(2.1	)		147.6
Income taxes		0.2			—		—			0.2
Income (loss) from continuing operations		147.4			2.1		(2.1	)		147.4
Income (loss) from discontinued operations, net of tax		(23.8	)		—		—			(23.8	)
Net income (loss)	$	123.6		$	2.1	$	(2.1	)	$	123.6

Vought Aircraft Industries, Inc. Consolidating Cash Flow Statement ~~Nine~~Three Months Ended ~~September~~March 2729, 2009 ($ in millions) (Unaudited)

				Guarantor			Intercompany
	Vought			Subsidiaries			Eliminations			Total
Operating activities
Net income (loss)	$	~~280~~17.69		$	10.97		$	(10.97	)	$	~~280~~17.69
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		5415.5			10.24			—			5515.79
Stock compensation expense		10.25			—			—			10.25
(Gain)/Loss from asset disposals		41.7			—			—			41.7
Income from investments in consolidated subsidiaries		(0.7	)		—			0.7			—
Income from investments in consolidated subsidiaries		(1.9	)		—			1.9			—
Changes in current assets and liabilities:
Trade and other receivables		2(8.05	)		(01.21	)		—			1(9.86	)
Intercompany accounts receivable		0(1.24	)		—(0.6	)		~~(0.~~2.0	)		—
Inventories		(~~166~~65.80	)		(21.81	)		—			(~~169~~66.61	)
Other current assets		(03.86	)		(0.1	)		—			(03.97	)
Accounts payable, trade		~~(28~~10.87	)		01.4			—			~~(28~~12.41	)
Intercompany accounts payable		—0.6			(01.24	)		0.(2.0	)		—
Accrued payroll and employee benefits		(01.4	)		(0.23	)		—			(01.67	)
Accrued and other liabilities		23(0.81	)		10.1			—			~~24.9~~—
Accrued contract liabilities		(4136.37	)		—			—			(4136.37	)
Other assets and liabilities—long-term		(36.8	)		1.0			—			(35.8	)
Other assets and liabilities — long-term		(2.6	)		1.0			—			(1.6	)
Net cash provided by (used in) operating activities		~~127~~(74.28	)		2.1.8			—			~~129~~(73.30	)
Investing activities
Capital expenditures		(266.15	)		(2.1.8	)		—			(288.23	)
Proceeds from sale of assets		289.2			—			—			289.2
Net cash used in investing activities		(6.5	)		(1.8	)		—			(8.3	)
Net cash provided by (used in) investing activities		263.1			(2.1	)		—			261.0
Financing activities
Proceeds from short-term bank debt		135.0			—			—			135.0
Payments on short-term bank debt		(135.0	)		—			—			(135.0	)
Proceeds from long-term bank debt		25.0			—			—			25.0
Proceeds from long-term bank debt		75.0			—			—			75.0
Net cash provided by (used in) financing activities		160.0			—			—			160.0
Payments on long-term bank debt		(357.9	)		—			—			(357.9	)
Net increase in cash and cash equivalents		78.7			—			—			78.7
Changes in restricted cash		(43.7	)		—			—			(43.7	)
Net cash provided by (used in) financing activities		(326.6	)		—			—			(326.6	)
Net increase in cash and cash equivalents		63.7			—			—			63.7
Cash and cash equivalents at beginning of period		86.6			0.1			—			86.7
Cash and cash equivalents at end of period	$	~~150~~165.3		$	0.1		$	—		$	~~150~~165.4

2925

~~Vought~~Note ~~Aircraft~~17 ~~Industries,~~— ~~Inc. Consolidating~~Fair ~~Cash~~Value ~~Flow Statement~~Measurements ~~Nine Months Ended September 28, 2008 (in millions) (Unaudited)~~

				Guarantor			Intercompany
	Vought			Subsidiaries			Eliminations			Total
Operating activities
Net income (loss)	$	123.6		$	2.1		$	(2.1	)	$	123.6
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		48.9			1.2			—			50.1
Stock compensation expense		2.2			—			—			2.2
Equity in losses of joint venture		0.6			—			—			0.6
(Gain)/Loss from asset disposals		(50.1	)		—			—			(50.1	)
Income from investments in consolidated subsidiaries		(2.1	)		—			2.1			—
Changes in current assets and liabilities:
Trade and other receivables		(81.4	)		(0.2	)		—			(81.6	)
Intercompany accounts receivable		0.8			(1.2	)		0.4			—
Inventories		(32.4	)		0.2			—			(32.2	)
Other current assets		0.5			(0.1	)		—			0.4
Accounts payable, trade		(36.2	)		(0.6	)		—			(36.8	)
Intercompany accounts payable		1.2			(0.8	)		(0.4	)		—
Accrued payroll and employee benefits		(0.8	)		0.4			—			(0.4	)
Accrued and other liabilities		(9.8	)		(0.2	)		—			(10.0	)
Accrued contract liabilities		(33.0	)		—			—			(33.0	)
Other assets and liabilities—long-term		(79.8	)		—			—			(79.8	)
Net cash provided by (used in) operating activities		(147.8	)		0.8			—			(147.0	)
Investing activities
Capital expenditures		(40.5	)		(1.2	)		—			(41.7	)
Proceeds from sale of joint venture		55.0			—			—			55.0
Net cash provided by (used in) investing activities		14.5			(1.2	)		—			13.3
Financing activities
Proceeds from short-term bank debt		153.0			—			—			153.0
Payments on short-term bank debt		(153.0	)		—			—			(153.0	)
Proceeds from Incremental Facility		184.6			—			—			184.6
Payments on long-term bank debt		(2.0	)		—			—			(2.0	)
Proceeds from sale of common stock		0.1			—			—			0.1
Net cash provided by (used in) financing activities		182.7			—			—			182.7
Net increase (decrease) in cash and cash equivalents		49.4			(0.4	)		—			49.0
Cash and cash equivalents at beginning of period		75.1			0.5			—			75.6
Cash and cash equivalents at end of period	$	124.5		$	0.1		$	—		$	124.6

Note 17- Fair Value Measurements

The Fair Value Measurements and Disclosures topic of the ASC, defines fair value, provides guidance for measuring fair value and requires certain disclosures. In accordance with this guidance, we utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

•		Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•		Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•		Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

As of ~~September~~March 2728, ~~2009~~2010, we had $~~150~~149.14 million of short term investments, primarily money ~~market~~ market funds, reflected at cost, which approximates fair value, in our cash and cash equivalents ~~balance~~ balance on our Consolidated Balance Sheet. The fair value ~~determination~~ of this asset involves Level 2 inputs and is determined based on a market approach.

Our deferred compensation liability to former executives is based on the most recently obtained fair value of our common stock. As of ~~September~~March 2728, ~~2009~~2010, the ~~fair value~~ determination of the fair value of this $14.4 million ~~deferred compensation~~ liability ~~involves~~involved Level 3 inputs. The value of this liability has ~~declined~~ increased by $02.53 million since December 31, ~~2008~~2009.

Note 18- ~~Comprehensive~~— ~~Income~~Subsequent ~~(Loss)~~Events

~~Comprehensive~~ Subsequent ~~income~~to March ~~(loss) consisted~~28, 2010, and in connection with our prior entry into the merger agreement with Triumph, we entered into letter agreements relating to certain transaction bonus opportunities totaling approximately $5.0 million with certain executives. The letter agreements provide for the payment of a cash bonus to each of the ~~following:~~executives within 5 days of the closing of the merger with Triumph. The bonuses are conditioned on the closing of the merger with Triumph and the executive’s execution of a general release of claims against us. In the event the merger agreement is terminated or amended prior to the closing date of the merger, we have reserved the right to revise or retract the executive’s right to receive the bonus.

	For the Three Months Ended						For the Nine Months Ended
	September 27,			September 28,			September 27,		September 28,
	2009			2008			2009		2008
	(in millions)
Income from continuing operations	$	19.2		$	20.6		$	66.8	$	147.4
Comprehensive income (loss), net of tax
Pension		14.1			13.6			40.0		18.4
OPEB		(5.8	)		(7.1	)		15.1		30.5
Total comprehensive income from continuing operations		27.5			27.1			121.9		196.3
Income (loss) from discontinuing operations, net of tax		219.4			(5.0	)		213.8		(23.8	)
Total comprehensive income, net of tax	$	246.9		$	22.1		$	335.7	$	172.5

Note 19- Fixed Assets

During the three month period ended June 28, 2009, we capitalized approximately $5.6 million of interest costs related to our assets-under-construction balance that were expensed in fiscal periods prior to 2009 in error. We also recorded a corresponding $1.9 million adjustment to increase depreciation expense, which was recorded to cost of sales during the three month period ended June 28, 2009. The total impact on net income from these adjustments was approximately $3.7 million. The capitalization also increased our Fixed Assets, net balance by $3.7 million. Additionally, during the nine month period ended September 27, 2009, we have capitalized interest costs of $0.8 million related to our current assets-under-construction balance.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our results of operations, financial condition and liquidity in conjunction with our interim unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis including information with respect to our plans and strategies for our business, statements regarding the industry outlook, our expectations regarding the future performance of our business, and the other non-historical statements contained herein are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.” You should also review the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2008~~2009 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 approximately 50% of our revenues from the commercial aircraft market but are also diversified across the military and business jet markets, which provide the balance of our revenues.

Our customer base consists of leading aerospace original equipment manufacturers or OEMs, including Airbus, Boeing, Cessna, Gulfstream, Hawker Beechcraft, Lockheed Martin, Northrop Grumman and Sikorsky, as well as the U.S. Air Force. We generate over 80% of our revenues from our three largest customers, Airbus, Boeing and Gulfstream.

Although the majority of our revenues are generated by sales in the U.S. market, we generate approximately 1210% of our revenue from sales outside of the United States.

Most of our revenues are generated under long-term contracts. 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 $2.61 billion at ~~September~~March 2728, ~~2009~~2010. Our calculation of backlog includes ~~only~~ 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.

For our commercial and business jet 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. WeAlso, ~~have~~volatility ~~received~~in ~~updated~~the ~~delivery~~financial ~~schedules~~markets may ~~from~~impact ~~several~~the ofoverall ~~our~~demand ~~customers~~for ~~who~~our ~~are~~commercial ~~slowing~~and ~~production~~business ~~rates~~aircraft ~~in 2009 and beyond~~products. ~~Also,~~To to the extent financial ~~the~~market ~~current~~conditions ~~global~~worsen, ~~financial~~we ~~crisis~~could ~~continues~~experience ordecline ~~worsens,~~in ~~overall~~the future on demand for our ~~commercial~~ commercial and business aircraft products ~~could continue to decline notwithstanding the growth over the past three years~~. 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.

3227

The market for our commercial, military and business jet programs has historically been cyclical. While the commercial, military and business jet markets experienced a period of ~~increased~~ increased production ~~over~~in ~~the~~recent ~~past few~~ years, asthe ~~discussed below,~~ unprecedented global market and economic conditions ~~have~~along ~~been challenging~~ with tighter credit conditions ~~and~~resulted ~~recessions~~ in ~~most major~~reduced ~~economies~~aircraft ~~expected~~demand toin ~~continue throughout~~ 2009. The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide credit to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers alike, and could continue to have an adverse affect on the demand for our aerostructures by both our commercial customers and the U.S. government for the next few years. Additionally, ~~continued turbulence~~future volatility in the U.S. and international markets and economies and ~~prolonged~~delayed ~~declines~~recovery inof business and consumer spending could adversely affect our liquidity and financial condition, including our ability to refinance maturing liabilities and access the capital markets to meet liquidity needs and the liquidity and financial condition of our customers.

Commercial Aircraft. Sales to the commercial aircraft market are 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. ~~Beginning~~Production inrates ~~2009,~~slowed weon ~~have begun receiving~~many ~~reduced~~of ~~delivery~~our ~~rates~~commercial ~~from~~aircraft ~~our~~in ~~customers.~~2009 Weand we expect those ~~reduced~~lower ~~delivery~~ rates to continue through at2010 ~~least~~with ~~the~~a slow ~~end~~recovery ~~of 2010~~thereafter.

Military Aircraft. U.S. national defense spending and procurement funding decisions, global geopolitical conditions, and current operational use of the existing military aircraft fleet drive sales in the military aircraft market. We believe that the demand for our rotorcraft programs, which are some of the key equipment being used in military operations, will experience some pressure during the next several years. Historically, the majority of our military revenues and a significant portion of our total revenue have been generated from our C-17 program. WeThe ~~currently~~U.S. ~~have~~government ahas ~~contract~~funded ~~from~~aircraft ~~Boeing~~ that would support C-17 production through ~~April 2011~~mid 2012. ~~The~~However, ~~President’s~~our ~~proposed~~business ~~2010~~could ~~budget~~be ~~does~~adversely ~~not~~impacted ~~include~~if ~~funding for~~ the ~~procurement~~Government ~~of new C-17 aircraft although Congress has proposed adding funding for additional aircraft. If Congress~~ does not ~~approve~~fund ~~the funding for~~ additional C-17 aircraft~~, our business could be adversely impacted~~.

Business Jet Aircraft. Sales to the business jet aircraft market are driven by long-term economic expansion, the increasing inconvenience of commercial airline travel, growing international acceptance and demand for business jet travel, fractional ownership of business jets and the introduction of new business jet models. ~~Beginning~~Reflecting inthe ~~2009~~pressures in ~~response~~the tofinancial ~~macro-economic~~and ~~conditions,~~business wemarkets ~~have~~in ~~begun~~2009, ~~receiving~~we experienced reduced ~~delivery~~production rates ~~from~~on several of our ~~OEMs~~programs and were notified of the suspension of the Cessna Citation Columbus — Model 850 program. We expect those reduced delivery rates to continue through ~~at least~~ the end of 2010 with slow recovery thereafter. ~~However~~In spite of these pressures, as a major supplier to the top-selling G350, G450, G500 and G550 and Citation X programs, we still believe we are well positioned to operate in key segments of the business jet market ~~when~~as macro-economic conditions continue to improve.

On July 630, 2009, we ~~entered~~sold ~~into an agreement to sell~~ the assets and operations of our 787 business conducted at North Charleston, South Carolina to ~~Boeing Commercial Airplanes Charleston South Carolina, Inc.,~~ a wholly owned subsidiary of The Boeing Company. ~~The transaction was completed on July 30, 2009.~~ Concurrent with the closing of the transaction, we entered into an agreement terminating ~~the existing 787 supply agreement releasing claims~~ and resolving rights and obligations, ~~including~~under ~~obligations incurred or created as a result of ordinary course performance of~~ the existing 787 supply agreement. ~~Going~~Under ~~forward, under~~ a newly negotiated contract, we ~~will manufacture~~still manufacture certain components for the 787 program as well as provide engineering services to Boeing pursuant to an engineering services agreement. We ~~also~~are ~~will~~providing ~~provide~~ certain transition services to Boeing pursuant to a transition services agreement and ~~perform~~performing new work scope on the Boeing 737 and 777 aircraft pursuant to a long-term supply agreement.

33 Under the terms of the senior credit facility, we are required to prepay or refinance any amounts outstanding of our $270.0 million Senior Notes by the last business day of 2010 or we must repay the aggregate amount of loans outstanding at that time under the senior credit facility unless a lender waives such prepayment (so long as a majority of our lenders (voting on a class basis) agree to such waiver). Because of the requirement to refinance the Senior Notes, the amounts outstanding under our senior credit facility have been classified as a current liability as of March 28, 2010.

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. It is our practice to close our books and records based on a thirteen-week quarter, which can lead to different period end dates for comparative purposes. The interim financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods, as our fiscal years end on December 31.

Revenue and Profit Recognition. We record revenue and profit for our long-term contracts using a percentage of completion method with, depending on the contract, either cost-to-cost or units-of-delivery as our basis to measure progress toward completing the contract.

•		Under the cost-to-cost method, progress toward completion is measured as the ratio of total costs incurred to our estimate of total costs at completion. We recognize costs as incurred. Profit is determined based on our estimated profit margin on the contract multiplied by our progress toward completion. Revenue represents the sum of our costs and profit on the contract for the period.

•		Under the units-of-delivery method, revenue on a contract is recorded as the units are delivered and accepted during the period at an amount equal to the contractual selling price of those units. The costs recorded on a contract under the units-of-delivery method are equal to the total costs at completion divided by the total units to be delivered. As our contracts can span multiple years, we often segment the contracts into production lots for the purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units delivered and the estimated costs for the units delivered.

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 may contain terms or provisions, such as price re-determination, requests for equitable adjustments 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~~29 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 research and development and other non-recurring activities, as well as costs that are not reimbursed under U.S. Government contract terms.

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 research and development and other non-recurring activities, as well as costs that are not reimbursed under U.S. Government contract terms.

Interest expense, net. Interest expense, net reflects interest income and expense, and includes the amortization of capitalized debt origination costs and the amortization of the original issue discount on an additional $200.0 million of term loans we borrowed pursuant to our existing senior credit facilities (“Incremental Facility”).

Other income (loss). Other income (loss) represents miscellaneous items unrelated to our core operations.

Equity in loss of joint venture. Equity in loss of joint venture reflected our share of the loss from Global Aeronautica, a joint venture in which we formerly participated. As a result of the sale of our equity interest in Global Aeronautica in 2008, our results of operations are no longer impacted by this joint venture.

Income tax benefit (expense). Income tax benefit (expense) represents federal income tax provided on our net book income from continuing operations. For a further discussion of our income tax provision, please see Note 10 — Income Taxes.

Income (loss) from discontinued operations, net of tax. Income (loss) from discontinued operations, net of tax represents the revenue and expenses associated with our 787 business conducted at North Charleston, South Carolina that was sold to Boeing Commercial Airplanes Charleston South Carolina, Inc., a wholly owned subsidiary of The Boeing Company on July 30, 2009. ~~Our gain on the sale of this business is also reflected as income (loss) from discontinued operations, net of tax.~~ See Note 3 — Discontinued Operations in the notes to the interim unaudited condensed consolidated financial statements included in Item 1.

Results of Operations

	Three Months			Three Months						~~Nine Months~~			~~Nine Months~~
	Ended			Ended						~~Ended~~			~~Ended~~
	September 27, 2009			September 28, 2008			$ Change			September 27, 2009			September 28, 2008			$ Change
	March 28, 2010			March 29, 2009			$ Change
	(in millions)
				($ in millions)
Revenue:
Commercial	$	~~226~~229.39		$	~~248~~168.75		$	~~(22~~61.4	)	$	~~642.5~~		$	~~679.9~~		$	~~(37.4~~	)
Military		~~168~~172.39			~~144~~146.82			2326.57			~~476.1~~			~~440.2~~			~~35.9~~
Business Jet		5267.17			8375.86			(~~31.~~7.9	)		~~203.7~~			~~241.9~~			~~(38.2~~	)
Total revenue	$	~~446~~470.75		$	~~477~~390.3		$	~~(30~~80.62	)	$	~~1,322.3~~		$	~~1,362.0~~		$	~~(39.7~~	)
Costs and expenses:
Cost of sales		~~376~~391.05			~~407~~324.18			~~(31~~66.17	)		~~1,109.5~~			~~1,089.1~~			~~20.4~~
Selling, general and administrative		3039.27			3428.95			(411.72	)		~~101.2~~			~~126.1~~			~~(24.9~~	)
Total costs and expenses	$	~~406~~431.2		$	~~442~~353.03		$	~~(35~~77.89	)	$	~~1,210.7~~		$	~~1,215.2~~		$	~~(4.5~~	)
Operating income		4039.53			3537.30			5.2.3			~~111.6~~			~~146.8~~			~~(35.2~~	)
Interest expense, net		(2012.45	)		(1614.18	)		(42.3	)		~~(43.9~~	)		~~(47.3~~	)		~~3.4~~
Other gain/(loss)		—			1.6			(1.6	)		—			48.7			(48.7	)
Income tax expense		—			—			—
Equity in loss of joint venture		—			—			—			—			(0.6	)		0.6
Income from continuing operations	$	26.8		$	22.2		$	4.6
Income tax expense		(0.9	)		(0.2	)		(0.7	)		(0.9	)		(0.2	)		(0.7	)
Income from discontinued operations, net of tax		—			(4.3	)		4.3
Income from continuing operations	$	19.2		$	20.6		$	(1.4	)	$	66.8		$	147.4		$	(80.6	)
Net income	$	26.8		$	17.9		$	8.9
Income (loss) from discontinued operations, net of tax		219.4			(5.0	)		224.4			213.8			(23.8	)		237.6
Net income	$	238.6		$	15.6		$	223.0		$	280.6		$	123.6		$	157.0

~~Comparison of Results of Operations for the Three Months Ended September 27, 2009 and September 28,~~30 ~~2008~~

Revenues. Revenue for the three months ended September 27, 2009 was $446.7 million, a decrease of $30.6 million, or 6%, compared with the same period in the prior year. When comparing the third quarter of 2009 with the same period in the prior year:

• Commercial revenue decreased $22.4 million, or 9%, primarily due to a $20.4 million decrease in sales resulting from the completion of one of our Airbus programs in the second quarter of 2009. • Military revenue increased $23.5 million, or 16% mainly due increased deliveries for the V-22 and C-130 programs as well as higher spares deliveries for C-17. • Business Jet revenue decreased $31.7 million, or 38%, primarily due to reduced delivery rates directed by our customers.

Operating income. Operating income from continuing operations for the three months ended September 27, 2009 was $40.5 million, an increase of $5.2 million, or 15%, compared with $35.3 million for the comparable period in the prior year. This increase was largely due to completion of the amortization of the intangible asset related to the 747-400 program in 2008.

Interest expense, net. Interest expense, net for the three month period ended September 27, 2009 was $20.4 million, an increase of $4.3 million, or 27%, compared with $16.1 million for the same period in the prior year. Interest expense increased primarily due to the acceleration of $7.1 million of debt origination costs from the pay down of $355.0 million term loans outstanding resulting from the 787 transaction partially offset by a reduction in the effective interest rate on our variable rate indebtedness excluding the acceleration.

~~Income~~Comparison ~~(loss) from discontinued operations, net~~ of ~~tax.~~Results ~~Income from discontinued operations, net~~ of ~~tax~~Operations for the ~~three~~Three ~~month~~Months ~~period~~Ended ~~ended September~~March 2728, ~~2009~~2010 ~~was~~and ~~$219.4~~March ~~million~~29, ~~primarily due to the~~2009 previously announced 787 transaction recorded during the period. This transaction included $275.0 million of income recognized for the resolution of 787 contractual issues as well as a $39.8 million loss on the sale of our 787 business.

~~Comparison~~Revenues. ofRevenue ~~Results~~for ofthe ~~Operations~~three ~~for~~months ~~the~~ended ~~Nine~~March 28, ~~Months~~2010 ~~Ended~~was ~~September~~$470.5 27million, ~~2009~~an ~~and~~increase ~~September~~of $80.2 28million, or 21%, compared with the same period in the prior year. When comparing the first ~~2008~~quarter of 2010 with the same period in the prior year:

~~Revenues.~~• ~~Revenue~~Commercial ~~for~~revenue ~~the~~increased ~~nine~~$61.4 ~~months~~million, ~~ended~~or ~~September 27~~36%, ~~2009~~primarily ~~was~~due ~~$1,322~~to increased sales for the 747-8 program.~~3 million,~~ a• ~~decrease~~Military of revenue increased $3926.7 million, or 318%, ~~compared~~mainly ~~with~~due increased deliveries for the ~~same~~V-22 ~~period~~and inC-130 programs as well as higher spares deliveries for the ~~prior~~C-17 ~~year~~program. ~~When~~• ~~comparing~~Business ~~the~~Jet ~~nine months~~revenue ~~ended~~decreased ~~September 27~~$7.9 million, ~~2009~~or ~~with~~10%, ~~the~~primarily ~~same~~due ~~period~~to the absence in 2010 of non-recurring sales for the ~~prior~~Cessna ~~year:~~ Citation Columbus 850.

•Operating ~~Commercial~~income. ~~revenue~~Operating ~~decreased~~income ~~$37.4~~from ~~million,~~continuing oroperations ~~6%,~~for ~~primarily~~the ~~due~~three tomonths aended March 28, 2010 was $4239.5 3 million, ~~decrease~~an inincrease ~~sales~~of ~~resulting~~$2.3 million, ~~from~~or ~~the~~6%, ~~completion~~compared ofwith ~~one~~$37.0 million offor ~~our~~the comparable ~~Airbus~~period ~~programs~~ in the ~~second~~prior ~~quarter of 2009 • Military revenue increased $35~~year.9 ~~million,~~This orincrease ~~8%,~~was ~~primarily~~largely due to increased deliveries on ~~the V~~ 747-228 program, ~~C-130~~and ~~program~~the ~~and~~absence ~~spares~~in ~~deliveries~~2010 ~~for~~of ~~the~~a ~~C-17~~pension ~~program.~~and •other ~~Business~~post-employment ~~Jet~~benefits ~~revenue~~curtailment charge ~~decreased~~recognized ~~$38.2~~in ~~million,~~2009 orthat ~~16%,~~resulted ~~primarily~~from ~~due~~the toIAM ~~reduced~~collective ~~delivery~~bargaining ~~rates~~agreement ~~directed~~in Nashville partially offset by ~~our~~lower ~~customers~~margins on military programs.

~~Operating~~Interest ~~income~~expense, net. ~~Operating~~Interest ~~income~~expense, net for the ~~nine~~three ~~months~~month period ended ~~September~~March 2728, ~~2009~~2010 was $~~111~~12.6 5 million, a decrease of $~~35.~~2.3 million, or 2416%, compared with $~~146~~14.8 million for the same period in in the prior year. ~~There~~Interest ~~were~~expense ~~several~~decreased ~~unusual~~due ~~items that contributed~~ to ~~the~~lower ~~decrease~~outstanding ~~including~~debt ~~the absence~~balances in ~~2009~~2010 ~~of the one-time release of $22.6 million of purchase accounting reserves for the~~as ~~747~~compared ~~program~~to reflecting the updated timeline for the completion of the deliveries for the 747-400 model. Also, non-recurring costs of $9.6 million were recorded during the period reflecting the impact of the pension and other post-retirement benefits curtailment resulting from the 2009 ~~collective bargaining agreement with the International Association of Machinists at our Nashville, Tennessee facility~~. ~~In addition to these items, overall program margins were lower due to the cost~~ ~~pressures mentioned above as well as lower margins recognized on non-recurring sales.~~

~~Interest~~Income ~~expense~~(loss) from discontinued operations, net of tax. ~~Interest~~Loss ~~expense~~from discontinued operations, net of tax for the ~~nine~~three month period ended ~~September~~March 2729, 2009 was $~~43.9 million, a decrease of $3.~~4 ~~million, or 7%, compared with $47~~.3 million ~~for~~reflecting the ~~same period~~loss ~~in the prior year. Interest expense decreased primarily due to the adjustment during the~~recognized second quarter of 2009 to capitalize approximately $5.6 million of interest costs to appropriately reflect the book value of Property, Plant and Equipment included in our assets-under-construction balance in fiscal periods prior to 2009. The remainder of the decrease resulted from a reduction in the effective interest rate on ~~our variable rate indebtedness partially offset by~~ the ~~acceleration~~ ofoperations ~~$7.1 million~~ of ~~debt origination costs from~~ the ~~pay~~787 ~~down~~business ofduring ~~$355.0 million~~that ~~term loans outstanding resulting from the 787 transaction~~period.

Other gain (loss). Other gain for the nine month period ended September 28, 2008 primarily reflected the $47.1 million gain from the sale of our equity interest in our Global Aeronautica joint venture. We did not have a similar transaction during the nine month period ended September 27, 2009.

Income (loss) from discontinued operations, net of tax. Income from discontinued operations, net of tax for the nine month period ended September 27, 2009 was $213.8 million primarily due to the previously announced 787 transaction recorded during the period. This transaction included $275.0 million of income recognized for the resolution of 787 contractual issues as well as a $39.8 million loss on the sale of our 787 business.

Critical Accounting Policies

Our financial statements have been prepared in conformity with US GAAP. The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information. Actual results could differ materially from those estimates.

Revenue 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 Revenue -— Construction-Type and Production-Type Contracts topic of the ASC and revenue and costs on contracts are recognized using percentage-of-completion methods of accounting. 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. Depending on the contract, we measure progress toward completion using either the cost-to-cost method or the units-of-delivery method.

•		Under the cost-to-cost method, progress toward completion is measured as the ratio of total costs incurred to our estimate of total costs at completion. We recognize costs as incurred. Profit is determined based on our estimated profit margin on the contract multiplied by our progress toward completion. Revenue represents the sum of our costs and profit on the contract for the period.

•		Under the units-of-delivery method, revenue on a contract is recorded as the units are delivered and accepted during the period at an amount equal to the contractual selling price of those units. The costs recorded on a contract under the units-of-delivery method are equal to the total costs at completion divided by the total units to be delivered. As our contracts can span multiple years, we often segment the contracts into production lots for the purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units delivered and the estimated costs for the units delivered.

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. The impact of revisions in cost estimates is 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 the Construction and Production-Type Contracts topic. 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 the Construction and Production-Type Contracts topic.

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:

	September 27,		December 31,
	March 28,		December 31,
	2009		2008
	2010		2009
	(in millions)
	($ in millions)
Advances and progress billings	$	9634.02	$	~~126~~59.84
Forward loss		~~6.7~~—		61.47
Other		95.78		713.91
Total accrued contract liabilities	$	~~112~~40.40	$	~~141~~74.12

Goodwill

Goodwill is tested for impairment, at least annually, in accordance with the provisions of the Intangibles — Goodwill and Other topic of the ASC. Under this topic, 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 the Company is a single reporting unit. Accordingly, all assets and liabilities are used to determine our carrying value. In connection with the sale of our 787 business on July 30, 2009 (discussed in Note 3 - Discontinued Operations), $122.9 million of our goodwill balance was allocated to that business based on the relative fair value of its assets. Subsequently, we performed an interim impairment test of our remaining Goodwill balance and determined the balance is not impaired.

~~For~~ We ~~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.

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 or when a remeasurement is necessary. Assumptions are based upon management’s best estimates, after consulting with outside investment advisors and actuaries, as of the measurement date.

The assumed discount rate utilized is based on a point in time estimate as of our December 31 annual measurement date or as of remeasurement dates as needed. 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.

39 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%. 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.

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 were unfunded as of December 31, 2009 and March 28, 2010. 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.

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%. 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.

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 were unfunded as of December 31, 2008 and September 27, 2009. 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.

In accordance with the Compensation — Retirement Benefits topic of the ASC we recognized the funded status of our benefit obligation in our statement of financial position as of December 31, ~~2008. This funded status was remeasured for some plans as of January 31,~~ 2009. The funded status was measured as the difference between the fair value of the plan’s assets and the PBO or accumulated postretirement benefit obligation of the plan. ~~For more information on the impact of~~ ~~this remeasurement, see Note 6 — Pension and Other Post-retirement Benefits.~~

Recent Accounting Pronouncements

In December ~~2007~~2009, the Financial Accounting Standards Board (“FASB”) issued anAccounting Standards ~~accounting~~Update ~~standard~~No. 2009-17, ~~that~~“Consolidations ~~provides~~(Topic ~~revised~~810) ~~guidance~~— onImprovements ~~how~~to Financial Reporting by ~~acquirors~~Enterprises ~~recognize~~Involved ~~and~~with ~~measure~~Variable ~~the~~Interest ~~consideration~~Entities” ~~transferred,~~(“ASU ~~identifiable~~2009-17”). ~~assets~~ASU ~~acquired,~~2009-17 changes how a ~~liabilities~~reporting ~~assumed,~~entity ~~noncontrolling~~determines ~~interests,~~when ~~and~~an ~~goodwill~~entity ~~acquired~~that inis ainsufficiently ~~business~~capitalized ~~combination.~~or is not controlled ~~This~~through ~~standard~~voting ~~also~~(or ~~expands~~similar rights) should be consolidated. The determination of whether a reporting entity is required ~~disclosures~~to ~~surrounding~~consolidate another entity is based on, among other things, the ~~nature~~other entity’s purpose and ~~financial~~design ~~effects~~and the reporting entity’s ability to direct the activities of the ~~business~~other ~~combinations.~~entity Wethat ~~adopted~~most significantly impact the ~~guidance~~other ofentity’s ~~this~~economic ~~accounting~~performance. ~~standard,~~ASU ~~currently~~2009-17 requires ~~included~~a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting ~~the~~entity ~~Business~~is ~~Combinations~~required ~~Topic~~to ofdisclose how its involvement with a variable interest entity affects the reporting ~~ASC~~entity’s onfinancial ~~January~~statements. ASU 2009-17 is effective for fiscal years beginning after November 115, 2009., Weand ~~considered~~interim ~~the~~periods ~~provisions~~within ~~of this~~those ~~accounting~~fiscal ~~standard~~years. ~~with~~We ~~respect~~adopted toASU ~~the~~2009-17 ~~sale~~as of January 1, ~~our~~2010, ~~787~~and ~~business~~its ~~(as~~application ~~discussed~~had inno ~~Note~~impact 3on -our interim, unaudited, condensed, ~~Discontinued~~consolidated ~~Operations)~~financial statements.

~~FASB~~ In ~~issued~~January 2010, ~~an accounting standard that requires enhanced disclosures about~~ the ~~plan~~FASB ~~assets~~issued ~~of a~~Accounting ~~company’s~~Standards ~~defined~~Update ~~benefit pension and other postretirement plans~~No. 2010-06, ~~The enhanced disclosures are~~“Improving ~~intended~~Disclosures toabout ~~provide~~Fair ~~users~~Value ofMeasurements” ~~financial statements with a greater understanding of:~~ (~~1) how investment~~“ASU ~~allocation decisions are made~~2010-06”), ~~including~~which ~~the~~provides ~~factors~~amendments ~~that are pertinent~~ to anFair Value ~~understanding~~Measurements ~~of investment policies~~ and ~~strategies;~~Disclosures ~~(2) the~~— ~~major~~Overall ~~categories~~subtopic of ~~plan assets; (3)~~ the ~~inputs~~ASC. ~~and~~ASU ~~valuation~~2010-06 ~~techniques~~requires ~~used~~additional disclosures toand ~~measure~~clarifications ~~the fair value~~ of ~~plan~~existing ~~assets;~~disclosures ~~(4) the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets~~ for ~~the~~recurring ~~period;~~ and ~~(5) significant~~nonrecurring ~~concentrations~~fair ~~of risk within plan assets~~value measurements. We adopted ~~the~~this ~~provisions~~update offor ~~this~~our ~~accounting~~fiscal ~~standard~~year onbeginning January 1, ~~2009~~2010. ~~and~~ASU ~~will provide the required~~2010-06 ~~enhanced~~did ~~disclosures~~not ~~for~~have ~~our~~a ~~pension~~material ~~plan~~impact ~~assets~~on in our ~~2009~~interim, ~~annual~~unaudited, ~~report~~condensed, onconsolidated ~~Form 10-K~~financial statements.

In May 2009, the FASB issued an accounting standard that requires an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. For nonrecognized subsequent events that must be disclosed to keep the financial statements from being misleading, an entity is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. In addition, this accounting standard requires an entity to disclose the date through which subsequent events have been evaluated. We adopted this accounting standard for our fiscal period ending June 28, 2009 and we have evaluated subsequent events through the date of issuance of our interim, unaudited, condensed consolidated financial statements on November 10, 2009. No material subsequent events have occurred since September 27, 2009.

In June 2009, the FASB issued an accounting standard that establishes the FASB Accounting Standards CodificationÔ (the Codification) as the source of authoritative U.S. generally accepted accounting principles (US GAAP). We adopted this accounting standard for our fiscal period ending September 27, 2009.

Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (ASUs), which will serve to update the Codification, provide background information about the accounting guidance and provide the basis for conclusions on the changes to the Codification. GAAP is not intended to be changed as a result of the Codification, but it will change the way the accounting guidance is organized and presented. As a result, these changes have a significant impact on how we reference GAAP in our financial statements and in our accounting policies for financial statements issued for interim and annual periods ending after September 15, 2009.

In this quarterly report, the Company has begun the process of implementing the statement by removing references to FASB statement numbers in the footnotes that follow and explaining the adherence to authoritative accounting guidance in plain English, where appropriate.

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, borrowing capacity through our credit facility and the long-term capital markets and negotiated advances and progress payments from our customers. 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.

For certain aircraft programs, milestone or advance payments from customers finance working capital, which helps to improve our liquidity. In addition, we may, in the ordinary course of business, settle outstanding claims or other contractual matters with customers or suppliers or we may receive payments for change orders not previously negotiated. Settlement of such matters can have a significant impact on our results of operations and cash flows.

~~We believe that cash flow from operations and cash and cash equivalents on hand will provide~~34 adequate funds for our ongoing working capital expenditures, pension contributions and near term debt service obligations allowing us to meet our current contractual commitments for at least the next twelve months.

~~Our~~ We ~~pension~~believe ~~plan~~that ~~funding~~cash ~~obligations~~flow ~~also~~from ~~impact~~operations, ~~our~~cash ~~liquidity~~ and ~~capital~~cash ~~resources.~~equivalents ~~In our annual report~~ on ~~Form~~hand ~~10-K~~and ~~for~~funds ~~the~~that will ~~fiscal~~be ~~year~~raised ~~ended~~as ~~December 31,~~part ~~2008, we provided estimates~~ of ~~our~~ ~~pension~~a ~~plan~~refinancing ~~contributions~~or ~~for~~restructuring ~~2009~~of —our ~~2013.~~senior ~~Our~~credit ~~future~~facility ~~pension~~and ~~contributions are primarily~~Senior ~~driven~~Notes bywill ~~the~~provide ~~funded~~adequate ~~level~~funding offor our ~~plans~~ongoing asworking ofcapital ~~December 31~~expenditures, ~~of each fiscal year. One of the primary~~pension ~~factors~~contributions ~~used~~and incapital ~~determining~~investments ~~our~~required ~~liability~~to ~~under~~meet our ~~plans~~current ~~for~~contractual ~~the~~and ~~purpose of those funding~~legal ~~requirements~~commitments isfor ~~the~~at ~~discount~~least ~~rate. Due to~~ the ~~actions~~next ~~earlier~~twelve ~~this year by the U~~months.S. ~~Treasury Department~~However, ~~expanding~~there ~~the~~is ~~permissible~~no ~~yield~~assurance ~~curves~~ that we can refinance ~~be used for~~ the ~~discount~~Senior ~~rate,~~Notes ~~our projected~~or ~~required~~the ~~pension~~senior ~~contributions~~credit ~~are~~facility ~~now~~prior ~~expected~~ to bethe ~~lower~~last ~~than~~business weday ~~reported~~of ~~in our 2008 annual report on Form 10-K~~2010.

~~The~~ Our ~~table~~pension ~~below~~plan ~~includes~~funding ~~our~~obligations ~~previous~~also ~~projected~~impact ~~pension~~our ~~funding~~liquidity ~~requirements~~and ~~disclosed~~capital inresources. In our annual report on Form 10-K for the fiscal year ended December 31, ~~2008~~2009, ~~and~~we ~~our~~provided ~~updated~~estimates ~~expected~~of our pension plan contributions for 2010 — 2014. Our future pension ~~funding~~contributions ~~requirements,~~are ~~reflecting~~primarily driven by the Ufunded level of our plans as of December 31 of each fiscal year.S. ~~Treasury~~Two ~~Department’s~~of ~~changes~~the factors used in determining our liability under our plan are the discount rate and the market value of the plan assets.

			Updated to
			reflect
	As previously		Treasury
	reported in the		Department
	10-K		changes
	(in Millions)
Projected contributions
2009		84.7		78.8
2010		165.8		98.1
2011		191.7		217.1
2012		174.7		166.8
2013		151.6		153.8
Total 2009-2013	$	768.5	$	714.6

Macro-economic conditions, the corporate bond rates and the fluctuations in the fair value of our plan assets as a result of the volatility in global financial markets will continue to impact our required contributions in future periods.

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.

As of ~~September~~March 2728, ~~2009~~2010, our total outstanding ~~long-term~~ debt was approximately $~~592~~590.5 4 million. This amount includes $270.0 million of 8% Senior Notes due 2011 (“Senior Notes”) and $~~325~~320.24 million of term loans outstanding under our senior credit facilities. Additionally, we had $41.3 million in outstanding letters of credit with $43.4 million of restricted cash as collateral for them.

On Our ~~July 30,~~outstanding ~~2009~~term weloans, ~~entered~~including ~~into~~amounts anunder ~~Amendment to our Credit Agreement (“Amendment”) which modified~~ the ~~Credit~~Incremental ~~Agreement~~Facility, toare ~~allow~~repayable ~~the sale of our 787 business (discussed~~ in ~~Note 3 -~~ ~~Discontinued~~equal ~~Operations)~~quarterly ~~and~~installments ~~provided for use~~ of ~~cash~~approximately ~~proceeds from the transaction to (i) pay down~~ $~~355~~1.05 million ofwith ~~term~~the ~~loans~~balance ~~outstanding~~due ~~and (ii) repay outstanding amounts~~ on ~~our revolver of~~December 22, ~~$135~~2011.~~0 million~~ ~~and~~Our ~~to permanently reduce~~ revolving commitments ~~under~~are ~~the~~scheduled ~~Credit Agreement~~ to ~~$100.0 million.~~expire ~~The~~on ~~Amendment~~December 22, ~~converted~~2010. ~~the~~However, ~~synthetic~~we ~~letter~~have ~~of credit facility under the Credit~~an ~~Agreement~~extension ~~into~~provision ~~additional~~that ~~term~~allows ~~loan~~us ofto ~~$50.0 million,~~extend aour ~~portion~~revolving ofcommitments ~~which~~with islenders ~~used~~who asagree ~~cash collateral~~to ~~for~~such ~~letters~~extension ofto ~~credit~~a ~~previously~~date ~~issued~~to ~~under~~be ~~the synthetic letter of credit facility~~agreed. AsWe ~~of September 27,~~are ~~2009,~~also ~~the~~obligated ~~cash~~to ~~restricted~~pay asan ~~collateral~~annual ~~for~~commitment ~~outstanding~~fee ~~letters of credit was $43.7~~on ~~million. The Amendment increased~~ the ~~interest~~unused ~~rate~~portion onof ~~all~~our ~~loans~~revolver ~~to London Interbank Offering Rate (LIBOR) plus a margin~~ of 40.005%, ~~with~~or aless, ~~minimum~~based ~~LIBOR~~on ~~floor~~our ofleverage 3ratio.~~50%.~~

42 Under the terms of the senior credit facility, we are required to prepay or refinance any amounts outstanding of our $270.0 million Senior Notes by the last business day of 2010 or we must repay the aggregate amount of loans outstanding at that time under the senior credit facility unless a lender waives such prepayment (so long as a majority of our lenders (voting on a class basis) agree to such waiver). Because of the requirement to refinance the Senior Notes, the amounts outstanding under our senior credit facility have been classified as a current liability as of March 28, 2010.

~~Our~~ Credit ~~outstanding~~Agreements ~~term~~and ~~loans,~~Debt ~~including~~Covenants. ~~amounts~~The ~~under~~indenture ~~the~~governing ~~Incremental~~our ~~Facility,~~Senior ~~are~~Notes ~~repayable~~and inour credit ~~equal~~agreement ~~quarterly~~contain ~~installments~~customary ofaffirmative ~~approximately~~and ~~$1.5 million~~negative ~~with~~covenants ~~the~~for ~~balance~~facilities ~~due~~of onthis ~~December 22~~type, ~~2011.~~including ~~Our~~limitations ~~revolving~~on ~~commitments~~our ~~are~~indebtedness, ~~scheduled~~liens, toinvestments, ~~expire~~distributions, onmergers ~~December 22~~and acquisitions, ~~2010~~dispositions of assets, subordinated debt and transactions with affiliates. The ~~Amendment~~ ~~incorporated~~credit anagreement ~~extension~~also ~~provision~~requires that ~~allows~~we usmaintain tocertain ~~extend~~financial ~~our~~covenants ~~revolving~~including ~~commitments~~a ~~with lenders~~leverage ~~who~~ratio, ~~agree~~the requirement to ~~such~~maintain ~~extension~~minimum tointerest coverage ratios, as defined in the agreement, and a ~~date~~limitation toon beour ~~agreed~~capital spending levels. WeThe ~~are~~indenture governing our Senior Notes also contains ~~obligated~~various torestrictive ~~pay~~covenants, anincluding ~~annual commitment~~the ~~fee~~incurrence onof additional indebtedness unless the ~~unused~~debt ~~portion~~is ofotherwise ~~our~~permitted ~~revolver~~under ofthe 0indenture.5% orAs ~~less~~of March 28, ~~based~~2010, onwe were in compliance with the covenants in the indenture and our ~~leverage~~credit ~~ratio~~agreement.

Credit Agreements and Debt Covenants. The indenture governing our Senior Notes and our credit agreement 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 and transactions with affiliates. The credit agreement also requires that we maintain certain financial covenants including a leverage ratio, the requirement to maintain minimum interest coverage ratios, as defined in the agreement, and a limitation on our capital spending levels. The indenture governing our Senior Notes also contains various restrictive covenants, including the incurrence of additional indebtedness unless the debt is otherwise permitted under the indenture. As of September 27, 2009, we were in compliance with the covenants in the indenture and our credit agreement.

Our 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 ~~4.00:1.00 for fiscal periods ending during 2009,~~ 3.75:1.00 for fiscal periods during 2010 and 3.50:1.00 for fiscal periods 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 fiscal periods ending during ~~2009~~2010 and for fiscal periods 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. The actual results of the total leverage ratio and net interest coverage ratio for the ~~nine~~ three month period ended ~~September~~March 2728, ~~2009~~2010 were 1.6361:1.00 and 45.7939:1.00, respectively.

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~~36 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) 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 gains/losses (including gains/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 Note 15 — Related Party Transactions.

Non-GAAP Financial Measures. Periodically we disclose to investors Adjusted EBITDA, ~~for~~which is a non-GAAP financial measure that our management uses to assess our compliance with the covenants ~~three~~in ~~month~~our ~~period~~senior ~~ended~~credit ~~September 27~~agreement, ~~2009~~our ~~was~~ongoing ~~$58.6 million,~~ability anto meet our obligations and manage ~~increase~~our levels of $3indebtedness.~~7 million~~ ~~from~~Adjusted ~~the~~EBITDA ~~same~~is ~~period~~calculated in ~~the~~accordance ~~prior~~with ~~year~~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 ~~for~~is ~~the~~calculated ~~nine month~~by ~~period~~making ~~ended~~adjustments ~~September~~to our net income (loss) ~~27,~~to ~~2009~~eliminate ~~was~~the effect ~~$185.~~of our (1) ~~million~~income tax expense, a(2) net ~~decrease~~interest expense, (3) any amortization or write-off of ~~$20.1~~debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness, (4) ~~million~~depreciation ~~from~~and ~~the~~amortization ~~same~~expense, (5) any extraordinary, ~~period~~unusual inor ~~the~~non-recurring ~~prior~~expenses ~~year.~~or ~~The~~gains/losses ~~following~~(including ~~table~~gains/losses ison asales ~~reconciliation~~of assets outside of the ordinary course of business, non-~~GAAP~~recurring ~~measure~~expenses ~~from~~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 ~~flows~~charges, ~~from~~expenses or ~~operations:~~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 Note 15 — Related Party Transactions.

Adjusted EBITDA for the three month period ended March 28, 2010 was $60.7 million, a decrease of $7.5 million from the same period in the prior year. The following table is a reconciliation of the non-GAAP measure from our cash flows from operations:

Reconciliation of Non-GAAP Measure — Adjusted EBITDA

	For the Three Months Ended						~~For the Nine Months Ended~~
	September 27,			September 28,			September 27,			September 28,
	March 28,			March 29,
	2009			2008			2009			2008
	2010			2009
Net cash provided by (used in) operating activities	$	~~224~~40.40		$	(~~109~~73.30	)	$	~~129.3~~		$	~~(147.0~~	)
Interest expense, net		2012.5			1614.18			~~43.9~~			~~47.3~~
Income tax expense (benefit)		~~0.9~~—			~~0.2~~—			~~0.9~~			~~0.2~~
Stock compensation expense		(02.57	)		(0.85	)		~~(1.2~~	)		~~(2.2~~	)
Equity in losses of joint venture		—			—			—			(0.6	)
Non-cash interest expense		(1.6	)		(1.8	)
Gain (loss) from asset sales and other losses		(39.8	)		1.6			(41.7	)		50.1
787 tooling amortization		—			0.5
Non-cash interest expense		(8.4	)		(1.8	)		(12.1	)		(4.1	)
Changes in operating assets and liabilities		2.4			107.3
787 tooling amortization		0.3			—			1.1			0.8
EBITDA	$	50.6		$	47.3
Changes in operating assets and liabilities		74.7			141.4			249.9			273.4
Non-recurring investment in Boeing 787 (1)		—			3.1
EBITDA	$	272.1		$	47.4		$	370.1		$	217.9
Unusual charges & other non-recurring program costs (2)		6.9			7.2
Investment in Boeing 787 and sale of 787 business (1)		(216.9	)		6.0			(213.8	)		28.0
Pension & OPEB curtailment and non-cash expense (3)		—			9.6
Unusual charges & other non-recurring program costs (2)		4.0			1.7			14.6			5.7
Other (4)		3.2			1.0
(Gain) Loss on disposal of property, plant and equipment (3)		—			(1.5	)		1.9			(50.1	)
Adjusted EBITDA	$	60.7		$	68.2
Pension & OPEB curtailment and non-cash expense (4)		—			—			9.6			—
Other (5)		(0.6	)		1.3			2.7			3.7
Adjusted EBITDA	$	58.6		$	54.9		$	185.1		$	205.2

(1)		Investment in Boeing 787 and sale of 787 business—The Boeing 787 program, described elsewhere in this quarterly report, required substantial start-up costs in prior 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 were expensed in our financial statements over several periods due to their magnitude and timing. As a result of the sale of our 787 business to Boeing, we settled outstanding contractual matters with Boeing and recognized a loss on the sale of the related assets and liabilities of the business. Our credit agreement excludes all gains or losses recognized on the sale of assets and it excludes our significant start-up investment in the Boeing 787 program because it represented an unusual significant investment in a major new program that was not indicative of ongoing core operations. Accordingly, the impact of the settlement of contractual matters, loss on the sale of the assets and liabilities and the investment that was expensed during the period was excluded from the calculation of Adjusted EBITDA. Also included is our loss in our joint venture with Global Aeronautica. Our share of Global Aeronautica’s net loss was $0.6 million for the nine month period ended September 28, 2008, respectively. On June 10, 2008, we sold our equity interest in Global Aeronautica to Boeing and as a result our adjusted EBITDA calculations for the periods presented above were not impacted by this joint venture. For more information, please refer to Note 13 — Investment in Joint Venture to our interim unaudited condensed consolidated financial statements.
(2)		Unusual charges and other non-recurring program costs—Our senior credit agreement excludes our expenses for unusual events in our operations and non-recurring costs that are not indicative of ongoing core operating performance, and accordingly the charges that have been expensed during the period are added back to Adjusted EBITDA.


(1)		Investment in Boeing 787—The Boeing 787 program, described elsewhere in this quarterly report, required substantial start-up costs in prior 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 were expensed in our financial statements over several periods due to their magnitude and timing. Our credit agreement excludes our significant start-up investment in the Boeing 787 program because it represented an unusual significant investment in a major new program that was not indicative of ongoing core operations. Accordingly, the impact of the investment that was expensed during the period was excluded from the calculation of Adjusted EBITDA.

4537

		For the three month periods ended September 27, 2009 and September 28, 2008, we incurred $1.3 million and $1.7 million, respectively, of non-recurring costs primarily related to a facilities rationalization initiative. For the nine month periods ended September 27, 2009 and September 28, 2008, we incurred $8.2 million and $5.7 million, respectively, of non-recurring costs primarily related to a facilities rationalization initiative.
(2)		Unusual charges and other non-recurring program costs—Our senior credit agreement excludes our expenses for unusual events in our operations and non-recurring costs that are not indicative of ongoing core operating performance, and accordingly the charges that have been expensed during the period are added back to Adjusted EBITDA.
		Additionally, for the nine month period ended September 27, 2009, we reversed $(0.5) million in non-recurring program costs related to the strike at our Nashville, Tennessee facility because the actual strike-related costs incurred on those programs were lower than the original estimates. During the nine month period ended September 27, 2009, we also recognized $1.8 million of non-recurring costs related to the suspension of the Cessna Citation Columbus — Model 850 business jet program.
		For the three month periods ended March 28, 2010 and March 29, 2009, we incurred $3.9 million and $3.1 million, respectively, of non-recurring costs primarily related to a facilities rationalization initiative and $3.0 million and $0.3 million of non-recurring costs related to Information Systems implementation initiatives. Additionally, for the three month period ended March 29, 2009, we recognized an additional $3.8 million in non-recurring program costs related to the strike at our Nashville facility.
		During the three and nine month periods ended September 27, 2009, we recognized $2.7 million and $5.1 million, respectively, of non-recurring costs related to Information Systems implementation initiatives.
(3)		Pension and other post-retirement benefits curtailment and non-cash expense related to the Compensation — Retirement Benefits topic of the ASC—The credit agreement allows us to remove non-cash benefit expenses, so to the extent that the recorded expense exceeds the cash contributions to the plan it is reflected as an adjustment in calculating Adjusted EBITDA. During the three month period ended March 29, 2009, we recognized $9.6 million curtailment resulting from the new IAM collective bargaining agreement. For more information, please refer to Note 6 — Pension and Other Post-Retirement Benefits to our interim unaudited condensed consolidated financial statements.
(3)		(Gain) Loss on disposal of property, plant and equipment (“PP&E”) and other assets — On occasion, where the asset is no longer needed for our business and ceases to offer sufficient value or utility to justify our retention of the asset, we choose to sell PP&E at a loss. These losses reduce our results of operations for the period in which the asset was sold. Similarly, in some cases, we sell assets at an amount in excess of book value. Our credit agreement provides that those gains and losses are reflected as an adjustment in calculating Adjusted EBITDA.
(4)		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.
(4)		Pension and other post-retirement benefits curtailment and non-cash expense related to the Compensation — Retirement Benefits topic of the ASC—The credit agreement allows us to remove non-cash benefit expenses, so to the extent that the recorded expense exceeds the cash contributions to the plan it is reflected as an adjustment in calculating Adjusted EBITDA. During the nine month period ended September 27, 2009, we recognized $9.6 million curtailment resulting from the new IAM collective bargaining agreement. For more information, please refer to Note 6 — Pension and Other Post-Retirement Benefits to our interim unaudited condensed consolidated financial statements.
(5)		Other—Includes non-cash stock expense and related party management fees. Our credit agreement provides that these expenses are reflected as an adjustment in calculating Adjusted EBITDA.

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 US 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

46 • it does not reflect our significant interest expense, or the cash requirements necessary to service our indebtedness;

~~Table~~• it does not reflect cash requirements for the payment of ~~Contents~~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 US GAAP. Management compensates for these limitations by not viewing Adjusted EBITDA in isolation, and specifically by using other US 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

	For the Nine Months Ended
	For the Three Months Ended
	September 27,			September 28,
	March 28,			March 29,
	2009			2008			Change
	2010			2009			Change
	(in millions)
	($ in millions)
Net income (loss)	$	280.6		$	123.6		$	157.0
Net income	$	26.8		$	17.9		$	8.9
Non-cash items		9815.6			216.84			95(0.8	)
Changes in working capital		(~~249~~2.94	)		(~~273~~107.43	)		23104.59
Net cash provided by (used in) operating activities		~~129~~40.30			(~~147~~73.0	)		~~276~~113.30
Net cash provided by (used in) investing activities		261.0			13.3			247.7
Net cash used in investing activities		(6.7	)		(8.3	)		1.6
Net cash provided by (used in) financing activities		(326.6	)		182.7			(509.3	)
Net cash provided by financing activities		0.4			160.0			(159.6	)
Net increase (decrease) in cash and cash equivalents		63.7			49.0			14.7
Net increase in cash and cash equivalents		33.7			78.7			(45.0	)
Cash and cash equivalents at beginning of period		86116.70			7586.67			1129.13
Cash and cash equivalents at end of period	$	~~150~~149.47		$	~~124~~165.64		$	25(15.87	)

Net cash provided by operating activities for the ~~nine~~three month period ended ~~September~~March 2728, ~~2009 was~~2010 was $~~129~~40.30 million, an increase of $~~276~~113.30 million compared to cash used of $~~147~~73.0 million for the ~~same~~ same period in ~~2008~~2009. This change primarily resulted from the ~~settlement~~timing of ~~contractual~~customer ~~matters related~~payments tofor the ~~787~~ 747-8 program ~~partially~~and ~~offset~~the bytiming ~~increased~~of ~~cash~~milestone ~~requirements~~payments for the ~~747~~C-817 program.

Net cash ~~provided~~used byin investing activities for the ~~nine~~three months ended ~~September~~March 2728, ~~2009~~2010 was $~~261~~6.0 7 million, ana ~~increase~~decrease of $~~247~~1.76 million compared to net cash ~~provided~~used byin investing activities of $138.3 million for the same period in ~~2008~~2009. The change is ~~primarily~~ due to ~~the $289.2 million, net of fees, of proceeds received for the sale of the 787 business and $13.5 million~~ fewer capital expenditures in ~~2009 offset by the $55~~2010.~~0 million of proceeds from the sale of our equity interest~~ ~~in Global Aeronautica to Boeing in 2008.~~

Net cash ~~used~~provided inby financing activities for the ~~nine~~three months ended ~~September~~March 2728, ~~2009~~2010 was $~~326~~0.64 million, a change of $~~509~~159.36 million compared ~~with~~to cash provided of $~~182~~160.70 million for the same ~~period~~ period in ~~2008~~2009. This change primarily resulted from the ~~difference~~absence ~~between our $184.6 million~~ in ~~net~~ ~~proceeds~~2010 ~~from~~of the ~~Incremental Facility in 2008 offset by the use of~~ $~~355~~135.0 million ofin ~~proceeds~~revolver ~~from~~borrowings ~~the~~and ~~sale of~~ the ~~787 business to pay down outstanding term loans, the conversion of the~~ $7525.0 million conversion of the synthetic letter of credit facility to a term loan ~~and~~that ~~the~~occurred ~~restriction of $43.7 million as collateral for outstanding letters of credit~~ in 2009.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements as of ~~September~~March 2728, ~~2009~~2010.


ITEM 3.		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 ~~impacts~~impact the amount of interest we must pay on our variable-rate debt and our calculation of our liability for our defined benefit plans. 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~~39 currently due but, not yet billed, 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 experience and any specific customer collection issues that have been identified, we record a provision for estimated credit losses, as deemed appropriate.

Trade accounts receivable include amounts billed and currently due from customers, amounts currently due but, not yet billed, 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 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. However, we believe that raw material prices will remain stable through the remainder of ~~2009~~2010 and after that, experience increases that are in line with inflation. asAdditionally, we generally do not employ forward contracts or other financial ~~the~~instruments ~~global~~to ~~economy~~hedge ~~recovers~~commodity price risk.

~~Over~~ Our ~~the~~suppliers’ ~~past~~failure ~~few~~to ~~years,~~provide weacceptable ~~have~~raw ~~experienced~~materials, ~~price~~components, ~~increases~~kits ~~due~~and ~~to increased infrastructure~~subassemblies ~~demand~~would inadversely ~~China~~affect ~~and~~our ~~Russia~~production asschedules ~~well~~and ascontract ~~the~~profitability. ~~growing~~We ~~economy~~maintain ~~generally.~~an extensive ~~Although,~~qualification ~~the~~and ~~current~~performance ~~global economic~~surveillance ~~crisis~~system ~~has~~to ~~lessened~~control ~~that~~risk ~~pressure,~~associated ~~price~~with ~~increases~~such supply ~~may~~base ~~resume~~reliance. inWe ~~2010~~utilize ~~and~~a ~~beyond~~range ~~as economic~~of ~~conditions~~long-term ~~improve.~~agreements ~~Additionally,~~and westrategic ~~generally~~aggregated dosourcing to ~~not~~optimize ~~employ~~procurement ~~forward~~expense ~~contracts~~and orsupply ~~other financial~~risk ~~instruments~~related to ~~hedge~~our ~~commodity~~raw ~~price risk~~materials.

Our suppliers’ failure to provide acceptable raw materials, components, kits and subassemblies could adversely affect our production schedules and contract profitability. We maintain a qualification and performance surveillance system to control risk associated with such supply base reliance. We utilize a range of long-term agreements and strategic aggregated sourcing to optimize procurement expense and supply risk related to our raw materials.

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. We have no such agreements currently outstanding. 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 currently have no such agreements outstanding; however, in the future we may choose to manage market risk with respect to interest rates by entering into new hedge agreements.

4840

Management performs a sensitivity analysis to determine how market interest rate changes will affect the fair value of any 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 interest rate movements. We are exposed to cash flow risk due to changes in interest rates with respect to the entire $~~325~~320.24 million of long-term, variable rate debt outstanding under our senior credit facilities at ~~September~~March 2728, ~~2009~~2010. A one-percentage point increase in interest rates on our long-term variable-rate indebtedness would decrease our annual pre-tax income by approximately $3.32 million for the year ending December 31, ~~2009~~2010. While there was no debt outstanding under our Revolver at March 28, 2010, 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.

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, if the value of the U.S. dollar declines in relation to foreign currencies, our foreign suppliers would experience exchange-rate related losses and seek 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 would increase (decrease) our cost of sales by approximately $0.3 million for the year.


ITEM 4.		CONTROLS AND PROCEDURES

Evaluation of Our Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September~~March 2728, ~~2009~~2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4941

PART II. OTHER INFORMATION

ITEM 1. 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.


ITEM 1A.		RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2008~~2009.


ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the ~~nine~~three ~~month~~months ~~period~~ ended ~~September~~March 2728, ~~2009~~2010, we ~~issued~~did annot ~~aggregate~~issue ofany ~~18,810~~ shares of our common stock ~~or less than 1% of the aggregate amount of common stock outstanding, to our members of our Board of Directors in reliance on Section 4(2) of the Securities Act~~.

During the nine month period ended September 27, 2009, we issued an aggregate of 1,614 shares of our common stock in connection with the exercise of SARs originally granted to our employees in accordance with Rule 701 of the Securities Act.


ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5.		OTHER INFORMATION

~~None~~ Compensatory Arrangements of Certain Officers.

50 On May 6, 2010, and in connection with our prior entry into the merger agreement with Triumph, we entered into a Change in Control Severance Agreement with each of Kevin McGlinchey, our Vice President, General Counsel and Corporate Secretary and Ronald Muckley, our Vice President, Engineering and Materiel. In addition, on May 6, 2010, and in connection with the merger agreement, we entered into letter agreements relating to certain transaction bonus opportunities with each of Mr. McGlinchey and Mr. Muckley, as well as with Elmer Doty, our President and Chief Executive Officer, Keith Howe, our Vice President and Chief Financial Officer and Stephen Davis, our Vice President, Commercial Aerostructures.

Change in Control Severance Agreements

The Change in Control Severance Agreements provide that in the event Mr. McGlinchey’s or Mr. Muckley’s employment is terminated by us or our successor without Cause (as such term is defined in the agreements) or the executive resigns his employment for Good Reason (as such term is defined in the agreements), in each case upon or within one year following the closing of the merger with Triumph, the executive will be entitled to receive cash severance payments equal to (i) two times the executive’s annual base salary, payable in equal installments over the two year period following termination, plus (ii) two times the executive’s target annual bonus amount, payable in a lump sum shortly following termination. The Change in Control Severance Agreements will remain effective for a period of one year following the closing date of merger with Triumph. However, if the closing date of the merger with Triumph does not occur within six months of the execution of the agreements, they will terminate and be of no further force or effect.

Transaction Bonus Letters

The letter agreements we have entered into with each of Mr. Doty, Mr. Howe, Mr. Davis, Mr. McGlinchey and Mr. Muckley provide for the payment of a cash bonus to each of the executives within 5 days of the closing of the merger with Triumph in the following amounts: Mr. Doty: $500,000; Mr. Howe: $1,000,000; Mr. Davis: $100,000; Mr. McGlinchey: $1,000,000; and Mr. Muckley: $350,000. The bonuses are conditioned on the closing of the merger with Triumph and the executive’s execution of a general release of claims against us. In the event the merger agreement is terminated or amended prior to the closing date of the merger, we have reserved the right to revise or retract the executive’s right to receive the bonus.

The foregoing summaries are qualified in their entirety by reference to the full text of the Change in Control Severance Agreements and letter agreements, copies of which are attached as Exhibits 10.1 through 10.7 to this Quarterly Report on Form 10-Q and are incorporated by reference herein.


ITEM 6.		EXHIBITS

(a) Exhibits

(10.1)*		~~Asset~~Transaction ~~Purchase~~Bonus ~~Agreement~~letter agreement between Vought Aircraft Industries, Inc. and ~~Boeing~~Elmer ~~Commercial~~Doty ~~Airplanes Charleston South Carolina, Inc. (formerly known as BCACSC, Inc.), a wholly owned subsidiary of The Boeing Company,~~ dated ~~July~~May 6, ~~2009~~2010.
(10.2)*		Transaction Bonus letter agreement between Vought Aircraft Industries, Inc. and Keith Howe dated May 6, 2010.
(10.3)*		Transaction Bonus letter agreement between Vought Aircraft Industries, Inc. and Steve Davis dated May 6, 2010.
(10.4)*		Transaction Bonus letter agreement between Vought Aircraft Industries, Inc. and Kevin McGlinchey dated May 6, 2010.
(10.5)*		Transaction Bonus letter agreement between Vought Aircraft Industries, Inc. and Ronald Muckley dated May 6, 2010.
(10.6)*		Change in Control Severance agreement between Vought Aircraft Industries, Inc. and Kevin McGlinchey dated May 6, 2010.
(10.7)*		Change in Control Severance agreement between Vought Aircraft Industries, Inc. and Ronald Muckley dated May 6, 2010.
(31.1)*		Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
(31.2)*		Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
(32.1)*		Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
(32.2)*		Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.


*		Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Vought Aircraft Industries, Inc. (Registrant)
		Vought Aircraft Industries, Inc.
November 10, 2009 (Date)		/s/ KEITH HOWE Vice President and Chief Financial Officer
		(Registrant)
November 10, 2009 (Date)		/s/ MARK JOLLY Principal Accounting Officer
May 7, 2010		/s/ KEITH HOWE
(Date)		Vice President and Chief Financial Officer
May 7, 2010		/s/ MARK JOLLY
(Date)		Principal Accounting Officer

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