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

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

Commission File Number 001-33160

Spirit AeroSystems Holdings, Inc.

Delaware		20-2436320
(State of Incorporation)		(I.R.S. Employer
		Identification Number)

3801 South Oliver
Wichita, Kansas 67210
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code:
(316) 526-9000

     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 check mark whether the registrant has submitted electronically and posted to its corporate Web site, 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 þ

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting 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

     As of May 3, 2010, the registrant had outstanding 105,216,232 shares of class A common stock, $0.01 par value per share and 35,518,436 shares of class B common stock, $0.01 par value per share.

 

 

TABLE OF CONTENTS

				Page
		PART I- FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements (unaudited)			3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			42
Item 4.		Controls and Procedures			42
		PART II- OTHER INFORMATION
Item 1.		Legal Proceedings			42
Item 1A.		Risk Factors			42
Item 5.		Other Information			42
Item 6.		Exhibits			43
Signatures					44
EX-10.1: Amendment to the Spirit AeroSystems Holdings, Inc. Amended and Restated Executive Incentive Plan.
EX-31.1: Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
EX-31.2: Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
EX-32.1: Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
EX-32.2: Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Operations
(unaudited)

		For the Three				For the Three
		Months Ended				Months Ended
		April 1, 2010				April 2, 2009
		($ in millions, except per share data)
Net revenues		$	1,043.3			$	887.4
Operating costs and expenses
Cost of sales			901.1				737.3
Selling, general and administrative			39.3				38.4
Research and development			9.9				13.9
Total operating costs and expenses			950.3				789.6
Operating income			93.0				97.8
Interest expense and financing fee amortization			(14.0	)			(9.1	)
Interest income			0.1				2.6
Other income (expense), net			(5.5	)			1.5
Income before income taxes and equity in net income (loss) of affiliates			73.6				92.8
Income tax provision			(17.8	)			(30.2	)
Income before equity in net income (loss) of affiliates			55.8				62.6
Equity in net income (loss) of affiliates			(0.3	)			0.1
Net income		$	55.5			$	62.7
Earnings per share
Basic		$	0.40			$	0.46
Diluted		$	0.40			$	0.45

See notes to condensed consolidated financial statements (unaudited)

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Balance Sheets
(unaudited)

		April 1,				December 31,
		2010				2009
		($ in millions)
Current assets
Cash and cash equivalents		$	186.6			$	369.0
Accounts receivable, net			235.1				160.4
Inventory, net			2,286.2				2,206.9
Deferred tax asset-current			57.7				55.8
Other current assets			17.6				60.8
Total current assets			2,783.2				2,852.9
Property, plant and equipment, net			1,320.3				1,279.3
Pension assets			176.9				171.2
Deferred tax asset-non-current			88.1				95.8
Other assets			72.7				74.6
Total assets		$	4,441.2			$	4,473.8
Current liabilities
Accounts payable		$	411.5			$	441.3
Accrued expenses			182.8				165.5
Current portion of long-term debt			9.0				9.1
Advance payments, short-term			243.3				237.4
Deferred revenue, short-term			88.1				107.1
Other current liabilities			30.2				21.8
Total current liabilities			964.9				982.2
Long-term debt			593.9				591.1
Bonds payable, long-term			293.7				293.6
Advance payments, long-term			683.0				727.5
Deferred revenue and other deferred credits			39.1				46.0
Pension/OPEB obligation			64.3				62.6
Deferred grant income liability			130.1				129.3
Other liabilities			49.5				67.7
Shareholders’ equity
Preferred stock, par value $0.01, 10,000,000 shares authorized, no shares issued and outstanding			—				—
Common stock, Class A par value $0.01, 200,000,000 shares authorized, 105,212,099 and 105,064,561 shares issued and outstanding, respectively			1.0				1.0
Common stock, Class B par value $0.01, 150,000,000 shares authorized, 35,522,202 and 35,669,740 shares issued and outstanding, respectively			0.4				0.4
Additional paid-in capital			952.8				949.8
Accumulated other comprehensive loss			(69.3	)			(59.7	)
Retained earnings			737.3				681.8
Total shareholders’ equity			1,622.2				1,573.3
Noncontrolling interest			0.5				0.5
Total equity			1,622.7				1,573.8
Total liabilities and equity		$	4,441.2			$	4,473.8

See notes to condensed consolidated financial statements (unaudited)

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Cash Flows
(unaudited)

		For the Three				For the Three
		Months Ended				Months Ended
		April 1, 2010				April 2, 2009
		($ in millions)
Operating activities
Net income		$	55.5			$	62.7
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation expense			27.3				30.7
Amortization expense			3.1				2.2
Accretion of long-term receivable			—				(2.5	)
Employee stock compensation expense			2.3				2.8
(Gain) loss from foreign currency transactions			8.1				(0.7	)
Loss on disposition of assets			—				0.2
Deferred taxes			6.0				(2.2	)
Pension and other post retirement benefits, net			(2.3	)			0.4
Grant income			(0.5	)			(0.2	)
Equity in net income/loss of affiliates			0.3				(0.1	)
Changes in assets and liabilities
Accounts receivable			(78.9	)			(121.6	)
Inventory, net			(88.1	)			(235.4	)
Accounts payable and accrued liabilities			(11.8	)			134.2
Advance payments			(38.6	)			(24.1	)
Deferred revenue and other deferred credits			(24.2	)			(27.6	)
Income taxes payable			34.1				32.1
Other			(2.5	)			—
Net cash (used in) operating activities			(110.2	)			(149.1	)
Investing activities
Purchase of property, plant and equipment			(69.2	)			(54.4	)
Long-term receivable			—				28.8
Other			(0.8	)			0.3
Net cash (used in) investing activities			(70.0	)			(25.3	)
Financing activities
Proceeds from revolving credit facility			—				100.0
Payments on revolving credit facility			—				(25.0	)
Principal payments of debt			(2.0	)			(1.9	)
Proceeds from governmental grants			—				0.5
Net cash provided by (used in) financing activities			(2.0	)			73.6
Effect of exchange rate changes on cash and cash equivalents			(0.2	)			(0.1	)
Net (decrease) in cash and cash equivalents for the period			(182.4	)			(100.9	)
Cash and cash equivalents, beginning of period			369.0				216.5
Cash and cash equivalents, end of period		$	186.6			$	115.6
Supplemental information
Change in value of financial instruments		$	(5.5	)		$	1.2
Property acquired through capital leases		$	4.0			$	1.8

See notes to condensed consolidated financial statements (unaudited)

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

1. Organization and Basis of Interim Presentation

     Spirit AeroSystems Holdings, Inc. (“Holdings” or the “Company”) was incorporated in the state of Delaware on February 7, 2005, and commenced operations on June 17, 2005 through the acquisition of The Boeing Company’s (“Boeing”) operations in Wichita, Kansas, Tulsa, Oklahoma and McAlester, Oklahoma (the “Boeing Acquisition”). Holdings provides manufacturing and design expertise in a wide range of products and services for aircraft original equipment manufacturers and operators through its subsidiary, Spirit AeroSystems, Inc. (“Spirit”). Onex Corporation (“Onex”) of Toronto, Canada maintains majority voting power of Holdings. In April 2006, Holdings acquired the aerostructures division of BAE Systems (Operations) Limited (“BAE Aerostructures”), which builds structural components for Airbus, a division of the European Aeronautic Defense and Space NV (“Airbus”), Boeing and Hawker Beechcraft Corporation. Prior to this acquisition, Holdings sold essentially all of its production to Boeing. Since Spirit’s incorporation, the Company has expanded its customer base to include Sikorsky, Rolls-Royce, Gulfstream, Bombardier, Mitsubishi Aircraft Corporation, Southwest Airlines, and Continental Airlines. The Company has its headquarters in Wichita, Kansas, with manufacturing facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita, Kansas; and Subang, Malaysia, which produces composite panels for wing components. The Company expects to open another manufacturing facility in Kinston, North Carolina by mid-2010 that will initially produce components for the Airbus A350 XWB aircraft, and is building an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France, which is also expected to be operational by mid-2010.

     The Company is the majority participant in the Kansas Industrial Energy Supply Company (KIESC), a tenancy-in-common with other Wichita companies established to purchase natural gas.

     The Company participates in two joint ventures, Spirit-Progresstech LLC (“Spirit-Progresstech”) and Taikoo Spirit AeroSystems Composite Co. Ltd. (“TSACCL”), of which Spirit’s ownership interest is 50.0% and 31.5%, respectively. Spirit-Progresstech provides aerospace engineering support services and TSACCL was formed to develop and implement a state-of-the-art composite and metal bond component repair station in the Asia-Pacific region.

     The accompanying unaudited interim condensed consolidated financial statements include the Company’s financial statements and the financial statements of its majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Article 10 of Regulation S-X. Investments in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies (generally 20% to 50% ownership), including Spirit-Progresstech and TSACCL, are accounted for under the equity method. KIESC is fully consolidated as the Company owns 77.8% of the entity’s equity. All intercompany balances and transactions have been eliminated in consolidation. The Company’s U.K. subsidiary uses local currency, the British pound, as its functional currency. All other foreign subsidiaries use local currency as their functional currency with the exception of our Malaysian subsidiary, which uses the British pound, and our French subsidiary, which uses the U.S. dollar.

     As part of the monthly consolidation process, the functional currencies of our international subsidiaries are translated to U.S. dollars using the end-of-month translation rate for balance sheet accounts and average period currency translation rates for revenue and income accounts.

     In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations for the interim periods. The results of operations for the three months ended April 1, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. Certain reclassifications have been made to the prior year financial statements and notes to conform to the 2010 presentation. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in our 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2010.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

2. New Accounting Pronouncements

     In February 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASC) No. 2010-09, Subsequent Events (Topic 855) — Amendments to Certain Recognition and Disclosure Requirements, which stated, among other things, that filers with the SEC are not required to disclose the date through which an entity has evaluated subsequent events. The guidance was effective upon issuance and did not have a material impact on the Company’s consolidated financial statements.

     In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Instruments, which, among other things, expands disclosures on recurring fair value measurements, including activity, transfers and reconciliation of asset and liability classes, using Levels 1, 2 and 3 as defined. The guidance also clarifies existing disclosures on levels of disaggregation between such classes and input and valuation techniques used to measure recurring and nonrecurring Level 2 or Level 3 fair value measurements. This guidance was effective for the Company’s first quarter reporting of 2010, except for the requirement related to purchases, sales, issuances, and settlements in the roll forward activity of Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Adoption of FASB ASU 2010-06 did not have a material effect on the Company’s consolidated financial statements.

     In January 2010, FASB issued Accounting Standards Update No. 2010-02, Consolidation (Topic 810) — Accounting and Reporting for Decreases in Ownership of a Subsidiary — A Scope Clarification, which expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets. The guidance in this update is effective for periods beginning in the first interim or annual reporting period ending on or after December 15, 2009 and thus is effective for the Company’s first quarter reporting in 2010. Adoption of FASB ASU 2010-02 did not have a material impact on the Company’s consolidated financial statements.

     In December 2009, FASB issued Accounting Standards Update No. 2009-17, Consolidation (Topic 810) — Improvements to Financial Reporting by Enterprises with Variable Interest Entities to incorporate the changes made by FASB Statement No. 167 into the FASB Codification. The guidance in this update is effective for periods beginning after November 15, 2009 and thus is effective for the Company’s first quarter reporting in 2010. Adoption of FASB ASU 2009-17 did not have a material impact on the Company’s consolidated financial statements.

3. Accounts Receivable

     Accounts receivable, net consists of the following:

		April 1,				December 31,
		2010				2009
Trade receivables		$	224.0			$	151.7
Other			11.1				8.8
Total			235.1				160.5
Less: allowance for doubtful accounts			—				(0.1	)
Accounts receivable, net		$	235.1			$	160.4

4. Inventory

     Inventories are summarized as follows:

		April 1,				December 31,
		2010				2009
Raw materials		$	198.8			$	209.1
Work-in-process			1,606.1				1,526.0
Finished goods			33.7				30.8
Product inventory			1,838.6				1,765.9
Capitalized pre-production			447.6				441.0
Total inventory, net		$	2,286.2			$	2,206.9

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     Inventories are summarized by platform as follows:

		April 1,				December 31,
		2010				2009
B737		$	302.3			$	298.4
B747(1)			166.9				140.6
B767			20.4				18.5
B777			136.6				146.3
B787(2)			942.0				896.3
Airbus — All platforms			129.0				129.9
Gulfstream(3)			413.0				365.8
Rolls-Royce			59.0				55.5
Cessna Citation Columbus(4)			22.8				23.0
Aftermarket			29.5				29.3
Other in-process inventory related to long-term contracts and other programs(5)			64.7				103.3
Total inventory		$	2,286.2			$	2,206.9

     Capitalized pre-production costs include certain costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. These costs are typically recovered over a certain number of ship set deliveries and the Company believes these amounts will be fully recovered.

     The following is a roll forward of the capitalized pre-production included in the inventory balance at April 1, 2010:

Balance, December 31, 2009		$	441.0
Charges to costs and expenses			(2.4	)
Capitalized costs			9.0
Exchange rate			—
Total capitalized pre-production, April 1, 2010		$	447.6

     At April 1, 2010, work-in-process inventory included $538.7 of deferred production costs, which is comprised of $502.1 related to the B787, $46.7 on certain other contracts for the excess of production costs over the estimated average cost per ship set, and $(10.1) of credit balances for favorable variances on other contracts between actual costs incurred and the estimated average cost per ship set for units delivered under the current production blocks. These balances were $457.4, including $412.9 related to the B787 and $50.5 for certain other contracts, and $(6.0) of credit balances for favorable variances on other contracts between actual costs incurred and the estimated cost per ship set for units delivered under the current production blocks, respectively, at December 31, 2009. Recovery of excess over average deferred production costs is dependent on the number of ship sets ultimately sold and the ultimate selling prices and lower production costs associated with future production under these contract blocks. The Company believes these amounts will be fully recovered.

     Sales significantly under estimates or costs significantly over estimates could result in the realization of losses on these contracts in future periods.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The following is a roll forward of the deferred production included in the inventory balance at April 1, 2010:

Balance, December 31, 2009		$	457.4
Charges to costs and expenses			(64.1	)
Capitalized costs (1)			147.2
Exchange rate			(1.8	)
Total deferred production, April 1, 2010		$	538.7

     The following is a roll forward of the inventory obsolescence and surplus reserve included in the inventory balance at April 1, 2010:

Balance, December 31, 2009		$	15.1
Charges to costs and expenses			2.9
Write-offs, net of recoveries			0.1
Exchange rate			(0.1	)
Total inventory obsolescence and surplus reserve, April 1, 2010		$	18.0

5. Property, Plant and Equipment

     Property, plant and equipment, net consists of the following:

		April 1,				December 31,
		2010				2009
Land		$	16.8			$	17.7
Buildings (including improvements)			261.0				258.1
Machinery and equipment			643.0				624.8
Tooling			493.9				488.5
Construction in progress			357.5				316.3
Total			1,772.2				1,705.4
Less: accumulated depreciation			(451.9	)			(426.1	)
Property, plant and equipment, net		$	1,320.3			$	1,279.3

     In January 2010, we revised our accounting estimate related to the useful lives of certain assets resulting in extending the useful lives of these assets. The effect of this change was a decrease in depreciation charges to inventory of $3.0 for the quarterly period ended April 1, 2010, which will eventually flow through cost of sales following the process for contract accounting.

     Interest costs associated with construction-in-progress are capitalized until the assets are completed and ready for use. Capitalized interest was $2.6 and $1.8 for the three months ended April 1, 2010 and April 2, 2009, respectively. Repair and maintenance costs are expensed as incurred. The Company recognized $20.6 and $20.3 of repair and maintenance expense for the three months ended April 1, 2010 and April 2, 2009, respectively.

     We capitalize certain costs, such as software coding, installation and testing, that are incurred to purchase or to create and implement internal use computer software in accordance with FASB authoritative guidance pertaining to capitalization of costs for internal use software. Depreciation expense related to capitalized software was $3.8 for each of the three month periods ended April 1, 2010 and April 2, 2009.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

6. Other Assets

     Other assets are summarized as follows:

		April 1,				December 31,
		2010				2009
Intangible assets
Patents		$	2.0			$	2.0
Favorable leasehold interests			9.7				9.7
Customer relationships			26.3				28.1
Total intangible assets			38.0				39.8
Less: Accumulated amortization-patents			(0.8	)			(0.7	)
Accumulated amortization-favorable leasehold interest			(3.2	)			(3.1	)
Accumulated amortization-customer relationships			(13.1	)			(13.2	)
Intangible assets, net			20.9				22.8
Deferred financing costs, net			23.0				25.0
Fair value of derivative instruments			1.3				1.2
Goodwill — Europe			2.8				3.0
Equity in net assets of affiliates			4.5				3.9
Other			20.2				18.7
Total		$	72.7			$	74.6

     Deferred financing costs are recorded net of $23.4 and $21.4 of accumulated amortization at April 1, 2010 and December 31, 2009, respectively. In 2009, the Company incurred $10.2 of additional deferred financing costs in connection with the amendment to its revolving credit facility and $7.2 of additional deferred financing costs in connection with the issuance and registration of its long-term bonds.

     The Company recognized $1.0 and $0.9 of amortization expense of intangibles for the three months ended April 1, 2010 and April 2, 2009, respectively.

     The following is a roll forward of the carrying amount of goodwill at April 1, 2010:

Balance, December 31, 2009		$	3.0
Goodwill acquired			—
Exchange rate			(0.2	)
Total goodwill, April 1, 2010		$	2.8

7. Advance Payments and Deferred Revenue/Credits

     Advance payments. Advance payments are those payments made to Spirit by third parties in contemplation of the future performance of services, receipt of goods, incurrence of expenditures, or for other assets to be provided by Spirit on a contract and are repayable if such obligation is not satisfied. The amount of advance payments to be recovered against units expected to be delivered within a year is classified as a short-term liability, with the balance of the unliquidated advance payments classified as a long-term liability.

     Deferred revenue. Deferred revenue consists of nonrefundable amounts received in advance of revenue being earned for specific contractual deliverables. These payments are classified as deferred revenue when received and recognized as revenue as the production units are delivered.

     Advance payments and deferred revenue/credits are summarized by platform as follows:

		April 1,				December 31,
		2010				2009
B737		$	52.9			$	59.8
B747			2.8				3.0
B787			883.7				924.3
Airbus — All platforms			53.3				66.8
Gulfstream			42.5				42.5
Other			18.3				21.6
Total advance payments and deferred revenue/credits		$	1,053.5			$	1,118.0

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

8. Government Grants

     As part of our site construction projects in Kinston, North Carolina and Subang, Malaysia, we have the benefit of grants related to government funding of a portion of these buildings and other specific capital assets. Due to the terms of the lease agreements, we are deemed to own the construction projects. During the construction phase of the facilities, as amounts eligible under the terms of the grants are expended, we will record that spending as property, plant and equipment (construction-in-progress) and deferred grant income liability (less the present value of any future minimum lease payments). Upon completion of the facilities, the deferred grant income will be amortized as a reduction to production cost. This amortization is based on specific terms associated with the different grants. In North Carolina, the deferred grant income related to the capital investment criteria, which represents half of the grant, will be amortized over the lives of the assets purchased to satisfy the capital investment performance criteria. The other half of the deferred grant income will be amortized over a ten-year period in a manner consistent with the job performance criteria. In Malaysia, the deferred grant income will be amortized based on the lives of the eligible assets constructed with the grant funds as there are no performance criteria. As of April 1, 2010, we recorded $130.1 within property, plant and equipment and deferred grant income liability related to the use of grant funds in North Carolina and Malaysia. Of this amount, $129.1 in property, plant and equipment represents transactions where funds have been paid directly to contractors by an agency of the Malaysian Government in the case of Malaysia, and by the escrow agent in North Carolina, so they are not reflected on the Statement of Cash Flows.

     Deferred grant income liability, net consists of the following:

		April 1,				December 31,
		2010				2009
Beginning Balance		$	129.3			$	38.8
Grant liability recorded			3.6				89.2
Grant income recognized			(0.5	)			(1.9	)
Exchange rate			(2.3	)			3.2
Total deferred grant income liability		$	130.1			$	129.3

     The asset related to the deferred grant income, net consists of the following:

		April 1,				December 31,
		2010				2009
Beginning Balance		$	129.3			$	38.8
Amount paid by Spirit (reimbursed by third parties)			—				0.7
Amount paid by agency/escrow agent			3.6				88.5
Depreciation offset to amortization of grant income			(0.5	)			(1.9	)
Exchange rate			(2.3	)			3.2
Total asset value related to deferred grant income		$	130.1			$	129.3

9. Derivative and Hedging Activities

     Effective as of the first quarter of 2009, we adopted FASB’s authoritative guidance on derivative and hedging disclosures, which expands the quarterly and annual disclosure requirements about our derivative instruments and hedging activities. The Company enters into interest rate swap agreements to reduce its exposure to the variable rate portion of its long-term debt. The Company also enters into foreign currency hedge contracts to reduce the risks associated with the changes in foreign exchange rates on sales and cost of sales denominated in currencies other than the entities’ functional currency. Any gains or losses on the hedges are included in earnings when the underlying transaction that was hedged occurs. The Company does not use these contracts for speculative or trading purposes. On the inception date, the Company designates a derivative contract as either a fair value or cash flow hedge in accordance with FASB guidance on accounting for derivatives and hedges and links the contract to either a specific asset or liability on the balance sheet, or to forecasted commitments or transactions. The Company formally documents the hedging relationship between the hedging instrument and the hedged item as well as its risk-management objective and strategy for undertaking the hedge, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method of measuring ineffectiveness. The Company also formally assesses, both at the hedge’s inception and on a quarterly basis, whether the derivative item is effective in offsetting changes in fair value or cash flows.

     Changes in the fair value of derivative instruments considered to be effective hedges are reported in accumulated other comprehensive income, net of tax. In the case of interest rate swaps, amounts are subsequently reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings. If the actual interest rate on the fixed rate portion of debt is less than LIBOR, the monies received are recorded as an offset to interest expense. Conversely, if the actual interest rate on the fixed rate portion of debt is greater than LIBOR, then the Company pays the difference, which is recorded to interest expense. Reclassifications of the amounts related to the foreign currency hedge contracts are recorded to earnings in the same period in which the underlying transaction occurs. Any change in the fair value resulting from ineffectiveness is immediately recognized in earnings.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has applied these valuation techniques for the three months ended April 1, 2010 and believes it has obtained the most accurate information available for the types of derivative contracts it holds. The Company attempts to manage exposure to counterparty credit risk by only entering into agreements with major financial institutions which are expected to be able to fully perform under the terms of the agreement.

     The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item; the derivative expires or is sold, terminated or exercised; the derivative is no longer designated as a hedging instrument because it is unlikely that a forecasted transaction will occur; or management determines that the designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company continues to carry the derivative instrument on the balance sheet at its fair value with subsequent changes in fair value included in earnings, and gains and losses that were accumulated in other comprehensive income are recognized immediately in earnings.

     To the extent that derivative instruments do not qualify for hedge accounting treatment, the changes in fair market value of the instruments are reported in the results of operations for the current period.

     The Company enters into master netting arrangements for its derivatives to mitigate the credit risk of financial instruments.

     The Company’s hedge agreements do not include provisions requiring collateral. The Company has certain derivative instruments covered by master netting arrangements whereby, in the event of a default as defined by the senior secured credit facility or termination event, the non-defaulting party has the right to offset any amounts payable against any obligation of the defaulting party under the same counterparty agreement.

     The entire asset classes of the Company, including hedges, are pledged as collateral for both the term loan and the revolving credit facility under the Company’s senior secured credit facility (see Note 11).

Interest Rate Swaps

     As required under our senior secured credit facility (see Note 11), we enter into floating-to-fixed interest rate swap agreements periodically. As of April 1, 2010, the interest swap agreements had notional amounts totaling $500.0.

														Term B				Fair Value,
						Variable				Fixed				Fixed				April 1,
Notional Amount		Expires				Rate				Rate(1)				Rate(2)				2010
$100		July 2010				LIBOR					4.37	%			6.12	%		$	(2.0	)
$100		July 2011				LIBOR					4.27	%			6.02	%		$	(5.3	)
$300		July 2011				LIBOR					3.23	%			4.98	%		$	(11.4	)
														Total				$	(18.7	)

     The purpose of entering into these swaps was to reduce the Company’s exposure to variable interest rates. The interest rate swaps settle on a quarterly basis when interest payments are made. These settlements occur through the maturity date. The interest rate swaps are being accounted for as cash flow hedges in accordance with FASB authoritative guidance. The fair value of the interest rate swaps was a liability (unrealized loss) of $(18.7) and $(20.3) at April 1, 2010 and December 31, 2009, respectively.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

Foreign Currency Forward Contracts

     Spirit’s wholly-owned subsidiary Spirit AeroSystems (Europe) Limited (“Spirit Europe”) has certain sales, expenses, assets and liabilities that are denominated in British pounds sterling. However, certain sales of Spirit Europe’s products and some procurement costs are denominated in U.S. dollars and Euros. As a consequence, movements in exchange rates could cause net sales and our expenses to fluctuate, affecting our profitability and cash flows. In addition, even when revenues and expenses are matched, we must translate British pound sterling denominated results of operations, assets and liabilities for our foreign subsidiaries to U.S. dollars in our consolidated financial statements. Consequently, increases and decreases in the value of the U.S. dollar as compared to the British pound sterling will affect our reported results of operations and the value of our assets and liabilities on our consolidated balance sheet, even if our results of operations or the value of those assets and liabilities has not changed in its original currency. These transactions could significantly affect the comparability of our results between financial periods and/or result in significant changes to the carrying value of our assets, liabilities and shareholders’ equity.

     We use foreign currency hedge contracts to reduce our exposure to currency exchange rate fluctuations. The objective of these contracts is to minimize the impact of currency exchange rate movements on our operating results. The hedges are being accounted for as cash flow hedges in accordance with FASB authoritative guidance. Gains and losses from these cash flow hedges are recorded to other comprehensive income until the underlying transaction for which the hedge was placed occurs and then the value in other comprehensive income is reclassified to earnings. In the third quarter of 2009, we entered into new hedging contracts to hedge the U.S. dollar revenue from certain customers. The fair value of the forward contracts was a net liability of $(4.3) and $(1.8) as of April 1, 2010 and December 31, 2009, respectively.

Notional Amount

		April 1, 2010								December 31, 2009
						Foreign								Foreign
		USD				Currency				USD				Currency
Year		Buy/(Sell)(1)				Buy/(Sell)(1)				Buy/(Sell)(1)				Buy/(Sell)(1)
2010		$	(33.4	)		£	20.2			$	(37.8	)		£	22.8
2011			(16.7	)			10.0				(16.7	)			10.0
2012-2013			(2.8	)			1.6				(2.8	)			1.6
		$	(52.9	)		£	31.8			$	(57.3	)		£	34.4

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The following table summarizes the Company’s fair value of outstanding derivatives at April 1, 2010 and December 31, 2009:

		Fair Values of Derivative Instruments
		Other Asset Derivatives								Other Liability Derivatives
		April 1, 2010				December 31, 2009				April 1, 2010				December 31, 2009
Derivatives designated as hedging instruments
Interest rate swaps
Current		$	—			$	—			$	16.3			$	16.9
Non-current			—				—				2.4				3.4
Foreign currency hedge contracts
Current			—				—				2.7				0.9
Non-current			—				—				1.3				0.6
Total derivatives designated as hedging instruments			—				—				22.7				21.8
Derivatives not designated as hedging instruments
Foreign currency hedge contracts
Current			0.8				0.4				0.8				0.5
Non-current			1.2				1.2				1.5				1.4
Total derivatives not designated as hedging instruments			2.0				1.6				2.3				1.9
Total derivatives		$	2.0			$	1.6			$	25.0			$	23.7

     The impact on other comprehensive income (OCI) and earnings from cash flow hedges for the three months ended April 1, 2010 and April 2, 2009 was as follows:

																						Location of
										Location of												(Gain) or Loss
										(Gain) or												Recognized in				Amount of (Gain) or Loss
										Loss				Amount of (Gain) or Loss								Income on				Recognized in Income on
		Amount of Loss								Reclassified				Reclassified from								Derivative				Derivative (Ineffective
		Recognized in OCI, net of								from				Accumulated OCI into								(Ineffective				Portion and Amount
		tax, on Derivative								Accumulated				Income								Portion and				Excluded from
		(Effective Portion)								OCI into				(Effective Portion)								Amount				Effectiveness Testing)
Derivatives in		For the Three Months Ended								Income				For the Three Months Ended								Excluded from				For the Three Months Ended
Cash Flow Hedging		April 1,				April 2,				(Effective				April 1,				April 2,				Effectiveness				April 1,				April 2,
Relationships		2010				2009				Portion)				2010				2009				Testing)				2010				2009
Interest rate swaps		$	(1.7	)		$	(1.4	)		Interest expense				$	4.3			$	3.3			Other (income)/ expense				$	—			$	—
Foreign currency hedge contracts			(1.9	)			0.2			Sales/Revenue					0.3				1.4			Other (income)/ expense					—				—
Total		$	(3.6	)		$	(1.2	)						$	4.6			$	4.7							$	—			$	—

     The impact on earnings from foreign currency hedge contracts that do not qualify as cash flow hedges was not material for the three months ended April 1, 2010 and April 2, 2009.

     Gains and losses accumulated in OCI for interest rate swaps are reclassified into earnings as each interest rate period is reset. During the next twelve months, the Company estimates that a loss of $(10.1) will be reclassified from OCI, net of tax, as a charge to earnings from interest rate swaps. Interest rate swaps are placed for a period of time not to exceed the maturity of the Company’s senior secured term loan. None of the gains or losses reclassified to earnings were attributable to the discontinuance of cash flow hedges.

     Gains and losses accumulated in OCI for foreign currency hedge contracts are reclassified into earnings as the underlying transactions for which the contracts were entered into are realized. During the next twelve months, the Company estimates that a loss of $(1.8) will be reclassified from OCI, net of tax. None of the gains or losses reclassified to earnings are attributable to the discontinuance of cash flow hedges.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

10. Fair Value Measurements

     FASB’s authoritative guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance discloses three levels of inputs that may be used to measure fair value:

	Level 1		Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.
	Level 2		Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Observable inputs, such as current and forward interest rates and foreign exchange rates, are used in determining the fair value of our interest rate swaps and foreign currency hedge contracts.
	Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets and liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

		Fair Value Measurements
														At April 1, 2010
														Using
														Quoted Prices in				Significant
		April 1, 2010												Active Markets				Other				Significant
		Total Carrying				Assets				Liabilities				for Identical				Observable				Unobservable
		Amount in				Measured at				Measured at				Assets				Inputs				Inputs
Description		Balance Sheet				Fair Value				Fair Value				(Level 1)				(Level 2)				(Level 3)
Money Market Fund		$	155.1			$	155.1			$	—			$	155.1			$	—			$	—
Interest Rate Swaps		$	(18.7	)		$	—			$	(18.7	)		$	—			$	(18.7	)		$	—
Foreign Currency Hedge Contracts		$	(4.3	)		$	2.0			$	(6.3	)		$	—			$	(4.3	)		$	—

		Fair Value Measurements
														At December 31, 2009
														Using
														Quoted Prices in				Significant
		December 31, 2009												Active Markets				Other				Significant
		Total Carrying				Assets				Liabilities				for Identical				Observable				Unobservable
		Amount in				Measured at				Measured at				Assets				Inputs				Inputs
Description		Balance Sheet				Fair Value				Fair Value				(Level 1)				(Level 2)				(Level 3)
Money Market Fund		$	240.0			$	240.0			$	—			$	240.0			$	—			$	—
Interest Rate Swaps		$	(20.3	)		$	—			$	(20.3	)		$	—			$	(20.3	)		$	—
Foreign Currency Hedge Contracts		$	(1.8	)		$	1.6			$	(3.4	)		$	—			$	(1.8	)		$	—

     The fair value of the interest rate swaps and foreign currency hedge contracts are determined by using mark-to-market reports generated for each derivative and evaluated for counterparty risk. In the case of the interest rate swaps, the Company evaluated its counterparty risk using credit default swaps, historical default rates and credit spreads.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The Company’s long-term debt consists of obligations with variable interest rates and senior unsecured notes. The estimated fair value of our debt obligations is based on the quoted market prices for such obligations. The following table presents the carrying amount and estimated fair value of long-term debt in accordance with FASB authoritative guidance on fair value measurements related to disclosures of financial instruments:

		April 1, 2010								December 31, 2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Senior secured term loan (including current portion)		$	570.6			$	564.5			$	572.0			$	549.9
Senior unsecured notes			293.7				304.5				293.6				289.5
Malaysian loan			17.1				16.8				16.3				16.1
		$	881.4			$	885.8			$	881.9			$	855.5

11. Debt

Credit Agreement

     In connection with the Boeing Acquisition, the Company executed an $875.0 credit agreement that consisted of a $700.0 senior secured term loan used to fund the acquisition and pay all related fees and expenses associated with the acquisition and the credit agreement, and a $175.0 senior secured revolving credit facility. In March 2008, the revolving credit facility was increased to $650.0. In June 2009, the Company entered into amendment No. 2 to its senior secured credit facility, whereby borrowing capacity under the revolving credit facility was increased from $650.0 to $729.0. The maturity date with respect to $408.8 of the revolver was extended to June 30, 2012. The maturity date for the remaining $320.2 of the revolver will continue to be June 30, 2010. Commitment fees associated with the portion of the revolver that was extended to June 30, 2012 increased from a rate of 50 basis points on the undrawn amount to 75 basis points. Commitment fees associated with the undrawn portion of the revolver that terminates on June 30, 2010 continue to be 50 basis points. The applicable margin payable on revolving loans with respect to which the underlying revolving credit commitment has been extended to June 30, 2012 (“Extending Revolving Loans”) has been increased. The applicable margin continues to be determined in accordance with a performance grid based on total leverage ratio and, for Extending Revolving Loans, ranges from 3.00% to 4.00% per annum in the case of LIBOR advances and from 2.00% to 3.00% per annum in the case of alternate base rate advances. The applicable margin payable with respect to loans that are Non-Extending Revolving Loans continues to range from 2.25% to 2.75% per annum in the case of LIBOR advances and from 1.25% to 1.75% per annum in the case of alternate base rate advances. At April 1, 2010, the Company’s total leverage ratio was 2.04:1.00 resulting in margins of 3.5% and 2.5% per annum on LIBOR borrowings on Extending Revolving Loans and Non-Extending Revolving Loans, respectively, and margins of 2.5% and 1.5% per annum on alternative base rate borrowings on Extending Revolving Loans and Non-Extending Revolving Loans, respectively. The entire asset classes of the Company, including inventory and property, plant and equipment, are pledged as collateral for both the term loan and the revolving credit facility. As of April 1, 2010 and December 31, 2009, the outstanding balance of the term loan was $570.6 and $572.0, respectively. No amounts were outstanding under the revolving credit facility at either April 1, 2010 or December 31, 2009. As of April 1, 2010, there were $19.0 of letters of credit outstanding.

     The amended credit agreement contains customary affirmative and negative covenants, including restrictions on indebtedness, liens, type of business, acquisitions, investments, sales or transfers of assets, payments of dividends, transactions with affiliates, change in control and other matters customarily restricted in such agreements. The amended credit agreement contains a revised Covenant Leverage Ratio and a new Interest Coverage Ratio. The Covenant Leverage Ratio (as defined in the credit agreement) financial covenant was modified to provide that the maximum Covenant Leverage Ratio as of the last day of any fiscal quarter through the final maturity date of the credit agreement shall not exceed 2.5:1 through maturity. The new Interest Coverage Ratio (as defined in the credit agreement) financial covenant was added to provide that the Interest Coverage Ratio as of the last day of any fiscal quarter through the final maturity date of the credit agreement shall not be less than 4:1. The Financial Covenant ratios are calculated each quarter in accordance with the credit agreement. Failure to meet these financial covenants would be an event of default under the senior secured credit facility. As of April 1, 2010, we were and expect to continue to be in full compliance with all covenants contained within our credit agreement.

Long-Term Bond Debt

     On September 30, 2009, Spirit issued $300.0 of 7¹/2% Senior Notes due October 1, 2017 (the “Notes”), with interest payable semi-annually, in cash, in arrears on April 1 and October 1 of each year, beginning April 1, 2010. Prior to October 1, 2012, Spirit may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at a redemption price of 107.5% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the redemption date. At any time prior to October 1, 2013, Spirit may redeem the Notes, in whole or in part, at a redemption price ratio equal to 100% of the principal amount of the Notes redeemed,

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

plus a make-whole premium, plus any accrued and unpaid interest and additional interest, if any, to the redemption date. Spirit may redeem the Notes at its option, in whole or in part, at any time on or after October 1 of the years set forth below, upon not less than 30 nor more than 60 days’ notice at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forth below, plus any accrued and unpaid interest and additional interest, if any, to the redemption date.

Year		Price
2013			103.750	%
2014			101.875	%
2015 and thereafter			100.000	%

     If a change of control of Spirit occurs, each holder of the Notes shall have the right to require that Spirit repurchase all or a portion of such holder’s Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of repurchase.

     The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Holdings and Spirit’s existing and future domestic subsidiaries that guarantee Spirit’s obligations under Spirit’s senior secured credit facility. As of April 1, 2010 and December 31, 2009, the outstanding balance of the Notes was $293.7 and $293.6, respectively.

     The Notes are Spirit’s senior unsecured obligations and rank equal in right of payment with all of Spirit’s and the guarantors’ other existing and future senior indebtedness. The Notes are senior in right of payment to all of Spirit’s and the guarantors’ existing and future indebtedness that is by its terms expressly subordinated to the Notes and the guarantees. The Notes are effectively subordinated in right of payment to all of Spirit’s and the guarantors’ secured indebtedness to the extent of the value of the assets securing such indebtedness, including obligations under Spirit’s senior secured credit facility, which is secured by substantially all of the assets of Spirit and the guarantors.

     The Indenture contains covenants that limit Spirit’s, Holdings and certain of Spirit’s subsidiaries’ ability, subject to certain exceptions and qualifications, to (i) incur additional debt; (ii) pay dividends, redeem stock or make other distributions, (iii) repurchase equity securities, prepay subordinated debt or make certain investments, (iv) make other restricted payments and investments, (v) issue certain disqualified stock and preferred stock, (vi) create liens without granting equal and ratable liens to the holders of the Notes, (vii) enter into sale and leaseback transactions, (viii) merge, consolidate or transfer or dispose of substantially all of their assets, (ix) enter into certain types of transactions with affiliates and (x) sell assets. These covenants are subject to a number of qualifications and limitations. In addition, the Indenture limits Spirit’s, Holdings’ and the guarantor subsidiaries’ ability to engage in businesses other than businesses in which such companies are engaged on the date of issuance of the Notes and related businesses.

     In addition, the Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among other things: failure to make payments on the Notes when due, failure to comply with covenants under the Indenture, failure to pay certain other indebtedness or acceleration of maturity of certain other indebtedness, failure to satisfy or discharge certain final judgments and occurrence of certain bankruptcy events. If an event of default occurs, the trustee or holders of at least 25% of the aggregate principal amount of the then outstanding Notes may, among other things, declare the entire outstanding balance of principal and interest on all outstanding Notes to be immediately due and payable. If an event of default involving certain bankruptcy events occurs, payment of principal and interest on the Notes will be accelerated without the necessity of notice or any other action on the part of any person.

     At the time of the offering, Spirit repaid $200.0 of borrowings under its existing senior secured revolving credit facility using a portion of the proceeds of the offering of the Notes, which increased the availability under the revolving credit facility to $729.0, reduced by $19.0 of outstanding letters of credit as of April 1, 2010.

Malaysian Term Loan

     On June 2, 2008, the Company’s wholly-owned subsidiary, Spirit AeroSystems Malaysia SDN BHD (“Spirit Malaysia”) entered into a Facility Agreement (“Malaysia Facility Agreement”) for a term loan facility of Ringgit Malaysia (RM) 69.2 (approximately USD $20.0) (the “Malaysia Facility”), with EXIM Bank to be used towards partial financing of plant and equipment (including the acquisition of production equipment), materials, inventory and administrative costs associated with the establishment of an aerospace-related composite component assembly plant, plus potential additional work packages in Malaysia at the Malaysia International Aerospace Center in Subang, Selangor, Malaysia (the “Project”). Funds for the Project will be available on a drawdown basis over a twenty-four month period from the date of the Malaysia Facility Agreement. Spirit Malaysia is scheduled to make periodic draws against the Malaysia Facility.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The indebtedness repayment requires quarterly principal installments of RM 3.3 (approximately $1.0) from September 2011 through May 2017, or until the entire loan principal has been repaid.

     Outstanding amounts drawn under the Malaysia Facility are subject to a fixed interest rate of 3.5% per annum, payable quarterly.

France Factory

     On July 17, 2009, the Company’s indirect wholly-owned subsidiary, Spirit AeroSystems France SARL (“Spirit France”) entered into a capital lease agreement for €9.0 (approximately $13.1), with BNP Paribas Bank (“BNP”) to be used towards the construction of an aerospace-related component assembly plant in Saint-Nazaire, France (the “Saint-Nazaire Project”). The Company will act as BNP’s construction agent during the construction phase of the Saint-Nazaire Project and lease payments will begin upon completion of construction, which is expected during the third quarter of 2010.

     The capital lease repayment is variable based on the three-month Euribor rate plus 2.2% and is paid quarterly. Payments are expected to be approximately €0.2 (approximately $0.3) quarterly from July 2010 through April 2025 with a residual amount of €0.9 (approximately $1.3) to be paid at the conclusion of the capital lease agreement.

     Outstanding amounts expended by BNP under the capital lease agreement are capitalized as construction-in-progress on the Company’s books with a corresponding amount of construction debt. As of the first quarter of 2010, the Company has recorded $9.7 in construction debt.

     Total debt shown on the balance sheet is comprised of the following:

		April 1,				December 31,
		2010				2009
Senior secured debt (short and long-term)		$	570.6			$	572.0
Long-term bond debt			293.7				293.6
Malaysian term loan			17.1				16.3
Present value of capital lease obligations			14.1				10.3
Other			1.1				1.6
Total		$	896.6			$	893.8

12. Pension and Other Post-Retirement Benefits

		Defined Benefit Plans
		Three Months				Three Months
		Ended				Ended
		April 1, 2010				April 2, 2009
Components of Net Periodic Pension Income
Service cost		$	1.6			$	1.4
Interest cost			10.4				9.7
Expected return on plan assets			(15.9	)			(13.9	)
Amortization of prior service cost			—				—
Amortization of net (gain)/loss			(0.1	)			2.2
Curtailment/settlement			—				—
Net periodic pension income		$	(4.0	)		$	(0.6	)

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

		Other Benefits
		Three Months				Three Months
		Ended				Ended
		April 1, 2010				April 2, 2009
Components of Net Periodic Benefit Cost
Service cost		$	0.7			$	0.3
Interest cost			0.9				0.7
Expected return on plan assets			—				—
Amortization of prior service cost			—				—
Amortization of net (gain)/loss			0.2				—
Curtailment/settlement			—				—
Net periodic benefit cost		$	1.8			$	1.0

Employer Contributions

     We expect to contribute zero dollars to the U.S. qualified pension plan and less than $0.3 to both the Supplemental Executive Retirement Plan (SERP) and post-retirement medical plans in 2010. Our projected contributions to the U.K. pension plan for 2010 were $7.2, of which $1.8 was contributed by the end of the first quarter of 2010. We anticipate contributing the additional $5.4 to the U.K. pension plan during the remainder of 2010. The entire amount contributed and the projected contributions can vary based on exchange rate fluctuations.

13. Stock Compensation

     The Company has established various stock compensation plans which include restricted share grants and stock purchase plans. Compensation values are based on the value of Holdings’ common stock at the grant date. The common stock value is added to equity and charged to period expense or included in inventory and cost of sales.

     For the three months ended April 1, 2010, the Company recognized a total of $2.3 of stock compensation expense, net of forfeitures, as compared to $2.8 of stock compensation expense, net of forfeitures, recognized for the three months ended April 2, 2009. Of the total $2.3 of stock compensation expense recorded for the three months ended April 1, 2010, $2.2 was recorded as expense in selling, general and administrative expense while the remaining $0.1 was capitalized in inventory and is recognized through cost of sales consistent with the accounting methods we follow in accordance with FASB authoritative guidance related to revenue recognition for construction-type and production-type contracts. Of the $2.8 of stock compensation expense recorded for the three months ended April 2, 2009, $2.7 was recorded as expense in selling, general and administrative expense while the remaining $0.1 was capitalized in inventory in accordance with the guidance.

     In the first quarter of 2010, 277,662 class A shares granted under the Short-Term Incentive Plan with a grant date fair value of $3.2 vested.

     Due to the occurrence during the first quarter of 2010 of the four-year anniversaries of the Executive Incentive Plan grant dates for certain participants in the plan, those participants acquired an incremental 8.81% interest in the shares granted to them under the plan, such that their total cumulative interest in the shares granted to them would be 80%. The total number of additional shares in which an interest was acquired in the first quarter of 2010 was 32,412. The participants have a nonforfeitable interest in those shares; however, as per the plan document, the shares remain restricted until the earlier of a liquidity event or June 16, 2015. Participants do not have the unrestricted rights of stockholders as long as the shares remain restricted.

14. Income Taxes

     The process for calculating our income tax expense involves estimating actual current taxes due plus assessing temporary differences arising from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities. Deferred tax assets are periodically evaluated to determine their recoverability. The total net deferred tax assets as of April 1, 2010 and December 31, 2009 were $131.9 and $136.0, respectively.

     We file income tax returns in all jurisdictions in which we operate. We established reserves to provide for additional income taxes that may be due in future years as these previously filed tax returns are audited. These reserves have been established based on management’s assessment as to the potential exposure attributable to permanent differences and associated interest. All tax reserves are analyzed quarterly and adjustments made as events occur that warrant modification.

     In general, the Company records income tax expense each quarter based on its best estimate as to the full year’s effective tax rate. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that give rise to discrete recognition include finalizing amounts in income tax returns filed, finalizing audit examinations for open tax years, and expiration of a statute of limitations.

     The 24.2% effective tax rate for the three months ended April 1, 2010 differs from the 32.5% effective tax rate for the same period in 2009 primarily due to settling the 2005 and 2006 Internal Revenue Service examination, partially offset by the U.S. Research and Experimentation Tax Credit (R&E Tax Credit) expiring on December 31, 2009.

     The Company expects no material change in its recorded unrecognized tax benefit liability in the next 12 months. We are not currently under examination in any tax jurisdictions.

15. Equity

Earnings per Share Calculation

     Basic earnings per share represents the income available to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted earnings per share represents the income available to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period.

     Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of the Company’s outstanding common stock are entitled to any dividend declared by the Board of Directors out of funds legally available for this purpose. No dividend may be declared on the class A or class B common stock unless at the same time an equal dividend is paid on every share of class A and class B common stock. Dividends paid in shares of the Company’s common stock must be paid, with respect to a particular class of common stock, in shares of that class. The Company does not intend to pay cash dividends on its common stock. In addition, the terms of the Company’s current financing agreements preclude it from paying any cash dividends on its common stock.

     In June 2008, the FASB issued authoritative guidance determining whether instruments granted in shared-based payment transactions are participating securities. Under the FASB guidance, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common shareholders. The Company’s service-based restricted stock awards contain non-forfeitable rights to dividends and are considered participating securities. Upon adoption of this standard, the service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for the three-month periods ended April 1, 2010 and April 2, 2009.

     The following table sets forth the computation of basic and diluted earnings per share:

		For the Three Months Ended
		April 1, 2010												April 2, 2009
										Per Share												Per Share
		Income				Shares				Amount				Income				Shares				Amount
						(in millions)												(in millions)
Basic EPS
Income available to common shareholders		$	54.9				137.3			$	0.40			$	62.4				137.1			$	0.46
Income allocated to participating securities			0.6				1.5								0.3				0.7
Net income		$	55.5											$	62.7
Diluted potential common shares							1.6												2.1
Diluted EPS
Net Income		$	55.5				140.4			$	0.40			$	62.7				139.9			$	0.45

     The balance of outstanding common shares presented in the consolidated statement of shareholders’ equity was 140.7 million and 140.2 million at April 1, 2010 and April 2, 2009, respectively. Included in the outstanding common shares were 3.0 million of issued but unvested shares at April 1, 2010 and April 2, 2009, which are excluded from the basic EPS calculation.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

Comprehensive Income

     Components of comprehensive income, net of tax, consist of the following:

		For the Three Months Ended
		April 1,				April 2,
		2010				2009
Net income		$	55.5			$	62.7
Comprehensive income (loss), net of tax
Unrealized gain (loss) on investments
Unrealized gain (loss) on interest rate swaps, net of tax(1)			(1.7	)			(1.4	)
Pension, SERP, and Retiree Medical adjustments, net of tax(2)			(0.1	)			(1.2	)
Unrealized gain (loss) on foreign currency hedge contracts, net of tax(3)			(1.9	)			0.2
Reclassification of realized (gain) loss on hedging instruments into net income, net of tax(4)			2.9				3.0
Foreign currency translation adjustments			(8.7	)			0.4
Total comprehensive income		$	46.0			$	63.7

Noncontrolling Interest

     Noncontrolling interest at April 1, 2010 remained unchanged from the prior year at $0.5.

16. Related Party Transactions

     On March 26, 2007, Hawker Beechcraft, Inc. (“Hawker”), of which Onex Partners II LP (an affiliate of Onex) owns approximately a 49% interest, acquired Raytheon Aircraft Acquisition Company and substantially all of the assets of Raytheon Aircraft Services Limited. Spirit’s Prestwick facility provides wing components for the Hawker 800 Series manufactured by Hawker. For the three months ended April 1, 2010 and April 2, 2009, sales to Hawker were $1.2 and $4.3, respectively. Receivables due from Hawker were $2.8 as of April 1, 2010.

     A member of the Holdings’ Board of Directors is also a member of the Board of Directors of Hawker.

     Prior to his departure from the Company in December 2009, a former executive of the Company was a member of the Board of Directors of one of the Company’s suppliers, Precision Castparts Corp. of Portland, Oregon, a manufacturer of complex metal components and products. For the three months ended April 2, 2009 the Company purchased $13.5 of products, from this supplier.

     A member of Holdings’ Board of Directors served as Chairman, President, and Chief Executive Officer of Aviall, Inc., the parent company of one of our customers, Aviall Services, Inc. and a wholly owned subsidiary of Boeing until his retirement in February 2010. On September 18, 2006, Spirit entered into a distribution agreement with Aviall Services, Inc. that extends until September 18, 2011 and automatically renews on an annual basis unless terminated by either party. Net revenues under the distribution agreement were $0.9 and $1.7 for the three months ended April 1, 2010 and April 2, 2009, respectively. Receivables due from Aviall were $0.1 as of April 1, 2010.

     The Company paid less than $0.1 to a subsidiary of Onex for services rendered for each of the three month periods ended April 1, 2010 and April 2, 2009. Management believes the amounts charged were reasonable in relation to the services provided.

     Boeing owns and operates significant information technology systems utilized by the Company and, as required under the acquisition agreement for the Boeing Acquisition, is providing those systems and support services to Spirit under a Transition Services Agreement. A number of services covered by the Transition Services Agreement have now been established by the Company, and the Company is scheduled to continue to use the remaining systems and support services it has not yet established. The Company incurred

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

fees of $1.1 and $5.5 for services performed for the three months ended April 1, 2010 and April 2, 2009, respectively. The amounts owed to Boeing and recorded as accrued liabilities were $1.3 and $11.0 at April 1, 2010 and April 2, 2009, respectively.

     The spouse of one of the Company’s executives is a special counsel at a law firm utilized by the Company and at which the executive was previously employed. The Company paid fees of $0.3 and $0.4 to the firm for the three month periods ended April 1, 2010 and April 2, 2009, respectively.

     An executive of the Company is a member of the Board of Directors of a Wichita, Kansas bank that provides banking services to Spirit. In connection with the banking services provided to Spirit, the Company pays fees consistent with commercial terms that would be available to unrelated third parties. Such fees are not material to Spirit.

17. Commitments, Contingencies and Guarantees

Litigation

     From time to time we are subject to, and are presently involved in, litigation or other legal proceedings arising in the ordinary course of business. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available, it is the opinion of the Company that none of these items, when finally resolved, will have a material adverse effect on the Company’s long-term financial position or liquidity. Consistent with the requirements of authoritative guidance on accounting for contingencies, we had no accruals at April 1, 2010 or December 31, 2009 for loss contingencies. However, an unexpected adverse resolution of one or more of these items could have a material adverse effect on the results of operations in a particular quarter or fiscal year.

     From time to time, in the ordinary course of business and like others in the industry, we receive requests for information from government agencies in connection with their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. We review such requests and notices and take appropriate action. We have been subject to certain requests for information and investigations in the past and could be subject to such requests for information and investigations in the future. Additionally, we are subject to federal and state requirements for protection of the environment, including those for disposal of hazardous waste and remediation of contaminated sites. As a result, we are required to participate in certain government investigations regarding environmental remediation actions.

     In December 2005, a lawsuit was filed against Spirit, Onex, and Boeing alleging age discrimination in the hiring of employees by Spirit when Boeing sold its Wichita commercial division to Onex. The complaint was filed in U.S. District Court in Wichita, Kansas and seeks class-action status, an unspecified amount of compensatory damages and more than $1.5 billion in punitive damages. The Asset Purchase Agreement requires Spirit to indemnify Boeing for damages resulting from the employment decisions that were made by us with respect to former employees of Boeing Wichita, which relate or allegedly relate to the involvement of, or consultation with, employees of Boeing in such employment decisions. The Company intends to vigorously defend itself in this matter. Management believes the resolution of this matter will not materially affect the Company’s financial position, results of operations or liquidity.

     In December 2005, a federal grand jury sitting in Topeka, Kansas issued subpoenas regarding the vapor degreasing equipment at our Wichita, Kansas facility. The government’s investigation appeared to focus on whether the degreasers were operating within permit parameters and whether chemical wastes from the degreasers were disposed of properly. The subpoenas covered a time period both before and after our purchase of the Wichita, Kansas facility. Subpoenas were issued to Boeing, Spirit and individuals who were employed by Boeing prior to the Boeing Acquisition, but are now employed by us. We responded to the subpoena and provided additional information to the government as requested. On March 25, 2008, the U.S. Attorney’s Office informed the Company that it was closing its criminal file on the investigation. A civil investigation into this matter is ongoing. Management believes the resolution of this matter will not materially affect the Company’s financial position, results of operations or liquidity.

     On February 16, 2007, an action entitled Harkness et al. v. The Boeing Company et al. was filed in the U.S. District Court for the District of Kansas. The defendants were served in early July 2007. The defendants include Spirit AeroSystems Holdings, Inc., Spirit AeroSystems, Inc., the Spirit AeroSystems Holdings Inc. Retirement Plan for the International Brotherhood of Electrical Workers (IBEW), Wichita Engineering Unit (SPEEA WEU) and Wichita Technical and Professional Unit (SPEEA WTPU) Employees, and the Spirit AeroSystems Retirement Plan for International Association of Machinists and Aerospace Workers (IAM) Employees, along with The Boeing Company and Boeing retirement and health plan entities. The named plaintiffs are twelve former Boeing employees, eight of whom were or are employees of Spirit. The plaintiffs assert several claims under the Employee Retirement Income and Securities Act and general contract law and brought the case as a class action on behalf of similarly situated individuals. The putative class consists of approximately 2,500 current or former employees of Spirit. The parties agreed to class certification and are currently in the discovery process. The sub-class members who have asserted claims

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

against the Spirit entities are those individuals who, as of June 2005, were employed by Boeing in Wichita, Kansas, were participants in the Boeing pension plan, had at least 10 years of vesting service in the Boeing plan, were in jobs represented by a union, were between the ages of 49 and 55, and who went to work for Spirit on or about June 17, 2005. Although there are many claims in the suit, the plaintiffs’ claims against the Spirit entities, asserted under various theories, are (1) that the Spirit plans wrongfully failed to determine that certain plaintiffs are entitled to early retirement “bridging rights” to pension and retiree medical benefits that were allegedly triggered by their separation from employment by Boeing and (2) that the plaintiffs’ pension benefits were unlawfully transferred from Boeing to Spirit in that their claimed early retirement “bridging rights” are not being afforded these individuals as a result of their separation from Boeing, thereby decreasing their benefits. The plaintiffs seek a declaration that they are entitled to the early retirement pension benefits and retiree medical benefits, an injunction ordering that the defendants provide the benefits, damages pursuant to breach of contract claims and attorney fees. Boeing has notified Spirit that it believes it is entitled to indemnification from Spirit for any “indemnifiable damages” it may incur in the Harkness litigation, under the terms of the Asset Purchase Agreement between Boeing and Spirit. Spirit disputes Boeing’s position on indemnity. Management believes the resolution of this matter will not materially affect the Company’s financial position, results of operations or liquidity.

     On July 21, 2005, the International Union, Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) filed a grievance against Boeing on behalf of certain former Boeing employees in Tulsa and McAlester, Oklahoma, regarding issues that parallel those asserted in Harkness et al. v. The Boeing Company et al. Boeing denied the grievance, and the UAW subsequently filed suit to compel arbitration, which the parties eventually agreed to pursue. The arbitration was conducted in January 2008. In July 2008, the arbitrator issued an opinion and award in favor of the UAW. The arbitrator directed Boeing to reinstate the seniority of the employees and “afford them the benefits appurtenant thereto.” On March 5, 2009, the arbitrator entered an Opinion and Supplemental Award that directed Boeing to award certain benefits to UAW members upon whose behalf the grievance was brought, notwithstanding the prior denial of such benefits by the Boeing Plan Administrator. On April 10, 2009, Boeing filed a Complaint in the United States District Court for the Northern District of Illinois, seeking a ruling that the Arbitrator exceeded his authority in granting the Supplemental Award. On September 16, 2009, the District Court entered an order affirming the arbitrator’s Supplemental Award. Boeing appealed the District Court’s decision to the U.S. Seventh Circuit Court of Appeals, which recently affirmed the District Court’s decision. Boeing previously notified Spirit of its intent to seek indemnification from Spirit for any “indemnifiable damages” it may incur in the UAW matter, pursuant to the terms of the Asset Purchase Agreement. Spirit disputes Boeing’s position on indemnity. Management believes the resolution of this matter will not materially affect the Company’s financial position, results of operations or liquidity.

     On May 11, 2009, Spirit filed a lawsuit in the United States District Court for the District of Kansas against SPS Technologies LLC (“SPS”), and Precision Castparts Corp. Spirit’s claims are based on the sale by SPS of certain non-conforming nut plate fasteners to Spirit between August 2007 and August 2008. Many of the fasteners were used on assemblies that Spirit sold to a customer. In the fall of 2008, Spirit discovered the non-conformity and notified the customer of the discrepancy. Subsequently, Spirit and the customer removed and replaced nut plates on various in-process aircraft assemblies. Spirit’s lawsuit seeks damages, including damages related to these efforts, under various theories, including breach of contract and breach of implied warranty.

Guarantees

     Contingent liabilities in the form of letters of credit, letters of guarantee and performance bonds have been provided by the Company. These letters of credit reduce the amount of borrowings available under the revolving credit facility. As of April 1, 2010 and December 31, 2009, $19.0 and $16.9, respectively, were outstanding in respect of the letters of credit, and $17.1 and $16.1, respectively, were outstanding in respect of these guarantees.

Indemnification

     The Company has entered into indemnification agreements with each of its directors, and some of its executive employment agreements include indemnification provisions. Under those agreements, the Company agrees to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as the Company’s agent or the agent of any of its subsidiaries to the fullest extent legally permitted.

Service and Product Warranties and Extraordinary Rework

     The Company provides service and warranty policies on its products. Liability under service and warranty policies is based upon specific claims and a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance or quality issues.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The following is a roll forward of the service warranty balance at April 1, 2010:

Balance, December 31, 2009		$	13.1
Charges to costs and expenses			1.7
Exchange rate			(0.2	)
Balance, April 1, 2010		$	14.6

18. Segment Information

     The Company operates in three principal segments: Fuselage Systems, Propulsion Systems and Wing Systems. Substantially all revenues in the three principal segments are from Boeing, with the exception of Wing Systems, which includes revenues from Airbus and other customers. Approximately 96% of the Company’s net revenues for the three months ended April 1, 2010 came from our two largest customers, Boeing and Airbus. All other activities fall within the All Other segment, principally made up of sundry sales of miscellaneous services, tooling contracts, and sales of natural gas through a tenancy-in-common with other companies that have operations in Wichita. The Company’s primary profitability measure to review a segment’s operating performance is segment operating income before unallocated corporate selling, general and administrative expenses and unallocated research and development. Unallocated corporate selling, general and administrative expenses include centralized functions such as accounting, treasury and human resources that are not specifically related to our operating segments and are not allocated in measuring the operating segments’ profitability and performance and operating margins.

     The Company’s Fuselage Systems segment includes development, production and marketing of forward, mid and rear fuselage sections and systems, primarily to aircraft OEMs (OEM refers to aircraft original equipment manufacturer), as well as related spares and maintenance, repairs and overhaul (MRO).

     The Company’s Propulsion Systems segment includes development, production and marketing of struts/pylons, nacelles (including thrust reversers) and related engine structural components primarily to aircraft or engine OEMs, as well as related spares and MRO services.

     The Company’s Wing Systems segment includes development, production and marketing of wings and wing components (including flight control surfaces) as well as other miscellaneous structural parts primarily to aircraft OEMs, as well as related spares and MRO services. These activities take place at the Company’s facilities in Tulsa and McAlester, Oklahoma, Prestwick, Scotland and Subang, Malaysia.

     The Company’s segments are consistent with the organization and responsibilities of management reporting to the chief operating decision-maker for the purpose of assessing performance. The Company’s definition of segment operating income differs from operating income as presented in its primary financial statements and a reconciliation of the segment and consolidated results is provided in the table set forth below. Most selling, general and administrative expenses, and all interest expense or income, related financing costs and income tax amounts, are not allocated to the operating segments.

     While some working capital accounts are maintained on a segment basis, much of the Company’s assets are not managed or maintained on a segment basis. Property, plant and equipment, including tooling, is used in the design and production of products for each of the segments and, therefore, is not allocated to any individual segment. In addition, cash, prepaid expenses, other assets and deferred taxes are managed and maintained on a consolidated basis and generally do not pertain to any particular segment. Raw materials and certain component parts are used in the production of aerostructures across all segments. Work-in-process inventory is identifiable by segment, but is managed and evaluated at the program level. As there is no segmentation of the Company’s productive assets, depreciation expense (included in fixed manufacturing costs and selling, general and administrative expenses) and capital expenditures, no allocation of these amounts has been made solely for purposes of segment disclosure requirements.

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

     The following table shows segment information:

		Three Months Ended				Three Months Ended
		April 1, 2010				April 2, 2009
Segment Revenues
Fuselage Systems		$	516.2			$	430.5
Propulsion Systems			274.4				227.4
Wing Systems			248.9				220.9
All Other			3.8				8.6
		$	1,043.3			$	887.4
Segment Operating Income
Fuselage Systems		$	75.9			$	74.9
Propulsion Systems			33.6				38.7
Wing Systems			18.9				19.5
All Other			0.3				0.4
			128.7				133.5
Unallocated corporate SG&A			(35.0	)			(35.5	)
Unallocated research and development			(0.7	)			(0.2	)
Total operating income		$	93.0			$	97.8

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)
($, €, £, and RM in millions other than per share amounts)

19. Condensed Consolidating Financial Information

     On September 30, 2009, Spirit completed an offering of $300.0 aggregate principal amount of its 7¹/2% Senior Notes due 2017 (the “Original Notes”). The Original Notes were sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States only to non-U.S. persons pursuant to Regulation S promulgated under the Securities Act. In connection with the sale of the Original Notes, the Company entered into a Registration Rights Agreement with the initial purchasers of the Original Notes party thereto, pursuant to which the Company, Spirit and the Subsidiary Guarantors (as defined below) agreed to file a registration statement with respect to an offer to exchange (the “Exchange Offer”) the Original Notes for a new issue of substantially identical notes registered under the Securities Act (the “Exchange Notes”, and together with the Original Notes, the “Notes”). On March 29, 2010, Spirit and the Subsidiary Guarantors (as defined below) filed Amendment No. 2 to a registration statement on Form S-4 (as so amended, the “Registration Statement”) with respect to the Exchange Offer and on April 20, 2010, the SEC declared the Registration Statement effective. The Exchange Offer was commenced on April 21, 2010. The Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the Company and its wholly-owned domestic subsidiaries (the “Subsidiary Guarantors”).

     The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:

(i)

Spirit, as the subsidiary issuer of the Notes;

(ii)

The Subsidiary Guarantors, on a combined basis, as guarantors of the Notes;

(iii)

The Company’s subsidiaries, other than the Subsidiary Guarantors, which will not be guarantors of the Notes (the “Subsidiary Non-Guarantors”), on a combined basis;

(iv)

Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Holdings, the Subsidiary Guarantors and the Subsidiary Non-Guarantors, (b) eliminate the investments in the Company’s subsidiaries and (c) record consolidating entries; and

(v)

Holdings and its subsidiaries on a consolidated basis.

     The Company, which is a guarantor of the Notes, is excluded from the tables below as it has no assets or operations independent from its subsidiaries.

Spirit AeroSystems Holdings, Inc.

Condensed Consolidating Statement of Operations
For the Three Months Ended April 1, 2010

						Guarantor				Non-Guarantor				Consolidating
		Spirit				Subsidiaries				Subsidiaries				Adjustments				Total
Net Revenues		$	938.7			$	0.2			$	118.7			$	(14.3	)		$	1,043.3
Operating costs and expenses
Cost of sales			806.5				0.2				108.7				(14.3	)			901.1
Selling, general and administrative			35.0				0.5				3.8				—				39.3
Research and development			9.9				—				—				—				9.9
Total operating costs and expenses			851.4				0.7				112.5				(14.3	)			950.3
Operating income (loss)			87.3				(0.5	)			6.2				—				93.0
Interest expense and financing fee amortization			(13.8	)			—				(1.0	)			0.8				(14.0	)
Interest income			0.9				—				—				(0.8	)			0.1
Other income (expense), net			1.0				—				(6.5	)			—				(5.5	)
Income (loss) before income taxes and equity in net loss of affiliates			75.4				(0.5	)			(1.3	)			—				73.6
Income tax expense			(18.8	)			0.2				0.8				—				(17.8	)
Income (loss) before equity in net loss of affiliates			56.6				(0.3	)			(0.5	)			—				55.8
Equity in net loss of affiliates			—				—				(0.3	)			—				(0.3	)
Net income (loss)		$	56.6			$	(0.3	)		$	(0.8	)		$	—			$	55.5

Spirit AeroSystems Holdings, Inc.

Condensed Consolidating Statement of Operations
For the Three Months Ended April 2, 2009

						Guarantor				Non-Guarantor				Consolidating
		Spirit				Subsidiaries				Subsidiaries				Adjustments				Total
Net Revenues		$	786.6			$	—			$	111.3			$	(10.5	)		$	887.4
Operating costs and expenses
Cost of sales			640.3				—				106.7				(9.7	)			737.3
Selling, general and administrative			32.9				—				5.5				—				38.4
Research and development			13.3				—				0.6				—				13.9
Total operating costs and expenses			686.5				—				112.8				(9.7	)			789.6
Operating income (loss)			100.1				—				(1.5	)			(0.8	)			97.8
Interest expense and financing fee amortization			(9.1	)			—				(0.7	)			0.7				(9.1	)
Interest income			3.3				—				—				(0.7	)			2.6
Other income, net			0.9				—				0.6				—				1.5
Income (loss) before income taxes and equity in net income of affiliates			95.2				—				(1.6	)			(0.8	)			92.8
Income tax expense			(30.2	)			—				—				—				(30.2	)
Income (loss) before equity in net income of affiliates			65.0				—				(1.6	)			(0.8	)			62.6
Equity in net income of affiliates			0.1				—				—				—				0.1
Net income (loss)		$	65.1			$	—			$	(1.6	)		$	(0.8	)		$	62.7