1278061--3/13/2009--VOUGHT_AIRCRAFT_INDUSTRIES

related topics

{regulation, government, change}

{debt, indebtedness, cash}

{customer, product, revenue}

{cost, contract, operation}

{cost, regulation, environmental}

{operation, natural, condition}

{cost, operation, labor}

{loss, insurance, financial}

{condition, economic, financial}

{capital, credit, financial}

{acquisition, growth, future}

{operation, international, foreign}

{product, liability, claim}

{control, financial, internal}

{property, intellectual, protect}

{personnel, key, retain}

{gas, price, oil}

Current market conditions could impact our ability to access new capital to meet our liquidity needs. Large customer concentration may negatively impact revenue, results of operations and cash flows. Our fixed-price contracts may commit us to unfavorable terms. We incur risk associated with new programs that are critical to our future profitability. The profitability of the 787 program depends significantly on the assumption that our expected recovery value equals or exceeds our costs incurred. Failure to, or delays in, renegotiation with our customers to finalize or update contract terms or pricing could materially impact our operations. Our business depends, in large part, on the future sales of the Boeing 787 program and further delays in the delivery schedule and renegotiation of contract terms for the 787 program could have a material adverse effect on our financial condition, results of operations and cash flows. Difficult global market conditions have adversely affected and could continue to adversely affect our industry. Financial market conditions may adversely affect our benefit plan assets, increase funding requirements and materially impact our statement of financial position. A decline in the U.S. defense budget or change of funding priorities may reduce demand for our customers military aircraft and reduce our sales of products used on military aircraft. Any significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue. We may be subject to work stoppages at our facilities or those of our principal customers, which could seriously impact the profitability of our business. We are exposed to fluctuations in foreign currency exchange rates and interest rates, as well as inflation and other economic factors in the countries in which we operate. The price volatility of energy costs may adversely affect our profitability. Commercial airlines have been and, as a result, we may be materially adversely affected by high fuel prices. We are subject to regulation of our technical data and goods exports. The construction of aircraft is heavily regulated and failure to comply with applicable laws could reduce our sales or require us to incur additional costs to achieve compliance, which could reduce our results of operations. Our operations depend on our manufacturing facilities throughout the U.S., which are subject to physical and other risks that could disrupt production. The U.S. Government is a significant customer of our largest customers and we and they are subject to specific U.S. Government contracting rules and regulations. We depend on key personnel and may not be able to retain those employees or recruit additional qualified personnel. We are subject to environmental regulation and our ongoing operations may expose us to environmental liabilities. Any product liability claims in excess of insurance may require us to dedicate cash flow from operations to pay such claims and damage our reputation impacting our ability to obtain future business. Significant consolidation by aerospace industry suppliers could adversely affect our business. High switching costs may substantially limit our ability to obtain business that is currently under contract with other suppliers. We are subject to the requirements of the National Industrial Security Program Operating Manual for our facility security clearance, which is a prerequisite for our ability to perform on classified contracts for the U.S. Government. We do not own most of the intellectual property and tooling used in our business. Future terrorist attacks may have a material adverse impact on our commercial business. We may be unable to satisfy commitments related to grants received. Any future business combinations, acquisitions or mergers expose us to risks, including the risk that we may not be able to successfully integrate these businesses or achieve expected operating synergies. Our financial statements are based on estimates required by GAAP, and actual results may differ materially from those estimated under different assumptions or conditions. While we believe our control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected. Risks Relating to Our Indebtedness Our substantial indebtedness could prevent us from fulfilling our obligations under our outstanding senior notes and our senior credit facilities. We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control. Market conditions may make it difficult to refinance our indebtedness with favorable terms. Restrictive covenants in our senior credit facilities and our outstanding senior notes may restrict our ability to pursue our business strategies.

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1278061--3/13/2009--VOUGHT_AIRCRAFT_INDUSTRIES_INC