1323739--4/14/2006--Standard_Aero_Holdings

related topics

{debt, indebtedness, cash}

{customer, product, revenue}

{operation, natural, condition}

{operation, international, foreign}

{condition, economic, financial}

{cost, regulation, environmental}

{loss, insurance, financial}

{product, market, service}

{investment, property, distribution}

{control, financial, internal}

{property, intellectual, protect}

{personnel, key, retain}

{acquisition, growth, future}

{stock, price, operating}

{gas, price, oil}

{product, candidate, development}

{financial, litigation, operation}

A further decline in the operational tempo of the U.S. military would affect the frequency with which the engines used in military aircraft reach scheduled intervals for maintenance events, which would adversely affect our results of operations. Decreases in spending or outsourcing by our military end-users could materially reduce our revenues and adversely affect our financial condition. A significant portion of our revenues from regional and business aviation customers are derived from services we provide on behalf of OEMs as a subcontractor for services they provide to their customers. As a result, we could be adversely affected by changes in demand by OEMs or their customers. We have incurred significant costs to obtain authorizations for new engine platforms, including the CF34 and AE3007, and to establish facilities for servicing such platforms. We may not realize all of the revenues or profit margins expected from these engine platforms now or in the future or recover the significant capital we have expended. The prices that we charge under our fixed-price contracts are predetermined and we bear the risk that our costs may exceed our estimates. Material weaknesses in our internal control over financial reporting resulted in material misstatements in our financial statements that required us to restate certain of our historical financial statements. If we fail to maintain effective internal control over financial reporting at a reasonable assurance level, we may not be able to accurately report our financial results or prevent fraud. A significant portion of our revenues is generated from engine platforms that are mature or declining. If we are unable to offset the resulting declines in revenues as engines are retired, our results of operations will be adversely affected. Competition in our business is intense and concentrated given the small market in which we participate and the narrow range of services that we provide within that market. If we fail to obtain or maintain engine service authorizations from OEMs, our revenues, cash flows and profitability may be materially adversely affected. A majority of our parts are procured from OEMs and their affiliates. If we are unable to purchase component parts or raw materials from these or other of our key suppliers, our business and results of operations may be materially adversely affected. Our profitability will be adversely affected if we are unable to reduce costs or increase prices in response to fluctuations in demand for our services. We rely on intellectual property in our business and our business could be adversely affected if we lose our intellectual property rights. The regional and business aviation industry may experience disruptions as a result of terrorist threats or attacks and other exogenous factors beyond our control that could materially adversely affect our results of operations and financial condition in future periods. We will not be able to operate our business if we fail to comply with or obtain and maintain the necessary regulatory approvals. Our operations depend on our facilities, which are subject to physical and other risks that could disrupt our business. Changes in foreign exchange rates could have adverse effects on our results of operations and financial condition. Our international operations are exposed to various risks, which could have a material adverse effect on our results of operations and financial condition. We may face large liability claims, which could have a material adverse effect on our results of operations and financial condition. Our operations may prove harmful to the environment, which could expose us to fines and damages and could require expensive remediation. Any expansion by acquisition may prove risky for us. Failure to retain certain of our executive officers or attract and retain the services of certain qualified employees may materially adversely affect our business and results of operations. We are controlled by Carlyle, whose interests in our business may differ from the interests of our other investors. Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from fulfilling our obligations under our notes. If we default on our obligations to pay our indebtedness we may not be able to make payments on our notes. To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. Despite current indebtedness levels, we, and our subsidiaries are able to incur substantially more debt, which would further exacerbate the risks associated with our substantial leverage. Our note holders right to receive payments on our notes and the guarantees is subordinated to the borrowings under our senior credit facilities and possibly all our future borrowings. Our note holders ability to receive payments on their notes is junior to those lenders who have a security interest in our assets. Restrictive covenants in our senior credit facilities and the indenture governing our notes may restrict our ability to pursue our business strategies. Certain subsidiaries are not subsidiary guarantors of our indebtedness under our notes. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Federal and state fraudulent transfer laws permit a court to void our notes and the guarantees, and, if that occurs, our note holders will not receive any payments on our notes. We are a holding company and may not have access to sufficient cash to make payments on our notes.

Full 10-K form ▸

1323739--4/14/2006--Standard_Aero_Holdings_Inc.