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TABLE OF CONTENTS
Item 8. Financial Statements and Supplementary Data

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

Form 10-K

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

 

 

For the fiscal year ended December 31, 2013

Or

o

 

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

 

 

For the transition period from            to            


Commission File Number 001-33160

Spirit AeroSystems Holdings, Inc.
(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  þ     No  o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o     No  þ

          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 on 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  þ     No  o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  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

          The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the closing price of the class A common stock on June 27, 2013, as reported on the New York Stock Exchange was approximately $2,643,834,149.

          As of February 12, 2014, the registrant had outstanding 120,991,868 shares of class A common stock, $0.01 par value per share, and 23,817,017 shares of class B common stock, $0.01 par value per share.


DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the registrant's Proxy Statement for the 2014 Annual Meeting of Stockholders to be filed not later than 120 day after the end of the fiscal year covered by this Report are incorporated herein by reference in Part III of this Annual Report on Form 10-K.


Table of Contents


TABLE OF CONTENTS

 
   
  Page  
PART I  
Item 1.   Business     3  
Item 1A.   Risk Factors     23  
Item 1B.   Unresolved Staff Comments     42  
Item 2.   Properties     43  
Item 3.   Legal Proceedings     44  
Item 4.   Mine Safety Disclosures     44  
    Executive Officers of the Registrant     44  

PART II

 
Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     47  
Item 6.   Selected Financial Data     50  
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations     52  
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk     79  
Item 8.   Financial Statements and Supplementary Data     82  
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure     158  
Item 9A.   Controls and Procedures     158  
Item 9B.   Other Information     160  

PART III

 
Item 10.   Directors, Executive Officers and Corporate Governance     161  
Item 11.   Executive Compensation     161  
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     161  
Item 13.   Certain Relationships and Related Transactions and Director Independence     161  
Item 14.   Principal Accountant Fees and Services     161  

PART IV

 
Item 15.   Exhibits, Financial Statement Schedules     162  
Signatures     168  
Schedule II — Valuation and Qualifying Accounts     169  

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This Annual Report contains certain "forward-looking statements" that may involve many risks and uncertainties. Forward-looking statements reflect our current expectations or forecasts of future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "intend," "estimate," "believe," "project," "continue," "plan," "forecast," or other similar words, or the negative thereof, unless the context requires otherwise. These statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors not to place undue reliance on any forward-looking statements.

        Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:

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        These factors are not exhaustive and it is not possible for us to predict all factors that could cause actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. Except to the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should review carefully the sections captioned "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report for a more complete discussion of these and other factors that may affect our business.

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PART I

Item 1.     Business

Our Company

        Unless the context otherwise indicates or requires, as used in this Annual Report, references to "we," "us," "our," or the "Company" refer to Spirit AeroSystems Holdings, Inc., its subsidiaries and predecessors. References to "Spirit" refer only to our subsidiary, Spirit AeroSystems, Inc., and references to "Spirit Holdings" or "Holdings" refer only to Spirit AeroSystems Holdings, Inc. References to "Boeing" refer to The Boeing Company and references to "Airbus" refer to Airbus S.A.S., a division of Airbus Group NV. References to "OEM" refer to commercial aerospace original equipment manufacturer.

        We are one of the largest independent non-OEM aircraft parts designers and manufacturers of commercial aerostructures in the world, based on annual revenues, as well as the largest independent supplier of aerostructures to Boeing. In addition, we are one of the largest independent suppliers of aerostructures to Airbus. Boeing and Airbus are the two largest aircraft OEMs in the world. Aerostructures are structural components such as fuselages, propulsion systems and wing systems for commercial and military aircraft. For the twelve months ended December 31, 2013, we generated net revenues of $5,961.0 million, and had net loss of $621.4 million.

        Spirit Holdings was incorporated in the state of Delaware on February 7, 2005, and commenced operations on June 17, 2005 through the acquisition of Boeing's operations in Wichita, Kansas; Tulsa, Oklahoma and McAlester, Oklahoma (the "Boeing Acquisition") by an investor group led by Onex Partners LP and Onex Corporation (together with its affiliates, "Onex"). Boeing's commercial aerostructures manufacturing operations in Wichita, Kansas and Tulsa and McAlester, Oklahoma, are referred to in this Report as "Boeing Wichita." Although Spirit began operations as a stand-alone company in 2005, its predecessor, Boeing Wichita (the "Predecessor"), had 75 years of operating history and expertise in the commercial and military aerostructures industry. Spirit Holdings, Spirit's parent company, has had publicly traded shares on the New York Stock Exchange under the ticker "SPR" since November 2006. Onex continues to hold approximately 94% of Spirit Holdings' class B common shares, which represents approximately 62% of total Spirit Holdings stockholder voting power.

        On April 1, 2006, we became a supplier to Airbus through our acquisition of the aerostructures division of BAE Systems (Operations) Limited, referred to in this Report as "BAE Systems." The acquired division of BAE Systems is referred to in this Report as "BAE Aerostructures," and the acquisition of BAE Aerostructures is referred to as the "BAE Acquisition."

        We manufacture aerostructures for every Boeing commercial aircraft currently in production, including the majority of the airframe content for the Boeing B737, the most popular major commercial aircraft in history. As a result of our unique capabilities both in process design and composite materials, we were awarded a contract that makes us the largest aerostructures content supplier on the Boeing B787, Boeing's next generation twin aisle aircraft. In addition, we are one of the largest content suppliers of wing systems for the Airbus A320 family, we are a significant supplier for the Airbus A380, and we will be a significant supplier for the new Airbus A350 XWB (Xtra Wide-Body) after the development stage of the program. Sales related to the large commercial aircraft market, some of which may be used in military applications, represented approximately 99% of our net revenues for the twelve-month period ended December 31, 2013.

        We derive our revenues primarily through long-term supply agreements with Boeing and Airbus. For the twelve months ended December 31, 2013, approximately 84% and 10% of our net revenues were generated from sales to Boeing and Airbus, respectively. We are currently the sole-source supplier of 97% of the products we sell to Boeing and Airbus, as measured by the dollar value of products sold. We are a critical partner to our customers due to the broad range of products we currently supply to them and our leading design and manufacturing capabilities using both metallic and composite materials. Under our supply agreements with Boeing and Airbus, we supply products for the life of the aircraft program (other

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than the A350 XWB and A380), including commercial derivative models. For the A350 XWB and A380, we have long-term requirements contracts with Airbus.

        Since Spirit's incorporation, the Company has expanded its customer base to include Sikorsky, Rolls-Royce, Gulfstream, Israel Aerospace Industries, Bombardier, Mitsubishi Aircraft Corporation, Bell Helicopter, Southwest Airlines, United Airlines and American Airlines. The Company has its headquarters in Wichita, Kansas, with manufacturing facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita and Chanute, Kansas; Kinston, North Carolina; Saint-Nazaire, France; and Subang, Malaysia.


Our History

        In December 2004 and February 2005, an investor group led by Onex formed Spirit and Spirit Holdings, respectively, for the purpose of acquiring Boeing Wichita. The Boeing Acquisition was completed on June 16, 2005. Prior to the acquisition, Boeing Wichita functioned as an internal supplier of parts and assemblies for Boeing's airplane programs and had very few sales to third parties.

        In connection with the Boeing Acquisition, we entered into a long-term supply agreement under which we are Boeing's exclusive supplier for substantially all of the products and services provided by Boeing Wichita to Boeing prior to the Boeing Acquisition. The Supply Agreement is a requirements contract covering certain products such as fuselages, struts/pylons and wing components for Boeing B737, B747, B767 and B777 commercial aircraft programs for the life of these programs, including any commercial derivative models. Pricing for existing products on in-production models expired in May 2013 and interim pricing provisions under the supply agreement are currently in effect. We are currently negotiating future pricing terms with Boeing. The future pricing will be effective for a period to be agreed upon by the parties. The interim pricing terms are determined according to the existing prices as of May 2013 using a quantity-based price adjustment formula and specified annual escalation until such time as future pricing is agreed. Interim pricing will be retroactively adjusted in the period in which we agree on future pricing terms.

        We also entered into a long-term supply agreement with Boeing for the B787 aircraft, covering the life of this aircraft program, including commercial derivatives. Under this contract we are Boeing's exclusive supplier for the forward fuselage, fixed and moveable leading wing edges and engine pylons for the B787. Pricing for the initial configuration of the B787-8 model is generally set through 2021, with prices decreasing as cumulative production volume levels are achieved. The B787 Supply Agreement provides that initial prices for the B787-9 and B787-10 are to be determined by a procedure set out in the B787 Supply Agreement, and to be documented by amendment once that amendment has been agreed to by the parties. The parties have engaged in discussions concerning how to determine initial B787-9 and B787-10 pricing and have not yet reached agreement. Prices are subject to adjustment for abnormal inflation (above a specified level in any year) and for certain production, schedule and other specific changes, including design changes from the contract configuration baseline for each B787 model.

        On April 1, 2006, we acquired BAE Aerostructures, which was subsequently renamed Spirit AeroSystems (Europe) Limited ("Spirit Europe"). Spirit Europe manufactures leading and trailing wing edges and other wing components for commercial aircraft programs for Airbus and Boeing. The BAE Acquisition provided us with a foundation to increase future sales to Airbus, as Spirit Europe is a key supplier of wing and flight control surfaces for the A320 platform, Airbus' core single-aisle program, and of wing components for the A380 platform, one of Airbus' most important new programs and the world's largest commercial passenger aircraft. In July 2008, Spirit Europe was awarded a contract with Airbus to design and assemble a major wing structure for the A350 XWB program. Under our supply agreements with Airbus, we supply most of our products for the life of the aircraft program (other than the A350 XWB and A380), including commercial derivative models, with pricing determined through 2015. For the A380 and A350 XWB, we have long-term requirements contracts with Airbus that cover a fixed number of units.

        In November 2006, we issued and sold 10,416,667 shares of our class A common stock and certain selling stockholders sold 52,929,167 shares of our class A common stock at a price to the public of $26.00

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per share in our initial public offering. In May 2007, certain selling stockholders sold 34,340,484 shares of our class A common stock at a price to the public of $33.50 per share in a secondary offering of our class A common stock. In April 2011, certain selling stockholders sold 10,307,375 shares of our class A common stock at a price to the underwriters of $24.49 per share in a secondary offering of our class A common stock.


Our Relationship with Boeing

    Supply Agreement with Boeing for B737, B747, B767 and B777 Platforms

        Overview.     In connection with the Boeing Acquisition, Spirit entered into long-term supply agreements under which we are Boeing's exclusive supplier for substantially all of the products and services provided by Boeing Wichita to Boeing prior to the closing of the Boeing Acquisition. The main supply contract is primarily comprised of two separate agreements: (1) the Special Business Provisions, or Sustaining SBP, which sets forth the specific terms of the supply arrangement with regard to Boeing's B737, B747, B767 and B777 aircraft and (2) the General Terms Agreement, or GTA, which sets forth other general contractual provisions relating to our various supply arrangements with Boeing, including provisions relating to termination, events of default, assignment, ordering procedures, inspections and quality controls. The summary below describes provisions contained in both the Sustaining SBP and the GTA as both agreements govern the main supply arrangement. We refer to the Sustaining SBP, the GTA and any related purchase order or contract collectively as the "Supply Agreement." The Supply Agreement is a requirements contract which covers certain products, including fuselages, struts/pylons and nacelles (including thrust reversers), wings and wing components, as well as tooling, for Boeing B737, B747, B767 and B777 commercial aircraft programs for the life of these programs, including any commercial derivative models. During the term of the Supply Agreement and absent default by Spirit, Boeing is obligated to purchase from Spirit all of its requirements for products covered by the Supply Agreement. Although Boeing is not required to maintain a minimum production rate, Boeing is subject to a maximum production rate above which it must negotiate with us regarding responsibility for non-recurring expenditures related to a capacity increase.

        Pricing.     The pricing terms for recurring products under the Supply Agreement expired in May 2013. Under these terms, prices were adjusted each year based on a quantity-based price adjustment formula described in the Supply Agreement whereby average per-unit prices are higher at lower volumes and lower at higher volumes. Prices are subject to adjustment for abnormal inflation (above a specified level in any year) and for certain production, schedule and other changes. See "Changes" below.

        As the expiration of the established pricing terms has passed, Boeing and Spirit are currently negotiating future pricing, to be applicable for a period to be agreed upon by the parties. Boeing and Spirit are required to negotiate the pricing for such additional period in good faith based on prevailing U.S. market conditions for forward fuselages, B737 fuselages and B737/B777 struts and nacelles and based on prevailing global market conditions for all other products. Until the parties are able to agree upon future pricing, pricing will be determined according to the price as of the expiration of the initial eight-year period, adjusted using the existing quantity-based price adjustment formula and annual escalation and such interim pricing will be retroactively adjusted in the period in which we agree on future pricing terms.

        Prices for commercial derivative models are to be negotiated in good faith by the parties based on then-prevailing market conditions. If the parties cannot agree on price, then they must engage in dispute resolution pursuant to agreed-upon procedures.

        Tooling.     Under the Supply Agreement, Boeing owns all tooling used in production or inspection of products covered by the Supply Agreement. Spirit is responsible for providing all new tooling required for manufacturing and delivering products under the Supply Agreement, and Boeing acquires title to such tooling upon completion of the manufacturing of the tools and payment by Boeing. Because Boeing owns this tooling, Spirit may not sell, lease, dispose of or encumber any of it. Spirit does, however, have the

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option to procure certain limited tooling needed to manufacture and deliver both Boeing and non-Boeing parts.

        Although Boeing owns the tooling, Spirit has the limited right to use this tooling without any additional charge to perform its obligations to Boeing under the Supply Agreement and also to provide aftermarket services in accordance with the rights granted to Spirit under other related agreements, including royalty-bearing license agreements. Boeing is entitled to use the tooling only under limited circumstances. Spirit is responsible for maintaining and insuring the tooling. Spirit's rights to use the tooling are subject to the termination provisions of the Supply Agreement.

        Changes.     Upon written notification to Spirit, Boeing has the right to make changes within the general scope of work performed by Spirit under the Supply Agreement. If any such change increases or decreases the cost or time required to perform, Boeing and Spirit must negotiate an equitable adjustment (based on rates, factors and methodology set forth in the Supply Agreement) to the price or schedule to reflect the change, except that Spirit will be responsible for absorbing the cost of certain changes. The Supply Agreement also provides for equitable adjustments to product prices if there are order accelerations or decelerations, depending on lead times identified in the Supply Agreement. In addition, the Supply Agreement provides for equitable adjustments to recurring part prices as well as the price of non-recurring work upon the satisfaction of certain conditions and upon certain minimum dollar thresholds being met.

        Additional Spirit Costs.     In the event that Boeing rejects a product manufactured by Spirit, Boeing is entitled to repair or rework such product, and Spirit is required to pay all reasonable costs and expenses incurred by Boeing related thereto. In addition, Spirit is required to reimburse Boeing for costs expended in providing Spirit and/or Spirit's contractors the technical or manufacturing assistance with respect to Spirit nonperformance issues.

        Termination for Convenience.     Subject to the restrictions prohibiting Boeing from manufacturing certain products supplied by Spirit or purchasing such products from any other supplier, Boeing may, at any time, terminate all or part of any order under the Supply Agreement by written notice to Spirit. If Boeing terminates all or part of an order, Spirit is entitled to compensation for certain costs.

        Termination of Airplane Program.     If Boeing decides not to initiate or continue production of a Boeing commercial aircraft model B737, B747, B767 or B777 or commercial derivative because it determines there is insufficient business basis for proceeding, Boeing may terminate such model or derivative, including any order therefor, by written notice to Spirit. In the event of such a termination, Boeing will be liable to Spirit for any orders issued prior to the date of the termination notice and may also be liable for certain termination costs.

        Events of Default and Remedies.     It is an "event of default" under the Supply Agreement if Spirit:

      (1)
      fails to deliver products as required by the Supply Agreement;

      (2)
      fails to provide certain "assurances of performance" required by the Supply Agreement;

      (3)
      breaches the provisions of the Supply Agreement relating to intellectual property and proprietary information;

      (4)
      participates in the sale, purchase or manufacture of airplane parts without the required approval of the Federal Aviation Administration, or FAA, or appropriate foreign regulatory agency;

      (5)
      fails under certain requirements to maintain a system of quality assurance;

      (6)
      fails to comply with other obligations under the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing);

      (7)
      is unable to pay its debts as they become due, dissolves or declares bankruptcy; or

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      (8)
      breaches the assignment provisions of the Supply Agreement (which breach continues for more than 10 days after notice is received from Boeing).

        If an event of default occurs, Boeing has the right to exercise various remedies set forth in the Supply Agreement, including the right to manufacture or to otherwise obtain substitute products, cancel any or all outstanding orders under the Supply Agreement, and/or terminate the Supply Agreement. Boeing is limited, however, in its ability to cancel orders or terminate the Supply Agreement for the defaults described in items (1), (2) and (6) above. In such cases, Boeing may not cancel orders unless the event of default is material and has an operational or financial impact on Boeing and may not terminate the Supply Agreement unless there are repeated, material events of default and certain other criteria are satisfied. Boeing may only terminate the Supply Agreement with respect to the aircraft program affected by the event of default. If two or more programs are affected by the event of default, Boeing may terminate the entire Supply Agreement. Boeing may also require Spirit to transfer tooling, raw material, work-in-process and other inventory and certain intellectual property to Boeing in return for reasonable compensation.

        Excusable Delay.     If delivery of any product is delayed by circumstances beyond Spirit's reasonable control, and without Spirit's or its suppliers' or subcontractors' error or negligence (including, without limitation, acts of God, war, terrorist acts, fires, floods, epidemics, strikes, unusually severe weather, riots and acts of government), or by any material act or failure to act by Boeing, each being an "excusable delay," then, subject to certain exceptions, Spirit's delivery obligations will be extended. If delivery of any product is delayed by an excusable delay for more than three months, Boeing may cancel all or part of any order for the delayed products.

        If delivery of any product constituting more than 25% of the ship set value for one or more models of program airplanes is delayed by an excusable delay for more than five months, Boeing may cancel the Sustaining SBP as it applies to such models of program airplanes, and neither party will have any liability to the other, other than as described in the above paragraph under the heading "Events of Default and Remedies."

        Assignment.     Spirit may not assign its rights under the Supply Agreement other than with Boeing's consent, which Boeing may not unreasonably withhold unless the assignment is to a disqualified person. A disqualified person is one: (1) whose principal business is as an OEM of commercial aircraft, space vehicles, satellites or defense systems; (2) that Boeing reasonably believes will not be able to perform its obligations under the Supply Agreement; (3) that, after giving effect to the transaction, would be a supplier of more than 40% by value of the major structural components of any Boeing program then in production; or (4) who is, or is an affiliate of, a commercial airplane operator or is one of five named corporate groups. Sale of majority voting power or of all or substantially all of Spirit's assets to a disqualified person is considered an assignment.

    B787 Supply Agreement with Boeing

        Overview.     Spirit and Boeing also entered into a long-term supply agreement for Boeing's B787 program, or the B787 Supply Agreement, which covers the life of the program and commercial derivatives. The B787 Supply Agreement is a requirements contract pursuant to which Spirit is Boeing's exclusive supplier for the forward fuselage, fixed and moveable leading wing edges, engine pylons and related tooling for the B787. While the B787 Supply Agreement does not provide for a minimum or maximum production rate, the agreement acknowledges that Spirit is responsible for capitalization to support a rate of ten per month. If Boeing decides to increase production above ten ship sets per month, and if a certain percentage of the profit margin of the additional revenue due to the increase is not projected to recover expenditures required to increase the production rate beyond that level, Spirit will negotiate with Boeing regarding an equitable price adjustment. Pursuant to the B787 Amendment described below, Spirit has agreed to proceed with all necessary capital and equipment investments required to support a rate of ten ship sets per month. Under the B787 Supply Agreement, Spirit also provides certain support, development and redesign engineering services to Boeing at an agreed hourly rate.

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        Pricing.     Pricing for the initial configuration of the B787-8 model is generally established through 2021, with prices decreasing as cumulative volume levels are met over the life of the program. The B787 Supply Agreement provides that initial prices for the B787-9 and B787-10 are to be determined by a procedure set out in the B787 Supply Agreement, and to be documented by amendment once that amendment has been agreed to by the parties. The parties have engaged in discussions concerning how to determine the initial B787-9 and B787-10 prices and have not yet reached agreement. Prices are subject to adjustment for abnormal inflation (above a specified level in any year) and for certain production, schedule and other specific changes, including design changes from the contract configuration baseline for each B787 model. As outlined in the amendment to the B787 Supply Agreement dated May 12, 2011 (the "B787 Amendment"), both parties will participate in an annual price adjustment process for each B787 model, which will involve an evaluation of the cost impact to Spirit as a result of Boeing directed changes. The price adjustments are calculated using a methodology set out in the B787 Supply Agreement. The evaluations take place and conclude in the first quarter of each calendar year and apply retroactively to certain of the prior year's prices to the extent set out in the B787 Supply Agreement. In June 2013, Spirit and Boeing completed the first annual price adjustment for the B787-8.

        Advance Payments/Deferred Revenue.     In December 2010, Spirit and Boeing entered into a memorandum of agreement ("MOA") and a settlement agreement regarding certain claims associated with the development and production of the B787 airplane. As part of these agreements, Spirit received a payment for $236.2 million which was recorded as deferred revenue (short-term) within the December 31, 2010 consolidated balance sheet pending finalization of a contract amendment, which would contain the final settlement terms. On May 12, 2011, Spirit and Boeing entered into the B787 Amendment, which finalized and implemented substantially all of the provisions of the December 2010 MOA. Among other things, the B787 Amendment spread out repayment of a $700.0 million cash advance made by Boeing to Spirit in 2007 to be offset against the purchase price of the first 1,000 B787 ship sets delivered to Boeing, instead of the first 500 ship sets. In the event Boeing does not take delivery of 1,000 ship sets prior to the termination of the B787 program or the B787 Supply Agreement, any advances not then repaid will be applied against any outstanding payments then due by Boeing to us, and any remaining balance will be repaid in annual installments of $42.0 million due on December 15th of each year until the advance payments have been fully recovered by Boeing. The B787 Amendment also changed the treatment of advances paid by Boeing for certain non-recurring work into a nonrefundable payment in full for such work.

        Accordingly, portions of the advance repayment liability are included as current and long-term liabilities in our consolidated balance sheet. As of December 31, 2013, the amount of advance payments and deferred revenue received by us from Boeing under the B787 Supply Agreement and not yet repaid or recognized as revenue was $600.2 million.

        Termination of Airplane Program.     If Boeing decides not to continue production of the B787 airplane program because it determines, after consultation with Spirit, that there is an insufficient business basis for proceeding, Boeing may terminate the B787 airplane program, including any orders, by written notice to Spirit. In the event of such a termination, Boeing will be liable to Spirit for costs incurred in connection with any orders issued prior to the date of the termination notice and may also be liable for certain termination costs and for compensation for any tools, raw materials or work-in-process requested by Boeing in connection with the termination.

        Events of Default and Remedies.     It is an "event of default" under the B787 Supply Agreement if Spirit:

      (1)
      fails to deliver products as required by the B787 Supply Agreement;

      (2)
      breaches the provisions of the B787 Supply Agreement relating to intellectual property and proprietary information;

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      (3)
      participates in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate foreign regulatory agency;

      (4)
      fails under certain requirements to maintain a system of quality assurance;

      (5)
      fails to comply with other obligations under the B787 Supply Agreement (which breach continues for more than 15 days after notice is received from Boeing);

      (6)
      is unable to pay its debts as they become due, dissolves or declares bankruptcy;

      (7)
      fails to comply with U.S. export control laws; or

      (8)
      breaches the assignment provisions of the B787 Supply Agreement.

        If an event of default occurs, Boeing has the right to exercise various remedies set forth in the B787 Supply Agreement, including the right to manufacture or to otherwise obtain substitute products, cancel any or all outstanding orders under the B787 Supply Agreement and/or terminate the B787 Supply Agreement. Before terminating any order or the B787 Supply Agreement, Boeing is required to work with Spirit to attempt to agree on a satisfactory recovery plan. Boeing may also require Spirit to transfer tooling, raw material, work-in-process and other inventory and certain intellectual property to Boeing in return for reasonable compensation.

        Assignment.     Spirit may not assign its rights under the B787 Supply Agreement or any related order other than with Boeing's consent, which Boeing may not unreasonably withhold unless the assignment is to a disqualified person. A disqualified person is one: (1) whose principal business is as an OEM of commercial aircraft, space vehicles, satellites or defense systems; (2) that Boeing reasonably believes will not be able to perform its obligations under the B787 Supply Agreement; (3) that, after giving effect to the transaction, would be a supplier of more than 40% by value of the major structural components of any Boeing program then in production; or (4) who is, or is an affiliate of, a commercial airplane operator or is one of five named corporate groups. Sale of majority voting power or of all or substantially all of Spirit's assets to a disqualified person is considered an assignment.

    License of Intellectual Property

        Supply Agreement.     All technical work product and works of authorship produced by or for Spirit with respect to any work performed by or for Spirit pursuant to the Supply Agreement are the exclusive property of Boeing. All inventions conceived by or for Spirit with respect to any work performed by or for Spirit pursuant to the Supply Agreement and any patents claiming such inventions are the exclusive property of Spirit, except that Boeing will own any such inventions that Boeing reasonably believes are applicable to the B787 platform, and Boeing may seek patent protection for such B787 inventions or hold them as trade secrets, provided that, if Boeing does not seek patent protection, Spirit may do so.

        Except as Boeing otherwise agrees, Spirit may only use Boeing proprietary information and materials (such as tangible and intangible confidential, proprietary and/or trade secret information and tooling) in the performance of its obligations under the Supply Agreement. Spirit is prohibited from selling products manufactured using Boeing proprietary information and materials to any person other than Boeing without Boeing's authorization.

        Spirit has granted to Boeing a license to Spirit proprietary information and materials and software and related products for use in connection with the testing, certification, use, sale or support of a product covered by the Supply Agreement, or the manufacture, testing, certification, use, sale or support of any aircraft including and/or utilizing a product covered by the Supply Agreement. Spirit has also granted to Boeing a license to use Spirit intellectual property to the extent such intellectual property interferes with Boeing's use of products or intellectual property belonging to Boeing under the Supply Agreement.

        To protect Boeing against Spirit's default, Spirit has granted to Boeing a license, exercisable on such default to practice and/or use, and license for others to practice and/or use on Boeing's behalf, Spirit's

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intellectual property and tooling related to the development, production, maintenance or repair of products in connection with making, using and selling products. As a part of the foregoing license, Spirit must, at the written request of and at no additional cost to Boeing, promptly deliver to Boeing any such licensed property considered by Boeing to be necessary to exercise Boeing's rights under the license.

        B787 Supply Agreement.     The B787 Supply Agreement establishes three classifications for patented invention and proprietary information: (1) intellectual property developed by Spirit during activity under the B787 Supply Agreement, or Spirit IP; (2) intellectual property developed jointly by Boeing and Spirit during that activity, or Joint IP; and (3) all other intellectual property developed during activity under the B787 Supply Agreement, or Boeing IP.

        Boeing may use Spirit IP for work on the B787 program and Spirit may license it to third parties for work on such program. Spirit may also not unreasonably withhold consent to the license of such intellectual property to third parties for work on other Boeing programs, provided that it may require a reasonable royalty to be paid and, with respect to commercial airplane programs, that Spirit has been offered an opportunity, to the extent commercially feasible, to work on such programs.

        Each party is free to use Joint IP in connection with work on the B787 and other Boeing programs, but each must obtain the consent of the other to use it for other purposes. If either party wishes to license Joint IP to a third party for work on a Boeing program other than the B787, then the other party may require a reasonable royalty, but may not unreasonably withhold its consent, as long as (if the program in question is another Boeing commercial airplane program) Spirit has been offered an opportunity, to the extent commercially feasible, to perform work for the particular program.

        Spirit is entitled to use Boeing IP for the B787 program, and may require Boeing to license it to subcontractors for the same purpose.

        Additional License From Boeing.     Boeing has licensed certain intellectual property rights to Spirit under a Hardware Material Services General Terms Agreement, or HMSGTA, and four initial Supplemental License Agreements, or SLAs, under the HMSGTA. The HMSGTA and the initial SLAs grant Spirit licenses to use Boeing intellectual property to manufacture listed parts for the aftermarket and to perform maintenance, repair and overhaul, or MRO, of aircraft and aircraft components for customers other than Boeing. These agreements also permit Spirit to use knowledge obtained by Spirit personnel prior to the closing of the Boeing Acquisition. Spirit also may obtain additional SLAs from Boeing and those SLAs will also supersede the restrictions on Spirit's use of Boeing's proprietary information and materials described above. Spirit pays Boeing royalties for the use of these licenses.


Intellectual Property

        We have several patents pertaining to our processes and products. While our patents, in the aggregate, are of material importance to our business, no individual patent or group of patents is of material importance. We also rely on trade secrets, confidentiality agreements, unpatented knowledge, creative products development and continuing technological advancement to maintain our competitive position.


Our Products

        We are organized into three principal reporting segments: (1) Fuselage Systems, which includes forward, mid and rear fuselage sections; (2) Propulsion Systems, which includes nacelles, struts/pylons and engine structural components; and (3) Wing Systems, which includes wing systems and components, flight control surfaces and other miscellaneous structural parts. The Fuselage Systems segment manufactures products at our facilities in Wichita, Kansas and Kinston, North Carolina, with an assembly plant for the A350 XWB in Saint-Nazaire, France. The Propulsion Systems segment manufactures products at our facilities in Wichita and Chanute, Kansas, and the Wing Systems segment manufactures products at our facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Subang, Malaysia and Kinston, North Carolina. Fuselage Systems, Propulsion Systems and Wing Systems represented approximately 48%, 27%,

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and 25%, of our net revenues for the twelve months ended December 31, 2013, respectively. All other activities fall within the All Other segment, representing less than 1% of our net revenues for the twelve months ended December 31, 2013, 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.

        As the programs we are involved in move through their life cycles, we classify them based on where they fall in the life cycle. The following table summarizes the program phases and programs in each category:

Program Phases
 
Life Cycle
 
Aircraft Platform
New   Generally early in development phase with possible low rate production   A350 XWB, Sikorsky CH53-K,
Mitsubishi Regional Jet,
Bombardier CSeries
    Significant design evolution    
    Typically has not achieved certifications    

Maturing

 

Generally in early production phase

 

B787, Rolls-Royce BR725, G280,
    Typically certification is achieved in this phase   G650, KC-46
    Less design evolution than in new program phase    

Mature

 

Generally at full-rate production

 

B737, B747, B767, B777, A320
    Typically certification has been achieved   Family, A330, A380, P8-A
    Relatively stable design with less engineering change    

    Commercial Aircraft Structures

        We principally design, engineer and manufacture commercial aircraft structures such as fuselages, nacelles (including thrust reversers), struts/pylons, wings and wing assemblies and flight control surfaces. We are the largest independent supplier of aerostructures to Boeing and one of the largest independent suppliers of aerostructures to Airbus. Sales related to the commercial aircraft structures market, some of which may be used in military applications, represented approximately 99% of our net revenues for the year ended December 31, 2013.

        Our structural components, in particular the forward fuselage and nacelles, are among the most complex and highly engineered structural components and represent a significant percentage of the costs of each aircraft. We are currently the sole-source supplier of 97% of the products we sell to Boeing and Airbus, as measured by dollar value of products sold. We typically sell a package of aerostructure components, referred to as a ship set, to our customers.

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        The following table summarizes the major commercial programs that we currently have under long-term contract by product and aircraft platform.

Product
 
Description
 
Aircraft Platform
Fuselage Systems        

Forward Fuselage

  Forward section of fuselage which houses flight deck, passenger cabin and cargo area   B737, B747, B767, B777, B787

Other Fuselage Sections

 

Mid-section and other sections of the fuselage and certain other structural components, including floor beams

 

B737, B747, B777, A350 XWB

Propulsion Systems        

Nacelles (including Thrust Reversers)

  Aerodynamic structure surrounding engines   B737, B747, B767, B777, Rolls-Royce BR725 Engine (for Gulfstream G650)

Struts/Pylons

 

Structure that connects engine to the wing

 

B737, B747, B767, B777, B787, Mitsubishi Regional Jet, Bombardier CSeries

Wing Systems        

Flight Control Surfaces

  Flaps and slats   B737, B777, A320 family

Wing Structures

 

Wing framework which consists mainly of spars, ribs, fixed leading edge, stringers, trailing edges and flap track beams

 

B737, B747, B767, B777, B787, A320 family, A330, A340, A350 XWB, A380, Gulfstream G650, Gulfstream G280

    Military Equipment

        In addition to providing aerostructures for commercial aircraft, we also design, engineer and manufacture structural components for military aircraft. We have been awarded a significant amount of work for the B737 P-8A, B737 C40 and B767 KC-46 Tanker. The B737 P-8A, B737 C40 and B767 KC-46 Tanker are commercial aircraft modified for military use. Other military programs for which we provide products include the development of the Sikorsky CH-53K and Bell Helicopter V-280 tilt-rotor, and various other programs.

        The following table summarizes the major military programs that we currently have under long-term contract by product and military platform. Rotorcraft is part of the Fuselage Systems segment and low observables, radome and other military are part of the Wing Systems segment.

Product
 
Description
 
Military Platform
Low Observables   Radar absorbent and translucent materials   Various
Rotorcraft   Forward cockpit and cabin   Sikorsky CH-53K Development Program

 

 

Fuselage

 

Bell Helicopter V-280 Development Program
Other Military   Fabrication, bonding, assembly, testing, tooling, processing, engineering analysis, and training   Various

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    Aftermarket

        We continue to broaden our base for aftermarket support of the products we design and build. We have developed our global sales and marketing channel for spare parts, with sales offices in Singapore, Ireland, China and the U.S. Our Spirit catalog has over 14,000 parts that we are selling directly to the marketplace by virtue of having obtained parts manufacturing approvals from the FAA. In the area of MRO we have repair stations in Wichita, Kansas, with FAA and European Aviation Safety Agency (EASA) certifications, and Prestwick, Scotland, which is EASA-certified with FAA certification pending. In addition, we operate an MRO repair station through a joint venture in Jinjiang, China, Taikoo Spirit AeroSystems Composite Company, Ltd., which holds Civil Aviation Administration of China certification and FAA and EASA approval.

        The following table summarizes our aftermarket products and services:

Product
 
Description
 
Aircraft Platform
Spares   Provides replacement parts and components support for:    
    In production aircraft   B737NG, B747, B767, B777, B787, Gulfstream G280 and G650, A320 family, A330, A340, A380

 

 

Out of production aircraft

 

B707, B727, B737 Classic, B757
Maintenance, Repair and Overhaul   Certified repair stations that provide complete on-site nacelle repair and overhaul; maintains global partnerships to support MRO services   B737, B747, B757, B767, B777 and G650 nacelles, and G650 and G280 wing components

Rotable Assets

 

Maintain a pool of rotable assets for exchange and/or lease

 

B737, B747, B757, B767, B777


Our Competitive Strengths

        We believe our key competitive strengths include:

        Leading Position in the Growing Commercial Aerostructures Market.     We are one of the largest independent non-OEM commercial aerostructures manufacturers with an estimated 17% market share of the global market. Based on their published aircraft backlog figures, Boeing and Airbus had a combined backlog of 10,639 commercial aircraft as of December 31, 2013, and 9,055 commercial aircraft as of December 31, 2012. We are under contract to provide aerostructure products for approximately 98% of the aircraft that comprise this commercial aircraft backlog. We are currently the sole-source supplier of 97% of the products we sell to Boeing and Airbus, as measured by dollar value of the products sold. The significant Boeing and Airbus aircraft order backlog for scheduled deliveries in this decade, and our strong relationships with Boeing and Airbus, should enable us to continue to profitably grow our core commercial aerostructures business.

        Participation on High-Volume and Major Growth Platforms.     We derive a high proportion of our Boeing revenues from the high-volume B737 program and a high proportion of our Airbus revenues from the high-volume A320 program. Boeing's backlog consists of approximately 3,680 B737s (more than eight years of backlog at current build rates) and Airbus' backlog consists of approximately 4,298 aircraft in the A320 family (more than eight years of backlog at current build rates). The B737 and A320 families are Boeing's and Airbus' best-selling commercial airplanes, respectively. We have also been awarded a significant amount of work on major twin-aisle programs, the B777, B787 and A350 XWB.

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        Stable Base Business.     We have entered into long-term supply agreements with Boeing and Airbus, our two largest customers, making us the exclusive supplier for most of the products covered by these contracts. Our supply agreements with Boeing provide that we will continue to supply essentially all of the products we currently supply to Boeing for the life of the current aircraft programs, including commercial derivative models. The principal supply agreements we have entered into with Boeing make us Boeing's exclusive source for substantially all of the products covered by the agreements.

        Under our supply agreements with Airbus, we supply most of our products for the life of the aircraft program, including commercial derivative models. For the A380 and A350 XWB, we have long-term requirements contracts with Airbus that cover a fixed number of units. We are currently the sole-source supplier for approximately 50% of the products, as measured by dollar volume, that we sell directly to Airbus.

        Strong Incumbent and Competitive Position.     We have a strong incumbent position on the products we currently supply to Boeing and Airbus, forged by long-standing relationships and long-term supply agreements. Several members of our management team have a long history of working in the aerospace industry, at Boeing Wichita and BAE Aerostructures. We believe our management team possesses inherent knowledge of and relationships with Boeing and Airbus that may not be matched to a corresponding degree between other suppliers and these two OEMs.

        We believe that OEMs incur significant costs to change aerostructures suppliers once contracts are awarded. Such changes after contract award require additional testing and certification, which may create production delays and significant costs for both the OEM and the new supplier. We also believe it would be cost prohibitive for other suppliers to duplicate our facilities and the over 20,000 major pieces of equipment that we own or operate. The combined insurable replacement value of all the buildings and equipment we own or operate is approximately $6.6 billion, including approximately $2.6 billion for buildings, approximately $2.4 billion for equipment that we own and approximately $1.6 billion for other equipment used in the operation of our business. The insurable values represent the estimated replacement cost of buildings and equipment used in our operations and covered by property insurance, and exceed the fair value of assets acquired as determined for financial reporting purposes. As a result, we believe that as long as we continue to meet our customers' requirements, the probability that they change suppliers on our current statement of work is quite low. Our incumbent position also provides us with a competitive advantage with respect to new business from our customers.

        Industry-Leading Technology, Design Capabilities and Manufacturing Expertise.     Spirit AeroSystems, independently, and previously as Boeing Wichita, has over 80 years of experience designing and manufacturing large-scale, complex aerostructures. We possess industry-leading engineering capabilities that include significant expertise in structural design, technology development, test, and regulatory certification (FAA and international civil aviation authorities). We specialize in the use of metallic and composite materials, conducting stress analyses to ensure structural integrity, systems engineering to ensure customer and regulatory requirements are clearly identified and managed, and acoustics technology.

        With approximately 1,500 degreed engineering and technical employees (including over 40 degreed contract engineers) and access to approximately 800 engineers from other engineering firms, we possess knowledge and manufacturing know-how that customers depend on and that would be difficult for other suppliers to replicate. In addition to our engineering expertise, we have strong manufacturing and technological capabilities. Our manufacturing processes are highly automated, delivering efficiency and quality, and we have expertise in manufacturing aerostructures using both metallic and composite materials. We have strong technical expertise in bonding and metals fabrication, assembly, tooling and composite manufacturing, including the handling of all composite material grades and fabricating large-scale complex contour composites. We provide aftermarket support for the products we design and build.

        We believe our technological, engineering and manufacturing capabilities separate us from many of our competitors and give us a significant competitive advantage to grow our business and increase our

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market share. The fact that we are one of the major external suppliers of forward fuselages for large commercial aircraft demonstrates our industry leadership. The forward fuselage is one of the most complex and technologically advanced aerostructures on a commercial aircraft because it must satisfy the aircraft's contour requirements; balance strength, aerodynamics and weight; and house the cockpit and avionics.

        Competitive and Predictable Labor Cost Structure.     Following the Boeing Acquisition, we entered into new labor contracts with our unions that established wage levels that are aligned with the local market. We also changed work rules and significantly reduced the number of job categories, resulting in greater flexibility in work assignment programs and increased productivity. Over the past four years, we successfully negotiated long-term labor agreements with each of the five unions representing factory and office workers in our U.S. locations. As a result, we expect our labor costs to be stable and predictable through 2019.

        Experienced Management Team.     We have an experienced and proven management team with significant aerospace and defense industry experience. We continue to add new talent to our management team and realign our existing talent pool. Our management team has successfully expanded our business and established the stand-alone operations of our business, and is actively working to reduce costs. Many of our executives and senior managers have lengthy experience working with our primary customers, including Boeing and Airbus, which provides us with detailed insight into how we can better serve our customers.


Operating Segments

        We operate 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. We serve customers in addition to Boeing and Airbus across our three principal segments; however, these customers currently do not represent a significant portion of our revenues, and are not expected to in the near future. 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, Kansas.

        The Fuselage Systems segment includes development, production and marketing of forward, mid and rear fuselage sections and systems, primarily to aircraft OEMs, as well as related spares and MRO. The Fuselage Systems segment manufactures products at our facilities in Wichita, Kansas; Kinston, North Carolina; and Saint-Nazaire, France.

        The 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 Propulsion Systems segment manufactures products at our facilities in Wichita and Chanute, Kansas.

        The Wing Systems segment includes development, production and marketing of wings and wing components (including flight control surfaces) and 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; Kinston, North Carolina; Prestwick, Scotland; and Subang, Malaysia.

        We are evaluating the potential realignment of our reportable segments as part of our 2014 business strategy. The reportable segment amounts and discussions reflected in this Annual Report reflect the management reporting that existed through the end of our 2013 fiscal year.

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Sales and Marketing

        Our established sales and marketing infrastructure supports our efforts to expand our business with new and existing customers in three sectors of the aerostructures industry: (1) large commercial airplanes, (2) business and regional jets and (3) military/helicopter. The sales directors establish and maintain relationships with individual customers and are supported in their campaigns by sales teams within specific product specialties and a market research team performing various analyses related to those products and customers. The comprehensive sales and marketing teams work closely to ensure a consistent, single message approach with customers.

        Although we have long-term contracts with Boeing and Airbus on programs such as the B737, B787, A320, A350 XWB and A380, and OEMs generally desire to minimize costs by retaining established aerostructure suppliers, our sales and marketing team continues to maintain strong relationships with the OEMs to position us for future business opportunities. Our marketing team continues to research and analyze trends in our industry and in new product development, and our sales team maintains regular contact with key Boeing and Airbus decision-makers to prepare for new business opportunities from both companies.

        We maintain a customer contact database to maximize our interactions with existing and potential customers. In the time that Spirit has existed as an independent company, we have been successful in building a positive identity and name recognition for the Company brand through advertising, trade shows, sponsorships and Spirit customer events. In order to diversify and win new customers, we market our expertise in the design and manufacture of major aerostructures and advanced manufacturing capabilities with both composites and traditional metals processes.


Customers

        Our primary customers are aircraft OEMs. Boeing and Airbus are our two largest customers. We are the largest independent aerostructures supplier to Boeing and one of the largest independent suppliers to Airbus. We entered into long-term supply agreements with our customers to provide aerostructure products to aircraft programs. As of December 31, 2013, virtually all of the products we sell are under long-term contracts and 97% of those products, as measured by dollar value of products sold, are supplied by us on a sole-sourced basis.

        We have good relationships with our customers due to our diverse product offerings, leading design and manufacturing capabilities using both metallic and composite materials, and competitive pricing.

        Boeing.     For the twelve months ended December 31, 2013, approximately 84% of our revenues were from sales to Boeing. We have a strong relationship with Boeing given our predecessor's 75+ year history as a Boeing division. As part of the Boeing Acquisition, we entered into a long-term supply agreement under which we are Boeing's exclusive supplier for substantially all of the products and services provided by Boeing Wichita prior to the Boeing Acquisition for the life of the programs. In addition, Boeing selected us to be the design leader for the Boeing B787 forward fuselage based in part on our expertise with composite technologies.

        We believe our relationship with Boeing is unmatched in the industry and will allow us to continue to be an integral partner with Boeing in the designing, engineering and manufacturing of complex aerostructures.

        Airbus.     For the twelve months ended December 31, 2013, approximately 10% of our revenues were from sales to Airbus. As a result of the BAE Acquisition, we became one of the largest independent aerostructures suppliers to Airbus, and we have expanded our relationship through new business wins. Under our supply agreement with Airbus, we supply products for the life of the aircraft program, including commercial derivative models, with pricing determined through 2015. For the A350 XWB and A380 programs, we have long-term requirements contracts with Airbus that cover a fixed number of units. We believe we can leverage our relationship with Airbus and our history of delivering high-quality products to further increase our sales to Airbus and continue to partner with Airbus on new programs going forward.

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        We are a significant supplier of the composite fuselage structure for the new Airbus A350 XWB. To accommodate this and other work, we expanded our operations in 2011 with the opening of a manufacturing facility in Kinston, North Carolina and an assembly plant in Saint-Nazaire, France, which will assemble the center fuselage sections it receives from the Kinston, North Carolina facility before transporting the completed assembled unit to Airbus. In addition, we have a contract with Airbus to design and manufacture a major wing structure for the A350 XWB program. Spirit Europe designs and assembles the wing leading edge structure primarily at its facility in Prestwick, Scotland. The composite front spar is built at the facility in Kinston, North Carolina with sub-assemblies being manufactured at the Spirit AeroSystems Malaysia facility in Subang, Malaysia.

        Although most of our revenues are obtained from sales inside the U.S., we generated $806.1 million, $785.7 million, and $653.1 million in sales to international customers for the twelve months ended December 31, 2013, December 31, 2012, and December 31, 2011, respectively, primarily to Airbus.

        The following chart illustrates the split between domestic and foreign revenues (dollars in millions):

 
  Year Ended
December 31, 2013
  Year Ended
December 31, 2012
  Year Ended
December 31, 2011
 
Revenue Source (1)
  Net Revenues   Percent of
Total
Net Revenues
  Net Revenues   Percent of
Total
Net Revenues
  Net Revenues   Percent of
Total
Net Revenues
 

United States

  $ 5,154.9     87 % $ 4,612.0     85 % $ 4,210.7     87 %

International

                                     

United Kingdom

    559.7     9 %   470.4     9 %   422.6     8 %

Other

    246.4     4 %   315.3     6 %   230.5     5 %
                           

Total International

    806.1     13 %   785.7     15 %   653.1     13 %
                           

Total Revenues

  $ 5,961.0     100 % $ 5,397.7     100 % $ 4,863.8     100 %
                           
                           

(1)
Revenues are attributable to countries based on the destination where goods are delivered.

        The international revenue is included primarily in the Wing Systems segment. All other segment revenues are primarily from U.S. sales. Approximately 6% of our long-lived assets based on book value are located in the United Kingdom as part of Spirit Europe with approximately another 5% of our long-lived assets located in countries outside the United States and the United Kingdom.


Expected Backlog

        As of December 31, 2013, our expected backlog associated with large commercial aircraft, business and regional jet, and military equipment deliveries through 2019, calculated based on contractual product prices and expected delivery volumes, was approximately $41.1 billion. This is an increase of $5.8 billion from our corresponding estimate as of the end of 2012 reflecting the fact that Airbus and Boeing new orders exceeded deliveries in 2013. Backlog is calculated based on the number of units Spirit is under contract to produce on our fixed quantity contracts, and Boeing and Airbus announced backlog on our supply agreements. The number of units may be subject to cancellation or delay by the customer prior to shipment, depending on contract terms. The level of unfilled orders at any given date during the year may be materially affected by the timing of our receipt of firm orders and additional airplane orders, and the speed with which those orders are filled. Accordingly, our expected backlog as of December 31, 2013 may not necessarily represent the actual amount of deliveries or sales for any future period.


Manufacturing and Engineering

    Manufacturing

        Our expertise is in designing, engineering and manufacturing large-scale, complex aerostructures. We maintain eight state-of-the-art manufacturing facilities in Wichita, Kansas; Chanute, Kansas; Tulsa,

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Oklahoma; McAlester, Oklahoma; Kinston, North Carolina; Prestwick, Scotland; Saint-Nazaire, France; and Subang, Malaysia.

        Our core manufacturing competencies include:

    composites design and manufacturing processes;

    leading mechanized and automated assembly and fastening techniques;

    large-scale skin fabrication using both metallic and composite materials;

    chemical etching and metal bonding expertise;

    monolithic structures technology; and

    precision metal forming producing complex contoured shapes in sheet metal and extruded aluminum.

        Our manufacturing expertise is supported by our state-of-the-art equipment. We have over 20,000 major pieces of equipment installed in our customized manufacturing facilities. For example, for the manufacture of the B787 composite forward fuselage, we installed a 30-foot diameter by 70-foot long autoclave, which is one of the largest autoclaves in the world. An autoclave is an enclosure device that generates controlled internal heat and pressure conditions used to cure and bond certain resins which is used in the manufacture of composite structures. We installed a comparable autoclave as well as other specialized machines in Kinston, North Carolina to support our work on the A350 XWB. We intend to continue to make the appropriate investments in our facilities to support and maintain our industry-leading manufacturing expertise.

    Engineering

        Spirit employs approximately 1,500 engineers and technical employees, including over 40 contract engineers. In addition, we currently contract the work of approximately 800 engineers from engineering services firms worldwide.

        Spirit employs 28 technical fellows who are experts in engineering and who keep the Company current with new technology by producing technical solutions for new and existing products and processes. We also employ 13 FAA designees and an additional 13 engineers who are in the process of becoming designees. The designees are experienced engineers appointed by the FAA to approve engineering data and witness compliance testing used for certification. In addition, we have an additional seven FAA designees available via contract to assist on an as-needed basis.

        The primary purpose of the engineering organization is to provide continuous support for new and ongoing designs, technology innovation and development for customer advancements, and production-related process improvements. We possess a broad base of engineering skills for design, analysis, test, certification, tooling and support of major fuselage, wing and propulsion assemblies using both metallic and composite materials. In addition, our regulatory certification expertise helps ensure associated designs and design changes are compliant with applicable regulations.

        Our engineering organization is composed of four primary groups, including: (1) Structures Design and Drafting, which focuses on production support, design-for-manufacturing and major product derivatives, and new customer introductions; (2) Structures Technology, which focuses on overall structural integrity over the lifecycle of the airframe through stress and durability analysis, damage tolerance analysis and vibration testing; (3) Manufacturing Engineering, which is responsible for applying lean manufacturing techniques, interpreting design drawings and providing manufacturing sequence work plans; and (4) Liaison, Lab and Materials, Processes and Standards, which conducts research into defects discovered by quality assurance through analytical chemistry, metallurgical, static and dynamic testing and full-scale testing.

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        Our industry-leading engineering capabilities are key strategic factors differentiating us from our competitors.

    Research and Development

        We believe that world-class research and development helps to maintain our position as an advanced partner to our OEM customers' new product development teams. As a result, we spend significant capital and financial resources on our research and development, including approximately $34.7 million during the year ended December 31, 2013, approximately $34.1 million during the year ended December 31, 2012, and approximately $35.7 million during the year ended December 31, 2011. Through our research, we strive to develop unique intellectual property and technologies that will improve our OEM customers' products and, at the same time, position us to win work on new products. Our development effort primarily focuses on preparing for the initial production of new products and improving manufacturing processes on our current work. It also serves as an ongoing process that helps develop ways to reduce production costs and streamline manufacturing processes.

        Our research and development is geared toward the architectural design of our principal products: fuselage systems, propulsion systems and wing systems. We are currently focused on research in areas such as advanced metallic joining, low-cost composites, acoustic attenuation, efficient structures, systems integration, advanced design and analysis methods, and new material systems. Other items that are expensed relate to research and development that is not funded by the customer. We collaborate with universities, research facilities and technology partners in our research and development.


Suppliers and Materials

        The principal raw materials used in our manufacturing operations are aluminum, titanium, steel and carbon fiber. We also purchase metallic parts, non-metallic parts, and machined components. In addition, we procure subassemblies from various manufacturers which are used in the final aerostructure assembly.

        Currently we have approximately 1,400 active manufacturing suppliers. No one supplier represents more than 3% of our total cost of sales. Our strategy is to enter into long-term contracts with suppliers to secure competitive pricing. Our exposure to rising costs of raw material is limited to some extent through leveraging relationships with our OEM's high-volume contracts.

        We continue to seek and develop sourcing opportunities from North America to Europe and Asia to achieve a competitive global cost structure. Over 25 countries are represented in our international network of suppliers.


Environmental Matters

        Our operations and facilities are subject to various environmental, health and safety laws and regulations, including federal, state, local and foreign government requirements, governing, among other matters, the emission, discharge, handling and disposal of regulated materials, the investigation and remediation of contaminated sites, and permits required in connection with our operations. Our operations are designed, maintained and operated to promote protection of human health and the environment. Although we believe that our operations and facilities are in material compliance with applicable environmental and worker protection laws and regulations, management cannot provide assurance that future changes in such laws or their enforcement, or the nature of our operations will not require us to make significant additional expenditures to ensure continued compliance. Further, we could incur substantial costs, including costs to reduce air emissions, clean-up costs, fines and sanctions, and third-party property damage or personal injury claims as a result of violations of or liabilities under environmental laws, relevant common law or the environmental permits required for our operations.

        New regulations or more stringent enforcement of existing requirements could also result in additional compliance costs. For example, various governments have enacted or are considering enactment

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of laws to reduce emissions of carbon dioxide and other so-called greenhouse gases ("GHG"). In particular, the U.S. Environmental Protection Agency (the "EPA") has promulgated new regulations that require certain of our facilities to report annual GHG emissions and may require new operating permits to be issued for those facilities. In the absence of a national price for carbon-based air pollutant emissions, new legislation from Congress, or information relative to additional regulation from the EPA, we are not in a position at this time to estimate the costs which may result from these or similar actions.

    United States

        Under some environmental laws in the United States, a current or previous owner or operator of a contaminated site may be held liable for the entire cost of investigation, removal or remediation of regulated materials at such property, whether or not the owner or operator knew of, or was responsible for, the presence of such regulated materials. Persons who arrange for disposal or treatment of hazardous materials also may be liable for the costs of investigation, removal or remediation of those substances at a disposal or treatment site, regardless of whether the affected site is owned or operated by them. Because we own and/or operate a number of facilities that have a history of industrial or commercial use and because we arrange for the disposal of regulated materials at many disposal sites, we may and do incur costs for investigation, removal and remediation.

        The Asset Purchase Agreement for the Boeing Acquisition, referred to herein as the "Asset Purchase Agreement", provides, with limited exceptions, that Boeing is responsible for environmental liabilities relating to conditions existing at the Wichita, Kansas and Tulsa and McAlester, Oklahoma facilities as of the Boeing Acquisition date. For example, Boeing is subject to an administrative consent order issued by the Kansas Department of Health and Environment, or KDHE, to contain and clean up contaminated groundwater, which underlies a majority of the Wichita site. Pursuant to the KDHE order, Boeing has a long-term remediation plan in place, and containment and remediation efforts are underway. We are responsible for any environmental conditions that we cause at these facilities following the Boeing Acquisition.

    United Kingdom

        In the United Kingdom, remediation of contaminated land may be compelled by the government in certain situations. If a property is to be redeveloped, the local authority, in its planning role, may require remediation as a condition to issuing a permit. In addition, in situations in which the contamination is causing harm to human health or polluting the environment, the local authority may use its environmental legislative powers to force remediation so that the impacted areas are "suitable for use." If contamination is polluting the property of a third party or causing loss, injury or damage, the third party may file an action against the owner or operator of the source in common law based on negligence or nuisance to recover the value of the loss, injury or damage sustained.

    Other International Sites

        Our interests in other international sites are subject to foreign government environmental laws and regulations. It is our policy and practice to comply with all requirements, both domestic and international. We believe that our procedures are properly designed to prevent unreasonable risk of environmental damage and resulting financial liability in connection with our business.


Competition

        Although we are one of the largest independent non-OEM aerostructures suppliers, based on annual revenues, with an estimated 17% share of the global non-OEM aerostructures market, this market remains highly competitive and fragmented. Our primary competition currently comes from either work performed by internal divisions of OEMs or other first-tier suppliers, but direct competition continues to grow.

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        Our principal competitors among OEMs include Airbus (including their wholly-owned subsidiaries Aerolia SAS, and Premium Aerotec GmbH), Boeing, Dassault Aviation, Embraer Brazilian Aviation Co., Alenia Aermacchi, Gulfstream Aerospace Co., United Technologies Corporation, and Textron Inc. These OEMs may choose not to outsource production of aerostructures due to their own direct labor and overhead considerations and capacity utilization at their own facilities. Consequently, traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce parts in-house or to outsource them. Offset requirements from customers of OEMs may also drive some decisions relative to their business model for production.

        Our principal competitors among non-OEM aerostructures suppliers are Aircelle S.A., Fuji Heavy Industries, Ltd., GKN Aerospace, Kawasaki Heavy Industries, Inc., Mitsubishi Heavy Industries, Sonaca, Triumph Group, Inc., Latecoere S.A., and Nexcelle. Our ability to compete for new aerostructures contracts depends upon (1) our design, engineering and manufacturing capabilities, (2) our underlying cost and pricing structure, (3) our business relationship with OEMs, and (4) our available manufacturing capacity. Some of our competitors have greater resources than we do and, therefore, may be able to adapt more quickly to new or emerging technologies and changes in customer requirements, or devote greater resources to the promotion and sale of their products than we can. Providers of aerostructures have traditionally competed on the basis of cost, technology, quality and service. We believe that developing and maintaining a competitive advantage will require continued investment in product development, engineering, supply-chain management and sales and marketing, and we may not have enough resources to make such investments.


Employees

        As of December 31, 2013, we had approximately 13,948 employees and approximately 229 contract labor personnel, located in our six U.S. facilities. Approximately 85% of our U.S. employees are represented by five unions. Our largest union is the International Association of Machinists and Aerospace Workers ("IAM"), which represents approximately 7,270 employees, or 52%, of the U.S. workforce. We successfully negotiated a new long-term ten-year contract with the IAM in 2010, which is in effect through June 25, 2020. For IAM-represented employees at our Kinston, North Carolina facility, we successfully negotiated a new long-term contract in December 2012, which is in effect through December 2024. The Society of Professional Engineering Employees in Aerospace — Wichita Technical and Professional Unit ("SPEEA — WTPU") represents approximately 1,696 employees, or 12%, of the U.S. workforce. In December of 2011, we successfully negotiated a new 9 1 / 2 year contract with SPEEA-WTPU, which is in effect through January 31, 2021. The International Union, Automobile, Aerospace and Agricultural Implement Workers of America ("UAW") represents approximately 1,978 employees, or 14%, of the U.S. workforce. The UAW contract is in effect through November 30, 2020. The Society of Professional Engineering Employees in Aerospace — Wichita Engineering Unit ("SPEEA — WEU") represents approximately 704 employees, or 5%, of the U.S. workforce. We successfully negotiated a new contract with this union in 2012, which is in effect through December 1, 2018. The International Brotherhood of Electrical Workers ("IBEW") represents approximately 193 employees, or 1%, of the U.S. workforce. The IBEW contract is in effect through September 18, 2020.

        As of December 31, 2013, we had approximately 953 employees and approximately 75 contract labor personnel located in our two U.K. facilities. Approximately 679, or 71%, of our U.K. employees are represented by one union, Unite (Amicus Section). In 2013, the Company negotiated two separate ten-year pay agreements, with the Manual Staff bargaining and the Monthly Staff bargaining groups of the Unite union. These agreements fundamentally cover basic pay and variable at risk pay, while other employee terms and conditions generally remain the same from year to year until both parties agree to change them. The current pay agreements expire December 31, 2022.

        As of December 31, 2013, we had approximately 562 employees and approximately 14 contract labor personnel in our Malaysia facility. None of our Malaysia employees are currently represented by a union.

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        As of December 31, 2013, we had approximately 109 employees and approximately 41 contract labor personnel in our French facilities. None of our France employees are currently represented by a union.

        We consider our relationships with our employees to be satisfactory.


Government Contracts

        Companies engaged in supplying defense-related equipment and services to U.S. Government agencies, either directly or by subcontract, are subject to business risks specific to the defense industry. These risks include the ability of the U.S. Government to unilaterally: (1) suspend or debar us from receiving new prime contracts or subcontracts; (2) terminate existing contracts; (3) reduce the value of existing contracts; (4) audit our contract-related costs and fees, including allocated indirect costs; and (5) control and potentially prohibit the export of our products.

        Most U.S. Government contracts for which we subcontract can be terminated by the U.S. Government either for its convenience or if the prime contractor defaults by failing to perform under the contract. In addition, the prime contractor typically has the right to terminate our subcontract for its convenience or if we default by failing to perform under the subcontract. Termination for convenience provisions generally provide only for our recovery of costs incurred or committed, settlement expenses and profit on the work completed prior to termination. Termination for default provisions generally provide for the subcontractor to be liable for excess costs incurred by the prime contractor in procuring undelivered items from another source.


Foreign Ownership, Control or Influence ("FOCI")

        Due to the fact that more than 50% of our voting power is effectively controlled by a non-U.S. entity (Onex) we are required to operate in accordance with the terms and requirements of a Special Security Agreement, or SSA, with the Department of Defense ("DOD"). Under the DOD National Industrial Security Program Operating Manual ("NISPOM"), the U.S. Government will not award contracts to companies determined to be under FOCI, where a DOD Facility Security Clearance, or FCL, is required, unless certain "mitigation" measures are put in place. The purpose of the FOCI mitigation measures is to protect cleared U.S. defense contractors against improper FOCI.

        We have been cleared to the "Secret" level under an SSA, which is one of the recognized FOCI mitigation measures under the NISPOM. As a cleared entity, we must comply with the requirements of our SSA, the NISPOM and any other applicable U.S. Government industrial security regulations. Failure to follow the requirements of the SSA, the NISPOM or any other applicable U.S. Government industrial security regulations could, among other things, result in termination of our FCL, which in turn would preclude us from being awarded classified contracts or, under certain circumstances, performing on our existing classified contracts.


Governmental Regulations

        The commercial aircraft component industry is highly regulated by the Federal Aviation Authority, or FAA, in the United States, the Joint Aviation Authority, or JAA, in Europe and other agencies throughout the world. The military aircraft component industry is governed by military quality specifications. We, and the components we manufacture, are required to be certified by one or more of these entities or agencies, and, in some cases, by individual OEMs, to engineer and service parts and components used in specific aircraft models.

        We must also satisfy the requirements of our customers, including OEMs and airlines that are subject to FAA regulations, and provide these customers with products and services that comply with the government regulations applicable to commercial flight operations. In addition, the FAA requires that various maintenance routines be performed on aircraft components. We believe that we currently satisfy or exceed these maintenance standards in our repair and overhaul services. We also maintain several FAA-approved repair stations.

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        The technical data and components used in the design and production of our products, as well as many of the products and technical data we export, either as individual items or as components incorporated into aircraft, are subject to compliance with U.S. export control laws. Collaborative agreements that we may have with foreign persons, including manufacturers or suppliers, are also subject to U.S. export control laws.

        Our operations are also subject to a variety of worker and community safety laws. The Occupational Safety and Health Act, or OSHA, mandates general requirements for safe workplaces for all employees. In addition, OSHA provides special procedures and measures for the handling of certain hazardous and toxic substances. Our management believes that our operations are in material compliance with OSHA's health and safety requirements.


Available Information

        Our Internet address is www.spiritaero.com. The content on our website is available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report.

        We make available through our Internet website, under the heading "Investor Relations", our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports after we electronically file such materials with the Securities and Exchange Commission ("SEC"). Copies of our key corporate governance documents, including our Corporate Governance Guidelines, Code of Ethics and Business Conduct, Finance Code of Conduct and charters for our Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are also available on our website.

        Our filed Annual and Quarterly Reports, Proxy Statement and other reports previously filed with the SEC are also available to the public through the SEC's website at http://www.sec.gov. Materials we file with the SEC may also be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Washington D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Item 1A.     Risk Factors

        An investment in our securities involves risk and uncertainties. The risks and uncertainties set forth below are those that we currently believe may materially and adversely affect us, our future business or results of operations, or investments in our securities. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also materially and adversely affect us, our future business or results of operations or investments in our securities.


Risk Factors Related to Our Business and Industry

     Our commercial business is cyclical and sensitive to commercial airlines' profitability. The business of commercial airlines is, in turn, affected by global economic conditions and geo-political considerations.

        We compete in the aerostructures segment of the aerospace industry. Our customers' business, and therefore our own, is directly affected by the financial condition of commercial airlines and other economic factors, including global economic conditions and geo-political considerations that affect the demand for air transportation. Specifically, our commercial business is dependent on the demand from passenger airlines and cargo carriers for the production of new aircraft. Accordingly, demand for our commercial products is tied to the worldwide airline industry's ability to finance the purchase of new aircraft and the industry's forecasted demand for seats, flights, routes and cargo capacity. Similarly, the size and age of the worldwide commercial aircraft fleet affects the demand for new aircraft and, consequently, for our products. Such factors, in conjunction with evolving economic conditions, cause the market in which we operate to be cyclical to varying degrees, thereby affecting our business and operating results.

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        The commercial airline industry is impacted by the strength of the global economy and the geopolitical events around the world. Possible exogenous shocks such as expanding conflicts or political unrest in the Middle East or Asia, renewed terrorist attacks against the industry, or pandemic health crises have the potential to cause precipitous declines in air traffic. Any protracted economic slump, adverse credit market conditions, future terrorist attacks, war or health concerns could cause airlines to cancel or delay the purchase of additional new aircraft which could result in a deterioration of commercial airplane backlogs. If demand for new aircraft decreases, there would likely be a decrease in demand for our commercial aircraft products, and our business, financial condition and results of operations could be materially adversely affected.

     Our business jet programs are sensitive to consumer preferences in the business jet market.

        Our business jet program success is tied to demand for products from the manufacturers with whom we contract. The business jet market is impacted by consumer preference for different business jet models. If demand for new aircraft from our customers decreases, there would likely be a corresponding decrease in demand for our business jet products, and our business, financial condition and results of operations could be materially adversely affected.

     Our business could be materially adversely affected if one of our components causes an aircraft accident.

        Our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us or our suppliers. While we believe that our liability insurance coverage is sufficient to protect us in the event of future product liability claims, it may not be adequate. Also, we may not be able to maintain insurance coverage in the future at an acceptable cost. Any such liability not covered by insurance or for which third-party indemnification is not available could require us to dedicate a substantial portion of our cash flows to make payments on such liability, which could have a material adverse effect on our business, financial condition and results of operations.

        An accident caused by one of our components could also damage our reputation for quality products. We believe our customers consider safety and reliability as key criteria in selecting a provider of aerostructures. If an accident were to be caused by one of our components, or if we were to otherwise fail to maintain a satisfactory record of safety and reliability, our ability to retain and attract customers could be materially adversely affected.

     Our business could be materially adversely affected by product warranty obligations.

        Our operations expose us to potential liability for warranty claims made by customers or third parties with respect to aircraft components that have been designed, manufactured, or serviced by us or our suppliers. Material product warranty obligations could have a material adverse effect on our business, financial condition and results of operations.

     Because we depend on Boeing and, to a lesser extent, Airbus, as our largest customers, our sales, cash flows from operations and results of operations will be negatively affected if either Boeing or Airbus reduces the number of products it purchases from us or if either experiences business difficulties.

        Currently, Boeing is our largest customer and Airbus is our second-largest customer. For the twelve months ended December 31, 2013, approximately 84% and 10% of our net revenues were generated from sales to Boeing and Airbus, respectively. Although our strategy, in part, is to diversify our customer base by entering into supply arrangements with additional customers, we cannot give any assurance that we will be successful in doing so. Even if we are successful in obtaining and retaining new customers, we expect that Boeing and, to a lesser extent, Airbus, will continue to account for a substantial portion of our sales for the foreseeable future. Although we are a party to various supply contracts with Boeing and Airbus which obligate Boeing and Airbus to purchase all of their requirements for certain products from us, those

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agreements generally do not require specific minimum purchase volumes. In addition, if we breach certain obligations under these supply agreements and Boeing or Airbus exercises its right to terminate such agreements, our business will be materially adversely affected. Boeing and Airbus have the contractual right to cancel their supply agreements with us for convenience, which could include the termination of one or more aircraft models or programs for which we supply products. Although Boeing and Airbus would be required to reimburse us for certain expenses, there can be no assurance these payments would adequately cover our expenses or lost profits resulting from the termination. In addition, we have agreed to a limitation on recoverable damages if Boeing wrongfully terminates our main supply agreement with respect to any model or program. If this occurs, we may not be able to recover the full amount of our actual damages. Furthermore, if Boeing or Airbus (1) experiences a decrease in requirements for the products which we supply to it; (2) experiences a major disruption in its business, such as a strike, work stoppage or slowdown, a supply-chain problem or a decrease in orders from its customers; or (3) files for bankruptcy protection; our business, financial condition and results of operations could be materially adversely affected.

     Our largest customer, Boeing, operates in a very competitive business environment.

        Boeing operates in a highly competitive industry. Competition from Airbus, Boeing's main competitor, as well as from regional jet makers and other foreign manufacturers of commercial single-aisle aircraft, has intensified as these competitors expand aircraft model offerings and competitively price their products. As a result of this competitive environment, Boeing continues to face pressure on product offerings and sale prices. While we do have supply agreements with Airbus, we currently have substantially more business with Boeing and thus any adverse effect on Boeing's production of aircraft resulting from this competitive environment may have a material adverse effect on our business, financial condition and results of operations.

     Our business depends, in large part, on sales of components for a single aircraft program, the B737.

        For the twelve months ended December 31, 2013, approximately 46% of our net revenues were generated from sales of components to Boeing for the B737 aircraft. While we have entered into long-term supply agreements with Boeing to continue to provide components for the B737 for the life of the aircraft program, including commercial and the military P-8A Poseidon derivatives, Boeing does not have any obligation to purchase components from us for any replacement for the B737 that is not a commercial derivative model. If we were unable to obtain significant aerostructures supply business for any B737 replacement program, our business, financial condition and results of operations could be materially adversely affected.

     Our business depends, in part, on securing work for replacement programs.

        While we have entered into long-term supply agreements with Boeing to provide components for the B737, B747, B767 and B777 and their commercial derivatives for the life of these aircraft programs, Boeing does not have any obligation to purchase components from us for any subsequent variant of these aircraft that is not a commercial derivative as defined by the Supply Agreement. Boeing has publicly announced its intention to update the B777 with a next-generation twin-engine aircraft program currently named the Boeing 777X. If the changes to the aircraft are later deemed significant enough to disqualify it as a commercial derivative for the B777 under the Supply Agreement, or Boeing successfully establishes it is not capable of being FAA certificated by an amendment to an existing Type Certificate through addition of a minor model or by a Supplemental Type Certificate, there is a risk that we may not be engaged by Boeing on the B777X to generally the same extent of Spirit's involvement in the B777, or at all. If we are unable to obtain significant aerostructures supply business for any update or replacement program for the B777 or any other aircraft program for which we provide significant content, our business, financial condition and results of operations could be materially adversely affected.

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     We may be required to repay Boeing up to approximately $600.2 million of advance payments related to the B787 Supply Agreement. The advances must be repaid in the event that Boeing does not take delivery of a sufficient number of ship sets prior to the termination of the aircraft program.

        In December 2010, Spirit and Boeing entered into a memorandum of agreement and a settlement agreement regarding certain claims associated with the development and production of the B787 airplane. As part of these agreements, Spirit received a payment in December 2010, which was recorded as deferred revenue (short-term) within the consolidated balance sheet pending finalization of a contract amendment which would contain the final settlement terms.

        On May 12, 2011, Boeing and Spirit entered into the B787 Amendment, which finalized the provisions of the memorandum of agreement. Based on the terms of the B787 Amendment, the payment received by Spirit in December 2010 was reclassified from deferred revenue to revenue, and certain advance payments received by Spirit were also reclassified to revenue. The B787 Amendment also spread out repayment of a $700.0 million cash advance made by Boeing to Spirit in 2007 to be offset against the purchase price of the first 1,000 B787 ship sets delivered to Boeing, instead of the first 500 ship sets. In the event Boeing does not take delivery of 1,000 ship sets prior to the termination of the B787 program or the B787 Supply Agreement, any advances not then repaid will be applied against any outstanding payments then due by Boeing to us, and any remaining balance will be repaid in annual installments of $42.0 million on December 15th of each year until the advance payments have been fully recovered by Boeing.

        Accordingly, portions of the advance repayment liability are included as current and long-term liabilities in our consolidated balance sheet. As of December 31, 2013, the amount of advance payments and deferred revenue received by us from Boeing under the B787 Supply Agreement and not yet repaid or recognized as revenue was approximately $600.2 million.

     We may be required to repay Airbus up to approximately $243.9 million of advance payments. The advances must be repaid in the event that Airbus does not take delivery of a sufficient number of ship sets prior to the date set out in the advance agreement.

        In February 2012, Spirit and Airbus entered into an agreement whereby Spirit received a series of payments totaling $250.0 million, which were recorded as advance payments within our consolidated balance sheet.

        The agreement provides for repayment of the $250.0 million in cash advances made by Airbus to be offset against the purchase price of the first 200 Section 15 A350 XWB ship sets delivered to Airbus prior to December 31, 2017. If in the course of 2015, Airbus, in its reasonable opinion, anticipates 200 units will not be ordered and paid for by the end of 2017, both Airbus and Spirit will agree in the first quarter of 2016 on a revised repayment amount to ensure the entire advance is repaid prior to December 31, 2017. In no circumstance would the repayment amount exceed the recurring price of each ship set.

        Portions of the advance repayment liability are included as current and long-term liabilities in our consolidated balance sheet. As of December 31, 2013, the amount of advance payments received by us from Airbus under the advance agreement and not yet repaid or recognized as revenue was approximately $243.9 million.

     The profitability of certain of our new and maturing programs depends significantly on the assumptions surrounding satisfactory settlement of claims and assertions.

        For certain of our new and maturing programs, we regularly commence work or incorporate customer requested changes prior to negotiating pricing terms for engineering work or the product which has been modified. We typically have the legal right to negotiate pricing for customer directed changes. In those cases, we assert to our customers our contractual rights to obtain the additional revenue or cost reimbursement we expect to receive upon finalizing pricing terms. An expected recovery value of these assertions is incorporated into our contract profitability estimates when applying contract accounting. Our

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inability to recover these expected values, among other factors, could result in the recognition of a forward loss on these programs and could have a material adverse effect on our results of operations.

        For the G650 program, we currently have $135.1 million of accounts receivable that are related to Gulfstream short-paid invoices for deliveries from 2010 through the end of the third quarter of 2013, the period through which these incomplete payments continued. In August, 2013, we instituted a demand for arbitration against Gulfstream, seeking damages from Gulfstream for the incomplete payments, as well as other damages and relief. Gulfstream counterclaimed against Spirit in the arbitration, seeking liquidated damages for delayed deliveries of wings, as well as other damages and relief. While we believe that the short-paid amount is collectible, if we are unable to collect this amount or if it becomes part of an overall settlement or arbitration award, recognition of additional forward losses on the G650 program could be required and the future cash flows of the Company could be significantly impacted.

     We face risks as we work to successfully execute on new or maturing programs.

        New or maturing programs with new technologies typically carry risks associated with design responsibility, development of new production tools, hiring and training of qualified personnel, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, ability of the customer to meet its contractual obligations to us, and our ability to accurately estimate costs associated with such programs. In addition, any new or maturing aircraft program may not generate sufficient demand or may experience technological problems or significant delays in the regulatory certification or manufacturing and delivery schedule. If we were unable to perform our obligations under new or maturing programs to the customer's satisfaction or manufacture products at our estimated costs, if we were to experience unexpected fluctuations in raw material prices or supplier problems leading to cost overruns, if we were unable to successfully perform under revised design and manufacturing plans or successfully resolve claims and assertions, or if a new or maturing program in which we had made a significant investment was terminated or experienced weak demand, delays or technological problems, our business, financial condition and results of operations could be materially adversely affected. Some of these risks have affected our maturing programs to the extent that we have recorded significant forward losses and maintain certain of our maturing programs at zero or low margins due to our inability to overcome the effects of these risks. We continue to face similar risks as well as the potential for default, quality problems, or inability to meet weight requirements and these could result in continued zero or low margins or additional forward losses, and the risk of having to write-off additional inventory if it were deemed to be unrecoverable over the life of the program. In addition, beginning new work on existing programs also carries risks associated with the transfer of technology, knowledge and tooling.

        In order to perform on new or maturing programs we may be required to construct or acquire new facilities requiring additional up-front investment costs. In the case of significant program delays and/or program cancellations, we could be required to bear certain unrecoverable construction and maintenance costs and incur potential impairment charges for the new facilities. Also, we may need to expend additional resources to determine an alternate revenue-generating use for the facilities. Likewise, significant delays in the construction or acquisition of a plant site could impact production schedules.

     We use estimates in accounting for revenue and cost for our contract blocks. Changes in our estimates could adversely affect our future financial performance.

        The Company recognizes revenue under the contract method of accounting and estimate s revenue and cost for contract blocks that span a period of multiple years. The contract method of accounting requires judgment on a number of underlying assumptions to develop our estimates. Due to the significant length of time over which revenue streams are generated, the variability of future period estimated revenue and cost may be adversely affected if circumstances or underlying assumptions change. For additional information on our accounting policies for recognizing revenue and profit, please see our

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discussion under "Management's Discussion and Analysis — Critical Accounting Policies" in this Form 10-K.

        Additionally, variability of future period estimated revenue and cost may result in recording additional valuation allowances against future deferred tax assets, which could adversely affect our future financial performance.

     Our operations depend on our ability to maintain continuing, uninterrupted production at our manufacturing facilities. Our production facilities are subject to physical and other risks that could disrupt production.

        Our manufacturing facilities could be damaged or disrupted by a natural disaster, war, terrorist activity or sustained mechanical failure. Although we have obtained property damage and business interruption insurance, a major catastrophe, such as a fire, flood, tornado or other natural disaster at any of our sites, war or terrorist activities in any of the areas where we conduct operations or the sustained mechanical failure of a key piece of equipment could result in a prolonged interruption of all or a substantial portion of our business. Any disruption resulting from these events could cause significant delays in shipments of products and the loss of sales and customers and we may not have insurance to adequately compensate us for any of these events. A large portion of our operations takes place at one facility in Wichita, Kansas and any significant damage or disruption to this facility in particular would materially adversely affect our ability to service our customers.

     We have announced the initiation of a process to divest our Oklahoma sites, which could disrupt our business, involve increased expenses and present risks not contemplated at the time of the divestiture.

        There can be no assurance that any sale of all or any portion of our Oklahoma sites will be completed in a timely manner, on a cost-effective basis, on terms favorable to us, or at all. A significant divestiture such as this typically entails numerous potential risks, including:

    diversion of resources and management's attention from the operation of the business;

    loss of key employees following such a transaction;

    insufficient proceeds to offset transaction related expenses;

    negative effects on our reported results of operations from disposition-related charges, amortization expenses related to intangibles, charges for impairment of long-term assets;

    difficulties in the separation of operations, services, products and personnel;

    the need to agree to retain or assume certain or future liabilities in order to complete the divestiture; and

    damage to our existing customer, supplier and other business relationships.

        Furthermore, the pursuit of any such transaction may require the expenditure of substantial legal and other fees, which may be incurred whether or not a transaction is consummated. As a result of the aforementioned risks, among others, the pursuit of the divestiture may not lead to increased stockholder value.

        We actively consider other divestitures from time to time. If we decide to pursue any other divestiture, it may involve numerous potential risks, including those described above.

     Future commitments to our customers to increase production rates depend on our ability to expand production at our manufacturing facilities.

        Boeing and Airbus, our two largest customers, have both announced planned production rate increases for several of their major programs. In some cases, in order to meet these increases in production rates, we will need to make significant capital expenditures to expand our capacity and improve our performance. While some of these expenditures will be reimbursed by our customers, we could be required to bear a significant portion of the costs. In addition, the increases in production rates could cause

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disruptions in our manufacturing lines, which could materially adversely impact our ability to meet our commitments to our customers, and have a resulting adverse effect on our financial condition and results of operations.

     We operate in a very competitive business environment.

        Competition in the aerostructures segment of the aerospace industry is intense. Although we have entered into supply agreements with Boeing and Airbus under which we are their exclusive supplier for certain aircraft parts, we will face substantial competition from both OEMs and non-OEM aerostructures suppliers in trying to expand our customer base and the types of parts we make.

        OEMs may choose not to outsource production of aerostructures due to, among other things, their own direct labor and other overhead considerations and capacity utilization at their own facilities. Consequently, traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce a part in-house or to outsource.

        Our principal competitors among non-OEM aerostructures suppliers are Aircelle S.A., Fuji Heavy Industries, Ltd., GKN Aerospace, Kawasaki Heavy Industries, Inc., Mitsubishi Heavy Industries, Sonaca, Triumph Group, Inc., Latecoere S.A., and Nexcelle. Some of our competitors have greater resources than we do and, therefore, may be able to adapt more quickly to new or emerging technologies and changes in customer requirements, or devote greater resources to the promotion and sale of their products than we can. Providers of aerostructures have traditionally competed on the basis of cost, technology, quality and service. We believe that developing and maintaining a competitive advantage will require continued investment in product development, engineering, supply-chain management and sales and marketing, and we may not have enough resources to make such investments. For these reasons, we may not be able to compete successfully in this market or against our competitors, which could have a material adverse effect on our business, financial condition and results of operations.

     High switching costs may substantially limit our ability to obtain business that is currently under contract with other suppliers.

        Once a contract is awarded by an OEM to an aerostructures supplier, the OEM and the supplier are typically required to spend significant amounts of time and capital on design, manufacture, testing and certification of tooling and other equipment. For an OEM to change suppliers during the life of an aircraft program, further testing and certification would be necessary, and the OEM would be required either to move the tooling and equipment used by the existing supplier for performance under the existing contract, which may be expensive and difficult (or impossible), or to manufacture new tooling and equipment. Accordingly, any change of suppliers would likely result in production delays and additional costs to both the OEM and the new supplier. These high switching costs may make it more difficult for us to bid competitively against existing suppliers and less likely that an OEM will be willing to switch suppliers during the life of an aircraft program, which could materially adversely affect our ability to obtain new work on existing aircraft programs.

     Increases in labor costs, potential labor disputes and work stoppages at our facilities or the facilities of our suppliers or customers could materially adversely affect our financial performance.

        Our financial performance is affected by the availability of qualified personnel and the cost of labor. A majority of our workforce is represented by unions. If our workers were to engage in a strike, work stoppage or other slowdown, we could experience a significant disruption of our operations, which could cause us to be unable to deliver products to our customers on a timely basis and could result in a breach of our supply agreements. This could result in a loss of business and an increase in our operating expenses, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our non-unionized labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face.

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        We have agreed with Boeing to continue to operate substantial manufacturing operations in Wichita, Kansas until at least June 16, 2015 and we have other commitments to keep major programs in Wichita until 2020 in certain circumstances. This may prevent us from being able to offer our products at prices that are competitive in the marketplace and could have a material adverse effect on our ability to generate new business.

        In addition, many aircraft manufacturers, airlines and aerospace suppliers have unionized work forces. Any strikes, work stoppages or slowdowns experienced by aircraft manufacturers, airlines or aerospace suppliers could reduce our customers' demand for additional aircraft structures or prevent us from completing production of our aircraft structures.

     Our business may be materially adversely affected if we lose our government, regulatory or industry approvals, if more stringent government regulations are enacted, or if industry oversight is increased.

        The FAA prescribes standards and qualification requirements for aerostructures, including virtually all commercial airline and general aviation products, and licenses component repair stations within the United States. Comparable agencies, such as the JAA in Europe, regulate these matters in other countries. If we fail to qualify for or obtain a required license for one of our products or services or lose a qualification or license previously granted, the sale of the subject product or service would be prohibited by law until such license is obtained or renewed and our business, financial condition and results of operations could be materially adversely affected. In addition, designing new products to meet existing regulatory requirements and retrofitting installed products to comply with new regulatory requirements can be expensive and time consuming.

        From time to time, the FAA, the JAA or comparable agencies propose new regulations or changes to existing regulations. These changes or new regulations generally increase the costs of compliance. To the extent the FAA, the JAA or comparable agencies implement regulatory changes, we may incur significant additional costs to achieve compliance.

        In addition, certain aircraft repair activities we intend to engage in may require the approval of the aircraft's OEM. Our inability to obtain OEM approval could materially restrict our ability to perform such aircraft repair activities.

     Our business is subject to regulation in the United States and internationally.

        The manufacturing of our products is subject to numerous federal, state and foreign governmental regulations. The number of laws and regulations that are being enacted or proposed by state, federal and international governments and authorities are increasing. Compliance with these regulations is difficult and expensive. If we fail to adhere, or are alleged to have failed to adhere, to any applicable federal, state or foreign laws or regulations, or if such laws or regulations negatively affect sales of our products, our business, prospects, results of operations, financial condition or cash flows may be adversely affected. In addition, our future results could be adversely affected by changes in applicable federal, state and foreign laws and regulations, or the interpretation or enforcement thereof, including those relating to manufacturing processes, product liability, trade rules and customs regulations, intellectual property, consumer laws, privacy laws, as well as accounting standards and taxation requirements (including tax-rate changes, new tax laws and revised tax law interpretations).

     We are subject to regulation of our technical data and goods under U.S. export control laws.

        As a manufacturer and exporter of defense and dual-use technical data and commodities, we are subject to U.S. laws and regulations governing international trade and exports, including, but not limited to, the International Traffic in Arms Regulations, administered by the U.S. Department of State, and the Export Administration Regulations, administered by the U.S. Department of Commerce. Collaborative agreements that we may have with foreign persons, including manufacturers and suppliers, are also subject to U.S. export control laws. In addition, we are subject to trade sanctions against embargoed countries, administered by the Office of Foreign Assets Control within the U.S. Department of the Treasury.

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        A determination that we have failed to comply with one or more of these export controls or trade sanctions could result in civil or criminal penalties, including the imposition of fines upon us as well as the denial of export privileges and debarment from participation in U.S. government contracts. Additionally, restrictions may be placed on the export of technical data and goods in the future as a result of changing geopolitical conditions. Any one or more of such sanctions could have a material adverse effect on our business, financial condition and results of operations.

     We are subject to environmental, health and safety regulations and our ongoing operations may expose us to related liabilities.

        Our operations are subject to extensive regulation under environmental, health and safety laws and regulations in the United States and other countries in which we operate. We may be subject to potentially significant fines or penalties, including criminal sanctions, if we fail to comply with these requirements. We have made, and will continue to make, significant capital and other expenditures to comply with these laws and regulations. We cannot predict with certainty what environmental legislation will be enacted in the future or how existing laws will be administered or interpreted. Our operations involve the use of large amounts of hazardous substances and regulated materials and generate many types of wastes, including emissions of hexavalent chromium and volatile organic compounds, and so-called greenhouse gases such as carbon dioxide. Spills and releases of these materials may subject us to clean-up liability for remediation and claims of alleged personal injury, property damage and damage to natural resources, and we may become obligated to reduce our emissions of hexavalent chromium, volatile organic compounds and/or greenhouse gases. We cannot give any assurance that the aggregate amount of future remediation costs and other environmental liabilities will not be material.

        Boeing, our predecessor at the Wichita facility, is under an administrative consent order issued by the Kansas Department of Health and Environment to contain and remediate contaminated groundwater, which underlies a majority of our Wichita facility. Pursuant to this order and its agreements with us, Boeing has a long-term remediation plan in place, and treatment, containment and remediation efforts are underway. If Boeing does not comply with its obligations under the order and these agreements, we may be required to undertake such efforts and make material expenditures.

        In connection with the BAE Acquisition, we acquired a manufacturing facility in Prestwick, Scotland that is adjacent to contaminated property retained by BAE Systems. The contaminated property may be subject to a regulatory action requiring remediation of the land. It is also possible that the contamination may spread into the property we acquired. BAE Systems has agreed to indemnify us, subject to certain contractual limitations and conditions, for certain clean up costs and other losses, liabilities, expenses and claims related to existing pollution on the acquired property, existing pollution that migrates from the acquired property to a third party's property and any pollution that migrates to our property from property retained by BAE Systems. If BAE Systems does not comply with its obligations under the BAE Acquisition agreement, we may be required to undertake such efforts and make material expenditures.

        In the future, contamination may be discovered at or emanating from our facilities or at off-site locations where we send waste. The remediation of such newly discovered contamination, related claims for personal injury or damages, or the enactment of new laws or a stricter interpretation of existing laws, may require us to make additional expenditures, some of which could be material. See "Business — Environmental Matters".

     New regulations related to conflict minerals have and will continue to force us to incur additional expenses, may make our supply chain more complex, and could adversely impact our business.

        The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains provisions to improve transparency and accountability concerning the supply of certain minerals and metals, known as conflict minerals, originating from the Democratic Republic of Congo (DRC) and adjoining countries. As a result, in August 2012, the SEC adopted annual investigation, disclosure and reporting requirements for

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those companies that manufacture or contract to manufacture products that contain conflict minerals that originated from the DRC and adjoining countries. As initial disclosure requirements commence in May 2014 (with respect to 2013), we have and will continue to incur compliance costs, including costs related to determining the sources of conflict minerals used in our products and other potential changes to processes or sources of supply as a consequence of such verification activities. The implementation of these rules could adversely affect the sourcing, supply and pricing of materials used in certain of our products. As there may be only a limited number of suppliers offering "conflict free" minerals, we cannot be sure that we will be able to obtain necessary conflict-free minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free.

     Significant consolidation in the aerospace industry could make it difficult for us to obtain new business.

        Suppliers in the aerospace industry have consolidated and formed alliances to broaden their product and integrated system offerings and achieve critical mass. This supplier consolidation is in part attributable to aircraft manufacturers more frequently awarding long-term sole-source or preferred supplier contracts to the most capable suppliers, thus reducing the total number of suppliers. If this consolidation were to continue, it may become more difficult for us to be successful in obtaining new customers.

     We may be materially adversely affected by high fuel prices.

        Due to the competitive nature of the airline industry, airlines are often unable to pass on increased fuel prices to customers by increasing fares. Fluctuations in the global supply of crude oil and the possibility of changes in government policy on jet fuel production, transportation and marketing make it difficult to predict the future availability of jet fuel. In the event there is an outbreak or escalation of hostilities or other conflicts, or significant disruptions in oil production or delivery in oil-producing areas or elsewhere, there could be reductions in the production or importation of crude oil and significant increases in the cost of fuel. If there were major reductions in the availability of jet fuel or significant increases in its cost, the airline industry and, as a result, our business, could be materially adversely affected.

     Interruptions in deliveries of components or raw materials, or increased prices for components or raw materials used in our products could delay production and/or materially adversely affect our financial performance, profitability, margins and revenues.

        We are highly dependent on the availability of essential materials and purchased components from our suppliers, some of which are available only from a sole source or limited sources. Our dependency upon regular deliveries from particular suppliers of components and raw materials means that interruptions or stoppages in such deliveries could materially adversely affect our operations until arrangements with alternate suppliers, to the extent alternate suppliers exist, could be made. If any of our suppliers were unable or were to refuse to deliver materials to us for an extended period of time, or if we were unable to negotiate acceptable terms for the supply of materials with these or alternative suppliers, our business could suffer.

        Moreover, we are dependent upon the ability of our suppliers to provide materials and components that meet specifications, quality standards and delivery schedules. Our suppliers' failure to provide expected raw materials or component parts that meet our technical specifications could adversely affect production schedules and contract profitability. We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs for us and possible forward losses on certain contracts. Even if acceptable alternatives are found, the process of locating and securing such alternatives might be disruptive to our business and might lead to termination of our supply agreements with our customers.

        Our continued supply of materials is subject to a number of risks including:

    the destruction of or damage to our suppliers' facilities or their distribution infrastructure;

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    a work stoppage or strike by our suppliers' employees;

    the failure of our suppliers to provide materials of the requisite quality or in compliance with specifications;

    the failure of essential equipment at our suppliers' plants;

    the failure of our suppliers to satisfy U.S. and international import and export control laws for goods that we purchase from such suppliers;

    the failure of our suppliers to meet regulatory standards;

    the failure, shortage or delay in the delivery of raw materials to our suppliers;

    contractual amendments and disputes with our suppliers; and

    inability of our suppliers to perform as a result of the weakened global economy or otherwise.

        In addition, our profitability is affected by the prices of the components and raw materials, such as titanium, aluminum and carbon fiber, used in the manufacturing of our products. These prices may fluctuate based on a number of factors beyond our control, including world oil prices, changes in supply and demand, general economic conditions, labor costs, competition, import duties, tariffs, currency exchange rates and, in some cases, government regulation. Although our supply agreements with Boeing and Airbus allow us to pass on to our customers certain unusual increases in component and raw material costs in limited situations, we may not be fully compensated by the customers for the entirety of any such increased costs.

     In order to be successful, we must attract, retain, train, motivate, develop and transition key employees, and failure to do so could harm our business.

        In order to be successful, we must attract, retain, train, motivate, develop and transition qualified executives and other key employees, including those in managerial, manufacturing and engineering positions. Identifying, developing internally or hiring externally, training and retaining qualified executives and engineers are critical to our future, and competition for experienced employees in the aerospace industry and in particular, Wichita, Kansas where the majority of our manufacturing and executive offices are located, can be intense. In order to attract and retain executives and other key employees in a competitive marketplace, we must provide a competitive compensation package, including cash- and share-based compensation. Our share-based incentive awards consist primarily of restricted stock grants, some of which are conditioned on our achievement of certain designated financial performance targets, which makes the size of a particular year's award uncertain. If employees do not receive share-based incentive awards with a value they anticipate, if our share-based compensation otherwise ceases to be viewed as a valuable benefit, if our total compensation package is not viewed as being competitive, or if we do not obtain the shareholder approval needed to continue granting share-based incentive awards in the amounts we believe are necessary, our ability to attract, retain, and motivate executives and key employees could be weakened. The failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. Further, changes in our management team may be disruptive to our business and any failure to successfully transition and assimilate key new hires or promoted employees could adversely affect our business and results of operations.

     We are subject to the requirements of the National Industrial Security Program Operating Manual ("NISPOM") for our Facility Security Clearance ("FCL"), which is a prerequisite for our ability to perform on classified contracts for the U.S. Government.

        A Department of Defense ("DOD") FCL is required for a company to be awarded and perform on classified contracts for the DOD and certain other agencies of the U.S. Government. From time to time we have performed and may perform on classified contracts, although we did not generate any revenues from classified contracts for the twelve months ended December 31, 2013. We have obtained an FCL at the

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"Secret" level. Due to the fact that more than 50% of our voting power is effectively controlled by a non-U.S. entity (Onex), we are required to operate in accordance with the terms and requirements of our Special Security Agreement ("SSA") with the DOD. If we were to violate the terms and requirements of our SSA, the NISPOM, or any other applicable U.S. Government industrial security regulations, we could lose our FCL. We cannot give any assurance that we will be able to maintain our FCL. If for some reason our FCL is invalidated or terminated, we may not be able to continue to perform under our classified contracts in effect at that time, and we would not be able to enter into new classified contracts, which could adversely affect our revenues.

     We derive a significant portion of our net revenues from direct and indirect sales outside the United States and are subject to the risks of doing business in foreign countries.

        We derive a significant portion of our revenues from sales by Boeing and Airbus to customers outside the United States. In addition, for the twelve months ended December 31, 2013, direct sales to our non-U.S. customers accounted for approximately 13% of our net revenues. We expect that our and our customers' international sales will continue to account for a significant portion of our net revenues for the foreseeable future. As a result, we are subject to risks of doing business internationally, including:

    changes in regulatory requirements;

    domestic and foreign government policies, including requirements to expend a portion of program funds locally and governmental industrial cooperation requirements;

    fluctuations in foreign currency exchange rates;

    the complexity and necessity of using foreign representatives and consultants;

    uncertainties and restrictions concerning the availability of funding credit or guarantees;

    imposition of tariffs and embargos, export controls and other trade restrictions;

    the difficulty of management and operation of an enterprise spread over various countries;

    compliance with a variety of foreign laws, as well as U.S. laws affecting the activities of U.S. companies abroad, including the Foreign Corrupt Practices Act, the U.K. Bribery Act and other applicable anti-bribery laws; and

    economic and geopolitical developments and conditions, including international hostilities, acts of terrorism and governmental reactions, inflation, trade relationships and military and political alliances.

        While these factors and the effect of these factors are difficult to predict, adverse developments in one or more of these areas could materially adversely affect our business, financial condition and results of operations in the future.

     Our fixed-price contracts and requirements to re-negotiate pricing at specified times may commit us to unfavorable terms.

        We provide most of our products and services through long-term contracts in which the pricing terms are fixed based on certain production volumes. Accordingly, there is the risk that we will not be able to sustain a cost structure that is consistent with assumptions used in bidding on contracts. Increased or unexpected costs may reduce our profit margins or cause us to sustain losses on these contracts. Other than certain increases in raw material costs which can be passed on to our customers in most instances, we must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts and in projecting the ultimate level of sales that we may achieve. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-price contract may reduce the profitability of a contract or cause a loss.

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        This risk particularly applies to products such as the Boeing B787, for which we had delivered one hundred sixty-four production articles as of December 31, 2013 since the inception of the program, and in respect of which our performance at the contracted price depends on our being able to achieve production cost reductions as we gain production experience although Spirit can recoup from Boeing half of any overruns within a certain percentage of shipset prices. When we negotiated the B787-8 pricing under the B787 Amendment, we assumed that a contractually mandated joint-effort by Boeing and Spirit to reduce costs and increase production efficiency, as well as favorable trends in volume, learning curve efficiencies and future pricing from suppliers would reduce our production costs over the life of the B787 program, thus maintaining or improving our margin on each B787 we produced. Pricing for the initial configuration of the B787-8 is generally established through 2021, with prices decreasing as cumulative volume levels are achieved. Prices are subject to adjustment for abnormal inflation (above a specified level in any year) and for certain production, schedule and other specific charges. The B787 Supply Agreement provides that initial prices for the B787-9 and B787-10 are to be determined by a procedure set out in the B787 Supply Agreement, and to be documented by amendment once that amendment has been agreed to by the parties. The parties have engaged in discussions concerning how to determine initial B787-9 and B787-10 pricing, and have not yet reached agreement. Our ability to obtain fair and equitable prices for subsequent models could impact the profitability of the overall program. Additionally, we cannot give any assurance that our development of new technologies or capabilities will be successful or that we will be able to reduce our B787 production costs over the life of the program. Our failure to reduce production costs or to obtain pricing as we have anticipated could result in the need to record additional forward losses for this program.

        Many of our other production cost estimates also contain pricing terms which anticipate cost reductions over time. In addition, although we have entered into these fixed price contracts with our customers, they may nonetheless seek to re-negotiate pricing with us in the future. Any such higher costs or re-negotiations could materially adversely affect our profitability, margins and revenues.

        Certain of our long-term supply agreements provide for re-negotiation of established pricing terms at specified times. In particular, pricing terms under our supply agreement with Boeing for the B737, B747, B767 and B777 platforms, which accounted for 70% of our net revenues in 2013, expired in May 2013, thus activating interim pricing provisions under the Supply Agreement. We are currently negotiating future pricing with Boeing for a period to be agreed upon by the parties. We are required to negotiate the pricing for such additional period in good faith based on prevailing U.S. market conditions for forward fuselages, B737 fuselages and B737/B777 struts and nacelles and based on prevailing global market conditions for all other products. Until we are able to agree upon pricing, pricing will be determined according to the existing prices, adjusted using a quantity-based price adjustment formula and specified annual escalation and such interim pricing will be retroactively adjusted in the period in which we agree on future pricing terms. If we agree on future pricing that provides us with operating margins that are lower than those which we currently experience, or if we are unable to agree on new pricing terms and the default pricing terms remain in effect for a period of time, our business, financial condition and results of operations could be materially adversely affected.

     The outcome of litigation and of government inquiries and investigations involving our business is unpredictable and an adverse decision in any such matter could have a material effect on our financial position and results of operations.

        We are involved in a number of litigation matters. These claims may divert financial and management resources that would otherwise be used to benefit our operations. No assurances can be given that the results of these matters will be favorable to us. An adverse resolution of any of these lawsuits could have a material impact on our financial position and results of operations. In addition, we are sometimes subject to government inquiries and investigations of our business due, among other things, to the heavily regulated nature of our industry and our participation on government programs. Any such inquiry or investigation could potentially result in an adverse ruling against us, which could have a material impact on our financial position and operating results.

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     If we are unable to protect our information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

        We rely on information technology networks and systems to manage and support a variety of business activities, including procurement and supply chain, engineering support, and manufacturing. Our information technology systems, some of which are managed by third-parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events. In addition, security breaches could result in unauthorized disclosure of confidential information. If our information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our manufacturing process could be disrupted resulting in late deliveries or even no deliveries if there is a total shutdown.

     We are implementing new company-wide software systems, which could cause unexpected production or other delays.

        We have recently implemented an Enterprise Resource Planning ("ERP") software system in several of our facilities, and have begun implementation of other system upgrades and infrastructure changes. We plan to complete implementation of ERP software in all of our primary facilities over the next two years. Unexpected problems with these implementations could result in production or other delays.

     We do not own most of the intellectual property and tooling used in our business.

        Our business depends on using certain intellectual property and tooling that we have rights to use under license grants from Boeing. These licenses contain restrictions on our use of Boeing intellectual property and tooling and may be terminated if we default under certain of these restrictions. Our loss of license rights to use Boeing intellectual property or tooling would materially adversely affect our business. See "Business — Our Relationship with Boeing — License of Intellectual Property." In addition to the licenses with Boeing, we license some of the intellectual property needed for performance under some of our supply contracts from our customers under those supply agreements. We must honor our contractual commitments to our customers related to intellectual property and comply with infringement laws governing our use of intellectual property. In the event we obtain new business from new or existing customers, we will need to pay particular attention to these contractual commitments and any other restrictions on our use of intellectual property to make sure that we will not be using intellectual property improperly in the performance of such new business. In the event we use any such intellectual property improperly, we could be subject to an infringement claim by the owner or licensee of such intellectual property.

        In the future, our entry into new markets may require obtaining additional license grants from Boeing and/or from other third parties. If we are unable to negotiate additional license rights on acceptable terms (or at all) from Boeing and/or other third parties as the need arises, our ability to enter new markets may be materially restricted. In addition, we may be subject to restrictions in future licenses granted to us that may materially restrict our use of third party intellectual property.

     Our success depends in part on the success of our research and development initiatives.

        We spent approximately $34.7 million on research and development during the twelve months ended December 31, 2013. Our expenditures on our research and development efforts may not create any new sales opportunities or increases in productivity that are commensurate with the level of resources invested.

        We are in the process of developing specific technologies and capabilities in pursuit of new business and in anticipation of customers going forward with new programs. If any such programs do not go forward or are not successful, we may be unable to recover the costs incurred in anticipation of such programs and our profitability and revenues may be materially adversely affected.

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     Any future business combinations, acquisitions, mergers, or joint ventures will expose us to risks, including the risk that we may not be able to successfully integrate these businesses or achieve expected operating synergies.

        We actively consider strategic transactions from time to time. We evaluate acquisitions, joint ventures, alliances and co-production programs as opportunities arise, and we may be engaged in varying levels of negotiations with potential competitors at any time. We may not be able to effect transactions with strategic alliance, acquisition or co-production program candidates on commercially reasonable terms or at all. If we enter into these transactions, we also may not realize the benefits we anticipate. In addition, we may not be able to obtain additional financing for these transactions. The integration of companies that have previously been operated separately involves a number of risks, including, but not limited to:

    demands on management related to the increase in size after the transaction;

    the diversion of management's attention from the management of daily operations to the integration of operations;

    difficulties in the assimilation and retention of employees;

    difficulties in the assimilation of different cultures and practices, as well as in the assimilation of geographically dispersed operations and personnel, who may speak different languages;

    difficulties combining operations that use different currencies or operate under different legal structures;

    difficulties in the integration of departments, systems (including accounting systems), technologies, books and records and procedures, as well as in maintaining uniform standards, controls (including internal accounting controls), procedures and policies;

    compliance with the Foreign Corrupt Practices Act, the U.K. Bribery Act and other applicable anti-bribery laws; and

    constraints (contractual or otherwise) limiting our ability to consolidate, rationalize and/or leverage supplier arrangements to achieve integration.

        Consummating any acquisitions, joint ventures, alliances or co-production programs could result in the incurrence of additional debt and related interest expense, as well as unforeseen contingent liabilities.

     We could be required to make future contributions to our defined benefit pension and post-retirement benefit plans as a result of adverse changes in interest rates and the capital markets.

        Our estimates of liabilities and expenses for pensions and other post-retirement benefits incorporate significant assumptions including the rate used to discount the future estimated liability, the long-term rate of return on plan assets and several assumptions relating to the employee workforce (salary increases, medical costs, retirement age and mortality). A dramatic decrease in the fair value of our plan assets resulting from movements in the financial markets may cause the status of our plans to go from an over-funded status to an under-funded status and result in cash funding requirements to meet any minimum required funding levels. Our results of operations, liquidity, or shareholders' equity in a particular period could be affected by a decline in the rate of return on plan assets, the rate used to discount the future estimated liability, or changes in employee workforce assumptions.

     We identified material weaknesses in our internal control over financial reporting.

        A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be

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prevented or detected on a timely basis. As of December 31, 2013, we concluded that we had material weaknesses in our internal control over financial reporting as described below:

    We did not maintain effective controls over the completeness, accuracy and valuation of inventory and cost of sales related to the Airbus A350 XWB Section 15 recurring program. Specifically, we did not maintain controls over the completeness and accuracy of the bill of materials used in the contract accounting estimate for this program. These controls were not designed effectively to ensure that the bill of materials used in the accounting estimates were accurate and provided a sound basis for estimating future costs. Although this material weakness did not result in a material misstatement of the Company's consolidated financial statements, the existence of the deficiency in our controls could result in an undetected material misstatement of the Company's consolidated financial statements.

    In addition, we did not maintain effective controls over the completeness, accuracy and valuation of inventory and cost of sales for the Gulfstream G280 and G650 programs. Specifically, controls over contract accounting estimates related to these programs were not operating effectively in order to ensure that (1) the bills of materials used in the accounting estimates were complete and provided a sound basis for estimating future costs; (2) the evaluation of current actual trends impacting prior estimates of supply chain and labor costs were identified and incorporated into the accounting estimates on a timely basis; and (3) the estimation of the number of production units used in the accounting estimates was accurate. This control deficiency resulted in audit adjustments to the cost of sales and inventory accounts and related financial disclosures within the Company's consolidated financial statements for the year ended December 31, 2012 and the condensed consolidated financial statements for the quarter ended June 27, 2013.

        Because of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2013, based on criteria in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

        Our efforts to remediate the aforementioned deficiencies in internal control over financial reporting are described further in Item 9A. Controls and Procedures .

        While we believe that we have a plan to remediate these deficiencies, we cannot be certain that additional material weaknesses or significant deficiencies will not develop or be identified. We are in the process of remediating our internal control deficiencies over the cost estimation process for the G280 and G650 programs in Tulsa, Oklahoma and completeness, accuracy and valuation of inventory and cost of sales related to the A350 XWB Section 15 program in Kinston, North Carolina. Any failure to maintain adequate internal control over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation could cause us to report additional material weaknesses or other deficiencies in our internal control over financial reporting and could result in a reasonable possibility of errors or misstatements in the consolidated financial statements that would be material.


Risk Factors Related to Our Capital Structure

     The interests of our controlling stockholder may conflict with your interests.

        Onex Partners LP, Onex Corporation and their respective partners and affiliates that beneficially own our class B common stock, herein referred to collectively as the "Onex entities," own 22,411,638 shares of our class B common stock. Our class A common stock has one vote per share, while our class B common stock has ten votes per share on all matters to be voted on by our stockholders. Consequently, the Onex entities control approximately 62% of the combined voting power of our outstanding common stock. Accordingly, and for so long as the Onex entities continue to hold class B common stock that represents at least 10% of the total number of shares of common stock outstanding, Onex will exercise a controlling influence over our business and affairs and will have the power to determine all matters submitted to a

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vote of our stockholders, including the election of directors and approval of significant corporate transactions such as amendments to our certificate of incorporation, mergers and the sale of all or substantially all of our assets. Onex could cause corporate actions to be taken even if the interests of Onex conflict with the interests of our other stockholders. This concentration of voting power could have the effect of deterring or preventing a change in control of Spirit that might otherwise be beneficial to our stockholders. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, owns shares representing a majority of the voting rights of the shares of Onex Corporation.

     Our substantial debt could adversely affect our financial condition and our ability to operate our business. The terms of the indenture governing our long-term bonds and our senior secured credit facility impose significant operating and financial restrictions on our company and our subsidiaries, which could also adversely affect our operating flexibility and put us at a competitive disadvantage by preventing us from capitalizing on business opportunities.

        As of December 31, 2013, we had total debt of approximately $1,167.3 million, including approximately $538.2 million of borrowings under our senior secured credit facility, $596.4 million of long-term bonds, a $10.0 million Malaysian loan, approximately $15.3 million of capital lease obligations, and $7.4 million in other debt obligations. In addition to our debt, as of December 31, 2013, we had $44.7 million of letters of credit and letters of guarantee outstanding.

        The terms of the indentures governing our long-term bonds and our senior secured credit facility impose significant operating and financial restrictions on us, which limit our ability, among other things, to:

    incur additional debt or issue preferred stock;

    pay dividends or make distributions to our stockholders;

    repurchase or redeem our capital stock;

    make investments;

    incur liens;

    enter into transactions with our stockholders and affiliates;

    sell certain assets;

    acquire the assets of, or merge or consolidate with, other companies; and

    incur restrictions on the ability of our subsidiaries to make distributions or transfer assets to us.

        These restrictions could have consequences, including the following:

    making it more difficult for us to satisfy our obligations with respect to our debt;

    limiting our ability to obtain additional financing to fund future working capital, capital expenditures, strategic acquisitions or other general corporate requirements;

    requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;

    increasing our vulnerability to general adverse economic and industry conditions;

    limiting our financial flexibility in planning for and reacting to changes in the industry in which we compete;

    placing us at a disadvantage compared to other, less leveraged competitors;

    having a material adverse effect on us if we fail to comply with the covenants in the senior secured credit facility or in the indentures governing our long-term bonds or in the instruments governing our other debt; and

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    increasing our cost of borrowing.

        Our existing senior secured revolving credit facility, which matures on April 18, 2017, is a significant source of liquidity for our business. The failure to extend or renew this agreement could have a significant effect on our ability to invest sufficiently in our programs, fund day to day operations, or pursue strategic opportunities.

        We cannot assure you that we will be able to maintain compliance with the covenants in the agreements governing our indebtedness in the future or, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

        In addition, despite the restrictions and limitations described above, subject to the limits contained in the agreements governing our indebtedness, we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. The terms of any future indebtedness we may incur could include more restrictive covenants. If we incur additional debt, the risks related to our level of debt could intensify.

        In addition, if we are unable to generate sufficient cash flow to service our debt and meet our other commitments, we may need to refinance all or a portion of our debt, sell material assets or operations, or raise additional debt or equity capital. We cannot provide assurance that we could effect any of these actions on a timely basis, on commercially reasonable terms or at all, or that these actions would be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us from effecting certain or any of these alternatives.

        Global credit markets are still recovering from the 2008 financial crisis, and are subject to numerous risk factors, including but not limited to concerns over sovereign debt in Europe and elsewhere; the impact and effectiveness of new financial legislation and regulation in the United States and Europe; the impact of those reforms on borrowers, financial institutions and credit rating agencies; potential systemic risk resulting from the interrelationship of credit market products and participants; global governmental and central banking policies; and conflict and political instability in the Middle East and Asia. There can be no assurance that access to credit markets will continue to be available to us.

     Any reduction in our credit ratings could materially and adversely affect our business or financial condition.

        As of December 31, 2013, our corporate credit rating was affirmed at BB and placed on negative outlook by Standard & Poor's and was affirmed at Ba2 and placed on negative outlook by Moody's Investor Services.

        On February 6, 2014, Moody's Investors Service placed the credit ratings of Spirit AeroSystems, Inc. under review for possible downgrade.

        The ratings reflect the agencies' assessment of our ability to pay interest and principal on our debt securities and credit agreements. A rating is not a recommendation to purchase, sell or hold securities. Each rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating agency has its own methodology for assigning ratings and, accordingly, each rating should be considered independently of all other ratings. Lower ratings would typically result in higher interest costs of debt securities when they are sold, and could make it more difficult to issue future debt securities. In addition, a downgrade in our fixed or revolving long-term debt rating could result in an increase in borrowing costs under our senior secured credit facility and could trigger a prepayment based on the excess cash flow prepayment provision under our term loan depending on our total leverage ratio. Any downgrade in our credit ratings could thus have a material adverse effect on our business or financial condition.

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     We may sell more equity and reduce your ownership in Spirit Holdings.

        Our business plan may require the investment of new capital, which we may raise by issuing additional equity (including equity interests which may have a preference over shares of our class A common stock) or additional debt (including debt securities and/or bank loans). However, this capital may not be available at all, or when needed, or upon terms and conditions favorable to us. The issuance of additional equity in Spirit Holdings may result in significant dilution of shares of our class A common stock. We may issue additional equity in connection with or to finance acquisitions. Further, our subsidiaries could issue securities in the future to persons or entities (including our affiliates) other than us or another subsidiary. This could materially adversely affect your investment in us because it would dilute your indirect ownership interest in our subsidiaries.

     Spirit Holdings' certificate of incorporation and by-laws and our supply agreements with Boeing contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

        Provisions of Spirit Holdings' certificate of incorporation and by-laws may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our current board of directors. These provisions include:

    multi-vote shares of common stock, which are owned by the Onex entities and management stockholders;

    advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and

    the authority of the board of directors to issue, without stockholder approval, up to 10 million shares of preferred stock with such terms as the board of directors may determine and an additional 55,738,264 shares of class A common stock (net of shares issued but subject to vesting requirements under our benefit plans and shares reserved for issuance upon conversion of outstanding shares of class B common stock) and an additional 125,409,562 shares of class B common stock (net of shares issued but subject to vesting requirements under our benefit plans).

        In addition, our supply agreements with Boeing include provisions giving Boeing the ability to terminate the agreements in the event any of certain disqualified persons acquire a majority of Spirit's direct or indirect voting power or all or substantially all of Spirit's assets. See "Business — Our Relationship with Boeing."

     Spirit Holdings is a "controlled company" within the meaning of the New York Stock Exchange rules and, as a result, qualifies for, and relies on, exemptions from certain corporate governance requirements.

        Because the Onex entities own more than 50% of the combined voting power of the common stock of Spirit Holdings, Spirit Holdings is deemed a "controlled company" under the rules of the New York Stock Exchange, or NYSE. As a result, Spirit Holdings qualifies for, and relies upon, the "controlled company" exception to the board of directors and committee composition requirements under the rules of the NYSE. Pursuant to this exception, Spirit Holdings is exempt from rules that would otherwise require that Spirit Holdings' board of directors be comprised of a majority of "independent directors" (as defined under the rules of the NYSE), and that Spirit Holdings' compensation committee and corporate governance and nominating committee be comprised solely of "independent directors," so long as the Onex entities continue to own more than 50% of the combined voting power of the common stock of Spirit Holdings. Spirit Holdings' board of directors consists of eleven directors, eight of whom qualify as "independent." Spirit Holdings' compensation and corporate governance and nominating committees are not comprised

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solely of "independent directors." Spirit Holdings does not currently rely on the exemption related to board composition, although it may do so in the future. See "Management — Executive Officers and Directors" and "Committees of the Board of Directors."

     Our stock price may be volatile.

        Price fluctuations in our class A common stock could result from general market and economic conditions and a variety of other factors, including:

    actual or anticipated fluctuations in our operating results;

    changes in aerostructures pricing;

    our competitors' and customers' announcements of significant contracts, acquisitions or strategic investments;

    changes in our growth rates or our competitors' and customers' growth rates;

    the timing or results of regulatory submissions or actions with respect to our business;

    our inability to finance or raise additional capital;

    conditions of the aerostructure industry, in the financial markets, or economic conditions in general; and

    changes in stock market analyst recommendations regarding our class A common stock, other comparable companies or the aerospace industry in general.

Item 1B.     Unresolved Staff Comments

        The Company received a comment letter from the Securities and Exchange Commission (the "SEC") Division of Corporation Finance dated December 10, 2012 regarding its Form 10-K for Fiscal Year Ended December 31, 2011 and Form 10-Q for the Fiscal Quarter Ended September 27, 2012. We have filed responses with the SEC that addressed several of the SEC staff's comments. However, as of February 19, 2014, we have not yet responded to comments regarding updates to our contract estimates which resulted in forward losses recognized in the third quarter of 2012 as we work with the SEC Division of Enforcement on some similar issues. We intend to continue to work with the Division of Corporation Finance to respond to the outstanding comments.

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Item 2.     Significant Properties

        The location, primary use, approximate square footage and ownership status of our principal properties as of December 31, 2013 are set forth below:

Location
  Primary Use   Approximate
Square Footage
  Owned/Leased

United States

           

Wichita, Kansas (1)

  Primary Manufacturing   11.3 million   Owned/Leased

  Facility/Offices/Warehouse        

Chanute, Kansas (2)

  Manufacturing Facility   59,362   Leased

Tulsa, Oklahoma

  Manufacturing Facility   1.9 million   Leased

McAlester, Oklahoma

  Manufacturing Facility   135,000   Owned

Kinston, North Carolina

  Primary Manufacturing/Office/Warehouse   761,600   Leased

Nashville, Tennessee (3)

  Office   15,000   Leased

United Kingdom

           

Prestwick, Scotland

  Manufacturing Facility   901,000   Owned

Preston, England

  Administrative Offices   28,000   Leased

Malaysia

           

Subang, Malaysia

  Manufacturing   337,000   Owned/Leased

France

           

Saint-Nazaire, France

  Primary Manufacturing/Office   58,800   Leased

Toulouse, France

  Office   3,400   Leased

(1)
95% of the Wichita facility is owned.

(2)
Operations began in Q1 2012.

(3)
Operation began in Q2 2012.

        Our physical assets consist of 15.5 million square feet of building space located on 1,335 acres in eleven facilities. We produce our fuselage systems and propulsion systems from our primary manufacturing facility located in Wichita, Kansas with some fuselage work done in our Kinston, North Carolina facility. We produce wing systems in our manufacturing facilities in Tulsa, Oklahoma; Kinston, North Carolina; Prestwick, Scotland; Saint-Nazaire, France; and Subang, Malaysia. In addition to these sites, we have a facility located in McAlester, Oklahoma dedicated to supplying machined parts and sub-assemblies to the Wichita and Tulsa facilities. We also have a light sub-assembly manufacturing facility located in Chanute, Kansas which manufactures small parts in support of Wichita propulsion.

        The Wichita facility, including Spirit's corporate offices, is comprised of 625 acres, 6.3 million square feet of manufacturing space, 1.3 million square feet of offices and laboratories for the engineering and design group and 3.7 million square feet for support functions and warehouses. A total of 617,429 square feet is currently vacant, with much of it planned for backfill by new programs. The Wichita site has access to transportation by rail, road and air. For air cargo, the Wichita site has access to the runways of McConnell Air Force Base.

        The Chanute facility, consists of 59,362 square feet of building space. The Chanute facility manufactures sub-assemblies for the propulsion segment, and is leased from the city of Chanute.

        The Tulsa facility consists of 1.9 million square feet of building space set on 153 acres. The Tulsa plant is located five miles from an international shipping port (Port of Catoosa) and is located next to the Tulsa International Airport. The Tulsa facility includes off site leased space, 1.5 miles east in the Green Valley Center. The McAlester site, which manufactures parts and sub-assemblies primarily for the Tulsa facility, consists of 135,000 square feet of building space on 92 acres.

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        The Prestwick facility consists of 0.9 million square feet of building space, comprised of 0.7 million square feet of manufacturing space and 0.2 million square feet of office space. This facility is set on 95 acres. The Prestwick plant is located on the west coast of Scotland, approximately 33 miles south of Glasgow, within close proximity to the motorway network that provides access between England and continental Europe. It is also easily accessible by air (at Prestwick International Airport) or by sea. We lease a portion of our Prestwick facility to the Regional Aircraft division of BAE Systems and certain other tenants.

        The Malaysian manufacturing plant is located at the Malaysia International Aerospace Center (MIAC) in Subang. The 269,000 square foot leased facility is set on 45 acres and is centrally located with easy access to Kuala Lumpur, Malaysia's capital city, as well as nearby ports and airports. The facility assembles composite panels for wing components. An additional 68,000 square foot warehouse owned by Spirit was constructed in 2012 for shipping/receiving and parts storage to make room for additional manufacturing space in the existing building.

        The Wichita and Tulsa manufacturing facilities have significant scale to accommodate the very large structures that are manufactured there, including, in Wichita, entire fuselages. Three of the U.S. facilities are in close proximity, with approximately 175 miles between Wichita and Tulsa and 90 miles between Tulsa and McAlester. Currently, these U.S. facilities utilize approximately 95% of the available building space. The Prestwick manufacturing facility currently utilizes only 72% of the space; of the remaining space, 15% is leased and 13% is vacant. The Preston office space is located in North Lancashire, England, approximately 200 miles south of Prestwick.

        The Kinston, North Carolina facility, supports the manufacturing of composite panels and wing components. The primary manufacturing site and off-site leased spaces total 318 acres and 761,600 square feet. In addition to the primary manufacturing facility, this includes three additional buildings leased from the NC Global Transpark Authority: 27,500 square foot warehouse/office supporting receiving needs, a 26,400 square foot warehouse providing tooling storage, and a 120,000 square foot manufacturing facility supporting light manufacturing.

        The Saint-Nazaire, France site was built on 6.25 acres and totals 58,800 square feet. This facility receives center fuselage frame sections for the Airbus A350 XWB from the facility in Kinston, North Carolina. Sections designed and manufactured in North Carolina are shipped across the Atlantic, received in Saint-Nazaire, and assembled before being transported to Airbus. Additionally, a 3,400 square foot office area in Toulouse, France is leased for engineering support.

Item 3.     Legal Proceedings

        Information concerning the litigation and other legal proceedings in which the Company is involved, may be found in Note 22 under the sub-heading "Litigation" in this Annual Report and that information is hereby incorporated by reference.

Item 4.     Mine Safety Disclosures

        Not applicable.


Executive Officers of the Registrant

        Listed below are the names, ages, positions held, and biographies of all executive officers of Spirit Holdings. Executive officers hold office until their successors are elected or appointed at the next annual meeting of the Board of Directors, or until their death, retirement, resignation, or removal.

        Larry Lawson, 55.     Mr. Lawson joined Spirit Holdings as President and Chief Executive Officer on April 6, 2013. Prior to joining Spirit Holdings, Mr. Lawson was Executive Vice President of Lockheed Martin's Aeronautics business segment. Mr. Lawson began his career as a flight control engineer working on the F-15 Eagle at McDonnell Douglas. He has since held a broad range of leadership positions in engineering, advanced development, business development, and program management in a career spanning more than 30 years. In his

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work at Lockheed Martin, Mr. Lawson has overseen key aircraft production programs such as the F-35, F-22, F-16, C-130J, and C-5, including highly classified programs in the world-renowned Skunk Works® organization. Mr. Lawson holds a bachelor's degree in Electrical Engineering from Lawrence Technological University, where he also serves on the board of trustees, has a master's degree in Electrical Engineering from the University of Missouri, and is a graduate of the Harvard Business School Advanced Management Program and an MIT Seminar XXI Fellow.

        Philip Anderson, 49.     Mr. Anderson became the Senior Vice President of Defense and Contracts of Spirit Holdings effective September 23, 2013. Mr. Anderson previously served as Senior Vice President and Chief Financial Officer of Spirit Holdings from February 12, 2010 to September 2013. From October 2009 to February 2010, Mr. Anderson served as Vice President and Interim Chief Financial Officer of Spirit Holdings. Mr. Anderson also served as Treasurer of Spirit Holdings from November 2006 to July 2010. From March 2003 to November 2006, Mr. Anderson was the Director of Corporate Finance and Banking for Boeing. Mr. Anderson began his career at Boeing in 1989 as a defense program analyst and served in a variety of finance and manufacturing operations leadership positions at Boeing Defense Systems and Boeing Commercial Airplanes. Mr. Anderson received his Bachelor of Arts and Masters of Business from Wichita State University and holds a Six Sigma Black Belt certification from the University of Michigan.

        David M. Coleal, 46.     Mr. Coleal assumed the role of Executive Vice President /General Manager — Boeing, Military, Business & Regional Jet Programs & Aftermarket in May 2013 after previously serving as Senior Vice President /General Manager of the Fuselage Segment since July 2011. Prior to joining Spirit AeroSystems, Mr. Coleal was Vice President and General Manager of Bombardier-Learjet. He joined Bombardier Aerospace in March 2008 and was responsible for all engineering and manufacturing operations, program change management, quality and material logistics for the Learjet family of aircraft, including development of the pioneering all-composite Learjet 85 mid-size business jet. From 2001 to 2008, Mr. Coleal worked at Cirrus Design Corporation, where he was initially responsible for operations, and he assumed positions of increasing responsibility until being named President and Chief Operating Officer in 2005. Mr. Coleal earned his Masters of Business Administration in Management Science from California State University — Hayward in 1997. He graduated from California State University in Sacramento in 1990 with a Bachelor of Science degree in Mechanical Engineering Technology.

        Sanjay Kapoor, 53.     Mr. Kapoor joined Spirit Holdings as Senior Vice President and Chief Financial Officer on September 23, 2013. Mr. Kapoor joined Spirit from Raytheon where he most recently served as Vice President of Integrated Air & Missile Defense for Raytheon Integrated Defense Systems (IDS). Prior to this role, Mr. Kapoor was IDS Vice President of Finance and Chief Financial Officer from 2004 to 2008. Mr. Kapoor also served as CFO at United Technologies' Pratt and Whitney Power Systems Division. His tenure at Pratt and Whitney also included roles as Director of Aftermarket Services for the Power Systems Business, controller for the Turbine Module Center and business manager for new commercial programs. Mr. Kapoor received his bachelor's degree in technology from the Indian Institute of Technology and a dual Masters of Business Administration in finance and entrepreneurial management from The Wharton School at the University of Pennsylvania.

        Jon D. Lammers, 49.     Mr. Lammers was named Senior Vice President — Secretary of Spirit Holdings in July 2012, and General Counsel of Spirit Holdings in October 2012. Mr. Lammers brings more than 20 years of legal experience, including 15 years at Cargill, Incorporated, where he served from July 1997 to July 2012. He served as Cargill's Asia Pacific general counsel in Singapore from June 2006 to June 2010 as well as Cargill's deputy North American general counsel in Wayzata, Minnesota from July 2010 to July 2012. Mr. Lammers earned his Bachelor of Science in Business Administration from the University of Southern California and his Juris Doctor degree from the University of Virginia.

        Samantha J. Marnick, 43.     Ms. Marnick became Senior Vice President — Chief Administration Officer in October 2012. From January 2011 to September 2012, Ms. Marnick served as Senior Vice President of Corporate Administration and Human Resources. From March 2008 to December 2010, Ms. Marnick served as Vice President Labor Relations & Workforce Strategy responsible for labor relations, global human resource

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project management office, compensation and benefits, and workforce planning. Ms. Marnick previously served as Director of Communications and Employee Engagement from March 2006 to March 2008. Prior to joining the Company, Ms. Marnick was a senior consultant and Principal for Mercer Human Resource Consulting holding management positions in both the United Kingdom and in the United States. Prior to that Ms. Marnick worked for Watson Wyatt, the UK's Department of Health and Social Security and The British Wool Marketing Board. Ms. Marnick holds a Master's degree from the University of Salford in Corporate Communication Strategy and Management.

        John Pilla, 54.     Mr. Pilla became the Senior Vice President/General Manager — Airbus and A350 XWB Program Management in May 2013. Prior to that, Mr. Pilla served as the Senior Vice President/General Manager, Propulsion Systems Segment of Spirit since July 2009 and added the role of Senior Vice President/General Manager of the Wing segment in September 2012. From July 2011 to May 2013, he was also responsible for the Aftermarket Customer Support Organization. From April 2008 to July 2009, Mr. Pilla was Chief Technology Officer of Spirit Holdings and he served as Vice President/General Manager — 787 of Spirit Holdings and/or Spirit, a position he assumed at the date of the Boeing Acquisition in June 2005 and held until March 2008. Mr. Pilla began his career at Boeing Commercial Airplanes in 1981 as a stress engineer and was promoted to Chief Engineer of Structures and Liaison in 1995. In 1997, Mr. Pilla led the Next-Generation 737 engineering programs and ultimately led the Define Team on the 737-900 fuselage and empennage in late 1997 as well as the 777LR airplane in May 2000. In July 2001, Mr. Pilla became the Director of Business Operations, a position he held until July 2003 when he accepted an assignment as 787 Director of Product Definition and Manufacturing. He received his Master's degree in Aerospace Structures Engineering in 1986 and a Masters in Business Administration in 2002 from Wichita State University.

        Heidi Wood, 48.     Ms. Wood joined Spirit Holdings as Senior Vice President — Strategy, Mergers and Acquisitions and Investor Relations in July 2013. Prior to joining the Company, Ms. Wood was Senior Vice President and Co-head of Global Sales at Avjet Corporation. From 1999 to 2013, Ms. Wood served as Managing Director and global head of aerospace/defense analysis at Morgan Stanley. She was responsible for leading North American, Europe, Latin American and Singapore-based teams. Prior to assuming her employment at Morgan Stanley, Ms. Wood was an analyst at Cowen & Company from 1992 to 1999. Ms. Wood holds a Bachelor of Arts degree with honors from Brown University.

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Part II

Item 5.     Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        Our class A common stock has been quoted on the NYSE under the symbol "SPR" since November 21, 2006. Prior to that time, there was no public market for our stock. As of February 12, 2014, there were approximately 1,282 holders of record of class A common stock. However, we believe that many additional holders of our class A common stock are unidentified because a substantial number of shares are held of record by brokers or dealers for their customers in street names. The closing price on February 12, 2014 was $28.86 per share as reported by the NYSE.

        As of February 12, 2014, there were approximately 123 holders of record of class B common stock. Our class B common stock is neither listed nor publicly traded.

        The following table sets forth for the indicated periods the high and low closing sales price for our class A common stock on the NYSE.

 
  2013   2012  
Fiscal Quarter
  High   Low   High   Low  

1st

  $ 19.00   $ 15.94   $ 25.66   $ 21.11  

2nd

  $ 21.93   $ 18.45   $ 25.72   $ 22.12  

3rd

  $ 25.99   $ 21.48   $ 25.85   $ 21.65  

4th

  $ 34.18   $ 23.54   $ 22.87   $ 14.04  


Dividend Policy

        We did not pay any cash dividends in 2012 or 2013 and we currently do not intend to pay cash dividends. Our future dividend policy will depend on the requirements of financing agreements to which we may be a party. Any future determination to pay dividends will be at the discretion of our Board of Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions.


Securities Authorized for Issuance under Equity Compensation Plans

        The following table represents restricted shares outstanding under the Executive Incentive Plan, the Director Stock Plan, and the Short-Term and Long-Term Incentive Plans as of December 31, 2013.

Equity Compensation Plan Information

Plan Category
  Number of Securities
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
  Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
  Number of Securities
Remaining Available
for Future Issuances
Under the Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
 
 
  (a)
  (b)
  (c)
 

Restricted Stock Awards

                   

Equity compensation plans approved by security holders (1)(2)

    N/A (3) $     8,939,862 (4)

Equity compensation plans not approved by security holders (2)

      $      

Total

    N/A (3) $     8,939,862 (4)

(1)
Approved by previous security holders in place before our initial public offering. Amendments were approved by shareholders in 2008 and 2011.

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(2)
Our equity compensation plans provide for the issuance of incentive awards to officers, directors, employees and consultants in the form of stock appreciation rights, restricted stock, restricted stock units and deferred stock, in lieu of cash compensation.

(3)
There are 1,732,535 class A shares and 869,219 class B shares outstanding under the Executive Incentive Plan, the Director Stock Plan, and the Short-Term and Long-Term Incentive Plans as of December 31, 2013.

(4)
As of December 31, 2013, there are 3,380,285; 2,404,323; 1,455,716 and 1,699,538 securities available for future issuance under the Executive Incentive Plan, the Director Stock Plan, and the Short-Term and Long-Term Incentive Plans, respectively.

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Stock Performance

        The following graph shows a comparison from December 31, 2008 through December 31, 2013 of cumulative total return of our class A common stock, Standard & Poor's 500 Stock Index, and the Standard & Poor's 500 Aerospace & Defense Index. Such returns are based on historical results and are not intended to suggest future performance. We have never paid dividends on our class A common stock and have no present plans to do so.

GRAPHIC

 
  INDEXED RETURNS
Years Ending

 
Company/Index
  Base
Period
12/31/08
    
12/31/2009
  12/31/2010   12/31/2011   12/31/2012   12/31/2013  

Spirit AeroSystems Holdings, Inc

    100     195.28     204.62     204.33     166.86     335.10  

S&P 500 Index

    100     126.46     145.51     148.59     172.37     228.19  

S&P 500 Aerospace & Defense Index

    100     124.64     143.47     151.04     173.04     268.07  

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Item 6.     Selected Financial Data


SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

        The following table sets forth our selected consolidated financial data for each of the periods indicated. Financial data is derived from the audited consolidated financial statements of Spirit Holdings. The audited consolidated financial statements for the years ended December 31, 2011, December 31, 2012 and December 31, 2013 are included in this Annual Report. You should read the information presented below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined and consolidated financial statements and related notes contained elsewhere in the Annual Report.

 
  Spirit Holdings  
 
  Twelve Months Ended  
 
  December 31,
2013
  December 31,
2012
  December 31,
2011
  December 31,
2010
  December 31,
2009
 
 
  (Dollars in millions, except per share data)
 

Statement of Income Data:

                               

Net revenues

  $ 5,961.0   $ 5,397.7   $ 4,863.8   $ 4,172.4   $ 4,078.5  

Cost of sales (1)

    6,059.5     5,245.3     4,312.1     3,607.9     3,581.4  

Selling, general and administrative expenses (2)

    200.8     172.2     159.9     156.0     137.1  

Impact from severe weather event

    30.3     (146.2 )            

Research and development

    34.7     34.1     35.7     51.5     56.7  
                       

Operating (loss) income

    (364.3 )   92.3     356.1     357.0     303.3  

Interest expense and financing fee amortization

    (70.1 )   (82.9 )   (77.5 )   (59.1 )   (43.6 )

Interest income

    0.3     0.2     0.3     0.3     7.0  

Other income (loss), net

    3.3     1.8     1.4     (0.4 )   6.1  
                       

(Loss) income before income taxes and equity in net income (loss) of affiliates

    (430.8 )   11.4     280.3     297.8     272.8  

Income tax (provision) benefit

    (191.1 )   24.1     (86.9 )   (78.2 )   (80.9 )

Equity in net income (loss) of affiliates

    0.5     (0.7 )   (1.0 )   (0.7 )   (0.2 )
                       

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4   $ 218.9   $ 191.7  
                       
                       

Net (loss) income per share, basic

  $ (4.40 ) $ 0.24   $ 1.36   $ 1.56   $ 1.39  

Shares used in per share calculation, basic (3)

    141.3     140.7     139.2     137.9     137.2  

Net (loss) income per share, diluted

  $ (4.40 ) $ 0.24   $ 1.35   $ 1.55   $ 1.37  

Shares used in per share calculation, diluted

    141.3     142.7     142.3     141.0     139.8  

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  Spirit Holdings  
 
  Twelve Months Ended  
 
  December 31,
2013
  December 31,
2012
  December 31,
2011
  December 31,
2010
  December 31,
2009
 
 
  (Dollars in millions)
 

Other Financial Data:

                               

Cash flow provided by (used in) operating activities

  $ 260.6   $ 544.4   $ (47.3 ) $ 125.1   $ (13.9 )

Cash flow (used in) investing activities

  $ (268.2 ) $ (248.8 ) $ (249.2 ) $ (288.4 ) $ (112.4 )

Cash flow (used in) provided by financing activities

  $ (13.9 ) $ (34.6 ) $ (6.7 ) $ 277.4   $ 276.1  

Capital expenditures

  $ (234.2 ) $ (236.1 ) $ (249.7 ) $ (288.1 ) $ (228.2 )

Consolidated Balance Sheet Data:

                               

Cash and cash equivalents

  $ 420.7   $ 440.7   $ 177.8   $ 481.6   $ 369.0  

Accounts receivable, net

  $ 550.8   $ 420.7   $ 267.2   $ 200.2   $ 160.4  

Inventories, net

  $ 1,842.6   $ 2,410.8   $ 2,630.9   $ 2,507.9   $ 2,206.9  

Property, plant & equipment, net

  $ 1,803.3   $ 1,698.5   $ 1,615.7   $ 1,470.0   $ 1,279.3  

Total assets

  $ 5,107.2   $ 5,415.3   $ 5,042.4   $ 5,102.0   $ 4,473.8  

Total debt

  $ 1,167.3   $ 1,176.2   $ 1,200.9   $ 1,196.8   $ 893.8  

Long-term debt

  $ 1,150.5   $ 1,165.9   $ 1,152.0   $ 1,187.3   $ 884.7  

Total equity

  $ 1,481.0   $ 1,996.9   $ 1,964.7   $ 1,810.9   $ 1,573.8  

(1)
Included in 2013 cost of sales are forward loss charges of $1,133.3 million, which includes $41.1 million on the B747-8 program, $16.4 million on the B767 program, $422.0 million on the B787 program, $111.3 million on the A350 XWB program, $240.9 million on the G280 wing program, $288.3 million on the G650 wing program and $13.3 million on our Rolls-Royce BR725 program. Included in 2012 cost of sales are forward loss charges of $636.7 million, which includes $11.5 million on the B747-8 program, $184.0 million on the B787 wing program, $8.9 million on the A350 XWB non-recurring wing contract, $118.8 million on the G280 wing program, $162.5 million on the G650 wing program and $151.0 million on our Rolls-Royce program. Included in 2011 cost of sales are forward loss charges of $132.1 million, which includes $81.8 million on the G280 wing program, $29.0 million on the Sikorsky CH-53K program, $18.3 million on the B747-8 program and $3.0 million on the A350 XWB non-recurring wing program. Included in 2010 cost of sales are charges of $18.9 million related to the grant of shares to employees represented by the IAM in connection with the ratification of a new ten-year labor contract on June 25, 2010, $6.5 million in early retirement incentives for members represented by the IAM who made elections to retire in 2010, and $3.3 million in grants of shares to employees represented by the UAW in connection with the ratification of a new ten-year labor contract on December 18, 2010. Also included in 2010 cost of sales is a $2.8 million forward loss on the G280 wing program. Included in the 2009 cost of sales are forward loss charges of $103.9 million, which includes $93.0 million on the G280 wing program and $10.9 million on the Cessna Citation Columbus program. Includes cumulative catch-up adjustments of $95.5 million, $14.7 million, $13.8 million, ($23.2) million and ($58.5) million for periods prior to the twelve months ended December 31, 2013, December 31, 2012, December 31. 2011, December 31, 2010 and December 31, 2009, respectively.

(2)
Includes non-cash stock compensation expenses of $19.6 million, $15.3 million, $11.1 million, $7.9 million and $9.7 million for the respective periods starting with the twelve months ended December 31, 2013.

(3)
Under the Financial Accounting Standards Board ("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. See Note 20, "Equity," for more details.

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Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations

        You should read the following discussion of our financial condition and results of operations in conjunction with the audited consolidated financial statements, the notes to the audited consolidated financial statements and the "Selected Consolidated Financial Information and Other Data" appearing elsewhere in this Annual Report. This section includes "forward-looking statements." Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "intend," "estimate," "believe," "project," "continue," "plan," "forecast," or other similar words. These statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown, including, but not limited to, those described in the "Risk Factors" section of this Annual Report. See also "Cautionary Statement Regarding Forward-Looking Statements." Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors not to place undue reliance on any forward-looking statements.


Recent Events

        On February 6, 2014, Moody's Investors Service placed the rating of Spirit AeroSystems, Inc. under review for possible downgrade.

        On January 16, 2014, Bombardier announced a delay in entry-into-service for the new C Series aircraft, for which Spirit provides content. This delay is not expected to have a material impact on Spirit's results of operations.

        On December 19, 2013, Spirit completed the sale of its interest in the Spirit-Progresstech joint venture, our former joint venture with ProgressTech, LTD.


Overview

        We are one of the largest independent non-OEM (original equipment manufacturer) aircraft parts designers and manufacturers of commercial aerostructures in the world, based on annual revenues, as well as the largest independent supplier of aerostructures to Boeing. In addition, we are one of the largest independent suppliers of aerostructures to Airbus. Boeing and Airbus are the two largest aircraft OEMs in the world. Aerostructures are structural components, such as fuselages, propulsion systems and wing systems for commercial and military aircraft. For the twelve months ended December 31, 2013, we generated net revenues of $5,961.0 million and net loss of $621.4 million.

        We are organized into three principal reporting segments: (1) Fuselage Systems, which includes forward, mid and rear fuselage sections, (2) Propulsion Systems, which includes nacelles, struts/pylons and engine structural components, and (3) Wing Systems, which includes wings, wing components, flight control surfaces and other miscellaneous structural parts. 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, Kansas. The Fuselage Systems segment manufactures products at our facilities in Wichita, Kansas and Kinston, North Carolina, with an assembly plant in Saint-Nazaire, France for the A350 XWB program. The Propulsion Systems segment manufactures products at our facilities in Wichita and Chanute, Kansas. The Wing Systems segment manufactures products at our facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Subang, Malaysia; and Kinston, North Carolina. Fuselage Systems, Propulsion Systems, Wing Systems and All Other represented approximately 48%, 27%, 25% and less than 1%, respectively, of our net revenues for the twelve months ended December 31, 2013.

        We are evaluating the potential realignment of our reportable segments as part of our 2014 business strategy. The reportable segment amounts and discussions reflected in this Annual Report reflect the management reporting that existed through the end of our 2013 fiscal year.

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Market Trends

        The financial health of the commercial airline industry has a direct and significant effect on our commercial aircraft programs. The global industry's year-over-year revenue grew from 2010 through 2013, and is forecast to continue growing in 2014 and 2015, after significant contraction in 2008 and 2009. One key driver of the commercial aircraft market is airline passenger and cargo traffic trends. Principal factors influencing traffic are economic growth and political stability. A significant downturn in global or regional economic stability, or exogenous shocks such as terrorism or a pandemic, could suppress traffic and negatively affect demand for our key customers' products.

        Demand for commercial aerostructures is highly correlated to demand for new aircraft. Boeing and Airbus have more than doubled their combined backlog since December 2006. The year-end 2013 combined backlog was 10,639 aircraft. High backlog levels are expected to continue to drive increasing production and delivery forecasts in the near to mid-term from both Boeing and Airbus.

        The following table sets forth the historical deliveries of Boeing and Airbus for 2008 through 2013 and delivery expectations for 2014.

 
  2008   2009   2010   2011   2012   2013   2014 (1)  

Boeing

    375     481     462     477     601     648     715-725  

Airbus

    483     498     510     534     588     626     626  
                               

Total

    858     979     972     1,011     1,189     1,274     1,341-1,351  

(1)
Boeing has announced that it expects its 2014 deliveries to be approximately 715-725 aircraft. Airbus announced that it expects 2014 deliveries to reach similar levels as 2013.

    Program Inventory

        Product inventory continues to grow in terms of absolute dollars and remains stable as a percentage of total assets. Inventory as a percentage of total assets was 36%, 45% and 52% at December 31, 2013, 2012 and 2011, respectively. This overall trend in inventory is driven primarily by our contractually required investments in certain programs, which include the Boeing B747-8, B787, Gulfstream G280 and G650, Airbus A350 XWB, Sikorsky CH-53K and Rolls-Royce BR725 programs. The contracts for these programs accounted for a decrease in inventory from 2012 to 2013 of $682.7 million, which is net of forward loss charges for each year. Excluding the forward loss charges, these programs would have increased inventory by $329.4 million from 2012 to 2013. The increases in inventory for new and maturing programs in the last few years are a result of the application of the percentage-of-completion method of contract accounting with regard to inventory and revenue recognition. Under this method, investments in new and maturing contracts, including contractual pre-production costs and recurring production costs in excess of the projected average cost to manufacture all units in the contract block, initially accumulate in inventory for the related contract. Once production has reached a point where the cost to produce a ship set falls below such projected average cost, the inventory balance for such program will begin to decrease. Deferred inventory costs are evaluated for recoverability through their inclusion in the total costs used in the calculation of each contract block's estimated profit margin. When the estimated total contract block costs exceed total estimated contract block revenues, a forward loss is recorded and an inventory reserve is established.


Management's Focus

        The Company's focus is on ensuring that our strategy and our operational and cost performance are world class. Overall, we are committed to the concept of change and we have undertaken specific actions recently that highlight that commitment. On May 2, 2013, we announced the undertaking of comprehensive strategic and financial reviews of our development programs at our Tulsa, Wichita, Kinston and St. Nazaire sites. These reviews were concluded in the fourth quarter of 2013. Decisions made as a result of these reviews include some of the actions we announced in 2013, the most significant of which was

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our commencement of a process to sell our Oklahoma facilities, which we announced on August 6, 2013. Certain of our maturing programs, including the Gulfstream G280 and G650 wing and the B787 wing programs, are produced at these facilities. This decision aligns with our strategy to focus on the commercial aerospace and defense segments of the marketplace. We may ultimately decide to sell only a portion of, or certain programs produced at, our Oklahoma facilities, to sell separate portions and/or programs to different buyers, or to retain the facilities in their entirety. We are also committed to reducing internal cost and improving operational efficiency through centralization of functions as demonstrated by the reduction in workforce activities completed in the third quarter of 2013. Additionally, we continue to align the business around our customers and programs with strong emphasis on markets, business management, program management, production and supply chain. We also added new executive talent and reassigned existing executive talent in an effort to strengthen performance in certain areas of our business. We anticipate taking additional actions in the near-term as we continue to focus on positioning the Company for future success.


New and Maturing Programs

        We are currently performing work on several new and maturing programs, which are in various stages of development. The Boeing B787-8 has received FAA and JAA certifications, as well as EASA certification for entry into service. The Gulfstream G280 and G650 have each received FAA and EASA certifications.

        During 2013, several events occurred that led to significant changes in cost estimates for several programs resulting in forward losses being recorded on some of these programs. Due to these changes, for the twelve months ended December 31, 2013, we recorded forward loss charges of $1,133.3 million, including $240.9 million on the Gulfstream G280, $288.3 million on the Gulfstream G650, $78.6 million on the Airbus A350 XWB fuselage recurring, $32.7 million on the Airbus A350 XWB fuselage non-recurring, $41.1 million on the Boeing B747-8 fuselage, $16.4 million on the Boeing B767 propulsion, $422.0 million on the Boeing B787 and a net $13.3 million on the Rolls-Royce BR725. These amounts are recorded within the Company's results of operations as part of cost of goods sold as well as on the consolidated balance sheet as forward loss provisions within inventory.

A350 XWB

        We continue to support the development of the A350 XWB program through a wing contract and a fuselage contract, both of which are segmented into a non-recurring design engineering phase and recurring production phase. In the first quarter of 2013, we reduced the margins for the A350 XWB fuselage recurring and A350 XWB wing recurring programs to break-even to reflect an increase in identified risk profile of these programs. In September and October of 2013, we agreed with Airbus on the work scope for the design and tooling related to the -1000 derivative of the A350 XWB fuselage and wing contracts, respectively.

        Based on current estimates, the agreement for the non-recurring design engineering phase of the -1000 derivative fuselage resulted in a $32.7 million forward loss which was recorded in the third quarter of 2013. There is a risk of additional forward loss if we do not successfully execute the design and engineering change process as projected.

        Our A350 XWB fuselage recurring program has experienced various production inefficiencies mostly driven by early development discovery and engineering change to the aircraft design, as well as higher test and transportation costs. Airbus is assisting us as we work through these issues and has provided additional resources to work alongside our personnel. In the third quarter of 2013, we recorded a forward loss of $78.6 million for the A350 XWB fuselage recurring contract due to these production inefficiencies. There continues to be risk of additional forward loss associated with the fuselage recurring contract as we work through production issues.

        Although we continue to project the wing recurring production contract to be break-even, there is still a substantial amount of risk similar to what we have experienced on other development programs.

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Particularly, our ability to successfully negotiate favorable terms with our suppliers, manage supplier performance, execute cost reduction strategies, hire and retain skilled production and management personnel, execute quality and manufacturing processes, and manage program schedule delays or adjust to higher rate schedules, among other risks, will determine the ultimate performance of these programs.

B787 Program

        As we move into a higher production rate on this program, our performance at the current contracted price depends on our continued ability to achieve cost reductions in manufacturing and support labor as well as supply chain. During the first and second quarters of 2013, we experienced production inefficiencies at our Tulsa facility as we transitioned the B787-9 derivative into production, which drove forward losses of $37.3 million on the B787 wing program. Additionally in the fourth quarter of 2013, we revised our estimates of the amount of near-term achievable cost reductions for the B787 program based on cost savings ideas generated, the maturity of those ideas, and the expected realization for the program. This change in cost savings estimates drove a forward loss in the fourth quarter of $384.7 million. Total forward losses for the program were $422.0 million for the twelve months ended December 31, 2013.

        Continuous improvement in our cost structure has been on-going since the beginning of the program as design engineering for both the B787-8 and B787-9 derivatives finalized and manufacturing plans solidified. Near term cost improvement efforts will focus on efficiency gains within our manufacturing process and execution of sourcing strategies.

        We have not yet established pricing for the B787-9, B787-10 or any future derivatives. The B787 Supply Agreement provides that initial prices for the B787-9 and B787-10 are to be determined by a procedure set out in the B787 Supply Agreement, and to be documented by amendment once that amendment has been agreed to by the parties. The parties have engaged in discussions concerning how to determine initial B787-9 and B787-10 pricing, and have not yet reached agreement. Our ability to successfully negotiate fair and equitable prices for these models as well as overall B787 delivery volumes and our ability to achieve forecasted cost improvements on all B787 models are key factors in achieving the projected financial performance for this program.

G280 and G650 Programs

        The Gulfstream G650 and G280 programs face near term risks that includes our ability to execute our contractual work statement, achieve supply chain cost reductions, and successfully perform to manufacturing plans and delivery schedules. Business jet market fluctuations caused by changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market, also present risk to these programs. The G650 program has significant near term risk as we work with our customer to resolve certain commercial issues related to Gulfstream's contention that delivered units failed to meet schedule and weight requirements.

Supply Chain Cost Reductions — G280 and G650

        Our 2012 cost estimates at completion for the Gulfstream G280 and G650 programs included significant cost reductions primarily related to sourcing opportunities projected to be realized between 2015 and 2018. These sourcing opportunities and related savings amounts were based on the experience of the supply chain team and operational management. During the second quarter of 2013, the supply chain team and operational management determined that a substantial portion of the total cost savings included in the contract estimates for each program would not be realized. This determination was based on a number of changing conditions and new developments including, an assessment of our actual experience with our customers regarding their receptiveness to proposed changes, completion of a detailed part analyses as part of our effort to project future sourcing costs, and our inability to achieve estimated supplier price reductions via negotiations with suppliers.

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Labor Estimates — Tulsa Facility

        The labor cost forecasts within the contract estimates for the G280, G650 and B787 are based on certain assumptions, including the level of disruption expected in the future. In our contract estimates through the first quarter of 2013, we assumed that certain disruptions to the manufacturing line caused by (i) supplier quality issues and late deliveries, (ii) customer inspections occurring in our facilities and (iii) our own manufacturing quality issues would be resolved by the middle of 2013. During the second and fourth quarters of 2013, key performance dates were missed and we extended the expected period of time during which these issues would be resolved in our assumptions for our contract estimates. As a result, we experienced higher actual costs as well as significant increases to forecasted costs, resulting in additional forward losses recognized on all of these programs in the second and fourth quarters of 2013.

Contractual Items — G650

        As we worked with Gulfstream to meet its production demand, we negotiated a temporary transfer of a portion of our work scope to Gulfstream for completion. In the second quarter of 2013, due to the effect of continued production challenges on our forecasted ability to achieve scheduled deliveries, we changed our assumptions to extend the duration of the work transfer and updated our estimates regarding this temporarily transferred work scope which is accounted for as a reduction in forecasted revenue. As described in more detail in Note 22, "Commitments, Contingencies and Guarantees," we instituted a demand for arbitration against Gulfstream to resolve certain contractual disputes primarily related to engineering changes made by Gulfstream and the impact of those changes to weight and delivery schedules as well as for incomplete payments to Spirit. We continually assess these contractual items and adjust our estimates as appropriate each quarter. Changes in these particular estimates resulted in additional forward losses recognized on the G650 in the second quarter of 2013.

General Statement Regarding New and Maturing Programs

        In order to continue to reduce risk on our new and maturing programs, it will be critical that we successfully perform under revised design and manufacturing plans, achieve forecasted cost reductions as we enter increasing levels of production, meet customer delivery schedules and successfully resolve claims, assertions and pricing negotiations with our customers and suppliers.

        Additionally, we face risks related to the announcement on August 6, 2013 of our initiation of a process to divest our Oklahoma facilities, which we may ultimately decide to sell separate portions and/or programs to different buyers, or retain the facilities in their entirety. We have a concentration of maturing programs, including the G650, G280 and B787 wing programs, at these facilities and a divestiture of these facilities may have a material financial impact in the period in which the divestiture becomes probable.


Basis of Presentation

        The financial statements include Spirit'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. Investments in business entities in which we do not have control, but have the ability to exercise influence over operating and financial policies, are accounted for by the equity method. Kansas Industrial Energy Supply Company ("KIESC"), a tenancy-in-common with other Wichita companies established to purchase natural gas, is fully consolidated as Spirit 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; the Malaysian subsidiary uses the British pound and our Singapore subsidiary uses the Singapore dollar. All other foreign subsidiaries and branches use the U.S. dollar as their functional currency.

        As part of the monthly consolidation process, the functional currency is translated to U.S. dollars using the end-of-month currency translation rate for balance sheet accounts and average period currency translation rates for revenue and income accounts as defined by FASB authoritative guidance on foreign currency translation.

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Critical Accounting Policies

        The following discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to inventory, income taxes, financing obligations, warranties, pensions and other post-retirement benefits and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management believes that the quality and reasonableness of our most critical policies enable the fair presentation of our financial position and results of operations. However, the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

        The following are our most critical accounting policies, which are those that require management's most subjective and complex judgments, requiring the use of estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

    Revenues and Profit Recognition

        A significant portion of the Company's revenues are recognized under long-term, volume-based pricing contracts, requiring delivery of products over several years. The Company recognizes revenue under the contract method of accounting and records sales and profits on each contract in accordance with the percentage-of-completion method of accounting, primarily using the units-of-delivery method. The units-of-delivery method recognizes as revenue the contract price of units of a basic production product delivered during a period and as the cost of earned revenue the costs allocable to the delivered units; costs allocable to undelivered units are reported in the balance sheet as inventory. The method is used in circumstances in which an entity produces units of a basic product under production-type contracts in a continuous or sequential production process to buyers' specifications. Recurring long-term production contracts are usually divided into contract blocks for this purpose, with each block treated as a separate contract for "units-of-delivery" production-type contract accounting purposes.

        The total quantity of production units to be delivered under a contract may be set as a single contract accounting block, or it can be split into multiple blocks. Unless the life of the contract is so long that it prevents reliable estimates, the entire contract quantity will typically be set as the contract accounting block quantity. "Life of program" or "requirements based" contracts often lead to continuing sales of more than twenty years. Since this is much longer than can be reliably estimated, we use parameters based on the contract facts and circumstances to determine the length of the contract block. This analysis includes: considering the customer's firm orders, internal assessment of the market, reliabilities of cost estimates, potential segmentation of non-recurring elements of the contract, and other factors. Contract block sizes may also be determined based on certain contractual terms such as pricing renegotiation dates such that certain contract blocks may use an approximate date instead of a defined unit quantity in order to increase the ability to estimate accurately given that the renegotiated pricing is unknown for the planning block. Shorter contract blocks for mature, ongoing programs are common due to the presence of recent cost history and probable forecast accuracy. Mature program contract blocks tend to be approximately two years in length. Initial contract blocks often require a longer time period and greater number of units in order to take into account the higher cost of early units due to a steeper experience curve and pre-production design costs. Initial contract blocks on new programs can extend up to ten years or longer. As these programs mature and efficiencies are realized, subsequent contract block length shortens to take into account the steady state of the continuing production.

        Revenues from non-recurring design work are recognized based on substantive milestones or use of the cost to cost method, that are indicative of our progress toward completion depending on facts and

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circumstances. We follow the requirements of FASB authoritative guidance on accounting for the performance of construction-type and certain production-type contracts (the contract method of accounting), using the cumulative catch-up method in accounting for revisions in estimates. Under the cumulative catch-up method, the impacts of revisions in estimates are recognized immediately when changes in estimated contract profitability become known.

        A profit rate is estimated based on the difference between total revenues and total costs over a contract block. Total revenues at any given time include actual historical revenues up to that time plus future estimated revenues. Total costs at any given time include actual historical costs up to that time plus future estimated costs. Estimated revenues include negotiated or expected values for units delivered, estimates of probable recoveries asserted against the customer for changes in specifications, price adjustments for contract and volume changes, escalation and assumed but currently unnegotiated price increases for derivative models. Costs include the estimated cost of certain pre-production effort (including non-recurring engineering and planning subsequent to completion of final design) plus the estimated cost of manufacturing a specified number of production units. Estimates take into account assumptions relative to future labor performance and rates, and projections relative to material and overhead costs including expected "learning curve" cost reductions over the term of the contract. Estimated revenues and costs also take into account the expected impact of specific contingencies that we believe are probable.

        Estimates of revenues and costs for our contract blocks span a period of multiple years and are based on a substantial number of underlying assumptions. We believe that the underlying assumptions are sufficiently reliable to provide a reasonable estimate of the profit to be generated. However, due to the significant length of time over which revenue streams will be generated, the variability of the revenue and cost streams can be significant if the assumptions change. Estimates of profit margins for contract accounting blocks are typically reviewed on a quarterly basis. Assuming the initial estimates of sales and costs under the contract block are accurate, the percentage-of-completion method results in the profit margin being recorded evenly as revenue is recognized under the contract block. Changes in these underlying estimates due to revisions in sales and cost estimates may result in profit margins being recognized unevenly over a contract block as such changes are accounted for on a cumulative basis in the period estimates are revised, which we refer to as cumulative catch-up adjustments. When the current estimates of total contract revenue and total contract cost indicate a loss, a provision for the entire loss on the contract, known as a forward loss charge, is recorded to cost of sales in the period in which it becomes evident.

        For revenues not recognized under the contract method of accounting, the Company recognizes revenues from the sale of products at the point of passage of title, which is generally at the time of shipment. Shipping and handling costs are included in cost of sales. Revenues earned from providing maintenance services including any contracted research and development are recognized when the service is complete or other contractual milestones are attained.

        Under an agreement with Airbus, beginning in 2012 certain payments that are also accounted for as consideration given by a vendor to a customer have been amortized as a reduction to net revenues.

        A significant portion of the Company's future revenues is expected to be derived from new or maturing programs. There are several risks inherent to such programs. In the design and engineering phase, we may incur costs in excess of our forecasts due to several factors, including cost overruns, customer directed change orders and delays in the overall program. We may also incur higher than expected recurring production costs, which may be caused by a variety of factors, including the future impact of engineering changes (or other change orders) or our inability to secure contracts with our suppliers at projected cost levels. Our ability to recover these excess costs from the customer will depend on several factors, including our rights under our contracts for such programs. In determining our profits and losses in accordance with the percentage-of-completion method of contract accounting, we are required to make significant assumptions regarding our future costs and revenues, as well as the estimated number of units to be manufactured under the contract and other variables. We continually review and update our assumptions based on market trends and our most recent experience. If we make material

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changes to our assumptions, such as a reduction in the estimated number of units to be produced under the contract (which could be caused by emerging market trends or other factors), an increase in future production costs or a change in the recoverability of increased design or production costs, we may experience negative cumulative catch-up adjustments related to revenues previously recognized. In some cases, we may recognize forward loss amounts. For a broader description of the various types of risks we face related to new and maturing programs, see "Risk Factors — Risk Factors Related to Our Business and Industry."

    Inventory

        Raw materials are stated at lower of cost (principally on an actual or average cost basis) or market. Inventoried costs attributed to units delivered under long-term contracts are based on the estimated average cost of all units expected to be produced and are determined under the learning curve concept which anticipates a predictable decrease in unit costs as tasks and production techniques become more efficient through repetition. This usually results in an increase in inventory (referred to as "excess-over-average" or "deferred production costs") during the early years of a contract. These costs are deferred only to the extent the amount of actual or expected excess-over-average is reasonably expected to be fully offset by lower-than-average costs in future periods of a contract. If in-process inventory plus estimated costs to complete a specific contract exceed the actual plus anticipated remaining sales value of such contract, such excess is charged to cost of sales in the period the loss becomes known, thus reducing total inventory to estimated realizable value. Costs in inventory include amounts relating to contracts with long production cycles, some of which are not expected to be realized within one year.

        The Company reviews its general stock materials and spare parts inventory each quarter to identify impaired inventory, including excess or obsolete inventory, based on historical sales trends and expected production usage. Impaired inventories are written off to work in process in the period identified.

        Total inventory includes deferred production costs for the excess of production costs over the estimated average cost per ship set, and credit balances for favorable variances on contracts between actual costs incurred and the estimated average cost per ship set for units delivered under the current production blocks. 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. Work-in-process inventory also includes non-recurring production costs. Non-recurring production costs include design and engineering costs and test articles.

        Finished goods inventory is stated at its estimated average per unit cost based on all units expected to be produced.

        Capitalized pre-production costs include certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. Significant customer-directed work changes can also cause pre-production costs to be incurred. These costs are typically recovered over a certain number of ship set deliveries.

    Income Taxes

        Income taxes are accounted for in accordance with FASB authoritative guidance on accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective tax bases. Tax rate changes impacting these assets and liabilities are recognized in the period during which the rate change occurs.

        A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a

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deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

        Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's prior earnings history including the forward losses previously recognized in the U.S., Management determined that it was necessary to establish a valuation allowance against nearly all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position in recent years once results from the year ended December 31, 2013 were included, the threshold after which there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. As of December 31, 2013, the total net U.S. deferred tax asset was $399.6 million. The net U.S. deferred tax asset after recording valuation allowances is $3.7 million. Valuation allowances recorded against the consolidated net U.S. deferred tax asset in the current year were $381.0 million. Additionally, the Company maintains a $14.9 million valuation allowance against separate company state income tax credits and previously recorded other U.S. issues and $0.6 million for other foreign issues which is an increase of $5.1 million from the prior year. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes.

        We record an income tax expense or benefit based on the net income earned or net loss incurred in each tax jurisdiction and the tax rate applicable to that income or loss. In the ordinary course of business, there are transactions for which the ultimate tax outcome is uncertain. These uncertainties are accounted for in accordance with FASB authoritative guidance on accounting for the uncertainty in income taxes. The final tax outcome for these matters may be different than management's original estimates made in determining the income tax provision. A change to these estimates could impact the effective tax rate and net income or loss in subsequent periods. We use the flow-through accounting method for tax credits. Under this method, tax credits reduce income tax expense.

    Pensions and Other Post-Retirement Benefits

        We account for pensions and other post-retirement benefits in accordance with FASB authoritative guidance on employers' accounting for pensions, post-retirement benefits other than pensions, defined benefit pension and other post-retirement plans (See Note 16, "Pension and Other Post-Retirement Benefits," for additional detail on these plans).

        Assumptions used in determining the benefit obligations and the annual expense for our pension and post-retirement benefits other than pensions are evaluated and established in conjunction with an independent actuary.

        We set the discount rate assumption annually for each of our retirement-related benefit plans as of the measurement date, based on a review of projected cash flows and long-term high-quality corporate bond yield curves. The discount rate determined on each measurement date is used to calculate the benefit obligation as of that date, and is also used to calculate the net periodic benefit expense/(income) for the upcoming plan year.

        We derive assumed expected rate of return on pension assets from the long-term expected returns based on the investment allocation by class specified in our investment policy. The expected return on plan assets determined on each measurement date is used to calculate the net periodic benefit expense/(income) for the upcoming plan year.

        Assumed health care cost trend rates have a significant effect on the amounts reported for the post-retirement health care plans. To determine the health care cost trend rates, we consider national health trends and adjust for our specific plan designs and locations.

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    Stock Compensation Plans

        At inception, we adopted FASB authoritative guidance which generally requires companies to measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value and to recognize this cost over the requisite service period or immediately if there is no service period or other performance requirements. Stock-based compensation represents a significant accounting policy of ours, which is further described in Note 15, "Debt," within the notes to our consolidated financial statements included in this Annual Report.

        We have established various stock compensation plans that include restricted share grants and restricted stock units.


New Accounting Standards

        For a listing of new accounting standards see Note 2, "Summary of Significant Accounting Policies — New Accounting Standards."


Results of Operations

        The following table sets forth, for the periods indicated, certain of our operating data:

 
  Twelve
Months
Ended
December 31,
2013
  Twelve
Months
Ended
December 31,
2012
  Twelve
Months
Ended
December 31,
2011
 
 
  ($ in millions)
 

Net revenues

  $ 5,961.0   $ 5,397.7   $ 4,863.8  

Cost of sales (1)(2)(3)

    6,059.5     5,245.3     4,312.1  

Selling, general and administrative expenses (4)

    200.8     172.2     159.9  

Impact from severe weather event (5)

    30.3     (146.2 )    

Research and development

    34.7     34.1     35.7  
               

Operating (loss) income

    (364.3 )   92.3     356.1  

Interest expense and financing fee amortization

    (70.1 )   (82.9 )   (77.5 )

Interest income

    0.3     0.2     0.3  

Other income, net

    3.3     1.8     1.4  
               

(Loss) income before income taxes and equity in net loss of affiliate

    (430.8 )   11.4     280.3  

Income tax (provision) benefit

    (191.1 )   24.1     (86.9 )
               

(Loss) income before equity in net loss of affiliate

    (621.9 )   35.5     193.4  

Equity in net income (loss) of affiliate

    0.5     (0.7 )   (1.0 )
               

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4  
               
               

(1)
The twelve months ended December 31, 2013 are inclusive of forward loss charges of $422.0 million, $288.3 million, $240.9 million, $111.3 million, $16.4 million, $41.1 million and $13.3 million on the Boeing B787, Gulfstream G650, Gulfstream G280, Airbus A350 XWB, Boeing B767, Boeing B747-8 and Rolls-Royce BR725, respectively. The twelve months ended December 31, 2013 includes charges of $17.8 million related to reduction in workforce activities, $38.1 million related to warranty reserve adjustments and $95.5 million in favorable cumulative catch-up adjustments for periods prior to December 31, 2013.

(2)
The twelve months ended December 31, 2012 are inclusive of forward loss charges of $184.0 million, $162.5 million, $151.0 million, $118.8 million, $8.9 million, $8.0 million and $11.5 million on the Boeing B787, Gulfstream G650, Rolls-Royce BR725, Gulfstream G280, Airbus A350 XWB wing

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    non-recurring, Boeing B767 and Boeing B747-8 programs, respectively. In addition, the twelve months ended December 31, 2012 includes charges of $3.6 million related to asset impairments, $2.2 million related to the disposal of certain assets, $2.2 million related to stock incentives for certain UAW-represented employees, $2.1 million for early retirement incentives for eligible employees and $14.7 million in favorable cumulative catch-up adjustments for periods prior to December 31, 2012. For the twelve months ended December 31, 2012, $11.0 million was reclassified from segment operating income to unallocated cost of sales to conform to current year presentation.

(3)
Included in 2011 is recognition of previously deferred revenue associated with the B787 Amendment in the second quarter of 2011, a net $81.8 million forward loss charge recorded for the G280 program, a net $29.0 million forward loss charge recorded for the Sikorsky CH-53K helicopter program, an $18.3 million forward loss charge recorded on the B747-8 program and a $3.0 million forward loss charge recorded on the A350 XWB non-recurring wing program. In addition, 2011 cost of sales includes a $9.0 million charge to replenish warranty and extraordinary rework reserves, $1.9 million in early retirement incentives for eligible UAW-represented employees and $13.8 million in favorable cumulative catch-up adjustments for periods prior to December 31, 2011. For the twelve months ended December 31, 2011, $6.9 million was reclassified from segment operating income to unallocated cost of sales to conform to current year presentation.

(4)
Includes non-cash stock compensation expenses of $19.6 million, $15.3 million and $11.1 million for the respective periods starting with the twelve months ended December 31, 2013.

(5)
For 2012, gain includes a $234.9 million insurance settlement amount, offset by $88.7 million of costs incurred related to the April 14, 2012 severe weather event. Costs include assets impaired by the storm, clean-up costs, repair costs and incremental labor, freight and warehousing costs associated with the impacts of the storm.

        Comparative ship set deliveries by model are as follows:

Model
  Twelve Months
Ended
December 31,
2013
  Twelve Months
Ended
December 31,
2012
  Twelve Months
Ended
December 31,
2011
 

B737

    442     417     377  

B747

    19     24     17  

B767

    15     25     23  

B777

    99     86     78  

B787

    65     43     25  
               

Total Boeing

    640     595     520  

A320 Family

    486     437     403  

A330/340

    113     97     93  

A350

    8     3      

A380

    34     24     24  
               

Total Airbus

    641     561     520  

Business/Regional Jets

    97     84     49  
               

Total

    1,378     1,240     1,089  
               
               

        For purposes of measuring production or ship set deliveries for Boeing aircraft in a given period, the term "ship set" refers to sets of structural fuselage components produced or delivered for one aircraft in such period. For purposes of measuring production or ship set deliveries for Airbus and Business/Regional Jet aircraft in a given period, the term "ship set" refers to all structural aircraft components produced or delivered for one aircraft in such period. Other components which are part of the same aircraft ship sets could be produced or shipped in earlier or later accounting periods than the components used to measure

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production or ship set deliveries, which may result in slight variations in production or delivery quantities of the various ship set components in any given period.

        Net revenues by prime customer are as follows:

Prime Customer
  Twelve Months
Ended
December 31,
2013
  Twelve Months
Ended
December 31,
2012
  Twelve Months
Ended
December 31,
2011
 

Boeing

  $ 5,022.6   $ 4,533.2   $ 4,156.7  

Airbus

    595.1     466.1     497.0  

Gulfstream

    138.6     165.1     56.5  

Sikorsky

    14.7     26.2     24.9  

Other (1)

    190.0     207.1     128.7  
               

Total net revenues

  $ 5,961.0   $ 5,397.7   $ 4,863.8  
               
               

(1)
Includes aftermarket sales

    Twelve Months Ended December 31, 2013 as Compared to Twelve Months Ended December 31, 2012

        Net Revenues.     Net revenues for the twelve months ended December 31, 2013 were $5,961.0 million, an increase of $563.3 million, or 10%, compared with net revenues of $5,397.7 million for the prior year. The increase in net revenues in 2013 as compared to 2012 was primarily due to production volume increases on Boeing, Airbus and business jet programs. We recorded approximately $525.3 million of additional production volume driven by customer delivery schedules and higher production rates, approximately $22.9 million of additional non-recurring revenue and approximately $10.1 million of additional aftermarket volume. Non-recurring revenue, which includes design and development efforts, increased during 2013 primarily due to increased efforts on the B737 MAX and A350 XWB non-recurring fuselage, partially offset by lower design and development activities on the B747-8, B787 and Sikorsky non-recurring contracts. Deliveries to Boeing increased by 8% to 640 ship sets during 2013 primarily driven by higher production rates on certain Boeing models, as compared to 595 ship sets delivered in the prior year. Deliveries to Airbus increased by 14% to 641 ship sets during 2013 primarily driven by customer delivery schedules, as compared to 561 ship sets delivered in the prior year. In total, ship set deliveries increased 11% to 1,378 ship sets in 2013 compared to 1,240 ship sets for the same period in the prior year. Approximately 94% of Spirit's net revenues for 2013 came from our two largest customers, Boeing and Airbus.

        Pricing terms under our Supply Agreement with Boeing for the B737, B747, B767 and B777 platforms, which accounted for 70% of our net revenue, expired in May 2013, thus activating interim pricing provisions outlined within the terms of the Supply Agreement. We are currently negotiating pricing with Boeing for a period to be agreed upon by both parties. Until we are able to agree upon pricing, revenue is recorded using the pricing terms as of May 2013 and will be retroactively adjusted in the period in which we agree on future pricing terms.

        We have not yet established pricing for the B787-9, B787-10 or any future derivatives. In accordance with the B787 Supply Agreement revenue recognized for 2013 B787-9 deliveries was based on interim pricing negotiated with Boeing pending final price negotiations. For B787-9 deliveries in contract block 1, we have applied the appropriate accounting guidance for unpriced change orders in estimating revenues which will also be updated once final pricing is negotiated.

        Cost of Sales.     Cost of sales as a percentage of net revenues was 102% for the twelve months ended December 31, 2013, as compared to 97% in the prior year. The increase in cost of sales of $814.2 million in 2013 is primarily due to higher production volume and forward loss charges of $1,133.3 million recognized on several programs including the B787, A350 XWB and Gulfstream programs (see — "New and Maturing

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Programs"). Cost of sales for the twelve months ended December 31, 2013 includes charges of $17.8 million related to reduction in workforce activities and $38.1 million related to warranty reserve adjustments. These charges were partially offset by a favorable $95.5 million cumulative catch-up adjustment related to periods prior to 2013 driven by productivity and efficiency improvements on core programs as well as a pension related gain of $17.2 million.

        In comparison, for the twelve months ended December 31, 2012 we recorded forward loss charges of $644.7 million. Also included in 2012 was a $2.2 million charge for UAW share grant awards in accordance with our labor agreement, a $2.1 million charge for early retirement incentives to eligible employees and other one-time expense reductions, a charge of $3.6 million as a result of impairment of assets, and a charge of $2.2 million related to the disposal of certain assets.

        SG&A, Research and Development.     Combined SG&A and Research and Development costs as a percentage of net revenues was 4% for each of the twelve month periods ended December 31, 2013 and December 31, 2012. SG&A expense increased $28.6 million for the twelve months ended December 31, 2013, or 17%, primarily due to an increase in executive stock compensation expense and severance amounts of $11.3 million, an increase in executive benefits of $7.7 million and an increase in professional service fees of $5.4 million. Research and development expenses for the twelve months ended December 31, 2013 were up $0.6 million, or 2% compared to the same period in the prior year.

        Impact of Severe Weather Event.     Expenses related to the April 2012 severe weather event were $30.3 million for the twelve months ended December 31, 2013, as compared to a gain of $146.2 million in 2012. The expenses for 2013 were related to property damage, clean up and continuing recovery costs. In comparison, during the third quarter of 2012, the Company settled the insurance claims resulting from the second quarter 2012 severe weather event and recorded a net $146.2 million gain to operating income for the twelve months ended December 31, 2012. This settlement resolved all property damage, clean-up and recovery costs related to the severe weather event as well as all expenses incurred to make up for the interruption of production and to reduce further disruptions.

        Operating Income (Loss).     Operating loss for the twelve months ended December 31, 2013 was ($364.3) million, which was $456.6 million lower than operating income of $92.3 million for the prior year. Operating income in 2013 was unfavorably impacted by forward loss charges of $1,133.3 million, $17.8 million related to reduction in workforce activities and $38.1 million related to warranty reserve adjustments, as compared to charges in prior year of $644.7 million of forward loss, $2.2 million for UAW share grant awards in accordance with our labor agreement, $2.1 million for early retirement incentives to eligible employees and other one-time expense reductions, $3.6 million as a result of impairment of assets, and $2.2 million related to the disposal of certain assets. This was partially offset by higher overall production volumes and aftermarket volumes and a favorable cumulative catch-up adjustment of $95.5 million in 2013.

        Interest Expense and Financing Fee Amortization.     Interest expense and financing fee amortization for the twelve months ended December 31, 2013 includes $63.4 million of interest and fees paid or accrued in connection with long-term debt and $6.7 million in amortization of deferred financing costs, as compared to $68.3 million of interest and fees paid or accrued in connection with long-term debt and $14.6 million in amortization of deferred financing costs in the prior year. The change in amortization of deferred financing costs was primarily driven by the write down in 2012 of $9.5 million in deferred financing fees as a result of debt extinguishment from the April 18, 2012 term loan refinancing.

        Interest Income.     Interest income for the twelve months ended December 31, 2013 was $0.3 million compared to $0.2 million for the same period in the prior year.

        Other Income, net.     Other income, net for the twelve months ended December 31, 2013 was a net gain of $3.3 million, primarily due to gains on foreign exchange rates on intercompany activity and borrowings, offset by a $0.7 million book loss on the sale of Spirit's shares in the Spirit-Progresstech joint venture, compared to income of $1.8 million for the same period in the prior year.

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        Provision for Income Taxes.     The income tax provision for the twelve months ended December 31, 2013, was $191.1 million compared to $(24.1) million for the prior year. The 2013 effective tax rate was (44.4)% as compared to (211.4)% for 2012. The difference in the effective tax rate recorded for 2013 as compared to 2012 is primarily related to establishing a valuation allowance on the U.S. deferred tax assets, increased losses in the U.S. and the extension of the U.S. Research Tax Credit on January 2, 2013. The decrease from the U.S. statutory tax rate is primarily attributable to the same factors.

        Segments.     The following table shows segment revenues and operating income for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Twelve Months
Ended
December 31,
2013
  Twelve Months
Ended
December 31,
2012
  Twelve Months
Ended
December 31,
2011
 
 
  ($ in millions)
 

Segment Revenues

                   

Fuselage Systems (1)

  $ 2,861.1   $ 2,590.6   $ 2,425.0  

Propulsion Systems

    1,581.3     1,420.9     1,221.5  

Wing Systems (1)

    1,502.5     1,375.1     1,207.8  

All Other

    16.1     11.1     9.5  
               

  $ 5,961.0   $ 5,397.7   $ 4,863.8  
               
               

Segment Operating Income

                   

Fuselage Systems (1)(2)

  $ 70.1   $ 387.2   $ 318.5  

Propulsion Systems (3)

    235.8     64.7     194.1  

Wing Systems (1)(4)

    (414.0 )   (339.1 )   0.5  

All Other

    4.4     1.0     1.3  
               

    (103.7 )   113.8     514.4  

Unallocated corporate SG&A

    (181.5 )   (155.3 )   (145.5 )

Unallocated impact from severe weather event (5)

    (30.3 )   146.2      

Unallocated research and development

    (8.9 )   (4.4 )   (1.9 )

Unallocated cost of sales (6)

    (39.9 )   (8.0 )   (10.9 )
               

Total operating income

  $ (364.3 ) $ 92.3   $ 356.1  
               
               

(1)
For 2011, includes recognition of deferred revenue, non-recurring revenue on B787-9 derivative and mission improvement, and pricing adjustments on prior and current-year deliveries all associated with the B787 Amendment, which was finalized in May 2011.

(2)
For 2013, includes forward loss charges of $489.6 million, which includes $41.1 million for the B747-8 program, $4.1 million for the B767 program, $333.1 million for the B787 program and $111.3 million for the A350 program. Also includes favorable cumulative catch-up adjustments of $60.1 million for periods prior to 2013. For 2012, includes a forward loss charge of $6.4 million for the B747-8 program and unfavorable cumulative catch-up adjustments for periods prior to 2012 of ($2.4) million. For 2011, includes a $29.0 million forward loss charge recorded for the Sikorsky CH-53K helicopter program and a $12.6 million forward loss charge for the B747-8 program.

(3)
For 2013, includes forward loss charges of $56.2 million, which includes $12.3 million for the B767 program, $30.6 million for the B787 program and $13.3 million for the Rolls-Royce BR725 program. For 2013, also includes favorable cumulative catch-up adjustments of $30.0 million for periods prior to 2013. For 2012, includes forward loss charges of $151.0 million recorded for the Rolls-Royce BR725 program and $8.0 million on our B767 program. For 2012, also includes favorable cumulative catch-up adjustments of $7.3 million for periods prior to 2012.

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(4)
For 2013, includes forward loss charges of $ 587.5 million, which includes $58.3 million for the B787 program, $240.9 million for the G280 program and $288.3 million for the G650 program. For 2013, also includes favorable cumulative catch-up adjustments of $5.4 million for periods prior to 2013. For 2012, includes forward loss charges of $184.0 million for the B787 wing program, $162.5 million for the G650 wing program, $118.8 million for the G280 wing program, $8.9 million for the A350 XWB non-recurring wing contract, and $5.1 million for the B747-8 wing program. For 2012, also includes favorable cumulative catch-up adjustments of $9.8 million for periods prior to 2012. For 2011, includes an $81.8 million forward loss charge recorded for the G280 wing program, a $5.7 million forward loss charge for the B747-8 program and a $3.0 million forward loss on the A350 XWB non-recurring wing contract.

(5)
For 2012, gain includes a $234.9 million insurance settlement amount, offset by $88.7 million of costs incurred related to the April 14, 2012 severe weather event. Costs include assets impaired by the severe weather event, clean-up costs, repair costs and incremental labor, freight and warehousing costs associated with the impacts of the severe weather event.

(6)
For 2013, includes charges of $38.1 million related to warranty reserve adjustments, $17.8 million related to reduction in workforce activities, $1.6 million in early retirement incentives, $15.4 million in gains related to pension activity and $2.2 million in gains primarily related to adjustments to intangible assets. For 2012, includes charges of $3.6 million related to asset impairments, $2.2 million related to stock incentives for certain UAW-represented employees and $2.1 million in early retirement incentives to eligible employees. For 2011, includes charges of $9.0 million due to a change in estimate to increase warranty and extraordinary rework reserves and $1.9 million in early retirement incentives elected by eligible UAW-represented employees.

        Fuselage Systems, Propulsion Systems, Wing Systems and All Other represented approximately 48%, 27%, 25% and less than 1%, respectively, of our net revenues for the twelve months ended December 31, 2013.

        Fuselage Systems.     Fuselage Systems segment net revenues for the twelve months ended December 31, 2013 were $2,861.1 million, an increase of $270.5 million, or 10.4%, compared to the same period in the prior year. The increase in net revenues was primarily due to increased production rates on several Boeing models as well as higher deliveries for the A350 XWB program driven by customer delivery schedule. In addition, non-recurring net revenue, which includes design and development efforts, increased during 2013 on the B737 MAX and A350 XWB non-recurring fuselage, partially offset by reduced design and developmental activities on the B747-8, B787 and our Sikorsky non-recurring contracts. Fuselage Systems posted segment operating margins of 2.5% for the twelve months ended December 31, 2013, down from 15% for the same period in the prior year. Reduced segment operating margins were primarily driven by forward loss charges of $41.1 million recorded on the B747-8 program, $4.1 million on the B767 program, $333.1 million on the B787 program and $111.3 million on the A350 XWB program. This was partially offset by favorable cumulative catch-up adjustments of $60.1 million related to periods prior to 2013 driven by productivity and efficiency improvements on core programs. In comparison, in the same period of 2012, we recorded a forward loss of $6.4 million for the B747-8 program, a charge of $2.2 million related to the disposal of certain assets and an unfavorable cumulative catch-up adjustment of $2.4 million related to periods prior to 2012.

        Propulsion Systems.     Propulsion Systems segment net revenues for the twelve months ended December 31, 2013 were $1,581.3 million, an increase of $160.4 million, or 11.3%, compared to the same period in the prior year. The increase in net revenues was primarily due to higher production rates on several Boeing models, and increased non-recurring revenue on the B737 MAX. Propulsion Systems posted segment operating margins of 14.9% for the twelve months ended December 31, 2013, up from 5% segment operating margins for the same period in the prior year. Improved segment operating margins were primarily due to lower forward loss charges recorded in 2013 compared to the same period in 2012. In 2013, the segment recorded an aggregate forward loss charge of $13.3 million on the Rolls-Royce BR725

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program, $12.3 million on the B767 program and $30.6 million recognized on the B787 program. These charges were partially offset by favorable cumulative catch-up adjustments related to periods prior to 2013 of $30.0 million driven by productivity and efficiency improvements on core programs. In comparison, in the same period of 2012, the segment recognized forward loss charges of $151.0 million recognized on the Rolls-Royce BR725 program and $8.0 million recognized on the B767 program, partially offset by favorable cumulative catch-up adjustments of $7.3 million related to periods prior to 2012.

        Wing Systems.     Wing Systems segment net revenues for the twelve months ended December 31, 2013 were $1,502.5 million, an increase of $127.4 million, or 9.3%, compared to the same period in the prior year. The increase in net revenues was primarily driven by higher production rates on several Boeing models and higher deliveries on our Airbus programs, partially offset by lower revenue on our Gulfstream G280 program as well as lower levels of non-recurring revenue on the Gulfstream G650 program compared to the prior year. Wing Systems posted segment operating margins of (28)% for the twelve months ended December 31, 2013, down from segment operating margins of (25)% for the same period in the previous year. Lower segment operating margins were due to forward loss charges of $58.3 million on the B787, $288.3 million on the G650 and $240.9 million on the G280 program. In addition, the segment recorded favorable cumulative catch-up adjustments of $5.4 million for periods prior to 2013 driven by productivity and efficiency improvements on core programs. In comparison, for 2012, the segment recorded forward loss charges of $184.0 million on the B787 program, $162.5 million on the G650 program, $118.8 million on the G280 program, $8.9 million on the A350 XWB non-recurring program and $5.1 million on the B747-8 program, partially offset by favorable cumulative catch-up adjustments of $9.8 million related to periods prior to 2012.

        All Other.     All Other segment net revenues consist of sundry sales of miscellaneous services, tooling contracts and revenues from KIESC. In the twelve months ended December 31, 2013, All Other segment net revenues were $16.1 million, an increase of $5.0 million, as compared to the same period in the prior year. The All Other segment recorded 27% operating margins for the twelve months ended December 31, 2013, up from segment operating margins of 9% for the same period in the prior year driven by increased tooling sales.

        We are evaluating the potential realignment of our reportable segments as part of our 2014 business strategy. The reportable segment amounts and discussions reflected in this Annual Report reflect the management reporting that existed through the end of our 2013 fiscal year.

    Twelve Months Ended December 31, 2012 as Compared to Twelve Months Ended December 31, 2011

        Net Revenues.     Net revenues for the twelve months ended December 31, 2012 were $5,397.7 million, an increase of $533.9 million, or 11%, compared with net revenues of $4,863.8 million for the prior year. The increase in net revenues in 2012 as compared to 2011 was primarily due to production volume increases on Boeing and business jet programs. The 2011 amount included the recognition of previously deferred revenue resulting from the B787 Amendment, which was finalized in May 2011. In addition, we recorded approximately $473.6 million of higher production volume driven by customer delivery schedules, approximately $38.2 million of additional aftermarket volume, and increases of approximately $10.8 million in non-recurring revenue. Non-recurring revenues, which includes design and development efforts, increased during 2012 primarily due to increased efforts on the B737, B767, and B787, partially offset by a reduction in A350 XWB non-recurring fuselage efforts. Deliveries to Boeing increased by 14% to 595 ship sets during 2012 compared to 520 ship sets delivered in the prior year, as ship set deliveries increased across all Boeing programs driven by customer delivery schedules. Deliveries to Airbus increased by 8% to 561 ship sets during 2012 compared to 520 ship sets delivered in the prior year due to increased deliveries across all Airbus programs driven by customer delivery schedules. In total, ship set deliveries increased 14% to 1,240 ship sets in 2012 compared to 1,089 ship sets for the same period in the prior year. Approximately 93% of Spirit's net revenues for 2012 came from our two largest customers, Boeing and Airbus.

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        Cost of Sales.     Cost of sales as a percentage of net revenues was 97% for the twelve months ended December 31, 2012, as compared to 89% in the prior year. The increase in cost of sales of $933.2 million in 2012 was primarily due to an increase in production rates, a net $184.0 million forward loss charge on our B787 wing program, a $162.5 million forward loss charge on our G650 wing program, a $151.0 million forward loss charge on our BR725 program, a $118.8 million forward loss charge on our G280 wing program, an $8.9 million forward loss charge on our A350 wing program, a $6.4 million forward loss charge on our B747-8 fuselage program, a $5.1 million forward loss charge on our B747-8 wing program, an $8.0 million forward loss charge on our B767 propulsion program, a $2.2 million charge for UAW share grant awards in accordance with our labor agreement, a $2.1 million charge for early retirement incentives to eligible employees and other one-time expense reductions, a charge of $3.6 million as a result of impairment of assets, and a charge of $2.2 million related to the disposal of certain assets. In addition, we continued to record zero margins on the B787 program, for which deliveries have increased during the year. In 2012, we recorded a favorable $14.7 million cumulative catch-up adjustment related to periods prior to 2012 driven by productivity and efficiency on core programs.

        In comparison, in the same period of 2011, we recorded a net $81.8 million forward loss charge on our G280 wing program, a net $29.0 million forward loss charge on our Sikorsky CH-53K helicopter program, an $18.3 million forward loss charge on our B747-8 program, a $9.0 million charge to replenish warranty and extraordinary rework reserves, a $3.0 million forward loss charge on our A350 XWB non-recurring wing contract and a $1.9 million charge for early retirement incentives for eligible UAW-represented employees. In 2011, we recorded a favorable $13.8 million cumulative catch-up adjustment related to periods prior to 2011 driven by productivity improvements, recognition of favorable performance as we closed out B737 and B777 contract blocks in the fourth quarter, and a lower forecast for our short-term incentive accrual, partially offset by increasing material costs in our Wing Systems segment.

        SG&A, Research and Development.     Combined SG&A and Research and Development costs as a percentage of net revenues was 4% for the twelve months ended December 31, 2012, compared to 4% in the prior year. SG&A expense increased $12.3 million for the twelve months ended December 31, 2012, or 8%, primarily due to an increase in stock compensation expense of $4.2 million to $15.3 million related to grants awarded in 2012, as compared to $11.1 million during the prior year and an increase in professional services in the last half of 2012. Research and development expenses for the twelve months ended December 31, 2012 were down $1.6 million, or 4% compared to the same period in the prior year, as we had fewer research and development projects underway in 2012 versus 2011.

        Impact of Severe Weather Event.     During the third quarter of 2012, the Company settled the insurance claims resulting from the second quarter 2012 severe weather event and recorded a net $146.2 million gain to operating income for the twelve months ended December 31, 2012. This settlement resolved all property damage, clean-up and recovery costs related to the severe weather event as well as all expenses incurred to make up for the interruption of production and to reduce further disruptions.

        Operating Income.     Operating income for the twelve months ended December 31, 2012 was $92.3 million, which was $263.8 million lower than operating income of $356.1 million for the prior year. Operating income in 2012 was unfavorably impacted by forward loss charges of $644.7 million (see — "Cost of Sales"), a $3.6 million charge to impairment of assets, a $2.2 million related to the disposal of certain assets, a $2.2 million charge for UAW share grant awards in accordance with our labor agreement, and a $2.1 million charge for early retirement incentives to eligible employees and other one-time expense reductions as compared to $132.1 million of forward loss charges, a $9.0 million charge to replenish warranty and extraordinary rework reserves, and a $1.9 million charge for early retirement incentives recorded in 2011. This was partially offset by higher overall production volumes and aftermarket volumes and a favorable cumulative catch-up of $14.7 million.

        Interest Expense and Financing Fee Amortization.     Interest expense and financing fee amortization for the twelve months ended December 31, 2012 includes $68.3 million of interest and fees paid or accrued in connection with long-term debt and $14.6 million in amortization of deferred financing costs, as compared

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to $71.9 million of interest and fees paid or accrued in connection with long-term debt and $5.6 million in amortization of deferred financing costs in the prior year. The change in interest expense associated with long-term debt was primarily driven by lower interest cost from new swaps entered into in the third quarter of 2011, partially offset by interest on the drawn portion of the revolver for a portion of 2012 and the effects of the new term loan entered into during the second quarter of 2012. Amortization of deferred financing costs increased by $9.0 million dollars in 2012 compared to the previous year primarily due to the write down of $9.5 million in deferred financing fees as a result of debt extinguishment from the April 18, 2012 term loan refinancing, partially offset by amortization of deferred financing cost over a longer term.

        Interest Income.     Interest income for the twelve months ended December 31, 2012 was $0.2 million compared to $0.3 million for the same period in the prior year.

        Other Income (Expense, net).     Other income (expense) for 2012 included a net gain of $1.8 million, primarily due to gains on foreign exchange rates on intercompany activity and borrowings, offset by a $3.0 million write-off of Hawker Beechcraft receivables and a $4.7 million charge for the impairment of assets, compared to income of $1.4 million for the same period in the prior year.

        Provision for Income Taxes.     The income tax provision for the twelve months ended December 31, 2012, was ($24.1) million compared to $86.9 million for the prior year. The 2012 effective tax rate was (211.4)% as compared to 31.0% for 2011. The difference in the effective tax rate recorded for 2012 as compared to 2011 is primarily related to reduced earnings and accounting for long term contracts, offset by the expiration of the U.S. Research Tax Credit on December 31, 2012. The decrease from the U.S. statutory tax rate is attributable primarily to reduced earnings, accounting for long term contracts and state income tax credits.

        On January 2, 2013, the President signed legislation retroactively extending the U.S. Research Tax Credit for two years, from January 1, 2012 through December 31, 2013. Our income tax expense for 2013 reflected the entire benefit of the Research Tax Credit attributable to 2012, which is estimated at $5.4 million. We also recorded the benefit of the 2013 Research Tax Credit in our 2013 tax expense.

        Fuselage Systems.     Fuselage Systems segment net revenues for the twelve months ended December 31, 2012 were $2,590.6 million, an increase of $165.6 million, or 7%, compared to the same period in the prior year. The increase in net revenues was primarily due to production volume increases in 2012 on Boeing programs. The 2011 amount included the recognition of revenue previously deferred in the second quarter of 2011 associated with the B787 Amendment settlement. In addition, non-recurring net revenue, which includes design and development efforts, increased in 2012 on the B737, B787 and Sikorsky CH-53K, partially offset by reduced design and developmental effort on the A350 XWB non-recurring fuselage program and the settlement of certain claims and assertions in the third quarter of 2012. Fuselage Systems posted segment operating margins of 15% for the twelve months ended December 31, 2012, up from 13% for the same period in the prior year. Improved segment operating margins were primarily driven by higher production volume due to rate increases on several Boeing programs with favorable margins and improved productivity and efficiency performance on our core programs, partially offset by increased zero margin revenue, a forward loss charge of $6.4 million for the B747-8 program, a charge of $2.2 million related to the disposal of certain assets and an unfavorable cumulative catch-up adjustment of $2.4 million related to periods prior to 2012. In comparison, in the same period of 2011, we recorded a forward loss of $29.0 million on the Sikorsky CH-53K program and a favorable cumulative catch-up adjustment of $13.6 million related to periods prior to 2011.

        Propulsion Systems.     Propulsion Systems segment net revenues for the twelve months ended December 31, 2012 were $1,420.9 million, an increase of $199.4 million, or 16%, compared to the same period in the prior year. The increase in net revenues was primarily driven by higher production volume on Boeing models, increased aftermarket volume and increased non-recurring efforts on the B737 and B787. Propulsion Systems posted segment operating margins of 5% for the twelve months ended December 31, 2012, down from 16% segment operating margins for the same period in the prior year. Reduced segment

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operating margins were due to forward loss charges of $151.0 million recognized on the Rolls-Royce BR725 program and $8.0 million recognized on the B767 program, partially offset by a favorable cumulative catch-up adjustment related to periods prior to 2012 of $7.3 million associated with productivity and efficiency on core programs. In comparison, in the same period of 2011, the segment recognized a $12.8 million favorable cumulative catch-up adjustment related to periods prior to 2011.

        Wing Systems.     Wing Systems segment net revenues for the twelve months ended December 31, 2012 were $1,375.1 million, an increase of $167.3 million, or 14%, compared to the same period in the prior year. The increase in net revenues was primarily driven by higher production volume on Boeing models and increased deliveries on our Gulfstream programs, partially offset by reduced non-recurring revenue on the A350 XWB non-recurring wing program and the settlement of certain claims and assertions in the third quarter of 2012. Wing Systems posted segment operating margins of (25)% for the twelve months ended December 31, 2012, down from segment operating margins of less than 1% for the same period in the previous year. In the twelve months of 2012, the segment recorded forward loss charges of $184.0 million on the B787 program, $162.5 million on the G650 program, $118.8 million on the G280 program, $8.9 million on the A350 XWB non-recurring program and $5.1 million on the B747-8 program, partially offset by a favorable cumulative catch-up adjustment related to periods prior to 2012 of $9.8 million driven in part by productivity and efficiency on core programs. In comparison, during 2011, we recorded an $81.8 million forward loss charge on our G280 wing contract, a $5.7 million forward loss charge on our B747-8 program, a $3.0 million forward loss on our A350 XWB non-recurring wing contract, and an unfavorable cumulative catch-up adjustment of $12.6 million related to periods prior to 2011.

        All Other.     All Other segment net revenues consist of sundry sales of miscellaneous services, tooling contracts and revenues from KIESC. In the twelve months ended December 31, 2012, All Other segment net revenues were $11.1 million, a slight increase of $1.6 million, as compared to the same period in the prior year. The All Other segment posted operating income before unallocated corporate expenses of less than 1% for the twelve months ended December 31, 2012. The All Other segment recorded 9% operating margins for the twelve months ended December 31, 2012, down from segment operating margins of 14% for the same period in the prior year driven by additional sundry sales with lower margins.


Liquidity and Capital Resources

        The primary sources of our liquidity include cash on hand, cash flow from operations, which includes receivables from customers and borrowings available under our revolving credit facility. Additionally, we may receive advance payments from customers and proceeds from asset sales. Our liquidity requirements are driven by our long-cycle business model. Our business model is comprised of four to six year non-recurring investment periods, which include design and development efforts, followed by ten to twenty years of recurring production. The non-recurring investment periods require significant outflows of cash as we design the product, build tooling, purchase equipment and build initial production inventories. These activities are typically funded partially through customer advances and milestone payments, which are offset against revenue as production units are delivered in the case of customer advances, or recognized as revenue as milestones are achieved in the case of milestone payments. The remaining funds needed to support non-recurring programs come from predictable cash inflows from our mature programs that are in the recurring phase of the production cycle. Occasionally, we have utilized borrowings and other sources of cash to fund non-recurring investments during periods where cash received from our customers is not adequate to fund our purchase commitments. The non-recurring investment period typically ends concurrently with initial deliveries of completed aircraft by our customers, which indicates that a program has entered into the recurring production phase. When a program reaches steady recurring production, it typically results in long-term generation of cash from operations. As part of our business model, we have continuously added new non-recurring programs, which are supported by mature programs that are in the steady recurring phase of the production cycle to promote growth.

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        As of December 31, 2013, we had $420.7 million of cash and cash equivalents on the balance sheet and $650.0 million of available borrowing capacity under our revolving credit facility. We had no outstanding balances under our revolving credit facility at the end of 2013. Based on our planned levels of operations and our strong liquidity position, we currently expect that our cash on hand, cash flow from operations and borrowings available under our revolving credit facility will be sufficient to fund our operations, inventory growth, planned capital investments, research and development expenditures and scheduled debt service payments for at least the next twelve months.

    Cash Flows

        The following table provides a summary of our cash flows for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  For the Twelve Months Ended  
 
  December 31, 2013   December 31, 2012   December 31, 2011  
 
  ($ in millions)
 

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4  

Adjustments to reconcile net income        

    343.0     66.8     154.5  

Changes in working capital

    539.0     442.8     (394.2 )
               

Net cash provided by (used in) operating activities

    260.6     544.4     (47.3 )

Net cash (used in) investing activities

    (268.2 )   (248.8 )   (249.2 )

Net cash (used in) financing activities

    (13.9 )   (34.6 )   (6.7 )
               

Effect of exchange rate change on cash and cash equivalents

    1.5     1.9     (0.6 )
               

Net (decrease) increase in cash and cash equivalents for the period

    (20.0 )   262.9     (303.8 )

Cash and cash equivalents, beginning of period

    440.7     177.8     481.6  
               

Cash and cash equivalents, end of period

  $ 420.7   $ 440.7   $ 177.8  
               
               

    Twelve Months Ended December 31, 2013 as Compared to Twelve Months Ended December 31, 2012

        Operating Activities.     For the twelve months ended December 31, 2013, we had a net cash inflow of $260.6 million from operating activities, an inflow decrease of $283.8 million; compared to a net cash inflow of $544.4 million for the prior year. The decrease in net cash inflow during 2013 as compared to 2012 was primarily driven by lower cash advances, a 2012 insurance settlement, and lower tax payments (see "Tax" below), partially offset by timing of vendor payments and receivables from customers. In 2012, net cash provided by operating activities was primarily due to the receipt of a $250.0 million advance from Airbus associated with an agreement on the A350 XWB fuselage program, $234.9 million of insurance proceeds from our global settlement, offset by $88.7 million for all property damage, clean-up and recovery costs related to the severe weather event as well as all expenses incurred to make up for the interruption of production and to reduce further disruptions, and by timing of vendor payments and receivables from customers. Also during 2013, we made tax payments of $69.4 million.

        Investing Activities.     For the twelve months ended December 31, 2013, we had a net cash outflow of $268.2 million from investing activities, an increase in outflow of $19.4 million, compared to a net cash outflow of $248.8 million for the prior year. In 2013, capital expenditures were $272.6 million, and consisted of purchases of tooling and machinery and equipment to support increasing production rates on several Boeing and maturing programs, as well as for replacement of assets destroyed in the April 2012 severe weather event. In comparison, in 2012, capital expenditures were $249.0 million.

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        Financing Activities.     For the twelve months ended December 31, 2013, we had a net cash outflow of $13.9 million from financing activities, a decrease in outflow of $20.7 million, compared to a net cash outflow of $34.6 million for the prior year. The decrease in outflow was primarily due to the 2012 refinancing of our $559.0 million senior secured credit facilities with new senior secured credit facilities of $550.0 million, resulting in a prepayment of principal of $9.0 million in 2012. During 2012, in addition to the prepayment of principal, we incurred financing fees of $12.4 million and original issue discount of $2.7 million. Payments on debt for the twelve months ended December 31, 2013 were $10.4 million, compared to $11.7 million, excluding refinancing activities, for the same period in the prior year.

    Twelve Months Ended December 31, 2012 as Compared to Twelve Months Ended December 31, 2011

        Operating Activities.     For the twelve months ended December 31, 2012, we had a net cash inflow of $544.4 million from operating activities, an inflow increase of $591.7 million, compared to a net cash outflow of $47.3 million for the same period in the prior year. During 2012, net cash provided by operating activities was primarily due to the receipt of a $250.0 million advance from Airbus associated with an agreement on the A350 XWB fuselage program, $234.9 million of insurance proceeds from our global settlement, offset by $88.7 million for all property damage, clean-up and recovery costs related to the severe weather event as well as all expenses incurred to make up for the interruption of production and to reduce further disruptions, and by timing of vendor payments and receivables from customers. For 2012, our cash flow was favorably impacted by cash receipts from B787 deliveries, which were higher in the current period than 2011 due to higher cash payments beginning in the third quarter of 2011 and continuing into 2012 resulting from contractual reductions in the portion of advances repaid by each ship set delivered. This temporary increase in cash received per unit ended with the delivery of the 100 th  unit in 2012. Also during 2012, we made federal tax payments of $97.4 million, which are net of an Internal Revenue Service ("IRS") refund for the 2011 tax year, and payments relating to settling the 2008 and 2009 IRS examinations.

        We continued to invest in inventory for new programs and additional production costs for ramp-up activities in support of increasing build rates on several Boeing programs. During 2012, inventory build for new programs, including the B787, A350 XWB and Gulfstream programs, was $1,571.0 million, an increase of $768.3 million, compared to the same period in the prior year. Additionally, inventory build for mature Boeing and Airbus programs, including costs associated with announced increasing build rates on several Boeing programs was approximately $3,754.3 million, an increase of $541.7 million, compared to the same period in the prior year. These activities were funded through cash flows from operations, including receivables from customers and customer advances. These increases are partially offset by the $644.7 million in forward loss charges recorded in 2012 which are reflected as sources of cash as they are recorded as provision within inventory.

        The $47.3 million net cash outflow for the twelve months ended December 31, 2011 was largely the result of approximately $4.52 billion in expenditures driven by continued growth in inventory to support engineering development and start-up production costs for new programs, including the B787, A350 XWB and Gulfstream programs and for ramp-up activities for increasing build rates on the B737 and B777 programs, partially offset by cash receipts of approximately $4.47 billion driven by revenue from unit deliveries, which increased across all Boeing and Airbus models and aftermarket volume.

        Investing Activities.     For the twelve months ended December 31, 2012, we had a net cash outflow of $248.8 million from investing activities, a decrease in outflow of $0.4 million compared to a net cash outflow of $249.2 million for the same period in the prior year. In 2012, capital expenditures were $249.0 million, and consisted of purchases of tooling and machinery and equipment to prepare for the manufacturing of our developmental programs, to support increasing production rates on several Boeing programs and for replacement of assets destroyed in the severe weather event. In comparison, in 2011, capital expenditures were $249.7 million.

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        Financing Activities.     For the twelve months ended December 31, 2012, we had a net cash outflow of $34.6 million from financing activities, an increase in outflow of $27.9 million, compared to a net cash outflow of $6.7 million for the same period in the prior year. The increase in outflow was primarily due to the refinancing of our $559.0 million senior secured credit facilities with new senior secured credit facilities of $550.0 million, resulting in a prepayment of principal of $9.0 million. In addition to the prepayment of principal, we incurred financing fees of $12.4 million and original issue discount of $2.7 million. Payments on debt other than the refinancing activity were $11.7 million, compared to $8.0 million for the same period in the prior year. During the first half of 2012, we drew down and repaid $170.0 million from our revolver.

    Future Cash Needs and Capital Spending

        Our primary future cash needs will consist of working capital, debt service, research and development and capital expenditures. We expend significant capital as we undertake new programs, which begin in the non-recurring investment phase of our business model. In addition, we expend significant capital to meet increased production rates on certain mature programs, including the B737. We also require capital to develop new technologies for the next generation of aircraft and are evaluating various plans to relieve capacity constraints for the announced customer production rate increases. Capital expenditures totaled approximately $272.6 million and $249.0 million, partially offset by $12.9 million in insurance proceeds from the severe weather event for the twelve months ended December 31, 2013 and December 31, 2012, respectively. Excluding the impact of the severe weather event, capital expenditures totaled approximately $234.2 million and $236.1 million for the twelve months ended December 31, 2013 and December 31, 2012, respectively. We plan to fund future capital expenditures and cash requirements from cash on hand, cash generated by operations, customer cash advances, insurance proceeds; borrowings available under our revolving credit facility and proceeds from assets sales, if any.

        EAC Changes in Estimates.     As described in more detail in the New and Maturing Programs discussion, the Company significantly increased its estimates regarding future production costs on several of its maturing programs in 2013. The majority of the $1,133.3 million of forward loss charges represent future cash expenditures which increase our projected future cash needs from previous estimates. These charges cover production blocks that are currently estimated to be completed at various dates between now and 2018.

    Pension and Other Post-Retirement Benefit Obligations

        Our U.S. pension plan remained fully funded at December 31, 2013 and we anticipate non-cash pension income for 2014 to remain at or near the same level as 2013. Our plan investments are broadly diversified and we do not anticipate a near-term requirement to make cash contributions to our U.S. pension plan. Effective December 31, 2013, the BAE Aerostructures pension plan benefits were frozen due to an amendment which closed the plan. Our projected contributions to the U.K. pension plan for 2014 are $0.7 million. See Note 16, "Pension and Other Post-Retirement Benefits," for more information on the Company's pension plans.

    Debt and Other Financing Arrangements

        Senior Secured Credit Facilities.     On April 18, 2012, Spirit entered into a $1.2 billion senior secured Credit Agreement (the "Credit Agreement") consisting of a $650.0 million revolving credit facility and a $550.0 million term loan B facility. The Credit Agreement refinanced and replaced the Second Amended and Restated Credit Agreement dated as of November 27, 2006, as amended. Proceeds of the new term loan were used to pay off outstanding amounts under the prior credit agreement. The revolving credit facility matures April 18, 2017 and bears interest, at Spirit's option, at either LIBOR, or a defined "base rate" plus an applicable margin based on Spirit's debt-to-EBITDA ratio (see table below). The term loan matures April 18, 2019 and bears interest, at Spirit's option, at LIBOR plus 3.00% with a LIBOR floor of 0.75% or base rate plus 2.00%, subject to a step down to LIBOR plus 2.75% or base rate plus 1.75%, as

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applicable, in the event Spirit's secured debt-to-EBITDA ratio is below 1:1 at any time after 2012. Substantially all of Spirit's assets, including inventory and property, plant and equipment, were pledged as collateral for both the term loan and the revolving credit facility. As of December 31, 2013, the outstanding balance of the term loan was $540.4 million. As of December 31, 2012, the outstanding balance of the term loan was $545.9 million. As of December 31, 2013 the carrying amount of the term loan was $538.2 million. The amount outstanding under the revolving credit facility was zero at each of December 31, 2013 and December 31, 2012. In the second quarter of 2012, the Company recorded a charge of $9.5 million for unamortized deferred financing fees as a result of extinguishment of the debt under the prior credit agreement.

        In addition to paying interest on outstanding principal under the Credit Agreement, Spirit is required to pay an unused line fee on the unused portion of the commitments under the revolving credit facility based on Spirit's debt-to-EBITDA ratio (see table below). Spirit is required to pay letter of credit fees equal to the applicable margin for LIBOR rate revolving credit borrowings with respect to letters of credit issued under the revolving credit facility (see table below). Spirit is also required to pay to the issuing banks that issue any letters of credit, letter of credit fronting fees in respect of letters of credit at a rate equal to twenty basis points per year, and to the administrative agent thereunder customary administrative fees.

Pricing Tier
  Debt-to-EBITDA
Ratio
  Commitment
Fee
  Letter of
Credit Fee
  Eurodollar
Rate Loans
  Base Rate
Loans
 

1

  ³ 3.0:1.0     0.450 %   2.50 %   2.50 %   1.50 %

2

  <3.0:1 but ³ 2.25:1     0.375 %   2.25 %   2.25 %   1.25 %

3

  <2.25:1 but ³ 1.75:1     0.300 %   2.00 %   2.00 %   1.00 %

4

  <1.75:1     0.250 %   1.75 %   1.75 %   0.75 %

        The 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 Credit Agreement also contained the following financial covenants (as defined in the Credit Agreement):

 
   

Senior Secured Leverage Ratio

  Shall not exceed 2.75:1.0

Interest Coverage Ratio

  Shall not be less than 4.0:1.0

Total Leverage Ratio

  Shall not exceed 4.0:1.0

        To address the forward loss charges that the Company recognized in the third quarter of 2012, the Company amended the Credit Agreement effective October 26, 2012. The amendment resulted in a temporary revision of the quarterly financial covenant ratios and increased the amount of time the Company has to apply the proceeds from the insurance settlement in connection with the severe weather event against expenses resulting from the event from 12 months to 24 months before the proceeds may be considered eligible for prepayment against the senior secured credit facility.

        Additionally, to address the forward loss charges that the Company recognized in the second quarter of 2013, the Company amended the Credit Agreement effective August 2, 2013. The amendment suspended the existing financial covenant ratios until December 31, 2014. The amendment requires Spirit to meet certain minimum liquidity and borrowing base requirements while the existing financial covenant ratios are suspended. Among other things, the amendment provides for the following key changes during the suspension period:

    The applicable margin for the revolving credit facility component of the senior secured Credit Agreement shall be the applicable percentage per annum set forth in Pricing Tier 1 (see table above), plus one-half of one percent (0.5)%.

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    The applicable margin for the term loan B credit facility component of the senior secured Credit Agreement shall be 3.00% per annum for Eurodollar Rate Loans and 2.00% per annum for Base Rate Loans.

    The Total Secured Outstandings (as defined in the Credit Agreement) shall not exceed the Aggregate Borrowing Base Amount (as defined in the Credit Agreement) Spirit is required to maintain and liquidity is not to be less than $500.0 million.

        In addition, pursuant to the amendment the mandatory application of proceeds from the potential sale of the Oklahoma sites to repay the borrowings under the senior secured Credit Agreement is reduced from 100% to 50%. The Company expects to be in compliance with all required covenants through December 31, 2014.

        On February 6, 2014, Moody's Investors Service placed the credit rating of Spirit AeroSystems, Inc. under review for possible downgrade. A downgrade of our credit rating could trigger a prepayment based on the excess cash flow prepayment provision under our term loan depending on our total leverage ratio.

        Senior Notes.     On November 18, 2010, we issued $300.0 million aggregate of 6.75% Senior Notes due 2020 (the "2020 Notes"), with interest payable on June 15 and December 15 of each year, beginning June 15, 2011. The 2020 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and Spirit's existing and future domestic subsidiaries that guarantee Spirit's obligations under Spirit's senior secured credit facility. The carrying value of the 2020 Notes was $300.0 million as of December 31, 2013.

        On September 30, 2009, we issued $300.0 million of 7.50% Senior Notes due October 1, 2017 (the "2017 Notes"), with interest payable on April 1 and October 1 of each year, beginning April 1, 2010. The 2017 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and Spirit's existing and future domestic subsidiaries that guarantee Spirit's obligations under Spirit's senior secured credit facility. The carrying value of the 2017 Notes was $296.4 million as of December 31, 2013.

        As of December 31, 2013, we were and expect to continue to be in full compliance with all covenants contained in the indentures governing the 2020 Notes and the 2017 Notes through December 31, 2014.

        Advances and Deferred Revenue on the B787 Program.     On May 12, 2011, Spirit and Boeing entered into the B787 Amendment which, among other things, established a new repayment schedule for advances made by Boeing to Spirit to be repaid against the purchase price of the first 1,000 B787 ship sets delivered to Boeing. In the event Boeing does not take delivery of 1,000 ship sets prior to the termination of the B787 program or the B787 Supply Agreement, any advances not then repaid will be applied against any outstanding payments then due by Boeing to us, and any remaining balance will be repaid in annual installments of $42.0 million due on December 15th of each year until the advance payments have been fully recovered by Boeing. The B787 Amendment also changed the treatment of advances paid by Boeing for certain non-recurring work into a nonrefundable payment in full for such work. As of December 31, 2013, the amount of advance payments and deferred revenue received by us from Boeing under the B787 Supply Agreement and not yet repaid or recognized as revenue was approximately $600.2 million.

        Advances on the A350 Fuselage Program.     In March 2012, we signed a Memorandum of Agreement with Airbus providing for Airbus to make advance payments to us in 2012. The advance payments are offset against the recurring price of A350 XWB ship sets invoiced by Spirit, at a rate of $1.25 million per ship set. As of December 31, 2013, the amount of advance payments received under this Memorandum of Agreement and not yet repaid was approximately $243.9 million.

        Malaysian Facility Agreement.     On June 2, 2008, Spirit Malaysia entered into a Facility Agreement for a term loan facility for Ringgit Malaysia RM69.2 million (approximately USD $20.0 million equivalent) (the "Malaysia Facility"), with the Malaysian Export-Import Bank. The Malaysia Facility requires quarterly principal repayments of RM3.3 million (approximately USD $1.0 million equivalent) from September 2011

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through May 2017 and quarterly interest payments payable at a fixed interest rate of 3.50% per annum. The Malaysia Facility loan balance as of December 31, 2013 was $10.0 million.

        French Factory Capital Lease Agreement.     On July 17, 2009, the Company's indirect wholly-owned subsidiary, Spirit AeroSystems France SARL entered into a capital lease agreement for €9.0 million (approximately USD $13.1 million equivalent) with a subsidiary of BNP Paribas Bank to be used towards the construction of our aerospace component assembly plant in Saint-Nazaire, France. Lease payments are variable, subject to the three-month Euribor rate plus 2.2%. Lease payments under the agreement are due quarterly through April 2025. As of December 31, 2013 and December 31, 2012, the Company has $10.7 million and $11.0 million, respectively, of debt attributable to the capital lease transaction. We currently assemble center fuselage frame sections and wings for the new Airbus A350 XWB aircraft at the Saint-Nazaire facility.

        Nashville Design Center Capital Lease Agreement.     On September 21, 2012, the Company entered into a capital lease agreement for $2.6 million for a portion of an office building in Nashville, Tennessee to be used for design of aerospace components. Lease payments are due monthly, and are subject to yearly rate increases until the end of the lease term of 124 months. As of December 31, 2013 and December 31, 2012, the Nashville Design Center capital lease balance was $2.5 million and $2.6 million, respectively.

    Credit Ratings

        As of December 31, 2013, our credit ratings were a BB rating and negative outlook by Standard and Poor's, and a Ba2 and negative outlook by Moody Investor Services.

        Our credit ratings are reviewed periodically by the rating agencies listed above. On February 6, 2014, Moody's Investors Service placed the credit ratings for Spirit AeroSystems, Inc. under review for possible downgrade.

        The credit rating agencies consider many factors when assigning their ratings, such as the global economic environment and its possible impact on our financial performance, including certain financial metrics used by the rating agencies in determining our credit ratings. Accordingly, it is possible the rating agencies could downgrade our credit ratings from their current levels. This could significantly influence the interest rate of any future debt financings.

        A debt security credit rating is not a recommendation to buy, sell or hold a security. Each rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating agency has its own methodology for assigning ratings. Accordingly, each rating should be considered independent of other ratings.

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    Contractual Obligations:

        The following table summarizes our contractual cash obligations as of December 31, 2013:

Contractual Obligations (1)(2)
  2014   2015   2016   2017   2018   2019   2020 and
After
  Total  

Principal payment on term loan

  $ 5.5   $ 5.5   $ 5.5   $ 5.5   $ 5.5   $ 512.9   $   $ 540.4  

Interest on debt (3)

    20.4     20.2     20.1     19.8     19.6     6.7         106.8  

Long-term bonds

                300.0             300.0     600.0  

Interest on long-term bonds

    42.8     42.8     42.8     37.1     20.3     20.3     19.3     225.4  

Principal payment on Malaysian term loan

    2.8     2.8     2.8     1.4                 9.8  

Interest on Malaysian loan

    0.3     0.3     0.2                     0.8  

U.K. pension obligation

    0.7                             0.7  

Non-cancelable capital lease payments (4)

    0.9     0.9     1.0     1.0     1.1     1.1     9.0     15.0  

Non-cancelable operating lease payments

    20.8     17.3     10.6     5.2     4.9     4.0     10.7     73.5  

Other

    14.4     4.6     4.5     2.2     0.4     0.4     8.5     35.0  

Purchase obligations (5)

    150.5     43.5     16.1     9.5     6.4             226.0  
                                   

Total

  $ 259.1   $ 137.9   $ 103.6   $ 381.7   $ 58.2   $ 545.4   $ 347.5   $ 1,833.4  
                                   
                                   

(1)
Does not include repayment of $600.2 million of B787 advances or deferred revenue credits to Boeing, or $243.9 million of Airbus advances, which are reflected in our consolidated balance sheet as short-term and long-term liabilities. See Note 10, "Advance Payments and Deferred Revenue/Credits."

(2)
The $18.4 million of unrecognized tax benefit liability for uncertain tax positions has been excluded from this table due to uncertainty involving the ultimate settlement period. See Note 19, "Income Taxes."

(3)
Interest on our Term Loan B was calculated for all years using the three-month LIBOR yield curve as of December 31, 2013 plus applicable margin.

(4)
Treats the financing of software license purchases and direct financing of system implementation as capital leases.

(5)
Purchase obligations represent computing, tooling, and property, plant and equipment commitments as of December 31, 2013.


Off-Balance Sheet Arrangements

        Other than operating leases disclosed in the notes to our financial statements included in this Annual Report, we have not entered into any off-balance sheet arrangements as of December 31, 2013.


Tax

        We establish reserves in accordance with FASB authoritative guidance to provide for additional income taxes that may be due in future years as these previously filed tax returns are audited. We recognize the financial statement impact for tax positions only after determining that based on its technical merits the relevant tax authority would more likely than not sustain the position on audit. For tax positions meeting the "more likely than not threshold" the amount recognized in the financial statements is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The reserves are adjusted quarterly to reflect changes in facts and circumstances, such as the tax audit's progress, case law developments, and new or emerging legislation. We believe that with a $13.3 million long-term payable, the tax reserves are adequate and reflect the most probable

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outcome for all tax contingencies known at December 31, 2013. Accordingly, the tax contingency liability is included as a non-current liability in our consolidated balance sheet.

        A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, Management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

        The amount of current U.S. and state tax receivables outstanding at December 31, 2013 is $75.2 million. The Company is evaluating options regarding the monetization of this asset, which include a refund request with the Internal Revenue Service, applying the balance towards our expected U.S. and state tax liabilities in 2014, or a combination of both approaches.


Expected Backlog

        As of December 31, 2013, our expected backlog associated with large commercial aircraft, business and regional jet, and military equipment deliveries through 2019, calculated based on contractual product prices and expected delivery volumes, was approximately $41.1 billion. This is an increase of $5.8 billion from our corresponding estimate as of the end of 2012 reflecting the fact that Airbus and Boeing new orders exceeded deliveries in 2013. Backlog is calculated based on the number of units Spirit is under contract to produce on our fixed quantity contracts, and Boeing and Airbus announced backlog on our supply agreements. The number of units may be subject to cancellation or delay by the customer prior to shipment, depending on contract terms. The level of unfilled orders at any given date during the year may be materially affected by the timing of our receipt of firm orders and additional airplane orders, and the speed with which those orders are filled. Accordingly, our expected backlog as of December 31, 2013 may not necessarily represent the actual amount of deliveries or sales for any future period.


Foreign Operations

        We engage in business in various non-U.S. markets. As of December 31, 2013, we have a foreign subsidiary with one facility in the United Kingdom, which serves as a production facility, a production facility in Malaysia, a worldwide supplier base, and a repair center for the European and Middle-Eastern regions. We purchase certain components and materials that we use in our products from foreign suppliers and a portion of our products will be sold directly to foreign customers, including Airbus, or resold to foreign end-users (i.e., foreign airlines and militaries). In addition, we operate an assembly facility in Saint-Nazaire, France to receive and assemble center fuselage frame sections for the Airbus A350 XWB commercial aircraft from the facility in Kinston, North Carolina before they are shipped to Airbus.

        Spirit is party to a joint venture with Hong Kong Aircraft Engineering Company Limited (HAECO), and its subsidiary, Taikoo Aircraft Engineering Company Limited (TAECO), Cathay Pacific Airways Limited, and Cal-Asia to develop and implement a state-of-the-art composite and metal bond component repair station in the Asia-Pacific region. The service center is called Taikoo Spirit AeroSystems Composite Co. Ltd.

        Currency fluctuations, tariffs and similar import limitations, price controls and labor regulations can affect our foreign operations. Other potential limitations on our foreign operations include expropriation, nationalization, restrictions on foreign investments or their transfers and additional political and economic risks. In addition, the transfer of funds from foreign operations could be impaired by any restrictive regulations that foreign governments could enact.

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        Sales to foreign customers are subject to numerous additional risks, including the impact of foreign government regulations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other actions that would have a direct or indirect adverse impact on our business or market opportunities with such governments' countries. Furthermore, the political, cultural and economic climate outside the United States may be unfavorable to our operations and growth strategy.

        For the twelve months ended December 31, 2013, our net revenues from direct sales to non-U.S. customers were approximately $806.1 million, or 13%, of total net revenues for the same period. For the twelve months ended December 31, 2012, our net revenues from direct sales to non-U.S. customers were approximately $785.7 million, or 15%, of total net revenues for the same period. For the twelve months ended December 31, 2011, our net revenues from direct sales to non-U.S. customers were approximately $653.1 million, or 13%, of total net revenues for the same period.


Inflation

        A majority of our sales are conducted pursuant to long-term contracts that set fixed unit prices, some of which provide for price adjustment for inflation. In addition, we typically consider expected inflation in determining proposed pricing when we bid on new work. Although we have attempted to minimize the effect of inflation on our business through these protections, sustained or higher than anticipated increases in costs of labor or materials could have a material adverse effect on our results of operations.

        Spirit's contracts with suppliers currently provide for fixed pricing in U.S. dollars. Spirit Europe's supply contracts are denominated in U.S. dollars, British pounds sterling or Euros. In some cases, our supplier arrangements contain inflationary adjustment provisions based on accepted industry indices, and we typically include an inflation component in estimating our supply costs. Although the raw material industry is experiencing a softening in demand, some specific materials have yet to reflect a corresponding reduction in price. We expect that raw material market pricing volatility will remain a factor that may impact our costs, despite protections in our existing supplier arrangements. We will continue to focus our strategic cost reduction plans on mitigating the effects of this potential cost increase on our operations.

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk

        As a result of our operating and financing activities, we are exposed to various market risks that may affect our consolidated results of operations and financial position. These market risks include fluctuations in interest rates, which impact the amount of interest we must pay on our variable rate debt.

        Other than the interest rate swaps described below, financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, the funds in which our pension assets are invested, and trade accounts receivable.

        Accounts receivable include amounts billed and currently due from customers, amounts earned but unbilled, particular estimated contract changes, claims in negotiation that are probable of recovery, and amounts retained by the customer pending arbitration. The amounts retained by the customer include $135.1 million at December 31, 2013, See Note 22, "Commitments, Contingencies and Guarantees." For the twelve months ended December 31, 2013, approximately 84% of our net revenues were from sales to Boeing. Additionally, at December 31, 2013 approximately 29% of our outstanding accounts receivable were due from Gulfstream. We continuously monitor collections and payments from customers and maintain a provision for estimated credit losses as deemed appropriate based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically not been material, we cannot guarantee that we will continue to experience the same credit loss rates in the future.

        We maintain cash and cash equivalents with various financial institutions and perform periodic evaluations of the relative credit standing of those financial institutions and from time to time we invest

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excess cash in liquid short-term money market funds. We have not experienced any losses in such accounts and believe that we are not exposed to any significant credit risk on cash and cash equivalents. Additionally, we monitor our defined benefit pension plan asset investments on a quarterly basis and we believe that we are not exposed to any significant credit risk in these investments.


Commodity Price Risks

        Some raw materials and operating supplies are subject to price and supply fluctuations caused by market dynamics. Our strategic sourcing initiatives are focused on mitigating the impact of commodity price risk. We are party to collective raw material sourcing contracts arranged through Boeing and Airbus. These collective sourcing contracts allow us to obtain raw materials at pre-negotiated rates and help insulate us from market volatility across the industry for certain specialized metallic and composite raw materials used in the aerospace industry. Although our supply agreements with Boeing and Airbus allow us to pass on certain unusual increases in component and raw material costs to Boeing and Airbus in limited situations, we may not be fully compensated for such increased costs. We also have long-term supply agreements with a number of our major parts suppliers. We, as well as our supply base, are experiencing pricing increases for metallic raw materials (primarily aluminum and titanium) despite softening market demand across the industry. Although the demand pressure has been somewhat eased for certain metallic and composite raw materials, the specialized nature of the materials used in the aerospace industry has prevented a corresponding decrease in prices. We generally do not employ forward contracts or other financial instruments to hedge commodity price risk, although we continue to review a full range of business options focused on strategic risk management for all raw material commodities.

        Any failure by our suppliers to provide acceptable raw materials, components, kits or subassemblies could adversely affect our production schedules and contract profitability. We assess qualification of suppliers and continually monitor them to control risk associated with such supply base reliance.

        To a lesser extent, we also are exposed to fluctuations in the prices of certain utilities and services, such as electricity, natural gas, chemicals and freight. We utilize a range of long-term agreements to minimize procurement expense and supply risk in these areas.


Interest Rate Risks

        After the effect of interest rate swaps, as of December 31, 2013, we had $225.0 million of total fixed rate debt and $315.4 million of variable rate debt outstanding as compared to $325.0 million of total fixed rate debt and $220.9 million of variable rate debt outstanding as of December 31, 2012. Borrowings under our Senior Secured Credit Facility bear interest that varies with LIBOR. Interest rate changes generally do not affect the market value of such debt, but do impact the amount of our interest payments and, therefore, our future earnings and cash flows, assuming other factors are held constant. Assuming other variables remain constant, including levels of indebtedness, a one percentage point increase in interest rates on our variable debt would have an estimated impact on pre-tax earnings and cash flows for the next twelve months of approximately $3.2 million.

        We enter into floating-to-fixed interest rate swap agreements periodically. As of December 31, 2013, the interest swap agreements had notional amounts totaling $225.0 million.

Notional Amount
  Expires   Variable
Rate
  Fixed
Rate (1)
  Effective
Fixed
Rate (2)
  Fair Value,
December 31,
2013
 

$

225   July 2014   1 Month LIBOR     1.37%   N/A   $ (1.4 )

(1)
The fixed rate represents the rate at which interest is paid by the Company pursuant to the terms of its interest rate swap agreements.

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(2)
As of December 31, 2013 the interest rate swaps are no longer effective and therefore the effective fixed rate is not applicable.

        The purpose of entering into these swaps was to reduce our exposure to variable interest rates. In accordance with FASB authoritative guidance the interest rate swaps are being accounted for as cash flow hedges and the fair value of the swap agreements is reported on the balance sheet as an asset, if positive, or a liability, if negative. The fair value of the interest rate swaps was a net liability of approximately ($1.4) million at December 31, 2013. 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 at year end 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. We do not use these contracts for speculative or trading purposes.


Foreign Exchange Risks

        As a result of the BAE Acquisition, we have sales, expenses, assets and liabilities that are denominated in British pounds sterling. Spirit Europe's functional currency is the British pound sterling. However, sales of Spirit Europe's products to Boeing 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.

        In accordance with FASB authoritative guidance, the intercompany revolving credit facility with Spirit Europe is exposed to fluctuations in foreign exchange rates. The fluctuation in rates for 2013 resulted in a gain of $2.9 million reflected in other income/expense.

        Other than the interest rate swaps and foreign exchange contracts, we have no other derivative financial instruments.

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Item 8.     Financial Statements and Supplementary Data


SPIRIT AEROSYSTEMS HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Spirit AeroSystems Holdings, Inc.

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of comprehensive income, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Spirit AeroSystems Holdings, Inc. and its subsidiaries (the "Company") at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule appearing under Item 15 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because material weaknesses in internal control over financial reporting related to the Company's contract accounting estimates for its Airbus A350, Gulfstream G280 and G650 programs existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2013 consolidated financial statements and our opinion regarding the effectiveness of the Company's internal control over financial reporting does not affect our opinion on those consolidated financial statements. The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention

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or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Kansas City, Missouri
February 19, 2014

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Spirit AeroSystems Holdings, Inc.

Consolidated Statements of Operations

 
  For the Twelve Months Ended  
 
  December 31,
2013
  December 31,
2012
  December 31,
2011
 
 
  ($ in millions, except per share data)
 

Net Revenues

  $ 5,961.0   $ 5,397.7   $ 4,863.8  

Operating costs and expenses

                   

Cost of sales

    6,059.5     5,245.3     4,312.1  

Selling, general and administrative

    200.8     172.2     159.9  

Impact from severe weather event

    30.3     (146.2 )    

Research and development

    34.7     34.1     35.7  
               

Total operating costs and expenses

    6,325.3     5,305.4     4,507.7  

Operating (loss) income

    (364.3 )   92.3     356.1  

Interest expense and financing fee amortization

    (70.1 )   (82.9 )   (77.5 )

Interest income

    0.3     0.2     0.3  

Other income, net

    3.3     1.8     1.4  
               

(Loss) income before income taxes and equity in net income (loss) of affiliates

    (430.8 )   11.4     280.3  

Income tax (provision) benefit

    (191.1 )   24.1     (86.9 )
               

(Loss) income before equity in net income (loss) of affiliates

    (621.9 )   35.5     193.4  

Equity in net income (loss) of affiliates

    0.5     (0.7 )   (1.0 )
               

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4  
               
               

(Loss) earnings per share

                   

Basic

  $ (4.40 ) $ 0.24   $ 1.36  

Diluted

  $ (4.40 ) $ 0.24   $ 1.35  

   

See notes to consolidated financial statements

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Spirit AeroSystems Holdings, Inc.

Consolidated Statements of Comprehensive Income

 
  For the Twelve Months Ended  
 
  December 31,
2013
  December 31,
2012
  December 31,
2011
 
 
  ($ in millions)
 

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4  

Other comprehensive income (loss), net of tax:

                   

Unrealized (loss) on interest rate swaps, net of tax effect of zero, zero, $2.4, respectively

            (4.2 )

Less: reclassification adjustment for loss realized in net income, net of tax effect of zero, $1.7, $3.1, respectively

        2.9     5.3  
               

Net gain on interest rate swaps

        2.9     1.1  

Unrealized gain (loss) on foreign currency hedge contracts, net of tax effect of zero, zero, $0.2, respectively

            0.5  

Less: reclassification adjustment for loss realized in net income, net of tax effect of zero, zero, $0.1, respectively

        0.1     0.2  

Less: reclassification adjustment for loss realized in net other assets, net of tax effect of zero, zero, $0.4, respectively

            0.7  
               

Net gain on foreign currency hedge contracts

        0.1     1.4  

Pension, SERP, and Retiree medical adjustments, net of tax effect of ($51.5), $19.5, $30.5, respectively              

    84.8     (30.5 )   (52.9 )

Unrealized foreign exchange gain on intercompany loan, net of tax effect of ($0.4), ($0.8), zero, respectively              

    1.2     2.2      

Foreign currency translation adjustments

    4.6     6.3     (0.5 )
               

Total other comprehensive income (loss)

    90.6     (19.0 )   (50.9 )
               

Total comprehensive (loss) income

  $ (530.8 ) $ 15.8   $ 141.5  
               
               

   

See notes to consolidated financial statements

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Spirit AeroSystems Holdings, Inc.

Consolidated Balance Sheets

 
  December 31,
2013
  December 31,
2012
 
 
  ($ in millions)
 

Current assets

             

Cash and cash equivalents

  $ 420.7   $ 440.7  

Accounts receivable, net

    550.8     420.7  

Inventory, net

    1,842.6     2,410.8  

Deferred tax asset-current

    26.9     57.1  

Other current assets

    103.2     26.1  
           

Total current assets

    2,944.2     3,355.4  

Property, plant and equipment, net

    1,803.3     1,698.5  

Pension assets

    252.6     78.4  

Deferred tax asset-non-current, net

        192.0  

Other assets

    107.1     91.0  
           

Total assets

  $ 5,107.2   $ 5,415.3  
           
           

Current liabilities

             

Accounts payable

  $ 753.7   $ 659.0  

Accrued expenses

    220.6     216.3  

Profit sharing

    38.4     28.3  

Current portion of long-term debt

    16.8     10.3  

Advance payments, short-term

    133.5     70.7  

Deferred revenue, short-term

    19.8     18.4  

Deferred grant income liability — current

    8.6     6.9  

Other current liabilities

    144.2     57.1  
           

Total current liabilities

    1,335.6     1,067.0  

Long-term debt

    1,150.5     1,165.9  

Advance payments, long-term

    728.9     833.6  

Pension/OPEB obligation

    69.8     75.6  

Deferred grant income liability — non-current

    108.2     116.6  

Deferred revenue and other deferred credits

    30.9     30.8  

Other liabilities

    202.3     128.9  

Equity

             

Preferred stock, par value $0.01, 10,000,000 shares authorized, no shares issued          

         

Common stock, Class A par value $0.01, 200,000,000 shares authorized, 120,946,429 and 119,671,298 shares issued, respectively

    1.2     1.2  

Common stock, Class B par value $0.01, 150,000,000 shares authorized, 23,851,694 and 24,025,880 shares issued, respectively

    0.2     0.2  

Additional paid-in capital

    1,025.0     1,012.3  

Accumulated other comprehensive loss

    (54.6 )   (145.2 )

Retained earnings

    508.7     1,127.9  
           

Total shareholders' equity

    1,480.5     1,996.4  

Noncontrolling interest

    0.5     0.5  
           

Total equity

    1,481.0     1,996.9  
           

Total liabilities and equity

  $ 5,107.2   $ 5,415.3  
           
           

   

See notes to consolidated financial statements

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Spirit AeroSystems Holdings, Inc.

Consolidated Statements of Changes in Shareholders' Equity

 
  Common Stock    
  Accumulated
Other
Comprehensive
Income (Loss)
  Retained
Earnings/
Accumulated
Deficit
   
 
 
  Additional
Paid-in
Capital
   
 
 
  Shares   Amount   Total  
 
  ($ in millions, except share data)
 

Balance — December 31, 2010

    142,098,702   $ 1.4   $ 983.6   $ (75.3 ) $ 900.7   $ 1,810.4  

Net income

                    192.4     192.4  

Employee equity awards

    909,244         12.4             12.4  

Stock forfeitures

    (221,165 )       (1.2 )           (1.2 )

Excess tax benefits from share-based payment arrangements

            1.1             1.1  

SERP shares issued

    78,862                      

Other comprehensive loss

                (50.9 )       (50.9 )
                           

Balance — December 31, 2011

    142,865,643     1.4     995.9     (126.2 )   1,093.1     1,964.2  

Net income

                    34.8     34.8  

Employee equity awards

    905,438         15.3             15.3  

Stock forfeitures

    (123,439 )                    

Excess tax benefits from share-based payment arrangements

            1.1             1.1  

SERP shares issued

    49,536                      

Other comprehensive loss

                (19.0 )       (19.0 )
                           

Balance — December 31, 2012

    143,697,178     1.4     1,012.3     (145.2 )   1,127.9     1,996.4  

Net loss

                    (621.4 )   (621.4 )

Equity in joint venture

                    2.2     2.2  

Employee equity awards

    1,979,066         12.6             12.6  

Stock forfeitures

    (668,263 )                    

Net shares settled

    (240,359 )                    

Excess tax benefits from share-based payment arrangements

            0.1             0.1  

SERP shares issued

    30,501                      

Other comprehensive income

                90.6         90.6  
                           

Balance — December 31, 2013

    144,798,123   $ 1.4   $ 1,025.0   $ (54.6 ) $ 508.7   $ 1,480.5  
                           
                           

   

See notes to consolidated financial statements

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Spirit AeroSystems Holdings, Inc.

Consolidated Statements of Cash Flows

 
  Twelve Months
Ended
December 31,
2013
  Twelve Months
Ended
December 31,
2012
  Twelve Months
Ended
December 31,
2011
 
 
  ($ in millions)
 

Operating activities

                   

Net (loss) income

  $ (621.4 ) $ 34.8   $ 192.4  

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities

                   

Depreciation expense

    158.2     151.1     129.2  

Amortization expense

    3.1     5.1     4.9  

Amortization of deferred financing fees

    6.7     14.6     5.6  

Accretion of customer supply agreement

    0.6     0.2      

Bad debt expense

            1.4  

Employee stock compensation expense

    19.6     15.3     11.2  

Excess tax benefit of share-based payment arrangements

    (0.6 )   (1.2 )   (1.3 )

Loss from discontinued hedge accounting on interest rate swaps

        5.2      

(Gain) from the ineffectiveness of hedge contracts

    (2.6 )   (1.5 )    

(Gain) loss from foreign currency transactions

    (2.6 )   (5.6 )   1.0  

Loss on disposition of assets

    0.1     14.1     1.0  

Deferred taxes

    202.8     (120.1 )   21.6  

Long-term tax benefit

    (2.5 )   3.6     (6.1 )

Pension and other post retirement benefits, net

    (32.0 )   (8.9 )   (9.6 )

Grant income

    (7.3 )   (5.8 )   (5.4 )

Equity in net loss of affiliates

    (0.5 )   0.7     1.0  

Changes in assets and liabilities

                   

Accounts receivable

    (128.5 )   (151.1 )   (66.3 )

Inventory, net

    666.0     228.3     (121.6 )

Accounts payable and accrued liabilities

    94.2     109.8     106.1  

Profit sharing/deferred compensation

    10.0     4.7     (5.5 )

Advance payments

    (41.9 )   239.6     (159.9 )

Income taxes receivable/payable

    (82.2 )   (4.3 )   65.0  

Deferred revenue and other deferred credits

    (0.2 )   (12.4 )   (265.9 )

Other

    21.6     28.2     53.9  
               

Net cash provided by (used in) operating activities

    260.6     544.4     (47.3 )
               

Investing activities

                   

Purchase of property, plant and equipment

    (234.2 )   (236.1 )   (249.7 )

Purchase of property, plant and equipment — severe weather event (see Note 4)

    (38.4 )   (12.9 )    

Proceeds from sale of assets

    0.7     1.6     0.5  

Other

    3.7     (1.4 )    
               

Net cash (used in) investing activities

    (268.2 )   (248.8 )   (249.2 )
               

Financing activities

                   

Proceeds from revolving credit facility

        170.0     30.0  

Payments on revolving credit facility

        (170.0 )   (30.0 )

Proceeds from issuance of debt

        547.6      

Principal payments of debt

    (10.4 )   (571.0 )   (8.0 )

Excess tax benefit of share-based payment arrangements

    0.6     1.2     1.3  

Debt issuance and financing costs

    (4.1 )   (12.4 )    
               

Net cash (used in) financing activities

    (13.9 )   (34.6 )   (6.7 )
               

Effect of exchange rate changes on cash and cash equivalents

    1.5     1.9     (0.6 )
               

Net (decrease) increase in cash and cash equivalents for the period            

    (20.0 )   262.9     (303.8 )

Cash and cash equivalents, beginning of period

    440.7     177.8     481.6  
               

Cash and cash equivalents, end of period

  $ 420.7   $ 440.7   $ 177.8  
               
               

Supplemental information

                   

Interest paid

  $ 68.0   $ 69.7   $ 83.7  

Income taxes paid

  $ 69.4   $ 96.7   $ 5.6  

Non-cash investing and financing activities

                   

Property acquired through capital leases

  $ 0.4   $ 2.6   $ 0.1  

Financing obligations

  $   $   $ 12.5  

   

See notes to consolidated financial statements

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Spirit AeroSystems Holdings, Inc.

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

1.     Nature of Business

        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 and certain of its affiliates maintain 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 Airbus Group NV ("Airbus") and Boeing. 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, United Airlines, American Airlines and Bell Helicopter. The Company has its headquarters in Wichita, Kansas, with manufacturing facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita, Kansas; Kinston, North Carolina and Subang, Malaysia. The Company has assembly facilities in Saint-Nazaire, France, and Chanute, Kansas.

        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 a joint venture, Taikoo Spirit AeroSystems Composite Co. Ltd. ("TSACCL"), of which Spirit's ownership interest is 31.5%. TSACCL was formed to develop and implement a state-of-the-art composite and metal bond component repair station in the Asia-Pacific region. On December 19, 2013, Spirit completed the sale of its interest in the Spirit-Progresstech joint venture.

        The accompanying consolidated financial statements include the Company's financial statements and the financial statements of its majority owned or controlled subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-K. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior year financial statements and notes to conform to the 2013 presentation.

2.     Summary of Significant Accounting Policies

    Basis of Presentation

        The accompanying 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 GAAP. Investments in business entities in which the Company does not have control, but has the ability to exercise influence over operating and financial policies, including TSACCL, are accounted for by 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; the Malaysian subsidiary uses the British pound and our Singapore subsidiary uses the Singapore dollar. All other foreign subsidiaries and branches use the U.S. dollar as their functional currency.

        As part of the monthly consolidation process, the functional currencies of the Company's 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.

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Spirit AeroSystems Holdings, Inc.

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

    Use of Estimates

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and assumptions. See Note 3, "Changes in Estimates," for details on current changes in estimates.

        The results of operations during fiscal 2013 include the favorable impact of cumulative catch-up adjustments relating to prior period revenues of $95.5 primarily associated with productivity and efficiency improvements on mature programs.

        The results of operations during fiscal 2012 include the favorable impact of cumulative catch-up adjustments relating to prior period revenues of $14.7 primarily associated with productivity and efficiency improvements on mature programs.

        The results of operations during fiscal 2011 include the favorable impact of cumulative catch-up adjustments relating to prior period revenues of $13.8 driven by productivity improvements, recognition of favorable performance as we closed out B737 and B777 contract blocks in the fourth quarter, and a lower forecast for our short-term incentive accrual, partially offset by increasing material costs in our Wing Systems segment.

    Revenues and Profit Recognition

        A significant portion of the Company's revenues are recognized under long-term, volume-based pricing contracts, requiring delivery of products over several years. The Company recognizes revenue under the contract method of accounting and records sales and profits on each contract in accordance with the percentage-of-completion method of accounting, primarily using the units-of-delivery method. The units-of-delivery method recognizes as revenue the contract price of units of a basic production product delivered during a period and as the cost of earned revenue the costs allocable to the delivered units. Costs allocable to undelivered units are reported in the balance sheet as inventory. The method is used in circumstances in which an entity produces units of a basic product under production-type contracts in a continuous or sequential production process to buyers' specifications. Recurring long-term production contracts are usually divided into contract blocks for this purpose, with each block treated as a separate contract for "units-of-delivery" production-type contract accounting purposes.

        The total quantity of production units to be delivered under a contract may be set as a single contract accounting block, or it can be split into multiple blocks. Unless the life of the contract is so long that it prevents reliable estimates, the entire contract will typically be set as the contract accounting block quantity. "Life-of-program" or "requirements-based" contracts often lead to continuing sales of more than twenty years. Since this is much longer than can be reliably estimated, Spirit uses parameters based on the contract facts and circumstances to determine the length of the contract block. This analysis includes: considering the customer's firm orders, internal assessment of the market, reliability of cost estimates, potential segmentation of non-recurring elements of the contract, and other factors. Contract block sizes may also be determined based on certain contractual terms such as pricing renegotiation dates, such that certain contract blocks may use an approximate date instead of a defined unit quantity in order to increase the ability to estimate accurately given that the renegotiated pricing is unknown for the planning block. Shorter contract blocks for mature, ongoing programs are common due to the presence of recent cost history and probable forecast accuracy. Mature program contract blocks tend to be approximately two years in length. Initial contract blocks often require a longer time period and a greater number of units in order to take into account the higher cost of early units due to a steeper experience curve and

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Spirit AeroSystems Holdings, Inc.

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

pre-production design costs. Initial contract blocks on new programs can extend up to ten years or longer. As these programs mature, costs stabilize and efficiencies are realized, subsequent contract block length shortens to take into account the steady state of the continuing production.

        Revenues from non-recurring design work are recognized based on substantive milestones or use of the cost-to-cost method, that are indicative of our progress toward completion depending on facts and circumstances. We follow the requirements of FASB authoritative guidance on accounting for the performance of construction-type and certain production-type contracts (the contract method of accounting), and use the cumulative catch-up method in accounting for revisions in estimates. Under the cumulative catch-up method, the impacts of revisions in estimates are recognized immediately when changes in estimated contract profitability become known.

        A profit rate is estimated based on the difference between total revenues and total costs over a contract block. Total revenues at any given time include actual historical revenues up to that time plus future estimated revenues. Total costs at any given time include actual historical costs up to that time plus future estimated costs. Estimated revenues include negotiated or expected values for units delivered, estimates of probable recoveries asserted against the customer for changes in specifications, price adjustments for contract and volume changes, escalation and assumed but currently unnegotiated price increases for derivative models. Costs include the estimated cost of certain pre-production efforts (including non-recurring engineering and planning subsequent to completion of final design) plus the estimated cost of manufacturing a specified number of production units. Estimates take into account assumptions related to future labor performance and rates, and projections related to material and overhead costs including expected "learning curve" cost reductions over the term of the contract. Estimated revenues and costs also take into account the expected impact of specific contingencies that we believe are probable.

        Estimates of revenues and costs for our contract blocks span a period of multiple years and are based on a substantial number of underlying assumptions. We believe that the underlying assumptions are sufficiently reliable to provide a reasonable estimate of the profit to be generated. However, due to the significant length of time over which revenue streams will be generated, the variability of the revenue and cost streams can be significant if the assumptions change. Estimates of profit margins for contract accounting blocks are typically reviewed on a quarterly basis. Assuming the initial estimates of sales and costs under the contract block are accurate, the percentage-of-completion method results in the profit margin being recorded evenly as revenue is recognized under the contract block. Changes in these underlying estimates due to revisions in sales and cost estimates may result in profit margins being recognized unevenly over a contract block as such changes are accounted for on a cumulative basis in the period estimates are revised, which we refer to as cumulative catch-up adjustments. Our Estimate At Completion estimating process is not solely an accounting process, but is instead an integrated part of the management of our business, involving numerous personnel in our planning, production control, contracts, cost management, supply chain and program and business management functions. In 2013, we recorded positive cumulative catch-up adjustments for periods prior to 2013 of $60.1, $30.0 and $5.4 for the Fuselage, Propulsion and Wing Segments, respectively. When the current estimates of total contract revenue and total contract cost indicate a loss, a provision for the entire loss on the contract, known as a forward loss charge, is recorded to cost of sales in the period in which they become evident. In 2013, we recognized $1,133.3 in forward losses.

        For revenues not recognized under the contract method of accounting, the Company recognizes revenues from the sale of products at the point of passage of title, which is generally at the time of shipment. Shipping and handling costs are included in cost of sales. Revenues earned from providing maintenance services, including any contracted research and development, are recognized when the service

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Spirit AeroSystems Holdings, Inc.

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

is complete or other contractual milestones are attained. Revenues from non-recurring design work are recognized based on substantive milestones that are indicative of our progress toward completion. Non-recurring revenues, which are derived primarily from engineering and design efforts, were $255.6, $239.4 and $222.0 for each of the twelve month periods ending December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

        As required by FASB authoritative guidance related to accounting for consideration given by a vendor to a customer, under an agreement with Airbus, certain payments are amortized as a reduction to revenues on units delivered. Additionally, in 2012 we began making certain payments related to our Gulfstream G280 and G650 programs. The Company recognized $28.6 and $51.1 as a reduction to net revenues for the periods ended December 31, 2013 and December 31, 2012, respectively.

    Developments on Our New and Maturing Programs

        A significant portion of the Company's future revenues is expected to be derived from new and maturing programs, most notably the B787, A350 XWB, G650 and G280, on which we may be contracted to provide design and engineering services, recurring production, or both. There are several risks inherent to such new and maturing programs. In the design and engineering phase, we may incur costs in excess of our forecasts due to several factors, including cost overruns, customer-directed change orders and delays in the overall program. We may also incur higher than expected recurring production costs, which may be caused by a variety of factors, including the future impact of engineering changes (or other change orders) or our inability to secure contracts with our suppliers at projected cost levels. Our ability to recover these excess costs from the customer will depend on several factors, including our rights under our contracts for the new and maturing programs. In determining our profits and losses in accordance with the percentage-of-completion method of contract accounting, we are required to make significant assumptions regarding our future costs and revenues, as well as the estimated number of units to be manufactured under the contract and other variables. We continually review and update our assumptions based on market trends and our most recent experience. If we make material changes to our assumptions, such as a reduction in the estimated number of units to be produced under the contract (which could be caused by emerging market trends or other factors), an increase in future production costs or a change in the recoverability of increased design or production costs, we may experience negative cumulative catch-up adjustments related to revenues previously recognized. In some cases, we may recognize forward loss amounts.

    Research and Development

        Research and development includes costs incurred for experimentation, design and testing and are expensed as incurred as required under FASB authoritative guidance pertaining to accounting for research and development costs.

    Joint Venture

        The value of the Company's 31.5% ownership interest in Taikoo Spirit AeroSystems Composite Co. Ltd. totaled $1.4 at December 31, 2013 and is accounted for under the equity method of accounting.

    Cash and Cash Equivalents

        Cash and cash equivalents represent all highly liquid investments with original maturities of three months or less.

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Spirit AeroSystems Holdings, Inc.

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

    Accounts Receivable

        Accounts receivable are recorded at the invoiced amount and do not bear interest. Consistent with industry practice, the Company classifies unbilled receivables related to contracts accounted for under the long-term contract method of accounting, as current. The Company determines an allowance for doubtful accounts based on a review of outstanding receivables. Account balances are charged off against the allowance after the potential for recovery is considered remote. The Company's allowance for doubtful accounts was approximately $0.2 and $4.3 at December 31, 2013 and December 31, 2012, respectively.

        Accounts receivable, net includes unbilled receivables on long-term aerospace contracts, comprised principally of revenue recognized on contracts for which amounts were earned but not contractually billable as of the balance sheet date, or amounts earned in which the recovery will occur over the term of the contract, which could exceed one year.

    Inventory

        Raw materials are stated at lower of cost (principally on an actual or average cost basis) or market. Inventoried costs attributed to units delivered under long-term contracts are based on the estimated average cost of all units expected to be produced and are determined under the learning curve concept which anticipates a predictable decrease in unit costs as tasks and production techniques become more efficient through repetition and supply chain costs are reduced as contracts are negotiated and design changes result in lower cost. This usually results in an increase in inventory (referred to as "excess-over-average" or "deferred production costs") during the early years of a contract. These costs are deferred only to the extent the amount of actual or expected excess-over-average is reasonably expected to be fully offset by lower-than-average costs in future periods of a contract. If in-process inventory plus estimated costs to complete a specific contract exceed the actual plus anticipated remaining sales value of such contract, such excess is charged to cost of sales in the period the loss becomes known, thus reducing inventory to estimated realizable value. Costs in inventory include amounts relating to contracts with long production cycles, some of which are not expected to be realized within one year.

        The Company reviews its general stock materials and spare parts inventory each quarter to identify impaired inventory, including excess or obsolete inventory, based on historical sales trends and expected production usage. Impaired inventories are written off to work-in-process in the period identified.

        Total inventory includes deferred production costs for the excess of production costs over the estimated average cost per ship set, and credit balances for favorable variances on contracts between actual costs incurred and the estimated average cost per ship set for units delivered under the current production blocks. 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. Work-in-process inventory also includes non-recurring production costs. Non-recurring production costs include design and engineering costs and test articles.

        Finished goods inventory is stated at its estimated average per unit cost based on all units expected to be produced.

        Capitalized pre-production costs include certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. Significant customer directed work changes can also cause pre-production costs to be incurred. These costs are typically recovered over a certain number of ship set deliveries.

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Spirit AeroSystems Holdings, Inc.

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

    Property, Plant and Equipment

        Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is applied using a straight-line method over the useful lives of the respective assets as described in the following table:

 
  Estimated Useful Life  

Land improvements

    20 years  

Buildings

    45 years  

Machinery and equipment

    3-20 years  

Tooling — Airplane program — B787, Rolls-Royce

    5-20 years  

Tooling — Airplane program — all others

    2-10 years  

Capitalized software

    3-7 years  

        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 cost for internal-use software. Our capitalization policy includes specifications that the software must have a service life greater than one year, is legally and substantially owned by Spirit, and has an acquisition cost of greater than $0.1.

    Intangible Assets

        Intangible assets are initially recorded at estimated fair value and are comprised of patents, favorable leasehold interests, and customer relationships that are amortized on a straight-line basis over their estimated useful lives, ranging from 6 to 16 years for patents, 14 to 24 years for favorable leasehold interests, and 8 years for customer relationships.

    Impairment or Disposal of Long-Lived Assets and Goodwill

        Spirit reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with FASB authoritative guidance on accounting for the impairment or disposal of long-lived assets. Under the standard, assets must be classified as either held-for-use or available-for-sale. An impairment loss is recognized when the carrying amount of an asset that is held for use exceeds the projected undiscounted future net cash flows expected from its use and disposal, and is measured as the amount by which the carrying amount of the asset exceeds its fair value, which is measured by discounted cash flows when quoted market prices are not available. For assets available-for-sale, an impairment loss is recognized when the carrying amount exceeds the fair value less cost to sell. The Company performs an annual impairment test for goodwill in the fourth quarter of each year, in accordance with FASB authoritative guidance pertaining to goodwill and other intangible assets, or more frequently, if an event occurs or circumstances change that would more likely than not reduce fair value below current value. Recent impairment testing has indicated no need for impairment.

    Deferred Financing Costs

        Costs relating to long-term debt are deferred and included in other long-term assets. These costs are amortized over the term of the related debt or debt facilities, and are included as a component of interest expense.

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

    Derivative Instruments and Hedging Activity

        We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates and interest rates. To account for our derivative financial instruments, we follow the FASB guidance on accounting for derivatives and hedges. Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in fair value of derivatives are recorded each period in earnings or accumulated other comprehensive income, depending on whether a derivative is effective as part of a hedge transaction, and if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in other comprehensive income are subsequently included in earnings in the periods in which earnings are affected by the hedged item or when the hedge is no longer effective. We present the cash flows associated with our derivatives as a component of the operating or investing sections of the statement of cash flows. Our use of derivatives has generally been limited to interest rate swaps and foreign currency forward contracts. The Company enters into foreign currency forward 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.

    Fair Value of Financial Instruments

        Financial instruments are measured in accordance with FASB authoritative guidance related to fair value measurements. This guidance clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about fair value measurements. See Note 12, "Fair Value Measurements."

    Income Taxes

        Income taxes are accounted for in accordance with FASB authoritative guidance on accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective tax bases. A valuation allowance is recorded to reduce deferred income tax assets to an amount that in management's opinion will ultimately be realized. Tax rate changes impacting these assets and liabilities are recognized in the period during which the rate change occurs.

        We record an income tax expense or benefit based on the net income earned or net loss incurred in each tax jurisdiction and at the tax rate applicable to that income or loss. In the ordinary course of business, there are transactions for which the ultimate tax outcome is uncertain. These uncertainties are accounted for in accordance with FASB authoritative guidance on accounting for the uncertainty in income taxes. The final tax outcome for these matters may be different than management's original estimates made in determining the income tax provision. A change to these estimates could impact the effective tax rate and net income or loss in subsequent periods. We use the flow-through accounting method for tax credits. Under this method, tax credits reduce income tax expense.

    Stock-Based Compensation and Other Share-Based Payments

        Many of the Company's employees are participants in various stock compensation plans. The Company accounts for stock option plans, restricted share plans and other stock-based payments in accordance with FASB authoritative guidance pertaining to share-based payment. The expense attributable to the Company's employees is recognized over the period the amounts are earned and vested, as described in Note 18 "Stock Compensation."

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

    Service and Product Warranties and Extraordinary Rework

        Provisions for estimated expenses related to service and product warranties and certain extraordinary rework are made at the time products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

        The following is a roll forward for the warranty and extraordinary rework provision as of December 31, 2013 and December 31, 2012:

 
  2013   2012  

Balance, January 1

  $ 30.9   $ 19.6  

Charges to costs and expenses

    38.3     12.0  

Write-offs, net of recoveries

    (0.6 )   (0.9 )

Exchange rate

    0.1     0.2  
           

Balance, December 31

  $ 68.7   $ 30.9  
           
           


New Accounting Pronouncements

        In July 2013, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (FASB ASU 2013-11). This update was issued to give explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The provisions of FASB ASU 2013-11 are effective for fiscal years and interim periods beginning after December 15, 2013. The adoption of the provisions of this update will not have a material impact on the Company's consolidated financial statements.

        In July 2013, the FASB issued ASU No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes (FASB ASU 2013-10). The amendments in this update permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to UST and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. The amendment is effective for qualifying new or redesignated hedging relationship entered into on or after July 17, 2013. The adoption of the provisions of ASU 2013-10 did not have a material impact on the Company's consolidated financial statements.

        In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (FASB ASU 2013-02). The amendment in this update requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. The provisions of FASB ASU 2013-02 were effective for annual and interim periods beginning after December 15, 2012. The adoption of the provisions of FASB ASU 2013-02 did not have a material impact on the Company's consolidated financial statements.

        In July 2012, the FASB issued ASU No. 2012-2, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (FASB ASU 2012-2). The amendment in this update permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles — Goodwill and Other —

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

General Intangibles Other than Goodwill. The provisions of FASB ASU 2012-2 were effective for annual and interim impairment tests performed in fiscal years beginning after September 15, 2012. The adoption of the provisions of FASB ASU 2012-2 did not have a material impact on the Company's consolidated financial statements.

        In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (FASB ASU 2011-11). The amendments in this update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The intention is to enhance required disclosures by improving information about financial instruments and derivative instruments that are either offset in accordance with FASB guidance or are subject to an enforceable master netting arrangement; irrespective of whether they are offset in accordance with FASB guidance. The provisions of FASB ASU 2011-11 have been effective for annual reporting periods beginning on or after January 1, 2013. The adoption of the provisions of FASB ASU 2011-11 has not had a material impact on the Company's consolidated financial statements.

3.     Changes in Estimates

        The Company's long-term contract estimates are based on estimated contract revenues and related costs over the Company's current contract blocks. Estimated contract revenues are generally not subject to significant revisions as most of the Company's contracts are fixed price and known at the inception of the contract; however, the contract cost elements of these estimates change frequently as the programs mature and that has historically been the primary driver of changes in our estimates. Contract costs are estimated based on actual costs incurred to date and an estimate of remaining costs over the current contract block, which can extend for multiple years. During the early phases of our program contracts, the future cost estimates are subject to significant variability and are based on numerous assumptions and judgments which require management to use its historical experience on similar programs until aircraft programs are type certified; low rate production is achieved; production processes mature; supply chain partners are contracted; and unit costs stabilize; which typically results in assumptions that costs will improve over the life of the contract block. This learning curve concept is typical in our industry; however, the level of design change and time spent in low rate production that was anticipated when we initially established these curves has been significantly exceeded as original delivery schedules have been delayed and engineering changes have continued. During 2013 and 2012, a combination of events occurred that resulted in significant changes in estimates on several new and maturing programs, resulting in forward losses being recorded on some of these programs. The following is a summary of those events.

    2013 Changes in Estimates

    Performance Issues — A350 XWB

        Our A350 XWB fuselage recurring program has experienced various production inefficiencies mostly driven by early development discovery and engineering change to the aircraft design, as well as higher test and transportation costs. Airbus is assisting us as we work through these issues and has provided additional resources to work alongside our personnel. In the third quarter of 2013, we recorded a forward loss of $78.6 for the A350 XWB fuselage recurring contract due to these production inefficiencies. There continues to be risk of additional forward loss associated with the recurring contract as we work through production issues.

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

    Non-Recurring Contract Agreements — A350 XWB

        In September and October of 2013 we agreed with Airbus on the work scope for the design and tooling related to the -1000 derivative of the A350 XWB fuselage and wing contracts. Based on current estimates, the agreement for the non-recurring phase of the -1000 derivative fuselage resulted in a $32.7 forward loss, which was recorded in the third quarter of 2013. There is a risk of additional forward loss if we do not successfully execute the design and engineering change process as projected.

    Supply Chain Cost Reductions — G280 and G650

        At the time we recorded the forward loss charges on the Gulfstream G280 and G650 programs in the third quarter of 2012, we had included in the respective estimates at completion significant cost reductions primarily related to sourcing costs between 2015 and 2018. These amounts were based on the experience of the supply chain team and operational management. During the second quarter of 2013, it became apparent that a substantial portion of the total cost savings included in the contract estimates for each program would not be realized. This determination was based on a number of changing conditions and new developments including an assessment of our actual experience with our customers regarding their receptiveness to proposed changes, completion of our detailed part analysis during the second quarter of 2013 as part of our effort to project future sourcing costs and our inability to achieve estimated supplier price reductions via negotiations with suppliers.

    Labor Estimates — Tulsa Facility

        The labor cost forecasts within the contract estimates for the G280, G650 and Boeing B787 are based on certain assumptions, including the level of disruption expected in the future. In our contract estimates through the first quarter of 2013, we assumed that certain disruptions to the manufacturing line caused by (i) supplier quality issues and late deliveries, (ii) customer inspections occurring in our facilities and (iii) our own manufacturing quality issues would be resolved by the middle of 2013. During the second quarter of 2013, key performance dates were missed, and we extended the expected period of time during which these issues would be resolved in our assumptions for our contract estimates. As a result, we experienced higher actual costs as well as significant increases to forecasted costs, resulting in additional forward losses recognized on all of these programs in the second and fourth quarters of 2013.

    Contractual Items — G650

        As we worked with Gulfstream to meet its production demand, we negotiated a temporary transfer of a portion of our work scope to Gulfstream for completion. In the second quarter of 2013, due to the effect of continued production challenges on our forecasted ability to achieve scheduled deliveries, we changed our assumptions to extend the duration of the work transfer and updated our estimates regarding this temporarily transferred work scope which is accounted for as a reduction in forecasted revenue. As described in more detail in Note 21, "Commitments, Contingencies and Guarantees," we instituted a demand for arbitration against Gulfstream to resolve certain contractual disputes primarily related to engineering changes made by Gulfstream and the impact of those changes to weight and delivery schedules as well as for incomplete payments to Spirit. We continually assess these contractual items and adjust our estimates as appropriate each quarter. Changes in these particular estimates resulted in additional forward loss recognized on the G650 in the second quarter of 2013.

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

    B787 program

        As we move into higher rates of production, our performance at the current contracted price depends on our being able to achieve production cost reductions as we gain production experience. During the second quarter of 2013, we continued to experience production inefficiencies at our Tulsa facility as we transitioned to production on the B787-9 derivative, which drove forward losses of $37.3 on the B787 wing program. Additionally in the fourth quarter of 2013, we revised our estimates of the amount of near-term achievable cost reductions for the B787 program based on cost savings ideas generated, the maturity of these ideas and the expected realization for the program. This change in cost savings estimates drove a forward loss of $384.7 in the fourth quarter of 2013.

    2012 Changes in Estimates

    Performance Issues — Tulsa Facility

        The Company's Tulsa facility has significant work content on three of the development programs (B787, G280, G650). The multiple complex development programs at this facility have created various performance issues that have resulted in previous changes to our contract estimates on these development programs.

        The performance issues at the Tulsa facility were magnified in the third quarter of 2012 when the Company implemented a recovery plan which would bring the Company current on the delivery schedule for its B787 wing components. The Company began implementing the recovery plan during late July 2012 which resulted in the addition of significant additional resources to meet delivery schedules. As the Company was implementing the recovery plan, it became clear during the third quarter estimation process that the remediation would have a significant impact on the future cost curves due to significant amounts of additional headcount and disruption.

    Type Certification

        On September 4 and 7, 2012, Gulfstream received type certification on the G280 and G650 aircraft, respectively. These type certifications impact three of the Company's development programs, G280, G650 and BR725 (the engine nacelle on the G650). Type certification is a significant program milestone for commercial aerospace products as it represents the airworthiness authority's approval of the completion and functionality of engineering design and the ability of the aircraft to enter into service, and leads directly to the commencement of full rate production. However, following type certification the ability to redesign for cost is significantly less if no derivative aircraft design is planned. We currently have no plans for derivative models, making redesign for cost improvements difficult after type certification.

        The pace of cost improvements was not keeping up with projected learning curves particularly related to redesign opportunities and as all three programs are preparing to enter full rate production, we revised our estimates to reflect higher costs.

    Decision on Work Package Transfers

        Given certain challenges of new programs at the Company's Kinston, North Carolina site and the fact that our newest facility in Chanute, Kansas was in the process of multiple work package transfers during the third quarter, the Company decided to delay the transfer of any additional work packages into these facilities. Overall, this had a significant impact on the BR725 program and the timing of anticipated cost reduction from the planned transfer of work content to lower-cost facilities.

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

    Finalization of Supplier Contracts

        During the early phases of our development programs, the Company will frequently procure small quantities of required sub-assemblies and parts from our suppliers. This practice generally forces us to pay higher unit prices for these sub-assemblies and parts, but allows us flexibility in evaluating supplier performance and quality as well as addressing design changes that frequently occur during the early phases of these development programs. Once design changes subside, we will generally contract on a longer-term basis with our suppliers which allows us to experience more favorable supply chain pricing.

        The Company has been successful in negotiating lower costs with suppliers on most of these development programs; however, these costs are not as low as original estimates. This pressure on supply chain cost runs across all of our development programs. As Boeing and Airbus have increased production rates on existing commercial programs, our suppliers have limited capacity to deal with even modest rate increases on our business jet programs. In addition, the capacity constraint in our supply base has prevented us from off-loading to the supply chain certain work we currently perform in-house. As a result of higher current costs which have exceeded estimates and recent negotiations with suppliers, the Company has revised supplier costs across several of the development programs.

    New and Maturing Programs Summary Performance

        Due primarily to the events described above in this Note 3, in 2013 we recorded forward loss charges of $78.6 on the recurring A350 XWB Section 15, $32.7 on the non-recurring A350 XWB Section 15, $240.9 on the G280 program, $288.3 on the G650 program and $422.0 on the B787 program. Additionally, due to program performance and/or changes in estimates in 2013 we recorded forward loss charges of $41.1, $16.4 and $21.7 on the B747, B767 and Rolls-Royce BR725 programs, respectively. The Rolls-Royce BR725 program also recorded a reduction of forward loss charges of $8.4 for a total net forward loss of $13.3 in 2013. These amounts were recorded within the Company's results of operations as part of cost of goods sold as well as on the condensed consolidated balance sheet as forward loss provisions within inventory to the extent each program's inventory balance was sufficient to absorb the charge. In the case that program inventory was not sufficient to absorb the full amount of a charge, the remainder was classified as a current liability.

        Due to performance, type certification, work package transfers and finalization of supplier contracts, as well as other events, for the twelve months ended December 31, 2012, we recorded forward loss charges of $184.0 on the Boeing 787, $162.5 on the Gulfstream G650, $151.0 on the Rolls-Royce BR725, $118.8 on the Gulfstream G280, $8.9 on the Airbus A350 XWB non-recurring wing, $11.5 on the Boeing 747-8 program and $8.0 on the B767 program. These amounts are recorded on the condensed consolidated balance sheet as forward loss provisions within inventory.

        Our consolidated net adjustments for costs related to the aforementioned changes in estimates and other circumstances for the twelve months ended December 31, 2013 and December 31, 2012 decreased operating profit, before income taxes, by approximately $1,133.3 and $644.7, respectively. These adjustments decreased net earnings for the twelve months ended December 31, 2013 and December 31, 2012 by approximately $713.0 ($5.04 per share) and $412.0 ($2.88 per share), respectively.

4.     Impact from Severe Weather Event

        On April 14, 2012, during a severe weather event, the Company's Wichita, Kansas facility, which includes its headquarters and manufacturing facilities for all Boeing models as well as operations for maintenance, repair and overhaul support and services (MRO), was hit by a tornado which caused significant damage to many buildings, disrupted utilities and resulted in complete suspension of production

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

for eight days. The Company's work-in-process and production equipment generally remained intact, and the Company resumed production on April 23, 2012, although some inefficiencies continued thereafter as a result of the damage and repair efforts.

        As of December 31, 2012, the Company had received a total of $234.9 in insurance payments based on estimated losses incurred as a result of the April 14, 2012 tornado. In accordance with its credit agreement, the Company provided a certificate to its lenders indicating that all net proceeds received in connection with the destruction caused by the April 14, 2012 tornado would be used for repair, replacement or restoration at the Wichita facility.

        On October 19, 2012, the Company reached an agreement with its insurers on a final settlement for all claims relating to the April 14, 2012 severe weather event. Under the terms of this settlement the insurers agreed to pay to the Company $234.9 (including payments previously made) to resolve all property damage, clean-up and recovery costs related to the severe weather event as well as all expenses incurred to make up for the interruption of production and to reduce further disruptions. Under the settlement agreement, the Company assumes all further risk involving the severe weather event on April 14, 2012.

        For the twelve months ended December 31, 2012, the Company recorded a net gain of $146.2 under severe weather event, which represents the settlement amount of $234.9 less cumulative charges of $88.7, which primarily relates to repair, clean-up, asset impairment and incremental freight, labor and warehousing costs to restore normal operations.

        During the twelve months ended December 31, 2013 and December 31, 2012, the Company recorded an impairment charge of zero and $0.2, respectively, for certain assets that were destroyed during the severe weather event. Any future impairment charges are expected to be immaterial.

        During the twelve months ended December 31, 2013, the Company recorded expenses of $30.3 under severe weather event, which represents continuing incremental freight, warehousing and other costs which are recorded as incurred.

5.     Accounts Receivable, net

        Accounts receivable, net consists of the following:

 
  December 31,
2013
  December 31,
2012
 

Trade receivables (1)(2)(3)

  $ 544.2   $ 415.9  

Other

    6.8     9.1  

Less: allowance for doubtful accounts

    (0.2 )   (4.3 )
           

Accounts receivable, net

  $ 550.8   $ 420.7  
           
           

(1)
Includes unbilled receivables of $33.5 and $25.6 at December 31, 2013 and December 31, 2012, respectively.

(2)
Includes $135.1 and $102.0 held in retainage at December 31, 2013 and December 31, 2012, respectively.

(3)
Includes $24.6 of withheld payments by a customer pending completion of retrofit work.

        Accounts receivable, net includes unbilled receivables on long-term aerospace contracts, comprised principally of revenue recognized on contracts for which amounts were earned but not contractually

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

billable as of the balance sheet date, or amounts earned in which the recovery will occur over the term of the contract, which could exceed one year.

        Also included in accounts receivable are amounts held in retainage which, as of December 31, 2013, are all related to Gulfstream and represent amounts due on G650 deliveries from 2010 through the third quarter of 2013. As described in more detail in Note 22, "Commitments, Contingencies and Guarantees," in August 2013, the Company instituted a demand for arbitration against Gulfstream Aerospace Corporation, seeking damages from Gulfstream for its incomplete payments to Spirit, as well as other damages and relief. Gulfstream counterclaimed against Spirit in the arbitration, seeking liquidated damages for delayed deliveries of wings, as well as other damages and relief. While we believe that the short-paid amount is collectible, if we are unable to collect this amount or if it becomes part of an overall settlement or arbitration award, recognition of additional forward losses on the G650 program could be required and the future cash flows of the Company could be significantly impacted.

        On May 3, 2012, one of our customers, Hawker Beechcraft, filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Subsequent to the bankruptcy filing, the Company reserved the remaining balance of its $3.5 receivable from Hawker in 2012. This balance was written off in 2013.

6.     Inventory

        Inventories are summarized as follows:

 
  December 31,
2013
  December 31,
2012 (1)
 

Raw materials

  $ 240.2   $ 250.3  

Work-in-process

    1,057.8     1,033.6  

Finished goods

    43.7     35.9  
           

Product inventory

    1,341.7     1,319.8  

Capitalized pre-production (2)

    486.2     524.6  

Deferred production

    1,661.2     1,173.8  

Forward loss provision

    (1,646.5 )   (607.4 )
           

Total inventory, net

  $ 1,842.6   $ 2,410.8  
           
           

(1)
For December 31, 2012, deferred production of $1,173.8 was reclassified from work-in-process to conform to current year presentation.

(2)
For December 31, 2013, $17.9 of work-in-process was reclassified to capitalized pre-production.

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

        Total inventory includes deferred production costs for the excess of production costs over the estimated average cost per ship set, and credit balances for favorable variances on contracts between actual costs incurred and the estimated average cost per ship set for units delivered under the current production blocks. 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.

        Non-recurring production costs include design and engineering costs and test articles.

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

        Inventories are summarized by platform and costs below:

 
  December 31, 2013  
 
  Product Inventory    
   
   
   
 
 
  Capitalized
Pre-Production
  Deferred
Production
  Forward Loss
Provision (1)(2)
  Total Inventory, net
December 31, 2013
 
 
  Inventory   Non-Recurring  

B747 (3)

  $ 96.4   $ 0.1   $ 4.4   $ 1.0   $ (37.2 ) $ 64.7  

B787

    263.9     14.7     158.2     597.3     (606.0 )   428.1  

Boeing — All other platforms (4)

    421.4     11.5     7.0     (21.7 )   (18.6 )   399.6  

A350 (5)

    166.7     42.5     76.5     388.8     (120.8 )   553.7  

Airbus — All other platforms

    83.2             18.8         102.0  

G280 (6)

    46.9         4.9     233.7     (285.5 )    

G650

    59.2         192.7     373.3     (450.8 )   174.4  

Rolls-Royce (7)

    15.8         42.5     69.3     (127.6 )    

Sikorsky

        5.4                 5.4  

Bombardier C-Series

    9.1             0.7         9.8  

Aftermarket

    37.0                     37.0  

Other platforms (8)

    67.1     0.8                 67.9  
                           

Total

  $ 1,266.7   $ 75.0   $ 486.2   $ 1,661.2   $ (1,646.5 ) $ 1,842.6  
                           
                           

 
  December 31, 2012  
 
  Product Inventory    
   
   
   
 
 
  Capitalized
Pre-Production
  Deferred
Production
  Forward Loss
Provision (1)
  Total Inventory, net
December 31, 2012
 
 
  Inventory   Non-Recurring  

B747

  $ 83.6   $ (0.7 ) $ 7.2   $ 3.6   $ (11.5 ) $ 82.2  

B787

    225.2     26.6     189.5     595.1     (184.0 )   852.4  

Boeing — All other platforms (4)

    392.3     31.6     5.8     (67.6 )   (6.5 )   355.6  

A350

    133.2     51.3     56.8     177.4     (8.9 )   409.8  

Airbus — All other platforms

    88.2             18.2         106.4  

G280

    83.3         5.5     98.3     (118.8 )   68.3  

G650

    36.7         208.4     297.3     (162.5 )   379.9  

Rolls-Royce (7)

    12.6         51.4     51.2     (115.2 )    

Sikorsky

        4.7                 4.7  

Bombardier C-Series

    3.9             0.3         4.2  

Aftermarket

    45.0                     45.0  

Other platforms (8)

    98.3     4.0                 102.3  
                           

Total

  $ 1,202.3   $ 117.5   $ 524.6   $ 1,173.8   $ (607.4 ) $ 2,410.8  
                           
                           

(1)
Forward loss charges taken since January 1, 2012 on blocks that have not closed.

(2)
Forward loss charges taken through December 31, 2011 were reflected within capitalized pre-production and inventory for the respective programs and are therefore not reflected as part of

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

    the Forward Loss Provision figure presented. The cumulative forward loss charges, net of contract liabilities, through December 31, 2013 on open blocks are $123.8, $463.1 and $29.0 for the A350 XWB, G280 and Sikorsky programs, respectively.

(3)
Forward loss provision of $41.1 recorded on the fuselage portion of the B747 program in 2013 included $21.2 of charges on the subsequent planning block. The total provision exceeded the inventory balance which resulted in a contract liability of $3.9 which will be reduced as additional contact costs are incurred.

(4)
Forward loss provision of $11.6 recorded in 2013 on the B767 program of which $7.5 related to propulsion which exceeded the inventory balance for the propulsion portion of the program. The excess of charge over program inventory was classified as a contract liability of $5.8 which will be reduced as additional contract costs are incurred. Forward loss provision of $8.0 recorded on the B767 program in the fourth quarter of 2012 exceeded the total inventory balance. The excess of the charge over program inventory was classified as a contract liability of $1.5 as of December 31, 2012 and was reduced to zero as additional inventory was generated as of June 27, 2013.

(5)
Forward loss provision of $32.7 recorded on the non-recurring fuselage portion of the A350-1000 XWB program in 2013 exceeded the total inventory balance. The excess of the charge over the program inventory is classified as a contract liability of $7.7, reduced to zero as additional inventory was generated as of December 31, 2013. This liability was reported in other current liabilities and was absorbed back into the forward loss category of inventory as inventory on the non-recurring portion of the program increased. In 2013, non-recurring in the amount of $17.9 was reclassified to capitalized pre-production.

(6)
Forward loss provision of $240.9 recorded in 2013 exceeded the total inventory balance. The excess of the charge over program inventory is classified as a contract liability. The total contract liability as of December 31, 2013 is $74.2. This contract liability is reported in other current liabilities. This liability will flow back into the forward loss category of inventory as inventory on the program increases.

(7)
Forward loss provision of $151.0 recorded in 2012 exceeded the total inventory balance. The excess of the charge over program inventory is classified as a contract liability. In 2013 a forward loss provision of $21.7 and forward loss reduction of $8.4 was recorded, the net of which increased the contract liability from 2012. The total contract liability is $36.7 as of December 31, 2013. This contract liability is reported in other current liabilities. This liability will flow back into the forward loss category of inventory as inventory on the program increases.

(8)
Includes over-applied and under-applied overhead.

        The following is a roll forward of the capitalized pre-production costs included in the inventory balance at December 31, 2013 and December 31, 2012:

 
  2013   2012  

Balance, January 1

  $ 524.6   $ 553.2  

Charges to costs and expenses

    (64.8 )   (59.7 )

Capitalized costs (1)

    26.4     31.1  
           

Balance, December 31

  $ 486.2   $ 524.6  
           
           

(1)
Capitalized costs in 2013 primarily due to reclassification of $17.9 from non-recurring to capitalized pre-production.

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Spirit AeroSystems Holdings, Inc.

Notes to the Consolidated Financial Statements — (Continued)
($, €, £, 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 December 31, 2013 and December 31, 2012:

 
  2013 (1)   2012 (1)  

Balance, January 1

  $ 1,173.8   $ 813.2  

Charges to costs and expenses

    (591.2 )   (260.1 )

Capitalized costs

    1,072.8     617.6  

Exchange rate

    5.8     3.1  
           

Balance, December 31

  $ 1,661.2   $ 1,173.8  
           
           

(1)
Increases in deferred production are driven primarily by new and maturing programs.

        Significant amortization of capitalized pre-production and deferred production inventory will occur over the following contract blocks:

 
  Contract Block
Quantity
  Orders (1)  

B787

    500     916  

A350 XWB

    400     812  

G280

    250     85  

G650

    350     145  

Rolls-Royce

    350     136  

(1)
Orders are from the published firm-order backlogs of Airbus and Boeing. For all other programs, orders represent purchase orders received from OEMs and are not reflective of OEM sales backlog. Orders reported are total block orders, including delivered units.

        Current block deliveries are as follows:

Model
  Current Block
Deliveries
 

B787

    164  

A350 XWB

    11  

Business/Regional Jets

    217  

        Contract block quantity is projected to fully absorb the balance of deferred production inventory. Capitalized pre-production and deferred production inventories are at risk to the extent that we do not achieve the orders in the forecasted blocks or if future actual costs exceed current projected estimates, as those categories of inventory are recoverable over future deliveries. In the case of capitalized pre-production this may be over multiple blocks. Should orders not materialize in future periods to fulfill the block, potential forward loss charges may be necessary to the extent the final delivered quantity does not absorb deferred inventory costs.

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

7.     Property, Plant and Equipment, net

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

 
  December 31,
2013
  December 31,
2012
 

Land

  $ 17.9   $ 17.7  

Buildings (including improvements)

    566.0     504.7  

Machinery and equipment

    1,084.0     960.0  

Tooling

    801.6     722.4  

Capitalized software

    172.2     170.2  

Construction-in-progress

    130.2     143.0  
           

Total

    2,771.9     2,518.0  

Less: accumulated depreciation

    (968.6 )   (819.5 )
           

Property, plant and equipment, net

  $ 1,803.3   $ 1,698.5  
           
           

        Interest costs associated with construction-in-progress are capitalized until the assets are completed and ready for use. Capitalized interest was $5.8 and $7.5 for the twelve months ended December 31, 2013 and December 31, 2012, respectively. Repair and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs, excluding the impact of the severe weather event, of $112.5, $124.2 and $115.5 for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011, 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 $19.6, $18.6 and $18.6 for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

        Spirit reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with FASB authoritative guidance on accounting for the impairment or disposal of long-lived assets. We evaluated the long-lived assets at our locations and determined no impairment was necessary.

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

8.     Other Assets

        Other assets are summarized as follows:

 
  December 31,
2013
  December 31,
2012
 

Intangible assets

             

Patents

  $ 1.9   $ 2.0  

Favorable leasehold interests

    6.3     9.7  

Customer relationships

    28.7     28.1  
           

Total intangible assets

    36.9     39.8  

Less: Accumulated amortization-patents

    (1.3 )   (1.2 )

Accumulated amortization-favorable leasehold interest

    (3.1 )   (4.8 )

Accumulated amortization-customer relationships

    (27.8 )   (23.7 )
           

Intangible assets, net

    4.7     10.1  

Deferred financing

             

Deferred financing costs

    80.5     76.4  

Less: Accumulated amortization-deferred financing costs

    (56.3 )   (49.6 )
           

Deferred financing costs, net

    24.2     26.8  

Other

             

Fair value of derivative instruments

         

Goodwill — Europe

    3.0     3.0  

Equity in net assets of affiliates

    1.4     5.1  

Customer supply agreement (1)

    37.6     39.9  

Other

    36.2     6.1  
           

Total

  $ 107.1   $ 91.0  
           
           

(1)
Under an agreement with our customer Airbus, certain payments accounted for as consideration given by the Company to Airbus are being amortized as a reduction to net revenues.

        The Company recognized $5.4, $4.1 and $4.1 of amortization expense of intangibles for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

        Estimated amortization expense associated with the Company's amortizable intangible assets for each of the next five years is as follows:

2014

  $ 1.4  

2015

  $ 0.5  

2016

  $ 0.5  

2017

  $ 0.5  

2018

  $ 0.4  

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

        The following is a roll forward of the carrying amount of goodwill at December 31, 2013 and December 31, 2012:

 
  2013   2012  

Balance, January 1

  $ 3.0   $ 2.9  

Goodwill acquired

         

Exchange rate

        0.1  
           

Balance, December 31

  $ 3.0   $ 3.0  
           
           

9.     Research and Development Milestones

        Milestone payments.     Milestone payments are recognized as revenue when milestones are deemed to be substantive and are achieved. A substantive milestone is one that is based on successful performance by the Company and not solely contingent upon the passage of time or performance by another party. Milestone payments collected in advance that have significant future performance obligations are presented as advance payments or deferred revenue, and are recognized when the milestone is achieved.

        As part of our ongoing participation in the B787-9 program, we received research and development milestone payments of $18.3 and $30.0 for the twelve months ended December 31, 2013 and December 31, 2012, respectively. Revenue and cost associated with the performance of the research and development are included in program revenue and costs. We expect to receive additional payments related to research and development on this program. These additional payments remain to be negotiated as of December 31, 2013.

10.   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.

        In March 2012, we signed a Memorandum of Agreement with Airbus providing for us to receive advance payments in 2012. The advance payments will be offset against the recurring price of A350 XWB ship sets invoiced by Spirit at a rate of $1.25 per ship set. We received zero and $250.0 in the twelve months ended December 31, 2013 and December 31, 2012, respectively.

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

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

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

 
  December 31,
2013
  December 31,
2012
 

B737

  $ 18.7   $ 20.5  

B787

    600.2     629.8  

A350 XWB

    243.9     250.2  

Airbus — All other platforms

    7.3     6.7  

Gulfstream

    22.0     28.2  

Other

    21.0     18.1  
           

Total advance payments and deferred revenue/credits

  $ 913.1   $ 953.5  
           
           

11.   Government Grants

        We received grants in the form of government funding for a portion of the site construction and other specific capital asset cost at our Kinston, North Carolina and Subang, Malaysia sites. Deferred grant income is being 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, is being amortized over the lives of the assets purchased to satisfy the capital investment performance criteria. The other half of the deferred grant income is being amortized over a 10-year period in a manner consistent with the job performance criteria. In Malaysia, the deferred grant income is being amortized based on the lives of the eligible assets constructed with the grant funds as there are no performance criteria. The value recorded within property, plant and equipment prior to amortization, including foreign exchange rate changes, related to the use of grant funds in North Carolina and Malaysia was $153.8 and $148.7 as of December 31, 2013 and December 31, 2012, respectively.

        Deferred grant income liability consists of the following:

 
  2013   2012  

Balance, January 1

  $ 123.5   $ 127.9  

Grant income recognized

    (7.3 )   (6.1 )

Exchange rate

    0.6     1.7  
           

Total deferred grant income liability, December 31

  $ 116.8   $ 123.5  
           
           

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

 
  2013   2012  

Beginning Balance, January 1

  $ 124.9   $ 128.3  

Amortization

    (5.1 )   (5.1 )

Exchange rate

    0.5     1.7  
           

Total asset value related to deferred grant income, December 31

  $ 120.3   $ 124.9  
           
           

12.   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

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

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 December 31, 2013 using  
 
  December 31, 2013  
 
   
  Significant
Other
Observable
Inputs
(Level 2)
   
 
Description
  Total Carrying
Amount in
Balance Sheet
  Assets
Measured at
Fair Value
  Liabilities
Measured at Fair
Value
  Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
  Significant
Unobservable
Inputs (Level 3)
 

Money Market Fund

  $ 293.3   $ 293.3   $   $ 293.3   $   $  

Interest Rate Swaps

  $ (1.4 ) $   $ (1.4 ) $   $ (1.4 ) $  

 

 
  Fair Value Measurements  
 
   
   
   
  At December 31, 2012 using  
 
  December 31, 2012  
 
   
  Significant
Other
Observable
Inputs
(Level 2)
   
 
Description
  Total Carrying
Amount in
Balance Sheet
  Assets
Measured at
Fair Value
  Liabilities
Measured at Fair
Value
  Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
  Significant
Unobservable
Inputs (Level 3)
 

Money Market Fund

  $ 312.2   $ 312.2   $   $ 312.2   $   $  

Interest Rate Swaps

  $ (4.0 ) $   $ (4.0 ) $   $ (4.0 ) $  

        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.

        The Company's long-term debt consists of a senior secured term loan, senior unsecured notes, and the Malaysian term loan. The estimated fair value of our debt obligations is based on the quoted market prices for such obligations or the historical default rate for debt with similar credit ratings.

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Spirit AeroSystems Holdings, Inc.

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

        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:

 
  December 31, 2013   December 31, 2012  
 
  Carrying
Amount
  Fair
Value
  Carrying
Amount
  Fair
Value
 

Senior secured term loan (including current portion)

  $ 538.2   $ 541.9 (1) $ 543.4   $ 550.0 (1)

Senior unsecured notes due 2017

    296.4     309.0 (1)   295.6     321.8 (1)

Senior unsecured notes due 2020

    300.0     323.4 (1)   300.0     321.8 (1)

Malaysian loan

    10.0     8.5 (2)   13.4     11.8 (2)
                   

Total

  $ 1,144.6   $ 1,182.8   $ 1,152.4   $ 1,205.4  
                   
                   

(1)
Level 1 Fair Value hierarchy

(2)
Level 2 Fair Value hierarchy

        See Note 14, "Investments" for fair value disclosure on government and corporate debt securities.

13.   Derivative 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 could enter 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 hedges are included in earnings when the underlying transaction that was hedged occurs. The Company does not use 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 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 any amounts related to foreign currency hedge contracts would be 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.

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Notes to the Consolidated Financial Statements — (Continued)
($, €, £, 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 as of December 31, 2013 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 would 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 the forecasted transaction is not expected to occur, or when the underlying transaction settles.

        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. As a result of the senior secured Credit Agreement entered into on April 18, 2012, the interest rate swaps no longer qualify for hedge accounting while LIBOR is below the LIBOR floor of 75 basis points under the Credit Agreement. Amounts in other comprehensive income for interest rate swaps as of April 18, 2012 have been included in earnings.

        The Company enters into master netting arrangements for its derivatives to mitigate the credit risk of financial instruments. The master netting arrangements do not impact the consolidated balance sheets for December 31, 2013 or December 31, 2012, respectively.

        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 are pledged as collateral for both the term loan and the revolving credit facility under the Company's senior secured credit facility (see Note 15, "Debt").


Interest Rate Swaps

        We enter into floating-to-fixed interest rate swap agreements periodically. As of December 31, 2013, the interest rate swap agreements had notional amounts totaling $225.

Notional Amount
  Expires   Variable
Rate
  Fixed
Rate (1)
  Effective
Fixed Rate (2)
  Fair Value,
December 31,
2013
 

$

225   July 2014   1 Month LIBOR     1.37 % N/A   $ (1.4 )

(1)
The fixed rate represents the rate at which interest is paid by the Company pursuant to the terms of its interest rate swap agreements.

(2)
As of December 31, 2013 the interest rate swaps are no longer effective and therefore the effective fixed rate is not applicable.

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

        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 monthly 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 ($1.4) at December 31, 2013 and ($4.0) at December 31, 2012.


Foreign Currency Forward Contracts

        We could use foreign currency hedge contracts to reduce our exposure to currency exchange rate fluctuations, which include hedging contracts to hedge U.S. dollar revenue from certain customers. The objective of these contracts would minimize the impact of currency exchange rate movements on our operating results. The hedges would be accounted for as cash flow hedges in accordance with FASB authoritative guidance. Gains and losses from cash flow hedges would be 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. The exception to the aforementioned treatment of realized gains/losses involves certain cash payments to Airbus, payable in British pounds sterling which were hedged, and this amount in other comprehensive income was reclassified into other assets when the underlying transaction occurred and will be amortized over the first A350 XWB contract block.

        The following table summarizes the Company's fair value of outstanding derivatives at December 31, 2013 and December 31, 2012:

 
  Other Liability Derivatives  
 
  December 31, 2013   December 31, 2012  

Derivatives designated as hedging instruments

             

Interest rate swaps

             

Current

  $ 1.4   $ 2.8  

Non-current

        1.2  
           

Total derivatives designated as hedging instruments

    1.4     4.0  
           

Total derivatives

  $ 1.4   $ 4.0  
           
           

        The impact on other comprehensive income ("OCI") and earnings from cash flow hedges for the twelve months ended December 31, 2013 and December 31, 2012 was as follows:

Derivatives in
Cash Flow Hedging
Relationships
  Amount of Gain or (Loss)
Recognized in OCI,
net of tax, on Derivative
(Effective Portion)
  Location of (Gain) or Loss Reclassified from Accumulated
OCI into Income
(Effective Portion)
  Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)  
 
  For the Twelve Months Ended    
  For the Twelve Months Ended  
 
  December 31,
2013
  December 31,
2012
   
  December 31,
2013
  December 31,
2012
 

Interest rate swaps

  $   $   Interest expense   $   $ 6.1  

Foreign currency hedge contracts

          Sales/ Revenue          
                       

Total

  $   $       $   $ 6.1  
                       
                       

        The impact on earnings from interest rate swaps that are no longer effective was a loss of $(0.8) and $(1.0) for the twelve months ended December 31, 2013 and December 31, 2012, respectively.

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

        The impact on earnings from foreign currency hedge contracts that do not qualify as cash flow hedges was zero and income of $0.3 for the twelve months ended December 31, 2013 and December 31, 2012, respectively.

14.   Investments

        The amortized cost and approximate fair value of held-to-maturity securities are as follows:

 
  December 31, 2013   December 31, 2012  
 
  Current   Noncurrent   Current   Noncurrent  

Government and Corporate Debt Securities

                         

Amortized cost

  $ 0.5   $ 3.1   $ 0.6   $ 2.8  

Unrealized gains

        0.1         0.1  

Unrealized losses

        (0.1 )        
                   

Fair value

  $ 0.5   $ 3.1   $ 0.6   $ 2.9  
                   
                   

        Maturities of held-to-maturity securities at December 31, 2013 are as follows:

 
  Amortized
Cost
  Approximate
Fair Value
 

Within One Year

  $ 0.5   $ 0.5  

One to Five Years

    1.2     1.2  

Five to Ten Years

    0.1     0.1  

After Ten Years

    1.8     1.8  
           

Total

  $ 3.6   $ 3.6  
           
           

        At December 31, 2013 and December 31, 2012, the fair value of certain investments in debt and marketable securities are less than their historical cost. Total fair value of these investments was $1.8 and $0.8, respectively, for the periods then ended, which is approximately 51% and 22%, respectively, of the Company's held-to-maturity investment portfolio. These declines primarily resulted from decreases in market interest rates and failure of certain investments to maintain consistent credit quality ratings or meet projected earnings targets.

        Based on evaluation of available evidence, including changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary.

        Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period in which the permanent impairment is identified.

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

15.   Debt

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

 
  December 31,
2013
  December 31,
2012
 

Senior secured term loan (short and long-term)

  $ 538.2   $ 543.4  

Senior notes (due 2017 and 2020)

    596.4     595.6  

Malaysian term loan

    10.0     13.4  

Present value of capital lease obligations

    15.3     16.4  

Other

    7.4     7.4  
           

Total

  $ 1,167.3   $ 1,176.2  
           
           

    Senior Secured Credit Facilities

        On April 18, 2012, Spirit entered into a $1.2 billion senior secured Credit Agreement (the "Credit Agreement") consisting of a $650.0 revolving credit facility and a $550.0 term loan B facility. The Credit Agreement refinanced and replaced the Second Amended and Restated Credit Agreement dated as of November 27, 2006, as amended. Proceeds of the new term loan were used to pay off outstanding amounts under the prior credit agreement. The revolving credit facility matures April 18, 2017 and bears interest, at Spirit's option, at either LIBOR, or a defined "base rate" plus an applicable margin based on Spirit's debt-to-EBITDA ratio (see table below). The term loan matures April 18, 2019 and bears interest, at Spirit's option, at LIBOR plus 3.00% with a LIBOR floor of 0.75% or base rate plus 2.00%, subject to a step down to LIBOR plus 2.75% or base rate plus 1.75%, as applicable, in the event Spirit's secured debt-to-EBITDA ratio is below 1:1 at any time after 2012. Substantially all of Spirit's assets, including inventory and property, plant and equipment, were pledged as collateral for both the term loan and the revolving credit facility. As of December 31, 2013, the outstanding balance of the term loan was $540.4. As of December 31, 2012, the outstanding balance of the term loan was $545.9. As of December 31, 2013, the carrying amount of the term loan was $538.2. The amount outstanding under the revolving credit facility was zero as of December 31, 2013 and December 31, 2012. The Company recorded a charge of $9.5 in 2012 for unamortized deferred financing fees as a result of extinguishment of the debt under the prior credit agreement.

        In addition to paying interest on outstanding principal under the Credit Agreement, Spirit is required to pay an unused line fee on the unused portion of the commitments under the revolving credit facility based on Spirit's debt-to-EBITDA ratio (see table below). Spirit is required to pay letter of credit fees equal to the applicable margin for LIBOR rate revolving credit borrowings with respect to letters of credit issued under the revolving credit facility (see table below). Spirit is also required to pay to the issuing banks that issue any letters of credit, letter of credit fronting fees in respect of letters of credit at a rate equal to twenty basis points per year, and to the administrative agent thereunder customary administrative fees.

Pricing Tier
  Debt-to-EBITDA
Ratio
  Commitment
Fee
  Letter of
Credit
Fee
  Eurodollar
Rate Loans
  Base Rate
Loans
 

1

  ³ 3.0:1     0.450 %   2.50 %   2.50 %   1.50 %

2

  <3.0:1 but ³ 2.25:1     0.375 %   2.25 %   2.25 %   1.25 %

3

  <2.25:1 but ³ 1.75:1     0.300 %   2.00 %   2.00 %   1.00 %

4

  <1.75:1     0.250 %   1.75 %   1.75 %   0.75 %

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

        The 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 Credit Agreement also contained the following financial covenants (as defined in the Credit Agreement):

Senior Secured Leverage Ratio

  Shall not exceed 2.75:1.0

Interest Coverage Ratio

  Shall not be less than 4.0:1.0

Total Leverage Ratio

  Shall not exceed 4.0:1.0

        To address the forward loss charges that the Company recognized in the third quarter of 2012, the Company amended the Credit Agreement effective October 26, 2012. The amendment resulted in a temporary revision of the quarterly financial covenant ratios and increased the amount of time the Company has to apply the proceeds from the insurance settlement in connection with the severe weather event against expenses resulting from the event from 12 months to 24 months before the proceeds may be considered eligible for prepayment against the senior secured credit facility.

        Additionally, to address the forward loss charges that the Company recognized in the second quarter of 2013, the Company amended the Credit Agreement effective August 2, 2013. The amendment suspended the existing financial covenant ratios until December 31, 2014. The amendment requires Spirit to meet certain minimum liquidity and borrowing base requirements while the existing financial covenant ratios are suspended. Among other things, the amendment provides for the following key changes during the suspension period:

    The applicable margin for the revolving credit facility component of the senior secured Credit Agreement shall be the applicable percentage per annum set forth in Pricing Tier 1 (see table above), plus one-half of one percent (0.5)%.

    The applicable margin for the term loan B credit facility component of the senior secured Credit Agreement shall be 3.00% per annum for Eurodollar Rate Loans and 2.00% per annum for Base Rate Loans.

    The Total Secured Outstandings (as defined in the Credit Agreement) shall not exceed the Aggregate Borrowing Base Amount (as defined in the Credit Agreement) Spirit is required to maintain and liquidity is not to be less than $500.0.

        In addition, pursuant to the amendment the mandatory application of proceeds from the potential sale of the Oklahoma sites to repay the borrowings under the senior secured credit agreement is reduced from 100% to 50%. The Company expects to be in compliance with all required covenants through December 31, 2014.

        On February 6, 2014, Moody's Investors Service placed the credit ratings of Spirit AeroSystems, Inc. under review for possible downgrade. A downgrade of our credit ratings could trigger a prepayment based on the excess cash flow prepayment provision under our term loan depending on our total leverage ratio.

    Senior Notes

        On November 18, 2010, we issued $300.0 aggregate of 6.75% Senior Notes due December 15, 2020 (the "2020 Notes"), with interest payable, in cash in arrears, on June 15 and December 15 of each year, beginning June 15, 2011. The 2020 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and Spirit's existing and future domestic subsidiaries that

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

guarantee Spirit's obligations under Spirit's senior secured credit facility. The carrying value of the 2020 Notes was $300.0 as of December 31, 2013.

        On September 30, 2009, we issued $300.0 of 7.50% Senior Notes due October 1, 2017 (the "2017 Notes"), with interest payable, in cash in arrears, on April 1 and October 1 of each year, beginning April 1, 2010. The 2017 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and Spirit's existing and future domestic subsidiaries that guarantee Spirit's obligations under Spirit's senior secured credit facility. The carrying value of the 2017 Notes was $296.4 as of December 31, 2013.

        As of December 31, 2013, we were and expect to remain in full compliance with all covenants contained in the indentures governing the 2020 Notes and the 2017 Notes through December 31, 2014.

    Malaysian Facility Agreement

        On June 2, 2008, the Company's wholly-owned subsidiary, Spirit AeroSystems Malaysia SDN BHD entered into a Facility Agreement for a term loan facility for Ringgit Malaysia ("RM") 69.2 (approximately USD $20.0 equivalent) (the "Malaysia Facility"), with the Malaysian Export-Import Bank. The Malaysia Facility requires quarterly principal repayments of RM3.3 (approximately USD $1.0) from September 2011 through May 2017 and quarterly interest payments payable at a fixed interest rate of 3.50% per annum. The Malaysia Facility loan balance as of December 31, 2013 was $10.0.

    French Factory Capital Lease Agreement

        On July 17, 2009, the Company's indirect wholly-owned subsidiary, Spirit AeroSystems France SARL entered into a capital lease agreement for €9.0 (approximately USD $13.1 equivalent) with a subsidiary of BNP Paribas Bank to be used towards the construction of our aerospace-related component assembly plant in Saint-Nazaire, France. Lease payments are variable, subject to the three-month Euribor rate plus 2.20%. Lease payments are due quarterly through April 2025. As of December 31, 2013 and December 31, 2012, the Saint-Nazaire capital lease balance was $10.7 and $11.0, respectively.

    Nashville Design Center Capital Lease Agreement

        On September 21, 2012, the Company entered into a capital lease agreement for $2.6 for a portion of an office building in Nashville, Tennessee to be used for design of aerospace components. Lease payments are due monthly, and are subject to yearly rate increases until the end of the lease term of 124 months. As of December 31, 2013 and December 31, 2012, the Nashville Design Center capital lease balance was $2.5 and $2.6, respectively.

16.   Pension and Other Post-Retirement Benefits

    Multi-employer Pension Plan

        In connection with the collective bargaining agreement signed with the International Association of Machinists and Aerospace Workers (IAM), the Company contributes to a multi-employer defined benefit pension plan (IAM National Pension Fund). The level of contribution, as specified in the bargaining agreement was $1.35 per hour of employee service for a maximum of 80 hours per bi-weekly pay period through June 30, 2010. Effective July 1, 2010 the contribution per the collective bargaining agreement is $1.50 per hour of employee service for a maximum of 80 hours per bi-weekly pay period. The IAM bargaining agreement provides for a $0.05 increase per hour in the contribution rate beginning on July 1, 2011, with an additional $0.05 increase effective July 1 of each year through 2019.

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

        The collective bargaining agreement with the UAW requires the Company to contribute a specified amount per hour of service to a multi-employer defined benefit pension plan (IAM National Pension Fund). The specified amount was $1.30 in 2010. Per the negotiated UAW collective bargaining agreement, the pension contributions will be as follows:

    Effective 1/1/2011 — $1.45
    Effective 1/1/2012 — $1.50
    Effective 1/1/2014 — $1.55
    Effective 1/1/2016 — $1.60
    Effective 1/1/2018 — $1.65
    Effective 1/1/2019 — $1.70
    Effective 1/1/2020 — $1.75

        The risk of this multi-employer plan is different from single-employer plans in the following aspects:

      1.
      Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

      2.
      If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

      3.
      If the Company chooses to stop participating in the multi-employer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

        The following table summarizes the multi-employer plan to which the Company contributes:

 
   
  Pension
Protection
Act Zone
Status
   
   
   
   
   
   
 
   
   
   
   
   
   
  Expiration
Date of
Collective-
Bargaining
Agreement
 
   
  FIP/RP
Status
Pending/
Implemented
  Contributions of the Company    
 
  EIN/Pension
Plan Number
  Surcharge
Imposed
Pension Fund
  2012   2013   2011   2012   2013

IAM National Pension Fund

    51-60321295   Green   Green   No   $ 22.8   $ 25.9   $ 27.9   No   IAM June 27, 2020
UAW November 30, 2020

Pension Fund

 

Year Company Contributions to Plan Exceeded More Than 5 Percent of
Total Contributions (as of December 31 of the Plan's Year-End)

IAM National Pension Fund

    2011, 2012, 2013

    Defined Contribution Plans

        The Company contributes to a defined contribution plan available to all U.S. employees, excluding IAM and UAW represented employees. Under the plan, the Company makes a matching contribution of 75% of the employee contribution to a maximum 8% of eligible individual employee compensation. In addition, non-matching contributions based on an employee's age and years of service are paid at the end of each calendar year for certain employee groups.

        The Company recorded $39.1, $39.5 and $38.4 in contributions to these plans for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

        On April 1, 2006, as part of the acquisition of BAE Aerostructures, the Company established a defined contribution pension plan for those employees who are hired after the date of acquisition. Under the plan, the Company contributes 8% of basic salary while participating employees are required to contribute 4% of basic salary. The Company recorded $1.8 in contributions to this plan for the period ended December 31, 2013, $0.8 in contributions for the period ended December 31, 2012 and $0.7 in contributions for the period ended December 31, 2011.

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

    Defined Benefit Pension Plans

        Effective June 17, 2005, pension assets and liabilities were spun-off from three Boeing qualified plans into four qualified Spirit AeroSystems plans for each Spirit employee who did not retire from Boeing by August 1, 2005. Effective December 31, 2005, all four qualified plans were merged together. In addition, Spirit has one nonqualified plan providing supplemental benefits to executives (SERP) who transferred from a Boeing nonqualified plan to a Spirit AeroSystems plan and elected to keep their benefits in this plan. Both plans are frozen as of the date of the Boeing Acquisition (i.e., no future service benefits are being earned in these plans). We intend to fund our qualified pension plan through a trust. Pension assets are placed in trust solely for the benefit of the pension plans' participants and are structured to maintain liquidity that is sufficient to pay benefit obligations.

        On April 1, 2006, as part of the acquisition of BAE Aerostructures, the Company established a defined benefit pension plan for those employees that had pension benefits remaining in BAE Systems' pension plan. In accordance with U.K. legislation, the plan and its assets are managed by an independent trustee company. The investment strategy adopted by this trustee is documented in a Statement of Investment Principles in line with U.K. legislation. The principles for the investment strategy are to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. The trustee has invested the plan assets in pooled arrangements with authorized investment companies which were selected to be consistent with the plan's overall investment principles and strategy. The specified target asset allocation is 55% equities, 5% real estate, 20% corporate bonds and 20% government bonds.

        Effective December 31, 2013, the U.K. pension plan was closed and benefits were frozen and thereafter subject only to statutory pension revaluation, resulting in a net curtailment gain of $13.1. This gain was due to the loss of salary linkage for employed members of the plan, less the cost of other benefit changes made as part of the plan closure.

    Other Post-Retirement Benefit Plans

        We also have post-retirement health care coverage for eligible U.S. retirees and qualifying dependents prior to age 65. Eligibility for employer-provided benefits is limited to those employees who were employed at the date of acquisition (Spirit) and retire on or after attainment of age 62 and 10 years of service. Employees who do not satisfy these eligibility requirements can retire with post-retirement medical benefits at age 55 and 10 years of service, but they must pay the full cost of medical benefits provided.

    Obligations and Funded Status

        The following tables reconcile the funded status of both pension and post-retirement medical benefits to the balance on the consolidated balance sheets for the fiscal years 2013 and 2012. Benefit obligation balances presented in the tables reflect the projected benefit obligation (PBO) and accumulated benefit obligation (ABO) for our pension plans, and accumulated post-retirement benefit obligations (APBO) for our post-retirement medical plan. We use an end of fiscal year measurement date of December 31 for our U.S. pension and post-retirement medical plans as required by FASB authoritative guidance.

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

 
  Pension Benefits   Other
Post-Retirement
Benefits
 
 
  Periods Ended
December 31,
  Periods Ended
December 31,
 
U.S. Plans
  2013   2012   2013   2012  

Change in projected benefit obligation:

                         

Beginning balance

  $ 1,080.3   $ 909.9   $ 75.7   $ 83.8  

Service cost

            2.8     3.3  

Employee contributions

                 

Interest cost

    42.9     42.5     2.1     3.5  

Actuarial (gains) and losses

    (148.5 )   135.0     (8.6 )   (14.7 )

Special Termination Benefits

    (4.1 )            

Benefits paid

    (21.2 )   (7.1 )   (0.4 )   (0.2 )
                   

Projected benefit obligation at the end of the period

  $ 949.4   $ 1,080.3   $ 71.6   $ 75.7  
                   
                   

Assumptions used to determine benefit obligation:

                         

Discount rate

    4.89 %   4.69 %   3.89 %   2.94 %

Rate of compensation increase

    N/A     N/A     N/A     N/A  

Medical assumptions:

                         

Trend assumed for the year

    N/A     N/A     8.05 %   8.50 %

Ultimate trend rate

    N/A     N/A     4.50 %   4.50 %

Year that ultimate trend rate is reached

    N/A     N/A     2030     2030  

Change in fair value of plan assets:

                         

Beginning balance

  $ 1,149.0   $ 1,027.2   $   $  

Actual return on assets

    51.5     130.9          

Employer contributions to plan

            0.4     0.2  

Benefits paid

    (21.2 )   (7.1 )   (0.4 )   (0.2 )

Expenses paid

        (2.0 )        
                   

Ending balance

  $ 1,179.3   $ 1,149.0   $   $  
                   
                   

Reconciliation of funded status to net amounts recognized:

                         

Funded status (deficit)

  $ 230.0   $ 68.7   $ 71.6   $ 75.7  

Employer contributions between measurement date and fiscal year end

                 
                   

Net amounts recognized

  $ 230.0   $ 68.7   $ 71.6   $ 75.7  
                   
                   

Amounts recognized in the balance sheet:

                         

Noncurrent assets

  $ 231.1   $ 69.9   $   $  

Current liabilities

            (2.9 )   (1.3 )

Noncurrent liabilities

    (1.1 )   (1.2 )   (68.7 )   (74.4 )
                   

Net amounts recognized

  $ 230.0   $ 68.7   $ (71.6 ) $ (75.7 )
                   
                   

Amounts not yet reflected in net periodic benefit cost and included in AOCI:

                         

Accumulated gain (loss)

    (89.7 )   (221.5 )   4.2     (4.4 )
                   

Accumulated other comprehensive income (AOCI)

  $ (89.7 ) $ (221.5 ) $ 4.2   $ (4.4 )

Cumulative employer contributions in excess of net periodic benefit cost

    319.7     290.2     (75.8 )   (71.2 )
                   

Net amount recognized in the balance sheet

  $ 230.0   $ 68.7   $ (71.6 ) $ (75.6 )
                   
                   

Information for pension plans with benefit obligations in excess of plan assets:

                         

Projected benefit obligation/APBO

  $ 1.1   $ 1.2   $ 71.6   $ 75.7  

Accumulated benefit obligation

    1.1     1.2          

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

 

 
  Pension Benefits  
 
  Periods Ended
December 31,
 
U.K. Plans
  2013   2012  

Change in projected benefit obligation:

             

Beginning balance

  $ 70.3   $ 57.2  

Service cost

    7.2     7.4  

Interest cost

    3.2     2.8  

Employee contributions

    0.1     0.1  

Actuarial (gains) and losses

    9.6     (0.2 )

Benefits paid

    (0.6 )   (0.3 )

Rebates from U.K. Government

        0.2  

Plan Curtailments

    (13.1 )    

Exchange rate changes

    1.6     3.1  
           

Projected benefit obligation at the end of the period

  $ 78.3   $ 70.3  
           
           

Assumptions used to determine benefit obligation:

             

Discount rate

    4.75 %   4.70 %

Rate of compensation increase

    3.25 %   3.10 %

Change in fair value of plan assets:

             

Beginning balance

  $ 78.8   $ 57.7  

Actual return on assets

    9.9     8.1  

Company contributions

    9.0     9.0  

Employee contributions

    0.1     0.1  

Rebates from U.K. Government

        0.9  

Benefits paid

    (0.6 )   (0.3 )

Exchange rate changes

    2.5     3.3  
           

Ending balance

  $ 99.7   $ 78.8  
           
           

Reconciliation of funded status to net amounts recognized:

             

Funded status (deficit)

    21.5     8.5  
           

Net amounts recognized

  $ 21.5   $ 8.5  
           
           

Amounts recognized in the balance sheet:

             

Noncurrent assets

  $ 21.5   $ 8.5  

Noncurrent liabilities

         
           

Net amounts recognized

  $ 21.5   $ 8.5  
           
           

Amounts not yet reflected in net periodic benefit cost and included in AOCI:

             

Accumulated gain (loss)

    4.4     8.9  
           

Accumulated other comprehensive income (AOCI)

    4.4     8.9  

Prepaid (unfunded accrued) pension cost

    17.1     (0.4 )
           

Net amount recognized in the balance sheet

  $ 21.5   $ 8.5  
           
           

Information for pension plans with benefit obligations in excess of plan assets:

             

Projected benefit obligation/APBO

  $   $  

Accumulated benefit obligation

         

Fair value of assets

  $   $  

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

    Annual Expense

        The components of pension and other post-retirement benefit plans expense for the U.S. plans and the assumptions used to determine benefit obligations for 2013, 2012 and 2011 are as follows:

 
  Pension Benefits   Other
Post-Retirement
Benefits
 
 
  Periods Ended
December 31,
  Periods Ended
December 31,
 
U.S. Plans
  2013   2012   2011   2013   2012   2011  

Components of net periodic benefit cost (income):

                                     

Service cost

  $   $   $   $ 2.7   $ 3.3   $ 3.0  

Interest cost

    42.9     42.5     41.9     2.1     3.5     3.7  

Expected return on plan assets

    (80.0 )   (71.6 )   (63.8 )            

Amortization of net (gain) loss

    11.8     5.7             1.2     0.7  

Special Termination Benefits

    (4.1 )                    
                           

Net periodic benefit cost (income)

    (29.4 )   (23.4 )   (21.9 )   4.8     8.0     7.4  
                           
                           

Other changes recognized in OCI:

                                     

Total recognized in OCI (income) loss

  $ (131.8 ) $ 72.0   $ 73.3   $ (8.6 ) $ (15.9 ) $ 4.6  

Total recognized in net periodic benefit cost and OCI

  $ (161.2 ) $ 48.6   $ 51.4   $ (3.8 ) $ (7.9 ) $ 12.0  
                           
                           

Assumptions used to determine net periodic benefit costs:

                                     

Discount rate

    4.01 %   4.69 %   5.67 %   2.94 %   4.23 %   5.33 %

Expected return on plan assets

    7.00 %   7.00 %   7.00 %   N/A     N/A     N/A  

Salary increases

    N/A     N/A     N/A     N/A     N/A     N/A  

Medical Assumptions:

                                     

Trend assumed for the year

    N/A     N/A     N/A     8.50 %   8.97 %   9.47 %

Ultimate trend rate

    N/A     N/A     N/A     4.50 %   4.50 %   4.50 %

Year that ultimate trend rate is reached

    N/A     N/A     N/A     2030     2030     2030  

        The estimated net (gain) loss that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year for each of Pension Benefits and Other Post-Retirement Benefits plans is zero.

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Spirit AeroSystems Holdings, Inc.

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

        The components of the pension benefit plan expense for the U.K. plans and the assumptions used to determine benefit obligations for 2013, 2012 and 2011 are as follows:

 
  Pension Benefits  
 
  Periods Ended
December 31,
 
U.K. Plans
  2013   2012   2011  

Components of net periodic benefit cost (income):

                   

Service cost

  $ 7.2   $ 7.4   $ 6.0  

Interest cost

    3.2     2.8     2.5  

Expected return on plan assets

    (4.6 )   (3.7 )   (3.3 )

Amortization of net (gain)

    (0.1 )       (0.3 )

Curtailment (gain) loss recognized

    (13.1 )        
               

Net periodic benefit cost

  $ (7.4 ) $ 6.5   $ 4.9  
               
               

Other changes recognized in OCI:

                   

Total income recognized in OCI

  $ 4.5   $ (4.9 ) $ 5.9  

Total recognized in net periodic benefit cost and OCI

  $ (2.9 ) $ 1.6   $ 10.8  
               
               

Assumptions used to determine net periodic benefit costs:

                   

Discount rate

    4.70 %   4.80 %   5.30 %

Expected return on plan assets

    5.80 %   5.80 %   6.10 %

Salary increases

    3.10 %   3.20 %   3.55 %

        The estimated net (gain) loss that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year for the U.K. plan is zero.

    Assumptions

        The Company sets the discount rate assumption annually for each of its retirement-related benefit plans as of the measurement date, based on a review of projected cash flow and a long-term high-quality corporate bond yield curve. The discount rate determined on each measurement date is used to calculate the benefit obligation as of that date, and is also used to calculate the net periodic benefit (income)/cost for the upcoming plan year.

        The pension expected return on assets assumption is derived from the long-term expected returns based on the investment allocation by class specified in the Company's investment policy. The expected return on plan assets determined on each measurement date is used to calculate the net periodic benefit (income)/cost of the upcoming plan year.

        Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. To determine the health care cost trend rates the Company considers national health trends and adjusts for its specific plan design and locations.

        A one-percentage point increase in the initial through ultimate assumed health care trend rates would have increased the accumulated post-retirement benefit obligation by $5.7 at December 31, 2013 and the aggregate service and interest cost components of non-pension post-retirement benefit expense for 2013 by $0.4. A one-percentage point decrease would have decreased the obligation by $5.2 and the aggregate service and interest cost components of non-pension post-retirement benefit expense for 2013 by $0.4.

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Spirit AeroSystems Holdings, Inc.

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


U.S. Plans

        The Company's investment objective is to achieve long-term growth of capital, with exposure to risk set at an appropriate level. This objective shall be accomplished through the utilization of a diversified asset mix consisting of equities (domestic and international) and taxable fixed income securities. The allowable asset allocation range is:

Equities

    20-50 %

Fixed income

    50-80 %

Real estate

    0-7 %

        Investment guidelines include that no security, except issues of the U.S. Government, shall comprise more than 5% of total Plan assets and further, no individual portfolio shall hold more than 7% of its assets in the securities of any single entity, except issues of the U.S. Government. The following derivative transactions are prohibited — leverage, unrelated speculation and "exotic" collateralized mortgage obligations or CMOs. Investments in hedge funds, private placements, oil and gas and venture capital must be specifically approved by the Company in advance of their purchase.

        The Company's plans have asset allocations for the U.S., as of December 31, 2013 and December 31, 2012, as follows:

 
  2013   2012  

Asset Category — U.S.

             

Equity securities — U.S. 

    29 %   29 %

Equity securities — International

    4 %   4 %

Debt securities

    65 %   65 %

Real estate

    2 %   2 %
           

Total

    100 %   100 %
           
           


U.K. Plans

        The Trustee's investment objective is to ensure that they can meet their obligation to the beneficiaries of the Plan. An additional objective is to achieve a return on the total Plan, which is compatible with the level of risk considered appropriate. The overall benchmark allocation of the Plan's assets is:

Equity securities

    55 %

Debt securities

    40 %

Property

    5 %

        The Company's plans have asset allocations for the U.K., as of December 31, 2013 and December 31, 2012, as follows:

 
  2013   2012  

Asset Category — U.K.

             

Equity securities

    54 %   56 %

Debt securities

    37 %   39 %

Other

    9 %   5 %
           

Total

    100 %   100 %
           
           

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Spirit AeroSystems Holdings, Inc.

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


Projected contributions and benefit payments

        Required pension contributions under Employee Retirement Income Security Act (ERISA) regulations are expected to be zero in 2014 and discretionary contributions are not expected in 2014. SERP and post-retirement medical plan contributions in 2014 are not expected to exceed $2.9. Expected contributions to the U.K. plan for 2014 are $0.7.

        We monitor our defined benefit pension plan asset investments on a quarterly basis and we believe that we are not exposed to any significant credit risk in these investments.

        The total benefits expected to be paid over the next ten years from the plans' assets or the assets of the Company, by country, are as follows:

U.S.
  Pension Plans   Other
Post-Retirement
Benefit Plans
 

2014

  $ 15.3   $ 2.9  

2015

  $ 19.6   $ 5.3  

2016

  $ 24.6   $ 6.0  

2017

  $ 29.7   $ 6.7  

2018

  $ 35.0   $ 7.7  

2019-2023

  $ 254.6   $ 42.3  

 

U.K.
  Pension Plans  

2014

  $ 0.7  

2015

  $ 0.7  

2016

  $ 0.7  

2017

  $ 0.7  

2018

  $ 0.8  

2019-2023

  $ 4.2  


Fair Value Measurements

        The pension plan assets are valued at fair value. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

        Temporary Cash Investments — These investments consist of U.S. dollars and foreign currencies held in master trust accounts. Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as level 1 investments.

        Collective Investment Trusts — These investments are public investment vehicles valued using middle market prices and performance of the fund. The trust allocates notional units to the policy holder based on the underlying notional unit buy (offer) price using the middle market price plus transaction costs. These investments are classified within level 2 of the valuation hierarchy. In addition, the collective investment trust includes a real estate fund which is classified within level 3 of the valuation hierarchy.

        Commingled Equity and Bond Funds — These investments are valued at the closing price reported by the Plan Trustee. These investments are not being traded in an active market, but are backed by various investment securities managed by the Bank of New York. Fair value is being calculated using unobservable inputs that rely on the Bank of New York's own assumptions and are therefore classified within level 2 of the valuation hierarchy, although these assumptions are based on underlying investments which are traded on an active market.

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Spirit AeroSystems Holdings, Inc.

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

        As of December 31, 2013 and December 31, 2012, the pension plan assets measured at fair value on a recurring basis were as follows:

 
   
  At December 31, 2013 Using  
Description
  December 31, 2013
Total
  Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Temporary cash investments

  $ 1.0   $ 1.0   $   $  

Collective Investment Trusts

  $ 98.7   $   $ 94.0   $ 4.7  

Commingled Equity and Bond Funds

  $ 1,179.3   $   $ 1,179.3   $  
                   

  $ 1,279.0   $ 1.0   $ 1,273.3   $ 4.7  
                   
                   

 

 
   
  At December 31, 2012 Using  
Description
  December 31, 2012
Total
  Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Temporary cash investments

  $ 0.8   $ 0.8   $   $  

Collective Investment Trusts

  $ 78.0   $   $ 74.1   $ 3.9  

Commingled Equity and Bond Funds

  $ 1,149.0   $   $ 1,149.0   $  
                   

  $ 1,227.8   $ 0.8   $ 1,223.1   $ 3.9  
                   
                   

        The table below sets forth a summary of changes in the fair value of the Plan's level 3 investment assets and liabilities for the years ended December 31, 2013 and December 31, 2012:

 
  December 31, 2013  
Description
  Beginning
Fair Value
  Purchases   Gain (Loss)   Sales,
Maturities,
Settlements, Net
  Exchange
rate
  Ending Fair
Value
 

Collective Investment Trusts

  $ 3.9   $ 0.4   $ 0.4   $   $   $ 4.7  
                           

  $ 3.9   $ 0.4   $ 0.4   $   $   $ 4.7  
                           
                           

 

 
  December 31, 2012  
Description
  Beginning
Fair Value
  Purchases   Gain (Loss)   Sales,
Maturities,
Settlements, Net
  Exchange
rate
  Ending Fair
Value
 

Collective Investment Trusts

  $ 3.1   $ 0.6   $ 0.2   $   $   $ 3.9  
                           

  $ 3.1   $ 0.6   $ 0.2   $   $   $ 3.9  
                           
                           

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Spirit AeroSystems Holdings, Inc.

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

17.   Capital Stock

        Holdings has authorized 360,000,000 shares of stock. Of that, 200,000,000 shares are class A common stock, par value $0.01 per share, one vote per share, 150,000,000 shares are class B common stock, par value $0.01 per share, ten votes per share, and 10,000,000 shares are preferred stock, par value $0.01 per share.

        In association with the Boeing Acquisition, Spirit executives with balances in Boeing's Supplemental Executive Retirement Plan (SERP) were authorized to purchase a fixed number of units of Holdings "phantom stock" at $3.33 per unit based on the present value of their SERP balances. Under this arrangement, 860,244 phantom units were purchased. Any payment on account of units may be made in cash or shares of common stock at the sole discretion of Holdings.

18.   Stock Compensation

        Holdings 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 fiscal period ended December 31, 2013, Holdings has recognized a net total of $19.6 of stock compensation expense. The entire $19.6 of net stock compensation expense recorded in 2013 was charged directly to selling, general and administrative expense accordance with FASB authoritative guidance, which included $0.5 of accelerated vesting expense for participants meeting the conditions for "qualifying retirement" under our Short-Term Incentive Plan. Holdings recognized a total of $15.3 and $11.2 of stock compensation expense for the periods ended December 31, 2012 and December 31, 2011, respectively. The total income tax benefit recognized in the income statement for share based compensation arrangements was $7.1, $5.6, and $4.1 for 2013, 2012, and 2011, respectively.

    Executive Incentive Plan

        The Company's Executive Incentive Plan, or EIP, is designed to provide participants with the opportunity to acquire an equity interest in the Company through direct purchase of the Company's class B common stock shares at prices established by the Board of Directors or through grants of class B restricted common stock shares with performance based vesting. The Company has the sole authority to designate either stock purchases or grants of restricted shares. The total number of shares authorized under the EIP is 12,000,000 and the grant terminates at the end of ten years.

        The Company has issued restricted shares as part of the Company's EIP. The restricted shares have been granted in groups of four shares. Participants do not have the unrestricted rights of stockholders until those shares vest. The shares may vest upon a liquidity event, with the number of shares vested based upon a participant's number of years of service to the Company, the portion of the investment by Onex and its affiliates liquidated through the date of the liquidity event and the return on invested capital by Onex and its affiliates through the date of the liquidity event. If a specific type of liquidity event has not occurred by the 10th year, shares may vest based on a valuation of the Company. The Company's initial public offering in November 2006 (the "IPO") and secondary offerings in May 2007 and April 2011 were considered liquidity events under the EIP. The Company records expenses equal to the fair value of the award over a five-year vesting period. The fair value of the award is based on the value of each share at the time of the grant multiplied by the probability of the share vesting based on historical performance of Onex's controlled investments.

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Spirit AeroSystems Holdings, Inc.

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

        The Company did not recognize any expense under the EIP for the year ended December 31, 2013. The Company expensed zero and a net total of less than $0.1 for the periods ended December 31, 2012 and December 31, 2011, respectively. The weighted average remaining period for the vesting of these shares is 1.5 years. The intrinsic value of the unvested shares based on the value of the Company's stock at December 31, 2013 was $29.6, based on the value of the Company's stock and the number of unvested shares.

        The following table summarizes the activity of restricted shares under the EIP for the periods ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Shares   Value (1)  
 
  (Thousands)
   
 

Executive Incentive Plan

             

Nonvested at December 31, 2010

    1,366     15.4  

Vested during period

    (446 )   (5.1 )

Forfeited during period

    (40 )   (0.5 )
           

Nonvested at December 31, 2011

    880     9.8  

Vested during period

         

Forfeited during period

         
           

Nonvested at December 31, 2012

    880     9.8  

Vested during period

         

Forfeited during period

    (11 )    
           

Nonvested at December 31, 2013

    869   $ 9.8  
           
           

(1)
Value represents grant date fair value.

    Board of Directors Stock Awards

        The Company's Director Stock Plan provides non-employee directors the opportunity to receive grants of restricted shares of class A common stock, or Restricted Stock Units (RSUs) or a combination of both common stock and RSUs. The class A common stock grants and RSU grants vest one year from the grant date. The RSU grants are payable upon the director's separation from service. The Board of Directors or its authorized committee may make discretionary grants of shares or RSUs from time to time. The maximum aggregate number of shares that may be granted to participants is 3,000,000 shares. In April 2008, the Director Stock Plan was amended such that all issuances of stock pursuant to the plan after that date would be grants of class A common stock or RSUs. All shares granted prior to April 2008 were class B common stock.

        For each non-employee director of the Company, at least one-half of their annual director compensation is required to be paid in the form of a grant of class A common stock and/or RSUs, as elected by each director. In addition, each director may elect to have all or any portion of the remainder of their annual director compensation paid in cash or in the form of a grant of class A stock and/or RSUs. If participants cease to serve as directors within a year of the grant, the restricted shares and/or RSUs are forfeited. In May and December of 2013, the Board of Directors authorized a grant of 34,747 and 4,321 shares of restricted class A common stock, respectively, valued at $0.9 based on the share price of the Company's common stock at the grant dates. The Company expensed a net amount of $0.7 for the Board of Directors shares for the period ended December 31, 2013. The Company expensed $0.7 during each of the periods ended December 31, 2012 and December 31, 2011. The Company's unamortized stock

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Spirit AeroSystems Holdings, Inc.

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

compensation related to these restricted shares is $0.4 which will be recognized over a weighted average remaining period of 11 months. The intrinsic value of the unvested shares based on the value of the Company's stock at December 31, 2013 was $1.3, based on the value of the Company's stock and the number of unvested shares.

        The following table summarizes stock and RSU grants to members of the Company's Board of Directors for the periods ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Shares   Value (1)  
 
  Class A   Class B   Class A   Class B  
 
  (Thousands)
   
   
 

Board of Directors Stock Grants

                         

Nonvested at December 31, 2010

    33       $ 0.7   $  

Granted during period

    30         0.7      

Vested during period

    (33 )       (0.7 )    

Forfeited during period

    (3 )       (0.1 )    
                   

Nonvested at December 31, 2011

    27         0.6      

Granted during period

    29         0.7      

Vested during period

    (27 )       (0.6 )    

Forfeited during period

                 
                   

Nonvested at December 31, 2012

    29         0.7      

Granted during period

    39         0.9      

Vested during period

    (29 )       (0.7 )    

Forfeited during period

                 
                   

Nonvested at December 31, 2013

    39       $ 0.9   $  
                   
                   

(1)
Value represents grant date fair value.

    Short-Term Incentive Plan

        The Second Amended and Restated Short-Term Incentive Plan ("STIP") enables eligible employees to receive incentive benefits in the form of restricted stock in the Company, cash, or both, as determined by the Board of Directors or its authorized committee. The stock portion vests one year from the date of grant. Restricted shares are forfeited if the employee's employment terminates prior to vesting. In August 2011, the STIP was amended such that all unvested stock will vest in the event of a qualifying retirement or change in control.

        In February 2013, 86,063 shares of Class A common stock with a value of $1.4 were granted under the Company's STIP for 2012 performance and will vest on the one-year anniversary of the grant date. The Company expensed $1.3 for shares granted under the STIP for the period ended December 31, 2013. The Company expensed $2.9 and $3.9 for the shares for the periods ended December 31, 2012 and December 31, 2011, respectively. The Company's unamortized stock compensation related to the unvested shares is $0.1, which will be recognized over a weighted average remaining period of 2 months. The intrinsic value of the unvested shares at December 31, 2013 was $2.1 based on the value of the Company's stock and the number of unvested shares.

130


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Spirit AeroSystems Holdings, Inc.

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

        The following table summarizes the activity of the restricted shares under the STIP for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Shares   Value (1)  
 
  (Thousands)
   
 

Short-Term Incentive Plan

             

Nonvested at December 31, 2010

         

Granted during period

    185     4.7  

Vested during period

    (10 )   (0.3 )

Forfeited during period

    (4 )   (0.1 )
           

Nonvested at December 31, 2011

    171     4.3  

Granted during period

    104     2.5  

Vested during period

    (170 )   (4.3 )

Forfeited during period

    (9 )   (0.2 )
           

Nonvested at December 31, 2012

    96     2.3  

Granted during period

    86     1.4  

Vested during period

    (113 )   (2.6 )

Forfeited during period

    (7 )   (0.1 )
           

Nonvested at December 31, 2013

    62   $ 1.0  
           
           

(1)
Value represents grant date fair value.

    Long-Term Incentive Plan

        The Fourth Amended and Restated Long-Term Incentive Plan ("LTIP") is designed to encourage retention of key employees.

        For shares granted in 2007, one-half of the granted restricted shares of class B common stock vested on the second anniversary of the grant date in February 2009, and the other one-half vested on the fourth anniversary of the grant date in 2011. Restricted shares are forfeited if the participant's employment terminates prior to vesting. In the first quarter of 2007, 67,391 shares valued at $2.0 were granted. The Company expensed zero, zero and less than $0.1 net of forfeitures for each of the periods ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.

        In February and April 2013, as part of the Company's 2012 Long-Term Incentive Plan, 9,460 and 33,784 shares of class A common stock with an aggregate grant date fair value of $0.8 were granted by the Board of Directors, and such shares will vest annually in three equal installments beginning on the two-year anniversary of the grant date.

        In May 2013, 1,326,299 class A shares valued at $27.6 were granted pursuant to the LTIP and will vest annually in three equal installments beginning on the two-year anniversary of the grant date. Additionally, 288,047 class A shares valued at $6.0 were granted and will vest annually in three equal installments beginning on the one-year anniversary date of April 2013.

        In June 2013, 34,425 class A shares valued at $0.7 were granted pursuant to the LTIP to employees at the UK location pursuant to a union contract ratification. These shares vested approximately one week after issuance.

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Spirit AeroSystems Holdings, Inc.

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

        In August and November 2013, an additional 37,754 and 103,337 class A shares totaling $4.0 were granted pursuant to the LTIP and will vest annually in three equal installments beginning on the two-year anniversary of the May 2013 grant date. Additionally, 33,859 class A shares valued at $1.0 were granted in November 2013 and will vest annually in three equal installments beginning September 2014.

        In May 2012, 618,804 class A shares valued at $15.3 were granted and will vest annually in three equal installments beginning on the two-year anniversary of the grant date. In August and November 2012, an additional 21,590 and 35,578 class A shares valued at $1.1 were granted and will vest annually in three equal installments beginning on the two-year anniversary of the May 2012 grant date. An additional 6,153 shares valued at $0.1 were granted during 2012. These shares will vest annually in three equal installments beginning on the two-year anniversary of the May 2011 grant date. In May 2011, 548,334 class A shares valued at $12.9 were granted (and an additional 1,826 class A shares valued at less than $0.1 were granted during February 2011 for 2010 compensation). These shares begin to vest annually in three equal installments beginning on the two-year anniversary of the May 2010 grant date.

        During 2012, 92,250 shares of class A common stock valued at $2.2 were granted to members of the UAW union pursuant to performance improvements set forth in the 2010 ten-year labor contract. These shares vested immediately upon issuance.

        During 2011, 500 shares of class A common stock with a value of less than $0.1 were granted to members of the UAW union under the LTIP pursuant to the ten-year labor contract. These shares vested immediately and the value was charged directly to cost of sales.

        The Company expensed a total of $17.6 for the unvested class A LTIP shares in the twelve months ended December 31, 2013. The Company expensed a net total of $11.9 and $7.0 for class A LTIP shares for the periods ended December 31, 2012 and December 31, 2011, respectively.

        The Company's unamortized stock compensation related to these unvested class A shares is $22.7 which will be recognized over a weighted average remaining period of 3.2 years. The intrinsic value of the unvested class A LTIP shares at December 31, 2013 was $80.3, based on the value of the Company's common stock and the number of unvested shares.

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Spirit AeroSystems Holdings, Inc.

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

        The following table summarizes the activity of the restricted shares under the LTIP for the periods ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Shares   Value (1)  
 
  Class A   Class B   Class A   Class B  
 
  (Thousands)
   
   
 

Long-Term Incentive Plan

                         

Nonvested at December 31, 2010

    1,490     28   $ 27.6   $ 0.8  

Granted during period

    550         13.0      

Vested during period

    (307 )   (28 )   (5.3 )   (0.8 )

Forfeited during period

    (175 )       (3.3 )    
                   

Nonvested at December 31, 2011

    1,558         32.0      

Granted during period

    774         18.8      

Vested during period

    (513 )       (10.0 )    

Forfeited during period

    (115 )       (2.5 )    
                   

Nonvested at December 31, 2012

    1,704         38.3      

Granted during period

    1,867         40.1      

Vested during period

    (552 )       (11.0 )    

Forfeited during period

    (661 )       (15.1 )    
                   

Nonvested at December 31, 2013

    2,358       $ 52.3   $  
                   
                   

(1)
Value represents grant date fair value.

19.   Income Taxes

        The following summarizes pretax income:

 
  2013   2012   2011  

U.S. 

  $ (499.8 ) $ (33.6 ) $ 265.9  

International

    69.0     45.0     14.4  
               

Total

  $ (430.8 ) $ 11.4   $ 280.3  
               
               

        The tax provision contains the following components:

 
  2013   2012   2011  

Current

                   

Federal

  $ (17.1 ) $ 89.8   $ 59.6  

State

    (2.1 )   1.9     3.4  

Foreign

    4.2     4.3     5.8  
               

Total current

  $ (15.0 ) $ 96.0   $ 68.8  

Deferred

   
 
   
 
   
 
 

Federal

  $ 139.0   $ (104.0 ) $ 20.3  

State

    57.8     (19.0 )   (2.0 )

Foreign

    9.3     2.9     (0.2 )
               

Total deferred

    206.1     (120.1 )   18.1  
               

Total tax expense

  $ 191.1   $ (24.1 ) $ 86.9  
               
               

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

        The income tax provision from operations differs from the tax provision computed at the U.S. federal statutory income tax rate due to the following:

 
  2013    
  2012    
  2011    
 

Tax at U.S. Federal statutory rate

  $ (150.8 )   35.0 % $ 4.0     35.0 % $ 98.1     35.0 %

State income taxes, net of Federal benefit

    (12.2 )   2.8     (1.8 )   (15.8 )   6.3     2.2  

State income tax credits, net of Federal benefit

    (7.7 )   1.8     (9.8 )   (86.0 )   (5.4 )   (1.9 )

Foreign rate differences

    (6.8 )   1.6     (4.6 )   (40.4 )   1.4     0.5  

Research and Experimentation

    (10.9 )   2.5     (3.2 )   (28.1 )   (10.2 )   (3.6 )

Domestic Production Activities Deduction

            (8.8 )   (77.2 )   (4.7 )   (1.7 )

Interest on assessments

    (0.6 )   0.1     0.3     2.6     0.8     0.4  

Valuation Allowance — U.S. Deferred Tax Asset

    381.0     (88.4 )                

Other

    (0.9 )   0.2     (0.2 )   (1.5 )   0.6     0.1  
                             

Total provision for income taxes

  $ 191.1     (44.4 )% $ (24.1 )   (211.4 )% $ 86.9     31.0 %
                                 
                                 

        Significant tax effected temporary differences comprising the net deferred tax asset are as follows:

 
  2013   2012  

Long-term contracts

  $ 409.9   $ 234.6  

Post-retirement benefits other than pensions

    26.6     28.6  

Pension and other employee benefit plans

    (68.0 )   (3.9 )

Employee compensation accruals

    45.8     35.9  

Depreciation and amortization

    (123.7 )   (106.9 )

Inventory

    3.4     (1.4 )

Interest swap contracts

    0.9     (0.1 )

State income tax credits

    61.1     49.8  

Accruals and reserves

    36.6     20.2  

Deferred production

    4.1     19.5  

Deferred gain — severe weather event

    (21.5 )   (39.1 )

Net operating loss carryforward

    1.3     10.7  

Other

    4.2     1.1  
           

Net deferred tax asset

    380.7     249.0  

Valuation allowance

    (396.5 )   (10.4 )
           

Net deferred tax asset

  $ (15.8 ) $ 238.6  
           
           

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

        Deferred tax detail above is included in the consolidated balance sheet and supplemental information as follows:

 
  2013   2012  

Current deferred tax assets

  $ 26.9   $ 57.1  

Current deferred tax liabilities

    (0.5 )   (3.3 )
           

Net current deferred tax asset

  $ 26.4   $ 53.8  
           

Non-current deferred tax assets

    0.0     192.0  

Non-current deferred tax liabilities

    (42.2 )   (7.2 )
           

Net non-current deferred tax asset

  $ (42.2 ) $ 184.8  
           

Total deferred tax asset

  $ (15.8 ) $ 238.6  
           
           

        A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, Management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

        Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's prior earnings history including the forward losses previously recognized in the U.S., management determined that it was necessary to establish a valuation allowance against nearly all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position in recent years once results from the year ended December 31, 2013 were included, the threshold after which there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. As of December 31, 2013, the total net U.S. deferred tax asset was $399.6. The net U.S. deferred tax asset after recording valuation allowances is $3.7. Valuation allowances recorded against the consolidated net U.S. deferred tax asset in the current year were $381.0. Additionally, the Company maintains a $14.9 valuation allowance against separate company state income tax credits and previously recorded other U.S. issues and $0.6 for other foreign issues which is an increase of $5.1 from the prior year. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes.

        Certain amounts in the 2012 and 2011 tax footnote have been reclassified to conform to the 2013 presentation.

        The increase from 2012 to 2013 in the long-term contracts deferred tax asset is primarily due to forward losses recognized during 2013 that are not currently deductible for tax.

        The decrease from 2012 to 2013 in the severe weather event deferred tax liability represents the identification and capitalization of qualified replacement property for book purposes with a corresponding increase to the deferred tax liability for depreciation and amortization.

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

        We have recognized cumulative book income for our international operations, but have incurred cumulative taxable losses in the United Kingdom. The resulting net operating loss carryforward is primarily due to the manner in which the United Kingdom treats long-term contract income accounting and capital allowances.

        As required under FASB authoritative guidance, $0.0 and $1.1 was recorded to Additional Paid in Capital, representing the tax effect associated with the net excess tax pool created during the periods ended December 31, 2013 and December 31, 2012, respectively.

        As of December 31, 2013, the Company has not provided U.S. tax on its cumulative undistributed earnings of foreign subsidiaries of approximately $129.0 because it is the Company's intention to reinvest these earnings indefinitely. The calculation of the unrecognized deferred tax liability related to these earnings is complex and the calculation is not practicable. If earnings were distributed, the Company would be subject to U.S. taxes and withholding taxes payable to foreign governments. Based on the facts and circumstances at that time, the Company would determine whether a credit for foreign taxes paid would be available to reduce or offset the U.S. tax liability.

        The beginning and ending unrecognized tax benefits reconciliation is as follows:

 
  2013   2012   2011  

Beginning balance

  $ 16.9   $ 15.5   $ 15.2  

Gross increases related to current period tax positions

    3.8     4.2     6.1  

Gross increases related to prior period tax positions

    0.4     1.8     33.5  

Gross decreases related to prior period tax positions

    (2.7 )   (3.8 )   (9.3 )

Statute of limitations' expiration

        (0.8 )   (0.8 )

Settlements

            (29.2 )
               

Ending balance

  $ 18.4   $ 16.9   $ 15.5  
               
               

        Included in the December 31, 2013 balance was $16.5 in tax affected unrecognized tax benefits which, if ultimately recognized, will reduce the Company's effective tax rate. The Internal Revenue Service's examination of the Company's 2012 U.S. Federal income tax return is complete. The Company will continue to participate in the Compliance Assurance Process ("CAP") program for our 2013 tax year. Additionally, we have been selected for the Compliance Maintenance phase of the CAP program for the 2014 tax year. The CAP program's objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination. HM Revenue & Customs is currently examining our 2009, 2010 and 2011 U.K. income tax returns. The Directorate General of Public Finance is currently examining our 2011 and 2012 France income tax returns. While a change could result from the ongoing examinations, the Company expects no material change in its recorded unrecognized tax benefit liability in the next 12 months, other than the potential $12.2 reduction for Malaysia mentioned below.

        Our U.S. federal income tax return for the 2010 tax year is subject to examination. We are also subject to examination in various states and foreign jurisdictions for the 2009-2013 tax years.

        We report interest and penalties, if any, related to unrecognized tax benefits in the income tax provision. As of December 31, 2013 and December 31, 2012, accrued interest on our unrecognized tax benefit liability included in the consolidated balance sheets was $0.1 and $0.7, respectively. The impact of interest on our unrecognized tax benefit liability during 2013 and 2012 was $(0.6) and $0.6, respectively.

        We operate under a tax holiday in Malaysia effective through September 2024. During the current year, management continues to maintain a reserve for potential uncertainty in meeting the tax holiday's

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

conditional employment and investment thresholds. While management believes we have met the required employment and investment thresholds, we continue to work through the process of validating the results with the respective Malaysian governmental authorities. If we can successfully demonstrate that the objectives have been achieved and the respective Malaysian authorities certify the results, we expect a $12.2 reduction in our unrecognized tax benefit liability.

        At December 31, 2013, we had $2.6 in United Kingdom net operating loss carryforwards that do not expire and $18.1 in North Carolina net operating loss carryforwards that expire in 2025.

        At December 31, 2013, we had $1.1 of U.S. Foreign Tax Credit carryforwards, a portion of which will expire beginning in 2018.

        On January 2, 2013, the President signed legislation retroactively extending the U.S. Research Tax Credit for two years, from January 1, 2012 through December 31, 2013. Our income tax expense for 2013 reflects the entire benefit of the Research Tax Credit attributable to 2012, which was $5.8. We also recorded the benefit of the 2013 Research Tax Credit of $5.1 in our 2013 tax expense.

        Included in the deferred tax assets at December 31, 2013 are $36.6 in Kansas High Performance Incentive Program ("HPIP") Credit, $7.3 in Kansas Research & Development ("R&D") Credit, and $2.7 in Kansas Business and Jobs Development Credit, totaling $46.6 in Kansas state income tax credit carryforwards, net of federal benefit. The HPIP Credit provides a 10% investment tax credit for qualified business facilities located in Kansas for which $5.9 expires in 2024, $0.6 expires in 2025, $3.5 expires in 2026, $5.0 expires in 2027, $9.7 expires in 2028 and the remainder expires in 2029. The R&D Credit provides a credit for qualified research and development expenditures conducted within Kansas. This credit can be carried forward indefinitely. The Business and Jobs Development Credit provides a tax credit for increased employment in Kansas. This credit can be carried forward indefinitely. As previously discussed, management determined that it was necessary to establish a valuation allowance against nearly all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position in recent years once results from the year ended December 31, 2013 were included, the threshold after which there is a presumption that the Company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. As a result, a full valuation allowance against all Kansas credits included as deferred tax assets is reflected within the total valuation allowance amount.

        Included in the deferred tax assets at December 31, 2013 are $6.8 in North Carolina Investing in Business Property Credit, $3.9 in North Carolina Investment in Real Property Credit, and $3.9 in North Carolina Creating Jobs Credit, totaling $14.6 in North Carolina state income tax credit carryforwards, net of federal benefit. The Investing in Business Property Credit provides a 7% investment tax credit for property located in a North Carolina development area and the Investment in Real Property Credit provides a 30% investment tax credit for real property located in a North Carolina development area. The Creating Jobs Credit provides a tax credit for increased employment in North Carolina. These North Carolina state income tax credits can be carried forward 20 years. It is management's opinion that $1.6 of these North Carolina state income tax credits will be utilized before they expire and a $12.9 valuation allowance was recorded, net of federal benefit.

20.   Equity

    Earnings per Share Calculation

        Basic net income per share is computed using the weighted-average number of outstanding shares of common stock during the measurement period. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the measurement period.

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

        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.

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

 
  For the Twelve Months Ended  
 
  December 31, 2013   December 31, 2012   December 31, 2011  
 
  Loss   Shares   Per
Share
Amount
  Income   Shares   Per
Share
Amount
  Income   Shares   Per
Share
Amount
 

Basic EPS

                                                       

(Loss) income available to common shareholders

  $ (621.4 )   141.3   $ (4.40 ) $ 34.4     140.7   $ 0.24   $ 189.2     139.2   $ 1.36  

Income allocated to participating securities

                  0.4     1.5           3.2     2.3        
                                                   

Net (loss) income

  $ (621.4 )             $ 34.8               $ 192.4              
                                                   
                                                   

Diluted potential common shares

                          0.5                 0.8        

Diluted EPS

                                                       

Net (loss) income

  $ (621.4 )   141.3   $ (4.40 ) $ 34.8     142.7   $ 0.24   $ 192.4     142.3   $ 1.35  

        The balance of outstanding common shares presented in the consolidated statement of shareholders' equity was 144.8 million, 143.7 million and 142.9 million at December 31, 2013, December 31, 2012 and December 31, 2011, respectively. Included in the outstanding common shares were 3.4 million, 2.7 million and 2.6 million of issued but unvested shares at December 31, 2013, December 31, 2012 and December 31, 2011, respectively, which are excluded from the basic EPS calculation. For the twelve months ended December 31, 2013, 1.0 million shares are not included in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive. These securities could be dilutive in future periods.

    Accumulated Other Comprehensive Loss

        Accumulated Other Comprehensive Loss is summarized by component as follows:

 
  December 31, 2013   December 31, 2012  

Pension

  $ (52.7 ) $ (132.0 )

SERP/ Retiree medical

    3.1     (2.6 )

Foreign currency impact on long term intercompany loan

    (2.2 )   (3.5 )

Currency translation adjustment

    (2.8 )   (7.1 )
           

Total accumulated other comprehensive loss

  $ (54.6 ) $ (145.2 )
           
           

    Noncontrolling Interest

        Noncontrolling interest at December 31, 2013 remained unchanged from the prior year at $0.5.

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($, €, £, and RM in millions other than per share amounts)

21.   Related Party Transactions

        On May 3, 2012, Hawker Beechcraft, Inc. ("Hawker") filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code and emerged from bankruptcy on February 19, 2013 as Beechcraft Corporation. The Company's Prestwick facility provided wing components for the Hawker 800 Series manufactured by Hawker. For the the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011 sales to Hawker were zero, $1.2 and $10.2, respectively. Receivables due from Hawker were $3.5 as of December 31, 2012, net of a $0.3 receivable write-off. The receivable was reserved against in 2012. The Company's $3.5 receivable balance from Hawker was written off during 2013.

        The Company paid $0.4, $0.3 and $0.2 to a subsidiary of Onex for services rendered for each of the twelve month periods ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively. Management believes the amounts charged were reasonable in relation to the services provided.

        A director (and former executive) of the Company is a member of the Board of Directors of Rockwell Collins, Inc., a supplier of manufacturing parts to the Company. Under the commercial terms of the arrangement with the supplier, Spirit paid $0.1 and less than $0.1 for the twelve month periods ended December 31, 2013 and December 31, 2012, respectively. The amounts owed to Rockwell Collins and recorded as accrued liabilities were less than $0.1 as of both December 31, 2013 and December 31, 2012.

        A director (and former 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 the Company.

22.   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 an accrual of less than $1.0 and zero at December 31, 2013 and December 31, 2012, respectively. However, an unexpected adverse resolution of one or more of these items could have a material adverse effect on the results of operations and cash flows 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.

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($, €, £, and RM in millions other than per share amounts)

        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. We understand that a civil investigation into this matter may be ongoing but the Company has not been contacted about this matter since the closing of the criminal investigation. 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 included 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 Boeing 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 Security 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. The sub-class members who asserted claims 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 were many claims in the suit, the plaintiffs' claims against the Spirit entities, asserted under various theories, were (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 initially sought a declaration that they were 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. On June 20, 2013, the district court entered an order dismissing all claims against the Spirit entities with prejudice. Plaintiffs' claims against Boeing entities remain pending in the litigation. 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 from the Boeing Acquisition 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

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($, €, £, and RM in millions other than per share amounts)

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 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 from the Boeing Acquisition. 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 and subsequently agreed to an appropriate cost related to those efforts. Spirit's lawsuit seeks damages, including damages related to these efforts, under various theories, including breach of contract and breach of implied warranty.

        On June 3, 2013, a putative class action lawsuit was commenced against the Company, Jeffrey L. Turner, and Philip D. Anderson in the U.S. District Court for the District of Kansas. The named plaintiff, who alleges that he is a purchaser of Holdings securities, alleges that defendants violated the federal securities laws by making material misrepresentations and omissions in the Company's public disclosures about the circumstances underlying the Company's accrual of $590.0 in forward loss charges in the third quarter of 2012. The lawsuit seeks certification of a class of all persons other than defendants who purchased Holdings securities between May 5, 2011 and October 24, 2012, and seeks an unspecified amount of damages on behalf of the putative class. On February 5, 2014 the Court entered an order naming two lead plantiffs. The Company intends to vigorously defend against these allegations, and management believes the resolution of this matter will not materially affect the Company's financial position, results of operations, or liquidity.

        In August 2013, the Company instituted a demand for arbitration against Gulfstream Aerospace Corporation. Spirit seeks damages from Gulfstream for its incomplete payments to Spirit for the wings Spirit manufactures for the G650 airplane, as well as other damages and relief. Gulfstream counterclaimed against Spirit in the arbitration, seeking liquidated damages for delayed deliveries of wings, as well as other damages and relief. The parties have selected arbitrators, and currently expect the arbitration hearing will take place in the first quarter of 2015. The Company intends to vigorously prosecute and defend the claims in arbitration. Management believes the resolution of this matter will not materially affect the Company's financial position, results of operations, or liquidity.

        In October 2012, Spirit was advised by the Staff of the Securities and Exchange Commission that they are conducting an inquiry that the Company believes to be focused on the timing of forward losses recognized in the third quarter of 2012. The Company is fully cooperating with the inquiry. The Company

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

cannot predict or determine whether any proceeding may be instituted as a result of the inquiry or the outcome of any proceeding that may be instituted.

    Commitments

        The Company leases equipment and facilities under various non-cancelable capital and operating leases. The capital leasing arrangements extend through 2025. Minimum future lease payments under these leases at December 31, 2013 are as follows:

 
   
  Capital    
 
 
  Operating   Present
Value
  Interest   Total  

2014

  $ 20.8   $ 1.1   $ 0.5   $ 22.4  

2015

  $ 17.3   $ 1.1   $ 0.5   $ 18.9  

2016

  $ 10.6   $ 1.0   $ 0.5   $ 12.1  

2017

  $ 5.2   $ 1.0   $ 0.4   $ 6.6  

2018

  $ 4.9   $ 1.1   $ 0.4   $ 6.4  

2019 and thereafter

  $ 14.7   $ 10.1   $ 8.8   $ 33.6  

        Operating lease payments were as follows:

 
  2013   2012   2011  

Minimum rentals

  $ 22.6   $ 19.6   $ 20.2  

Contingent rentals

             

Less: Sub-lease

             
               

Total

  $ 22.6   $ 19.6   $ 20.2  
               
               

        Spirit's aggregate capital commitments totaled $226.0 and $264.8 at December 31, 2013 and December 31, 2012, respectively.

        The Company paid $0.9 and $1.2 in interest expense related to the capital leases for periods ending December 31, 2013 and December 31, 2012, respectively.

    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 both December 31, 2013 and December 31, 2012, outstanding letters of credit were $19.9. Outstanding guarantees were $24.8 and $25.6 at December 31, 2013 and December 31, 2012, respectively.

    Indemnification

        The Company has entered into customary 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.

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

    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.

        The following is a roll forward of the service warranty and extraordinary rework balance at December 31, 2013 and December 31, 2012:

 
  2013   2012  

Balance, January 1

  $ 30.9   $ 19.6  

Charges to costs and expenses

    38.3     12.0  

Write-offs, net of recoveries

    (0.6 )   (0.9 )

Exchange rate

    0.1     0.2  
           

Balance, December 31

  $ 68.7   $ 30.9  
           
           

    Bonds

        Spirit utilized City of Wichita issued Industrial Revenue Bonds ("IRBs") to finance self-constructed and purchased real and personal property at the Wichita site. Tax benefits associated with IRBs include provisions for a ten-year complete property tax abatement and a Kansas Department of Revenue sales tax exemption on all IRB funded purchases. Spirit and the Predecessor purchased these IRBs so they are bondholders and debtor / lessee for the property purchased with the IRB proceeds.

        Spirit recorded the property on its consolidated balance sheet in accordance with FASB authoritative guidance, along with a capital lease obligation to repay the IRB proceeds. Therefore, Spirit and the Predecessor have exercised their right to offset the amounts invested and obligations for these bonds on a consolidated basis. The assets and liabilities associated with these IRBs were $394.7 and $345.7 at December 31, 2013 and December 31, 2012, respectively.

        Spirit utilized $80.0 in Kansas Development Finance Authority ("KDFA") issued bonds to receive a rebate of payroll taxes from the Kansas Department of Revenue to KDFA bondholders. Concurrently, a Spirit subsidiary issued an intercompany note with identical principal, terms, and conditions to the KDFA bonds. In accordance with FASB authoritative guidance, the principal and interest payments on these bonds offset in the consolidated financial statements.

23.   Other Income (Expense), Net

        Other income (expense), net is summarized as follows:

 
  For the Twelve Months Ended  
 
  12/31/2013   12/31/2012   12/31/2011  

KDFA bond

  $ 3.4   $ 4.5   $ 4.3  

Rental and miscellaneous (expense)

    (1.1 )   (8.4 )   (0.7 )

Foreign currency gains (loss)

    1.0     5.7     (2.2 )
               

Total

  $ 3.3   $ 1.8   $ 1.4  
               
               

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

        Foreign currency gains (loss) are due to the impact of movement in foreign currency exchange rates on trade and intercompany receivables/payables and other long-term contractual rights/obligations denominated in a currency other than the entity's functional currency.

24.   Significant Concentrations of Risk

    Economic Dependence

        The Company's largest customer (Boeing) accounted for approximately 84%, 84%, and 85% of the revenues for the periods ending December 31, 2013, December 31, 2012, and December 31, 2011, respectively. Approximately 27% and 28% of the Company's accounts receivable balance at December 31, 2013 and December 31, 2012, respectively, was attributable to Boeing.

        The Company's second largest customer (Airbus) accounted for approximately 10%, 9% and 10% of the revenues for the periods ending December 31, 2013, December 31, 2012, and December 31, 2011, respectively. Approximately 28% and 26% of the Company's accounts receivable balance at December 31, 2013 and December 31, 2012, respectively, was attributable to Airbus.

        Approximately 29% and 25% of the Company's accounts receivable balance at December 31, 2013 and December 31, 2012, respectively, was attributable to Gulfstream.

25.   Supplemental Balance Sheet Information

        Accrued expenses and other liabilities consist of the following:

 
  December 31,
2013
  December 31,
2012
 

Accrued expenses

             

Accrued wages and bonuses

  $ 26.8   $ 35.8  

Accrued fringe benefits

    123.1     110.1  

Accrued interest

    8.6     7.8  

Workers' compensation

    9.1     9.0  

Property and sales tax

    26.3     27.0  

Warranty/extraordinary rework reserve — current

    0.8     1.4  

Other

    25.9     25.2  
           

Total

  $ 220.6   $ 216.3  
           
           

Other liabilities

             

Federal income taxes — non-current

  $ 13.3   $ 12.4  

Deferred tax liability — non-current

    42.2     7.2  

Warranty/extraordinary rework reserve — non-current

    67.9     29.5  

Customer cost recovery (1)

    62.0     62.0  

Other

    16.9     17.8  
           

Total

  $ 202.3   $ 128.9  
           
           

(1)
As part of the B787 Amendment, Spirit agreed to pay Boeing for work to complete initial production units.

26.   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 94% of the

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

Company's net revenues for the twelve months ended December 31, 2013 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, Kansas. 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, unallocated impact of severe weather event, unallocated research and development and unallocated cost of sales. 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. Unallocated impact of severe weather event includes property repairs, clean up and recovery costs related to the April 14, 2012 tornado at the Company's Wichita facility. Unallocated research and development includes research and development efforts that benefit the Company as a whole and are not unique to a specific segment. Unallocated cost of sales includes general costs not directly attributable to segment operations, such as early retirement and other incentives. All of these unallocated items are not specifically related to our operating segments and are not allocated in measuring the operating segments' profitability and performance and operating margins.

        We are evaluating the potential realignment of our reportable segments as part of our 2014 business strategy. The reportable segment amounts and discussions reflected in this Annual Report reflect the management reporting that existed through the end of our 2013 fiscal year.

        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. The Fuselage Systems segment manufactures products at our facilities in Wichita, Kansas and Kinston, North Carolina. The Fuselage Systems segment also includes an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France.

        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 Propulsion Systems segment manufactures products at our facilities in Wichita and Chanute, Kansas.

        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; Kinston, North Carolina; Prestwick, Scotland; and Subang, Malaysia.

        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.

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

        The following table shows segment revenues and operating income for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011:

 
  Twelve Months
Ended
December 31,
2013
  Twelve Months
Ended
December 31,
2012
  Twelve Months
Ended
December 31,
2011
 

Segment Revenues

                   

Fuselage Systems

  $ 2,861.1   $ 2,590.6   $ 2,425.0  

Propulsion Systems

    1,581.3     1,420.9     1,221.5  

Wing Systems

    1,502.5     1,375.1     1,207.8  

All Other

    16.1     11.1     9.5  
               

  $ 5,961.0   $ 5,397.7   $ 4,863.8  
               
               

Segment Operating (Loss) Income

                   

Fuselage Systems (1)

  $ 70.1   $ 391.9   $ 323.1  

Propulsion Systems (2)

    235.8     67.5     196.4  

Wing Systems (3)

    (414.0 )   (335.6 )   0.5  

All Other

    4.4     1.0     1.3  
               

    (103.7 )   124.8     521.3  

Unallocated corporate SG&A

    (181.5 )   (155.3 )   (145.5 )

Unallocated impact of severe weather event (4)

    (30.3 )   146.2      

Unallocated research and development

    (8.9 )   (4.4 )   (1.9 )

Unallocated cost of sales (5)

    (39.9 )   (19.0 )   (17.8 )
               

Total operating (loss) income

  $ (364.3 ) $ 92.3   $ 356.1  
               
               

(1)
For 2013, inclusive of forward loss charges of $41.1, $4.1, $333.1 and $111.3 for the B747-8, B767, B787 and A350 XWB programs, respectively. A350 XWB forward loss of $111.3 is comprised of $32.7 on the A350-1000 XWB non-recurring fuselage portion and $78.6 on the A350 XWB recurring fuselage program. For 2012, includes a forward loss charge of $6.4 for the B747-8 program. For 2011, includes a $29.0 forward loss charge recorded for the Sikorsky CH-53K helicopter program and a $12.6 forward loss charge for the B747-8 program. Also includes cumulative catch-up adjustments for periods prior to 2013 and 2012 of $60.1 and $(2.4), respectively.

(2)
Inclusive of forward loss charges of $12.3, $30.6 and $21.7 for the B767, B787 and Rolls-Royce BR725 programs, respectively, for 2013. Also includes $8.4 reduction of forward loss charge recorded due to change in estimate for the Rolls-Royce program in 2013. For 2012, includes forward loss charges of $151.0 recorded on our Rolls-Royce program and $8.0 on our B767 program. Also includes cumulative catch-up adjustments for periods prior to 2013 and 2012 of $30.0 and $7.3, respectively.

(3)
For 2013, includes forward loss charges of $58.3, $240.9 and $288.3 for the B787, G280 and G650 programs, respectively. For 2012, includes forward loss charges recorded of $184.0 for the B787 wing program, $162.5 for the G650 wing program, $118.8 for the G280 wing program, $8.9 for the A350 XWB non-recurring wing contract, and $5.1 for the B747-8 wing program. Also includes cumulative catch-up adjustments for periods prior to 2013 and 2012 of $5.4 and $9.8, respectively. For 2011, includes a $81.8 forward loss charge recorded for the G280 wing program, a $5.7 forward loss charge for the B747-8 program and a $3.0 forward loss on the A350 XWB non-recurring wing contract.

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

(4)
For 2012, gain includes a $234.9 insurance settlement amount, offset by $88.7 of costs incurred related to the April 14, 2012 severe weather event. Costs include assets impaired by the storm, clean-up costs, repair costs and incremental labor, freight and warehousing costs associated with the impacts of the storm.

(5)
Inclusive of charges of $38.1, $17.8, and $1.6 related to warranty reserve adjustments, reduction in workforce and early retirement incentives in 2013. Also, includes gains related to pension activity of $15.4 for the same period. For 2012 and 2011, $11.0 and $6.9, respectively, were reclassified from segment operating income to unallocated cost of sales to conform to current year presentation. Includes charges in the second quarter of 2012 of $3.6 related to asset impairments, $2.2 related to stock incentives for certain UAW-represented employees and $2.1 in early retirement incentives to eligible employees and charges in the second quarter of 2011 of $9.0 due to a change in estimate to increase warranty and extraordinary rework reserves and $1.9 in early retirement incentives elected by eligible UAW-represented employees.

        The following chart illustrates the split between domestic and foreign revenues:

 
  Year Ended
December 31, 2013
  Year Ended
December 31, 2012
  Year Ended
December 31, 2011
 
Revenue Source (1)
  Net Revenues   Percent of
Total
Net Revenues
  Net Revenues   Percent of
Total
Net Revenues
  Net Revenues   Percent of
Total
Net Revenues
 

United States

  $ 5,154.9     87 % $ 4,612.0     85 % $ 4,210.7     87 %

International

                                     

United Kingdom

    559.7     9 %   470.4     9 %   422.6     8 %

Other

    246.4     4 %   315.3     6 %   230.5     5 %
                           

Total International

    806.1     13 %   785.7     15 %   653.1     13 %
                           

Total Revenues

  $ 5,961.0     100 % $ 5,397.7     100 % $ 4,863.8     100 %
                           
                           

(1)
Net Revenues are attributable to countries based on destination where goods are delivered.

        Most of the Company's long-lived assets are located within the United States. Approximately 6% of our long-lived assets based on book value are located in the United Kingdom as part of Spirit Europe with approximately another 5% of our total long-lived assets located in countries outside the United States and the United Kingdom. The following chart illustrates the split between domestic and foreign assets:

 
  Year Ended
December 31, 2013
  Year Ended
December 31, 2012
 
Asset Location
  Total
Long-Lived Assets
  Percent of
Total
Long-Lived Assets
  Total
Long-Lived Assets
  Percent of
Total
Long-Lived Assets
 

United States

  $ 1,608.2     89 % $ 1,506.9     89 %

International

                         

United Kingdom

    99.3     6 %   101.1     6 %

Other

    95.8     5 %   90.5     5 %
                   

Total International

    195.1     11 %   191.6     11 %
                   

Total Long-Lived Assets

  $ 1,803.3     100 % $ 1,698.5     100 %
                   
                   

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

27.   Quarterly Financial Data (Unaudited)

 
  Quarter Ended  
2013
  December 31,
2013 (1)
  September 27,
2013 (2)
  June 28,
2013 (3)
  March 29,
2013 (4)
 

Revenues

  $ 1,494.4   $ 1,503.7   $ 1,520.7   $ 1,442.2  

Operating (Loss) income

  $ (320.8 ) $ 50.5   $ (238.5 ) $ 144.5  

Net (loss) income

  $ (586.9 ) $ 93.7   $ (209.4 ) $ 81.2  

(Loss) earnings per share, basic

  $ (4.15 ) $ 0.66   $ (1.48 ) $ 0.57  

(Loss) earnings per share, diluted

  $ (4.15 ) $ 0.65   $ (1.48 ) $ 0.57  

 

 
  Quarter Ended  
2012
  December 31,
2012 (5)
  September 29,
2012 (6)
  June 30,
2012 (7)
  March 31,
2012 (8)
 

Revenues

  $ 1,425.6   $ 1,365.3   $ 1,341.0   $ 1,265.8  

Operating Income (loss)

  $ 98.0   $ (210.5 ) $ 82.5   $ 122.3  

Net income (loss)

  $ 60.7   $ (134.4 ) $ 34.9   $ 73.6  

Earnings (loss) per share, basic

  $ 0.43   $ (0.96 ) $ 0.25   $ 0.52  

Earnings (loss) per share, diluted

  $ 0.43   $ (0.96 ) $ 0.24   $ 0.52  

(1)
Fourth quarter 2013 earnings include the impacts of forward loss charges of $30.8, $4.1, $7.5, $333.1, $30.6, $21.0, $43.0, $54.1 and $21.7 on the B747 fuselage, B767 fuselage, B767 propulsion, B787 fuselage, B787 propulsion, B787 wing, G650 wing, G280 wing and BR725 propulsion portions of programs, respectively, and a $382.6 charge resulting from the establishment of a deferred tax asset valuation allowance.

(2)
Third quarter 2013 earnings include the impacts of forward loss charges of $5.3, $0.8, $6.4, $32.7 and $78.6 on the B747 fuselage, B767 propulsion, G280 wing, A350-1000 XWB non-recurring fuselage and A350 XWB recurring fuselage portions of programs, respectively.

(3)
Second quarter 2013 earnings included the impacts of forward loss charges of $5.0, $4.0, $22.0, $234.2 and $191.5 on the B747 fuselage, B767 propulsion, B787 fuselage, G650 wing and G280 wing portions of programs, respectively. Also includes $8.4 reduction in forward loss due to change in estimate recorded for the BR725 program.

(4)
First quarter of 2013 earnings includes the impact of the forward loss charge of $15.3 on the B787 wing portion of the program.

(5)
Fourth quarter 2012 earnings include the impacts of forward loss charges of $6.4 on the B747 fuselage program, $8.0 on the B767 propulsion program and $20.0 on the G280 wing program. Also includes charges of $18.1 related to the April 14, 2012 severe weather event.

(6)
Third quarter 2012 earnings included the impacts of a $151.0 forward loss charge for our Rolls-Royce program, a charge of $184.0 for the B787 wing program, a charge of $88.1 for the G280 wing program, a charge of $162.5 for the G650 wing program, a charge of $2.4 for the A350 XWB program, a charge of $2.4 for the B747-8 wing program, and a net gain of $218.8 resulting from the insurance settlement net of cost incurred related to the April 14, 2012 severe weather event.

(7)
Second quarter 2012 earnings included the impacts of a $6.5 forward loss charge recorded on our A350 XWB non-recurring wing contract, charges of $3.6 for asset impairment, $2.2 related to stock

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

    incentives for certain UAW-represented employees, and $1.1 in early retirement incentives to eligible employees. Also includes a charge of $54.5 related to the April 14, 2012 severe weather event.

(8)
First quarter 2012 earnings included a $2.7 forward loss charge recorded for the B747-8 program, $10.7 forward loss charge for the G280 wing program and $1.0 related to early retirement incentives to eligible employees.

28.   Condensed Consolidating Financial Information

        On November 18, 2010, Spirit completed an offering of $300.0 aggregate principal amount of its 2020 Notes. On September 30, 2009, Spirit completed an offering of $300.0 aggregate principal amount of its 2017 Notes. Both the 2017 Notes and the 2020 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 initial sales of the 2017 Notes and the 2020 Notes, the Company entered into Registration Rights Agreements with the initial purchasers of the 2017 Notes and the 2020 Notes, respectively, pursuant to which the Company, Spirit and the Subsidiary Guarantors (as defined below) agreed to file (x) a registration statement with respect to an offer to exchange original 2017 Notes for a new issue of substantially identical notes registered under the Securities Act (the "2017 Notes Exchange Offer") and (y) a registration statement with respect to an offer to exchange the original 2020 Notes for a new issue of substantially identical notes registered under the Securities Act (the "2020 Notes Exchange Offer"). The 2017 Notes Exchange Offer was consummated on May 26, 2010. The 2020 Notes Exchange Offer was consummated on January 31, 2011. The 2017 Notes and 2020 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the Company and its 100% owned domestic subsidiaries, other than Spirit (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)
      Holdings, as the parent company;

      (ii)
      Spirit, as the subsidiary issuer of the 2017 Notes and the 2020 Notes;

      (iii)
      The Subsidiary Guarantors, on a combined basis, as guarantors of the 2017 Notes and the 2020 Notes;

      (iv)
      The Company's subsidiaries, other than the Subsidiary Guarantors, which are not guarantors of the 2017 Notes and the 2020 Notes (the "Subsidiary Non-Guarantors"), on a combined basis;

      (v)
      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

      (vi)
      Holdings and its subsidiaries on a consolidated basis.

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Spirit AeroSystems Holdings, Inc.

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

Condensed Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2013

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Net Revenues

  $   $ 5,393.4   $ 205.9   $ 738.9   $ (377.2 ) $ 5,961.0  

Operating costs and expenses

                                     

Cost of sales

   
   
5,602.1
   
197.8
   
636.8
   
(377.2

)
 
6,059.5
 

Selling, general and administrative

    3.0     174.4     3.0     20.4         200.8  

Impact from severe weather event

        30.3                 30.3  

Research and development

        32.2     0.1     2.4         34.7  
                           

Total operating costs and expenses

    3.0     5,839.0     200.9     659.6     (377.2 )   6,325.3  

Operating income (loss)

    (3.0 )   (445.6 )   5.0     79.3         (364.3 )

Interest expense and financing fee amortization

        (69.2 )       (11.2 )   10.3     (70.1 )

Interest income

        10.5         0.1     (10.3 )   0.3  

Other income (expense), net

        3.1         0.2         3.3  
                           

Income (loss) before income taxes and equity in net (loss) income of affiliates and subsidiaries

    (3.0 )   (501.2 )   5.0     68.4         (430.8 )

Income tax benefit (provision)

    (0.1 )   (175.6 )   (1.9 )   (13.5 )         (191.1 )
                           

Income (loss) before equity in net income (loss) of affiliates and subsidiaries

    (3.1 )   (676.8 )   3.1     54.9         (621.9 )

Equity in net income (loss) of affiliates

    0.5             0.5     (0.5 )   0.5  

Equity in net income (loss) of subsidiaries

    (618.8 )   58.2             560.6      
                           

Net income (loss)

    (621.4 )   (618.6 )   3.1     55.4     560.1     (621.4 )

Other comprehensive income (loss)

    90.6     5.8           84.8     (90.6 )   90.6  
                           

Comprehensive income (loss)

  $ (530.8 ) $ (612.8 ) $ 3.1   $ 140.2   $ 469.5   $ (530.8 )
                           
                           

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Spirit AeroSystems Holdings, Inc.

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


Condensed Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2012

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Net Revenues

  $   $ 4,910.1   $ 151.5   $ 594.2   $ (258.1 ) $ 5,397.7  

Operating costs and expenses

                                     

Cost of sales

   
   
4,842.1
   
141.4
   
519.9
   
(258.1

)
 
5,245.3
 

Selling, general and administrative

    3.0     145.8     2.8     20.6         172.2  

Impact from severe weather event

        (146.2 )               (146.2 )

Research and development

        32.8         1.3         34.1  
                           

Total operating costs and expenses

    3.0     4,874.5     144.2     541.8     (258.1 )   5,305.4  

Operating income (loss)

    (3.0 )   35.6     7.3     52.4         92.3  

Interest expense and financing fee amortization

        (81.9 )       (10.3 )   9.3     (82.9 )

Interest income

        9.4         0.1     (9.3 )   0.2  

Other income (expense), net

        (0.9 )   (0.1 )   2.8         1.8  
                           

Income (loss) before income taxes and equity in net income (loss) of affiliates and subsidiaries

    (3.0 )   (37.8 )   7.2     45.0         11.4  

Income tax benefit (provision)

    (0.2 )   34.1     (2.7 )   (7.1 )       24.1  
                           

Income (loss) before equity in net income (loss) of affiliates and subsidiaries

    (3.2 )   (3.7 )   4.5     37.9         35.5  

Equity in net income (loss) of affiliates

    (0.7 )   (1.3 )       0.6     0.7     (0.7 )

Equity in net income (loss) of subsidiaries

    38.7     42.4             (81.1 )    
                           

Net income (loss)

    34.8     37.4     4.5     38.5     (80.4 )   34.8  

Other comprehensive income (loss)

    (19.0 )   (32.2 )       13.2     19.0     (19.0 )
                           

Comprehensive income (loss)

  $ 15.8   $ 5.2   $ 4.5   $ 51.7   $ (61.4 ) $ 15.8  
                           
                           

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Spirit AeroSystems Holdings, Inc.

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


Condensed Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2011

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Net Revenues

  $   $ 4,401.4   $ 22.4   $ 536.6   $ (96.6 ) $ 4,863.8  

Operating costs and expenses

                                     

Cost of sales

   
   
3,898.2
   
18.3
   
492.2
   
(96.6

)
 
4,312.1
 

Selling, general and administrative

    4.4     134.0     2.6     18.9         159.9  

Impact from severe weather event

                         

Research and development

        34.9         0.8         35.7  
                           

Total operating costs and expenses

    4.4     4,067.1     20.9     511.9     (96.6 )   4,507.7  

Operating income (loss)

    (4.4 )   334.3     1.5     24.7         356.1  

Interest expense and financing fee amortization

        (76.3 )       (7.2 )   6.0     (77.5 )

Interest income

        6.3             (6.0 )   0.3  

Other income (expense), net

        4.5         (3.1 )       1.4  
                           

Income (loss) before income taxes and equity in net income (loss) of affiliates and subsidiaries

    (4.4 )   268.8     1.5     14.4         280.3  

Income tax benefit (provision)

    1.6     (82.3 )   (0.6 )   (5.6 )       (86.9 )
                           

Income (loss) before equity in net income (loss) of affiliates and subsidiaries

    (2.8 )   186.5     0.9     8.8         193.4  

Equity in net income (loss) of affiliates

    (1.0 )   (0.7 )       (0.3 )   1.0     (1.0 )

Equity in net income (loss) of subsidiaries

    196.2     9.8             (206.0 )    
                           

Net income (loss)

    192.4     195.6     0.9     8.5     (205.0 )   192.4  

Other comprehensive income (loss)

    (50.9 )   (46.8 )       (4.1 )   50.9     (50.9 )
                           

Comprehensive income (loss)

  $ 141.5   $ 148.8   $ 0.9   $ 4.4   $ (154.1 ) $ 141.5  
                           
                           

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Spirit AeroSystems Holdings, Inc.

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

Condensed Consolidating Balance Sheet
December 31, 2013

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Current assets

                                     

Cash and cash equivalents

  $   $ 359.2   $   $ 61.5   $   $ 420.7  

Accounts receivable, net

        643.3     15.3     214.5     (322.3 )   550.8  

Inventory, net

        1,340.2     208.7     293.7         1,842.6  

Deferred tax asset — current

        25.2         1.7         26.9  

Other current assets

        100.7         2.5         103.2  
                           

Total current assets

        2,468.6     224.0     573.9     (322.3 )   2,944.2  

Property, plant and equipment, net

        1,308.0     305.3     190.0         1,803.3  

Pension assets

        231.1         21.5         252.6  

Investment in subsidiary

    1,026.3     281.5             (1,307.8 )    

Equity in net assets of subsidiaries

    454.7     119.4             (574.1 )    

Other assets

        422.4     80.0     24.2     (419.5 )   107.1  
                           

Total assets

  $ 1,481.0   $ 4,831.0   $ 609.3   $ 809.6   $ (2,623.7 ) $ 5,107.2  
                           
                           

Current liabilities

                                     

Accounts payable

  $   $ 666.5   $ 224.2   $ 185.2   $ (322.2 ) $ 753.7  

Accrued expenses

        189.9     0.5     30.2         220.6  

Profit sharing

        35.7         2.7         38.4  

Current portion of long-term debt

        12.9         3.9         16.8  

Advance payments, short-term

        133.5                 133.5  

Deferred revenue, short-term

        15.7         4.1         19.8  

Deferred grant income liability — current

            7.3     1.3         8.6  

Other current liabilities

        137.1         7.1         144.2  
                           

Total current liabilities

        1,191.3     232.0     234.5     (322.2 )   1,335.6  

Long-term debt

        1,131.4     80.0     278.6     (339.5 )   1,150.5  

Advance payments, long-term

        728.9                 728.9  

Pension/OPEB obligation

        69.8                 69.8  

Deferred grant income liability — non-current

            75.6     32.6         108.2  

Deferred revenue and other deferred credits

        22.7         8.2         30.9  

Other liabilities

        245.6         36.7     (80.0 )   202.3  

Total equity

    1,481.0     1,441.3     221.7     219.0     (1,882.0 )   1,481.0  
                           

Total liabilities and shareholders' equity

  $ 1,481.0   $ 4,831.0   $ 609.3   $ 809.6   $ (2,623.7 ) $ 5,107.2  
                           
                           

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Spirit AeroSystems Holdings, Inc.

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


Condensed Consolidating Balance Sheet
December 31, 2012

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Current assets

                                     

Cash and cash equivalents

  $   $ 369.1   $   $ 71.6   $   $ 440.7  

Accounts receivable, net

        513.2     13.7     171.7     (277.9 )   420.7  

Inventory, net

        2,006.9     164.3     239.7     (0.1 )   2,410.8  

Deferred tax asset — current

        57.1                 57.1  

Other current assets

        22.2         3.9         26.1  
                           

Total current assets

        2,968.5     178.0     486.9     (278.0 )   3,355.4  

Property, plant and equipment, net

        1,221.1     289.3     188.1         1,698.5  

Pension assets

        69.9         8.5         78.4  

Investment in subsidiary

    1,013.7     281.4             (1,295.1 )    

Equity in net assets of subsidiaries

    983.2     58.2             (1,041.4 )    

Deferred tax asset — non-current, net

        192.3         (0.3 )       192.0  

Other assets

        405.0     80.0     27.5     (421.5 )   91.0  
                           

Total assets

  $ 1,996.9   $ 5,196.4   $ 547.3   $ 710.7   $ (3,036.0 ) $ 5,415.3  
                           
                           

Current liabilities

                                     

Accounts payable

  $   $ 616.3   $ 157.2   $ 163.4   $ (277.9 ) $ 659.0  

Accrued expenses

        188.4     2.6     25.3         216.3  

Profit sharing

        25.9         2.4         28.3  

Current portion of long-term debt

        6.6         3.7         10.3  

Advance payments, short-term

        70.7                 70.7  

Deferred revenue, short-term

        16.6         1.8         18.4  

Deferred grant income liability — current

            5.7     1.2         6.9  

Other current liabilities

        52.6         4.5         57.1  
                           

Total current liabilities

        977.1     165.5     202.3     (277.9 )   1,067.0  

Long-term debt

        1,142.9     80.0     284.5     (341.5 )   1,165.9  

Advance payments, long-term

        833.6                 833.6  

Pension/OPEB obligation

        75.6                 75.6  

Deferred grant income liability — non-current

            83.3     33.3         116.6  

Deferred revenue and other deferred credits

        21.1         9.7         30.8  

Other liabilities

        189.3         19.6     (80.0 )   128.9  

Total equity

    1,996.9     1,956.8     218.5     161.3     (2,336.6 )   1,996.9  
                           

Total liabilities and shareholders' equity

  $ 1,996.9   $ 5,196.4   $ 547.3   $ 710.7   $ (3,036.0 ) $ 5,415.3  
                           
                           

154


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Spirit AeroSystems Holdings, Inc.

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

Condensed Consolidating Statements of Cash Flows
For the Twelve Months Ended December 31, 2013

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Operating activities

                                     

Net cash provided by (used in) operating activities

  $ (621.4 ) $ 219.0   $ 34.2   $ 7.4   $ 621.4   $ 260.6  
                           

Investing activities

                                     

Purchase of property, plant and equipment

        (190.9 )   (34.2 )   (9.1 )       (234.2 )

Purchase of property, plant and equipment — severe weather event

        (38.4 )               (38.4 )

Proceeds from sale of assets

        0.7                 0.7  

Equity in net assets of subsidiaries

    621.4     3.0         0.7     (621.4 )   3.7  

Other

        4.8         (4.8 )        
                           

Net cash provided by (used in) investing activities

    621.4     (220.8 )   (34.2 )   (13.2 )   (621.4 )   (268.2 )
                           

Financing activities

                                     

Proceeds from revolving credit facility

                         

Payments on revolving credit facility

                         

Proceeds from issuance of debt

                         

Principal payments of debt

        (6.6 )       (3.8 )       (10.4 )

Collection on (repayment of) intercompany debt

        2.0         (2.0 )        

Debt issuance and financing costs

        (4.1 )               (4.1 )

Excess tax benefits from share-based payment arrangements

        0.6                 0.6  
                           

Net cash provided by (used in) financing activities

        (8.1 )       (5.8 )       (13.9 )
                           

Effect of exchange rate changes on cash and cash equivalents

                1.5         1.5  
                           

Net (decrease) in cash and cash equivalents for the period          

        (9.9 )       (10.1 )       (20.0 )

Cash and cash equivalents, beginning of period

        369.1         71.6         440.7  
                           

Cash and cash equivalents, end of period

  $   $ 359.2   $   $ 61.5   $   $ 420.7  
                           
                           

155


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Spirit AeroSystems Holdings, Inc.

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


Condensed Consolidating Statements of Cash Flows
For the Twelve Months Ended December 31, 2012

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Operating activities

                                     

Net cash provided by (used in) operating activities

  $ 34.8   $ 586.6   $ 4.6   $ (46.8 ) $ (34.8 ) $ 544.4  
                           

Investing activities

                                     

Purchase of property, plant and equipment

        (204.7 )   (4.6 )   (26.8 )       (236.1 )

Purchase of property, plant and equipment — severe weather event

        (12.9 )               (12.9 )

Proceeds from sale of assets

        0.4         1.2         1.6  

Equity in net assets of subsidiaries

    (34.8 )   (1.6 )       0.2     34.8     (1.4 )
                           

Net cash provided by (used in) investing activities

    (34.8 )   (218.8 )   (4.6 )   (25.4 )   34.8     (248.8 )
                           

Financing activities

                                     

Proceeds from revolving credit facility

        170.0                 170.0  

Payments on revolving credit facility

        (170.0 )               (170.0 )

Proceeds from issuance of debt

        547.2         0.4         547.6  

Principal payments of debt

        (567.4 )       (3.6 )       (571.0 )

Collection on (repayment of) intercompany debt

        (74.0 )       74.0          

Debt issuance and financing costs

        (12.4 )               (12.4 )

Excess tax benefits from share-based payment arrangements

        1.2                 1.2  
                           

Net cash provided by (used in) financing activities

        (105.4 )       70.8         (34.6 )
                           

Effect of exchange rate changes on cash and cash equivalents

                1.9         1.9  
                           

Net increase in cash and cash equivalents for the period          

        262.4         0.5         262.9  

Cash and cash equivalents, beginning of period

        106.7         71.1         177.8  
                           

Cash and cash equivalents, end of period

  $   $ 369.1   $   $ 71.6   $   $ 440.7  
                           
                           

156


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Spirit AeroSystems Holdings, Inc.

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


Condensed Consolidating Statements of Cash Flows
For the Twelve Months Ended December 31, 2011

 
  Holdings   Spirit   Guarantor
Subsidiaries
  Non-Guarantor
Subsidiaries
  Consolidating
Adjustments
  Total  

Operating activities

                                     

Net cash provided by (used in) operating activities

  $ 193.5   $ (63.2 ) $ 25.7   $ (9.8 ) $ (193.5 ) $ (47.3 )
                           

Investing activities

                                     

Purchase of property, plant and equipment

        (184.7 )   (25.7 )   (39.3 )       (249.7 )

Proceeds from the sale of assets

        0.3         0.2         0.5  

Equity in net assets of subsidiaries

    (193.5 )               193.5      
                           

Net cash provided by (used in) investing activities

    (193.5 )   (184.4 )   (25.7 )   (39.1 )   193.5     (249.2 )
                           

Financing activities

                                     

Proceeds from revolving credit facility

        30.0                 30.0  

Payments on revolving credit facility

        (30.0 )               (30.0 )

Principal payments of debt

        (5.8 )       (2.2 )       (8.0 )

Collection on (repayment of) intercompany debt

        (57.3 )       57.3          

Excess tax benefits from share-based payment arrangements

        1.3                 1.3  
                           

Net cash provided by (used in) financing activities

        (61.8 )       55.1         (6.7 )
                           

Effect of exchange rate changes on cash and cash equivalents

                (0.6 )       (0.6 )
                           

Net (decrease) increase in cash and cash equivalents for the period

        (309.4 )       5.6         (303.8 )

Cash and cash equivalents, beginning of period

        416.1         65.5         481.6  
                           

Cash and cash equivalents, end of period

  $   $ 106.7   $   $ 71.1   $   $ 177.8  
                           
                           

29.   Subsequent Events

        In January 2014, the Company completed its negotiations with its customer for the initial delivery unit of the Bell V280 helicopter. The Company agreed to invest $5.0 in the program over the next five years. Under contract accounting the investment was recorded as a forward loss.

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Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

        Our President and Chief Executive Officer and Senior Vice President and Chief Financial Officer have evaluated the effectiveness of our disclosure controls as of December 31, 2013 and have concluded that, because of the material weakness in our internal control over financial reporting discussed below, these disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) were not effective. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time period specified in the SEC rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management of the Company, including the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In light of the material weakness discussed below, the Company performed additional analysis and other post-closing procedures to ensure our consolidated financial statements are prepared in accordance with generally accepted accounting principles. Accordingly, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that the consolidated financial statements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.


Management's Report on Internal Control over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO and effected by the Company's board of directors, management and other personnel to provide reasonable assurance of the reliability of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatement. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in condition, or that the degree of compliance with the policies or procedures may deteriorate.

        Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We did not maintain effective controls over the completeness, accuracy and valuation of inventory and cost of sales related to the Airbus A350 XWB Section 15 recurring program. Specifically, we did not maintain controls over the completeness and accuracy of the bill of materials used in the contract accounting estimates for this program. These controls were not designed effectively to ensure that the bill of materials used in the accounting estimates were accurate and provided a sound basis for estimating future costs. Although this material weakness did not result in a material misstatement of the Company's consolidated financial statements, the existence of the

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control deficiency could result in an undetected material misstatement of the Company's consolidated financial statements.

        In addition, we did not maintain effective controls over the completeness, accuracy and valuation of inventory and cost of sales for the Gulfstream G280 and G650 programs. Specifically, controls over contract accounting estimates related to these programs were not operating effectively in order to ensure that (1) the bills of materials used in the accounting estimates were complete and provided a sound basis for estimating future costs; (2) the evaluation of current actual trends impacting prior estimates of supply chain and labor costs were identified and incorporated into the accounting estimates on a timely basis; and (3) the estimation of the number of production units used in the accounting estimates was accurate. This control deficiency resulted in audit adjustments to the cost of sales and inventory accounts and related financial disclosures within the Company's consolidated financial statements for the year ended December 31, 2012 and the condensed consolidated financial statements for the quarter ended June 27, 2013.

        Because of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2013, based on criteria in Internal Control — Integrated Framework issued by COSO.

        The effectiveness of the Company's internal control over financial reporting as of December 31, 2013, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm as stated in their report which appears herein.


Changes in Internal Controls over Financial Reporting

        During 2013, several of our sites were implementing a new enterprise resource planning (ERP) system. This conversion affected certain general ledger functions, and resulted in changes to processes and controls as we migrated from legacy systems to the new ERP platforms. Other than this item, there were no other changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Remediation Plan

        Management has been actively engaged in developing a remediation plan to address the above material weakness. The remediation efforts expected to be implemented include the following:

    Establish a more comprehensive review and approval procedure, with increased Corporate oversight for the G280 and G650 programs at our Tulsa business unit.

    Enhance analysis and review of cost estimates related to supply chain management, labor and the bill of material for the G280 and G650 programs at our Tulsa business unit.

    Increase Corporate oversight of changes to EAC assumptions specifically regarding estimates of production units for the G280 and G650 programs at our Tulsa business unit.

    Enhance analysis and review of the bill of materials and its impact on cost estimates for the A350 XWB Section 15 recurring program.

        Management has developed plans for the implementation of the foregoing remediation efforts and will monitor the implementation. Under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of the Company's internal control environment to improve the overall effectiveness of internal control over financial reporting.

        Management believes the foregoing efforts will effectively remediate the material weakness. As the Company continues to evaluate and work to improve its internal control over financial reporting, management may determine to take additional measures to address the control deficiency or determine to modify the remediation plan described above.

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        If not remediated, this control deficiency could result in future material misstatements to the Company's financial statements.

Item 9B.     Other Information

        None.

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PART III

Item 10.     Director, Executive Officers and Corporate Governance

        Information concerning the directors of Spirit Holdings will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

        Information concerning the executive officers of Spirit is included in Part I of this Annual Report on Form 10-K.

        Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

        Information concerning Corporate Governance and the Board of Directors of Spirit Holdings will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

        The Company has adopted a Code of Ethics and a Finance Code of Professional Conduct that applies to the Company's Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and persons performing similar functions. A copy of the Code of Ethics and Finance Code of Professional Conduct is available on the Company's website at www.spiritaero.com under the "Investor Relations" link, and any waiver from the Code of Ethics or Finance Code of Professional Conduct will be timely disclosed on the Company's website or a Current Report on Form 8-K, as will any amendments to the Code of Ethics or Spirit Finance Code of Conduct.

Item 11.     Executive Compensation

        Information concerning the compensation of directors and executive officers of Spirit Holdings will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        Information concerning the ownership of Spirit Holdings' equity securities by certain beneficial owners and by management will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

        Equity Compensation Plan Information is included in Part II of this Annual Report.

Item 13.     Certain Relationships and Related Transactions, and Director Independence

        Information concerning certain relationships and related transactions and director independence will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

Item 14.     Principal Accounting Fees and Services

        Information concerning principal accounting fees and services will be provided in Spirit Holdings' proxy statement for its 2014 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year, and that information is hereby incorporated by reference.

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Part IV

Item 15.     Exhibits and Financial Statement Schedules

Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
2.1   Asset Purchase Agreement, dated as of February 22, 2005, between Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and The Boeing Company   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 2.1
2.2   First Amendment to Asset Purchase Agreement, dated June 15, 2005, between Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and The Boeing Company   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 2.2
3.1   Amended and Restated Certificate of Incorporation of Spirit AeroSystems Holdings, Inc.   Annual Report on Form 10-K (File No. 001-33160), filed February 20, 2009, Exhibit 3.1
3.2   Third Amended and Restated By Laws of Spirit AeroSystems Holdings, Inc.   Current Report on Form 8-K (File No. 001-33160), filed May 3, 2010, Exhibit 3.1
4.1   Form of Class A Common Stock Certificate   Amendment No. 5 to Registration Statement on Form S-1/A (File No. 333-135486), filed November 17, 2006, Exhibit 4.1
4.2   Form of Class B Common Stock Certificate   Amendment No. 5 to Registration Statement on Form S-1/A (File No. 333-135486), filed November 17, 2006, Exhibit 4.2
4.3   Registration Agreement, dated June 16, 2005, among Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) and the persons listed on Schedule A thereto   Registration Statement on Forms S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 4.4
4.4   Indenture dated as of September 30, 2009, governing the 7 1 / 2 % Senior Notes due 2017, by and among Spirit AeroSystems, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A.   Current Report on Form 8-K (File No. 001-33160), filed October 1, 2009, Exhibit 4.1
4.5   Form of 7 1 / 2 % Senior Note due 2017   Current Report on Form 8-K (File No. 001-33160), filed October 1, 2009, included as Exhibit A to Exhibit 4.1
4.6   Registration Rights Agreement, dated as of September 30, 2009, among Spirit AeroSystems, Inc., the guarantors identified therein, Banc of America Securities LLC and the other initial purchasers of the Notes named therein   Current Report on Form 8-K (File No. 001-33160), filed October 1, 2009, Exhibit 4.3
4.7   Indenture dated as of November 18, 2010, governing the 6 3 / 4 % Senior Notes due 2020, by and among Spirit AeroSystems, Inc., the guarantors identified therein and The Bank of New York Mellon Trust Company, N.A.   Current Report on Form 8-K (File No. 001-33160), filed November 18, 2010, Exhibit 4.1
4.8   Form of 6 3 / 4 % Senior Note due 2020   Current Report on Form 8-K (File No. 001-33160), filed November 18, 2010, included as Exhibit A to Exhibit 4.2

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Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
4.9   Registration Rights Agreement, dated as of November 18, 2010, among Spirit AeroSystems, Inc., the guarantors identified therein, Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of itself and as representative of the several initial purchasers of the notes named therein   Current Report on Form 8-K (File No. 001-33160), filed November 18, 2010, Exhibit 4.3
4.10   Supplemental Indenture, dated as of August 11, 2010   Quarterly Report on Form 10-Q (File No. 001-33160), filed November 5, 2010, Exhibit 4.1
10.1†   Employment Agreement, dated June 16, 2005, between Jeffrey L. Turner and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.)   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.1
10.2†   Amendment to Employment Agreement between Spirit AeroSystems, Inc. and Jeffrey L. Turner, dated December 31, 2008   Current Report on Form 8-K (File No. 001-33160), filed January 6, 2009, Exhibit 10.1.1
10.3†   Employment Agreement, dated September 13, 2005, between Spirit AeroSystems, Inc. and H. David Walker   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.3
10.4†   Employment Agreement, dated December 28, 2005, between Spirit AeroSystems, Inc. and John Lewelling   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.4
10.5†   Employment Agreement between Spirit AeroSystems, Inc. and Philip D. Anderson, dated February 12, 2010   Current Report on Form 8-K (File No. 001-33160), filed February 17, 2010, Exhibit 10.1
10.6†   Spirit AeroSystems Holdings, Inc. Amended and Restated Executive Incentive Plan   Quarterly Report on Form 10-Q (File No. 001-33160), filed October 31, 2008, Exhibit 10.7
10.7†   Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.) Supplemental Executive Retirement Plan   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.8
10.8†   Amendment to Spirit AeroSystems Holdings, Inc. Supplemental Executive Retirement Plan, dated July 30, 2007   Registration Statement on Form S-8 (File No. 333-146112), filed September 17, 2007, Exhibit 10.2
10.9†   Spirit AeroSystems Holdings, Inc. Second Amended and Restated Short-Term Incentive Plan.   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 5, 2011, Exhibit 10.3
10.10†   Spirit AeroSystems Holdings, Inc. Fourth Amended and Restated Long-Term Incentive Plan.   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 5, 2011, Exhibit 10.4
10.11†   Spirit AeroSystems Holdings, Inc. Cash Incentive Plan   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.11
10.12†   Spirit AeroSystems Holdings, Inc. Union Equity Participation Program   Amendment No. 2 to Registration Statement on Form S-1/A (File No. 333-135486), filed October 30, 2006, Exhibit 10.12
10.13†   Spirit AeroSystems Holdings, Inc. Second Amended and Restated Director Stock Plan   Registration Statement on Form S-8 (File No. 333-150402), filed April 23, 2008, Exhibit 10.1
10.14   Form of Indemnification Agreement   Amendment No. 1 to Registration Statement on Form S-1/A (File No. 333-135486), filed August 29, 2006, Exhibit 10.14

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Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
10.15   Security Agreement, dated as of June 16, 2005, made by and among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Onex Wind Finance LP, 3101447 Nova Scotia Company, Onex Wind Finance LLC and Citicorp North America, Inc., as collateral agent.   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.20
10.16   Security Agreement, dated as of June 16, 2005, made by and among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), Spirit AeroSystems Finance, Inc. (f/k/a Mid-Western Aircraft Finance, Inc.), Onex Wind Finance LP, 3101447 Nova Scotia Company, Onex Wind Finance LLC and The Boeing Company, as agent.   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.22
10.17††   Special Business Provisions (Sustaining), as amended through February 6, 2013, between The Boeing Company and Spirit AeroSystems, Inc.   *
10.18††   General Terms Agreement (Sustaining and others), dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.)   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.24
10.19††   Hardware Material Services General Terms Agreement, dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.)   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.25
10.20††   Ancillary Know-How Supplemental License Agreement, dated as of June 16, 2005, between The Boeing Company and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.)   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.26
10.21   Sublease Agreement, dated as of June 16, 2005, among The Boeing Company, Boeing IRB Asset Trust and Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems, Inc.)   Registration Statement on Form S-1 (File No. 333-135486), filed June 30, 2006, Exhibit 10.27
10.22   Inducement Agreement between Spirit AeroSystems, Inc. and The North Carolina Global TransPark Authority, dated May 14, 2008   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 1, 2008, Exhibit 10.2
10.23   Lease Agreement between Spirit AeroSystems, Inc. and The North Carolina Global TransPark Authority, dated May 14, 2008   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 1, 2008, Exhibit 10.3
10.24   Construction Agency Agreement between Spirit AeroSystems, Inc. and The North Carolina Global TransPark Authority, dated May 14, 2008   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 1, 2008, Exhibit 10.4

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Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
10.25†   Amendment to the Spirit AeroSystems Holdings, Inc. Amended and Restated Executive Incentive Plan.   Quarterly Report on Form 10-Q (File No. 001-33160), filed May 6, 2010, Exhibit 10.1
10.26   Amendment No. 3 dated as of October 15, 2010, to the Second Amended and Restated Credit Agreement, dated as of November 27, 2006, among Spirit AeroSystems, Inc. (f/k/a Mid-Western Aircraft Systems,  Inc.), Spirit AeroSystems Holdings, Inc. (f/k/a Mid-Western Aircraft Systems Holdings, Inc.), the guarantors party thereto; Bank of America, N.A. and the other lenders party thereto.   Current Report on Form 8-K (File No. 001-33160), filed October 20, 2010, Exhibit 10.1
10.27   Spirit AeroSystems Holdings, Inc. Amended and Restated Deferred Compensation Plan, As Amended   Quarterly Report on Form 10-Q (File No. 001-33160), filed May 6, 2011, Exhibit 10.34
10.28†   Employment Agreement between Spirit AeroSystems, Inc. and David Coleal, effective as of July 14, 2011   Quarterly Report on Form 10-Q (File No. 001-33160), filed November 4, 2011, Exhibit 10.1
10.29   Credit Agreement, dated as of April 18, 2012, among Spirit AeroSystems, Inc., the other guarantors party thereto, Bank of America, N.A. and the other agents and lenders party thereto   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 7, 2012, Exhibit 10.1
10.30   Amendment No. 1, dated as of October 26, 2012, to Credit Agreement dated as of April 18, 2012 among Spirit Aerosystems, Inc., Spirit AeroSystems Holdings, Inc., the other guarantors party thereto, Bank of America, N.A. and the other agents and lenders party thereto   Current Report on Form 8-K (File No. 001-33160), filed October 30, 2012, Exhibit 10.1
10.31   Amendment No. 2, dated as of August 2, 2013, to Credit Agreement dated as of April 18, 2012 among Spirit Aerosystems, Inc., Spirit AeroSystems Holdings, Inc., the other guarantors party thereto, Bank of America, N.A. and the other agents and lenders party thereto   *
10.32†   Amended and Restated Employment Agreement, between Spirit AeroSystems, Inc. and Jon Lammers, effective as of July 24, 2012   Quarterly Report on Form 10-Q (File No. 001-33160), filed November 5, 2012, Exhibit 10.1
10.33   Amendment No. 2, dated March 4, 2011, to General Terms Agreement (Sustaining and Others) between The Boeing Company and Spirit AeroSystems, Inc.   Quarterly Report on Form 10-Q (File No. 001-33160), filed November 5, 2012, Exhibit 10.2
10.35††   Memorandum of Agreement, between The Boeing Company and Spirit AeroSystems, Inc., made as of March 9, 2012, amending Special Business Provisions (Sustaining)   Quarterly Report on Form 10-Q (File No. 001-33160), filed November 5, 2012, Exhibit 10.4
10.36†   Employment Agreement between Spirit AeroSystems, Inc. and Larry A. Lawson, effective as of March 18, 2013   Current Report on Form 8-K (File No. 001-33160), filed March 22, 2013, Exhibit 10.1

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Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
10.37†   Retirement and Consulting Agreement and General Release between Spirit AeroSystems, Inc., Spirit AeroSystems Holdings, Inc. and Jeffrey L. Turner, effective as of May 2, 2013   Current Report on Form 8-K (File No. 001-33160), filed May 6, 2013, Exhibit 10.1
10.38†   Retirement and Consulting Agreement and General Release between Spirit AeroSystems, Inc., Spirit AeroSystems Holdings, Inc. and Michael G. King, effective as of June 18, 2013   Current Report on Form 8-K (File No. 001-33160), filed June 24, 2013, Exhibit 10.1
10.39†   Employment Agreement between Spirit AeroSystems, Inc. and Sanjay Kapoor, effective as of August 23, 2013   Current Report on Form 8-K (File No. 001-33160), filed August 26, 2013, Exhibit 10.1
10.40†   Employment Agreement between Spirit AeroSystems, Inc. and Heidi Wood, effective as of July 15, 2013   *
10.41†   Amendment to Employment Agreement between Spirit Aerosystems, Inc. and Heidi Wood, effective as of July 15, 2013   *
10.42†   Form of Executive Compensation Letter   *
12.1   Ratio of Earnings to Fixed Charges   *
14.1   Code of Ethics    
    (i) Spirit AeroSystems Holdings, Inc. Code of Ethics and Business Conduct, as amended   Quarterly Report on Form 10-Q (File No. 001-33160), filed August 5, 2011, Exhibit 14.1
    (ii) Spirit AeroSystems Holdings, Inc. Code of Conduct for Finance Employees   Annual Report on Form 10-K (File No. 001-33160), filed March 5, 2007, Exhibit 14.1
21.1   Subsidiaries of Spirit AeroSystems Holdings, Inc.   *
23.1   Consent of PricewaterhouseCoopers LLP   *
31.1   Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.   *
31.2   Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.   *
32.1   Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.   **
32.2   Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.   **
101.INS@   XBRL Instance Document.   *
101.SCH@   XBRL Taxonomy Extension Schema Document.   *
101.CAL@   XBRL Taxonomy Extension Calculation Linkbase Document.   *
101.DEF@   XBRL Taxonomy Extension Definition Linkbase Document.   *
101.LAB@   XBRL Taxonomy Extension Label Linkbase Document.   *

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Article I. Exhibit
Number
  Section 1.01 Exhibit   Incorporated by
Reference to the
Following Documents
101.PRE@   XBRL Taxonomy Extension Presentation Linkbase Document.   *

Indicates management contract or compensation plan or arrangement

††
Indicates that portions of the exhibit have been omitted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment

*
Filed herewith

**
Furnished herewith

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Wichita, State of Kansas on February 19, 2014.

    SPIRIT AEROSYSTEMS HOLDINGS, INC.

 

 

By:

 

/s/    Sanjay Kapoor     

Sanjay Kapoor
Senior Vice President and Chief Financial Officer

        Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature   Title   Date

 

 

 

 

 
/s/    Larry A. Lawson

        Larry A. Lawson
  Director, President and Chief Executive
Officer (Principal Executive Officer)
  February 19, 2014

/s/    Sanjay Kapoor

        Sanjay Kapoor

 

Senior Vice President and Chief Financial Officer (Principal Financial Officer)

 

February 19, 2014

/s/    James Steven Sharp

        James Steven Sharp

 

Corporate Controller (Principal
Accounting Officer)

 

February 19, 2014

/s/    Robert Johnson

        Robert Johnson

 

Director, Chairman of the Board

 

February 19, 2014

/s/    Charles Chadwell

        Charles Chadwell

 

Director

 

February 19, 2014

/s/    Ivor Evans

        Ivor Evans

 

Director

 

February 19, 2014

/s/    Paul Fulchino

        Paul Fulchino

 

Director

 

February 19, 2014

/s/    Richard Gephardt

        Richard Gephardt

 

Director

 

February 19, 2014

/s/    Ronald Kadish

        Ronald Kadish

 

Director

 

February 19, 2014

/s/    Christopher E. Kubasik

        Christopher E. Kubasik

 

Director

 

February 19, 2014

/s/    Tawfiq Popatia

        Tawfiq Popatia

 

Director

 

February 19, 2014

/s/    Francis Raborn

        Francis Raborn

 

Director

 

February 19, 2014

/s/    Jeffrey L. Turner

        Jeffrey L. Turner

 

Director

 

February 19, 2014

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SCHEDULE II — Valuation and Qualifying Accounts
Allowance for Doubtful Accounts, Warranties and Extraordinary Rework, and Deferred Tax Asset Valuation
(Deducted from assets to which they apply)

Allowance for Doubtful Accounts
  2013   2012   2011  

Balance, January 1

  $ 4.3   $ 1.4   $  

Charges to costs and expenses

    (0.2 )   3.2     1.6  

Write-offs, net of recoveries

    (4.3 )   (0.3 )   (0.2 )
               

Balance, December 31

  $ (0.2 ) $ 4.3   $ 1.4  
               
               

 

Warranties and Extraordinary Rework
  2013   2012   2011  

Balance, January 1

  $ 30.9   $ 19.6   $ 18.7  

Charges to costs and expenses

    38.3     12.0     18.4  

Write-offs, net of recoveries

    (0.6 )   (0.9 )   (17.5 )

Exchange rate

    0.1     0.2      
               

Balance, December 31

  $ 68.7   $ 30.9   $ 19.6  
               
               

 

Deferred Tax Asset Valuation Allowance
  2013   2012   2011  

Balance, January 1

  $ 10.4   $ 8.2   $ 5.3  

US deferred tax asset

    381.0          

Income tax credits

    3.7     1.9     2.9  

Depreciation and Amortization

    0.2     0.3      

Other

    1.2          
               

Balance, December 31

  $ 396.5   $ 10.4   $ 8.2  
               
               

169




Exhibit 10.17

 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Amendment 8

 

SPECIAL BUSINESS PROVISIONS

 

between

 

THE BOEING COMPANY

 

and

 

SPIRIT AEROSYSTEMS, INCORPORATED

 

MS-65530-0016

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

TABLE OF CONTENTS

 

TITLE PAGE

TABLE OF CONTENTS

ATTACHMENTS

AMENDMENT PAGE

RECITAL PAGE

 

1.0

DEFINITIONS

 

9

2.0

CONTRACT FORMATION

 

13

 

2.1

Order

 

 

13

 

2.2

Entire Agreement

 

13

 

2.3

Incorporated by Reference

 

13

 

2.4

Written Authorization to Proceed

 

13

3.0

SUBJECT MATTER OF SALE

 

14

 

3.1

Subject Matter of Sale

 

14

 

3.2

Period of Performance

 

14

 

3.3

Nonrecurring Work

 

14

 

 

3.3.1

Engineering Services

 

14

 

 

 

3.3.1.1

Engineering Services

 

14

 

 

3.3.2

Product Development and Test

 

14

 

 

 

3.3.2.1

Product Development and Test Activities

 

14

 

 

 

3.3.2.2

Static and Fatigue Test Articles

 

15

 

 

3.3.3

Certification Support

 

15

 

 

3.3.4

Tooling

 

15

 

 

 

3.3.4.1

Tooling — General

 

15

 

 

 

3.3.4.2

Contractor Use-Tooling (also known as Seller-Use Tooling)

 

15

 

 

 

3.3.4.3

Common-Use Tooling

 

15

 

 

 

3.3.4.4

Use of Casting, Forging and Extrusion Tooling

 

16

 

 

 

3.3.4.5

Initial Planning

 

16

 

 

 

3.3.4.6

Title to Tooling

 

16

 

 

 

3.3.4.7

Use and Disposition of Tooling

 

16

 

 

 

3.3.4.8

Reserved

 

17

 

 

 

3.3.4.9

Responsible Party

 

17

 

 

3.3.5

Life Cycle Product Teams

 

17

 

 

3.3.6

Weight Status Reporting

 

17

 

3.4

Recurring Work

 

17

 

 

3.4.1

Production Articles

 

17

 

 

3.4.2

Delivery Point and Schedule

 

18

 

 

 

3.4.2.1

Additional Events of Excusable Delay

 

18

 

 

3.4.3

Transportation Routing Instructions

 

18

 

 

3.4.4

Manufacturing Configuration

 

18

 

 

3.4.5

Sustaining Product Definition

 

18

 

 

3.4.6

Tooling Maintenance

 

18

 

 

3.4.7

Maintenance of Production Planning

 

19

 

 

3.4.8

Certification Support

 

19

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

 

 

3.4.9

Type Design and Type Certification Data Development and Protection

 

19

 

 

3.4.10

Seller Authorized Representative (AR) Requirements and Obligations

 

19

 

3.5

Product Support and Miscellaneous Work

 

19

 

 

3.5.1

Miscellaneous Work

 

19

 

 

3.5.2

Delivery Schedule of Other Products and Performance of Services

 

20

4.0

PRICING

 

20

 

4.1

Recurring Price

 

20

 

 

4.1.1

Interim Extension Pricing

 

20

 

4.2

RESERVED

 

21

 

4.3

Pricing of Requirements for Modification or Retrofit

 

21

 

 

4.3.1

Boeing Responsibility or Regulatory Requirement

 

21

 

 

4.3.2

Reserved

 

21

 

4.4

Expedite of Production Requirements

 

21

 

4.5

Pricing for Derivatives

 

21

 

4.6

POA Pricing

 

21

5.0

PAYMENT

 

22

 

5.1

Invoicing

 

22

 

 

5.1.1

Invoicing Requirements

 

22

 

 

5.1.2

Invoicing Shipset Identification

 

22

 

 

5.1.3

Customs Invoicing

 

22

 

 

5.1.4

Mailing Instructions

 

22

 

 

5.1.5

Pay From Receipt

 

22

 

5.2

Recurring Payment

 

23

 

 

5.2.1

Non-Recurring Payment

 

23

 

5.3

Payment Method

 

25

 

5.4

Payment Errors

 

25

6.0

CHANGES

 

25

7.0

CHANGE PROVISIONS

 

26

 

7.1

Price Adjustment for Changes

 

26

 

7.2

Change Pricing Criteria

 

26

 

7.3

Reserved

 

28

 

7.4

Reserved

 

28

 

7.5

Schedule Acceleration/Deceleration

 

28

 

 

7.5.1

Production Rates

 

28

 

7.6

Total Cost Management

 

28

 

 

7.6.1

Boeing Generated Technical and Cost Improvement

 

29

 

7.7

Obsolescence

 

29

 

7.8

Reserved

 

29

 

7.9

Proposals for Price Adjustment

 

29

 

7.10

Apportionment and Payment of Price Adjustments

 

32

 

 

7.10.1

Recurring Work Price Adjustment

 

32

 

 

7.10.2

Apportionment and Payment

 

32

8.0

GOVERNING QUALITY ASSURANCE REQUIREMENTS

 

32

9.0

STATUS REPORTS/REVIEWS

 

32

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

 

9.1

Notification of Shipment

 

32

 

9.2

General Reports / Reviews

 

33

 

9.3

Cost Performance Visibility

 

33

 

9.4

Problem Reports

 

34

 

9.5

Notice of Delay - Premium Effort

 

35

 

9.6

Diversity Reporting Format

 

35

 

9.7

Planning Schedule

 

35

10.0

BOEING ASSISTANCE

 

35

 

10.1

Boeing Technical / Manufacturing Assistance Regarding Seller’s Nonperformance

 

35

 

10.2

Other Boeing Assistance

 

36

11.0

REPAIR AUTHORIZATION

 

36

 

11.1

Boeing-Performed Work

 

36

 

11.2

Reimbursement for Repairs

 

36

12.0

OTHER REQUIREMENTS

 

37

 

12.1

SUPPORTING DOCUMENTATION

 

37

 

 

12.1.1

Supporting Documentation and Priority

 

37

 

 

12.1.2

Revision of Documents

 

37

 

 

12.1.3

Compliance

 

38

 

12.2

Reserved

 

38

 

12.3

ACCOUNTABILITY FOR TOOLING

 

39

 

12.4

CERTIFIED TOOL LISTS

 

39

 

12.5

BOEING FURNISHED TOOLING

 

39

 

12.6

PACKAGING AND SHIPPING

 

39

 

 

12.6.1

Packaging

 

39

 

 

12.6.2

Product Packaging

 

40

 

 

12.6.3

Disposable Shipping Fixtures

 

40

 

 

12.6.4

Packing Sheet and Test Reports

 

40

 

 

12.6.5

Additional Copies

 

41

 

 

12.6.6

Price Inclusive

 

41

 

12.7

CYCLE TIME REQUIREMENTS

 

41

 

12.8

COMPATIBILITY WITH ENGINEERING BUSINESS AND PRODUCTION SYSTEMS

 

41

 

12.9

ELECTRONIC ACCESS AND EXCHANGE OF DIGITAL PRODUCT DEFINITION

 

41

 

 

12.9.1

Exchange of Digital Product Definition between Boeing and Seller

 

41

 

 

12.9.2

Systems/Software Compatibility between Boeing and Seller

 

41

 

 

12.9.3

Electronic Access, Communications and Data Exchange via Telecommunications

 

42

 

12.10

PROGRAM MANAGER

 

42

 

12.11

SUBCONTRACTING

 

42

 

 

12.11.1

Subcontractors and Suppliers

 

43

 

12.12

INTERNATIONAL COOPERATION

 

43

 

 

12.12.1

Market Access and Sales Support

 

43

 

 

12.12.2

Offset Assistance

 

44

 

12.13

SUPPLY CHAIN INTEGRATION

 

44

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

 

 

12.13.1

Supplier Banked Material (SBM) or Boeing Provided Details (BPD)

 

44

 

 

 

12.13.1.1 ATA Stringers

 

45

 

 

12.13.2

Boeing Raw Material Strategy

 

45

 

 

12.13.3

Third Party Pricing

 

46

 

 

 

12.13.3.1 Toray Raw Material

 

46

 

 

12.13.4

Obligation to Accept Assignment of Contracts

 

47

 

12.14

Reserved

 

47

 

12.15

LIFE CYCLE PRODUCT TEAM

 

47

 

 

12.15.1

Purpose

 

47

 

 

 

12.15.1.1 Qualifications

 

48

 

 

12.15.2

Work Schedule

 

48

 

 

12.15.3

Equipment and Supplies

 

48

 

 

12.15.4

Employment Status

 

48

 

 

12.15.5

Team Leader

 

49

 

 

12.15.6

Discipline

 

49

 

 

12.15.7

Removal of Personnel

 

49

 

12.16

INCREMENTAL RELEASE

 

49

 

12.17

PARTICIPATION

 

49

 

 

12.17.1

Other Boeing Entities

 

49

 

 

12.17.2

RESERVED

 

50

 

 

12.17.3

RESERVED

 

50

 

 

12.17.4

Notification of Contract

 

50

 

12.19

Surplus Products

 

50

 

 

12.19.1

Return of Surplus Products

 

50

 

 

12.19.2

Substitution of Surplus Products

 

50

13.0

ORDER OF PRECEDENCE

 

51

14.0

RESERVED

 

52

15.0

APPLICABLE LAW

 

52

16.0

PRODUCT SUPPORT AND ASSURANCE

 

52

 

16.1

Warranty

 

52

 

 

16.1.1

Product Support and Assurance Document (PSAD) D6-83315

 

52

17.0

ADMINISTRATIVE MATTERS

 

52

 

17.1

Administrative Authority

 

52

 

17.2

Administrative Agreement

 

53

18.0

OBLIGATION TO PURCHASE AND SELL

 

53

 

18.1

Replacements

 

53

19.0

STRATEGIC ALIGNMENT / SUBCONTRACTING

 

53

20.0

OWNERSHIP OF INTELLECTUAL PROPERTY

 

54

 

20.1

Technical Work Product

 

54

 

20.2

Inventions and Patents

 

54

 

20.3

Works of Authorship and Copyrights

 

55

 

20.4

Pre-Existing Inventions and Works of Authorship

 

56

21.0

SOFTWARE PROPRIETARY INFORMATION RIGHTS

 

56

 

5



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

22.0

INFRINGEMENT

 

56

23.0

DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS

 

57

24.0

CONFIGURATION CONTROL

 

57

25.0

RESERVED

 

57

26.0

ON-SITE SUPPORT

 

58

 

26.1

Indemnification Negligence of Seller or subcontractor

 

58

 

26.2

Commercial General Liability

 

58

 

26.3

Automobile Liability

 

59

 

26.4

Workers’ Compensation

 

59

 

26.5

Certificates of Insurance

 

59

 

26.6

Self-Assumption

 

59

 

26.7

Protection of Property

 

60

 

26.8

Compliance with Boeing Site Requirements

 

60

27.0

RESERVED

 

60

28.0

DELIVERY - TITLE AND RISK OF LOSS

 

60

 

28.1

Title and Risk of Loss

 

60

29.0

RESERVED

 

61

30.0

CUSTOMER CONTACT

 

61

31.0

RESERVED

 

61

 

31.1

Interest on Overdue Amounts

 

61

32.0

SURVIVAL

 

61

33.0

INVENTORY AT CONTRACT COMPLETION

 

62

34.0

SELLER ASSISTANCE

 

62

35.0

NONRECURRING WORK TRANSFER

 

63

36.0

DISPOSITION OF TOOLING

 

63

37.0

CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)

 

64

38.0

ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS

 

64

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

ATTACHMENTS

 

Attachment 1

 

Work Statement and Pricing

Attachment 2

 

Production Article Definition and Contract Change Notices

Attachment 3

 

Reserved

Attachment 4

 

Additional Statement of Work

Attachment 5

 

Rates and Factors

Attachment 8

 

Lead time Matrix (Accel/Decel)

Attachment 7

 

Indentured Priced Parts List and POA Pricing

Attachment 8

 

Seller Data Submittals

Attachment 9

 

Non-Recurring Agreements

Attachment 10

 

Quality Assurance Requirements

Attachment 11

 

Second Tier Support

Attachment 12

 

Non-U.S. Procurement Report Form

Attachment 13

 

Reserved

Attachment 14

 

Production Article Delivery Schedule

Attachment 15

 

Model Mix Constraint Matrix

Attachment 16

 

Boeing Furnished Material/Boeing Provided Details

Attachment 17

 

Reserved

Attachment 18

 

Reserved

Attachment 19

 

Reserved

Attachment 20

 

Quantity Price Adjustment

Attachment 21

 

Commodity Listing and Terms of Sale

Attachment 22

 

Abnormal Escalation

Attachment 23

 

767-2C SOW

 

7



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

AMENDMENTS

 

Amend
Number

 

Description

 

Date

 

Approval

1

 

Revise Company name from Mid-Western Aircraft Systems Incorporated to Spirit AeroSystems throughout document. Update attachments 1, 2, 4, 14 and 16.

 

2/23/06

 

H. McCormick/
 R. Stone

2

 

Incorporate CCNs as listed in attachment 2, includes addition of new section 12,19, modification to sections 3.4.9,12.16 and 32.0, updates to attachments 1, 2, 6, 7, 15, 16, 19 and 20.

 

4/11/07

 

H. McCormick/
 J. Edwards

3

 

Incorporate CCNs as listed in attachment 2, updates to attachments 1, 2, 7, 14, 15, 16 and 22.

 

11/28/07

 

H. McCormick/
 J. Edwards

4

 

Incorporate CCNs as listed in attachment 2. Updates to Attachments 1, 2, 7, 14, 15, 16. Incorporate Attachment 1A per CCN 508, 1328.

 

7/8/08

 

S. Hu
W. Wallace

5

 

Incorporate CCNs as listed in attachment 2, includes addition of new section 12.3.1.1. Updates to Attachments 1, 2, 7, 14, 15, 16, 20.

 

6/22/09

 

S. Hu
 R. Stone

6

 

Incorporate CCNs as listed in attachment 2. Updates to Attachments 1, 2, 4, 7, 9, 10, 14, 16. Incorporate Attachment 9 per CCN 2385.

 

11/23/10

 

S. Hu
M. Milan

7

 

Incorporate CCNs as listed in attachment 2, includes addition of new section 12.13.3.1. Updates to Attachments 1, 2, 4, 7, 9, 14, 16. Incorporate Attachment 1B per CCN 4212 and Attachment 23 per the 767-2C MOA.

 

7/29/11

 

S. Hu
M. Milan

8

 

Incorporate CCNs as listed in attachment 2, includes revisions to section 7.9 and 12.13.1.1. Updates to Attachments 1, 2, 4, 7, 9, 14, 15, 16.

 

2/6/2013

 

C. Howell
M. Milan

 

8


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of June 16, 2005 by and between Spirit AeroSystems Inc., a Delaware Corporation with its principal office in Wichita, Kansas (“Seller”), and The Boeing Company, a Delaware corporation acting by and through its Boeing Commercial Airplanes business unit (collectively and individually “Boeing”).  Hereinafter, the Seller and Boeing may be referred to jointly as “Parties” hereto.

 

Now, therefore , in consideration of the mutual covenants set forth herein, the Parties agree as follows:

 

SPECIAL BUSINESS PROVISIONS

 

1.0                                DEFINITIONS

 

The definitions used herein are the same as those used in the GTA.  In addition, the following terms are defined as follows:

 

A.                         “Aircraft” means a completed Program Airplane ready for delivery or delivered to a Customer.

 

B.                         “Boeing Proprietary Spare Parts” means all Spare Parts, which are manufactured (i) by Boeing, or (ii) to Boeing’s detailed design with Boeing’s authorization, or (iii) in whole or in part using Boeing Proprietary Information.

 

C.                         “Boeing-Use Tooling” means certain gauge and interface Tooling (not including Boeing master gauges) manufactured by Seller in accordance with designs provided by Boeing, to be used exclusively by Boeing.

 

D.                         “Common-Use Tooling” means all Contractor-Use Tooling that enters into a Boeing facility or Boeing designated destination and that is required for use by Boeing and Seller, and, if applicable, a third party.

 

E.                          “Contract Change Notice” or “CCN” means any written notice sent by Boeing to Seller describing any Change to the general scope of this SBP pursuant to SBP Section 6.0 and authorizing Seller to proceed with the performance of work hereunder in accordance with such Change description.

 

F.                           “Contractor-Use Tooling” (also known as “Seller-Use Tooling”) means all Tooling needed to manufacture and deliver Products (including but not limited to, Supplier-Use Tools, Common-Use Tools, Mechanical Handling Equipment, Rotating Tools, Shipping Equipment, Interface Control Tools and Interface Production Tools as defined in Boeing Document D33200-1).

 

9



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

G.                         “Cycle Time” means the period of time that elapses between the dates the Program executes a Customer implementation directive for a Program Airplane and delivery of such Program Airplane to such Customer.

 

H.                        “Dataset” means any compilation of data or information (including, without limitation, numerical data, geometric definitions, program instructions or coded information) which may be used directly in, integrated with or applied to, a computer program for further processing.  A Dataset may be a composite of two or more other Datasets or an extract of a larger Dataset.

 

I.                             “Derivative” means any model airplane that either (1) can be FAA certificated by an amendment to an existing Type Certificate through addition of a new minor model, or by a Supplemental Type Certificate; and bears the same major model designation as an airplane currently being manufactured (e.g., 737, 747, 767, 777) by Boeing:  or (2) includes all of the following conditions: (a) has the same number of engines as the existing model airplane; (b) utilizes essentially the same aerodynamic and propulsion design, major assembly components, and systems as the existing model airplane; (c) achieves other payload/range combinations by changes in body length, engine thrust or variations in certified gross weight; (d) has the same body cross-section as the subject model aircraft; and (e) uses substantially the same technology, design, materials, specifications, and manufacturing processes as existing Program Airplane.  Derivative does not mean Boeing Integrated Defense Systems (IDS) Products or any BCA aircraft delivered to Boeing IDS except as currently provided in Attachment 4.  A Derivative does not include any subject model airplane, which has been or was currently in production as of the date of execution of this SBP, or any new airplane program receiving a new major model designation and which requires a new Type Certificate.

 

J.                             “Drawing” means an electronic or manual depiction of graphics or technical information representing a Product or any part thereof and which includes the parts list and specifications relating thereto.

 

K.                        “Effective Date” means the date on which both parties fully execute this SBP.

 

L.                          “End Item Assembly” means any Product which is described by a single part number and which is comprised of more than one component part.

 

M.                      “Engineering Release” means engineering Drawings, Datasets or other Documents, that define the design requirements of any Product.

 

10



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

N.                         “Existing Tooling” means all accountable Tooling relating to this SBP in the possession of Boeing on the date hereof, “Existing Boeing-Use Tooling”, “Existing Common-Use Tooling” and “Existing Contractor-Use Tooling” means respectively “Boeing-Use Tooling”, “Common-Use Tooling” and “Contractor-Use Tooling” that are not New Tooling.

 

O.                         “Life Cycle Product Team” or “LCPT”, Integrated Product Team” or “IPT” or “Design Build Team” or “DBT” means a team composed of representatives from engineering, operations, procurement, finance, design-to-cost and other disciplines as Boeing and Seller shall specify whose objective is to optimize designs for cost, weight, performance and producibility.

 

P.                           “Manufacturing Work Package” or “Work Package” means manufacturing effort that Seller will provide under this SBP.

 

Q.                         “Miscellaneous Work” is Seller performed work or services that includes, but is not limited to provision of additional test articles, New Boeing-Use Tooling, test support, field support and Boeing-used supplier facilities.

 

R.                         “New Tooling” means all Tooling other than Existing Tooling.  “New Boeing-Use Tooling”, “New Common-Use Tooling”, or “New Contractor-Use Tooling”, respectively, means Boeing-Use Tooling, Common-Use Tooling, or Contractor-Use Tooling, respectively, that is not Existing Tooling.

 

S.                           “Nonrecurring Work” is Seller performed work other than Recurring Work or Spares and Miscellaneous Work, which may include, but is not limited to Product Definition, product development, Tooling, static and fatigue test articles, Transportation Devices and planning.

 

T.                          “Obsolescence” means the discontinuation of the requirement for any Product as a result of engineering or manufacturing change, which has rendered such Product no longer usable in the production of the Program Airplane or any Derivative.

 

U.                         “Person” means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.

 

V.                         “Price” means the amount to be paid by Boeing to Seller for any Product in accordance with the terms of this SBP.

 

W.                      “Products” In addition to the definition in the GTA, “Products” has the meaning of Product Definition.

 

11



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

X.                         “Product Definition” means the engineering design deliverables (layouts, interface drawings, stress notes, etc.) required to design, build, test, certify, deliver and support Orders.

 

Y.                         “Production Articles” means those completed assemblies defined and configured, including SCD Products, as set forth in SBP Attachment 1 and 2 “Production Article Definition and Contract Change Notices” for the Program Airplane and any Derivative, and not including Products or Production Articles used for modification or retrofit of previously delivered Program Airplanes, except as provided in SBP Section 4.3.1. Purchases of Parts or Production Articles for modifications or retrofits, other than those described in Section 4.3.1, shall be governed by SBP number SBP-6-5118-AEC-016.

 

Z.                          “Program” means the design, development, marketing, manufacture, sales and customer support of Program Airplanes, Derivatives and Products.

 

AA.                “Program Airplane” means a Boeing commercial transport aircraft having a model designation of 737, 747, 767 or 777 for which Seller shall provide Product Definition and Production Articles pursuant to this SBP.

 

BB.                “Purchased on Assembly” (POA) means any detail component needed to replace a component on an End Item Assembly currently in Boeing’s assembly line process.

 

CC.                “Recurring Shipset Price” or “Recurring Price” means the Price for the Recurring Work associated with each Shipset and or part as identified in Attachment 1.

 

DD.                “Recurring Work” means work Seller performs in producing Product Definition and Production Articles.  The cost of Recurring Work can include, but is not limited to design, tool maintenance, replacement, and storage, packaging, disposable shipping fixtures and maintenance of production planning.

 

EE.                  “Replacement” means any model airplane that is not a Derivative airplane and substantially takes the place of a current model or models, or serves the same market segment or both.

 

FF.                    “SCD Products” means all goods, including components and parts thereof, designed to a Boeing Specification Control Drawing by Seller or its subcontractors or suppliers, and provided or manufactured under this Contract.

 

GG.                “Shipset” means the total set of Production Articles provided by Seller hereunder necessary for production of one Program Airplane or Derivative.

 

12



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

HH.              “Tooling” For purposes of this SBP, Tooling means all tooling, used in production or inspection of Products, either provided to Seller by Boeing or supplied by Seller whereby Boeing agrees to pay Seller for the manufacture of such tooling, including New Tooling and Existing Tooling.

 

2.0                                CONTRACT FORMATION

 

2.1                                Order

 

Any Order to which this SBP applies will include a statement incorporating this SBP by reference unless otherwise specifically agreed to in writing by the Parties.

 

Each such Order will be governed by and be deemed to include the provisions of this SBP.

 

2.2                                Entire Agreement

 

The Order, this SBP, the GTA, the AA, and the EAA sets forth the entire agreement, and supersede any and all other prior agreements, understandings and communications between Boeing and Seller related to the subject matter of an Order.  The rights and remedies afforded to Boeing or Customers pursuant to any provisions of an Order are in addition to any other rights and remedies afforded by any other provisions of the Order, the General Terms Agreement (GTA) or the SBP, by law or otherwise.

 

2.3                                Incorporated by Reference

 

General Terms Agreement (“GTA”) BCA-65530-0016 dated June 16, 2005 is incorporated in and made a part of this SBP by this reference.

 

Administrative Agreement (“AA”) AA-65530-0010 dated June 16, 2005 is incorporated in and made a part of this SBP by this reference.

 

In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, the Documents set forth in SBP Section 12.1 “Supporting Documentation” are incorporated in and made a part of this SBP by reference with full force and effect, as if set out in full text.  It is the Seller’s responsibility to comply with the latest revision of these documents as made available by Boeing.

 

2.4                                Written Authorization to Proceed

 

Boeing’s Procurement Representative may give written or electronic authorization to Seller to commence performance before Boeing issues an Order as provided in the GTA.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.0                                SUBJECT MATTER OF SALE

 

3.1                                Subject Matter of Sale

 

Subject to the provisions of this SBP, Seller shall sell to Boeing and Boeing shall purchase from Seller certain Products as described in this SBP including, certain Production Articles and other recurring Products as described in SBP Section 3.4 “Recurring Work”, and other Miscellaneous Work as described in SBP Section 3.5 “Product Support and Miscellaneous Work”.  In addition, Seller shall be responsible for providing engineering services and other Nonrecurring Work as described in SBP Section 3.3 “Nonrecurring Work”

 

3.2                                Period of Performance

 

The period of performance for this SBP shall include manufacturing and all other activities required to support delivery of Products from June 16, 2005 through life of Program Airplanes and Derivatives of those Program Airplanes.

 

3.3                                Nonrecurring Work

 

3.3.1                                              Engineering Services

 

3.3.1.1                                                            Engineering Services

 

Seller is responsible for engineering activities as set forth in Attachment 4 “Additional Statement of Work”.  Seller responsibilities for the work packages defined in Attachment 1 include those items outlined in Attachment 4.

 

Design shall conform to the standards and requirements set forth in Attachment 4 “Additional Statement of Work” and Product Definition in schedules set forth in Attachment 13 and the applicable documents referred to in SBP Section 12.1 “Supporting Documentation”.

 

3.3.2                                              Product Development and Test

 

3.3.2.1                                                            Product Development and Test Activities

 

Seller is responsible for all product development and test activities required to design, build, test, deliver, certify, and support Products as set forth in SBP Attachment 4 “Additional Statement of Work”.  Seller shall also prepare, and Boeing shall have the right to review, initial product development and test planning documentation as necessary to produce Product Definition, Production Articles in accordance with SBP Attachment 2 “Production Article Definition and Contract Change Notices” and Spare Parts in accordance with SBP Attachment 7.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.3.2.2                                                            Static and Fatigue Test Articles

 

Seller will provide Boeing with Products and associated hardware as set forth in SBP Attachment 2 “Production Article Definition and Contract Change Notices” for static and fatigue tests, and as scheduled in SBP Attachment 14.

 

3.3.3                                              Certification Support

 

Seller is responsible for all certification activities as set forth in SBP Attachment 4 “Additional Statement of Work” including the associated costs.

 

3.3.4                                              Tooling

 

3.3.4.1                                                            Tooling — General

 

Boeing will retain ownership of all Existing Tooling and shall acquire ownership of all New Tooling upon passage of title thereto to Boeing in accordance with Section 3.3.4.6 of this SBP, and for financial reporting purposes and income tax purposes the Parties shall treat all Tooling so owned by Boeing in a manner consistent with Boeing’s ownership thereof.  Subject only to Seller’s right of use granted by Boeing hereunder and without diminishing the obligations of Seller hereunder, Boeing shall have and retain all rights, title and interest in all Tooling.  Seller shall be entitled to use Tooling for the purposes of performing its obligations of this SBP and for Spares and MRO aftermarket according to the terms of the HMSGTA, any applicable SLA’s and any other applicable SBP’s.

 

All Tooling produced or used in performance of this SBP must conform to the provisions of Boeing Document D953W001, “General Operations Requirements Document for Suppliers External/Internal Suppliers/Program Partners,” and D33200-1, “Boeing Suppliers’ Tooling Document” or, subject to Boeing’s review and approval not to be unreasonably withheld or delayed, its equivalent or replacement document.

 

3.3.4.2                                                            Contractor Use-Tooling (also known as Seller-Use Tooling)

 

As of the date hereof, Seller is responsible for providing all New Contractor-Use Tooling (as defined in “New Tooling”) needed to manufacture and deliver Products as required in the performance of this SBP.  Seller shall plan, design, manufacture or procure, and test all New Contractor-Use Tooling.  Existing Contractor-Use Tooling (as defined in “Existing Tooling”) and New Contractor-Use Tooling shall be in the configuration, quantity and quality required to produce (i) Production Articles in accordance with SBP Attachment 14 and (ii) other Boeing requirements for Products (including, without limitation, Spare Parts).

 

3.3.4.3                                                            Common-Use Tooling

 

Seller shall design, manufacture or procure, and test all New Common-Use Tooling including, without limitation, strongback handling fixtures, rotable

 

15



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

shipping fixtures and handling fittings.  The requirements for such items will be defined and identified by Boeing.

 

3.3.4.4                                                            Use of Casting, Forging and Extrusion Tooling

 

Boeing or its designees shall have and retain the right to use all Tooling for the production of castings, forgings and extrusions produced at Seller’s direction for use under this SBP and such Tooling shall be used only in the performance of this SBP or any other SBP that Boeing may designate in writing.  Such Tooling shall be retained for use in production of castings, forgings and extrusions for Boeing or as Boeing directs until Boeing gives written notice to Seller that a requirement for the use of such Tooling no longer exists.  Subject to the terms of this SBP, Boeing hereby grants to Seller the right to use any Tooling during the term of this SBP for the production of castings, forgings or extrusions that will become part of any Product, in which Boeing has a right of use, ownership or other proprietary interest.

 

3.3.4.5                                                            Initial Planning

 

Seller will perform all Tooling and production planning activities.  Seller shall also prepare, and Boeing shall have the right to review, Tooling and production planning documentation as necessary to evaluate Seller’s ability to produce Production Articles in accordance with SBP Attachment 2 “Production Article Definition and Contract Change Notices” SBP Attachment 4 “Additional Statement of Work” and Spare Parts.

 

3.3.4.6                                                            Title to Tooling

 

Boeing shall retain title to all Existing Tooling.  Title to all New Tooling shall pass from Seller or any of Seller’s subcontractors to Boeing upon completion of the manufacture of such New Tooling by Seller or any of its subcontractors and after payment therefore by Boeing, in accordance with Section 5.2.1 or otherwise, and such title shall thereafter be retained by Boeing for all purposes.  Seller shall ensure that any subcontract for the production of New Tooling provides for the passing of title to Boeing pursuant to the immediately preceding sentence.

 

3.3.4.7                                                            Use and Disposition of Tooling

 

Seller shall use any and all Tooling only for the purpose of performing its obligations under this SBP, except as provided in SBP Section 3.3.4.1, and shall not sell, lease or otherwise dispose of any Tooling.  Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,).  Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this SBP.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.3.4.8                                                            Reserved

 

3.3.4.9                                                            Responsible Party

 

Seller shall absorb alt costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling.  Seller shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Boeing, to manufacture parts for anyone other than Boeing without the prior written authorization of Boeing; provided, however, that Seller shall be entitled to use Tooling as provided in SBP Section 3.3.4.1.

 

When Boeing agrees to pay for Tooling to support the manufacture and delivery of applicable Product(s) identified herein, the amount shall be set forth in SBP Attachment 1.  The costs of necessary repair and maintenance to the Tooling are included in such amount.  Invoices received with incorrect, improperly prepared or incomplete certified tool lists will be returned for correction prior to payment.  Invoices shall be dated concurrent with, or subsequent to, shipment of the Products.  Boeing shall notify Seller of any action required for discrepant Tooling, other than Boeing-Use Tooling.

 

3.3.5                                              Life Cycle Product Teams

 

Seller shall, in accordance with SBP Section 12.15 and as mutually agreed between the Parties locate at Boeing’s facilities key personnel for Life Cycle Product Teams (LCPT’s) as may be required.

 

3.3.6                                              Weight Status Reporting

 

Seller shall report to Boeing the actual weights of Products in accordance with the requirements of Document D6T-10898-1, “Weight Compliance Requirements/Participant Contractors”.

 

3.4                                Recurring Work

 

3.4.1                                              Production Articles

 

Upon acceptance of the initial and subsequent Orders, Seller shall provide the Production Articles specified in SBP Attachment 1 “Statement of Work”, Attachment 2 “Production Article Definition and Contract Change Notices” in accordance with the delivery schedules set forth in SBP Attachment 14 and/or the Order.  All Production Articles will be designed, manufactured, certified, tested, delivered, and supported in accordance with the specifications and schedules set forth in this SBP.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.4.2                                              Delivery Point and Schedule

 

Notwithstanding the provisions of GTA Section 4.1, deliveries of Production Articles shall be strictly in accordance with the quantities, the schedule and other requirements specified by Boeing.  Notwithstanding the provisions of GTA Section 4.1, all Products shall be delivered F.O.B. carrier’s transport at Seller’s plant.

 

3.4.2.1                                                            Additional Events of Excusable Delay

 

In addition to those Excusable Delays described in GTA Section 14.0, in the event of a delay caused by Boeing affecting Sellers on time delivery, Boeing and Seller shall seek commercially practical solutions to assure Boeing maintains on-schedule delivery of the airplane to the airplane customer.

 

3.4.3                                              Transportation Routing Instructions

 

Products shall be transported by the agent, carriers and routings specified by Boeing.  Seller shall obtain the prior approval of Boeing, not to be unreasonably withheld or delayed, before shipping any Products on a route other than that specified by Boeing.

 

3.4.4                                              Manufacturing Configuration

 

The pricing set forth in SBP Attachment 1, as of the date hereof, is based on the latest definition or revisions of the statement of work, as of the date hereof, and is subject to change in accordance with this SBP.

 

3.4.5                                              Sustaining Product Definition

 

Seller shall provide Product Definition and sustaining engineering in accordance with the documents set forth in Attachment 4 “Additional Statement of Work”, Attachment 13 “Product Definition Schedule” and the applicable documents referred to in SBP Section 12.1 “Supporting Documentation”.

 

3.4.6                                              Tooling Maintenance

 

Seller shall provide at no cost to Boeing on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200, “Boeing Suppliers’ Tooling Document” or, subject to Boeing review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.

 

18


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.4.7                                              Maintenance of Production Planning

 

Seller will revise and maintain the production planning as required to support the production and certification of Production Articles and Spare Parts.

 

3.4.8                                              Certification Support

 

Seller is responsible for all certification activities as set forth in SBP Attachment 4 “Additional Statement of Work” including the associated costs.

 

3.4.9                                              Type Design and Type Certification Data Development and Protection

 

Seller is responsible for the development and maintenance of all type design and type certification data for which they have type design/certification responsibility and/or support type design/certification, including where applicable, flow down requirements to Seller’s subcontractors and suppliers.  Seller shall maintain such type design and type certificate data in accordance with Boeing Document D6-83393, “Certification Records Retention for Boeing Suppliers” for the life of such type certificate.  As part of this SBP Boeing is entitled to access, review and receive the type design/certification and data in a manner Boeing and Seller agree to in the D6-83393 or a records management agreement.  Boeing Document D6-83393 is incorporated in and made a part hereof by this reference.  Seller shall make available to Boeing, upon request, all compliance data as set forth in the D6-83393 related to the Product(s) which is maintained by Seller or Seller’s subcontractors or suppliers.  Such records shall be made available as soon as possible but in no event later than seventy-two (72) hours of Boeing’s request.

 

3.4.10                                       Seller Authorized Representative (AR) Requirements and Obligations

 

Seller’s AR as designated and approved by Boeing shall operate and act in accordance with Boeing Document DOA-300064-NM “Delegated Option Authorization Procedures Manual” or “BCA Delegated Compliance Organization Procedures Manual” as amended from time to time including but not limited to providing compliance findings to Boeing Delegated Compliance Organization.  Said document is incorporated and made a part hereof by this reference.

 

3.5                                Product Support and Miscellaneous Work

 

3.5.1                                              Miscellaneous Work

 

Seller shall provide to Boeing Miscellaneous Work, including, without limitation New Boeing-Use Tooling, field support or other related program support items, as may be ordered by Boeing from time to time.

 

19



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.5.2                                              Delivery Schedule of Other Products and Performance of Services

 

All deliveries of other Products and performance of services will be as set forth in any applicable Order, as set forth in SBP Section 3.4.2.

 

4.0                                PRICING

 

4.1                                Recurring Price

 

The Price of Recurring Products is set forth in SBP Attachment 1 and includes the total price for all work under this SBP; subject to any applicable adjustment under SBP Section 7.0.

 

Prices shall be firm fixed priced through the eighth anniversary of the first day of the month in which both Parties fully execute this SBP as developed using Attachment 20 and listed in Attachment 1.  For example, if the Parties fully execute this SBP on March 25, 2005 then the eighth anniversary of the first day of the month of that execution is March 1, 2013.  In addition, Attachment 1 work package price(s) are subject to adjustment for abnormal escalation as provided in Attachment 22.

 

Twenty Four (24) months prior to the eighth anniversary of the first day of the month in which both Parties fully execute this SBP, Seller will propose pricing for the following ten (10) years or a period agreed upon by the Parties.

 

The Parties will negotiate pricing in good faith based on then-prevailing domestic market conditions for 41 sections (all programs), 737 fuselage, 737/777 struts & nacelles and then-prevailing global market conditions for all other Products.

 

4.1.1                                              Interim Extension Pricing

 

If the Parties are unable to reach agreement on Pricing by the date which is six months prior to the end of the period for which Pricing has been fixed, then such matter shall be resolved pursuant to GTA Section 33.0.  If any dispute on Pricing continues after the eighth anniversary of the first day of the month in which both Parties fully execute this SBP, then interim Pricing shall be established.  Interim Pricing shall be the then current Base Price (as of the eighth anniversary referred to above) adjusted in accordance with SBP Attachment 20 and escalated annually using the indices outlined below.  At such time as a resolution on Pricing has been achieved, an appropriate debit or credit will be made retroactive to the day after the eighth anniversary of the first day of the month in which both Parties fully execute this SBP.  Using the example in section 4.1, the date would be March 2, 2013.

 

A.                                     Material — [*****]

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

B.                                     Labor — [*****]

 

Approximately forty-five days before the eighth anniversary of the first day of the month in which both Parties fully execute this SBP and on approximately the same date of each year thereafter until such time as a resolution on Pricing has been achieved, Boeing will use the above referenced indices to calculate the appropriate escalation factor based on actual index growth for the previous twelve (12) months using a composite of [*****] and [*****].  Then current Attachment 1 Pricing will be revised to include this escalation factor for deliveries in the following year.

 

4.2                                RESERVED

 

4.3                                Pricing of Requirements for Modification or Retrofit

 

4.3.1                                              Boeing Responsibility or Regulatory Requirement

 

Any Products required by Boeing to support a modification or retrofit program, which results from a regulatory requirement or which Boeing may be liable for the cost associated with such program, shall be provided to Boeing at the applicable price as set forth in SBP Attachment 1.

 

4.3.2                                              Reserved

 

4.4                                Expedite of Production Requirements

 

Seller agrees to support Boeing’s short flow requirements with its best effort.

 

4.5                                Pricing for Derivatives

 

Prices for Derivative(s) will be negotiated in good faith based on then-prevailing market conditions appropriate for each Product type.  If the Parties are unable to reach agreement on Pricing then the Parties shall refer to GTA Section 33.0 “Disputes” for resolution.

 

4.6                                POA Pricing

 

Seller shall expend best efforts to provide the earliest possible delivery of any spare designated as POA by Boeing.  Such effort includes but is not limited to working twenty-four (24) hours a day, seven (7) days a week and use of premium transportation.  Seller shall specify the delivery date of any such POA within two (2) hours of a POA request.

 

The price for POA requirements shall be the price for such Products listed in SBP Attachment 1 or the pro rata share of the appropriate Attachment 1 price represented by the POA multiplied by a factor of [*****].

 

21



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

5.0                                PAYMENT

 

5.1                                Invoicing

 

5.1.1                                              Invoicing Requirements

 

Seller shall submit separate invoices for items other than Pay from Receipt items (as defined in Section 5.1.5) for each applicable Order.

 

Materials purchased by Seller from Boeing shall be satisfied by Boeing issuing a debit against Seller’s account as follows:

 

In the case of Boeing Provided Details (as defined in Attachment 16), debits will be issued by Boeing as provided in Attachment 20, section titled “Billing for BPD Parts not yet transferred from Boeing”.

 

For all other materials, including materials purchased from Boeing’s Accommodation Sales group, debits will be issued by Boeing on the (net) fifteenth (15 th ) day from the scheduled delivery date.  If the debit amount exceeds the amount outstanding on the Seller’s account, Boeing will notify Seller and Seller will pay such amount upon receipt of such notification.

 

5.1.2                                              Invoicing Shipset Identification

 

Seller shall indicate on each invoice the line number of each Shipset included therein, as applicable.

 

5.1.3                                              Customs Invoicing

 

All specific questions and concerns on customs invoicing may be addressed to the Boeing Traffic Organization.

 

5.1.4                                              Mailing Instructions

 

All mailed invoices shall be addressed to:

 

Boeing Commercial Airplanes
P.O. Box 34656
Seattle, WA  98124-1656
Attention:  Payment Services

 

5.1.5                                              Pay From Receipt

 

An invoice shall not be required from Seller in the case of “Pay From Receipt” items.  Pay From Receipt items shall include Products (except Tooling), Production Articles, Purchase On Assembly items (POA’s) and such other items as Boeing may designate in writing (collectively, the “Pay From Receipt Items”). Each shipment shall contain an accurate and complete pack slip.  In the case of Pay From Receipt items, the date of payment is calculated from the shipment

 

22



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

date (the date items are received by carrier from Seller) as stated on such pack slip.  If the Sellers pack sip does not state the actual shipment date, the date of payment is calculated from the date the items are received by Boeing at its manufacturing site.

 

5.2                                Recurring Payment

 

Unless otherwise provided under Written agreement between the Parties, payments shall be paid in immediately available funds net [*****] calendar days after the shipment date (the date items are received by the carrier from Seller).  Except in the case of an Order requiring Pay-From Receipt, the date of payment is calculated from the later of (a) the date the items are delivered to Boeing at its manufacturing site, (b) the date of receipt of a correct and valid invoice or (c) the scheduled delivery date of such product.  Payment shall be done electronically as mutually agreed.  Boeing agrees to promptly notify the Seller if it receives an invoice Boeing believes to be incorrect.

 

All Payments are subject to adjustment for shortages, credits and rejections.

 

5.2.1                                              Non-Recurring Payment

 

Non Recurring Tooling payment shall be paid in immediately available funds net ten (10) calendar days after receipt by Boeing of both a correct and valid invoice and where required, a completed and approved certified tool list (CTL), (whichever is later).

 

Timing for non-recurring engineering, product development and test payments for Derivatives shall be tied to specific events as non-recurring effort progresses, which events shall not be limited to first shipset delivery and receipt by Boeing.  Schedule of specific events to be mutually agreed upon for each engineering development effort (i.e. 25%, 50%, 90% engineering release).

 

Future Product Development Projects will be supported up to forty (40) hours (includes technical consultation and development of ROM work statement and schedules as required) before Seller is eligible for compensation under the Technical Services Agreement (TSA) or this SBP.

 

Attachment 4 contains the Engineering Delegation requirements for sustaining products that are part of this SBP and included in the part pricing in Attachment 1.  All costs associated with Seller Engineering responsibility are included within Attachment 1 pricing for sustaining programs and will not be subject to additional payment from Boeing.

 

To maintain, repair, sustain, and replace Boeing’s Tooling and to provide certain capital property, plant, and equipment (excluding leasehold improvements and real property) required to support Seller’s activities under this Agreement, Boeing shall pay to Seller forty five million five hundred thousand dollars ($45,500,000) in 2007, an additional one hundred and sixteen million one hundred thousand dollars

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

($116,100,000) in 2008, and an additional one hundred and fifteen million four hundred thousand dollars ($115,400,000) in 2009 for such Tooling and property, plant, and equipment costs.  Within each such year, the payments are to be made in equal quarterly installments within 15 days following each Invoice Date (as defined below) and shall not be affected by the amount of costs set forth in the written list of costs delivered to Boeing on such Invoice Date pursuant to the following paragraph.

 

By March 15, June 15, September 15, and December 15 (each an “Invoice Date”) of each of 2007, 2008, and 2009, Seller will deliver to Boeing a written list of any Tooling and capital property, plant, and equipment (excluding leasehold improvements and real property) acquired after the Effective Date and prior to such Invoice Date (and not previously paid for by Boeing under this provision), and the costs thereof, the aggregate amount of which costs does not exceed the amount of the payment due within 15 days following such Invoice Date.  Pursuant to the terms of Section 3.3.4.6, upon payment by Boeing, Boeing will acquire title to and ownership of the Tooling and property, plant and equipment described in such list free of liens, claims or rights of any third party.

 

In the event Boeing acquires title to and ownership of any property, plant and equipment from Seller pursuant to this Section 5.2.1, Seller shall continue to have the right to use such property, plant and equipment to the same extent it had such right prior to such acquisition by Boeing, without paying any additional consideration to Boeing, and the Parties shall undertake in good faith to enter into any documentation necessary to evidence such right.  In addition, to the extent movable, any such property, plant and equipment acquired by Boeing shall remain at Seller’s facility subject to the terms of the Agreement, including Boeing’s rights under GTA sections 12.0 and 13.0 and SBP section 34.0, and Seller shall have the right to move any such movable property, plant and equipment in accordance with its use thereof and with the terms of the Agreement.

 

If Boeing acquires title to and ownership of any property, plant and equipment pursuant to this Section 5.2.1, then paragraphs (1) and (2) are also applicable.

 

(1)                                  Seller shall bear the risk of loss and shall provide at no cost to Boeing on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, and insurance for such property, plant and equipment to the same extent Seller generally provides such services with respect to property, plant and equipment owned by Seller; it being understood, however, that Boeing as the owner thereof bears the economic burden of any applicable depreciation and obsolescence for such property, plant and equipment;

 

(2)                                  Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the

 

24



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

rights of Boeing, in respect of any property, plant and equipment to which Boeing acquires title to and ownership of pursuant to this Section 5.2.1.

 

To the extent Seller did not incur Tooling or capital property, plant and equipment (excluding leasehold improvements and real property) costs prior to any Invoice Date which were not previously paid for by Boeing under this provision, in an amount equivalent to the amount paid by Boeing within 15 days following such Invoice Date, the excess amount shall be allocated to other assets not owned by Boeing, in a manner to be mutually determined by Buyer and Seller at that time.  For the avoidance of doubt, Boeing will acquire title to and ownership of the other assets to which the excess amounts are allocated free of liens, claims or rights of any third party, provided that such excess amounts allocated are equal to the book value of such other assets.

 

5.3                                Payment Method

 

All payments hereunder shall be made electronically to an account designated in writing by Seller.

 

5.4                                Payment Errors

 

If an error in payment (over payment or under payment) is discovered by Boeing or Seller, a written notification will be submitted to the other Party and resolution of the error will occur in a timely manner after discovery of such error.

 

6.0                                CHANGES

 

Notwithstanding the provisions of GTA Section 10.1, at any time, Boeing may, by written direction to Seller, make changes within the general scope of this SBP in:  (i) Statement of Work requirements and Documents, requirements for Product Definition, Drawings, designs, specifications, configurations, Datasets or any other Document (ii) Tooling (including, without limitation, the quantities thereof), services or Spare Parts to be provided by Seller under this SBP; (iii) the method of shipping or packing; (iv) the place of delivery, inspection, or acceptance for all Products (v) Program schedules, delivery rates and schedules for performance of services; including short flow requirements; (vi) Products, the Program Airplane and Derivative models and Customer variables; (vii) Boeing Furnished Material and any Boeing furnished or provided property; (viii) the allocation of responsibility as between Seller and Boeing for production of any component of any Product or the provision of any Service such that it does not significantly reduce the content of Seller’s Statement of Work for any given major end item or major sub assembly; (ix) the allocation of responsibility among Seller and third parties such that it does not significantly reduce the content of Seller’s Statement of Work for any given major end item or major sub assembly; (x) certification requirements; (xi) Miscellaneous Work requested to be performed not in then current Statement of Work (any of the foregoing a “Change”); (xii) description, time and place of Services to be performed.  Seller shall immediately comply with

 

25



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

such written direction upon receipt, irrespective of any failure by the Parties to agree that such Change shall be subject to Price adjustment in accordance with SBP Section 7.0 “Change Provisions”.

 

If Seller reasonably expects that any Document or any revision to any Document shall significantly affect Seller’s performance of any work hereunder, Seller shall, without affecting its obligation to comply, in accordance with SBP Section 12.1 “Supporting Documentation,” with any such Document as revised, so notify Boeing in writing in accordance with the Administrative Agreement within twenty (20) days of Seller’s receipt of such Document or revision.  If Seller provides notification as required by this Section, then any such revision or any written direction pursuant to the immediately preceding paragraph that constitutes or results in a Change shall be subject to Section 7.0.

 

If Seller considers that Boeing’s conduct constitutes a Change, Seller shall notify Boeing’s Procurement Representative promptly in writing as to the nature of such conduct and its effect upon Seller’s performance.  In the absence of such notification, Seller shall not be entitled to equitable adjustment.

 

SBP Sections 6.0 and 7.0 apply in lieu of GTA Section 10.0.

 

7.0                                CHANGE PROVISIONS

 

Notwithstanding the provisions of GTA Section 10.0, “Changes”, no adjustment will be made to the Price of any Products for any Change orders as provided in GTA Section 10.0 or SBP Section 6.0, “Changes” issued through the period of performance of this SBP except as may be provided under SBP Sections 7.0 through 7.10.

 

SBP Sections 6.0 and 7.0 apply in lieu of GTA Section 10.0.

 

7.1                                Price Adjustment for Changes

 

If any individual Change increases or decreases the cost or time required to perform this contract, Boeing and Seller shall negotiate in good faith an equitable adjustment in the price or schedule for recurring and non recurring work, or both, to reflect the increase or decrease subject to the following provisions:  (i) Seller shall be responsible for absorbing the cost of Seller generated changes to meet requirements and specifications of the Program Statement of Work (PSOW) as described in this SBP and as existing prior to the Change; and (ii) Seller shall be responsible for absorbing the cost of changes required to correct Seller’s deficiencies related to any delegated engineering part (statement of work) of Seller.

 

7.2                                Change Pricing Criteria

 

The following Change pricing thresholds will apply to all Changes:

 

26



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Recurring Price :

 

An equitable adjustment (either debit or credit) shall be negotiated and incorporated into the applicable Attachment 1 recurring part Price if both of the following conditions are met:

 

a.                                       For Engineering Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part or for Statement of Work allocation Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part (see note 1 below), and

 

b.                                       The recurring price impact for each individual Change exceeds [*****] per year based on then current requirements forecasted for the following calendar year.

 

Note 1:  For Statement of Work allocation changes only there is an annual cumulative cap of [*****].  The annual cumulative cap will begin January 1 st  of each year and end December 31 st  of each year.  This cap will re-set to zero at the beginning of each year and only new Statement of Work allocation changes falling below the [*****] threshold will be applied against this cap.  The value attributable to each change will be as negotiated by the Parties and Seller agrees to provide information to Boeing for these Change proposals consistent with the terms of this SBP for any and all assertions believed to contribute towards the annual [*****] cap.

 

Non-Recurring

 

An equitable adjustment will be made by Boeing to Seller for non-recurring if both of the following conditions are met:

 

a.                                       The non-recurring price impact for each individual Change exceeds [*****], and

 

b.                                       The non-recurring Change is associated with a new statement of work (not for current configuration of parts defined in Attachment 1 as of June 16, 2005.

 

27



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

7.3                                Reserved

 

7.4                                Reserved

 

7.5                                Schedule Acceleration/Deceleration

 

Boeing may revise the delivery schedule and/or firing order without additional cost or change to the unit price stated in the applicable Order if (a) the delivery date of the Product under such Order is on or before the last date of contract if applicable, and (b) Boeing provides Seller with written notice of such changes, provided however that Seller shall be entitled to payment for schedule accelerations made with less than the notification lead times for acceleration and deceleration identified in SBP Attachment 6.  In case of shorter notification for acceleration, Product price for those Products shipped inside the notification period (less than [*****] notification) shall be equitably adjusted as agreed by the Parties.  In case of shorter notification for deceleration, Product price will be adjusted by [*****] for those Products shipped inside the notification period (less than [*****] notification).  Except as provided in this clause “Schedule Acceleration/Deceleration”, there shall be no other price adjustment for schedule rate or firing order changes.  The resulting payment amount shall be paid in accordance with SBP Section 5.0.  Boeing shall notify Seller of accelerations, decelerations and refirings as soon as reasonably practical.  Boeing and Seller further agree to work in good faith to decrease all lead times identified in SBP Attachment 6 in support of then current Boeing lead time objectives for each Airplane Program.  Joint reviews of the program lead times will take place at least annually during the contract period to identify opportunities for reduction.  Where the Parties mutually agree to reduce the lead times, SBP Attachment 6 will be updated and such update will not be considered a Change under SBP 6.0.

 

7.5.1                                              Production Rates

 

This SBP contains no minimum production rates.  The maximum production rates are as defined in Attachment 15 “Maximum Production Rates and Model Mix Constraint Matrix”.  Seller is responsible to support these rates at no additional cost to Boeing.  Higher rates are subject to negotiation.

 

7.6                                Total Cost Management

 

Any cost reductions resulting from incorporation of joint Boeing and Seller cost reduction initiatives (TCMS) will result in a reduction in the Attachment 1 Prices in a mutually agreed manner that equitably preserves, or enhances if market conditions allow, the anticipated economics for both Boeing and Seller.  The immediately preceding sentence does not apply to material initiatives referred to in Attachment 20.F.

 

28


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Boeing and Seller confirm their intention for the Program Airplane to remain price and performance (including weight) competitive throughout the life of the Program by incorporating into the Program Airplane advances in design, configuration, materials, or manufacturing processes that will benefit the Parties and Boeing’s customers.

 

If Boeing reasonably demonstrates, after consultation with Seller, that a proposed cost reduction initiative that would materially increase the competetiveness of the Program Airplane in the market place can be accomplished in a manner that would preserve the anticipated economics of the Program for both Boeing and Seller, Seller shall incorporate the subject cost reduction initiative in a timely manner after reasonable notice from Boeing and reduce the price in a mutually agreed manner that equitably preserves the anticipated economics of the Program for both Boeing and Seller.

 

7.6.1                                              Boeing Generated Technical and Cost Improvement

 

At any time during the Seller’s performance under this SBP, Boeing may offer specific recommendations to Seller for the incorporation of any new technologies and process improvements intended to reduce Seller’s costs or improve product performance.  These recommendations may include, but are not limited to, Boeing proprietary information and Boeing owned patents.  Notwithstanding any other provision(s) elsewhere in this SBP, where a savings is achieved and documented as a result of the implementation of a recommendation initiated by Boeing and which Seller agrees to implement, the Parties will reduce the Price in a mutually agreed manner.

 

7.7                                Obsolescence

 

No adjustment pursuant to Section 7.1 shall include any of Seller’s costs for Obsolescence.  Not withstanding the foregoing Seller shall be entitled to payment for any Obsolescence estimated to exceed the lesser of (i) ten thousand ($10,000) dollars and (ii) ten percent (10%) of the recurring Attachment 1 Price in accordance with GTA Section 12.3.  Each Change shall, for purposes of determining Obsolescence costs, be considered separately.  Changes, for purposes of determining Obsolescence costs, may not be combined for purposes of exceeding the percentage limit as described in this SBP Section 7.7.  Seller may not defer implementation of Changes so as to avoid Obsolescence unless the priority of such Change permits such implementation.

 

7.8                                Reserved

 

7.9                                Timeframe for Price Adjustment Proposals:

 

Price adjustment proposals for Changes made prior to 100% Engineering Release shall be submitted no later than sixty (60) calendar days after 100% Engineering Release. Seller shall submit to Boeing a listing of all Changes which were received by Seller prior to 100% Engineering Release together with the Seller’s proposal for appropriate price adjustment.

 

29



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

For Changes subsequent to 100% Engineering Release, Seller must submit a written notice of impact to a Boeing Procurement Agent within twenty-five (25) days of receipt of a CCN or other written direction. A fully supported proposal must be submitted within ninety (90) calendar days after receipt of such direction.

 

If Boeing does not receive a proposal within the ninety (90) day time period, unless otherwise agreed to in writing by both parties, no such adjustment shall be made to Nonrecurring and Recurring Shipset Prices.

 

Review of Price Adjustment Proposal :

 

Subject to Seller’s delivery of a proposal to Boeing within the Timeframes described above, Boeing will conduct a proposal review within thirty (30) days from receipt of Seller’s proposal. If Boeing determines that Seller’s proposal is not fully supported, Boeing will provide a detailed list of proposal deficiencies in writing including examples of types of data that were omitted. Boeing will consider proposal timing and data availability when evaluating proposals. Spirit will provide requested data as available to make proposal fully supported.

 

Once the proposal is considered fully supported, Boeing will make an offer within 90 days and engage in diligent good faith negotiations to settle the claim or request an extension for delay. A mutually agreed to negotiation schedule shall be utilized to set settlement priorities.

 

If Boeing does not request additional supporting data within thirty (30) days of receipt of Seller’s proposal, Spirit will receive an offer within ninety (90) days from date of submittal or Boeing will request an extension. The thirty (30) day review period for fully supported proposals is considered to be part of the ninety (90) day timeframe Boeing has to prepare an offer.

 

If a settlement is not subsequently reached within ninety (90) days of a formal offer, negotiations shall be elevated to the Senior Manager of Boeing Supplier Management Contracts for resolution. Until such time new Pricing is negotiated, Seller will continue to be paid at the existing Attachment 1 Price.

 

Proposal Content :

 

Seller shall provide a detailed description of each Change, the technical impact on the Product’s form, fit, and/or function, and any significant impact on manufacturing processes. Seller shall include with each proposal a complete estimate of the Change’s impact on the Seller’s cost per Product, including, but not limited to, the impact on labor hours, labor rates utilized for the proposal, processing costs, sub-tier supplier costs, overhead and raw material costs. Boeing must be able to substantiate and verify Seller’s submittal for any such price adjustment claim. Seller’s claim must be consistent with market driven prices for such Product.

 

A Fully Supported Proposal may include but is not limited to the following data as available and applicable to support the Sellers claim:

 

The standard quote form template will be used for all submittals. Data will be submitted when available unless otherwise agreed to in writing.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

·                                           Dollars and hours on the standard quote form will be:

 

·                                           Linked via formulas which provide visibility to the calculations and links used to derive the total.

 

·                                           Linked to a separate tab on the form that contains back-up data to substantiate the numbers.

 

·                                           Priced bill of material (BOM) for the affected baseline statement of work and delta statement of work:

 

·                                           Identify part numbers by adds, deletes, and swaps.

 

·                                           BOMs will be formatted so that adds, deletes and swaps can be easily compared for delta work statement.

 

·                                           Basis of estimate (BOE), describing effort, SOW and estimating methodology used to arrive at estimate.

 

·                                           Rates and factors:

 

·                                           The rates, factors and methodology set forth in SBP Attachment 5, shall be utilized to calculate the equitable adjustment, if any, to be paid by Boeing for each individual change for which Seller estimates a value that is less than [*****] .

 

·                                           For each Change for which Seller estimates a value that is greater than [*****] , the proposal shall contain the above mentioned Content and stand on its own merits.

 

Additional data to be provided as available and when applicable if requested by Boeing.

 

·                                           Make/buy decision updates.

 

·                                           Learning curves with explanation of assumptions.

 

·                                           Material: TMX purchase order (PO), Spirit PO number, quantity, raw material specifications, price paid OR a BOE with supporting documentation.

 

·                                           A list of proposed in-house built parts; Boeing may select a random number of parts for validation. Competitive bid matrix for changes in excess of [*****].

 

·                                           PO, invoice and supplier quotes:

 

·                                           Spirit will provide a list of proposed vendor parts; Boeing may select a random number of parts for validation.

 

·                                           Supplier Purchase Order:

 

·                                           Provide duration, pricing, and pricing related terms, unless protected by a proprietary agreement.

 

·                                           Part card totals.

 

·                                           Tooling:

 

·                                           Tool type, tool number, tool design hours, tool fabrication hours, tool material and labor rate.

 

·                                           Supply Chain Management (SCM) tooling:

 

·                                           Provide Supplier quote, PO, invoice, or a BOE with supporting documentation.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

·                                           Quality Assurance:

 

·                                           Validation of hours, BOE.

 

·                                           Numerically Controlled (NC) Programming: List of affected parts, number of NC programming hours per part, number of tapes per part, number of hours per tape.

 

7.10                         Apportionment and Payment of Price Adjustments

 

7.10.1                                       Recurring Work Price Adjustment

 

The amount of the Recurring Price adjustment shall be equal to the value of the Change subject to SBP Sections 6 and 7 and shall be documented in SBP Attachment 1.

 

7.10.2                                       Apportionment and Payment

 

The then-current recurring billing Price shall be adjusted to reflect the Change beginning with the first Shipset, which incorporates such Change.

 

8.0                                GOVERNING QUALITY ASSURANCE REQUIREMENTS

 

In addition to those general quality assurance requirements set forth in the GTA, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10.

 

9.0                                STATUS REPORTS/REVIEWS

 

9.1                                Notification of Shipment

 

Seller shall notify the Boeing personnel identified in the “Administrative Agreement”, as identified in SBP Section 17.0, by telephone, facsimile or other agreed means when any shipment has been made.  Such notification will include (i) a list of the items and quantities of items shipped, (ii) the Shipset number with respect to any item shipped, (iii) the number and weight of containers shipped, (iv) the shipper or packing sheet number with respect to such shipment, and (v) the date of such shipment.  Seller shall airmail, facsimile or send by other agreed means copies of shipping manifests for Common-Use Tools to Boeing.  Such manifests shall identify Common-Use Tool codes and part numbers, unit numbers of Common-Use Tools and the airplane effectivity of the Production Article contained in such Common-Use Tools.

 

Seller shall notify Boeing as soon as possible via fax, telecon, or as otherwise agreed to by the Parties of each POA requirement shipment.  Such notification shall include time and date shipped, quantity shipped, Order, pack slip, method of transportation and air bill if applicable.  Seller shall also notify Boeing immediately upon the discovery of any delays in shipment of any requirement and identify the earliest revised shipment possible.

 

32



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

9.2                                General Reports / Reviews

 

When requested by Boeing, Seller shall update and submit, as a minimum, monthly status reports or data requested by Boeing using a method mutually agreed upon by Boeing and Seller.  Boeing has the right to impose more frequent reporting on Seller to achieve program objectives, if necessary.

 

When requested by Boeing, Seller shall provide to Boeing a Product Definition and manufacturing milestone chart identifying the major engineering, purchasing, planning, Tooling and manufacturing operations for the applicable Product(s).

 

Program reviews will be held at Seller’s facility or Boeing’s facilities as requested by Boeing.  The topics of these reviews may include Product Definition status, raw material and component part status, manufacturing status, production status, Seller’s current and future capacity assessments, Boeing supplied components, inventory, Boeing’s requirements, Changes, forecasts and other issues pertinent to Seller’s performance under this SBP.  Reviews will allow formal presentations and discussion of status reports as set forth above.

 

Formal management reviews shall be held periodically by Boeing and Seller to evaluate total cost performance.  During these reviews, Seller shall present and provide actual cost performance data with respect to this SBP.  Boeing and Seller will also use these reviews to discuss production forecast information useful for Seller’s planning purposes.

 

All information normally provided under Section 8.0 of the “Administrative Agreement”, as identified in SBP Section 17.0, shall be provided by Seller.

 

9.3                                Cost Performance Visibility

 

Management reviews will be held by Boeing and Seller that will include total cost performance and schedule performance.  These reviews will be held on a regularly scheduled basis.

 

33



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

9.4                                Problem Reports

 

In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, that could impact Seller’s ability to deliver Product Definition or Products on time and otherwise in conformance with the terms of the Order, Seller shall promptly provide a detailed report, notifying Boeing Procurement Representative of program problems/issues.  The report shall contain a detailed description of the problem, impact on the program or affected tasks, and corrective/remedial action, with a recovery schedule.  Seller also promptly shall require each of its subcontractors supporting the Order to provide such notification to Seller concerning any such problems/issues of any subcontracted good or service to Seller.  Submittal of a report in no way relieves Seller of any obligations under the Order nor does it constitute a waiver of any rights and remedies Boeing may have with respect to any default, except as provided under GTA Section 14.0.

 

Problem reports shall be promptly submitted to the Boeing Procurement Representative within twenty-four (24) hours of a problem becoming known to Seller.  Status reports shall include, but are not limited to, the following topics:

 

A.                                     Product Definition maturity, schedule and performance updates;

 

B.                                     Delivery schedule updates, written recovery schedules, schedule impact issues and corrective action;

 

C.                                     Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions;

 

D.                                     Identification of changes to key manpower or staffing levels;

 

E.                                      Identification of the critical events/activities expected within the next month and a discussion of potential risk factors;

 

F.                                       Progress on open action items, including closure dates;

 

G.                                     Purchased components and raw material status;

 

H.                                    Identification of quality issues and resolutions;

 

I.                                         Manufacturing and quality inspection progress of first article Products;

 

J.                                         Status on New Tooling design and fabrication, as applicable, until completion;

 

K.                                    Inventory status of castings and forgings procured by Seller (if applicable).

 

This SBP Section 9.4 applies in lieu of the 2 nd  sentence of GTA Section 4.1.

 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

9.5                                Notice of Delay - Premium Effort

 

Where Seller has notified Boeing of a Program problem pursuant to SBP Section 9.4, Boeing may, at its sole discretion, direct Seller to use additional effort, including premium effort, and shall ship via air or other expedited routing in order to avoid or minimize delay to the maximum extent possible.  In the absence of delays caused by Boeing or its designees that have an impact on Seller’s delivery schedule, all additional costs resulting from such premium effort and/or premium transportation shall be paid by Seller.  Additional costs include, but are not limited to, all costs and expenses incurred by Boeing as a result of production line disruption attributable to Seller’s delayed delivery.  These requirements will not apply to Seller during the course of an Excusable Delay, as defined in GTA Section 14.0; however, at the conclusion of the Excusable Delay Seller will be responsible for all provisions of this Section 9.5.  Boeing’s rights under this SBP Section 9.5 are not exclusive, and any other rights provided in this contract, in law or equity, are reserved.

 

The SBP Section 9.5 applies in lieu of the 3 rd  sentence of GTA Section 4.1.

 

9.6                                Diversity Reporting Format

 

Seller shall use reasonable efforts to report to Boeing on a quarterly basis, starting from the date of this SBP award, all payments to small businesses, small disadvantaged business/minority business enterprises, women-owned small business and historically black colleges and universities and minority institutions in dollars and as a percentage of the contract price paid to Seller to date, proving the information shown on the Second Tier Report located in SBP Attachment 11.

 

9.7                                Planning Schedule

 

From time to time and at least quarterly, Boeing will provide information to facilitate Seller production forecasting.  Any such planning schedule, forecast, or quantity estimate provided by Boeing shall be used solely for informational purposes and shall not be binding on either party.

 

10.0                         BOEING ASSISTANCE

 

10.1                         Boeing Technical / Manufacturing Assistance Regarding Seller’s Nonperformance

 

Seller shall reimburse Boeing for all reasonable Boeing costs expended in providing Seller and/or Seller’s subcontractor’s technical or manufacturing assistance in resolving Seller nonperformance issues.  Such reimbursement may be offset against any pending Seller invoice, regardless of Boeing model or program; provided, that Boeing shall not be entitled to set off any such obligation, sum or amount against any invoices for payments, in the totality of $277 million, pursuant to Section 5.2.1 of this SBP.  Boeing’s rights under this clause are in addition to those available to Boeing for Seller’s nonperformance

 

35



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

issues, including those where a demand for an Assurance of Performance may be made under GTA Section 17.0.

 

10.2                         Other Boeing Assistance

 

In the event either Party believes that Seller requires Boeing technical (including engineering), manufacturing or training assistance for any activity within Seller’s area of responsibility under this SBP, Seller and Boeing shall negotiate the scope and price for such Boeing assistance.

 

11.0                         REPAIR AUTHORIZATION

 

11.1                         Boeing-Performed Work

 

In the event that any Product is rejected by Boeing pursuant to GTA Section 8.3, Seller hereby grants to Boeing the right, without prior authorization from Seller, to repair or rework such Product, or to have such Product repaired or reworked by a third party.  Such repair or rework by Boeing or such third party shall be deemed not to be inconsistent with Seller’s Ownership of such Product.

 

All reasonable costs and expenses of Boeing relating to such repair or rework shall be paid by Seller.  Such costs and expenses shall be an amount equal to Boeing’s reasonable estimated rework hours multiplied by Boeing’s then-current rate for labor and materials or the amount charged Boeing by any third party for performing such repair or rework.  Disruption costs and expenses shall be an amount equal to the portion of resultant planned installation time allocated for reasonable out-of-sequence work multiplied by Boeing’s then-current rate for labor.  These provisions shall also apply to incomplete work shipped to Boeing for completion (traveled work).

 

11.2                         Reimbursement for Repairs

 

Pursuant to this SBP Section 11.2, Boeing will either:  1) advise Seller quarterly, commencing on June 16, 2005, of costs and expenses incurred in the previous quarter for repair of Products; or 2) notify Seller, through Boeing’s automated systems, of costs and expenses incurred for each individual repair.  Seller shall notify Boeing within sixty (60) days after receipt of such advice of any significant errors detected by Seller in Boeing’s estimate of costs and expenses.  Boeing and Seller shall promptly resolve such errors.  Seller’s failure to so notify Boeing shall be deemed to be an acceptance of Boeing’s estimate of costs and expenses.  The same process shall apply where Seller is repairing products for Boeing.  Boeing shall be entitled to either (a) set off the amount of such costs and expenses against any amounts payable to Seller hereunder or (b) invoice Seller for the amount of such costs and expenses, and Seller shall pay the invoiced amount promptly upon receipt of a valid and correct invoice.

 

36



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.0                         OTHER REQUIREMENTS

 

12.1                         SUPPORTING DOCUMENTATION

 

12.1.1                                       Supporting Documentation and Priority

 

All Documents (as hereinafter defined) are by this reference incorporated herein and made a part of this SBP.  For purposes of this SBP, “Document” means all specifications, Drawings, Datasets, documents, publications and other similar materials, whether in a tangible or intangible form, as the same shall be revised from time to time, which relate to the design, manufacture, test, certification, delivery, support and sale of Products or the provision of services to Boeing pursuant to this SBP, including, but not limited to, the documents listed below, and any other documents specifically referred to in this SBP or in such other documents, but shall not include any SBP (including the attachments hereto or thereto), the GTA, the AA, the EAA, or any Order.  Reference in any Document to “Contractor” or “Seller” or “Supplier shall mean Seller for the purposes of this SBP.  In the event of any inconsistency between the terms and conditions of this SBP (not including any Documents) and the terms and conditions of any Document, the terms and conditions of the SBP shall control.  In the event any provisions of any Document or Documents conflict among themselves, Boeing will, on its own initiative or at the request of Seller, resolve such conflict (subject to the other provisions of this SBP and the GTA), revise such Document or Documents accordingly, and so notify Seller.  In resolving any such conflicts, this SBP shall be read as a whole and in a manner most likely to accomplish its purposes.

 

12.1.2                                       Revision of Documents

 

Subject to the terms of this SBP Section 12.1, Boeing may at any time revise any Document prepared by Boeing and Boeing shall provide Seller with revisions to Documents prepared by Boeing.  No such revision shall be effective with respect to Seller unless and until such revision is available to Seller.

 

37



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.1.3                                       Compliance

 

Seller shall promptly comply with the provisions of all Documents referenced in this SBP, the GTA and any Order, including any revisions Boeing may make thereto provided that no such revision shall be effective with respect to Seller unless and until such revision is available to Seller.

 

List of Certain Documents:

 

Item

 

No.

 

Title

A.

 

D1-4426

 

Boeing Approved Process Sources

B.

 

D6-82479

 

Boeing Quality Management System Requirements for Suppliers

C.

 

D37200

 

Skin Quality Acceptance Standards for Clad Aluminum Raw Material

D.

 

D6-9002

 

Appearance Control of Clad Aluminum Exterior Skins

E.

 

D953W001

 

General Operations Requirements Document For Suppliers — External/internal Suppliers/Program Partners

F.

 

D962W101

 

Supplier Change Management - Major Structures Program Partners

G.

 

D33200-1

 

Boeing Suppliers’ Tooling Document

H.

 

D6-17781

 

Material and Performance Evaluation of Designated Parts

I.

 

D6-1276

 

Control of materials and processes for designated parts and components of Boeing products

J.

 

D6T10898-1

 

Weight Compliance Requirement/Participant Contractors

K.

 

ATA 300

 

Specification for Packaging of Airline Supplies

L.

 

D37520-1, -1A, -1B

 

Supplier’s Part Protection Guides

M.

 

D6-51991

 

Quality Assurance Standard Reflecting Digital Product Definition for Boeing Suppliers Using CAD/CAM

N.

 

D6-81628

 

Shipping Label, Barcoded Preparation and Placement

O.

 

D6-83315

 

Product Support and Assurance Document (PSAD)

P.

 

D6-56199

 

Hardware and software compatibility requirements for suppliers use of BCAG CATIA native datasets as sole authority for design, manufacturing and inspection

Q.

 

D6-83267-201

 

BCA Engineering System and Process Transition and Cutover Plan to Support the Divestiture of the Wichita/Tulsa Division

 

12.2        Reserved

 

38


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.3                         ACCOUNTABILITY FOR TOOLING

 

Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, “Boeing Suppliers’ Tooling Document” or, subject to Boeing review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement.  This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing’s designee pursuant to GTA Section 12.0, GTA Section 13.0 or SBP Section 33.0.  All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.  Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool.  Boeing Lifetime Serial Numbers may be provided to Seller by Boeing.

 

12.4                         CERTIFIED TOOL LISTS

 

Seller shall prepare a list or lists (“Certified Tool List”) in accordance with the D33200, “Boeing Suppliers’ Tooling Document” or, subject to Boeing review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Boeing shall request.  Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized.  Seller shall promptly submit each initial Certified Tool List to Boeing.  Seller shall subsequently submit from time to time as specified by Boeing new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.

 

12.5                         BOEING FURNISHED TOOLING

 

With respect to Existing Tooling and New Tooling, and in the event Boeing furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1.  Boeing shall notify Seller of any action required for discrepant Tooling.

 

12.6                         PACKAGING AND SHIPPING

 

In lieu of the provisions of GTA Section 7.0, the following SBP Sections shall address all packaging and shipping matters.

 

12.6.1                                       Packaging

 

The prices shown in SBP Attachment 1 include all packaging costs.  Seller shall package Product in accordance with the applicable requirements set forth in the Order.

 

39



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.6.2                                       Product Packaging

 

Except as expressly provided otherwise herein, all Products shall be prepared (cleaned, preserved, etc.) and packed for shipment in a manner reasonably acceptable to Boeing pursuant to Document D37520-1, -1A, & -1B, “Supplier’s Part Protection Guide,” to (i) comply with carrier regulations and (ii) prevent damage or deterioration during handling, shipment and outdoor storage at destination for up to ninety (90) days.  Packaging design shall be suitable for, and consistent with, the requirements and limitations of the transportation mode specified by Boeing.  Boeing specifically reserves the right, at Boeing’s discretion; to direct air shipment or other expedited shipping methods from the delivery point information in SBP Section 3.2.1 and Seller shall maintain a capability (where reasonably practicable) for meeting this requirement.  Seller shall submit two (2) copies of its proposed preparation procedure and packaging design to Boeing for approval (not to be unreasonably withheld or delayed) prior to the first Product delivery, and shall prepare and package each Product in accordance with the procedure and design approved by Boeing.  Notwithstanding any Boeing approval of Seller’s packaging design, Seller shall be solely liable for the manufacture of such packaging.  Any package (or unitized group of packages) weighing in excess of forty (40) pounds or otherwise not suited to manual handling shall be provided with skids to permit use of mechanical handling equipment.

 

Product packaging shall be in accordance with document D6-81628, “Shipping Label, Barcoded Preparation and Placement”, which is incorporated herein by reference.

 

12.6.3                                       Disposable Shipping Fixtures

 

Seller shall design, manufacture or procure, and test disposable shipping fixtures, as requested by Boeing, to support Orders.  The requirements for such items will be defined and identified by Boeing.  The design of any disposable shipping fixture shall be approved by Boeing (not to be unreasonably withheld or delayed) and conform to the standards and requirements of the applicable documents referred to in SBP Section 2.3.

 

12.6.4                                       Packing Sheet and Test Reports

 

The No. 1 shipping container in each shipment shall contain one (1) copy in English of (i) a packing sheet listing the contents of the entire shipment in accordance with Boeing’s written instructions and (ii) any test reports required by the specifications applicable to the Products being shipped.

 

For Non-United States shipments, prior to exportation of any Product, one (1) copy of the required customs invoice shall be enclosed in a waterproof envelope or wrapper, clearly marked “Customs Invoice,” securely attached to the outside of the No. 1 shipping container of each shipment.  Each customs invoice shall contain all of the information specified in SBP Section 27.

 

40



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.6.5                                       Additional Copies

 

Additional copies of packing sheets, test reports shall be furnished to Boeing in accordance with Boeing’s written instructions.

 

12.6.6                                       Price Inclusive

 

Unless otherwise specified in this SBP, the Prices for Products stated in this SBP include the cost with respect to such Products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports, in accordance with this SBP.

 

12.7                         CYCLE TIME REQUIREMENTS

 

Boeing and Seller acknowledge that Boeing is committed to reduce Cycle Time.  Seller agrees to support Boeing in its commitment and to work with Boeing to develop mutually acceptable actions to support Cycle Time requirements as specified by Boeing to support the Program Airplane.  Upon Boeing’s request, Seller shall submit to Boeing a written plan describing how Seller would comply with the Cycle Time schedules, as specified by Boeing.

 

12.8                         COMPATIBILITY WITH ENGINEERING BUSINESS AND PRODUCTION SYSTEMS

 

Seller shall implement and maintain systems as required to ensure:  i) compatibility with Boeing systems; and ii) Seller’s performance under this SBP, including, but not limited to, business, manufacturing and engineering systems.

 

12.9                         ELECTRONIC ACCESS AND EXCHANGE OF DIGITAL PRODUCT DEFINITION

 

12.9.1                                       Exchange of Digital Product Definition between Boeing and Seller

 

Seller’s approval to receive and use computerized data shall be in accordance with documents D6-51991 “Quality Assurance Standards Reflecting Digital Product Definition for Boeing Suppliers using CAD/CAM”, D6-56199 “Hardware and Software Compatibility Requirements for Suppliers Use of BCAG CATIA Native Datasets as Authority for Design, Manufacturing and Inspection”, and D6-81491, “Authority and Usage of CATIA Native, CATIA IGES and PDM STEP Datasets.”

 

12.9.2                                       Systems/Software Compatibility between Boeing and Seller

 

After Seller is qualified to use the data exchange methods in accordance with Boeing Document D6-51991, “Quality Assurance Standards Reflecting Digital Product Definition for Boeing Suppliers Using CAD/CAM,” Seller shall maintain compatibility with Boeing’s systems in accordance with D6-55199 “Hardware and Software Compatibility Requirements for Suppliers Use of BCAG CATIA Native

 

41



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Datasets as authority for Design, Manufacturing and Inspection.”  Boeing shall provide timely notification to Contractor of revisions to Boeing’s systems.

 

12.9.3                                       Electronic Access, Communications and Data Exchange via Telecommunications

 

Any electronic communications and data exchange via telecommunications between the Parties shall be pursuant to an electronic access agreement executed concurrently with this SBP.  Provided, that any amendments to the SBP, GTA, AA or EAA shall be communicated in writing and not solely by electronic communication.

 

Any electronic access to Boeing by Seller or Seller by Boeing shall be pursuant to an electronic access or similar agreement.

 

12.10                  PROGRAM MANAGER

 

Seller will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Seller’s performance hereunder.  The assignment of such program manager will be subject to Boeing’s prior approval of such person’s resume, such approval not to be unreasonably withheld or delayed.

 

12.11                  SUBCONTRACTING

 

During the term of this SBP, Seller agrees to work with Boeing to identify and implement opportunities to introduce into its sub-contract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors.  Seller and Boeing shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.6.

 

In addition to the provisions of GTA Section 28.1, for subcontracts in excess of [*****] in value, subcontracting activities are subject to Boeing review and approval.  Boeing approval is not to be unreasonably withheld or delayed.

 

This SBP Section 12.11 shall apply in lieu of the first sentence of the 2 nd  paragraph of GTA Section 28.0.

 

42



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.11.1                                Subcontractors and Suppliers

 

Notwithstanding anything to the contrary set forth in this SBP or the GTA, Seller shall not be in breach of this Agreement with respect to breaches solely attributable to subcontractors or suppliers and where (i) such breach relates to an obligation of Seller with respect to a subcontractor or supplier party to an agreement originally between Boeing and such subcontractor or supplier (an “Assigned Agreement”), (ii) such breach is solely attributable to an Assigned Agreement that prohibits or does not allow, Seller to require such supplier or subcontractor to comply with such obligation and (iii) Seller has used commercially reasonable efforts to persuade such subcontractor or supplier to comply with such obligation.  Provided, however, that (i) Seller will promptly notify Boeing whenever its management becomes aware that an Assigned Agreement prohibits or does not allow Seller to require a supplier or subcontractor to comply with such an obligation; (ii) Seller will use commercially reasonable efforts to obtain the agreement of such supplier or subcontractor to comply with the obligations of Seller to Boeing with respect to subcontractors or suppliers, or both, including reasonable payments therefore.  Provided, that this clause shall not apply (i) with respect to obligations that are mandated by law or regulation or safety of flight considerations, and (ii) after two (2) years from the date of this SBP.

 

12.12                  INTERNATIONAL COOPERATION

 

12.12.1                                Market Access and Sales Support

 

Seller agrees to work with Boeing to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy.  Boeing and Seller agree to work together to identify countries where Seller may subcontract and manage associated supply chain in support of Boeing’s market access and international business strategy.  With respect to work covered by this SBP, and if directed by Boeing, Seller shall use commercially reasonable efforts to procure from subcontractors and manage associated supply chain, in countries selected by Boeing, goods and services having a value of not more than twenty-five-percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice.  Such direction shall be at Boeing’s sole option and may occur at any time during the performance of this SBP; provided that Seller shall not be required to breach any then existing subcontract.  Seller may satisfy such requirement through purchases either related or not related to this SBP.  Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors including the dollars contracted.  Seller shall provide to Boeing with an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year.  If Seller is directed by Boeing to subcontract any part of its Work Packages and Seller anticipates an increase to the Price of the Order as a result of such direction, Seller shall notify Boeing in writing within thirty (30) days of such direction.  If there is a cost or schedule impact, Boeing shall respond within thirty (30) days on whether Seller is to proceed.  In such cases if Boeing directs Seller to proceed and there is a

 

43



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

resulting increase to the Price of the Order, then the Parties will mutually agree to an equitable adjustment in Price.

 

12.12.2                                Offset Assistance

 

Seller shall use commercially reasonable efforts to cooperate with Boeing in the fulfillment of any non-United States offset program obligation that Boeing may have accepted as a condition of the sale of a Boeing product.  In the event that Seller is either directed by Boeing pursuant to Section 12.12.1, or on its own solicits bids and/or proposals for, or procures or offers to procure any goods or services relating to the work covered by this SBP from any source outside of the United States, Boeing shall be entitled, to the exclusion of all others, to all industrial benefits and other “offset” credits which may result from such solicitations, procurements or offers to procure.  Seller shall take any commercially reasonable actions that may be required on its part to assure that Boeing receives such credits.  Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors including the dollars contracted.  Seller shall provide to Boeing an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year.  The reports shall be submitted on the next 1 st  of August and the 1 st  of February respectively.  If Seller is directed by Boeing to subcontract any part of its Product(s) to a country in which Boeing has an offset obligation, and Seller anticipates an increase to the Price of the Product(s) as a result of such direction, Seller shall notify Boeing in writing within thirty (30) days of such direction.  If there is a cost or schedule impact, Boeing shall respond within thirty (30) days on whether Seller is to proceed.  In such cases if Boeing directs Seller to proceed and there is a resulting increase to the Price of the Product(s), then the Parties will mutually agree to an equitable adjustment in Price.  Attachment 12, Section 2 lists obligations in place at contract signing.

 

This SBP Section 12.12.2 applies in lieu of GTA Section 36.0.

 

12.13                  SUPPLY CHAIN INTEGRATION

 

12.13.1                                Supplier Banked Material (SBM) or Boeing Provided Details (BPD)

 

Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Seller by Boeing (“Boeing Furnished Material”) shall be administered in accordance with a Bonded Stores Agreement.

 

Boeing Provided Details (including raw material, standards, detail components and assemblies) to Seller’s statement of work are listed in Attachment 16 with their associated purchase price and will be updated by Boeing periodically to reflect Boeing current Price.

 

Seller shall provide Boeing with required on-dock dates for all such material and BPD.  Seller’s notice shall provide Boeing with sufficient time to acquire the material.  If any parts will be supplied by Boeing then they will be identified in Attachment 16.

 

44



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.13.1.1                                              ATA Stringers

 

Pricing for ATA Stringer parts as noted in Attachment 16 are [*****] priced from [*****] through [*****].  If airplane rates decrease to lower than [*****] APM for the combined 737 and 767 Programs deliveries, ATA Stringer prices will increase up to [*****] as defined by Boeing.

 

If airplane rates decrease to lower than [*****] APM for the combined 737 and 767 Programs deliveries, ATA Stringer prices will increase by up to an additional [*****] as defined by Boeing, for a total increase up to [*****] to the negotiated [*****] price.  Boeing and Spirit will mutually agree on the effective date of the price increase.

 

The parties mutually agree that equitable compensation may be recovered for [*****].

 

Boeing is responsible for all [*****] costs associated with Boeing Airplane Program changes including derivatives and Boeing initiated production changes that lead to new [*****].

 

Spirit is responsible for all Non-recurring and Recurring costs associated with Spirit dictated changes, including part numbers or configurations generated to support Spirit unique requirements, those not dictated by Boeing, e.g., modification work, rejections or any SP (special part).  One time non-recurring lot charge of [*****] will apply to each Spirit SP.  Non-recurring tooling costs associated with SP will be included in the SP recurring price.

 

Boeing is not liable for costs incurred by Spirit as a result of Boeing MRB actions related to BPD ATA Stringers or Spirit rejections of Boeing produced BPD ATA Stringers.

 

12.13.2                                Boeing Raw Material Strategy

 

During the term of this SBP, Seller shall procure from Boeing (or its designated service provider who will act on behalf of Boeing) all raw material of the commodity type specified on the SBP Attachment entitled “Commodity Listing and Terms of Sale” (SBP Attachment 21) necessary to support any Order issued pursuant to this SBP.  From time to time, Boeing may amend the SBP Attachment entitled “Commodity Listing and Terms of Sale” by adding or deleting commodity types.  Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under SBP Section 7.0, provided that Seller shall take no action to terminate its existing supply agreements when such termination would result in an assertion for an adjustment until the Seller has received approval from Boeing.  The provision of any raw material by Boeing to Seller shall be according to Boeing’s standard terms of sale, the text of which is included in the SBP Attachment entitled “Commodity Listing and Terms of Sale.”  Boeing shall advise Seller of any designated service provider to be used at the

 

45



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

time the Order is issued.  Upon request by Boeing, Seller must provide to Boeing documentation (e.g., packing slips, invoices) showing Seller’s full compliance with the obligations under this SBP Section.  If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity.  If Seller reasonably believes that Boeing or its designated service provider cannot support Seller requirements to fulfill an Order issued pursuant to this SBP, then Seller shall have the right to procure raw materials from other sources and shall notify Boeing prior to such procurement.  The provisions of this Section 12.13.2 will only apply to that portion of Seller contracts that support Boeing Statement of Work.

 

12.13.3                                Third Party Pricing

 

Boeing may at any time identify products within Seller’s Products, for which Boeing has established a contract that Seller may purchase directly from Boeing’s subcontractor under the terms of Boeing’s subcontract (“Third Party Price Contract”).  Pricing for products under a Third Party Price Contract is only available for products listed in this SBP.  Seller is free to negotiate and enter into contracts at lower prices or on better terms, with this subcontractor or another company.  Seller to notify Boeing of any cost reductions resulting from use of Third Party Price Contracts.  Seller shall apply [*****] of the savings achieved through the use of these Boeing Third Party Price Contracts towards Price reductions on the applicable Boeing Products.

 

12.13.3.1                                              Toray Raw Material

 

During the term of this SBP, Spirit’s material purchases from Toray to support any requirements for products listed in Attachment 1 of the SBP shall be applicable to the terms of Section 12.13.3 Third Party Pricing.  The Third Party Pricing reimbursement will be based on the difference between the [*****] base (Attachment 1 prices are determined using this value) and [*****].

 

Methodology:

 

1)                                      Each year, in February, Boeing and Spirit will agree on the total airplane deliveries for the prior 12-month period for each minor model.

 

2)                                      Boeing will use the agreed-to Material Buy weights (to be updated every [*****]) and the total airplane deliveries to determine the total Toray material purchases by Spirit for the year.

 

3)                                      The Third Party Pricing reimbursement will be calculated using the Toray Reimbursement formula.

 

Toray Reimbursement formula:

 

46



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

The formula to be used in the calculation of the Toray Third Party Pricing reimbursement is:

 

[*****]

 

P is calculated for the [*****] period, and for the [*****] period, each year, due to two Quantity Based Discount factors in each calendar year.

 

 

 

Fly Weight

 

Buy Weight

[*****]

 

 

 

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

[*****]

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

12.13.4                                Obligation to Accept Assignment of Contracts

 

If Boeing has a contract(s) with a third party supplier that is primarily related to Seller and the contract was not assigned to Seller as of the date of this SBP and Boeing later determines that it has residual requirements or obligations for goods or services that 1) Boeing had previously obtained from the third party supplier prior to such date; 2) are still used in the Products provided by Seller under the SBP; and 3) that Seller no longer obtains from the third party supplier, Boeing can require Seller to accept an assignment of the contract(s) up through the current term of each contract or contracts in order for Seller to satisfy the residual requirements obligations.

 

12.14                  Reserved

 

12.15                  LIFE CYCLE PRODUCT TEAM

 

12.15.1                                Purpose

 

In the event Boeing uses Life Cycle Product Teams LCPT (or similar teams), personnel located at Boeing’s facilities in accordance with this SBP will conduct

 

47



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

their respective activities concurrently in a team environment to assist Boeing in developing firm configuration and product development definition and meeting Program requirements which includes improving producibility, reliability and maintainability of the Program Airplane.  Notwithstanding Seller’s participation in the LCPT, Boeing shall have the right to make any and all determinations with respect to airplane performance and product strategy and the design of the Program Airplane and any Derivative.

 

12.15.1.1                                              Qualifications

 

Boeing shall have the right to review the qualifications of all personnel proposed by Seller for assignment to the LCPT or similar teams.  Seller shall forward professional resumes of such personnel to Boeing for review and approval not to be unreasonably withheld or delayed prior to assignment of such personnel.

 

12.15.2                                Work Schedule

 

Except for sickness and other unavoidable absence, all personnel assigned to the LCPT by Seller pursuant to this SBP Section 12.15, shall be available during the customary work shift at the place designated by Boeing eight (8) working hours per day, Monday through Friday (except for identified Boeing holidays and such vacation periods as Boeing may reasonably permit) and shall work all overtime hours as Boeing may reasonably request.

 

12.15.3                                Equipment and Supplies

 

Boeing shall furnish certain office equipment (e.g. desks, telephones, network access) and office supplies to Seller’s LCPT personnel.  Boeing will not provide personal property (such as computing equipment, software or drafting equipment and calculators) necessary for the performance by Seller’s LCPT personnel.  Seller shall provide all computing equipment and software required to support its LCPT personnel while located at Boeing’s facilities.

 

Boeing shall not be responsible for loss or damage to such personal property.

 

12.15.4                                Employment Status

 

Seller’s LCPT personnel shall at all times remain employees of Seller and not employees of Boeing.  Seller shall be responsible for all wages, salaries and other amounts due Seller’s LCPT personnel and shall be responsible for all reports, requirements and obligations respecting them under local, state or federal laws of the United States, or the laws of any foreign country, including but not limited to social security, income tax, unemployment compensation, workers’ compensation and any other local, state or federal taxes of the United States or the taxes of any foreign country.

 

48


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.15.5                                Team Leader

 

Seller shall designate one of its LCPT personnel “Team Leader.”  Administrative matters between Boeing and Seller arising during the performance of this SBP shall be managed by the Team Leader.

 

12.15.6                                Discipline

 

Discipline of Seller’s LCPT personnel shall be Seller’s responsibility.  While on Boeing premises, Seller’s LCPT personnel shall obey all Boeing rules.  While on Seller premises, Boeing’s LCPT personnel shall obey all Seller rules.

 

12.15.7                                Removal of Personnel

 

Upon receipt of a written request from Boeing for the replacement of any person assigned to the LCPT by Seller pursuant to this SBP Section 12.15, Seller shall remove such person from the LCPT.  As soon thereafter as reasonably possible, Seller shall promptly furnish a satisfactory replacement or alternate arrangement.

 

12.16                  INCREMENTAL RELEASE

 

Seller shall develop production plans and schedules for Production Articles based on SBP Attachment 14 and applicable Orders.  These production plans and schedules will include plans for the purchase of material and the fabrication and assembly of Production Articles in accordance with Seller policy.  Seller shall purchase material, standards and purchased parts and authorize fabrication and assembly of Production Articles in accordance with Schedules and lead times as specified in Attachment 6.

 

Seller-proposed and Boeing-approved costs associated with Schedules will be addressed pursuant to GTA Sections 12.3, 15.0, 16.0 and 25.2, provided the procedural requirements of those GTA sections are met.

 

12.17                  PARTICIPATION

 

12.17.1                                Other Boeing Entities

 

Seller agrees that any Boeing division or Boeing subsidiary (“Boeing Entity”) not specifically included in this SBP may, by issuing a purchase order, work order, or other release document, place orders under this SBP during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this SBP.  Seller agrees that the prices set forth herein may be disclosed by Boeing on a confidential basis to Boeing entities wishing to invoke this SBP Section 17.1.  Seller shall notify the Boeing Procurement Representative named in SBP Section 9.0 of Boeing Entities not specifically referenced herein who frequently use this SBP.

 

49



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.17.2                                RESERVED

 

12.17.3                                RESERVED

 

12.17.4                                Notification of Contract

 

In the event a purchaser known by Seller to be a Boeing Entity places an order for supplies or services covered by this SBP but fails to reference this SBP or otherwise seek the prices established by this SBP, Seller shall notify such purchaser of the existence of this SBP and the prices established hereunder and shall offer such prices to such purchaser.

 

12.18                  RESERVED

 

12.19                  Surplus Products

 

12.19.1                                Return of Surplus Products

 

Boeing shall be entitled to return to Seller, at Boeing’s expense, any Product that has been delivered to Boeing in accordance with this SBP and that is surplus to Boeing’s then current requirements (including without limitation, any Products returned to Boeing by any Customer); provided that (i) any such Product may only be returned to Seller if agreed by Seller, and such agreement shall not be unreasonably withheld, and (ii) such Product is in a current production configuration or can be, in Boeing’s determination, economically changed to such a configuration.  On receipt of any such Product, Seller shall credit Boeing’s account with [*****] or an amount to be negotiated on a case by case basis, [*****] as set forth in SBP Attachment 7 “Indentured Parts Price List and Spare Part Pricing.”  If instructed by Boeing, Seller shall rework any such returned Product to put such Product in a current configuration.  Such rework shall be considered Miscellaneous Work and shall be priced in accordance with SBP Attachment 7 “Indentured Priced Parts List and POA’s” or as may be otherwise mutually agreed between the Parties.

 

12.19.2                                Substitution of Surplus Products

 

In its sole discretion, Boeing may, upon providing written notice to Seller at least four (4) months prior to the scheduled delivery date for any Production Article, elect to use any Product in inventory or any Product returned to Boeing by any Customer in the place of such Production Article.  Boeing’s notice shall include the cumulative line number of the Program Airplane or Derivative on which Boeing intends to incorporate such Product.  Seller shall not deliver such Production Article to Boeing and shall not invoice Boeing for the Price of such undelivered Production Article.

 

50



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

13.0                         ORDER OF PRECEDENCE

 

In the event of a conflict or inconsistency between any of the terms of the following documents, the following order of precedence shall control:

 

A.                                     These Special Business Provisions (“SBP”) including attachments excluding all documents listed below, then

 

B.                                     General Terms Agreement (“GTA”) (excluding all documents listed elsewhere on this listing), then

 

C.                                     Purchase contract, if any, then

 

D.                                     Order (excluding all documents listed elsewhere on this listing), then

 

E.                                      D6-83323, Engineering Delegation Levels and Responsibility, Accountability and Authority (RAA) Descriptions for Specific Components on 737, 767, 747 and 777 Aircraft

 

F.                                       D6-83267-2, BCA Engineering Requirements for Mid-Western Aircraft Systems, Incorporated — Divestiture of the Wichita/Tulsa Division

 

G.                                     Engineering Drawing by Part Number and, if applicable, Supplier Specification Plan (SSP) then

 

H.                                    All documents incorporated by reference in SBP Section 12.1 “Supporting Documentation”, List of Certain Documents, and 16.0, Product Support and Assurance, of this SBP, then

 

I.                                         Electronic Access Agreement, then

 

J.                                         Administrative Agreement, if any, then

 

K.                                    Any other Boeing generated exhibits, attachments, forms, flysheets, codes or documents that the Parties agree shall be part of this SBP, then lastly

 

L.                                      Any Seller generated documents that the Parties agree shall be part of this SBP.

 

In resolving any such conflicts or inconsistencies, these documents shall be read as a whole and in a manner most likely to accomplish their purposes.

 

Either party shall promptly report to the other party in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.

 

51



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

14.0                         RESERVED

 

15.0                         APPLICABLE LAW

 

This contract shall be governed by the laws of the State of Washington No consideration shall be given to Washington’s conflict of law rules.  This contract excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods.  Boeing and Seller hereby irrevocably consent to and submit themselves exclusively to the jurisdiction of the applicable courts of King County, Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof.  Boeing and Seller hereby waive and agree not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Boeing and Seller are not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper.

 

16.0                         PRODUCT SUPPORT AND ASSURANCE

 

16.1                         Warranty

 

Seller acknowledges that Boeing and Customers must be able to rely on each Product performing as specified and that Seller will provide all required support pursuant to the PSAD.  Accordingly, the following provisions, including documents, if any, set forth below are incorporated herein and made a part hereof:

 

16.1.1                                       Product Support and Assurance Document (PSAD) D6-83315

 

Boeing may choose initially not to extend the Seller’s full warranty of Product to Customers.  This action shall in no way relieve Seller of any obligation set forth in the warranty documents listed above.  Boeing, at its sole discretion, may extend Seller’s full warranty of Product to its Customers at any time. Furthermore, Seller agrees to support the Product as long as any aircraft using or supported by the Product remains in service.

 

17.0                         ADMINISTRATIVE MATTERS

 

17.1                         Administrative Authority

 

For all matters requiring the approval or consent of either Party, such approval or consent shall be requested in writing and is not effective until given in writing by a person authorized to do so in the Administrative Agreement.  With respect to Boeing, authority to grant approval or consent is limited to Boeing’s Procurement Representative as provided in the Administrative Agreement.

 

52



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

17.2                         Administrative Agreement

 

An Administrative Agreement is used for administrative matters not specifically addressed elsewhere and sets forth certain obligations of the Parties relating to the administration of the SBP, GTA and each Order.  The Administrative Agreement is identified and incorporated in SBP Section 12.1 “Supporting Documentation”.

 

18.0                         OBLIGATION TO PURCHASE AND SELL

 

Boeing and Seller agree that in consideration of the prices set forth in Attachment 1, Seller shall sell and deliver to Boeing and Boeing shall purchase from Seller all of Boeing’s requirements for Products as set forth in SBP Section 3.0 and corresponding Products as required for Derivatives which shall be added to Attachment 1 during the period of performance for this SBP.  Such Products shall be shipped at any scheduled rate of delivery in accordance with the terms of delivery as determined by Boeing, and Seller shall sell to Boeing and Boeing shall purchase exclusively from Seller Boeing’s requirements of such Products during the term of this SBP, Provided that, without limitation on Boeing’s right to determine its requirements, Boeing shall not be obligated to issue an Order for any given Product and shall be relieved of its exclusivity obligations for that Product to the extent that Boeing has the right to cancel as provided in GTA Section 13.2.A.

 

18.1                         Replacements

 

This Agreement contains no obligation for either Party relating to Replacement Aircraft.

 

19.0                         STRATEGIC ALIGNMENT / SUBCONTRACTING

 

With the exclusion of major end items as set forth in Attachment 1, Boeing may assign this SBP or any Order, in whole or in part, to a third party who is under an obligation to supply Boeing with components, kits, assemblies or systems that require the Seller’s Product; Provided that such assignment shall not relieve Boeing of its obligations under this SBP or any Order.  Seller may subcontract its obligations hereunder to a third party, subject to the terms of this SBP and provided that such subcontracting shall not relieve Seller of its obligations under this SBP or any Order.

 

20.0                         OWNERSHIP OF INTELLECTUAL PROPERTY

 

20.1                         Technical Work Product

 

53



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

All technical work product, including to the extent protectible by ownership rights, but not limited to, ideas, information, data, documents, drawings, software, software documentation, software tools, designs, specifications, and processes produced by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP will be the exclusive property of Boeing and be delivered to Boeing promptly upon request.

 

20.2                         Inventions and Patents

 

20.2.1 Subject to the provisions of paragraph 20.2.3, all inventions conceived by or for Seller on or after the effective date of this SBP, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP shall be owned by Seller, and any patents claiming such inventions (both domestic and foreign), will be the exclusive property of Seller.  Nothing in this paragraph 20.2.1 shall abridge or modify Boeing’s rights under 35 USC secs. 102 or 103 to inventions independently developed by or for Boeing on or after the effective date of this SBP.

 

20.2.2 Seller shall (i)  use commercially reasonable efforts to promptly disclose to Boeing in written detail all inventions disclosed to Seller which were conceived prior to the effective date of this SBP (“Boeing Inventions”) and (ii) shall, at Boeing’s sole cost and expense, execute all papers, cooperate with Boeing, and perform all acts, reasonably requested by Boeing to assist Boeing in connection with the filing, prosecution, maintenance, or assignment of patents and patent applications claiming such Boeing Inventions.

 

20.2.3 Notwithstanding anything to the contrary in this SBP, all inventions conceived, developed, or first reduced to practice by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller, pursuant to this SBP (“SBP Inventions”) that Boeing reasonably believes are applicable to, developed for, incorporated in or to be incorporated in the 787 (“SBP 787 Inventions”), and any patents claiming such inventions (both domestic and foreign) will, subject to paragraph 20.2.3 (b) below, be the exclusive property of Boeing.  Seller will promptly disclose all SBP Inventions to Boeing in written detail.  Boeing shall have 90 days in which to inform Seller in writing whether Boeing reasonably believes such SBP Inventions are SBP 787 Inventions, and further, which SBP 787 Inventions Boeing wishes to pursue patent protection on the SBP 787 Inventions.

 

(a)                                  In the event Boeing elects to pursue patent protection on the SBP 787 Inventions, Boeing shall bear the entire cost and expense and Seller shall execute all papers, cooperate with Boeing and perform all acts, reasonably requested by Boeing to assist Boeing in connection with the filing, prosecution, maintenance, or assignment of related patents or patent applications on behalf of Boeing.

 

54



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

(b)                                  In the event Boeing elects not to pursue patent protection on the SBP 787 Inventions, Seller shall have a period of 12 calendar months, commencing upon receipt of Boeing’s notice to not pursue patent protection, in which to file a formal patent application under 35 USC sec. 111(a) or a formal application under the Patent Cooperation Treaty or, subject to the following sentence, a provisional patent application under 35 USc secs. 111(b) or 119(e) or other similar provisional filing permitted by other sovereigns.  The filing of a provisional patent application or other similar provisional filing shall not qualify as the filing of a formal patent application for purposes of this subsection (b) unless Seller files a formal patent application within twelve (12) months after the filing of the provisional patent application.  In any event, Seller shall, prior to the date on which any such provisional patent application would be published, either abandon or file a formal patent application with respect to any provisional patent application.  Seller shall bear the entire cost and expense of filing, prosecuting and maintaining any patents and patent applications so filed.

 

(c)                                   In the event Seller fails to file a formal patent application or abandons a patent application in the manner described in sub paragraph (b) above and Boeing has also elected not to pursue patent protection on said SBP 787 Inventions as described in subparagraph (a) above, the subject matter of said SBP 787 Inventions shall be held as a trade secret and shall be the sole and exclusive property of Boeing.

 

20.3                         Works of Authorship and Copyrights

 

All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller pursuant to this SBP, together with all copyrights subsisting therein, will be the sole property of Boeing. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Boeing.  The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Boeing.

 

20.4                         Pre-Existing Inventions and Works of Authorship

 

55



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Seller grants to Boeing, with the right of Boeing to sublicense the same to Boeing’s subcontractors, suppliers, and customers in connection with Products or work being performed for Boeing, an irrevocable nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Seller at any time and existing prior to or during the term of this SBP, but only to the extent that such patents or copyrights would otherwise interfere with Boeing’s or Boeing’s subcontractors’, suppliers’, or customers’ use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Boeing under this SBP.

 

21.0                         SOFTWARE PROPRIETARY INFORMATION RIGHTS

 

Seller hereby grants to Boeing a perpetual, nonexclusive, paid-up, worldwide license to reproduce, distribute copies of, perform publicly, display publicly, and make Seller intended derivative works from software included in or provided with or for Products (Software) and related information and materials (Software Documentation) as reasonably required by Boeing in connection with (1) the testing, certification, use, sale, or support of a Product, or the manufacture, testing, certification, use, sale, or support of any aircraft including and/or utilizing a Product, or (2) the design or acquisition of hardware or software intended to interface with Software.  The license granted to Boeing under this SBP Section 21.0, also includes the right to grant sublicenses to Customers as reasonably required in connection with Customers’ operation, maintenance, overhaul, and modification of any aircraft including and/or utilizing Software.  All copies and Seller intended derivative works made pursuant to the foregoing license or any sublicense to a Customer will automatically become, subject to the foregoing license, the property of Boeing or Customer, and Boeing agrees to preserve Seller’s copyright notice thereon to the extent that such a notice was included with the original Software and/or Software Documentation.  Seller acknowledges that Boeing is the owner of all tangible copies of Software and Software Documentation provided to or made by Boeing or Customers pursuant to this SBP, and Seller hereby authorizes Boeing and Customers to dispose of, and to authorize the disposal of, the possession of any and all such copies by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

 

22.0                         INFRINGEMENT

 

Each Party will indemnify, defend, and hold harmless the other Party from all claims, suits, actions, awards (including, but not limited to, awards based on intentional infringement of patents known at the time of such infringement, exceeding actual damages, and/or including attorneys’ fees and/or costs), liabilities, damages, costs and attorneys’ fees related to the actual or alleged infringement of any United States or foreign intellectual property right (including, but not limited to, any right in a patent, copyright, industrial design or semiconductor mask work, or based on misappropriation or wrongful use of information or documents) and arising out of the use of the indemnifying Party’s

 

56



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Proprietary Information and Materials in connection with the manufacture, sale or use of Products by the other Party or by Boeing’s Customers.  Each Party will duly notify the other Party of any such claim, suit or action in respect of which the notifying Party may be obligated to provide indemnification under this SBP Section 22.0; and the indemnifying Party will, at its own expense, fully defend such claim, suit or action on behalf of the indemnified Party and, if applicable, Boeing’s Customers.  Neither Party shall have any obligation under this SBP Section 22.0 with regard to any infringement arising from:  (i) such Party’s compliance with formal specifications issued by the other Party where infringement could not be avoided in complying with such specifications or (ii) use or sale of Products in combination with other items when such infringement would not have occurred from the use or sale of those Products solely for the purpose for which they were designed or sold by such Party.  For purposes of this SBP Section 22.0 only, the term “Customer” shall not include the United States government; and the term “Party” shall include Boeing or Seller, as applicable, its subsidiaries and all officers, agents and employees of Boeing or Seller, as applicable, or any of its subsidiaries.

 

23.0                         DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS

 

Seller grants to Boeing a license under Seller’s copyrights for the purpose of converting Seller’s Proprietary Information and Materials to a digital format (“Digital Materials”) and making such Digital Materials available to its employees for company internal use through a computer data base system solely in connection with the use of the Products as permitted by Boeing’s license rights in the underlying Seller Proprietary Information and Materials.  Except as otherwise specifically agreed to in writing by the Parties, said license set forth hereunder shall survive termination or cancellation of this SBP relative to Digital Materials included in Boeing’s computer data base system prior to receipt of such notice of termination or cancellation.

 

24.0                         CONFIGURATION CONTROL

 

Seller agrees not to make any change in materials or design details which would affect the Product or any component part thereof except as may be provided for in SBP Attachment 4 without prior written approval, not to be unreasonably withheld or delayed, of Boeing.  If such approval is granted, all part numbers and the originals of all drawings and data shall be revised accordingly.  Seller will use commercially reasonable efforts to place the above requirement in all its subcontracts for supplier identified purchased equipment which it enters into after the date hereof, whether such equipment is supplied to Seller as an end item or as a component part of an end item.

 

25.0                         Reserved

 

57



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

26.0                         ON-SITE SUPPORT

 

26.1                         Indemnification Negligence of Seller or subcontractor

 

Seller shall indemnify and hold harmless Boeing, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Seller or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or arising out of or in any way related to this Agreement t, the performance thereof by Seller or any subcontractor thereof, including without limitation the provision of services, personnel, facilities, equipment, support, supervision, or review which occurs while Seller’s employees are on premises owned or controlled by Boeing.  The foregoing indemnity shall apply only to the extent of the negligence of Seller, any subcontractor thereof, or their respective employees.  In no event shall Seller’s obligations hereunder be limited to the extent of any insurance available to or provided by the Seller or any subcontractor thereof.  Seller expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.

 

Boeing shall indemnify and hold harmless Seller, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Boeing or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or arising out of or in any way related to this Agreement, the performance thereof by Boeing or any subcontractor thereof, including without limitation the provision of services, personnel, facilities, equipment, support, supervision, or review which occurs while Boeing’s employees are on premises owned or controlled by Seller.  The foregoing indemnity shall apply only to the extent of the negligence of Boeing, any subcontractor thereof, or their respective employees.  In no event shall Boeing’s obligations hereunder be limited to the extent of any insurance available to or provided by Boeing or any subcontractor thereof.  Boeing expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.

 

This SBP Section 26.1 applies in lieu of GTA Section 5.3.

 

26.2                         Commercial General Liability

 

If Seller or any subcontractor thereof will be performing work on Boeing premises, Seller shall carry and maintain, and ensure that all subcontractors or suppliers thereof carry and maintain, throughout the period when work is performed and until final acceptance by Boeing, Commercial General Liability insurance with available limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury and property damage combined.

 

58


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

26.3                         Automobile Liability

 

If licensed vehicles will be used in connection with the performance of the work, Seller shall carry and maintain, and ensure that any subcontractor thereof who uses a licensed vehicle in connection with the performance of the work carries and maintains, throughout the period when work is performed and until final acceptance by Boeing, Business Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed, or otherwise, with available limits of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage.

 

26.4                         Workers’ Compensation

 

Throughout the period when work is performed and until final acceptance by Boeing, Seller shall, and ensure that any subcontractor thereof shall, cover or maintain insurance in accordance with the applicable laws relating to Workers’ Compensation with respect to all of their respective employees working on or about Boeing premises.  If Boeing is required by any applicable law to pay any Workers’ Compensation premiums with respect to an employee of Seller or any subcontractor, Seller shall reimburse Boeing for such payment.  Notwithstanding such insurance requirement above, in this SBP section 26.4 Seller shall be allowed to self insure; in compliance with applicable state law.

 

26.5                         Certificates of Insurance

 

Prior to commencement of the work Seller shall provide for Boeing review and approval, not to be unreasonable withheld or delayed.  Certificates of Insurance reflecting full compliance with the requirements set forth in SBP Section 26.2 “Commercial General Liability”, SBP Section 26.3 “Automobile Liability” and, SBP Section 26.3 “Workers’ Compensation”.  Such certificates shall be kept current and in compliance throughout the period when work is being performed and until final acceptance by Boeing, and shall provide for thirty (30) days advance written notice to Boeing in the event of cancellation.  Failure of Seller or any subcontractor thereof to furnish Certificates of Insurance, or to procure and maintain the insurance required herein or failure of Boeing to request such certificates, endorsements or other proof of coverage shall not constitute a waiver of the respective Seller’s or subcontractor’s obligations hereunder.

 

26.6                         Self-Assumption

 

Any self-insured retention, deductibles, and exclusions in coverage in the policies required under this Section 26.0 shall be assumed by, for the account of, and at the sole risk of Seller or the subcontractor, which provides the insurance, and to the extent applicable shall be paid by such Seller or subcontractor.  In no event shall the liability of Seller or any subcontractor thereof be limited to the extent of any of the minimum limits of insurance required herein.

 

59



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

26.7                         Protection of Property

 

Seller assumes, and shall ensure that all subcontractors or suppliers thereof and their respective employees assume, the risk of loss or destruction of or damage to any property of such Parties whether owned, hired, rented, borrowed, or otherwise.  Seller waives, and shall ensure that any subcontractor thereof and their respective employees waive, all rights of recovery against Boeing, its subsidiaries, and their respective directors, officers, employees and agents for any such loss or destruction of or damage to any property of Seller, any subcontractor, or their respective employees, other than for any such loss, destruction or damage resulting from the negligence or willful misconduct of Boeing, any of its subsidiaries, or any of their respective directors, officers, employees or agents.

 

At all times Seller shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Boeing property.  If any such property is damaged by the fault, negligence, or willful misconduct of Seller or any subcontractor thereof, Seller shall, at no cost to Boeing, promptly and equitably reimburse Boeing for such damage or repair or otherwise make good such property to Boeing’s satisfaction.  If Seller fails to do so, Boeing may do so and recover from Seller the cost thereof.

 

26.8                         Compliance with Boeing Site Requirements

 

In the event the Seller or Seller’s Subcontractor(s) performs any aspect of an applicable GTA, SBP or Order on property owned, operated, leased, or controlled by Boeing (hereinafter “On-Site Work”), Seller agrees to comply with Boeing’s environmental, safety and health requirements.  These are the same provisions with which Boeing employees must comply.  In the event Boeing or Boeing’s subcontractor(s) performs any aspect of an applicable GTA, SBP or Order on property owned, operated, leased, or controlled by Seller, Boeing agrees to comply with Seller’s environmental, safety and health requirements.  These are the same provisions with which Seller’s employees must comply.

 

27.0                         Reserved

 

28.0                         DELIVERY - TITLE AND RISK OF LOSS

 

28.1                         Title and Risk of Loss

 

Without diminishing the obligations of Seller under this SBP, title to and risk of any loss of, or damage to, all Products (except for Tooling) shall pass from Seller to Boeing upon delivery as set forth in SBP Section 3.4.2 (Delivery Point and Schedule), except for loss or damage to the extent resulting from Seller’s fault, negligence, willful misconduct or failure to comply with the material terms of this SBP.  Passing of title on delivery shall not constitute final acceptance of such Products by Boeing.

 

60



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Notwithstanding the provisions of this SBP Section 28.1, and without diminishing Seller’s obligations under this SBP, risk of any loss of, or damage to, all Existing Tooling and New Tooling (except for Common-Use Tooling) shall pass from Seller to Boeing upon delivery as set forth in Section 3.4.2 (Delivery Point and Schedule), except for loss or damage to the extent resulting from Seller’s fault or negligence or failure to comply with the terms of this SBP.

 

29.0                         Reserved

 

30.0                         CUSTOMER CONTACT

 

Boeing is responsible for all contact with Customers regarding the Program, Program Airplanes and Derivatives and any other Boeing model aircraft programs.  Seller shall not make any contact with actual or potential Customers on the subject of the Program, Program Airplanes or Derivatives without Boeing’s prior written consent, not to be unreasonable withheld or delayed; and Seller shall respond to any inquiry from actual or potential Customers regarding the Program, Program Airplanes or Derivatives by requesting that the inquiry be directed to Boeing.  Seller shall, concurrently with such response, advise Boeing of such inquiry.

 

31.0                         Reserved

 

31.1                         Interest on Overdue Amounts

 

If Seller or Boeing shall fail to pay when and as due any amount payable hereunder, such amount shall bear interest payable on demand, at the per annum rate announced by Citibank, New York, New York, as its prime rate on the last working day of the month in which such amount becomes due.

 

32.0                         SURVIVAL

 

Without limiting any other survival provision contained herein and notwithstanding any other provision of this SBP or the GTA to the contrary, the representations, covenants, agreements and obligations of the Parties set forth in GTA Section 12.3 “Seller’s Claim”, GTA Section 16.0 “Termination or Wrongful Cancellation”, GTA Section 18.0 “Responsibility for Property”, GTA Section 20.0 “Proprietary Information and Items”, GTA Section 24.0 “Boeing’s Rights in Seller’s Patents, Copyrights, Trade Secrets and Tooling”, GTA Section 29.0 “Non-Waiver/Partial Invalidity”, GTA Section 38.0 “Applicable Law”, GTA Section 39.0 “Order of Precedence”, this SBP Section 32.0 “Survival”, SBP Section 3.4.9 “Type Design and Type Certification Data Development and Protection”, SBP Sections 3.5 “Product Support and Miscellaneous Work”, SBP Section 13.0 “Order of Precedence”, SBP Section 15.0 “Applicable Law”, SBP Section 16.0 “Product Support and Assurance”, SBP Section 20.0 “Intellectual Property”, SBP Section 22.0 “Infringement”, and SBP Section 26.0 “Insurance for On-Site Support” (if applicable), shall survive any cancellation, termination or expiration of this SBP, any assignment of this SBP or any payment and performance of any or all of the other obligations of the Parties hereunder.  Termination or cancellation

 

61



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

of any part of this SBP shall not alter or affect any part of this SBP which has not been terminated or cancelled.

 

33.0                         INVENTORY AT CONTRACT COMPLETION

 

Subsequent to Seller’s last delivery of Product(s), which contain, convey, embody or were manufactured in accordance with or by reference to Boeing’s Proprietary Information or Materials, including but not limited to finished goods, work-in-process and detail components (hereafter “Inventory”) which are in excess of Order quantity may be made available to Boeing for purchase.  Seller may be entitled to keep such inventory for other Boeing approved purposes.  In the event Boeing, in its sole discretion, elects not to purchase the Inventory, Seller may keep and sell such Inventory, under the terms of its spares supplemental license agreement with Boeing, as long as that supplemental license agreement is in good standing.  If Seller’s spares supplemental license agreement has been terminated or cancelled, Seller shall scrap the Inventory.  Prior to scrapping the Inventory, Seller shall mutilate or render it unusable.  Seller shall maintain, pursuant to their quality assurance system, records certifying destruction of the applicable Inventory.  Said certification shall state the method and date of mutilation and destruction of the subject Inventory.  Boeing or applicable regulatory agencies shall have the right to review and inspect these records at any time it deems necessary.  In the event Seller elects to maintain the Inventory, Seller shall maintain accountability for the Inventory and Seller shall not sell or provide the Inventory to any third party without prior specific written authorization from Boeing.  Failure to comply with these requirements shall be a material breach and grounds for default pursuant to GTA Section 13.0.  Nothing in this SBP Section 33.0 prohibits Seller from making legal sales directly to the United States of America government.

 

34.0                         SELLER ASSISTANCE

 

In accordance with GTA Section 12.2 and GTA Section 13.2 Boeing may, by written notice to Seller, require Seller to transfer to Boeing or to Boeing’s designee title (to the extent not previously transferred) to certain (i) Contractor-Use Tooling, Common-Use Tooling and other Tooling, (ii) Transportation Devices, (iii) Boeing Furnished Material, (iv) raw materials, parts, work-in-process, incomplete or completed assemblies, and all other Products or parts thereof in the possession or under the effective control of Seller or any of its subcontractors, and (v) Proprietary Information of Boeing, including, without limitation, planning data, Product Definition, Drawings and other Proprietary Information relating to the design, production, maintenance, repair and use of all Products and Contractor-Use Tooling and Common-Use Tooling, in the possession or under the effective control of Seller or any of its subcontractors, in each case free and clear of all liens, claims or other rights of any Person.  Seller shall immediately transfer and deliver, and cause each of its subcontractors to transfer and deliver, any or all of the aforesaid items in accordance with any written notice or notices given hereunder by Boeing to Seller, notwithstanding any event or circumstance whatsoever, including, without limitation, any claim or dispute Seller may assert in connection with a termination of this SBP or any

 

62



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

payment for any such items.  If Boeing shall require Seller to transfer and deliver to Boeing or Boeing’s designee any of the aforesaid items, Seller shall cooperate with and shall assist Boeing in developing and implementing plans to transfer the production of Products and provision of services to Boeing, or to any other Person designated by Boeing, in an expeditious and orderly manner and will take such other steps to assist Boeing as Boeing may request in good faith, all for the purpose of maintaining, or attempting to maintain as nearly as may be possible, production of Program Airplanes and Derivatives in accordance with Boeing’s schedule of delivery of Program Airplanes and Derivatives to Customers.  Boeing will bear the reasonable costs associated with such cooperation, assistance and other steps except following an Event of Default in which case Seller shall bear such reasonable costs.

 

Following an Event of Default, Boeing and Seller acknowledge that the Program, and Boeing’s ability to sell and deliver Program Airplanes and Derivatives to Customers, will be substantially impaired if Seller delays, for any reason, its performance under this SBP Section 34.0.  Boeing and Seller also acknowledge that Seller’s assistance hereunder in the event of a cancellation, in whole or in part, of this SBP will be of fundamental significance to reduce incidental, consequential or other damages to Boeing. Consequently, Seller shall transfer and deliver to Boeing any or all of the aforesaid items notwithstanding any dispute or claim that Seller may have against Boeing.  Seller shall not delay its performance under this SBP Section 34.0 by any action, including, without limitation, any judicial or other proceeding, or by any failure to act.  Seller hereby authorizes Boeing or its representatives to enter upon its, or any of Seller’s subcontractors (Seller shall obtain from its subcontractors Boeing’s right to so enter and act), premises at any time during regular business hours upon one (1) day’s advance written notice, for the limited purpose of taking physical possession of any or all of the aforesaid items.  At the request of Boeing, Seller shall promptly provide to Boeing a detailed list of such items, including the location thereof, and shall catalog, crate, package, mark and ship such items expeditiously and in an orderly manner and otherwise in the manner requested by Boeing, which request may specify incremental or priority shipping of certain items. Seller shall, if instructed by Boeing, store or dispose of any or all of the aforesaid items in any reasonable manner requested by Boeing.

 

35.0                         NONRECURRING WORK TRANSFER

 

Following an Event of Default, Program Cancellation, expiration of this SBP or the termination of this SBP by mutual agreement of the Parties, Seller agrees to transfer to Boeing all Nonrecurring Work relating to the affected Program, or if this SBP is cancelled, all Non-Recurring Work set forth in SBP Section 3.3 “Nonrecurring Work”.

 

36.0                         DISPOSITION OF TOOLING

 

In the event Boeing exercises its rights under GTA Section 12.0, GTA Section 13.0 or SBP Section 34.0, Seller shall transfer and deliver to Boeing any and all Tooling that must be transferred and delivered pursuant to GTA Section 12.0,

 

63



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

GTA Section 13.0 or SBP Section 34.0 free and clear of any and all liens, claims or rights of any third party.

 

37.0                         CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)

 

C-TPAT is an initiative between business and government to protect global commerce from terrorism and increase the efficiencies of global transportation.  The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain.  Such practices may include but are not limited to the following:

 

Procedural Security — Procedures in place to protect against unmanifested material being introduced into the supply chain—

 

Physical Security —Buildings constructed to resist intrusion, perimeter fences, locking devices, and adequate lighting;

 

Access Controls —Positive identification of all employees, visitors and suppliers;

 

Personnel Security —Employment screening, background checks and application verifications;

 

Education and Training Awareness —Security awareness training, incentives for participation in security controls.

 

Seller agrees to work with Boeing and appropriate industry and governmental agencies, as necessary, to develop and implement policies and procedures consistent with the C-TPAT initiative to ensure the safe and secure transport of Products under this SBP.

 

38.0                         ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS

 

Seller shall implement an environmental management system (“EMS”) and health and safety management system (“HSMS”) with respect to its performance under this SBP; and insert, in any of its subcontractor and supplier contracts for performance of Seller’s obligations under this SBP, provisions substantially similar to this SBP Section 38.0 and GTA Section 21.0 (Compliance with Laws).

 

39.0                         RESTRICTIONS ON LOBBYING

 

39.1                         Applicability

 

SBP Section 39.0 applies to all Sellers, domestic and foreign if:
Seller’s Product is sold by Boeing, individually or incorporated into another product such as an Aircraft, to a Customer who finances the purchase of the

 

64



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Product or product with a direct loan from the Export-Import Bank of the United States (“Direct Loan”), and

 

The ship set price of the Product, combined with the ship set prices of any other items sold to Boeing by Seller which are incorporated into the product sold to the Customer, exceeds [*****].

 

39.2                         Certification

 

Boeing will notify Seller in writing if it believes the conditions of 39.1 are met and the below described certificate and disclosure form are required.  If applicable, Boeing will also identify the Aircraft being financed.

 

Upon receipt of such notice, Seller will execute an “Anti-Lobbying Certificate” substantially in the form of Attachment 24 to this SBP and, if applicable, Standard Form-LLL, “Disclosure Form to Report Lobbying.”  (a copy of the form can be found at http://www.whitehouse.gov/sites/default/files/omb/grants/sfillin.pdf )

 

Seller will provide the executed certificate to the Boeing Procurement Representative.  Also, Seller will forward to the Boeing Procurement Representative any originals of the Standard Form-LLL received by Seller from its subcontractors of any tier promptly upon Seller’s receipt.

 

39.3                         Flow Down

 

With respect to any Direct Loan, the substance of this SBP MS-65530-0016 shall apply to all of Seller’s suppliers of any tier who supply items with a ship set price exceeding [*****].  Seller agrees to incorporate the substance of SBP MS-65530-0016, including this subsection 39.3, in all applicable subcontracts.

 

65



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.

 

BOEING

 

SELLER

 

 

 

THE BOEING COMPANY

Boeing Commercial Airplanes

 

Spirit AeroSystems Inc.

 

 

 

 

 

 

Name:

 

Name:

 

 

 

Title:

 

Title:

 

 

 

Date:

 

Date:

 

66


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

 

WORK STATEMENT AND PRICING
(Reference SBP Sections 3.2.1, 3.3.4.1, 3.4.4, 4.1, 4.8.2, 7.2, 7.2.1, 7.10.1, 12.6.1, 18.0)

 

FOR PURPOSES OF SBP Section 18.0, “OBLIGATION TO PURCHASE AND SELL” Boeing shall be defined as the following organizations, divisions, groups or entities:

 

BCA Supply Management and Procurement; The Boeing Company, Seattle, WA

 

The price for Products to be delivered on or before the eighth anniversary of the first day of the month in which both parties fully execute this SBP except as otherwise noted below will be as follows:

 

Period 1

 

TBD

 

Period 5

 

TBD

Period 2

 

TBD

 

Period 6

 

TBD

Period 3

 

TBD

 

Period 7

 

TBD

Period 4

 

TBD

 

Period 8

 

TBD

 

Attachment 1 step down pricing is from base year.

 

·                   [Note:  The total value reflected in attachment 1 (SOW) is intended to represent the total Lloyd site SOW (BCA production) and total Price on June 16, 2005 per the established 2003 Baseline.  If a disparity is identified between Attachments 1 SOW and the actual Lloyd site SOW, Attachment 1 will be revised to reflect the change and the summary value will be re-spread among the revised SOW.  This Attachment will continue to be revised through the transition period to reflect any change to the 2003 Baseline values and/or part numbers.  Items marked as LMI’s are being further defined as Boeing Part Numbers (part numbers may be one-to-one or one-to-many after conversion), Engineering Changes, Part Number Rolls, un-identified parts may be added/deleted to the SOW to ensure a clean statement of work, and any work transfer activity identified (ie.. 737 Horizontal/Vertical Stabilizers, 737 Tail cone, etc.) will be deleted from this SBP upon the work transfer date.  Seller will continue to support Boeing requirements for these products until successfully transferred to another party.

 

·                   “Boeing and Seller agree that Attachment 1 prices will be set such that: (i) when the prices are applied to the parts in the bill of material for any minor model type listed on Schedule A [this is to be the agreed minor model pricing sheet], the shipset price for such minor model will equal the amount set forth on Schedule A unless mutually agreed by Boeing and Seller as provided for below; (ii) the shipset price per minor model set forth on Schedule A is to be allocated to component parts incorporated into such shipset proportionately to the part pricing information contained in Boeing’s enterprise resource planning (ERP) system, with the proviso that any part that is common to two or more minor models will bear a single price irrespective of the minor model for which it is intended to be used; and (iii) to the extent that the proviso in subclause (ii) would result in the bill of material pricing for any minor model not aggregating to the Schedule A price, then the excess or deficiency is to be allocated among parts that are unique to such minor model, proportionately to the part pricing information for such unique parts contained in Boeing’s ERP system.  Boeing and Seller agree to use their best efforts to set Attachment 1 prices on the foregoing basis within 10 calendar days following the date on which the APA is signed.  If within this 10 day period a price allocation methodology acceptable to both Boeing and Seller is developed that aligns final Attachment 1 part prices to the proportionate part pricing in Boeing’s ERP system more closely than the foregoing basis, this revised methodology will be referred to a committee comprised of any four of John Borst, Bryan Gerard, Luis Valdes, Seth Mersky, and Nigel Wright.  If for any reason Boeing and Seller have not completed an Attachment 1 acceptable to both Parties within 10 calendar days from the date on which the APA is signed, all associated issues will be referred to such committee.  Any decision of such committee must be made unanimously to be valid.  When prices are established in accordance with the foregoing, this Attachment 1 will be updated accordingly.”]

 

[The following pages provide detail part numbers and pricing for each year. Note: Attachment 1 Parts and Prices provided under separate file due to size.] Non-recurring pricing and non-pricing agreements are contained in ATTACHMENT 9.

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

ATTACHMENT 1 SCHEDULE A

 

Wichita Site

 

 

 

 

 

Tulsa and McAlester Sites

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

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[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

[*****]

 

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[*****]

 

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[*****]

 

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[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

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[*****]

 

 

 

 

 

 

 

 

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[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

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[*****]

 

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[*****]

 

[*****]

 

 

 

 

 

 

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 1A TO
SPECIAL BUSINESS PROVISIONS

 

Attachment 1A

 

The statement of work ([*****]) listed in this Attachment 1A is subject to all terms and conditions of SBP MS-65530-0016 and Amendment 1 thereto.  Any reference to Attachment 1 in this SBP is applicable to the work statement listed on this Attachment 1A with the following exceptions:

 

1.                                       With reference to clause 3.2 Period of Performance, the wording in section 3.2 is amended in its entirety only to the extent that applies to the parts listed in this Attachment 1A by the following:

 

The period of performance for this work statement is April 18 th , 2006 through [*****].  Boeing has no obligation to Seller for any or all derivative airplane programs for this statement of work.  At or prior to the end of this period of performance, the Parties may agree to an extension beyond [*****], subject to agreement of the Parties as to Price and Schedule.

 

2.                                       With reference to clause 4.1 Recurring Price, wording in section 4.1 is amended in its entirety only to the extent that it applies to the statement of work listed in this Attachment 1A by the following:

 

The Price of Recurring Products is set forth in SBP Attachment 1A and includes the total price for all work under this Attachment 1A, subject to any applicable adjustments under SBP section 7.0.

 

3.                                       With reference to clause 4.4.1 Interim Extension Pricing, wording in section 4.1.1 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1A.

 

4.                                       With reference to clause 4.5 pricing for Derivatives, wording in section 4.5 is superseded in its entirety for the statement of work listed in this Attachment 1A by the following:

 

For Derivatives(s) and follow-on work outside the term of this SBP, Boeing reserves the right to contract with any supplier Boeing determines is appropriate for the supply of the Products addressed in the SBP Attachment 1A.  In determining the appropriate supplier for Derivative(s),[*****], will be a key consideration in the selection process, and in the establishment of Nonrecurring and Recurring Shipset Prices for Derivative(s).  If Boeing selects Seller as the supplier for these Products, change pricing will be subject to SBP Section 7.9.

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

5.                                       With reference to Attachment 16 Boeing Furnished Material/Boeing Provided Details, Attachment 16 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1A.

 

6.                                       With reference to Attachment 22 Abnormal Escalation, Attachment 22 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1A.

 

7.                                       With Reference to GTA section 12.3 Seller’s Claim, the following text is deleted and not applicable to the statement of work listed in this Attachment 1A:

 

If Boeing terminates an Airplane Program according to the terms of GTA 25.0 within [*****] of [*****], then Seller shall further have the right to receive from Boeing an inconvenience fee equal to the [*****], determined without regard to any write-off or other adjustment by reason of such termination, for the Tooling in support of the terminated Airplane Program.

 

Boeing shall have ninety (90) days from receipt of Seller’s claim to dispute such claim by delivering to Seller a written notice setting forth Boeing’s grounds for dispute.  If Boeing does not deliver such a notice to Seller or reach agreement with Seller regarding Seller’s claim within such ninety (90) day period, Seller may by written notice, seek resolution of its claim through the Senior Vice President Supplier Management or that person’s equivalent (the “Senior Executive”) as provided in Section 33.  If no response from such Senior Executive is received by Seller within 30 days of such Senior Executive’s receipt of Seller’s notice, Boeing shall pay Seller the amount claimed by Seller within fifteen (15) days thereafter.  Provided, however, that such payment shall be subject to full or partial recovery by Boeing by setoff, credit or otherwise, to the extent Seller’s claim is determined by Boeing to not be (x) in compliance with the terms of Section 12 or Attachment 1A to this GTA or (y) compensable under the regulations cited below; provided, however, that Boeing’s determination shall remain subject to the provisions of SBP Section 33.

 

8.                                       With reference to GTA section 15 Suspension of Work, the following text is deleted and not applicable to the statement of work listed in this Attachment 1A:

 

“and Boeing will compensate Seller for its reasonable direct costs incurred as a result of such Stop Work Order”.

 

9.                                       With reference to GTA section 16.0 Termination or Wrongful Cancellation, the following text is deleted and not applicable to the statement of work listed in this Attachment 1A:

 

“plus an amount for [*****], if any.  Notwithstanding the foregoing, if Boeing wrongfully cancels or terminates all orders with respect to a model

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

of Program Airplane (“Cancelled Program Airplane”) and such cancellation or termination results in or has the effect of a cancellation or termination of this Agreement or SBP MS-65530-0016 in its entirety with respect to the Cancelled Program Airplane, or if Boeing wrongfully cancels or terminates SBP MS-65530-0016 with respect to a Cancelled Program Airplane, then Seller shall be entitled to all remedies available at law or in equity, except that the monetary damages that Seller may recover shall not exceed [*****].

 

The prices for Products to be delivered on or before [*****] through [*****] are [*****] prices.  The pricing for [*****] is reflective of [*****] percent of the total yearly requirements for the subject parts.  Yearly requirements are inclusive of production, spares, retrofit, modification, POA and replacement part requirements.

 

The Parties acknowledge and agree that those provisions that have been amended in this Attachment 1A do not amend the same provisions for the rest of the Contract.

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 1B TO
SPECIAL BUSINESS PROVISIONS

 

Attachment 1B

 

Recitals

 

WHEREAS, Boeing and Seller entered into a Memorandum of Agreement dated August 28, 2007 (“MOA” for purposes of this Attachment 1B) for the model 747-8 propulsion work;

 

WHEREAS, the Parties intended, and established within the MOA, that the nacelle portion of the statement of work in the MOA would be governed by the prospective agreement Special Business Provisions MS-65520-0049;

 

AND

 

WHEREAS, the Parties never completed negotiation of or executed MS-65520-0049;

 

NOW, therefore, the Parties wish to establish terms and conditions by which certain 747-8 nacelle work will be governed by SBP MS-65530-0016.

 

The statement of work for 747-8 Nacelle listed in this SBP Attachment 1B (Nacelle SOW 1B) is subject to all terms and conditions of SBP MS-65530-0016 and Amendment 5 thereto, except as otherwise specified in this Attachment 1B.

 

As of the effective date of SBP Attachment 1B, one Non-Recurring milestone payment remains as agreed in MOA 6-5630-MEG07-003, Attachment 2.  The remaining milestone payment for [*****] has not been paid and is due at first aircraft delivery to the Customer.

 

Nacelle SOW-1B

 

[*****]

[*****]

[*****]

[*****]

 

[*****]

[*****]

[*****]

[*****]

[*****]

[*****]

[*****]

[*****]

 

030-22002-1 - Primary Exhaust (Kit)

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Any reference to SBP Attachment 1 Work Statement and Pricing in this SBP is applicable to the Nacelle SOW 1B with the following exceptions:

 

1.                                       With reference to SBP Section 3.2 Period of Performance, the wording in section 3.2 is superseded in its entirety by the following for the parts listed in this SBP Attachment 1B:

 

The period of performance for this work statement is [*****] through [*****] at which time Boeing has no further obligation to procure Attachment 1B statement of work from Seller.  If a new 747 derivative airplane program is launched during this Period of Performance, Seller shall retain all rights included in this SBP Attachment 1B for that derivative airplane program.

 

[*****] prior to the end of the [*****] period of performance, Buyer will notify Seller of Buyers intent to either competitively bid the SBP Attachment 1B statement of work or negotiate pricing with Seller as a single source supplier.

 

2.                                       With reference to SBP Section 4.1 Recurring Price, wording in section 4.1 is superseded in its entirety by the following for the statement of work listed in this Attachment 1B:

 

The Price of Recurring Products is set forth in Attachment 1B of the SBP and includes the total price for all baseline statement of work under this Attachment 1B, subject to any applicable adjustments under SBP Section 7.0. Change Provisions, Pricing shall be included as an update to SBP Attachment 1 and SBP Attachment 7 Indentured Parts List and POA Pricing upon execution of this Amendment 1B.

 

747-8 Nacelle Shipset Pricing

 

The Nacelle shipset consists of [*****] Inlet, [*****] Fan Cowl and [*****] Exhaust Nozzle / Plug Kits.  The [*****] Price [*****] Nacelle shipset baseline pricing shall be [*****].  Individual component pricing shall be [*****] for the Inlet, [*****] for the Fan Cowls and [*****] for the Exhaust Nozzle/Plug Kits.

 

For clarification purposes, the Pricing in the MOA in August 2007 is for the baseline statement of work, 314U800-01 Rev New dated December 6, 2006, and all Changes subsequent to the baseline statement of work are not included in the SBP Attachment 1B pricing set forth above.

 

If Buyer, [*****] prior to the [*****] Period of Performance end date has notified Seller of its intent to contract with Seller as a single source supplier, then [*****] prior to the end of the [*****] period of performance, Seller will

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

propose pricing for the following [*****] or a period agreed upon by the Parties.  The parties will negotiate pricing in good faith based on then-prevailing market conditions for 747-8 Nacelle hardware.

 

3.                                       With reference to SBP Section 4.1.1 Interim Extension Pricing, wording in section 4.1.1 is superseded in its entirety by the following for the statement of work listed in this SBP Attachment 1B:

 

If the parties are unable to reach agreement on Pricing by the date which is [*****] prior to [*****], then such matter shall be resolved pursuant to GTA Section 33.0.  If any dispute for Pricing continues after the period of performance then interim pricing shall be established.  Interim Pricing shall be the then current Base Price adjusted in accordance with SBP Attachment 20 and escalated annually using the indices outlined below.  At such time as a resolution on Pricing has been achieved, an appropriate debit or credit will be made retroactive to the day after the expiration of the period of performance of this Attachment 1B of the SBP.

 

A.                                     Material - [*****]

 

B.                                     Labor - [*****]

 

4.                                       With reference to SBP Section 5.2 Recurring Payment, wording in section 5.2 is superseded in its entirety by the following, for the statement of work listed in this Attachment 1B:

 

Unless otherwise provided under written agreement between the Parties, payments shall be paid in immediately available funds net [*****] calendar days after the shipment date (the date items are received by the carrier from Seller).  Except in the case of an Order requiring Pay-From Receipt, the date of payment is calculated from the later of (a) the date the items are delivered to Boeing at its manufacturing site, (b) the date of receipt of a correct and valid invoice or (c) the scheduled delivery date of such Product.  Payment shall be done electronically as mutually agreed.  Boeing agrees to promptly notify Seller if it receives an invoice Boeing believes to be incorrect.

 

All Payments are subject to adjustment for shortages, credits and rejections

 

5.                                       With reference to SBP Section 5.2.1 Non-Recurring Payment, the first paragraph and only the first paragraph, beginning “Non-Recurring Tooling Payment...” is superseded by the following for the statement of work listed in this Attachment 1B.

 



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Non-Recurring Tooling payment shall be paid in immediately available funds net [*****] calendar days after receipt by Boeing of both a correct and valid invoice and where required a completed and approved certified tool list (CTL) (whichever is later).

 

6.                                       With reference to SBP Section 7.5 Schedule Acceleration/Deceleration and SBP Attachment 6 Lead Time Matrix, the 747-8 Nacelle Hardware listed in this Attachment 1B will be subject to the same 747 Strut / Nacelle (S/N) Lead Times, as outlined in Amendment 5 of SBP MS-65530-0016 Atch 6, column 747.

 

7.                                       With reference to SBP Attachment 16 Boeing Provided Details and Supplier Banked material, Attachment 16 will be updated to reflect the current GE115 Boeing Provided Details for installation on the Inlet.

 

8.                                       With reference to SBP Attachment 20 Quantity Based Price Adjustment Formula, Attachment 20 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1B.

 

9.                                       With reference to SBP Attachment 22 Abnormal Escalation, Attachment 22 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1B.

 

The Parties acknowledge and agree that those provisions that have been amended in this Attachment 1B do not amend the same provisions for the rest of the Contract.

 


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

 

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Section 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1)

 

A.                                     Configuration

 

The configuration of each Production Article shall be as described in the latest released Supplier Specification Plan (SSP) revision in the Order and/or in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article:

 

B.                                     Contract Change Notices

 

The following Contract Change Notices are hereby incorporated into this SBP.

 

Amendment 1 incorporates:

 

1

 

2

 

4

 

5

 

6 rev A

 

7

 

8

9

 

10

 

11

 

12

 

13

 

14

 

15

16

 

17

 

18

 

19

 

20

 

21

 

22

23

 

24

 

25

 

26

 

27

 

28

 

29

30

 

31

 

32

 

33

 

34

 

35

 

36

37

 

40

 

41

 

42

 

43

 

44

 

45

46

 

47

 

48

 

49

 

50

 

51

 

52

53

 

54

 

55

 

56

 

57

 

58

 

59

60

 

61

 

62

 

63

 

64

 

65

 

67

68

 

69

 

70R1

 

71

 

71 rev A

 

72

 

73

74

 

75

 

76 rev A

 

77

 

78

 

79

 

80

81

 

83

 

84

 

85

 

86

 

87

 

88

89

 

91

 

92

 

92 (dup #)

 

93

 

95

 

96

97

 

98

 

99

 

100

 

101

 

102

 

103

104

 

105

 

106

 

107

 

108

 

109

 

110

111

 

112

 

117

 

118

 

119

 

120

 

121

122

 

123

 

124

 

125

 

127

 

 

 

 

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 2 incorporates:

 

068

 

070

 

090

 

114

 

115

 

116

 

126

128

 

129

 

130

 

131

 

132

 

133

 

134

135

 

136

 

137

 

138

 

139

 

140

 

141

142

 

143

 

144

 

145

 

146

 

147

 

148

149

 

150

 

151

 

152

 

153

 

154

 

155

156

 

157

 

158

 

159

 

160

 

161

 

162

162 RI

 

163

 

164

 

165

 

166

 

167

 

168

169

 

170

 

171

 

172

 

173

 

174

 

175

175R1

 

176

 

177

 

178

 

179

 

180

 

181

 

 

 

 

 

 

 

 

 

 

 

 

 

182

 

183

 

184

 

185

 

186

 

187

 

187 (2)

188

 

189

 

190

 

191

 

192

 

193

 

194

195

 

196

 

197

 

198

 

199

 

200

 

201

202

 

203

 

204

 

205

 

206

 

207

 

208

209

 

211

 

211 (2)

 

212

 

212 (2)

 

213

 

214

214 (2)

 

214R1

 

215

 

215 (2)

 

215r1

 

216

 

216 (2)

216 (3)

 

217

 

218

 

219

 

220

 

221

 

222

223

 

224

 

225

 

226

 

227

 

228

 

228(2)

229

 

230

 

231

 

232

 

233

 

234

 

235

236

 

237

 

238

 

239

 

240

 

241

 

242

243

 

244

 

245

 

246

 

247

 

247 (2)

 

248

249

 

250

 

251

 

252

 

253

 

254

 

255

256

 

257

 

258

 

259

 

260

 

260R1

 

261

262

 

263

 

264

 

265

 

266

 

267

 

268

269

 

270

 

271

 

272

 

272r1

 

273

 

274

275

 

276

 

277

 

278

 

279

 

280

 

281

282

 

283

 

284

 

285

 

286

 

287

 

288

289

 

290

 

291

 

292

 

293

 

294

 

295

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

296

 

297

 

298

 

299

 

301

 

302

 

303

303 rev A

 

304

 

305

 

306

 

307

 

308

 

309

309R2

 

310

 

311

 

311r1

 

312

 

313

 

314

315

 

316

 

317

 

318

 

318 (2)

 

319

 

319 (2)

320

 

321

 

322

 

323

 

324

 

325

 

326

327

 

328

 

329

 

329

 

330

 

330

 

331

332

 

333

 

334

 

335

 

336

 

337

 

338

339

 

340

 

341

 

342

 

343

 

344

 

345

346

 

347

 

348

 

349

 

350

 

351

 

352

353

 

354

 

355

 

356

 

357

 

358

 

359

360

 

361

 

362

 

363

 

364

 

365

 

366

367

 

368

 

369

 

370

 

371

 

372

 

373

374

 

375

 

376

 

377

 

378

 

379

 

380

381

 

382

 

383

 

384

 

385

 

385 (2)

 

386

386 (2)

 

387

 

387 (2)

 

388

 

389

 

390

 

391

392

 

394

 

395

 

396

 

397

 

399

 

400

401

 

402

 

403

 

404

 

405

 

406

 

407

408

 

409

 

410

 

411

 

412

 

413

 

414

415

 

415R1

 

416

 

417

 

418

 

419

 

420

421

 

422

 

423

 

424

 

426

 

427

 

428

428 (2)

 

429

 

429

 

430

 

430 (2)

 

431

 

433

434

 

435

 

436

 

436 (2)

 

437

 

437 (2)

 

438

439

 

440

 

442

 

446

 

447

 

448

 

449

450

 

451

 

452

 

453

 

454

 

455

 

456

457

 

459

 

462

 

463

 

464

 

465

 

478

480

 

481

 

482

 

482

 

483

 

485

 

486

487

 

488

 

489

 

491

 

492

 

493

 

494

496

 

497

 

497R1

 

498

 

499

 

500

 

501

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 3 incorporates:

 

082

 

309R4

 

309R5

 

502

 

502R1

 

503

 

504

505

 

506

 

507

 

508R1

 

508(2)

 

509

 

510

511

 

512

 

514

 

515

 

516

 

517

 

518

519

 

520

 

521

 

522

 

523

 

524

 

525

526

 

527

 

529

 

530

 

530R1

 

531

 

531R1

532

 

533

 

534

 

535

 

536

 

537

 

538

539

 

540

 

541

 

542

 

543

 

544

 

545R1

546

 

547

 

549

 

549 R.A

 

550

 

551

 

552

553

 

554

 

555

 

556

 

557

 

559

 

561

562

 

564

 

565

 

566R1

 

567

 

569

 

570

571

 

572

 

574

 

575

 

576

 

576 (2)

 

577R1

578

 

579

 

580

 

581

 

582

 

583

 

586

587

 

588

 

589

 

590

 

592

 

593

 

594

595

 

597

 

598

 

599

 

600

 

601

 

602

603

 

603R2

 

604

 

605

 

606

 

607

 

608

609

 

610

 

611

 

612

 

613

 

614

 

615

616

 

617

 

618

 

618 RI

 

619

 

620

 

621

622

 

623

 

625

 

626

 

627R1

 

628

 

629

630

 

633

 

634

 

635

 

636

 

637

 

639R2

640

 

641

 

642

 

643

 

644

 

645

 

646

647

 

648

 

649

 

650

 

651

 

652

 

653

655

 

656

 

657

 

658

 

659

 

660

 

661

662

 

664 R1

 

666

 

667

 

668

 

668 (2)

 

669

670

 

671

 

673

 

675

 

676

 

677

 

678

679

 

681

 

682

 

683

 

684R1

 

685

 

686R1

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

687

 

688(2)

 

688

 

689

 

689(2)

 

690 (2)

 

690

691

 

692

 

693

 

694

 

695

 

697

 

698

699

 

700 R1

 

701

 

702 R1

 

703

 

705

 

706

707

 

707 Rev A

 

708

 

709

 

710

 

711

 

712

713

 

714

 

715

 

716

 

717

 

718

 

719

721

 

722

 

723

 

724

 

725

 

726

 

727

728

 

729

 

730

 

731

 

732

 

733

 

734

735

 

736

 

737

 

738

 

739

 

740

 

742

743

 

744

 

745

 

746

 

747

 

748

 

749

750

 

751

 

752

 

753

 

754

 

755

 

757

758

 

759

 

760

 

761

 

762

 

763

 

764

765

 

766

 

767

 

768

 

769

 

770

 

771

772

 

773

 

774

 

775

 

778

 

779

 

780

781

 

782

 

784

 

785

 

786

 

787

 

788

789

 

790R1

 

791

 

792

 

794

 

795

 

796

798

 

799 R1

 

800

 

801

 

802 RI

 

803

 

804

805

 

806

 

807

 

808

 

811

 

812

 

813

814

 

816

 

817R1

 

819

 

820

 

822

 

823

824R1

 

82581

 

826

 

827

 

828

 

829

 

830

830 R1

 

831

 

833

 

834

 

836

 

838R1

 

839

840

 

841

 

842

 

843

 

844

 

845

 

847REV B

848

 

849

 

850

 

850

 

851

 

852

 

853

857

 

858

 

859

 

860

 

861 R1

 

864

 

868

874

 

875

 

876

 

879

 

880

 

881

 

883

885

 

899

 

904

 

916R2

 

939

 

 

 

 

 

5


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 4 incorporates:

 

214R2

 

309R3

 

444

 

445

 

460

 

479

 

484

490

 

495

 

513

 

549R1

 

596

 

619R1

 

624

631

 

632

 

639 R3

 

663

 

673R1

 

692R1

 

695(2)

751(2)

 

752

 

756

 

769R2

 

773R1

 

774R1

 

776

791R1

 

793

 

796R1

 

800R1

 

802R2

 

803R1

 

809

810

 

815

 

818

 

821

 

840(2)

 

850R1

 

855

856

 

862R1

 

866

 

867

 

870

 

873

 

877

878

 

882

 

884

 

885

 

886

 

887R1

 

888

889

 

890(2)

 

892

 

893

 

894

 

895

 

896

897

 

898

 

899

 

900

 

901

 

902

 

903

905

 

906

 

907

 

908R2

 

909R1

 

910

 

911

912

 

913

 

914

 

915

 

918

 

919

 

920

921

 

922

 

923

 

924R1

 

925

 

926

 

927

928

 

929

 

930

 

933

 

935R1

 

936

 

937

938

 

940

 

942

 

947

 

948

 

949

 

950

951

 

952

 

953

 

954

 

958

 

959R1

 

962

963

 

964

 

965

 

967

 

968

 

970

 

972

975

 

976R2

 

977

 

979

 

981

 

982

 

983

983(2)

 

984

 

985

 

986

 

987(2)

 

991

 

992

993

 

994

 

995

 

996R1

 

997

 

997(2)

 

999

1000

 

1001

 

1002

 

1003

 

1006

 

1008

 

1009

1012

 

1013

 

1014

 

1015

 

1016

 

1017

 

1030

1032

 

1035

 

1040

 

1047

 

1071

 

1081

 

1092

1132

 

1133

 

1134

 

1135

 

1137R2

 

1142

 

1146

1153

 

1271

 

1328

 

 

 

 

 

 

 

 

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 5 incorporates:

 

443

 

461

 

585

 

700R2

 

704

 

716(2)

 

803R1

821R1

 

884R1

 

969

 

1011

 

1018

 

1019

 

1020

1023

 

1024

 

1025

 

1026

 

1027

 

1028

 

1033R1

1034

 

1036

 

1037

 

1038

 

1039

 

1042

 

1043

1045

 

1046

 

1048

 

1049

 

1050

 

1051

 

1053

1054

 

1055

 

1058

 

1059

 

1060

 

1061

 

1062

1065

 

1066

 

1067

 

1068

 

1069

 

1070

 

1073

1074

 

1075

 

1076

 

1077

 

1078

 

1079

 

1080

1083

 

1084

 

1085

 

1086

 

1087

 

1088

 

1089

1090

 

1091

 

1093

 

1094

 

1095

 

1097

 

1098

1099

 

1100

 

1101

 

1102

 

1103

 

1104

 

1105

1106

 

1107

 

1108

 

1109

 

1110

 

1113

 

1114

1114R1

 

1115

 

1116

 

1117

 

1118

 

1119

 

1120

1121

 

1122

 

1123

 

1124RevA

 

1125

 

1126

 

1127

1128

 

1129

 

1130

 

1131

 

1136

 

1138RevA

 

1139

1140

 

1141

 

1143

 

1144

 

1145 RevA

 

1147

 

1148

1149R1

 

1150

 

1151

 

1152

 

1154

 

1155

 

1156

1157

 

1158

 

1159

 

1160

 

1161

 

1162

 

1164

1165

 

1166

 

1167

 

1168

 

1169

 

1170

 

1171

1172

 

1173

 

1174

 

1175

 

1177

 

1178

 

1179

1180

 

1181

 

1182

 

1184

 

1185

 

1186

 

1187

 

7



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 5 incorporates - continued

 

1190

 

1191

 

1192

 

1193

 

1194

 

1195

 

1197

1198

 

1200

 

1201

 

1202

 

1204

 

1205

 

1206

1208

 

1209

 

1210

 

1211

 

1212

 

1213

 

1214

1215R1

 

1217

 

1219

 

1220

 

1221

 

1223

 

1224

1225

 

1226

 

1228

 

1229

 

1230

 

1231

 

1232

1233

 

1234

 

1241

 

1243

 

1244R2

 

1245

 

1246

1247

 

1249

 

1251

 

1253

 

1255

 

1256

 

1257

1259

 

1260

 

1261

 

1263

 

1264

 

1266

 

1267

1268

 

1269

 

1270

 

1273

 

1274

 

1275

 

1276

1277

 

1278

 

1279

 

1280

 

1281

 

1282

 

1283

1284R1

 

1285

 

1286

 

1287

 

1288

 

1290

 

1291

1293

 

1294

 

1295

 

1296

 

1297

 

1299

 

1300

1301

 

1302

 

1303

 

1304

 

1305

 

1306

 

1308

1312

 

1313

 

1315

 

1316

 

1317

 

1318R1

 

1319

1320

 

1321

 

1322R1

 

1323

 

1325

 

1326

 

1327

1329

 

1330

 

1331

 

1332

 

1333

 

1334

 

1335

1336

 

1337

 

1338

 

1339

 

1340

 

1341

 

1343

1344

 

1345

 

1346

 

1347

 

1348

 

1349

 

1350

1351

 

1352

 

1353

 

1354

 

1355

 

1356

 

1357

1359 Rev6

 

1360R1

 

1361

 

1362

 

1364

 

1365

 

1366

1367

 

1388

 

1369

 

1370

 

1371

 

1372

 

1373

1374

 

1375

 

1376R2

 

1377

 

1378

 

1379

 

1380

1381

 

1382

 

1383

 

1384

 

1385

 

1386

 

1387

 

8



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1388

 

1389R2

 

1390

 

1391

 

1392

 

1393

 

1395

1398

 

1399

 

1400

 

1401

 

1402

 

1403

 

1404RevA

1407R2

 

1408

 

1409

 

1410

 

1411

 

1412

 

1415

1416

 

1417

 

1418

 

1419

 

1420

 

1421

 

1422

1423

 

1424

 

1425

 

1426 RevD

 

1427

 

1428

 

1429

1430

 

1431

 

1432

 

1433

 

1434

 

1435

 

1436

1438

 

1439R1

 

1440

 

1441

 

1442

 

1443

 

1444

1445

 

1446

 

1447

 

1449

 

1450

 

1451

 

1452

1454

 

1455

 

1456

 

1457

 

1458

 

1459

 

1460

1461

 

1462

 

1463R1

 

1464

 

1465

 

1466

 

1467

1468

 

1469

 

1470

 

1471

 

1473

 

1474

 

1475

1476

 

1477R2

 

1478

 

1479R1

 

1481

 

1482

 

1484

1485

 

1486

 

1487

 

1488

 

1489

 

1490

 

1492

1494R1

 

1498

 

1499R1

 

1501

 

1502

 

1503

 

1504

1505

 

1506R2

 

1507

 

1509

 

1510

 

1511

 

1512R1

1513R1

 

1514

 

1515

 

1516

 

1517

 

1518

 

1519

1520

 

1522

 

1523

 

1524

 

1525

 

1526

 

1527

1528

 

1529

 

1530

 

1531

 

1532

 

1533

 

1534

1535

 

1536

 

1537

 

1538

 

1539

 

1540

 

1541

1542

 

1543

 

1544

 

1546

 

1549

 

1550

 

1551

1552

 

1553

 

1556

 

1557

 

1558

 

1559

 

1560

1561

 

1562

 

1565

 

1569

 

1570

 

1571

 

1572

1573

 

1576

 

1577

 

1578

 

1580R2

 

1581

 

1584

1585

 

1586

 

1587

 

1588

 

1589

 

1591

 

1592

1593

 

1596

 

1597

 

1598

 

1599

 

1600

 

1601

1602

 

1603

 

1604

 

1605

 

1606

 

1607

 

1608

 

9



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1609

 

1611

 

1612

 

1613

 

1614

 

1615R2

 

1616

1617

 

1618

 

1619

 

1620

 

1622

 

1623

 

1624

 

Amendment 5 incorporates - continued:

 

1625

 

1626

 

1627

 

1628

 

1629

 

1630

 

1632

1633

 

1634

 

1635

 

1636

 

1637

 

1638

 

1639

1640

 

1641

 

1642

 

1644

 

1645

 

1646

 

1647

1648

 

1649

 

1650

 

1651

 

1652

 

1653

 

1654

1655

 

1656

 

1657

 

1658

 

1659

 

1661

 

1662

1663

 

1664

 

1665

 

1666

 

1667

 

1668

 

1669R1

1670

 

1671

 

1672

 

1674

 

1675

 

1676

 

1677

1678

 

1679

 

1680

 

1681

 

1682

 

1683

 

1684

1685

 

1687

 

1688

 

1689

 

1690

 

1691

 

1692

1693

 

1694

 

1695

 

1696

 

1697

 

1698

 

1699

1700

 

1701

 

1702

 

1703

 

1704

 

1705

 

1706

1707

 

1708

 

1709

 

1710

 

1711

 

1712

 

1713

1715

 

1716

 

1717

 

1718

 

1719

 

1720

 

1721

1722

 

1723

 

1724

 

1728

 

1729

 

1730

 

1731

1732

 

1733

 

1734

 

1735

 

1736

 

1737

 

1738

1739

 

1740

 

1741

 

1745

 

1746

 

1747

 

1748

1749

 

1751

 

1752

 

1753

 

1754

 

1755

 

1756

1757

 

1758

 

1759

 

1760

 

1761

 

1762

 

1763

1764

 

1765

 

1766R1

 

1767

 

1769

 

1770

 

1771

1772

 

1773

 

1774

 

1775

 

1776

 

1777

 

1778

17779

 

1780

 

1781

 

1783

 

1784

 

1785

 

1786

1788

 

1789

 

1790

 

1794

 

1795

 

1797

 

1798

1799

 

1800

 

1803

 

1807

 

1808

 

1809

 

1810

 

10


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1811

 

1842

 

1813

 

18141815

 

1816

 

1817

 

1818

1819

 

1820

 

1821

 

1822

 

1823

 

1824

 

1825

1826

 

1827

 

1828

 

1829

 

1830

 

1831

 

1832

1835

 

1836

 

1837

 

1838

 

1839

 

1840

 

1842

1843

 

1844

 

1845

 

1846

 

1847

 

1848

 

1849

1850

 

1851

 

1852

 

1853

 

1854R1

 

1855

 

1856

1857

 

1858

 

1859

 

1860

 

1861

 

1862

 

1863

1864

 

1865

 

1866

 

1867

 

1868

 

1869

 

1870

1871

 

1872

 

1873

 

1874

 

1875

 

1876

 

1877

1878

 

1879

 

1880

 

1882

 

1883

 

1885

 

1886

1887

 

1888R1

 

1889

 

1890

 

1891

 

1892R1

 

1893

1894

 

1895

 

1896

 

1897

 

1898

 

1899

 

1900

1901

 

1902

 

1903

 

1904

 

1905

 

1906

 

1907

1908

 

1909

 

1910

 

1911

 

1912

 

1913 RevA

 

1914

1915

 

1916

 

1917

 

1918

 

1919

 

1920

 

1922

1924

 

1925

 

1926

 

1927

 

1928

 

1929

 

1930

1931

 

1932

 

1933

 

1934

 

1935

 

1936

 

1937

1938

 

1939

 

1940

 

1941

 

1942

 

1943

 

1945

1946

 

1947

 

1948

 

1949

 

1956

 

1972

 

1974

1984

 

1986

 

1998

 

2000

 

2012

 

2013

 

2032

2040

 

2058

 

2107

 

2108

 

2109

 

2110

 

2111

2114

 

2115

 

2117

 

2119

 

2120

 

2138

 

2144

2145

 

2146

 

2147

 

2163

 

2168

 

2190

 

 

 

Amendment 6 incorporates:

 

841(2)

 

1022

 

1163

 

1183

 

1188

 

1196

 

1199

1203

 

1218

 

1227

 

1235

 

1252

 

1265

 

1338

 

11



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1406 R1

 

1412

 

1422

 

1423

 

1430

 

1454

 

1480

1488

 

1491

 

1557R1

 

1574

 

1582

 

1583

 

1610

1621

 

1631

 

1643

 

1660

 

1725

 

1726

 

1727

1750

 

1768

 

1791

 

1792

 

1793

 

1865R1

 

1871R1

1881

 

1921

 

1923

 

1949R1

 

1950

 

1951

 

1952

1953

 

1954

 

1955

 

1957

 

1958

 

1959

 

1960

1961

 

1962

 

1964

 

1965

 

1966

 

1967

 

1968

1969

 

1970

 

1971

 

1975

 

1976

 

1977

 

1978

1979

 

1980

 

1982

 

1963

 

1985

 

1987

 

1988

1989

 

1990

 

1991

 

1992

 

1993

 

1994

 

1995

1996

 

1997

 

1999

 

2001

 

2002

 

2003

 

2004

2005

 

2006

 

2007

 

2008

 

2009

 

2011R1

 

2013R1

2014

 

2015

 

2016

 

2017

 

2018

 

2019

 

2020

2021

 

2022

 

2023

 

2024

 

2025

 

2026

 

2027

2028

 

2029

 

2030

 

2031

 

2033

 

2034

 

2035

2036R2

 

2037

 

2038

 

2039

 

2041R1

 

2042

 

2043

2045

 

2047

 

2048

 

2049

 

2050

 

2051

 

2052

2053

 

2054

 

2055

 

2056

 

2057

 

2059

 

2060R1

2061

 

2065R2

 

2066

 

2067

 

2068

 

2069

 

2070

2071

 

2072

 

2073

 

2074

 

2075

 

2076

 

2077

2078

 

2079

 

2080

 

2081

 

2086

 

2087

 

2089

2090

 

2091

 

2092

 

2093

 

2094

 

2095

 

2096

2097

 

2098

 

2099

 

2100

 

2101

 

2103

 

2104

2105

 

2110

 

2112

 

2113

 

2116

 

2121

 

2122

2123

 

2124

 

2125

 

2126

 

2128

 

2129

 

2130

2131

 

2132

 

2133

 

2134

 

2135

 

2136

 

2137

2141

 

2142

 

2143

 

2146R1

 

2146R2

 

2146R3

 

2147R1

 

12



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2147R2

 

2147R3

 

2147R4

 

2151

 

2152

 

2154

 

2155

2156

 

2157

 

2159

 

2160

 

2161

 

2162

 

2164

2165

 

2166

 

2167

 

2168

 

2169

 

2170

 

2171

2172

 

2173

 

2174

 

2175

 

2176

 

2177

 

2178

2179

 

2180

 

2181

 

2182

 

2183

 

2184

 

2185

2186

 

2187

 

2188

 

2189

 

2191

 

2192

 

2193

2194

 

2195

 

2197

 

2198

 

2199

 

2200

 

2201

2202

 

2203

 

2204

 

2205

 

2206

 

2207

 

2208

2209

 

2210

 

2211

 

2214

 

2215

 

2216

 

2217

2218

 

2219

 

2220

 

2221

 

2221

 

2224

 

2225

2226

 

2227

 

2228

 

2229

 

2230

 

2231

 

2232

2233

 

2234

 

2235

 

2236

 

2237

 

2238

 

2239

2240

 

2241

 

2242

 

2243

 

2244

 

2245

 

2246

2247

 

2248

 

2249

 

2250

 

2251

 

2252

 

2253

2254

 

2255

 

2256

 

2257

 

2258

 

2259

 

2260

2261

 

2262

 

2264

 

2263

 

2265

 

2266

 

2267

 

Amendment 6 incorporates - continued:

 

2268

 

2269

 

2270

 

2271

 

2272

 

2273

 

2274

2275

 

2276

 

2277

 

2278

 

2279

 

2280

 

2281

2282

 

2283

 

2284

 

2285

 

2286

 

2287

 

2288

2289

 

2290

 

2291

 

2292

 

2293

 

2294

 

2295

2296

 

2297

 

2298

 

2299

 

2301

 

2303

 

2304

2305

 

2306

 

2307

 

2308

 

2309

 

2310

 

2311

2312

 

2313

 

2314

 

2315

 

2316

 

2317

 

2318

2319

 

2320

 

2321

 

2322

 

2323

 

2324

 

2325

2326

 

2327

 

2328

 

2329

 

2330

 

2331

 

2332

 

13



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2333

 

2334

 

2335

 

2336

 

2337

 

2338

 

2339

2340

 

2341

 

2342

 

2343

 

2344

 

2345

 

2346

2347

 

2348

 

2349

 

2350R1

 

2351

 

2352

 

2353

2354

 

2355

 

2356

 

2357

 

2358

 

2359

 

2360

2361

 

2362

 

2363

 

2364

 

2365R1

 

2366

 

2367

2368

 

2369

 

2370

 

2371

 

2372

 

2373

 

2374

2375

 

2376

 

2377

 

2378

 

2379

 

2380

 

2381

2382

 

2383

 

2384

 

2385

 

2386

 

2387

 

2388

2389

 

2390

 

2391

 

2392

 

2393

 

2394

 

2395

2396

 

2397

 

2398

 

2399

 

2400

 

2401

 

2402

2403

 

2404

 

2405

 

2406

 

2407

 

2408

 

2409

2410

 

2411

 

2412

 

2413

 

2414

 

2415

 

2416

2417

 

2418

 

2419

 

2422

 

2423

 

2424

 

2425

2426

 

2427

 

2428

 

2429

 

2430

 

2431

 

2432

2436R1

 

2437

 

2438

 

2439

 

2440

 

2441

 

2442

2443

 

2444

 

2445

 

2446

 

2447

 

2448

 

2449

2450

 

2451

 

2452

 

2453

 

2454

 

2455

 

2456

2457

 

2458

 

2459

 

2460

 

2461

 

2462

 

2463

2464

 

2465

 

2467

 

2470

 

2471

 

2472

 

2473

2474

 

2475

 

2476

 

2477

 

2478

 

2479

 

2480

2481

 

2482

 

2483

 

2484

 

2485

 

2486

 

2487

2489

 

2492

 

2493

 

2494

 

2495

 

2496

 

2497

2498

 

2499

 

2500

 

2501

 

2502

 

2503

 

2504

2505

 

2506

 

2508

 

2509

 

2510

 

2510

 

2511

2512

 

2513

 

2514

 

2515

 

2516

 

2517

 

2518

2519

 

2520

 

2521

 

2522

 

2523

 

2524

 

2525

2526

 

2527

 

2528

 

2529

 

2530

 

2531

 

2532

 

14



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2533

 

2534

 

2535

 

2536

 

2537

 

2538

 

2539

2540

 

2542

 

2543

 

2544

 

2545

 

2546

 

2547

2548

 

2549

 

2550

 

2551

 

2552

 

2553R1

 

2554

2555

 

2556

 

2557

 

2558

 

2559

 

2560

 

2561

2562

 

2563

 

2564

 

2565

 

2566

 

2567

 

2568

2569

 

2570

 

2571

 

2572

 

2573

 

2574

 

2575

2576

 

2577

 

2578

 

2579

 

2580

 

2581

 

2582

2583

 

2584

 

2585

 

2586

 

2587

 

2588

 

2589

2590

 

2591

 

2592

 

2593

 

2594

 

2595

 

2596

 

Amendment 6 incorporates continued:

 

2597

 

2598

 

2599

 

2600

 

2601

 

2602

 

2603

2604R1

 

2606

 

2607

 

2608

 

2609

 

2610

 

2611

2612

 

2613

 

2614

 

2615

 

2616

 

2617

 

2618

2619

 

2620

 

2621

 

2622

 

2623

 

2624

 

2625

2626

 

2627

 

2628

 

2629

 

2630

 

2631

 

2632

2633

 

2634

 

2635

 

2636

 

2637

 

2638

 

2639

2640

 

2641

 

2642

 

2643

 

2644

 

2645

 

2646

2647

 

2648

 

2649

 

2650

 

2651

 

2653

 

2654

2655

 

2656

 

2657

 

2658

 

2659

 

2660

 

2661

2662

 

2663

 

2664

 

2665

 

2666

 

2667

 

2668

2669

 

2670

 

2671

 

2672

 

2673

 

2674

 

2675

2676

 

2677

 

2678

 

2679

 

2680

 

2681

 

2682

2683

 

2684

 

2685

 

2686

 

2687

 

2688

 

2689

2690

 

2691

 

2692

 

2693

 

2695

 

2696

 

2697

2698

 

2699

 

2700

 

2701

 

2702

 

2703

 

2704

2705

 

2706

 

2707

 

2708

 

2709

 

2710

 

2711

 

15


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2712

 

2713

 

2714

 

2715

 

2716

 

2717

 

2718

2719

 

2720

 

2721

 

2722

 

2723

 

2724

 

2725

2726

 

2727

 

2728

 

2729

 

2730

 

2731

 

2732RA

2733

 

2735

 

2736

 

2737

 

2738

 

2739

 

2740

2741

 

2742

 

2743

 

2744R1

 

2745

 

2746

 

2748

2749

 

2750

 

2751

 

2752

 

2753

 

2754

 

2755

2756

 

2757

 

2758

 

2759

 

2760

 

2761

 

2762

2763

 

2764

 

2765

 

2766

 

2767

 

2768

 

2769

2770

 

2771

 

2772

 

2773

 

2774

 

2775

 

2776

2777

 

2778

 

2779

 

2780

 

2781

 

2782

 

2783

2784

 

2785

 

2786

 

2787

 

2788

 

2789

 

2790

2791

 

2792

 

2793

 

2794

 

2795

 

2796

 

2797

2798

 

2799

 

2800

 

2801

 

2803

 

2804

 

2805

2806

 

2807

 

2808

 

2809

 

2810

 

2811

 

2811R1

2812

 

2813

 

2814

 

2815

 

2815R1

 

2816

 

2818

2819

 

2820

 

2821

 

2822

 

2823

 

2824

 

2825

2826

 

2827

 

2828

 

2829

 

2830

 

2831

 

2832

2833

 

2834

 

2835

 

2836

 

2837

 

2838

 

2839

2840R1

 

2840R2

 

2841

 

2842

 

2843

 

2844

 

2845

2846

 

2847

 

2848

 

2849

 

2850

 

2852

 

2853

2854

 

2855

 

2856

 

2858

 

2859

 

2860

 

2861

2862

 

2863

 

2864

 

2865

 

2866

 

2867

 

2868

2869

 

2870

 

2871

 

2872

 

2874

 

2879

 

2882

2886

 

2887

 

2888

 

2889

 

2890

 

2891

 

2892

2893

 

2895

 

2896

 

2897

 

2898

 

2899

 

2900

2901

 

2902

 

2903

 

2904

 

2905

 

2906

 

2907

2908

 

2910

 

2911

 

2912

 

2913

 

2914

 

2915

 

16



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2916

 

2917

 

2918

 

2919

 

2920

 

2921

 

2922

2923

 

2924

 

2926

 

2927

 

2928

 

2929

 

2930

 

Amendment 6 incorporates - continued:

 

2931

 

2932

 

2933

 

2934

 

2935

 

2936

 

2937

2937R1

 

2938

 

2939

 

2940

 

2941

 

2942

 

2943

2944

 

2945

 

2946

 

2947

 

2948

 

2949

 

2950

2951

 

2952

 

2953

 

2954

 

2955

 

2956

 

2957

2958

 

2959

 

2960

 

2961

 

2962

 

2963

 

2964

2965

 

2966

 

2967

 

2968

 

2969

 

2970

 

2971

2972

 

2973

 

2974

 

2975

 

2976

 

2977

 

2978

2979

 

2980

 

2981

 

2982

 

2983

 

2984

 

2985

2986

 

2987

 

2988

 

2989

 

2990

 

2991

 

2992

2993

 

2994

 

2995

 

2996

 

2997

 

2998

 

2999

3000

 

3011

 

3013

 

3030

 

3035

 

3036

 

3037

3048

 

3050

 

3051

 

3064

 

3067

 

3077

 

3088

3091

 

3110

 

3113

 

3128

 

3144

 

3161

 

3162

3165

 

3167

 

3168

 

3169

 

3174

 

3197

 

3198

3224

 

3177

 

3201

 

 

 

 

 

 

 

 

 

Amendment 7 incorporates:

 

2002

 

2040 R1

 

2118R2

 

2126R1

 

2126R2

 

2140

 

2199R1

2223

 

2488R3

 

2490

 

2491

 

2580R2

 

2623R1

 

2652R1

2724R1

 

2802

 

2817

 

2851

 

2894

 

2935R1

 

3001

3001R1

 

3002

 

3003

 

3004

 

3005

 

3006

 

3007

3008

 

3009

 

3010

 

3012

 

3014

 

3015

 

3016

3017

 

3018

 

3019

 

3020

 

3021

 

3022

 

3023

3024

 

3025

 

3026

 

3027

 

3028

 

3029

 

3031

3032

 

3033

 

3033R1

 

3034

 

3038

 

3039

 

3040

 

17



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3042

 

3043

 

3044

 

3045

 

3046

 

3052

 

3053

3054

 

3055

 

3056

 

3057

 

3058

 

3059

 

3060

3061

 

3062

 

3063

 

3065

 

3068

 

3069

 

3070

3071

 

3072

 

3074

 

3075

 

3076

 

3080

 

3081

3082

 

3083

 

3084

 

3089

 

3092

 

3093

 

3094

3095

 

3096

 

3097

 

3098

 

3099

 

3100

 

3101

3102

 

3104

 

3105R1

 

3105R3

 

3108

 

3109

 

3111

3112

 

3114

 

3115

 

3117

 

3118

 

3119

 

3120

3124

 

3124R1

 

3126R1

 

3127

 

3129

 

3130

 

3132

3133

 

3134

 

3135

 

3137

 

3138

 

3139

 

3140

3141

 

3142

 

3143

 

3148

 

3149

 

3150

 

3151

3152

 

3153

 

3154

 

3155

 

3156

 

3157

 

3158

3159

 

3160

 

3166

 

3170

 

3172

 

3173R3

 

3175

3176

 

3180

 

3181

 

3182

 

3183

 

3184

 

3185

3186

 

3187

 

3188

 

3188R1

 

3189

 

3190

 

3191

3195

 

3196

 

3198R1

 

3198R2

 

3202

 

3203

 

3204

3205

 

3206

 

3208

 

3209

 

3210

 

3211

 

3212

3216

 

3218

 

3219

 

3221

 

3223

 

3225

 

3227

3228

 

3229

 

3231

 

3232

 

3233

 

3236

 

3237

3238

 

3239

 

3240

 

3241

 

3242

 

3243

 

3244

3245

 

3246

 

3248

 

3249

 

3250

 

3251

 

3252

3253

 

3254

 

3255

 

3256

 

3257

 

3258

 

3260

3261

 

3262

 

3263

 

3265

 

3267

 

3268

 

3269

3272

 

3273

 

3274

 

3277

 

3278

 

3279

 

3280

3281

 

3282

 

3283

 

3284

 

3285

 

3286

 

3287

3288

 

3299

 

3290

 

3291

 

3292

 

3294

 

3295

3296

 

3297

 

3300

 

3302

 

3305

 

3308

 

3309

 

18



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3310

 

3313

 

3318

 

3319

 

3321

 

3322

 

3323

3324

 

3325

 

3326

 

3327

 

3328

 

3329

 

3330

3331

 

3337

 

3337R1

 

3338

 

3339

 

3340

 

3341

3342

 

3343

 

3344

 

3345

 

3346

 

3347

 

3348

3349

 

3350

 

3351

 

3352

 

3353

 

3354

 

3355

3356

 

3357

 

3358

 

3359

 

3359R1

 

3360

 

3360R1

3361

 

3362

 

3362

 

3363

 

3363R1

 

3364

 

3365

3366

 

3367

 

3368

 

3369R1

 

3369R2

 

3370

 

3371

3372

 

3373

 

3374

 

3375

 

3375R1

 

3376

 

3377

3378

 

3379

 

3380

 

3382

 

3383

 

3385

 

3387

 

Amendment 7 incorporates - continued:

 

3388

 

3388R1

 

3389

 

3390

 

3391

 

3392

 

3395

3397

 

3398

 

3390

 

3391

 

3392

 

3395

 

3397

3398

 

3399

 

3400

 

3401

 

3402

 

3403

 

3405

3406

 

3408

 

3409

 

3410

 

3411

 

3412

 

3414

3415

 

3416

 

3417

 

3418

 

3419

 

3420R1

 

3421

3422

 

3423

 

3427

 

3428

 

3429

 

3430

 

3431

3432

 

3433

 

3434

 

3435

 

3436

 

3437

 

3438

3438R1

 

3439

 

3440

 

3441

 

3442

 

3443

 

3444

3445

 

3446

 

3447

 

3448

 

3449

 

3450

 

3451

3452

 

3453

 

3454

 

3455

 

3456

 

3457

 

3458

3459

 

3460

 

3461

 

3462

 

3463

 

3464

 

3465

3466

 

3467

 

3468

 

3469

 

3469R1

 

3470

 

3471

3472

 

3473

 

3474

 

3475

 

3479

 

3480

 

3481

3483

 

3484

 

3485

 

3486

 

3487

 

3488

 

3489

3490

 

3492

 

3496

 

3497

 

3498

 

3499

 

3500

3501

 

3502

 

3503

 

3504

 

3505

 

3508

 

3509R1

 

19



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3510

 

3511

 

3512

 

3513

 

3513R1

 

3514

 

3516

3517

 

3518

 

3519

 

3620

 

3521

 

3522

 

3523

3524

 

3526

 

3526

 

3527

 

3527R1

 

3528

 

3531

3532

 

3533

 

3534

 

3534R1

 

3535

 

3536

 

3537

3538

 

3539

 

3540

 

3540R1

 

3541

 

3542

 

3543

3544

 

3545

 

3547

 

3548

 

3549

 

3550

 

3551

3552

 

3553

 

3553R1

 

3554

 

3555

 

3556

 

3557

3558

 

3559

 

3560

 

3561

 

3562

 

3564

 

3565

3566

 

3567

 

3568

 

3569

 

3570

 

3571

 

3572

3573

 

3574

 

3575

 

3576

 

3577

 

3578

 

3580

3582

 

3584

 

3587

 

3588

 

3589

 

3590

 

3591

3595

 

3596

 

3597

 

3599

 

3600

 

3601

 

3602

3604

 

3605

 

3606

 

3607

 

3609

 

3610

 

3611

3613 RevA

 

3614

 

3615

 

3616

 

3619

 

3620

 

3621

3623

 

3624

 

3626

 

3627

 

3628

 

3629

 

3630

3631

 

3632

 

3633

 

3634

 

3635

 

3637

 

3638

3642

 

3643

 

3644

 

3645

 

3647

 

3648

 

3649

3650

 

3651

 

3652

 

3653

 

3664

 

3655

 

3656

3657

 

3658

 

3669

 

3661

 

3662

 

3663

 

3664

3665

 

3666

 

3667

 

3668

 

3669

 

3670

 

3671

3672

 

3673

 

3674

 

3675

 

3676

 

3677

 

3678

3679

 

3680

 

3681

 

3682

 

3683

 

3684

 

3685

3686

 

3687

 

3688

 

3689

 

3690

 

3691

 

3692

3693

 

3694

 

3695

 

3696

 

3697

 

3698

 

3699

3700

 

3701

 

3702

 

3703

 

3704

 

3705

 

3706

3707

 

3708

 

3709

 

3710

 

3711

 

3712

 

3713

 

20


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3714

 

3714R1

 

3715

 

3716

 

3717

 

3719

 

3720

3721

 

3722

 

3723

 

3724

 

3725

 

3726

 

3727

3728

 

3729

 

3730

 

3731

 

3732

 

3733

 

3734

 

21



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 7 incorporates - continued:

 

3735

 

3736

 

3737

 

3738

 

3739

 

3740

 

3741R1

3743

 

3744

 

3745

 

3746

 

3757

 

3748

 

3749

3750

 

3751

 

3752

 

3753

 

3754

 

3755

 

3756

3757

 

3758

 

3759

 

3760

 

3762

 

3763

 

3765

3766

 

3767

 

3768

 

3769

 

3770

 

3771

 

3772

3773

 

3774

 

3775

 

3776

 

3778

 

3779

 

3783

3784

 

3785

 

3786

 

3787

 

3788

 

3789

 

3790

3791

 

3792

 

3793

 

3794

 

3795

 

3797

 

3798

3800

 

3802

 

3803

 

3804

 

3805

 

3806

 

3807

3808

 

3809

 

3810

 

3811

 

3812

 

3813

 

3814

3815

 

3816

 

3817

 

3818

 

3819

 

3820

 

3821

3822

 

3823

 

3824

 

3825

 

3826

 

3827

 

3828

3829

 

3830

 

3831

 

3832

 

3833

 

3834

 

3836

3837

 

3838

 

3839

 

3841

 

3842

 

3843

 

3844

3847

 

3848

 

3850

 

3851

 

3852

 

3853

 

3854

3855

 

3856

 

3857

 

3860

 

3861

 

3861R1

 

3862

3863

 

3864

 

3865

 

3866

 

3869

 

3870

 

3871

3871R1

 

3873

 

3874

 

3875

 

3876

 

3877

 

3878

3879

 

3880

 

3881

 

3882

 

3883

 

3884

 

3885

3886

 

3887

 

3889

 

3890

 

3893

 

3894

 

3895

3896

 

3897

 

3898

 

3898R1

 

3899

 

3900

 

3901

3902

 

3903

 

3904

 

3905

 

3906

 

3907

 

3908

3909

 

3910

 

3911

 

3912

 

3913

 

3914

 

3915

3916

 

3917

 

3918

 

3919

 

3920

 

3921

 

3922

3923

 

3924

 

3925

 

3926

 

3927

 

3928

 

3929

3931

 

3932

 

3934

 

3935

 

3936

 

3937

 

3938

 

22



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3939

 

3940

 

3941

 

3942

 

3943

 

3944

 

3945

3946

 

3947

 

3948

 

3949

 

3950

 

3951

 

3952

3953

 

3954

 

3955

 

3956

 

3957

 

3958

 

3959

3960

 

3961

 

3962

 

3963

 

3964

 

3965

 

3966

3967

 

3968

 

3969

 

3970

 

3971

 

3972

 

3973

3974

 

3975

 

3976

 

3977

 

3978

 

3979

 

3980

3981

 

3982

 

3983

 

3984

 

3985

 

3986

 

3987

3988

 

3989

 

3990

 

3991

 

3992

 

3993

 

3994

3995

 

3996

 

3997

 

3998

 

3999

 

4000

 

4001

4002

 

4003

 

4004

 

4005

 

4006

 

4007

 

4008

4009

 

4010

 

4011

 

4012

 

4013

 

4014

 

4015

4016

 

4017

 

4018

 

4019

 

4020

 

4021

 

4022

4023

 

4024

 

4025

 

4026

 

4027

 

4028

 

4029

4031

 

4032

 

4034

 

4035

 

4036

 

4037

 

4038

4039

 

4040

 

4040R1

 

4042

 

4043

 

4044

 

4045

4046

 

4047

 

4048

 

4050

 

4051

 

4052

 

4053

4054

 

4055

 

4056

 

4057

 

4058

 

4059

 

4060

4061

 

4062

 

4063

 

4064

 

4065

 

4066

 

4067

4068

 

4069

 

4070

 

4071

 

4072

 

4073

 

4074

 

23



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 7 incorporates - continued:

 

4075

 

4076

 

4077

 

4078

 

4079

 

4080

 

4081

4082

 

4083

 

4084

 

4085

 

4089

 

4090

 

4091

4092

 

4094

 

4095

 

4096

 

4097

 

4098

 

4099

4100

 

4101

 

4102

 

4102R1

 

4104

 

4105

 

4107RevA

4108

 

4109

 

4110

 

4111

 

4112

 

4113

 

4114

4115

 

4116

 

4117

 

4119

 

4120

 

4121

 

4125

4126

 

4127

 

4128

 

4129

 

4130

 

4131

 

4132

4133

 

4134

 

4135

 

4136

 

4137

 

4138

 

4139

4142

 

4144R1

 

4145

 

4146

 

4147

 

4148

 

4149

4150

 

4151

 

4152

 

4154

 

4155

 

4156

 

4157

4159

 

4160

 

4161

 

4162

 

4163

 

4164

 

4166

4167

 

4168

 

4170

 

4171

 

4172

 

4173

 

4174

4175

 

4176

 

4177

 

4178

 

4179

 

4181

 

4182

4183

 

4185

 

4186

 

4187

 

4188

 

4189

 

4190

4191

 

4192

 

4193

 

4194

 

4195

 

4196

 

4197

4198

 

4199

 

4200

 

4201

 

4202

 

4203

 

4204

4205

 

4206

 

4207

 

4208

 

4209

 

4210

 

4211

4212

 

4213

 

4214

 

4215

 

4219

 

4220

 

4222

4223

 

4224

 

4225

 

4226

 

4227

 

4228

 

4229

4230

 

4231R1

 

4232

 

4233

 

4234

 

4235

 

4236

4237

 

4238

 

4239

 

4240

 

4241

 

4242

 

4243

4244

 

4246

 

4247

 

4248

 

4249

 

4250

 

4251

4252

 

4253

 

4254

 

4255

 

4257

 

4258

 

4259

4260

 

4261

 

4262

 

4264

 

4265

 

4266

 

4267

4269

 

4272

 

4273

 

4274

 

4275

 

4277

 

4278

4280

 

4281

 

4282

 

4283

 

4284

 

4285

 

4286

 

24



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

4287

 

4288

 

4288R1

 

4289

 

4291

 

4292

 

4293

4294

 

4295

 

4296

 

4296R1

 

4298

 

4299

 

4300

4301

 

4302

 

4303

 

4304

 

4305

 

4306

 

4308

4309

 

4313

 

4314

 

4315

 

4316

 

4318

 

4319

4319R1

 

4320

 

4323

 

4324

 

4325

 

4325R1

 

4326

4327

 

4328

 

4329

 

4330

 

4331

 

4332

 

4333

4334

 

4335

 

4336

 

4337

 

4338

 

4339

 

4341

4342

 

4343

 

4344

 

4345

 

4346

 

4347

 

4350

4351

 

43524353

 

4354

 

4356

 

4357

 

4358

 

4359

4360

 

4361

 

4363

 

4365

 

4366

 

4388

 

4370

4371

 

4372

 

4374

 

4375

 

4376

 

4377

 

4378

4379

 

4380

 

4381

 

4382

 

4383

 

4384

 

4385

4386

 

4387

 

4388

 

4389

 

4390

 

4391

 

4392

4393

 

4394

 

4395

 

4396

 

4397

 

4398

 

4398R1

4399

 

4400

 

4402

 

4405

 

4406

 

4407

 

4408

4409

 

4410

 

4411

 

4412

 

4413

 

4414

 

4415

4416

 

4417

 

4419

 

4420

 

4422

 

4423

 

4423R1

4424

 

4424R1

 

4425

 

4425R1

 

4426

 

4426R1

 

4427

4428

 

4429

 

4430

 

4431

 

4432

 

4433

 

4434

4435

 

4436

 

4437

 

4438

 

4439

 

4440

 

4441

4442

 

4443

 

4448

 

4449

 

4452

 

4453

 

4454

 

25



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 7 incorporates - continued:

 

4457

 

4458

 

4461

 

4462

 

4463

 

4464

 

4465

4470

 

4471

 

4472

 

4473

 

4474

 

4475

 

4476

4477

 

4477R1

 

4478

 

4479

 

4480

 

4485

 

4486

4487

 

4488

 

4489

 

4490

 

4491

 

4494

 

4500

4501

 

4503

 

4504

 

4507

 

4508

 

4510

 

4511

4512

 

4513

 

4518

 

4520

 

4521

 

4522

 

4523

4524

 

4527

 

4528

 

4529

 

4531

 

4532

 

4533

4535

 

4536

 

4537

 

4538

 

4539

 

4540

 

4540

4542

 

4543

 

4544

 

4545

 

4546

 

4547

 

4548

4556

 

4557

 

4558

 

4559

 

4560

 

4562

 

4563

4564

 

4565

 

45666

 

4567

 

4574

 

4575

 

4576

4577

 

4578

 

4586

 

4587

 

4588

 

4589

 

4590

4591

 

4592

 

4593

 

4594

 

4595

 

4596

 

4597

4598

 

4599

 

4601

 

4606

 

4607

 

4611

 

4612

4613

 

4614

 

4615

 

4616

 

4617

 

4618

 

4619

4621

 

4622

 

4623

 

4624

 

4625

 

4626

 

4627

4628

 

4630

 

 

 

 

 

 

 

 

 

 

 

26


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Amendment 8 incorporates

 

2580 R3

 

2805 R1

 

3105

 

3123

 

3126 R1

 

3136

 

3163

3164

 

3171

 

3178

 

3179

 

3192

 

3193

 

3194

3199

 

3200

 

3207

 

3215

 

3217

 

3220

 

3222

3230

 

3234

 

3247

 

3299

 

3336

 

3363 R2

 

3363 R3

3393

 

3394

 

3396

 

3396 R1

 

3413

 

3476

 

3477

3478

 

3504 R1

 

3505 R1

 

3504 R2

 

3506 R1

 

3507

 

3509

3581

 

3583

 

3592

 

3625

 

3639

 

3639 R1

 

3640

3641

 

3646

 

3761

 

3796

 

3840

 

3845

 

3849

3865 R1

 

3868

 

3871 R2

 

3872

 

3891

 

3892

 

3930

4038 R1

 

4049

 

4086

 

4087

 

4093

 

4103

 

4106

4122

 

4123

 

4124

 

4140

 

4153

 

4163 R1

 

4163 R2

4165

 

4169

 

4180

 

4217

 

4218

 

4230 R1

 

4231 R3

4234 R1

 

4268

 

4270

 

4271

 

4276

 

4290

 

4304 R1

4305 R1

 

4307

 

4317

 

4340

 

4342 R2

 

4355

 

4359 R1

4359 R2

 

4362 R1

 

4364

 

4373

 

4396 R1

 

4398 R2

 

4399 R2

4405

 

4418

 

4444

 

4445

 

4451

 

4459

 

4460

4462 R1

 

4466

 

4467

 

4468

 

4469

 

4471 R1

 

4477 R1

4481

 

4482

 

4483

 

4483 R1

 

4484

 

4495

 

4496

4497

 

4498

 

4499

 

4502

 

4505

 

4506

 

4509

4509 R1

 

4514

 

4515

 

4516

 

4517

 

4519

 

4525

4548 RA

 

4548 RB

 

4549

 

4550

 

4551

 

4552

 

4552 R1

4553

 

4554

 

4555

 

4555 R1

 

4555 R2

 

4556 R1

 

4560 R1

4561

 

4570

 

4571

 

4572

 

4602

 

4604

 

4605

4608

 

4609

 

4609 R1

 

4610

 

4617 R1

 

4620

 

4622 R1

4622 R2

 

4622 R3

 

4629

 

4631

 

4633

 

4635

 

4636

4637

 

4638

 

4639

 

4640

 

4641

 

4642

 

4643

4644

 

4645

 

4646

 

4647

 

4648

 

4649

 

4650

4651

 

4652

 

4653

 

4653 R1

 

4656

 

4657

 

4658

4659

 

4660

 

4661

 

4662

 

4663

 

4665

 

4666

4667

 

4668

 

4669

 

4670

 

4672

 

4673

 

4674

4675

 

4676

 

4677

 

4678

 

4679

 

4680

 

4681

4682

 

4683

 

4684

 

4685

 

4686

 

4687

 

4688

4689

 

4690

 

4690 R1

 

4691 R1

 

4692

 

4693

 

4694

4695

 

4696

 

4697

 

4698

 

4699

 

4700

 

4701

4702

 

4703

 

4704

 

4705

 

4706

 

4707

 

4708

4709

 

4710

 

4711

 

4712

 

4713

 

4714

 

4715

4716

 

4717

 

4719

 

4720

 

4721

 

4722

 

4724

4725

 

4726

 

4727

 

4728

 

4729

 

4730

 

4731

4732

 

4733

 

4734

 

4736

 

4737

 

4737 RA

 

4738

4739

 

4740

 

4741

 

4741 R1

 

4742

 

4743

 

4744

4745

 

4746

 

4747

 

4750

 

4751

 

4752

 

4754

4755

 

4756

 

4757

 

4758

 

4760

 

4761

 

4762

4763

 

4764

 

4765

 

4766 R1

 

4767

 

4768

 

4769

4770

 

4771

 

4772

 

4773

 

4774

 

4775

 

4776

4777

 

4778

 

4779

 

4780

 

4781

 

4782

 

4783

4784

 

4785

 

4786

 

4787

 

4788

 

4789

 

4790

4793

 

4794

 

4795

 

4796

 

4796 R1

 

4797

 

4799

4800

 

4801

 

4802

 

4803

 

4804

 

4805

 

4806

4807

 

4809

 

4810

 

4811

 

4812

 

4813

 

4814

4815

 

4816

 

4816 RA

 

4817

 

4818

 

4819

 

4820

4821

 

4822

 

4823

 

4824

 

4825

 

4827

 

4828

 

27



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

4829

 

4829 R1

 

4830

 

4831

 

4832

 

4833

 

4834

4835

 

4836

 

4837

 

4838

 

4840

 

4841

 

4842

4843

 

4844

 

4845

 

4846

 

4847

 

4848

 

4849

4850

 

4850 R1

 

4851

 

4852

 

4853

 

4854

 

4855

4856

 

4857

 

4858

 

4859

 

4860

 

4861

 

4862 R1

4863

 

4864

 

4865

 

4866

 

4867

 

4868

 

4869

4870

 

4871

 

4872

 

4873

 

4874

 

4875

 

4876

4877

 

4878

 

4879

 

4880

 

4881

 

4882

 

4883

4884

 

4885

 

4886

 

4887

 

4888

 

4889

 

4890

4891

 

4892

 

4893

 

4894

 

4895

 

4896

 

4897

4898

 

4899

 

4900

 

4901

 

4902

 

4903

 

4904

4905

 

4906

 

4907

 

4908

 

4909

 

4910

 

4911

4912

 

4913

 

4914

 

4915

 

4916

 

4917

 

4918

4919

 

4920

 

4921

 

4922

 

4923

 

4925

 

4929

4930

 

4931 R1

 

4932

 

4933

 

4934

 

4935

 

4936

4937

 

4938

 

4939

 

4940

 

4941

 

4942

 

4943

4944

 

4945

 

4946

 

4947

 

4948

 

4949

 

4950

4951

 

4952

 

4953

 

4954

 

4956

 

4957

 

4958

4959

 

4960

 

4961

 

4962

 

4963

 

4964

 

4965

4966

 

4967

 

4968

 

4969

 

4970

 

4971

 

4972

4973

 

4974

 

4975

 

4976

 

4977

 

4978

 

4979

4980

 

4981

 

4982

 

4983

 

4984

 

4985

 

4986

4987

 

4988

 

4989

 

4990

 

4991

 

4992

 

4993

4994

 

4995

 

4997

 

4998

 

4999

 

5000

 

5001

5002

 

5003

 

5004

 

5005

 

5006

 

5007

 

5008

5009

 

5010

 

5011

 

5012

 

5013

 

5014

 

5015

5016

 

5017

 

5018

 

5019

 

5020

 

5021

 

5022

5023

 

5024

 

5025

 

5026

 

5027

 

5028

 

5029

5031

 

5033

 

5034

 

5035

 

5036

 

5037

 

5038

5039

 

5040

 

5041

 

5042

 

5043

 

5044

 

5045

5046

 

5046 R1

 

5047

 

5048

 

5049

 

5050

 

5051

5052

 

5053

 

5054

 

5055

 

5056

 

5059

 

5061

5062

 

5063

 

5064

 

5065

 

5066

 

5067

 

5074

5075

 

5076

 

5077

 

5079

 

5085

 

5086

 

5087

5088

 

5089

 

5090

 

5091

 

5092

 

5093

 

5094

5095

 

5097

 

5099

 

5100

 

5102

 

5103

 

5104

5105

 

5106

 

5107

 

5108

 

5109

 

5110

 

5111

5112

 

5113

 

5115

 

5116

 

5117

 

5118

 

5118 R1

5119

 

5120

 

5122

 

5123

 

5126

 

5127

 

5130

5131

 

5132

 

5133

 

5134

 

5135

 

5136

 

5137

5138

 

5139

 

5140

 

5141

 

5142

 

5143

 

5144 R1

5145

 

5146

 

5147

 

5148

 

5149

 

5150

 

5150 R1

5150 R2

 

5156

 

5157

 

5158

 

5159

 

5160

 

5161

5150 R2

 

5156

 

5157

 

5158

 

5159

 

5160

 

5161

5162

 

5163

 

5164

 

5165

 

5167

 

5170

 

5172

5173

 

5174

 

5175

 

5176

 

5177

 

5178

 

5179

5183

 

5184

 

5185

 

5186

 

5187

 

5188

 

5189

5190

 

5190 R1

 

5191

 

5192

 

5193

 

5194

 

5195

5196

 

5197

 

5198

 

5199

 

5200

 

5201

 

5202

5203

 

5204

 

5205

 

5206

 

5207

 

5208

 

5208 R1

5209

 

5210

 

5211

 

5212

 

5213

 

5213 R1

 

5214

5215

 

5216

 

5217

 

5218

 

5219

 

5220

 

5221

 

28



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

5222

 

5223

 

5224

 

5226

 

5227

 

5228

 

5229

5230

 

5231

 

5233

 

5234

 

5235

 

5236

 

5237

5239

 

5240

 

5241

 

5242

 

5243

 

5244

 

5245

5246

 

5247

 

5248

 

5249

 

5250

 

5251

 

5252

5253

 

5254

 

5255

 

5256

 

5257

 

5258

 

5259

5260

 

5261

 

5262

 

5263

 

5264

 

5265

 

5266

5267

 

5268

 

5269

 

5270

 

5271

 

5272

 

5273

5274

 

5275

 

5277

 

5278

 

5279

 

5280

 

5281

5282

 

5283

 

5284

 

5285

 

5286

 

5287

 

5288

5289

 

5290

 

5291

 

5293

 

5294

 

5295

 

5296

5297

 

5298

 

5299

 

5300

 

5301

 

5302

 

5303

5304

 

5305

 

5306

 

5307

 

5308

 

5309

 

5310

5311

 

5312

 

5313

 

5314

 

5315

 

5316

 

5317

5318

 

5319

 

5320

 

5321

 

5322

 

5323

 

5324

5325

 

5326

 

5327

 

5328

 

5329

 

5330

 

5331

5332

 

5333

 

5334

 

5335

 

5336

 

5337

 

5338

5339

 

5340

 

5341

 

5342

 

5343

 

5344

 

5345

5346

 

5347

 

5348

 

5349

 

5350

 

5351

 

5353

5354

 

5355

 

5356

 

5357

 

5358

 

5359

 

5360

5361

 

5362

 

5363

 

5364

 

5365

 

5366

 

5367

5368

 

5369

 

5370

 

5371

 

5372

 

5373

 

5374

5375

 

5376

 

5377

 

5378

 

5379

 

5380

 

5381

5382

 

5383

 

5384

 

5385

 

5386

 

5387

 

5388

5389

 

5390

 

5391

 

5392

 

5393

 

5394

 

5395

5396

 

5397

 

5398

 

5399

 

5400

 

5401

 

5402

5396

 

5397

 

5398

 

5399

 

5400

 

5401

 

5402

5402 R1

 

5403

 

5404

 

5405

 

5406

 

5407

 

5409

5410

 

5411

 

5412

 

5414

 

5415

 

5416

 

5417

5418

 

5419

 

5420

 

5420 R1

 

5421

 

5422

 

5423

5424

 

5425

 

5426

 

5427

 

5428

 

5429

 

5430

5431

 

5432

 

5433

 

5434

 

5435

 

5436

 

5437

5438

 

5439

 

5441

 

5442

 

5443

 

5444

 

5445

5446

 

5447

 

5448

 

5449

 

5449 R1

 

5450

 

5451

5452

 

5453

 

5454

 

5455

 

5456

 

5457

 

5458

5459

 

5461

 

5462

 

5463

 

5464

 

5465

 

5466

5467

 

5468

 

5469

 

5470

 

5471

 

5472

 

5473

5474

 

5475

 

5478

 

5479

 

5480

 

5482

 

5483

5484

 

5485

 

5486

 

5487

 

5488

 

5489

 

5490

5491

 

5492

 

5493

 

5494

 

5495

 

5496

 

5497

5498

 

5499

 

5500

 

5501

 

5503

 

5504

 

5505

5506

 

5507

 

5508

 

5509

 

5510

 

5511

 

5512

5513

 

5514

 

5515

 

5516

 

5517

 

5518

 

5519

5520

 

5521

 

5522

 

5524

 

5526

 

5527

 

5528

5529

 

5530

 

5532

 

5535

 

5538

 

5538 R1

 

5541

 

5542

 

5543

 

5544

 

5545

 

5546

 

5547

5548

 

5549

 

5550

 

5551

 

5552

 

5553

 

5554

5555

 

5556

 

5557

 

5558

 

5559

 

5560

 

5562

5563

 

5564

 

5565

 

5566

 

5568

 

5568 R2

 

5569

5571

 

5572

 

5573

 

5574

 

5575

 

5576

 

5577

5578

 

5579

 

5580

 

5581

 

5582

 

5583

 

5584

5585

 

5586

 

5587

 

5588

 

5589

 

5590

 

5591

5592

 

5593

 

5594

 

5595

 

5596

 

5597

 

5598

 

29



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

5600

 

5602

 

5603

 

5604

 

5605

 

5606

 

5607

5608

 

5609

 

5610

 

5611

 

5612

 

5613

 

5614

5614 R1

 

5615

 

5621

 

5622

 

5623

 

5625

 

5626

5627

 

5628

 

5629

 

5630

 

5631

 

5632

 

5633

5634

 

5635

 

5636

 

5638

 

5638 R1

 

5639

 

5640

5642

 

5644

 

5646

 

5647

 

5648

 

5649 R1

 

5650

5651

 

5653

 

5661

 

5662

 

5663

 

5664

 

5665

5666

 

5667

 

5668

 

5669 R1

 

5670

 

5671

 

5672

5673

 

5674

 

5675

 

5676

 

5678

 

5679

 

5683

5684

 

5685

 

5686

 

5687

 

5688

 

5689

 

5690

5691

 

5692

 

5693

 

5694

 

5695

 

5696

 

5697

5698

 

5699

 

5700

 

5701

 

5702

 

5703

 

5704

5705

 

5705 R1

 

5706

 

5709

 

5710

 

5711

 

5713

5723

 

5724

 

5725

 

5727

 

5728

 

5729

 

5731

5732

 

5733

 

5734

 

5735

 

5737

 

5738

 

5739

5740

 

5741

 

5742

 

5750

 

5752

 

5753

 

5754

5757

 

5759

 

5760

 

5765

 

5766

 

5767

 

5768

5769

 

5770

 

5775

 

5776

 

5777

 

5778

 

5780

5781

 

5782

 

5783

 

5784

 

5787

 

5789

 

5788

5793

 

5794

 

5795

 

5796

 

5805

 

5807

 

5808

5809

 

5810

 

5811

 

5812

 

5813

 

5814

 

5815

5820

 

5821

 

5822

 

5823

 

5823 R1

 

5825

 

5826

5827

 

5828

 

5829

 

5830 R1

 

5831

 

5838

 

5838

5848

 

5849

 

5849 R1

 

5850

 

5851

 

5852

 

5855

5875

 

5880

 

5881

 

5881 R1

 

5885

 

5887

 

5888

5888 R1

 

5889

 

5889 R1

 

5890

 

5891

 

5892

 

5893

5894

 

5894 R1

 

5895

 

5896

 

5896 R2

 

5896 R3

 

5898

5899

 

5901

 

5902

 

5903

 

5904

 

5905

 

5907

5910

 

5911

 

5912 R1

 

5913 R1

 

5914

 

5915 R1

 

5916 R1

5917 R1

 

5917 R2

 

5918

 

5919

 

5920

 

5920 R1

 

5920 R2

5921

 

5923

 

5924

 

5925

 

5926

 

5931

 

5932

5934

 

5927

 

5933

 

5935

 

5936

 

5937

 

5939

5940

 

5941

 

5942

 

5943

 

5944

 

5945

 

5946

5947

 

5948

 

5949

 

5950

 

5959

 

5960

 

5961

5962

 

5963

 

5965

 

5966

 

5967

 

5968

 

5969

5970

 

5971

 

5972

 

5974

 

5976

 

5977

 

5977 R1

5978

 

5979

 

5980

 

5981

 

5981 R1

 

5982

 

5983

5983 R1

 

5984

 

5985

 

5986

 

5987

 

5988

 

5989

5990

 

5991

 

5992

 

5992 R1

 

5993

 

5994

 

5995

5997

 

5998

 

5999

 

6000

 

6001

 

6002

 

6003

6004

 

6004 R1

 

6006

 

6008

 

6009

 

6010

 

6010

6017

 

6018

 

6018 R1

 

6019

 

6021

 

6022

 

6024

6025

 

6026

 

6029

 

6030

 

6030R1

 

6035 R1

 

6034

6037

 

6039

 

6044

 

6045

 

6046

 

6047

 

6048

6049

 

6054

 

6055

 

6056

 

6057

 

6058

 

6059

6060

 

6061

 

6062

 

6063

 

6064

 

6065

 

6066

6067

 

6071

 

6072

 

6073

 

6074

 

6075

 

6076

6077

 

6078

 

6081

 

6086 R1

 

6100

 

6102

 

6103

6104

 

6112

 

6119

 

6120

 

6121

 

6122

 

6123

6124

 

6130

 

6134

 

6135

 

6139

 

6140

 

6141

 

6142

 

6143

 

6144

 

6146

 

6147

 

6148

6151

 

6154

 

6156

 

6159

 

6160

 

6163

 

6165

 

30



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

6168

 

6169

 

6171

 

6177

 

6178

 

6184

 

6184 R1

6185

 

6186 R1

 

6187

 

6190

 

6191

 

6194

 

6195

6197

 

6198 R1

 

6199

 

6201

 

6202

 

6203

 

6206

6207

 

6209

 

6213

 

6214

 

6217

 

6218

 

6222

6226

 

6231

 

6235

 

6237

 

6238

 

6239

 

6240

6242

 

6243

 

6244

 

6246

 

6254

 

6256

 

6257

6258

 

6259

 

6261

 

6262

 

6264

 

6265

 

6265 R1

6266

 

6269

 

6270

 

6277

 

6282

 

6283

 

6286

6287

 

6288

 

6289

 

6290

 

6291

 

6292

 

6295

6296

 

6297

 

6298

 

6299

 

6300

 

6301

 

6302

6303

 

6304

 

6305

 

6306

 

6307

 

6308

 

6309

6310

 

6312

 

6313

 

6314

 

6316

 

6317

 

6318

6319

 

6321

 

6323

 

6324

 

6325

 

6330

 

6330 R1

6331

 

6333

 

6336

 

6341

 

6343

 

6346

 

6350

 

6350 R1

 

6350 R2

 

6351

 

6352

 

6353

 

6355

6360

 

6361

 

6362

 

6365

 

6369

 

6372

 

6373

6378

 

6379

 

6381

 

6383

 

6385

 

6386

 

6387

6388

 

6396

 

6397

 

6398

 

6399

 

6401

 

6402

6403

 

6409 R1

 

6410

 

6411

 

6412

 

6413

 

6415

6416

 

6417

 

6423

 

6424

 

6425

 

6427

 

6429

6430

 

6431

 

6433

 

6434

 

6435

 

6440

 

6442

6443

 

6444

 

6445

 

6446

 

6447

 

6450

 

6451

6455

 

6456

 

6457

 

6458

 

6459

 

6460

 

6461

6462

 

6465

 

6471

 

6477

 

6478

 

6479

 

6480

6481

 

6482

 

6483

 

6486

 

6488

 

6489

 

6492

6493

 

6495

 

6496

 

6497

 

6498

 

6500

 

6501

6502

 

6503

 

6504

 

6505 R1

 

6509

 

6510

 

6511

6512

 

6513

 

6514

 

6515

 

6517

 

6521

 

6522

6523

 

6524 R1

 

6525

 

6534

 

6536

 

6538

 

6541

6543

 

6548

 

6549

 

6550

 

6557

 

6559

 

6561

6564

 

6570

 

6570 R1

 

6571

 

6572

 

6573

 

6574

 

6579

 

6581

 

6582

 

6583

 

6584

 

6585

6586

 

6587

 

6588

 

6589

 

6590

 

6597

 

6598 R1

6589

 

6590

 

6597

 

6598 R1

 

6598 R2

 

6602

 

6603

6604

 

6604

 

6609

 

6610

 

6611

 

6612

 

6613

6614

 

6616

 

6617

 

6618 R1

 

6620

 

6621

 

6627

6628

 

6630

 

6631

 

6633

 

6634

 

6635

 

6636

6638

 

6639

 

6640

 

6641

 

6644

 

6645

 

6646

6647

 

6650

 

6651

 

6655

 

6656

 

6657

 

6658

6660

 

6666

 

6667

 

6668

 

6669

 

6670

 

6671

6672

 

6673

 

6676

 

6677

 

6678

 

6679

 

6686

6687

 

6689

 

6691

 

6695

 

6706

 

6710

 

6713

6714

 

6716

 

6719

 

6721

 

6722

 

6723

 

6725

6728

 

6739

 

6741

 

6744

 

6744 R1

 

6744 R2

 

6745

6746

 

6747

 

6748

 

6749

 

6750

 

6751

 

6752

6753

 

6754

 

6755

 

6756

 

6757

 

6758

 

6759

6760

 

6761

 

6762

 

6763

 

6764

 

6765

 

6770

6771

 

6772

 

6775 R1

 

6776

 

6777 R1

 

6777 R2

 

6805

6815

 

6818

 

6827

 

6828

 

6850

 

6850 R1

 

6851

6851 R1

 

6857

 

6858

 

6859

 

6866

 

6876 R1

 

6891 R1

6892

 

6893 R1

 

6899 R1

 

6966

 

6983

 

7023

 

7116

 

31


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 3 TO

SPECIAL BUSINESS PROVISIONS

 

RESERVED

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

BP ATTACHMENT 4 TO
SPECIAL BUSINESS PROVISIONS

 

ADDITIONAL STATEMENT OF WORK

 

(Reference SBP Section 3.3.1.1, 3.3.2.1, 3.3.3.31, 3.4.51, 3.4.81, 7.9)

 

A.                                     Sustaining Engineering Delegation Statement of Work

 

Seller’s responsibilities as they relate to Sustaining Engineering Delegation work for the products included in this Special Business Provisions are defined in Boeing Document D6-83323.  This Document includes summary matrices depicting the Engineering Delegation requirements for each product commodity and a Responsibility, Authority and Accountability (RAA) Document.  The baseline as of the date hereof shall be D6-83323 Rev. New signed January 21, 2005 which will be subject to periodic update.

 

D6-83323 is a summary of the Engineering Delegation requirements for sustaining products that are part of this SBP and included in the part pricing in Attachment 1.  All costs associated with Seller Engineering responsibility as described within D6-83323 with the exception of Fleet Support (as covered in the Technical Services Agreement) or as provided for below are included within Attachment 1 pricing for sustaining programs and will not be subject to additional payment from Boeing.

 

In addition, Boeing and Seller responsibilities related to the 737MMA program are defined in the 737MMA BCA/IDS Working Together Agreement signed December 2004 by R.K. Gardner, J.L. Turner and A.M. Parasida.  All activities and responsibilities identified for “BCA - Wichita” within this document will be the responsibility of Seller.

 

Product development projects in work at Boeing’s Wichita Division that have been selected for inclusion in this SBP as of the date hereof are outlined in Section B of this Attachment 4.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

B. Product Development Projects Subject to Non-Recurring Engineering Payments

 

For future product development projects, a determination will be made as to whether (i) a requirement for production hardware associated with this developmental effort is anticipated; and (ii) the production hardware resulting from this developmental effort is either a change to or a derivative of the current Attachment 1 Statement of Work.  If these conditions are met, these projects will be added to Section B.1 or B.2 of Attachment 4 per the criteria set forth below.  If these conditions are not met then the development projects should not be added to Attachment 4 and instead, should be covered by the Services Agreement.

 

B.1 Product Development Projects

 

a.                                       Section B1 includes those major re-design efforts that support Derivative aircraft and will be subject to non-recurring engineering payments according to the terms of SBP 5.2.1. The level of effort expended by Boeing on these development projects prior to June 16, 2005 will not be included in such non-recurring engineering payments to Seller.

 

b.                                       Those projects that support Derivative aircraft or where applicable, BCA aircraft delivered by BCA to BDS, will be added to this Section B.1 pursuant to SBP 7.9 and will be subject to non-recurring payments.

 

c.                                        For those projects added to this Section B.1, Seller will provide up to [*****] hours in the aggregate of engineering support per project at no charge to Boeing.  This support will include but shall not be limited to technical consultation, work statement development and schedule development.

 

d.                                       All changes that are approved and incorporated prior to certification and subject to the derivative production airplane unit 1, whether in sequence or out of sequence, will be paid for as part of B1.  All changes approved and not completed prior to certification will be added to B2 threshold for that year.

 

e.                                        The following list of product development known projects will be subject to non-recurring engineering payments according to the terms of SBP 5.2.1.  The level of effort expended by Boeing on these development projects prior to June 16, 2005 will not be included in such non-recurring engineering payments:

 

737 Short Field Landing Performance

737-900X

737-800MMA

737 Wedgetail

747-8

777-200LR Freighter

737-900BBJ3

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

B.2. Product Development Projects Subject to Thresholds.

 

a.                                       Section B.2 is for Boeing initiated and approved PRR’s [limited to Design Engineering, Stress Engineering and Project Manufacturing Engineering] that will be subject to such non-recurring engineering payments only after the threshold for embedded engineering support as described below has been exceeded.

 

b.                                       Those Boeing initiated and approved PRR’s [limited to Design Engineering, Stress Engineering and Project Manufacturing Engineering] that support changes to the then existing Attachment 1 statement of work will be incorporated under Section B.2 pursuant to SBP 7.9 and not be subject to additional non-recurring payment until the sustaining engineering threshold for the program appropriate for each project has been exceeded.  Only Boeing initiated and approved PRR changes will apply towards these thresholds and will be eligible for additional non-recurring payment once the thresholds have been exceeded.

 

c.                                        The PRR process starts at Engineering Authorization by the Chief Engineer and is documented in the ECC database on the ECM.

 

d.                                       For all PRR’s issued under Attachment 4, B2, Boeing will issue an ATP for the Design effort, which will contain the Boeing’s PRR approval minutes, followed by a CCN.

 

e.                                        Customer Introductions and Master Changes are Seller’s responsibility and will not be subject to additional non-recurring payment.

 

f.                                         In addition, only those Boeing initiated and approved PRR changes [Limited to Design Engineering, Stress Engineering, and Project Manufacturing Engineering] with an impact to Seller that exceeds [*****] engineering hours per change will apply towards these thresholds.  PRR changes that do not result in a minimum impact of [*****] engineering hours per change to Seller will not apply towards the threshold and will not be subject to additional non-recurring payment.

 

g.                                        Baseline PRR Engineering Thresholds:

 

Each contract year (cy) June 1st through May 31st, an adjustment will be made concurrent with the quantity based price adjustment process outlined within Attachment 20 to establish the appropriate threshold for each program for the following year.  To calculate the new threshold, the PRR Engineering Thresholds per Airplane as identified below will be multiplied by [*****] (beta factor) times the change in delivery rates by program for the target year vs. 2003 Airplane Deliveries by Program.  This value will then be added to (or subtracted from) the Baseline PRR Engineering Thresholds.  In other words, the PRR Engineering Threshold for any given year will be increased (or decreased) by [*****] of the variation in airplane deliveries by program for that year versus 2003 airplane deliveries.

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Supporting Documentation:  Contract Year to date summary by Program and Business Unit.  Refer to example below.

 

Forecasted PRR
Engineering Thresholds

 

2003 Baseline Hours

 

Threshold Hours for Boeing

 

Initiated PRR’s

 

 

 

2003 (Base)

 

*

 

CY1:

 

CY2: 2006

 

CY3: 2007

 

CY4: 2008

 

CY5: 2009

 

737

 

[*****]

 

hours

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

747

 

[*****]

 

hours

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

767

 

[*****]

 

hours

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

777

 

[*****]

 

hours

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

Airplane Deliveries

 

INPUT

 

737

 

173

 

airplanes

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

747

 

19

 

airplanes

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

767

 

24

 

airplanes

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

777

 

39

 

airplanes

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

2003 Airplane Deliveries - Forecasted

 

 

 

 

 

 

 

 

 


 

*Year is defined as the 12 month period beginning the first day of the anniversary month of the contract.

 

Model

 

PRR Engineering
Threshold Hours
CY 8

 

Quantity of
Airplanes

737

 

[*****]

 

424

747

 

[*****]

 

24

767

 

[*****]

 

24

777

 

[*****]

 

90

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

MOA — Revision of SBP Clause 7.9 and Attachment 4

 

Contract Year to date summary detail including hours charged to date by month for each PRR, also PRR approval dates as identified in the Engineering meeting minutes, additional data may be requested.  Refer to example below:

 

 

 

 

 

 

 

737 PRR Threshold Assertion - Period One
Period One 6/17/2005 - 6/15/2006
Status as of 6/15/2006 rev 4. (compiled

PRR Number

 

Pt Card
Count

 

PPR/ECR Title

 

PRR/ECR
Start

 

Jun

 

Jul

 

Aug

 

Sep

 

Oct

 

Nov

 

Dec

 

Jan

 

Feb

 

Mar

 

Apr

 

May

 

Jun

 

Cu

 

Date should
correspond with
the engineering
meeting minute’s
approval date.

38656

 

 

 

Improved Sound Damping In Aircraft Aft Cabin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ECR 01249

 

 

 

Improved Sound Damping In Aircraft Aft Cabin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

PRR 38656/ECR 01249 Improved Sound Damping In Aircraft Aft Cabin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38658

 

 

 

Flight Deck Door for - 700C Part 121 Operators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38665

 

 

 

Forward Entry Door False Latching/Indication Revision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38275-82

 

 

 

Thrust Reverser Cascade Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38275-90

 

 

 

Thrust Reverser Lightning Strike Protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38275-110S

 

 

 

Engine Strut Heat Insulation Blanket - Replacement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ECR 694

 

 

 

Insulation Blanket - Modification - Thrust Reverser (PRR 38690)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38647

 

 

 

Tech insertion - Mid Exit Door Plug - Option

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ECR 1513

 

 

 

Insulation Blanket Redesign (PRR 38275-110S)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract year to date summary by Program and Business Unit.  Seller will provide quarterly report of actual Engineering hours, within 20 working days after the end of each quarter.  Refer to example below:

 

Spirit AeroSystems
PRR Period IV Activity Summary
Status as of 06/11/2009 (Compiled 12-18-2009)

 

Work Order

 

Program

 

<100 hrs
YTD

 

>100 hrs
YTD

 

Total
YTD

 

Current
Threshold

 

Under/
(Over)

3N921

 

737 Fuselage

 

 

 

 

 

 

 

 

 

 

3N931

 

737 Nacelles

 

 

 

 

 

 

 

 

 

 

3N950

 

737 Struts

 

 

 

 

 

 

 

 

 

 

38920

 

737 Wing

 

 

 

 

 

 

 

 

 

 

Total 737

 

 

 

 

 

 

 

 

 

14,544

 

14,544

3N901

 

747 Fuselage

 

 

 

 

 

 

 

 

 

 

3N951

 

747 Struts

 

 

 

 

 

 

 

 

 

 

3N933

 

747 Nacelles

 

 

 

 

 

 

 

 

 

 

Total 747

 

 

 

 

 

 

 

 

 

6,635

 

6,635

3N902

 

767 Fuselage

 

 

 

 

 

 

 

 

 

 

3N952

 

767 Struts

 

 

 

 

 

 

 

 

 

 

Total 767

 

 

 

 

 

 

 

 

 

1,350

 

1,350

3N903

 

777 Fuselage

 

 

 

 

 

 

 

 

 

 

3N934

 

777 Nacelles

 

 

 

 

 

 

 

 

 

 

3N953

 

777 Struts

 

 

 

 

 

 

 

 

 

 

35310

 

777 Wing

 

 

 

 

 

 

 

 

 

 

Total 777

 

 

 

 

 

 

 

 

 

17,810

 

17,810

 


*YTD values shown above represent cumulative PRR engineering hours through the current status date for the period June 13, 2008 to June 11, 2009.  Current threshold values are based on delivery of the following units per model:  366/737, 17/747, 13/767, & 83/777.

 

5


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 5 TO

SPECIAL BUSINESS PROVISIONS

 

RATES AND FACTORS

 

(Reference SBP Section 7)

 

The following Rates will be utilized for changes to Material, Outside Processing and Touch Labor.  All other costs and profit are part of the Wrap Rates fixed for life of contract.

 

Cost Item

 

Factor or Rate

 

 

 

 

 

Direct Engineering:

 

[*****]

 

Engineering, Planning, N/C Programming & Tool Design are to be billed at this rate
Does not include Engineering Management which is an Indirect Cost

 

 

 

 

 

 

 

Direct Manufacturing Labor:

 

[*****]

 

Basic Factory Labor and Quality Assurance are to be billed at this rate
Direct Support Costs are included as an Indirect Cost and part of the rate also

 

 

 

 

 

 

 

Direct Material/Outside Processing/Non-Labor:

 

[*****]

 

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 6 TO

SPECIAL BUSINESS PROVISIONS

 

Lead Time Matrix
(Reference Section 7.5, 12.16)

 

Lead Time Matrix

 

Months from Authorization to Proceed to F.O.B. Seller’s Plant

 

 

 

737

 

747

 

767

 

777

 

 

Structures

 

S/N

 

Structures

 

S/N

 

Structures

 

S/N

 

Structures

 

S/N

Raw Material Forward Buy Authorization

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order Base Extension

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rate Increase

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rate Decrease

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Introduction

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Reorder

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Refire

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Deimplementation

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assembly - Wichita controlled end items

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assembly - Tulsa controlled end items

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fabrication - Wichita controlled end items

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fabrication - Tulsa controlled end items

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

Lead time in months is from authorization to proceed to F.O.B. seller’s plant.
Forward buy authorization is for limited procurement of material and/or parts as required in order to support an expected full authorization of an order base extension.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SPB ATTACHMENT 7 TO

SPECIAL BUSINESS PROVISIONS

 

INTENDURED PRICED PARTS LIST For POA’s

 

(Seller to submit to Boeing within 60 days of Contract signing)

 

A.                                     INDENTURE PRICED PARTS LIST

(Reference SBP 3.3.2.1, 4.4, 4.6)

 

Note:  Attachment 7 Parts and Prices provided under separate file due to size.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 8 TO
SPECIAL BUSINESS PROVISIONS

 

SELLER DATA SUBMITTALS
(Reference SBP 9.0)

 

EXAMPLES

 

1.                                       Program Status Reports (as requested by Boeing)
Seller’s program progress reports, highlighting significant accomplishments and critical program issues, etc.

 

2.                                      Production Definition Milestone Schedule (as requested by Boeing)
Seller’s Product Definition schedule depicting key milestone events to support program requirements.

 

3.                                       Manufacturing Milestone Schedule (as requested by Boeing)
Seller’s manufacturing schedule depicting key milestone events to support program requirements.

 

4.                                       Certified Tool List
Seller’s Certified Tool Lists for identifying all accountable tools, including any subsequent new, reworked or re-identified tools affecting the first production spares Product.

 

5.                                       Problem Reports (as required)
Seller’s written notification to Boeing of program problems, potential program impact and corrective action.

 

6.                                       Total Cost Management System Plan
Annually Seller will submit a TCMS plan as required under SBP Section 7.6.

 

1


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 9 TO
SPECIAL BUSINESS PROVISIONS

 

NON-RECURRING AGREEMENTS

 

The purpose of this attachment 9 is to document and incorporate all nonrecurring pricing and non-pricing agreements into this SBP.  These agreements are to be documented in the below format as applicable.  The Boeing purchase order must be included below when the agreement is for Boeing accountable tooling.  This Boeing purchase order will be used to link the agreements to the Boeing Tooling records.

 

The following non-recurring pricing and non-pricing agreements are hereby incorporated into this SBP

 

Item 
Number

 

Agreement Title

 

Description

1.

 

[*****]

 

1992

2.

 

[*****]

 

2055

3.

 

[*****]

 

2323, CCN 831

4.

 

[*****]

 

2385

5.

 

[*****]

 

2572

6.

 

[*****]

 

2580R1

7.

 

[*****]

 

2624

8.

 

[*****]

 

2631

9.

 

[*****]

 

2632

10.

 

[*****]

 

2754

11.

 

[*****]

 

2765

12.

 

[*****]

 

2808

13.

 

[*****]

 

2816

14.

 

[*****]

 

2840R1

15.

 

[*****]

 

2840R2

16.

 

[*****]

 

2844

17.

 

[*****]

 

2846

18.

 

[*****]

 

2867

19.

 

[*****]

 

2872

20.

 

[*****]

 

2938

21.

 

[*****]

 

3067

22.

 

[*****]

 

3088

23.

 

[*****]

 

3197

24.

 

[*****]

 

3198

25.

 

[*****]

 

3198R1

26.

 

[*****]

 

3198R2

27.

 

[*****]

 

3305

28.

 

[*****]

 

3363

29.

 

[*****]

 

3435

30.

 

[*****]

 

3448

31.

 

[*****]

 

2488 R3

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

32.

 

[*****]

 

2580R2

33.

 

[*****]

 

3172

34.

 

[*****]

 

3198R1

35.

 

[*****]

 

3198R2

36.

 

[*****]

 

3305

37.

 

[*****]

 

3363

38.

 

[*****]

 

3363R1

39.

 

[*****]

 

3435

40.

 

[*****]

 

3448

41.

 

[*****]

 

3519

42.

 

[*****]

 

3596

43.

 

[*****]

 

4107 Rev A

44.

 

[*****]

 

4120

45.

 

[*****]

 

4127

46.

 

[*****]

 

4247

47.

 

[*****]

 

4238

48.

 

[*****]

 

4239

49.

 

[*****]

 

4285

50.

 

[*****]

 

4386

51.

 

[*****]

 

4419

52.

 

[*****]

 

4434

53.

 

[*****]

 

4443

54.

 

[*****]

 

4477

55.

 

[*****]

 

4477R1

56.

 

[*****]

 

4490

57.

 

[*****]

 

4491

58.

 

[*****]

 

4524

59.

 

[*****]

 

4621

60.

 

[*****]

 

2580 R3

61.

 

[*****]

 

3193

62.

 

[*****]

 

3200

63.

 

[*****]

 

3215

64.

 

[*****]

 

3363R2

65.

 

[*****]

 

3363R3

66.

 

[*****]

 

3849

67.

 

[*****]

 

4049

68.

 

[*****]

 

4451

69.

 

[*****]

 

4477 R1

70.

 

[*****]

 

4742

71.

 

[*****]

 

4796

72.

 

[*****]

 

4796 R1

73.

 

[*****]

 

4806

74.

 

[*****]

 

4834

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

75.

 

[*****]

 

5009

76.

 

[*****]

 

5023

77.

 

[*****]

 

5029

78.

 

[*****]

 

5059

79.

 

[*****]

 

5061

80.

 

[*****]

 

5087

81.

 

[*****]

 

5100

82.

 

[*****]

 

5104

83.

 

[*****]

 

5110

84.

 

[*****]

 

5138

85.

 

[*****]

 

5148

86.

 

[*****]

 

5156

87.

 

[*****]

 

5170

88.

 

[*****]

 

5186

89.

 

[*****]

 

5263

90.

 

[*****]

 

5396

91.

 

[*****]

 

5398

92.

 

[*****]

 

5441

93.

 

[*****]

 

5461

94.

 

[*****]

 

5462

95.

 

[*****]

 

5463

96.

 

[*****]

 

5473

97.

 

[*****]

 

5510

98.

 

[*****]

 

5552

99.

 

[*****]

 

5621

100.

 

[*****]

 

5649 R1

101.

 

[*****]

 

5667

102.

 

[*****]

 

5691

103.

 

[*****]

 

5692

104.

 

[*****]

 

5700

105.

 

[*****]

 

5781

106.

 

[*****]

 

5782

107.

 

[*****]

 

5866

108.

 

[*****]

 

5889

109.

 

[*****]

 

5889 R1

110.

 

[*****]

 

5943

111.

 

[*****]

 

5944

112.

 

[*****]

 

5945

113.

 

[*****]

 

5950

114.

 

[*****]

 

5977

115.

 

[*****]

 

5991

116.

 

[*****]

 

6017

117.

 

[*****]

 

6018

118.

 

[*****]

 

6018 R1

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

119.

 

[*****]

 

6284

120.

 

[*****]

 

6314

121.

 

[*****]

 

6324

122.

 

[*****]

 

6325

123.

 

[*****]

 

6365

124.

 

[*****]

 

6413

125.

 

[*****]

 

6415

126.

 

[*****]

 

6427

127.

 

[*****]

 

6429

128.

 

[*****]

 

6598 Rev1

129.

 

[*****]

 

6598 Rev2

130.

 

[*****]

 

6650

131.

 

[*****]

 

6741

132.

 

[*****]

 

6772

133.

 

[*****]

 

6818

134.

 

[*****]

 

6983

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Agreement text format:

 

Item XXX:  agreement title:                                    incorporated by CCN#XXXX

 

Overview of agreement including CCN number(s) affected by agreement.

A. Statement of work
B. Settlement value and payment obligations
C. Additional rates and factors
D. Boeing purchase order numbers for non-recurring payments
E. Other

 

5


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS

 

QUALITY ASSURANCE REQUIREMENTS

 

All work performed under this SBP shall be in accordance with the following:

 

A10.1                                                                Quality System

 

A.                                     Document AS/EN/JISQ 9100. “Quality Systems - Aerospace - Model for Quality Assurance in Design, Development, Production, Installation and Servicing” as may be revised from time to time, which are incorporated herein and made a part hereof by this reference.

 

B.                                     Document D6-82479, “Boeing Quality Management System Requirements for Suppliers - Appendix A - Quality Management System” as amended from time to time, which is incorporated herein and made a part hereof by this reference.

 

C.                                     Document D6-82479, “Boeing Quality Management System Requirements for Suppliers - Addendum 1 - Advanced Quality System for Product and Process Improvement” as amended from time to time, which is incorporated herein and made a part hereof by this reference.

 

A10.2                                                                Common Quality Purchasing Data and Business Requirements

 

A10.2.1                                                  Seller Annual Internal Quality Audit

 

At lease annually, the Seller shall conduct an internal audit to ensure compliance to their quality system and the controlling quality assurance document.

 

A10.2.2                                                      Change in Quality Management Representative

 

The Seller shall promptly notify Boeing of any changes in the management representative with assigned responsibility and authority for the quality system.

 

A10.2.3                                                  English Language

 

When specifically requested by Boeing, Seller shall make specified quality data and/or approved design data available in the English language.

 

The Seller shall maintain an English language translation of (1) its quality manual, and (2) an index of all other Seller procedures that contain quality requirements.  Boeing may require the Seller to translate additional documentation.

 

A10.2.4                                                      Changes to Quality System

 

The Seller shall immediately notify Boeing in writing of any change to the quality control system that may affect the inspection, conformity or airworthiness of the

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Product.  After the issue of initial Boeing quality system approval, each change to the quality control system is subject to review by Boeing.

 

A10.2.5                                                      Supplier Quality Performance

 

If Seller fails to achieve and maintain 98% site quality acceptance rate, which is a prerequisite for delegated inspection authority awarded at Boeing’s discretion, the Seller shall be responsible for one or more of the following as directed by Boeing:

 

A.                                     Obtaining source inspection from a Boeing-qualified contractor at Seller’s own expense;

 

B.                                     Reimbursing Boeing for reasonable Boeing costs incurred at the point of manufacture (i.e. Seller’s site) to verify product conformance;

 

C.                                     Reimburse Boeing for reasonable Boeing costs incurred at the point of receipt to verify product conformance.

 

The site quality acceptance rate is a calculation of the ratio of acceptable units delivered to the total units delivered, or an alternate criteria quality acceptance rating, equivalent to 98% as defined by the contracting Boeing site(s).

 

A10.2.6                                                      Excess Inventory

 

The Seller shall strictly control all inventory of Boeing proprietary product that is in excess of contract quantity in order to prevent product from being sold or provided to any third party without prior written authorization from Boeing.

 

A10.2.7                                                      Aerospace Quality Management System (AQMS) Certification

 

Boeing recognition of Seller’s AQMS certification/registration does not affect the right of Boeing to conduct audits and issue findings at the Seller’s facility.  Boeing reserves the right to provide Boeing-identified quality system findings, associated quality system data, and quality performance data to the Seller’s Certification/Registration Board (CRB).

 

Seller shall ensure the following relative to AQMS certification:

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

A10.2.7.1                                            Accreditation of Certification/Registration Body

 

The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments.  The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.

 

NOTE:                                                           IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc.  Reference IAQG website for listing of accredited CRBs:  http://www.iagg.sae.org/servlets/index?PORTAL_CODE=IAQG

 

A10.2.7.2                                            Records of Certification/Registration

 

The seller maintains objective evidence of CRB certification/registration on file at Seller’s facility.  Objective evidence shall include:

 

a.                                       The accredited AQMS certificate(s) of registration;

 

b.                                       The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;

 

c.                                        Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).

 

NOTE:                                                           Certification records shall be maintained in accordance with Boeing specified contractual quality record retention requirements.

 

A10.2.7.3                                            Right of Access to CRB

 

The CRB services agreement provides for “right of access” to all CRB records by Boeing, applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.

 

A10.2.7.4                                            Audit Results/Data Reporting to IAQG

 

The CRB has Seller’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

A10.2.7.5                                            Notification to Boeing of Change in Status

 

Boeing is immediately notified in writing should the Seller’s certification/registration be suspended or withdrawn, or accreditation status of Seller’s CRB be withdrawn.  Send email notification to grpcrboversightrep@boeing.com.

 

A10.2.7.6                                            Provision of Boeing Quality Data to CRB

 

Boeing-identified findings and Seller’s quality performance data is provided to the CRB during certification/registration and surveillance activity.

 

A10.2.7.7                                            CRB Access to Proprietary Data

 

CRB shall be provided access to applicable proprietary data (including Boeing proprietary data) to the extent necessary to assess Seller’s compliance to AQMS requirements.  CRB shall agree to keep confidential and protect Boeing proprietary information under terms no less stringent than Seller’s contractual agreement with Boeing.  Seller will assure that such information is conspicuously marked “BOEING PROPRIETARY”.

 

A10.2.7.8                                            Seller Compliance with CRB Requirements

 

Seller complies with all CRB requirements imposed to issue and maintain certification/registration.

 

A10.2.8                                                      Verification of Corrective Action

 

When Boeing notifies Seller of a detected nonconformance, Seller shall immediately take action to eliminate the nonconformance on all products in Seller’s control.  Seller shall also maintain on file verification that root cause corrective action has occurred and has resolved the subject condition.  At the specific request of Boeing, this verification shall occur for the next five (5) shipments after implementation of the corrective action to ensure detected nonconformance has been eliminated.  Boeing reserves the right to review the verification data at Seller’s facility or have the data submitted to Boeing.

 

A10.2.9                                                      Corrective Action Report

 

Where Seller is requested to submit a corrective action report, Seller will submit its response within ten (10) days of receipt of such request unless an extension is otherwise provided by Boeing.  Any corrective action report submitted to Boeing shall be in the format specified by Boeing.  If after submittal to Boeing supplier determines need for revision, Seller shall immediately notify Boeing of such revision.  In the event Seller is unable to respond within the allotted ten day time frame, Seller shall submit a request for extension which shall include the reason for the extension request and the time need to complete the corrective action report.

 

A10.2.10                                               Relocation/Subcontract Notification (Puget Sound only)

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

The Seller shall not relocate or subcontract any Category I or II work outside the U.S. without written Boeing acceptance.  Notification to Boeing should be made to the Procurement Agent who manages the Seller’s contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions.  Category I and II work is defined in FAA Order 81200.2, Appendix 4.

 

A10.2.11                                               Quality Metrics & Reporting

 

When requested by Boeing, Seller agrees to work with Boeing to develop and implement processes designed at improving Seller’s quality performance.  Process will include sufficient detail to allow Boeing to evaluate Seller’s progress.

 

A10.3                                                                Site Unique Quality Purchasing Data Requirements

 

A10.3.1                                                  Acceptance/Rejection of Seller’s Root Cause/Corrective Action

 

Boeing reserves the right to reject any root cause and/or corrective action determination provided by the Seller, and may request subsequent investigation and/or corrective action to either Boeing or Seller-initiated corrective action requests.  If the Seller is late in responding to corrective action requests by Boeing, or if Boeing requires subsequent corrective action, Boeing reserves the right to withhold acceptance of shipments either at source or destination until Seller corrective action is submitted to Boeing’s satisfaction.

 

A10.3.2                                                      Change in Manufacturing Facility

 

The Seller shall immediately notify Boeing in writing of any change to the manufacturing facility location of the contracted part number or assembly.

 

A10.4                                                                Incorporated by Reference

 

In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, Seller is required to maintain compliance with the following documents as may be revised from time to time, and incorporated herein, and made a part of this SBP by reference with full force and effect, as if set out in full text:

 

A10.4.1                                                      Document AS/EN/SJAC 9102. “Aerospace First Article Inspection (FAI) Requirement”

 

Seller shall perform First Article Inspections (FAIs) in accordance with AS/EN/SJAC 9102 for all new and revised production articles produced after June 16, 2005.

 

5



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

A10.4.2                                                      Boeing Document D1-8007, “Approval Guide for Supplier Statistical Sampling Plans”

 

A Seller that performs acceptance sampling shall meet the requirements of document D1-8007.  Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling.  Subsequent revisions to approved sampling plans require Boeing approval prior to implementation.  Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection.

 

When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics.

 

In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.

 

A10.4.3                                                      Boeing Document D6-51991, “Quality Assurance Standard for Digital Product Definition (DPD) at Boeing Suppliers”

 

Seller is required to obtain Boeing approval as a DPD-capable supplier if seller receives, downloads, and/or uses Computer Aided Design (CAD) geometry in any format from any Boeing facility.  Boeing digital datasets are reference only (not design or inspection authority) until Boeing DPD approval status is obtained.

 

A10.4.4                                                  Boeing Document D1-4426, “Approved Process Sources”

 

This document defines the approved sources for special processing, composite raw materials, composite products, aircraft bearings, designated fasteners, and metallic raw materials.

 

A10.4.5                                                      Boeing Document D-13709-4, “Requirements for Obtaining MRB Authority by Boeing Suppliers”

 

Seller shall not use dispositions of use-as-is or repair on Boeing-designed product unless current revision of Seller’s Material Review Board (MRB) plan complies with D-137094 (not in 7E7) and has been approved by Boeing.

 

A10.4.6                                                  Reserved

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

A10.4.7                                                      Procurement Operating Instructions (PO1 M6-1007) (used by Puget Sound)

 

Procurement Operating Instructions (POI M6-1007), as revised from time to time.  Individual Quality notes contained in Procurement Operating Instructions (POI M6-1007) are applicable when identified on the purchase document.

 

See Boeing Website —

 

http://www.boeing.com/companyoffices/doingbiz/index.html, or contact Boeing Procurement representative for printed copy of notes.

 

7


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 11 TO

SPECIAL BUSINESS PROVISIONS

 

Boeing Commercial Airplanes (BCA) TIER REPORT (Reference SBP Section 9.6)

 

Seller Name:

Date:

Seller Contact:

Phone:

BCA Procurement Agent Contact:

Phone

BCA Purchase Contract #:

Reporting Period*

o Jan - Mar

o   Apr - Jun

o July - Sept

o Oct - Dec

Year:

Definitions**

Small Business (SB)

The term “small business” shall mean a small business as defined pursuant to section 3 of the Small Business Act (15 U.S.C.A. 632) and relevant regulations issued pursuant thereto.  Generally, this means a small business organized for profit, it is independently owned and operated, is not dominant in the field of operations in which it is bidding, and meets the size standards as prescribed in Government regulations.  (Includes SDBs, SMBEs and WOSBs)

Small Disadvantaged Business (SDB)

A small business certified by the U.S. Small Business Administration as a socially and economically small disadvantaged business for consideration of Government set-a-side contracting opportunities and business development.  (Includes SDBs who are women-owned)

Small Minority Business Enterprise (SMBE)

A small business that is at least 51 percent owned, operated and controlled by a minority group member (Asian, Black, Hispanic, and Native Americans); or, in the case of a publicly-owned business, at least 51% of the stock is owned by one or more minority group members and such individuals control the management and daily operations.  (Includes SDBs)

Women-owned Small Business (WOSB)

A small business concern that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women.  (Includes WOSBs who are also SDBs)

Contract Dollars Received by Seller

A.

Boeing Commercial Airplanes contract dollars received by seller for the above reporting period* (report in whole numbers):       $                                                

Value of Subcontract 2 nd  Tier Dollars Awarded

(for Boeing Commercial Airplanes Purchase Contract ONLY)

Diversity Category

Reporting Period (see above*)

Dollars
(report in whole numbers)

Percent of
Seller Dollars

B.

Small Business (SB)

 

(B ÷ A)

C.

Small Minority Business Enterprise (SMBE)

 

(C ÷ A)

D.

Women-owned Small Business (WOSB)

 

(D ÷ A)

Authorized Company Representative (Print):

Authorized Company Representative (Signature):   Date:

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 12 TO

SPECIAL BUSINESS PROVISIONS

 

NON-U.S. PROCUREMENT REPORT FORM

 

(Reference SBP Section 12.12)

 

(Seller to Submit)

 

Attachment 12, Section 1

 

Seller Name

 

Country

 

Commodity/
Nomenclature

 

Bid
Dollars

 

Contracted
Dollars

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 12 TO
SPECIAL BUSINESS PROVISIONS

 

Attachment 12
(Reference SBP Section 12.12)

 

Attachment 12 Section 2

 

The following outlines offset requirements that are currently in work and that Seller is obligated to complete as part of this SBP.

 

                1)            Korea - Horizontal Stabilizers and Vertical Fin

 

·                   Obligation for Wichita to complete transfer of 737NG Horizontal Stabilizers and Vertical Fin, [*****] (or most current configuration) according to plan and schedule in place on (June 16, 2005).

 

·                                           The schedules and hardware quantities are subject to change in support of program requirements.  Such changes will be made in accordance with the terms indentified in Paragraph 7.5 in the Special Business Provisions.

 

·                   Offload to KAI in Korea

 

·                   Seller to provide work transfer support/resources as identified for “Wichita” in above referenced plan.  Boeing shall reimburse Seller for the reasonable travel costs incurred by Seller’s employees for purposes of providing such work transfer support in Korea.  Travel costs shall include airfare, hotels, meals and car rental costs consistent with Seller’s standard travel practices and shall not exceed the cost of Boeing’s ordinary travel practices.  Seller shall promptly submit invoices to Boeing substantiating costs for which Seller seeks reimbursement.  Such invoices shall be paid by Boeing in accordance with Paragraph 5.0.

 

·                   These part numbers will be removed from Attachment 1 of this SBP and Boeing will have no further obligation to purchase these part numbers from Seller at the conclusion of this work transfer.

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

WICHITA

 

737NG HORIZONTAL STABILIZER

 

PRODUCTION DELIVERY SCHEDULE R-142R2

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

1732

 

5/4/2005

 

1842

 

10/11/2005

 

1982

 

4/14/2006

1737

 

5/12/2005

 

1845

 

10/14/2005

 

1987

 

4/20/2006

1742

 

5/19/2005

 

1848

 

10/19/2005

 

1991

 

4/26/2006

1746

 

5/25/2005

 

1851

 

10/24/2005

 

1995

 

5/2/2006

1749

 

5/31/2005

 

1854

 

10/27/2005

 

2000

 

5/8/2006

1752

 

6/3/2005

 

1857

 

11/1/2005

 

2004

 

5/12/2006

1755

 

6/8/2005

 

1860

 

11/4/2005

 

2010

 

5/18/2006

1758

 

6/13/2005

 

1863

 

11/8/2005

 

2014

 

5/24/2006

1761

 

6/16/2005

 

1866

 

11/11/2005

 

2018

 

5/30/2006

1764

 

6/21/2005

 

1869

 

11/15/2005

 

2023

 

6/5/2006

1767

 

6/24/2005

 

1872

 

11/18/2005

 

2028

 

6/8/2006

1770

 

6/29/2005

 

1875

 

11/23/2005

 

2032

 

6/14/2006

1773

 

7/5/2005

 

1878

 

11/29/2005

 

2036

 

6/19/2006

1776

 

7/8/2005

 

1881

 

12/2/2005

 

2041

 

6/23/2006

1779

 

7/13/2005

 

1886

 

12/8/2005

 

2046

 

6/28/2006

1782

 

7/18/2005

 

1890

 

12/14/2005

 

2050

 

7/5/2006

1785

 

7/21/2005

 

1895

 

12/20/2005

 

2054

 

7/10/2006

1788

 

7/26/2005

 

1899

 

1/4/2006

 

2059

 

7/14/2006

1791

 

7/29/2005

 

1904

 

1/10/2006

 

2064

 

7/19/2006

1794

 

8/3/2005

 

1909

 

1/16/2006

 

2067

 

7/24/2006

1797

 

8/8/2005

 

1913

 

1/20/2006

 

2071

 

7/27/2006

1800

 

8/11/2005

 

1918

 

1/26/2006

 

2075

 

8/1/2006

1803

 

8/16/2005

 

1922

 

2/1/2006

 

2079

 

8/4/2006

1806

 

8/19/2005

 

1927

 

2/7/2006

 

2084

 

8/9/2006

1809

 

8/24/2005

 

1931

 

2/13/2006

 

2087

 

8/14/2006

1812

 

8/29/2005

 

1936

 

2/17/2006

 

2091

 

8/17/2006

1815

 

9/1/2005

 

1940

 

2/23/2006

 

2095

 

8/22/2006

1818

 

9/7/2005

 

1945

 

3/1/2006

 

2099

 

8/25/2006

1821

 

9/12/2005

 

1950

 

3/7/2006

 

2103

 

8/30/2006

1824

 

9/15/2005

 

1954

 

3/13/2006

 

2107

 

9/5/2006

1827

 

9/20/2005

 

1959

 

3/17/2006

 

2111

 

9/8/2006

1830

 

9/23/2005

 

1963

 

3/23/2006

 

2115

 

9/13/2006

1833

 

9/28/2005

 

1968

 

3/29/2006

 

2119

 

9/18/2006

1836

 

10/3/2005

 

1973

 

4/4/2006

 

2123

 

9/21/2006

1839

 

10/6/2005

 

1977

 

4/10/2006

 

2127

 

9/26/2006

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

WICHITA
737NG HORIZONTAL STABILIZER
PRODUCTION DELIVERY SCHEDULE R-142R2 — continued

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

2131

 

9/29/2006

 

2272

 

3/8/2007

2135

 

10/4/2006

 

2275

 

3/13/2007

2139

 

10/9/2006

 

2279

 

3/16/2007

2143

 

10/12/2006

 

2284

 

3/21/2007

2147

 

10/17/2006

 

2287

 

3/26/2007

2151

 

10/20/2006

 

2291

 

3/29/2007

2155

 

10/25/2006

 

2295

 

4/3/3007

2159

 

10/30/2006

 

2299

 

4/6/2007

2163

 

11/2/2006

 

2304

 

4/11/2007

2167

 

11/7/2006

 

2307

 

4/16/2007

2170

 

11/10/2006

 

2311

 

4/19/2007

2174

 

11/15/2006

 

2315

 

4/24/2007

2179

 

11/20/2006

 

2320

 

4/27/2007

2183

 

11/27/2006

 

2323

 

5/2/2007

2187

 

11/30/2006

 

2327

 

5/7/2007

2191

 

12/5/2006

 

2331

 

5/10/2007

2196

 

12/8/2006

 

2335

 

5/15/2007

2199

 

12/13/2006

 

2339

 

5/18/2007

2203

 

12/18/2006

 

2343

 

5/23/2007

2207

 

12/21/2006

 

2347

 

5/29/2007

2211

 

1/4/2007

 

2351

 

6/1/2007

2215

 

1/9/2007

 

2356

 

6/6/2007

2220

 

1/12/2007

 

2359

 

6/11/2007

2223

 

1/17/2007

 

2363

 

6/14/2007

2227

 

1/22/2007

 

2367

 

6/19/2007

2231

 

1/25/2007

 

2372

 

6/22/2007

2235

 

1/30/2007

 

2375

 

6/27/2007

2240

 

2/2/2007

 

2379

 

7/2/2007

2243

 

2/7/2007

 

2383

 

7/6/2007

2247

 

2/12/2007

 

2388

 

7/11/2007

2251

 

2/15/2007

 

2391

 

7/16/2007

2255

 

2/20/2007

 

2395

 

7/19/2007

2259

 

2/23/2007

 

2399

 

7/24/2007

2264

 

2/28/2007

 

 

 

 

2268

 

3/5/2007

 

 

 

 

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

THE BALANCE OF THIS SCHEDULE IS FOR PLANNING PURPOSES ONLY

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

S/S 1

 

8/1/2007

 

S/S 22

 

11/1/2007

 

S/S 43

 

5/1/2008

S/S 2

 

8/1/2007

 

S/S 23

 

11/1/2007

 

S/S 44

 

5/1/2008

S/S 3

 

8/1/2007

 

S/S 24

 

11/1/2007

 

S/S 45

 

5/1/2008

S/S 4

 

8/1/2007

 

S/S 25

 

12/1/2007

 

S/S 46

 

5/1/2008

S/S 5

 

8/1/2007

 

S/S 26

 

12/1/2007

 

S/S 47

 

6/1/2009

S/S 6

 

8/1/2007

 

S/S 27

 

1/1/2008

 

S/S 48

 

6/1/2008

S/S 7

 

9/1/2007

 

S/S 28

 

1/1/2008

 

S/S 49

 

6/1/2008

S/S 8

 

9/1/2007

 

S/S 29

 

1/1/2008

 

S/S 50

 

7/1/2008

S/S 9

 

9/1/2007

 

S/S 30

 

1/1/2008

 

S/S 51

 

7/1/2008

S/S 10

 

9/1/2007

 

S/S 31

 

2/1/2008

 

S/S 52

 

7/1/2008

S/S 11

 

9/1/2007

 

S/S 32

 

2/1/2008

 

S/S 53

 

8/1/2008

S/S 12

 

9/1/2007

 

S/S 33

 

2/1/2008

 

S/S 54

 

8/1/2008

S/S 13

 

10/1/2007

 

S/S 34

 

2/1/2008

 

S/S 55

 

8/1/2008

S/S 14

 

10/1/2007

 

S/S 35

 

3/1/2008

 

S/S 56

 

9/1/2008

S/S 15

 

10/1/2007

 

S/S 36

 

3/1/2008

 

S/S 57

 

9/1/2008

S/S 16

 

10/1/2007

 

S/S 37

 

3/1/2008

 

S/S 58

 

9/1/2008

S/S 17

 

10/1/2007

 

S/S 38

 

3/1/2008

 

S/S 59

 

10/1/2008

S/S18

 

10/1/2007

 

S/S 39

 

4/1/2008

 

S/S 60

 

10/1/2008

S/S 19

 

11/1/2007

 

S/S 40

 

4/1/2008

 

S/S 61

 

10/1/2008

S/S 20

 

11/1/2007

 

S/S 41

 

4/1/2008

 

END OF PRODUCTION

S/S 21

 

11/1/2007

 

S/S 42

 

4/1/ 2008

 

 

 

 

 

5



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Wichita
737NG Vertical Fin
Master Schedule R-142R2

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO

BOEING

1

 

1731

 

5/2/2005

 

36

 

1811

 

8/25/2005

 

71

 

1902

 

1/9/2006

2

 

1732

 

5/3/2005

 

37

 

1814

 

8/30/2005

 

72

 

1904

 

1/10/2006

3

 

1734

 

5/6/2005

 

38

 

1816

 

9/1/2005

 

73

 

1905

 

1/12/2006

4

 

1737

 

5/11/2005

 

39

 

1819

 

9/7/2005

 

74

 

1907

 

1/16/2006

5

 

1740

 

5/16/2005

 

40

 

1821

 

9/9/2005

 

75

 

1910

 

1/18/2006

6

 

1743

 

5/19/2005

 

41

 

1822

 

9/12/2005

 

76

 

1912

 

1/19/2006

7

 

1746

 

5/24/2005

 

42

 

1824

 

9/14/2005

 

77

 

1913

 

1/23/2006

8

 

1749

 

5/27/2005

 

43

 

1826

 

9/16/2005

 

78

 

1915

 

1/25/2006

9

 

1751

 

6/1/2005

 

44

 

1829

 

9/21/2005

 

79

 

1918

 

1/27/2006

10

 

1754

 

6/6/2005

 

45

 

1831

 

9/23/2005

 

80

 

1920

 

1/30/2006

11

 

1756

 

6/8/2005

 

46

 

1834

 

9/28/2005

 

81

 

1921

 

2/1/2006

12

 

1757

 

6/9/2005

 

47

 

1836

 

9/30/2005

 

82

 

1923

 

2/3/2006

13

 

1759

 

6/13/2005

 

48

 

1839

 

10/5/2005

 

83

 

1926

 

2/7/2006

14

 

1761

 

6/15/2005

 

49

 

1841

 

10/7/2005

 

84

 

1928

 

2/8/2006

15

 

1764

 

6/20/2005

 

50

 

1842

 

10/10/2005

 

85

 

1929

 

2/10/2006

16

 

1766

 

6/22/2005

 

51

 

1844

 

10/12/2005

 

86

 

1931

 

2/14/2006

17

 

1769

 

6/27/2005

 

52

 

1846

 

10/14/2005

 

87

 

1934

 

2/16/2006

18

 

1771

 

6/29/2005

 

53

 

1849

 

10/19/2005

 

88

 

1936

 

2/17/2006

19

 

1774

 

7/5/2005

 

54

 

1851

 

10/21/2005

 

89

 

1937

 

2/21/2006

20

 

1776

 

7/7/2005

 

55

 

1854

 

10/26/2005

 

90

 

1939

 

2/23/2006

21

 

1779

 

7/12/2005

 

56

 

1856

 

10/28/2005

 

91

 

1942

 

2/27/2006

22

 

1781

 

7/14/2005

 

57

 

1859

 

11/2/2005

 

92

 

1944

 

2/28/2006

23

 

1784

 

7/19/2005

 

58

 

1861

 

11/3/2005

 

93

 

1945

 

3/2/2006

24

 

1786

 

7/21/2005

 

59

 

1866

 

11/10/2005

 

94

 

1947

 

3/3/2006

25

 

1789

 

7/26/2005

 

60

 

1870

 

11/15/2005

 

95

 

1949

 

3/7/2006

26

 

1791

 

7/28/2005

 

61

 

1873

 

11/18/2005

 

96

 

1951

 

3/8/2006

27

 

1794

 

8/2/2005

 

62

 

1877

 

11/23/2005

 

97

 

1952

 

3/10/2006

28

 

1795

 

8/3/2005

 

63

 

1880

 

11/30/2005

 

98

 

1954

 

3/13/2006

29

 

1796

 

8/4/2005

 

64

 

1883

 

12/5/2005

 

99

 

1956

 

3/15/2006

30

 

1799

 

8/9/2005

 

65

 

1886

 

12/7/2005

 

100

 

1958

 

3/16/2006

31

 

1801

 

8/11/2005

 

66

 

1889

 

12/15/2005

 

101

 

1959

 

3/20/2006

32

 

1803

 

8/15/2005

 

67

 

1891

 

12/16/2005

 

102

 

1961

 

3/21/2006

33

 

1804

 

8/16/2005

 

68

 

1893

 

12/19/2005

 

103

 

1962

 

3/23/2006

34

 

1806

 

8/18/2005

 

69

 

1894

 

12/22/2005

 

104

 

1964

 

3/24/2006

35

 

1809

 

8/23/2005

 

70

 

1897

 

1/5/2006

 

105

 

1966

 

3/28/2006

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Wichita
737NG Vertical Fin
Master Schedule R-142R2 — continued

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO
BOEING

106

 

1968

 

3/29/2006

 

141

 

2030

 

6/13/2006

 

176

 

2099

 

8/25/2006

107

 

1969

 

3/31/2006

 

142

 

2032

 

6/14/2006

 

177

 

2101

 

8/29/2006

108

 

1971

 

4/3/2006

 

143

 

2034

 

6/16/2006

 

178

 

2103

 

8/30/2006

109

 

1973

 

4/5/2006

 

144

 

2036

 

6/19/2006

 

179

 

2105

 

9/1/2006

110

 

1975

 

4/6/2006

 

145

 

2038

 

6/21/2006

 

180

 

2107

 

9/5/2006

111

 

1976

 

4/10/2006

 

146

 

2039

 

6/22/2006

 

181

 

2109

 

9/7/2006

112

 

1978

 

4/11/2006

 

147

 

2041

 

6/26/2006

 

182

 

2111

 

9/8/2006

113

 

1979

 

4/13/2006

 

148

 

2043

 

6/27/2006

 

183

 

2113

 

9/12/2006

114

 

1982

 

4/14/2006

 

149

 

2045

 

6/29/2006

 

184

 

2115

 

9/13/2006

115

 

1983

 

4/18/2006

 

150

 

2047

 

6/30/2006

 

185

 

2117

 

9/15/2006

116

 

1985

 

4/19/2006

 

151

 

2049

 

7/5/2006

 

186

 

2119

 

9/18/2006

117

 

1986

 

4/21/2006

 

152

 

2051

 

7/6/2006

 

187

 

2121

 

9/20/2006

118

 

1988

 

4/24/2006

 

153

 

2053

 

7/10/2006

 

188

 

2123

 

9/21/2006

119

 

1990

 

4/26/2006

 

154

 

2055

 

7/11/2006

 

189

 

2125

 

9/25/2006

120

 

1992

 

4/27/2006

 

155

 

2057

 

7/13/2006

 

190

 

2127

 

9/26/2006

121

 

1993

 

5/1/2006

 

156

 

2059

 

7/14/2006

 

191

 

2129

 

9/28/2006

122

 

1995

 

5/2/2006

 

157

 

2061

 

7/18/2006

 

192

 

2131

 

9/29/2006

123

 

1997

 

5/4/2006

 

158

 

2063

 

7/19/2006

 

193

 

2133

 

10/3/2006

124

 

1999

 

5/5/2006

 

159

 

2065

 

7/21/2006

 

194

 

2135

 

10/4/2006

125

 

2001

 

5/9/2006

 

160

 

2067

 

7/24/2006

 

195

 

2137

 

10/6/2006

126

 

2002

 

5/10/2006

 

161

 

2069

 

7/26/2006

 

196

 

2139

 

10/9/2006

127

 

2003

 

5/12/2006

 

162

 

2071

 

7/27/2006

 

197

 

2141

 

10/11/2006

128

 

2006

 

5/15/2006

 

163

 

2073

 

7/31/2006

 

198

 

2143

 

10/12/2006

129

 

2007

 

5/17/2006

 

164

 

2075

 

8/1/2006

 

199

 

2145

 

10/16/2006

130

 

2009

 

5/18/2006

 

165

 

2077

 

8/3/2006

 

200

 

2147

 

10/17/2006

131

 

2010

 

5/22/2006

 

166

 

2079

 

8/4/2006

 

201

 

2149

 

10/19/2006

132

 

2012

 

5/23/2006

 

167

 

2081

 

8/8/2006

 

202

 

2151

 

10/20/2006

133

 

2014

 

5/25/2006

 

168

 

2083

 

8/9/2006

 

203

 

2153

 

10/24/2006

134

 

2016

 

5/26/2006

 

169

 

2085

 

8/11/2006

 

204

 

2155

 

10/25/2006

135

 

2018

 

5/31/2006

 

170

 

2087

 

8/14/2006

 

205

 

2157

 

10/27/2006

136

 

2020

 

6/1/2006

 

171

 

2089

 

8/16/2006

 

206

 

2159

 

10/30/2006

137

 

2022

 

6/5/2006

 

172

 

2091

 

8/17/2006

 

207

 

2161

 

11/1/2006

138

 

2024

 

6/6/2006

 

173

 

2093

 

8/21/2006

 

208

 

2163

 

11/2/2006

139

 

2026

 

6/8/2006

 

174

 

2095

 

8/22/2006

 

209

 

2165

 

11/6/2006

140

 

2028

 

6/9/2006

 

175

 

2097

 

8/24/2006

 

210

 

2167

 

11/7/2006

 

7



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Wichita
737NG Vertical Fin
Master Schedule R-142R2 — continued

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO
BOEING

 

S/S

 

C/L

 

SHIP TO
BOEING

211

 

2169

 

11/9/2006

 

246

 

2239

 

2//2/2007

 

281

 

2309

 

4/18/2007

212

 

2171

 

11/10/2006

 

247

 

2241

 

2/6/2007

 

282

 

2311

 

4/19/2007

213

 

2173

 

11/14/2006

 

248

 

2243

 

2/7/2007

 

283

 

2313

 

4/23/2007

214

 

2175

 

11/15/2006

 

249

 

2245

 

2/9/2007

 

284

 

2315

 

4/24/2007

215

 

2177

 

11/17/2006

 

250

 

2247

 

2/12/2007

 

285

 

2317

 

4/26/2007

216

 

2179

 

11/20/2006

 

251

 

2249

 

2/14/2007

 

286

 

2319

 

4/27/2007

217

 

2181

 

11/22/2006

 

252

 

2251

 

2/15/2007

 

287

 

2321

 

5/1/2007

218

 

2183

 

11/27/2006

 

253

 

2253

 

2/19/2007

 

288

 

2323

 

5/2/2007

219

 

2185

 

11/29/2006

 

254

 

2255

 

2/20/2007

 

289

 

2325

 

5/4/2007

220

 

2187

 

11/30/2006

 

255

 

2257

 

2/22/2007

 

290

 

2327

 

5/7/2007

221

 

2189

 

12/4/2006

 

256

 

2259

 

2/23/2007

 

291

 

2329

 

5/9/2007

222

 

2191

 

12/5/2006

 

257

 

2261

 

2/27/2007

 

292

 

2331

 

5/10/2007

223

 

2193

 

12/7/2006

 

258

 

2263

 

2/28/2007

 

293

 

2333

 

5/14/2007

224

 

2195

 

12/8/2006

 

259

 

2265

 

3/2/2007

 

294

 

2335

 

5/15/2007

225

 

2197

 

12/12/2006

 

260

 

2267

 

3/5/2007

 

295

 

2337

 

5/17/2007

226

 

2199

 

12/13/2006

 

261

 

2269

 

3/7/2007

 

296

 

2339

 

5/18/2007

227

 

2201

 

12/15/2006

 

262

 

2271

 

3/8/2007

 

297

 

2341

 

5/22/2007

228

 

2203

 

12/18/2006

 

263

 

2273

 

3/12/2007

 

298

 

2343

 

5/23/2007

229

 

2205

 

12/20/2006

 

264

 

2275

 

3/13/2007

 

299

 

2345

 

5/25/2007

230

 

2207

 

12/21/2006

 

265

 

2277

 

3/15/2007

 

300

 

2347

 

5/29/2007

231

 

2209

 

1/3/2007

 

266

 

2279

 

3/16/2007

 

301

 

2349

 

5/31/2007

232

 

2211

 

1/4/2007

 

267

 

2281

 

3/20/2007

 

302

 

2351

 

6/1/2007

233

 

2213

 

1/8/2007

 

268

 

2283

 

3/21/2007

 

303

 

2353

 

6/5/2007

234

 

2215

 

1/9/2007

 

269

 

2285

 

3/23/2007

 

304

 

2355

 

6/6/2007

235

 

2217

 

1/11/2007

 

270

 

2287

 

3/26/2007

 

305

 

2357

 

6/8/2007

236

 

2219

 

1/12/2007

 

271

 

2289

 

3/28/2007

 

306

 

2359

 

6/11/2007

237

 

2221

 

1/16/2007

 

272

 

2291

 

3/29/2007

 

307

 

2361

 

6/13/2007

238

 

2223

 

1/17/2007

 

273

 

2293

 

4/2/2007

 

308

 

2363

 

6/14/2007

239

 

2225

 

1/19/2007

 

274

 

2295

 

4/3/2007

 

309

 

2365

 

6/18/2007

240

 

2227

 

1/22/2007

 

275

 

2297

 

4/5/2007

 

310

 

2367

 

6/19/2007

241

 

2229

 

1/24/2007

 

276

 

2299

 

4/6/2007

 

311

 

2369

 

6/21/2007

242

 

2231

 

1/25/2007

 

277

 

2301

 

4/10/2007

 

312

 

2371

 

6/22/2007

243

 

2233

 

1/29/2007

 

278

 

2303

 

4/11/2007

 

313

 

2373

 

6/26/2007

244

 

2235

 

1/30/2007

 

279

 

2305

 

4/13/2007

 

314

 

2375

 

6/27/2007

245

 

2237

 

2/1/2007

 

280

 

2307

 

4/16/2007

 

315

 

2377

 

6/29/2007

 

8



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Wichita
737NG Vertical Fin
Master Schedule R-142R2 — continued

 

S/S

 

C/L

 

SHIP TO
BOEING

 

 

 

 

 

 

 

 

 

 

 

 

316

 

2379

 

7/2/2007

 

 

 

 

 

 

 

 

 

 

 

 

317

 

2381

 

7/5/2007

 

 

 

 

 

 

 

 

 

 

 

 

318

 

2383

 

7/6/2007

 

 

 

 

 

 

 

 

 

 

 

 

319

 

2385

 

7/10/2077

 

 

 

 

 

 

 

 

 

 

 

 

320

 

2387

 

7/11/2007

 

 

 

 

 

 

 

 

 

 

 

 

321

 

2389

 

7/13/2007

 

 

 

 

 

 

 

 

 

 

 

 

322

 

2391

 

7/16/2007

 

 

 

 

 

 

 

 

 

 

 

 

323

 

2393

 

7/18/2007

 

 

 

 

 

 

 

 

 

 

 

 

324

 

2395

 

7/19/2007

 

 

 

 

 

 

 

 

 

 

 

 

325

 

2397

 

7/23/2007

 

 

 

 

 

 

 

 

 

 

 

 

326

 

2399

 

7/25/2007

 

 

 

 

 

 

 

 

 

 

 

 

 

9



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

THE BALANCE OF THIS SCHEDULE IS FOR PLANNING PURPOSES ONLY

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

1

 

8/1/2007

 

41

 

11/1/2007

 

81

 

4/1/2008

2

 

8/1/2007

 

42

 

11/1/2007

 

82

 

4/1/2008

3

 

8/1/2007

 

43

 

11/1/2007

 

83

 

4/1/2008

4

 

8/1/2007

 

44

 

11/1/2007

 

84

 

4/1/2008

5

 

8/1/2007

 

45

 

11/1/2007

 

85

 

4/1/2008

6

 

8/1/2007

 

46

 

12/1/2007

 

86

 

4/1/2008

7

 

8/1/2007

 

47

 

12/1/2007

 

87

 

4/1/2008

8

 

8/1/2007

 

48

 

12/1/2007

 

88

 

4/1/2008

9

 

8/1/2007

 

49

 

12/1/2007

 

89

 

4/1/2008

10

 

8/1/2007

 

50

 

12/1/2007

 

90

 

4/1/2008

11

 

8/1/2007

 

51

 

1/1/2008

 

91

 

4/1/2008

12

 

8/1/2007

 

52

 

1/1/2008

 

92

 

5/1/2008

13

 

9/1/2007

 

53

 

1/1/2008

 

93

 

5/1/2008

14

 

9/1/2007

 

54

 

1/1/2008

 

94

 

5/1/2008

15

 

9/1/2007

 

55

 

1/1/2008

 

95

 

5/1/2008

16

 

9/1/2007

 

56

 

1/1/2008

 

96

 

5/1/2008

17

 

9/1/2007

 

57

 

1/1/2008

 

97

 

5/1/2008

18

 

9/1/2007

 

58

 

1/1/2008

 

98

 

5/1/2008

19

 

9/1/2007

 

59

 

2/1/2008

 

99

 

5/1/2008

20

 

9/1/2007

 

60

 

2/1/2008

 

100

 

5/1/2008

21

 

9/1/2007

 

61

 

2/1/2008

 

101

 

6/1/2008

22

 

9/1/2007

 

62

 

2/1/2008

 

102

 

6/1/2008

23

 

9/1/2007

 

63

 

2/1/2008

 

103

 

6/1/2008

24

 

10/1/2007

 

64

 

2/1/2008

 

104

 

6/1/2008

25

 

10/1/2007

 

65

 

2/1/2008

 

105

 

6/1/2008

26

 

10/1/2007

 

66

 

2/1/2008

 

106

 

6/1/2008

27

 

10/1/2007

 

67

 

2/1/2008

 

107

 

6/1/2008

28

 

10/1/2007

 

68

 

2/1/2008

 

108

 

6/1/2008

29

 

10/1/2007

 

69

 

2/1/2008

 

109

 

6/1/2008

30

 

10/1/2007

 

70

 

3/1/2008

 

110

 

7/1/2008

31

 

10/1/2007

 

71

 

3/1/2008

 

111

 

7/1/2008

32

 

10/1/2007

 

72

 

3/1/2008

 

112

 

7/1/2008

33

 

10/1/2007

 

73

 

3/1/2008

 

113

 

7/1/2008

34

 

10/1/2007

 

74

 

3/1/2008

 

114

 

7/1/2008

35

 

11/1/2007

 

75

 

3/1/2008

 

115

 

7/1/2008

36

 

11/1/2007

 

76

 

3/1/2008

 

116

 

7/1/2008

37

 

11/1/2007

 

77

 

3/1/2008

 

117

 

7/1/2008

38

 

11/1/2007

 

78

 

3/1/2008

 

118

 

8/1/2008

39

 

11/1/2007

 

79

 

3/1/2008

 

119

 

8/1/2008

40

 

11/1/2007

 

80

 

3/1/2008

 

120

 

8/1/2008

 

10



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

THE BALANCE OF THIS SHCEDULE IS FOR PLANNING PURPOSES ONLY

 

C/L

 

SHIP TO
RENTON

 

C/L

 

SHIP TO
RENTON

121

 

8/1/2008

 

161

 

1/1/2009

122

 

8/1/2008

 

162

 

1/1/2009

123

 

8/1/2008

 

163

 

1/1/2009

124

 

8/1/2008

 

164

 

1/1/2009

125

 

8/1/2008

 

165

 

2/1/2009

126

 

8/1/2008

 

166

 

2/1/2009

127

 

9/1/2008

 

167

 

2/1/2009

128

 

9/1/2008

 

168

 

2/1/2009

129

 

9/1/2008

 

169

 

2/1/2009

130

 

9/1/2008

 

170

 

2/1/2009

131

 

9/1/2008

 

171

 

2/1/2009

132

 

9/1/2008

 

172

 

2/1/2009

133

 

9/1/2008

 

173

 

3/1/2009

134

 

9/1/2008

 

174

 

3/1/2009

135

 

9/1/2008

 

175

 

3/1/2009

136

 

10/1/2008

 

176

 

3/1/2009

137

 

10/1/2008

 

177

 

3/1/2009

138

 

10/1/2008

 

178

 

3/1/2009

139

 

10/1/2008

 

179

 

3/1/2009

140

 

10/1/2008

 

180

 

3/1/2009

141

 

10/1/2008

 

181

 

4/1/2009

142

 

10/1/2008

 

182

 

4/1/2009

143

 

10/1/2008

 

183

 

4/1/2009

144

 

10/1/2008

 

184

 

4/1/2009

145

 

11/1/2008

 

 

 

End of Production

146

 

11/1/2008

 

 

 

 

147

 

11/1/2008

 

 

 

 

148

 

11/1/2008

 

 

 

 

149

 

11/1/2008

 

 

 

 

150

 

11/1/2008

 

 

 

 

151

 

11/1/2008

 

 

 

 

152

 

11/1/2008

 

 

 

 

153

 

12/1/2008

 

 

 

 

154

 

12/1/2008

 

 

 

 

155

 

12/1/2008

 

 

 

 

156

 

12/1/2008

 

 

 

 

157

 

1/1/2009

 

 

 

 

158

 

1/1/2009

 

 

 

 

159

 

1/1/2009

 

 

 

 

160

 

1/1/2009

 

 

 

 

 

11


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Wichita/Tulsa KAI 737 HS & VF Support Schedule
2005-2008

 

The support schedule below represents the support schedule currently agreed to by both parties; it is subject to change by Boeing based on program requirements.  Support schedule will be maintained on a rolling 90 day notification process.

 

 

 

Assembly Support:

 

Program Support:

2005

 

 

 

 

 

 

 

 

 

May:

 

1 Person (15 days in-plant)

 

1 Person (3 days in-plant)

June:

 

2 People (5 days each in-plant)

 

1 Person (3 days in-plant)

July:

 

2 People (5 days each in-plant)

 

3 People (3 days each in-plant)

Aug:

 

3 People (5 days each in-plant)

 

1 Person (3 days in-plant)

Sep:

 

2 People (10 days each in-plant)

 

1 Person (5 days in-plant)

Oct:

 

2 People (10 days each in-plant)

 

2 People (3 days each in-plant)

Nov:

 

1 Person (10 days in-plant)

 

4 People (3 days each in-plant)

 

 

 

 

 

2006 :

 

 

 

 

 

 

 

 

 

1st Qtr.

 

2 People (10 days each in-plant

 

8 People (5 days each in-plant)

2nd Qtr.

 

1 Person (5 days in-plant)

 

2 People (5 days each in-plant)

3rd Qtr.

 

2 People (5 days each in-plant)

 

6 People (5 days each in-plant)

4th Qtr.

 

No Planned Support

 

No Planned Support

 

 

 

 

 

2007 :

 

 

 

 

 

 

 

 

 

1st Qtr.

 

No Planned Support

 

2 People (5 days each in-plant)

2nd Qtr.

 

4 People (5 days each in-plant

 

4 People (5 days each in-plant)

3rd Qtr.

 

No Planned Support

 

4 People (5 days each in-plant)

4th Qtr.

 

4 People (5 days each in-plant)

 

4 People (5 days each in-plant)

 

 

 

 

 

2008 :

 

 

 

 

 

 

 

 

 

1st Qtr.

 

4 People (5 days each in-plant)

 

4 People (5 days each in-plant)

2nd Qtr.

 

No Planned Support

 

No Planned Support

3rd Qtr.

 

4 People (5 days each in-plant)

 

6 People (5 days each in-plant)

4th Qtr.

 

4 People (5 days each in-plant)

 

4 People (5 days each in-plant)

 

12



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

2) Turkey - Lot Time Hardware

 

·                                           Obligation for Wichita to subcontract statement of work as identified in the below referenced plan.

·                                           Offload to TAI or other suppliers in Turkey

·                                           Wichita offloading in Five (5) phases of lot time work.

·                                           The work packages are identified below to denote the scope of work and dollar amounts.  It is not Boeing’s intent to manage the work statement and individual part numbers.  For the avoidance of doubt, the intent is that Seller agrees to offload the parts in these work packages to Turkey or place parts of equivalent estimated value

 

The key elements of the Turkey Program are:

 

I.     Define the work statement using the following WTP numbers:

 

WTP B2000- 341 - Package #1
WTP B2000- 416 - Package #2
WTP B2000- 322 - Package #3
WTP B2001- 420 - Package #4
WTP B2001- 425 - Package #5

 

Additionally, Attachment TP 1 (below) describes the number of parts per package.

 

II.    Continue to provide financial actuals to BCAG Finance for Industrial Participation (IP) reporting purposes.  Wichita Seller will not be responsible for calculating Turkish Added Value (TAV); however they need to be aware of the TAV contractual requirements levied on the Boeing Company.  Boeing is required to have a minimum of 30% TAV on hardware deliveries during the years 2003 to mid-2006; 35% during mid-2006 to mid-2009; and 40% on shipments beyond 2009.

 

III.  Maintain the functions of the current management team supporting the IP program and the direct relationships that have been established.  For the period commencing on the date of this SBP and ending at first article shipment of the last detail part of WTP B2001-425-package number 5, Boeing shall reimburse Seller for the reasonable travel costs incurred by such management team.  Travel costs shall include airfare between the U.S. and Turkey, hotels, meals and car rental costs consistent with Seller’s standard travel practices and shall not exceed the cost of Boeing’s ordinary travel practices.  Seller shall promptly submit invoices to Boeing substantiating costs for which Seller seeks reimbursement.  Such invoices shall be paid by Boeing in accordance with Paragraph 5.0.  Boeing shall pay for any travel to, and support to, Turkey.  The IP manager for Turkey, the procurement organizations and the work transfer group, finance and quality assurance.  All of these organizations are involved in the IP program for Turkey and we want to maintain these direct relationships as opposed to working through other entities.

 

13



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Turkey Work Packages

 

TAI Package #1

 

Model

 

Phase

 

Package

 

ACC

 

Assy’s

 

FAB

 

POP

 

IWA

 

737

 

2

 

216

 

 

 

33

 

47

 

62

 

1

 

737

 

2

 

217

 

 

 

89

 

274

 

138

 

11

 

737

 

2

 

218

 

 

 

14

 

27

 

40

 

2

 

737

 

3

 

301

 

 

 

10

 

21

 

9

 

0

 

767

 

2

 

222

 

 

 

7

 

0

 

20

 

8

 

767

 

2

 

223

 

 

 

4

 

8

 

4

 

1

 

767

 

2

 

224

 

 

 

6

 

0

 

18

 

0

 

767

 

2

 

232

 

 

 

1

 

0

 

2

 

0

 

767

 

2

 

233

 

 

 

79

 

196

 

135

 

17

 

777

 

2

 

226

 

 

 

69

 

378

 

81

 

3

 

777

 

2

 

227

 

 

 

5

 

20

 

0

 

2

 

777

 

2

 

228

 

 

 

34

 

79

 

19

 

0

 

Totals

 

 

 

12

 

 

 

351

 

1050

 

528

 

45

 

 

TAI Package #2

 

Model

 

Phase

 

Package

 

ACC

 

Assy’s

 

FAB

 

POP

 

IWA

 

737

 

2

 

215

 

 

 

62

 

83

 

73

 

0

 

737

 

3

 

302

 

 

 

72

 

64

 

122

 

23

 

737

 

3

 

307

 

 

 

63

 

196

 

149

 

8

 

737

 

3

 

310

 

 

 

26

 

24

 

144

 

0

 

737

 

4

 

2

 

 

 

0

 

0

 

0

 

13

 

737

 

4

 

9

 

 

 

28

 

64

 

38

 

6

 

737

 

4

 

24

 

 

 

9

 

64

 

16

 

0

 

747

 

2

 

229

 

 

 

40

 

67

 

25

 

4

 

Totals

 

 

 

8

 

 

 

300

 

562

 

567

 

 

 

 

TAI Package #3

 

Model

 

Phase

 

Package

 

ACC

 

Assy’s

 

FAB

 

POP

 

IWA

 

737

 

5

 

6

 

 

 

251

 

376

 

453

 

30

 

737

 

5

 

9

 

 

 

37

 

38

 

75

 

11

 

737

 

5

 

13

 

 

 

19

 

22

 

58

 

15

 

737

 

5

 

16

 

 

 

49

 

116

 

32

 

4

 

737

 

5

 

19

 

 

 

17

 

39

 

48

 

1

 

737

 

5

 

27

 

 

 

14

 

11

 

19

 

7

 

737

 

5

 

38

 

 

 

12

 

24

 

0

 

0

 

747

 

5

 

41

 

 

 

36

 

50

 

42

 

0

 

767

 

2

 

221

 

 

 

7

 

7

 

6

 

0

 

767

 

3

 

309

 

 

 

122

 

437

 

76

 

4

 

767

 

3

 

314

 

 

 

50

 

110

 

50

 

4

 

777/767

 

3

 

308

 

 

 

20

 

53

 

41

 

24

 

Totals

 

 

 

13

 

 

 

634

 

1283

 

900

 

100

 

 

14



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Turkey Work Packages — continued

 

TAI Package #4

 

Model

 

Phase

 

Package

 

ACC

 

Assy’s

 

FAB

 

POP

 

IWA

 

737

 

3

 

318

 

 

 

22

 

48

 

33

 

0

 

737

 

4

 

25

 

 

 

5

 

3

 

14

 

0

 

737

 

4

 

27

 

 

 

4

 

4

 

7

 

0

 

737

 

4

 

36

 

 

 

0

 

6

 

0

 

0

 

737

 

4

 

39

 

 

 

46

 

69

 

132

 

5

 

737

 

5

 

1

 

 

 

22

 

25

 

35

 

6

 

737

 

5

 

5

 

 

 

37

 

32

 

50

 

12

 

747

 

1

 

202

 

 

 

37

 

50

 

54

 

0

 

747

 

3

 

305

 

 

 

11

 

36

 

34

 

0

 

747

 

3

 

316

 

 

 

64

 

78

 

91

 

0

 

747

 

4

 

45

 

 

 

19

 

39

 

22

 

1

 

767

 

1

 

213

 

 

 

87

 

255

 

99

 

4

 

767

 

2

 

220

 

 

 

68

 

100

 

97

 

26

 

777

 

1

 

206

 

 

 

8

 

20

 

2

 

0

 

Totals

 

 

 

14

 

 

 

430

 

765

 

670

 

54

 

 

TM Package #5

 

Model

 

Phase

 

Package

 

ACC

 

Assy’s

 

FAB

 

POP

 

IWA

 

737

 

3

 

304

 

 

 

23

 

54

 

7

 

0

 

737

 

3

 

321

 

 

 

4

 

7

 

6

 

6

 

737

 

3

 

323

 

 

 

8

 

13

 

6

 

0

 

737

 

4

 

21

 

 

 

4

 

4

 

4

 

0

 

737

 

4

 

41

 

 

 

3

 

3

 

8

 

2

 

737

 

4

 

42

 

 

 

6

 

12

 

7

 

0

 

737

 

4

 

43

 

 

 

3

 

14

 

3

 

0

 

737

 

5

 

87

 

 

 

13

 

24

 

34

 

0

 

737

 

5

 

88

 

 

 

3

 

3

 

2

 

1

 

747

 

3

 

300

 

 

 

28

 

61

 

22

 

6

 

747

 

4

 

46

 

 

 

6

 

19

 

16

 

0

 

747

 

4

 

49

 

 

 

9

 

8

 

12

 

0

 

747

 

4

 

54

 

 

 

69

 

93

 

127

 

6

 

747

 

4

 

58

 

 

 

16

 

2

 

29

 

0

 

747

 

5

 

44

 

 

 

57

 

170

 

60

 

9

 

747

 

5

 

45

 

 

 

54

 

145

 

50

 

0

 

777

 

3

 

303

 

 

 

7

 

13

 

3

 

0

 

777

 

3

 

312

 

 

 

23

 

60

 

16

 

0

 

777

 

3

 

313

 

 

 

42

 

127

 

32

 

0

 

777

 

3

 

317

 

 

 

33

 

51

 

17

 

2

 

777

 

3

 

319

 

 

 

50

 

101

 

0

 

0

 

777

 

3

 

320

 

 

 

8

 

0

 

0

 

18

 

777

 

3

 

325

 

 

 

11

 

16

 

19

 

4

 

777

 

4

 

88

 

 

 

3

 

34

 

2

 

0

 

777

 

4

 

89

 

 

 

64

 

130

 

38

 

0

 

777

 

4

 

100

 

 

 

12

 

18

 

13

 

9

 

777

 

4

 

102

 

 

 

16

 

18

 

32

 

0

 

777

 

4

 

103

 

 

 

26

 

48

 

20

 

11

 

Totals

 

 

 

30

 

 

 

601

 

1248

 

585

 

74

 

 

15



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Turkey Work Packages — continued

 

Package Summary

 

 

 

Pkg 1

 

Pkg 2

 

Pkg 3

 

Pkg 4

 

Pkg 5

 

Total

 

737

 

146

 

233

 

399

 

136

 

67

 

981

 

747

 

0

 

40

 

36

 

131

 

239

 

446

 

767

 

97

 

0

 

179

 

155

 

0

 

431

 

777

 

108

 

0

 

20

 

8

 

295

 

431

 

Total

 

351

 

273

 

634

 

430

 

601

 

2289

 

 

16


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3) China737 Tailcone

 

·                   Work transfer [*****]

 

·                   This part number will transition from a Seller build to a Boeing Puget Sound Global Partners purchased item.

 

·                   Boeing Puget Sound Global Partners will have responsibility for entering into and maintaining a contract with the target supplier for this work transfer.  In the event that Boeing requests that Seller travel to China for purposes of providing support in China, Boeing shall reimburse Seller for the reasonable travel costs incurred by Seller’s employees.  Travel costs shall include airfare between the U.S. and China, hotels, meals and car rental costs consistent with Seller’s standard travel practices and shall not exceed the cost of Boeing’s ordinary travel practices.  Seller shall promptly submit invoices to Boeing substantiating costs for which Seller seeks reimbursement. Such invoices shall be paid by Boeing in accordance with Paragraph 5.0.

 

This part number will be removed from Attachment 1 of this SBP and Boeing will have no further obligation to purchase part number from Seller at the conclusion of this work transfer. The schedule and hardware quantities are subject to change support program requirements. Such changes will be made in accordance with the terms of paragraph 7.5 of the Special Business Provisions.

 

·                   For each 737 airplane delivered by Boeing after the date this SBP is fully executed and through the duration of this SBP, Boeing will make a payment to Spirit AeroSystems Inc. in the amount of [*****] where: (i) Spirit AeroSystems Inc. does not produce and/or supply to Boeing a Tailcone for use on the 737 aircraft delivered and (ii) Boeing obtains and installs on the 737 aircraft delivered a Tailcone from a source other than Spirit AeroSystems Inc.

 

·                   Reference WTM item 613.

 

17



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Schedule for 737 Tailcone for Wichita

 

Month

 

Wichita Delivery Quantity

Jan-05

 

19

Feb-05

 

20

Mar-05

 

20

Apr-05

 

19

May-05

 

21

Jun-05

 

20

Jul-05

 

23

Aug-05

 

21

Sep-05

 

21

Oct-05

 

20

Nov-05

 

19

Dec-05

 

24

Jan-06

 

24

Feb-06

 

24

Mar-06

 

24

Apr-06

 

24

May-06

 

21

Jun-06

 

21

Jul-06

 

21

Aug-06

 

21

Sep-06

 

21

Oct-06

 

21

Nov-06

 

21

Dec-06

 

21

Jan-07

 

14

Feb-07

 

14

Mar-07

 

14

Apr-07

 

14

May-07

 

14

Jun-07

 

10

Jul-07

 

10

Aug-07

 

10

Sep-07

 

10

Oct-07

 

10

Nov-07

 

10

Dec-07

 

10

Jan-08

 

0

Feb-08

 

0

Mar-08

 

0

Apr-08

 

0

 

 

651

 

Additionally, Boeing receives Market Access credit through the Wichita, Tulsa and McAlester sites as follows:

 

18



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Australia:  Tulsa / Wichita
Canada:  Tulsa / Wichita
China:
Europe/NATO
France-Wichita / Tulsa
India:
South Africa:
South Korea: Wichita / Tulsa
United Kingdom:  Wichita / Tulsa
Russia

 

19



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 13 TO

SPECIAL BUSINESS PROVISIONS

 

RESERVED

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 14 TO

SPECIAL BUSINESS PROVISIONS

 

PRODUCTION ARTICLE DELIVERY SCHEDULE

(Reference SBP Section 3.3.2, 3.3.4, 3.4.1)

 

MASTER SCHEDULE**

 

737 R160R1

747 E144R2

767 T123R1

777 U50R13

 

To be provided by Boeing for Products Delivered via manual FOB Master

Schedule.  All other products schedules via the Order.

 


**Each time a master schedule firing order for the model 737, 747, 767 & 777 Program is released, Boeing will furnish Seller with a copy.  Seller will use that information to determine the airplane configuration for each line number .

 

1


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 15 TO
SPECIAL BUSINESS PROVIONS

 

MAXIMUM PRODUCTION RATE
And MODEL MIX CONSTRAINT MATRIX
(Reference SBP Section 7.5.1)

 

SBP Attachment 15

 

 

 

Monthly

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

 

 

 

 

Engines

 

 

 

 

Protection

 

Wichita

 

STRUCTURES

 

 

 

Units

 

 

 

PSD

 

 

MODELS

 

Rate

 

Capacity

 

MIX

 

Separation

 

Skin Polish

 

Protection

 

WCH Capacity

737

 

[*****]Units

 

[*****] Units

 

 

 

 

 

 

 

 

 

[*****]

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

 

 

[*****]

 

 

 

 

 

[*****]

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

NOTE:  The number of [*****]and [*****] model airplanes shown above reflect a total capability of [*****] and reflect the number of [*****] model airplanes which can be manufactured with a  corresponding reduction in the number of [*****] model airplanes.  [*****] of separation is preferred and [*****] US may be required between [*****] model units, to ensure [*****] production is achievable within a given month for [*****].  Production capacity and combinations of [*****] and [*****] models are limited to a total of [*****] with [*****] of separation as defined in the matrix above.  The combinations in the matrix above reflect the number of [*****] airplanes that can be produced with a corresponding reduction in [*****] Models.

 

[*****] Rate Schedules above [*****].

 

[*****] Fin, Stabilizer and Section 48 Sub-Assembly have been removed.  Spirit no longer manufactures these products.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

MODELS

 

Monthly

 

Wichita

 

MIX

 

STRUCTURES

 

Engine - Protection Rates

 

 

 

 

 

 

 

 

 

 

 

 

Units

 

 

 

 

 

 

 

 

 

 

747

 

[*****] Units

 

[*****] Units

 

[*****]

 

Separation

 

Skin Polish

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

Units

 

 

 

 

 

 

 

 

 

 

767

 

[*****] Units

 

[*****] Units

 

MIX

 

eparation

 

Skin Polish

 

 

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

Units

 

 

 

 

 

 

 

 

 

 

777

 

[*****] Units

 

[*****] Units

 

MIX

 

Separation

 

Skin Polish

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

TOTAL UNITS

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEGEND

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*****]

 

 

 

 

 

 

 

 

 

 

 

BOEING - SPIRIT PROPRIETARY

 

Skin Fab Polish Program Matrix

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

[*****]

 

[*****]

 

[*****]

 

2


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

 

BOEING PROVIDED DETAILS (BPD)
AND SUPPLIER BANKED MATERIAL (SBM)

(Reference clause 12.13.1)

 

A.                                     Supplier Banked Material (SBM) :

 

Requirements managed per Bonded Stores Agreement (BSA) dated
February 1, 2006.

 

SUPPLIER BANK MATERIAL (SBM)

 

Product
Number

 

Program

 

Description

 

Quantity
per S/S

[*****]

 

[*****]

 

WEAPONS BAY DOOR ASSY, LEFT

 

[*****]

[*****]

 

[*****]

 

WEAPONS BAY DOOR ASSY, RIGHT

 

[*****]

[*****]

 

[*****]

 

SEAL, ACCESS PANEL

 

[*****]

[*****]

 

[*****]

 

Hydraulic Power Drive Unit (HPDU)

 

[*****]

[*****]

 

[*****]

 

Manual Drive Shaft

 

[*****]

[*****]

 

[*****]

 

Angle Gearbox, LH

 

[*****]

[*****]

 

[*****]

 

Angle Gearbox, RH

 

[*****]

[*****]

 

[*****]

 

Torque Shaft

 

[*****]

[*****]

 

[*****]

 

Link Assy

 

[*****]

[*****]

 

[*****]

 

Rotary Geared Actuator (RGA)

 

[*****]

[*****]

 

[*****]

 

Torque Shaft

 

[*****]

[*****]

 

[*****]

 

Torque Shaft

 

[*****]

[*****]

 

[*****]

 

Torque Shaft

 

[*****]

[*****]

 

[*****]

 

Torque Shaft

 

[*****]

[*****]

 

[*****]

 

Torque Coupler

 

[*****]

[*****]

 

[*****]

 

IDG TO BREAKAWAY CONNECTOR - LEFT ENGINE POWER

 

[*****]

[*****]

 

[*****]

 

IDG TO BREAKAWAY CONNECTOR - RIGHT ENGINE POWER

 

[*****]

[*****]

 

[*****]

 

Inboard Actuator Tray Assy (LHS)

 

[*****]

[*****]

 

[*****]

 

Center Actuator Tray Assy (LHS)

 

[*****]

[*****]

 

[*****]

 

Outboard Actuator Tray Assy (LHS)

 

[*****]

[*****]

 

[*****]

 

Inboard Actuator Tray Assy (RHS)

 

[*****]

[*****]

 

[*****]

 

Center Actuator Tray Assy (RHS)

 

[*****]

[*****]

 

[*****]

 

Outboard Actuator Tray Assy (RHS)

 

[*****]

[*****]

 

[*****]

 

ESB (1 per side)

 

[*****]

[*****]

 

[*****]

 

Cable Harness ESB to LEAS, H-Stab

 

[*****]

[*****]

 

[*****]

 

Cable Harness ESB to Inboard LEA, H-Stab

 

[*****]

[*****]

 

[*****]

 

RR Probe

 

[*****]

[*****]

 

[*****]

 

PW Probe

 

[*****]

[*****]

 

[*****]

 

GE 90 Sensor

 

[*****]

[*****]

 

[*****]

 

GE 90 Gasket

 

[*****]

[*****]

 

[*****]

 

GE 90 Damper

 

[*****]

[*****]

 

[*****]

 

GE 90 Harness

 

[*****]

[*****]

 

[*****]

 

GE 90 Harness

 

[*****]

[*****]

 

[*****]

 

GE 115 Sensor

 

[*****]

[*****]

 

[*****]

 

GE 115 Gasket

 

[*****]

[*****]

 

[*****]

 

GE 115 Damper

 

[*****]

[*****]

 

[*****]

 

GE 115 Harness

 

[*****]

[*****]

 

[*****]

 

GE 115 Harness

 

[*****]

[*****]

 

[*****]

 

Bracket for Prox. Sensor

 

[*****]

[*****]

 

[*****]

 

Bracket for Prox. Sensor

 

[*****]

[*****]

 

[*****]

 

Grommet

 

[*****]

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

[*****]

 

[*****]

 

Hose

 

[*****]

[*****]

 

[*****]

 

Valve

 

[*****]

[*****]

 

[*****]

 

Weapons Bay Door Set of Parts

 

[*****]

 

B.                                     Boeing Provided Details (BPD )

 

This SBP Attachment 16 identifies Boeing Provided Details (parts) and their associated purchase price which are currently being provided to Seller.

 

Per SBP Attachment 20 the intent is for Seller to re-source all BPD’s per the agreed to transfer plan.

 

Seller shall provide Boeing with discreet schedules (lead-time away) which depicts Seller’s requirements for these parts until such time as the parts have been resourced.  The identified transfer price for each BPD, excluding ATA stringers, will be adjusted periodically to reflect Boeing’s then current fully burdened cost.

 

Notwithstanding the foregoing, the prices associated with parts sourced from Boeing’s Winnipeg operations will be subject to any subsequent pricing agreement established directly between Seller and Boeing Winnipeg.

 

Attachment 16 will continue to be updated / revised to reflect any additional identified BPD or work transfer activity.

 

[Note:  Attachment 16 BPD Parts list and Prices provided under separate file due to size.]

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 17 TO
SPECIAL BUSINESS PROVISIONS

 

Reserved

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 18 TO
SPECIAL BUSINESS PROVISIONS

 

Reserved

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 19 TO
SPECIAL BUSINESS PROVISIONS

 

Reserved

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 20 TO
SPECIAL BUSINESS PROVISIONS

 

QUANTITY BASED PRICE ADJUSTMENT FORMULA

 

This attachment sets forth the methodology used to calculate the annual Unit Billing Prices which shall be reflected along with the Base Prices within Attachment 1.

 

A)            Definitions :

 

Airplane Program — refers to Boeing aircraft designation (e.g. 737, 747, 767, and 777).

 

Part Number — an alpha numeric designation for each unique product manufactured.

 

Unit Billing Price — Price to be paid for each separate Part Number delivered in a specified calendar year based on the airplane quantities and price reduction tables.

 

Airplane Production Quantity Tables — A series of tables that outline a “Tier Level” based on airplane production quantities.

 

Tier Level — A designation given to represent a specific range of airplane program production quantities.

 

Quantity Based Price Reduction Percentage Table — A table which assigns a discount percentage based on Tier Level.

 

Base Price — Part Number pricing prior to application of quantity based discount percentage.  Base Prices (by calendar year) will be included in Attachment 1 and unlike Unit Billing Prices, will not be updated annually to reflect changes in production quantities.

 

Firing Order — Boeing published schedules which depict airplane manufacturing, shop completion and delivery dates for each unique aircraft produced.

 

BPD — Boeing Provided Details are Detailed Part Numbers used by the supplier in the completion of its end-item Statement of Work sold to Boeing under this contract.  Seller purchases BPD’s from Boeing.

 

B)            Unit Pricing — Methodology

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1)                                      Boeing will utilize the Airplane Production Quantity Tables as contained within this Attachment 20 to determine total number of aircraft which fall within each Tier Level and the Quantity Based Price Reduction Percentage Table to determine the price reduction to the base unit prices.

 

2)                                      Each year, approximately sixty days prior to the anniversary of the first day of the month in which both parties fully execute this SBP, Boeing will use the most recently published Firing Orders to determine the total forecasted airplane production quantities for all Airplane Programs for the 12 month period immediately following the anniversary of the first day of the month in which both parties fully execute this SBP.  This total production quantity will include all aircraft scheduled for shop completion at Boeing during the aforementioned 12 month period as reflected in these Firing Orders.

 

3)                                      Boeing will utilize the Airplane Production Quantity Tables as contained within this Attachment 20 to determine total number of aircraft which fall within each Tier Level.

 

4)                                      Boeing will utilize the Quantity Based Price Reduction Percentage Table to calculate a weighted average percentage reduction for use in determining Unit Billing Prices.

 

5)                                      Boeing will update Attachment 1 approximately 30 days prior to the anniversary of the first day of the month in which both parties fully execute this SBP to include new Unit Billing Prices as calculated above for use during the following 12 month period.

 

6)                                      Updated Attachment 1 Unit Billing Prices will be utilized by Seller for billing throughout this 12 month period.

 

7)                                      Each year, a review of the actual airplane deliveries will occur approximately 30 days after the anniversary of the first day of the month in which both parties fully execute this SBP.  If there is a deviation from forecasted production quantities to actual production quantities, a reconciliation lump sum payment or credit will be processed by Buyer and Seller.

 

2


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

C)                                    Unit Pricing — Calculation Tables

 

1)            Airplane Production Quantity Tables ( Table 1 ):

 

737/747/767/777 Total Airplane Production Quantities

Per Year

 

Tier 1

 

Tier 2

 

Tier 3

[*****]

 

[*****]

 

[*****]

 

2)            Quantity Based Price Reduction Percentage Table ( Table 2 ):

 

Tier
Level

 

Period
1

 

Period
2

 

Period
3

 

Period
4

 

Period
5

 

Period
6

 

Period
7

 

Period
8

Tier 1

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

Tier 2

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

Tier 3

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

Each of the Periods within Table 2 will be of 12 month duration and will immediately succeed the prior period.  The combined eight years for these eight periods will be equal to the period of firm fixed pricing identified in SBP 4.1.

 

Period 1 will begin on the first day of the month in which both parties fully execute this SBP and will end 12 months later.  Period 8 will end on the day before the eighth anniversary of the first day of the month in which both parties fully execute this SBP.  For example, if Period 1 begins on April 1, 2005 then Period 8 will end on March 31, 2013.

 

D)                                    Unit Pricing — Billing Price Formula :

 

The formula to be used in the calculation of the Unit Billing Price for each Part Number is:

 

P

:Unit Billing Price

A

:Tier 1 Percent (as reflected Table 2 above)

B

:Tier 2 Percent (as reflected in Table 2 above)

C

:Tier 3 Percent (as reflected in Table 2 above)

D

:Target year Annual Airplane Production Total Quantity

E

:Tier 1 airplane quantity (Table 1)

F

:Tier 2 airplane quantity (Table 1)

G

:Tier 3 airplane quantity (Table 1)

H

:Base Unit Price (as reflected in Attachment 1)

 

 

[*****]

 

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Note:  Discounted Pricing for Part Numbers who’s Unit Yearly Billing Price is greater than $200 shall be rounded to the nearest dollar.  Discounted Pricing for Part Numbers who’s Unit Yearly Billing Price is equal to or less than $200 shall be rounded to the nearest cent.

 

E)                                    Unit Pricing — Example :

 

This example will calculate a hypothetical Unit Billing Price for a Part Number with a Base Price of [*****] for Period 3, assuming it is the 12 month period from April 1, 2007 through March 31, 2008.

 

1)            On February 1, 2007 Boeing reviews the most recently published Firing Orders and determines that a total of [*****] aircraft are scheduled to be Boeing Shop Complete between April 1, 2007 and March 31, 2008.

 

2)            Boeing utilizes the “Attachment 20” Airplane Production Quantity Table to determine that the numbers of aircraft which fall into each Tier Level are as follows:

 

Tier 1 Airplanes

 

Tier 2 Airplanes

 

Tier 3 Airplanes

[*****]

 

[*****]

 

[*****]

 

3)            Boeing utilizes the Quantity Based Price Reduction Percentage Table to identify the appropriate discount percentages to be used for Period 3 Unit Billing Prices for each Tier Level.

 

4)            Boeing utilizes the Unit Billing Price Formula and the information retrieved from Attachment 1 and Tables 1 and 2 as reflected below to calculate the appropriate Unit Billing Price for this Part Number for Period 3.

 

H

:Base Price (as reflected in Attachment 1)

[*****]

A

:Tier 1 Percent (as reflected in Table 2 above)

[*****]

B

:Tier 2 Percent (as reflected in Table 2 above)

[*****]

C

:Tier 3 Percent (as reflected in Table 2 above)

[*****]

D

:Annual Airplane Production Total Quantity

[*****]

E

:Tier 1 airplane quantity (Table 1)

[*****]

F

:Tier 2 airplane quantity (Table 1)

[*****]

G

:Tier 3 airplane quantity (Table 1)

[*****]

 

 

 

[*****]

 

 

 

[*****]

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

P              :Unit Billing Price  =   [*****]

 

5)            Boeing will utilize this same methodology to re-calculate Period 3 Unit Billing Prices for all Part Numbers contained within Attachment 1.  Attachment 1 will be updated to reflect new Unit Billing Prices for Period 3 and provided to Seller.

 

6)            Seller will utilize revised Attachment 1 for billing throughout Period 3.

 

5



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

F)                                     Boeing Provided Details (BPD) — Cost Savings Process

 

Introduction:

 

Boeing and Seller expect that cost reductions may be accomplished by moving from Boeing facilities the BPD’s related to Seller’s Products and renegotiating certain outside material and parts supply contracts related to Seller’s Products.  The BPD’s will be transitioned from Boeing to Seller based on a mutually agreed plan.

 

Items Included:

 

·                         All BPD parts are identified in SBP Attachment 16, only the following are required to be outsourced:

 

·                         All BPD produced in [*****] will be outsourced.

 

·                         Only parts that are direct shipped to Wichita/Tulsa are included

 

BPD Savings and Application:

 

·                         Boeing will receive an additional [*****] cost reduction per year starting in the year 2006 to the price reduction percentages depicted in the “Quantity Based Price Reduction Percentage Table” (Table 2 above) for Periods 1 through 8.

 

The application of the [*****] price adjustment shall be made to the “Quantity Based Price Reduction Percentage Table” after the calculation of the quantity based price reduction has occurred, for each of the three tiers.

 

Calculation Example:

 

·                         Reference above example (section E) resulted in an initial price of:

 

[*****]

 

·                         Additional [*****] cost reduction applied to Initial Unit Billing Price resulting in the Final Unit Billing Price.  Final Unit Billing Price = [*****]

 

Billing for BPD Parts not yet transferred from Boeing :

 

·                         Boeing will debit monthly (against current unpaid Seller invoices) the value of all BPD parts delivered in the prior month.  The total value will equal the then current Boeing Unit price as outlined in Attachment 16 multiplied by the quantity of parts delivered to Seller in that month.

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Attachment 16 will be updated periodically by Boeing to reflect the most current Boeing fully burdened cost, except for ATA stringers reference SBP section 12.13.1.1.

 

·                                           This process will remain in effect unless and until an alternate source has been implemented for BPD parts.

 

·                                           Seller will provide Boeing with a 12 month requirements forecast for BPD parts identified for transfer except for any titanium parts which Seller will provide an 18 month forecast.  Seller will also provide no less than four (4) months notification to Boeing prior to alternate source implementation for any BPD part.

 

·                                           BPD Parts are FOB Boeing-dock and will be shipped at Seller cost.

 

Tooling associated with BPD :

 

Only Single use tooling will be made available for transfer to Seller as Boeing accountable tooling.  Single use tooling shall mean any tooling that is used solely for the manufacturing of a single part Number and that is not being utilized by Boeing for any other purpose.

 

Boeing Support of BPD Transfer :

 

Boeing will provide typical supplier technical and outsource support.

 

7



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 21 TO
SPECIAL BUSINESS PROVISIONS

 

COMMODITY LISTING AND TERMS OF SALE

 

(Reference SBP Section 12.13.2)

 

COMMODITY LISTING

 

Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys.

 

Aluminum extrusions, all press size or circle size.

 

Titanium includes all wrought and un-wrought titanium mill products.

 

TERMS OF SALE

 

Parties

 

The Seller is The Boeing Company, acting through its agent, TMX.  The Customer is a Boeing subcontractor, at any tier, who is manufacturing a product in support of a Boeing requirement.

 

Sales

 

All materials to be furnished by Seller are to be within the limits and the sizes published by Seller and subject to Seller’s standard tolerances for variations.  Seller will warrant that all materials to be supplied will conform to the descriptions contained herein and on the face of the purchase order and that Seller will convey good title to any such materials free from any security interest, or other lien or encumbrance held by any other party and unknown to the customer.  THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS AND SELLER WILL MAKE NO OTHER EXPRESS OR IMPLIED WARRANTIES EXCEPT AS STATED HEREIN.  Seller will not be liable for any incidental or consequential damages for any breach of warranty, express or implied.  Seller’s liability and the Customer’s sole and exclusive remedy will be limited at Seller’s option either to (a) return of the materials and repayment of the purchase price, or (b) replacement of nonconforming materials upon return thereof to Seller.  The Customer shall be required to notify Seller in writing of any claim of breach of warranty and no materials shall be returned to Seller by the Customer without Seller’s consent.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

TERMS OF SALE — continued

 

Payment Terms

 

The following payment processes will be followed for material sold to Customer by Seller.  All payments shall be in United States Dollars.

 

DEBIT PROCESS

 

The debit process will be used in all circumstances where the Customer has an account with the Seller.  The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services.  The amount due will be collected by the Seller’s applying a debit to the Customer’s account.  Payment is due on the (net) fifteenth (15 th ) day from the scheduled delivery date.  The debit will be applied to the Seller’s account on the payment due date.  If the debit amount exceeds the amount outstanding on the Customer’s account, the Customer will remit to The Boeing Company the amount due beyond the debit payment due date.  The foregoing debit process does not apply to Sellers who are only performing under orders issued by the Tulsa Division of the Boeing Commercial Airplanes.

 

INVOICE PROCESS

 

The invoice process will be used for Customers not currently making direct sales to Boeing; foreign countries governed by MITI laws and regulations (currently Australia, Brazil, China, India, Japan, and Korea), and orders issued by the Tulsa Division of the Boeing Commercial Airplanes.  The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services.  Payment is due on the (net) thirtieth (30 th ) day after the date of Seller’s invoice, which shall be issued on the day following the date of shipment.

 

DEBIT/INVOICE DISPUTE PROCEDURE

 

Customer may dispute payment amounts due provided that (1) Customer contacts Seller within 25 days of the date of the debit/invoice, (2) Customer provides a complete reason as to the dispute.  If the action is Seller’s to resolve, late payment charges will not be assessed on amounts that are under dispute.  Once a dispute has been resolved, payment terms will be (net) fifteen (15) days from the date of resolution.

 

FAILURE TO PAY

 

In the event Customer fails to make payments when due, Seller reserves the right to assert whatever remedies it may have under law, including setoffs against amounts due from Seller to Customer on other contracts.  In such an event, Seller may, with respect to future orders, require full payment in advance or otherwise alter the terms of payment specified earlier.

 

2


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 22 TO
SPECIAL BUSINESS PROVISIONS

 

ABNORMAL ESCALATION

(Reference SBP 4.1)

 

1.               Prices for Recurring Products will be adjusted for Abnormal Escalation as provided below.  In the event that escalation, as forecast by a composite of the identified below indices, exceeds [*****] for any given calendar year (“Abnormal Escalation”), the Prices for Recurring Products for the subsequent calendar year shall be adjusted by that percentage value which exceeds [*****] .  Abnormal Escalation is calculated each year against the Prices for Recurring Products effective for that year and is not cumulative. The adjusted Prices for Recurring Products will revert back to the SBP Attachment 1 Prices for Recurring Products at the beginning of the subsequent calendar year.

 

Any prolonged extraordinary inflation would be considered by the parties to determine any mutually agreeable proper actions to be taken.

 

2.               Adjustments to the Prices for Recurring Products will be determined by the following economic indices:

 

A.             Material [*****]

 

B.             Labor [*****]

 

Composite - [*****]

 

3. Special Notes:

 

In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and [Partner] shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.

 

All calculations will be held to a six (6) decimal place level of precision.

 

Indices shall be pulled on [November 15 th ] of each year.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

4. Abnormal Escalation Formula:

 

Adjustments to the Prices for Recurring Products, if any, for the period 2008 through 2021 shall be calculated as follows:

 

[*****]

 

[*****]

 

A = Adjusted Prices for Recurring Products (20X2 Price)

B = Base Prices for Recurring Products

IP = Percentage of composite index as compared to the previous year

MC = Current material index value (September 20X1)

MP = Previous year material index value (September 20X0)

LC = Current labor index value (3 rd  quarter 20X1)

LP = Previous year labor index value (3 rd  quarter 20X0)

 

5. Example: Abnormal Escalation Price Increase

 

B = $2,000,000

MC = September 2008 material index value = [*****]

MP = September 2007 material index value = [*****]

LC = 3 rd  quarter 2008 labor index value = [*****]

LP = 3 rd  quarter 2007 labor index value = [*****]

 

IP = [*****]

Since IP > [*****] , clause is triggered

 

2009 Unit Price = [*****]

 

6. Example: Abnormal Escalation Clause Not Triggered

 

B = $2,000,000

MC = September 2008 material index value = [*****]

MP = September 2007 material index value = [*****]

LC = 3 rd  quarter 2008 labor index value = [*****]

LP = 3 rd  quarter 2007 labor index value = [*****]

 

IP = [*****]

Clause not triggered because (IP < [*****] )

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

 

767-2C SOW

 

MEMORANDUM OF AGREEMENT

 

between

 

THE BOEING COMPANY

 

and

 

Spirit AeroSystems Inc.

 

Model 767-2C

Recurring and Nonrecurring Agreement

 

This Memorandum of Agreement (MOA) is entered into as of February 4, 2011 by and between Spirit AeroSystems Inc., a Delaware corporation, with its principal office in Wichita, Kansas (“Seller”), and The Boeing Company, a Delaware Corporation with an office in Seattle, Washington (“Boeing”), acting by and through the Boeing Commercial Airplane business unit.  Hereinafter, the Seller and Boeing may be referred to individually as a Party or jointly as Parties hereto.

 

RECITALS

 

A.        Boeing is seeking award of the contract for the United States Air Force (USAF) KC-X Tanker

B.        Seller currently supplies Products to Boeing which support the 767 aircraft.  Boeing is offering a modified version of the 767, the 767-2C, in support of its response to USAF solicitation FA8625-10-R-6600, for the KC-X Tanker.

C.        Boeing and Seller wish to establish pricing based upon the provisions of this MOA in support of Boeing’s 767-2C Program.

 

Now, therefore, in consideration of the mutual covenants set forth herein, the Parties agree as follows:

 

I.                               Entities

 

Any Boeing business unit may order 767-2C Products for the USAF KC-X Tanker program from Seller in accordance with the terms of this MOA.

 

II.                          Applicability

 

This MOA pertains only to the 767-2C Products for the USAF KC-X Tanker program and does not alter any existing agreements relating to other items in SBP MS-65530-0016.

 

III.                     Term

 

A. This MOA shall become effective (the “Effective Date”) and constitute an amendment to SBP MS-65530-0016 at the time Boeing is awarded the USAF KC-X Tanker program, and Boeing provides Seller written direction to begin performance of its obligations under this amendment.  Such amendment shall be attached to SBP MS-65530-0016 within 30 days of the Effective Date.

 

1



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

B. If the MOA does not become effective and constitute an amendment to SBP MS-655300016 prior to [*****] the pricing contained herein shall no longer be valid, and shall be subject to renegotiation by the Parties.

 

IV.                  Baseline Statement of Work

 

The Baseline Statement of Work shall be as depicted in 10-BOE-GBH-113 Rev. New, dated February 3, 2011 for fuselage (the “Fuselage BOE”) and 10-BOE-GBH-114 Rev. New, dated February 3, 2011 for propulsion (the “Propulsion BOE”).

 

V.                       [*****] Pricing

 

If the USAF KC-X Tanker contract is awarded to Boeing, then Seller offers to sell to Boeing the Products for the 767-2C Program identified in Exhibits A, B and, C to this MOA at the prices set forth herein, subject to the terms set forth herein.  Seller intends that this [*****] price offer be, and confirms that this [*****] price offer is, except as otherwise provided herein, effective throughout the applicable period of performance as set forth herein.

 

VI.                      Nonrecurring Statement of Work Price and [*****]

 

A.             The nonrecurring price for the Baseline Statement of Work is [*****] as depicted in Exhibit A.

B.             Boeing shall make [*****] other than tooling associated with the Fuselage BOE, in accordance with the process herein.  [*****] shall be as specified in Exhibit G and such [*****] shall be based on [*****] as specified therein.  A schedule of such [*****] shall be agreed and attached as an amendment to the MOA in Exhibit G within [*****] days of the Effective Date.

C.             Boeing shall make [*****] other than tooling associated with the Propulsion BOE, in accordance with the process herein.   [*****] shall be as specified in Exhibit G and such [*****] shall be based on [*****] as specified therein.  A schedule of such [*****] shall be agreed and attached as an amendment to the MOA in Exhibit G within [*****] days of the Effective Date.

D.             In the event of schedule extension or delay, Seller shall be entitled to nonrecurring compensation for the percentage of nonrecurring work other than tooling released at the time of such extension or delay, not to exceed the originally agreed to [*****] due within that [*****] as set forth in Exhibit G. In the event of such schedule extension or delay, Boeing and Seller shall agree on the new [*****] for the remaining engineering release and payments.

E.              Nonrecurring payments for tooling shall be paid by Boeing per the first paragraph of SBP MS-65530-0016 Section 5.2.1.

 

VII.                 Recurring Baseline Statement of Work Price

 

A.             Recurring pricing shall be [*****] for the Baseline Statement of Work for the first [*****] shipsets at [*****] per shipset of recurring Products delivered, except as provided otherwise herein.

B.             Thereafter, Baseline Statement of Work recurring prices for shipsets of Products delivered during years [*****] through [*****] shall be the [*****] prices identified in Exhibit A, except as provided otherwise herein.

C.             If the [*****] or subsequent shipsets, deliver to Boeing before [*****] , then the baseline recurring shipset price for such units shall be the [*****] baseline recurring shipset price identified in Exhibit A, and such price does not include, but shall be subject to, price and schedule adjustments otherwise set forth in this MOA.

 

2



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

D.        Price shall be subject to renegotiation at shipset [*****] should the program exceed [*****] shipsets. [*****] , Boeing and Seller shall negotiate an equitable price adjustment.

E.         The firm fixed recurring price shall be valid for any quantity up to 24 shipsets per year; however, if the [*****] , the Parties shall negotiate an equitable adjustment in price.

F.          The economic price adjustment clause shall be as depicted in Exhibit E. Such economic price adjustment clause shall be applicable beginning with lot [*****] and shall remain effective thereafter.

 

VIII.                 D6-83323

 

For purposes of clarity, descriptions of roles and responsibilities within the Fuselage BOE and Propulsion BOE are only with respect to the original technical requirements. Revisions to the technical requirements which cause Seller to repeat engineering tasks related to Seller roles and responsibilities in the Fuselage BOE or Propulsion BOE are not part of the Baseline Statement of Work Price.

 

If there is a D6-83323 nonrecurring engineering task or activity that has to be performed for the 767-2C that is outside the contents of either the Fuselage or Propulsion BOE, for which Seller has responsibility per the D6-83323, Seller will perform such task or activity provided that Seller receives written direction from Boeing in accordance with SBP MS-65530-0016 and such task or activity shall be subject to an equitable price and schedule adjustment in accordance with the terms of the MOA.

 

The D6-83323 Document will continue to define Seller’s sustaining engineering responsibility for the 767-2C Products.

 

For the avoidance of doubt, and despite reference to D6-83323 herein, the D6-83323 shall remain of lower precedence to the SBP, GTA, Purchase contract, and Order as specified in MS-65530-0016 Section 13.

 

IX.                          Obligation to Purchase and Sell

 

767-2C Products shall be subject to SBP MS-65530-0016 Section 18.0 Obligation to Purchase and Sell provided Boeing is awarded the contract for the USAF KC-X system requirements.

 

X.                               Schedule

 

A.             A Boeing-Seller master phasing plan shall be attached as an amendment to the MOA within 30 days of the Effective Date.

B.             The minimum number of months to avoid Seller schedule compression shall be [*****] months for fuselage and [*****] months for propulsion as measured from the time Boeing provides written direction to Seller to begin performance of its obligations (based upon Boeing’s receipt of award of the USAF tanker program) to the time of Seller’s first unit delivery to Boeing.  In the event that Seller provides any build-to-print work hereunder, the Parties shall agree upon the minimum number of months to avoid schedule compression to Seller as measured from the time of Boeing’s release of frozen detail part definition to delivery to Boeing of the associated unit.  For clarification purposes, frozen part definition

 

3



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

must include all technical data such as dimensions, materials, ply lay ups if applicable, treatments and process specifications for detail part fabrication.

C.             In the event that the USAF awards the USAF KC-X Tanker contract to Boeing and the subsequent Program schedule causes a compression of Seller’s schedule, such Program schedule shall constitute a Change and be subject to SBP MS-65530-0016 Section 7.1 “Price Adjustment for Changes”.  For the avoidance of doubt, any subsequent schedule change that increases or decreases the cost or time required to perform the contract, SBP MS-65530-0016 Section 7.1 shall continue to apply.

D.             In addition to the foregoing, the lead times established in Attachment 6 of the SPB MS-65530-0016 shall remain in effect.

 

4



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

XI.                     Changes

 

A.               Initial Changes

 

Any Change occurring prior to FAA certification of the 767-2C, that is incorporated on any of the first four shipsets, shall constitute an Initial Change.  Initial Changes shall be subject to SBP MS-65530-0016 except as otherwise identified within this MOA.  Initial Changes shall not be subject to the Change thresholds described in SBP MS-65530-0016 article 7.2.  For the avoidance of doubt the equitable price adjustment for an Initial Change shall include all units upon which the Change is incorporated, including any of the first four units and any subsequent units such Change is incorporated upon, and those for retrofit.

 

B.               Nonrecurring Changes Payment

 

1. Payment for the Engineering portion of Boeing required Changes that result in Seller’s release of Engineering Drawings prior to Seller’s 100% Drawing Release, and for which a price has been agreed to between the Parties and a correct and valid invoice has been received by Boeing, shall be paid by equally distributing the agreed price for the Engineering portion of the Change to [*****] in Exhibit G.  Such [*****] shall be made net [*****] calendar days after the applicable [*****] as defined in Exhibit G.

 

2. Payment for the Engineering portion of Boeing required Changes that result in Seller’s release of Engineering Drawings after Seller’s 100% Drawing Release, and for which a price has been agreed to between the Parties and a correct and valid invoice has been received by Boeing, shall be paid net [*****] calendar days following the later of fours months after the date of Seller’s release of the drawings required by the Change, or the date of the agreement by the Parties on the price of the Engineering Change.

 

C.               Change Negotiation Process

 

Subject to Seller’s delivery of a fully supported proposal to Boeing within the timeframes described in SBP Section 7.9 “Proposals for Price Adjustment”; Boeing shall make an offer to Seller within 90 days of receipt of such proposal, and the Parties shall mutually agree to jointly set negotiation priorities and schedules and to engage in diligent good faith negotiations to settle the claims.  If a settlement is not subsequently reached within [*****] , the negotiations shall be elevated to Senior Contracts Management for resolution.

 

D.               Rates and Factors

 

The Parties shall continue to negotiate rates and factors for pricing Initial Changes to reach agreement within [*****] of execution of the MOA.  Such agreement shall be documented as an amendment to the MOA.  Boeing and Seller Senior Contracts Management shall have meetings twice monthly with each other to ensure adequate progress in negotiations.  If the teams designated by each Party do not reach agreement on such rates and factors within [*****] of the execution of the MOA, such negotiations shall be elevated to Senior Contracts Management.

 

E.                Common Changes

 

For nonrecurring Changes that are common to sustaining program(s) and 767-2C, the aggregate price of the Change for all affected programs shall be used to assess clearance of the applicable threshold.  Only a single threshold shall apply for nonrecurring Changes that are common to sustaining program(s) and the 767-2C in order to assess whether the aggregate price of the common Change exceeded such threshold. The applicable threshold shall be derived from the program on which the Change is first

 

5



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

incorporated. The nonrecurring price of the portion of a Change that is common shall be charged to the program on which the Change is first incorporated.

 

XII.                Post Delivery Modifications

 

If the Government pursues any future modifications to the USAF KC-X Tanker weapon system or equipment after delivery of the USAF KC-X Tanker from The Boeing Company to the Government, regardless of whether the Government procures the modification from the Original Equipment Manufacturer or from a third party manufacturer, Seller agrees to provide to Boeing, as reasonably necessary, the same support consisting of engineering consultation, analyses, and access to technical data and licenses which are required by MS-65530-0016; and Seller shall authorize Boeing to release the results of such engineering consultation, analyses, and access to technical data and licenses to the Government and or Government selected third party.  The Seller’s support will be provided at commercially reasonable terms at the time of the effort.  The price for any support provided by the Seller in accordance with this special contract provision shall be negotiated by the Parties after the Government identifies the nature and scope of the support effort required.

 

XIII.           SBP MS-65530-0016, Attachment 4

 

PRR engineering thresholds described in SBP MS-65530-0016 Attachment 4 shall not be applicable for calculation of equitable adjustment for Initial Changes.

 

XIV.            Weight

 

Seller shall participate in any weight reduction studies as authorized by Boeing and agreed to with Seller per the engineering service agreement SBP-6-5118-AEC-016 to support assessment of airplane weight reduction initiatives.  Seller shall ensure controls are in place to prevent weight growth in the manufacturing process.  Periodic reporting of component weights shall be required to validate such controls are effective and to initially establish actual airplane component weight targets.  Seller shall utilize traditional weight efficient design practices.  Seller does not agree to a guaranteed weight as part of this agreement.  Any guaranteed weight shall be subject to mutual agreement of the Parties.

 

XV.                 Obsolescence

 

Seller shall work to minimize the impact of obsolescence of Products and components throughout the term of the Contract.

 

XVI.            [*****]

 

[*****] shall not apply to 767-2C end item pricing, and 767-2C end item deliveries shall not be counted toward commercial [*****] .

 

XVII.       Spares and Warranty

 

Spares shall be subject to, and Spares pricing shall be calculated in accordance with, SBP SPARES-65132-0270.  However, the warranty period shall be limited to [*****] from delivery to USAF.

 

XVIII.                                                  Federal Acquisition Regulation Commercial Item Procurement

 

6



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

A.                         Exhibit F to this MOA lists those clauses from FAR, DFARS, Air Force Federal Acquisition Regulation Supplement (“AFFARS”), and/or Air Force Materiel Command Federal Acquisition Regulation Supplement (“AFMCFARS”) required by law, regulation, or the prime contract to be included in the subcontract (“Subcontract”) between Boeing and Seller under the 767-2C Program.  So long as Seller is delivering “commercial items” as defined in FAR Clause 52.244-6 and FAR 2.101 (with the terms “General public and nongovernmental entities” as used in the definition of “commercial item” at FAR 2.101 being defined in DFARS 202.101) (“Commercial Item”), the only FAR, DFAR, AFFARS, or AFMCFARS flow down clauses that shall be included in the Subcontract are those specified in Exhibit F.

B.                         Seller is the world’s largest supplier of commercial airplane assemblies and components supporting Boeing’s 737, 747, 767, 777, and 787 commercial aircraft with most of its sales to the commercial aircraft market.

C.                         The Parties agree that this MOA shall be for Commercial Items.

D.                         To the extent that Seller has design-build responsibility, or discretion regarding parts selection, Seller will promptly provide information as to its proposed design and/or parts selection to Boeing if such design and/or parts selection has aspects that reasonably would affect the qualification of a Deliverable as a Commercial Item.  If either Party believes that such proposed design and/or parts selection would adversely impact the qualification of the Deliverable as a Commercial Item, the Parties shall cooperate in promptly reaching a resolution, acknowledging that maintaining any production schedule is paramount.  Boeing shall not issue Seller any modifications or change orders under this MOA, which can only be satisfied by the delivery of products or services that do not meet the definition of Commercial Item.  To the extent that either the US Government or Boeing requires Changes which Seller reasonably believes do not qualify as a Commercial Item, the parties shall promptly develop change incorporation plans to mitigate the risk and the need for Spirit to perform non-commercial effort.  Should the U.S. Government determine that the statement of work (SOW), or any portion thereof, does not qualify as a Commercial Item, the Parties shall cooperate and work together to obtain a contracting officer determination under FAR 15.403-1(c)(3) that the item(s) are commercial item(s).  If (i) the contracting officer finally determines that the item(s) are not commercial item(s), or (ii) Seller reasonably believes a Change does not qualify as a Commercial Item, the Parties shall use their commercially reasonable best efforts to transition, with minimal disruption, that portion of the SOW which represents the noncommercial item to another supplier and shall amend this MOA to reflect such transition and the contracting officer’s determination.  The Parties acknowledge and agree that the alternative of compelling Seller to accept and/or perform work on the USAF KC-X Tanker program which does not qualify as work for a Commercial Item is the least desired alternative, and Boeing will exert every reasonable effort to avoid that alternative subject to good faith cooperation by Seller.  In the event that such transition is not achievable with commercially reasonable best efforts, or in the event that such transition occurs, the MOA shall be amended by the Parties to reflect the modification of the MOA terms.  If amendment of the MOA causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this MOA, Boeing shall make an equitable adjustment to the price, the delivery schedule, or both, provided that Seller reasonably satisfies its obligations in (1)(7) of this provision.  Such cost adjustment shall include, but is not limited to, [*****] .  Boeing shall make such equitable adjustment so long as Seller:

 

7



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

1.                   exercised reasonable due diligence in developing a design and selecting parts that would reasonably ensure its Deliverables would satisfy the FAR Commercial Item definition in advance of performance of its Baseline SOW, and of any subsequent changes to its Baseline SOW;

2.                   provided Boeing prompt information as to its proposed design and/or parts selection if such design or parts selection has aspects that would reasonably affect the qualification of a Deliverable as Commercial Item;

3.                   provided Boeing, in response to a contracting officer determination that the SOW or any portion thereof did not qualify as a Commercial Item, data reasonably available to Seller that reasonably supported a determination that Seller’s Deliverables were Commercial Items;

4.                   provides Boeing Seller’s other than cost or pricing data as described in FAR 15.403-3 relating to any Deliverables if requested by the U.S. Government contracting officer;

5.                  provides Boeing or the U.S. Government contracting officer Seller’s cost and pricing data relating to any Deliverables that the U.S. Government determines do not qualify as Commercial Items following a final determination by the U.S. Government that the SOW or any portion thereof did not qualify as a Commercial Item;

6.                   provides Boeing the necessary technical data and tooling to enable another source of supply to perform that portion of the SOW which represents the noncommercial item in the event that Boeing transfers that portion of the SOW to another supplier, provided that the transfer of such tooling does not interfere with Seller’s performance of the remaining portions of the SOW; and

7.                   continues to perform its entire SOW unless and until the Parties can transition that portion of the SOW which represents the noncommercial item to another supplier.

E.          The prices in this MOA for the Baseline Statements of Work are based upon, and take into account, the terms and conditions in the FAR and DFARS clauses identified in GTA BCA-65530-0016 Section 21.2 and Exhibit F.  Otherwise, the prices contained in this MOA for the respective Baseline Statements of Work do not include the [*****] .

 

XIX.                Export Compliance

 

A.        In performing the obligations of this Agreement, both Parties will comply with United States export control and sanctions laws, regulations, and orders, as they may be amended from time to time, applicable to the export and re-export of goods, software, technology, or technical data (“Items”) or services, including without limitation the Export Administration Regulations (“EAR”), International Traffic in Arms Regulations (“ITAR”), and regulations and orders administered by the Treasury Department’s Office of Foreign Assets Control (collectively, “Export Control Laws”).

B.        The Party conducting the export shall be responsible for obtaining the required authorizations.  The Party conducting the re-export shall be responsible for obtaining the required authorizations.  Each Party shall reasonably cooperate and exercise reasonable efforts to support the other Party in obtaining any necessary licenses or authorizations required to perform its obligations under this Agreement.

C.        The Party providing Items or services under this contract shall, upon request, notify the other Party of the Items or services’ export classification (e.g., the Export Control Classification Numbers or United States Munitions List [USML] category and subcategory).

 

XX.                Order of Precedence

 

Except as specified herein, all other terms and conditions of SBP MS-65530-0016 shall apply. In the event of a conflict between the terms of this MOA and the SBP MS-65530-0016, the terms of this MOA shall have precedence.  The Exhibits to this MOA are incorporated as part

 

8


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

of this MOA.

 

XXI.                          Termination

 

In the event of termination of an Order, in whole or in part, for any reason other than Seller default, or in the event of termination of the 767-2C Program for any reason other than Seller default, Seller shall have the right to submit a written termination claim under Section 12.0 of the GTA BCA-65530-0016 for nonrecurring work and materials.  The reference in Section 12.3 to FAR 52-249-2 is changed to the May 2004 version of the clause without alternates, paragraphs (e) — (h) of which are incorporated herein by reference except “Government” and “Contracting Officer” shall mean Boeing, “Contractor” shall mean Seller and “Contract” shall mean “Order,” “Contract,” or “Program” as applicable.  Notwithstanding the foregoing, Seller shall not be subject to cost principles and shall use commercially allowable records as it relates to paragraphs (e) — (h) above.  Boeing shall be obligated to pay for Seller nonrecurring expenses in accordance with FAR reference specified herein.  However, in the event that such termination of Seller is as a result of USAF termination of Boeing under its prime contract with the government, [*****] .  The foregoing is limited to nonrecurring payment in termination for any reason other than Seller default, and is not intended to augment or supersede terms of BCA-65530-0016 or SBP MS-65530-0016 related to payment of recurring costs in termination.

 

XXII.                     Choice of Law

 

This MOA shall be governed by the internal laws of the State of Washington without reference to any rules governing conflict of laws.

 

EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.

 

BOEING

 

SELLER

 

 

 

THE BOEING COMPANY

 

Spirit AeroSystems Inc.

 

 

 

Signature:

 

Signature:

 

 

 

Printed Name:

 

Printed Name:

 

 

 

Title:

 

Title:

 

 

 

Date:

 

Date:

 

9



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit A

 

Work Statement and Pricing

 

Baseline Statement of Work Nonrecurring:

 

 

 

Structures

 

Propulsion

Nonrecurring other than tooling

 

[*****]

 

[*****]

Tooling

 

[*****]

 

[*****]

 

Baseline Statement of Work Recurring:

 

 

 

Total S/S

 

Fuselage*

 

Strut*

 

Nacelle*

Recurring Price Units [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

Price Calendar [*****]

 

[*****]

 

 

 

 

 

 

 


*Boeing and Seller shall agree on the further allocation of the Fuselage, Strut, and Nacelle shipset pricing as set forth above into end-item prices within 30 days of execution of the MOA.  The sum of the end-item prices for each of the Fuselage, Strut, and Nacelle shall equal the total shipset prices as set forth above.

 

10



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit B

 

10-BOE-GBH-113 Rev. New, Dated February 3, 2011

 

Spirit AeroSystems, Inc. Proprietary, Business Confidential, Boeing Proprietary,

 

The information herein may contain Technical Controlled data under Category VIII (i) of the International Traffic in Arms Regulations (ITAR).  The control of this data is set forth by the Department of State, Directorate of Defense Trade Controls: 22 CFR§ 120-130.  Export of this data by any means to unauthorized persons, as defined by these laws, whether in the United States or abroad, without an export license or other approval from the U.S. Department of State is expressly prohibited.

 

FUSELAGE BASELINE STATEMENT OF WORK

 

FUSELAGE BASELINE STATEMENT OF WORK AND GENERAL QUALIFICATIONS

 

The following constitutes the basis for Seller’s Baseline Statement of Work price, and modification from 10-BOE-GBH-113 Rev. New, Dated February 3, 2011 constitutes a Change.

 

A.                         FUSELAGE BASELINE STATEMENT OF WORK:

 

1.               Except as otherwise stated herein the Baseline Statement of Work price is based on Spirit redlines (10-BOE-110-GBH, Exhibit B, Fuselage Baseline Statement of Work Technical Configuration Memo, Rev. New, June 7, 2010) to paragraphs 1.4.1 through 1.4.1.9 (less 1.4.1.6) of the Statement of Work (SOW) as described in CONFIG-BKQ15-C09-018 Rev. A (Configuration Description, Model 767-PD-2127 Rev I, Tanker Provisioned 767- 2CX Derivative, Section 41 and Related Systems Extract for Spirit AeroSystems), dated March 17, 2010, prepared by Lennard Baron.  Paragraphs 0 through 1.4.0, and 1.6 through the remainder of CONFIG-BKQ15-C09-018 Rev. A is reference information only for Seller.

 

2.               The Baseline Statement of Work price includes all approved PDDMs identified in the configuration memo (CONFIG-BKQ15-C09-018 Rev. A, Table 0.1-3), but does not include work or material for any Tanker associated follow on trade studies or PDDMs for section 41.

 

3.               Seller is not responsible for design or installation of any ballistic panels for military applications.  Seller shall design floor panels in areas not requiring ballistic protection.  Seller is not responsible to design and install floor panels requiring ballistic protection.  Seller shall design and install structural provisions for the refueling receptacle.  Seller shall design the mini crown panel assembly to include the skin, doubler, slipway, frames and intercostals.  Seller is responsible to build the mini crown panel assembly or have it built by a Seller designated vendor.  The baseline SOW does not include Seller effort related to boom strike protection.  Refueling doors, actuators and associated mechanisms shall be installed pre-rigged by Seller, or by Seller designated vendor, but such items shall be designed by Boeing and provided to Seller or the Seller designated vendor.  Seller shall design and install water system provisions to include a water service pan and door.  Seller shall provide provisions for structural hard points (mounting locations) for AROS operator deck that are similar to commercial 767 aircraft structure responsibility of Seller prior to execution of the MOA.  Seller is not responsible to install AROS system.

 

4.               The bill of material for the Baseline Statement of Work is documented in file “10-BOE-110-GBH, Exhibit C, Fuselage Baseline Statement of Work Bill of Material, Rev. New, June 7, 2010.xls”.  This document assumes 767 line unit [*****] as a baseline and contains only the

 

11



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

delta work statement to design build and install new details/assemblies and installations for 767-2CX section 41 end items 141T0100-xxx (receptacle panel), 141T0200-xxx (lower Lobe), 141T0300-XXX (LH side panel), 141T0400-XXX (RH Side Panel, 141T0800-XXX (Cab Assy).  The work statement also contains the design effort for Boeing build/installation responsibility parts (ex. floor panel details/installs and section 41 join details/ installs).  Item A parts are parts for which engineering responsibility for non-structural details, assemblies and modules resides with Boeing and build responsibility resides with Spirit.  Item A parts are not included in Exhibit C.  (Reference paragraph 40)

 

5.               In addition to the section 41 end items, Seller’s Baseline Statement of Work price includes loose parts for section 41 and seat tracks for other sections of the airplane as set forth in 10-BOE-110-GBH, Exhibit D, Fuselage Baseline Statement of Work Loose Parts List, Rev. New, June 7, 2010.  This list also includes a shear pin for the Nacelles, a bracket assembly for the forward spar and a bracket assembly for the aft spar.  A quantity of one was assumed for each of the parts on this list.  All items on the list with yellow highlighting were identified by Boeing as similar-to parts which will be changing for the 767-2CX.  New plans and NC tapes were assumed for only the highlighted parts.  Seller does not have design responsibility for the loose ship parts.

 

6.               The Baseline Statement of Work for new and revised Tooling is set forth in 10-BOE-110-GBH, Exhibit F, Fuselage New and Revised Tooling List, Rev. New, June 7, 2010.  The 767 manufacturing line utilized prior to execution of this MOA will be used for production of 7672C.

 

B.                         FUSELAGE GENERAL QUALIFICATIONS:

 

1.               As of the date of signature of this MOA Seller has not received the Design Criteria, Design Requirements and Objectives (DR&O) or the Customer Specific Option Selection (CSOS) documents for the 767-2C.  Any additional requirements in these documents that exceed or change those in the Baseline Statement of Work are not included in Seller’s Baseline Statement of Work price.

 

2.               Except as otherwise set forth herein, the Seller 767 manufacturing line existing prior to execution of this MOA shall be utilized for manufacture of the 767-2C.

 

3.               Seller shall only be responsible to remove unnecessary structural and systems provisions within the Baseline Statement of Work if Seller design is modifying the module, assembly, or affected detail pursuant to some other design requirement.

 

4.               Seller shall not be responsible for the design or build integration of section 41 to section 43. Boeing bears the responsibility of body integration for the section 41/43 join.  The K-hole indexing plan and location/attachment of lift fittings existing prior to execution of this MOA shall be maintained.

 

5.               Any skin gauge increase from that utilized in a particular part prior to the execution of this MOA shall not exceed the capabilities of the current stretch form blocks utilized by Seller. This Baseline Statement of Work price is based upon [*****] prior to execution of this MOA.

 

6.               Any [*****] from that existing in sustaining production prior to execution of this MOA [*****] is not included in the Baseline Statement of Work price.

 

12



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

7.               Any [*****] from that existing in sustaining production prior to execution of this MOA for all skins in the statement of work having impact on [*****] to Seller is not included in the Baseline Statement of Work price.

 

8.               Conversion of Mylar/V4 models to CATIA V5/Enovia/PDM with 2D drawings shall only be performed for new parts released within the Baseline Statement of Work as set forth in 10-BOE-110-GBH, Exhibit C, Fuselage Baseline Statement of Work Bill of Material Rev. New, June 7, 2010.  For purposes of clarity, re-tabbed parts will not be converted to V5 and “new parts released” refers to parts that were released as a result of modification from or addition to sustaining production existing prior to execution of this MOA.  Any impact to Seller [*****] are not included in the Baseline Statement of Work price.

 

9.               For Catia V4 to V5 conversion referenced herein, Boeing shall provide software and/or thick/thin client access to Spirit for use as set forth in the Long-Term Access (LTA) matrix for sustaining 767 programs.

 

Boeing agrees that Supplier may utilize a third-party engineering contractor for purposes of converting, to the extent contemplated under this MOA, Boeing sustaining program drawings from Catia V4 to Catia V5 as needed, either in advance of design for 767-2C program unique characteristics, or otherwise in compliance with ITAR requirements. Utilization of third-party engineering contractor shall comply with proprietary information requirements of BCA-65530-0016 Article 20.

 

10.        Seller shall not be responsible for any interiors design to account for height mismatch between Seller designed traditional floor panels (non-ballistic protection) and Boeing design floor panels for ballistic protection (trip hazard).

 

11.        The Baseline Statement of Work price contained herein is based on [*****] prior to the execution of this MOA.

 

12.        The Baseline Statement of Work price is based upon [*****] existing prior to the execution of this MOA except to the extent otherwise specified in the [*****] set forth as part of the Baseline Statement of Work clarification.

 

13.        Boeing shall provide an appropriate number of Riverbed Technology and licenses to Seller if Enovia is used.

 

14.        The Baseline Statement of Work price does not include any modifications after initial basic release, with exception of [*****] .

 

15.        Finite element modeling shall be MSC-Nastran-Patran.

 

16.        Boeing shall provide Seller with a coarse grid FEM of section 41 representing the Baseline Statement of Work configuration, including a super element representing the stiffness of the remaining airplane with external applied loads or the equivalent stiffness of section 43.  The super element shall be validated, by Boeing, against displacements from the master model. Seller shall update FEM model of Section 41 to include refueling receptacle and preliminary sizing.

 

13



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

17.        Boeing shall be responsible for providing preliminary and final structures/systems interfaces that affect Seller design SOW by the negotiated Preliminary Interface Design Definition (PIDD) and Final Interface Design Definition (FIDD) dates.  Any delay or revision of such interface data after negotiated dates shall be subject to remuneration to the extent it drives additional Seller effort or expense.  Seller shall not be obligated (design or build) to incorporate late interface definition during initial basic release if incorporation of late or revised interface information does not support Seller engineering and build schedule.

 

18.        For purposes of clarity, a single issuance of the following loads from Boeing to Seller shall constitute a complete Single Certification Loads Data Set (SCLDS) for Seller fuselage work: 1. Static ultimate, 2. Decompression, 3. Fatigue, 4. ITDAS templates, 5. Interface, and 6. Floor frame / decompression.  Seller’s Baseline Statement of Work price is limited to engineering effort and other expenses related to a single loads cycle as defined above as SCLDS.

 

19.        Seller’s Baseline Statement of Work price is based upon Boeing providing [*****] , by dates to be agreed upon as relates to support nonrecurring product definition for the associated structure.

 

20.        Boeing shall be responsible for providing payloads certification interface loads for interior items attaching to section 41 structure including but not limited to lavatory, galley, closet, AROs, seats, and crew rest.  For concentrated interior loads greater than 300 lbs (waste water tank, water tank, instrument closets, etc), discrete loads shall be included in the floor/frame internal loads analysis.  Boeing shall provide interface loads by dates to be agreed upon as relates to support nonrecurring product definition for the associated structure.  Any delay or revision of such loads data shall be subject to remuneration to the extent it drives additional Seller effort or expense.

 

21.        The Baseline Statement of Work price is based on informal One-Page loads Estimate Comparison received as part of Boeing letter 6-5255-CH-10-133 on September 15, 2010. Such load comparison shows [*****] .  Any exceedance [*****] that impacts Seller Design, Build or Analysis effort will be subject to remuneration.

 

22.        The Baseline Statement of Work price is based on utilization of 767-400 Structural Criteria document requirements existing prior to the execution of this MOA (D6T11108-2, Rev. A, dated May 27, 1998 and D141T-001, Rev B, dated August 24, 1998).

 

23.        The Baseline Statement of Work price is based on the multi-element design/construction approach and the failsafe analysis approach used on current 767 Passenger airplanes in existence prior to the execution of this MOA.

 

24.        Boeing Structures Work Station (SWS) and Common Structural Work Station (CSW) analysis tools (IAS, SA, SA+, SAPB, MATDB, FASTDB, IDTAS, FEADMS, Moss-Duberg, FAMOSS, APARD, DTNAL and other programs for Damage Tolerance) shall be made available to and utilized by Seller, and are the basis for the Baseline Statement of Work price.

 

25.        Boeing shall provide access to Boeing’s internal loads (Python) codes to Manipulate Bulk Data File (BDF) for model updates.  Specific Python codes Include split.py, split_grid.py, and apard_properties.py.

 

14



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

26.        The Baseline Statement of Work price does not include Seller support to Boeing for the Aircraft Recovery Documents or Flight Testing.

 

27.        Strength Check Notes (SCN) shall be archived electronically in the ANI/Castle database by Boeing.  Seller shall create cover sheets and provide files to Boeing for submittal in the database by the Boeing librarian.  Filing of SCNs in Enovia is not in Seller’s Baseline Statement of Work.

 

28.        SCNs are considered informal analysis notes.

 

29.        Quality requirements shall be D6-36592-1, Rev. A.

 

30.        The Baseline Statement of Work price is based on certification analysis deliverables from Seller section 41 to Boeing limited to inputs for the following documents:

 

a.               Static/Ultimate

b.               Damage Tolerance

c.                Sudden Pressure Loss

d.               Detailed Level Report

e.                Maintenance Planning Document.

 

31.        Seller Baseline Statement of Work price includes section 41 inputs for the formal certification documents listed above and respective OBAR 8100-3 form approvals as of the date of execution of this MOA.  Compilation and formatting of the certification documents shall be Boeing’s responsibility.  For purposes of clarity, Seller’s Baseline Statement of Work price does not include any certification or analysis for testing or any test hardware/units.  Seller shall review all SCNs for approval for certification in accordance with D6-36592-1, Rev A July 14, 2009.  Spirit will support Boeing review of SCNs.  If Boeing requests revisions that are not directly due to technical findings caused by Seller, such impact will be subject to remuneration to Seller.

 

32.        Boeing shall provide Seller access to GTTA drawings, CATIA, models and stress analysis for 767-2C structure that is the same or similar to GTTA structure.

 

33.        Boeing shall be responsible for making all entries into the WDEX system for 767-2C.  Seller shall provide weight information to Boeing if and as required per an agreed to weight process to be determined.

 

34.        Standard Boeing Commercial Damage Tolerance Methods (D6-24958, Book 3, Oct 2009 Revision) shall be utilized for damage tolerance analysis of modified details.

 

35.        Any Item B parts are parts for which engineering responsibility for the non-structural details and assemblies resides with Boeing, but the engineering responsibility for the next higher structural assembly and module resides with Spirit.  Build responsibility also resides with Spirit for such parts.  Any Item B parts to be installed by a Seller engineering module shall be released by Boeing by the engineering release date to be negotiated between the parties. Any Boeing engineering parts that are not released by their negotiated date will not be included on Seller module release if late release does not support Seller engineering and build schedule.

 

36.        Based on the One-Page loads Comparison received as part of Boeing letter 6-5255-CH-10133 on September 15, 2010, Boeing and Seller will agree to document areas of minimal

 

15


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

loads and requirements changes, and agree on analysis and documentation required for such areas by Firm Structures Loads Configuration (FSLC), Dec 17, 2010.

 

[*****] (scheduled for release in the fall of 2011) or other Boeing requirements changes that drive additional analyses effort for Spirit above the documented agreement shall be subject to remuneration.

 

37. The Baseline Statement of Work price is based on the -400 FAA amendment level and certification requirements applicable prior to execution of this MOA; and therefore assumes that any required increase or change in certification level that impacts new or existing part cards, including analysis, design or build activity, shall be subject to remuneration.  No test hardware or modification of certification requirements from the 767 baseline passenger configurations in sustaining production prior to the execution of this MOA produced are included in the Baseline Statement of Work price.  As such, the 767-200C is planned to be certified to 14 CFR Amendment 25-159 with the following exceptions as per G-1 paper draft:

 

a.                                            25.677(b) at 25-23

 

b.                                            25.1435 (a)(b) at 25-41

 

c.                                             25.1329(h) at 25-46

 

d.                                            25.783(e)(f) at 25-23

 

e.                                             25.365(e), e(2) at 25-54 (same as original certification basis for 767)

 

f.                                              25.571 at 25-86

 

g.                                             25.1301 at 25-0

 

h.                                            25.1309 at 25-41

 

38. The Baseline Statement of Work price does not include any modifications in bird strike protection requirements from the 767 baseline passenger configurations in sustaining production prior to the execution of this MOA, nor does it include any modifications in the location of critical flight control systems/components requiring such protection.

 

39. The Baseline Statement of Work price is based upon material usage consistent with Seller’s 767 commercial usages prior to the execution of this MOA.  For any new material requirements, Boeing shall be responsible for providing allowables data for analysis and certification activities.

 

40. The Baseline Statement of Work is based on a maximum of 43 Item A part cards.  Effort required for additional part cards beyond the 43 shall be subject to remuneration.  Seller shall have the opportunity to conduct manufacturing producibility review of new Boeing engineering planned for installation by Seller.  New engineering for which Boeing is responsible shall include determinant assembly features as required by Seller manufacturing to support Seller build plan.

 

41. Except as otherwise set forth herein, the Baseline Statement of Work price is based upon use of the same software applications utilized for the 767 Program prior to the execution of this MOA.

 

16



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit C

 

10-BOE-GBH-114 Rev. New, dated February 3, 2011

 

Spirit AeroSystems, Inc. Proprietary, Business Confidential, Boeing Proprietary,

 

The information herein may contain Technical Controlled data under Category VIII (i) of the International Traffic in Arms Regulations (ITAR).  The control of this data is set forth by the Department of State, Directorate of Defense Trade Controls: 22 CFR§ 120-130.  Export of this data by any means to unauthorized persons, as defined by these laws, whether in the United States or abroad, without an export license or other approval from the U.S. Department of State is expressly prohibited.

 

STRUT BASELINE STATEMENT OF WORK

 

STRUT BASELINE STATEMENT OF WORK AND GENERAL QUALIFICATIONS

 

The following constitutes the basis for Seller’s Baseline Statement of Work price, and modification from 10-BOE-GBH-114 Rev. New dated February 3, 2011 constitutes a Change.

 

A.             STRUT BASELINE STATEMENT OF WORK

 

Seller’s Baseline Statement of Work is based upon the 767-200ER 311T4290-61 and -62 strut assemblies, with a change from the PW4060 engine to the PW4062 engine, and with installation of a larger Integrated Drive Generators (IDG) to support electronic loading.  In addition, the Seller Baseline Statement of Work includes provisions for a larger power feeder cable and grounding and wire bundle enhancements as set forth herein.

 

Excluded from this statement of work are Coordination Sheet P-YP70-ERA 10-08 dated 4/26/10 regarding provisions for Electromagnetic Effects Requirements for the Engine and Cowl of the 767-2CX (including, but not limited to, HIRF and lightning strike protection), and Coordination Sheet P-YP70-ERA 10-03 dated 2/25/10.

 

B.             STRUT GENERAL QUALIFICATIONS

 

1.               Test Instrumentation hardware is not defined and is not included in the Baseline Statement of Work price.

 

2.               Tooling and NC tapes impacts associated with engineering changes are not included in the Baseline Statement of Work price.

 

3.               Seller’s administration responsibilities shall be: 1. program planning and scheduling, 2. coordination meetings with Boeing program office, and 3. records management.

 

4.               Seller’s certification responsibilities shall be: 1. management of Seller’s portion of strut structures certification effort, 2. Coordinate with Boeing in Boeing’s certification effort as needed, 3. Preparation of data for inclusion in certification document deliverables as part of Boeing’s certification plan, and 4. Signature of 8100 forms as appropriate. Certification document deliverables are static analysis (ultimate, limit), damage tolerance analysis, fan blade out and windmilling, and rotor burst.

 

5.               Seller’s design support responsibilities shall be: 1. Supervision of structural analysis effort, 2. Review and incorporation of new, single set of certification loads, pressures, and temperatures, 3. Complete loads assessment of strut structure for new loads against -300ER certification loads, 4. Development of strength check notes for all strut structure with higher loads than -300ER 5. Review and approve 120KVA power feeder provisions, 6. Assist Boeing in minor updates to the Structural Repair Manual (SRM) revisions/documents to the extent specified herein, 7. Provide data and forms for the Maintenance Planning Document and Structural Inspection Planning Data (SIPD), and 8. Execution of Seller Material Review Board (MRB) effort required prior to certification for rejection tags.

 

17



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

6.               Seller shall be responsible for work statement in support of the strut box structure as follows: 1. Structural analysis including ultimate, limit, fatigue, damage tolerance, Fan Blade Off (FBO)/windmilling, rotor burst and wheels-up landing, 2. Revise finite element modeling for inclusion in integrated finite element model, 3. Validate Integrated Finite Element Model (IFEM), 4. Determine fatigue life, 5. Determine margins of safety, 6. Determine damage tolerance capability to include residual strength, crack growth, and Damage Tolerance Rating (DTR) analysis, 7. Prepare analysis documentation to include strength check notes and formal analysis inputs, and 8. Transmit analysis to Boeing.  For transmission of analysis to Boeing, electronic PDFs are acceptable, and original paper copies shall be provided by Seller upon request.

 

7.               Seller shall be responsible for the design and substantiation of strut box structure, including R1 first fastener row and on, and R2 first fastener row and on.  Seller responsibility for design and substantiation of strut box structure excludes: 1. All strut-to-wing attachment links and pins, 2. Strut mounted R3/R4 (duckbill) fitting, 3. Strut mounted R1 lug and effects of link misalignment, and 4. Strut mounted R2 lug and effects of link misalignment. 5. Strut mounted R7/R8 lug and effects of link misalignment.

 

8.               Seller shall not be responsible for design and substantiation of strut-to-wing attachment, including strut fittings, and shall not be responsible for engine mount structure.  In addition the Baseline Statement of Work price does not include combustor burn through analysis, damage locations modifications, or modifications to sonic environment.

 

9.               Boeing shall provide loads, pressures, temperatures and sonic environment data to Seller. Seller’s Baseline Statement of Work price is based upon a single set of loads, pressures, temperatures and sonic environment data.

 

10.        Seller’s Baseline Statement of Work price is based on use of existing strut hardware as defined by Section A above with no alteration except for upper spar web cut out enlargements (reference DWG 311T3110-60).

 

11.        Seller’s price for the Baseline Statement of Work does not include: 1. Test support, 2. Test hardware, 3. Writing of test plans or test reports 4. Support for Preliminary Design Review (PDR) or Critical Design Review (CDR), 5. Travel, 6. Safety assessment of existing fleet hardware to current certification basis or analysis methods, nor 7. Air Force specific requirements beyond those required by the FAA.

 

12.        Seller’s price for the Baseline Statement of Work price does not include [*****] except for any new or revised detail as required by this Baseline Strut SOW.

 

13.        Seller shall provide stress AR support as needed.

 

14.        A fitting factor shall be used with current understanding of FAA requirements for a new design, not as a derivative.

 

15.        Seller’s Baseline Statement of Work price includes the strut mounted fan cowl support beam and strut fairings.

 

16.        Boeing shall provide strains and STW reactions from previous static 767-200 tests or from 767-2C static tests for model validation purposes.

 

18



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

17.        Seller’s Baseline Statement of Work price includes Seller engineering effort associated with a single set of load cycle data provided by Boeing to Seller.  Loads for all documents including formal documents shall come from this single set of load cycle data provided by Boeing to Seller.  For purposes of clarity, a set of load cycle data for strut shall constitute a complete set of certification loads, including, but not limited to, dynamic gust, static maneuver, IFEM, FBO, windmilling, sonic, and fatigue.

 

18.        For purposes of clarity, a single issuance of the following loads from Boeing to Seller shall constitute a complete Single Certification Loads Data Set (SCLDS) for strut: 1. Dynamic gust, 2. Static maneuver, 3. IFEM, 4. FBO, 5. Windmilling, 6. Sonic, and 7. Fatigue.  Seller’s Baseline Statement of Work price is limited to engineering effort and other expenses related to a single loads cycle as defined above as SCLDS.

 

19.        Seller’s Baseline Statement of Work price is limited to a maximum of [*****] hours of SRM support, including AD and repairs efforts.  If any additional effort is required to complete SRM support, this would require a Statement of Work update.

 

20.        Seller’s Baseline Statement of Work price includes [*****] damage tolerance details in total.

 

21.        Structural modifications with respect to 120kVA power feeder shall be limited to upper spar web penetration and lower disconnect panel.

 

22.        Seller’s Baseline Statement of Work price is based on use of the same Boeing analysis tools utilized by the Parties prior to execution of this MOA.  Seller’s Baseline Statement of Work price is based upon FAA level existing prior to the execution of this MOA.

 

23.        Except as otherwise set forth herein, the Baseline Statement of Work price is based upon use of the same software applications utilized for the 767 Program prior to the execution of this MOA.

 

NACELLE BASELINE STATEMENT OF WORK AND GENERAL QUALIFICATIONS

 

The following constitutes the basis for Seller’s Baseline Statement of Work price, and modification from 10-BOE-GBH-114 Rev. New dated February 3, 2011 constitutes a Change.

 

A.  NACELLE BASELINE STATEMENT OF WORK

 

1.               Seller’s Baseline Statement of Work is based upon the [*****] .  In addition, the Seller Baseline Statement of Work includes provisions for grounding and wire bundle enhancements as set forth herein, enhancements or modifications to composite panels within Propulsion are excluded.

 

2.               Excluded from this statement of work are Coordination Sheet P-YP70-ERA 10-08 dated 4/26/10 regarding provisions for Electromagnetic Effects Requirements for the Engine and Cowl of the 767-2CX (including, but not limited to, HIRF and lightning strike protection), and Coordination Sheet P-YP70-ERA 10-03 dated 2/25/10.

 

19



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.               The Nacelle NRE Baseline Statement of Work price is based upon “Statement of Work Attachment A” (2010-01-12_767_SOW_Update) from Boeing 7A7 Propulsion RFP letter No. 6-5-255-CH-10-091 dated January 21, 2010 except as otherwise set forth herein.

 

4.               314T4080-9 inlet assembly, 314T4085-11 & -12 fan cowl assemblies, and 314T4090-21 & - 22 core cowl assemblies nacelle hardware, other than thrust reverser, shall be used with no change.  The thrust reverser revised for tanker 315T4295-80, -82, -83 and -85 shall be used with no change.  The current configuration has already been modified to account for new IDG and shall not result in any further modification.  Partial RTO and low power burst duct conditions are applicable.  Wire bundles installed in the inlet and thrust reverser shall be revised to address increased EME/HIRF threat levels.

 

B.  NACELLE GENERAL QUALIFICATIONS

 

1.               Seller shall be responsible for design and substantiation of inlet, fan cowl, fan duct cowl, and thrust reverser.

 

2.               Boeing shall be responsible for: a. Design and substantiation of nozzle and plug, b. All installation and installation hardware (design and stress), c. Approval of all design data, d. Certification of all nacelle hardware and its installation, including inlet, fan cowl, chine, fan duct, thrust reverser, core cowl and load share, nozzle, and plug, e. Provide revised SCDs that address or reflect any new certification requirements as well as changes necessary to accommodate increased thrust and additional accessories, f. Provide thermal and sonic environment, g. Provide external loads.

 

3.               Seller is responsible for recalculating margins of safety.

 

4.               The product shall be FAA certified and include pRTO, burst duct, FBO/Windmilling and fitting factor.

 

5.               767 thrust reverser interchangeability with 747 models shall not be included or evaluated.

 

6.               Revised grounding provisions to cowl assembly per latest requirements.  Full scale inner wall static test prior to engine test shall not be required.

 

7.               Safety assessment of existing fleet hardware to current certification basis is not included in the Baseline Statement of Work price.

 

8.               Partial RTO condition for the inner wall that results in modifications to the inner wall shall be subject to remuneration for modifications to the inner wall.

 

9.               Changes in Boeing analysis tools that result in redesign of previously acceptable structure, even if loads are lower, shall be subject to remuneration for such redesign.

 

10.        FAA amendment level revisions resulting in redesign of previously acceptable structure, even if loads are lower, shall be subject to remuneration for such redesign.

 

11.        Test Instrumentation hardware is not defined and is not included in the Baseline Statement of Work price.

 

20



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

12.        Tooling and NC tapes impacts associated with engineering changes are not included in the Baseline Statement of Work price.

 

13.        For purposes of clarity, a single issuance of the following loads from Boeing to Seller shall constitute a complete Single Certification Loads Data Set (SCLDS) for nacelle: a. Maneuver, b. Fail safe, c. IFEM, d. FBO, e. Windmilling, f. pRTO, g. Pressure, h. Temperature, i. Sonic Environment, and j. Fatigue.  Seller’s Baseline Statement of Work price is limited to engineering effort and other expenses related to a single loads cycle as defined above as SCLDS.

 

14.        Except as otherwise set forth herein, the Baseline Statement of Work price is based upon use of the same software applications utilized for the 767 Program prior to the execution of this MOA.

 

C.             NACELLE WORK STATEMENT ADMINISTRATION

 

Seller administration responsibilities for the nacelle are: 1. Program planning and scheduling, 2. Participation in coordination meetings with Boeing and Boeing Defense Systems as needed, and 3. Records management of Seller created documents and transmittals received from Boeing.

 

Boeing shall be responsible for coordination with Pratt and Whitney, and Seller shall support the coordination as necessary.

 

D.             NACELLE CERTIFICATION

 

Seller certification responsibilities shall be: 1. Management of Seller portion of nacelle structures certification effort, 2. Review of and input to the Boeing provided certification plan, 3. AR to support certification effort including delegation, 4. Work of certification activities with Boeing and Boeing Defense Systems, 5. Support certification meetings with the FAA, 6. Prepare analysis data to include review and comments to the certification document, stress and damage tolerance analysis, and 7. Review and sign off of drawings, not including any additional effort associated with a Boeing final approval if deemed necessary.

 

Boeing shall bear certification responsibilities except as set forth above.  Boeing certification responsibilities shall include: 1. coordination and release of the certification plan, 2. Primary responsibility for support of the FAA/BDCO, 3. Preparation of data for inclusion of certification document deliverables relative to summary data, and 4. Coordination and submittal of certification documents for approval by the certifying entity.

 

E.             NACELLE INTEGRATION

 

Seller shall have the following responsibilities relative to integration of the inlet, chine, fan cowl, thrust reverser, and core cowl: 1. Demonstration of means of compliance, 2. Design review support for PDR and CDR, 3. Coordination with other groups within Seller, 4. Obtain new or revised loads pressures and temperatures, 5. Provide detail analysis for internal temperatures and loads, 6. Develop and transmit internal loads transmittal sheets, 6. Submit strength check notes for review and approval by Boeing, 7. Submit for review and approval SRM documents, and 8. Provide redlines and analysis for approval.

 

Boeing shall have the following responsibilities relative to integration of the inlet, chine, fan cowl, thrust reverser and core cowl: 1. Provide specific design requirements, 2. Provide thermal and sonic environment, external loads including, but not limited to IFEM, FBO, and windmilling, 3.

 

21



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Develop and transmit external loads transmittal sheets, 4. Provide AR support for SRM revisions and documents, and 5. Compile and release SRMs.

 

F.              NACELLE DESIGN EFFORT

 

Seller responsibilities relative to direct support of the design effort for inlet, chine, fan cowl, thrust reverser, and core cowl shall be as follows: 1. Conduct loads review and structural analysis effort, 2. Review and incorporate loads, pressures and temperatures, 3. Review existing structural analysis against new loads, 4. Revise structural analysis as required against new loads, 5. Develop strength check notes and update for new loads as necessary, 6. Review and approve revised drawings as necessary, 7. Develop SRM revisions / documents, provide engineering support to the MRB effort prior to certification for rejection tags, 8. Provide work statement support to Boeing relative to revision of the thrust reverser and core cowl to accommodate the new IDG,

 

G.            NACELLE pRTO SUBSTANTION FOR THRUST REVERSER, V-BLADE DISENGAGMENT

 

Seller responsibilities relative to Partial Refused Take Off (pRTO) substantiation for the thrust reverser and for v-blade disengagement shall be as follows: 1. Support for 767 PW pRTO compliance via review and incorporation of 737/777 Lessons Learned, 2. Support Boeing test and analysis planning through review and input to test plan, 3. Provide overall minimum engagement analysis for v-groove / blade stack up analysis, 4. Provide new thrust reverser FE model, including 3D CATIA Model conversion, to support FE meshing for modeling only, 5. Validation of new FEM model against full scale engine test data provided by Boeing, 6. FEM correlation of inner v-blade deflection against test data, 7. Support selection of critical deployed positions, 8. Support definition of limit load case (P13 and P15 pressure loading) for pRTO normal operation, and 8. Support of Boeing safety assessment.  Seller shall not be responsible to: 1. Provide safety analysis, 2. Conduct testing, nor 3. to provide FBO hardware.

 

Boeing responsibilities relative to pRTO substantiation for the thrust reverser and for v-blade disengagement shall be as follows: 1. Conduct test, 2. Provide test plan and documentation, 3. Provide probability study related to safety, 4. Provide, including 3D modeling effort, blocker door kinematics analysis (drag link and blocker door angles versus deployment positions), 5. Provide the necessary engine interface information for v-groove/blade stack-up analysis, 6. Provide determination of translating sleeve deployment times, 7. Provide definition of limit load case (P13 and P15 pressure loading) for pRTO normal operation.

 

H.            NACELLE ENGINE TEST SUPPORT

 

Seller engine test support responsibilities shall be as follows: 1. Provide input to Boeing regarding instrument test drawings, 2. Provide detail and end item hardware conformity for conformity inspection, 3. Provide input and installation instrumentation as required by Full Scale Engine Test document including on-site support during the test, 4. Support of Boeing test preparation as necessary, 5. Support of Boeing test data reduction efforts by formatting data, and 6. Support Boeing test data analysis and report through participation in meetings and Boeing coordination efforts.

 

Boeing engine test responsibilities as the primary responsible Party shall be as follows: 1. Conduct test, 2. Provide and release instrument test drawings, 3. Conform overall test configuration, 4. Provide and release test preparation, 5. Provide test data reduction efforts, and 6. Provide test data analysis and report.

 

I.                 NACELLE STRUCTURAL ANALYSIS

 

22



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Seller structural analysis responsibilities as the primary responsible Party shall be as follows: 1. CFD Loads or Loads from engine test applied to model for all design load cases, 2. Generate plots of vent area versus under cowl pressure, 3. FE model prediction of v-blade deflections based on engine test pressure loads, 4. Review model correlation between engine data and FE model deflection, 5. Inner v-blade deflection versus various translating sleeve deployment position to determine the peak deflection, 6. Sensitivity study showing major contributors to v-blade deflection at various sleeve deployment position, 7. Perform detailed stress analysis to obtain margin of safety of fan duct assembly/thrust reverser and core cowl at critical sleeve deployment positions, 8. Provide internal certification loads for final certification design loads, 9. Conduct stress analysis of inlet, chine, fan cowl, thrust reverser, and core cowl, 10. Provide analysis summary for static and damage tolerance analysis, 11. Prepare and transmit analysis documentation to Boeing, and 12. Prepare and transmit documentation in support of Certification documentation.

 

J.               NACELLE FBO/WINDMILLING SUBSTANTIATION

 

Seller FBO/windmilling substantiation responsibilities shall be as follows: 1. Revise FEM for inclusion in integrated FEM model, 2. Apply FBO /windmilling loads to structure (FEM), 3. Evaluate structure for FBO and windmilling loads, 4. Prepare analysis documentation for FBO and windmilling conditions, and 5. Transmit analysis to Boeing.

 

Boeing shall provide interface loads to Seller for FBO/windmilling substantiation.

 

K.            NACELLE WIRING

 

Existing clamps and brackets are the basis for the Baseline Statement of Work price.

 

Additional grounding provisions shall require no new analysis by Seller.

 

L.             CONVERSION

 

Seller’s price for the Baseline Statement of Work price does not include any [*****] except for any new or revised detail as required by this Baseline Nacelle SOW.

 

23


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit D
Notional Production Lot Summary

 

Title

 

Quantity

 

LRIP Lot 1

 

 

 

Low Rate Initial Production (Lot 1)

 

 [*****]

 

LRIP Lot 2

 

 

 

Low Rate Initial Production (Lot 2)

 

[*****]

 

Full Rate Production Lot 3

 

 

 

Full Rate Production (Lot 3)

 

[*****]

 

Full Rate Production Lot 4

 

 

 

Full Rate Production (Lot 4)

 

[*****]

 

Full Rate Production Lot 5

 

 

 

Full Rate Production (Lot 5)

 

[*****]

 

Full Rate Production Lot 6

 

 

 

Full Rate Production (Lot 6)

 

[*****]

 

Full Rate Production Lot 7

 

 

 

Full Rate Production (Lot 7)

 

[*****]

 

Full Rate Production Lot 8

 

 

 

Full Rate Production (Lot 8)

 

[*****]

 

Full Rate Production Lot 9

 

 

 

Full Rate Production (Lot 9)

 

[*****]

 

Full Rate Production Lot 10

 

 

 

Full Rate Production (Lot 10)

 

[*****]

 

Full Rate Production Lot 11

 

 

 

Full Rate Production (Lot 11)

 

[*****]

 

Full Rate Production Lot 12

 

 

 

Full Rate Production (Lot 12)

 

[*****]

 

Full Rate Production Lot 13

 

 

 

Full Rate Production (Lot 13)

 

[*****]

 

 

24



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit E

 

Economic Price Adjustment Provision

 

This Economic Price Adjustment (EPA) provision will be included in the amendment to SBP MS-65530-0016 and may be included in sub-tier contracts in support of the program.

 

(a)          The provisions of this EPA clause provide for both price increases and decreases to protect the USAF (Hereinafter “Customer”), Boeing and the Seller from the effects of economic changes as specified by the indices and the bands as specified in this clause.  It shall be the intent of the Customer and Boeing to identify any adjustment authorized by this clause prior to the release of requirements by the Customer for the applicable government fiscal year procurement lot quantities.  Boeing shall notify the Customer in writing not later than [*****] calendar days prior to the scheduled release of such requirements if an increase or decrease in the applicable pricing is warranted pursuant to the terms of this clause.  The notice to the Customer shall include the amount of the increase or decrease relative to Seller’s pricing.

 

(b)          Within [*****] days following authorization from the Customer, Boeing shall issue to Seller a change to the applicable Order(s) revising the pricing upwards or downwards as appropriate for the requirements supporting the applicable EPA period.

 

(c)           Adjustments under this clause, if any, shall be based upon the formula specified in Paragraph (g) below.  These adjustment amounts are subject to either upward or downward movement.

 

(d)          [*****] shall be used as the standard of measurement for this clause.  The index used for calculations of this clause is [*****] .

 

(e)           The following rules shall apply in making numeric calculations under this clause:

 

(1)          Round decimals to 4 decimal places;

(2)          Round dollar calculations to the nearest whole dollar;

(3)          Round up numbers equal to or greater than 5;

(4)          Round down numbers less than or equal to 4;

(5)          Round percentages to 2 decimal places (e.g. 3.47%).

 

(f)            For purposes of calculating the adjustments required by this clause, the following projected average annual index rates shall apply.  The source of the baseline projected indices shown below is [*****] .  For the years beyond [*****] , the last data point of escalation will be projected at the same rate (straight-lined) on an annual basis through the final period of performance.  Table 1 reflects the projected index based on [*****] , year [*****] ( [*****] per annum).

 

Table 1 - Baseline Projected Average Annual Index Rates

 

Projected Time
Period

 

(Dec 1985=100)
Index Rate

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

25



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

(g) The economic price adjustment shall be calculated as follows:

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

Example calculation for [*****]:

 

 

 

 

 

Example 1
CY2020

 

Example 2
CY 2020

 

Example 3
CY2020

 

STEP

 

FORMULA

 

RESULT

 

RESULT

 

RESULT

 

1

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

2

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 

26



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

4*

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

5

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

6

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

7

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

8

 

[*****]

 

[*****]

 

[*****]

 

[*****]

 

 


* If the resulting value is between [*****] and [*****] , no adjustment will be calculated; therefore, do not proceed to Step 5.

 

EXAMPLE 1: The EPA adjustment is a [*****] decrease in the Price.

EXAMPLE 2: There is no EPA adjustment since the trigger band was not exceeded.

EXAMPLE 3: The EPA adjustment is a [*****] increase in the Price.

 

(i)          Once an adjustment to an eligible Item’s Product price amount has been accomplished under this clause, or a determination made that no adjustment is permitted pursuant to paragraph (g)(4) above, said Item shall not be subject to further Economic Price Adjustment for that applicable period.

 

(j)         In the event the [*****] used are discontinued; or if [*****] suspends publication of an index identified in paragraph (d) above or significantly alters the method of calculating the index, Boeing and the Customer shall agree upon an appropriate substitute index for use under this clause and provide that index to Seller.  If the Boeing and the Customer cannot agree on a substitute or comparable index within [*****] calendar days after an index has been discontinued or altered in method of calculation, Boeing may, acting unilaterally and subject to Customers appeal in accordance with the applicable contract, either adopt the [*****] as altered or establish a new index which shall be provided to Seller.

 

(k)      Any dispute arising under or related to the terms and/or procedures set forth in the foregoing paragraphs shall be resolved in accordance with the provisions of the contract’s Disputes clause located in GTA BCA-65530-0016.

 

27



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit F

FAR and DFAR regulations

 

Flow Down Clauses Applicable to Spirit AeroSystems, Inc.

 

Flowdown of FAR Clauses Applicable to Commercial Items — The FAR clauses listed in FAR 52.244-6(c)(1) below, except as provided in the notes for the clauses marked by asterisks, are incorporated herein by this reference, except that “Contractor” shall mean “Seller.”  The Seller shall flow down FAR 52.244-6, as modified below, to its suppliers, consistent with the notes.

 

FAR 52.244-6 Subcontracts for Commercial Items (Dec 2009)

 

(A) DEFINITIONS. AS USED IN THIS CLAUSE—

 

“COMMERCIAL ITEM” HAS THE MEANING CONTAINED IN FEDERAL ACQUISITION REGULATION 2.101,
DEFINITIONS.

 

“SUBCONTRACT” INCLUDES A TRANSFER OF COMMERCIAL ITEMS BETWEEN DIVISIONS, SUBSIDIARIES, OR AFFILIATES OF THE CONTRACTOR OR SUBCONTRACTOR AT ANY TIER.

 

(B) TO THE MAXIMUM EXTENT PRACTICABLE, THE CONTRACTOR SHALL INCORPORATE, AND REQUIRE ITS SUBCONTRACTORS AT ALL TIERS TO INCORPORATE, COMMERCIAL ITEMS OR NONDEVELOPMENTAL ITEMS AS COMPONENTS OF ITEMS TO BE SUPPLIED UNDER THIS CONTRACT.

 

(C)(1) THE CONTRACTOR SHALL INSERT THE FOLLOWING CLAUSES IN SUBCONTRACTS FOR COMMERCIAL ITEMS:

 

(i)52.203-13 , Contractor Code of Business Ethics and Conduct (Dec 2008) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note )), if the subcontract exceeds $5,000,000 and has a performance period of more than 120 days.  In altering this clause to identify the appropriate parties, all disclosures of violation of the civil False Claims Act or of Federal criminal law shall be directed to the agency Office of the Inspector General, with a copy to the Contracting Officer.

 

(ii) [Reserved]

 

* (iii)  52.219-8 , Utilization of Small Business Concerns (May 2004) (15 U.S.C. 637(d)(2)  and (3)), if the subcontract offers further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $550,000 ($1,000,000 for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.

 

** (iv)  52.222-26 , Equal Opportunity (Mar 2007) (E.O. 11246).

 

**(v)          52.222-35 , Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sept 2006) (38 U.S.C. 4212(a) );

 

**(vi)       52.222-36 , Affirmative Action for Workers with Disabilities (June 1998) (29 U.S.C. 793) .

 

(vii)             [Reserved]

 

(viii)          52.222-50 , Combating Trafficking in Persons (Feb 2009) (22 U.S.C. 7104(g) ).

 

(ix)                [Reserved]

 

28


 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

(2)While not required, the Contractor may flow down to subcontracts for commercial items a minimal number of additional clauses necessary to satisfy its contractual obligations.

 

(D)THE CONTRACTOR SHALL INCLUDE THE TERMS OF THIS CLAUSE, INCLUDING THIS PARAGRAPH (D), IN SUBCONTRACTS AWARDED UNDER THIS CONTRACT.

 


Notes:

 

*Not applicable to the performance of Seller to the extent that the contract, together with all of its subcontracts, will be performed entirely outside the United States and its “outlying areas” as defined in FAR 2.101.

 

**Not applicable to the performance of Seller to the extent that both the performance of its work under the contract, and its recruitment of workers, will occur outside the United States, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, and Wake Island. If a supplier will perform any work, or recruit any workers, within the United States, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, and Wake Island, then this clause must be flowed down to that supplier.

 

Flowdown of DFARS Clauses Applicable to Commercial Items — The DFARS clause listed in DFARS 252.244-7000(c) below, is incorporated herein by this reference, except that “Contractor” shall mean “Seller.” The Seller shall flow down DFARS 252.244-7000 to its suppliers, as modified below.

 

DFARS 252.244-7000 SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL COMPONENTS (DOD CONTRACTS) (AUG 2009)

 

In addition to the clauses listed in paragraph (c) of the Subcontracts for Commercial Items clause of this contract (Federal Acquisition Regulation 52.244-6), the Contractor shall include the terms of the following clause, if applicable, in subcontracts for commercial items or commercial components, awarded at any tier under this contract:

 

(a)          [Reserved]

(b)          [Reserved]

(c)           252.246-7003 Notification of Potential Safety Issues.

(d)          [Reserved]

(e)           [Reserved]

 

29



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit G
[*****]

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

 

[*****]

 

Dollars

 

Dates

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

 

 

 

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

 

[*****]

 

Dollars

 

Dates

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

[*****]

 

[*****]

 

 

 

 

[*****]

 

30



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

Exhibit H
[*****]

 

The following [*****] elements and deliverables are applicable to nonrecurring efforts associated with the Baseline Statement of Work for propulsion.

 

1.               Structural Assessment of static strength for Fan Blade Out (FBO) loads, Ultimate External Dynamic Gust and Ground loads, and Ultimate External Static Maneuver loads

(Based upon delivery of loads by Boeing as part of the single loads cycle)

 

a.               Strut (and Fan Cowl Support Beam (FCSB):

i.                   [*****] :

1.               Revise finite element modeling for inclusion in integrated finite element model,

2.               Conduct loads assessment of strut structure for new loads (listed above) against -300ER certification loads, and

3.               Conduct a single static strength assessment of critical details for FBO loads, Ultimate External Dynamic Gust and Ground loads, and Ultimate External Static Maneuver loads in order to identify any inadequate margins of safety.

4.               For the purpose of clarity, critical strut details are: spar assemblies, side skin assemblies, engine mount bulkheads, frames, and hinge fittings.

 

ii.                [*****]

1.               Provide Engineering Memo(s) for:

a.               Summary of loads assessment,

b.               Margin of safety summary with critical conditions, and

c.                List of strut details which require redesign to ensure static strength capability and a description of proposed changes.

2.               Provide updated strut FEM model for inclusion into Boeing IFEM.

 

b.               Nacelle:

i.                   [*****] :

1.               Review existing structural analysis against new loads, and

2.               Conduct a single assessment of critical details for FBO loads, Ultimate External Dynamic Gust and Ground loads, and Ultimate External Static Maneuver loads in order to identify any inadequate margins of safety for the inlet, fan cowl, fan duct cowl, and thrust reverser.

ii.                [*****]

1.               Provide Engineering Memo for:

a.               Summary of loads assessment,

b.               Margin of safety summary with critical conditions, and

c.                List of nacelle details which require redesign to ensure static strength capability and a description of proposed changes.

2.               Provide updated nacelle FEM model for inclusion into Boeing IFEM.

 

2.               Structural Analysis for Complete Loads Set

(Based upon delivery of loads by Boeing as part of the single loads cycle)

 

a.               Strut (and FCSB):

i.                   [*****]

1.               Conduct an assessment of critical details for loads that were received as part of the single loads cycle but not included in the first milestone. for fatigue, discrete source damage tolerance, windmilling, and wheels up landing (This milestone is not inclusive of any crackgrowth certification deliverables); and

2.               Conduct preliminary crack growth analysis for the purposes of evaluating Principal Structural Elements (PSE’s).

ii.                [*****]

1.               Provide Engineering Memo for:

a.               Margin of safety summary for fatigue and discrete source damage tolerance for critical details,

 

31



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

b.               Analysis summary for windmilling, wheels up landing, rotorburst and preliminary crack growth for critical details, and

c.                List of strut details which require redesign to ensure required fatigue and damage tolerance capability, and a description of proposed changes.

 

b.               Nacelle:

i.                   [*****]

1.               Conduct an assessment of critical details for loads that were received as part of the single loads cycle, but not included in the first milestone for the inlet, fan cowl, fan duct cowl, and thrust reverser:

a.               Obtain new or revised loads pressures and temperatures,

b.               Detail analysis for internal temperatures and loads,

c.                Generate plots of vent area versus under cowl pressure, and

d.               Conduct stress analysis of all thrust reverser and core cowl structure.

2.               Partial Refused Take Off (pRTO) substantiation for the thrust reverser and for v-blade disengagement:

a.               Support Boeing test and analysis planning for through review and input to test plan as required up to milestone date,

b.               Conduct overall minimum engagement analysis for v-groove / blade stack up analysis,

c.                Support selection of critical deployed positions, if requested by Boeing and Spirit accepted completion date is prior to milestone date, and

d.               Support definition of limit load case (pressure loads P13 and P15) for pRTO normal operation, if requested by Boeing and Spirit accepted completion date is prior to milestone date.

3.               Windmilling:

a.               Apply FBO /windmilling loads to structure (FEM), and

b.               Evaluate structure for FBO and windmilling loads.

ii.                [*****]

1.               Provide Engineering Memo of Assessment Results to include:

a.               Summary of loads assessment,

b.               Margin of safety summary with critical conditions (Includes ultimate, limit, fatigue, damage tolerance, and Fan Blade Off (FBO)/windmilling), and

c.                List of nacelle details which require redesign to ensure required capability and a description of proposed changes.

2.               pRTO

a.               Provide Engineering Memo for

i.                                           Overall minimum engagement analysis for v-groove / blade stack up results;

ii.                                        Inputs for test plan, if requested by Boeing and Spirit accepted completion date is prior to milestone date;

iii.                                     Inputs for selection of critical deployed positions as required prior to milestone date,

iv.                                    Inputs for definition of limit load case (P13 and P15 pressure loading) for pRTO normal operation, if requested by Boeing and Spirit accepted completion date is prior to milestone date.

 

3.               Spirit Submittal of Certification package to PS-Div

a.               Strut (and FCSB)

i.                   [*****]
(Conducted once for a single set of loads)

1.               Development of strength check notes for strut structure with higher loads than -300ER,

2.               Conduct Finite Element Model validation,

 

32



 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.  Omissions are designated by the symbol [*****].

 

Boeing/Spirit AeroSystems Inc.

Special Business Provisions (SBP)

MS-65530-0016 Amendment 8

 

3.               Preparation of data for inclusion in certification document deliverables as part of Boeing’s certification plan, and

a.               Certification document deliverables are static analysis (ultimate, limit) and damage tolerance analysis for FBO, windmilling, rotor burst, and crack growth.

b.               Crack growth has traditionally been delayed to occur after initial type certification and should only be considered an element of this milestone if both parties have mutually agreed to complete all DTR forms prior to certification.

4.               Signature of 8100 forms as appropriate.

ii.                [*****] :

1.               SCN’s transmitted to Boeing,

2.               DTR forms transmitted to Boeing, if both parties have mutually agreed to complete all damage tolerance crack growth deliverables prior to certification,

3.               Transmittal of formal document inputs, and

4.               Completed 8100-9 forms as requested.

 

b.               Nacelle

i.                   [*****] :

1.               Submit strength check notes for review and approval by Boeing,

2.               Preparation of data for inclusion in certification document deliverables as part of Boeing’s certification plan, and

3.               Signature of 8100 forms as appropriate.

ii.                [*****] :

1.               SCN’s transmitted to Boeing,

2.               Transmittal of formal document inputs, and

3.               Completed 8100-9 forms as requested.

 

33




Exhibit 10.31

 

AMENDMENT NO. 2

TO

CREDIT AGREEMENT

 

This Amendment No. 2, dated as of August 2, 2013 (this “ Amendment ”) is entered into among SPIRIT AEROSYSTEMS, INC., a Delaware corporation (the “ Borrower ”); SPIRIT AEROSYSTEMS HOLDINGS, INC., a Delaware corporation (the “ Parent Guarantor ”); each of the other Guarantors party hereto; BANK OF AMERICA, N.A., as Administrative Agent, and the Lenders party hereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the Parent Guarantor and the other Guarantors identified therein, the Lenders and Bank of America, N.A., as Administrative Agent are parties to that certain Credit Agreement dated as of April 18, 2012 (as amended, modified, extended, restated or otherwise supplemented from time to time, including without limitation pursuant to that certain Amendment No. 1 dated as of October 26, 2012, the “ Credit Agreement ”);

 

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement, and the Lenders (by action of the Requisite Lenders) have agreed to such amendments subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

 

Section 1. Amendments

 

1.1                                The definitions set forth on Schedule 1 attached hereto are hereby added to Section 1.01 of the Credit Agreement in appropriate alphabetical order.

 

1.2                                In the definition of “Applicable Rate” in Section 1.01 of the Credit Agreement, clause (b) is amended by adding a proviso at the end thereof (immediately following the pricing grid) to read as follows:

 

; provided that, notwithstanding anything to the contrary in the foregoing, at all times during the Suspension Period, the “Applicable Rate” with respect to any Term B Loan shall be the percentage per annum set forth in Pricing Tier 1;

 

1.3                                In the definition of “Applicable Rate” in Section 1.01 of the Credit Agreement, clause (c) is amended by adding a proviso at the end thereof (immediately following the pricing grid) to read as follows:

 

; provided that, notwithstanding anything to the contrary in the foregoing, at all times during the Suspension Period, the “Applicable Rate” with respect to Revolving Loans, Swing Line Loans, Letters of Credit and the Commitment Fee shall be the percentage per annum set forth in Pricing Tier 1.

 



 

1.4                                The definition of “Eurodollar Base Rate” set forth in Section 1.01 of the Credit Agreement is amended in its entirety to read as follows:

 

Eurodollar Base Rate ” means:

 

(a)                                  for any Interest Period with respect to a Eurodollar Rate Loan, (i) the rate per annum equal to the London Interbank Offered Rate or any successor thereto approved by the Administrative Agent (“ LIBOR ”) as published by the applicable Reuters screen page (or such other commercially available source providing quotations of LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; and

 

(b)                                  for any interest calculation with respect to a Base Rate Loan on any date, (i) the rate per annum equal to LIBOR published by the applicable Reuters screen page (or such other commercially available source providing quotations of LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, determined two (2) London Banking Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at the date and time of determination;

 

provided , however , that notwithstanding the foregoing, Eurodollar Base Rate with respect to any Term B Loan that bears interest at a rate based on clause (a) or (b) of this definition shall in any event not be less than three-quarters of one percent (0.75%).

 

1.5                                The definition of “Guarantors” set forth in Section 1.01 of the Credit Agreement is amended by (i) deleting the word “and” in the first sentence thereof at the end of clause (a) and replacing it with a “,”, (ii) deleting the “.” in the first sentence thereof at the end of clause (b) and replacing it with “and” and (iii) adding a new clause (c) to the first sentence thereof to read as follows:

 

(c)                                   with respect to (i) Obligations under any Swap Contract between any Loan Party and any Swap Bank that is permitted to be incurred pursuant to clause (vii) of Section 8.01(a), (ii) Obligations under any Treasury Management Agreement between any Loan Party and any Treasury Management Bank and (iii) any Swap Obligation of a Specified Loan Party (determined before giving effect to Sections 4.01 and 4.08) under the Guaranty, the Borrower.

 

1.6                                The definition of “Obligations” set forth in Section 1.01 of the Credit Agreement is amended by adding a new sentence at the end thereof to read as follows:

 

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Notwithstanding anything to the contrary in the foregoing, the “Obligations” of a Guarantor shall exclude any Excluded Swap Obligations with respect to such Guarantor.

 

1.7                                In Section 2.01(c)(i) of the Credit Agreement, the text “The Borrower may from time to time on or after the Closing Date” is amended to read as “The Borrower may from time to time after the Suspension Period”.

 

1.8                                In Section 2.01(c)(ii) of the Credit Agreement, the text “The Borrower may from time to time on or after the Closing Date” is amended to read as “The Borrower may from time to time after the Suspension Period”.

 

1.9                                In Section 2.03(h), the first sentence thereof is amended by inserting “ plus , during the Suspension Period, one-half of one percent (0.50%)” immediately following the text “the Applicable Rate” set forth therein.

 

1.10                         Section 2.05(b)(ii) of the Credit Agreement is amended by inserting “(except with respect to any Net Proceeds from any Asset Sale of the Tulsa Assets, in which case fifty percent (50%) of such Net Proceeds)” immediately after the text “one hundred percent (100%) of such Net Proceeds” set forth therein.

 

1.11                         In Section 2.08(a) of the Credit Agreement, each of clauses (i), (iii) and (v) are amended by inserting the text “ plus , during the Suspension Period, one-half of one percent (0.50%)” immediately following the text “the Applicable Rate for Revolving Loans” in clauses (i) and (iii) and following the text “the Applicable Rate” in clause (v).

 

1.12                         Article IV of the Credit Agreement is amended to add a new Section 4.08 to read as follows:

 

4.08                         Keepwell .

 

Each Loan Party that is a Qualified ECP Guarantor at the time the Guaranty in this Article IV by any Loan Party that is not then an “eligible contract participant” under the Commodity Exchange Act (a “ Specified Loan Party ”) or the grant of a security interest under the Loan Documents by any such Specified Loan Party, in either case, becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party from time to time to honor all of its obligations under this Guaranty and the other Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings under this Article IV voidable under applicable Debtor Relief Laws, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section 4.08 shall remain in full force and effect until the Obligations have been indefeasibly paid and performed in full (other than contingent indemnification obligations under the Loan Documents that are not then due or claimed). Each Loan Party intends this Section 4.08 to constitute, and this Section 4.08 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Specified Loan Party for all purposes of the Commodity Exchange Act.

 

1.13                         Section 5.02 of the Credit Agreement is amended by adding a new clause (d) to read as follows:

 

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(d)                                  During the Suspension Period, before and after immediately giving effect to the Credit Extension requested in the Request for Credit Extension, the Total Secured Outstandings shall not exceed the Aggregate Borrowing Base Amount set forth in the Borrowing Base Certificate most recently delivered pursuant to Section 7.01(m) or, with respect to the period prior to the first such delivery after the Amendment No. 2 Effective Date, on the Amendment No. 2 Effective Date.

 

1.14                         Section 7.01 of the Credit Agreement is amended by (i) deleting the word “and” at the end of 7.01(k), (ii) deleting the period at the end of 7.01(l) and substituting “; and” therefor and (iii) adding a new clause (m) to read as follows:

 

(m)                              during the Suspension Period, not later than ten (10) Business Days after the delivery of any financial statements pursuant to Section 7.01(a) or (b) , a Borrowing Base Certificate duly executed by a Responsible Officer of the Borrower setting forth a calculation of the Aggregate Borrowing Base Amount as of the end of the most recent Fiscal Quarter covered by such financial statements.

 

1.15                         Section 8.01(a) of the Credit Agreement is amended by (i) deleting the word “and” at the end of clause (xix), (ii) deleting the period at the end of clause (xx) and substituting “; and” therefor and (iii) adding a new clause (xxi) and a new paragraph at the end thereof, in each case to read as follows:

 

(xxi)                        during the Suspension Period, Permitted Additional Indebtedness in an aggregate principal amount not to exceed $300,000,000 at any time outstanding.

 

Notwithstanding anything to the contrary in the foregoing, during the Suspension Period, Indebtedness under the immediately foregoing clauses (xii) , (xvi) , (xvii) , (xviii) and (xix) shall be permitted only to the extent that such Indebtedness (x) is in existence as of the Amendment No. 2 Effective Date and is described on Schedule 8.01 or (y) is a Permitted Refinancing of such Indebtedness.

 

1.16                         Section 8.05 of the Credit Agreement is amended by (i) deleting the word “and” at the end of clause (xiii), (ii) adding the word “and” at the end of clause (xiv) and (iii) adding a new clause (xv) to read as follows:

 

(xv)                           so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the sale of the Tulsa Assets;

 

1.17                         Section 8.07(vii) is amended by inserting the text “except during the Suspension Period,” immediately prior to the text “so long as no Default or Event of Default then exists” set for therein.

 

1.18                         Section 8.12 of the Credit Agreement is amended and restated in its entirety to read as follows:

 

8.12                         Financial Covenants .

 

(a)                                  Commencing with the Fiscal Quarter ending December 31, 2014, the Borrower will not permit the Senior Secured Leverage Ratio as of the last day of any Fiscal Quarter to exceed 2.75:1.0.

 

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(b)                                  Commencing with the Fiscal Quarter ending December 31, 2014, the Borrower will not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter to be less than 4.00:1.0.

 

(c)                                   Commencing with the Fiscal Quarter ending December 31, 2014, the Borrower will not permit the Total Leverage Ratio as of the last day of any Fiscal Quarter to exceed 4.00:1.0.

 

(d)                                  Commencing with the Fiscal Quarter ending December 31, 2014, if, as of the date of any Airbus Discontinuance or any 787 Discontinuance, the outstanding aggregate amount of advance payments or progress payments made by Boeing and/or Airbus in connection with the 787 Program and/or the A350 XWB Program that are then considered “Indebtedness” exceeds $250,000,000, the Borrower will not permit the Total Leverage Ratio to exceed the Total Leverage Ratio required at such time by Section 8.12(c) for the period in which such Airbus Discontinuance or 787 Discontinuance shall be deemed to have occurred as provided below. For purposes of calculating the Total Leverage Ratio pursuant to this clause (d) , the occurrence of an Airbus Discontinuance or the occurrence of a 787 Discontinuance shall be deemed to have occurred as of the last day of the most recent four Fiscal Quarter period preceding the date of such Airbus Discontinuance and/or such 787 Discontinuance for which the Borrower was required to deliver financial statements pursuant to Section 7.01(a) or (b) .

 

(e)                                   During the Suspension Period, at any time, the Borrower will not permit the Total Secured Outstandings to exceed the Aggregate Borrowing Base Amount set forth in the most recent Borrowing Base Certificate delivered pursuant to Section 7.01(m) .

 

(f)                                    As of each Fiscal Quarter ending during the Suspension Period, commencing with the Fiscal Quarter ending June 27, 2013, the Borrower will not permit Minimum Liquidity to be less than $500,000,000.

 

1.19                         Section 9.05 of the Credit Agreement is amended by adding a new sentence at the end thereof to read as follows:

 

Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or such Guarantor’s assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section.

 

1.20                         The Credit Agreement is amended to include a new Schedule 8.01 (Existing Indebtedness as of the Amendment No. 2 Effective Date under clauses (vi), (xvi), (xvii), (xviii) and (xiv) of Section 8.01(a) of the Credit Agreement) in the form attached hereto as Schedule 8.01, and the table of Schedules and Exhibits following the table of contents in the Credit Agreement shall be amended updated accordingly.

 

1.21                         The Credit Agreement is amended to include a new Exhibit 1.01 (Form of Borrowing Base Certificate) in the form attached hereto as Exhibit 1.01, and the table of Schedules and Exhibits following the table of contents in the Credit Agreement shall be amended accordingly.

 

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Section 2. Conditions Precedent to the Effectiveness of this Amendment.

 

This Amendment shall become effective as of the date first written above when, and only when, each of the following conditions precedent shall have been satisfied or waived (the “ Amendment No. 2 Effective Date ) by the Administrative Agent:

 

2.1                                Executed Counterparts . The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Guarantors, the Administrative Agent, the Requisite Lenders and the Requisite Revolving Lenders;

 

2.2                                Borrowing Base Certificate . The Administrative Agent shall have received a Borrowing Base Certificate as of the Amendment No. 2 Effective Date;

 

2.3                                No Default or Event of Default . Immediately before and after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing; and

 

2.4                                Fees and Expenses . The Borrower shall have delivered, by wire transfer of immediately available funds, to the Administrative Agent, for the account of each Lender that consents to this Amendment, an amendment fee in an amount equal to twenty-five basis points (0.25%) of the sum of the Revolving Commitment of such Lender plus the aggregate outstanding principal amount of the Term B Loan of such Lender, which fee shall be earned and payable on the Amendment No. 2 Effective Date.

 

Section 3. Representations and Warranties

 

On and as of the Amendment No. 2 Effective Date, after giving effect to this Amendment, the Loan Parties hereby represent and warrant to the Administrative Agent and each Lender as follows:

 

3.1                                this Amendment has been duly authorized, executed and delivered by each Loan Party and, assuming the due execution and delivery of this Amendment by each of the other parties hereto, constitutes the legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally;

 

3.2                                each of the representations and warranties contained in Article VI of the Credit Agreement and in each other Loan Document is true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date);

 

3.3                                no Default or Event of Default has occurred and is continuing; and

 

3.4                                after giving effect to this Amendment, neither the modification of the Credit Agreement affected pursuant to this Amendment nor the execution, delivery, performance or effectiveness of this Amendment (a) impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all Obligations, whether heretofore or hereafter incurred; or (b) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such Liens.

 

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Section 4. Fees and Expenses

 

The Borrower agrees to pay promptly (and in any event on the Amendment No. 2 Effective Date) after presentation of an invoice therefor all reasonable and documented out-of-pocket fees and expenses of the Joint Lead Arrangers (including the reasonable and documented fees and out-of-pocket expenses of Moore & Van Allen, PLLC) in connection with the preparation, negotiation, execution and delivery of this Amendment.

 

Section 5. Reference to the Effect on the Loan Documents

 

5.1                                As of the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder”, “thereof’ and words of like import), shall mean and be a reference to the Credit Agreement, as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument. Each of the table of contents and lists of Exhibits and Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as of the Amendment No. 2 Effective Date;

 

5.2                                Except as expressly amended hereby or specifically waived above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed;

 

5.3                                The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Borrower, Lead Arranger or the Administrative Agent under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein; and

 

5.4                                This Amendment is a Loan Document.

 

Section 6. Execution in Counterparts

 

This Amendment may be executed by the parties hereto in several counterparts (including by facsimile or other electronic imaging means (e.g., “.pdf” or “.tif”), each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

 

Section 7. Governing Law

 

THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 8. Headings

 

The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

 

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Section 9. Notices

 

All communications and notices hereunder shall be given as provided in the Credit Agreement.

 

Section 10 . Severability

 

The fact that any term or provision of this Amendment is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person.

 

Section 11. Successors

 

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

 

Section 12. Cross-References

 

References in this Amendment to any Section are, unless otherwise specified or otherwise required by the context, to such Section of this Amendment.

 

Section 13. Affirmations

 

13.1                         Each Loan Party signatory hereto hereby (a) ratifies and affirms its obligations under the Loan Documents (including guarantees and security agreements) executed by the undersigned and (b) acknowledges, renews and extends its continued liability under all such Loan Documents and agrees such Loan Documents remain in full force and effect, in each case, as modified by this Amendment.

 

13.2                         Each Loan Party signatory hereto hereby reaffirms, as of the Amendment No. 2 Effective Date, (a) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated thereby, and (b) its guarantee of payment of the Obligations pursuant to the Guaranty and the Lien on the Collateral securing payment of the Obligations pursuant to the Security Documents.

 

13.3                         Each Loan Party signatory hereto hereby certifies that, as of the date hereof (both before and after giving effect to the occurrence of the Amendment No. 2 Effective Date), the representations and warranties made by it contained in the Loan Documents to which it is a party are true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date).

 

13.4                         Each Loan Party signatory hereto hereby acknowledges and agrees that the acceptance by the Administrative Agent and each Lender shall not be construed in any manner to establish any course of dealing on the Administrative Agent’s or Lender’s part, including the providing of any notice or the requesting of any acknowledgment not otherwise expressly provided for in any Loan Document with respect to any future amendment, waiver, supplement or other modification to any Loan Document or any arrangement contemplated by any Loan Document.

 

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13.5                         Each Loan Party signatory hereto hereby represents and warrants that, immediately after giving effect to this Amendment, each Loan Document, in each case as modified by this Amendment (where applicable), to which it is a party, assuming the due execution and delivery of such Loan Document as modified (where applicable) by each of the other parties thereto, continues to be a legal, valid and binding obligation of the undersigned, enforceable against such party in accordance with its terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

 

[SIGNATURE PAGES FOLLOW]

 

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IN WINTER WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers and general partners thereunto duly authorized, as of the date first written above.

 

 

SPIRIT AEROSYSTEMS, INC.

 

 

 

 

By:

/s/ Mark J. Suchinski

 

Name:

Mark J. Suchinski

 

Title:

Vice President, Treasurer & Financial Planning

 

 

 

SPIRIT AEROSYSTEMS HOLDINGS, INC.

 

 

 

 

By:

/s/ Mark J. Suchinski

 

Name:

Mark J. Suchinski

 

Title:

Vice President, Treasurer & Financial Planning

 

 

 

SPIRIT AEROSYSTEMS INTERNATIONAL HOLDINGS, INC.

 

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

 

 

SPIRIT AEROSYSTEMS FINANCE, INC.

 

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

 

 

SPIRIT AEROSYSTEMS INVESTCO, LLC

 

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

 

 

SPIRIT AEROSYSTEMS CAROLINA, INC.

 

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

 

 

SPIRIT AEROSYSTEMS OPERATIONAL INTERNATIONAL, INC.

 

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

SPIRIT AEROSYSTEMS, INC.

AMENDMENT NO. 2

 



 

 

SPIRIT DEFENSE, INC.

 

 

 

By:

/s/ Joseph T. Boyle

 

Name:

Joseph T. Boyle

 

Title:

Assistant Secretary

 

SPIRIT AEROSYSTEMS, INC.

AMENDMENT NO. 2

 



 

 

Bank of America, N.A.,

 

as Administrative Agent and Collateral Agent

 

 

 

By:

/s/ Kevin L. Ahart

 

Name:

Kevin L. Ahart

 

Title:

Vice President

 

SPIRIT AEROSYSTEMS, INC.

AMENDMENT NO. 2

 


 

LENDERS’ SIGNATURE PAGES ON FILE WITH ADMINISTRATIVE AGENT

 



 

Schedule 1

 

Defined Terms

 

Advance Percentage ” means as follows:

 

(a)                                  with respect to Eligible Receivables, seventy percent (70%);

 

(b)                                  with respect to Eligible Raw Materials Inventory and Eligible Finished Goods Inventory, sixty percent (60%);

 

(c)                                   with respect to Eligible Work-in-Process Inventory, thirty-five percent (35%);

 

(d)                                  with respect to Eligible P&E, fifty percent (50%);

 

(e)                                   with respect to Eligible Real Estate, fifty percent (50%); and

 

(f)                                    with respect to Eligible Intercompany Loans, seventy-five percent (75%).

 

Aggregate Borrowing Base Amount ” means, as of any date of determination, the sum of the Eligible Collateral Borrowing Base Amounts for each type of Eligible Collateral.

 

Amendment No. 2 to Credit Agreement ” means that certain Amendment No. 2 to Credit Agreement dated as of August 2, 2013 by and among the Loan Parties, the Lenders party thereto and Bank of America, as Administrative Agent.

 

Amendment No. 2 Effective Date ” means August 2, 2013.

 

Borrowing Base Certificate ” means a certificate substantially in the form of Exhibit 1.01.

 

Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .).

 

Customary Permitted Liens ” means, with respect to all Eligible Collateral, the Permitted Liens described in clauses (i) , (v) , and (xv)  of Section 8.02 and (b) solely with respect to Eligible P&E and Eligible Real Estate, Permitted Liens described in clauses (vii)  and (x) , of Section 8.02 .

 

Eligible Collateral ” means Eligible Receivables, Eligible Raw Materials Inventory, Eligible Finished Goods Inventory, Eligible Work-in-Process Inventory, Eligible P&E, Eligible Real Estate and Eligible Intercompany Loans of the Loan Parties; provided that upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, Eligible Collateral shall exclude any Eligible Receivables, Eligible Raw Materials Inventory, Eligible Finished Goods Inventory, Eligible Work-in-Process Inventory and/or Eligible P&E associated with the 787 Program or the A350 XWB Program, as applicable.

 

Eligible Collateral Borrowing Base Amount ” means, as of any date of determination, with respect to any Eligible Collateral, the Eligible Value for such Eligible Collateral multiplied by the Advance Percentage for such Eligible Collateral.

 

Eligible Finished Goods Inventory ” means, as of any date of determination, the items classified by the Loan Parties as “finished goods” in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary

 



 

Permitted Liens.

 

Eligible Intercompany Loans ” means loans made by any of the Loan Parties to any Foreign Subsidiary of the Borrower that constitute Collateral; provided that (a) loans shall not be included in Eligible Intercompany Loans unless the promissory note or other instrument evidencing such Indebtedness has been delivered to the Collateral Agent, together with a duly executed allonge or other instrument of transfer with respect thereto and (b) a loan shall not be included in Eligible Intercompany Loans if the aggregate outstanding principal amount thereof, when taken together with all other outstanding Indebtedness of the applicable obligor, exceeds the going concern value of the obligor (determined as of the date of the Borrowing Base Certificate most recently delivered pursuant to Section 7.01(m)) with respect to such loan.

 

Eligible P&E ” means, as of any date of determination, the items classified by the Loan Parties as “property and equipment” (other than “real property”) in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens; provided that any such property and equipment constituting a fixture (as defined in the Uniform Commercial Code), shall constitute “Eligible P&E” only if a fixture filing has been filed in the appropriate local jurisdiction in respect thereof. For purposes of clarity, any tooling not owned by the Loan Parties shall not be included in Eligible P&E.

 

Eligible Raw Materials Inventory ” means, as of any date of determination, the items classified by the Loan Parties as “raw materials” in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens.

 

Eligible Real Estate ” means, as of any date of determination, Mortgaged Properties in respect of which the Collateral Agent has valid, perfected and enforceable Mortgages, subject only to Customary Permitted Liens; provided that no Mortgaged Property shall constitute “Eligible Real Estate” until the Loan Parties have delivered to the Collateral Agent appraisals that comply with the requirements of the Federal Institutions Reform, Recovery and Enforcement Act with respect to a sampling of parcels of real estate included in the Mortgaged Properties (with the sample to be agreed between the Borrower and the Administrative Agent).

 

Eligible Receivables ” means, as of any date of determination, the items classified by the Loan Parties as “accounts receivable” in accordance with GAAP, in each case (a) that are owing by a Person that is not a consolidated Affiliate of any Loan Party, (b) that have not been outstanding for more than one hundred twenty (120) days, (c) that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens, (d) that are not unbilled receivables and (e) net of retainage. As used herein “unbilled receivables” means unbilled receivables on long-term aerospace contracts, comprised principally of revenue recognized on contracts for which amounts were earned but not contractually billable as of the date of determination, or amounts earned in which recovery will occur over the term of the contract, which could exceed one year, and “retainage” means any portion of the agreed upon contract payment withheld until the contracted for work is complete or substantially complete, including without limitation amounts due on Gulfstream G650 deliveries from 2010 through such date of determination.

 

Eligible Value ” means, as of any date of determination:

 

(a)                                  with respect to Eligible Receivables, the Net Book Value of Eligible Receivables as derived from the general ledger or other financial records of the Loan Parties that is the basis for the most recent Borrowing Base Certificate delivered to the Administrative Agent in

 

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accordance with the Credit Agreement;

 

(b)                                  with respect to each of Eligible Raw Material Inventory, Eligible Finished Goods Inventory and Eligible Work-in-Process Inventory, the Net Book Value of such Eligible Raw Material Inventory, Eligible Finished Goods Inventory and Eligible Work-in-Process Inventory, as derived from the general ledger or other financial records of the Loan Parties that is the basis for the most recent Borrowing Base Certificate delivered to the Administrative Agent in accordance with the Credit Agreement;

 

(c)                                   with respect to Eligible P&E, the Net Book Value of the Eligible P&E as derived from the general ledger or other financial records of the Loan Parties that is the basis for the most recent Borrowing Base Certificate delivered to the Administrative Agent in accordance with the Credit Agreement; and

 

(d)                                  with respect to Eligible Real Estate, the Net Book Value of the Eligible Real Estate as derived from the general ledger or other financial records of the Loan Parties that is the basis for the most recent Borrowing Base Certificate delivered to the Administrative Agent in accordance with the Credit Agreement.

 

Eligible Work-in-Process Inventory ” means, as of any date of determination, items classified by the Loan Parties as “work-in-process” in accordance with GAAP, in each case (a) that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens, (b) net of deferred production costs to the extent they are included in work-in-process, (c) net of capitalized pre-production costs to the extent they are included in work-in-process and (d) net of forward loss provision to the extent it is included in work-in-process. As used herein, (x) “deferred production costs” shall mean inventory costs under long-term contracts that exceed the estimated average cost of all units expected to be produced to the extent the actual or expected excess-over-average is reasonably expected to be fully offset by lower-than-average costs in future periods of a contract, and (y) “capitalized pre-production costs” shall mean certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis or as a result of significant customer directed work changes.

 

Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant under a Loan Document by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 4.08 and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or grant by such Guarantor of a security interest, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Master Agreement governing more than one Swap Contract, such exclusion shall apply to only the portion of such Swap Obligation that is attributable to Swap Contracts for which such Guaranty or security interest is or becomes illegal.

 

Master Agreement ” has the meaning set forth in the definition of “Swap Contract.”

 

Minimum Liquidity ” means, as of any date of determination, on an aggregate basis for all Loan Parties, the sum of (a) unrestricted and unencumbered (other than by Liens (x) in favor of the Administrative Agent or (y) permitted under clause (xv) of Section 8.02) cash maintained in accounts located in (i) the United States and (ii) to the extent that such cash is available after giving effect to any

 

3



 

reduction for repatriation or other taxes or fees associated with the repatriation of such cash into the United States, Scotland, and (b) unused Revolving Commitments actually available for Borrowing.

 

Net Book Value ” means, with respect to any asset of any Person (a) except in the case of accounts receivable, the gross book value of such asset on the balance sheet of such Person, minus depreciation or amortization in respect of such asset on such balance sheet, and (b) in the case of accounts receivable, the gross book value thereof minus any specific reserves attributable thereto, each determined in accordance with GAAP.

 

Qualified ECP Guarantor ” means at any time each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Specified Loan Party ” has the meaning specified in Section 4.08.

 

Suspension Period ” means the period from and including the Amendment No. 2 Effective Date through and including the date of receipt of a Compliance Certificate for the period of four fiscal quarters ending December 31, 2014 in accordance with Section 7.01(b).

 

Swap Obligations ” means with respect to any Guarantor any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

Total Secured Outstandings ” means, as of any date of determination, the sum of (a) the aggregate outstanding principal of all Term Loans plus (b) Total Revolving Outstandings plus (c) all other Indebtedness secured by a Lien.

 

Tulsa Assets ” means property or assets used for, or in support of, operations in or near Tulsa or McAlester, Oklahoma.

 

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Schedule 8.01

 

Existing Indebtedness as of the Amendment No. 2 Effective Date Under Clauses (xii), (xvi), (xvii), (xviii) and (xix) of Section 8.01(a) of the Credit Agreement

 

1.               Indebtedness evidenced by that certain Loan Agreement, dated as of April 1, 2006, between the Spirit AeroSystems, Inc. and Spirit Aerosystems (Europe) Ltd., as borrower, as amended, restated, supplemented or otherwise modified from time to time.

 

2.               Indebtedness evidenced by that certain Loan Agreement, dated as of June 18, 2009, among Spirit AeroSystems, Inc. and Spirit AeroSystems France Sarl, as borrower, as amended, restated, supplemented or otherwise modified from time to time.

 

3.               [OTHERS]

 



 

Exhibit 1.01

 

[Form of] Borrowing Base Certificate

 

Financial Statement Date:                     ,            

 

To:                              Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of April 18, 2012 (as amended, restated, extended, supplemented, increased or otherwise modified in writing from time to time, including without limitation pursuant to that certain Amendment No. 1 dated as of October 26, 2012 and that certain Amendment No. 2 dated as of August 2, 2013, the “ Credit Agreement ”), among Spirit AeroSystems, Inc., a Delaware corporation (the “ Borrower ”), the Parent Guarantor and the other Guarantors identified therein, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the                                                   of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower pursuant to Section 7.01(m)  of the Credit Agreement, and that attached hereto as Schedule 1 is the calculation of the Aggregate Borrowing Base Amount for the most recent Fiscal Quarter covered by the financial statements referenced above in conformance with the terms of the Credit Agreement.

 

[Signature page follows]

 



 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                    ,                     .

 

 

SPIRIT AEROSYSTEMS, INC.,

 

a Delaware corporation

 

 

 

By:

 

 

Name:

 

Title:

[Must be a Responsible Officer]

 


 

Schedule 1

 

ELIGIBLE COLLATERAL

 

AMOUNT

 

1.

Eligible Receivables(1)

 

 

 

a

Net Book Value of accounts receivable in accordance with GAAP that are owing by a Person that is not a consolidated Affiliate of the Company

 

$

 

 

b.

Net Book Value of accounts receivable in accordance with GAAP that have been outstanding for more than one hundred twenty (120) days

 

$

 

 

c.

Net Book Value of accounts receivable in accordance with GAAP that do not constitute Collateral or in which the Collateral Agent does not have a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens

 

$

 

 

d.

Net Book Value of accounts receivable in accordance with GAAP that are unbilled receivables

 

$

 

 

e.

Retainage

 

$

 

 

f.

Eligible Value of Eligible Receivables (1.a. minus 1.b. minus 1.c. minus 1.d. minus 1.e.)

 

$

 

 

g.

Eligible Receivables to be included in Aggregate Borrowing Base Amount (70% times 1.f.)

 

$

 

 

2.

Eligible Raw Materials Inventory(2)

 

 

 

a.

Net Book Value of raw materials in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens

 

$

 

 

b.

Eligible Raw Materials Inventory to be included in Aggregate Borrowing Base Amount (60% times 2.a.)

 

$

 

 

3.

Eligible Finished Goods Inventory(3)

 

 

 

a.

Net Book Value of finished goods in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens

 

$

 

 

b.

Eligible Finished Goods Inventory to be included in Aggregate Borrowing Base Amount (60% times 3.a.)

 

$

 

 

4.

Eligible Work-in-Process Inventory(4)

 

 

 

a.

Net Book Value of work-in-process in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens

 

$

 

 

b.

Deferred production costs to the extent they are included in work-in-process

 

$

 

 

c.

Capitalized pre-production costs to the extent they are included in work-in- process

 

$

 

 

d.

Forward loss provision to the extent it is included in work-in-process

 

$

 

 

 


(1) Upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, any Eligible Receivables associated with the 787 Program or the A350 XWB Program shall be excluded.

(2) Upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, any Eligible Raw Materials Inventory associated with the 787 Program or the A350 XWB Program shall be excluded.

(3) Upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, any Eligible Finished Goods Inventory associated with the 787 Program or the A350 XWB Program shall be excluded.

(4) Upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, any Eligible Work-in-Process Inventory associated with the 787 Program or the A350 XWB Program shall be excluded.

 



 

e.                Eligible Value of Eligible Work-in-Process Inventory (4.a. minus 4.b. minus 4.c. minus 4.d.)

 

$

 

 

f.                 Eligible Work-in-Process Inventory to be included in Aggregate Borrowing Base Amount (35% times 4.e.)

 

$

 

 

5.               Eligible P&E(5)(6)

 

 

 

a.               Net Book Value of property and equipment (other than real property) in accordance with GAAP that constitute Collateral and in which the Collateral Agent has a valid, perfected and enforceable security interest, subject only to Customary Permitted Liens(7)

 

$

 

 

b.               Eligible P&E to be included in Aggregate Borrowing Base Amount (50% times 5.a.)

 

$

 

 

6.               Eligible Real Estate

 

 

 

a.               Net Book Value of Mortgaged Properties in respect of which the Collateral Agent has valid, perfected and enforceable Mortgages, subject only to Customary Permitted Liens(8)

 

$

 

 

b.               Eligible Real Estate to be included in Aggregate Borrowing Base Amount (50% times 6.a.)

 

$

 

 

7.               Eligible Intercompany Loans

 

 

 

a.               Loans made by any of the Loan Parties to any Foreign Subsidiary of the Borrower that constitute Collateral(9)

 

$

 

 

b.               Eligible Intercompany Loans to be included in Aggregate Borrowing Base Amount (75% times 7.a.)

 

$

 

 

AGGREGATE BORROWING BASE AMOUNT

 

 

 

1.               Aggregate Borrowing Base Amount (1.g. plus 2.b. plus 3.b. plus 4.f. plus 5.b. plus 6.b. plus 7.b.)

 

$

 

 

2.               Total Secured Outstandings

 

 

 

a.               Aggregate outstanding principal of all Terms Loans

 

$

 

 

b.               Total Revolving Outstandings

 

$

 

 

c.                All other Indebtedness secured by a Lien

 

$

 

 

d.               Total Secured Outstandings (2.a. plus 2.b. plus 2.c.)

 

$

 

 

3.               Section 8.12(e)  of the Credit Agreement requires that the Borrower not permit Total Secured Outstandings to exceed the Aggregate Borrowing Base Amount set forth above. The Borrower [is][is not] in compliance with Section 8.12(e)  of the Credit Agreement.

 

 

 

 

Note: In the event of conflict between the provisions and formulas set forth in this Schedule 1 and the

 


(5) Upon the occurrence of any Airbus Discontinuance or any 787 Discontinuance, any Eligible P&E associated with the 787 Program or the A350 XWB Program shall be excluded.

(6) Any tooling not owned by the Loan Parties shall not be included in Eligible P&E.

(7) Any such property and equipment constituting a fixture (as defined in the Uniform Commercial Code), shall constitute Eligible P&E only if a fixture filing has been filed in the appropriate local jurisdiction in respect thereof.

(8) No Mortgaged Property shall constitute Eligible Real Estate until the Loan Parties have delivered to the Collateral Agent appraisals that comply with the requirements of the Federal Institutions Reform, Recovery and Enforcement Act with respect to a sampling of parcels of real estate included in the Mortgaged Properties (with the sample to be agreed between the Borrower and the Administrative Agent).

(9) Loans shall not be included in Eligible Intercompany Loans (a) unless the promissory note or other instrument evidencing such Indebtedness has been delivered to the Collateral Agent, together with a duly executed allonge or other instrument of transfer with respect thereto and (b) if the aggregate outstanding principal amount thereof, when taken together with all other outstanding Indebtedness of the applicable obligor, exceeds the going concern value of the obligor with respect to such loan.

 



 

provisions and formulas set forth in the Credit Agreement, the provisions and formulas of the Credit Agreement shall prevail.

 




Exhibit 10.40

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into as of June       , 2013 (the “Effective Date”) by Spirit AeroSystems, Inc., a Delaware corporation (“we,” “us,” “our,” and other similar pronouns), and Heidi Wood (“you,” “your,” “yours,” and other similar pronouns). Our parent company is Spirit AeroSystems Holdings, Inc. (“Holdings”), and references in this Agreement to “Spirit” mean us and Holdings collectively.

 

Recitals

 

A .                                     We are engaged in the manufacture, fabrication, maintenance, repair, overhaul, and modification of aerostructures and aircraft components, and market and sell our products and services to customers throughout the world (together with any other businesses in which Spirit may in the future engage, by acquisition or otherwise, the “Business”).

 

B.                                     We have agreed to employ you as our Senior Vice President Strategy, and you have agreed to accept such employment in accordance with the terms and conditions of this Agreement.

 

C.                                     In the course of performing your duties for us, you are likely to acquire confidential and proprietary information belonging to us, our customers, and our suppliers, develop relationships that are vital to our Business and goodwill, and acquire other important assets in which we have a protectable interest, and you have agreed to the covenants in this Agreement required to protect those assets.

 

Agreement

 

In consideration of the foregoing and the representations, warranties and mutual covenants herein, you and we agree as follows:

 

1.                                       Employment

 

(a)                                  Position and Responsibility We agree to employ you as our Senior Vice President Strategy, reporting to the Chief Executive Officer, to perform such duties in and about our Business as are appropriate for a person in such position, which may include serving as an executive officer or member of the board of directors of any other affiliated company at our request. The job title and duties referred to in the preceding sentence may be changed by us in our sole discretion at any time. Your office will be at our headquarters in Wichita, KS. You will devote your full time to this employment

 

(b)                                  Employment Period Your employment will commence on the Effective Date, will continue for a period of two years after the Effective Date (the “Initial Term”), and will be automatically extended for successive one-year periods thereafter (each a “Renewal Term”), unless either of us provides the other with written notice at least ninety days in advance of the expiration of the Initial Term or the then-current Renewal Term, as applicable, that such period will not be so extended (the Initial Term and any Renewal Term are, collectively, the

 

1



 

“Employment Period”). In all cases, your employment is subject to earlier termination as provided in this Agreement.

 

2 .                                       Performance

 

You will devote your best efforts and abilities to faithfully preserve and advance our Business, welfare, and best interests. You will strictly comply with all Spirit rules, policies, and procedures in effect and as amended from time to time, including, but not limited to, our Code of Ethical Business Conduct, Insider Trading Policy, Anti-Bribery Policy, Related Person Transaction Policy, Special Security Agreement, and internal and disclosure controls; follow all applicable U.S. and foreign laws and regulations; and be governed by our decisions and instructions consistent with the duties assigned to you.

 

3 .                                       Compensation

 

Except as otherwise provided herein, for all services to be performed by you in any capacity, including without limitation any services as an officer, director, member of any committee, or any other duties assigned to you, during the Employment Period we will pay or provide you with the following, and you will accept the same, as compensation for your covenants in and performance of your duties under this Agreement:

 

(a)                                  Base Salary You will be entitled to an annual salary of $400,000 (“Base Salary”), which will be paid in accordance with our policies and procedures. The Base Salary may be changed from time to time on a discretionary basis or based upon your and/or our performance or such other factors as the Board or the Board’s compensation committee (“Committee”) deems appropriate in its sole discretion.

 

(b)                                  Sign On Bonuses

 

(i)                                 Signing Bonus — Cash In consideration of entering into this Agreement, we will pay you a one-time grossed-up cash bonus of $150,000 (the “Signing Bonus”), plus an amount equal to all taxes required to be withheld with respect to your receipt of that payment, so that after such taxes are withheld you will receive a net amount of $150,000. This amount will be payable within 30 days of the Effective Date of this Agreement. Payment of the Signing Bonus is conditioned upon you being employed on the date payment is made and remaining employed by us for a period of not less than one year after the date of the payment. If the foregoing condition precedent is not satisfied with respect to this payment, this payment plus the grossed-up taxes thereon, must be immediately repaid to us, except that you will not be required to repay any amount if you are terminated by us without Cause. In the event of your termination under circumstances that require repayment of part or all of the Signing Bonus, we may deduct from your paycheck(s) (or other amounts owed to you) an amount equal to the amount due to be repaid. To the extent such deductions are not sufficient to fully reimburse us, you will remain obligated to pay us in full for such amounts still due and owing.

 

(ii)                              Signing Bonus — Restricted Stock Subject to approval by the Holdings board of directors, in consideration of entering into this Agreement, we will grant you a

 

2



 

one-time award of $440,000 of restricted stock (the “Bonus Shares”) under the Spirit AeroSystems Holdings, Inc. Long-Term Incentive Plan, as amended or restated from time to time (the “LTIP”), subject to the terms and provisions of the LTIP and this Section 3(b). The Bonus Shares will vest in accordance with the following vesting schedule:

 

Years of Service
After Effective Grant Date

 

Percent Vested
in Bonus Shares

 

 

 

 

 

Less than 2

 

0

%

2 but less than 3

 

33

%

3 but less than 4

 

66

%

4 or more

 

100

%

 

For purposes of this vesting schedule, the “Effective Grant Date” will be May 7, 2013, which is the same date grants of shares under the LTIP were made to the broad class of LTIP participants for 2013, with the effect that the Bonus Shares will vest on the same schedule as the shares previously awarded to the broad class of LTIP participants for 2013. You will be credited with a year of service after the Effective Grant Date for each 12-month period after the Effective Grant Date during which you are continuously performing services (or deemed to be continuously performing services) for us.

 

(iii)                                Number of Shares For purposes of determining the number of shares of stock to be granted in connection with the award described in the foregoing clause (ii), the total dollar value of the award will be divided by an amount equal to the average of the opening value and the closing value of a share of our Class A common stock traded on the New York Stock Exchange, as determined on the third trading day after the date on which we publicly announce our earnings for the second fiscal quarter of 2013. The number of shares so determined with respect to each award will be rounded up to the nearest whole number.

 

(c)                                   Short-Term Incentive Plan You are eligible to participate in the Spirit AeroSystems Holdings, Inc. Short-Term Incentive Plan, as amended or restated from time to time (“STIP”), pursuant to and in accordance with the terms and conditions of the STIP. Your STIP award opportunity will be 80% of Base Salary if target performance goals are reached and 160% of Base Salary if outstanding performance goals are reached. If target performance goals are not reached, you will be entitled to such incentive compensation, if any, as is otherwise provided by the STIP and our policies. In addition to the foregoing, we agree that (i) for the 2013 plan year, you will be entitled to an incentive compensation award under the STIP of 80% of Base Salary; (ii) the amount you are entitled to receive for the 2013 plan year will not be prorated due to service for less than the full 2013 plan year; (iii) the cash component payable to you for the 2013 plan year shall be paid to you on or before December 1, 2013, in the amount of $160,000, less applicable withholdings; and (iv) the stock component payable to you for the 2013 plan year shall be made in the time and manner consistent with the STIP, in or about February 2014, and will be subject to the STIP’s normal vesting schedule.

 

(d)                                  Long-Term Incentive Plan You are eligible to participate in annual awards under the LTIP granted by the Board or the Committee, pursuant to and in accordance

 

3



 

with the terms and conditions of the LTIP, as amended or restated from time to time. Each year of the Initial Term, you will receive an annual LTIP award equal to 110% of Base Salary. Your annual LTIP awards will be granted at the time and on the terms that we grant annual LTIP awards to our other executives.

 

(e)                                   Nonqualified Deferred Compensation Plan You are eligible to participate in the Spirit AeroSystems Holdings, Inc. Amended and Restated Deferred Compensation Plan, as amended or restated from time to time (“DCP”), subject to and in accordance with the terms and provisions of the DCP. You may elect to voluntarily defer compensation under the DCP in accordance with the terms and conditions of the DCP and the plan administrator’s policies and procedures.

 

(f)                                    Other Benefit Plans You will also be eligible to participate in other executive benefit plans, policies, practices, and arrangements in which one or more of our senior executives is eligible to participate from time to time, including without limitation (i) any defined benefit or defined contribution retirement plan, excess or supplementary plan, profit-sharing plan, savings plan, health and dental plan, disability plan, survivor-income and life-insurance plan, executive financial planning program, or other arrangement, or any successors thereto; (ii) any perquisite allowance or reimbursement arrangement the Board or Committee may adopt; and (iii) such other benefit plans as we may establish or maintain from time to time (collectively “Benefit Plans”). Your entitlement to any other compensation or benefits will be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.

 

(g)                                   Earned Time Off You will be provided with earned time off and 12 paid holidays each year in accordance with our policies and practices in effect from time to time. Notwithstanding any contrary policy or practice, however, you will be credited with a minimum of 16 days of earned time off per year, of which 16 days will be immediately available to you upon the Effective Date.

 

(h)                                  Fringe Benefits You will be provided with all other fringe benefits and perquisites awarded by the Board or Committee for your position level from time to time, including relocation benefits at the Company’s Level 4 Policy.

 

(i)                                      Withholding Taxes We will have the right to deduct from all payments made to you hereunder any federal, state, local and foreign taxes required by law to be withheld.

 

(j)                                     Expenses During your employment, we will promptly pay or reimburse you for all reasonable out-of-pocket expenses incurred by you in the performance of your duties, in accordance with our policies and procedures then in effect.

 

The payment or reimbursement of expenses described in this Section 3(j) are not intended to provide for the deferral of compensation within the meaning of Code Section 409A because all such expenses are to be paid or reimbursed currently and/or will be tax-free. To the extent such expenses are deemed to provide for the deferral of compensation within the meaning of Code Section 409A, they are intended to meet the requirements of a specified date or a fixed

 

4



 

schedule of payments, and this reimbursement provision will be interpreted and applied in a manner consistent with such requirements. The right to payment of, or reimbursement for, expenses is not subject to liquidation or exchange for any other benefit.

 

4.                                       Restrictions

 

(a)                                  Acknowledgements You acknowledge and agree that (i) during the Employment Period, because of the nature of your responsibilities and the resources provided by us, you will acquire and/or develop valuable and confidential skills, information, trade secrets, and relationships with respect to our Business; (ii) you may develop on our behalf a personal relationship with various persons, including but not limited to representatives of customers and suppliers, where you may be a principal or our only contact with such persons, and as a consequence, you will occupy a position of trust and confidence to us; (iii) the Business involves the manufacturing, marketing, and sale of our products and services to customers throughout the world, our competitors, both in the United States and internationally, consist of both domestic and international businesses, and the services to be performed by you involve aspects of both our domestic and international business; and (iv) it would be impossible or impractical for you to perform your duties without access to our confidential and proprietary information and contact with persons who are valuable to our Business and goodwill.

 

(b)                                  Reasonableness In view of the foregoing and in consideration of the remuneration to be paid to you, you agree that it is reasonable and necessary for the protection of our Business and goodwill that you undertake the covenants in this Section 4 regarding your conduct during and subsequent to your employment by us, and acknowledge we will suffer irreparable injury if you engage in any conduct prohibited by this Section 4.

 

(c)                                   Non-Compete During the Employment Period and for a period of (1)   in the case of involuntary termination without Cause, one year after termination of employment, and (2) in the case of termination of employment for any other reason, two years after such termination of employment, neither you nor any individual, corporation, partnership, limited liability company, trust, estate, joint venture, or other organization or association (“Person”) with your assistance nor any Person in which you directly or indirectly have any interest of any kind (without limitation) will, anywhere in the world, directly or indirectly own, manage, operate, control, be employed by, serve as an officer or director of, solicit sales for, invest in, participate in, advise, consult with, or be connected with the ownership, management, operation, or control of any business that is engaged, in whole or in part, in the Business, or any business that is competitive with the Business or any portion thereof, except for our exclusive benefit. You will not be deemed to have breached the provisions of this Section 4(c) solely by holding, directly or indirectly, not greater than 2% of the outstanding securities of a company listed on a national securities exchange.

 

(d)                                  Non-Solicitation During the Employment Period and for a period of (1) in the case of involuntary termination without Cause, one year after termination of employment, and (2) in the case of termination of employment for any other reason, two years after such termination of employment, neither you nor any Person with your assistance nor any Person in which you directly or indirectly have an interest of any kind (without limitation) will, directly or

 

5



 

indirectly (A) solicit or take any action to induce any employee to quit or terminate their employment with us or our affiliates; or (B) employ as an employee, independent contractor, consultant, or in any other position any person who was an employee of ours or our affiliates during the aforementioned period.

 

(e)                                   Confidentiality

 

(i)                                      Confidential Information For purposes of this Agreement, “Confidential Information” means any information (whether in written, oral, graphic, schematic, demonstration, or electronic format, whether or not specifically marked or identified as confidential, and whether obtained by you before or after the Effective Date), not otherwise publicly disclosed by Spirit, regarding (without limitation) Spirit, its Business, customers, suppliers, business partners, prospects, contacts, contractual arrangements, discussions, negotiations, evaluations, labor negotiations, bids, proposals, aircraft programs, costs, pricing, financial condition or results, plans, strategies, governmental relations, projections, analyses, methods, processes, models, tooling, know-how, trade secrets, discoveries, research, developments, inventions, engineering, technology, proprietary information, intellectual property, designs, computer software, intelligence, legal or regulatory compliance, accounting decisions, opportunities, challenges,’ and any other information of a confidential or proprietary nature. Notwithstanding the foregoing, Confidential Information will not include any information that (A) you are required to disclose by the order of a court or administrative agency, subpoena, or other legal or administrative demand, so long as (1) you give us written notice and an opportunity to contest or seek confidential treatment of such disclosure; and (2) you fully cooperate at our expense with any such contest or confidential treatment request; (B) has been otherwise publicly disclosed or made publicly available by Spirit; or (C) was obtained by you in good faith after your employment with us ended from a source that was under no obligation of confidentiality to Spirit or any customer or supplier.

 

(ii)                                   Non-Use and Non-Disclosure Without our express written consent, you will not at any time (whether during the Employment Period or after any termination of your employment for any reason) use for any purpose (other than for our exclusive benefit) or disclose to any Person (except at our direction) any Confidential Information.

 

(f)                                    Effect of Breach You agree that a breach of this Section 4 cannot adequately be compensated by money damages and, therefore, we will be entitled, in addition to any other right or remedy available to us (including, but not limited, to an action for damages, accounting, or disgorgement of profit), to an injunction restraining such breach or a threatened breach and to specific performance of such provisions, and you consent to the issuance of such injunction and the ordering of specific performance without the requirement for us to post a bond or other security or to prove lack of an adequate remedy at law.

 

(g)                                   Other Rights Preserved Nothing in this Section 4 eliminates or diminishes rights we may have with respect to the subject matter hereof under other agreements, our governing documents or statutes, or provisions of law (including but not limited to common law and the Uniform Trade Secrets Act), equity, or otherwise. Without limiting the foregoing, this

 

6



 

Section 4 does not limit any rights we may have under any Spirit policies or any agreements with you regarding Confidential Information.

 

5.                                       Termination Your employment with us will terminate upon the following circumstances:

 

(a)                                  Without Cause At any time at the election of either you or us for any reason or no reason, without Cause, but subject to the provisions of this Agreement. It is expressly understood that your employment is strictly “at will.”

 

(b)                                  Cause At any time at our election for Cause.

 

“Cause” for this purpose means (i) your commission of a material breach of this Agreement or acts involving fraud, material and intentional dishonesty, material and intentional unauthorized disclosure of Confidential Information, the commission of a felony or other crime involving moral turpitude, or material violation of Spirit policies; (ii) direct and deliberate acts constituting a material breach of your duty of loyalty to Spirit; (iii) your refusal or material failure (other than by reason of your serious physical or mental illness, injury, or medical condition) to perform your job duties and responsibilities, including, but not limited to, any duties or responsibilities reasonably assigned to you by the Board, if such refusal or failure is not remedied within 30 days after you receive written notice thereof from the Board; (iv) your material underperformance, as reflected in two consecutive written performance reviews provided to you not less than 6 months apart; or (v) your inability to obtain and maintain the appropriate level of United States security clearance.

 

(c)                                   Death or Disability Your death or your inability to perform the services required of you for a period of 180 days during any twelve-month period (“Disability”).

 

6.                                       Effect of Termination

 

(a)                                  General Rule  If your employment terminates for any reason other than as described in Section 6(b) below, we will pay your compensation only through the last day of employment, and, except as otherwise expressly provided in this Agreement or the STIP, the LTIP, the DCP, or any Benefit Plan, we will have no further obligation to you.

 

(b)                                  Termination Without Cause If your employment is terminated by us without Cause at any time during the Initial Term of the Agreement, then for so long as you comply with your continuing obligations under Section 4 we will (1)   continue to pay your monthly Base Salary in effect immediately before termination of your employment for a period of six months, and (2) at our option, either pay the cost of COBRA medical and dental benefits coverage for a period of six months or pay you an amount each month for six months equal to the cost of providing COBRA medical and dental benefits.

 

To receive the benefits described in this Section 6(b), you will be required to sign a general release of claims in a form we deem acceptable. The release must be provided, and any revocation period must have expired, not later than 60 days after termination of employment. If

 

7



 

the foregoing conditions are satisfied then, except as provided below, payment of salary continuation and other benefits will begin 60 days after termination of employment.

 

Notwithstanding any contrary provision of this Section 6(b), if you are a Specified Employee at the time employment terminates, the payments described in Section 6(b) will, to the extent such amounts are deferred compensation within the meaning of Code Section 409A, be delayed until the date that is the earlier of (i) six months after your termination of employment, or (ii) the date of your death, and upon reaching that date, all amounts that would have been paid during the six-month delay period, plus interest thereon at the prime rate (as published in the Wall Street Journal) from the date the payment would have been made but for this paragraph to the date of payment, will be paid in a single lump sum, and all remaining amounts will be paid in equal monthly payments for the remainder of the Salary Continuation Period.

 

“Specified Employee” means that, with respect to a corporation any stock in which is publicly traded on an established securities market or otherwise, you are, or are treated under Code Section 409A as, either (A) an officer having annual compensation greater than $130,000 (as adjusted for cost-of-living increases in accordance with Code Section 416(i)(1)(A) and Code Section 415(d)), (B) a 5% owner, or (C) a 1% owner having annual compensation from the corporation of more than $150,000. For purposes of determining your percentage ownership, the constructive-ownership rules described in Code Section 416(i)(1)(B) will apply. The determination whether you are a Specified Employee will be made in accordance with regulations issued under Code Section 409A and other available guidance.

 

Except as otherwise expressly provided in this Agreement or in any Benefit Plan, we will have no further obligation to you

 

(c)                                   Disability or Death If your employment terminates due to Disability or death, we will pay your monthly Base Salary only through the date of termination.

 

(d)                                  Your Post-Termination Obligations On termination of employment for any reason, (1) you will resign as of the date of such termination as a director and officer of Spirit and its affiliates and as a fiduciary of any of Spirit’s or its affiliates’ benefit plans, (2) you will promptly execute and deliver upon such termination any document reasonably required by Spirit or an affiliate to evidence the foregoing resignations, (3) you will immediately deliver to us all Confidential Information, all copies and embodiments thereof, and all records, notes, worksheets, schematics, customer lists, supplier lists, memoranda, computer files and storage devices, analyses and derivative works based thereon or which relate in any way thereto, and (4) you will pay to us any amounts due and owing by you as specified in this Agreement.

 

(e)                                   Survival of Provisions Your obligations under 4 through 9 of this Agreement will survive the expiration or termination of your employment for any reason.

 

7.                                       Representations and Warranties You represent and warrant to us that:

 

(a)                                  No Conflicts To the best of your knowledge, you are under no duty (whether contractual, fiduciary or otherwise) that would prevent, restrict or limit you from

 

8



 

entering into this Agreement and fully performing all duties and services for us, and the performance of such duties and services will not conflict with any other agreement, policy or obligation by which you are bound.

 

(b)                                  No Hardship Your experience and/or abilities are such that observance of the covenants in this Agreement will not cause you any undue hardship and will not unreasonably interfere with your ability to earn a livelihood.

 

8.                                       Clawback Right You acknowledge that certain amounts paid under this Agreement or the Benefit Plans described herein are subject to any Spirit policy on the recovery of compensation (i.e., a so-called “clawback policy”), as it exists now or as later adopted, and as thereafter amended from time to time.

 

9.                                       Mediation

 

(a)                                  General Obligation to Mediate Except as provided in this Agreement, prior to initiating any legal action, the parties agree to submit all unsettled claims, disputes, controversies, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that this Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between them (“Disputes”) to mediation in Wichita, Kansas, in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation will be private, confidential, voluntary, and nonbinding. Either party may withdraw from the mediation at any time before signing a settlement agreement by giving written notice to the other party and the mediator. The mediator will be neutral and impartial. The mediator will be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. Each party will pay its respective attorneys’ fees and other costs associated with the mediation, and each party will equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within 90 days of its submission to mediation, the parties may proceed with legal action.

 

(b)                                  Confidentiality The parties agree that they will not disclose, or permit those acting on their respective behalf to disclose, any aspect of the proceedings under Section 9(a), including but not limited to the resolution or the existence or amount of any award, to any Person, unless divulged (i) to an agency of the federal or state government; (ii) pursuant to a court or administrative order; (iii) pursuant to a requirement of law; (iv) pursuant to prior written consent of the parties; (v) pursuant to a legal proceeding to enforce a settlement agreement or arbitration award; or (vi) by Spirit, to the extent required under federal securities laws and regulations. This provision does not prohibit the parties’ disclosure of the terms of any settlement to their attorney(s), accountant(s), financial advisor(s), or family members, so long as such persons first agree to comply with the provisions of this Section 9(b).

 

(c)                                   Injunctions Notwithstanding anything to the contrary in this Section, the parties will have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction.

 

9


 

10.                                General

 

(a)                                  Notices All notices required or permitted under this Agreement must be in writing and may be given by personal delivery, effective on the day of such delivery, or may be mailed by certified mail, return receipt requested, effective three business days after the date of mailing, addressed as follows:

 

To us:

 

Spirit AeroSystems, Inc.

Attention: Senior Vice President, General Counsel and Secretary

3801 S. Oliver

P.O. Box 780008, Mail Code K11-60

Wichita, KS 67278-0008

Facsimile: 316.529.4539

Email: jon.d.lammers@spiritaero.com

 

or such other person or contact information as designated in writing to you.

 

To you:

 

Heidi Wood

 

at your last known residence address, email, or facsimile number or to such other contact information as designated in writing to us.

 

(b)                                  Successors Neither this Agreement nor any right or interest herein will be assignable or transferable (whether by pledge, grant of a security interest or otherwise) by you or your beneficiaries or legal representatives, except by will, the laws of descent and distribution, or inter vivos revocable living grantor trust as your beneficiaries, and any other purported assignment will be void. This Agreement will be binding upon and will inure to the benefit of Spirit, its successors and assigns, and will be binding on you and your heirs, beneficiaries, and legal and personal representatives.

 

(c)                                   Waiver, Modification, and Interpretation No provisions of this Agreement may be modified, waived, or discharged except by written instrument signed by you and an appropriate officer of Spirit empowered to sign the same by our or Holdings’ Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time.

 

(d)                                  Interpretation The validity, interpretation, construction, and performance of this Agreement will be governed by the laws of the State of Kansas, except that the corporate law of the State of Delaware will govern issues related to the issuance of common stock. Any

 

10



 

action brought to enforce or interpret this Agreement will be maintained exclusively in the state and federal courts located in Wichita, Kansas.

 

(e)                                   Headings The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of any provision of this Agreement. No provision of this Agreement will be interpreted for or against either party on the basis that such party was the draftsman of such provision, and no presumption or burden of proof will arise disfavoring or favoring either party by virtue of the authorship of any provision of this Agreement.

 

(f)                                    Counterparts We and you may execute this Agreement in counterparts, each of which will be deemed an original and both of which will constitute a single instrument. In proving this Agreement, it will not be necessary to produce or account for more than one such counterpart.

 

(g)                                   Invalidity of Provisions If a court of competent jurisdiction declares that any provision of this Agreement is invalid, illegal, or unenforceable in any respect, then in lieu of such illegal, invalid, or unenforceable provision the court may add as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as is possible. If such court cannot so substitute or declines to so substitute for such illegal, invalid, or unenforceable provision (i) such provision will be fully severable; (ii) this Agreement will be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and (iii) the remaining provisions of this Agreement will continue in full force and effect and not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. The covenants in this Agreement will each be construed to be a separate agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of yours against us, predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by us of any covenants in this Agreement.

 

(h)                                  Entire Agreement This Agreement (together with the documents expressly referred to herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between you and us, and may not be changed except by written instrument duly executed by you and us in the same manner as this Agreement.

 

(i)                                      Compliance with Code Section 409A The amounts payable to you after separation from service under 6(b) (if any) are intended to be exempt from the definition of “deferred compensation” for purposes of Code Section 409A as amounts payable only in the event of involuntary termination without Cause. To the extent any such amounts constitute “deferred compensation” for purposes of Code Section 409A, then those amounts will be paid to you in equal monthly installments, and payment of such amounts may not be accelerated. This Section 10(i) and the terms of this Agreement are intended to comply with, and will be interpreted and construed in accordance with and in a manner that complies with, the requirements of Code Section 409A, to the extent necessary.

 

[Signature page follows.]

 

11



 

IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date(s) set forth below, to be effective as of the Effective Date.

 

 

 

SPIRIT AEROSYSTEMS, INC.

 

 

 

 

Date:

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

Heidi Wood

 

12



 

9.                                                 Miscellaneous. This Agreement shall be binding upon, and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns, but this Agreement shall not be assignable by the Recipient without the prior written consent of the Company. This Agreement constitutes the complete agreement between the parties hereto with respect to the subject matter hereof and shall continue in full force and effect until terminated by mutual agreement of the parties hereto. The section headings used herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the internal laws of the State of Kansas, without giving effect to the principles of conflicts of law thereof, and each party consents to personal jurisdiction in such state and voluntarily submits to the jurisdiction of the courts of such state in any action or proceeding relating to this Agreement. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof is held to be invalid, illegal or unenforceable under any applicable law or rule in any jurisdiction, such provision will be ineffective only to the extent of such invalidity, illegality, or unenforceability, without invalidating the remainder of this Agreement. This Agreement may not be modified or amended and no provision hereof may be waived, in whole or in part, except by a written agreement signed by the parties hereto. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

10.                                          Term. This Agreement shall remain in full force and effect for two years from the date hereof, or until such time as the Recipient becomes employed by the Company, at which point the terms of the Recipient’s Employment Agreement will control the parties’ relationship as regards the subject matter of this Agreement.

 

IN WITNESS WHEREOF, the .  parties hereto have duly executed this Agreement effective as of the date first set forth above.

 

[The Recipient]

 

Spirit AeroSystems , Inc.

 

 

 

 

 

 

By

/s/ Heidi R. Wood

 

By

/s/ Suzanne K. Smith

 

 

 

 

Title:

 

Title:

Director, Global H.R. Services

 




Exhibit 10.41

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (“Amendment”) is entered into by Spirit AeroSystems, Inc., a Delaware corporation (“we,” “us,” “our,” and other similar pronouns), and Heidi Wood (“you,” “your,” “yours,” and other similar pronouns), to be effective as of the Effective Date.

 

Recitals

 

A.                                     We previously entered into an Employment Agreement with you (the “Agreement”), and we now wish to amend the Agreement to reflect the terms and provisions set forth in this Amendment, with such amended terms to be effective as if included in the Agreement from its inception.

 

B.                                     You have reviewed this Amendment and found it acceptable.

 

Amendment

 

On the basis of the foregoing, the Agreement is amended as follows, effective as of the Effective Date:

 

1.                                       Short-Term Incentive Plan

 

Section 3(c) of the Agreement, relating to your participation in the STIP, is amended in its entirety to read as follows:

 

(c)                                   Short-Term Incentive Plan You are eligible to participate in the Spirit AeroSystems Holdings, Inc. Short-Term Incentive Plan, as amended or restated from time to time (“STIP”), pursuant to and in accordance with the terms and conditions of the STIP. Your STIP award opportunity will be 80% of Base Salary if target performance goals are reached and 160% of Base Salary if outstanding performance goals are reached. If target performance goals are not reached, you will be entitled to such incentive compensation, if any, as is otherwise provided by the STIP and our policies. In addition to the foregoing, we agree that (i) for the 2013 plan year, you will be entitled to an incentive compensation award under the STIP of not less than 80% of Base Salary; (ii) the amount you are entitled to receive for the 2013 plan year will not be prorated due to service for less than the full 2013 plan year; (iii) one-half of the minimum STIP award payable to you for the 2013 plan year shall be paid to you on or before December 1, 2013, in cash in the amount of $160,000; and (iv) the remaining $160,000 of the minimum STIP award payable to you for the 2013 plan year, plus any additional award attributable to performance in excess of target, shall be paid to you one-half in cash and one-half in stock in or about February 2014, and, in the case of stock, will be subject to the STIP’s normal vesting schedule.

 

1



 

2.                                       Defined Terms

 

Terms not specifically defined in this Amendment will have the meanings set forth in the Agreement.

 

3.                                       Remaining Provisions

 

The remaining provisions of the Agreement will continue in full force and effect unless and until further amended or modified in accordance with the terms of the Agreement.

 

IN WITNESS WHEREOF, this Amendment has been executed by the parties on the date(s) set forth below.

 

 

 

 

SPIRIT AEROSYSTEMS, INC.

 

 

 

 

 

 

Date:

9-4-2013

 

By:

/s/ Suzanne K. Scott

 

 

Name:

Suzanne K. Scott

 

 

Title:

Director, Global H.R. Services

 

 

 

 

 

 

Date:

9/4/13

 

/s/ Heidi R. Wood

 

 

Heidi Wood

 

2




Exhibit 10.42

 

 

Date

 

Dear Name,

 

I would like to take this opportunity to thank and recognize you for your performance contributions, determination, flexibility and teamwork, which have made a positive impact within the Spirit team.

 

Effective x Date, your Executive Compensation will be adjusted as noted below:

 

Current Base Salary:

 

$xx

 

New Base Salary:

 

$xx

 

 

 

 

 

Current Short-Term Incentive Plan (STIP):

 

xx%

 

New Short-Term Incentive Plan (STIP):

 

xx%

 

 

 

 

 

Current Long-Term Incentive Plan (LTIP):

 

xx%

 

New Long-Term Incentive Plan (LTIP):

 

xx%

 

 

 

 

 

Current Total Direct Compensation (TDC):

 

$xx

 

Your new Total Direct Compensation (TDC):

 

$xx

 

 

Once again, thank you and congratulations. I look forward to strong performance and achieving our goals in 201X and beyond.

 

Sincerely,

 

Manager

 




Exhibit 12.1

 

 

 

Spirit Holdings

 

 

 

Twelve Months Ended

 

 

 

December 31,
2013

 

December 31,
2012

 

December 31,
2011

 

December 31,
2010

 

December 31,
2009

 

Earnings:

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees

 

$

(430.8

)

$

11.4

 

$

280.3

 

$

297.8

 

$

272.8

 

Add: Fixed Charge (from below)

 

81.9

 

95.1

 

89.6

 

73.0

 

54.0

 

Add: Amortization of capitalized interest

 

3.8

 

3.6

 

2.9

 

2.1

 

2.3

 

Add: Distributed income of equity investee

 

0.5

 

(0.7

)

(1.0

)

(0.7

)

(0.2

)

Subtract: Capitalized interest expense

 

5.8

 

7.5

 

 

 

7.1

 

 

 

$

(350.4

)

$

101.9

 

$

371.8

 

$

372.2

 

$

321.8

 

Fixed charges:

 

 

 

 

 

 

 

 

 

 

 

Interest expense (including amortization of debt issuance costs, debt discounts and premiums)

 

$

70.1

 

$

82.9

 

$

77.5

 

$

59.1

 

$

43.6

 

Add: Capitalized interest expense

 

5.8

 

7.5

 

5.4

 

10.3

 

7.1

 

Add: Portion of rentals representing interest (1/3 of Operating Lease Payments)

 

6.0

 

4.6

 

6.7

 

3.6

 

3.3

 

 

 

$

81.9

 

$

95.0

 

$

89.6

 

$

73.0

 

$

54.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges

 

(4.3

)

1.1

 

4.1

 

5.1

 

6.0

 

 




EXHIBIT 21.1

 

Subsidiaries of Spirit AeroSystems Holdings, Inc. — Delaware

Spirit AeroSystems, Inc. — Delaware

Spirit AeroSystems Finance, Inc. — Delaware

Subsidiaries of Spirit AeroSystems, Inc. — Delaware

Spirit AeroSystems International Holdings, Inc. — Delaware

Spirit AeroSystems Operations International, Inc. — Delaware

Spirit AeroSystems North Carolina, Inc. — North Carolina

Spirit Defense, Inc. — Delaware

Subsidiaries of Spirit AeroSystems International Holdings, Inc.

Spirit AeroSystems (Europe) Limited — United Kingdom

Spirit AeroSystems Malaysia Sdn Bhd — Malaysia

Spirit AeroSystems Singapore Pte. Ltd. — Singapore

Spirit AeroSystems Global Investments, CV — Netherlands

Spirit AeroSystems Investco, LLC — Delaware

Spirit AeroSystems Canada, Ltd. — Canada

Subsidiaries of Spirit AeroSystems Global Investments, CV — Netherlands

Spirit AeroSystems France SARL — France

Spirit AeroSystems Global Investments Cooperatief U.A. — Netherlands

Spirit AeroSystems Global Investments B.V. — Netherlands

 




Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-146112, 333-150401, 333-150402, and 333-174951), Form S-4 (Nos. 333-16334 and 333-17116) and Form S-3 (No. 333-173369) of Spirit AeroSystems Holdings, Inc. of our report dated February 19, 2014 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K .

 

/s/ PricewaterhouseCoopers LLP

 

PricewaterhouseCoopers LLP

 

Kansas City, Missouri

 

February 19, 2014

 

 




EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO

RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Larry A. Lawson, certify that:

 

1.                     I have reviewed this Annual Report on Form 10-K of Spirit AeroSystems Holdings, Inc. (“registrant”);

 

2.                     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.                     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.                     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)                Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)                Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)                 Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)                Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.                     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a)                All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)                Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

/s/ Larry A. Lawson

 

Larry A. Lawson

 

President and Chief Executive Officer

 

 

Date: February 19, 2014

 

 




EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO

RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Sanjay Kapoor, certify that:

 

1.     I have reviewed this Annual Report on Form 10-K of Spirit AeroSystems Holdings, Inc. (“registrant”);

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

/s/ Sanjay Kapoor

 

 

Sanjay Kapoor
Senior Vice President and Chief Financial Officer

 

Date: February 19, 2014

 




EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Larry A. Lawson, as President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 

/s/ Larry A. Lawson

 

 

Larry A. Lawson
President and Chief Executive Officer

 

Date: February 19, 2014




EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Sanjay Kapoor, as Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

/s/ Sanjay Kapoor

 

 

Sanjay Kapoor
Senior Vice President and Chief Financial Officer

 

Date: February 19, 2014