Hawker Beechcraft Acquisition Company, LLC Reports Full Year 2008 Financial Results

WICHITA, Kan. , Feb. 12 /PRNewswire/ -- Hawker Beechcraft Acquisition Company, LLC (HBAC) reported net sales of $3.5 billion and operating income of $135.5 million for the 12 months ending Dec. 31, 2008 .

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2008 net sales were significantly impacted by the four-week strike by the International Association of Machinists (IAM) in August. The strike disrupted manufacturing and assembly operations, which significantly reduced aircraft deliveries for the remainder of the year. During 2008, the Company delivered 441 business and general aviation aircraft, consisting of 160 business jet, 178 turboprop and 103 piston aircraft. Additional detail regarding 2008 aircraft deliveries is included in the Appendix. The strike also impacted sales volume in the Trainer Aircraft segment as discussed further in Segment Results.

Operating income for the year was also impacted by the reduced deliveries as a result of the strike. The strike resulted in lower Business and General Aviation segment aircraft deliveries and reduced production in the Trainer Aircraft segment, impacting overall operating income. Also included in 2008 results were charges of $91.1 million associated with increased costs to conform specific early-production Hawker 4000 units to the final type design and establish more normal production processes.

The Company recorded a net after-tax loss for the year of $139.9 million. The loss included the impact of a non-cash increase in tax expense of $108.7 million as a result of a valuation reserve recorded against the U.S. federal deferred tax assets in compliance with the prescribed GAAP accounting treatment for deferred tax assets.

Operating cash flow consumed during the 12 months ending Dec. 31, 2008 , was $69.0 million and was significantly impacted by an increase in inventory associated with the reduced deliveries as a result of the strike and delays in deliveries of the Hawker 4000. The timing of the Hawker 4000 deliveries was impacted by certain product enhancements incorporated in the aircraft type design late in 2008 as well as others to be incorporated in 2009.

On Dec. 31, 2008 , the Company had $377.6 million in cash and cash equivalents. In addition, its available revolving credit facility was undrawn. The Company believes that its cash on hand, anticipated cash from operations and, if required, borrowings under the revolving credit facility will be sufficient to meet its cash requirements through 2009.

Net bookings for the year were $4.8 billion and year end backlog was $7.6 billion. As the general economic environment has deteriorated, new order activity has declined and order cancellations have increased. The Company does not believe 2009 new bookings will reach recent year levels and anticipates declining backlog in 2009.

In response to weakness in the global economy and anticipated reduced aircraft production rates, the Company reduced its workforce by approximately 500 workers in November 2008 and, in early 2009, announced another 2,300 reductions to be completed by the end of the year. These reductions will decrease operating costs in 2009; however, the impact on the Company's 2008 results was not significant.

Segment Results

Business and General Aviation Aircraft

The Business and General Aviation segment recorded sales of $2,820.6 million and operating income of $24.7 million during 2008. In addition to the impact of the strike and the Hawker 4000 charges, segment results were also impacted by a $13.7 million charge recorded in the fourth quarter of 2008 to reduce the carrying value of used aircraft to current market value.

Trainer Aircraft