Delivered 72 Aircraft; Lost $1.5 Million On Hawker 4000, Other Charges

The numbers weren't as good as they'd hoped... but by all indications, the situation should improve soon. That's the message from Hawker Beechcraft Acquisition Company, LLC (HBAC) which on Wednesday reported continued strong market acceptance and demand for its products, resulting in net bookings of $1.1 billion during the three months ending March 30, 2008. Continued strong order activity resulted in a record backlog of $6.8 billion.

That's the good news. Less encouraging was the news HBAC recorded an operating loss of $1.5 million for the quarter, in part due to an $18.4 million charge related to early production Hawker 4000 aircraft. This resulted from an increase in the cost to conform the early aircraft to the final type design, according to the company.

Also included in the operating results were non-cash charges of $22.1 million resulting from increased depreciation and amortization expense due to step-up in the cost basis of long-term assets and from foreign currency derivative contracts, all incurred as a result of purchase accounting related to the acquisition of HBAC.

Net sales for the quarter were $576.5 million. The company delivered 72 business and general aviation aircraft consisting of 20 jet, 29 turbo-prop and 23 piston aircraft. During the quarter, the company also launched a reorganization of its Little Rock Hawker completions operations, to support the increased aircraft completion volumes that are associated with deliveries of the Hawker 750, and the expected introduction of the oft-delayed Hawker 4000, this year.

These reorganization activities impacted the normal completion cycle for aircraft during the quarter, resulting in the delivery of five Hawker 900XP and one Hawker 850XP being shifted to the second quarter. HBAC’s trainer segment also delivered 17 T-6A Texan II aircraft to the US Government during the first quarter.

Operating cash consumed during the three months ending March 30, 2008 totaled $181.9 million. This resulted from a growth in inventory in connection with increased build rates and the delay in aircraft deliveries noted previously.

"While disappointed by this quarter’s operating results, we are still extremely excited about our record billings, increasing backlog and our position in the market," said Jim Schuster, chairman and CEO of Hawker Beechcraft Corporation. "The end of the first quarter marks a tremendous first full year as Hawker Beechcraft, having solidified our future as the largest privately-held aircraft manufacturer in the world. We invested in new products, expanded infrastructure and added talented people – strategically positioning our brands for continued growth worldwide."

FMI: www.hawkerbeechcraft.com