Phil Anderson - Treasurer and Vice President of Investor Relations Jeffrey Turner - President and Chief Executive Officer Rick Schmidt - Chief Financial Officer and Executive Vice President

Robert Spingarn - Credit Suisse Howard Rubel - Jefferies & Co Joseph Nadol - J.P. Morgan Troy Lahr - Stifel Nicolaus & Company, Inc Heidi Wood - Morgan Stanley Dana Merber - GMP Securities Joseph Campbell - Barclays Capital David Strauss - UBS Carter Lee - Davenport & Company Operator: Good day ladies and gentlemen and welcome to the Fourth Quarter and Full Year 2008 Spirit AeroSystems Holdings Earnings Conference Call. My name is Stacy and I will be your conference moderator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. (Operator Instructions). I would now like to turn the presentation over to Mr. Phil Anderson, Treasurer and Vice President of Investor Relations, please proceed sir.

Good morning and welcome to Spirit's fourth quarter and full year 2008 earnings call. I am Phil Anderson and with me today are Jeff Turner, Spirit's President and Chief Executive Officer and Rick Schmidt, Spirit's Chief Financial Officer. After brief comments by Jeff and Rick regarding our performance and outlook, we will take your questions. In order to allow everyone to participate in the question and answer segment today, we ask you to limit yourself to one or two questions. Before we begin, I need to remind you that any projections or goals we may include in our discussions today are likely to involve risks which are detailed in our news release, in our SEC filings, and in the forward-looking statement at the end of this presentation. And as a reminder, you can follow today's broadcast and slide presentation on our website at spiritaero.com. I would now like to turn the presentation over to Jeff Turner.

Thank you, Bill and good morning. Let me welcome you to Spirit's fourth quarter and full year 2008 earnings call. 2008 was a year filled with accomplishments and challenges for Spirit as we focused on long-term value creation for our shareholders. I would like to take a few moments this morning to highlights several of the accomplishment and also to provide some perspective on the challenges we faced in 2008. And I'll conclude on how we are positioning ourselves for the future. I'll begin on slide 2. Overall, we executed our core business well and our performance was solid across the company. Despite the machinist's strike at Boeing and the pension headwind, we achieved full year sales of $3.8 billion, operating margins of 10.8%, and fully diluted earnings per share of $1.91. Financially, the impact of the IAM strike at Boeing along with the forecast for future pension expense reduced the full year earnings by $0.51 per share. We made good progress on our growth and diversification strategy in 2008. We announced projects underway with Gulfstream and Rolls Royce while winning new business with Airbus, Cessna, and Mitsubishi. Each of these development programs are underway and making solid progress. We are also making progress on establishing our new Spirit Malaysia manufacturing facility. Spirit Malaysia is on schedule to be operational by the end of the first quarter of 2009. Spirit Malaysia's initial focus will be on Airbus products but overtime we'll provide value to products across the Company. And we'll add value immediately in 2009. Additionally we announced and commenced construction of a manufacturing facility in North Carolina. This new facility will support Spirit's new business content on the Airbus A350 XWB. Spirit North Carolina is expected to be operational in mid 2010. I continue to be pleased with our performance on the 787 program. Our team continues to work well with the customer and our suppliers regarding future production plans. I'll provide you additional thoughts on the 787 programs later in the presentation. Spirit's year-end backlog increased 20% over 2007 to $31.7 billion. This increase consists of the combined Airbus and Boeing backlogs and new business wins. Now let me provide you with my perspective on the challenges we faced in 2008. As I've mentioned before, I'm extremely proud of how the Spirit team planned and executed our business during the two months strike by machinists at Boeing. Our internal planning, partnering with our customers, and working with our unions representing Spirit employees allowed Spirit to maintain production while avoiding layoffs and furloughs. The reduced work week schedule enabled the Company to execute a balanced approach to address this difficult situation. This plan successfully balanced the requirements of our customers, our suppliers, the medium employees and shareholders, while minimizing the impact to our communities and maintaining the health of our business. I'm proud of our team's ability to take challenges head on and deliver solid performance in a non standard business environment. Pension asset performance and the discount rate also impacted our results for the fourth quarter and full year 2008. However, as you know our U.S. plan was frozen when Spirit was formed and pension income and expense is a non-cash item. The plan remains fully funded at year end 2008. Now let's talk about some of the specific accomplishments across the business beginning on slide 3. All three of our business segments revenues and operating margins were impacted by both the machinists' strike at Boeing and the higher projected pension expense which Rick will discuss in his comments. For the year we delivered 72 fewer Boeing ship sets than we had expected prior to this strike. The Fuselage team continued to execute well across all programs. They delivered the 2,800 737 next generation Fuselage, the six 777 Freighter for Fuselage section, the third P-8A Poseidon Fuselage, and the first 747-8 for Fuselage section to Boeing in 2008. The team continues making advancements on the Sikorsky CH-53K and the Cessna Columbus programs. On slide 4, you see the propulsion teams results for the year. The propulsion team delivered the first 747-8 unit and third ship set of P-8A Pylon in 2008. The team continuously gained momentum on other development programs including the Mitsubishi Regional Jet and the BR 725 program for Rolls-Royce. On slide 5 you see the Wing System segment which is comprised of our Spirit Europe and our Oklahoma operations. In addition to the strike and pension impact, Spirit Europe's margins were impacted by the substantial strengthening of the U.S. dollar during the quarter. Airbus products remained on track and our European MRO operation is open at the Prestwick facility. And the previously mentioned Spirit Malaysia facility is planned to be operational in the first quarter of 2009. Now let me turn to slide 6 and give you a brief update on the 787. We delivered aircraft number five in late January and aircraft number six, the last flight test aircraft is progressing through the systems installation process. Overall product quality remains high and we continue to work with the supply base to enable a smooth production ramp up. We are continuing to work closely with our customer on incorporating necessary engineering changes on flight test aircraft and the first in service aircraft. Our internal efforts remained focused on productivity improvements and increased utilization of the capability we have in place. We expect to restart forward piece of large production later in 2009. Now let me turn it over to Rick who will provide more details on our financial results and outlook.

Thanks Jeff and good morning everyone. Slide 8 summarizes our financial results for the fourth quarter which were significantly impacted by the IAM strike at Boeing. Revenues were down 34% over the prior year period driven largely by the strike and the impact of a strengthening dollar on our UK results. We estimate the strike impact to Q4 deliveries by 63 units or about 451 million of revenues. The strengthening dollar lowered Q4 revenues by approximately 30 million versus the prior year period. Operating profit at $28 million for the quarter was down 74% as margin were impacted by lower revenues from the strike and a negative 27 million cumulative catch-up adjustments. Strike impacted operating profit by an estimated by 57 million in the quarter. Fully diluted earnings per share of $0.14 for the quarter were down 74% from earnings of $0.54 per share in the prior year period largely due to strike impact of an estimated $0.28 per share in the negative cumulative catch. The current period benefited by $8 million or $0.06 per share from the continuation of the research and experimentation tax credit. As this tax legislation was not passed until the fourth quarter, the full year benefit was reflected in the current quarter. Cash flow from operations of 58 million and capital expenditures of 61 million for the quarter reflect our continuing investment in the 787 program and other new programs, revised 787 payment terms negotiated earlier this year, and additional strike related inventory build. Slide 9 highlights our progression on key P&L metrics over the trailing four quarters. Fourth quarter revenues were down 37% sequentially from Q3, as the strike impacted the entire quarter's results versus only a few weeks in the third quarter. We estimate revenues lost to the strike to be 53 million in the third quarter and 451 million in the fourth quarter for a total year impact of just over $500 million. Operating income margins were 4.4% in the quarter, well below the prior year period and sequentially due to the strike impact and negative cumulative catch-up adjustment mentioned earlier. Lastly fourth quarter fully diluted EPS of $0.14 was down 74% sequentially due to the same factors. Our effective tax-rate in the current quarter was almost zero due to the recognition of the full year R&E credit that I mentioned earlier. On slide 10, R&D expense in the fourth quarter was 15 million about flat with the prior year period in absolute dollars but a larger percentage of sales, the sales were temporarily lower due to the strike. Sequentially R&D expense grew 15% from the third quarter, as we began a modest ramp up in spending for some of our recently announced new programs primarily in the fuselage segment. SG&A expense for the quarter was 36 million about 29% below the prior year period due primarily to lower non-cash stock compensation expense and the impact of the three day work week for most of the quarter. Sequentially SG&A was down 8% from the third quarter for the same reasons. The revenue decline cause by the strike resulted in SG&A and R&D increasing from 6.6% of sales in the fourth quarter of 2007 and 5.0% in third quarter of 2008 to 7.9% in the current quarter. When sales returned to pre-strike levels these metrics should also resume their historical trend. Slide 11 summarizes the P&L for the fourth quarter and full year, versus the same periods in the prior year. During the quarter, Spirit realized approximately 27 million of net unfavorable changes in contract to estimates, versus the net 3.5 million favorable in the prior year period and 13 million unfavorable adjustment in the third quarter. 20 million of the 27 million unfavorable adjustments relates specifically to lower pension income in our current contract accounting blocks. While this lower pension income will be realized in 2009 and 2010, it effectively increases cost for the entire contract block and under our accounting policies must be recognized in the current quarter. This adjustment impacted profitability in all three of our reporting segments. Another 5 million of the 27 million unfavorable cumulative catch-up adjustment relates to foreign exchange rate movements, more specifically for Spirit, the strengthening of the dollar versus the pound. The approximate 20% strengthening of the dollar in the fourth quarter lowers the dollar value of our pound based revenues and profits resulting in a negative adjustment. The impact of the Boeing IAM strike was largely reflected in the third quarter results based on our initial estimates for the duration of the strike and the pace of the subsequent ramp up. These estimates were trued up in the fourth quarter and generally found to be conservative resulting in the partial reversal of the strike related impact, booked in the third quarter. Slide 12 compares 2008 full year results to prior two years for revenue, operating margins, and fully diluted earnings per share. Despite the impact of the strike and the recent delays in the introduction of the 787 program, Spirit has continued to grow and strengthen as a company. Slide 13; summarizes the estimated earning's impact on total year 2008 results, from the IAM strike at Boeing and the negative cumulative catch adjustment resulting from lower pension income in the next few years. The strike impacted reported EPS of $1.91 for fully diluted share by an estimated $0.41 per share in the third and fourth quarter. Lower pension income in the remaining months of our current contract blocks negatively impacted Spirit by 20 million pre-tax or $0.10 per share all in the fourth quarter. Absent these events, Spirit would have experienced double-digit year-over-year earnings growth, despite the delays in the 787 deliveries, which constrained our 2008 results but will provide solid long-term growth. Slide 14; summarizes the trailing four quarter changes in our cash and debt balances. Cash balances at the end of the fourth quarter of 217 million, increased 39 million or 22% from the prior quarter and largely due to improving cash flow from operations. The fourth quarter included a 110 million of customer cash advances for the 787 program. Total debt balances decreased slightly in the quarter, due to some minor scheduled repayments. At the end of the fourth quarter our net debt to capital ratio was just over 22% versus 27% at year-end 2007. And our net debt to 2008 EBITDA ratio continues to be well below 1. The year-end 2008 metrics includes a 186 million reduction in shareholders equity which was reflected in other comprehensive income due to the unfavorable performance of our defined benefit pension plan in 2008 that I'll discuss in a minute. Additionally, at the end of the fourth quarter the company had over 850 million of short-term liquidity available through all revolving credit agreements and available cash balances, which we continue to believe is fully adequate to fund projected cash flow needs. Earlier I mentioned that our 2008 pension plan performance will result in lower pension income in future years. Slide 15 provides further details on our U.S. defined benefit pension plan in 2008 which you may recall was frozen at the time of the divestiture from Boeing. At the end of the year this plan was still more than fully funded with planned assets at a 110% of planned liabilities. The funding percentage is down from 157% at year-end 2007, due to a 23% reduction in planned assets and a 53 basis point reduction in the discount rate on a respective measurement dates. This performance reduces the level of non-cash pension income expected to be generated by the U.S. BB plan and increase the Spirit's total pension expense in 2009 and 2010 by approximately $35 million per year. This reduction is reflected in our current contract accounting blocks and generated to 20 million negative cumulative catch adjustment in Q4 as I mention earlier. Overall Spirit continuous to have a strong fully funded plan. Although, it is still subject to the same influencing experience by many other companies. Slide 16, details our cash flow for the full year 2008 versus 2007. Cash flow from operations was positive 205 million, as higher customer advance payments and ongoing profitability continues to offset working capital growth. The working capital build was largely centered on inventory which was driven by the reschedule of 787 deliveries earlier this year, continuing engineering changes on the 787, and pre-production and non-recurring engineering spending for other new programs including 747-8 and our two new Gulfstream programs. Fourth quarter inventory growth of 113 million includes an increase in capitalized development cost of 45 million for the quarter, entirely for new programs unrelated to the 787. This capitalized development cost for 87 were largely completed in late 2007. At the end of the year, capitalized development cost were $421 million in total, including $235 million for the 787. The strike also contributed to higher inventory balances at the end of the quarter due to the timing lag of rebalancing our supply chain to reduce delivery schedules. This inventory should be delivered during 2009. The decline in our accounts payable balance during the fourth quarter is also a function of reducing incoming material from the supply base. Capital expenditures were $61 million in the fourth quarter and $236 million for the year. Total year spending was down 18% from 2007 as the installation of production capacity for the 787-8 program continues to wind down. Slide 17 summarizes our guidance for 2009 compared to 2008 actual results. 2009 revenues should be in a range of 4.25 billion to 4.35 billion, a 12% to 14% growth over 2008. This growth will partially result from the resumption of pre-strike levels of unit deliveries to Boeing. Ramp up of 787 deliveries and growth in revenues from non-Boeing customers will also contribute in 2009. Offsetting some of this growth is currency headwind from our UK operations. At the present dollar and pound exchange rate, negative currency headwind for revenues will exceed $100 million. Full pre-strike delivery levels will not be achieved until the end of the first quarter. So we expect it to be the weakest quarter of the year in 2009. On this projected revenue base, Spirit expects earnings for fully diluted share of $2.15 to $2.35 and 18% growth over 2008 using the midpoint of the range. Earnings growth should exceed revenue growth due to the non-recurrence of negative cumulative catch adjustments booked in 2008 and contributions from new programs. SG&A and R&D expense are projected to remain at 5% to 5.5% of sales, consistent with our levels in 2008. Offsetting some of our margin expansion opportunities will be earnings headwind created by foreign exchange that I mentioned earlier, lower projected interest income, and a higher effective tax rate in 2009. I'd now like to turn it back over to Jeff for some closing comments.

Thank you Rick. I will wrap up on slide 18 with a few brief comments. Our core business is performing well, we're conservatively capitalized, and financially strong. Our continuous focus is on meeting our customer commitments as we grow and diversify our business over the long-term. We're equally as focused on cost containment and improving profitability. Early in 2008, we implemented processes to limit hiring and intensified our efforts to improve operational efficiencies. These efforts are yielding results as we enter into the uncertain market environment. Overall, given the challenges we've faced, I am pleased with our 2008 performance and I am confident we're positioned to support our customer requirements for 2009. In addition we are doing the necessary contingency planning to prepare for a range of possible economic outcomes. We will now be glad to take your questions.

(Operator Instructions). Your first question comes from the line of Robert Spingarn with Credit Suisse. Please proceed. Robert Spingarn - Credit Suisse: Good morning everyone.

Good morning.

Hi Rob. Robert Spingarn - Credit Suisse: Rick, you just talked about the capitalized development in inventory, I think it was 235 for the 787, 235 million and then another 100 plus on other programs. How much are you amortizing per unit shift on 787?

787, is all being amortized over the first 500 units. Robert Spingarn - Credit Suisse: Okay.

So, it's roughly 1.4 million a copy. Robert Spingarn - Credit Suisse: Okay, okay. Excellent.

And that will be amortized straight line again over those first 500 units. Robert Spingarn - Credit Suisse: Okay. And then one other thing, I think you were just talking about --

I think that was the cash ...

About 400 million, 400,000, the $230 million.

I'm sorry, you're absolutely right, yeah I'm sorry. I was thinking of the advance, now you're absolutely right. It's the 235 million we're going to amortize over those 500 units, yeah. Robert Spingarn - Credit Suisse: Okay, so little under $0.5 million a piece.

Yeah. Robert Spingarn - Credit Suisse: And on the CapEx that you talked about for next year, the figure you gave, did you mention what... is there any offset from Boeing there?

Well, we have the final year of the CapEx reimbursement program that I think we highlighted on will guidance page. Robert Spingarn - Credit Suisse: Yeah.

It's -- the final year is a $150 million, so that we will always reflect that as a separate line item. Robert Spingarn - Credit Suisse: Okay, you are talking about 2009 now?

For 2009, yes. Robert Spingarn - Credit Suisse: Okay. I was looking into 2008 actual of 116

It was 116 in '08 actual, that's correct. Robert Spingarn - Credit Suisse: Okay, so they are very similar.

Yes, they are. But that is the last year of that reimbursement. Robert Spingarn - Credit Suisse: Okay. And then really the only other thing I wanted to ask you about, is if you could walk us through how we should think about this positive cash flow that you've talked about in the guidance, but not with a whole lot of specificity, how should we think about the working capital accounts as we go through the year and then relative to the CapEx and reimbursement try to size this cash flow.

Alright. Talking specifically about working capital, we do expect to have some further working capital build in 2009. It will be almost entirely an inventory we're expecting on the order of another 200 million of growth and inventory receivables. We should have a little bit growth in receivables based on higher revenues but that should be offset by our accounts payable balance, coming back into kind of historical levels now that the strike is behind us. So I would think most of our working capital growth would be centered on inventory. Then, the other item to consider in our cash flows is the 787 advances. As you know; we've received significant advances the last couple of years which start to be repaid once we start to deliver 787 units. So, we will ship a number of 787 units but we largely have been paid for those units already in 2008. So we in effect start to have a repayment of the prior year advancements and we estimate that to be roughly around $100 million in 2009. Robert Spingarn - Credit Suisse: Okay and while we're on the topic, Rick I don't know if this is you or Jeff, but you ship size, roughly what would you say you've got an inventory ship sets started anywhere from beginning of the work to finished product?

Rob, we have not yet any change in the number that we've started, from several quarters now. I think its lying in at 22 that we had started. Robert Spingarn - Credit Suisse: Okay.

So, we will later this year restart that process. Robert Spingarn - Credit Suisse: So just to reconcile what Rick just said, at what point in the delivery manifest -- what have you been paid for in terms of advances, was it 40-50 units?

The advances that we have received in 2008 basically paid for roughly that many, paid fully for that many units. Robert Spingarn - Credit Suisse: So the number I threw out there?

Yes. Robert Spingarn - Credit Suisse: Okay. Last question for Jeff. How should we think about -- your guidance contemplates Boeing and Airbus sticking with their production schedules. And is there any cushion, perhaps in the backend of the year should that weaken. We know you have to sort of work to their manifest, but how do you think about the numbers with the conservative angle?

Well, I think there is a couple of angels to that or couple of facets to that question Rob. First of all they did announce a delivery number for them and as you know we lead them somewhat. So, we have also looked at little bit of contingency; to see a little bit wider range for us, which we think is prudent. The other thing is as Rick mentioned we have a little bit lower first quarter because we got a fair amount of hedge start on the first part of the year deliveries for Boeing. So, I think the combination of those two we've been as prudent as we know how to be and we will still of course fully meet the demand pool from the customers. Robert Spingarn - Credit Suisse: Okay. Thank you both.

Thank you. Operator: Your next question comes from the line of Howard Rubel with Jefferies. Please proceed. Howard Rubel - Jefferies & Co: Thank you very much. I want to talk a little bit of that your outlook. If we add back the numbers that Rick walked us through with respect to the strike. There was $0.10 per pension and another $0.41 for the disruption and so that would have gotten us, a number I think like $0.51 to get to like 2.42 and your outlook for this year is 2.35 at the high end. There is still some strike impact in this current quarter and then there is still about $35 million or so that Rick articulated regarding pension. So if we added those back you would show growth year-over-year, is that fair?

Yes, I think it is Howard. The other point you'd didn't mentioned that I alluded to in my earlier comments, we are expecting a little '09 headwind as well from a lower interest income and a slightly higher effective tax rate. I estimate those two items will create about $0.10 to $0.12 of headwind in 2009. Howard Rubel - Jefferies & Co: That's helpful. And then, just to talk about 787, actually rather talk about Hawker exposure for a moment, I mean they have cut rates fairly substantially and you are seeing some pressure in the business jet market. Could you just address again how you are dealing with some of those uncertainties, hard to do it, when the customers says we need it tomorrow. But -- ?

So, clearly the way we deal with that Howard is of course keep our ear to the ground and sometime in our case our ear to the air. And close communication with customers we watch, what you guys forecast and we run a number of scenarios and make sure that our planning is looking forward to encompass a whole range of possible outcomes. And then make prudent steps in our decisions. So we are -- so as you can imagine and as we've mentioned earlier in '08 we became more conservative in overhead management and staffing and those sorts of things. And of course we carry that -- we carry that on and even to a heighten level in '09, realizing that we have to balance potential outcomes, whatever they are with the demand, the demand that gets pulled from it. Howard Rubel - Jefferies & Co: Now I just have one last thing. The wing, are revenues... was that and profitability looked a little bit weak, were there any issues with respect to the new development programs or was that all just currency, Rick?

No the entire 5 million that I mentioned was negative cumulative catch related to currency all falls into the link segment. Howard Rubel - Jefferies & Co: Thank you gentlemen very much.

Thank you Howard. Operator: Your next question comes from the line of Joe Nadol with J.P. Morgan. Please proceed. Joseph Nadol - J.P. Morgan: Thanks. Good morning.

Hi Joe. Joseph Nadol - J.P. Morgan: First question is just -- your quarterly guidance I don't... wouldn't want you to start at President, but just given circumstances here, I was wondering if you could help a little bit on what kind of ship set volume you're looking at for Q1, you've already said it's going to be weaker. What sort of residual is there from the strike?

Well, the way I would categorize it Joe is Boeing announced that the strike caused them 105 units of production in 2008 and if you look at our unit ship sets, we had -- we lost 72 units in 2008, and that included three units of 87 deliveries. So if you exclude those, we lost 69 units. So the difference between the 69 units and 105 units for us has to come out of 2009. And most of that will come out of the early part of the year. Joseph Nadol - J.P. Morgan: Okay, that's helpful. On the cash flow, I guess the 200 million that you mentioned, Rick in terms of the growth in inventory that's net of what you'll be able to shed in terms of strike related inventory?

That's correct, that's a net increase. Joseph Nadol - J.P. Morgan: Okay. And so, taking a step back here, and more philosophically looking at the cash flow look into the balance sheet, any investments that you have planned, your net debt hasn't budged much but that's not including the Boeing advantages, which as you know have been going up quite a bit over the past several quarters, and you had to burn those off in the next several years. Obviously the outlook has shifted and both business share market and the commercial aircraft market to some degree. Can you talk a bit about how you're viewing both the investments that you already have in the plan, and just any other way you can cut CapEx, and how you're evaluating potential new investments. So, I imagine that pipeline is going to be shutdown just because OEMs are going to be pulling back?

Yeah, let me a take a swing at that, and then Rick can add some flavor, if he wants to. First of all, of course we're being as conservative as we know how to be, we're delaying projects that can be delayed. Of course we have certain contractual commitments that we will continue to meet, but again it goes back to the whole spectrum of contingency planning that we do and the requirements that we have. I would also make note that a number of our new development programs have some shared risk associated with our customers and partners as well as Spirit. So, we have stressed our plans through a whole number of scenarios and feel -- it is hard to say very good, it's hard to feel very good in this environment, but feel very confident that we have the whole range of potential outcomes that covered and remained very conservatively capitalized and very strong. Joseph Nadol - J.P. Morgan: Okay. Thank you.

Yes, Operator: Your next question comes from line of Troy Lahr with Stifel Nicolaus. Please proceed. Troy Lahr - Stifel Nicolaus & Company, Inc: Thanks. Just wondered regarding your 2009 guidance, if you could talk a little bit more at the segment level and give us some clarity on how you see that shaping up?

In terms of -- Troy Lahr - Stifel Nicolaus & Company, Inc: Just sales and margins.

The sales will obviously follow the production deliveries. I think we'll see a little bit higher growth in our wing business because of some of our new programs there. Primarily the Gulfstream programs will contribute some revenues. I think we'll have a little higher growth in our Fuselage business. Again, some of our new programs there, the Sikorsky program, the A350 program will generate some revenues that wouldn't be directly attributable to changes in production rates. So I think you'll see a little higher growth in those two segments. The profitability will basically return to the levels that we saw before the strike, maybe a little bit down because of the below our pension income which as you heard, we took a few catch adjustments for that in the fourth quarter but that obviously dampens our margins going forward. So, that will stay with us through the remainder of this contract blocks which will take us out through the end of 2009. Troy Lahr - Stifel Nicolaus & Company, Inc: Okay, but just on the margin side; I mean we really don't seen anything moving meaningfully one way or the other one segment versus the other?

No I think, once you get past the strike impact, I think you will see our margins look similar to what we had before. Troy Lahr - Stifel Nicolaus & Company, Inc: And then, when do we expect the blocks to start resetting given the delays, is that kind of middle of 2010 now?

No, it's actually. Again it varies by program obviously. But because each contract has its own end point based on the number of units included in the block. But generally the most of our blocks will mature around the end of 2009. There is fear that go off into early '10, but the big ones for us are 737, the various products that we make on the 737 and those blocks pretty much come to an end at the end of 2009. So on an average, if you kind of plus and minus it all, I say on average we'll start the new blocks somewhere in the first part -- first quarter of 2010. Troy Lahr - Stifel Nicolaus & Company, Inc: Great, thanks guys. Operator: Your next question comes from the line of Heidi Wood with Morgan Stanley. Please proceed. Heidi Wood - Morgan Stanley: Good morning. I want to turn to the cash flow, Rick if you don't mind and get a little bit better clarity. I may have missed it but are you, what is the cash flow guidance from operations for 2009?

Well, we didn't provide any specific guidance, again given the volatility that we have. We didn't provide very specific guidance. What we said is that we would expect to have positive cash flows, positive free cash flows with the assumption of 250 million to 275 million of CapEx. And that includes obviously the 115 million of capital reimbursement that we mentioned earlier. I mean if you do the math on that it wouldn't imply a cash flow from operations that looks a lot like what we did in 2008. Heidi Wood - Morgan Stanley: Alright, well given that it is such a significant driver for your stock and such great concern, perhaps you can give us a little more clarity up, how in the quarterly outlook basis are you cash positive every quarter or could you give us a sense about the puts and takes as we think about the next couple of quarters Rick?

Yes, and I think you'll find if you go back and look at our historical results particularly in the first quarter of 2008 even the first quarter of 2007. The first quarter tends to be our weakest cash flow quarters just because of the way our deliveries typically ended at the end of the calendar year. Typically we -- everything we ship in December, we get paid for in the month of December. So we end up with quite low receivables balances at the end of the year and those kind of returned to normal levels at the end of the first quarter. So we always have some receivables build which constraints our -- obviously our cash flows in the first quarter. I believe you'll see that again in this quarter. So the first quarter should be our weakest for the year. After that it really just depends on the timing of payments from customers for various activities they we are doing and the timing of deliveries. Heidi Wood - Morgan Stanley: And then what about inventory. I mean we've seen it build, you again talked about -- you gave us some kind of puts and takes on it but again what happens over the next couple of quarters, where is inventory going to end in year-end 2009?

As we said in our earlier remark we expect on the order of about another 200 million of inventory growth in the total year and in response to one of the questions it was does that include the burn off the inventory that you build for the strike and it certainly does. So, we will burn off most of that inventory in the first part of the year, so that should help reduce the amount of inventory growth that we'll see in the early part of the year. But other than that I don't really see any real variations on a quarter-to-quarter basis. I mean that inventory growth is primarily for starting to ramp up production on the 787. It's for the development cost that are continuing for some of our new programs and those are not really on a quarterly sensitive basis. That does a fairly steady ramp up during the year. Heidi Wood - Morgan Stanley: And one last question on the Malaysia facility. Can you give us a sense as to how we should think about the quarterly migration of work going forward, I mean how does that, how we're going to see still into margins and what should we be expecting there?

I will maybe address the question of how its build in the margins. Obviously it has improved cost or lowered cost in our current contract block, so early on Malaysia primarily benefits our A320 block and that block extends for a longer period of time. It extends into mid 2010. So we're already starting to see a little bit of the savings in our current block but relatively little. What you'll see is the majority of those savings will fall into subsequent blocks. Heidi Wood - Morgan Stanley: Okay, great. Thanks very much.

Thank you Heidi. Operator: Your next question comes from the line of Dana Merber with GMP Securities. Please proceed. Dana Merber - GMP Securities: Good morning guys, just a couple of questions. First, with respect to your backlog, you mentioned, Jeff mentioned that it includes the commercial aerospace programs plus some of the new contract wins. Can you maybe give us a bit more of a breakdown, like what proportion of it is commercial, what's the new contract wins, little more detail perhaps?

Well clearly the lion share of that is the commercial jet transport backlog. I'd say well over 90.

The only part of the non Boeing work or non Airbus production work that we would have in backlog are those development programs that are specifically contracted for. We would not have for instance -- there is of course these probably good example, we on our CH50 3K contract, we have won a development contract and then there is another contract that follows that, that would be production contract. So, on our current backlog all we have is the development contract because at this point the production contract hasn't been awarded. So we limited to those things that are contractually firm. Dana Merber - GMP Securities: Okay. And just with respect to your CapEx as well, I know you're going to be incurring, I am assuming the bulk of the CapEx on the Carolina plant over the next two years, is that fair. I mean when will -- how can we think about that kind of breakdown?

No, absolutely the growth that you see in our CapEx from '08 to '09 is really totally based on putting in place the production equipment for our North Carolina facility. Absent that event our CapEx probably would have been down a little bit in 2009. Dana Merber - GMP Securities: Thanks very much guys.

Thank you. Operator: Your next question comes from the line of (inaudible) with Sanford Bernstein. Please proceed.

Good morning.

Good morning.

You have won quite a number of new programs, the two Gulf Stream, of course you got A350, the Cessna, the MRJ, can you give us an insight into sort of the timing and size of capital and R&D commitments that you would need to make over time for those?

Well, the R&D investment for most of those is relatively modest and it's spread out over the course of the next few years. In many cases as we said in earlier calls and presentations, we've been successful and being able to share the development cost for a number of these programs with our customers, with third parties, and with Spirit providing some of the development costs as well. So that kind of sharing arrangement has resulted in the actual R&D expenses for those programs being relatively modest in the next couple of years.

And capital for equipment in facilities?

Yeah, facilities wise in most cases, those programs that you mentioned, fits fairly well while within our current brick and mortar so there's not other than the A350 which is a major program that we're building the new facility for in North Carolina. Other than that the other programs that you mentioned would largely fit into our existing facilities. We may have some expansion in some capital equipments and things like that, but no significant new brick and mortar.

Okay and then on the segments; if we add back the cumulative catch-ups to the margins and the different segments this quarter, they were still down versus previous recent quarters. Should we assume that, that was the effect of the strike on volumes primarily. I mean you mentioned the currency effect on wings?

Actually there is two things that come into play. Probably the single largest if you're just looking at absolute margin percentages, is the R&D and SG&A expense, because we had a much lower volume base in the fourth quarter. The same dollars of R&D and SG&A that we spent in prior quarters looks like a larger percentage of revenues. So, that had a for instance in fuselage, if you look year-to-year, Q4 last year to Q4 this year, that had an almost two percentage point impact and it negatively impacted to really all of the segments. The other factor that comes in to play is the cum catches relate to the periods prior to the fourth quarter. So they in effect correct the profitability on margins that we booked through third quarter of this year. They don't take into account the impact that it has on the current quarter. So, for instance the lower pension expense, lower pension income that we talked about, generated a negative cum catch, but it also obviously reduces the profitability in the current quarter. So that's reflected in there as well.

Got it. Okay, thank you.

Thanks. Operator: (Operator Instructions) Your next question comes from the line of Joseph Campbell with Barclays Capital. Please proceed. Joseph Campbell - Barclays Capital: Hi, good morning. It's actually Carter Koplan and Jo Campbell.

Good morning. Joseph Campbell - Barclays Capital: And we'll keep to ... good morning. Jeff, following as let's open the opportunity to reconsider its production rates from sort of level to potentially down in their guidance to us. And what I was wondering is, as I seem to be talking about well, if emergencies happen, we might have to do something to the end of '09 but probably not. And depending on how soon we do these things, we're probably talking about the second half of 2010 rather than the first half. But, how does that work in terms of just the timing of because you lead them a bit, how do they have to ... when do they have to tell you say, if they want to make a change the 2010, when do you have to know how to ... when to do that?

Our contracted lead times are six months on the reduction side it's a little longer on the rate increase side. So, contractually they're obligated tell us within six months if they, of course if they violate that then there is we're entitled to equitable compensation. Joseph Campbell - Barclays Capital: But, normally wouldn't they tell you earlier in that, that's a sort of hard... where is that?

Yeah, I think Joe I've seen some... Joseph Campbell - Barclays Capital: Shock?

Some shock, right. There would be a very smooth plan, with not just us but other key partner suppliers to Boeing. Joseph Campbell - Barclays Capital: So, I mean conceptually as late as that the end of this year and beginning of the next we're something in the second half, but presuming that they are doing this by looking at the world and talking to all their customers and so on. They would give you notice of your firing line or a heads up at least in May or June ... mid-year say, if they could?

I think that's fair. And of course as we mentioned earlier, we do lead them so they could hold their guidance for number of units for '09 and it still might impact us in '09. Joseph Campbell - Barclays Capital: Well that's what I was going to say, so if they were making changes to the second half of 2010 rather than the first half, can we assume that your 2009 would be unchanged?

I think that's a fair assumption.

Absolutely. Joseph Campbell - Barclays Capital: Right, if they were to do that earlier then it starts to get into your ... okay, Carter has one.

Rick, just a couple of quick ones; on the 787 margin. Now you've obviously, I mean we're not starting backup winding barrels until later in the year that program's pushed to the right. Did you make another revision to the 787 margin in the quarter or do you expect to in subsequent quarters or are we getting near zero, any color there is helpful.

Yeah, sure. Now we chew up margins in the profitability estimates on all of our contracts every quarter. And we did that again in the fourth quarter. Obviously the... there was as I recall, a slight deterioration on the 787 but it was largely immaterial. Joseph Campbell - Barclays Capital: Okay and one last one on R&D and SG&A, perhaps I missed it but what's your expectation for R&D and SG&A for '09?

As I said in my prepared comments Joe, what we're expecting that in '09 that R&D and SG&A, the combination of the two would be in the 5 to 5.5% range, which is about where we ended up 2008, if you look at the total year '08 which you admittedly is a little bit impacted by the strike, we are about 5.4% for the 2008. So, we think that as a percentage of sales that will hold, so that implies obviously that we'll have some growth in 2008. Maybe not as much as dollar-for-dollar with revenues but certainly, we will have some growth.

Is the growth in R&D or is it in SG&A?

It's a little bit in both.

During the strike period?

Yeah, well a couple of things there, that's couple of variables on the SG&A side; we're obviously starting to build the infrastructure now in North Carolina or to support that program. So we'll have a little infrastructure growth in SG&A to support that. And also on the R&D side, the kind of the major variables for us in 2009 are the 787 derivatives. Depending on the schedule of the derivatives, it's possible that we could incur some R&D expense in 2009 for those programs. At this point, we're still working with the customer obviously on those schedules and how much of that would be R&D expense versus contract costs. But we're certainly keeping a place holder on our guidance for some growth in R&D expense next year primarily for that reason. Joseph Campbell - Barclays Capital: Great. Thanks a lot guys.

Thank you.

Thanks Guys.

Thank you.

Your next question comes from the line of David Strauss with UBS. Please proceed. David Strauss - UBS: Good morning.

Good morning.

Good morning, David. David Strauss - UBS: Did you specifically spell out how many deliveries for the 787 are baked based into your revenue guidance for '09?

We did not. But we've got a range covered there and it's in the 10 to 15 unit range. David Strauss - UBS: Okay. So if I think about it, you're, based on the difference where you are and where Boeing is in terms of deliveries on the non-787 part, you should probably going to deliver and 30 or so ships that's relative to '08 on the in-production supplement, 10 to 15 on the 787, that's would baked into revenue guidance. I was just having a hard time at getting to your number?

Right. So it's -- Boeing has guided to a 4.80 to 4.85 for 2009. We said we still have to burn-off the 30 units that we built in '08. So, on that legacy basis, our core should be in those 4.50 to 4.60 kind of range. Again, we tend to be a little bit ahead of Boeing because of the lead times. But it'll be in that range excluding the 787 and the 787 would be on top on that. David Strauss - UBS: Okay, that's helpful. And then Rick or Jeff, maybe could you just talk about conceptually, if Boeing were to bring down rates, what impact that might have to your margins given the volume-based pricing arrangement that you have with Boeing?

Well, you're absolutely right. The volume-based pricing mechanism that we have certainly helps protects margins when rates go down and that was the intent of that mechanism when we put it to -- originally put it in place. So, that will provide some protection for margins. It doesn't completely protect margins as you can imagine with the fixed cost base that we have here. But to the extent to that happens, we talked earlier about when the current contract logs end, that impact, if it were to happen would by and large be reflected in our next contract logs. Kind of given where we are today, with the end points of our current blocks and kind of Jeff mentioned, alluded to the fact, that with our lead times, we don't see a whole lot of impact on our current contract blocks but certainly it would create some exposure in the next blocks. David Strauss - UBS: Okay. And last one; I think you've disclosed that your shifts of value on the G650s around $6 million. Have you disclosed your shifts of values on the 250?

I don't recall that we have but its, I mean its

On the 650?

Yeah, on 250.

No, we have not.

I don't recall that we have, but I mean certainly it's substantial. David Strauss - UBS: Okay guys

Remember on the 250 we just have the wing on the 650 we also have the then the sales on the BR 725. So the 650 content would be higher.

Your next question comes from the line of Carter Lee with Davenport & Company. Please proceed. Carter Lee - Davenport & Company: Good morning gentlemen. Following on the G 650, have you provided any production guidance on that ship set for year '09?

No, we have not. And won't unless our customer does. Carter Lee - Davenport & Company: Okay. On the 777, I was wondering if you might be able to help me out on ramping up on the 777 in first quarter, will that be ... will all of the ramp ups be equal against each product line I was trying to see I could model it differently. Could you get back up -- could you ramp up quicker on the 777 and say to 73 or even to 74 for that matter?

You are talking getting backup on the production step after the.... Carter Lee - Davenport & Company: Pre-strike production run rates, yes.

By the end of February, very early in March, I think we'll be back to full production rate. Carter Lee - Davenport & Company: On all the aircraft?

Yes. Carter Lee - Davenport & Company: Okay.

I think that's right, isn't it?

Yes. Carter Lee - Davenport & Company: And just one more on ... can we assume that will be any type of catch up of the ... I'll call it the lost aircraft, the 69 units that you referred to. Can we expect that anything will be caught up in fiscal year '09?

Well. Certainly Boeing's guidance did not indicate that that there would be a catch up of the 105 airplanes that they said they've lost. So if they don't catch them up certainly, we're not in the position to do so either. Carter Lee - Davenport & Company: Okay. Thank you.

Thanks.

Your next question comes from the line of Howard Rubel with Jefferies. Please proceed. Howard Rubel - Jefferies & Co: I just wanted to ask a follow-up question for a moment. There were a number of what I call deferred revenue lines and some other things on the cash flow statement. Could you address those please Rick?

Sure, I mean the deferred revenue comes in where we get cash in advance of ... yeah, I was completing certain parts of the work scope and we had that situation on a couple of our new programs. I think the most the largest in Q4 was on the A-350 program. Howard Rubel - Jefferies & Co: And on...

So, those payments that we've received obviously will turn into revenues in future periods as the work is completed. Howard Rubel - Jefferies & Co: Right, and you haven't booked the revenue... right, that's the whole point.

Right.

Right. Howard Rubel - Jefferies & Co: And were there also some payments either on the 747-8 or the 787 that were above the shift set values?

Well I mentioned in my comments, we did receive an additional 110 million of 787 advances. So that's certainly reflected in our Q4 results. And we were able to resolve some 747-8 in our engineering items development costs. Nothing of any real consequence, but we did resolve some of those items in the fourth quarter and did receive some revenue for those as well. Howard Rubel - Jefferies & Co: Thank you.

Thanks Howard. Operator we have time for one more question please.

Your next question comes from the line of Heidi Wood with Morgan Stanley. Please proceed Heidi Wood - Morgan Stanley: Jeff, I had a follow-up which is ... I'm just wondering you talked about the contractual commitments that you had with the OEMs. I'm just wondering if you've got any kind of an appetite to talk to them and renegotiate, just given that the world has changed so substantially. I mean just given the R&D that you're going to be spending on some plans where the outlook may be changed, do have much appetite to do that?

Well, I think in general Heidi, I think we were open to negotiations that are appropriate, that's a pretty broad question I think. I mean clearly we feel good about the business that we won, the programs that we wanted on, and we feel very good about the long-term viability of the market. I think, I mean clearly things have changed in the short-term here. But we've been very conservative in the way we manage our business. So, we don't see anything on the horizon that would put us in a position where we had to go, renegotiate. So, if it makes sense to our long-term relationships and short-term needs, we certainly will. But, nothing really pops to mind that's having needed to do that at this moment. Heidi Wood - Morgan Stanley: Okay, thanks very much.

Thank you.

We thank you for your participation in today's conference. This does conclude your presentation. You may now disconnect and have a great day.