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Friday, April 25, 2014

Spirit AeroSystems estimates insurance claim from tornado at $400 million

By Molly McMillin
The Wichita Eagle

Spirit AeroSystems estimates its insurance claim from an EF-3 tornado that tore through its Wichita plant April 14 at about $400 million.

The company took a $55 million charge, or 26 cents per share, related to expenses in the second quarter related to tornado damage, the company said Thursday.

Spirit also took a $10 million charge for fees related to its $1.2 billion in debt refinancing, which closed April 18.

The tornado knocked out power and water, broke gas lines, took production equipment off line and blew off roofs as winds of about 160 mph ripped through the site.

The storm damaged 40 buildings and scattered debris across the complex.

The storm hit Spirit about 10:45 p.m. April 14, while about 200 employees were on site.

They sought shelter as debris blew through the buildings. No one was hurt.

Words can’t describe what Spirit went through, Mike King, Spirit senior vice president and chief operating officer, said last month.

As they went through each building to assess damage, King said he was glad when a building was dark.

“That meant the building had a roof,” King said.

Employees and contractors worked around the clock to get production and operations resumed. Spirit was able to resume some shipments three days after the tornado hit.

Eight days after the storm, all 10,800 Wichita employees were back at work.

Now, temporary fixes that were made to allow the resumption of work need to be replaced with permanent repairs.

Spirit is working with its insurers to determine the applicable deductibles related to property damage and expenses related to the tornado, company officials said.

The costs will be recorded as a severe weather event, and will be excluded from program cost of sales, they said.

Additional expenses will be recognized in future periods as they are incurred.

Offsetting credits will be recognized in future periods as insurance recoveries are confirmed, the company said.

“Our leaders, employees, unions, community and government partners are doing an outstanding job supporting Spirit’s ongoing recovery efforts,” Phil Anderson, Spirit senior vice president and chief financial officer, said in a statement. “We remain focused on supporting all of our customers from the Wichita facility as we recover from this event and execute the planned growth across the business.”

Contact Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com.

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