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P I P E R A I R C R A F T , I N C.

Piper UpdatePiper Update

Piper Aircraft, Inc. Proprietary Sun ‘n Fun 2007

Jim Bass, CEOJanuary 20, 2009


Agenda

Overall Economic Environment• Overall Economic Environment

• Piper’s State of Affairs

• Update on Expenditure of Project Osprey Funds

• Piper’s Commitment to Indian River County and State of Florida

• Go Forward Strategy• Go Forward Strategy

Piper Aircraft, Inc. Proprietary


Overall Economic Environment



01/16/09



Overall Economic EnvironmentPiper Believes that the Global Economy Is Experiencing a Deep and Prolonged

Recession• Major stimulus efforts by the U.S., China and Europe totaling over $2T have failed to

gain traction as banks hoard cash in U.S. Treasuries

• U.S. stocks declined nearly 40% and lost $10.4T in market value from 10/07 through 2008

Fl id l t (7 3%) i 11th t t t i th ti d i• Florida unemployment (7.3%) is 11th worst state in the nation and isat a 15 year high and growing – I.R.C. is currently at 10% (3rd highest in Florida)

N f “F l ” ti i t d t ARM d d ff t f th• New wave of “Foreclosures” anticipated to occur as ARMs come due and affect further declines in property values

• 30% - 40% decline in industrial output will continue as a “lack of confidence” impacts h i b h ipurchasing behaviors

• Market is being fundamentally restructured as years of debt spending cause painful “deleveraging”


Many Are in a State of Denial or Panic


Overall Market SituationGeneral Aviation Has Not Been Immune to the Economic Downturnwhich has Resulted in a Major Restructuring of Several Manufacturers as Dramatically Lower Sales Impact Businesses

• Adam, Grob & Eclipse file for bankruptcy• All other GA Companies Distressed

Mooney Shutdown– Mooney Shutdown– Cirrus, Cessna & Beechcraft – Major Layoffs

• Lending Institutions Not Willing to Finance Aircraft Sales– Restricted liquidity harms sales

Hi h I i i b h & d i f• Higher Inventories in both new & used aircraft• Elimination of “Bonus Depreciation” tax benefit (benefit used by 40% of

buyers)• Customers reluctant to buy aircraft (Domestic & International Markets)Customers reluctant to buy aircraft (Domestic & International Markets)

– 18% exchange rate increase in U.S. Dollar over Euro weakens exports

Uncertainty Breeds Inaction


Uncertainty Breeds Inaction


Economic Crisis Seriously Affecting General Aviation

Friday, November 7, 2008

Report: Hawker Beechcraft BeginsLayoffs

General Aviation is Experiencing one of the Worst Downturns in Recent Hi t R lti i Wid d L ff Sh td d B k t i


History Resulting in Widespread Layoffs, Shutdowns and Bankruptcies


Piper’s State of Affairs



f G C %As a Result of the Global Recession, Piper Currently Forecasts a 40%Decline in Unit Volume in 2009 compared to 2008.

Actions to Adjust Business to Market RealityActions to Adjust Business to Market Reality• Reduced work week from 5 to 4 days for most employees to save as many jobs

as possible while also preserving benefits (employees can receive unemploymentbenefits for a portion of the fifth day from the State)

f % C• Adjusted work force – reduced approximately 12% or 150 employees. Currently, Piper employs 900-1000 people with an annual payroll of approximately $52M

• Decreased factory output to correlate with market demand• Be prepared if market gets worseBe prepared if market gets worse

Strategic Initiatives• New Product Development & Innovation continues

St S l & M k ti ti iti d• Strong Sales & Marketing activities underway• Still recruiting and hiring critical talent• Investing in new infrastructure, equipment & tooling to improve productivity, quality

and safety


y


Piper is better positioned than most companies to weather this financial “Perfect Storm”

• Diverse customer base (owner/operators, corporations & flight schools with geographic diversity– comprehensive product line focused on growth)

• Revenue complemented by highly stable parts business serving world’s 2nd largestinstalled base (85 000+ Piper aircraft)installed base (85,000+ Piper aircraft)

• Strong balance sheet with financial flexibility • Dominating six place market - PA46 line (Matrix, Mirage & Meridian) -“Category Killers”• Customers gravitating to legacy manufacturers such as Piperg g g y p• Experienced Worldwide Dealer Network• Established and qualified supply base• Highly talented and dedicated workforce• Supportive Community & State• Supportive Community & State

Compelling Opportunities Will Increasingly Become Available for the S


Financially Strong


Comprehensive Produce Line Focused on Growth

PiperJet $2,199,000

$1 896 500260 KTAS

360 KTASWilliams FJ44 Engine

Garmin Avionics

Meridian$1,896,500

$1,141,000213 KTAS

Pressurized Piston Single

P&W PT6 Turbine EngineSeats 6 in cabin-class comfort

M t i

Mirage

$757,000213 KTAS

Unpressurized Piston SingleSeats 6 in cabin class comfort

gSeats 6 in cabin-class comfort

Seneca V

Matrix

$756,500197 KTAS

High-performance twinSeats 6 in quiet, low-vibration cabin

Seats 6 in cabin-class comfort

Seminole

$201 400

$510,645

117 KTASP i l i i

168 KTASReliable, twin training aircraft

Glass cockpit


Warrior$201,400 Proven, single engine trainer

Glass cockpit


Fully-Integrated Manufacturing CapabilityMetal Fabrication Composite FabricationMachining

TO COME

Metal Bonding Component SubassemblyStructural SubassemblySubassembly

Paint TestFinal Assembly


Insulation from Variabilty in the Supply Chain or Market


Full Capability Development Center Engineering Services Aerodynamics Airframe Design Avionics & Electrical Avionics & Electrical

Methods Powerplant & Mechanical Systems Structures Engineering Administration Production Support Team Service Support Team & publications Other Disciplines Program Management Test Operations Ground Testing Instrumentation Instrumentation

Flight Test (Authorized Reps) Aircraft Certification Services FAA Administrator Administration Lead Certification Engineers

From Concept to Design Certification and Testing Piper Does It All

FAA Authorized Reps


From Concept to Design, Certification and Testing, Piper Does It All


PiperJet Flight Test Status

• 61+ flights, 104+ hours– Maximum speeds:Maximum speeds:

• 200 KIAS at 17,500 ft = 270 KTAS(360 KTAS Goal)

– Minimum speeds:• 90 KIAS at approximately gross weight, or CLMax

= 1.39(65 KIAS CLM 2 5 G l)(65 KIAS or CLMax =2.5 Goal)

• Aircraft behaving well– No significant maintenance issues– Handling, performance, etc. positive and

improvingimproving

• 1st customer deliveries could match economic recovery cycle

Exceeding Expectations as Flight Envelope is Expanded


Exceeding Expectations as Flight Envelope is Expanded


V.L.J. Competitive Market

CGrob (SPn)PiperJetFiled for insolvency

- Increasing sales in PA46’sIncreasing production

and demand ≈ 100 units

CessnaMustang

Epic (Elite)

g- Dealers bullish on product

- In a class by itself- Positive Response from

Public & Trade PublicationsEpic (Elite) Public & Trade Publications

Not competitive

with Piper Jet

Cirrus (Vision)

Diamond (D-Jet)Eclipse (400 & 500)

Adam (A700)Program Delayed

Filed Chapter 11Investors Suspended Flight

Test and Cert.

with Piper Jet


Filed Chapter 11 Bankruptcy - Workforce furloughed


Safety Performance2008 Total Recordable Incident Rate (TRIR)

8.0

10.0

50% Better than the Industry Average

4.0

6.0

TRIR

IndustryAverage

5.7

0.0

2.0

2004 2005 2006 2007 2008

2008 Severity Rate

4.0

5.0

e1 0

2.0

3.0

Seve

rity

Rat

e

IndustryAverage

2.9

0.0

1.0

2004 2005 2006 2007 2008

Piper Safety Performance An Industry Leader

75% Better than the Industry Average


Piper Safety Performance… An Industry Leader


U d tUpdate on Expenditure of Project Osprey Fundsp j p y



How are Funds being Spent?

• Strengthening facilities to Miami-Dade Building Code– Largest under-roof facilities available to support/coordinate emergency relief efforts

d i it i i if i dduring community crisis if required

• Repairing hurricane damaged buildings

C ti t d i bl fli ht li• Correcting water drainage problems on flight line

• Renovating aging infrastructure (more than 50 years old)

P h i t li & i t f t & f t d ti• Purchasing tooling & equipment for current & future production

• Improving facility for customer deliveries

I t lli iti l f t i t• Installing critical safety equipment

Careful Expenditure of Project Osprey Funds on Critical Projects


p j p y j


Piper Aircraft spent/committed the majority of funds in Florida (80%) - IRC (48%)benefiting the community

Building Code

Other

20% or

21% 23%

Equipment & Tooling

Hurricane Repair Building Code

Safety

20% or $2.1M

IRC (48%)or $5.1M

Other

Florida 80% or $8.5M $10.6M Total Received

17%

17%

22%

Capital Spending Usage Spending by Geography

IRC Spends $4M and Receives $6.667M Matching Payment from the State


IRC Spends $4M and Receives $6.667M Matching Payment from the State Which Primarily Went to Support Local BusinessesWhich Primarily Went to Support Local Businesses


Capital Spending Update

Key Projects Spent to Date Current Planned Exp. Total Project

Bldg. Improvements

Bldg.18 149 601 750 Hurricane Repair

($000’s)

Bldg.18 149 601 750 Hurricane Repair

Bldg. 21 1199 302 1501 Strengthen to meet code

Bldg. 1A 350 227 577 Hurricane Repair

Bldg. 20 209 21 230 Drainage/Safety

Factory Enhancements

Improve bonding process 360 261 621 Quality Improvements

Machinery & Equipment 528 146 774 Efficiency/Quality

Tooling & Fixtures 1047 106 1153 Efficiency/Quality

Facilities Upgrades 403 209 604 Mfg. flow/energy savings

Engineering

Data Acquisition Systems 4 157 161 Aircraft Testing

C t 75 0 75 Ad D igComputers 75 0 75 Advance Design

$4324 $2022 $6346 Committed to Date

Other 1836 777 2613 Smaller Projects

6160 2799 8959


Approximately $9M of $10.7M Received has been Spent or Committed…..Balance to be Spent/Committed During 1H of 2009


Ongoing Facilities Renovations

Improved DrainageHardened Structure & Roofing on Hangar

Repairing Hurricane Damage

New Retail Facility

New LightingNew Machinery for improved efficiency

and safety


Reinforced Buildings & Windows


Research & Development Spending

2007 2008 Totals$x1000 $x1000 $x1000

PiperJet $13,538 $8,150 $21,688Matrix $5,900 $645 $6,545Meridian Garmin $1,908 $796 $2,704Mirage $910 $13 $923Mirage $910 $13 $923Misc Product Enhancement $380 $435 $815GPS Wide Area Augmentation System (WAAS) $74 $236 $310Interior Upgrades $188 $82 $270Saratoga Garmin G1000 $183 $0 $183Synthetic Vision & Pathways $0 $17 $17

Totals $23,081 $10,374 $33,455

Piper Continues to Invest Heavily in New Products and I ti ($34M i l t t )


Innovation – ($34M in last two years)


Pi ’ C it t tPiper’s Commitment toIndian River County & State of Floriday



Piper’s Commitment to IRC and Florida• $52.3M in annual payroll across nearly 1000 employees (2008)• Spent $38.2M on goods & services in Florida ($9.8M in IRC) in 2008• Bring in “new work” from other manufacturers into the community

– Assist I.R.C. Chamber of Commerce to recruit new companies to the community• I.R.C. Mobile Blood Bank – Single highest contributor to the local hospitals

– 400 units of blood/annually• Increase United Way company match to 50%

A i C S i t P ti i t i “R l f Lif ” d “M ki• American Cancer Society – Participate in “Relay for Life” and “Making Strides Against Breast Cancer” - Hosting Annual Fundraiser in 09

• Created the “Piper Education Program” – Provides education for 50+ at-risk high school students in IRC

Each student mentored by a Piper employee– Each student mentored by a Piper employee– 90% graduation rate

• Annual “William T. Piper” College Scholarship Program for local students – 4 students per year

• Provide 5200 sq. ft. free office space to education programs (past 17 years)q p p g (p y )• Host major business events at local hotels & restaurants

Piper is Committed to the Well Being and Future of IRC and the State of Florida


Piper is Committed to the Well Being and Future of IRC and the State of Florida


Go Forward Strategy



Go Forward Strategy

• Worldwide economic decline is impacting Piper’s 2009 business plan– Difficult to forecast future demand with accuracy

C t d St t f Fl id h d t d i t l dit d d t d th t• County and State of Florida have conducted internal audits and documented that Piper has met or exceeded all necessary contractual requirements for the first payment

• Critical infrastructure improvements will be completed by mid-2009

• Based on worldwide economic conditions Piper may delay the 2nd payment until the economy improvesthe economy improves– Contract performance terms to be extended until the economy improves– Delay extends Piper’s commitment to stay in Florida/IRC

• Piper is committed to working closely with IRC and State of Florida representatives

Pi V l th P t hi it h F d ith IRC d th St t f Fl id


Piper Values the Partnership it has Formed with IRC and the State of Florida


Actions That Would Help Piper

• Stabilization of World & U.S. markets with improved liquidity and purchasing confidencep q y p g

• Continuation of the “Bonus Depreciation” tax policy• Elimination of Florida sales tax on out of state

aircraft purchases• State incentives to “buy local” for flight training y g g

schools & others• Continued support from community & state

leadership for economic development without sacrificing our quality of life



Q&A Session


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