Spirit AeroSystems Holdings, Inc. [SPR] Filings

10-Q 1 spr-20240926.htm 10-Q spr-20240926

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 26, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33160

Spirit AeroSystems Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						20-2436320
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3801 South Oliver

Wichita, Kansas 67210

(Address of principal executive offices and zip code)

(316) 526-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	SPR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 17, 2024, the registrant had 116,912,390 shares of Class A Common Stock, par value $0.01 per share, outstanding.

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TABLE OF CONTENTS


	PART I — FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63


PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	69
Item 5.	Other Information	70
Item 6.	Exhibits	70
Signatures		73

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Operations

(unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
	($ in millions, except per share data)
Net revenues	$	1,470.6	$	1,438.9	$	4,665.3	$	4,235.0
Operating costs and expenses
Cost of sales	1,716.6		1,492.5		5,580.3		4,320.2
Selling, general and administrative	93.8		69.2		258.9		217.2

Restructuring costs	(0.1)		—		0.7		7.2
Research and development	10.4		10.1		34.4		33.9
Other operating expense	—		0.8		—		5.7
Total operating costs and expenses	1,820.7		1,572.6		5,874.3		4,584.2
Operating loss	(350.1)		(133.7)		(1,209.0)		(349.2)
Interest expense and financing fee amortization	(90.8)		(75.1)		(253.3)		(221.1)
Other (expense) income, net	(33.0)		7.3		(30.3)		(120.0)
Loss before income taxes and equity in net income (loss) of affiliates	(473.9)		(201.5)		(1,492.6)		(690.3)
Income tax provision	(2.8)		(2.4)		(15.9)		(1.1)
Loss before equity in net income (loss) of affiliates	(476.7)		(203.9)		(1,508.5)		(691.4)
Equity in net income (loss) of affiliates	0.1		—		0.2		(0.2)
Net loss	$	(476.6)	$	(203.9)	(1,508.3)		(691.6)
Less noncontrolling interest in earnings of subsidiary	(0.3)		(0.2)		(0.6)		—
Net loss attributable to common shareholders	$	(476.9)	$	(204.1)	$	(1,508.9)	$	(691.6)
Loss per share
Basic	$	(4.07)	$	(1.94)	$	(12.93)	$	(6.58)
Diluted	$	(4.07)	$	(1.94)	$	(12.93)	$	(6.58)

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
	($ in millions)
Net loss	$	(476.6)	$	(203.9)	$	(1,508.3)	$	(691.6)
Changes in other comprehensive loss, net of tax:

Pension, SERP, and retiree medical adjustments, net of tax effect of $3.9 and $1.2 for the three months ended, respectively, and $4.1 and ($15.2) for the nine months ended, respectively.	4.8		0.8		4.9		49.5
Unrealized foreign exchange gain (loss) on intercompany loan, net of tax effect of ($1.1) and $0.6 for the three months ended, respectively, and ($1.0) and ($0.2) for the nine months ended, respectively.	2.3		(1.1)		2.0		0.4
Unrealized gain (loss) on cash flow hedges, net of tax effect of $0.1 and $1.2 for the three months ended, respectively, and $0.3 and $0.1 for the nine months ended, respectively.	2.6		(5.2)		1.9		2.5
Reclassification of (gain) loss on cash flow hedges to earnings, net of tax effect of $0.0 and $0.0 for the three months ended, respectively, and $0.0 and $0.0 for the nine months ended, respectively.	(3.0)		(3.8)		(2.9)		(1.7)
Foreign currency translation adjustments	37.1		(22.8)		32.6		3.2
Total other comprehensive gain (loss), net of tax	43.8		(32.1)		38.5		53.9
Less comprehensive loss attributable to noncontrolling interest	(0.3)		(0.2)		(0.6)		—
Total comprehensive loss	$	(433.1)	$	(236.2)	$	(1,470.4)	$	(637.7)

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


	September 26, 2024		December 31, 2023
	($ in millions)
Assets
Cash and cash equivalents	$	217.6	$	823.5
Restricted cash	—		0.1
Accounts receivable, net	572.6		585.5
Contract assets, short-term	1,059.5		522.9
Inventory, net	2,020.7		1,767.3
Other current assets	63.4		52.5
Total current assets	3,933.8		3,751.8
Property, plant and equipment, net	1,986.2		2,084.2
Right of use assets	86.9		92.1
Contract assets, long-term	22.9		—
Pension assets	48.0		33.5
Restricted plan assets	48.2		61.1
Deferred income taxes	0.1		0.1
Goodwill	631.3		631.2
Intangible assets, net	184.8		196.2
Other assets	107.0		99.9
Total assets	$	7,049.2	$	6,950.1
Liabilities
Accounts payable	$	1,091.1	$	1,106.8
Accrued expenses	520.9		420.1
Profit sharing	53.8		15.7
Current portion of long-term debt	426.2		64.8
Operating lease liabilities, short-term	9.8		9.1
Advance payments, short-term	98.2		38.3
Contract liabilities, short-term	262.6		192.6
Forward loss provision, short-term	413.0		256.6
Deferred revenue and other deferred credits, short-term	69.7		49.6
Customer financing, short-term	442.0		—
Other current liabilities	45.0		44.7
Total current liabilities	3,432.3		2,198.3
Long-term debt	3,976.4		4,018.7
Operating lease liabilities, long-term	80.1		84.3
Advance payments, long-term	249.5		301.9
Pension/OPEB obligation	27.3		30.3
Contract liabilities, long-term	180.3		161.3
Forward loss provision, long-term	596.5		224.1
Deferred revenue and other deferred credits, long-term	58.6		76.7
Deferred grant income liability - non-current	28.1		25.8
Deferred income taxes	12.8		9.1
Customer financing, long-term	207.4		180.0
Other non-current liabilities	136.4		135.5
Stockholders’ Equity (Deficit)
Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 116,631,455 and 116,054,291 shares issued and outstanding, respectively	1.2		1.2
Additional paid-in capital	1,458.3		1,429.1
Accumulated other comprehensive loss	(51.1)		(89.6)
Retained earnings	(892.6)		616.3
Treasury stock, at cost (41,587,480 shares each period, respectively)	(2,456.7)		(2,456.7)
Total stockholders’ equity (deficit)	(1,940.9)		(499.7)
Noncontrolling interest	4.4		3.8
Total equity (deficit)	(1,936.5)		(495.9)
Total liabilities and equity	$	7,049.2	$	6,950.1

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)

(unaudited)


	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Noncontrolling Interest

	Shares	Amount												Total
	($ in millions, except share data)
Balance — December 31, 2023	116,054,291	$	1.2	$	1,429.1	$	(2,456.7)	$	(89.6)	$	616.3	$	3.8	$	(495.9)
Net loss	—	—		—		—		—		(1,032.0)		—		(1,032.0)


Stock-based compensation - ESPP	—	—		1.2		—		—		—		—		1.2
Employee equity awards	468,567	—		19.5		—		—		—		—		19.5

Net shares settled	(175,455)	—		(5.1)		—		—		—		—		(5.1)
ESPP shares issued	271,746	—		3.8		—		—		—		—		3.8

Other	—	—		—		—		—		—		0.3		0.3
Other comprehensive loss	—	—		—		—		(5.3)		—		—		(5.3)
Balance — June 27, 2024	116,619,149	$	1.2	$	1,448.5	$	(2,456.7)	$	(94.9)	$	(415.7)	$	4.1	$	(1,513.5)
Net loss	—	—		—		—		—		(476.9)		—		(476.9)

Stock-based compensation - ESPP	—	—		0.8		—		—		—		—		0.8
Employee equity awards	18,648	—		9.3		—		—		—		—		9.3

Net shares settled	(6,342)	—		(0.3)		—		—		—		—		(0.3)



Other	—	—		—		—		—		—		0.3		0.3
Other comprehensive gain	—	—		—		—		43.8		—		—		43.8
Balance — September 26, 2024	116,631,455	$	1.2	$	1,458.3	$	(2,456.7)	$	(51.1)	$	(892.6)	$	4.4	$	(1,936.5)


	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Noncontrolling Interest

	Shares	Amount												Total
	($ in millions, except share data)
Balance — December 31, 2022	105,252,421	$	1.1	$	1,179.5	$	(2,456.7)	$	(203.9)	$	1,232.5	$	3.7	$	(243.8)
Net loss	—	—		—		—		—		(487.5)		—		(487.5)


Employee equity awards	360,884	—		19.2		—		—		—		—		19.2
Stock forfeitures	(230,612)	—		—		—		—		—		—		—
Net shares settled	(173,639)	—		(5.8)		—		—		—		—		(5.8)
ESPP shares issued	79,840	—		3.2		—		—		—		—		3.2

Other	—	—		—		—		—		—		(0.2)		(0.2)

Other comprehensive gain	—	—		—		—		86.0		—		—		86.0
Balance — June 29, 2023	105,288,894	$	1.1	$	1,196.1	$	(2,456.7)	$	(117.9)	$	745.0	$	3.5	$	(628.9)
Net loss	—	—		—		—		—		(204.1)		—		(204.1)

Employee equity awards	8,055	—		8.6		—		—		—		—		8.6

Net shares settled	(8,490)	—		(0.3)		—		—		—		—		(0.3)
ESPP shares issued	—	—		0.9		—		—		—		—		0.9
SERP shares issued	16,023	—		—		—		—		—		—		—

Other	—	—		—		—		—		—		0.2		0.2
Other comprehensive loss	—	—		—		—		(32.1)		—		—		(32.1)
Balance — September 28, 2023	105,304,482	$	1.1	$	1,205.3	$	(2,456.7)	$	(150.0)	$	540.9	$	3.7	$	(855.7)

(a) Cash dividends declared per common share were $0.00 and $0.00 for the three and nine months ended September 26, 2024 and September 28, 2023, respectively.

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	For the Nine Months Ended
	September 26, 2024		September 28, 2023
Operating activities	($ in millions)
Net loss	$	(1,508.3)	$	(691.6)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	232.9		236.9
Amortization of deferred financing fees	8.9		5.2
Accretion of customer supply agreement	1.8		1.8
Employee stock compensation expense	30.8		29.3
Gain from derivative instruments	(2.9)		(1.7)
Loss (gain) from foreign currency transactions	27.1		(4.0)

Loss on disposition of assets	1.3		0.9
Deferred taxes	6.9		(3.8)
Pension and other post-retirement plans (income) expense	(8.9)		61.8
Grant liability amortization	(0.9)		(0.9)
Equity in net (income) loss of affiliates	(0.2)		0.2
Forward loss provision	524.9		(50.7)
Gain on settlement of financial instrument	(1.2)		(1.4)
Asset impairment charges	0.2		—
Change in fair value of acquisition consideration and settlement	—		(2.4)
Gain on settlement of New Market Tax Credit incentive program	(5.7)		—
Changes in assets and liabilities
Accounts receivable, net	31.8		(127.0)
Inventory, net	(245.8)		(227.0)
Contract assets	(557.3)		(114.5)
Accounts payable and accrued liabilities	65.4		222.2
Profit sharing/deferred compensation	37.6		(22.5)
Advance payments	5.2		87.4
Income taxes receivable/payable	5.5		1.1
Contract liabilities	88.4		(3.9)
Pension plans employer contributions	(2.2)		178.0
Deferred revenue and other deferred credits	(0.7)		67.4
Other	7.9		19.7
Net cash used in operating activities	(1,257.5)		(339.5)
Investing activities
Purchase of property, plant, and equipment	(106.8)		(76.5)


Other	0.1		—
Net cash used in investing activities	(106.7)		(76.5)
Financing activities
Proceeds from issuance of debt	359.2		12.7

Receipts from customer financing	509.4		180.0
Payments on customer financing	(40.0)		—
Borrowings under revolving credit facility	—		1.6
Principal payments of debt	(46.5)		(47.2)
Payments on term loans	(3.0)		(3.0)
Payment of acquisition consideration	—		(6.0)
Payment of New Market Tax Credit incentive program financing	(1.9)		—



Taxes paid related to net share settlement awards	(5.4)		(6.1)
Proceeds from issuance of ESPP stock	3.8		2.6
Debt issuance and financing costs	(10.8)		(0.5)




Net cash provided by financing activities	764.8		134.1
Effect of exchange rate changes on cash and cash equivalents	0.3		—
Net decrease in cash, cash equivalents, and restricted cash for the period	(599.1)		(281.9)
Cash, cash equivalents, and restricted cash, beginning of period	845.9		678.4
Cash, cash equivalents, and restricted cash, end of period	$	246.8	$	396.5

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Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
	For the Nine Months Ended
	September 26, 2024		September 28, 2023
Cash and cash equivalents, beginning of the period	$	823.5	$	658.6
Restricted cash, short-term, beginning of the period	0.1		0.2
Restricted cash, long-term, beginning of the period	22.3		19.6
Cash, cash equivalents, and restricted cash, beginning of the period	$	845.9	$	678.4

Cash and cash equivalents, end of the period	$	217.6	$	374.1
Restricted cash, short-term, end of the period	—		0.2
Restricted cash, long-term, end of the period	29.2		22.2
Cash, cash equivalents, and restricted cash, end of the period	$	246.8	$	396.5

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

1. Organization, Basis of Interim Presentation and Recent Developments

Unless the context otherwise indicates or requires, as used in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” and the “Company” refer to Spirit AeroSystems Holdings, Inc. and its consolidated subsidiaries. References to “Spirit” refer only to our subsidiary, Spirit AeroSystems, Inc., and references to “Holdings” refer only to Spirit AeroSystems Holdings, Inc.

The Company provides manufacturing and design expertise in a wide range of fuselage, propulsion, and wing products and services for aircraft original equipment manufacturers (“OEM”) and operators through Holdings’ subsidiaries including Spirit. The Company’s headquarters are in Wichita, Kansas, with manufacturing and assembly facilities in Tulsa, Oklahoma; Prestwick, Scotland; Wichita, Kansas; Kinston, North Carolina; Subang, Malaysia; Saint-Nazaire, France; Biddeford, Maine; Woonsocket, Rhode Island; Belfast, Northern Ireland; Casablanca, Morocco; and Dallas, Texas.

The accompanying unaudited interim condensed consolidated financial statements include the Company’s financial statements and the financial statements of its majority-owned or controlled subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the instructions to Form 10-Q and Article 10 of Regulation S-X. The Company’s fiscal quarters are 13 weeks in length. Since the Company’s fiscal year ends on December 31, the number of days in the Company’s first and fourth quarters varies slightly from year to year. All intercompany balances and transactions have been eliminated in consolidation.

As part of the monthly consolidation process, the Company’s international subsidiaries that have functional currencies other than the U.S. dollar are translated to U.S. dollars using the end-of-month translation rate for balance sheet accounts and average period currency translation rates for revenue and income accounts. The subsidiaries in Prestwick, Scotland and Subang, Malaysia use the British pound as their functional currency. All other foreign subsidiaries and branches use the U.S. dollar as their functional currency.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments and elimination of intercompany balances and transactions) considered necessary to fairly present the results of operations for the interim period. The results of operations for the nine months ended September 26, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

In connection with the preparation of the condensed consolidated financial statements, the Company evaluated subsequent events through the date the financial statements were issued. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024 (the “2023 Form 10-K”).

The Company’s significant accounting policies are described in Note 3 Summary of Significant Accounting Policies to our consolidated financial statements in the 2023 Form 10-K.

Agreement and Plan of Merger with The Boeing Company

On June 30, 2024, Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Boeing Company (“Boeing”) and Sphere Acquisition Corp., a wholly owned subsidiary of Boeing (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Holdings (the “Merger”), with Holdings surviving the Merger and becoming a wholly owned subsidiary of Boeing.

On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Holdings Class A Common Stock, par value $0.01 per share (“Holdings Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares of Holdings Common Stock owned by Boeing, Merger Sub, any other wholly owned subsidiary of Boeing, Holdings, or any wholly owned subsidiary of Holdings, in each case, not held on behalf of third parties) will be automatically cancelled and cease to exist and will be converted into the right to receive a number of shares of Holdings Common Stock, of the par value of $5 each, of Boeing (“Boeing Common Stock”) equal to (a) if the volume-weighted average price per share of Boeing Common Stock on the New York Stock Exchange for the 15 consecutive trading days ending on and including the second full trading day prior to the Effective Time

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

(the “Boeing Stock Price”), is greater than $149.00 but less than $206.94, the quotient obtained by dividing $37.25 by the Boeing Stock Price, rounded to four decimal places or (b) if the Boeing Stock Price is greater than or equal to $206.94, 0.1800 or (c) if the Boeing Stock Price is equal to or less than $149.00, 0.2500 (such number of shares of Boeing Common Stock, the “Per Share Merger Consideration”).

Under the terms of the Merger Agreement, the closing of the Merger is subject to various conditions, including: (a) the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of Holdings Common Stock entitled to vote thereon (the “Holdings Stockholder Approval”); (b) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the receipt of other specified regulatory approvals (collectively, including the expiration or termination of any such waiting periods, the “Regulatory Approvals”); (c) the absence of any law or order issued by a governmental entity prohibiting the consummation of the Merger; (d) the approval for listing on the New York Stock Exchange of, and the effectiveness of a registration statement on Form S‑4 relating to, the shares of Boeing Common Stock to be issued in the Merger; (e) solely with respect to the obligations of Boeing and Merger Sub to effect the closing of the Merger, (1) the accuracy (subject to materiality qualifiers in certain cases) of the representations and warranties of Holdings contained in the Merger Agreement, (2) Holdings having performed in all material respects the obligations required to be performed by it under the Merger Agreement at or prior to the closing of the Merger, (3) the Regulatory Approvals having been obtained without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (4) the absence of a Material Adverse Effect (as defined in the Merger Agreement) or any event that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect since the date of the Merger Agreement and (5) Holdings having completed the divestiture of certain portions of the Company’s business related to the performance by the Company of its obligations under supply contracts with Airbus SE and its affiliates (the “Spirit Airbus Business”); and (f) solely with respect to the obligation of Holdings to effect the closing of the Merger, (1) the accuracy (subject to materiality qualifiers in certain cases) of the representations and warranties of Boeing and Merger Sub contained in the Merger Agreement, (2) each of Boeing and Merger Sub having performed in all material respects the obligations required to be performed by it under the Merger Agreement at or prior to the closing of the Merger and (3) the absence of a Parent Material Adverse Effect (as defined in the Merger Agreement) or any event that would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect since the date of the Merger Agreement.

The Merger Agreement includes customary representations, warranties and covenants of Holdings, Boeing and Merger Sub, including covenants restricting Holdings from soliciting alternative acquisition proposals, governing the conduct of the Company’s business during the period between the date of the Merger Agreement and completion of the Merger and relating to the parties’ efforts to consummate the Merger as promptly as reasonably practicable. The Merger Agreement includes provisions to facilitate the disposition by the Company to Airbus SE and its affiliates (“Airbus”) of the Spirit Airbus Business, as contemplated by a term sheet between Spirit and Airbus SE (the “Airbus Term Sheet”) described below under the sub-heading Airbus Term Sheet. The Merger Agreement also includes provisions, which are consistent with provisions in the Airbus Term Sheet, to facilitate the potential sale, subject to certain Boeing consent rights, by the Company to other third parties of specified assets and businesses, some of which include or comprise parts of the Spirit Airbus Business. Such specified assets and businesses include, among others, the Company’s operations in Belfast, Northern Ireland (other than the operations that are part of the Spirit Airbus Business) and Subang, Malaysia, certain of the Company’s operations in Prestwick, Scotland and the Company’s Fiber Materials, Inc. business.

The Merger Agreement includes termination provisions under which either Holdings or Boeing may terminate the Merger Agreement in various circumstances, including if the Merger has not been consummated by March 31, 2025, subject to three automatic three-month extensions if on each such date all of the closing conditions except those relating to regulatory approvals or the disposition of the Spirit Airbus Business have been satisfied or waived (such date, as so extended (if applicable), the “Outside Date”). Upon termination of the Merger Agreement in specified circumstances, Holdings would be required to pay to Boeing a termination fee of $150.0. Upon termination of the Merger Agreement in other specified circumstances, Boeing would be required to pay to Holdings a termination fee of $300.0 reduced (but not to less than zero) by the aggregate then-outstanding amount of cash advances to be repaid by the Company to Boeing, whether or not then due and payable, pursuant to the applicable agreements governing cash advances by Boeing to the Company.

Subject to satisfaction of the closing conditions in the Merger Agreement, the closing of the Merger is expected to occur in mid-2025.

In connection with the proposed merger, Spirit and Boeing have each received a request for additional information (“second request”) from the Federal Trade Commission as part of the regulatory review process under the HSR Act. The second

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

request extends the waiting period imposed by the HSR Act until 30 days after Spirit and Boeing have substantially complied with the requests or the waiting period is terminated sooner by the Federal Trade Commission.

Other than transaction expenses associated with the Merger of $28.8 and $46.8 for the three and nine months ended September 26, 2024, respectively, the Merger Agreement did not affect the Company’s consolidated financial statements for the three and nine months ended September 26, 2024.

Airbus Term Sheet

Spirit and Airbus SE entered into the Airbus Term Sheet on June 30, 2024. The Airbus Term Sheet is a binding term sheet under which the parties have agreed to negotiate in good faith definitive agreements (the “Definitive Agreements”), including a purchase agreement, providing for the acquisition by Airbus or its affiliates of the Spirit Airbus Business on the terms set forth in the Airbus Term Sheet with the goal of permitting Boeing and Holdings to consummate the Merger prior to the Outside Date. The Airbus Term Sheet provides that the execution of the Definitive Agreements will be subject to and conditioned upon the completion to the satisfaction of Airbus of its due diligence. The Airbus Term Sheet contemplates that specified portions of the Spirit Airbus Business, such as the portion of the Spirit Airbus Business in Prestwick, Scotland (the “Airbus Prestwick Business”), may, instead of being acquired by Airbus or its affiliates, be acquired by one or more third parties.

Under the transaction terms set forth in the Airbus Term Sheet, Airbus would acquire from Spirit and its subsidiaries the Spirit Airbus Business, excluding any portions thereof to be acquired by third parties, and cash in the amount of $559.0 (subject to downward adjustment if the acquisition by Airbus includes the Airbus Prestwick Business) for nominal consideration of one dollar, subject to working capital and other purchase price adjustments and additional adjustments, to be agreed between the parties prior to execution and delivery of the Definitive Agreements, to reflect the fair market value of specified assets of the Spirit Airbus Business to the extent they are to be acquired by Airbus rather than third parties.

The transaction terms set forth in the Airbus Term Sheet include provisions for, among other things, the payment in full by Spirit to Airbus of any loans, advance payments, similar arrangements and undisputed liquidated damages owing from Spirit to Airbus (the “Outstanding Amounts”) as of the closing of the transactions contemplated by the Airbus Term Sheet (the “Airbus Transactions,” and such closing, the “Airbus Closing”), with any disputed liquidated damages to be resolved and paid in accordance with a mutually agreed dispute resolution process; transitional arrangements with respect to specified real estate; obtaining third-party consents; segregation of Spirit’s business conducted primarily for the benefit of Airbus from the remainder of Spirit’s business and treatment of vendor and supply contracts, employees, intellectual property, pensions and unfunded employee liabilities in connection with the separation of those portions of Spirit’s business; mutual indemnification and releases; inclusion in the Definitive Agreements of customary representations, warranties and covenants; and transitional and other arrangements to be entered into by the parties at the Airbus Closing.

Under the transaction terms set forth in the Airbus Term Sheet, the Airbus Closing would be conditioned upon the receipt of applicable governmental and regulatory consents, approvals and clearances; the absence of any order, legal prohibition or injunction preventing the consummation of the Airbus Transactions; compliance by the parties with their pre-closing covenants in all material respects; payment in full of the Outstanding Amounts; the closing under the Merger Agreement occurring substantially concurrently with the Airbus Transactions; there being no material adverse change after the date of the Definitive Agreements and before the Airbus Closing in the business operations to be acquired by Airbus at the Airbus Closing; and Spirit’s implementation in all material respects of technical measures and policies to protect confidential data of Airbus.

The Airbus Term Sheet provides that no binding agreement has been made with respect to the French aspects of the Airbus Transactions (“Airbus French Transactions”). Prior to the Company and Airbus and its affiliates entering into definitive agreements that are applicable to the Airbus French Transactions, Spirit and Airbus have agreed to comply with their respective information and consultation obligations with applicable employees and employee representatives. The Airbus Term Sheet also provides that the parties will complete necessary labor consultations and obtain necessary approvals from applicable unions and works councils in various jurisdictions, as may be legally required.

Liquidity

These condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles (GAAP) on a going concern basis, which assumes the Company will be able to continue as a going concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However,

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

substantial doubt about the Company’s ability to continue as a going concern exists. The Company has incurred net losses of $1,508.9, $616.2, $545.7, and $540.8, for the nine months ended September 26, 2024, and the years ended December 31, 2023, 2022, and 2021, respectively, and cash used in operating activities of $1,257.5, $225.8, $394.6, and $63.2, respectively for the same periods. As of September 26, 2024, our debt balance was $4,402.6, including $426.2 of debt classified as short-term. The Company’s cash and cash equivalents were $217.6 and $823.5 as of September 26, 2024, and December 31, 2023, respectively. The Company will require additional liquidity to continue its operations over the next 12 months.

Further, certain changes made to the production and delivery process implemented by Boeing have had an immediate impact to the Company’s results of operations and cash flows. On March 2, 2024, Boeing announced they would no longer accept deliveries of product that required out of sequence assembly or incremental quality re-work. As a result, the Company has experienced higher levels of inventory and contract assets and lower operational cash flows due to the inability to physically ship and invoice end items to Boeing in a timeframe aligned with production activities. Additionally, during late 2023 the Company was preparing its production line to accommodate an expected increase in production rates for 2024 and beyond. Boeing’s ability to increase production rates is governed by the FAA, and the production rates which were anticipated are now limited. During the quarter ended September 26, 2024, the Company continued to experience delays and realized higher than anticipated costs with respect to these production and delivery processes, and anticipates that some level of higher costs will continue in the future.

On April 18, 2024, the Company entered into a Memorandum of Agreement (“MOA”) with Boeing, where Boeing advanced $425.0 to the Company to support the Company’s liquidity. This MOA was amended on June 20, 2024, to increase the advance by an additional $40.0 and to revise certain repayment amounts and extend near-term repayment dates. As of the date of this filing, we have repaid $40.0 of the MOA advances; however, the other amounts remain outstanding. We have engaged in discussion with Boeing regarding a second amendment to the MOA, but there can be no assurance that such amendment will be entered into on acceptable terms, if at all.

On October 18, 2024, we announced a 21-day furlough, effective October 27, 2024, for approximately 700 employees working on the B767 and B777 programs in response to the strike by Boeing employees as the Company has reached maximum storage capacity on the B767 and B777 programs. Our ability to align our costs, including both internal and supply chain related spending, to react to unexpected changes in customer-determined production rates has and will likely continue to have a material impact on the Company’s results of operations and cash flows. Our liquidity has been impacted by higher levels of inventory and contract assets, lower operational cash flows due to a decrease in expected deliveries to Boeing, higher factory costs to maintain rate readiness (attributed to product quality verification process enhancements, including moving such processes from Renton, Washington, to Wichita, Kansas), Boeing no longer allowing for traveled work on the B737 fuselage to its factories, the strike by Boeing employees, and limitations on Boeing increasing production rates. Based upon expected production volumes and deliveries, the terms of this advance require installments be repaid through October 2024, which has been deferred.

Additionally, the Company was in negotiations with Airbus related to pricing adjustments on the A220 and A350 programs during 2023 and continuing into 2024 with a goal of completing those negotiations in early 2024. As a result of the announcement on March 1, 2024, that the Company was engaged in discussions with Boeing about a possible acquisition of the Company by Boeing, followed by the signing of the Merger Agreement and Term Sheet on June 30, 2024, there was a shift in the strategic discussions with Airbus relevant to pricing adjustments on the A220 and A350 programs, most recently with a focus toward customer advances and other accommodations.

These developments in 2024 resulted in a significant reduction in projected revenue and operating cash flows over the next twelve months. Additionally, although the advances received in 2024 have provided essential operational liquidity, there can be no assurance that we will be able to obtain additional advances from our customers, repay current advances on the specified due dates, renegotiate the due date or otherwise obtain additional liquidity as needed under acceptable terms or at all. We will need to obtain additional funding to sustain operations, as we expect to continue generating operating losses for the foreseeable future.

As of November 5, 2024, management has developed a plan designed to improve liquidity in response to the developments highlighted above. These plans are dependent upon many factors, including, among other things, the outcomes of active discussions related to the timing or amounts of repayment for certain customer advances, the timing and expected proceeds received from certain divestitures, the expected timing and outcome of the Merger Agreement and Term Sheet announced June 30, 2024, achieving anticipated B737 deliveries, and the timing, resolution, and ultimate impact of the strike by Boeing

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

employees. Management is also evaluating additional strategies intended to improve liquidity to support operations, including, but not limited to, additional customer advances, issuing securities or debt financing subject to any contractual limitations and conditions, including the Merger Agreement, and restructuring of operations in an effort to increase efficiency and decrease expenses, which may include layoffs or additional furloughs. However, there can be no assurance that these plans or strategies will sufficiently improve our liquidity needs or that we will otherwise realize the anticipated benefits. Accordingly, substantial doubt about the Company’s ability to continue as a going concern exists.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

2. New Accounting Pronouncements

In December 2022, the FASB issued ASU No. 2022-06, which defers the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting from December 31, 2022 to December 31, 2024. ASU No. 2022-06 was effective upon issuance. ASU No. 2022-06 provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting, providing optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. To date, the Company has not had a modification to which the application of this guidance is applicable. The Company will continue evaluating the potential impact of adopting this guidance on its consolidated financial statements, the impact of which is not expected to be material.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU No. 2023-07 is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted, including in an interim period. The Company will continue evaluating the potential impact of adopting this guidance.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies FASB Accounting Standards Codification 740 to enhance the transparency and decision usefulness of income tax disclosures. ASU No. 2023-09 is effective on a prospective basis for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has not elected early adoption and implementation of this guidance. The guidance will be adopted and implemented for the Company’s fiscal year beginning January 1, 2025. The adoption is not expected to have a material impact to our financial position or results of operations.

In March 2024, the FASB issued ASU No. 2024-01 Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or if it is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity regarding scope application. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective January 1, 2025, including interim periods, and is not expected to have a significant impact on our financial statements.

In March 2024, the FASB issued ASU 2024-02 Codification Improvements - Amendments to Remove References to the Concepts Statements which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective January 1, 2025 and is not expected to have a significant impact on our financial statements.

3. Changes in Estimates

The Company has a periodic forecasting process in which management assesses the progress and performance of the Company’s programs. This process requires management to review each program’s progress by evaluating the program schedule, changes to identified risks and opportunities, changes to estimated revenues and costs for the accounting contracts

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

(and options if applicable), and any outstanding contract matters. Risks and opportunities include but are not limited to management’s judgment about the cost associated with the Company’s ability to achieve the schedule, technical requirements (e.g., a newly-developed product versus a mature product), and any other program requirements. Due to the span of years it may take to completely satisfy the performance obligations for the accounting contracts (and options, if any) and the scope and nature of the work required to be performed on those contracts, the estimation of total revenue and costs is subject to many variables and, accordingly, is subject to change based upon judgment. The Company’s estimate of costs depends on maintaining continuing, uninterrupted production at its manufacturing facilities and its suppliers’ facilities. The continued fragility of the global aerospace supply chain may lead to interruptions in deliveries of or increased prices for components or raw materials used in the Company’s products, labor disruptions, and could delay production and/or materially adversely affect the Company’s business. When adjustments in estimated total consideration or estimated total cost are required, any changes from prior estimates for fully satisfied performance obligations are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors including production efficiencies, assumed rate of production, the rate of overhead absorption, changes to scope of work, and contract modifications. Cumulative catch-up adjustments are primarily related to changes in the estimated margin of contracts with performance obligations that are satisfied over time.

Changes in estimates could materially adversely affect the Company’s future financial performance. While certain increases in raw material costs can generally be passed on to the Company’s customers, in most instances the Company must fully absorb cost overruns. Some of the factors that may cause the costs incurred in fulfilling contracts to vary substantially from current estimates are technical problems, production rate changes, production stoppages, materials shortages, supplier difficulties, realization targets, existence of and execution to recovery plans caused by these factors, and multiple other events, including those identified in Item 1A. “Risk Factors” of the 2023 Form 10-K. The risk particularly applies to products such as the B787, A220, and A350, which are in forward loss positions.

During the third quarter ended September 26, 2024, the Company recognized unfavorable changes in estimates of $242.9, which included net forward loss charges of $217.2, and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2024 of $25.7. The forward losses in the third quarter were primarily driven by current production performance, and supply chain cost growth on the A350 and A220 programs, additional labor and supply chain cost growth on the B787 program, and increased costs related to factory performance on the B767 program. The unfavorable cumulative catch-up adjustments primarily relate to increased production costs associated with changes implemented by Boeing in March 2024 to introduce a new product verification process in Wichita, KS on the B737 program and current period changes in certain cost allocation methodologies and increased production costs on the B777 program. This change in business process for the B737 units has delayed delivery acceptances and caused a buildup of undelivered units in Wichita, KS. Additionally, the Company is maintaining a higher cost profile for an expected increase in production rates that has now been delayed due to the limitation on Boeing increasing its production rates, and production cost overruns on the A320 program.

During the third quarter ended September 28, 2023, the Company recognized unfavorable changes in estimates of $165.1, which included net forward loss charges of $101.1, and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2023 of $64.0. The forward losses in the quarter ended September 28, 2023 were primarily driven by labor and production cost growth on the A350 program, additional labor and supply chain cost growth on the B787 program, increased factory performance and supply chain costs on the B767 program, and production costs incurred on the Sikorsky CH-53K program. The unfavorable cumulative catch-up adjustments were primarily related to increased factory performance costs and rework costs related to the quality issue on the B737 aft pressure bulkhead on the B737 program, and production cost overruns and foreign currency movements on the A320 program.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

Changes in estimates are summarized below:


	For the Three Months Ended				For the Nine Months Ended
Changes in Estimates	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Commercial	$	(37.5)	$	(59.1)	$	(89.0)	$	(40.7)
Defense & Space	11.8		(4.9)		10.9		(8.7)
Aftermarket	—		—		—		—
Total (Unfavorable) Favorable Cumulative Catch-up Adjustment	$	(25.7)	$	(64.0)	$	(78.1)	$	(49.4)

Changes in Estimates on Loss Programs (Forward Loss) by Segment
Commercial	$	(212.9)	$	(86.5)	$	(918.9)	$	(298.3)
Defense & Space	(4.3)		(14.6)		(7.2)		(17.5)
Aftermarket	—		—		—		—
Total Changes in Estimates (Forward Loss) on Loss Programs	$	(217.2)	$	(101.1)	$	(926.1)	$	(315.8)

Total Change in Estimate	$	(242.9)	$	(165.1)	$	(1,004.2)	$	(365.2)
EPS Impact (diluted per share based upon applicable forecasted effective tax rate)	$	(2.09)	$	(1.57)	$	(8.70)	$	(3.48)

4. Accounts Receivable and Allowance for Credit Losses

Accounts Receivable, net

Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment. Unbilled receivables are reflected under contract assets on the Condensed Consolidated Balance Sheets. See also Allowance for Credit Losses, below.

Accounts receivable, net consists of the following:


	September 26, 2024		December 31, 2023
Trade receivables	$	552.6	$	555.8
Other	33.2		42.0
Less: allowance for credit losses	(13.2)		(12.3)
Accounts receivable, net	$	572.6	$	585.5

The Company has agreements (through Holdings’ subsidiaries) to sell, on a revolving basis, certain trade accounts receivable balances with Boeing, Airbus, and Rolls-Royce PLC and its affiliates (collectively, “Rolls-Royce”) to third-party financial institutions. These programs were primarily entered into as a result of customers seeking payment term extensions with the Company and they continue to allow the Company to monetize the receivables prior to their payment date, subject to payment of a discount. No guarantees are delivered under the agreements. The Company’s ability to continue using such agreements is primarily dependent upon the strength of the applicable customer’s financial condition. Transfers under these agreements are accounted for as sales of receivables resulting in the receivables being derecognized from the Company’s Condensed Consolidated Balance Sheets. For the nine months ended September 26, 2024, $2,569.4 of accounts receivable were sold via these arrangements. The proceeds from these sales of receivables are included in cash from operating activities in the

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

Condensed Consolidated Statements of Cash Flows. The recorded net loss on sale of receivables was $35.1 for the nine months ended September 26, 2024 and is included in other income and expense. See Note 20 Other Income (Expense), Net.

Allowance for Credit Losses

During the nine months ended September 26, 2024, there have been no significant changes in the factors that influenced management’s current estimate of expected credit losses, nor changes to the Company’s accounting policies or Current Expected Credit Losses methodology. The beginning balances, current period activity, and ending balances of the allocation for credit losses on accounts receivable and contract assets were not material.

5. Contract Assets and Contract Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed. Contract assets, current are those that are expected to be billed to our customer within 12 months. Contract assets, long-term are those that are expected to be billed to our customer over periods greater than 12 months. No impairments to contract assets were recorded for the period ended September 26, 2024 or the period ended September 28, 2023. See also Note 4 Accounts Receivable and Allowance for Credit Losses.

Contract liabilities are established for cash received in excess of revenues recognized and are contingent upon the satisfaction of performance obligations. Contract liabilities primarily consist of cash received on contracts for which revenue has been deferred since the receipts are in excess of transaction price resulting from the allocation of consideration based on relative standalone selling price to future units (including those under option that the Company believes are likely to be exercised) with prices that are lower than standalone selling price. These contract liabilities will be recognized earlier if the options are not fully exercised, or immediately, if the contract is terminated prior to the options being fully exercised.


	September 26, 2024		December 31, 2023		Change
Contract assets	$	1,082.4	$	522.9	$	559.5
Contract liabilities	(442.9)		(353.9)		(89.0)
Net contract assets (liabilities)	$	639.5	$	169.0	$	470.5

For the period ended September 26, 2024, the increase in contract assets reflects the net impact of more over time revenue recognition in relation to billed revenues during the period as well as the impact of changes implemented by Boeing in March 2024 to introduce a new product verification process in Wichita, KS. This change in business process has delayed delivery acceptances and caused a buildup of undelivered units in Wichita, KS. The increase in contract liabilities reflects the net impact of more deferred revenues recorded in excess of revenue recognized during the period. The increase in the current period was driven by receipts in both the Commercial and Defense & Space segments related to funding for specific program expenditures. The Company recognized $41.3 of revenue that was included in the contract liability balance at the beginning of the period.


	September 28, 2023		December 31, 2022		Change
Contract assets	$	616.9	$	502.2	$	114.7
Contract liabilities	(352.8)		(356.4)		3.6
Net contract assets (liabilities)	$	264.1	$	145.8	$	118.3

For the period ended September 28, 2023, the increase in contract assets reflects the net impact of more over time revenue recognition in relation to billed revenues during the period. The decrease in contract liabilities reflects the net impact of less deferred revenues recorded in excess of revenue recognized during the period. The Company recognized $66.4 of revenue that was included in the contract liability balance at the beginning of the period.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

6. Revenue Disaggregation and Outstanding Performance Obligations

Disaggregation of Revenue

The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time, based upon the location where products and services are transferred to the customer, and based upon major customer. The Company’s principal operating segments and related revenue are noted in Note 22 Segment Information.

The following tables show disaggregated revenues for the periods ended September 26, 2024 and September 28, 2023:


	For the Three Months Ended				For the Nine Months Ended
Revenue	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
Contracts with performance obligations satisfied over time	$	1,057.6	$	1,064.1	$	3,392.8	$	3,176.2
Contracts with performance obligations satisfied at a point in time	413.0		374.8		1,272.5		1,058.8
Total Revenue	$	1,470.6	$	1,438.9	$	4,665.3	$	4,235.0

The following table disaggregates revenue by major customer:


	For the Three Months Ended				For the Nine Months Ended
Customer	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
Boeing	$	850.7	$	883.9	$	2,801.6	$	2,640.6
Airbus	299.8		274.5		954.0		816.8
Other	320.1		280.5		909.7		777.6
Total Revenue	$	1,470.6	$	1,438.9	$	4,665.3	$	4,235.0

The following table disaggregates revenue based upon the location where control of products is transferred to the customer:


	For the Three Months Ended				For the Nine Months Ended
Location	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
United States	$	1,132.8	$	1,156.0	$	3,606.6	$	3,379.8
International
United Kingdom	148.6		163.5		464.5		505.3
Other	189.2		119.4		594.2		349.9
Total International	337.8		282.9		1,058.7		855.2
Total Revenue	$	1,470.6	$	1,438.9	$	4,665.3	$	4,235.0

Remaining Performance Obligations

Unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future are noted in the table below. The Company expects options to be exercised in addition to the amounts presented below:


	Remaining in 2024		2025		2026		2027 and after
Unsatisfied performance obligations	$	1,486.8	$	4,013.4	$	1,286.6	$	1,132.2

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

7. Inventory

Inventory consists of raw materials used in the production process, work-in-process, which is direct material, direct labor, overhead and purchases, and capitalized pre-production costs. Raw materials are stated at lower of cost (principally on an actual or average cost basis) or net realizable value. Capitalized pre-production costs include certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. These costs are typically amortized over a period that is consistent with the satisfaction of the underlying performance obligations to which these relate.


	September 26, 2024		December 31, 2023
Raw materials	$	493.4	$	414.4
Work-in-process(1)	1,427.4		1,283.7
Finished goods	80.9		48.4
Product inventory	2,001.7		1,746.5
Capitalized pre-production	19.0		20.8
Total inventory, net	$	2,020.7	$	1,767.3

(1)Work-in-process inventory includes direct labor, direct material, overhead, and purchases on contracts for which revenue is recognized at a point in time as well as sub-assembly parts that have not been issued to production on contracts for which revenue is recognized over time using an input method. For the periods ended September 26, 2024 and December 31, 2023, work-in-process inventory includes $520.0 and $262.0, respectively, of costs incurred in anticipation of specific contracts and no impairments were recorded in the periods.

Product inventory, summarized in the table above, is shown net of valuation reserves of $152.7 and $150.2 as of September 26, 2024 and December 31, 2023, respectively.

Excess capacity and abnormal production costs are excluded from inventory and recognized as expense in the period incurred. Cost of sales for the three and nine months ended September 26, 2024 includes period expense of $70.1 and $142.5, respectively, for excess capacity production costs related to temporary B737 MAX and A220 production schedule changes, and ($0.1) and $0.7 of restructuring costs, respectively. Cost of sales for the three and nine months ended September 28, 2023 includes period expense of $56.4 and $152.9, respectively, for excess capacity production costs related to temporary B737 MAX, A320 and A220 production schedule changes, $0.0 and $7.2, respectively, of restructuring costs, and abnormal production costs of $0.8 and $8.1, respectively, related to the temporary production pause, partially offset by $0.0 and ($2.4), respectively, of benefit related to the settlement of a contingent consideration obligation related to a prior year acquisition.

8. Property, Plant and Equipment, net

Property, plant and equipment, net consists of the following:


	September 26, 2024		December 31, 2023
Land	$	30.9	$	30.5
Buildings (including improvements)	1,331.5		1,307.6
Machinery and equipment	2,498.1		2,460.6
Tooling	1,033.1		1,064.8
Capitalized software	340.4		338.4
Construction-in-progress	146.8		119.0
Total	5,380.8		5,320.9
Less: accumulated depreciation	(3,394.6)		(3,236.7)
Property, plant and equipment, net	$	1,986.2	$	2,084.2

Capitalized interest was $1.9 and $0.4 for the three months ended September 26, 2024 and September 28, 2023, respectively, and $4.7 and $3.8 for the nine months ended September 26, 2024 and September 28, 2023, respectively. Repair

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs of $52.0 and $32.1 for the three months ended September 26, 2024 and September 28, 2023, respectively, and $149.7 and $124.4 for the nine months ended September 26, 2024 and September 28, 2023, respectively.

The Company capitalizes certain costs, such as software coding, installation, and testing, that are incurred to purchase or to create and implement internal-use computer software. Depreciation expense related to capitalized software was $4.3 and $5.6 for the three months ended September 26, 2024 and September 28, 2023, respectively, and $13.3 and $17.5 for the nine months ended September 26, 2024 and September 28, 2023, respectively.

The Company reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the period ended September 26, 2024, there were no events which would require the Company to update its impairment analysis.

9. Leases

The Company determines if an arrangement is a lease at the inception of a signed agreement. Operating leases are included in right-of-use (“ROU”) assets (long-term), short-term operating lease liabilities, and long-term operating lease liabilities on the Company’s Condensed Consolidated Balance Sheets. Finance leases are included in Property, Plant and Equipment, current maturities of long-term debt, and long-term debt.

ROU assets represent the right of the Company to use an underlying asset for the length of the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

To determine the present value of lease payments, the Company uses its estimated incremental borrowing rate or the implicit rate, if readily determinable. The estimated incremental borrowing rate is based on information available at the lease commencement date, including any recent debt issuances and publicly available data for instruments with similar characteristics. The ROU asset also includes any lease payments made and excludes lease incentives.

The Company’s lease terms may include options to extend or terminate the lease and, when it is reasonably certain that an option will be exercised, those options are included in the net present value calculation. Leases with a term of 12 months or less, which are primarily related to automobiles and manufacturing equipment, are not recorded on the Condensed Consolidated Balance Sheets. The aggregate amount of lease cost for leases with a term of 12 months or less is not material.

The Company has lease agreements that include lease and non-lease components, which are generally accounted for separately. For certain leases (primarily related to IT equipment), the Company does account for the lease and non-lease components as a single lease component. A portfolio approach is applied to effectively account for the ROU assets and liabilities for those specific leases referenced above. The Company does not have any material leases containing variable lease payments or residual value guarantees. The Company also does not have any material subleases.

The Company currently has operating and finance leases for items such as manufacturing facilities, corporate offices, manufacturing equipment, transportation equipment, and vehicles. The majority of the Company’s active leases have remaining lease terms that range between less than one year to 17 years, some of which include options to extend the leases for up to 30 years, and some of which include options to terminate the leases within one year.

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

Components of lease expense:


	For the Three Months Ended				For the Nine Months Ended
	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
Operating lease cost	$	3.8	$	3.6	$	10.9	$	10.8
Finance lease cost:
Amortization of assets	9.5		9.5		29.1		26.6
Interest on lease liabilities	1.9		2.1		5.9		5.9
Total net lease cost	$	15.2	$	15.2	$	45.9	$	43.3

Supplemental cash flow information related to leases was as follows:


	For the Three Months Ended				For the Nine Months Ended
	September 26, 2024		September 28, 2023		September 26, 2024		September 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3.8	$	3.5	$	11.2	$	10.5
Operating cash flows from finance leases	$	1.9	$	2.1	$	5.9	$	5.9
Financing cash flows from finance leases	$	13.0	$	13.0	$	39.5	$	36.9

ROU assets obtained in exchange for lease obligations:
Operating leases	$	0.4	$	5.1	$	1.8	$	5.6

Supplemental balance sheet information related to leases:


	September 26, 2024		December 31, 2023
Finance leases:
Property and equipment, gross	$	334.9	$	336.9
Accumulated amortization	(155.9)		(135.8)
Property and equipment, net	$	179.0	$	201.1

The weighted average remaining lease term as of September 26, 2024 for operating and finance leases was 35.0 years and 4.5 years, respectively. The weighted average discount rate as of September 26, 2024 for operating and finance leases was 6.2% and 6.5%, respectively. The weighted average remaining lease term as of December 31, 2023 for operating and finance leases was 33.2 years and 4.7 years, respectively. The weighted average discount rate as of December 31, 2023 for operating and finance leases was 6.2% and 6.3%, respectively. See Note 14 Debt for current and non-current finance lease obligations.

As of September 26, 2024, remaining maturities of lease liabilities were as follows:


	2024		2025		2026		2027		2028		2029 and thereafter		Total Lease Payments		Less: Imputed Interest		Total Lease Obligations
Operating Leases	$	3.8	$	15.1	$	12.6	$	9.9	$	9.0	$	181.1	$	231.5	$	(141.6)	$	89.9
Financing Leases	$	13.3	$	45.0	$	29.3	$	13.6	$	7.0	$	22.4	$	130.6	$	(17.9)	$	112.7

As of September 26, 2024, the Company had additional operating and financing lease commitments that have not yet commenced of approximately $0.8 and $5.4, respectively, for manufacturing equipment, software, and facilities that are in

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

various phases of construction or customization for the Company’s ultimate use, with lease terms between 3 and 5 years. The Company’s involvement in the construction and design process for these assets is generally limited to project management.

10. Other Assets, Goodwill, and Intangible Assets

Other current assets are summarized as follows:


	September 26, 2024		December 31, 2023
Prepaid expenses	$	51.3	$	34.8
Income tax receivable	—		5.3
Other assets - short-term	12.1		12.4
Total other current assets	$	63.4	$	52.5

Other assets are summarized as follows:


	September 26, 2024		December 31, 2023
Deferred financing
Deferred financing costs	$	—	$	0.9
Less: Accumulated amortization - deferred financing costs	—		(0.9)
Deferred financing costs, net	$	—	$	—
Other

Supply agreements (1)	$	1.3	$	3.5
Equity in net assets of affiliates	1.0		0.8
Restricted cash - collateral requirements	29.2		22.3
Rotables	45.4		44.0
Other	30.1		29.3
Total other long-term assets	$	107.0	$	99.9

(1) Certain payments accounted for as consideration paid by the Company to a customer are being amortized as reductions to net revenues.

Goodwill is summarized as follows:


			Changes in Goodwill Balance
	Balance at								Balance at
Segment	December 31, 2023		Acquisitions		Adjustments/Other		Currency Exchange		September 26, 2024
Commercial	$	296.6	$	—	$	—	$	0.1	$	296.7
Defense & Space	$	13.2	$	—	$	—	$	—	$	13.2
Aftermarket	$	321.4	$	—	$	—	$	—	$	321.4
	$	631.2	$	—	$	—	$	0.1	$	631.3

The total goodwill value includes no accumulated impairment loss in any of the periods presented. The Company assesses goodwill for impairment annually or more frequently if events or circumstances indicate that the fair value of a reporting unit that includes goodwill may be lower than its carrying value. For the period ended September 26, 2024, there were no events or circumstances which would require the Company to update its goodwill impairment analysis.

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

Intangible assets are summarized as follows:


	September 26, 2024		December 31, 2023
Intangible assets

Favorable leasehold interests	$	2.8	$	2.8
Developed technology asset	103.1		103.1
Customer relationships intangible asset	139.6		139.6

Total intangible assets	245.5		245.5

Less: Accumulated amortization - favorable leasehold interest	(2.2)		(2.1)
Accumulated amortization - developed technology asset	(27.0)		(21.9)
Accumulated amortization - customer relationship	(31.5)		(25.3)
Intangible assets, net	$	184.8	$	196.2

Amortization expense was $3.8 and $3.8 for the for the three months ended September 26, 2024 and September 28, 2023, respectively, and $11.4 and $11.4 for the nine months ended September 26, 2024 and September 28, 2023, respectively.

The amortization for each of the five succeeding years relating to intangible assets currently recorded in the Condensed Consolidated Balance Sheets and the weighted average amortization is estimated to be the following as of September 26, 2024:


Year	Customer relationships		Favorable leasehold interest		Developed technology		Total
remaining in 2024	$	2.1	$	—	$	1.7	$	3.8
2025	8.2		0.1		6.9		15.2
2026	8.2		0.1		6.9		15.2
2027	8.2		0.1		6.9		15.2
2028	8.2		0.1		6.9		15.2
2029	7.8		0.1		6.9		14.8

Weighted average amortization period	13.7 years		4.8 years		11.1 years		12.6 years

11. Advance Payments

Advances on the B787 Program. Boeing has made advance payments to Spirit under the B787 Special Business Provisions and General Terms Agreement (collectively, the “B787 Supply Agreement”) that are required to be repaid to Boeing by way of offset against the purchase price for future shipset deliveries. Advance repayments were initially scheduled to be spread evenly over the remainder of the first 1,000 B787 shipsets delivered to Boeing. On April 8, 2014, Spirit signed a memorandum of agreement with Boeing that suspended advance repayments related to the B787 program for a period of twelve months beginning April 1, 2014. Repayment recommenced on April 1, 2015, and any repayments that otherwise would have become due during such twelve-month period will offset the purchase price for shipsets 1001 through 1120. On December 21, 2018, Spirit signed a memorandum of agreement with Boeing that again suspended the advance repayments beginning with line unit 818. The advance repayments resumed in 2022 at a lower rate of $0.45 per shipset at line unit number 1135 and will continue through line number 1605.

In the event Boeing does not take delivery of a sufficient number of shipsets to repay the full amount of advances prior to the termination of the B787 program or the B787 Supply Agreement, any advances not then repaid will be applied against any outstanding payments then due by Boeing to us, and any remaining balance will be repaid in annual installments of $27.0 due on December 15th of each year until the advance payments have been fully recovered by Boeing. As of September 26, 2024,

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)

the amount of advance payments received from Boeing under the B787 Supply Agreement and not yet repaid was approximately $172.8.

In support of tooling and capital expenditures for future production rate increases on the B787 program, the memorandum of agreement entered into on October 12, 2023 between Boeing and Spirit (the “2023 MOA”) included an agreement for Boeing to advance Spirit a total of $71.7 in quarterly installments beginning October 2023 through April 2025. Spirit will align the repayment plan to coincide with deliveries to Boeing beginning April 2025 through October 2027. In the event Boeing does not take delivery of a sufficient number of shipsets to repay the full amount of advance prior to October 31, 2027, the remaining balance up to the $71.7 will be due in the fourth quarter of 2027. As of September 26, 2024, the amount of advance payments received by Spirit from Boeing and not yet repaid was approximately $55.9.

Advances on the A350 Program. During the twelve months ended December 31, 2023, the Company received an advance payment from Airbus of $100.0 under an agreement between Airbus S.A.S. and Spirit AeroSystems (Europe) Limited (“Spirit Europe”) signed on June 23, 2023 (the “A350 Agreement”). The A350 Agreement provides for up to $100.0 of advances that are required to be repaid along with a nominal fee to Airbus by way of offset against the purchase price of A350 FLE shipset deliveries in 2025. To the extent actual deliveries in 2025 are insufficient to offset the advance amount, any amount not offset against deliveries will be due and payable to Airbus per the terms of the Airbus Term Sheet. In connection with the A350 Agreement, Spirit Europe has pledged certain program assets including work in process inventories and raw materials at Spirit’s Scotland facility in an amount sufficient to cover the advances. See also the disclosure under the heading “Airbus Term Sheet” in Note 1 Organization, Basis of Interim Presentation and Recent Developments.

Other. The Advance payments, long-term line item on the Condensed Consolidated Balance Sheets for the period ended September 26, 2024 includes $18.9 related to payments received from an Aftermarket segment customer for contracted work that was impacted by the sanctions imposed by the U.S. and other governments on Russia following its invasion of Ukraine.

12. Fair Value Measurements

The FASB’s authoritative guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance discloses three levels of inputs that may be used to measure fair value:

Level 1Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.

Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Observable inputs, such as current and forward interest rates and foreign exchange rates, are used in determining the fair value of the interest rate swaps and foreign currency hedge contracts.

Level 3Unobservable inputs that are supported by little or no market activity and are significant to the fair value of assets and liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

At September 26, 2024, the Company’s long-term debt includes a senior secured term loan, senior notes, and bridge credit facility described further under Note 14 Debt. The estimated fair value of the Company’s debt obligations is based on the quoted market prices for such obligations or the historical default rate for debt with similar credit ratings. The following table presents the carrying amount and estimated fair value of long-term debt. See also Note 13 Derivative and Hedging Activities and Note 15 Pension and Other Post-Retirement Benefits.

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

(U.S. Dollars in millions other than per share amounts)


	September 26, 2024					December 31, 2023
	Carrying Amount		Fair Value			Carrying Amount		Fair Value
Senior secured term loan B (including current portion)	$	571.8	$	576.1	(2)	$	571.0	$	573.1	(2)
Delayed-draw bridge loan	343.4		343.4		(1)	—		—		(1)
Exchangeable senior notes due 2028	223.2		296.3		(2)