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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 March 28, 2024
Or
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)
 
Registrant’s telephone number, including area code:
(316) 526-9000
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading symbolName of each exchange on which registered
Class A common stock, par value $0.01 per shareSPRNew 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 companyEmerging 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 April 18, 2024, the registrant had 116,552,203 shares of class A common stock, $0.01 par value per share, outstanding.
1

TABLE OF CONTENTS
 





2


PART 1. FINANCIAL INFORMATION
 
Item 1. Financial Statements (unaudited)
 
Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
 
 For the Three
Months Ended
 March 28,
2024
March 30,
2023
 ($ in millions, except per share data)
Net revenues
$1,702.8 $1,431.4 
Operating costs and expenses  
Cost of sales2,138.3 1,432.2 
Selling, general and administrative81.5 77.4 
Restructuring costs 6.3 
Research and development10.6 10.6 
Total operating costs and expenses2,230.4 1,526.5 
Operating loss(527.6)(95.1)
Interest expense and financing fee amortization(80.2)(72.4)
Other income (expense), net2.3 (117.4)
Loss before income taxes and equity in net loss of affiliates(605.5)(284.9)
Income tax (provision) benefit(11.0)4.3 
Loss before equity in net loss of affiliates(616.5)(280.6)
Equity in net loss of affiliates(0.1)(0.7)
Net loss(616.6)(281.3)
Less noncontrolling interest in earnings of subsidiary(0.1)0.1
Net loss attributable to common shareholders$(616.7)$(281.2)
Loss per share  
Basic$(5.31)$(2.68)
Diluted$(5.31)$(2.68)
 
See notes to condensed consolidated financial statements (unaudited)




3

Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(unaudited)
 
 For the Three
Months Ended
 March 28,
2024
March 30,
2023
 ($ in millions)
Net loss$(616.6)$(281.3)
Changes in other comprehensive loss, net of tax:
Pension, SERP, and retiree medical adjustments, net of tax effect of $0.6 and ($16.6) for the three months ended, respectively.
0.3 49.2 
Unrealized foreign exchange gain (loss) on intercompany loan, net of tax effect of $0.1 and ($0.4) for the three months ended, respectively.
(0.4)0.9 
Unrealized gain (loss) on cash flow hedges, net of tax effect of $0.7 and $0.0 for the three months ended, respectively.
(1.0)7.2 
Reclassification of (gain) loss on cash flow hedges to earnings, net of tax effect of $0.0 and $0.0 for the three months ended, respectively.
(1.2)3.4 
Foreign currency translation adjustments(5.3)15.6 
Total other comprehensive (loss) gain, net of tax
(7.6)76.3 
Less comprehensive income attributable to noncontrolling interest(0.1)0.1 
Total comprehensive loss$(624.3)$(204.9)
 

See notes to condensed consolidated financial statements (unaudited)




4

Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets
(unaudited) 
March 28, 2024December 31, 2023
 ($ in millions)
Assets  
Cash and cash equivalents$352.0 $823.5 
Restricted cash0.1 0.1 
Accounts receivable, net577.5 585.5 
Contract assets, short-term824.2 522.9 
Inventory, net1,797.5 1,767.3 
Other current assets56.9 52.5 
Total current assets3,608.2 3,751.8 
Property, plant and equipment, net2,040.1 2,084.2 
Right of use assets90.9 92.1 
Contract assets, long-term8.1  
Pension assets37.2 33.5 
Restricted plan assets50.0 61.1 
Deferred income taxes0.1 0.1 
Goodwill631.2 631.2 
Intangible assets, net192.4 196.2 
Other assets106.3 99.9 
Total assets$6,764.5 $6,950.1 
Liabilities
Accounts payable$1,138.3 $1,106.8 
Accrued expenses483.9 420.1 
Profit sharing22.4 15.7 
Current portion of long-term debt81.0 64.8 
Operating lease liabilities, short-term9.4 9.1 
Advance payments, short-term67.8 38.3 
Contract liabilities, short-term152.3 192.6 
Forward loss provision, short-term313.2 256.6 
Deferred revenue and other deferred credits, short-term57.0 49.6 
Other current liabilities42.4 44.7 
Total current liabilities2,367.7 2,198.3 
Long-term debt3,991.2 4,018.7 
Operating lease liabilities, long-term83.5 84.3 
Advance payments, long-term283.6 301.9 
Pension/OPEB obligation29.4 30.3 
Contract liabilities, long-term153.5 161.3 
Forward loss provision, long-term545.2 224.1 
Deferred revenue and other deferred credits, long-term66.3 76.7 
Deferred grant income liability - non-current27.1 25.8 
Deferred income taxes16.5 9.1 
Other non-current liabilities314.3 315.5 
Stockholders’ Equity
Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 116,276,706 and 116,054,291 shares issued and outstanding, respectively
1.2 1.2 
Additional paid-in capital1,435.4 1,429.1 
Accumulated other comprehensive loss(97.2)(89.6)
Retained earnings(0.4)616.3 
Treasury stock, at cost (41,587,480 shares each period, respectively)
(2,456.7)(2,456.7)
Total stockholders’ equity
(1,117.7)(499.7)
Noncontrolling interest3.9 3.8 
Total equity(1,113.8)(495.9)
Total liabilities and equity$6,764.5 $6,950.1 

 See notes to condensed consolidated financial statements (unaudited)




5



Spirit AeroSystems Holdings, Inc. 
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
 Common StockAdditional
Paid-in
Capital
Treasury StockAccumulated
Other
Comprehensive
Loss
Retained
Earnings
Noncontrolling Interest 
  
 SharesAmountTotal
 ($ in millions, except share data)
Balance — December 31, 2023116,054,291 $1.2 $1,429.1 $(2,456.7)$(89.6)$616.3 $3.8 $(495.9)
Net loss— — — — — (616.7)— (616.7)
Stock-based compensation - ESPP
— — 0.7 — — — — 0.7 
Employee equity awards375,822  10.1 — — — — 10.1 
Net shares settled(153,407) (4.5)— — — — (4.5)
Other— — — — —  0.1 0.1 
Other comprehensive loss— — — — (7.6)— — (7.6)
Balance — March 28, 2024116,276,706 $1.2 $1,435.4 $(2,456.7)$(97.2)$(0.4)$3.9 $(1,113.8)
 Common StockAdditional
Paid-in
Capital
Treasury StockAccumulated
Other
Comprehensive
Loss
Retained
Earnings
Noncontrolling Interest 
  
 SharesAmountTotal
 ($ in millions, except share data)
Balance — December 31, 2022105,252,421 $1.1 $1,179.5 $(2,456.7)$(203.9)$1,232.5 $3.7 $(243.8)
Net loss— — — — — (281.2)— (281.2)
Employee equity awards266,321  9.0 — — — — 9.0 
Stock forfeitures(230,108) — — — — — — 
Net shares settled(137,007) (4.8)— — — — (4.8)
Other— — — — —  (0.1)(0.1)
Other comprehensive gain
— — — — 76.3 — — 76.3 
Balance — March 30, 2023105,151,627 $1.1 $1,183.7 $(2,456.7)$(127.6)$951.3 $3.6 $(444.6)

(a)    Cash dividends declared per common share were $0.00 and $0.00 for the three months ended March 28, 2024 and March 30, 2023, respectively.




6

Spirit AeroSystems Holdings, Inc. 
Condensed Consolidated Statements of Cash Flows
(unaudited)
For the Three Months Ended
March 28, 2024March 30, 2023
Operating activities($ in millions)
Net loss$(616.6)$(281.3)
Adjustments to reconcile net loss to net cash used in operating activities 
Depreciation and amortization expense77.9 79.9 
Amortization of deferred financing fees1.7 1.7 
Accretion of customer supply agreement0.8 0.6 
Employee stock compensation expense10.8 9.0 
(Gain) loss from derivative instruments(1.2)3.4 
(Gain) loss from foreign currency transactions(5.9)4.0 
Loss on disposition of assets0.7 0.1 
Deferred taxes9.0 (16.4)
Pension and other post-retirement plans (income) expense(2.8)63.6 
Grant liability amortization(0.3)(0.3)
Equity in net loss of affiliates0.1 0.7 
Forward loss provision378.1 6.9 
Gain on settlement of financial instrument(0.5)(0.5)
Changes in assets and liabilities
Accounts receivable, net7.4 (116.6)
Inventory, net(34.8)(75.8)
Contract assets(309.8)(22.0)
Accounts payable and accrued liabilities99.7 152.9 
Profit sharing/deferred compensation6.7 (18.4)
Advance payments12.2 (3.3)
Income taxes receivable/payable2.7 11.8 
Contract liabilities(48.0)(13.8)
Pension plans employer contributions(0.7)179.0 
Deferred revenue and other deferred credits(0.5)(3.0)
Other(2.3)(8.4)
Net cash used in operating activities(415.6)(46.2)
Investing activities  
Purchase of property, plant, and equipment(28.7)(22.9)
Net cash used in investing activities(28.7)(22.9)
Financing activities  
Borrowings under revolving credit facility 0.7 
Principal payments of debt(16.5)(15.5)
Taxes paid related to net share settlement awards(4.5)(4.8)
Debt issuance and financing costs(0.5)(0.5)
Net cash used in financing activities(21.5)(20.1)
Effect of exchange rate changes on cash and cash equivalents(0.3)0.9 
Net decrease in cash, cash equivalents, and restricted cash for the period(466.1)(88.3)
Cash, cash equivalents, and restricted cash, beginning of period845.9 678.4 
Cash, cash equivalents, and restricted cash, end of period$379.8 $590.1 




7

Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
For the Three Months Ended
March 28, 2024March 30, 2023
Cash and cash equivalents, beginning of the period$823.5 $658.6 
Restricted cash, short-term, beginning of the period0.1 0.2 
Restricted cash, long-term, beginning of the period22.3 19.6 
Cash, cash equivalents, and restricted cash, beginning of the period$845.9 $678.4 
Cash and cash equivalents, end of the period$352.0 $567.8 
Restricted cash, short-term, end of the period0.1 0.2 
Restricted cash, long-term, end of the period27.7 22.1 
Cash, cash equivalents, and restricted cash, end of the period$379.8 $590.1 

See notes to condensed consolidated financial statements (unaudited)




8

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 its 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 three months ended March 28, 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.

Merger Discussions with Boeing

On March 1, 2024, the Company and Boeing issued press releases confirming that they were in discussions regarding a possible acquisition of the Company by Boeing. The Company and Boeing have continued these discussions, however, we cannot provide any certainty that the parties will reach an agreement related to the terms of a potential acquisition or close such transaction.

Liquidity

These consolidated financial statements have been prepared in accordance with US generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.

The Company has incurred net losses of $616.7, $616.2, $545.7, and $540.8, for the three months ended March 28, 2024, and the years ended December 31, 2023, 2022, and 2021, respectively, and cash used in operating activities of $415.6, $225.8, $394.6, and $63.2, respectively for the same periods. The Company’s cash and cash equivalents were $352.0 and $823.5 as of




9

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

March 28, 2024, and December 31, 2023, respectively. The B737 MAX 9 derivative fleet was temporarily grounded by the Federal Aviation Administration (“FAA”) while certain safety inspections were completed and to allow the FAA time to review any required maintenance actions following the January 5, 2024 in-flight incident on a B737 MAX 9 aircraft flown by Alaska Airlines. The B737 MAX 9 fleet returned to service on January 26, 2024, after mandatory inspections were completed. The Company is participating in investigations relating to this incident. Management is currently unable to fully estimate what impact this incident, including any impacts of investigations, will have on the Company’s near or long-term financial position, results of operations and cash flows.

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. Additionally, during late 2023 the Company was preparing its production line to accommodate an expected increase in production rates that has now been delayed due to the FAA’s imposed limitation on Boeing increasing its production rates. The Company’s ability to align its factory costs which include both internal and supply chain related spending to react to sudden changes in customer-determined production rates will likely have a material impact on the Company’s results of operations and cash flows. On April 18, 2024, the Company entered into a Memorandum of Agreement (“MOA”) with Boeing, where Boeing will advance $425.0 to the Company in order to support the Company’s liquidity. The Company’s 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, and the FAA’s imposition of limitations on Boeing increasing production rates. Based upon expected production volumes and deliveries, the terms of this advance require installments be repaid from June to October 2024.

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 is currently engaged in discussions with Boeing about a possible acquisition of the Company by Boeing, there was a shift in the strategic discussions with Airbus relevant to pricing adjustments on the A220 and A350 programs, and management has determined that it is uncertain on timing or amount of any pricing adjustments that should be included in its current forecast.

These recent developments in the quarter ended March 28, 2024 resulted in a significant reduction in projected revenue and operating cash flows over the next twelve months. Management has developed a plan to improve liquidity because of the changes highlighted above. The Company is also evaluating additional strategies to improve liquidity to support operations, including, but not limited to, additional customer advances, negotiating changes to existing advance repayment arrangements, issuing incremental equity or debt financing, and restructuring of operations to increase efficiency and decrease expenses. These plans are dependent on many factors, including achieving forecasted B737 deliveries, securing additional financing or equity funding, renegotiating timing of certain customer advances or receiving incremental customer advances, or negotiating pricing adjustments on certain loss-making programs. Management expects these plans will sufficiently improve the Company’s liquidity needs to enable continuation of operations for at least the next twelve months.


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,




10

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

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 (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.





11

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

During the first quarter ended March 28, 2024, the Company recognized unfavorable changes in estimates of $534.6, which included net forward loss charges of $495.4, and unfavorable cumulative catch-up adjustments related to periods prior to the first quarter of 2024 of $39.2. The forward losses in the first quarter were primarily driven by a change in strategic pricing conversations with our customer, Airbus, incremental orders Airbus secured, foreign currency impacts, 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 forward losses on the Airbus A350 and A220 programs include net incremental losses for anticipated performance obligations beyond 2026 of $168.3 related to the incremental firm orders Airbus secured. 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. This change in business process has delayed delivery acceptances and caused a build up 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 FAA’s imposed limitation on Boeing increasing its production rates, and production cost overruns on the A320 program.

During the first quarter ended March 30, 2023, the Company recognized unfavorable changes in estimates of $121.9, which included net forward loss charges of $110.0, and unfavorable cumulative catch-up adjustments related to periods prior to the first quarter of 2023 of $11.9. The forward losses in the quarter ended March 30, 2023 were primarily driven by supplier price negotiations and estimated supply chain costs including certain non-recurring cost estimates, schedule revisions, and foreign exchange headwinds on the A220 program, schedule changes and other supply chain cost growth on the A350 program, additional labor and supply chain cost growth on the B787 program, and increased cost projections on the CL650 program. The unfavorable cumulative catch-up adjustments primarily relate to the Company’s preliminary assessment of the impact to production costs including factory disruption related to the notice of escapement issued to Boeing for the B737 Vertical Fin Attach Fittings and supply chain cost growth.

Changes in estimates are summarized below:

For the Three Months Ended
Changes in EstimatesMarch 28, 2024March 30, 2023
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Commercial$(38.9)$(11.0)
Defense & Space(0.3)(0.9)
Aftermarket  
Total (Unfavorable) Favorable Cumulative Catch-up Adjustment$(39.2)$(11.9)
Changes in Estimates on Loss Programs (Forward Loss) by Segment
Commercial$(493.8)$(109.9)
Defense & Space(1.6)(0.1)
Aftermarket  
Total Changes in Estimates (Forward Loss) on Loss Programs$(495.4)$(110.0)
Total Change in Estimate$(534.6)$(121.9)
EPS Impact (diluted per share based upon applicable forecasted effective tax rate)$(4.68)$(1.14)






12

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

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:

March 28,
2024
December 31,
2023
Trade receivables$552.1 $555.8 
Other40.5 42.0 
Less: allowance for credit losses(15.1)(12.3)
Accounts receivable, net$577.5 $585.5 

The Company has agreements (through its subsidiaries) to sell, on a revolving basis, certain trade accounts receivable balances with Boeing, Airbus Group SE and its affiliates (collectively, “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 three months ended March 28, 2024, $814.0 of accounts receivable were sold via these arrangements. The proceeds from these sales of receivables are included in cash from operating activities in the Condensed Consolidated Statements of Cash Flows. The recorded net loss on sale of receivables was $10.6 for the three months ended March 28, 2024 and is included in other income and expense. See Note 20 Other Income (Expense), Net.

Allowance for Credit Losses

During the three months ended March 28, 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 March 28, 2024 or the period ended March 30, 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.





13

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

March 28, 2024December 31, 2023Change
Contract assets$832.3 $522.9 $309.4 
Contract liabilities(305.8)(353.9)48.1 
Net contract assets (liabilities)$526.5 $169.0 $357.5 

For the period ended March 28, 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 build up of undelivered units in Wichita, KS. 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 $49.5 of revenue that was included in the contract liability balance at the beginning of the period.

March 30, 2023December 31, 2022Change
Contract assets$525.6 $502.2 $23.4 
Contract liabilities(342.8)(356.4)13.6 
Net contract assets (liabilities)$182.8 $145.8 $37.0 

For the period ended March 30, 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 $25.8 of revenue that was included in the contract liability balance at the beginning of the period.


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 March 28, 2024 and March 30, 2023:

 For the Three
Months Ended
RevenueMarch 28,
2024
March 30,
2023
Contracts with performance obligations satisfied over time$1,282.1 $1,112.8 
Contracts with performance obligations satisfied at a point in time420.7 318.6 
Total Revenue$1,702.8 $1,431.4 

The following table disaggregates revenue by major customer:

For the Three
Months Ended
CustomerMarch 28,
2024
March 30,
2023
Boeing$1,088.6 $921.1 
Airbus317.1 267.6 
Other297.1 242.7 
Total Revenue$1,702.8 $1,431.4 




14

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)


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

For the Three
Months Ended
LocationMarch 28,
2024
March 30,
2023
United States$1,350.7 $1,149.7 
International
United Kingdom157.3 170.3 
Other194.8 111.4 
Total International352.1 281.7 
Total Revenue$1,702.8 $1,431.4 

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 2024202520262027 and after
Unsatisfied performance obligations$4,766.4 $3,152.2 $1,299.7 $754.5 


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.

March 28,
2024
December 31,
2023
Raw materials$423.7 $414.4 
Work-in-process(1)
1,300.5 1,283.7 
Finished goods53.0 48.4 
Product inventory1,777.2 1,746.5 
Capitalized pre-production20.3 20.8 
Total inventory, net$1,797.5 $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 March 28, 2024 and December 31, 2023, work-in-process inventory includes $232.4 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 $154.6 and $150.2 as of March 28, 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 months ended March 28, 2024 includes period expense of $26.1 for excess capacity production costs related to temporary B737 MAX and A220 production schedule changes. Cost of sales for the three months ended March 30, 2023 includes period expense of $43.3 for excess capacity production costs related to temporary B737 MAX, A320 and A220 production schedule changes, and $6.3 of restructuring costs.




15

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)



8.  Property, Plant and Equipment, net
 
Property, plant and equipment, net consists of the following: 
 
March 28,
2024
December 31,
2023
Land$30.5 $30.5 
Buildings (including improvements)1,314.0 1,307.6 
Machinery and equipment2,481.7 2,460.6 
Tooling1,071.9 1,064.8 
Capitalized software338.6 338.4 
Construction-in-progress110.6 119.0 
Total5,347.3 5,320.9 
Less: accumulated depreciation(3,307.2)(3,236.7)
Property, plant and equipment, net$2,040.1 $2,084.2 
Capitalized interest was $1.2 and $1.6 for the three months ended March 28, 2024 and March 30, 2023, respectively. Repair and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs of $44.1 and $42.7 for the three months ended March 28, 2024 and March 30, 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 $4.4 and $6.1 for the three months ended March 28, 2024 and March 30, 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 March 28, 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




16

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

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.

Components of lease expense:

For the Three
Months Ended
March 28,
2024
March 30,
2023
Operating lease cost$3.5 $3.7 
Finance lease cost:
Amortization of assets9.6 8.6 
Interest on lease liabilities2.1 1.8 
Total net lease cost$15.2 $14.1 

Supplemental cash flow information related to leases was as follows:

For the Three
Months Ended
March 28,
2024
March 30,
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3.7 $3.5 
Operating cash flows from finance leases$2.1 $1.9 
Financing cash flows from finance leases$13.3 $11.3 
ROU assets obtained in exchange for lease obligations:
Operating leases$0.2 $0.1 

Supplemental balance sheet information related to leases:

March 28, 2024December 31, 2023
Finance leases:
Property and equipment, gross$336.4 $336.9 
Accumulated amortization(145.4)(135.8)
Property and equipment, net$191.0 $201.1 

The weighted average remaining lease term as of March 28, 2024 for operating and finance leases was 33.5 years and 4.4 years, respectively. The weighted average discount rate as of March 28, 2024 for operating and finance leases was 6.2% and 6.4%, 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 March 28, 2024, remaining maturities of lease liabilities were as follows:





17

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

202420252026202720282029 and thereafterTotal Lease PaymentsLess: Imputed InterestTotal Lease Obligations
Operating Leases$11.1 $14.7 $12.2 $9.7 $8.8 $174.1 $230.6 $(137.7)$92.9 
Financing Leases$41.4 $42.8 $27.5 $12.8 $6.9 $22.3 $153.7 $(20.9)$132.8 

As of March 28, 2024, the Company had additional operating and financing lease commitments that have not yet commenced of approximately $0.4 and $15.2, respectively, for manufacturing equipment, software, and facilities that are in various phases of construction or customization for the Company’s ultimate use, with lease terms between 3 and 9 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:

March 28,
2024
December 31,
2023
Prepaid expenses$46.6 $34.8 
Income tax receivable2.6 5.3 
Other assets - short-term7.7 12.4 
Total other current assets$56.9 $52.5 

Other assets are summarized as follows:

March 28,
2024
December 31,
2023
Deferred financing  
Deferred financing costs$0.9 $0.9 
Less: Accumulated amortization - deferred financing costs(0.9)(0.9)
Deferred financing costs, net$ $ 
Other  
Supply agreements (1)
$2.4 $3.5 
Equity in net assets of affiliates0.7 0.8 
Restricted cash - collateral requirements27.7 22.3 
Rotables45.4 44.0 
Other30.1 29.3 
Total other long-term assets$106.3 $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 atBalance at
SegmentDecember 31,
2023
AcquisitionsAdjustments/OtherCurrency ExchangeMarch 28,
2024
Commercial$296.6 $ $ $ $296.6 
Defense & Space$13.2 $ $ $ $13.2 
Aftermarket$321.4 $ $ $ $321.4 
$631.2 $ $ $ $631.2 




18

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

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 March 28, 2024, there were no events or circumstances which would require the Company to update its goodwill impairment analysis.

Intangible assets are summarized as follows:

March 28,
2024
December 31,
2023
Intangible assets  
Favorable leasehold interests$2.8 $2.8 
Developed technology asset103.1 103.1 
Customer relationships intangible asset139.6 139.6 
Total intangible assets245.5 245.5 
Less: Accumulated amortization - favorable leasehold interest(2.2)(2.1)
         Accumulated amortization - developed technology asset(23.6)(21.9)
         Accumulated amortization - customer relationship(27.3)(25.3)
Intangible assets, net$192.4 $196.2 
Amortization expense was $3.8 and $3.7 for the for the three months ended March 28, 2024 and March 30, 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 March 28, 2024:

YearCustomer relationshipsFavorable leasehold interest
Developed technology
Total
remaining in 2024$6.2 $0.1 $5.2 $11.5 
20258.2 0.1 6.9 15.2 
20268.2 0.1 6.9 15.2 
20278.2 0.1 6.9 15.2 
20288.2 0.1 6.9 15.2 
20297.8 0.1 6.9 14.8 
Weighted average amortization period14.2 years5.3 years11.6 years13.1 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.




19

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)


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 March 28, 2024, the amount of advance payments received from Boeing under the B787 Supply Agreement and not yet repaid was approximately $183.2.

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 March 28, 2024, the amount of advance payments received by Spirit from Boeing and not yet repaid was approximately $32.2.

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 on December 31, 2025. 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.

Advances on the A220 Program. During the three months ended March 28, 2024, the Company received an advance payment from Airbus of $17.0 under a term sheet agreement between Airbus Canada Limited Partnership (“Airbus Canada”) and Shorts Brothers PLC (the Company’s facilities located in Belfast, Northern Ireland), for short term funding for increased freight costs incurred in the period from January to March 2024. This advance will form part of a financial support package under a proposed Memorandum of Agreement under negotiations between the parties and shall be used by the Company to enable timely delivery of aerostructures via air freight through March 31, 2024. The increased freight costs will be fully borne by the Company. The parties’ original intent was to have the method and timing of payment resolved by the end of April 2024, however, as of the date of this filing these issues have not been resolved.

Other. The Advance payments, long-term line item on the Condensed Consolidated Balance Sheets for the period ended March 28, 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 1 Quoted 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 2                      Observable 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




20

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

interest rates and foreign exchange rates, are used in determining the fair value of the interest rate swaps and foreign currency hedge contracts.
 
Level 3                 Unobservable 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 March 28, 2024, the Company’s long-term debt includes a senior secured term loan and senior notes 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.  

 March 28, 2024 December 31, 2023 
 Carrying
Amount
Fair
Value
 Carrying
Amount
Fair
Value
 
Senior secured term loan B (including current portion)$572.3 $575.1 (2)$571.0 $573.1 (2)
Exchangeable senior notes due 2028222.5 313.7 (2)222.2 292.6 (2)
Senior notes due 2025
20.8 20.8 (1)20.8 20.7 (1)
Senior secured noted due 2026
299.2 288.1 (1)299.1 288.0 (1)
Senior notes due 2028696.7 652.9 (1)696.6 616.8 (1)
Senior secured first lien notes due 2029
888.8 970.2(1)888.4 973.0(1)
Senior secured second lien notes due 20301,180.3 1,320.8(1)1,180.0 1,273.1(1)
Total$3,880.6 $4,141.6  $3,878.1 $4,037.3  

(1)Level 1 Fair Value hierarchy
(2)Level 2 Fair Value hierarchy 


13.  Derivative and Hedging Activities

Derivatives Accounted for as Hedges

Cash Flow Hedges – Foreign Currency Forward Contract

The Company has entered into currency forward contracts, each designated as a cash flow hedge upon the date of execution, for the purpose of reducing the variability of cash flows and hedging against the foreign currency exposure for forecasted payroll, pension and vendor disbursements that are expected to be made in the British Pound Sterling. The hedging program implemented is intended to reduce foreign currency exposure, and the associated forward currency contracts hedge forecasted transactions through December 2024.

The following table summarizes the notional amounts (representing the gross contract/notional amount of the derivatives outstanding) and fair values of the derivative instruments in the Condensed Consolidated Balance Sheets as of March 28, 2024, and December 31, 2023. The foreign currency exchange contracts are measured within Level 1 of the Fair Value hierarchy. See Note 12 Fair Value Measurements.





21

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

Notional amountOther assetsOther liabilities
March 28, 2024December 31, 2023March 28, 2024December 31, 2023March 28, 2024December 31, 2023
Derivatives designated as hedging instruments:
Foreign currency exchange contracts$161.8 $169.1 $ $3.0 $ $ 
Total derivatives at fair value$ $3.0 $ $ 

Changes in the fair value of cash flow hedges are recorded in AOCI and recorded in earnings in the period in which the hedged transaction settles. The gain (loss) recognized in AOCI associated with our hedging transactions is presented in the following table:

Three Months Ended
March 28, 2024March 30, 2023
Recognized in total other comprehensive loss:
Foreign currency exchange contracts$(1.8)$2.5 

The following table summarizes the gains/(losses) associated with our hedging transactions reclassified from AOCI to earnings:

Three Months Ended
March 28, 2024March 30, 2023
Foreign currency exchange contracts:
Other income (expense)$1.2 $(3.4)

Within the next 12 months, the Company expects to recognize a loss of $0.0 in earnings related to the foreign currency forward contracts. As of March 28, 2024, the maximum term of the hedged forecasted transaction was 9 months. Generally, the Company has agreements with its counterparties that contain a provision whereby if the Company defaults on its existing credit facilities and payment of the loans extended under such facilities is accelerated, the Company could be declared in default under its agreements, which may result in the early termination of the outstanding derivatives governed by such agreements and the payment of an early termination amount.





22

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

14.  Debt
 
Total debt shown on the Condensed Consolidated Balance Sheets is comprised of the following: 

March 28, 2024December 31, 2023
CurrentNoncurrentCurrentNoncurrent
Senior secured term loan B$5.8 $566.5 $5.8 $565.2 
Exchangeable senior notes due 2028 222.5  222.2 
Senior notes due 2025
20.8   20.8 
Senior secured notes due 2026
 299.2  299.1 
Senior notes due 2028 696.7  696.6 
Senior secured first lien notes due 2029
 888.8  888.4 
Senior secured second lien notes due 2030 1,180.3  1,180.0 
Present value of finance lease obligations46.6 86.2 48.3 95.0 
Other7.8 51.0 10.7 51.4 
Total$81.0 $3,991.2 $64.8 $4,018.7 

Credit Agreement

On October 5, 2020, Spirit entered into a term loan credit agreement (the “Credit Agreement”) providing for a $400.0 senior secured term loan B credit facility with the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent. On October 5, 2020, Spirit borrowed the full $400.0 of initial term loans available under the Credit Agreement. On November 15, 2021, the Company entered into a first refinancing, incremental assumption and amendment agreement (the “November 2021 Amendment”) to the Credit Agreement. The November 2021 Amendment provides for, among other things, (i) the refinancing of the $397.0 aggregate principal amount of term loans outstanding under the Credit Agreement immediately prior to the effectiveness of the November 2021 Amendment with term loans in an equal principal amount with a lower interest rate (the “Repriced Term Loans”) and (ii) an incremental term loan facility of $203.0 in aggregate principal amount with the same terms as the Repriced Term Loans. On November 23, 2022, the Company entered into a second refinancing amendment (the “November 2022 Amendment”) to the Credit Agreement (the Credit Agreement as amended by the November 2021 Amendment and the November 2022 Amendment, the “Amended Credit Agreement”). The November 2022 Amendment provides for, among other things, the refinancing of the $594.0 aggregate principal amount of term loans outstanding under the Credit Agreement immediately prior to the effectiveness of the November 2022 Amendment with term loans in an equal principal amount with a later maturity date.

The obligations under the Amended Credit Agreement are guaranteed by Holdings and Spirit AeroSystems North Carolina, Inc., a wholly-owned subsidiary of Holdings (“Spirit NC” and, together with Holdings, the “Guarantors”) and will be guaranteed by each existing and future, direct and indirect, wholly-owned material domestic subsidiary of Holdings, subject to certain customary exceptions. The obligations are secured by a first-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of March 28, 2024, the outstanding balance of the Amended Credit Agreement was $586.6 and the carrying value was $572.3.

As of March 28, 2024, the Company was in compliance with all covenants in the Amended Credit Agreement.

Exchangeable Notes

On November 13, 2023, Spirit entered into an Indenture (the “Exchangeable Notes Indenture”), by and among Spirit, the Guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee, in connection with Spirit’s issuance of $230.0 aggregate principal amount of its 3.250% Exchangeable Senior Notes due 2028 (the “Exchangeable Senior Notes”). The Exchangeable Senior Notes are senior, unsecured obligations of Spirit and are fully and unconditionally guaranteed on a senior, unsecured basis by the Guarantors.





23

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

The Exchangeable Senior Notes will be exchangeable at an initial exchange rate of 34.3053 shares of Holdings’ Class A common stock per $1,000.00 principal amount of Exchangeable Senior Notes (equivalent to an initial exchange price of approximately $29.15 per share of Class A common stock). At the initial exchange rate, the Exchangeable Senior Notes would be convertible into 7,890,219 shares of Holdings’ Class A common stock. The initial exchange rate is subject to adjustment, as provided in the Exchangeable Notes Indenture.

In connection with certain corporate events, or if Spirit calls any Exchangeable Senior Notes for redemption, Spirit will, under certain circumstances, be required to increase the exchange rate for noteholders who elect to exchange their Exchangeable Senior Notes in connection with any such corporate event or exchange their Exchangeable Senior Notes called for redemption during the related redemption period.

During the three months ended March 28, 2024, no adjustments were made to the conversion or exercise prices of the Exchangeable Senior Notes.

As of March 28, 2024, the outstanding balance of the Exchangeable Senior Notes was $230.0 and the carrying value was $222.5. Interest expense recognized for the three months ended March 28, 2024 was $1.8. During the three months ended March 28, 2024, $0.4 of debt issuance costs were amortized. Unamortized debt issuance costs at March 28, 2024 related to the Exchangeable Senior Notes were $7.5.

The Exchangeable Senior Notes mature on November 1, 2028, unless earlier exchanged, redeemed, or repurchased.

Second Lien 2030 Notes

On November 21, 2023, Spirit entered into an Indenture (the “Second Lien 2030 Notes Indenture”), by and among Spirit, the Guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, in connection with Spirit’s offering of $1,200.0 aggregate principal amount of its 9.750% Senior Secured Second Lien Notes due 2030 (the “Second Lien 2030 Notes”).

The Second Lien 2030 Notes are guaranteed by the Guarantors, and will be guaranteed by each existing and future, direct and indirect, wholly-owned material domestic subsidiary of Holdings that guarantee Holdings’ obligations under the Amended Credit Agreement and certain other indebtedness, subject to certain customary exceptions. The Second Lien 2030 Notes are secured by a second-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of March 28, 2024, the outstanding balance of the Second Lien 2030 Notes was $1,200.0 and the carrying value was $1,180.3.

The Second Lien 2030 Notes mature on November 15, 2030.

First Lien 2029 Notes

On November 23, 2022, Spirit entered into an Indenture by and among Spirit, the Guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, in connection with Spirit’s offering of $900.0 aggregate principal amount of its 9.375% Senior Secured First Lien Notes due 2029 (the “First Lien 2029 Notes”).

The First Lien 2029 Notes are guaranteed by the Guarantors, and will be guaranteed by each existing and future, direct and indirect, wholly-owned material domestic subsidiary of Holdings that guarantee Holdings’ obligations under the Amended Credit Agreement and certain other indebtedness. The First Lien 2029 Notes are secured by a first-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of March 28, 2024, the outstanding balance of the First Lien 2029 Notes was $900.0 and the carrying value was $888.8.

The First Lien 2029 Notes mature on November 30, 2029.




24

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)


2025 Notes

On October 5, 2020, Spirit entered into an Indenture by and among Spirit, the Guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, in connection with Spirit’s offering of $500.0 aggregate principal amount of its 5.500% Senior Secured First Lien Notes due 2025 (the “2025 Notes”).

The 2025 Notes are guaranteed by the Guarantors and were initially secured by a first-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions, which lien was released on November 22, 2022.

As of March 28, 2024, the outstanding balance of the 2025 Notes was $20.8 and the carrying value was $20.8.

The 2025 Notes mature on January 15, 2025.
2026 Notes

In June 2016, the Company issued $300.0 in aggregate principal amount of 3.850% Senior Notes due June 15, 2026 (the “2026 Notes”).

The 2026 Notes are guaranteed by the Guarantors, and each existing and future, direct and indirect, subsidiary of the Company that guarantee the Company’s obligations under the Amended Credit Agreement and certain other indebtedness.

On October 5, 2020, Spirit entered into a Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”), by and among Spirit, the Company, Spirit NC, and The Bank of New York Mellon Trust Company, N.A., as trustee in connection with 2026 Notes. Under the Fourth Supplemental Indenture, the holders of the 2026 Notes were granted security on an equal and ratable basis with the secured parties under the Credit Agreement.

On November 23, 2022, Spirit entered into a Fifth Supplemental Indenture (the “Fifth Supplemental Indenture”), by and among Spirit, the Company, Spirit NC, and The Bank of New York Mellon Trust Company, N.A., as trustee in connection with 2026 Notes. Under the Fifth Supplemental Indenture, the holders of the 2026 Notes were granted security on an equal and ratable basis with the holders of the First Lien 2029 Notes.

On November 21, 2023, Spirit entered into a Sixth Supplemental Indenture (the “Sixth Supplemental Indenture”), by and among Spirit, the Company, Spirit NC and The Bank of New York Mellon Trust Company, N.A., as trustee in connection with the 2026 Notes. Under the Sixth Supplemental Indenture, the holders of the 2026 Notes were granted security on an equal and ratable basis with the holders of the Second Lien 2030 Notes.

As of March 28, 2024, the outstanding balance of the 2026 Notes was $300.0 and the carrying value was $299.2.

The 2026 Notes mature on June 15, 2026.

2028 Notes

On May 30, 2018, Spirit entered into an Indenture (the “2018 Indenture”) by and among Spirit, the Company and The Bank of New York Mellon Trust Company, N.A., as trustee in connection with Spirit’s offering of $300.0 aggregate principal amount of its Senior Floating Rate Notes due 2021 (the “Floating Rate Notes”), $300.0 aggregate principal amount of its 3.950% Senior Notes due 2023 (the “2023 Notes”) and $700.0 aggregate principal amount of its 4.600% Senior Notes due 2028 (the “2028 Notes” and, together with the Floating Rate Notes and the 2023 Notes, the “2018 Notes”). On February 24, 2021, Spirit redeemed the outstanding $300.0 principal amount of the Floating Rate Notes. On November 23, 2022, Spirit redeemed the outstanding $300.0 principal amount of the 2023 Notes. Holdings guarantees Spirit's obligations under the 2028 Notes on a senior unsecured basis.

As of March 28, 2024, the outstanding balance of the 2028 Notes was $700.0 and the carrying value was $696.7.

The 2028 Notes mature on June 15, 2028.




25

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)


As of March 28, 2024, the Company was in compliance with all covenants contained in the indentures governing the Second Lien 2030 Notes, First Lien 2029 Notes, 2025 Notes, 2026 Notes, and the 2028 Notes.


15. Pension and Other Post-Retirement Benefits

 Defined Benefit Plans
 For the Three
Months Ended
Components of Net Periodic Pension Expense (Income)March 28,
2024
March 30,
2023
Service cost$0.6 $0.8 
Interest cost17.7 20.1 
Expected return on plan assets(21.6)(21.8)
Amortization of net loss 0.1 
Settlement loss (gain)(1)
 64.6 
Net periodic pension expense (income)$(3.3)$63.8 

 Other Benefits
 For the Three
Months Ended
Components of Other Benefit Expense (Income)March 28,
2024
March 30,
2023
Service cost$0.2 $0.2 
Interest cost0.4 0.4 
Amortization of prior service cost0.3 (0.2)
Amortization of net gain (0.4)(0.5)
Net periodic other benefit income$0.5 $(0.1)
(1) Includes a $64.6 settlement charge for PVP A during the three months ended March 30, 2023.

The components of net periodic pension expense (income) and other benefit income, other than the service cost component, are included in Other income (expense), net in the Company’s Condensed Consolidated Statements of Operations. See Note 20 Other Income (Expense), Net.

Effective October 1, 2021, the Company spun off a portion of the existing PVP A, to a new plan called PVP B (“PVP B). As part of the PVP B plan termination process, a lump sum offering was provided during 2021 for PVP B participants and the final asset distribution was completed in the first quarter of 2022. At March 28, 2024, a pension reversion asset of $50.0 is recorded on the Restricted plan assets line item on the Company’s Condensed Consolidated Balance Sheets. Restricted plan assets are expected to be reduced over the next five years as they are distributed to employees under a qualified compensation and benefit program. Restricted plan assets are valued at fair value with gain or loss on fair value adjustments recognized within other income. The underlying investments’ fair value measurement levels under the FASB’s authoritative guidance on fair value measurements are Level 2, see Note 12 Fair Value Measurements.

Separately, during the three months ended March 30, 2023, the Company received an excess plan asset reversion of $179.5 of cash from PVP A. This transaction was accounted for as a negative contribution, and is included on the Pension plans employer contributions line item on the Company’s Condensed Consolidated Statement of Cash Flows for the three months ended March 30, 2023. Excise tax of $35.9 related to the reversion of excess plan assets was separately recorded to the Other (expense) income, net line item on the Company’s Condensed Consolidated Statements of Operations for the three months ended March 30, 2023. See also Note 20 Other Income (Expense), Net.

In July 2022, the Company adopted and communicated to participants a plan to terminate the PVP A. During the three months ended March 30, 2023, the Company recognized non-cash, pre-tax non-operating accounting charges of $64.6 related to




26

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

the plan termination, primarily reflecting the accounting for a group annuity purchase made in the first quarter of 2023, which resulted in a settlement charge related to the accelerated recognition of the actuarial losses for the PVP A plan that were previously included in the Accumulated other comprehensive loss line item in the Stockholders’ Equity section of the Company’s Condensed Consolidated Balance Sheets.

Employer Contributions
 
The Company’s expected contributions for the current year have not significantly changed from those described in the Company’s 2023 Form 10-K.


16.  Stock Compensation
 
Holdings has established the stockholder-approved Amended and Restated 2014 Omnibus Incentive Plan (the “Omnibus Plan”), to grant cash and equity awards of Holdings’ Class A Common Stock, par value $0.01 per share (the “Common Stock”), to certain individuals. Holdings has established the Long-Term Incentive Plan (the “LTIP”) under the Omnibus Plan to grant equity awards to certain employees of the Company.

The Company recognized a net total of $10.1 and $9.0 of stock compensation expense for the three months ended March 28, 2024 and March 30, 2023, respectively.

During the three months ended March 28, 2024, 409,170 time or service-based restricted stock units (“RSUs”) were granted with an aggregate grant date fair value of $11.9 under the Company’s LTIP. Awards vest over a three-year period, beginning on the date of grant. Values for these awards are based on the value of Common Stock on the grant date.

During the three months ended March 28, 2024, 388,386 performance-based restricted stock units (“PBRSUs”) were granted with an aggregate grant date fair value of $14.9 under the Company’s LTIP. These awards are earned based on Holdings’ total shareholder return relative to its peer group over a three-year performance period. Values for these awards are initially measured on the grant date using the estimated payout levels derived from a Monte Carlo valuation model.

During the three months ended March 28, 2024, 384,734 shares of Common Stock with an aggregate grant date value of $16.0 vested under the Company’s LTIP.

The Company maintains the Spirit AeroSystems Holdings, Inc. Employee Stock Purchase Plan (the “ESPP”) which became effective on October 1, 2017 and was amended and restated on October 21, 2022. Under the amended plan, the per-share purchase price for the Company’s Common stock purchased under the ESPP is 85% of the lower of (a) the fair market value of a share on the first day of the applicable offering period or (b) the fair market value of a share on the applicable purchase date.

The Company recognized $0.7 of stock compensation expense related to the ESPP for the three months ended March 28, 2024. The Company recognized no stock compensation expense related to the ESPP for the three months ended March 30, 2023.

17. Income Taxes
    
The process for calculating the Company’s income tax expense involves estimating actual current taxes due plus assessing temporary differences arising from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities. Deferred tax assets are periodically evaluated to determine their recoverability and whether a valuation allowance is necessary.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income




27

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding our prior earnings history, including the forward losses previously recognized in the U.S., the Company has recorded a valuation allowance against U.S. deferred tax assets. Increases in the valuation allowances recorded against U.S. deferred tax assets in the three months ended March 28, 2024 were $87.1. This is comprised of $0.0 related to other comprehensive income (“OCI”) and $87.1 from continuing operations. As of March 28, 2024, the total net U.S. deferred tax asset before the valuation allowance was $593.7 and the total net U.S. valuation allowance was $595.2. The net U.S. deferred tax liability after valuation allowances was $1.5.

The Company has determined a valuation allowance on certain U.K. deferred tax assets is needed based upon cumulative losses generated in the U.K. Increases in the valuation allowances recorded against U.K. deferred tax assets in the three-month period ended March 28, 2024 were $72.3. This is comprised of ($0.5) related to other comprehensive income (“OCI”) and $72.8 from continuing operations, including utilization of net operating losses. As of March 28, 2024, the total net U.K. deferred tax asset before the valuation allowance was $418.2 and the total net U.K. valuation allowance was $431.5. The net U.K. deferred tax liability after valuation allowance was $13.3.

The Company files income tax returns in all jurisdictions in which it operates. The Company establishes reserves to provide for additional income taxes that may be due upon audit. These reserves are established based on management’s assessment as to the potential exposure attributable to permanent tax adjustments and associated interest. All tax reserves are analyzed quarterly and adjustments made as events occur that warrant modification.

In general, the Company records income tax expense each quarter based on its estimate as to the full year’s effective tax rate. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits with respect to share-based compensation, finalizing amounts in income tax returns filed, finalizing audit examinations for open tax years, expiration of statutes of limitations, and changes in tax law.
The (1.82%) effective tax rate for the three months ended March 28, 2024 differs from the 1.50% effective tax rate for the same period of 2023 primarily due to changes in the valuation allowances recorded on U.S. and U.K. deferred tax assets. As the Company is currently reporting a pre-tax loss for the three months ended March 28, 2024, an increase in the effective tax rate results in an increase of income tax benefits while a decrease in the rate results in a reduction of income tax benefits.

As allowed by the Coronavirus Aid, Relief, and Economic Security Act, the Company has filed a claim for a pre-tax employee retention credit of $18.8 for 2020 and $1.0 for 2021. The outstanding pre-tax employee retention credit refund claim as of March 28, 2024 is $3.1.

The Company’s federal audit is conducted under the Internal Revenue Service Compliance Assurance Process (“CAP”) program. The Company will continue to participate in the CAP program for 2021 through 2024. The CAP program’s objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination. The Company has an open tax audit in the Kingdom of Morocco for tax years ending prior to the Company’s ownership of the Moroccan legal entity. There are ongoing audits in other jurisdictions that are not material to the financial statements and the Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and years.

The Company operates under a tax holiday in Malaysia which is effective through September 30, 2024. The tax holiday is conditional upon remaining in good standing with the Malaysia taxing authorities, having at least 20% value-add and at least 30% of employees with diploma/degree in science/technical discipline. The tax benefit impact of this holiday has been $3.4, $3.0, and $3.4 for 2023, 2022, and 2021, respectively. The tax benefit for the three months ended March 28, 2024 was $0.6.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world have and are enacting legislation. Pillar Two will apply to the Company’s worldwide operations. As the Company does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially increase the Company’s global tax costs.





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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)

18.  Equity
 
Earnings per Share Calculation
 
Basic net income per share is computed using the weighted-average number of outstanding shares of Common Stock during the measurement period. Diluted net income per share is computed using the weighted-average number of outstanding shares of Common Stock and, when dilutive, potential outstanding shares of Common Stock during the measurement period. Diluted earnings per share includes any dilutive impact of service-based restricted stock units, director restricted stock units, restricted stock awards, and performance-based restricted stock units.

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. As of March 28, 2024, no treasury shares have been reissued or retired.

The total authorization amount remaining under the current share repurchase program is approximately $925.0. During the three-month period ended March 28, 2024, the Company did not repurchase any shares of its Common Stock under this share repurchase program. Share repurchases are currently on hold. The Credit Agreement imposes restrictions on the Company’s ability to repurchase shares.

The following table sets forth the computation of basic and diluted earnings per share:

For the Three Months Ended
March 28, 2024March 30, 2023
IncomeSharesPer Share
Amount
IncomeSharesPer Share
Amount
Basic EPS
Loss available to common stockholders$(616.7)116.2 $(5.31)$(281.2)104.9 $(2.68)
Income allocated to participating securities    
Net loss$(616.7)$(281.2)
Diluted potential common shares  
Diluted EPS
Net loss$(616.7)116.2 $(5.31)$(281.2)104.9 $(2.68)

Included in the outstanding Common Stock were 0.0 million and 0.1 million of issued but unvested shares at March 28, 2024 and March 30, 2023, respectively, which are excluded from the basic Earnings Per Share (“EPS”) calculation.

Shares of Common Stock of 9.6 million were excluded from diluted EPS as a result of incurring a net loss for the three months ended March 28, 2024, as the effect would have been antidilutive. Additionally, diluted EPS for the three months ended March 28, 2024 excludes 0.2 million shares that may be dilutive shares of Common Stock in the future but were not included in the computation of diluted EPS because the effect was either antidilutive or the performance condition was not met.

Shares of Common Stock of 0.9 million were excluded from diluted EPS as a result of incurring a net loss for the three months ended March 30, 2023, as the effect would have been antidilutive. Additionally, diluted EPS for the three months ended March 30, 2023 excludes 0.2 million shares that may be dilutive shares of Common Stock in the future but were not included in the computation of diluted EPS because the effect was either antidilutive or the performance condition was not met.
Accumulated Other Comprehensive Loss
 
Accumulated Other Comprehensive Loss is summarized by component as follows:





29

Spirit AeroSystems Holdings, Inc. 
Notes to the Condensed Consolidated Financial Statements (unaudited)
(U.S. Dollars in millions other than per share amounts)

As ofAs of
 March 28, 2024December 31, 2023
Pension$(18.4)$(18.7)
SERP/Retiree medical6.7 6.8 
Derivatives - foreign currency hedge 2.2 
Foreign currency impact on long-term intercompany loan(14.9)(14.6)
Currency translation adjustment(70.6)(65.3)
Total accumulated other comprehensive loss$(97.2)$(89.6)
 
Amortization or settlement cost recognition of the pension plans’ net gain/(loss) reclassified from accumulated other comprehensive loss and realized into cost of sales and selling, general and administrative on the Condensed Consolidated Statements of Operations was $0.1 and ($64.0) for the three months ended March 28, 2024 and March 30, 2023, respectively.

    
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