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 ~~October~~April 1, ~~2020~~2021


☐			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 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 whether 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 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~~April 23, ~~2020,~~2021, the registrant had ~~105,637,271~~105,419,603 shares of class A common stock, $0.01 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

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					For the Three Months Ended
		October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019				April 1, 2021		April 2, 2020
		($ in millions, except per share data)										($ in millions, except per share data)
Revenue	Revenue	$	806.3	$	1,919.9	$	2,528.2	$	5,903.8	Revenue		$	900.8	$	1,077.3
Operating costs and expenses	Operating costs and expenses									Operating costs and expenses
Cost of sales	Cost of sales	903.4		1,647.6		2,941.0		5,029.1		Cost of sales		958.8		1,112.5
Selling, general and administrative	Selling, general and administrative	52.8		53.6		179.2		173.6		Selling, general and administrative		57.6		77.4

Restructuring costs	Restructuring costs	19.5		0		68.4		0		Restructuring costs		2.1		42.6

Research and development	Research and development	7.5		12.6		28.1		36.0		Research and development		8.2		12.3
Loss on disposal of assets		0		0		22.9		0
Total operating costs and expenses	Total operating costs and expenses	983.2		1,713.8		3,239.6		5,238.7		Total operating costs and expenses		1,026.7		1,244.8
Operating (loss) income		(176.9)		206.1		(711.4)		665.1
Operating loss										Operating loss		(125.9)		(167.5)
Interest expense and financing fee amortization	Interest expense and financing fee amortization	(53.0)		(23.6)		(133.8)		(66.1)		Interest expense and financing fee amortization		(59.8)		(32.2)
Other expense, net		(10.0)		(9.5)		(65.4)		(11.9)
(Loss) income before income taxes and equity in net (loss) income of affiliate		(239.9)		173.0		(910.6)		587.1
Income tax benefit (provision)		85.2		(41.7)		340.0		(124.7)
(Loss) income before equity in net (loss) income of affiliate		(154.7)		131.3		(570.6)		462.4
Other income (expense), net										Other income (expense), net		12.8		(49.0)
Loss before income taxes and equity in net loss of affiliate										Loss before income taxes and equity in net loss of affiliate		(172.9)		(248.7)
Income tax benefit										Income tax benefit		1.7		87.2
Loss before equity in net loss of affiliate										Loss before equity in net loss of affiliate		(171.2)		(161.5)
Equity in net loss of affiliate	Equity in net loss of affiliate	(0.8)		0		(3.8)		0		Equity in net loss of affiliate		(0.4)		(1.5)
Net (loss) income		$	(155.5)	$	131.3	$	(574.4)	$	462.4
(Loss) earnings per share
Net loss										Net loss		$	(171.6)	$	(163.0)
Loss per share										Loss per share
Basic	Basic	$	(1.50)	$	1.27	$	(5.53)	$	4.46	Basic		$	(1.65)	$	(1.57)
Diluted	Diluted	$	(1.50)	$	1.26	$	(5.53)	$	4.41	Diluted		$	(1.65)	$	(1.57)

See notes to condensed consolidated financial statements (unaudited)

Table of Contents

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited)

For the Three Months Ended For the Nine Months Ended
October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
($ in millions)
Net (loss) income $ (155.5) $ 131.3 $ (574.4) $ 462.4
Changes in other comprehensive (loss) gain, net of tax:
Pension, SERP, and Retiree medical adjustments, net of tax effect of ($7.4) and ($11.4) for the three months ended, respectively, and $0.9 and ($11.2) for the nine months ended, respectively 23.8 36.9 (3.0) 36.2
Unrealized foreign exchange (loss) gain on intercompany loan, net of tax effect of ($0.4) and $0.2 for the three months ended, respectively, and $0.4 and $0.3 for the nine months ended, respectively 1.4 (1.1) (1.2) (1.3)
Unrealized (loss) gain on interest rate swaps, net of tax effect of $0.0 and $0.0 for the three months ended, respectively, and ($3.3) and $0.0 for the nine months ended, respectively 0 (1.5) (10.9) (1.5)
Reclassification of loss on interest rate swaps to earnings, net of tax effect of ($2.8) and $0.0 for the three months ended, respectively, and ($3.1) and $0.0 for the nine months ended, respectively $ 9.2 $ 0 $ 10.3 $ 0
Foreign currency translation adjustments $ 17.3 $ (12.8) $ (15.6) $ (16.7)
Total other comprehensive (loss) gain 51.7 21.5 (20.4) 16.7
Total comprehensive (loss) income $ (103.8) $ 152.8 $ (594.8) $ 479.1


	For the Three Months Ended
		April 1, 2021		April 2, 2020
		($ in millions)
Net loss		$	(171.6)	$	(163.0)
Changes in other comprehensive loss, net of tax:

Pension, SERP, and Retiree medical adjustments, net of tax effect of $0.1 and $28.8 for the three months ended, respectively		(4.9)		(93.2)
Unrealized foreign exchange gain (loss) on intercompany loan, net of tax effect of ($0.2) and $0.9 for the three months ended, respectively		0.5		(2.9)
Unrealized gain (loss) on hedges, net of tax effect of $0.0 and $0.0 for the three months ended, respectively		1.2		—
Unrealized (loss) gain on interest rate swaps, net of tax effect of $0.0 and $3.0 for the three months ended, respectively		—		(9.8)
Reclassification of gain on interest rate swaps to earnings, net of tax effect of ($0.3) and $0.0 for the three months ended, respectively		0.9		0
Foreign currency translation adjustments		6.4		(35.8)
Total other comprehensive gain (loss)		4.1		(141.7)
Total comprehensive loss		$	(167.5)	$	(304.7)

See notes to condensed consolidated financial statements (unaudited)

Table of Contents

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
		($ in millions)					($ in millions)
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,441.3	$	2,350.5	Cash and cash equivalents	$	1,359.3	$	1,873.3
Restricted cash	Restricted cash	1.3		0.3		Restricted cash	0.3		0.3
Accounts receivable, net	Accounts receivable, net	388.8		546.4		Accounts receivable, net	525.8		484.4
Contract assets, short-term	Contract assets, short-term	333.6		528.3		Contract assets, short-term	361.9		368.4
Inventory, net	Inventory, net	1,183.3		1,118.8		Inventory, net	1,395.8		1,422.3
Other current assets	Other current assets	259.6		98.7		Other current assets	344.5		336.3
Total current assets	Total current assets	3,607.9		4,643.0		Total current assets	3,987.6		4,485.0
Property, plant and equipment, net	Property, plant and equipment, net	2,147.4		2,271.7		Property, plant and equipment, net	2,457.0		2,503.8
Right of use assets	Right of use assets	44.4		48.9		Right of use assets	70.0		70.6
Contract assets, long-term	Contract assets, long-term	4.1		6.4		Contract assets, long-term	5.9		4.4
Pension assets	Pension assets	404.2		449.1		Pension assets	466.8		455.9
Deferred income taxes	Deferred income taxes	136.7		106.5		Deferred income taxes	0.3		0.1
Goodwill	Goodwill	78.4		2.4		Goodwill	583.9		565.3
Intangible assets, net	Intangible assets, net	29.5		1.2		Intangible assets, net	207.0		215.2
Other assets	Other assets	151.8		76.8		Other assets	89.3		83.6
Total assets	Total assets	$	6,604.4	$	7,606.0	Total assets	$	7,867.8	$	8,383.9
Liabilities	Liabilities					Liabilities
Accounts payable	Accounts payable	$	483.1	$	1,058.3	Accounts payable	$	540.8	$	558.9
Accrued expenses	Accrued expenses	289.8		240.2		Accrued expenses	383.3		365.6
Profit sharing	Profit sharing	38.1		84.5		Profit sharing	14.9		57.0
Current portion of long-term debt	Current portion of long-term debt	335.5		50.2		Current portion of long-term debt	40.2		340.7
Operating lease liabilities, short-term	Operating lease liabilities, short-term	5.5		6.0		Operating lease liabilities, short-term	5.5		5.5
Advance payments, short-term	Advance payments, short-term	20.1		21.6		Advance payments, short-term	53.1		18.9
Contract liabilities, short-term	Contract liabilities, short-term	100.9		158.3		Contract liabilities, short-term	119.3		97.6
Forward loss provision, short-term	Forward loss provision, short-term	169.9		83.9		Forward loss provision, short-term	244.5		184.6
Deferred revenue and other deferred credits, short-term	Deferred revenue and other deferred credits, short-term	15.7		14.8		Deferred revenue and other deferred credits, short-term	15.0		22.2

Other current liabilities	Other current liabilities	37.7		42.9		Other current liabilities	71.4		58.4
Total current liabilities	Total current liabilities	1,496.3		1,760.7		Total current liabilities	1,488.0		1,709.4
Long-term debt	Long-term debt	2,659.0		2,984.1		Long-term debt	3,525.2		3,532.9
Operating lease liabilities, long-term	Operating lease liabilities, long-term	39.1		43.0		Operating lease liabilities, long-term	66.6		66.6
Advance payments, long-term	Advance payments, long-term	325.0		333.3		Advance payments, long-term	289.9		327.4
Pension/OPEB obligation	Pension/OPEB obligation	47.0		35.7		Pension/OPEB obligation	431.8		440.2
Contract Liabilities, long-term	Contract Liabilities, long-term	371.7		356.3		Contract Liabilities, long-term	348.5		372.0
Forward loss provision, long-term	Forward loss provision, long-term	303.8		163.5		Forward loss provision, long-term	509.1		561.4
Deferred revenue and other deferred credits, long-term	Deferred revenue and other deferred credits, long-term	33.6		34.4		Deferred revenue and other deferred credits, long-term	38.0		38.9
Deferred grant income liability - non-current	Deferred grant income liability - non-current	27.4		29.0		Deferred grant income liability - non-current	27.9		28.1
Deferred income taxes	Deferred income taxes	10.0		8.3		Deferred income taxes	10.9		13.0
Other non-current liabilities	Other non-current liabilities	119.5		95.8		Other non-current liabilities	438.9		437.0
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity
Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 105,660,882 and 104,882,379 shares issued and outstanding, respectively		1.1		1.1
Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 105,438,110 and 105,542,162 shares issued and outstanding, respectively						Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 105,438,110 and 105,542,162 shares issued and outstanding, respectively	1.1		1.1
Additional paid-in capital	Additional paid-in capital	1,133.2		1,125.0		Additional paid-in capital	1,144.4		1,139.8
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(129.6)		(109.2)		Accumulated other comprehensive loss	(150.0)		(154.1)
Retained earnings	Retained earnings	2,623.5		3,201.3		Retained earnings	2,153.7		2,326.4
Treasury stock, at cost (41,523,470 shares each period, respectively)	Treasury stock, at cost (41,523,470 shares each period, respectively)	(2,456.7)		(2,456.8)		Treasury stock, at cost (41,523,470 shares each period, respectively)	(2,456.7)		(2,456.7)
Total stockholders' equity	Total stockholders' equity	1,171.5		1,761.4		Total stockholders' equity	692.5		856.5
Noncontrolling interest	Noncontrolling interest	0.5		0.5		Noncontrolling interest	0.5		0.5
Total equity	Total equity	1,172.0		1,761.9		Total equity	693.0		857.0
Total liabilities and equity	Total liabilities and equity	$	6,604.4	$	7,606.0	Total liabilities and equity	$	7,867.8	$	8,383.9

See notes to condensed consolidated financial statements (unaudited)

Table of Contents

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(unaudited)


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

		Shares	Amount								Total							Shares					Amount								Total
		($ in millions, except share data)																		($ in millions, except share data)
Balance — December 31, 2019		104,882,379	$	1.1			$	1,125.0				$	(2,456.8)	$	(109.2)	$	3,201.3				$	1,761.4
Balance — December 31, 2020																			Balance — December 31, 2020	105,542,162			$	1.1			$	1,139.8			$	(2,456.7)			$	(154.1)			$	2,326.4			$	856.5
Net loss	Net loss	—	—		—				—			—		(418.9)		(418.9)			Net loss	—			—		—				—				—				(171.6)				(171.6)

Dividends Declared(a)	Dividends Declared(a)	—	—		—				—			—		(2.4)		(2.4)			Dividends Declared(a)	—			—		—				—				—				(1.1)				(1.1)
Employee equity awards	Employee equity awards	972,614	0		13.3				—			—		—		13.3			Employee equity awards	30,024			0		6.5				—				—				—				6.5
Stock forfeitures	Stock forfeitures	(87,903)	0		—				—			—		—		—			Stock forfeitures	(94,820)			0		—				—				—				—				—
Net shares settled	Net shares settled	(197,918)	0		(13.7)				—			—		—		(13.7)			Net shares settled	(77,954)			0		(3.3)				—				—				—				(3.3)
ESPP shares issued	ESPP shares issued	55,656	—		1.3											1.3			ESPP shares issued	29,500			—		1.4																1.4
SERP shares issued																			SERP shares issued	9,198			—		0				—				—				—				0

Treasury shares		—	—		—				0.1			—		—		0.1
Other comprehensive loss		—	—		—				—			(72.1)		—		(72.1)
Balance — July 2, 2020		105,624,828	$	1.1	$	1,125.9			$	(2,456.7)		$	(181.3)	$	2,780.0	$	1,269.0
Net loss		—	—		—				—			—		(155.5)		(155.5)
Dividends Declared(a)		—	—		—				—			—		(1.0)		(1.0)
Employee equity awards		7,657	0		6.3				—			—		—		6.3
Stock forfeitures		(30,906)	0		—				—			—		—		—
Net shares settled		(9,507)	0		(0.3)				—			—		—		(0.3)
ESPP shares issued		68,810	—		1.3				—			—		—		1.3
Other comprehensive gain																			Other comprehensive gain	—			—		—				—				4.1				—				4.1
Balance — April 1, 2021																			Balance — April 1, 2021	105,438,110			$	1.1	$	1,144.4			$	(2,456.7)			$	(150.0)			$	2,153.7			$	692.5

Other comprehensive gain		—	—		—				—			51.7		—		51.7
Balance — October 1, 2020		105,660,882	$	1.1	$	1,133.2			$	(2,456.7)		$	(129.6)	$	2,623.5	$	1,171.5


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

		Shares	Amount								Total							Shares					Amount								Total
		($ in millions, except share data)																		($ in millions, except share data)
Balance — December 31, 2018		105,461,817	$	1.1			$	1,100.9				$	(2,381.0)	$	(196.6)	$	2,713.2				$	1,237.6
Net income		—	—		—				—			—		331.1		331.1
Adoption of ASU 2018-02		—	—		—				—			(8.3)		8.3		0
Balance — December 31, 2019																			Balance — December 31, 2019	104,882,379			$	1.1			$	1,125.0			$	(2,456.8)			$	(109.2)			$	3,201.3			$	1,761.4
Net loss																			Net loss	—			—		—				—				—				(163.0)				(163.0)

Dividends Declared(a)	Dividends Declared(a)	—	—		—				—			—		(25.3)		(25.3)			Dividends Declared(a)	—			—		—				—				—				(1.4)				(1.4)
Employee equity awards	Employee equity awards	392,933	0		15.1				—			—		—		15.1			Employee equity awards	736,078			0		12.3				—				—				—				12.3
Stock forfeitures	Stock forfeitures	(97,154)	0		—				—			—		—		—			Stock forfeitures	(83,998)			0		—				—				—				—				—
Net shares settled	Net shares settled	(126,808)	0		(11.8)				—			—		—		(11.8)			Net shares settled	(190,581)			0		(13.0)				—				—				—				(13.0)
ESPP shares issued	ESPP shares issued	14,617	—		1.3				—			—		—		1.3			ESPP shares issued	55,977			—		1.3				—				—				—				1.3
SERP shares issued		6,214	—		—				—			—		—		—
Treasury shares		(796,409)	(0.1)		—				(75.0)			—		—		(75.1)

Other comprehensive loss	Other comprehensive loss	—	—		—				—			(4.7)		—		(4.7)			Other comprehensive loss	—			—		—				—				(141.7)				—				(141.7)
Balance — June 27, 2019		104,855,210	$	1.0	$	1,105.5			$	(2,456.0)		$	(209.6)	$	3,027.3	$	1,468.2
Net income		—	—		—				—			—		131.3		131.3
Dividends Declared(a)		—	—		—				—			—		(12.4)		(12.4)
Employee equity awards		37,841	0		8.2				—			—		—		8.2
Stock forfeitures		(2,568)	0		—				—			—		—		—
Net shares settled		(2,432)	0		(0.3)				—			—		—		(0.3)
Balance — April 2, 2020																			Balance — April 2, 2020	105,399,855			$	1.1	$	1,125.6			$	(2,456.8)			$	(250.9)			$	3,036.9			$	1,455.9

Other comprehensive gain		—	—		—				—			21.5		—		21.5
Balance — September 26, 2019		104,888,051	$	1.0	$	1,113.4			$	(2,456.0)		$	(188.1)	$	3,146.2	$	1,616.5

(a) Cash dividends declared per common share were $0.01 for the three months ended April ~~2, 2020, $0.01 for the three months ended July 2, 2020, and $0.01 for the three months ended October~~ 1, ~~2020.~~2021. Cash dividends declared per common share were ~~$0.12~~$0.01 for the three months ended ~~March 28, 2019, $0.12 for the three months ended June 27, 2019, and $0.12 for the three months ended September 26, 2019.~~April 2, 2020.

Table of Contents

Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


		For the Nine Months Ended					For the Three Months Ended
		October 1, 2020		September 26, 2019			April 1, 2021		April 2, 2020
Operating activities	Operating activities	($ in millions)				Operating activities	($ in millions)
Net (loss) income		$	(574.4)	$	462.4
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Net loss						Net loss	$	(171.6)	$	(163.0)
Adjustments to reconcile net loss to net cash used in operating activities						Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	Depreciation and amortization expense	202.5		187.0		Depreciation and amortization expense	80.3		67.3
Amortization of deferred financing fees	Amortization of deferred financing fees	12.6		2.6		Amortization of deferred financing fees	2.3		1.9
Accretion of customer supply agreement	Accretion of customer supply agreement	1.6		3.3		Accretion of customer supply agreement	0.6		1.1
Employee stock compensation expense	Employee stock compensation expense	17.1		22.6		Employee stock compensation expense	6.6		9.8
Loss from derivative instruments		0		8.1
Gain from foreign currency transactions		(1.1)		17.2
Gain from derivative instruments						Gain from derivative instruments	(0.1)		0
Loss (gain) from foreign currency transactions						Loss (gain) from foreign currency transactions	7.2		(6.5)
Loss on disposition of assets	Loss on disposition of assets	24.9		0.7		Loss on disposition of assets	0.3		0.2
Deferred taxes	Deferred taxes	(34.3)		29.4		Deferred taxes	(0.9)		(61.5)
Long term income tax payable						Long term income tax payable	(1.9)		0
Pension and other post-retirement benefits, net	Pension and other post-retirement benefits, net	57.2		(9.7)		Pension and other post-retirement benefits, net	(15.2)		59.9
Grant liability amortization	Grant liability amortization	(3.2)		(13.8)		Grant liability amortization	(0.4)		(2.4)
Equity in net loss of affiliate	Equity in net loss of affiliate	3.8		0		Equity in net loss of affiliate	0.4		0
Forward loss provision	Forward loss provision	226.3		(7.5)		Forward loss provision	(3.5)		(9.0)

Changes in assets and liabilities	Changes in assets and liabilities					Changes in assets and liabilities
Accounts receivable, net	Accounts receivable, net	169.3		(167.8)		Accounts receivable, net	(38.3)		36.1
Inventory, net	Inventory, net	(66.1)		(3.3)		Inventory, net	23.1		(59.4)
Contract assets	Contract assets	200.4		(67.5)		Contract assets	5.6		144.5
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(530.6)		149.3		Accounts payable and accrued liabilities	(6.4)		(278.6)
Profit sharing/deferred compensation	Profit sharing/deferred compensation	(46.2)		(12.2)		Profit sharing/deferred compensation	(42.6)		(66.7)
Advance payments	Advance payments	(19.9)		120.8		Advance payments	(0.8)		(19.8)
Income taxes receivable/payable	Income taxes receivable/payable	(252.6)		4.9		Income taxes receivable/payable	3.6		(32.8)
Contract liabilities	Contract liabilities	(44.1)		(16.7)		Contract liabilities	(1.7)		39.1
Deferred revenue and other deferred credits		2.0		6.2

Other	Other	42.0		2.6		Other	(16.8)		8.5
Net cash (used in) provided by operating activities		(612.8)		718.6
Net cash used in operating activities						Net cash used in operating activities	(170.2)		(331.3)
Investing activities	Investing activities					Investing activities
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(70.4)		(118.8)		Purchase of property, plant and equipment	(27.6)		(31.0)

Equity in assets of affiliates						Equity in assets of affiliates	0		1.5
Acquisition, net of cash acquired	Acquisition, net of cash acquired	(117.9)		0		Acquisition, net of cash acquired	0		(118.1)
Other	Other	4.9		0.1		Other	1.2		0.3
Net cash used in investing activities	Net cash used in investing activities	(183.4)		(118.7)		Net cash used in investing activities	(26.4)		(147.3)
Financing activities	Financing activities					Financing activities
Proceeds from issuance of debt		1,200.0		250.0
Proceeds from revolving credit facility		0		100.0

Customer financing	Customer financing	10.0		0		Customer financing	(2.5)		10.0
Principal payments of debt	Principal payments of debt	(22.7)		(8.5)		Principal payments of debt	(9.8)		(7.3)
Payments on term loans	Payments on term loans	(439.7)		(5.2)		Payments on term loans	(1.0)		(5.7)
Payments on revolving credit facility		(800.0)		(100.0)
Payments on floating rate notes						Payments on floating rate notes	(300.0)		0

Taxes paid related to net share settlement awards	Taxes paid related to net share settlement awards	(14.0)		(12.1)		Taxes paid related to net share settlement awards	(3.3)		(13.1)
Proceeds from issuance of ESPP stock	Proceeds from issuance of ESPP stock	2.6		1.3		Proceeds from issuance of ESPP stock	1.4		1.3
Debt issuance and financing costs	Debt issuance and financing costs	(27.6)		0		Debt issuance and financing costs	0		(4.8)
Purchase of treasury stock		0.1		(75.0)

Dividends paid	Dividends paid	(14.4)		(37.8)		Dividends paid	(1.1)		(12.4)
Other	Other	0.1		0.8		Other	(0.1)		0
Net cash (used in ) provided by financing activities		(105.6)		113.5
Net cash used in financing activities						Net cash used in financing activities	(316.4)		(32.0)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(3.3)		(13.5)		Effect of exchange rate changes on cash and cash equivalents	(1.0)		(6.2)
Net (decrease) increase in cash, cash equivalents, and restricted cash for the period		(905.1)		699.9
Net decrease in cash, cash equivalents, and restricted cash for the period						Net decrease in cash, cash equivalents, and restricted cash for the period	(514.0)		(516.8)
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	2,367.2		794.1		Cash, cash equivalents, and restricted cash, beginning of period	1,893.1		2,367.2
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	1,462.1	$	1,494.0	Cash, cash equivalents, and restricted cash, end of period	$	1,379.1	$	1,850.4

Table of Contents


Reconciliation of Cash, Cash Equivalents, and Restricted Cash:	Reconciliation of Cash, Cash Equivalents, and Restricted Cash:					Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
		For the Nine Months Ended					For the Three Months Ended
		October 1, 2020		September 26, 2019			April 1, 2021		April 2, 2020
Cash and cash equivalents, beginning of the period	Cash and cash equivalents, beginning of the period	$	2,350.5	$	773.6	Cash and cash equivalents, beginning of the period	$	1,873.3	$	2,350.5
Restricted cash, short-term, beginning of the period	Restricted cash, short-term, beginning of the period	0.3		0.3		Restricted cash, short-term, beginning of the period	0.3		0.3
Restricted cash, long-term, beginning of the period	Restricted cash, long-term, beginning of the period	16.4		20.2		Restricted cash, long-term, beginning of the period	19.5		16.4
Cash, cash equivalents, and restricted cash, beginning of the period	Cash, cash equivalents, and restricted cash, beginning of the period	$	2,367.2	$	794.1	Cash, cash equivalents, and restricted cash, beginning of the period	$	1,893.1	$	2,367.2

Cash and cash equivalents, end of the period	Cash and cash equivalents, end of the period	$	1,441.3	$	1,477.3	Cash and cash equivalents, end of the period	$	1,359.3	$	1,833.6
Restricted cash, short-term, end of the period	Restricted cash, short-term, end of the period	1.3		0.3		Restricted cash, short-term, end of the period	0.3		0.3
Restricted cash, long-term, end of the period	Restricted cash, long-term, end of the period	19.5		16.4		Restricted cash, long-term, end of the period	19.5		16.5
Cash, cash equivalents, and restricted cash, end of the period	Cash, cash equivalents, and restricted cash, end of the period	$	1,462.1	$	1,494.0	Cash, cash equivalents, and restricted cash, end of the period	$	1,379.1	$	1,850.4

See notes to condensed consolidated financial statements (unaudited)

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM 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, 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 “Spirit Holdings” or ~~the “Company”)~~“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 ~~subsidiary, Spirit AeroSystems, Inc. (“Spirit”).~~subsidiaries including Spirit. The Company's headquarters are in Wichita, Kansas, with manufacturing and assembly facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita, Kansas; Kinston, North Carolina; Subang, Malaysia; Saint-Nazaire, France; San Antonio, Texas; Biddeford, Maine; Casablanca, Morocco; Belfast, Northern Ireland; and ~~Biddeford, Maine (not including new facilities acquired in connection with our acquisition of select assets from Bombardier Inc. and affiliates, as further described in Note 26,~~ ~~Subsequent Events). The Company~~Dallas, Texas. Spirit has previously announced site consolidation activities, including the McAlester, Oklahoma and San Antonio, Texas sites. The work transfer and closure activities for these sites ~~will~~are planned to primarily take place over the ~~next several months.~~first half of 2021.

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 ~~entities~~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 ~~U.K.~~subsidiaries in Prestwick, Scotland and ~~Malaysian subsidiaries~~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~~three months ended ~~October~~April 1, ~~2020,~~2021, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

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 ~~2019~~2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February ~~28, 2020~~25, 2021 (the ~~“2019~~“2020 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 ~~2019~~2020 Form 10-K. ~~The single update to the significant accounting policies described in the 2019 Form 10-K is related to the impact of adopting ASU No. 2016-13,~~ ~~Financial Instruments - Credit losses (Topic 326) (“ASU 2016-13”) and is described in detail in Note 2,~~ ~~Adoption of New Accounting Standards, and Note 5,~~ ~~Accounts Receivable and Allowance for Credit Losses~~.

~~Recent Developments~~COVID-19

~~B737MAX. In March 2019,~~During the B737 MAX fleet was grounded in the U.S. and internationally following the 2018 and 2019 accidents involving two B737 MAX aircraft. To date, the fleet remains grounded and the recertification process is continuing. The B737 MAX program is a critical program to the Company and for the twelvethree months ended ~~December 31, 2019, approximately 53% of~~April 1, 2021, the ~~Company’s net revenues were generated from sales of components~~COVID-19 pandemic continued to ~~The Boeing Company (“Boeing”) for the B737 aircraft. Due to the grounding and the impacts of COVID-19~~have a significant negative impact on the aviation industry, ~~the Company has experienced significant deterioration in its B737 MAX production rates that have reduced the Company’s revenues. A summary of the production rate changes is below.~~

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €,~~our customers, and ~~RM in millions other than per share amounts)~~

•On April 12, 2019, Boeing and the Company executed a Memorandum of Agreement (the “2019 MOA”) providing that the Company was to maintain its delivery rate of 52 shipsets per month with respect to the B737 MAX. Previously, the Company was expecting to increase production to a rate of 57 shipsets per month in 2019;

•On December 19, 2019, Boeing directed the Company to stop all B737 MAX deliveries to Boeing effective January 1, 2020. Accordingly, Spirit suspended all B737 MAX production beginning on January 1, 2020;

•On February 6, 2020, Boeing and Spirit entered into a Memorandum of Agreement (the “2020 MOA”) largely superseding the 2019 MOA and providing for Spirit to deliver to Boeing 216 B737 MAX shipsets in 2020;

•~~On May 4, 2020, Boeing and the Company agreed that Spirit would deliver 125 B737 MAX shipsets to Boeing in 2020; and~~

•~~On June 19, 2020, Boeing directed Spirit to reduce its 2020 B737 production plan from 125 to 72 shipsets.~~

~~COVID-19~~. The COVID-19 pandemic and its effects (including travel advisories, shutdowns or shelter-in-place mandates or recommendations, restrictive protocols, and canceled events) have caused a significant decline in the demand for air travel and, as a result, the Company has experienced a significant deterioration in its revenues during the nine months ended October 1, 2020, resulting in a net loss of $574.4 for that period.our business globally. The length of the COVID-19 pandemic and its impact on the aviation industry and the Company’s operational and financial performance isremains uncertain and outside of the Company’s control. The Company expects the pandemic and its effects to continue to have a significant negative impact on its business for the duration of the pandemic and during the subsequent economic recovery, which could be for an extended period of time.

~~The Company has taken several actions to reduce costs, increase liquidity and strengthen its financial position in light~~B737 MAX

Boeing's deliveries of ~~the economic impact of the COVID-19 pandemic, and~~ the B737 MAX ~~grounding and related production changes including~~resumed in the ~~following (certain capitalized terms are defined further below):~~

•~~Reduced pay for all executives by 20 percent until further notice;~~

•~~Reduced 2020-2021 term non-employee director compensation by 15 percent;~~

•~~Reduced planned capital expenditures and operating expenses;~~

•~~Suspended share repurchase program;~~

•~~Reduced quarterly dividends to one penny per share;~~

•~~Initiated multiple production worker furloughs;~~

•~~Reduced pay for all U.S based, salaried employees and implemented a correlating four-day work week, which remains~~fourth quarter of 2020 when the FAA rescinded the order that grounded B737 MAX aircraft in ~~place for its salaried workforce at its Wichita, Kansas facility until further notice;~~

•~~Reduced~~ ~~~6,600~~ ~~employees globally including voluntary packages;~~

•~~Amended and eventually terminated our 2018 Credit Agreement and put into place current Credit Agreement for $400 million;~~

•~~Issued $1.2 billion in Second Lien 2025 Notes and $500 million in First Lien 2025 Notes; and~~

•Elected to defer the payment of $21.4 in employer payroll taxes incurred through October 1, 2020, as provided by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), of which 50% is required to be deposited by December 2021 and the remaining 50% by December 2022 and accrued a pre-tax benefit related to the Employee Retention Credit related to paid employee furloughs of approximately $13.6. In addition, as of October 1, 2020 the Company has recorded a deferral of $29.4 of VAT payments until March 2022 under the United ~~Kingdom deferral scheme.~~

~~The substantial reduction in our production rates for 2020 has significantly reduced revenue received in connection with~~States. Regulators from Brazil, Canada, the ~~B737 MAX program~~EU and presents challenges to our liquidity. These challenges are exacerbated by the COVID-19 pandemic as other programs that mitigate the strain of the lower B737 MAX production rate are now suspended or producing at lower rates. The COVID-19 and B737 MAX situations are largely out of our control. If Boeing is unable to return the B737 MAX to service in one or more jurisdictions, begin timely deliveries to customers, or if our customers' production levels across our programs are reduced beyond current expectations due to depressed demand relating to COVID-19 or otherwise, our business, financial condition, results of operations and cash flows could be materially adversely impacted.

~~2. Adoption of New Accounting Standards~~

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, (“ASU 2016-13”), which requires the immediate recognition of management's estimates of current expected credit losses. ASU 2016-13 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2019. Early adoption is permittedU.K. have taken similar actions

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~after fiscal years beginning December 15, 2018. The Company adopted ASU 2016-13 as of January~~to unground the B737 MAX and permit return to service, and according to Boeing, other global regulatory approvals/certifications are expected in 2021. During the three month period ended April 1, ~~2020 by means of the modified retrospective method and required cumulative-effect adjustment~~2021, Boeing continued to the opening retained earnings as of that date. The cumulative-effect adjustment to the opening retained earnings as of January 1, 2020 was not material. All credit losses in accordance with ASU 2016-13 were on receivables and/or contract assets arising from the Company’s contracts with customers including the cumulative-effect adjustment to the opening retained earnings. There is no significant impact to our operating resultsreceive orders for the ~~current period due to ASU 2016-13.~~B737MAX, and several air carriers resumed flights on the aircraft.

2. Adoption of New Accounting Standards

In ~~January 2017,~~December 2019, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350),~~2019-12, Simplifying the ~~Test~~Accounting for ~~Goodwill Impairment~~Income Taxes ("ASU 2019-12”) which modifies FASB Accounting Standards Codification (“ASC”) 740 to simplify the accounting for income taxes. ASU 2017-04”), which eliminates Step 2 of the goodwill impairment test and the qualitative assessment for any reporting unit with a zero or negative carrying amount. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-042019-12 is effective for ~~annual or any interim goodwill impairment tests in~~ fiscal years beginning after December 15, ~~2019.~~2020. The adoption of ASU 2019-12 did not have ana material impact on our financial ~~statements.~~position or results of operations.

In October 2020, the FASB issued ASU 2020-09, (“ASU 2020-09”), which revises certain SEC paragraphs of the ASC to reflect, as appropriate, the amended financial statement disclosure requirements in SEC Release 33-10762, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities. There is no impact to our financial position or results of operations due to the adoption of ASU 2020-09.

3. New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which 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. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. An entity may elect to apply ASU 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Simplifying the Accounting for Income Taxes~~ ("ASU 2019-12”) which modifies FASB Accounting Standards Codification 740 to simplify the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

~~In August 2018, the FASB issued ASU No. 2018-14,~~ ~~Compensation-Retirement Benefits-Defined Benefit Plans-General(Topic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans~~ (“ASU 2018-14”), which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020, and for interim periods therein with early adoption permitted. Adoption on a retrospective basis for all periods presented is required. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

4. 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. When adjustments in estimated total consideration or

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

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. The full extent to which the effects of the COVID-19 pandemic will impact our business, operations, results of operations and financial condition depends on future developments that are inherently uncertain. We have made reasonable estimates and judgments of the COVID-19 pandemic’s impact within our financial statements and there may be changes to those estimates in future periods related to changes in potential production volumes or timing of those production volumes.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

During the ~~third~~first quarter ended ~~October~~April 1, ~~2020,~~2021, the Company recognized unfavorable changes in estimates of ~~$123.8 million,~~$78.2, which included net forward charges of ~~$128.4 million,~~$72.4, and ~~favorable~~unfavorable cumulative catch-up adjustments related to periods prior to the ~~third~~first quarter of ~~2020~~2021 of ~~$4.6 million.~~

The Company provided previous guidance that disclosed an estimated forecasted forward loss in the third quarter ended October 1, 2020 on the B787 program of $25-$35 million and the A350 program of $13-$20 million based upon data available as of July 2, 2020. Throughout the quarter ended October 1, 2020, the demand for wide body aircraft continued to evolve as a result of uncertainty regarding timing of resolution of the global pandemic. The Company evaluated additional schedule and production demand information received from our customers, market and analyst data including forecasted demand for wide body aircraft, and as a result, adjusted the expected results on the B787 and A350 programs to include a lower rate of production for a longer duration compared to its previous forecast. This resulted in incremental fixed cost absorption on the B787 and A350 programs and as a result, the forward loss recognized was $64.7 million on the B787 program and $44.9 million on the A350 program for the quarter ended October 1, 2020.

Additionally, Boeing announced that the combined production rate on the B777/777X program would decrease to 2 APM beginning in 2021. The Company previously disclosed this production volume decrease on the B777/777X program would impact other commercial programs across the Company, and may result in additional forward losses.$5.8. The forward losses ~~for~~in the first quarter ~~ended October 1, 2020 for programs other than~~relate primarily to the B767 program due to cost performance, B787 program primarily driven by engineering analysis and the estimated cost of re-work, and A350 ~~were $18.8.~~

program primarily driven by schedule changes and costs for tooling and build process quality improvements.

Changes in estimates are summarized below:


		For the Three Months Ended				For the Nine Months Ended					For the Three Months Ended
Changes in Estimates	Changes in Estimates	October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019		Changes in Estimates		April 1, 2021		April 2, 2020
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment	(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment									(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Fuselage	Fuselage	$	8.8	$	(14.4)	$	(18.9)	$	(2.0)	Fuselage		$	1.9	$	(4.0)
Propulsion	Propulsion	(4.6)		1.8		(8.6)		(1.5)		Propulsion		(5.6)		(1.5)
Wing	Wing	0.4		(0.4)		(3.1)		1.7		Wing		(2.1)		(2.7)

Total (Unfavorable) Favorable Cumulative Catch-up Adjustment	Total (Unfavorable) Favorable Cumulative Catch-up Adjustment	$	4.6	$	(13.0)	$	(30.6)	$	(1.8)	Total (Unfavorable) Favorable Cumulative Catch-up Adjustment		$	(5.8)	$	(8.2)

Changes in Estimates on Loss Programs (Forward Loss) by Segment	Changes in Estimates on Loss Programs (Forward Loss) by Segment									Changes in Estimates on Loss Programs (Forward Loss) by Segment
Fuselage	Fuselage	$	(92.0)	$	(18.8)	$	(260.3)	$	(13.8)	Fuselage		$	(55.1)	$	(13.2)
Propulsion	Propulsion	(14.9)		(4.0)		(34.2)		(3.1)		Propulsion		(4.7)		(3.1)
Wing	Wing	(21.5)		(6.0)		(47.7)		(4.9)		Wing		(12.6)		(3.4)
Total Changes in Estimates (Forward Loss) on Loss Programs	Total Changes in Estimates (Forward Loss) on Loss Programs	$	(128.4)	$	(28.8)	$	(342.2)	$	(21.8)	Total Changes in Estimates (Forward Loss) on Loss Programs		$	(72.4)	$	(19.7)

Total Change in Estimate	Total Change in Estimate	$	(123.8)	$	(41.8)	$	(372.8)	$	(23.6)	Total Change in Estimate		$	(78.2)	$	(27.9)
EPS Impact (diluted per share based upon 2020 forecasted effective tax rate)		$	(0.77)	$	(0.31)	$	(2.33)	$	(0.18)
EPS Impact (diluted per share based upon 2021 forecasted effective tax rate)										EPS Impact (diluted per share based upon 2021 forecasted effective tax rate)		$	(0.74)	$	(0.17)

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

5. 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 balance sheet. Prior periods allowance for credit losses were based on legacy GAAP. Beginning January 1, 2020, management assesses and records an allowance for credit losses using a current expected credit loss ("CECL") model. See also Allowance for Credit Losses, below.

Accounts receivable, net consists of the following:


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Trade receivables	Trade receivables	$	366.9	$	515.2	Trade receivables	$	498.8	$	458.9
Other	Other	26.5		32.6		Other	33.4		31.1
Less: allowance for doubtful accounts		(4.6)		(1.4)
Less: allowance for credit losses						Less: allowance for credit losses	(6.4)		(5.6)
Accounts receivable, net	Accounts receivable, net	$	388.8	$	546.4	Accounts receivable, net	$	525.8	$	484.4

The Company has two agreements (through its subsidiaries) to sell, on a revolving basis, certain trade accounts receivable balances with Boeing and Airbus to third party financial institutions. These programs were primarily entered into as a result of Boeing and Airbus seeking payment term extensions with the Company and they continue to allow ~~Spirit~~the Company to monetize the receivables prior to their payment date, subject to payment of a discount. No guarantees are delivered under the agreements. ~~Our~~The Company's ability to continue using such agreements is primarily dependent upon the strength of Boeing’s and Airbus’s financial condition. Transfers under this agreement are accounted for as sales of receivables resulting in the receivables being derecognized from the Company's balance sheet. For the ~~nine~~three months ended ~~October~~April 1, ~~2020, $1,516.3~~2021, $455.1 of accounts receivable ~~have been~~were sold via these arrangements. The proceeds from these sales of receivables are included in cash from operating activities in the Condensed Consolidated Statement of Cash Flows. The recorded net loss on sale of receivables is ~~$6.7~~$1.6 for the ~~nine~~three months ended ~~October~~April 1, ~~2020~~2021 and is included in Other income and expense. See Note 21, Other (Expense) Income, Net.

Allowance for Credit Losses

~~Beginning January 1, 2020, management~~Management assesses and records an allowance for credit losses on financial assets within the scope of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the ~~CECL~~Current Expected Credit Losses (“CECL”) model. Prior periods allowance for credit losses were based on a review of outstanding receivables that are charged off against the allowance after the potential for recovery is considered remote in accordance with legacy GAAP. The amount necessary to adjust the allowance for credit losses to management’s current estimate, as of the reporting date, on these ~~assets~~assets is recorded in net income as credit loss expense. All credit losses reported in accordance with ASU 2016-13 were on trade receivables and/or contract assets arising from the Company’s contracts with customers.

In determining the appropriate methodology to use within the CECL model for receivables and contract assets arising from the Company’s contracts with customers, the Company considered the risk characteristics of the applicable assets. Spirit segregated the trade receivables and contract assets into “pools” of assets at the major customer level. The Company's assessment was based on similarity of risk characteristics shared by these pool of assets. Management observed that risks for collectability, with regard to the trade receivables and contract assets resulting from contracts with customers include: macro level economic conditions that impact all of Spirit’s customers, macro level market conditions that could impact Spirit’s customers in certain aircraft categories, certain customer specific market conditions, certain customer specific economic conditions, and certain customer specific administrative conditions.

The Company selected a loss-rate method for the CECL model, based on the relationship between historical write-offs of receivables and the underlying sales by major customer. Utilizing this model, a historical loss-rate is applied against the amortized cost of applicable assets, at the time the asset is established. The loss rate reflects the Company’s current estimate of the risk of loss (even when that risk is remote) over the expected remaining contractual life of the assets. The Company's policy is to deduct write-offs from the allowance for credit losses account in the period in which the financial assets are deemed uncollectible.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

The changes to the allowance for credit losses and related credit loss expense reported for the current period were solely based on the results of the CECL model. During the ~~nine~~three months ended ~~October~~April 1, 2020, worsening economic conditions related to the COVID-19 pandemic influenced management’s current estimate of expected credit losses. In particular, trade accounts receivables from certain suppliers and third party Global Customer Support & Services ("GCS&S") customers are now included in the historical loss rate method CECL model at a higher loss-rate than originally estimated. This change did not have a material impact on reported results for the three or nine month periods ended October 1, 2020. Other than this change,2021, 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 CECL 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.

6. 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 ~~October~~April 1, ~~2020~~2021 or the period ended ~~September 26, 2019.~~April 2, 2020. See also Note 5, Accounts Receivable and Allowance for Credit Losses.

Contract liabilities are established for cash received ~~that is~~ 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.


		October 1, 2020		December 31, 2019		Change			April 1, 2021		December 31, 2020		Change
Contract assets	Contract assets	$	337.7	$	534.7	$	(197.0)	Contract assets	$	367.8	$	372.8	$	(5.0)
Contract liabilities	Contract liabilities	(472.6)		(514.6)		42.0		Contract liabilities	(467.8)		(469.6)		1.8
Net contract assets (liabilities)	Net contract assets (liabilities)	$	(134.9)	$	20.1	$	(155.0)	Net contract assets (liabilities)	$	(100.0)	$	(96.8)	$	(3.2)

For the period ended ~~October~~April 1, ~~2020,~~2021, the decrease in contract assets reflects the net impact of less ~~overtime~~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 ~~$91.0~~$62.0 of revenue that was included in the contract liability balance at the beginning of the period.


		September 26, 2019		December 31, 2018		Change			April 2, 2020		December 31, 2019		Change
Contract assets	Contract assets	$	588.7	$	523.5	$	65.2	Contract assets	$	391.3	$	534.7	$	(143.4)
Contract liabilities	Contract liabilities	(510.9)		(527.7)		16.8		Contract liabilities	(555.8)		(514.6)		(41.2)
Net contract assets (liabilities)	Net contract assets (liabilities)	$	77.8	$	(4.2)	$	82.0	Net contract assets (liabilities)	$	(164.5)	$	20.1	$	(184.6)

For the period ended ~~September 26, 2019,~~April 2, 2020, the ~~increase~~decrease in contract assets reflects the net impact of ~~additional revenues recognized~~less over time revenue recognition in ~~excess of~~relation to billed revenues during the period. The ~~decrease~~increase in contract liabilities reflects the net impact of ~~less~~additional deferred revenues recorded in excess of revenue recognized during the period. The Company recognized ~~$109.7~~$33.1 of revenue that was included in the contract liability balance at the beginning of the period.

7. 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

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

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 ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019:~~April 2, 2020:

For the Three Months Ended For the Nine
Months Ended
Revenue October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
Contracts with performance obligations satisfied over time $ 510.6 $ 1,466.9 $ 1,511.9 $ 4,491.8
Contracts with performance obligations satisfied at a point in time 295.7 453.0 1,016.3 1,412.0
Total Revenue $ 806.3 $ 1,919.9 $ 2,528.2 $ 5,903.8

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)


	For the Three Months Ended
Revenue		April 1, 2021		April 2, 2020
Contracts with performance obligations satisfied over time		$	649.2	$	605.9
Contracts with performance obligations satisfied at a point in time		251.6		471.4
Total Revenue		$	900.8	$	1,077.3

The following table disaggregates revenue by major customer:


		For the Three Months Ended				For the Nine Months Ended					For the Three Months Ended
Customer	Customer	October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019		Customer		April 1, 2021		April 2, 2020
Boeing	Boeing	$	493.8	$	1,542.0	$	1,539.9	$	4,705.1	Boeing		$	467.9	$	676.1
Airbus	Airbus	160.1		284.1		575.3		934.0		Airbus		231.6		287.2
Other	Other	152.4		93.8		413.0		264.7		Other		201.3		114.0
Total Revenue	Total Revenue	$	806.3	$	1,919.9	$	2,528.2	$	5,903.8	Total Revenue		$	900.8	$	1,077.3

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


		For the Three Months Ended				For the Nine Months Ended					For the Three Months Ended
Location	Location	October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019		Location		April 1, 2021		April 2, 2020
United States	United States	$	642.0	$	1,620.6	$	1,936.4	$	4,935.8	United States		$	624.2	$	782.5
International	International									International
United Kingdom	United Kingdom	103.6		177.4		358.2		577.6		United Kingdom		136.3		184.1
Other	Other	60.7		121.9		233.6		390.4		Other		140.3		110.7
Total International	Total International	164.3		299.3		591.8		968.0		Total International		276.6		294.8
Total Revenue	Total Revenue	$	806.3	$	1,919.9	$	2,528.2	$	5,903.8	Total Revenue		$	900.8	$	1,077.3

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 2020 2021 2022 2023 and After
Unsatisfied performance obligations $ 579.2 $ 2,755.3 $ 3,707.3 $ 7,466.6


	Remaining in 2021		2022		2023		2024 and After
Unsatisfied performance obligations	$	2,115.3	$	3,317.2	$	4,310.2	$	3,258.0

8. 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 preproduction 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

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

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.

October 1,
2020 December 31,
2019
Raw materials $ 304.0 $ 253.1
Work-in-process(1)
838.3 822.8
Finished goods 14.2 14.5
Product inventory 1,156.5 1,090.4
Capitalized pre-production 26.8 28.4
Total inventory, net $ 1,183.3 $ 1,118.8

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)


	April 1, 2021		December 31, 2020
Raw materials	$	331.8	$	337.3
Work-in-process(1)	989.5		1,000.6
Finished goods	48.2		58.1
Product inventory	1,369.5		1,396.0
Capitalized pre-production	26.3		26.3
Total inventory, net	$	1,395.8	$	1,422.3

(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 using the input method. For the periods ended ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019,~~2020, work-in-process inventory includes ~~$184.9~~$365.0 and ~~$157.2,~~$351.2, respectively, of costs incurred in anticipation of specific contracts and no impairments were recorded in the period.

Product inventory, summarized in the table above, is shown net of valuation reserves of ~~$49.2~~$56.7 and ~~$39.0~~$56.8 as of ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 month periods~~months ended ~~October~~April 1, ~~2020~~2021 includes period expense of ~~$72.6 and $228.8, respectively, of~~$67.6 for excess capacity production costs related to temporary B737 MAX, A220 and A320 production schedule changes. Cost of sales also includes abnormal costs related to temporary workforce adjustments as a result of COVID-19 production pause, net of the U.S. employee retention credit and U.K. government subsidies for the three ~~and nine month periods~~months ended ~~October~~April 1, ~~2020~~2021 of ~~$(10.9) and $33.8, respectively.~~$2.1.

9. Property, Plant and Equipment, net

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


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Land	Land	$	17.6	$	15.9	Land	$	30.9	$	30.8
Buildings (including improvements)	Buildings (including improvements)	937.2		924.0		Buildings (including improvements)	1,196.5		1,166.7
Machinery and equipment	Machinery and equipment	1,973.2		1,941.5		Machinery and equipment	2,128.0		2,120.5
Tooling	Tooling	1,025.9		1,047.4		Tooling	1,042.2		1,036.1
Capitalized software	Capitalized software	275.3		277.8		Capitalized software	282.6		282.5
Construction-in-progress	Construction-in-progress	196.1		192.8		Construction-in-progress	204.9		220.0
Total	Total	4,425.3		4,399.4		Total	4,885.1		4,856.6
Less: accumulated depreciation	Less: accumulated depreciation	(2,277.9)		(2,127.7)		Less: accumulated depreciation	(2,428.1)		(2,352.8)
Property, plant and equipment, net	Property, plant and equipment, net	$	2,147.4	$	2,271.7	Property, plant and equipment, net	$	2,457.0	$	2,503.8

Capitalized interest was ~~$1.3~~$1.4 and ~~$1.5~~$1.2 for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019, respectively, and $3.8 and $5.1 for the nine months ended October 1,~~April 2, 2020, ~~and September 26, 2019,~~ respectively. Repair and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs of ~~$25.7~~$34.4 and ~~$32.9~~$30.5 for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019, respectively, and $82.7 and $102.7 for the nine month ended October 1,~~April 2, 2020, ~~and September 26, 2019,~~ respectively.

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

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 $4.1 and $4.3 for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019, respectively, and $12.6 and $13.3 for the nine month ended October 1,~~April 2, 2020, ~~and September 26, 2019,~~ respectively.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

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. During the nine month period ended October 1, 2020, the Company disposed of long-lived assets with a net book value of $19.2 and $3.7 related to production decreases, process-related changes and quality improvement initiatives on the B787 and A350 programs, respectively. By segment, the disposal charge consisted of $22.5 and $0.4 related to the Fuselage Systems Segment and Wing Systems Segment, respectively, and is included as a separate line item of the operating loss in the Condensed Consolidated Statements of Operations for the period. For the period ended ~~October~~April 1, ~~2020,~~2021, there were no ~~triggering~~ events which would require the Company to update its impairment analysis.

10. 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 consolidated balance sheet. 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 balance sheet. 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 18 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				For the Nine Months Ended					For the Three Months Ended
		October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019				April 1, 2021		April 2, 2020
Operating lease cost	Operating lease cost	$	2.2	$	2.4	$	6.6	$	6.7	Operating lease cost		$	2.5	$	2.2
Finance lease cost:	Finance lease cost:									Finance lease cost:
Amortization of assets	Amortization of assets	5.7		2.9		16.0		7.1		Amortization of assets		6.0		5.8
Interest on lease liabilities	Interest on lease liabilities	1.6		0.7		4.7		1.7		Interest on lease liabilities		1.6		1.6
Total net lease cost	Total net lease cost	$	9.5	$	6.0	$	27.3	$	15.5	Total net lease cost		$	10.1	$	9.6

Supplemental cash flow information related to leases was as follows:

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~Supplemental cash flow information related to leases was as follows:~~


		For the Three Months Ended				For the Nine Months Ended					For the Three Months Ended
		October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019				April 1, 2021		April 2, 2020
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:									Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	2.1	$	2.4	$	6.5	$	6.7	Operating cash flows from operating leases		$	2.4	$	2.2
Operating cash flows from finance leases	Operating cash flows from finance leases	$	1.6	$	0.8	$	4.7	$	1.7	Operating cash flows from finance leases		$	1.6	$	1.6
Financing cash flows from finance leases	Financing cash flows from finance leases	$	7.7	$	3.4	$	21.4	$	7.2	Financing cash flows from finance leases		$	8.9	$	6.7

ROU assets obtained in exchange for lease obligations:	ROU assets obtained in exchange for lease obligations:									ROU assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	0.1	$	0.9	$	0.3	$	1.6	Operating leases		$	1.0	$	0.2

Supplemental balance sheet information related to leases:


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Finance leases:	Finance leases:					Finance leases:
Property and equipment, gross	Property and equipment, gross	$	212.3	$	165.5	Property and equipment, gross	$	214.2	$	214.2
Accumulated amortization	Accumulated amortization	(39.6)		(23.5)		Accumulated amortization	(51.1)		(45.1)
Property and equipment, net	Property and equipment, net	$	172.7	$	142.0	Property and equipment, net	$	163.1	$	169.1

The weighted average remaining lease term as of ~~October~~April 1, ~~2020~~2021 for operating and finance leases was ~~9.9~~42.8 years and ~~5.6~~5.2 years, respectively. The weighted average discount rate as of ~~October~~April 1, ~~2020~~2021 for operating and finance leases was ~~5.6%~~5.5% and ~~4.4%~~4.3%, respectively. The weighted average remaining lease term as of December 31, ~~2019~~2020 for operating and finance leases was ~~10.2~~42.3 years and ~~6.5~~5.5 years, respectively. The weighted average discount rate as of December 31, ~~2019~~2020 for operating and finance leases was ~~5.6%~~5.5% and 4.3%, respectively. See Note 15, Debt, for current and non-current finance lease obligations. There has not been a significant impact on lease terms, costs, cash flows, or balance sheet values, including any impairment of lease assets, as a result of the COVID-19 pandemic.

As of ~~October~~April 1, ~~2020,~~2021, remaining maturities of lease liabilities were as follows:


		2020		2021		2022		2023		2024		2025 and thereafter		Total Lease Payments		Less: Imputed Interest		Total Lease Obligations			2021		2022		2023		2024		2025		2026 and thereafter		Total Lease Payments		Less: Imputed Interest		Total Lease Obligations
Operating Leases	Operating Leases	$	2.1	$	7.5	$	7.2	$	6.1	$	5.5	$	30.3	$	58.7	$	(14.1)	$	44.6	Operating Leases	$	6.6	$	8.8	$	7.9	$	7.4	$	6.8	$	170.0	$	207.5	$	(135.4)	$	72.1
Financing Leases	Financing Leases	$	10.3	$	40.0	$	36.1	$	31.4	$	25.2	$	40.2	$	183.2	$	(21.0)	$	162.2	Financing Leases	$	30.8	$	37.2	$	32.2	$	25.4	$	15.6	$	24.7	$	165.9	$	(17.9)	$	148.0

As of ~~October~~April 1, ~~2020,~~2021, the Company had additional operating and financing lease commitments that have not yet commenced of approximately ~~$26.0 for~~$106.9 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 715 years. The Company’s involvement in the construction and design process for these assets is generally limited to project management.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

11. Other Assets, Goodwill, and Intangible Assets

Other current assets are summarized as follows:


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Prepaid expenses	Prepaid expenses	15.5		19.3		Prepaid expenses	$	26.3	$	16.3
Income tax receivable	Income tax receivable	240.9		74.2		Income tax receivable	312.4		315.3
Other assets- short term	Other assets- short term	3.2		5.2		Other assets- short term	5.8		4.7
Total other current assets	Total other current assets	$	259.6	$	98.7	Total other current assets	$	344.5	$	336.3

Other assets are summarized as follows:


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Deferred financing	Deferred financing					Deferred financing
Deferred financing costs	Deferred financing costs	48.3		41.7		Deferred financing costs	$	0.9	$	0.9
Less: Accumulated amortization - deferred financing costs	Less: Accumulated amortization - deferred financing costs	(42.2)		(36.9)		Less: Accumulated amortization - deferred financing costs	(0.5)		(0.5)
Deferred financing costs, net	Deferred financing costs, net	6.1		4.8		Deferred financing costs, net	$	0.4	$	0.4
Other	Other					Other
Long term income tax receivable (1)		72.7		0

Supply agreements ~~(2)~~(1)	Supply agreements ~~(2)~~(1)	11.2		11.5		Supply agreements ~~(2)~~(1)	$	10.7	$	11.4
Equity in net assets of affiliates	Equity in net assets of affiliates	3.9		7.7		Equity in net assets of affiliates	2.7		3.1
Restricted cash - collateral requirements	Restricted cash - collateral requirements	19.5		16.4		Restricted cash - collateral requirements	19.5		19.5
Other	Other	38.4		36.4		Other	56.0		49.2
Total other long term assets	Total other long term assets	$	151.8	$	76.8	Total other long term assets	$	89.3	$	83.6

(1) ~~Increase in income tax receivable not expected to be received within 12 months and is an increase over the prior year as a result of the carryback provisions included in the CARES Act.~~

~~(2)~~ 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:

October 1,
2020 December 31,
2019
Goodwill - United Kingdom 2.4 2.4
Goodwill - United States(1)
76.0 0
Total $ 78.4 $ 2.4


	April 1, 2021		December 31, 2020
Goodwill(1)	$	583.9	$	565.3

(1) The ~~acquisition of Fiber Materials Inc. ("FMI")~~Bombardier Acquisition (as defined below) on ~~January 10,~~October 30, 2020 resulted in the establishment of ~~$76.2 goodwill. In second quarter~~$486.8 of goodwill included in the balance reported at December 31, 2020, ~~$0.2~~which was ~~received upon final settlement~~adjusted to $505.3 as of ~~net working capital, reducing~~April 1, 2021 as a result of certain purchase price allocation adjustments recorded during the purchase price accounting measurement period based on additional information obtained. See also Note 24, Acquisitions. As of April 1, 2021, given the preliminary nature of the Bombardier Acquisition purchase price allocation, the Company has not yet allocated goodwill ~~balance~~ to ~~$76.0.~~the relevant reportable segments.

The total goodwill value includes no accumulated impairment loss in any of the periods presented. The goodwill balance as of April 1, 2021 excluding the balance of ~~goodwill by reportable segment as of October 1, 2020 is~~$505.3 resulting from the Bombardier Acquisition, was allocated $42.9 to the Fuselage Systems Segment, $33.1 to the Propulsion Systems Segment, and ~~$2.4~~$2.6 to the Wing Systems Segment. The ~~total~~balance of goodwill ~~value~~by reportable segment as of ~~$78.4 includes no accumulated impairment loss in any~~December 31, 2020, excluding the balance of $486.8 resulting from the ~~periods presented.~~Bombardier Acquisition noted above, was $42.9 for the Fuselage Systems segment, $33.1 for the Propulsion Systems segment, and $2.5 for the Wing Systems segment. The change in ~~value~~the Wing Systems segment goodwill balance from December 31, ~~2019 to October 1,~~ 2020 ~~for the United Kingdom goodwill item, as seen in the table above,~~ reflects net exchange rate differences arising during the period. ~~The goodwill balance as of December 31, 2019 of $2.4 is allocated to the Wing Systems Segment.~~

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 ~~October~~April 1, ~~2020,~~2021, there were no events or circumstances which would require the Company to update its goodwill impairment analysis.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~there were no triggering events which would require the Company to update its goodwill impairment analysis.~~ Each of the reportable segments, noted above, is comprised of a single operating segment, which is the reporting unit for goodwill. At October 1, 2020, the Fuselage Systems reporting unit has $42.9 of goodwill, the Propulsion Systems reporting unit has $33.1 of goodwill, and the Wing Systems reporting unit has $2.4 of goodwill.

Intangible assets are summarized as follows:


		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Intangible assets	Intangible assets					Intangible assets
Patents	Patents	$	2.0	$	2.0	Patents	$	2.0	$	2.0
Favorable leasehold interests	Favorable leasehold interests	2.8		2.8		Favorable leasehold interests	2.8		2.8
Developed technology asset~~(1)~~(2)	Developed technology asset~~(1)~~(2)	30.0		0		Developed technology asset~~(1)~~(2)	92.0		94.0
Customer relationships intangible asset(2)						Customer relationships intangible asset(2)	121.1		124.1
Other						Other	0.2		0
Total intangible assets	Total intangible assets	34.8		4.8		Total intangible assets	$	218.1	$	222.9
Less: Accumulated amortization - patents	Less: Accumulated amortization - patents	(2.0)		(1.9)		Less: Accumulated amortization - patents	(2.0)		(2.0)
Accumulated amortization - favorable leasehold interest	Accumulated amortization - favorable leasehold interest	(1.8)		(1.7)		Accumulated amortization - favorable leasehold interest	(1.8)		(1.8)
Accumulated amortization - developed technology asset	Accumulated amortization - developed technology asset	(1.5)		0		Accumulated amortization - developed technology asset	(4.2)		(2.6)
Accumulated amortization - developed technology asset						Accumulated amortization - developed technology asset	(3.1)		(1.3)
Intangible assets, net	Intangible assets, net	29.5		1.2		Intangible assets, net	$	207.0	$	215.2

(1) The acquisition of ~~FMI~~Fiber Materials Inc. on January 10, 2020 resulted in the establishment of a $30.0 intangible asset for developed technology.

(2) The Bombardier Acquisition resulted in the establishment of a $64.0 intangible asset for developed technology and a $124.1 intangible asset for customer relationships, which have been adjusted to $62.0 for intangible asset for developed technology and $121.1 for customer relationships related to the goodwill adjustment described above. See also Note 24, Acquisitions.

The amortization for each of the five succeeding years relating to intangible assets currently recorded in the Condensed Consolidated Balance sheet and the weighted average amortization is estimated to be the following as of ~~October~~April 1, ~~2020:~~2021:


Year	Year	Patents	Favorable leasehold interest	Developed Technology	Total	Year	Patents		Favorable leasehold interest		Developed Technology		Total
remaining in 2020		0	0	0.5	0.5
2021		0	0.1	2.0	2.1
remaining in 2021						remaining in 2021	$	0.1	$	4.6	$	5.0	$	9.7
2022	2022	0	0.1	2.0	2.1	2022	0.1		6.1		6.8		13.0
2023	2023	0	0.1	2.0	2.1	2023	0.1		6.1		6.8		13.0
2024	2024	0	0.1	2.0	2.1	2024	0.1		6.1		6.8		13.0
2025	2025	0	0.1	2.0	2.1	2025	0.1		6.1		6.8		13.0
2026						2026	0.1		6.1		6.8		13.0

Weighted average amortization period	Weighted average amortization period	—	8.8	14.3	14.1	Weighted average amortization period	8.3 years		14.3 years		17.6 years		16.2 years

12. 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, ~~the Company~~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 1,001 through 1,120. On December 21, 2018, ~~the Company~~Spirit signed a memorandum of agreement with Boeing that again suspended the advance repayments beginning with line unit ~~818. The advance repayments will resume at a lower rate of $0.45 per shipset at line number 1135 and continue through line number 1605.~~

2019

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

818. The advance repayments will resume at a lower rate of $0.45 per shipset at line number 1135 and 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 due on December 15th of each year until the advance payments have been fully recovered by Boeing. As of ~~October~~April 1, ~~2020,~~2021, the amount of advance payments received from Boeing under the B787 Supply Agreement and not yet repaid was approximately $212.

Advances on the B737 Program. In an effort to minimize the disruption to Spirit's operations and its supply chain, ~~the 2019 MOA~~Spirit and Boeing entered into a Memorandum of Agreement on April 12, 2019 (the "2019 MOA"), which included the terms and conditions for an advance payment to be made from Boeing to Spirit in the amount of $123, which was received during the third quarter of 2019. The ~~2020 MOA~~parties entered into another memorandum of agreement on February 6, 2020 (the "2020 MOA"), which extended the repayment date of the $123 advance received by Spirit under the 2019 MOA to 2022. The 2020 MOA also required Boeing to pay $225 to Spirit in the first quarter of 2020, consisting of (i) $70 in support of Spirit’s inventory and production stabilization, of which $10 will be repaid by Spirit in 2021, and (ii) $155 as an incremental pre-payment for costs and shipset ~~deliveries~~deliveries over the next two years. On February 9, 2021, Spirit signed a letter of agreement for Boeing to pay $38.5 to Spirit in the first quarter of 2021, which consisted of (i) $68.5 as additional pre-payment for the costs and shipset deliveries less the (ii) ($30) credit owed to Boeing for rate-based pricing premium. As of April 1, 2021, the amount of advance payments received from Boeing and not yet repaid was $130.5.

Advances on the Irkut Program. Irkut made an advance payment of $150 to Short Brothers plc, an indirect subsidiary of Holdings ("Shorts"), at the inception of the program in 2012 for the design and development of the Nacelle for the MC-21 aircraft. The remainder of $0.5 will be released in 2021.

13. 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 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 ~~October~~April 1, ~~2020,~~2021, the Company’s long-term debt includes a senior secured ~~notes~~term loan and senior ~~unsecured notes.~~notes described further under Note 15, 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 (table excludes First Lien 2025 Notes, which were issued after quarter end on October 5, 2020):~~ debt:

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

October 1, 2020 December 31, 2019
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
2018 Term Loan and 2018 DDTL (including current portion) $ 0 $ 0 (2) $ 438.5 $ 440.1 (2)
2018 Revolver 0 0 (2) 800.0 800.0 (2)
Senior unsecured floating rate notes due 2021 299.6 283.3 (1) 299.1 298.4 (1)
Senior unsecured notes due 2023 298.7 267.0 (1) 298.3 307.2 (1)
Senior secured notes due 2026 298.0 279.9 (1) 297.8 305.6 (1)
Senior unsecured notes due 2028 694.5 575.3 (1) 694.1 734.4 (1)
Senior secured notes due 2025 (Second Lien 2025 Notes) 1,183.4 1,204.2 (1) $ 0 $ 0
Total $ 2,774.2 $ 2,609.7 $ 2,827.8 $ 2,885.7


	April 1, 2021					December 31, 2020
	Carrying Amount		Fair Value			Carrying Amount		Fair Value
Senior secured term loan B (including current portion)	$	389.2	$	393.6	(2)	$	389.6	$	395.0	(2)
Floating rate notes	0		0			299.7		297.5		(1)
Senior notes due 2023	298.9		296.4		(1)	298.8		293.8		(1)
Senior secured first lien notes due 2025	494.2		522.9		(1)	493.9		521.2		(1)
Senior secured second lien notes due 2025	1,185.1		1,280.4		(1)	1,184.2		1,279.1		(1)
Senior notes due 2026	298.2		310.0		(1)	298.1		313.9		(1)
Senior notes due 2028	694.8		683.5		(1)	694.6		689.2		(1)
Total	$	3,360.4	$	3,486.8		$	3,658.9	$	3,789.7

(1)Level 1 Fair Value hierarchy

(2)Level 2 Fair Value hierarchy

14. Derivative and Hedging Activities

The Company has traditionally entered into interest rate swap agreements to reduce its exposure to the variable rate portion of its long-term debt. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

The Company has historically entered into derivative instruments ~~covered~~governed by master netting arrangements whereby, in the event of a default as defined by the 2018 Credit Agreement (as defined below) or termination event, the non-defaulting party has the right to offset any amounts payable against any obligation of the defaulting party under the same counterparty agreement. See Note 15, ~~Debt, for more information.~~

~~Derivatives Not Accounted for as Hedges~~

~~Interest Rate Swaps~~

~~On March 15, 2017, the Company entered into an interest rate swap agreement, with an effective date of March 31, 2017. The swap has a notional value of $250.0~~that contain various netting and ~~fixed the variable portion of the Company’s floating rate debt at 1.815%. The swap expired in March 2020.~~

setoff provisions.

Derivatives Accounted for as Hedges

Cash Flow Hedges - Interest Rate Swaps

During the third quarter of 2019, ~~the Company~~Spirit entered into two interest rate swap agreements, designated as cash flow hedges by the Company, with a combined notional value of $450.0. ~~As of October 1, 2020, the Company has one~~On February 24, 2021, Spirit terminated its remaining swap agreement with a notional value of $150.0. ~~These derivatives have been designated as cash flow hedges by~~As of April 1, 2021, the ~~Company. The fair value of these hedges was a liability of $1.7 as of October 1, 2020, which is recorded in the other current liabilities line item on the Condensed Consolidated Balance Sheet.~~Company had no swaps outstanding.

Changes in the fair value of cash flow hedges are recorded in Accumulated Other Comprehensive Income ("AOCI") and recorded in earnings in the period in which the hedged transaction occurs. ~~The~~NaN gain or loss was recognized in AOCI ~~was $0.0 and $14.2~~ for the three ~~and nine~~ months ended ~~October~~April 1, ~~2020, respectively.~~2021. For the three ~~and nine~~ months ended ~~October~~April 1, ~~2020~~2021 a loss of ~~$1.6 and $3.0~~$0.4 was reclassified from AOCI to earnings, and included in the interest expense line item on the Condensed Consolidated Statements of Operations, and in operating activities on the Condensed Consolidated Statements of Cash Flows. For the three ~~and nine~~ months ended ~~October~~April 1, ~~2020~~2021 a loss of ~~$10.4~~$0.7 was reclassified from AOCI to earnings resulting from the termination of a swap agreement, and included in the other income line item on the Condensed Consolidated Statements of Operations, and in operating activities on the Condensed Consolidated Statement of Cash Flows.

Cash Flow Hedges – Foreign Currency Forward Contract

On February 3, 2021, Shorts entered into a foreign currency forward contract, designated as a cash flow hedge, to purchase £100.0 for $137.1 on October 28, 2021, for purposes of hedging exposure to foreign currency risk on a contribution of £100.0 to be made to the Shorts' Pension on the first anniversary of the Bombardier Acquisition closing.

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 occurs. The gain recognized in AOCI was $1.2 for the three months ended April 1, 2021. Within the next 12 months, Shorts expects to recognize a gain of $1.2 in earnings related to the foreign currency forward contracts. As of April 1, 2021, the maximum term of the hedged forecasted transaction was 7 months.

15. Debt

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~the Company expects to recognize a loss of $1.7 in earnings related to these hedged contracts. As of October 1, 2020, the maximum term of hedged forecasted transactions was 9 months.~~

~~15. Debt~~

Total debt shown on the balance sheet is comprised of the following:

October 1, 2020 December 31, 2019
Current Noncurrent Current Noncurrent
2018 Term Loan and 2018 DDTL $ 0 $ 0 $ 22.8 $ 415.7
2018 Revolver — 0 — 800.0
Senior unsecured floating rate notes due 2021 299.6 0 0 299.1
Senior unsecured notes due 2023 0 298.7 0 298.3
Senior secured notes due 2026 0 298.0 0 297.8
Senior unsecured notes due 2028 0 694.5 0 694.1
Senior secured notes due 2025 0 1,183.4 0 0
Present value of finance lease obligations 34.2 128.0 25.8 121.3
Other 1.7 56.4 1.6 57.8
Total $ 335.5 $ 2,659.0 $ 50.2 $ 2,984.1


	April 1, 2021				December 31, 2020
	Current		Noncurrent		Current		Noncurrent
Senior secured term loan B	$	3.9	$	385.3	$	3.9	$	385.7
Floating Rate Notes	0		0		299.7		0
Senior notes due 2023	0		298.9		0		298.8
Senior secured first lien notes due 2025	0		494.2		0		493.9
Senior secured second lien notes due 2025	0		1,185.1		0		1,184.2
Senior notes due 2026	0		298.2		0		298.1
Senior notes due 2028	0		694.8		0		694.6
Present value of finance lease obligations	35.0		113.0		35.3		121.5
Other	1.3		55.7		1.8		56.1
Total	$	40.2	$	3,525.2	$	340.7	$	3,532.9

~~2018 Credit Agreement~~

On July 12, 2018, the Company entered into a $1,256.0 senior unsecured Second Amended and Restated Credit Agreement (as amended, the “2018 Credit Agreement”) among Spirit, as borrower, the Company, as parent guarantor, the lenders party thereto, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and the other agents named therein, consisting of a $800.0 revolving credit facility (the “2018 Revolver”), a $206.0 term loan A facility (the “2018 Term Loan”) and a $250.0 delayed draw term loan facility (the “2018 DDTL”). The 2018 Credit Agreement was amended several times in 2020, as described in the Company’s prior filings with the SEC, in order to provide for, among other things, covenant relief, security, reduction of the available commitments under the 2018 Revolver and changes to the mandatory prepayment provisions.

On September 30, 2020, Spirit repaid the remaining balances under the 2018 Term Loan and the 2018 DDTL. As of October 1, 2020, the outstanding balance of the 2018 Term Loan and 2018 DDTL was $0.0. The Company repaid the outstanding balance of the 2018 Revolver on April 30, 2020. As of October 1, 2020, the outstanding balance of the 2018 Revolver was $0.0.

~~As of October 1, 2020, we were in compliance with all applicable covenants under the 2018 Credit Agreement.~~

~~On October 5, 2020 (the “Capital Closing Date”), Spirit terminated the 2018 Credit Agreement.~~

Credit Agreement

On ~~the Capital Closing Date,~~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 ~~the Capital Closing Date,~~October 5, 2020, Spirit borrowed the full $400.0 of initial term loans available under the Credit Agreement. The Credit Agreement also permits Spirit to request one or more incremental term facilities in an aggregate principal amount not to exceed (x) in the case of any incremental facility that is secured on a pari passu basis with the Credit Agreement, the greater of (a) $950.0 and (b) such other amount, so long as on a pro forma basis after giving effect to the incurrence of such indebtedness and the use of proceeds thereof, the first lien secured net leverage ratio does not exceed 3.25 to 1.00; and (y) in the case of any incremental facility that is secured on a junior basis to the Credit Agreement, the greater of (a)

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

$500.0 and (b) such other amount, so long as on a pro forma basis after giving effect to the incurrence of such indebtedness and the use of proceeds thereof, the secured net leverage ratio does not exceed 5.00 to 1.00. Borrowings under the Credit Agreement will be used for general corporate purposes.

The Credit Agreement will mature on January 15, 2025. The Credit Agreement will amortize in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. Interest on borrowings under the Credit Agreement will initially accrue at the Eurodollar rate plus an applicable margin equal to 5.25%.

The obligations under the Credit Agreement are guaranteed by ~~the Company~~Holdings and Spirit AeroSystems North Carolina, Inc., a wholly-owned subsidiary of the Company (“Spirit NC”), (collectively, the “Guarantors”) and each existing and future, direct and indirect, wholly-owned material domestic subsidiary of ~~the Company,~~Spirit, 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.

~~The~~As of April 1, 2021, the outstanding balance of the Credit Agreement ~~contains usual~~was $399.0 and ~~customary affirmative and negative covenants for facilities and transactions of this type and that, among other things, restrict~~ the Company and its restricted subsidiaries’ ability to incur additional indebtedness, create liens, consolidate or merge, make acquisitions and other investments, guarantee obligations of third parties, make loans or advances, declare or pay certain dividends or distributions on the Company’s stock, redeem or repurchase shares of the Company’s stock, engage in transactions with affiliates and enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends or dispose of assets. These covenants are subject to a number of qualifications and limitations.carrying value was $389.2.

~~The Credit Agreement provides for customary events~~As of ~~default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving~~April 1, 2021, the Company ~~and its material subsidiaries.~~was in compliance with all covenants in the Credit Agreement.

~~Senior Notes~~

First Lien 2025 Notes

On ~~the Capital Closing Date,~~October 5, 2020, Spirit entered into an Indenture (the “First Lien 2025 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 $500.0 aggregate principal amount of its 5.500% Senior Secured First Lien Notes due 2025 (the “First Lien 2025 Notes").

The First Lien 2025 Notes were issued and sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and in offshore transactions to non-U.S. persons pursuant to Regulation S under the Securities Act.

The First Lien 2025 Notes mature on January 15, 2025 and bear interest at a rate of 5.500% per year payable semiannually in cash in arrears on January 15 and July 15 of each year. The first interest payment date is January 15, 2021.

~~The First Lien 2025 Notes~~ are guaranteed by the Guarantors and secured by certain real property and personal property, including certain equity interests, owned by Spirit and the Guarantors. ~~The First Lien 2025 Notes and guarantees are Spirit’s and~~

As of April 1, 2021, the ~~Guarantors’ senior secured obligations and rank equally in right~~outstanding balance of ~~payment with all of their existing and future senior indebtedness, effectively equal with their existing and future indebtedness secured on a pari passu basis by the collateral for~~ the First Lien 2025 Notes ~~to the extent of the value of the collateral (including the Credit Agreement~~was $500.0 and the 2026 Notes), effectively senior to all of their existing and future indebtedness that is not secured by a lien, or is secured by a junior-priority lien, on the collateral for the First Lien 2025 Notes to the extent of thecarrying value of the collateral, effectively junior to any of their other existing and future indebtedness that is secured by assets that do not constitute collateral for the First Lien 2025 Notes to the extent of the value of such assets, and senior in right of payment to any of their existing and future subordinated indebtedness.was $494.2.

~~The First Lien 2025~~

2026 Notes ~~Indenture contains covenants that limit Spirit’s,~~

In June 2016, the ~~Company’s~~Company issued $300.0 in aggregate principal amount of 3.850% Senior Notes due June 15, 2026 (the “2026 Notes”) with interest payable, in cash in arrears, on June 15 and the Company’s subsidiaries’ ability, subject to certain exceptions and qualifications, to incur indebtedness secured by liens, enter into sale and leaseback transactions, make restricted payments and investments and enter into certain mergers or consolidations and transferDecember 15 of each year, beginning December 15, 2016.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~substantially all~~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 ~~Company~~2026 Notes were granted security on an equal and ~~its subsidiaries’ assets. These covenants are subject to a number~~ratable basis with the holders of ~~qualifications and limitations. In addition,~~ the First Lien 2025 ~~Indenture provides for customary events~~Notes and the secured parties under the Credit Agreement.

As of ~~default.~~April 1, 2021, the outstanding balance of the 2026 Notes was $300.0 and the carrying value was $298.2.

Second Lien 2025 Notes

On April 17, 2020, Spirit entered into an Indenture (the “Second Lien 2025 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 7.500% Senior Secured Second Lien Notes due 2025 (the “Second Lien 2025 Notes”).

The Second Lien 2025 Notes were issued and sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and in offshore transactions to non-U.S. persons pursuant to Regulation S under the Securities Act.

~~The Second Lien 2025 Notes~~ mature on April 15, 2025 and bear interest at a rate of 7.500% per year payable semiannually in cash in arrears on April 15 and October 15 of each year. The first interest payment date was October 15, 2020. ~~As of October 1, 2020, the outstanding balance of the Second Lien 2025 Notes was $1,200.0 and the carrying value was $1,183.4.~~

The Second Lien 2025 Notes are guaranteed by the Guarantors and secured by certain real property and personal property, including certain equity interests, owned by Spirit and the Guarantors. ~~The Second Lien 2025 Notes and guarantees are Spirit’s and~~

As of April 1, 2021, the ~~Guarantors’ senior secured obligations and will rank equally in right~~outstanding balance of payment with all of their existing and future senior indebtedness, effectively junior to all of their existing and future first-priority lien indebtedness to the extent of the value of the collateral securing such indebtedness (including indebtedness under the Credit Agreement, the Second Lien 2025 Notes was $1,200.0 and the ~~2026 Notes), effectively junior to any of their other existing and future indebtedness that is secured by assets that do not constitute collateral for the Second Lien 2025 Notes to the extent of the~~carrying value ~~of such assets, and senior in right of payment to any of their existing and future subordinated indebtedness.~~was $1,185.1.

The Second Lien 2025 Notes Indenture contains covenants that limit Spirit’s, the Company’s and the Company’s subsidiaries’ ability, subject to certain exceptions and qualifications, to create liens, enter into sale and leaseback transactions and guarantee other indebtedness without guaranteeing the Notes. These covenants are subject to a number of qualifications and limitations. In addition, the Second Lien 2025 Notes Indenture provides for customary events of default.

Floating Rate, 2023, and 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”). ~~The Company~~Holdings guaranteed Spirit’s obligations under the 2018 Notes on a senior unsecured basis.

~~The Floating Rate Notes bear interest at a rate per annum equal to three-month LIBOR, as determined in~~On February 24, 2021, Spirit redeemed the ~~case~~outstanding $300 million principal amount of ~~the initial interest period, on May 25, 2018, and thereafter at the beginning of each quarterly period as described herein, plus 80 basis points and mature on June 15, 2021. Interest on~~ the Floating Rate ~~Notes is payable on March 15, June 15, September 15 and December 15~~Notes. As of ~~each year, beginning on September 15, 2018. The 2023~~April 1, 2021, the outstanding balance of the Floating Rate Notes ~~bear interest at a rate~~ was $0.

As of ~~3.950% per annum and mature on June 15, 2023. The 2028 Notes bear interest at a rate~~April 1, 2021, the outstanding balance of ~~4.600% per annum and mature on June 15, 2028. Interest on~~ the 2023 Notes and the 2028 Notes ~~is payable on June 15~~was $300.0 and ~~December 15~~$700.0, respectively, and the carrying value was $298.9 and $694.8, respectively.

As of ~~each year, beginning on December 15, 2018. The outstanding balance of~~April 1, 2021, the ~~Floating Rate~~Company was in compliance with all covenants contained in the indentures governing the First Lien 2025 Notes, 2026 Notes, Second Lien 2025 Notes, 2023 Notes and 2028 Notes was $300.0, $300.0, and $700.0 as of October 1, 2020, respectively. The carrying value of the Floating Rate Notes, 2023 Notes, and 2028 Notes was 299.6, $298.7, and $694.5 as of October 1, 2020, respectively.

The 2018 Indenture contains covenants that limit Spirit’s, the Company’s and certain of the Company’s subsidiaries’ ability, subject to certain exceptions and qualifications, to create liens without granting equal and ratable liens to the holders of the 2018 Notes and enter into sale and leaseback transactions. These covenants are subject to a number of qualifications and limitations. In addition, the 2018 Indenture provides for customary events of default.Notes.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~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”) with interest payable, in cash in arrears, on June 15 and December 15 of each year, beginning December 15, 2016. As of October 1, 2020, the outstanding balance of the 2026 Notes was $300.0 and the carrying value was $298.0. The Company and Spirit NC guarantee Spirit's obligations under the 2026 Notes on a senior secured basis.

On February 24, 2020, Spirit entered into a Second Supplemental Indenture (the “Second Supplemental Indenture”) by and among Spirit, the Company, Spirit NC, and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as trustee in connection with the 2026 Notes. Under the Second Supplemental Indenture, the 2026 Noteholders were granted security on an equal and ratable basis with the lenders under the 2018 Credit Agreement until the security in favor of the lenders under the 2018 Credit Agreement is released. The security granted in connection with the Second Supplemental Indenture was released on the Capital Closing Date. The Supplemental Indenture also added Spirit NC as an additional guarantor under the indenture governing the 2026 Notes.

On April 17, 2020, Spirit entered into a Third Supplemental Indenture (the “Third 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 Third Supplemental Indenture, the noteholders were granted security on an equal and ratable basis with the holders of the Second Lien 2025 Notes.

On the Capital Closing Date, 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 holders of the First Lien 2025 Notes and the secured parties under the Credit Agreement.

16. Pension and Other Post-Retirement Benefits

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

Defined Benefit Plans

For the Three
Months Ended
For the Nine
Months Ended
Components of Net Periodic Pension Expense/(Income) October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
Service cost $ 0.2 $ 0.3 $ 0.7 $ 1.0
Interest cost 5.4 10.0 20.1 30.0
Expected return on plan assets (16.6) (16.6) (49.5) (50.0)
Amortization of net loss 0 0.1 0.2 0.5
Curtailment loss (gain) (2)
0 0 33.9 (0.1)
Settlement loss (3)
4.2 0 9.3 0
Special termination benefits (1)
(1.6) (5.5) 31.4 9.7
Net periodic pension expense (income) $ (8.4) $ (11.7) $ 46.1 $ (8.9)

Other Benefits
For the Three
Months Ended For the Nine
Months Ended
Components of Other Benefit Expense October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
Service cost $ 0.1 $ 0.2 $ 0.5 $ 0.7
Interest cost 0.2 0.3 0.7 1.0
Amortization of prior service cost (0.2) (0.2) (0.6) (0.7)
Amortization of net gain (0.4) (0.6) (1.3) (1.8)
Curtailment (gain) loss (2)

0 0 (0.2) 0
Special termination benefits (1)
$ 0 $ 0 $ 12.0 $ 0
Net periodic other benefit expense (income) $ (0.3) $ (0.3) $ 11.1 $ (0.8)


		Defined Benefit Plans
	For the Three Months Ended
Components of Net Periodic Pension Expense/(Income)		April 1, 2021		April 2, 2020
Service cost		$	10.8	$	0.2
Interest cost		13.7		8.0
Expected return on plan assets		(39.4)		(17.3)

Curtailment loss (gain) (2)		0		33.0

Special termination benefits (1)		0		24.7
Net periodic pension expense (income)		$	(14.9)	$	48.6


		Other Benefits
	For the Three Months Ended
Components of Other Benefit Expense		April 1, 2021		April 2, 2020
Service cost		$	0.2	$	0.3
Interest cost		0.1		0.2
Amortization of prior service cost		(0.2)		(0.2)
Amortization of net gain		(0.4)		(0.5)
Curtailment (gain) loss (2)		0		(0.3)
Special termination benefits (1)		0		11.8
Net periodic other benefit expense (income)		$	(0.3)	$	11.3

(1) Special termination benefits for the three ~~and nine~~ months ~~ending October 1,~~ended April 2, 2020 is a combination of pension value plan, ~~and~~ postretirement medical plan, and settlement accounting changes offset by a reduction in the Company's net benefit obligation. ~~For~~Due to settlement accounting, the ~~three months and nine months ending October 1, 2020 special termination benefits, curtailment accounting, and the remeasurement of~~Company remeasured the pension assets and obligations and retiree medical which resulted in a ~~$(31.9)~~$116.8 and ~~$0.4~~$4.3 impact to ~~OCI, respectively. For the three months and nine months ending October 1, 2020, retiree medical resulted in a $0.0 and $2.3 impact to OCI,~~Other Comprehensive Income ("OCI"), respectively. This impact is included in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income. The Company expects to record additional charges related to settlement accounting in subsequent 2020 quarters tied to cash payments made.~~.

(2) ~~The Company's~~Curtailment loss in the three months ended April 2, 2020 occurred as result of the Company’s Voluntary Retirement Program ("VRP") ~~resulted in an estimated 16% and 12% reduction in future working lifetime for~~offered to eligible employees during the ~~pension value plan and postretirement medical plan resulting in a curtailment accounting charge~~first quarter of ~~$0.0 and $33.7 for the three and nine months ended October 1,~~ 2020 ~~respectively~~ and is included in other (expense) income in the Company's Condensed Consolidated Statements of Operations.

~~(3) Under ASC 715 -~~ ~~Compensation Retirement Benefits~~, settlement accounting is triggered when the total lump sums paid during the fiscal year exceed the combined service cost and interest cost component. Because the lump sums paid to date as part of the VRP exceed the estimated service cost and interest cost, the Company recognized a settlement loss of $4.2 and $9.3 for the three months and nine months ended October 1, 2020, respectively. The weighted average discount rate for the pension benefit obligation, as a result of remeasurement triggered by settlement accounting, changed to 2.52%.

The components of net periodic pension expense (income) and other benefit expense, other than the service cost component, are included in other (expense) income in the Company's Condensed Consolidated Statements of Operations.

Employer Contributions

The Company expects to contribute zero dollars to the U.S. qualified pension plan and a combined total of approximately $10.4 for the U.S. Supplemental Executive Retirement Plan (“SERP”) and U.S. post-retirement medical plans in 2021. The Company’s projected contributions to the U.K. pension plan for 2021 are $1.9. Additionally, the Company expects to contribute $181.8 for the Shorts' Pension, the Shorts' Executive Benefits Scheme, and the Shorts' Postretirement Medical Plan. The entire amount contributed can vary based on exchange rate fluctuations.

17. Stock Compensation

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

The Company expects to contribute zero dollars to the U.S. qualified pension plan and a combined total of approximately $9.5 for the Supplemental Executive Retirement Plan (“SERP”) and post-retirement medical plans in 2020. The Company’s projected contributions to the U.K. pension plan for 2020 are $1.8. The entire amount contributed can vary based on exchange rate fluctuations.

~~17. Stock Compensation~~

Holdings has established the stockholder-approved 2014 Omnibus Incentive Plan, as amended (the “Omnibus Plan”), to grant cash and equity awards of Class A Common Stock, par value $0.01 per share (the “Common Stock”), to certain individuals.

The Company recognized a net total of $6.2 and $7.5 of stock compensation expense for the three months ended October 1, 2020 and September 26, 2019, respectively, and a net total of $17.1 and $22.6 of stock compensation expense for the nine months ended October 1, 2020 and September 26, 2019, respectively.

Holdings has established the Long-Term Incentive Plan (the “LTIP”) under the Omnibus Plan to grant equity awards to certain employees of the Company. ~~Generally, specified employees are entitled to receive a long-term incentive award that, for the 2020 year, consisted of the following:~~

•~~60%~~The Company recognized a net total of $6.6 and $9.8 of stock compensation expense for the ~~award consisted~~three months ended April 1, 2021 and April 2, 2020, respectively.

During the three months ended April 1, 2021, 346,896 time or service-based restricted stock units ("RSUs") and 30,024 time or service-based restricted stock awards ("RSAs") were granted with aggregate date fair values of ~~time-based, service-condition restricted Common Stock that vests in equal installments~~$16.1 under the Company's LTIP. Awards generally vest over a two or three-year period, ~~(the “RS Award”).~~beginning on the date of grant. Values for these awards are based on the value of Common Stock on the grant ~~date;~~date.

•~~20% of~~During the ~~award consisted of~~three months ended April 1, 2021, 161,954 performance-based ~~market-condition~~ restricted ~~Common Stock that vests on the three-year anniversary of the~~stock units ("PBRSUs") were granted with aggregate grant date ~~contingent upon TSR compared to~~fair value of $9.8 under the Company’s ~~peers (the “TSR Award”).~~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; and~~

•20% of the award consisted of performance-based (performance-condition) restricted Common Stock that vests on the three-year anniversary of the grant date contingent upon the Company’s cumulative three-year free cash flow as a percentage of the Company’s cumulative three-year revenues meeting certain pre-established goals (the “FCF Percentage Award”). Values for these awards are based on the dividend adjusted value of Common Stock on the grant date.model.

During the ~~nine~~three months ended ~~October~~April 1, 2020, 499,945 shares, 198,980 shares, and 176,815 shares of Common Stock with aggregate grant date fair values of $20.6, $6.2 and $9.3 were granted as RS Awards, TSR Awards, and FCF Percentage Awards under the Company’s LTIP. During the nine months ended October 1, 2020, 38,249 shares of Common Stock with aggregate grant date fair values of $2.5 were granted and vested as a result of a union ratification bonus. The Board of Directors were granted 64,7502021, 202,153 shares of Common Stock with an aggregate grant date value of ~~$1.3 and~~$14.2 vested 12,877 shares of Common Stock with an aggregate grant date value of $1.1 for the nine months ended October 1, 2020. Additionally, 489,889 shares of Common Stock with an aggregate grant date fair value of $33.2 under the ~~LTIP vested during the nine months ended October 1, 2020.~~Company's LTIP.

18. 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. We have reviewed our material~~recoverability and whether a valuation allowance is necessary.

A valuation allowance, if needed, reduces deferred tax assets to ~~determine whether or~~the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not ~~a valuation allowance was necessary. Based on~~to be realized, the ~~Company’s earnings history, in conjunction with other~~Company assesses all available positive and negative evidence. The weight given to the positive and negative evidence ~~we have determined~~is commensurate with the extent the evidence may be objectively verified. As such, it is ~~more likely than not that~~generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the ~~benefits~~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 recorded an incremental valuation allowance of $40.2 for the period ended April 1, 2021. As of April 1, 2021, the total net U.S. deferred tax asset was $190.5. The net U.S. deferred tax liability after the recording valuation allowances was $0.2. The change from December 31, 2020 is additional valuation allowance recognized on the deferred tax assets ~~will be realized and therefore,~~generated from the 2021 activity.

The Company has determined a valuation allowance on certain U.K. deferred tax assets is ~~not appropriate at this time. We~~needed based upon cumulative losses generated in the U.K. Valuation allowances recorded against U.K. deferred tax assets in the period ended April 1, 2021 were $6.2. This is comprised of $3.5 for opening balance sheet adjustments related to Bombardier Acquisition, $0.6 related to OCI and $2.1 from continuing operations. As of April 1, 2021, the total net U.K. deferred tax asset before the valuation allowance was $187.2. The net U.K. deferred tax liability after valuation allowance was $9.8.

The Company will continue to regularly assess the potential for realization of ~~our~~its net deferred tax assets in future periods. Changes in future earnings projections, among other factors, may cause usthe Company to record a valuation allowance against some or all of ~~our~~its net deferred tax assets, which may materially impact ~~our~~its income tax expense in the period ~~we determine~~the Company determines that these factors have changed. The total net deferred tax asset at October 1, 2020, and December 31, 2019, was $126.7 and $98.2, respectively. The difference is primarily due to the creation of deductible temporary differences and utilization of taxable temporary differences within the current year.

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

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

Table of Contents

Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

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 and expiration of statutes of limitations, and changes in tax law.

~~The 37.3% effective~~The 1.0% effective tax rate for the ~~nine~~three months ended ~~October~~April 1, ~~2020~~2021 differs from the ~~21.2%~~35.1% effective tax rate for the same period of ~~2019~~2020 primarily due to the benefit generated related to the carryback of our 2020 estimated income tax loss as permitted by the CARES Act and the benefit related to the re-measurement of deferred taxes due to the CARES Act resultingvaluation allowance recorded in ~~increases to the tax rate. Additionally, the benefit generated by state tax credits and foreign rate differences resulted in net increases to the tax rate.~~2021. As the Company is currently reporting a pre-tax loss for the ~~nine~~three months ended ~~October~~April 1, ~~2020,~~2021, increases to tax expense result in a decrease to the effective tax rate and decreases to tax expense result in an increase to the effective tax rate.

As of ~~October~~April 1, ~~2020,~~2021, the Company ~~has~~had deferred ~~$21.4~~$33.0 of employer payroll taxes, as allowed by the ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), of which 50% are required to be deposited by December 2021 and the remaining 50% by December 2022. As of ~~October~~April 1, ~~2020,~~2021, the Company has recorded an estimated ~~it will be eligible for a~~ pre-tax employee retention credit of approximately ~~$13.6.~~$18.6 related to calendar year 2020. The Company ~~will continue to evaluate~~is evaluating its eligibility ~~for this~~to continue with the pre-tax employee retention credit ~~for~~or to avail itself of the ~~remainder of 2020.~~Aviation Manufacturing Jobs Protection Program. In addition, as of ~~October~~April 1, ~~2020,~~2021, the Company ~~has~~had recorded a deferral of ~~$29.4~~$31.8 of VAT payments with the option to pay in smaller payments through the end of March 31, 2022 interest free under the United Kingdom deferral scheme. The CARES Act allows net operating losses to be carried back to the previous five years, when the federal tax rate was 35%. As of October 1, 2020 the Company anticipates it will report a net operating loss when it files its fiscal year 2020 tax return. Management will continue to monitor potential legislation as well as market conditions which may materially alter the anticipated value of this net operating loss.

The Company's federal audit for the 2020 tax year is ~~substantially complete~~in process under the Internal Revenue Service Compliance Assurance Program ("CAP") ~~for the 2019 tax year.~~. The Company will continue to participate in the CAP program for the ~~2020~~2021 tax year. The CAP program’s objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination. ~~There are no~~The Company has an open ~~audits~~tax audit in the ~~Company’s foreign jurisdictions.~~Kingdom of Morocco for the tax years ended prior to the Company's ownership of the Moroccan legal entity. The company has been notified of the opening of a French Tax Audit Control for the tax years 2018 and 2019.

19. 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.

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. As of ~~October~~April 1, ~~2020,~~2021, 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 ~~nine~~three month period ended ~~October~~April 1, ~~2020,~~2021, the Company ~~repurchased zero~~did not repurchase any shares of its Common Stock under this share repurchase program. Share repurchases are currently on hold pending the outcome of ~~the B737 MAX grounding and~~ the COVID-19 pandemic. 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:

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

For the Three Months Ended
October 1, 2020 September 26, 2019
Income Shares Per Share
Amount Income Shares Per Share
Amount
Basic EPS
(Loss) income available to common stockholders $ (155.5) 103.9 $ (1.50) $ 131.2 103.5 $ 1.27
Income allocated to participating securities 0 0 0.1 0.1
Net (loss) income $ (155.5) $ 131.3
Diluted potential common shares 1.0
Diluted EPS
Net (loss) income $ (155.5) 103.9 $ (1.50) $ 131.3 104.6 $ 1.26


		For the Nine Months Ended											For the Three Months Ended
		October 1, 2020					September 26, 2019						April 1, 2021					April 2, 2020
		Income		Shares	Per Share Amount		Income		Shares	Per Share Amount			Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic EPS	Basic EPS											Basic EPS
(Loss) income available to common stockholders		$	(574.4)	103.8	$	(5.53)	$	462.1	103.6	$	4.46
Loss available to common stockholders												Loss available to common stockholders	$	(171.6)	104.1	$	(1.65)	$	(162.9)	103.7	$	(1.57)
Income allocated to participating securities	Income allocated to participating securities	0		0			0.3		0.1			Income allocated to participating securities	0		0			(0.1)		0
Net (loss) income		$	(574.4)				$	462.4
Net loss												Net loss	$	(171.6)				$	(163.0)

Diluted potential common shares	Diluted potential common shares								1.1			Diluted potential common shares			0					0
Diluted EPS	Diluted EPS											Diluted EPS
Net (loss) income		$	(574.4)	103.8	$	(5.53)	$	462.4	104.8	$	4.41
Net loss												Net loss	$	(171.6)	104.1	$	(1.65)	$	(163.0)	103.7	$	(1.57)

Included in the outstanding Common Stock were ~~1.6~~1.3 million and ~~1.4~~1.5 million of issued but unvested shares at ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019,~~April 2, 2020, respectively, which are excluded from the basic Earnings Per Share ("EPS") calculation.

Common shares of 1.3 million and 0.7 million, respectively, were excluded from diluted EPS ~~calculation.~~as a result of incurring a net loss for the three months ended April 1, 2021 and April 2, 2020, as the effect would have been antidilutive. Additionally, diluted EPS for the three months ended April 1, 2021 and April 2, 2020 excludes 0.2 million and 0.3 million shares, respectively, that may be dilutive common shares 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:


		As of		As of			As of		As of
		October 1, 2020		December 31, 2019			April 1, 2021		December 31, 2020
Pension	Pension	$	(52.8)	$	(53.1)	Pension	$	(116.5)	$	(112.0)
Interest swaps	Interest swaps	(1.2)		(0.6)		Interest swaps	0		(0.9)
SERP/Retiree medical	SERP/Retiree medical	13.7		17.1		SERP/Retiree medical	14.0		14.5
Derivatives - foreign currency hedge						Derivatives - foreign currency hedge	1.2		0
Foreign currency impact on long term intercompany loan	Foreign currency impact on long term intercompany loan	(14.3)		(13.1)		Foreign currency impact on long term intercompany loan	(11.2)		(11.8)
Currency translation adjustment	Currency translation adjustment	(75.0)		(59.5)		Currency translation adjustment	(37.5)		(43.9)
Total accumulated other comprehensive loss	Total accumulated other comprehensive loss	$	(129.6)	$	(109.2)	Total accumulated other comprehensive loss	$	(150.0)	$	(154.1)

Amortization or curtailment cost recognition of the pension plans’ net gain/(loss) reclassified from accumulated other comprehensive loss and realized into costs of sales and selling, general and administrative on the Condensed Consolidated Statements of Operations was ~~$0.7~~$0.6 and ~~$0.7~~$1.0 for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019, respectively, and $2.0 and $2.0 for the nine months ended October 1,~~April 2, 2020, ~~and September 26, 2019,~~ respectively.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

Rights Plan

On April 22, 2020, the Company’s Board of Directors declared a dividend of one right (a “Right”) for each outstanding share of Common Stock held of record at the close of business on May 1, 2020 (the “Record Time”), and adopted a stockholder rights plan, as set forth in the Stockholder Protection Rights Agreement, dated as of April 22, 2020 (the “Rights Agreement”), between the Company and Computershare Inc., as Rights Agent. Generally, the Rights may cause substantial dilution to a person or group that acquires 10% (or 20% in the case of a passive institutional investor) or more of the Common Stock unless the Rights are first redeemed or the Rights Agreement is terminated by the Board. While the Rights will not prevent a takeover of the Company, they may discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. Nevertheless, the Rights will not interfere with a Board-approved transaction that is in the best interests of the Company and its stockholders because the Rights can be redeemed, or the Rights Agreement terminated, on or prior to the consummation of such a transaction. Prior to exercise, the Rights do not confer voting or dividend rights.The Rights Agreement expired on April 22, 2021 per its terms.

20. Commitments, Contingencies and Guarantees

Litigation

From time to time, the Company is subject to, and is presently involved in, litigation, legal proceedings, or other claims arising in the ordinary course of business. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available, the Company believes that, on a basis of information presently available, none of these items, when finally resolved, will have a material adverse effect on the Company’s long-term financial position or liquidity.

On February 10, 2020, February 24, 2020, and March 24, 2020, three separate private securities class action lawsuits were filed against the Company in the U.S. District Court for the Northern District of Oklahoma, its Chief Executive Officer, Tom Gentile III, former chief financial officer, Jose Garcia, and former controller (principal accounting officer), John Gilson. On April 20, 2020, the Class Actions were consolidated by the court (the “Consolidated Class Action”), and on July 20, 2020, the plaintiffs filed a Consolidated Class Action Complaint which added Shawn Campbell, the Company’s former Vice President for the 737NG and 737 Max program, as a defendant. Allegations in the Consolidated Class Action include (i) violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against the Company and Messrs. Gentile, Garcia and Gilson, (ii) violations of Section 20(a) of the Exchange Act against the individual defendants, and (iii) violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) promulgated thereunder against all defendants.

On June 11, 2020, a shareholder derivative lawsuit (the “Derivative Action 1”) was filed against the Company (as nominal defendant), all members of the Company’s Board of Directors, and Messrs. Garcia and Gilson in the U.S. District Court for the Northern District of Oklahoma. Allegations in the Derivative Action 1 include (i) breach of fiduciary duty, (ii) abuse of control, and (iii) gross mismanagement. On October 5, 2020, a shareholder derivative lawsuit (the “Derivative Action 2” and, together with Derivative Action 1, the “Derivative Actions”) was filed against the Company (as nominal defendant), all members of the Company’s Board of Directors, and Messrs. Garcia and Gilson in the Eighteenth Judicial District, District Court of Sedgwick County, Kansas. Allegations in the Derivative Action 2 include (i) breach of fiduciary duty, (ii) waste of corporate assets, and (iii) unjust enrichment.

The facts underlying the Consolidated Class Action and Derivative Actions relate to the accounting process compliance independent review (the “Accounting Review”) discussed in the Company’s January 30, 2020 press release and described under Management's Discussion and Analysis of Financial Condition and Results of Operations - Accounting Review of the ~~2019~~Annual Report on Form 10-K for the year ended December 31, 2019, and its resulting conclusions.The Company voluntarily reported to the SEC the determination that, with respect to the third quarter of 2019, the Company did not comply with its established accounting processes related to potential third quarter contingent liabilities received after the quarter-end.On March 24, 2020, the Staff of the SEC Enforcement Division informed the Company that it had determined to close its inquiry without recommending any enforcement action against ~~Spirit.~~ the Company.In addition, the facts underlying the Consolidated Class Action and Derivative Actions relate to the Company’s disclosures regarding the B737 MAX grounding and Spirit’s production rate (and related matters) after the grounding. On September 18, 2020, the Company and individual defendants filed a motion to dismiss the Consolidated Class Action. That motion is pending. The Derivative Actions have been stayed pending a decision on the Consolidated Class Action.The Company and the individual defendants deny the allegations in the Consolidated Class Action and the Derivative ~~Actions.~~Action.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

The Company is involved in a lawsuit filed by a former executive officer for benefits withheld in connection with a disputed violation of restrictive covenants within his retirement agreement.While the Company believes it is not probable that the former executive will succeed in the lawsuit, based upon the executive’s selection of cash as the sole remedy in the third quarter of 2020, the lawsuit could result in a loss up to $40 including pre-trial interest and any other relief, including an estimated offset by retaining previously vested shares.Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

From time to time, in the ordinary course of business and similar to others in the industry, the Company receives requests for information from government agencies in connection with their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. The Company reviews such requests and notices and takes appropriate action. Additionally, the Company is subject to federal and state requirements for protection of the environment, including those for disposal of hazardous waste and remediation of contaminated sites. As a result, the Company is required to participate in certain government investigations regarding environmental remediation actions.

~~The Company is involved in a lawsuit filed by a former executive officer for benefits withheld in connection with a disputed violation of restrictive covenants within his retirement agreement. While~~In addition to the Company believes it is not probable that the former executive will succeed in the lawsuit, based upon the executive’s selection of cash as the sole remedy in the third quarter of 2020, the lawsuit could result in a loss up to $40 including pre-trial interest and any other relief, including an estimated offset by retaining previously vested shares. Factors underlying this estimated range of loss may changeitems addressed above, from time to time, the Company is subject to, and ~~actual results may vary significantly from this estimate.~~is presently involved in, litigation, legal proceedings, or other claims arising in the ordinary course of business. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available, the Company believes that, on a basis of information presently available, none of these items, when finally resolved, will have a material adverse effect on the Company’s long-term financial position or liquidity.

Customer and Vendor Claims

From time to time the Company receives, or is subject to, customer and vendor claims arising in the ordinary course of business, including, but not limited to, those related to product quality and late delivery. The Company accrues for matters when losses are deemed probable and reasonably estimable. In evaluating matters for accrual and disclosure purposes, we take into consideration multiple factors including without limitation our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of an unfavorable outcome, and the severity of any potential loss. Any accruals deemed necessary are reevaluated at least quarterly and updated as matters progress over time.

While the final outcome of these types of matters cannot be predicted with certainty, considering, among other things, the factual and legal defenses available, it is the opinion of the Company that, when finally resolved, no current claims will have a material adverse effect on the Company’s long-term financial position or liquidity. However, it is possible that the Company’s results of operations in a period could be materially affected by one or more of these other matters.

Guarantees

Outstanding guarantees were ~~$19.4~~$19.6 and ~~$21.5~~$19.6 at ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Restricted Cash - Collateral Requirements

The Company was required to maintain $19.5 and ~~$16.4~~$19.5 of restricted cash as of ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, related to certain collateral requirements for obligations under its workers’ compensation programs. The restricted cash is included in “Other assets” in the Company’s Condensed Consolidated Balance Sheets.

Indemnification

The Company has entered into customary indemnification agreements with its non-employee directors, and its bylaws and certain executive employment agreements include indemnification and advancement provisions. Pursuant to the terms of the bylaws and, with respect to Jose Garcia, his employment agreement, the Company is providing Messrs. Garcia and Gilson ~~advancement of~~ and all other individual defendants withdefense costs and provisional indemnity with respect to the Consolidated Class Action and Derivative ~~Actions.~~Actions, as appropriate. Under the bylaws and any applicable agreements, the Company agrees to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as the Company’s agent or the agent of any of its subsidiaries to the fullest extent legally permitted.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

The Company has agreed to indemnify parties for specified liabilities incurred, or that may be incurred, in connection with transactions they have entered into with the Company. The Company is unable to assess the potential number of future claims that may be asserted under these indemnities, nor the amounts thereof (if any). As a result, the Company cannot estimate the maximum potential amount of future payments under these indemnities and therefore, no liability has been recorded.

Service and Product Warranties and Extraordinary Rework

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

Provisions for estimated expenses related to service and product warranties and certain extraordinary rework are evaluated on a quarterly basis. These costs are accrued and are recorded to unallocated cost of goods sold. These estimates are established using historical information on the nature, frequency, and average cost of warranty claims, including the experience of industry peers. In the case of new development products or new customers, Spirit considers other factors including the experience of other entities in the same business and management judgment, among others. Service warranty and extraordinary rework is reported in current liabilities and other liabilities on the balance sheet.

The warranty balance presented in the table below includes unresolved warranty claims that are in dispute in regards to their value as well as their contractual liability. The Company estimated the total costs related to some of these claims, however, there is significant uncertainty surrounding the disposition of these disputed claims and as such, the ultimate determination of the provision’s adequacy requires significant management judgment. The amount of the specific provisions recorded against disputed warranty claims was $8.1 as of ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019.~~2020. These specific provisions represent the Company’s best estimate of probable warranty claims. Should the Company incur higher than expected warranty costs and/or discover new or additional information related to these warranty provisions, the Company may incur additional charges that exceed these recorded provisions. The Company utilized available information to make appropriate assessments, however, the Company recognizes that data on actual claims experience is of limited duration and therefore, claims projections are subject to significant judgment. The amount of the reasonably possible disputed warranty claims in excess of the specific warranty provision was $12.1 as of ~~October~~April 1, ~~2020~~2021 and December 31, ~~2019.~~2020.

The following is a roll forward of the service warranty and extraordinary rework balance at ~~October~~April 1, ~~2020:~~2021:


Balance, December 31, ~~2019~~2020	$	~~64.7~~76.9
Charges (release) to costs and expenses	~~2.9~~ (0.3)
Payouts	~~(1.4)~~(1.0)
Exchange rate	~~(0.2)~~0
Balance, ~~October~~April 1, ~~2020~~2021	$	~~66.0~~75.6

21. Other (Expense) Income, Net

Other (expense) income, net is summarized as follows:

For the Three
Months Ended For the Nine
Months Ended
October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
Kansas Development Finance Authority bond $ 0.6 $ 0.8 $ 2.3 $ 2.8
Rental and miscellaneous income 0 0 0.1 0.1
Interest income 0.9 2.6 9.0 8.8
Foreign currency (losses) gains (1)
(3.4) (17.9) 1.4 (9.9)
Loss on foreign currency contract and interest rate swaps (10.6) (0.5) (10.5) (18.3)
Litigation settlement 0 0 0 13.5
Loss on sale of accounts receivable (2.0) (6.5) (6.7) (18.7)
Pension (loss) income (2)
9.0 12.0 (56.4) 9.8
ASC 326 credit loss reserve (3.6) 0 (3.6) 0
Other (0.9) 0 (1.0) 0
Total $ (10.0) $ (9.5) $ (65.4) $ (11.9)

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)


	For the Three Months Ended
		April 1, 2021		April 2, 2020
Kansas Development Finance Authority bond		$	0.9	$	1.1

Interest income		0.6		6.9
Foreign currency (losses) gains (1)		(8.9)		5.4
Loss on foreign currency contract and interest rate swaps		(0.8)		0.1
Loss on sale of accounts receivable		(1.6)		(3.1)
Pension income (loss) (2)		26.1		(59.6)
ASC 326 credit loss reserve		(1.0)		0
Intangible assets amortization		(2.3)		0
Other		(0.2)		0.2
Total		$	12.8	$	(49.0)

(1) Foreign currency gains and losses are due to the impact of movement in foreign currency exchange rates on long-term contractual rights/obligations, as well as cash and both trade and intercompany receivables/payables that are denominated in a currency other than the entity’s functional currency.

(2) Pension income for the three months ended April 1, 2021 includes $15.4 of income related to Belfast pension plan. Pension expense for the three ~~and nine~~ months ended ~~October 1,~~April 2, 2020 includes ~~$2.6 and $86.4~~$69.2 of ~~expenses~~expense related to the voluntary retirement ~~program, respectively. Pension expense for the three and nine months ended September 26, 2019 includes $5.5 and ($9.7), respectively, of income/(expenses) related to the voluntary retirement~~ program.

22. Segment Information

The Company operates in 3 principal segments: Fuselage Systems, Propulsion Systems, and Wing Systems. Revenue from Boeing represents a substantial portion of the Company's revenues in all segments. The Wing Systems Segment also includes significant revenues from Airbus. Approximately ~~81%~~78% of the Company's net revenues for the three months ended ~~October~~April 1, ~~2020~~2021 came from the Company's two largest customers, Boeing and Airbus. All other activities fall within the All Other segment, principally made up of non-recurring contracts, sundry sales of miscellaneous services, tooling contracts and sales of natural gas through a tenancy-in-common with other companies that have operations in Wichita, Kansas. The Company's primary profitability measure to review a segment’s operating performance is segment operating income before corporate selling, general and administrative expenses, research and development, and unallocated cost of sales.

Corporate selling, general and administrative expenses include centralized functions such as accounting, treasury, and human resources that are not specifically related to the Company's operating segments and are not allocated in measuring the operating segments’ profitability and performance and net profit margins. Research and development includes research and development efforts that benefit the Company as a whole and are not unique to a specific segment. Restructuring costs represent corporate level charges related to ~~involuntary workforce reductions~~the closure of the San Antonio and ~~the VRP.~~McAlester sites. Unallocated cost of sales includes general costs not directly attributable to segment operations, such as warranty, early retirement and other incentives. All of these items are not specifically related to the Company’s operating segments and are not utilized in measuring the operating segments’ profitability and performance.

The Company’s Fuselage Systems Segment includes development, production and marketing of forward, mid and rear fuselage sections and systems, primarily to aircraft ~~Original Equipment Manufacturers (“OEMs”), as well as related spares and maintenance, repairs and overhaul (“MRO”) services and exterior components of rocket systems.~~OEMs (OEM refers to aircraft original equipment manufacturer). The Fuselage Systems Segment manufactures products at the Company's facilities in Wichita, Kansas; ~~Biddeford, Maine; Tulsa; Kinston, North Carolina;~~Tulsa and McAlester, Oklahoma; San Antonio, Texas; Kinston, North Carolina; Biddeford, Maine; Casablanca, Morocco; Belfast, Northern Ireland; and Subang, Malaysia. The Fuselage Systems Segment also includes an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France. The Company has previously announced site consolidation activities, including the McAlester, Oklahoma and San Antonio, Texas sites. The work transfer and closure activities for these sites will take place over the next several months.

The Company’s Propulsion Systems Segment includes development, production and marketing of struts/pylons, nacelles (including thrust reversers), and related engine structural components primarily to aircraft or engine OEMs, as well as related spares and MRO ~~services and internal components to rocket propulsion systems.~~services. The Propulsion Systems Segment manufactures products at the Company's facility in Wichita, Kansas; Dallas, Texas; Biddeford, Maine; Belfast, Northern Ireland; and San Antonio, Texas.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

The Company’s Wing Systems Segment includes development, production and marketing of wings and wing components (including flight control surfaces)~~, and~~ as well as other miscellaneous structural parts primarily to aircraft ~~OEMs, as well as related spares and MRO services.~~OEMs. These activities take place at the Company’s facilities in ~~Kinston, North Carolina;~~ Tulsa and McAlester, Oklahoma; San Antonio, Texas; Kinston, North Carolina; Prestwick, Scotland; Belfast, Northern Ireland; Casablanca, Morocco; and Subang, Malaysia. The Company has previously announced site consolidation activities, including the McAlester, Oklahoma and San Antonio, Texas sites. The work transfer and closure activities for these sites will take place over the next several months.

The Company’s segments are consistent with the organization and responsibilities of management reporting to the chief operating decision-maker for the purpose of assessing performance. The Company’s definition of segment operating income differs from ~~net profit margin~~Operating income as presented in its primary financial statements and a reconciliation of the segment and consolidated results is provided in the table set forth below.

While some working capital accounts are maintained on a segment basis, much of the Company’s assets are not managed or maintained on a segment basis. Property, plant and equipment, including tooling, is used in the design and production of

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

products for each of the segments and, therefore, is not allocated to any individual segment. In addition, cash, prepaid expenses, other assets, and deferred taxes are managed and maintained on a consolidated basis and generally do not pertain to any particular segment. Raw materials and certain component parts are used in aerostructure production across all segments. Work-in-process inventory is identifiable by segment, but is managed and evaluated at the program level. As there is no segmentation of the Company’s productive assets, depreciation expense (included in fixed manufacturing costs and selling, general and administrative expenses) and capital expenditures, no allocation of these amounts has been made solely for purposes of segment disclosure requirements.

The following table shows segment revenues and operating income for the three months ended April 1, 2021 and ~~nine months ended October 1, 2020 and September 26, 2019:~~April 2, 2020:


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019				April 1, 2021		April 2, 2020
Segment Revenues	Segment Revenues									Segment Revenues
Fuselage Systems	Fuselage Systems	$	421.1	$	1,005.3	$	1,299.7	$	3,171.7	Fuselage Systems		$	437.1	$	551.5
Propulsion Systems	Propulsion Systems	170.8		520.9		565.6		1,525.5		Propulsion Systems		226.5		225.2
Wing Systems	Wing Systems	168.3		391.0		582.2		1,197.4		Wing Systems		223.6		291.4
All Other	All Other	46.1		2.7		80.7		9.2		All Other		13.6		9.2
		$	806.3	$	1,919.9	$	2,528.2	$	5,903.8			$	900.8	$	1,077.3
Segment Operating Income (Loss)	Segment Operating Income (Loss)									Segment Operating Income (Loss)
Fuselage Systems(1)	Fuselage Systems(1)	$	(96.7)	$	105.8	$	(434.6)	$	380.5	Fuselage Systems(1)		$	(59.8)	$	(86.4)
Propulsion Systems(2)	Propulsion Systems(2)	(15.6)		111.7		(38.2)		304.9		Propulsion Systems(2)		16.7		(5.3)
Wing Systems(3)	Wing Systems(3)	(23.2)		53.9		(52.1)		177.1		Wing Systems(3)		(18.9)		13.6
All Other	All Other	19.1		1.3		28.9		2.5		All Other		1.2		1.8
		$	(116.4)	$	272.7	$	(496.0)	$	865.0			$	(60.8)	$	(76.3)
SG&A	SG&A	(52.8)		(53.6)		(179.2)		(173.6)		SG&A		(57.6)		(77.4)
Research and development	Research and development	(7.5)		(12.6)		(28.1)		(36.0)		Research and development		(8.2)		(12.3)
Unallocated cost of sales	Unallocated cost of sales	(0.2)		(0.4)		(8.1)		9.7		Unallocated cost of sales		0.7		(1.5)
Total operating income	Total operating income	$	(176.9)	$	206.1	$	(711.4)	$	665.1	Total operating income		$	(125.9)	$	(167.5)

(1) The three ~~and nine~~ months ended ~~October~~April 1, ~~2020~~2021 includes excess capacity production costs of ~~$42.0 and $143.8, respectively,~~$42.6 related to the temporary B737 MAX and A220 production schedule changes, abnormal costs of ~~$(7.4) and $19.1, respectively,~~$0.7 for temporary workforce adjustments as a result of COVID-19 production pause net of U.S. employee retention credit and U.K. government subsidies, ~~$6.6 and $39.1, respectively,~~$1.8 of restructuring ~~costs, and $0 and $22.5, respectively, from loss on the disposition of assets.~~

~~(2)~~costs. The three ~~and nine~~ months ended ~~October 1,~~April 2, 2020includes excess capacity ~~production costs~~cost of ~~$17.5 and $50.8, respectively,~~$51.2 related to the ~~temporary~~ B737 MAX production schedule ~~changes,~~adjustment that began on January 1, 2020, $15.3 of abnormal costs ~~of $(2.9) and $7.3, respectively,~~ for temporary workforce adjustments ~~as a result of~~resulting from the Boeing production suspension which began on March 25, 2020 related to COVID-19, ~~production pause net of U.S employee retention credit~~, and ~~$3.8 and $14.2, respectively,~~$30.1 of restructuring costs.

~~(3) The three and nine months ended October 1, 2020~~includes excess capacity production costs of $13.1 and $34.2, respectively, related to the temporary B737 MAX and A320 production schedule changes, abnormal costs of $(0.6) and $7.4, respectively, for temporary workforce adjustments as a result of COVID-19, ~~net of U.S employee retention credit~~ ~~and U.K government subsidies, $9.1 and $15.1, respectively, of restructuring costs, and $0 and $0.4, respectively, from loss on the disposition of assets.~~

~~Note that none of the information above includes the new facilities acquired in connection with our acquisition of select assets from Bombardier Inc. and affiliates, as further described in Note 26,~~ ~~Subsequent Events~~.

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Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

(2) The three months ended April 1, 2021includes excess capacity production costs of $7.2 related to the temporary B737 MAX and A220 production schedule changes, abnormal costs of $0.1 for temporary workforce adjustments as a result of COVID-19 production pause net of U.S employee retention credit, and $(0.2) of restructuring costs. The three months ended April 2, 2020 includes excess capacity cost of $15.8 related to the B737 MAX production schedule adjustment that began on January 1, 2020, $6.2 of abnormal costs for temporary workforce adjustments resulting from the Boeing production suspension which began on March 25, 2020 related to COVID-19, and $8.8 of restructuring costs.

~~23. Restructuring Costs~~(3) The three months ended April 1, 2021includes excess capacity production costs of $17.8 related to the temporary B737 and A220 MAX and A320 production schedule changes, abnormal costs of $1.3 for temporary workforce adjustments as a result of COVID-19, net of U.S employee retention credit and U.K government subsidies, $0.5 of restructuring costs. The three months ended April 2, 2020 includes excess capacity cost of $6.4 related to the B737 MAX production schedule adjustment that began on January 1, 2020, $3.9 of abnormal costs for temporary workforce adjustments resulting from the Boeing production suspension which began on March 25, 2020 related to COVID-19, and $3.7 of restructuring costs.

23. Restructuring Costs

The Company's results of operations for both the ~~nine~~three months ended April 1, 2021 and the three months ended April 2, 2020 include restructuring costs related to actions the Company has taken to align costs to updated production levels that have been directed by the Company's customers (restructuring activity). Largely beginning in the three month period ~~ending October 1,~~ended April 2, 2020, the Company's customers, including Boeing and Airbus, ~~have~~ significantly reduced their overall production rates as a result of the COVID-19 pandemic and, in the case of Boeing, the B737 MAX grounding. ~~As a result, the Company took actions to align costs to the updated production levels (restructuring activity).~~ The ~~Company’s planned~~ restructuring ~~activities are documented in a restructuring plan that is approved and controlled by management. The planned activities to align costs to expected production levels has~~activity materially affected the scope of operations and manner in which business is conducted by the ~~Company. The~~Company compared to periods prior to the restructuring plan includes additional restructuring activity in the three months ended October, 1, 2020, as the COVID-19 pandemic has continued to have a significant negative impact on the aviation industry and further impacted the Company’s global business.activities.

Restructuring costs ~~under the plan, which~~ are presented separately as a component of operating loss on the ~~consolidated statement~~Condensed Consolidated Statement of ~~operations, are~~Operations. The total restructuring costs of $2.1 for the three months ended April 1, 2021 includes cost related to McAlester and San Antonio site closures. For the three months ended April 2, 2020, total restructuring costs of $42.6 were comprised of $31.5 related to involuntary workforce reductions and $11.1 related to a VRP.

Of the ~~VRP. The~~$2.1 total restructuring ~~costs of $68.4~~cost for the ~~nine~~three months ended ~~October~~April 1, ~~2020 includes $47.5 related to involuntary workforce reductions and $20.9 related to the VRP.~~

The total restructuring costs related to involuntary workforce reductions of $47.5 for the nine months ended October 1, 2020 that includes $31.5 for first quarter 2020 for approximately 3,200 employees, $4.9 for the second quarter 2020 for approximately 1,450 additional employees in response to COVID-19 impacts, and $11.1 for the third quarter 2020 for approximately 1,950 additional employees. The $47.5 total represents the full cost of the involuntary workforce restructuring activities included in the plan through October 1, 2020. Of the $47.5 total for the nine months ended October 1, 2020, $41.12021, $1.2 was paid during the ~~nine-month~~three-month period ended ~~October~~April 1, ~~2020~~2021 and the remaining ~~$6.4~~$0.9 is recorded in the accrued expenses line item on the balance sheet as of ~~October~~April 1, ~~2020.~~

The total restructuring costs related to the VRP of $20.9 for the nine months ended October 1, 2020 represents the total costs expected to be incurred for the voluntary retirement packages that includes $11.1 for the first quarter 2020 for 207 employees, $1.4 for the second quarter 2020 for 27 employees, $8.4 for the third quarter 2020 for 165 employees. The cost related to packages under the VRP are generally accrued and charged to earnings when the employee accepts the offer. Of the $20.9 total for the nine months ended October 1, 2020, $20.5 was paid during the nine-month period ended October 1, 2020 and the remaining $0.4 is recorded in the accrued expenses line item on the consolidated balance sheet as of October 1, 2020.2021.

The costs of the restructuring plan are included in segment operating margins. The total amount for the ~~nine-month~~three month period ended ~~October~~April 1, ~~2020~~2021 for each segment is ~~$39.1~~$1.8 for the Fuselage Systems Segment, ~~$14.2~~($0.2) for the Propulsion Systems Segment, and ~~$15.1~~$0.5 for the Wing Systems Segment. The total amount for the three month period ended April 2, 2020 for each segment is $30.1 for the Fuselage Systems Segment, $8.8 for the Propulsion Systems Segment, and $3.7 for the Wing Systems Segment.

24. Acquisitions

~~FMI~~

On January 10, 2020, Spirit completed the acquisition of 100% of the outstanding equity of FMI. The acquisition-date fair value of consideration transferred was $121.6, which included cash payment to the seller, payment of closing indebtedness, and payment of selling expenses.

Acquiring FMI aligns with the Company's strategic growth objectives to diversify its customer base and expand the current defense business. Founded in 1969 and headquartered in Biddeford, ME, FMI is an industry-leader in the design and manufacture of complex composite solutions that are primarily used in aerospace applications. Over the past 50 years, FMI has developed a portfolio related to its high temperature composites. FMI's main operations focus on multidirectional reinforced composites that enable high-temperature applications such as thermal protection systems, re-entry vehicle nose tips, and rocket motor throats and nozzles. Their unique capabilities have positioned them as a leader in 3D woven carbon-carbon high-temperature materials for hypersonic missiles, which the Department of Defense has identified as a national priority.

The acquisition was funded from cash on hand. The Company incurred $1.5 in acquisition-related costs. Acquisition-related expenses were $0.0 and $0.5 for the three and nine months ended October 1, 2020, respectively, and are included in SG&A on the Condensed Consolidated Statement of Operations.

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

The purchase price has been allocated among assets acquired and liabilities assumed at fair value, with the excess purchase price recorded as goodwill. The Company has recorded purchase accounting entries, which the Company concluded were final as of quarter ended October 1, 2020:


~~At January 10, 2020~~
~~Cash and cash equivalents~~	$	~~3.5~~
~~Accounts receivable~~	~~5.3~~
~~Inventory~~	~~1.9~~
~~Contract Assets, short-term~~	~~5.6~~
~~Prepaid and other current assets~~	~~0.5~~
~~Equipment and leasehold improvements~~	~~12.3~~
~~Intangible assets~~	~~30.0~~
~~Goodwill~~	~~76.0~~
~~Other noncurrent assets~~	~~0.2~~
~~Total assets acquired~~	$	~~135.3~~

~~Accounts payable and accrued liabilities~~	~~1.8~~
~~Income Tax Payable~~	~~1.4~~
~~Contract liabilities, short-term~~	~~2.2~~
~~Accrued payroll and employee benefits~~	~~0.6~~
~~Other current liabilities~~	~~0.2~~
~~Deferred income taxes, non-current~~	~~7.5~~
~~Other noncurrent liabilities~~	~~0.2~~
~~Total liabilities assumed~~	~~13.9~~
~~Net assets acquired~~	$	~~121.4~~

~~The intangible assets included above consist of the following:~~

Amount Amortization Period
(in years)
Developed technology asset $ 30.0 15
Total intangible assets $ 30.0 15

FMI has developed proprietary know-how over the past 50 years related to its densification and weaving processes. FMI's densification and weaving processes are used to develop specialized composites which can withstand high temperatures and meet the structural requirements set forth by FMI's customers. FMI has developed proprietary designs for 3D and 4D weaving of uncrimped carbon fibers. The densification process utilizes proprietary formulas of heat, pressure, materials, and time to create high density composite solutions at scale. FMI's developed technology results in high strength to weight composites with unmatched density, stability, and heat resistance, which are essential for the mission critical markets it serves. This developed technology is the primary driver of FMI's longstanding, competitive advantage in the markets.

FMI is typically engaged with government agencies through purchase orders and does not have any life of program commitments from customers. As a result of FMI’s existing developed technology and incumbent position on previous purchase orders, FMI is positioned to capture future government programs. As such, the developed technology and contract assets were subsumed into one consolidated intangible asset (collectively referred to as the developed technology asset).

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

The developed technology intangible asset is deemed to be the primary revenue-generating identifiable intangible asset acquired in the Transaction. The multi-period excess earnings method ("MPEEM") was used as the approach for estimating the fair value of the developed technology intangible asset which utilizes significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. The analysis included assumptions for projections of revenues and expenses, contributory asset charges, discount rates, and a tax impacts.

The goodwill amount of $76.0 recognized is attributable primarily to expected revenue synergies generated by the integration of our products and technologies with those of FMI and intangible assets that do not qualify for separate recognition, such as the assembled workforce of FMI. None of the goodwill is expected to be deductible for income tax purposes. The goodwill is allocated $42.9 to the Fuselage Systems Segment and $33.1 to the Propulsion Systems Segment. This allocation was based upon the fair value of the projected earnings as of the acquisition date. The recognized goodwill was adjusted from $76.2 to $76.0 resulting from settlement of net working capital in second quarter of 2020. See Note 11, ~~Other Assets, Goodwill, and Intangible Assets~~ ~~for more information on goodwill.~~

The fair value of accounts receivables acquired is $5.3, which approximates the gross contractual amount. The Company expects substantially all amounts to be collectible. Prior to the acquisition, the Company did not have a preexisting relationship with FMI.

The Company’s consolidated income statement from the acquisition date to the period ending October 1, 2020 includes revenue and earnings of FMI of $43.2 and $6.7, respectively. The following summary, prepared on a pro forma basis, presents the unaudited consolidated results of operations for the nine months ended October 1, 2020 and September 26, 2019, as if the acquisition of FMI had been completed as of the beginning of fiscal 2019, after including in fiscal 2019 any post-acquisition adjustments directly attributable to the acquisition, and after including the impact of adjustments such as amortization of intangible assets, and interest expense on related borrowings and, in each case, the related income tax effects. These amounts have been calculated after substantively applying the Company’s accounting policies. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of our results of operations had the Company owned FMI for the entire periods presented.

For the Three Months Ended For the Nine Months Ended
October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
Revenue - as reported $ 806.3 $ 1,919.9 $ 2,528.2 $ 5,903.8
Revenue - pro forma 806.3 1,927.4 2,529.0 5,926.8
Net (loss) income - as reported $ (155.5) $ 131.3 $ (574.4) $ 462.4
Net (loss) income - pro forma (155.5) 131.9 (574.3) 464.1
Earnings Per Share - Diluted - as reported $ (1.50) 1.26 $ (5.53) 4.41
Earnings Per Share - Diluted - pro forma (1.50) 1.26 (5.53) 4.43

Asco

On May 1, 2018, the Company and its wholly-owned subsidiary Spirit AeroSystems Belgium Holdings BVBA (“Spirit Belgium”) entered into a definitive agreement (as amended, the “Asco Purchase Agreement”) with certain private sellers providing for the purchase by Spirit Belgium of all of the issued and outstanding equity of S.R.I.F. N.V., the parent company of Asco Industries N.V. (“Asco”), subject to certain customary closing adjustments, including foreign currency adjustments (the “Asco Acquisition”). On September 25, 2020, the Company, Spirit Belgium and the Sellers entered into an amendment to the Asco Purchase Agreement (the “Termination Agreement”) pursuant to which the parties agreed to terminate the Asco Purchase Agreement, including all schedules and annexes thereto (other than certain confidentiality agreements) (collectively with the Asco Purchase Agreement, the “Transaction Documents”), effective as of September 25, 2020. Under the Termination Agreement, the parties also agreed to release each other from any and all claims, rights of action, howsoever arising, of every kind and nature, in connection with, arising out of, based upon or related to, directly or indirectly, the Transaction Documents, including any breach, non-performance, action or failure to act under the Transaction Documents.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

Acquisition-related expenses were ~~($0.1)~~$0.1 and ~~$3.1~~$11.0 for the three months ended ~~October~~April 1, ~~2020~~2021 and September 26, 2019, respectively, and $17.3 and $8.4 for the nine month ended October 1, 2020 and September 26, 2019, respectively, and are included in selling, general and administrative costs on the condensed and consolidated statement of operations.

~~Bombardier~~

On October 31, 2019, Spirit and Spirit AeroSystems Global Holdings Limited (“Spirit UK”), wholly owned subsidiaries of the Company, entered into a definitive agreement (the “Bombardier Purchase Agreement”) with Bombardier Inc., Bombardier Aerospace UK Limited, Bombardier Finance Inc. and Bombardier Services Corporation (collectively, the “Bombardier Sellers”) pursuant to which, subject to the satisfaction or waiver of certain conditions, Spirit UK will acquire the outstanding equity of Short Brothers plc (“Shorts”) and Bombardier Aerospace North Africa SAS ("BANA"), and Spirit will acquire substantially all the assets of the maintenance, repair and overhaul business in Dallas, Texas (collectively, the “Bombardier Acquired Business”) and assume certain liabilities of Shorts and BANA (the “Bombardier Acquisition”).

Spirit, Spirit UK and the Bombardier Sellers entered into an amendment to the Bombardier Purchase Agreement on October 26, 2020 and closed the Bombardier Acquisition on October 30, 2020, which is described further under Note 26, Subsequent Events.

~~Acquisition-related expenses were $3.3 and $6.2 for the three months and nine months ended October 1,~~April 2, 2020, respectively, and are included in selling, general and administrative costs on the Condensed Consolidated Statement of Operations.

Bombardier

~~25. Condensed Consolidating Financial Information~~

~~The Floating Rate Notes, 2023 Notes,~~On October 30, 2020, Spirit and ~~2028 Notes~~Spirit AeroSystems Global Holdings Limited, wholly owned subsidiaries of the Company, completed their previously announced acquisition of the outstanding equity of Short Brothers plc (“Shorts”) and Bombardier Aerospace North Africa SAS, and substantially all the assets of the maintenance, repair and overhaul business in Dallas, Texas (collectively, the ~~"Unsecured Notes"~~“Bombardier Acquired Business”), along with the assumption of certain liabilities of Shorts and BANA (the “Bombardier Acquisition”).

The Bombardier Acquired Businesses are ~~fully~~global leaders in aerostructures and ~~unconditionally guaranteed~~fabrication, delivering composite and metallic wing components, nacelles, fuselages and tail assemblies, along with high-value mechanical assemblies made out of aluminum, titanium and steel. The backlog of work includes long-term contracts on ~~a senior unsecured basis by Holdings.~~the Airbus aircraft family, along with Bombardier business and regional jets. The ~~2026 Notes~~acquisition is in line with the Company’s growth strategy of increasing Airbus content, developing low-cost country footprint, and ~~First Lien 2025 Notes~~growing the Company’s aftermarket business. The Bombardier Acquired Businesses are ~~fully~~included within the Fuselage Systems, Propulsion Systems, and unconditionally guaranteed on a senior secured first lien basis by Holdings and Spirit NC. The Second Lien 2025 Notes are fully and unconditionally guaranteed on a senior secured second lien basis by Holdings and Spirit NC. Together,Wing Systems reporting segments. Refer to Note 22, Segment Information for additional information about the ~~Floating Rate Notes, 2023 Notes, Second Lien 2025 Notes, First Lien 2025 Notes, 2026 Notes, and 2028 Notes shall be referred to as the “Existing Notes.”~~Company’s segments.

The ~~following condensed consolidating~~Company, acting through certain of its subsidiaries, also assumed net pension liabilities of approximately $316. As a result of the acquisition of the acquired Bombardier Business, Spirit assumed financial ~~information, which has been prepared in accordance~~obligations related to a repayable investment agreement with the ~~requirements~~Department for ~~presentation~~Business, Energy and Industrial Strategy of ~~Rule 3-10(d)~~the Government of ~~Regulation S-X promulgated~~the United Kingdom. As a result of its obligation to make future payments under this agreement, the Company recorded the assumed obligation from this transaction as a liability on its Consolidated Balance Sheet that will be accounted for using the interest method over the estimated life of the agreement. As a result, the Company imputes interest on the transaction and recorded imputed interest expense at the estimated interest rate. The Company's estimate of the interest rate under the ~~Securities Act, presents~~agreement is based on the ~~condensed consolidating financial information separately for:~~amount of payments expected to be made over the remaining life of the agreement. The Company utilizes future sales projections and growth rates to further develop this estimate. The projected amount of payments expected to be made involves the use of significant estimates and assumptions with respect to the number of units expected to be sold. The Company periodically assesses the expected payments to be made using a combination of historical results and forecasts from market data sources. To the extent such payments are greater or less than its initial estimates or the timing of such payments is materially different than its original estimates, the Company will adjust the amortization of the liability prospectively. The Company determined the fair value of the liability at the acquisition date to be $304 which is included within the liabilities assumed, with a current effective annual imputed interest rate of 6.78%. Cash payments made related to the principal component of the liability will be classified as a financing outflow on the Consolidated Statement of Cash Flows, while payments made related to the interest component will be presented within operating cash flows.

~~(i)~~The $275 cash consideration, along with these assumed liabilities, results in a total enterprise value of $895. The Company agreed to procure payment of a special contribution of £100 to the Shorts pension scheme on October 30, 2021. In addition, included within the liabilities assumed is approximately $292.5 in forward loss contracts. Refer to Note 4 ~~Holdings, as the parent guarantor of the Existing Notes, as further detailed~~Changes in ~~Note 15,~~ Estimates~~Debt~~;

~~(ii)Spirit, as issuer of the Existing Notes;~~

~~(iii)Spirit NC, as a guarantor of the 2026 Notes and First Lien 2025 Notes~~ for additional information on ~~a senior secured first lien basis and the Second Lien 2025 Notes on a senior secured second lien basis;~~

~~(iv)The Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”), on a combined basis;~~

~~(v)~~Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Holdings, Spirit NC, and the Non-Guarantor Subsidiaries, (b) eliminate the investments in the Company’s ~~subsidiaries, and (c) record consolidating entries; and~~

~~(vi)Holdings and its subsidiaries on a consolidated basis.~~forward loss provisions.

Acquisition-related expenses were $1.3 and $1.0 for the three months ended April 1, 2021 and April 2, 2020, respectively, and are included in selling, general and administrative costs on the Condensed Consolidated Statement of Operations.

The acquisition was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess purchase price recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. In some cases, the Company used discounted cash flow analyses, which were based on the Company's best estimate of future sales, earnings and cash flows after considering such factors as general market conditions, customer budgets, existing firm and future orders, changes in working capital, long term business plans and recent operating performance. Use of different estimates and judgments could yield materially different results.

The Company also identified contractual obligations with customers on certain contracts with economic returns that are lower than could be realized in market transactions as of the acquisition date. The Company measured these liabilities under the

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~Condensed Consolidating Statements~~measurement provisions of ~~Operations~~FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” which is based on the price to transfer the obligation to a market participant at the measurement date, assuming that the liability will remain outstanding in the marketplace. Significant assumptions were used to determine the fair value of the loss contract reserves using the discounted cash flow model including discount rates, forecasted quantities of products to be sold under the long-term contracts and market prices for respective products. These were forward looking assumptions that could be affected by future economic and market conditions. Based on the estimated net cash outflows of the programs plus a reasonable contracting profit margin required to transfer the contracts to market participants, the Company recorded assumed liabilities of approximately $292.5 in connection with the Bombardier Acquisition. These liabilities are shown within the Forward loss provision on the Consolidated Balance Sheet for the period ended April 1, 2021. These liabilities will be liquidated in accordance with the underlying pattern of obligations, as reflected by the expenses incurred on the contracts, as a reduction to cost of sales. Total consumption of the contractual obligation in 2020 was $7.2. Total consumption of the contractual obligation for the next five year, based upon the assumptions referenced above is expected to be as follows: $16.1 in 2021, $45.9 in 2022, $71.5 in 2023, $85.0 in 2024, and $66.8 in 2025.

~~For~~

The Company expects to substantially finalize its purchase price allocation by October 30, 2021 after the ~~Three Months Ended October~~Company further analyzes and assesses a number of the factors used in establishing the fair values of assets acquired and liabilities assumed as of the Bombardier Acquisition date including, but not limited to, contractual and operational factors underlying the customer-related intangible assets and property, plant and equipment; details surrounding tax matters; and assumptions underlying certain existing or potential reserves, such as those for product warranties and environmental matters. Based on additional information obtained during the three month measurement period ended April 1, ~~2020~~2021, the Company recognized the following adjustments to its preliminary purchase price allocation, which are included below: Intangible assets decreased by $5.0, forward loss liability increased by $10.9, accounts receivable decreased by $2.2 and inventory decreased by $0.4. As a result of these adjustments, as of April 1, 2021, the recognized goodwill was adjusted from $486.8 to $505.3. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table below.

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Revenue $ 0 $ 705.5 $ 56.7 $ 130.0 $ (85.9) $ 806.3
Operating costs and expenses
Cost of sales — 812.0 54.7 122.6 (85.9) 903.4
Selling, general and administrative 3.3 43.8 0.7 5.0 — 52.8
Restructuring cost 0 10.9 0.2 8.4 0 19.5
Research and development — 6.2 0.1 1.2 — 7.5
Loss on disposal of assets 0 0 0 0 0 0
Total operating costs and expenses 3.3 872.9 55.7 137.2 (85.9) 983.2
Operating (loss) income (3.3) (167.4) 1.0 (7.2) — (176.9)
Interest expense and financing fee amortization — (53.0) 0 (0.4) 0.4 (53.0)
Other (expense) income, net — (6.2) (0.1) (3.3) (0.4) (10.0)
(Loss) income before income taxes and equity in net (loss) income of affiliate and subsidiaries (3.3) (226.6) 0.9 (10.9) — (239.9)
Income tax benefit (provision) 1.2 82.8 (0.2) 1.4 — 85.2
(Loss) income before equity in net (loss) income of affiliate and subsidiaries (2.1) (143.8) 0.7 (9.5) — (154.7)
Equity in net (loss) income of affiliate — — 0 (0.8) — (0.8)
Equity in net (loss) income of subsidiaries (153.4) (9.6) 0 — 163.0 0
Net (loss) income (155.5) (153.4) 0.7 (10.3) 163.0 (155.5)
Other comprehensive (loss) income 51.7 51.7 0 18.7 (70.4) 51.7
Comprehensive (loss) income $ (103.8) $ (101.7) $ 0.7 $ 8.4 $ 92.6 $ (103.8)

The preliminary purchase price allocation of the assets acquired and the liabilities assumed at the acquisition date is as follows:


At October 30, 2020
Cash and cash equivalents	$	4.4
Accounts receivable, net	91.9
Inventory	251.6
Other current assets	11.1
Intangible assets, net	183.1
Other non-current assets	11.7
Property and equipment, net	373.6
Right of use asset	27.7
Goodwill	505.3
Total assets acquired	$	1,460.4

Accounts payable	$	90.4
Accrued payroll and employee benefits	113.8
Forward loss provision, short-term	23.3
Other current liabilities	31.5
Forward loss provision, long-term	269.2
Other non-current liabilities	313.4
Operating lease liabilities, long-term	27.5
Retirement benefits	316.3
Total liabilities assumed	$	1,185.4
Net assets acquired	$	275.0

The preliminary amounts allocated to the intangible assets identified are as consist of the follows:

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

($, €, £, and RM in millions other than per share amounts)

~~Condensed Consolidating Statements of Operations~~

~~For the Three Months Ended September 26, 2019~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Revenue $ 0 $ 1,747.5 96.4 $ 218.3 $ (142.3) $ 1,919.9
Operating costs and expenses
Cost of sales — 1,511.6 93.3 185.0 (142.3) 1,647.6
Selling, general and administrative 2.6 46.4 0.7 3.9 — 53.6
Research and development — 11.0 0.2 1.4 — 12.6
Total operating costs and expenses 2.6 1,569.0 94.2 190.3 (142.3) 1,713.8
Operating income (loss) (2.6) 178.5 2.2 28.0 — 206.1
Interest expense and financing fee amortization — (23.6) — (0.9) 0.9 (23.6)
Other income (expense), net — (12.1) — 3.5 (0.9) (9.5)
Income (loss) before income taxes and equity in net income of affiliate and subsidiaries (2.6) 142.8 2.2 30.6 — 173.0
Income tax (provision) benefit 0.6 (36.9) (0.5) (4.9) — (41.7)
Income (loss) before equity in net income of affiliate and subsidiaries (2.0) 105.9 1.7 25.7 — 131.3
Equity in net income of affiliate — — — — — 0
Equity in net income (loss) of subsidiaries 133.3 27.4 — — (160.7) 0
Net income 131.3 133.3 1.7 25.7 (160.7) 131.3
Other comprehensive income (loss) 21.5 21.5 — (13.9) (7.6) 21.5
Comprehensive income (loss) $ 152.8 $ 154.8 $ 1.7 $ 11.8 $ (168.3) $ 152.8


	Amount		Amortization Period
			(in years)
Developed Technology	$	62.0	15.0
Customer Relationships	$	121.1	18.0
Total intangible assets	$	183.1

The customer relationships intangible asset consists of estimated future revenues. The customer relationships intangible asset was valued using the excess earnings method (income approach) in which the value is derived from an estimation of the after-tax cash flows specifically attributable to the customer relationships. The analysis included assumptions for projections of revenues and expenses, contributory asset charges, discount rates, and a tax amortization benefit. The developed technology intangible asset was valued using the relief from royalty method (income approach) in which the value is derived by estimation of the after-tax royalty savings attributable to owning the assets. Assumptions in this analysis included projections of revenues, royalty rates representing costs avoided due to ownership of the assets, discount rates, and a tax amortization benefit.

The goodwill recognized is attributable primarily to expected synergies and intangible assets that do not qualify for separate recognition, such as the acquired assembled workforce. We expect $24.8 of the goodwill to be deductible for income tax purposes. As of April 1, 2021, given the preliminary nature of the Bombardier Acquisition purchase price allocation and time constraints, the Company has not yet allocated goodwill to the relevant reporting units and or reportable segments.

The results of operations of the Bombardier Acquired Businesses are included in the Company’s Consolidated Statements of Operations for the three months ended April 1, 2021. The following summary, prepared on a pro-forma basis, represents the unaudited consolidated results of operations for the three months ended April 1, 2021 and April 2, 2020 as if the Bombardier Acquisition had been completed as of January 1, 2020. The pro-forma results include the impact of any post-acquisition adjustments directly attributable to the acquisition and the impact of adjustments such as the recognition of additional depreciation and amortization expense, and the related income tax effects. This pro-forma presentation does not include any impact of transaction synergies. The pro-forma results are not necessarily indicative of what the results of operations would have been had the Bombardier Acquisition occurred during the periods presented, nor does they purport to represent results for any future periods.


	For the Three Months Ended
	April 1, 2021		April 2, 2020
Revenue - as reported	$	900.8	$	1,077.3
Revenue - pro-forma	900.8		1,226.7
Net (loss) income - as reported	$	(171.6)	$	(163.0)
Net (loss) income - pro-forma	(171.6)		(152.3)
Earnings Per Share - Diluted - as reported	$	(1.65)	$	(1.57)
Earnings Per Share - Diluted - pro-forma	(1.65)		(1.47)

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Statements of Operations~~

~~For the Nine Months Ended October 1, 2020~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Revenue $ 0 $ 2,182.2 $ 224.2 $ 456.0 $ (334.2) $ 2,528.2
Operating costs and expenses
Cost of sales 0 2,628.4 216.4 430.4 (334.2) 2,941.0
Selling, general and administrative 11.7 151.6 1.9 14.0 0 179.2
Restructuring cost 0 58.1 0.5 9.8 0 68.4
Research and development 0 24.9 0.3 2.9 0 28.1
Loss on disposal of assets 0 19.2 3.7 0 0 22.9
Total operating costs and expenses 11.7 2,882.2 222.8 457.1 (334.2) 3,239.6
Operating (loss) income (11.7) (700.0) 1.4 (1.1) — (711.4)
Interest expense and financing fee amortization 0 (133.7) 0 (1.9) 1.8 (133.8)
Other (expense) income, net 0 (65.0) (0.2) 1.6 (1.8) (65.4)
(Loss) income before income taxes and equity in net (loss) income of affiliate and subsidiaries (11.7) (898.7) 1.2 (1.4) — (910.6)
Income tax benefit (provision) 4.4 334.5 (0.3) 1.4 0 340.0
(Loss) income before equity in net (loss) income of affiliate and subsidiaries (7.3) (564.2) 0.9 — — (570.6)
Equity in net (loss) income of affiliate 0 0 0 (3.8) 0 (3.8)
Equity in net (loss) income of subsidiaries (567.1) (2.9) 0 0 570.0 0
Net (loss) income (574.4) (567.1) 0.9 (3.8) 570.0 (574.4)
Other comprehensive (loss) income (20.4) (20.4) 0 (16.8) 37.2 (20.4)
Comprehensive (loss) income $ (594.8) $ (587.5) $ 0.9 $ (20.6) $ 607.2 $ (594.8)

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Statements of Operations~~

~~For the Nine Months Ended September 26, 2019~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Revenue $ 0 $ 5,346.5 342.3 $ 719.9 $ (504.9) $ 5,903.8
Operating costs and expenses
Cost of sales — 4,592.5 331.6 609.9 (504.9) 5,029.1
Selling, general and administrative 9.6 149.5 2.3 12.2 — 173.6
Research and development — 31.3 0.8 3.9 — 36.0
Total operating costs and expenses 9.6 4,773.3 334.7 626.0 (504.9) 5,238.7
Operating income (loss) (9.6) 573.2 7.6 93.9 — 665.1
Interest expense and financing fee amortization — (65.9) — (3.0) 2.8 (66.1)
Other (expense) income, net — (13.7) — 4.6 (2.8) (11.9)
Income (loss) before income taxes and equity in net income of affiliate and subsidiaries (9.6) 493.6 7.6 95.5 — 587.1
Income tax (provision) benefit 2.2 (110.2) (1.8) (14.9) — (124.7)
Income (loss) before equity in net income of affiliate and subsidiaries (7.4) 383.4 5.8 80.6 — 462.4
Equity in net income of affiliate — — — — — 0
Equity in net income of subsidiaries 469.8 86.4 — — (556.2) 0
Net income 462.4 469.8 5.8 80.6 (556.2) 462.4
Other comprehensive (loss) income 16.7 16.7 — (18.0) 1.3 16.7
Comprehensive income (loss) $ 479.1 $ 486.5 $ 5.8 $ 62.6 $ (554.9) $ 479.1

~~Table of Contents~~

~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Balance Sheet~~

~~October 1, 2020~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Assets
Cash and cash equivalents $ — $ 1,258.7 $ 0 $ 182.6 $ — $ 1,441.3
Restricted cash 0 1.3 0 0 0 1.3
Accounts receivable, net — 517.9 66.1 182.4 (377.6) 388.8
Contract assets, short-term 0 279.0 0 54.6 0 333.6
Inventory, net — 816.1 161.8 205.4 — 1,183.3
Other current assets — 251.9 0 7.7 — 259.6
Total current assets — 3,124.9 227.9 632.7 (377.6) 3,607.9
Property, plant and equipment, net — 1,683.6 273.8 190.0 — 2,147.4
Right of use assets 0 37.3 7.0 0.1 0 44.4
Contract assets, long-term 0 4.1 0 0 0 4.1
Pension assets, net — 378.9 — 25.3 — 404.2
Deferred income taxes — 136.6 — 0.1 — 136.7
Goodwill 0 76.0 0 2.4 0 78.4
Intangible assets, net 0 29.5 0 0 0 29.5
Investment in subsidiary 1,172.0 818.8 — — (1,990.8) —
Other assets — 226.1 — 112.5 (186.8) 151.8
Total assets $ 1,172.0 $ 6,515.8 $ 508.7 $ 963.1 $ (2,555.2) $ 6,604.4
Liabilities
Accounts payable $ — $ 503.5 $ 234.8 $ 122.7 $ (377.9) $ 483.1
Accrued expenses — 240.9 1.7 46.9 0.3 289.8
Profit sharing — 33.9 — 4.2 — 38.1
Current portion of long-term debt — 333.5 0.2 1.8 — 335.5
Operating lease liabilities, short-term — 4.9 0.6 0 0 5.5
Advance payments, short-term — 20.1 — — — 20.1
Contract liabilities, short-term 0 100.9 0 0 0 100.9
Forward loss provision, long-term 0 163.4 0 6.5 0 169.9
Deferred revenue and other deferred credits, short-term — 15.4 — 0.3 — 15.7
Other current liabilities — 25.6 — 12.1 — 37.7
Total current liabilities — 1,442.1 237.3 194.5 (377.6) 1,496.3
Long-term debt — 2,650.2 0.6 94.4 (86.2) 2,659.0
Operating lease liabilities, long-term — 32.7 6.4 0 0 39.1
Advance payments, long-term — 325.0 — — — 325.0
Pension/OPEB obligation — 47.0 — — — 47.0
Contract liabilities, long-term 0 371.7 0 0 0 371.7
Forward loss provision, long-term 0 303.8 0 0 0 303.8
Deferred grant income liability - non-current — 8.9 — 18.5 — 27.4
Deferred revenue and other deferred credits — 28.2 — 5.4 — 33.6
Deferred income taxes 0 0 0 10.0 0 10.0
Other liabilities — 214.2 — 5.9 (100.6) 119.5
Total equity 1,172.0 1,092.0 264.4 634.4 (1,990.8) 1,172.0
Total liabilities and stockholders’ equity $ 1,172.0 $ 6,515.8 $ 508.7 $ 963.1 $ (2,555.2) $ 6,604.4

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Balance Sheet~~

~~December 31, 2019~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Assets
Cash and cash equivalents $ — $ 2,193.3 $ — $ 157.2 $ — $ 2,350.5
Restricted cash 0 0.3 0 0 0 0.3
Accounts receivable, net — 565.4 50.5 250.7 (320.2) 546.4
Inventory, net 0 786.8 136.8 195.2 0 1,118.8
Contract assets, short-term 0 458.8 0 69.5 0 528.3
Other current assets — 93.5 — 5.2 — 98.7
Total current assets — 4,098.1 187.3 677.8 (320.2) 4,643.0
Property, plant and equipment, net — 1,773.0 306.3 192.4 — 2,271.7
Right of use assets — 41.2 7.5 0.2 0 48.9
Contract assets, long-term 0 6.4 0 0 0 6.4
Pension assets, net — 424.2 — 24.9 — 449.1
Deferred income taxes 0 106.3 0 0.2 0 106.5
Goodwill 0 0 0 2.4 0 2.4
Intangible assets, net 0 1.2 0 0 0 1.2
Investment in subsidiary 1,761.9 838.4 — — (2,600.3) —
Other assets — 147.6 — 116.0 (186.8) 76.8
Total assets $ 1,761.9 $ 7,436.4 $ 501.1 $ 1,013.9 $ (3,107.3) $ 7,606.0
Liabilities
Accounts payable $ — $ 977.1 $ 226.3 $ 175.1 $ (320.2) $ 1,058.3
Accrued expenses — 210.0 0.8 29.4 — 240.2
Profit sharing — 76.9 — 7.6 — 84.5
Current portion of long-term debt — 48.4 0.2 1.6 — 50.2
Operating lease liabilities, short-term 0 5.3 0.6 0.1 0 6.0
Advance payments, short-term — 21.6 — — — 21.6
Contract liabilities, short-term 0 158.3 — 0 0 158.3
Forward loss provision, long-term 0 83.9 0 0 0 83.9
Deferred revenue and other deferred credits, short-term — 14.5 — 0.3 — 14.8
Other current liabilities — 29.3 2.1 11.5 — 42.9
Total current liabilities — 1,625.3 230.0 225.6 (320.2) 1,760.7
Long-term debt — 2,974.7 0.9 94.7 (86.2) 2,984.1
Operating lease liabilities, long-term 0 36.0 6.9 0.1 0 43.0
Advance payments, long-term — 333.3 — — — 333.3
Pension/OPEB obligation — 35.7 — — — 35.7
Contract liabilities, long-term 0 356.3 0 0 0 356.3
Forward loss provision, long-term 0 163.5 0 0 0 163.5
Deferred grant income liability - non-current — 9.2 — 19.8 — 29.0
Deferred revenue and other deferred credits — 30.4 — 4.0 — 34.4
Deferred income taxes 0 0 0 8.3 0 8.3
Other liabilities — 190.1 — 6.3 (100.6) 95.8
Total equity 1,761.9 1,681.9 263.3 655.1 (2,600.3) 1,761.9
Total liabilities and stockholders’ equity $ 1,761.9 $ 7,436.4 $ 501.1 $ 1,013.9 $ (3,107.3) $ 7,606.0

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Statements of Cash Flows~~

~~For the Nine Months Ended October 1, 2020~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Operating activities
Net cash used in operating activities $ — $ (634.9) $ (16.2) $ 38.3 $ — $ (612.8)
Investing activities
Purchase of property, plant and equipment — (53.4) (1.3) (15.7) — (70.4)
Acquisition, net of cash acquired 0 (117.9) 0 0 0 (117.9)
Other 0 0.4 — 4.5 0 4.9
Net cash used in investing activities — (170.9) (1.3) (11.2) — (183.4)
Financing activities
Proceeds from issuance of debt — 1,200.0 0 0 0 1,200.0
Proceeds from revolving credit facility — — — — — —
Customer financing 0 10.0 0 0 0 10.0
Principal payments of debt — (21.2) (0.2) (1.3) — (22.7)
Payments on term loans — (439.7) 0 — — (439.7)
Payments on revolving credit facility — (800.0) 0 — — (800.0)
Proceeds (payments) from intercompany debt — (20.9) 17.7 3.2 — —
Taxes paid related to net share settlement of awards 0 (14.0) 0 0 0 (14.0)
Proceeds (payments) from subsidiary for purchase of treasury stock (0.1) 0.1 0 0 0 0
Purchase of treasury stock 0.1 — 0 — — 0.1
Proceeds (payments) from subsidiary for dividends paid 14.4 (14.4) 0 0 0 0
Dividends paid (14.4) 0 0 0 0 (14.4)
Proceeds from issuance of ESPP stock 0 2.6 0 0 0 2.6
Debt issuance costs 0 (27.6) 0 0 0 (27.6)
Other 0 0 0.1 0 0.1
Net cash (used in) provided by financing activities — (125.1) 17.5 2.0 — (105.6)
Effect of exchange rate changes on cash and cash equivalents — 0.5 — (3.8) — (3.3)
Net (decrease) increase in cash and cash equivalents for the period — (930.4) — 25.3 — (905.1)
Cash, cash equivalents, and restricted cash, beginning of period — 2,210.0 — 157.2 — 2,367.2
Cash, cash equivalents, and restricted cash, end of period $ — $ 1,279.6 $ — $ 182.5 $ — $ 1,462.1

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~Condensed Consolidating Statements of Cash Flows~~

~~For the Nine Months Ended September 26, 2019~~

Holdings Spirit Spirit NC Non-Guarantor
Subsidiaries Consolidating
Adjustments Total
Operating activities
Net cash provided by operating activities $ — $ 571.3 $ 53.3 $ 94.0 $ — $ 718.6
Investing activities
Purchase of property, plant and equipment — (94.0) (7.7) (17.1) — (118.8)
Other 0 0.1 0 0 0 0.1
Net cash used in investing activities — (93.9) (7.7) (17.1) — (118.7)
Financing activities
Proceeds from issuance of debt — 250.0 — — — 250.0
Proceeds from revolving credit facility — 100.0 0 0 0 100.0
Principal payments of debt 0 (7.8) (0.2) (0.5) 0 (8.5)
Payments on term loans — (5.2) 0 — — (5.2)
Payments on revolving credit facility 0 (100.0) 0 0 0 (100.0)
Proceeds (payments) from intercompany debt 0 56.1 (45.4) (10.7) 0 0
Taxes paid related to net share settlement of awards 0 (12.1) 0 0 0 (12.1)
Proceeds (payments) from subsidiary for dividends paid 37.8 (37.6) 0 (0.2) 0 0
Dividends paid (37.8) 0 0 0 0 (37.8)
Proceeds (payments) from subsidiary for purchase of treasury stock 75.0 (75.0) 0 0 0 0
Purchase of treasury stock (75.0) 0 0 0 0 (75.0)
Proceeds from issuance of ESPP stock 0 1.3 0 0 0 1.3
Other 0 0.8 0 0 0 0.8
Net cash provided by (used in) financing activities — 170.5 (45.6) (11.4) — 113.5
Effect of exchange rate changes on cash and cash equivalents — (13.2) — (0.3) (13.5)
Net increase in cash and cash equivalents for the period — 634.7 — 65.2 — 699.9
Cash, cash equivalents, and restricted cash, beginning of period — 725.5 — 68.6 — 794.1
Cash, cash equivalents, and restricted cash, end of period — 1,360.2 — 133.8 — 1,494.0

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~~Spirit AeroSystems Holdings, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements (unaudited)~~

~~($, €, and RM in millions other than per share amounts)~~

~~26.~~ ~~Subsequent Events~~

~~Refinancing~~

On October 5, 2020, Spirit, the Company, and Spirit NC terminated the 2018 Credit Agreement, entered into the Credit Agreement, issued the First Lien 2025 Notes, and entered into the Fourth Supplemental Indenture with respect to the 2026 Notes. For more information, see Note 15, Debt.

~~Bombardie~~r ~~Acquisition~~

On October 26, 2020, Spirit, Spirit UK and the Bombardier Sellers entered into an amendment to the Bombardier Purchase Agreement (the “Amendment”). The Amendment reduced the net proceeds purchase price payable to the Bombardier Sellers from $500 to $275. Spirit will continue to make a special contribution of £100 (approximately $130) to the Shorts pension scheme (“Shorts Pension”) on the first anniversary of closing.

On October 30, 2020, Spirit and Spirit UK closed the Bombardier Acquisition and assumed certain liabilities including the net pension liabilities of the Shorts Pension and Shorts' financial payment obligations under a repayable investment agreement with the United Kingdom’s Department for Business, Energy and Industrial Strategy. The acquired business involves aerostructures and fabrication manufacturing and MRO services. The backlog of work includes long-term contracts on Airbus programs, along with Bombardier business jets. The acquisition is in line with the Company’s growth strategy of increasing Airbus content, growing the Company's aftermarket business, and developing a low-cost country footprint.

~~The Company has begun the process of estimating the fair value of tangible and intangible assets acquired and liabilities assumed in connection with the Bombardier Acquisition.The initial fair value estimates and related purchase price allocation will be completed on a preliminary basis and recorded in the fourth quarter of 2020.~~

~~We expect any supplemental pro forma information required by ASC 805 to be completed in the fourth quarter and disclosed in the Company’s 2020 Annual Report on Form 10-K.~~ The amount of time required to accurately calculate any required supplemental pro-forma financial data and compile the detailed information required to support the purchase accounting results exceeds the amount of time which has lapsed since closing the transaction on October 30, 2020. As a result, any supplemental pro-forma financial information required by ASC 805 is not available as of the filing date.

Acquisition-related expenses were $3.3 and $6.2 for the three months and nine months ended October 1, 2020, respectively, and are included in selling, general and administrative costs on the condensed consolidated statement of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise indicates or requires, as used in this Quarterly Report, 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 “Spirit Holdings” or “Holdings” refer only to Spirit AeroSystems Holdings, Inc.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report"). The following section may include “forward-looking statements.” Forward-looking statements reflect our current expectations or forecasts of future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “aim,” “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “should,” “target,” “will,” “would,” and other similar words, or phrases, or the negative thereof, unless the context requires otherwise. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties, both known and unknown, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors not to place undue reliance on any forward-looking statements.

Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:

1)~~the timing and conditions surrounding the return to service of the B737 MAX, future demand for the aircraft, and any residual impacts of the grounding on production rates for the aircraft;~~

2)~~our reliance on Boeing for a significant portion of our revenues;~~

3)~~our ability to continue to grow our business and execute our growth strategy including our ability to enter into profitable supply arrangements with additional customers;~~

4)~~the business condition and liquidity of Boeing, Airbus and other customers and their ability to satisfy their contractual obligations to the Company;~~

5)demand for our products and services and the effect of economic or geopolitical conditions, or other events, such as pandemics, in the industries and markets in which we operate in the U.S. and globally;

6)•the impact of the COVID-19 pandemic on our business and operations, including on the demand for our and our customers’ products and services, on trade and transport restrictions, on the global aerospace supply chain, on our ability to retain the skilled work force necessary for production and development, and generally on our ability to effectively manage the impacts of the COVID-19 pandemic on our business operations;

7)• demand for our products and services and the general effect of economic or geopolitical conditions, or other events, such as pandemics, in the industries and markets in which we operate in the U.S. and globally;

• the timing and conditions surrounding the full worldwide return to service (including receiving the remaining regulatory approvals) of the B737 MAX, future demand for the aircraft, and any residual impacts of the B737 MAX grounding on production rates for the aircraft;

• our reliance on Boeing and Airbus for a significant portion of our revenues;

• the business condition and liquidity of our customers and their ability to satisfy their contractual obligations to the Company;

• the certainty of our backlog, including the ability of customers to cancel or delay orders prior to shipment;

8)• our ability to accurately estimate and manage performance, cost, margins, and revenue under our contracts, and the potential for additional forward losses on new and maturing programs;

9)• our accounting estimates for revenue and costs for our contracts and potential changes to those estimates;

• our ability to continue to grow and diversify our business, execute our growth strategy, and secure replacement programs, including our ability to enter into profitable supply arrangements with additional customers;

• the outcome of product warranty or defective product claims and the impact settlement of such claims may have on our accounting assumptions;

• our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components;

• our ability and our suppliers’ ability to ~~accommodate,~~meet stringent delivery (including quality and ~~the cost of accommodating,~~timeliness) standards and accommodate changes in the build rates of ~~certain~~ aircraft;

~~10)~~• our ability to maintain continuing, uninterrupted production at our manufacturing facilities and our suppliers’ facilities;

• competitive conditions in the markets in which we operate, including in-sourcing by commercial aerospace original equipment manufacturers;

~~11)~~• our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing, Airbus and other customers;

~~12)~~• our ability to effectively ~~assess, manage, and~~ integrate the acquisition of select assets of Bombardier along with other acquisitions that we pursue, and generate synergies and other cost savings therefrom, while avoiding unexpected costs, charges, expenses, and adverse changes to business relationships and business disruptions;

~~13)~~• the possibility that our cash flows may not be adequate for our additional capital needs;

• any reduction in our credit ratings;

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~~14)~~• our ability to access the capital markets to fund our liquidity needs, and the costs and terms of any additional financing;

• our ability to avoid or recover from ~~cyber-based~~cyber or other security attacks and other operations disruptions;

~~15)~~• legislative or regulatory actions, both domestic and foreign, impacting our ~~operations;~~

~~16)~~operations, including the effect of changes in tax laws and rates ~~including as a result of the 2020 U.S. presidential election~~ and our ability to accurately calculate and estimate the effect of such changes;

~~17)any reduction in our credit ratings;~~

~~18)our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components;~~

~~19)~~• our ability to recruit and retain a critical mass of highly skilled employees;

~~20)~~• our relationships with the unions representing many of our employees, including our ability to avoid labor disputes and work stoppages with respect to our union employees;

~~21)~~• spending by the U.S. and other governments on defense;

~~22)~~• pension plan assumptions and future contributions; ~~and~~

~~23)~~• the effectiveness of our internal control over financial reporting; and any difficulties or delays that could affect the Company’s ability to effectively implement the remediation plan, in whole or in part, to address the material weakness identified in the Company’s internal control over financial reporting, as described in Item 9A. “Controls and Procedures” of the Annual Report on Form 10-K for the year ended December 31, 2019;

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~~24)~~• the outcome or impact of ongoing or future litigation, arbitration, claims, and regulatory actions or investigations, including our exposure to potential product liability and warranty claims;

~~25)~~• adequacy of our insurance coverage;

• our ability to continue selling certain receivables through our supplier financing programs;

~~26)our ability to access the capital markets to fund our liquidity needs,~~• and ~~the costs and terms of any additional financing;~~

~~27)any regulatory or legal action arising from the review of our accounting processes;~~

~~28)potential impacts on the Company and the jurisdictions it operates relating to the 2020 U.S. presidential election, including potential changes to the Department of Defense budgets and spending; and~~

~~29)~~the risks of doing business internationally, including fluctuations in foreign currency exchange rates, impositions of tariffs or embargoes, ~~(including recent contemplated actions by the World Trade Organization and any retaliatory actions from other jurisdictions),~~ trade restrictions, compliance with foreign laws, and domestic and foreign government policies.

These factors are not exhaustive and it is not possible for us to predict all factors that could cause actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. Except to the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should review carefully the section captioned “Risk Factors” in our most recent Annual Report on Form 10-K ~~and under Part II, Item 1A, “Risk Factors” in Form 10-Q for the first and second quarters of 2020 and hereunder~~ for a more complete discussion of these and other factors that may affect our business.

COVID-19

During the three months ended ~~October~~April 1, ~~2020,~~ 2021,the COVID-19 pandemic ~~has~~ continued to have a significant negative impact on the aviation industry, our customers, and our business globally. ~~In response to the pandemic, we~~Distribution and ~~our customers have implemented production suspensions and our customers have adjusted production rates. Our customers may reduce or alter production rates again if circumstances require. A description~~administration of ~~our customers’ rates are below. We expect the pandemic and its effects to continue to have a significant negative impact on our business for the duration of the pandemic and~~vaccines generally progressed during the ~~subsequent economic recovery, which could be an extended period of time.~~

In response to the COVID-19 pandemic, we have enacted our crisis management and response process as part of our enterprise risk management program to help us navigate the challenges we face due to the COVID-19 pandemic. Actions that we have taken include the following (certain capitalized terms are defined further below):

•~~Deployed global teams to monitor the situation and recommend appropriate actions;~~

•~~Implemented travel restrictions for our employees;~~

•~~Implemented social-distancing standards throughout the workplace and mandated mask use;~~

•~~Initiated consistent and ongoing cleaning of high-touch areas;~~

•~~Conducted deep cleaning and sanitization of work spaces potentially exposed to the virus;~~

•~~Established processes aligned with CDC guidelines to work with any exposed individual on the necessary quarantine~~ period, and ~~the process to return to work;~~travel advisories and

•~~Implemented working from home to minimize potential exposure to the virus.~~

Spirit has taken several actions to reduce costs, increase liquidity and strengthen our financial position in light of the economic impact of the COVID-19 pandemic, and the B737 MAX impact (further described below), including the following:

•~~Reduced pay for all executives by 20 percent until further notice;~~

•~~Reduced 2020-2021 term non-employee director compensation by 15 percent;~~

•~~Reduced planned capital expenditures and operating expenses;~~

•~~Suspended share repurchase program;~~

•~~Reduced quarterly dividends to one penny per share;~~

•~~Initiated multiple production worker furloughs;~~

•~~Reduced pay for all U.S. based, salaried employees and implemented a correlating four-day work week which remains in place for salaried workforce at its Wichita, Kansas facility until further notice;~~

•~~Reduced~~ ~~~6,600~~ ~~employees globally including voluntary packages;~~

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•~~Amended and eventually terminated our 2018 Credit Agreement and put into place current Credit Agreement for $400 million;~~

•~~Issued $1.2 billion in Second Lien 2025 Notes and $500 million in First Lien 2025 Notes; and~~

•Elected to defer the payment of $21.4 million in employer payroll taxes incurred through October 1, 2020, as provided by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), of which 50% is required to be deposited by December 2021 and the remaining 50% by December 2022 and accrued a pre-tax benefit related to the Employee Retention Credit related to paid employee furloughs of approximately $13.6 million. In addition, as of October 1, 2020 the Company has recorded a deferral of $29.4 million of VAT payments until March 2022 under the United Kingdom deferral scheme.

~~If OEM production rates decline in the future or the expected pandemic recovery timeline lengthens, Spirit will evaluate further cost reduction actions, including additional workforce actions.~~

Our customers, including Boeing and Airbus, have significantly reduced their overall production rates as a result of the COVID-19 pandemic and, in the case of Boeing, the B737 MAX grounding, described below. A discussion of current rates is set forth below:

~~Boeing Production Volumes~~

~~As of October 1, 2020 the overall rates announced by Boeing and used by the Company in the third~~ q~~uarter of 2020 are as follows:~~

•~~B737 MAX, including P-8, of 72 shipsets for 2020, increasing to 31 airplanes per month (“APM”) in 2022;~~

•~~B787 average production volume of 10 APM in 2020, decreasing to 6 APM in 2021 and 2022;~~

•~~B777/777X average production volume of 3.6 APM in 2020, decreasing to 1.8 APM in 2021;~~

•~~B767 current and future production volume of 3 APM; and~~

•~~B747 current production volume of 0.5 APM and ending production in 2022.~~

The Company is attempting to calibrate its cost structure to the lower production volumes and manage the impact of excess production capacity across our sites. The Company’s strategy to recalibrate its cost structure is likely to lead to a consolidation of sites where excess capacity exists.

~~Airbus Production Volumes~~

~~As of October 1, 2020 the overall rates announced by Airbus and used by the Company in third quarter are as follows:~~

•~~Single-aisle average production volume of 40 APM;~~

•~~A350 average production volume of 3.5 APM in 2020, increasing to 5 APM end of 2021; and~~

•~~A330 average production volume of 2 APM.~~

~~Due~~ restrictions generally eased, however, due to the uncertain and rapidly evolving nature of current conditions around the world, we are unable to predict accurately the impact that COVID-19 will have on our business going forward, ~~including:~~

•~~whether there will be additional production suspensions or production rate reductions relating to~~including for the ~~COVID-19 pandemic and~~reasons stated in our Annual Report on Form 10-K for the ~~resulting impact on our financial performance, liquidity and our cash flows;~~year ended December 31, 2020 ("2020 Form 10-K").

•~~if we will have significant employee absenteeism due to fear of COVID-19 infection;~~

•~~if we may experience lawsuits or regulatory actions due to COVID-19 spread in the workplace;~~

•~~reputational risk we may experience due to COVID-19 spread in the workplace;~~

•~~the effect of significant salary cuts across our workforce, which may result in critical employee departures;~~

•the impact remote working arrangements, salary reductions, and shortened work weeks for salaried employees will have on the health and productivity of management and our employees, and our ability to maintain our financial reporting processes and related controls and manage the complex accounting issues presented by the COVID-19 pandemic such as excess cost accounting, impairment analysis and business combination controls;

•~~the impact on the Company’s vendors and outsourced business processes and their process and controls documentation;~~

•~~the impact on our suppliers, including whether they will be able to meet our future needs;~~

•~~the impact on our contracts with our customers and suppliers, including force majeure provisions;~~

•our ability to withstand and recover from any cyberattacks as a result of a remote working environment, and potential reputational impacts or loss of customer contracts as a result of such cyberattacks;

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•~~the impact on our ability to successfully integrate the Bombardier Acquisition;~~

•~~the impact on the public’s demand and ability to pay for future airline travel, whether or not vaccines or effective treatments for COVID-19 become available; and~~

•~~the impact of Government health and protection policies to future air traffic demand.~~

Any of these items or all of these items may occur, which individually or in the aggregate may have a material adverse effect on our business, financial condition, results of operations and cash flows.

The extent of the effects of the COVID-19 outbreak on our business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments, most of which are outside of our control. These include, but are not limited to:

•~~the severity, extent and duration of the global pandemic and its impact on the aircraft industry;~~

•~~the availability of a vaccine or cure that mitigates the effect of the virus;~~

•actions taken by governments and municipalities to contain the disease or treat its impact, including travel restrictions and bans, bans on public gatherings, closures of non-essential businesses and aid and economic stimulus efforts;

•~~the speed and extent of the recovery across the broader travel ecosystem, including how long the public will continue to be concerned about the pandemic and avoid aircraft travel; and~~

•~~any economic recession resulting from the pandemic.~~

The pandemic may continue to expand in regions that have not yet been significantly affected by the COVID-19 outbreak or may return to regions that were previously heavily impacted by the pandemic, which could continue to affect our business. Also, existing restrictions in affected areas could be extended after the virus has been contained in order to avoid relapses, and regions that recover from the outbreak may suffer from a relapse and re-imposition of restrictions.

Our expectation is that our business operations will not improve until our customers are willing to produce aircraft at sufficient levels, which is dependent upon the public's willingness to use aircraft travel, ~~and~~ sufficient OEM orders (without suspension) from airlines and the financial resources of airlines, ~~specifically~~other companies and ~~generally. This may not occur until well after the broader global economy begins to improve.~~individuals.

~~CARES Act and United Kingdom Deferral Scheme~~

On March 27, 2020, the CARES Act was enacted in the United States. The CARES Act, among other things, provides certain changes to tax laws, which may impact the Company’s results of operations, financial position and cash flows. The Company is currently implementing certain provisions of the CARES Act, such as deferring employer payroll taxes and utilizing the ability to carry back and deduct losses to offset prior income in previously filed tax returns.

As of October 1, 2020, the Company has deferred $21.4 million of employer payroll taxes, as allowed by the CARES Act, of which 50% are required to be deposited by December 2021 and the remaining 50% by December 2022 and accrued a pre-tax benefit related to the Employee Retention Credit related to paid employee furloughs of approximately $13.6 million. In addition, as of October 1, 2020, the Company has recorded a deferral of $29.4 million of VAT payments until March 2022 under the United Kingdom deferral scheme.

The CARES Act allows net operating losses to be carried back to the previous five years, when the federal tax rate was 35%. As of October 1, 2020, the Company anticipates it will report a net operating loss when it files its fiscal year 2020 tax return. Management will continue to monitor potential legislation as well as dynamic market conditions which may materially alter the anticipated value of this net operating loss.

As part of the U.S. government’s response to COVID-19, to support the health of the defense industrial base, the Department of Defense allocated certain funds to our prime customers to expand statements of work. Such allocation includes $80 million that was set aside for an expansion of the Company work scope in connection with the Company’s critical work on Defense programs. Defense Production Act Title III contracts support the defense industrial base and use funds authorized and appropriated under the CARES Act.

B737 Program

The B737 MAX program is a critical program to the Company. For the twelve months ended December 31, 2018, 2019, and 2020, approximately 56%, 53%, and 19% of our net revenues were generated from sales of components to Boeing for the B737 ~~MAX aircraft.~~aircraft, respectively. While

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we have entered into long-term supply agreements with Boeing to continue to provide components for the B737 for the life of the aircraft program, including commercial and ~~the~~ military P-8 derivatives, Boeing does not have any obligation to purchase components from us for any replacement for the B737 that is not a commercial derivative model as defined by the Sustaining Agreement. The contract is a requirements contract and Boeing can reduce the purchase volume at any time.

In March 2019, the B737 MAX fleet was grounded in the U.S. and internationally following the 2018 and 2019 accidents involving two B737 MAX aircraft. ~~To date,~~On November 18, 2020, the ~~fleet remains grounded~~FAA issued an order rescinding the grounding of the B737 MAX and published an Airworthiness Directive specifying design changes that must be made before the ~~recertification process is continuing. Due~~aircraft returns to service. Since November 2020, regulators from Brazil, Canada, the EU and U.K. have taken similar actions to unground the B737 MAX and permit return to service after aircraft owners and operators incorporate the required changes to the ~~grounding~~aircraft.

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According to Boeing, other global regulatory approvals/certifications are expected in 2021. Boeing's deliveries of the B737 MAX resumed in the fourth quarter of 2020 when the FAA rescinded the order that grounded B737 MAX aircraft in the United States. During the three month period ended April 1, 2021, Boeing had continued to receive orders for the B737MAX, and ~~the impacts of COVID-19~~several air carriers resumed flights on the aviation industry, the Company has experienced significant deteriorations in its B737 MAX production rates that have reduced the Company’s revenues. A summary of the production rate changes is below.aircraft.

•~~On April 12, 2019, Boeing and~~In 2021, we expect that ongoing demand challenges from the ~~Company executed a Memorandum of Agreement (the “2019 MOA”) providing that the Company was~~737 MAX grounding will continue to ~~maintain its delivery rate of 52 shipsets per month with respect to the B737 MAX. Previously, the Company was expecting to increase production to a rate of 57 shipsets per month in 2019;~~

•~~On May 4, 2020, Boeing and the Company agreed that Spirit would deliver 125 B737 MAX shipsets to Boeing in 2020; and~~

•~~On June 19, 2020, Boeing directed Spirit to reduce its 2020 B737 production plan from 125 to 72 shipsets.~~

~~While we have taken actions to align our cost structure to the lower 2020 production rates, the benefit of such actions will~~ be ~~realized over time and the B737 MAX situation continues to present challenges to our liquidity. These challenges are~~ exacerbated by the COVID-19 pandemic asbecause other programs that mitigate the strain of the lower B737 MAX production rate ~~are now~~continue to be suspended or producing at lower rates. We expect air travel demand will improve from 2020 levels as COVID-19 vaccinations are administered globally. The overall pace of any recovery of air travel demand will depend on availability, speed and acceptance of vaccinations, the speed at which COVID-19 may mutate, effectiveness of vaccines on new strains of the COVID-19 virus, government travel restrictions and availability and speed of test results. We expect that domestic air travel demand will recover sooner than international air travel demand and, as a result, we expect that the B737 MAX and other narrowbody production rates will recover to pre-pandemic levels before widebody production rates. For additional information, see the “Risk Factors” section of our 2020 Form 10-K.

~~While recent news reports have indicated that~~B787 Program

In the ~~recertification process~~year ended December 31, 2020, Boeing announced B787 production rate changes from 10 aircraft per month to 5 aircraft per month. This resulted in an incremental forward loss charge of $192.5 million for the ~~B737 MAX continues, we are unable to determine definitively when Boeing will be able to secure regulatory approval for~~year ended December 31, 2020. During the ~~B737 MAX. Based~~year ended December 31, 2020 our focus was on ~~public information, we have assumed that regulatory approval will enable Boeing to resume delivering B737 MAX aircraft to its customers~~achieving cost reductions in our manufacturing and supply chain.

During the fourth quarter of ~~2020. However,~~2020, as Boeing was reviewing its B787 Dreamliner production system, we began analyzing our own B787 production system. During the ~~civil aviation authorities control~~quarter ended April 1, 2021, we continued to evaluate data received from Boeing, and further refined the ~~timeline for recertification and resumption of deliveries and actual timing may be materially different. Further, we cannot predict the effect~~areas of the ~~COVID-19 pandemic on this timeline. In~~B787 which could require re-work. With the ~~event~~data we have collected so far and based upon requests from Boeing, we have completed an initial assessment regarding the rework required and determined that an amount of ~~delays~~$29.3 million is our best estimate for a probable loss as of April 1, 2021. This amount is management’s estimate of costs related to ~~this timeline~~engineering changes and ~~corresponding changes~~rework and constitutes the forward loss charge for the B787 program recorded for the quarter ended April 1, 2021 based upon all available information as of such date. Changes to ~~our~~the scope of quality issues may increase or decrease the total estimated provision as of April 1, 2021. Additionally, further production rate ~~we may be required~~changes or claims relating to ~~take actions with longer-term impact, such as~~inspection and rework costs could result in additional ~~changes to our production plans, employment reductions and/or the expenditure of significant resources to support our supply chain and/or Boeing.~~incremental forward loss charges.

~~If Boeing is unable~~Due to ~~return~~B787 production issues, in the B737 MAX to service in one or more jurisdictions, begin timely deliveries to customers, or if our customers’ production levels across our programs are reduced beyond current expectations due to depressed demand relating to COVID-19 or otherwise, our liquidity position may worsen absent our ability to procure additional financing, our ability to comply withfirst quarter of 2021, B787 employees were temporarily furloughed for the ~~terms of our existing indebtedness~~three weeks. We expect there may be ~~negatively impacted and our business, financial condition, results of operations and cash flows could be materially adversely impacted.~~future headcount reductions to align to reduced production rates.

Recoverability and Impairment ~~Recoverability~~Tests of Current and Noncurrent Assets

The Company’s operations require management to make estimates, which involve a significant amount of judgment when completing recoverability and impairment tests of current and noncurrent assets. Factors that management estimates include, but are not limited to, program delivery schedules, changes to identified risks and opportunities, changes to estimated revenues and costs for the accounting contracts, any outstanding contractual matters, the economic lives of the assets, foreign currency exchange rates, tax rates, capital spending, and customers’ financial condition. The ability for the Company to fully assess these factors is challenging and presents many risks and opportunities, as more fully described in Note 4, Changes in Estimates, to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

The uncertainties associated with the duration of the COVID-19 pandemic increase the difficulty in estimating the potential impact of these factors. Actual results could differ from these estimates, which were based upon circumstances that existed as of the date of the consolidated financial statements, ~~October~~April 1, ~~2020.~~2021. Subsequent to this date, it is reasonably possible that changes to the global economic situation and to public securities markets as a consequence of the COVID-19 pandemic could alter estimates as a result of the financial circumstances of the markets in which the Company operates, the price of the Company’s publicly traded equity in comparison to the Company’s carrying value, and the health of the global economy. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with

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respect to the fair value of the Company’s reporting units in relation to potential goodwill impairment and the fair value of long-lived assets in relation to potential impairment.

At ~~October~~April 1, ~~2020,~~2021, the net book value of long-lived assets was ~~$2,147.4~~$2,457.0 million and the balance of intangible assets was ~~$29.5~~$207.0 million. For the period ended ~~October~~April 1, ~~2020,~~2021, there were no events which would require the Company to update its impairment analysis.

As of ~~October~~April 1, ~~2020,~~2021, the balance of goodwill was ~~$78.4~~$583.9 million. Goodwill primarily represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the acquisition of Fiber Materials Inc.

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("FMI") in the first quarter of 2020 and the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the Bombardier Acquisition (as defined below) in the fourth quarter of 2020. Goodwill is primarily assigned to two reporting units, our fuselage systems reporting unit which is aligned with our Fuselage Systems Segment, and our propulsion systems reporting unit which is aligned to our Propulsion Systems Segment.

The Company assesses goodwill for impairment annually as of the first day of the fourth quarter, 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 ~~October~~April 1, ~~2020,~~2021, there were no ~~triggering~~ events or circumstances which would require the Company to update its goodwill impairment analysis. As discussed above, due to the inherent uncertainties of the current operating environment, we will continue to evaluate our reporting units for events or circumstances that indicate that their fair values may be lower than their carrying values, however, as of October 1, 2020, management believes that there is sufficient excess fair value for each of the reporting units such that no material amount of goodwill is at risk of failing future quantitative impairment tests.values.

~~Bombardier Acquisition~~

On October 31, 2019, Spirit and Spirit UK, wholly owned subsidiaries of the Company, entered into a definitive agreement (the “Bombardier Purchase Agreement”) with Bombardier Inc., Bombardier Aerospace UK Limited, Bombardier Finance Inc. and Bombardier Services Corporation (collectively, the “Bombardier Sellers”) pursuant to which Spirit UK agreed to acquire the outstanding equity of Short Brothers plc (“Shorts”) and Bombardier Aerospace North Africa SAS ("BANA"), and Spirit agreed to acquire substantially all the assets of the maintenance, repair and overhaul business in Dallas, Texas (collectively, the “Bombardier Acquired Business”) and assume certain liabilities of Shorts and BANA (the “Bombardier Acquisition”).

On October 26, 2020, Spirit, Spirit UK and the Bombardier Sellers entered into an amendment to the Bombardier Purchase Agreement (the “Amendment”). The Amendment reduced the net proceeds purchase price payable to the Bombardier Sellers from $500 million to $275 million. Spirit will continue to make a special contribution of £100 million (approximately $130 million) to the Shorts pension scheme (“Shorts Pension”) on the first anniversary of closing.

On October 30, 2020, Spirit and Spirit UK closed the Bombardier Acquisition and assumed certain liabilities including the net pension liabilities of the Shorts Pension and Shorts' financial payment obligations under a repayable investment agreement with the United Kingdom’s Department for Business, Energy and Industrial Strategy. The acquired business involves aerostructures and fabrication manufacturing and maintenance, repairs and overhaul (“MRO”) services. The backlog of work includes long-term contracts on Airbus programs, along with Bombardier business jets. The acquisition is in line with the Company’s growth strategy of increasing Airbus content, growing the Company's aftermarket business, and developing a low-cost country footprint.

Under the original Bombardier Purchase Agreement, the Pension Contribution was to be made at Closing. Subsequently, in exchange for a parent guarantee by Spirit of up to £112.4 million (approximately $146.0 million), the parties changed the date on which the payment will be made to-one year after closing (October 30, 2021). The Shorts Pension is in a deficit position and there is a risk that additional contributions will be required to fund the deficit or from the trustees the UK Pension Regulator as described under Part II, Item 1A. "Risk Factors."

~~Asco Acquisition~~

On September 25, 2020, the Company, Spirit Belgium and the Sellers entered into an amendment to the Asco Purchase Agreement (the “Termination Agreement”) pursuant to which the parties agreed to terminate the Asco Purchase Agreement, including all schedules and annexes thereto (other than certain confidentiality agreements) (collectively with the Asco Purchase

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Agreement, the “Transaction Documents”), effective as of September 25, 2020. Under the Termination Agreement, the parties also agreed to release each other from any and all claims, rights of action, howsoever arising, of every kind and nature, in connection with, arising out of, based upon or related to, directly or indirectly, the Transaction Documents, including any breach, non-performance, action or failure to act under the Transaction Documents.

Results of Operations

The following table sets forth, for the periods indicated, certain of our operating data:

Three Months Ended Nine Months Ended
October 1,
2020 September 26,
2019 October 1,
2020 September 26,
2019
($ in millions) ($ in millions)
Revenue $ 806.3 $ 1,919.9 $ 2,528.2 $ 5,903.8
Cost of sales 903.4 1,647.6 2,941.0 5,029.1
Gross (loss) profit (97.1) 272.3 (412.8) 874.7
Selling, general and administrative 52.8 53.6 179.2 173.6
Restructuring costs 19.5 — $ 68.4 —
Research and development 7.5 12.6 28.1 36.0
Loss on disposal of assets $ — — $ 22.9 —
Operating (loss) income (176.9) 206.1 (711.4) 665.1
Interest expense and financing fee amortization (53.0) (23.6) (133.8) (66.1)
Other (expense) income, net (10.0) (9.5) (65.4) (11.9)
(Loss) income before income taxes and equity in net (loss) income of affiliate (239.9) 173.0 (910.6) 587.1
Income tax benefit (provision) 85.2 (41.7) 340.0 (124.7)
(Loss) income before equity in net (loss) income of affiliate (154.7) 131.3 (570.6) 462.4
Equity in net (loss) income of affiliate (0.8) — (3.8) —
Net (loss) income $ (155.5) $ 131.3 $ (574.4) $ 462.4


	Three Months Ended
		April 1, 2021		April 2, 2020
	($ in millions)
Revenue		$	900.8	$	1,077.3
Cost of sales		958.8		1,112.5
Gross loss		(58.0)		(35.2)
Selling, general and administrative		57.6		77.4
Restructuring costs		$	2.1	42.6
Research and development		8.2		12.3
Operating loss		(125.9)		(167.5)
Interest expense and financing fee amortization		(59.8)		(32.2)
Other income (expense), net		12.8		(49.0)
Loss before income taxes and equity in net loss of affiliate		(172.9)		(248.7)
Income tax benefit		1.7		87.2
Loss before equity in net loss of affiliate		(171.2)		(161.5)
Equity in net loss of affiliate		(0.4)		(1.5)
Net loss		$	(171.6)	$	(163.0)

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Comparative shipset deliveries by model are as follows:


		Three Months Ended		Nine Months Ended			Three Months Ended
Model	Model	October 1, 2020	September 26, 2019	October 1, 2020	September 26, 2019	Model		April 1, 2021	April 2, 2020
B737	B737	15	154	52	453	B737		29	18
B747	B747	1	2	4	5	B747		1	2
B767	B767	9	9	20	25	B767		10	6
B777	B777	14	15	30	44	B777		5	9
B787	B787	30	40	92	124	B787		15	40
Total Boeing	Total Boeing	69	220	198	651	Total Boeing		60	75
A220	A220	9	8	32	26	A220		12	15
A320 Family	A320 Family	108	160	365	510	A320 Family		130	188
A330	A330	4	9	17	27	A330		5	8
A350	A350	12	23	51	81	A350		12	26
A380		—	—	—	1

Total Airbus	Total Airbus	133	200	465	645	Total Airbus		159	237
Business and Regional Jets (1)		4	17	26	43
Total Business and Regional Jets (1)						Total Business and Regional Jets (1)		50	12
Total	Total	206	437	689	1,339	Total		269	324

~~Table~~(1) Beginning in the fourth quarter of ~~Contents~~2020, total business/regional jet deliveries include deliveries related to the Bombardier Acquisition.

For purposes of measuring production or shipset deliveries for Boeing aircraft in a given period, the term “shipset” refers to sets of structural fuselage components produced or delivered for one aircraft in such period. For purposes of measuring production or shipset deliveries for Airbus and Business/Regional Jet aircraft in a given period, the term “shipset” refers to all structural aircraft components produced or delivered for one aircraft in such period. For the purposes of measuring wing shipset deliveries, the term “shipset” refers to all wing components produced or delivered for one aircraft in such period. Other components that are part of the same aircraft shipsets could be produced or shipped in earlier or later accounting periods than the components used to measure production or shipset deliveries, which may result in slight variations in production or delivery quantities of the various shipset components in any given period.

Net revenues by prime customer are as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended
Prime Customer	Prime Customer	October 1, 2020		September 26, 2019		October 1, 2020		September 26, 2019			Prime Customer	April 1, 2021		April 2, 2020
		($ in millions)				($ in millions)				($ in millions)
Boeing	Boeing	$	493.8	$	1,542.0	$	1,539.9	$	4,705.1		Boeing	$	467.9	$	676.1
Airbus	Airbus	160.1		284.1		575.3		934.0			Airbus	231.6		287.2
Other	Other	152.4		93.8		413.0		264.7			Other	201.3		114.0
Total net revenues	Total net revenues	$	806.3	$	1,919.9	$	2,528.2	$	5,903.8		Total net revenues	$	900.8	$	1,077.3

Changes in Estimates

During the ~~third~~first quarter of ~~2020,~~2021, we recognized unfavorable changes in estimates of ~~$123.8~~$78.2 million, which included net forward charges of ~~$128.4~~$72.4 million, and ~~favorable~~unfavorable cumulative catch-up adjustments related to periods prior to the ~~third~~first quarter of ~~2020~~2021 of ~~$4.6~~$5.8 million.

~~We provided previous guidance which disclosed an estimated forecasted~~ The forward ~~loss~~losses in the ~~third~~first quarter ~~ended October 1, 2020 on~~relate primarily to the B767 program due to cost performance, B787 program ~~of $25-$35 million~~primarily driven by engineering analysis and the estimated cost of re-work, and A350 program ~~of $13-$20 million based upon data available as of July 2, 2020. Throughout the quarter ended October 1, 2020, the demand~~primarily driven by schedule changes and costs for ~~wide body aircraft continued to evolve as a result of uncertainty regarding timing of resolution of the global pandemic. We evaluated additional schedule~~tooling and production demand information received from our customers, market and analyst data including forecasted demand for wide body aircraft, and as a result, adjusted the expected results on the B787 and A350 programs to include a lower rate of production for a longer duration compared to its previous forecast. This resulted in incremental fixed cost absorption on the B787 and A350 programs and as a result, the forward loss recognized was $64.7 million on the B787 program and $44.9 million on the A350 program for the quarter ended October 1, 2020.build process quality improvements.

During the same period in the prior year, we recognized total unfavorable changes in estimates of ~~$41.8~~$27.9 million, which included ~~unfavorable changes in estimates on~~net forward loss ~~programs~~charges of ~~$28.8~~$19.7 million, and unfavorable cumulative catch-up adjustments related to periods prior to the ~~third~~first quarter of ~~2019~~2020 of ~~$13.0~~$8.2 million.

Three Months Ended ~~October~~April 1, ~~2020~~2021 as Compared to Three Months Ended ~~September 26, 2019~~April 2, 2020

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Revenue. ~~Revenues~~Net revenue for the three months ended ~~October~~April 1, ~~2020 were $806.3~~2021 was $900.8 million, a decrease of ~~$1,113.6~~$176.5 million, or ~~58.0%~~16.4%, compared to net ~~revenues~~revenue of ~~$1,919.9~~$1,077.3 million for ~~the same period in the prior year. Lower revenues were recorded for all segments during the third quarter of 2020 compared to~~ the same period in the prior year. The decrease in ~~revenues~~revenue was ~~primarily due to B737 MAX grounding and~~driven by customer-directed lower production ~~activity~~ on B787, B777, A350, and A320 ~~due to COVID-19,~~programs and a decrease in aftermarket sales from the same period in the prior year. The decrease was partially offset by ~~increased Defense activity.~~an increase from the prior period in B737 MAX and defense program revenue and revenue from our recently acquired A220 wing and Bombardier programs. Approximately ~~81%~~78% and 89% of Spirit’s net revenues for the ~~third~~first quarter of 2021 and 2020, respectively, came from our two largest customers, Boeing ~~and~~and Airbus.

Total production deliveries to Boeing decreased to 6960 shipsets during the ~~third~~first quarter of ~~2020,~~2021, compared to ~~220~~75 shipsets delivered in the same period of the prior year, primarily driven by decreased production on the B787 program, partially offset by increased deliveries on the B737 MAX ~~and B787 programs.~~program. Total production deliveries to Airbus decreased to ~~133~~159 shipsets during the ~~third~~first quarter of ~~2020,~~2021, compared to ~~200~~237 shipsets delivered in the same period of the prior year, primarily driven by decreased production on the A320 and A350 programs. ~~Total production~~Production deliveries offor programs recently acquired in the Bombardier Acquisition are reflected in the business/regional jet ~~wing and wing~~ components ~~decreased~~that increased to 450 shipsets during the ~~third~~first quarter of ~~2020,~~2021, compared to 1712 shipsets delivered in the same period of the prior year. In total, production deliveries decreased to ~~206~~269 shipsets during the ~~third~~first quarter of ~~2020,~~2021, compared to ~~437~~324 shipsets delivered in the same period of the prior year.

Gross (Loss) Profit. Gross Loss was ($~~97.1)~~58.0) million for the three months ended ~~October~~April 1, ~~2020,~~2021, compared to Gross ~~Profit~~Loss of ~~$272.3~~($35.2) million for the same period in the prior year. ~~This decrease~~The increase was primarily driven by ~~decreased margins recognized on~~

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~~the B737 MAX and B777 programs,~~ additional forward losses in the quarter on the B787 program primarily driven by engineering analysis and the estimated cost of re-work, and the A350 program primarily driven by schedule changes and costs for tooling and build process quality improvements. The forward loss charges on the B787 and A350 programs, ~~due to reduced~~and margin deterioration on the B737 MAX program, were partially offset by excess capacity and abnormal production ~~rates,~~costs that were lower in the first quarter of 2021 than the first quarter of 2020. The excess capacity production costs ~~of $72.6 million due to~~were driven by temporary production schedule changes on B737 MAX and A320 ~~programs,~~programs. In the first quarter of 2021, we recognized $67.6 million of excess capacity production costs and $2.1 million of net temporary workforce ~~favorable~~adjustments as a result of COVID-19, compared to prior year excess capacity cost of $73.4 million and abnormal costs related to temporary workforce adjustments of ~~$10.9 million due to COVID-19, net of the U.S. employee retention credit and U.K. government subsidies.~~$25.4 million. In the ~~third~~first quarter of ~~2020,~~2021, we recognized ~~$4.6~~$5.8 million of ~~favorable~~unfavorable cumulative catch-up adjustments related to periods prior to the ~~third~~first quarter of ~~2020,~~2021, and ~~$128.4~~$72.4 million of net forward loss charges related to the B787, B747, B767, ~~A350,~~ and ~~BR725~~A350 programs. In the ~~third~~first quarter of ~~2019,~~2020, we recorded ~~$13.0~~$8.2 million of unfavorable cumulative catch-up adjustments related to periods prior to the ~~third~~first quarter of ~~2019,~~2020, and ~~$28.8~~$19.7 million of net forward loss ~~charges.~~charges related to the B747, B787, A350, and BR725 programs.

SG&A and Research and Development. SG&A expense was ~~$0.8~~$19.8 million lower for the three months ended ~~October~~April 1, ~~2020,~~2021, compared to the same period in the prior ~~year.~~year, reflecting cost reduction initiatives and lower acquisition related expenses for the period. Research and development expense was ~~$5.1~~$4.1 million lower for the three months ended ~~October~~April 1, ~~2020,~~2021, compared to the same period in the prior year.

Restructuring Costs. Restructuring costs ~~were $19.5 million higher for the three months ended October 1, 2020, compared to the same period in the prior year~~ for cost-alignment and headcount reductions as a result of B737 MAX grounding and COVID-19 ~~impacts.~~impacts decreased $40.5 million for the three months ended April 1, 2021, compared to the same period in the prior year. The variance reflects the relatively higher cost-alignment and headcount reduction activity seen in the prior year period.

Operating (Loss) Income. Operating loss for the three months ended ~~October~~April 1, ~~2020~~2021 was ($~~176.9)~~125.9) million, ~~a decrease~~an improvement of ~~$383~~$41.6 million, compared to operating ~~income~~loss of ~~$206.1~~($167.5) million for the same period in the prior year. The ~~decrease was primarily driven by~~improvement reflects the ~~production schedule changes~~increased gross loss on ~~B737 MAX, B787, B777, A350~~sales and ~~A320 programs. Spirit recognized lower margin driven by significantly less deliveries as a result of B737 MAX grounding~~offsetting reductions to restructuring costs, SG&A costs, and ~~COVID-19 impacts, excess capacity production~~research and development costs of $72.6 million, temporary workforce favorable adjustment of $10.9 million due to COVID-19 net of U.S. employee retention credit and U.K. government subsidies, and restructuring expenses of $19.5 million for cost-alignment and headcount reductions. Further, Spirit recognized a non-cash expense of $2.6 million resulting from the Company's Voluntary Retirement Program (the "VRP"). In addition to the expenses described above, Spirit recognized forward loss charges of $128.4 million in the third quarter of 2020 related to the B787, B747, B767, A350, and BR725 programs.mentioned above.

Interest Expense and Financing Fee Amortization. Interest expense and financing fee amortization for the three months ended ~~October~~April 1, ~~2020~~2021 increased $27.6 million compared to the same period in the prior year. The three months ended April 1, 2021 includes ~~$41.0~~$48.6 million of interest and fees paid or accrued in connection with long-term debt and $2.4 million in amortization of deferred financing costs and original issue discount, compared to $26.7 million of interest and fees paid or accrued in connection with long-term debt and ~~$4.4 million in amortization of deferred financing costs and original issue discount, compared to $19.9 million of interest and fees paid or accrued in connection with long-term debt and $0.9~~$2.1 million in amortization of deferred financing costs and original issue discount for the same period in the prior year. The remaining variance from the comparable prior period is driven by interest expense recognized on the repayable investment agreement with the Department for Business, Energy and Industrial Strategy of the Government of the United Kingdom. See also Note 24, Acquisitions.

Other (Expense) Income, net. Other ~~expense,~~income, net for the three months ended ~~October~~April 1, ~~2020~~2021 was ~~$10.0~~$12.8 million, compared to ~~$9.5~~a net expense of $49.0 million for the same period in the prior year. ~~Other expense,~~The increase in other income primarily reflects a net ~~during~~pension loss recognized in the ~~third quarter~~prior year period related to a voluntary retirement program. This increase related to net pension

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income in the current year period was ~~primarily driven~~partially offset by ~~loss reclassified from Accumulated Other Comprehensive Income ("AOCI")~~foreign exchange losses and lower interest income as ~~a result of termination of a swap agreement.~~compared to the prior year period.

Provision for Income Taxes. On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, (i) for taxable years beginning before 2021, net operating loss ("NOL") carryforwards and carrybacks may offset 100% of taxable income, (ii) NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund and (iii) for taxable years beginning in 2019 and 2020, the base for interest deductibility is increased from 30% to 50% of earnings before interest, taxes, depreciation and amortization.~~The anticipated impacts of the CARES Act have been incorporated into our results and are reflected in the effective tax rate outlined below~~

Our reported tax rate includes two principal components: an expected annual tax rate and discrete items resulting in additional provisions or benefits that are recorded in the quarter that an event arises. Events or items that could give rise to discrete recognition include excess tax benefit in respect of share-based compensation, finalizing audit examinations for open tax years, statute of limitations expiration, or a change in tax law.

Deferred income tax assets and liabilities are recognized for future income tax consequences attributable to differences between the financial statement carrying amounts for existing asset and liabilities and their respective tax bases. A valuation allowance is recorded to reduce deferred income tax assets to an amount that in management’s opinion will ultimately be realized. We have reviewed our material deferred tax assets to determine whether or not a valuation allowance was necessary. Based on evaluation of both the ~~Company’s earnings history, in conjunction with other~~ positive and negative evidence ~~we have~~available, management determined that it ~~is more likely than not that the benefits from the deferred tax assets will be realized and a valuation allowance is not appropriate at~~

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~~this time. We will~~was necessary to continue to ~~regularly assess the potential for realization of our net deferred tax assets in future periods. Changes in future earnings projections, among other factors, may cause us to record~~maintain a valuation allowance against ~~some or~~nearly all of ~~our~~its net U.S. and U.K. deferred tax assets ~~which may materially impact our income tax expense~~as of April 1, 2021. The net valuation allowance was increased by $40.2 million in the ~~period we determine that these factors have changed.~~U.S. and by $6.2 million in the UK for the three months ended April 1, 2021.

The income tax benefit for the three months ended ~~October~~April 1, ~~2020~~2021 includes ~~($78.3)~~$1.2 million for federal taxes, ($~~5.3)~~1.3) million for state taxes and ($1.6) million for foreign taxes. The income tax ~~benefit~~provision for the three months ended ~~September 26, 2019~~April 2, 2020 includes ~~$39.5~~($47.0) million for federal taxes, ($~~2.7)~~43.8) million for state taxes and ~~$4.9~~$3.6 million for foreign taxes. The effective tax rate for the three months ended ~~October~~April 1, ~~2020 was 35.5%~~2021 is 1.0% as compared to ~~24.1%~~35.1% for the same period in ~~2019.~~2020. As we are reporting a pre-tax loss for the three months ended ~~October~~April 1, ~~2020,~~2021, increases to tax expense result in a decrease to our effective tax rate and decreases to tax expense result in an increase to our effective tax rate. The increase to our effective tax rate is primarily due to the benefits generated related to the carryback of our 2020 estimated income tax loss as permitted by the CARES Act, to state credits generated, offset by reduction in the GILTI tax.

The ~~increase~~decrease from the U.S. statutory tax rate (resulting in incremental tax ~~benefit)~~expense) is attributable primarily to the impact of the ~~resulting permanent benefit related to the carryback of our 2020 estimated~~valuation allowance recognized on US and UK deferred tax ~~loss, offset by foreign tax rates lower than the U.S. rate.~~assets.

~~The United Kingdom Finance Act 2020 was passed by~~Spirit filed its tentative federal income tax return for the ~~House of Commons on July 2,~~year ended December 31, 2020 and ~~received Royal Assent~~the respective net operating loss carryback claim on ~~July 22, 2020. As~~March 15, 2021. This filing includes a ~~result of the enactment of this tax law change, we have a re-measurement related to our deferred tax liabilities in the third quarter of 2020 resulting in less than $1 million of~~federal income tax ~~expense.~~refund claim of approximately $300 million, which is classified as an other current asset.

Segments. The following table shows segment revenues and operating income for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019:~~April 2, 2020:


		Three Months Ended				Three Months Ended
		October 1, 2020		September 26, 2019				April 1, 2021		April 2, 2020
		($ in millions)				($ in millions)
Segment Revenues	Segment Revenues						Segment Revenues
Fuselage Systems	Fuselage Systems	$	421.1	$	1,005.3		Fuselage Systems	$	437.1	$	551.5
Propulsion Systems	Propulsion Systems	170.8		520.9			Propulsion Systems	226.5		225.2
Wing Systems	Wing Systems	168.3		391.0			Wing Systems	223.6		291.4
All Other	All Other	46.1		2.7			All Other	13.6		9.2
		$	806.3	$	1,919.9			$	900.8	$	1,077.3
Segment Operating (Loss) Income	Segment Operating (Loss) Income						Segment Operating (Loss) Income
Fuselage Systems	Fuselage Systems	$	(96.7)	$	105.8		Fuselage Systems	$	(59.8)	$	(86.4)
Propulsion Systems	Propulsion Systems	(15.6)		111.7			Propulsion Systems	16.7		(5.3)
Wing Systems	Wing Systems	(23.2)		53.9			Wing Systems	(18.9)		13.6
All Other	All Other	19.1		1.3			All Other	1.2		1.8
		(116.4)		272.7				(60.8)		(76.3)
SG&A	SG&A	(52.8)		(53.6)			SG&A	(57.6)		(77.4)

Research and development	Research and development	(7.5)		(12.6)			Research and development	(8.2)		(12.3)
Unallocated cost of sales (1)	Unallocated cost of sales (1)	(0.2)		(0.4)			Unallocated cost of sales (1)	0.7		(1.5)
Total operating (loss) income	Total operating (loss) income	$	(176.9)	$	206.1		Total operating (loss) income	$	(125.9)	$	(167.5)

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(1) Includes ~~$0.2~~$0.3 million reversal of warranty expense and ~~$0.4~~$1.3 million warranty expense for the three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019,~~April 2, 2020, respectively.

Fuselage Systems Segment, Propulsion Systems Segment, Wing System Segment, and All Other represented approximately ~~52%~~49%, ~~21%~~25%, ~~21%~~25% and 6%1%, respectively, of our net revenues for the three months ended ~~October~~April 1, 2021 and approximately 51%, 21%, 27% and 1% respectively, of our net revenues for the three months ended April 2, 2020.

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Fuselage Systems. Fuselage Systems Segment net revenues for the three months ended ~~October~~April 1, ~~2020~~2021 were ~~$421.1~~$437.1 million, a decrease of ~~$584.2~~$114.4 million, or ~~58%~~21%, compared to the same period in the prior year. The decrease in ~~revenue~~revenues was primarily due to lower production volumes on ~~B737 MAX,~~B777, B787 ~~B777,~~ and A350 programs, and a lower revenue from aftermarket sales. The decrease was partially offset by ~~increased Defense activity.~~an increase from the prior period in B737 MAX and defense program revenue and revenue from our recently acquired Bombardier programs. Fuselage Systems Segment operating margins were ~~(23%~~(14%) for the three months ended ~~October~~April 1, ~~2020,~~2021, compared to ~~11%~~(16%) for the same period in the prior ~~year, primarily due to lower margins recognized on the B737 MAX program due to significantly less deliveries,~~year. Increased forward losses on B787 and A350 programs and the impact of the lower volume of aftermarket sales were offset by increased profit on defense programs and lower restructuring and excess capacity production costs. For the three months ended April 1, 2021, the Fuselage Systems Segment includes $1.8 million of restructuring costs, $42.6 million of excess capacity production costs, and $0.7 million of ~~$42.0~~net temporary workforce adjustments as a result of COVID-19, compared with excess capacity costs of $51.2 million, temporary workforce ~~favorable impact~~reductions of ~~$7.4~~$15.3 million due to COVID-19 ~~net of U.S. employee retention credit,~~related Boeing production suspensions, and restructuring costs of ~~$6.6~~$30.1 million for ~~cost alignment and headcount reductions.~~the same period in the prior year. In the ~~third~~first quarter of ~~2020,~~2021, the segment recorded favorable cumulative catch-up adjustments of ~~$8.8~~$1.9 million and net forward loss charges of ~~$92.0~~$55.1 million. In comparison, during the ~~third~~first quarter of ~~2019,~~2020, the segment recorded unfavorable cumulative catch-up adjustments of ~~$14.4~~$4.0 million and net forward loss charges of ~~$18.8~~$13.2 million.

Propulsion Systems. Propulsion Systems Segment net revenues for the three months ended ~~October~~April 1, ~~2020~~2021 were ~~$170.8~~$226.5 million, an increase of $1.3 million, or 1%, compared to the same period in the prior year. The increase was primarily due to increased volume of B737 MAX and aftermarket sales, partially offset by lower production volumes on B777 and B787 programs. Propulsion Systems Segment operating margins were 7% for the three months ended April 1, 2021, compared to (2%) for the same period in the prior year, driven largely by lower restructuring costs and excess capacity production costs that offset margin deterioration on the B737 MAX program and an additional forward loss on the B787 program. For the three months ended April 1, 2021 the Propulsion Systems Segment includes ($0.2) million of restructuring costs, $7.2 million of excess capacity production costs, and $0.1 million of net temporary workforce adjustments as a result of COVID-19, compared with excess capacity costs of $15.8 million, temporary workforce reductions of $6.2 million due to COVID-19 related Boeing production suspensions, and restructuring costs of $8.8 million for the same period in the prior year. The segment recorded unfavorable cumulative catch-up adjustments of $5.6 million and net forward loss charges of $4.7 million for the three months ended April 1, 2021. In comparison, during the same period of the prior year, the segment recorded unfavorable cumulative catch-up adjustments of $1.5 million and net forward loss charges of $3.1 million.

Wing Systems. Wing Systems Segment net revenues for the three months ended April 1, 2021 were $223.6 million, a decrease of ~~$350.1~~$67.8 million, or ~~67%~~23%, compared to the same period in the prior year. The decrease was primarily due to lower production volumes on B737 MAX, ~~B777,~~B787, A320, and ~~B787 programs. Propulsion~~A350 programs, partially offset by revenue from our recently acquired A220 wing program. Wing Systems Segment operating margins were ~~(9%~~(8%) for the three months ended ~~October~~April 1, ~~2020,~~2021, compared to ~~21%~~5% for the same period in the prior year. ~~This decrease~~The reduction in margin was primarily driven by ~~lower margins due to significantly less deliveries on the B737 MAX, and B777 programs,~~current period forward ~~loss~~losses on B787 ~~program,~~and A350 programs and higher excess capacity costs compared to the same period in the prior year. For the three months ended April 1, 2021 the Wing Systems Segment includes $0.5 million of restructuring costs, $17.8 million of excess capacity production costs, and $1.3 of ~~$17.5 million, and~~net temporary workforce ~~favorable impact~~adjustments as a result of ~~$2.9~~COVID-19, compared with excess capacity costs of $6.4 million, temporary workforce reductions of $3.9 million due to COVID-19 ~~net of U.S. employee retention credit,~~related Boeing production suspensions, and restructuring costs of ~~$3.8~~$3.7 million for ~~cost alignment and headcount reductions. The~~the same period in the prior year. In the first quarter of 2021, the segment recorded unfavorable cumulative catch-up adjustments of ~~$4.6~~$2.1 million and net forward loss charges of ~~$14.9 million for the three months ended October 1, 2020.~~$12.6 million. In comparison, during the same period of the prior year, the segment recorded ~~favorable cumulative catch-up adjustments of $1.8 million and net forward loss charges of~~ ~~$4.0~~ ~~million.~~

~~Wing Systems.~~ Wing Systems Segment net revenues for the three months ended October 1, 2020 were $168.3 million, a decrease of $222.7 million, or 57%, compared to the same period in the prior year. The decrease was primarily due to lower production volumes on B737 MAX, B777, B787, A320, and A350 programs. Wing Systems Segment operating margins were (14%) for the three months ended October 1, 2020, compared to 14% for the same period in the prior year, primarily driven by lower margins due to significantly fewer deliveries on the B737 MAX, forward losses on B787 and A350 programs, excess capacity cost of $13.1 million, temporary workforce favorable impact of $0.6 million due to COVID-19 net of U.S employee retention credit and U.K. government subsidies, and restructuring costs of $9.1 million for cost alignment and headcount reductions. In the third quarter of 2020, the segment recorded favorable cumulative catch-up adjustments of $0.4 million and net forward loss charges of $21.5 million. In comparison, during the third quarter of 2019, the segment recorded unfavorable cumulative catch-up adjustments of ~~$0.4~~$2.7 million and ~~$6.0~~$3.4 million of net forward loss charges.

All Other. All Other segment net revenues consist of sundry sales of miscellaneous services and natural gas revenues from the Kansas Industrial Energy Supply Company ("KIESC"). In the three months ended ~~October~~April 1, ~~2020,~~2021, all Other segment net revenues were ~~$46.1~~$13.6 million, an increase of ~~$43.4~~$4.4 million compared to the same period in the prior year, primarily due to non-recurring revenue.

~~Nine Months Ended October 1, 2020 as Compared to Nine Months Ended September 26, 2019~~

~~Revenue.~~ Revenues for the nine months ended October 1, 2020 were $2,528.2 million, a decrease of $3,375.6 million, or 57.2%, compared to net revenues of $5,903.8 million for the same period in the prior year. The decrease in revenues was primarily due to decreased production activity on the B737 MAX, B777, B787, A350 and A320, partially offset by increased Defense activity. Approximately 83.7% of Spirit’s net revenues for the period came from our two largest customers, Boeing and Airbus.

Total production deliveries to Boeing decreased to 198 shipsets through third quarter of 2020, compared to 651 shipsets delivered in the same period of the prior year, primarily driven by decreased production on the B737 MAX, B777, B767 and B787 programs. Total production deliveries to Airbus decreased to 465 shipsets through third quarter of 2020, compared to 645 shipsets delivered in the same period of the prior year, primarily driven by decreased production on the A320, A330 and A350 programs, partially offset by increased A220 deliveries. Total production deliveries of business/regional jet wing and wing components decreased to 26 shipsets through third quarter of 2020, compared to 43 shipsets delivered in the same period of the prior year. In total, production deliveries decreased to 689 shipsets through third quarter of 2020, compared to 1,339 shipsets delivered in the same period of the prior year.

~~Gross (Loss) Profit.~~ Gross Loss was ($412.8) million for the nine months ended October 1, 2020, compared to Gross Profit of $874.7 million for the same period in the prior year. This decrease was primarily driven by decreased margins recognized on the B737 MAX, B777, and A320 programs, forward loss charges on B787 and A350 programs due to reduced

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production rates, excess capacity production costs of $228.8 million, and temporary workforce adjustment costs of $33.8 million due to COVID-19, net of the U.S employee retention credit and U.K. government subsidies. Through the third quarter of 2020, we recognized $30.6 million of unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2020, and $342.2 million of net forward loss charges related to B787, B747, B767, A350 and BR725 programs. Through the third quarter of 2019, we recorded $1.8 million of unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2019, and $21.8 million of net forward loss charges.

~~SG&A and Research and Development.~~ SG&A expense was $5.6 million higher for the nine months ended October 1, 2020, compared to the same period in the prior year mainly acquisition costs related to Asco and Bombardier. Research and development expense was $7.9 million lower for the nine months ended October 1, 2020, compared to the same period in the prior year.

~~Restructuring Costs.~~ Restructuring costs were $ $68.4 million higher for the nine months ended October 1, 2020 compared to the same period in the prior year for cost-alignment and headcount reductions related to B737 MAX grounding and COVID-19 impacts.

~~Operating (Loss) Income.~~ Operating loss for the nine months ended October 1, 2020 was ($711.4) million, a decrease of $1,376.5 million, compared to operating income of $665.1 million for the same period in the prior year. The decrease was primarily driven by decreased margins on B737 MAX, B777, B787, A350 and A320 programs, excess capacity production costs of $228.8 million, and temporary workforce adjustment costs of $33.8 million due to COVID-19, net of the U.S. employee retention credit and U.K. government subsidies. Spirit also recognized restructuring expenses of $68.4 million for cost-alignment and headcount reductions, and $22.9 million loss from disposition of assets. Further, Spirit recognized a non-cash expense of $86.4 million resulting from the VRP. In addition to the expenses described above, Spirit recognized net forward loss charges of $342.2 million for the nine months ended October 1, 2020 related to B787, B747, B767, A350 and BR725 programs.

~~Interest Expense and Financing Fee Amortization.~~ Interest expense and financing fee amortization for the nine months ended October 1, 2020 includes $108.8 million of interest and fees paid or accrued in connection with long-term debt and $9.8 million in amortization of deferred financing costs and original issue discount, compared to $57.4 million of interest and fees paid or accrued in connection with long-term debt and $2.7 million in amortization of deferred financing costs and original issue discount for the same period in the prior year.

~~Other (Expense) Income, net.~~ Other expense, net for the nine months ended October 1, 2020 was ($65.4) million, compared to ($11.9) million for the same period in the prior year. Other expense, net through the third quarter of 2020 was primarily driven by the VRP.

~~Provision for Income Taxes.~~ On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, (i) for taxable years beginning before 2021, net operating loss carryforwards and carrybacks may offset 100% of taxable income, (ii) NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund and (iii) for taxable years beginning in 2019 and 2020, the base for interest deductibility is increased from 30% to 50% of earnings before interest, taxes, depreciation and amortization. The anticipated impacts of the CARES Act have been incorporated into our results and are reflected in the effective tax rate outlined below.

Deferred income tax assets and liabilities are recognized for future income tax consequences attributable to differences between the financial statement carrying amounts for existing asset and liabilities and their respective tax bases. A valuation allowance is recorded to reduce deferred income tax assets to an amount that in management’s opinion will ultimately be realized. We have reviewed our material deferred tax assets to determine whether or not a valuation allowance was necessary. Based on the Company’s earnings history, in conjunction with other positive and negative evidence, we have determined it is more likely than not that the benefits from the deferred tax assets will be realized and a valuation allowance is not appropriate at this time. We will continue to regularly assess the potential for realization of our net deferred tax assets in future periods.

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Changes in future earnings projections, among other factors, may cause us to record a valuation allowance against some or all of our net deferred tax assets, which may materially impact our income tax expense in the period we determine that these factors have changed.

The income tax benefit for the nine months ended October 1, 2020 includes ($282.7) million for federal taxes, ($55.9) million for state taxes and ($1.4) million for foreign taxes. The income tax benefit for the nine months ended September 26, 2019 includes $112.7 million for federal taxes, ($2.8) million for state taxes and $14.7 million for foreign taxes. The effective tax rate for the nine months ended October 1, 2020 was 37.3% as compared to 21.2% for the same period in 2019. As we are reporting a pre-tax loss for the nine months ended October 1, 2020, increases to tax expense result in a decrease to our effective tax rate and decreases to tax expense result in an increase to our effective tax rate. The increase to our effective tax rate is primarily due to the benefits generated related to the carryback of our 2020 estimated income tax loss as permitted by the CARES Act, the re-measurement of deferred taxes under the CARES Act, increases in state tax credits, and increases in the benefit from foreign rate differences.

The increase from the U.S. statutory tax rate (resulting in incremental tax benefit) is attributable primarily to the impact of the resulting permanent benefit related to the carryback of our 2020 estimated tax loss, the re-measurement of deferred taxes under the CARES Act, and state income tax credits.

~~Segments.~~ ~~The following table shows segment revenues and operating income for the nine months ended October 1, 2020 and September 26, 2019:~~

Nine Months Ended
October 1,
2020 September 26,
2019
($ in millions)
Segment Revenues
Fuselage Systems $ 1,299.7 $ 3,171.7
Propulsion Systems 565.6 1,525.5
Wing Systems 582.2 1,197.4
All Other 80.7 9.2
$ 2,528.2 $ 5,903.8
Segment Operating (Loss) Income
Fuselage Systems $ (434.6) $ 380.5
Propulsion Systems (38.2) 304.9
Wing Systems (52.1) 177.1
All Other 28.9 2.5
(496.0) 865.0
SG&A (179.2) (173.6)
Research and development (28.1) (36.0)
Unallocated cost of sales (1)
(8.1) 9.7
Total operating (loss) income $ (711.4) $ 665.1

~~(1) Includes $2.7 million warranty expense and~~ ~~$10.1~~ ~~million reversal of warranty expense for the nine months ended October 1, 2020 and September 26, 2019, respectively.~~

Fuselage Systems Segment, Propulsion Systems Segment, Wing Systems Segment, and All Other represented approximately 51.4%, 22.4%, 23.0% and 3.2%, respectively, of our net revenues for the nine months ended October 1, 2020.

~~Fuselage Systems.~~ Fuselage Systems Segment net revenues for the nine months ended October 1, 2020 were $1,299.7 million, a decrease of $1,872 million, or 59.0%, compared to the same period in the prior year. The decrease in revenue was primarily due to lower production volumes on B737 MAX, B777, B787 and A350 programs partially offset by increased activity on defense. Fuselage Systems Segment operating margins were (33%) for the nine months ended October 1, 2020, compared to 12% for the same period in the prior year, primarily due to lower margins recognized on the B737 MAX program due to grounding, less deliveries on B777 program, forward losses on B787, A350 and B767 programs, excess capacity

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production costs of $143.8 million, temporary workforce reductions of $19.1 million due to COVID-19 net of U.S. employee retention credit, restructuring costs of $39.1 million for cost alignment and headcount reductions, and $22.5 million loss from disposition of assets. Through the third quarter of 2020, the segment recorded unfavorable cumulative catch-up adjustments of $18.9 million and net forward loss charges of $260.3 million. In comparison, during the same period of 2019, the segment recorded unfavorable cumulative catch-up adjustments of $2 million and net forward charges of $13.8 million.

~~Propulsion Systems.~~ Propulsion Systems Segment net revenues for the nine months ended October 1, 2020 were $565.6 million, a decrease of $959.9 million, or 62.9%, compared to the same period in the prior year. The decrease was primarily due to lower production volumes on B737 MAX, B777, B787 and BR725 programs. Propulsion Systems Segment operating margins were (7%) for the nine months ended October 1, 2020, compared to 20% for the same period in the prior year. This decrease was primarily driven by lower margins due to significantly less deliveries on the B737 MAX program due to grounding, less deliveries on B777 program, forward loss on B787 program, excess capacity costs of $50.8 million, temporary workforce reductions of $7.3 million due to COVID-19 net of U.S employee retention credit, restructuring costs of $14.2 million for cost alignment and headcount reductions. The segment recorded unfavorable cumulative catch-up adjustments of $8.6 million and net forward loss charges of $34.2 million for the nine months ended October 1, 2020. In comparison, during the same period of the prior year, the segment recorded unfavorable cumulative catch-up adjustments of $1.5 million and net forward loss charges of $3.1 million.

~~Wing Systems.~~ Wing Systems Segment net revenues for the nine months ended October 1, 2020 were $582.2 million, a decrease of $615.2 million, or 51.4%, compared to the same period in the prior year. The decrease was primarily due to lower production volumes on B737 MAX, B777, B787, A320 and A350 programs. Wing Systems Segment operating margins were (9%) for the nine months ended October 1, 2020, compared to 15% for the same period in the prior year, primarily due to lower margins recognized on the B737 MAX and A320 program due to less deliveries, forward losses on B787 and A350 programs, excess capacity costs of $34.2 million, temporary workforce reductions of $7.4 million due to COVID-19 net of U.S employee retention credit and U.K. government subsidies, restructuring costs of $15.1 million for cost alignment and headcount reductions, and $0.4 million loss from the disposition of assets. Through the third quarter of 2020, the segment recorded unfavorable cumulative catch-up adjustments of $3.1 million and net forward loss charges of $47.7 million. In comparison, through the third quarter of 2019, the segment recorded favorable cumulative catch-up adjustments of $1.7 million and $4.9 million of net forward loss charges.

~~All Other.~~ All Other segment net revenues consist of sundry sales of miscellaneous services and natural gas revenues from KIESC, a tenancy in common with other Wichita companies established to purchase natural gas where we are a major participant. In the nine months ended October 1, 2020, all Other segment net revenues were $80.7 million, an increase of $71.5 million compared to the same period in the prior year, primarily due to non-recurring programs.

Liquidity and Capital Resources

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We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our principal source of liquidity is operating cash flows from continuing operations. Our operating cash flows from continuing operations have been adversely impacted by the B737 MAX grounding and the COVID-19 pandemic (and resulting production rate changes associated with both events) and we expect that adverse impact to continue for the remainder of ~~2020~~2021 and beyond. For purposes of assessing our liquidity needs in this section, we have assumed that Boeing would not further reduce the B737 MAX production rate ~~(which naturally depends on the timely recertification of the B737 MAX and timely return to service)~~ and that other customers generally would not further reduce their production rates.

~~We expend significant capital as we undertake new programs, meet increased production rates on certain mature and maturing programs, and develop new technologies for the next generation~~As of aircraft, which may not be funded by our customers. As part of our cost-reduction actions, we have reduced our capital expenditures. In addition, other significant factors that affect our overall management of liquidity include: debt service, redemptions or repayment of debt or incentive obligations, the ability to attract long-term capital at satisfactory terms, research and development, capital expenditures, and merger and acquisition activities, such as the Bombardier aerostructures acquisitions. Historically, share repurchases and dividend payments have also been factors affecting our liquidity. Our share repurchase program is paused and we reduced our quarterly dividend to one penny per share.

~~In the three months ended October~~April 1, ~~2020, we issued the Second Lien 2025 Notes with a principal amount of $1.2 billion and, as of October 1, 2020,~~2021, our debt balance ~~is $2,994.5~~was $3,565.4 million.

As of ~~October~~April 1, ~~2020,~~2021, we had ~~$1,441.3~~$1,359.3 million of cash and cash equivalents on the balance sheet, which reflects a decrease of ~~$505.8~~$514.0 million from the cash and cash equivalents balance of ~~$1,947.1~~$1,873.3 million as of ~~July 2,~~December 31, 2020.

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We believe our cash on hand and cash flows generated from operations coupled with our ability to vary our cost structure quickly, will provide sufficient liquidity to address the challenges and opportunities of the current market and our global cash needs, including M&A integration activities, capital expenditures, debt service, and working capital, although we could experience significant fluctuations in our cash flows from period to period during the crisis. As of ~~October~~April 1, ~~2020,~~2021, we were in compliance with all applicable covenants ~~under~~in the agreements governing our ~~2018 Credit Agreement, as amended. The 2018 Credit Agreement was terminated on October 5, 2020.~~indebtedness.

As of April 1, 2021, the Other current asset line item on our Condensed Consolidated Balance Sheet includes $312.4 million income tax receivable related to a tax refund anticipated to be received in year 2021. The COVID-19 pandemic has created significant uncertainty in our industry. Aviation demand has deteriorated due to the pandemic and responsive government preventative measures. Our customers have reduced their production rates, which negatively impacts results of operations and cash flows. We are unable to predict the outcomevalue of the ~~pandemic and the resulting impact on the aviation industry and, accordingly, cannot predict the outcome on our operations. The Company has taken a number~~income tax receivable was $315.3 million as of ~~actions to assist with managing the impacts of the COVID-19 pandemic, including those described earlier in this section.~~

~~Apart from the COVID-19 pandemic, the B737 MAX grounding creates significant liquidity challenges for the Company. For the twelve months ended~~ December 31, 2019, approximately 53% of our net revenues were generated from sales of components to Boeing for the B737 aircraft. Spirit’s production plan for the B737 MAX in 2020, at 72 total shipsets to be delivered to Boeing, is significantly less than its production rate of 606 shipsets in 2019. Further, the COVID-19 pandemic may delay the recertification timeline for the B737 MAX and/or cause Boeing to further lower the current production rate. While Spirit has taken significant actions to curb costs and preserve liquidity, the B737 MAX grounding combined with the COVID-19 pandemic significantly challenges Spirit’s liquidity.

2020.

If Boeing is unable to return the B737 MAX to service in one or more jurisdictions, begin timely deliveries to customers, if production levels by Boeing or Airbus are reduced beyond current expectations due to depressed demand relating to the COVID-19 pandemic or otherwise, or if Spirit has difficulties in managing its cost structure to take into account changes in production schedules, Spirit’s liquidity position may worsen absent Spirit’s ability to procure additional financing, and Spirit’s business, financial condition, results of operations and cash flows could be materially adversely impacted.

Furthermore, if the B737 MAX production rates and other production rates are insufficient to generate the cash the Company needs for working capital in the future or if production levels by Boeing or Airbus are reduced beyond current expectations due to depressed demand, the COVID-19 pandemic or otherwise, the Company may need to access the debt or equity markets for additional liquidity. To the extent the Company is unable to secure such additional liquidity the Company’s operations and financial position could be materially adversely affected. The Company may not be able to obtain new debt or equity financing in light of the significant uncertainty relating to the B737 MAX or the impacts of the COVID-19 pandemic or otherwise.

The Company has two agreements (through the subsidiaries) to sell, on a revolving basis, certain trade accounts receivable balances with Boeing and Airbus to third party financial institutions. These programs were primarily entered into as a result of Boeing and Airbus seeking payment term extensions with the Company and they continue to allow Spirit to monetize the receivables prior to their payment date, subject to payment of a discount. Our ability to continue using such agreements is primarily dependent upon the strength of Boeing’s and Airbus’s financial condition. If any of these financial institutions involved with these arrangements experiences financial difficulties, becomes unwilling to support Boeing or Airbus due to a deterioration in their financial condition or otherwise, or is otherwise unable to honor the terms of the factoring arrangements, we may experience significant disruption and potential liquidity issues due to the failure of such arrangements, which could have an adverse impact upon our operating results, financial condition and cash flows. For the three months ended April 1, 2021, $455.1 million of accounts receivable were sold via these arrangements.

Spirit filed its tentative federal income tax return for the year ended December 31, 2020 and the respective net operating loss carryback claim on March 15, 2021. This filing includes a federal income tax refund claim of approximately $300 million, which is classified as an other current asset.

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Cash Flows

The following table provides a summary of our cash flows for the ~~nine~~three months ended ~~October~~April 1, ~~2020~~2021 and ~~September 26, 2019:~~April 2, 2020:


		For the Nine Months Ended					For the Three Months Ended
		October 1, 2020		September 26, 2019			April 1, 2021		April 2, 2020
		($ in millions)					($ in millions)

Net cash (used in) provided by operating activities		$	(612.8)	$	718.6
Net cash used in operating activities						Net cash used in operating activities	$	(170.2)	$	(331.3)
Net cash used in investing activities	Net cash used in investing activities	(183.4)		(118.7)		Net cash used in investing activities	(26.4)		(147.3)
Net cash (used in) provided by financing activities		(105.6)		113.5
Net cash used in financing activities						Net cash used in financing activities	(316.4)		(32.0)
Effect of exchange rate change on cash and cash equivalents	Effect of exchange rate change on cash and cash equivalents	(3.3)		(13.5)		Effect of exchange rate change on cash and cash equivalents	(1.0)		(6.2)
Net (decrease) increase in cash, cash equivalents and restricted cash for the period		(905.1)		699.9
Net decrease in cash, cash equivalents and restricted cash for the period						Net decrease in cash, cash equivalents and restricted cash for the period	(514.0)		(516.8)
Cash, cash equivalents, and restricted cash beginning of period	Cash, cash equivalents, and restricted cash beginning of period	2,367.2		794.1		Cash, cash equivalents, and restricted cash beginning of period	1,893.1		2,367.2
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	1,462.1	$	1,494.0	Cash, cash equivalents, and restricted cash, end of period	$	1,379.1	$	1,850.4

~~Nine~~Three Months Ended ~~October~~April 1, ~~2020~~2021 as Compared to ~~Nine~~Three Months Ended ~~September 26, 2019~~April 2, 2020

Operating Activities. For the ~~nine~~three months ended ~~October~~April 1, ~~2020,~~2021, we had a net cash outflow of ~~$612.8~~$170.2 million from operating activities, ~~an increase~~a decrease in net outflow of ~~$1,331.4~~$161.1 million compared to a net cash ~~inflow~~outflow of ~~$718.6~~$331.3 million for the same period in the prior year. The ~~increase~~decrease in net cash outflow is primarily represents improved cash flows from working capital due to ~~negative impacts~~the

Table of ~~working capital requirements driven by supplier payments made and reduction~~Contents

timing of ~~cash inflow from operating activities following~~ the ~~rate reduction due to~~prior year Boeing production suspension of the B737 MAX ~~grounding~~program, and ~~COVID-19 pandemic. This was offset~~the impact of additional cost reduction activities undertaken by the ~~cash payments of $215 million received from Boeing as part of~~Company within the ~~2020 MOA.~~last year.

Investing Activities. For the ~~nine~~three months ended ~~October~~April 1, ~~2020,~~2021, we had a net cash outflow of ~~$183.4~~$26.4 million for investing activities, ~~an increase~~a decrease in outflow of ~~$64.7~~$120.9 million compared to a net cash outflow of ~~$118.7~~$147.3 million for the same period in the prior year. The ~~increase~~decrease in cash outflow is primarily ~~due~~relates to the ~~FMI acquisition.~~prior period acquisition of FMI.

Financing Activities. For the ~~nine~~three months ended ~~October~~April 1, ~~2020,~~2021, we had a net cash outflow of ~~$105.6~~$316.4 million for financing activities, an increase in outflow of ~~$219.1~~$284.4 million, compared to a net cash ~~inflow~~outflow of ~~$113.5~~$32.0 million for the same period in the prior ~~year~~year. The increased cash outflow was primarily driven by ~~the payment~~redemption of the ~~2018 Revolver in second quarter 2020, repayment~~$300 million principal amount of the ~~2018 Term Loan~~Floating Rate Notes within the current period and ~~D2018 DDTL~~a reduction in ~~third quarter 2020, partially offset by~~ the ~~proceeds from~~amount of cash dividends paid compared to the ~~issuance~~prior period. During the three months ended April 1, 2021, we paid a dividend of ~~the Second Lien 2025 Notes. There was a cash inflow due~~$1.1 million to our stockholders of record, compared to a dividend of $12.4 million paid in the ~~2018 DDTL of $250 million during~~same period in the ~~first quarter of 2019. During the nine months ended October 1, 2020, there~~prior year. There were no repurchases of Common Stock under our share repurchase program ~~compared to 796,409 shares repurchased for $75 million~~ during either the ~~same period in the prior year. Additionally, during the nine~~three months ended ~~October~~April 1, ~~2020, we paid a dividend of $14.4 million to our stockholders of record, compared to a dividend of $37.8 million paid in the same period in the prior year.~~2021 or April 2, 2020.

Pension and Other Post-Retirement Benefit Obligations

Our U.S. pension plan remained fully funded at ~~October~~April 1, ~~2020,~~2021, and we anticipate non-cash pension income for ~~2020~~2021 to remain at or near the same level as ~~2019.~~2020. Our plan investments are broadly diversified and we do not anticipate a near-term requirement to make cash contributions to our U.S. pension plan. See Note 16, Pension and Other Post-Retirement Benefits, for more information on the Company’s pension plans.

~~On October 30, 2020, Spirit~~The Company expects to contribute zero dollars to the U.S. qualified pension plan and ~~Spirit UK closed~~a combined total of approximately $10.4 million for the ~~Bombardier Acquisition~~U.S. Supplemental Executive Retirement Plan (“SERP”) and ~~assumed certain liabilities including~~U.S. post-retirement medical plans in 2021. The Company’s projected contributions to the ~~net~~U.K. pension ~~liabilities of~~plan for 2021 are $1.9 million. Shorts expects to contribute $181.8 8 million for the ~~Shorts Pension. Under~~Shorts’ Pension Scheme, the ~~original Bombardier Purchase Agreement,~~Shorts’ Executive Benefits Scheme, and the ~~Pension Contribution was to be made at Closing. Subsequently,~~Shorts’ Postretirement Medical Plan in exchange for a parent guarantee by Spirit of up to £112.4 million (approximately $146.0 million), the parties changed the date on which the payment will be made to one year after closing (October 30, 2021).2021. The ~~Shorts~~Shorts’ Pension is in a deficit position and there is a risk that additional contributions will be required to fund the deficit from the trustees or the UKU.K. Pension Regulator as described under Part II, Item 1A. "Risk ~~Factors."~~Factors" of our 2020 Form 10-K.

Amounts noted above that are not in U.S. Dollars contributed can vary based on exchange rate fluctuations.

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~~Interest Rate Swaps~~

On March 15, 2017, the Company entered into an interest rate swap agreement, with an effective date of March 31, 2017. The swap has a notional value of $250.0 million and fix the variable portion of the Company’s floating rate debt at 1.815%. The swap expired in March 2020.Derivatives Accounted for as Hedges

Cash Flow Hedges - Interest Rate Swaps

During the third quarter of 2019, the Company entered into two interest rate swap agreements, designated as cash flow hedges by the Company, with a combined notional value of ~~$450.0. As of October 1, 2020,~~$450.0 million. On February 24, 2021, the ~~Company has one~~company terminated its remaining swap agreement with a notional value of ~~$150.0. These derivatives have been designated as~~$150 million. As of April 1, 2021, the Company has no swaps outstanding.

Changes in the fair value of cash flow hedges ~~by the Company. The fair value of these hedges was a liability of $1.7 as of October 1, 2020, which is~~are recorded in AOCI and recorded in earnings in the ~~other current liabilities~~period in which the hedged transaction occurs. No gain or loss was recognized in AOCI for the three months ended April 1, 2021. For the three months ended April 1, 2021 a loss of $0.4 million was reclassified from AOCI to earnings, and included in the interest expense line item on the Condensed Consolidated ~~Balance Sheet.~~Statements of Operations, and in operating activities on the Condensed Consolidated Statements of Cash Flows. For the three months ended April 1, 2021 a loss of $0.7 million was reclassified from AOCI to earnings resulting from the termination of a swap agreement, and included in the other income line item on the Condensed Consolidated Statements of Operations, and in operating activities on the Condensed Consolidated Statement of Cash Flows.

Cash Flow Hedges – Foreign Currency Forward Contract

On February 3, 2021, the Company entered into a foreign currency forward contract, designated as a cash flow hedge, to purchase £100.0 million for $137.1 million on October 28, 2021, for purposes of hedging exposure to foreign currency risk on a contribution of £100.0 million to the Shorts Brothers PLC Pension Fund.

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 occurs. The ~~loss~~gain recognized in AOCI was ~~$0.0 and $14.2~~$1.2 million for the three ~~and nine~~ months ended ~~October~~April 1, 2020, respectively. For the three and nine months ended October 1, 2020, a loss of $1.6 million and $3.0 million was reclassified from AOCI to earnings, and included in the interest expense line item on the Condensed Consolidated Statement of Operations, and in operating activities on the Condensed Consolidated Statement of Cash Flows. For the three and nine months ended October 1, 2020 a loss of2021. ~~$10.4 million~~ was reclassified from AOCI to earnings resulting from the termination of a swap agreement, and included in the other income line item on the Condensed Consolidated Statement of Operations, and in operating activities on the Condensed Consolidated Statement of Cash Flows. Within the next 12 months, the Company expects to recognize a ~~loss~~gain of ~~$1.7~~$1.2 million in earnings related to ~~these hedged~~the foreign currency forward contracts. As of ~~October~~April 1, ~~2020,~~2021, the maximum term of the hedged forecasted ~~transactions~~transaction was 97 months.

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Debt and Other Financing Arrangements

~~On September 30, 2020 Spirit paid~~As of April 1, 2021, the ~~remaining~~outstanding balance of the ~~2018~~senior secured Term Loan ~~and the 2018 DDTL. As of October 1, 2020, the outstanding balance~~B Credit Agreement was $399.0 million and the carrying value ~~of the 2018 Term Loan and the 2018 DDTL~~ was ~~$0.0.~~$389.2 million.

The ~~carrying value~~outstanding balance of the ~~Floating Rate Notes,~~ 2023 Notes and 2028 Notes was ~~$299.6~~$300.0 million ~~$298.7~~, and $700.0 million as of April 1, 2021, respectively. The carrying value of the 2023 Notes and 2028 Notes was $298.9 million, and ~~$694.5~~$694.8 million as of ~~October~~April 1, ~~2020,~~2021, respectively. On February 24, 2021, Spirit redeemed in full the outstanding $300 million principal amount of the Floating Rate Notes. As of April 1, 2021, the outstanding balance of the Floating Rate Notes was $0.

~~The carrying value~~As of April 1, 2021, the outstanding balance of the Second Lien 2025 Notes, First Lien 2025 Notes, and 2026 Notes was ~~$1,183.4~~$1,200.0 million, $500.0 million, and ~~$298.0~~$300.0 million, ~~as of October 1, 2020, respectively.~~respectively, and the carrying value was $1,185.1 million, $494.2 million, and $298.2 million.

See Note 15, Debt, to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

Information Regarding Guarantors of Spirit’s Notes Registered Under the Securities Act of 1933

Spirit’s 2026 Notes are guaranteed by Spirit NC and the Company, and Spirit’s 2023 Notes and 2028 Notes are guaranteed by the Company. None of Spirit’s notes are guaranteed by Spirit’s or the Company’s other domestic subsidiaries or any foreign subsidiaries (together, the “non-guarantor subsidiaries”). The Company consolidates each of Spirit and Spirit NC in its consolidated financial statements. Spirit and Spirit NC are both 100 percent-owned and controlled by the Company. The Company’s guarantees of Spirit’s indebtedness are full and unconditional, except that the guarantees may be automatically released and relieved upon satisfaction of the requirements for legal defeasance or covenant defeasance under the applicable indenture being met. The Company’s guarantees are also subject to a standard limitation which provides that the maximum amount guaranteed by the Company will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

The guarantees of the Company and Spirit NC with respect to Spirit’s 2026 Notes are made on a joint and several basis. The guarantee of Spirit NC is not full and unconditional because Spirit NC can be automatically released and relieved of its obligations under certain circumstances, including if it no longer guarantees Spirit’s credit facility. Like the Company’s guarantees, the guarantee of Spirit NC is subject to a standard limitation which provides that the maximum amount guaranteed by Spirit NC will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

All of the existing guarantees by the Company and Spirit NC rank equally in right of payment with all of the guarantors’ existing and future senior indebtedness. The secured indebtedness of the Company and Spirit NC (including guarantees of Spirit’s existing and future secured indebtedness) will be effectively senior to guarantees of any unsecured indebtedness to the extent of the value of the assets securing such indebtedness. Future guarantees of subordinated indebtedness will rank junior to any existing and future senior indebtedness of the guarantors. The guarantees are structurally junior to any debt or obligations of non-guarantor subsidiaries, including all debt or obligations of subsidiaries that are released from their guarantees of the notes. As of December 31, 2020, indebtedness of our non-guarantor subsidiaries included $85.2 million of outstanding borrowings under intercompany agreements with guarantor subsidiaries and $12.4 million of finance leases of our non-guarantor subsidiaries.

Based on our understanding of Rule 3-10 of Regulation S-X (“Rule 3-10”), we believe that the Company’s guarantees of Spirit’s indebtedness comply with the conditions set forth in Rule 3-10, which enable us to present summarized financial information for the Company, Spirit and Spirit NC, which is a consolidated guarantor subsidiary, in accordance with Rule 13-01 of Regulation S-X. The summarized financial information excludes information regarding the non-guarantor subsidiaries. In accordance with Rule 3-10, separate financial statements of the guarantor subsidiaries have not been presented.

The following tables include summarized financial information of Spirit, Holdings, and Spirit NC (together, the “obligor group”). Investments in and equity in the earnings of the Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”), which are not a member of the obligor group, have been excluded. The summarized financial information of the obligor group is presented on a combined basis for Spirit and Holdings, and separately for Spirit NC, with intercompany balances and transactions between entities in the obligor group eliminated. The obligor group’s amounts due from, amounts due to and transactions with Non-Guarantor Subsidiaries have been presented in separate line items, if they are material. There are no non-controlling interest in any of the obligor group entities.

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Summarized Statements of Income	Three Months Ended April 2, 2021
($ millions)	Holdings and Spirit		Spirit NC
Net Sales to unrelated parties	$	643.4	$	—
Net Sales to Non-Guarantor Subsidiaries	1.1		5.9
Gross loss on sales to unrelated parties	(56.3)		—
Gross loss on sales to Non-Guarantor Subsidiaries	(1.0)		(0.6)
(Loss) Income from continuing operations	(161.3)		1.2
Net (loss) income	$	(161.3)	$	1.2


Summarized Balance Sheets	Holdings and Spirit				Spirit NC
($ millions)	April 2, 2021		December 31, 2020		April 2, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	1,218.6	$	1,664.5	$	—	$	—
Receivables due from Non-Guarantor Subsidiaries	45.2		43.8		22.9		25.0
Receivables due from unrelated parties	238.1		230.8		—		—
Contract Assets	314.3		319.8		—		—
Inventory, Net	798.8		828.4		147.1		156.8
Other current assets	326.3		318.7		—		—
Total current assets	$	2,941.3	$	3,406.0	$	170.0	$	181.8
Loan receivable from Non-Guarantor Subsidiaries	85.2		85.2		—		—
Property, plant and equipment, net	1,634.7		1,666.7		255.3		264.3
Pension assets, net	438.8		428.6		—		—
Other non-current assets	243.6		233.0		6.8		6.9
Total non-current assets	$	2,402.3	$	2,413.5	$	262.1	$	271.2
Liabilities
Accounts payable to Non-Guarantor Subsidiaries	$	79.4	$	78.8	$	18.1	$	11.0
Accounts payable to unrelated parties	362.8		392.3		22.7		17.7
Accrued expenses	258.7		233.7		0.9		0.4
Current portion of long-term debt	37.1		337.7		0.2		0.2
Other current liabilities	429.6		368.8		0.6		0.6
Total current liabilities	$	1,167.6	$	1,411.3	$	42.5	$	29.9
Long-term debt	3,515.6		3,522.6		0.6		0.6
Contract liabilities, long-term	348.5		370.9		—		—
Forward loss provision, long-term	252.7		299.1		—		—
Other non-current liabilities	579.1		620.2		6.1		6.3
Total non-current liabilities	$	4,695.9	$	4,812.8	$	6.7	$	6.9

Supply Chain Financing Applicable to Suppliers

The Company has also provided its suppliers with access to a supply chain financing program through a facility with a third party financing institution. This program was primarily entered into as a result of Spirit and its subsidiaries seeking payment term extensions with suppliers and the program allows suppliers to monetize the receivables prior to their payment date, subject to payment of a discount. Our suppliers’ ability to continue using such agreements is primarily dependent upon the strength of our financial condition. While our suppliers’ access to this supply chain financing program could be curtailed if our credit ratings are downgraded, we do not believe that changes in the availability of supply chain financing to our suppliers will have a significant impact on our liquidity.

The balance of payables to suppliers who elected to participate in supply chain financing program that is included in our accounts payable balance as of ~~October~~April 1, ~~2020~~2021 is ~~$41.4 million.~~$41.8 million. The balance as of ~~September 26, 2019 was $149.4~~ April 2, 2020 was $52.1 million. Payables to suppliers who elected to participate in the supply chain financing program decreased ~~by $95.9~~ by $11.6 million for the ~~nine~~three months ended ~~October~~April 1, ~~2020~~2021 and ~~increased~~decreased by ~~$99.2~~ $85.2 million for the same period in the prior year. The ~~decrease~~decreases for ~~the nine months ended October 1, 2020 was~~both periods were primarily due to ~~reduced production on certain programs and associated~~ decreases in purchases from suppliers related to reduced production during the applicable period in relation to the immediately preceding period and not due to any changes in the availability of supply chain financing. The increase for the nine months ended September 26, 2019 reflects a combination of higher purchases, an extension of payment terms with certain suppliers and increased utilization of our supply chain financing programs.

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Advance Payments

Advances on the B737 Program. ~~The~~In an effort to minimize the disruption to Spirit's operations and its supply chain, Spirit and Boeing entered into a memorandum of agreement on April 12, 2019 ~~MOA included the terms and conditions~~(the "2019 MOA"), which provided for an advance payment to be made from Boeing to Spirit in the amount of ~~$123.0~~$123 million, which was received during the third quarter of 2019. The parties entered into another memorandum of agreement on February 6, 2020 ~~MOA~~(the "2020 MOA"), which extended the repayment date of the ~~$123.0~~$123 million advance received by Spirit under the 2019 MOA to 2022. The 2020 MOA also required Boeing to pay $225 million to Spirit in the first quarter of 2020, consisting of (i) $70 million in support of Spirit’s inventory and production stabilization, of which $10 million will be repaid by Spirit in 2021, and (ii) $155 million as an incremental pre-payment for costs and shipset ~~deliveries~~deliveries over the next two years. On February 9, 2021, the Company signed a letter of agreement for Boeing to pay $38.5 million to Spirit in the first quarter of 2021, which consisted of (i) $68.5 million as additional pre-payment for the costs and shipset deliveries less the (ii) ($30) million credit owed to Boeing for rate-based pricing premium. As of April 1, 2021, the amount of advance payments received from Boeing and not yet repaid was $130.5 million.

Advances on the B787 Program. Boeing has made advance payments to Spirit under the B787 Supply Agreement that are required to be repaid to Boeing by way of offset against the purchase price for future shipset deliveries. As of ~~October~~April 1, ~~2020,~~2021, the amount of advance payments received by us from Boeing under the B787 Supply Agreement and not yet repaid was approximately $212 million.

Advances on the Irkut Program. Irkut made an advance payment of $150 million to Shorts at the inception of the program in 2012 for the design and development of the Nacelle for the MC-21 aircraft. The remainder of $0.5 million will be released in 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a result of our operating and financing activities, we are exposed to various market risks that may affect our consolidated results of operations and financial position. These market risks include fluctuations in interest rates, which impact the amount of interest we must pay on our variable rate debt. In addition to other information set forth in this report, you should carefully consider the factors discussed in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our ~~2019~~2020 Form 10-K which could materially affect our business, financial condition or results of operations. With the exception of the updates regarding market risk discussed under Risk Factors in Part II, Item 1A, there have been no material changes in the Company’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of the Company’s 2020 Form ~~10-K for the year ended December 31, 2019.~~10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our President and Chief Executive Officer and Senior Vice President and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of ~~October~~April 1, ~~2020~~2021 and have concluded that these disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management of the Company, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~As disclosed in our Form 10-K for~~Our assessment of the ~~fiscal year ended December 31, 2019, we identified a material weakness in~~effectiveness of our internal control over financial reporting as of ~~December 31, 2019.~~

~~The remediation plan we disclosed in our 10-K for the fiscal year ended December 31, 2019, included the following items:~~

•~~Management changes.~~

•~~Enhance training around the appropriate treatment~~April 1, 2021 did not include an assessment of claims and assertions and other subjective elements and key judgments of our estimate at completion ("EAC") process to reinforce the existing written Company policies. This training will focus on control owners within the EAC process, including program, accounting and executive leadership.

•Reassess processes and design of controls to ensure that all customer claims and assertions are identified and evaluated in accordance with established Company policies and procedures. This remediation step will include validation and reconciliation of claims data with our key customers and retention of this data in a centralized claims repository to facilitate the completeness of our accounting for claims and assertions.

~~Over the first three quarters of 2020, our management completed the following items:~~

•~~Completed management changes.~~

•Developed and deployed enhanced training to specifically address the appropriate treatment of claims and assertions and other subjective elements and key judgments of our EAC process to reinforce the existing written Company policies. The training sessions included control owners within the EAC process, including program, accounting and executive leadership.

•Reassessed the required processes and design of controls to ensure that all customer claims and assertions are identified and evaluated in accordance with established Company policies and procedures. This remediation step includes validation and reconciliation of claims data with our key customers. Additionally, we developed a technology solution to retain, track, evaluate and certify that all claims data contained in this centralized claims repository are complete and appropriately included within the respective program EAC in a timely manner, including a certification from key control owners that the appropriate amounts included within the centralized claims repository are included within the respective EACs.

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~~Management has implemented these steps and is in the process of testing the operating effectiveness of these additional processes and controls. We are currently evaluating~~ the effectiveness of ~~these controls in response to~~internal control over financial reporting of the ~~material weakness identified. Except with respect to our remediation plan, there~~Bombardier Acquisition, which was acquired on October 30, 2020. There were no changes in our internal control over financial reporting during the quarter ended ~~October~~April 1, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding any recent material development relating to our legal proceedings since the filing of our ~~2019~~2020 Form 10-K is included in Note 20, Commitments, Contingencies and Guarantees to our condensed consolidated financial statements included in Part I of this Quarterly Report and incorporated herein by reference.

Item 1A. Risk Factors

~~In addition to other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I,~~ “Item ~~1A, “Risk Factors,” in~~1A. Risk Factors” of our ~~2019~~2020 Form 10-K ~~as updated by~~includes a discussion of our ~~Quarterly Reports on Form 10-Q for the first and second quarters of 2020 and herein, which~~known material risk factors, other than risks that could ~~materially affect our business, financial condition,~~apply to any issuer or ~~results of operations.~~offering. There have been no material changes tofrom the ~~Company’s~~ risk factors ~~previously disclosed~~described in our ~~2019~~2020 Form ~~10-K, as updated by our Quarterly Reports on Form 10-Q for the first and second quarters of 2020, except for as follows:~~

~~The COVID-19 pandemic has had and is expected to continue to have a material negative impact on our industry and business.~~

In response to the COVID-19 pandemic, many governments around the world have implemented and are continuing to enforce a variety of measures to reduce the spread of COVID-19, including restrictions and bans on travel, bans on public gatherings, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders, and closures of businesses. In addition to governmental measures, many companies are adopting similar restrictions to protect their employees from potential exposure. These actions have forced our customers, including Boeing and Airbus, to reduce production rates. Further, such measures and the public’s desire to avoid catching COVID-19 have heavily impacted the use of aircraft transportation and caused global aviation demand to collapse, resulting in a significant negative impact on our industry, customers, suppliers, partners, workforce and operations.

Since we largely support commercial aerostructures customers, our financial results and prospects are almost entirely dependent on global aviation demand and the resulting rates of production our customers demand from us. Our customers have decreased production rates across multiple programs and may experience pressure to further adjust production rates or again suspend production in the future.

The extent to which the pandemic will continue to negatively affect our business and results of operations will depend on numerous evolving factors and future developments that we are not able to predict, including:

•~~whether there will be additional production suspensions relating to the COVID-19 pandemic and the resulting impact on our financial performance, liquidity and our cash flows;~~

•~~if we will have significant employee absenteeism due to infection or fear of COVID-19 infection;~~

•~~if we may experience lawsuits or regulatory actions due to COVID-19 spread in the workplace;~~

•~~reputational risk we may experience due to COVID-19 spread in the workplace;~~

•~~the effect of significant salary cuts across our workforce, which may result in critical employee departures;~~

•the impact remote working arrangements, salary reductions, and shortened work weeks for salaried employees will have on the health and productivity of management and our employees, and our ability to maintain our compliance practices and procedures, financial reporting processes and related controls, and manage the complex accounting issues presented by the COVID-19 pandemic such as excess cost accounting, impairment analysis and business combination controls;

•~~the impact on the Company’s vendors and outsourced business processes and their process and controls documentation;~~

•~~potential failure or reduced capacity of third parties on which the Company relies, including suppliers, lenders, and other business partners, to meet the Company’s obligations and needs;~~

•~~the impact on our contracts with our customers and suppliers, including force majeure provisions;~~

•~~the availability of a vaccine or cure that mitigates the effect of the virus;~~

•~~the impacts on the financial markets and the availability and cost of credit to the Company;~~

•~~our customers’ ability to pay for our products and services;~~

•~~the impact of Government health and protection policies to future air traffic demand;~~

•~~the impact on our ability to successfully integrate the Bombardier Acquisition;~~

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•our ability to withstand and recover from any cyberattacks or operation interruptions as a result of a remote working environment, and potential reputational impacts or loss of customer contracts as a result of such cyberattacks and interruptions; and

•the impact on demand for the Company’s products, and the public’s demand and ability to pay for future airline travel, whether or not vaccines or effective treatments for COVID-19 become available.

A number of these items have occurred to certain degrees and any or all of these items may occur in the future, which individually or in the aggregate may have a material adverse effect on our business, financial condition, results of operations and cash flows.

We expect that the COVID-19 pandemic will have a significant negative impact on our business for the duration of the pandemic and during the subsequent economic recovery, which could be an extended period of time.

The extent of the effects of the COVID-19 outbreak on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, most of which are outside of our control. These include, but are not limited to:

•~~the severity, extent, and duration of the pandemic and its impact on the aircraft industry;~~

•~~the availability of a vaccine or cure that mitigates the effect of the virus;~~

•~~the speed and extent of the recovery across the industry, including how long the public will continue to be concerned about the pandemic and avoid aircraft travel; and~~

•~~any economic recession resulting from the pandemic.~~

Our expectation is that our business operations will not improve until our customers are willing to produce aircraft at sufficient levels, which is dependent upon the public’s willingness to use aircraft travel and sufficient OEM demand and orders (without suspension) from airlines including for narrow and wide-body aircraft and the ability of airlines to weather the crisis specifically and generally. This may not occur until well after the broader global economy begins to improve. Further, the recovery may look different for types of aircraft. For example, we expect that the pandemic recovery time for wide-body aircraft may be longer than for narrow-body aircraft due to reduced traveler demand and lower volumes of international travel.

The COVID-19 pandemic, along with the B737 MAX grounding, presents significant challenges to our business. The COVID-19 pandemic presents the potential for impairment charges and increased bad debt expense provisions or credit losses, which could negatively impact the Company’s results. Further, our factoring arrangements may expose us to additional risks in light of the pandemic.

Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the COVID-19 pandemic’s effects on our customers and their production rates, the return to service of the B737 MAX and expected production rates, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and our credit ratings. The steps that we have taken to improve our liquidity position may not be adequate and the cost savings may be less than we currently anticipate. In addition, as a result of the repayment and termination of the 2018 Credit Agreement, we expect to no longer have access to a revolving credit facility.

As a result of the impacts of the COVID-19 pandemic, we may be required to raise additional capital and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings.

As of December 31, 2019, Spirit’s corporate credit ratings were Baa3 by Moody’s, and BBB- by S&P Global Ratings. On January 13, 2020, Moody’s downgraded Spirit’s credit rating from Baa3 to Ba2. On January 31, 2020, S&P downgraded Spirit’s credit rating from BBB- to BB. On April 14, 2020, Moody’s further downgraded Spirit’s credit rating from Ba2 to Ba3, and on April 14, 2020, S&P downgraded Spirit’s credit rating from BB to BB-. On June 25, 2020, S&P downgraded Spirit’s credit rating to B+. On July 21, 2020, Moody’s downgraded Spirit’s credit rating to B2 with a negative outlook. On September

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24, 2020, Moody’s affirmed this rating. On August 3, 2020, S&P downgraded Spirit’s credit rating to B with a stable outlook. On September 22, 2020, S&P affirmed this rating. The ratings reflect the agencies’ assessment of our ability to pay interest and principal on our debt securities and credit agreements. A rating is not a recommendation to purchase, sell or hold securities. Each rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating agency has its own methodology for assigning ratings and, accordingly, each rating should be considered independently of all other ratings.

If our credit ratings were to be still further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt financing will be further negatively impacted. Lower ratings would typically result in higher interest costs of debt securities when they are sold and could make it more difficult to issue future debt securities. In addition, a downgrade in our credit ratings could result in an increase in borrowing costs in connection with the incurrence of new indebtedness or refinancing of our existing indebtedness. There is no guarantee that additional debt financing will be available in the future to fund our obligations, or that it will be available on commercially reasonable terms, in which case we may need to seek other sources of funding. Suppliers may seek credit support or other assurances that could affect our costs of doing business or liquidity. Any downgrade in our credit ratings could thus have a material adverse effect on our business or financial condition.

As a result of the deterioration of our business due to the COVID-19 outbreak, we are currently evaluating goodwill, long-term investments and long-lived assets for possible impairment. Based on our analysis, as of July 2, 2020, no impairment charge related to any long-term investments and/or long-lived assets will be recorded. For the period ended October 1, 2020, there were no triggering events which would require the Company to update its impairment analysis. We currently believe that no impairment to our goodwill (all of which relates to our acquisition of FMI on January 10, 2020) is necessary as FMI’s business and production volumes are substantially insulated from the commercial aerospace industry. In addition, given the volatility in global markets, we are evaluating whether we would expect any incremental bad debt expenses or credit losses. Any material increase in our provisions for bad debt would have a corresponding effect on our results of operations and related cash flows.

The Company has two agreements to sell, on a revolving basis, certain trade accounts receivable balances with Boeing and Airbus to third party financial institutions. These programs were primarily entered into as a result of Boeing and Airbus seeking payment term extensions with the Company and they continue to allow Spirit to monetize the receivables prior to their payment date, subject to payment of a discount. No guarantees are delivered under the agreements. Our ability to continue using such agreements is primarily dependent upon the strength of Boeing’s and Airbus’s financial condition. If any of these financial institutions involved with these arrangements experiences financial difficulties, becomes unwilling to support Boeing or Airbus due to a deterioration in their financial condition or otherwise, or is otherwise unable to honor the terms of the factoring arrangements, we may experience significant disruption and potential liquidity issues due to the failure of such arrangements, which could have an adverse impact upon our operating results, financial condition and cash flows.

Our business depends, in large part, on sales of components for a single aircraft program, the B737 MAX. Further suspensions or reductions in our production rates for the B737 MAX as well as our other programs, as a result of the COVID-19 pandemic may have a material adverse impact on our business, financial condition, results of operations, and cash flows.

For the twelve months ended December 31, 2019, approximately 53% of our net revenues were generated from sales of components to Boeing for the B737 aircraft. While we have entered into long-term supply agreements with Boeing to continue to provide components for the B737 for the life of the aircraft program, including commercial and the military P-8 derivatives, Boeing does not have any obligation to purchase components from us for any replacement for the B737 that is not a commercial derivative model as defined by the Sustaining Agreement. The contract is a requirements contract and Boeing can reduce the purchase volume at any time.

While we have taken actions to align our cost structure to lower 2020 production rates, the benefit of such actions will be realized over time and the B737 MAX situation continues to presents challenges to our business. These challenges are exacerbated by the COVID-19 pandemic as other programs that alleviate the strain of the lower B737 MAX production rate are now producing at lower rates.

If Boeing is unable to return the B737 MAX to service in one or more jurisdictions, begin timely deliveries to customers, or if production levels across our programs are reduced beyond current expectations due to depressed demand relating to COVID-19 or otherwise, our liquidity position may worsen absent our ability to procure additional financing, our ability to comply with the terms of our existing indebtedness may be negatively impacted and our business, financial condition, results of operations, and cash flows could be materially adversely impacted.

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While recent news reports have indicated that the recertification process for the B737 MAX continues, we are unable to determine definitively when Boeing will be able to secure regulatory approval for the B737 MAX. Based on public information, we have assumed that U.S. regulatory approval will enable Boeing to resume delivering B737 MAX aircraft to its customers in the fourth quarter of 2020. However, international civil aviation authorities control the timeline for recertification and resumption of deliveries and actual timing may be materially different. Further, we cannot predict the effect of the COVID-19 pandemic on this timeline. In the event of delays to this timeline and corresponding changes to our production rate, we may be required to take actions with longer-term impact, such as additional changes to our production plans, employment reductions and/or the expenditure of significant resources to support our supply chain and/or Boeing.

Our business depends on our ability to maintain a healthy supply chain and timely deliver products that meet or exceed stringent quality standards, which are negatively impacted by the COVID-19 pandemic. Fluctuating production rates may require the Company to exercise order terminations under its contract and Spirit may incur fees for such terminations.

Our business depends on our ability to maintain a healthy supply chain, achieve planned production rate targets, and meet or exceed stringent performance and reliability standards. The supply chain for large commercial aerostructures is complex and involves hundreds of suppliers and their technical employees from all over the world.

Operational issues, including delays or defects in supplier components relating to government mandated production shutdowns or otherwise, could result in significant out-of-sequence work and increased production costs, as well as delayed deliveries to customers. Our suppliers’ failure to provide parts on a timely basis or to provide parts that meet our technical specifications could have a materially adverse effect on production schedules, contract performance, and contract profitability. We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs for us and possible forward losses on certain contracts. Even if acceptable alternatives are found, the process of locating and securing such alternatives might be disruptive to our business and might lead to termination of our supply agreements with our customers.

In order for us to keep the supply chain healthy, we must minimize disruption and production changes. Our suppliers are experiencing substantial disruption due to the B737 MAX grounding and the impacts of COVID-19 and the production rate changes resulting from both events. Due to cost pressures and revenue deterioration, many suppliers are distressed and some of our suppliers have filed or may file for restructuring relief. The Credit Agreement and certain of our indentures generally restrict the amount of funds we can invest in suppliers to assist with difficulties. If these suppliers cannot timely deliver components to us at the cost and rates necessary to achieve our targets and we are not able to secure timely and adequate replacement parts, we may be unable to meet delivery schedules and/or the financial performance of our programs would suffer. If any of such suppliers supply critical parts to us, we may breach our obligations to our customers and, as a result, or customers may terminate such agreements. If the agreements are significant to us, our business, financial condition, results of operations and cash flows could be materially adversely impacted.

~~Our backlog is subject to change due to the COVID-19 pandemic, the B737 MAX grounding, and related cancellation~~s.

From time to time, we disclose our expected backlog associated with large commercial aircraft, business and regional jets, and military equipment deliveries, calculated based on contractual and historical product prices and expected delivery volumes. We expect our backlog to decline throughout 2020 due to cancellations related to the COVID-19 pandemic, and the pandemic may also extend or delay the time in which we expect to realize value from our backlog. Further, public information has indicated that certain customers are deferring or canceling B737 MAX orders based on the prolonged grounding and/or due to COVID-19 depressed demand, which will cause the B737 MAX backlog to further deteriorate. If the B737 MAX aircraft remains grounded for an extended period of time, additional reductions to the backlog and/or significant order cancellations should be expected.

Backlog is calculated based on the number of units Spirit is under contract to produce on our fixed quantity contracts, and Boeing’s and Airbus’ announced backlog on our supply agreements (which are based on orders from customers). Accordingly, we rely on latest available information from Boeing and Airbus to calculate our backlog. The latest available information we have to date may not reflect expected cancellations related to the COVID-19 pandemic or the continued B737 MAX grounding. The number of units may be subject to cancellation or delay by the customer prior to shipment, depending on contract terms. The level of unfilled orders at any given date during the year may be materially affected by the timing of our receipt of firm orders and additional airplane orders, and the speed with which those orders are filled. Accordingly, our expected backlog does not necessarily represent the actual amount of deliveries or sales for any future period.

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~~Our business could be negatively impacted by changes in the United States political environment.~~

The 2020 presidential election and the 2020 congressional and state elections in the United States have resulted in significant uncertainty with respect to, and have and could further result in changes in legislation, regulation, and government policy at the federal, state and local levels. Any such changes could significantly impact our business as well as the markets in which we compete. Specific legislative and regulatory proposals that may impact us include changes to the corporate tax rate, immigration policy, import and export regulations, and tariffs and customs duties, among others. To the extent changes in the political environment have a negative impact on us or on our markets or our corporate tax rate, our business, results of operation and financial condition could be materially and adversely impacted in the future.

~~We may not be able to generate sufficient taxable income to fully realize our domestic deferred tax assets, which would also have to be reduced if U.S. federal income tax rates are lowered.~~

At October 1, 2020, we have recognized domestic net deferred tax assets of approximately $126.7 million. If we are unable to generate sufficient taxable income, we will not be able to fully realize the recorded amount of the net deferred tax assets. The Company’s projections of future taxable income required to fully realize the recorded amount of the net deferred tax assets reflect numerous assumptions about our operating business and investments, and are subject to change as conditions change specific to our business units, investments or general economic conditions. Changes that are adverse to the Company could result in the need to record a deferred tax asset valuation allowance resulting in a charge to results of operations and a decrease to total stockholders’ equity. The Company believes that its estimate of future taxable income is reasonable but inherently uncertain, and if its current or future operations and investments generate taxable income different than the projected amounts, recording a valuation allowance is possible.

Adverse changes in the securities markets or interest rates, changes in actuarial assumptions, and legislative or other regulatory actions could substantially increase the costs of the Shorts Pension acquired in the Bombardier Acquisition and could result in a requirement to contribute additional sums to the Shorts Pension.

As part of the Bombardier Acquisition, Spirit acquired Shorts Brothers, which sponsors the Shorts Pension, a defined benefit pension plan that is closed to new participants. The Shorts Pension is not yet closed to the future accrual of additional benefits for current participants. Spirit acts as parent guarantor to the Shorts Pension for the limited amount of ~~£112.4 million (approximately $146 million).~~

Following future valuations of the Shorts Pension’s assets and liabilities or following future discussions with the Shorts Pension's trustee, the annual funding obligation and/or the arrangements to ensure adequate funding for the Shorts Pension may change. The future valuations under the Shorts Pension are affected by a number of assumptions and factors, including legislative or other regulatory changes; assumptions regarding interest rates, currency rates, inflation, mortality, and retirement rates; the investment strategy and performance of the Shorts Pension’s assets; and actions by the U.K. Pensions Regulator. Volatile economic conditions caused by COVID-19 or other events could increase the risk that the funding requirements increase following the next triennial valuation. The U.K. Pensions Regulator also has powers under the Pensions Act 2004 to impose a contribution notice or a financial support direction on Shorts (and other persons connected with the Company or Shorts) if, in the case of a contribution notice, the U.K. Pensions Regulator reasonably believes such person has been party to an act, or deliberate failure to act, intended to avoid pension liabilities or that is materially detrimental to the pension plan, or, in the case of a financial support direction, if a plan employer is a service company or insufficiently resourced and the Pensions Regulator considers it is reasonable to act against such a person. A significant increase in the funding requirements for Shorts Pension could result in the imposition of additional financial contributions to the Shorts Pension and, if such required contributions are significant, could have a material adverse effect on Shorts or our business, financial condition, and results of operations.

10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our repurchases during the three months ended April 1, 2021 of our Common Stock that is registered pursuant to Section 12 of the Exchange Act.

ISSUER PURCHASES OF EQUITY SECURITIES


Period (1)	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Repurchased Under the Plans or Programs (2)
	($ in millions other than per share amounts)

January , 2021 - February 4, 2021	5,652	$	38.72	—	$925.0
February 5, 2021 - March 4, 2021	72,009	$	43.28	—	$925.0
March 5, 2021 - April 1, 2021	293	$	48.88	—	$925.0
Total	77,954	$	43.01	—	$925.0

(1) 77,954 shares were transferred to us from employees in satisfaction of tax withholding obligations associated with the vesting of restricted stock awards under the Omnibus Plan. No purchases were made under our Board-approved share repurchase program.

(2) The total authorization amount remaining under the Board-approved share repurchase program is $925.0 million. Share repurchases are currently on hold due to the impacts of the B737 MAX grounding and the COVID-19 pandemic. The Credit Agreement imposes additional restrictions on the Company’s ability to repurchase shares.

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Item 6. Exhibits

Exhibit
Number

Exhibit

Incorporated by Reference to the Following Documents

~~4.1~~10.1†

~~Indenture, dated as of October 5, 2020, among Spirit AeroSystems, Inc.,~~Director Stock Program under the Spirit AeroSystems Holdings, Inc.~~, Spirit AeroSystems North Carolina, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent.~~ 2014 Omnibus Incentive Plan, effective April 28, 2021

~~Current Report on Form 8-K (File No. 001-33160), filed October 5, 2020, Exhibit 4.1~~
*

~~4.2~~

~~Form of 5.500% Senior Secured First Lien Notes due 2025 (included as Exhibit A to Exhibit 4.1).~~

~~Current Report on Form 8-K (File No. 001-33160), filed October 5, 2020, Exhibit 4.2(included as Exhibit A to Exhibit 4.1 thereto)~~

~~4.3~~10.2†

~~Fourth Supplemental Indenture, dated as~~Form of ~~October 5, 2020, among Spirit AeroSystems, Inc., Spirit AeroSystems Holdings, Inc., Spirit AeroSystems North Carolina, Inc., and The Bank of New York Mellon Trust Company, N.A., as Trustee.~~Time-Based Restricted Stock Unit Award Agreement (U.S. Participants)

~~Current Report on Form 8-K (File No. 001-33160), filed October 5, 2020, Exhibit 4.3~~
*

~~10.~~110.3†

~~Sixth Amendment, dated as~~Form of ~~July 31, 2020, to the Second Amended and Restated Credit~~Performance-Based Restricted Stock Unit Award Agreement among Spirit AeroSystems, Inc., as borrower, Spirit AeroSystems Holdings, Inc., as parent guarantor, Spirit AeroSystems North Carolina, Inc., as a guarantor, the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent.(U.S. Participants)

~~Current Report on Form 8-K (File No. 001-33160), filed August 3, 2020, Exhibit 10.1~~

~~10.2~~

Term Loan Credit Agreement, dated as of October 5, 2020, by and among Spirit AeroSystems, Inc., the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and collateral agent.

~~Current Report on Form 8-K (File No. 001-33160), filed October 5, 2020, Exhibit 10.1~~

~~10.3~~

~~Termination Agreement dated September 25, 2020 by and among Spirit AeroSystems Holdings, Inc., Spirit AeroSystems Belgium Holdings BVBA and certain private sellers.~~

~~Current Report on Form 8-K (File No. 001-33160), filed September 25, 2020, Exhibit 10.1~~*

10.4†

~~Retirement~~Form of Non-Employee Director Award Agreement ~~and General Release with John Pilla, dated July 29, 2020.~~

~~Current Report on Form 8-K (File No. 001-33160), filed July 30, 2020, Exhibit 10.1~~*

~~10.5~~10.5†

~~Deed~~Form of Amendment, dated as of October 16, 2020, by and among Spirit AeroSystems, Inc, and Spirit AeroSystems Global Holdings Limited, and Bombardier Inc., Bombardier Aerospace UK Limited, Bombardier Finance Inc. and Bombardier Services Corporation.Time-Based Restricted Stock Unit Award Agreement (Non-U.S. Participants)

~~Current Report on Form 8-K (File No. 001-33160), filed October 30, 2020, Exhibit 10.2~~*

~~10.6~~10.6†

Form of Performance-Based Restricted Stock Unit Award Agreement (Non-U.S. Participants)

10.7†

Perquisite Allowance Plan

10.8††

Amendment ~~dated as of October 26, 2020, by and among Spirit AeroSystems, Inc,~~48 to Special Business Provisions (SBP) MS-65530-0016 between The Boeing Company and Spirit ~~AeroSystems Global Holdings Limited, and Bombardier~~Aerosystems, Inc.~~, Bombardier Aerospace UK Limited, Bombardier Finance Inc. and Bombardier Services Corporation.~~

~~Current Report on Form 8-K (File No. 001-33160), filed October 26, 2020, Exhibit 10.1)~~*

10.9††

Amendment 33 to Special Business Provisions (SBP) BCA-MS-65530-0019 between The Boeing Company and Spirit Aerosystems, Inc.

10.10

Amendment 3 to General Terms Agreement BCA-65520-0032 Between The Boeing Company and Spirit Aerosystems, Inc.

10.11

Amendment 4 to General Terms Agreement BCA-65530-0016 Between The Boeing Company and Spirit Aerosystems, Inc.

22.1

Subsidiary Guarantors and Debt Securities

31.1*

Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1**

Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

32.2**

Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

~~Table of Contents~~

101.INS*

Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Table of Contents

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†

Indicates management contract or compensation plan or arrangement.

††

Indicates that confidential portions of the exhibit have been omitted in accordance with the rules of the Securities and Exchange Commission.

Filed herewith.

Furnished herewith.

7553

Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPIRIT AEROSYSTEMS HOLDINGS, INC.

Signature

Title

Date

/s/ Mark J. Suchinski

Senior Vice President and Chief Financial

~~November 3, 2020~~May 5, 2021

Mark J. Suchinski

Officer (Principal Financial Officer)

Signature

Title

Date

/s/ Damon Ward

Vice President, Corporate Controller

~~November 3, 2020~~May 5, 2021

Damon Ward

(Principal Accounting Officer)

7654


	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	5737
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7650
Item 4.	Controls and Procedures	7650


PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	7851
Item 1A.	Risk Factors	7851
Item 5.2.	~~Other Information~~Unregistered Sales of Equity Securities and Use of Proceeds	8251
Item 6.	Exhibits	8352
Signatures		8654


	October 1, 2020		December 31, 2019
Goodwill - United Kingdom	2.4		2.4
Goodwill - United States(1)	76.0		0
Total	$	78.4	$	2.4


	Holdings		Spirit		Spirit NC		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Revenue	$	0	$	705.5	$	56.7	$	130.0	$	(85.9)	$	806.3
Operating costs and expenses
Cost of sales	—		812.0		54.7		122.6		(85.9)		903.4
Selling, general and administrative	3.3		43.8		0.7		5.0		—		52.8
Restructuring cost	0		10.9		0.2		8.4		0		19.5
Research and development	—		6.2		0.1		1.2		—		7.5
Loss on disposal of assets	0		0		0		0		0		0
Total operating costs and expenses	3.3		872.9		55.7		137.2		(85.9)		983.2
Operating (loss) income	(3.3)		(167.4)		1.0		(7.2)		—		(176.9)
Interest expense and financing fee amortization	—		(53.0)		0		(0.4)		0.4		(53.0)
Other (expense) income, net	—		(6.2)		(0.1)		(3.3)		(0.4)		(10.0)
(Loss) income before income taxes and equity in net (loss) income of affiliate and subsidiaries	(3.3)		(226.6)		0.9		(10.9)		—		(239.9)
Income tax benefit (provision)	1.2		82.8		(0.2)		1.4		—		85.2
(Loss) income before equity in net (loss) income of affiliate and subsidiaries	(2.1)		(143.8)		0.7		(9.5)		—		(154.7)
Equity in net (loss) income of affiliate	—		—		0		(0.8)		—		(0.8)
Equity in net (loss) income of subsidiaries	(153.4)		(9.6)		0		—		163.0		0
Net (loss) income	(155.5)		(153.4)		0.7		(10.3)		163.0		(155.5)
Other comprehensive (loss) income	51.7		51.7		0		18.7		(70.4)		51.7
Comprehensive (loss) income	$	(103.8)	$	(101.7)	$	0.7	$	8.4	$	92.6	$	(103.8)