スピリットエアロシステムズHDの四半期報告

Table of Contents

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 June 29, 2023


☐			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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

☒

☐

If an emerging growth company, indicate by check mark 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 July 19, 2023, the registrant had 105,289,353 shares of class A common stock, $0.01 par value per share, outstanding.

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TABLE OF CONTENTS


	PART I — FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54


PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 5.	Other Information	56
Item 6.	Exhibits	57
Signatures		58

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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 Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
	($ in millions, except per share data)
Revenue	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6
Operating costs and expenses
Cost of sales	1,395.5		1,277.5		2,827.7		2,417.4
Selling, general and administrative	70.6		70.2		148.0		134.7

Restructuring costs	0.9		—		7.2		0.2
Research and development	13.2		14.9		23.8		27.2
Other operating expense	4.9		—		4.9		—
Total operating costs and expenses	1,485.1		1,362.6		3,011.6		2,579.5
Operating loss	(120.4)		(104.7)		(215.5)		(146.9)
Interest expense and financing fee amortization	(73.6)		(55.1)		(146.0)		(114.0)
Other (expense) income, net	(9.9)		34.6		(127.3)		72.3
Loss before income taxes and equity in net income (loss) of affiliates	(203.9)		(125.2)		(488.8)		(188.6)
Income tax (provision) benefit	(3.0)		3.5		1.3		14.5
Loss before equity in net income (loss) of affiliates	(206.9)		(121.7)		(487.5)		(174.1)
Equity in net income (loss) of affiliates	0.5		(0.5)		(0.2)		(0.9)
Net loss	$	(206.4)	$	(122.2)	$	(487.7)	$	(175.0)
Less noncontrolling interest in earnings of subsidiary	0.1		—		0.2		—
Net loss attributable to common shareholders	$	(206.3)	$	(122.2)	$	(487.5)	$	(175.0)
Loss per share
Basic	$	(1.96)	$	(1.17)	$	(4.64)	$	(1.67)
Diluted	$	(1.96)	$	(1.17)	$	(4.64)	$	(1.67)

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited)


	For the Three Months Ended				For the Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
	($ in millions)
Net loss	$	(206.4)	$	(122.2)	$	(487.7)	$	(175.0)
Changes in other comprehensive loss, net of tax:

Pension, SERP, and retiree medical adjustments, net of tax effect of $0.2 and ($1.1) for the three months ended, respectively, and ($16.4) and ($1.0) for the six months ended, respectively.	(0.5)		3.1		48.7		2.6
Unrealized foreign exchange gain (loss) on intercompany loan, net of tax effect of ($0.4) and $1.3 for the three months ended, respectively, and ($0.8) and $1.8 for the six months ended, respectively.	0.6		(2.8)		1.5		(4.0)
Unrealized gain (loss) on cash flow hedges, net of tax effect of ($1.1) and $0.0 for the three months ended, respectively, and ($1.1) and $0.0 for the six months ended, respectively.	0.5		(13.1)		7.7		(17.0)
Reclassification of (gain) loss on cash flow hedges to earnings, net of tax effect of $0.0 and $0.0 for the three months ended, respectively, and $0.0 and $0.0 for the six months ended, respectively.	(1.3)		4.1		2.1		5.6
Foreign currency translation adjustments	10.4		(33.0)		26.0		(46.5)
Total other comprehensive gain (loss), net of tax	9.7		(41.7)		86.0		(59.3)
Less comprehensive income attributable to noncontrolling interest	0.1		—		0.2		—
Total comprehensive loss	$	(196.7)	$	(163.9)	$	(401.5)	$	(234.3)

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


	June 29, 2023		December 31, 2022
	($ in millions)
Assets
Cash and cash equivalents	$	525.7	$	658.6
Restricted cash	0.2		0.2
Accounts receivable, net	499.5		489.5
Contract assets, short-term	580.8		501.0
Inventory, net	1,636.3		1,470.7
Other current assets	48.8		38.3
Total current assets	3,291.3		3,158.3
Property, plant and equipment, net	2,124.8		2,205.9
Right of use assets	90.5		94.3
Contract assets, long-term	16.6		1.2
Pension assets	27.3		196.9
Restricted plan assets	60.9		71.1
Deferred income taxes	0.3		4.8
Goodwill	631.2		630.5
Intangible assets, net	203.8		211.4
Other assets	98.5		91.8
Total assets	$	6,545.2	$	6,666.2
Liabilities
Accounts payable	$	974.4	$	919.8
Accrued expenses	408.2		411.7
Profit sharing	13.7		40.5
Current portion of long-term debt	56.0		53.7
Operating lease liabilities, short-term	8.3		8.3
Advance payments, short-term	30.6		24.9
Contract liabilities, short-term	132.7		111.1
Forward loss provision, short-term	331.4		305.9
Deferred revenue and other deferred credits, short-term	47.0		21.7
Other current liabilities	183.5		54.9
Total current liabilities	2,185.8		1,952.5
Long-term debt	3,814.9		3,814.9
Operating lease liabilities, long-term	83.0		85.4
Advance payments, long-term	236.4		199.9
Pension/OPEB obligation	23.1		25.2
Contract liabilities, long-term	216.7		245.3
Forward loss provision, long-term	311.4		369.2
Deferred revenue and other deferred credits, long-term	46.1		49.0
Deferred grant income liability - non-current	26.4		25.7
Deferred income taxes	3.8		1.3
Other non-current liabilities	226.5		141.6
Stockholders’ Equity
Common Stock, Class A par value $0.01, 200,000,000 shares authorized, 105,288,894 and 105,252,421 shares issued and outstanding, respectively	1.1		1.1
Additional paid-in capital	1,196.1		1,179.5
Accumulated other comprehensive loss	(117.9)		(203.9)
Retained earnings	745.0		1,232.5
Treasury stock, at cost (41,587,480 shares each period, respectively)	(2,456.7)		(2,456.7)
Total stockholders' equity	(632.4)		(247.5)
Noncontrolling interest	3.5		3.7
Total equity	(628.9)		(243.8)
Total liabilities and equity	$	6,545.2	$	6,666.2

See notes to condensed consolidated financial statements (unaudited)

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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		Noncontrolling Interest

	Shares	Amount												Total
	($ in millions, except share data)
Balance — December 31, 2022	105,252,421	$	1.1	$	1,179.5	$	(2,456.7)	$	(203.9)	$	1,232.5	$	3.7	$	(243.8)
Net loss	—	—		—		—		—		(281.2)		—		(281.2)


Employee equity awards	266,321	—		9.0		—		—		—		—		9.0
Stock forfeitures	(230,108)	—				—		—		—		—		—
Net shares settled	(137,007)	—		(4.8)		—		—		—		—		(4.8)


Other	—	—		—		—		—		—		(0.1)		(0.1)
Other comprehensive loss	—	—		—		—		76.3		—		—		76.3
Balance — March 30, 2023	105,151,627	$	1.1	$	1,183.7	$	(2,456.7)	$	(127.6)	$	951.3	$	3.6	$	(444.6)
Net loss	—	—		—		—		—		(206.3)		—		(206.3)

Employee equity awards	94,563	—		10.2		—		—		—		—		10.2
Stock forfeitures	(504)	—		—		—		—		—		—		—
Net shares settled	(36,632)	—		(1.0)		—		—		—		—		(1.0)
ESPP shares issued	79,840	—		3.2		—		—		—		—		3.2


Other	—	—		—		—		—		—		(0.1)		(0.1)
Other comprehensive loss	—	—		—		—		9.7		—		—		9.7
Balance — June 29, 2023	105,288,894	$	1.1	$	1,196.1	$	(2,456.7)	$	(117.9)	$	745.0	$	3.5	$	(628.9)


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

	Shares	Amount												Total
	($ in millions, except share data)
Balance — December 31, 2021	105,037,845	$	1.1	$	1,146.2	$	(2,456.7)	$	(23.7)	$	1,781.4	$	0.5	$	448.8
Net loss	—	—		—		—		—		(52.8)		—		(52.8)

Dividends declared(a)	—	—		—		—		—		(1.1)		—		(1.1)
Employee equity awards	152,306	—		8.3		—		—		—		—		8.3
Stock forfeitures	(82,611)	—		—		—		—		—		—		—
Net shares settled	(111,874)	—		(5.3)		—		—		—		—		(5.3)
ESPP shares issued	40,078	—		1.9		—		—		—		—		1.9



Other comprehensive gain	—	—		—		—		(17.6)		—		—		(17.6)
Balance — March 31, 2022	105,035,744	$	1.1	$	1,151.1	$	(2,456.7)	$	(41.3)	$	1,727.5	$	0.5	$	382.2
Net loss	—	—		—		—		—		(122.2)		—		(122.2)
Dividends declared(a)	—	—		—		—		—		(1.1)		—		(1.1)
Employee equity awards	141,869	—		9.9		—		—		—		—		9.9
Stock forfeitures	(8,585)	—		—		—		—		—		—		—
Net shares settled	(30,869)	—		(1.2)		—		—		—		—		(1.2)




Other comprehensive loss	—	—		—		—		(41.7)		—		—		(41.7)
Balance — June 30, 2022	105,138,159	$	1.1	$	1,159.8	$	(2,456.7)	$	(83.0)	$	1,604.2	$	0.5	$	225.9

(a) Cash dividends declared per common share were $0.00 and $0.01 for the three months ended June 29, 2023 and June 30, 2022, respectively. Cash dividends declared per common share were $0.00 and $0.02 for the six months ended June 29, 2023 and June 30, 2022, respectively.

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Spirit AeroSystems Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	For the Six Months Ended
	June 29, 2023		June 30, 2022
Operating activities	($ in millions)
Net loss	$	(487.7)	$	(175.0)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	157.7		169.0
Amortization of deferred financing fees	3.5		3.7
Accretion of customer supply agreement	1.2		1.3
Employee stock compensation expense	19.8		18.3
Loss (gain) from derivative instruments	2.1		4.0
Loss (gain) from foreign currency transactions	8.5		(25.7)

Loss on disposition of assets	0.3		1.6
Deferred taxes	(11.5)		(13.6)
Pension and other post-retirement plans expense (income)	62.6		(39.7)
Grant liability amortization	(0.6)		(0.7)
Equity in net loss of affiliates	0.2		0.9
Forward loss provision	(32.5)		(53.4)
Gain on settlement of financial instrument	(0.9)		(21.0)
Change in fair value of acquisition consideration and settlement	(2.4)		—
Changes in assets and liabilities
Accounts receivable, net	(17.1)		(124.7)
Inventory, net	(161.4)		13.9
Contract assets	(92.7)		(44.5)
Accounts payable and accrued liabilities	88.8		105.5
Profit sharing/deferred compensation	(26.9)		(43.7)
Advance payments	41.1		(65.7)
Income taxes receivable/payable	7.2		12.1
Contract liabilities	(7.3)		(26.5)
Pension plans employer contributions	178.4		23.0
Deferred revenue and other deferred credits	21.7		(38.8)
Other	18.9		(12.0)
Net cash used in operating activities	(229.0)		(331.7)
Investing activities
Purchase of property, plant, and equipment	(51.3)		(45.2)


Other	—		(2.2)
Net cash used in investing activities	(51.3)		(47.4)
Financing activities
Payment of principal - settlement of financial instrument	—		(289.5)
Customer financing	180.0		—
Borrowings under revolving credit facility	1.6		—
Principal payments of debt	(31.2)		(22.5)
Payments on term loans	(1.5)		(3.0)



Taxes paid related to net share settlement awards	(5.9)		(6.5)
Proceeds from issuance of ESPP stock	2.6		1.9
Debt issuance and financing costs	(0.5)		—

Dividends paid	—		(2.2)


Net cash used in financing activities	145.1		(321.8)
Effect of exchange rate changes on cash and cash equivalents	4.8		(7.6)
Net decrease in cash, cash equivalents, and restricted cash for the period	(130.4)		(708.5)
Cash, cash equivalents, and restricted cash, beginning of period	678.4		1,498.4
Cash, cash equivalents, and restricted cash, end of period	$	548.0	$	789.9

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Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
	For the Six Months Ended
	June 29, 2023		June 30, 2022
Cash and cash equivalents, beginning of the period	$	658.6	$	1,478.6
Restricted cash, short-term, beginning of the period	0.2		0.3
Restricted cash, long-term, beginning of the period	19.6		19.5
Cash, cash equivalents, and restricted cash, beginning of the period	$	678.4	$	1,498.4

Cash and cash equivalents, end of the period	$	525.7	$	770.2
Restricted cash, short-term, end of the period	0.2		0.2
Restricted cash, long-term, end of the period	22.1		19.5
Cash, cash equivalents, and restricted cash, end of the period	$	548.0	$	789.9

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

1. Organization, Basis of Interim Presentation and Recent Developments

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

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

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

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

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments and elimination of intercompany balances and transactions) considered necessary to fairly present the results of operations for the interim period. The results of operations for the six months ended June 29, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 17, 2023 (the “2022 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 2022 Form 10-K.

2. Adoption of New Accounting Standards

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50). The amendments in the update require additional qualitative and quantitative disclosure about supplier finance programs. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. ASU No. 2022-04 is effective on a retrospective basis for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for an amended disclosure requirement related to certain rollforward information, which is effective on a prospective basis for fiscal years beginning after December 15, 2023. The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements, and the Company does not expect this guidance to have a material impact prospectively.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

3. New Accounting Pronouncements

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

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. The Company’s estimate of costs depends on maintaining continuing, uninterrupted production at its manufacturing facilities and its suppliers’ facilities. The continued fragility of the global aerospace supply chain may lead to interruptions in deliveries of or increased prices for components or raw materials used in the Company's products, labor disruptions, and could delay production and/or materially adversely affect the Company's business. When adjustments in estimated total consideration or estimated total cost are required, any changes from prior estimates for fully satisfied performance obligations are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors including production efficiencies, assumed rate of production, the rate of overhead absorption, changes to scope of work, and contract modifications. Cumulative catch-up adjustments are primarily related to changes in the estimated margin of contracts with performance obligations that are satisfied over time.

Changes in estimates could materially adversely affect the Company’s future financial performance. While certain increases in raw material costs can generally be passed on to the Company’s customers, in most instances the Company must fully absorb cost overruns. Some of the factors that may cause the costs incurred in fulfilling contracts to vary substantially from current estimates are technical problems, production rate changes, production stoppages, materials shortages, supplier difficulties, realization targets, existence of and execution to recovery plans caused by these factors, and multiple other events, including those identified in Item 1A. "Risk Factors" of the 2022 Form 10-K. The risk particularly applies to products such as the B787, A220, and A350, which are in forward loss positions.

During the second quarter ended June 29, 2023, the Company recognized unfavorable changes in estimates of $126.3, which included net forward loss charges of $104.7, and unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2023 of $21.6. The forward losses in the second quarter were primarily driven by supply chain costs including certain non-recurring cost estimates, schedule revisions, supplier price negotiations, and schedule changes and other supply chain cost growth on the A350 program, additional labor and supply chain cost growth on the B787 program, and foreign exchange movement and supply chain issues on the A220 program. Forward losses also include strike disruption charges of $28.3 million reflected as changes in estimates during the period related to wages, other employee benefits and production schedule disruptions. (For additional discussion of strike impacts, see Item 2, “Overview.”) The unfavorable cumulative catch-up adjustments primarily relate to increased labor costs resulting from the IAM union negotiations and increased supply chain costs on the B737 program, and production cost overruns, estimates of the impact of production schedule changes, and increased costs for materials, freight, labor and overhead on the A320 program.

During the second quarter ended June 30, 2022, the Company recognized unfavorable changes in estimates of $71.7, which included net forward loss charges of $63.7, and unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2022 of $8.0.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

The forward losses in the quarter ended June 30, 2022 primarily related to increased cost estimates for production rate decreases and build schedule changes, supply chain costs, and other costs on the B787 program, and anticipated production recovery costs related to the bankruptcy of a supplier and associated failure of that supplier to deliver key parts on the A220 wing program. Forward loss charges were also recorded on the A350 program driven by production schedule changes received from our customer, increased labor costs, and increased non-recurring engineering and tooling costs. The unfavorable cumulative catch-up adjustments primarily relate to the B737 and A320 programs. Increased cost estimates on the B737 program were driven by production schedule changes, parts shortages, and increased supply chain costs. The A320 program unfavorable cumulative catch-up adjustment was driven by production cost overruns experienced and estimates of the impact of production schedule changes, increased material cost, increased freight cost, and increased labor and overhead cost.

Changes in estimates are summarized below:


	For the Three Months Ended				For the Six Months Ended
Changes in Estimates	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Commercial	$	(15.7)	$	(7.9)	$	(20.9)	$	(25.2)
Defense & Space	(5.9)		(0.1)		(6.3)		0.8
Aftermarket	—		—		—		—
Total (Unfavorable) Favorable Cumulative Catch-up Adjustment	$	(21.6)	$	(8.0)	$	(27.2)	$	(24.4)

Changes in Estimates on Loss Programs (Forward Loss) by Segment
Commercial	$	(101.9)	$	(59.4)	$	(211.8)	$	(85.2)
Defense & Space	(2.8)		(4.3)		(2.9)		(2.3)
Aftermarket	—		—		—		—
Total Changes in Estimates (Forward Loss) on Loss Programs	$	(104.7)	$	(63.7)	$	(214.7)	$	(87.5)

Total Change in Estimate	$	(126.3)	$	(71.7)	$	(241.9)	$	(111.9)
EPS Impact (diluted per share based upon applicable forecasted effective tax rate)	$	(1.20)	$	(0.63)	$	(2.30)	$	(0.98)

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 Condensed Consolidated Balance Sheets. See also Allowance for Credit Losses, below.

Accounts receivable, net consists of the following:


	June 29, 2023		December 31, 2022
Trade receivables	$	471.4	$	477.9
Other	37.5		19.7
Less: allowance for credit losses	(9.4)		(8.1)
Accounts receivable, net	$	499.5	$	489.5

The Company has agreements (through its subsidiaries) to sell, on a revolving basis, certain trade accounts receivable balances with Boeing, Airbus Group SE and its affiliates (collectively, “Airbus”), and Rolls-Royce PLC and its affiliates (collectively, “Rolls-Royce”) to third-party financial institutions.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

These programs were primarily entered into as a result of customers seeking payment term extensions with the Company and they continue to allow the Company to monetize the receivables prior to their payment date, subject to payment of a discount. No guarantees are delivered under the agreements. The Company's ability to continue using such agreements is primarily dependent upon the strength of the applicable customer’s financial condition. Transfers under these agreements are accounted for as sales of receivables resulting in the receivables being derecognized from the Company's Condensed Consolidated Balance Sheets. For the six months ended June 29, 2023, $1,698.6 of accounts receivable were sold via these arrangements. The proceeds from these sales of receivables are included in cash from operating activities in the Condensed Consolidated Statements of Cash Flows. The recorded net loss on sale of receivables was $23.3 for the six months ended June 29, 2023 and is included in other income and expense. See Note 21 Other Income (Expense), Net.

Allowance for Credit Losses

During the six months ended June 29, 2023, there have been no significant changes in the factors that influenced management’s current estimate of expected credit losses, nor changes to the Company’s accounting policies or Current Expected Credit Losses methodology. The beginning balances, current period activity, and ending balances of the allocation for credit losses on accounts receivable and contract assets were not material.

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 June 29, 2023 or the period ended June 30, 2022. See also Note 5 Accounts Receivable and Allowance for Credit Losses.

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


	June 29, 2023		December 31, 2022		Change
Contract assets	$	597.4	$	502.2	$	95.2
Contract liabilities	(349.4)		(356.4)		7.0
Net contract assets (liabilities)	$	248.0	$	145.8	$	102.2

For the period ended June 29, 2023, the increase in contract assets reflects the net impact of more over time revenue recognition in relation to billed revenues during the period. The decrease in contract liabilities reflects the net impact of less deferred revenues recorded in excess of revenue recognized during the period. The Company recognized $53.9 of revenue that was included in the contract liability balance at the beginning of the period.


	June 30, 2022		December 31, 2021		Change
Contract assets	$	483.6	$	443.2	$	40.4
Contract liabilities	(360.4)		(387.0)		26.6
Net contract assets (liabilities)	$	123.2	$	56.2	$	67.0

For the period ended June 30, 2022, the increase in contract assets reflects the net impact of more over time revenue recognition in relation to billed revenues during the period. The decrease in contract liabilities reflects the net impact of less deferred revenues recorded in excess of revenue recognized during the period. The Company recognized $52.1 of revenue that was included in the contract liability balance at the beginning of the period.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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 upon major customer. The Company’s principal operating segments and related revenue are noted in Note 23 Segment Information.

The following tables show disaggregated revenues for the periods ended June 29, 2023 and June 30, 2022:


	For the Three Months Ended				For the Six Months Ended
Revenue	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Contracts with performance obligations satisfied over time	$	999.3	$	933.0	$	2,112.1	$	1,762.7
Contracts with performance obligations satisfied at a point in time	365.4		324.9		684.0		669.9
Total Revenue	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6

The following table disaggregates revenue by major customer:


	For the Three Months Ended				For the Six Months Ended
Customer	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Boeing	$	835.6	$	762.2	$	1,756.7	$	1,409.4
Airbus	274.7		281.1		542.4		585.0
Other	254.4		214.6		497.0		438.2
Total Revenue	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6

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


	For the Three Months Ended				For the Six Months Ended
Location	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
United States	$	1,074.1	$	907.5	$	2,223.8	$	1,731.0
International
United Kingdom	171.5		158.2		341.8		328.0
Other	119.1		192.2		230.5		373.6
Total International	290.6		350.4		572.3		701.6
Total Revenue	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6

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 2023		2024		2025		2026 and after
Unsatisfied performance obligations	$	2,730.2	$	5,267.2	$	1,569.9	$	224.5

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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


	June 29, 2023		December 31, 2022
Raw materials	$	378.4	$	332.7
Work-in-process(1)	1,157.0		1,044.9
Finished goods	77.9		69.4
Product inventory	1,613.3		1,447.0
Capitalized pre-production	23.0		23.7
Total inventory, net	$	1,636.3	$	1,470.7

(1)Work-in-process inventory includes direct labor, direct material, overhead, and purchases on contracts for which revenue is recognized at a point in time as well as sub-assembly parts that have not been issued to production on contracts for which revenue is recognized over time using an input method. For the periods ended June 29, 2023 and December 31, 2022, work-in-process inventory includes $255.9 and $392.2, respectively, of costs incurred in anticipation of specific contracts and no impairments were recorded in the periods.

Product inventory, summarized in the table above, is shown net of valuation reserves of $92.5 and $136.8 as of June 29, 2023 and December 31, 2022, 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 six months ended June 29, 2023 includes period expense of $53.2 and $96.5, respectively, for excess capacity production costs related to temporary B737 MAX, A320 and A220 production schedule changes, and abnormal production costs of $7.3 and $7.3, respectively, related to the temporary production pause.

9. Property, Plant and Equipment, net

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


	June 29, 2023		December 31, 2022
Land	$	30.4	$	30.1
Buildings (including improvements)	1,295.1		1,269.1
Machinery and equipment	2,413.2		2,365.1
Tooling	1,062.1		1,055.9
Capitalized software	338.3		336.1
Construction-in-progress	85.1		102.2
Total	5,224.2		5,158.5
Less: accumulated depreciation	(3,099.4)		(2,952.6)
Property, plant and equipment, net	$	2,124.8	$	2,205.9

Capitalized interest was $1.8 and $0.5 for the three months ended June 29, 2023 and June 30, 2022, respectively, and $3.4 and $1.9 for the six months ended June 29, 2023 and June 30, 2022, respectively. Repair and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs of $49.6 and $36.4 for the three months ended June 29, 2023 and June 30, 2022, respectively, and $92.3 and $71.3 for the six months ended June 29, 2023 and June 30, 2022, respectively.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

The 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 $5.8 and $6.5 for the three months ended June 29, 2023 and June 30, 2022, respectively, and $11.9 and $11.5 for the six months ended June 29, 2023 and June 30, 2022, respectively.

The Company reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the period ended June 29, 2023, there were no 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 Condensed Consolidated Balance Sheets. Finance leases are included in Property, Plant and Equipment, current maturities of long-term debt, and long-term debt.

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

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

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

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

The Company currently has operating and finance leases for items such as manufacturing facilities, corporate offices, manufacturing equipment, transportation equipment, and vehicles. The majority of the Company's active leases have remaining lease terms that range between less than one year to 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 Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Operating lease cost	$	3.5	$	3.3	$	7.2	$	6.6
Finance lease cost:
Amortization of assets	8.5		8.2		17.1		16.3
Interest on lease liabilities	2.0		1.6		3.8		3.3
Total net lease cost	$	14.0	$	13.1	$	28.1	$	26.2

Supplemental cash flow information related to leases was as follows:

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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


	For the Three Months Ended				For the Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3.5	$	3.2	$	7.0	$	6.3
Operating cash flows from finance leases	$	1.9	$	1.6	$	3.8	$	3.3
Financing cash flows from finance leases	$	12.6	$	11.4	$	23.9	$	22.5

ROU assets obtained in exchange for lease obligations:
Operating leases	$	0.4	$	0.8	$	0.5	$	1.2

Supplemental balance sheet information related to leases:


	June 29, 2023		December 31, 2022
Finance leases:
Property and equipment, gross	$	311.9	$	295.4
Accumulated amortization	(118.9)		(103.4)
Property and equipment, net	$	193.0	$	192.0

The weighted average remaining lease term as of June 29, 2023 for operating and finance leases was 33.0 years and 4.9 years, respectively. The weighted average discount rate as of June 29, 2023 for operating and finance leases was 5.8% and 5.6%, respectively. The weighted average remaining lease term as of December 31, 2022 for operating and finance leases was 31.7 years and 5.3 years, respectively. The weighted average discount rate as of December 31, 2022 for operating and finance leases was 5.8% and 5.0%, respectively. See Note 15 Debt for current and non-current finance lease obligations.

As of June 29, 2023, remaining maturities of lease liabilities were as follows:


	2023		2024		2025		2026		2027		2028 and thereafter		Total Lease Payments		Less: Imputed Interest		Total Lease Obligations
Operating Leases	$	6.8	$	13.2	$	13.4	$	11.4	$	8.9	$	166.5	$	220.2	$	(128.9)	$	91.3
Financing Leases	$	27.7	$	47.9	$	33.7	$	22.0	$	9.6	$	26.2	$	167.1	$	(21.5)	$	145.6

As of June 29, 2023, the Company had additional operating and financing lease commitments that have not yet commenced of approximately $5.6 and $37.3, respectively, for manufacturing equipment, software, and facilities that are in various phases of construction or customization for the Company's ultimate use, with lease terms between 2 and 18 years. The Company’s involvement in the construction and design process for these assets is generally limited to project management.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

11. Other Assets, Goodwill, and Intangible Assets

Other current assets are summarized as follows:


	June 29, 2023		December 31, 2022
Prepaid expenses	$	41.4	$	27.5
Income tax receivable	—		3.9
Other assets - short-term	7.4		6.9
Total other current assets	$	48.8	$	38.3

Other assets are summarized as follows:


	June 29, 2023		December 31, 2022
Deferred financing
Deferred financing costs	$	0.9	$	0.9
Less: Accumulated amortization - deferred financing costs	(0.8)		(0.8)
Deferred financing costs, net	$	0.1	$	0.1
Other

Supply agreements (1)	$	4.9	$	6.4
Equity in net assets of affiliates	0.9		1.1
Restricted cash - collateral requirements	22.1		19.6
Rotables	43.0		39.0
Other	27.5		25.6
Total other long-term assets	$	98.5	$	91.8

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

Goodwill is summarized as follows:


			Changes in Goodwill Balance
	Balance at									Balance at
Segment	December 31, 2022		Acquisitions		Adjustments/Other			Currency Exchange		June 29, 2023
Commercial	$	296.5	$	—	$	—		$	—	$	296.5
Defense & Space	$	12.6	$	—	$	0.6	(1)	$	—	$	13.2
Aftermarket	$	321.4	$	—	$	—		$	0.1	$	321.5
	$	630.5	$	—	$	0.6		$	0.1	$	631.2

(1) As a result of certain purchase price allocation adjustments recorded during the purchase price accounting measurement period based on additional information obtained, the goodwill resulting from the T.E.A.M., Inc. Acquisition was adjusted by $0.6, from $7.1 that was reported at December 31, 2022, to $7.7 as of June 29, 2023. See also Note 26 Acquisitions.

The total goodwill value includes no accumulated impairment loss in any of the periods presented. The Company assesses goodwill for impairment annually or more frequently if events or circumstances indicate that the fair value of a reporting unit that includes goodwill may be lower than its carrying value. For the period ended June 29, 2023, there were no events or circumstances which would require the Company to update its goodwill impairment analysis.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

Intangible assets are summarized as follows:


	June 29, 2023		December 31, 2022
Intangible assets

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

Total intangible assets	$	245.5	$	245.5

Less: Accumulated amortization - favorable leasehold interest	(2.1)		(2.1)
Accumulated amortization - developed technology asset	(21.1)		(15.0)
Accumulated amortization - customer relationship	(18.5)		(17.0)
Intangible assets, net	$	203.8	$	211.4

Amortization expense was $3.9 and $3.6 for the for the three months ended June 29, 2023 and June 30, 2022, respectively and $7.6 and $7.3 for the six months ended June 29, 2023 and June 30, 2022, respectively.

The amortization for each of the five succeeding years relating to intangible assets currently recorded in the Condensed Consolidated Balance Sheets and the weighted average amortization is estimated to be the following as of June 29, 2023:


Year	Customer relationships		Favorable leasehold interest		Developed Technology		Total
remaining in 2023	$	4.1	$	0.1	$	3.5	$	7.7
2024	8.2		0.1		6.9		15.2
2025	8.2		0.1		6.9		15.2
2026	8.2		0.1		6.9		15.2
2027	8.2		0.1		6.9		15.2
2028	8.2		0.1		6.9		15.2

Weighted average amortization period	14.9 years		6.0 years		12.4 years		13.9 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, Spirit signed a memorandum of agreement with Boeing that suspended advance repayments related to the B787 program for a period of twelve months beginning April 1, 2014. Repayment recommenced on April 1, 2015, and any repayments that otherwise would have become due during such twelve-month period will offset the purchase price for shipsets 1001 through 1120. On December 21, 2018, Spirit signed a memorandum of agreement with Boeing that again suspended the advance repayments beginning with line unit 818. The advance repayments 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 June 29, 2023, the amount of advance payments received from Boeing under the B787 Supply Agreement and not yet repaid was approximately $198.1.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

Advances on the B737 Program. 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 (the "2019 MOA"), which included the terms and conditions for an advance payment to be made from Boeing to Spirit in the amount of $123.0, which was received during the third quarter of 2019. Spirit and Boeing entered into a Memorandum of Agreement on February 6, 2020, which extended the repayment date of the $123.0 advance received by Spirit under the 2019 MOA to 2022. $0.0 and $30.8 of advance payments received from Boeing were repaid in the six months ended June 29, 2023 and June 30, 2022, respectively. There was no balance due as of June 29, 2023.

Advances on the A350 Program. During the quarter ended June 29, 2023, the Company received an advance payment from Airbus of $50.0 under an agreement between Airbus S.A.S. and Spirit AeroSystems (Europe) Limited ("Spirit Europe") signed on June 23, 2023 (the "A350 Agreement"). The A350 Agreement provides for up to $100.0 of advances that are required to be repaid along with a nominal fee to Airbus by way of offset against the purchase price of A350 FLE shipset deliveries in 2025. To the extent actual deliveries in 2025 are insufficient to offset the advance amount, any amount not offset against deliveries will be due and payable to Airbus on December 31, 2025. In connection with the A350 Agreement, Spirit Europe has pledged certain program assets including work in process inventories and raw materials at Spirit's Scotland facility in an amount sufficient to cover the advances.

Other. The Advance payments, short-term line item on the Condensed Consolidated Balance Sheets for the period ended June 29, 2023 includes $18.9 related to payments received from an Aftermarket segment customer for contracted work that was impacted by the sanctions imposed by the U.S. and other governments on Russia following its invasion of Ukraine.

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 June 29, 2023, the Company’s long-term debt includes a senior secured term loan and senior 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. See also Note 14 Derivative and Hedging Activities and Note 16 Pension and Other Post-Retirement Benefits.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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


	June 29, 2023					December 31, 2022
	Carrying Amount		Fair Value			Carrying Amount		Fair Value
Senior secured term loan B (including current portion)	$	572.8	$	573.6	(2)	$	571.7	$	564.5	(2)

Senior secured first lien notes due 2025	20.8		20.6		(1)	20.7		20.8		(1)
Senior secured second lien notes due 2025	1,192.9		1,178.9		(1)	1,191.0		1,179.0		(1)
Senior notes due 2026	298.9		276.1		(1)	298.8		272.8		(1)
Senior notes due 2028	696.2		579.8		(1)	695.9		562.3		(1)
Senior notes due 2029	887.7		946.8		(1)	$	887.2	935.7		(1)
Total	$	3,669.3	$	3,575.8		$	3,665.3	$	3,535.1

(1)Level 1 Fair Value hierarchy

(2)Level 2 Fair Value hierarchy

14. Derivative and Hedging Activities

Derivatives Accounted for as Hedges

Cash Flow Hedges – Foreign Currency Forward Contract

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

The following table summarizes the notional amounts (representing the gross contract/notional amount of the derivatives outstanding) and fair values of the derivative instruments in the Condensed Consolidated Balance Sheets as of June 29, 2023, and December 31, 2022. The foreign currency exchange contracts are measured within Level 1 of the Fair Value hierarchy. See Note 13 Fair Value Measurements.


	Notional amount				Other assets				Other liabilities
	June 29, 2023		December 31, 2022		June 29, 2023		December 31, 2022		June 29, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Foreign currency exchange contracts	$	160.1	$	157.1	$	3.8	$	—	$	—	$	2.4
Total derivatives at fair value					$	3.8	$	—	$	—	$	2.4

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


	Three Months Ended				Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Recognized in total other comprehensive loss:
Foreign currency exchange contracts	$	1.6	$	(13.1)	$	4.1	$	(17.0)

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

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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


	Three Months Ended				Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Foreign currency exchange contracts:
Other income (expense)	$	1.3	$	(4.1)	$	(2.1)	$	(5.6)

Within the next 12 months, the Company expects to recognize a gain of $3.8 in earnings related to the foreign currency forward contracts. As of June 29, 2023, the maximum term of the hedged forecasted transaction was 9 months. Generally, the Company has agreements with its counterparties that contain a provision whereby if the Company defaults on its existing credit facilities and payment of the loans extended under such facilities is accelerated, the Company could be declared in default under its agreements, which may result in the early termination of the outstanding derivatives governed by such agreements and the payment of an early termination amount.

Derivatives Not Accounted for as Hedges

During the six months ended June 29, 2023, all foreign currency forward contracts were designated as hedges, and the Company applied hedge accounting to all foreign currency forward contracts.

During the six months ended June 30, 2022, the Company entered into foreign currency forward contracts in the amount of $291.5 to minimize the risk of currency exchange rate movements on the Company's planned settlement of the repayable investment agreement between the Company and the U.K.'s Department for Business, Energy and Industrial Strategy. During the six-month period ended June 30, 2022, these foreign currency forward contracts were settled, and new contracts were entered into in the amount of $293.7, which were also settled during the period. The Company did not designate these forward contracts as hedges or apply hedge accounting to the forward contracts. For the six months ended June 30, 2022, the Company recorded a net gain of $1.6 to other income on the Condensed Consolidated Statements of Operations related to the foreign currency forward contracts.

15. Debt

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


	June 29, 2023				December 31, 2022
	Current		Noncurrent		Current		Noncurrent
Senior secured term loan B	$	5.7	$	567.1	$	5.7	$	566.0

Senior secured first lien notes due 2025	—		20.8		—		20.7
Senior secured second lien notes due 2025	—		1,192.9		—		1,191.0
Senior notes due 2026	—		298.9		—		298.8
Senior notes due 2028	—		696.2		—		695.9
Senior notes due 2029	—		887.7		—		887.2
Present value of finance lease obligations	46.8		98.8		42.2		102.3
Other	3.5		52.5		5.8		53.0
Total	$	56.0	$	3,814.9	$	53.7	$	3,814.9

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

Credit Agreement

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

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

As of June 29, 2023, the outstanding balance of the Credit Agreement was $591.0 and the carrying value was $572.8.

As of June 29, 2023, the Company was in compliance with all covenants in the Credit Agreement.

First Lien 2029 Notes

On November 23, 2022, Spirit entered into an Indenture (the “First Lien 2029 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 $900.0 aggregate principal amount of its 9.375% Senior Secured First Lien Notes due 2029 (the “First Lien 2029 Notes”).

The First Lien 2029 Notes are guaranteed by the Guarantors, and each existing and future, direct and indirect, wholly-owned material domestic subsidiary of the Company, subject to certain customary exceptions. The First Lien 2029 Notes are secured by a first-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of June 29, 2023, the outstanding balance of the First Lien 2029 Notes was $900.0 and the carrying value was $887.7.

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

First Lien 2025 Notes

On 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 are guaranteed by the Guarantors and were initially secured by a first-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of June 29, 2023, the outstanding balance of the First Lien 2025 Notes was $20.8 and the carrying value was $20.8.

The First Lien 2025 Notes mature on January 15, 2025.

2026 Notes

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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.

On October 5, 2020, Spirit entered into a Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”), by and among Spirit, the Company, Spirit NC, and The Bank of New York Mellon Trust Company, N.A., as trustee in connection with 2026 Notes. Under the Fourth Supplemental Indenture, the holders of the 2026 Notes were granted security on an equal and ratable basis with the holders of the First Lien 2025 Notes and the secured parties under the Credit Agreement.

As of June 29, 2023, the outstanding balance of the 2026 Notes was $300.0 and the carrying value was $298.9.

The 2026 Notes mature on June 15, 2026.

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 mature on April 15, 2025.

The Second Lien 2025 Notes are guaranteed by the Guarantors and secured by a second-priority lien with respect to substantially all assets of Spirit and the Guarantors, subject to certain exceptions.

As of June 29, 2023, the outstanding balance of the Second Lien 2025 Notes was $1,200.0 and the carrying value was $1,192.9.

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”). Holdings guaranteed Spirit’s obligations under the 2018 Notes on a senior unsecured basis. On February 24, 2021, Spirit redeemed the outstanding $300.0 principal amount of the Floating Rate Notes. On November 23, 2022, Spirit redeemed the outstanding $300.0 principal amount of the 2023 Notes.

The 2028 Notes mature on June 15, 2028.

As of June 29, 2023, the outstanding balance of the 2028 Notes was $700.0 and the carrying value was $696.2.

As of June 29, 2023, the Company was in compliance with all covenants contained in the indentures governing the First Lien 2029 Notes, First Lien 2025 Notes, 2026 Notes, Second Lien 2025 Notes, and 2028 Notes.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

16. Pension and Other Post-Retirement Benefits


	Defined Benefit Plans
	For the Three Months Ended				For the Six Months Ended
Components of Net Periodic Pension Expense (Income)	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Service cost	$	0.8	$	0.8	$	1.6	$	1.2
Interest cost	18.5		13.9		38.6		29.1
Expected return on plan assets	(20.2)		(33.5)		(42.0)		(70.3)
Amortization of net loss	—		2.1		0.1		2.1

Settlement loss (gain)(1)	—		—		64.6		(1.4)

Net periodic pension expense (income)	$	(0.9)	$	(16.7)	$	62.9	$	(39.3)


	Other Benefits
	For the Three Months Ended				For the Six Months Ended
Components of Other Benefit Expense (Income)	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Service cost	$	0.1	$	0.2	$	0.3	$	0.4
Interest cost	0.3		0.2		0.7		0.3
Amortization of prior service cost	(0.2)		(0.2)		(0.4)		(0.4)
Amortization of net gain	(0.4)		(0.4)		(0.9)		(0.7)


Net periodic other benefit expense	$	(0.2)	$	(0.2)	$	(0.3)	$	(0.4)

(1) Includes a $64.6 settlement charge for the Company's Pension Value Plan ("PVP A") during the six months ended June 29, 2023, and a $1.4 settlement credit for PVP B (as defined below) related to final asset distribution during the six months ended June 30, 2022.

The components of net periodic pension expense (income) and other benefit expense, other than the service cost component, are included in Other income (expense), net in the Company's Condensed Consolidated Statements of Operations. See Note 21 Other Income (Expense), Net.

As disclosed in the Company's 2022 Form 10-K, effective October 1, 2021, the Company spun off a portion of the existing PVP A, to a new plan called PVP B ("PVP B"). As part of the PVP B plan termination process, a lump sum offering was provided during 2021 for PVP B participants and the final asset distribution was completed in the first quarter of 2022. At June 29, 2023, a pension reversion asset of $60.9 is recorded on the Restricted plan assets line item on the Company’s Condensed Consolidated Balance Sheets. Restricted plan assets are expected to be reduced over the next six years as they are distributed to employees under a qualified compensation and benefit program. Restricted plan assets are valued at fair value with gain or loss on fair value adjustments recognized within other income. The underlying investments' fair value measurement levels under the FASB's authoritative guidance on fair value measurements are Level 2, see Note 13 Fair Value Measurements.

Separately, during the six months ended June 29, 2023, the Company received an excess plan asset reversion of $179.5 of cash from PVP A. During the three and six months ended June 30, 2022, the Company withdrew $34.0 of cash from PVP B, which represented an excess plan assets reversion. These transactions were accounted for as a negative contribution and are included on the Pension plans employer contributions line item on the Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2023 and June 30, 2022. Excise tax of $35.9 and $6.8 related to the reversion of excess plan assets was separately recorded to the Other income (expense), net line item on the Company's Condensed Consolidated Statements of Operations for the six months ended June 29, 2023 and June 30, 2022, respectively. See also Note 21 Other Income (Expense), Net.

As disclosed in the Company's 2022 Form 10-K, in July 2022 the Company adopted and communicated to participants a plan to terminate the PVP A.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

During the six months ended June 29, 2023, the Company recognized non-cash, pre-tax non-operating accounting charges of $64.6 related to the plan termination, primarily reflecting the accounting for a group annuity purchase made in the first quarter of 2023, which resulted in a settlement charge related to the accelerated recognition of the actuarial losses for the PVP A plan that were previously included in the Accumulated other comprehensive loss line item in the Stockholders' Equity section of the Company's Condensed Consolidated Balance Sheets.

Employer Contributions

Other than the reversion of excess plan assets noted above, which was accounted for as a negative contribution, the Company's expected contributions for the current year have not significantly changed from those described in the Company's 2022 Form 10-K.

17. Stock Compensation

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

The Company recognized a net total of $10.2 and $10.1 of stock compensation expense for the three months ended June 29, 2023 and June 30, 2022, respectively, and a net total of $19.2 and $18.3 of stock compensation expense for the six months ended June 29, 2023 and June 30, 2022, respectively.

During the six months ended June 29, 2023, 544,996 time or service-based restricted stock units ("RSUs") were granted with an aggregate date fair values of $18.5 under the Company's LTIP. Awards vest over a three-year period, beginning on the date of grant. Values for these awards are based on the value of Common Stock on the grant date.

During the six months ended June 29, 2023, 231,927 performance-based restricted stock units ("PBRSUs") were granted with an aggregate grant date fair value of $12.0 under the Company’s LTIP. These awards are earned based on Holdings’ total shareholder return relative to its peer group over a three-year performance period. Values for these awards are initially measured on the grant date using the estimated payout levels derived from a Monte Carlo valuation model.

During the six months ended June 29, 2023, 116,006 PBRSUs were granted with an aggregate grant date fair value of $4.0 under the Company’s LTIP. These awards are earned based on pre-established 2024 - 2025 free cash flow goals. Values for these awards are based on the dividend adjusted value of Common Stock on the grant date.

During the six months ended June 29, 2023, 116,006 PBRSUs were granted with an aggregate grant date fair value of $4.0 under the Company’s LTIP. These awards are earned based on pre-established goals of revenue growth over a three-year performance period. Values for these awards are based on the dividend adjusted value of Common Stock on the grant date.

During the six months ended June 29, 2023, 42,065 shares of restricted Common Stock and 39,005 non-employee director restricted stock units (“DRSUs”) were granted to the Board of Directors of the Company (the "Board") with an aggregate grant date fair value of $2.0. Both types of awards vest if the non-employee director remains continuously in service for the entire one-year term to which the grant relates. If the non-employee director incurs a termination for any reason before the end of the term (before the annual meeting of stockholders following the grant), the awards are forfeited. Upon vesting, shares relating to restricted Common Stock awards are delivered to the director free of restriction; however, vested shares of Common Stock underlying DRSUs are not delivered to the director until the date that the director leaves the Board. Values for these awards are based on the value of Common Stock on the grant date.

During the six months ended June 29, 2023, 456,503 shares of Common Stock with an aggregate grant date value of $22.1 vested under the Company's LTIP. Additionally, 41,096 shares of Common Stock previously granted to the Board vested with an aggregate grant date fair value of $1.3, and 22,155 DRSUs previously awarded to the Board vested with an aggregate grant date fair value of $0.7.

The Company maintains the Spirit AeroSystems Holdings, Inc. Employee Stock Purchase Plan (the "ESPP") which became effective on October 1, 2017 and was amended and restated on October 21, 2022.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

Under the amended plan, the per-share purchase price for the Company's Common stock purchased under the ESPP is 85% of the lower of (a) the fair market value of a share on the first day of the applicable offering period or (b) the fair market value of a share on the applicable purchase date.

The Company recognized $0.6 of stock compensation expense related to the ESPP for the three and six months ended June 29, 2023. The Company recognized no stock compensation expense related to the ESPP for the three and six months ended June 30, 2022.

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 and whether a valuation allowance is necessary.

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

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding our prior earnings history, including the forward losses previously recognized in the U.S., the Company has recorded a valuation allowance against U.S. deferred tax assets. Increases in the valuation allowances recorded against U.S. deferred tax assets in the six-month period ended June 29, 2023 were $69.0. This is comprised of ($0.4) related to other comprehensive income ("OCI") and $69.4 from continuing operations. As of June 29, 2023, the total net U.S. deferred tax asset before the valuation allowance was $504.4 and the total net U.S. valuation allowance was $504.2. The net U.S. deferred tax asset after valuation allowances was $0.2.

The Company has determined a valuation allowance on certain U.K. deferred tax assets is needed based upon cumulative losses generated in the U.K. Increases in the valuation allowances recorded against U.K. deferred tax assets in the six-month period ended June 29, 2023 were $35.6. This is comprised of ($0.4) related to other comprehensive income ("OCI") and $36.0 from continuing operations, including utilization of net operating losses. As of June 29, 2023, the total net U.K. deferred tax asset before the valuation allowance was $312.6 and the total net U.K. valuation allowance was $314.9. The net U.K. deferred tax liability after valuation allowance was $2.3.

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

In general, the Company records income tax expense each quarter based on its estimate as to the full year’s effective tax rate. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits with respect to share-based compensation, finalizing amounts in income tax returns filed, finalizing audit examinations for open tax years, expiration of statutes of limitations, and changes in tax law.

The 0.27% effective tax rate for the six months ended June 29, 2023 differs from the 7.67% effective tax rate for the same period of 2022 primarily due to changes in the valuation allowances recorded on U.S. and U.K. deferred tax assets, nondeductible interest expense and nondeductible excise tax. As the Company is currently reporting a pre-tax loss for the six months ended June 29, 2023, an increase in the effective tax rate results in an increase of income tax benefits while a decrease in the rate results in a reduction of income tax benefits.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

As allowed by the Coronavirus Aid, Relief, and Economic Security Act, the Company has filed a claim for a pre-tax employee retention credit of $18.8 for 2020 and $1.0 for 2021. The outstanding pre-tax employee retention credit refund claim as of June 29, 2023 is $2.2.

The Company's federal audit is conducted under the Internal Revenue Service Compliance Assurance Process ("CAP") program and is essentially complete for the 2020 tax year. The Company will continue to participate in the CAP program for 2021 through 2023. The CAP program's objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination. The Company has an open tax audit in the Kingdom of Morocco for tax years ending prior to the Company's ownership of the Moroccan legal entity. There are ongoing audits in other jurisdictions that are not material to the financial statements and the Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and years.

On July 11, 2023, the U.K. Finance Bill 2023 Number 2, also known as the Spring Finance Bill 2023, received Royal Assent. This legislation is effective for periods beginning after December 31, 2023 and has no impact on the current financial statements.

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. Diluted earnings per share includes any dilutive impact of service-based restricted stock units, director restricted stock units, restricted stock awards, and performance-based restricted stock units.

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. As of June 29, 2023, 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 six-month period ended June 29, 2023, the Company did not repurchase any shares of its Common Stock under this share repurchase program. Share repurchases are currently on hold. The Credit Agreement imposes restrictions on the Company’s ability to repurchase shares.

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


	For the Three Months Ended
	June 29, 2023					June 30, 2022
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic EPS
Loss available to common stockholders	$	(206.3)	105.2	$	(1.96)	$	(122.2)	104.6	$	(1.17)
Income allocated to participating securities	—		—			—		—
Net loss	$	(206.3)				$	(122.2)

Diluted potential common shares			—					—
Diluted EPS
Net loss	$	(206.3)	105.2	$	(1.96)	$	(122.2)	104.6	$	(1.17)

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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


	For the Six Months Ended
	June 29, 2023					June 30, 2022
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic EPS
Loss available to common stockholders	$	(487.5)	105.1	$	(4.64)	$	(175.0)	104.5	$	(1.67)
Income allocated to participating securities	—		—			—		—
Net loss	$	(487.5)				$	(175.0)

Diluted potential common shares			—					—
Diluted EPS
Net loss	$	(487.5)	105.1	$	(4.64)	$	(175.0)	104.5	$	(1.67)

Included in the outstanding Common Stock were 0.1 million and 0.4 million of issued but unvested shares at June 29, 2023 and June 30, 2022, respectively, which are excluded from the basic Earnings Per Share ("EPS") calculation.

Shares of Common Stock of 0.4 million and 0.6 million, respectively, were excluded from diluted EPS as a result of incurring a net loss for the three and six months ended June 29, 2023, as the effect would have been antidilutive. Additionally, diluted EPS for the three and six months ended June 29, 2023 excludes 0.2 million shares that may be dilutive shares of Common Stock in the future but were not included in the computation of diluted EPS because the effect was either antidilutive or the performance condition was not met.

Shares of Common Stock of 0.5 million and 0.7 million, respectively, were excluded from diluted EPS as a result of incurring a net loss for the three and six months ended June 30, 2022, as the effect would have been antidilutive. Additionally, diluted EPS for the three and six months ended June 30, 2022 excludes 0.3 million shares that may be dilutive shares of Common Stock in the future but were not included in the computation of diluted EPS because the effect was either antidilutive or the performance condition was not met.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss is summarized by component as follows:


	As of		As of
	June 29, 2023		December 31, 2022
Pension	$	(45.7)	$	(95.4)

SERP/Retiree medical	11.7		12.7
Derivatives - foreign currency hedge	2.7		(7.1)
Foreign currency impact on long-term intercompany loan	(14.9)		(16.4)
Currency translation adjustment	(71.7)		(97.7)
Total accumulated other comprehensive loss	$	(117.9)	$	(203.9)

Amortization or settlement 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 $0.6 and ($1.5) for the three months ended June 29, 2023 and June 30, 2022, respectively and ($63.4) and ($0.9) for the six months ended June 29, 2023 and June 30, 2022, respectively.

20. Commitments, Contingencies and Guarantees

Litigation

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 B737NG and B737 MAX program, as a defendant.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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 in Part II, Item 7 of the 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 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 was granted by the U.S. District Court on January 7, 2022, which denied leave to amend and dismissed the Consolidated Class Action with prejudice. On February 4, 2022, the plaintiffs in the Consolidated Class Action appealed this decision to the Tenth Circuit Court of Appeals (the "Appellate Court"). Briefings have been filed and oral argument was held before the Appellate Court on November 18, 2022. The Derivative Actions remain stayed at this point. The Company and the individual defendants have denied, and continue to deny, the allegations in the Consolidated Class Action and the Derivative Actions.

On May 3, 2023, a private securities class action lawsuit was filed in the U.S. District Court for the Southern District of New York against the Company, its Chief Executive Officer, Tom Gentile III, and its Senior Vice President and Chief Financial Officer, Mark J. Suchinski. The lawsuit was brought on behalf of certain purchasers of securities of the Company, who allege purported misstatements and omissions concerning alleged faulty production controls and the alleged incorrect installation of fittings on certain B737 MAX planes (the "Securities Class Action"). The specific claims in the Securities Class Action include (i) violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants, and (ii) violations of Section 20(a) of the Exchange Act against the individual defendants. Lead plaintiff and counsel in the B737 Securities Class Action have not yet been appointed. The Company believes that the claims in this lawsuit are without merit and intends to defend against them vigorously.

Spirit is also involved in litigation with its former Chief Executive Officer ("CEO") related to a disputed violation of restrictive covenants in his retirement agreement. On October 19, 2021, the U.S. District Court for the District of Kansas (the "District Court") ruled in favor of the former CEO and awarded him $44.8 for benefits withheld in connection with the disputed violation. The Company has appealed this decision to the Appellate Court. On February 27, 2023, the Appellate Court issued an opinion reversing the District Court decision and concluding that the former CEO had violated the terms of the restrictive covenant and remanded for the District Court to address in the first instance whether the restrictive covenant is enforceable under state law. On March 13, 2023, the CEO file a Petition for Panel Rehearing, which was denied on March 28, 2023 following Spirit's response to the Petition. On April 13, 2023, the District Court issued a briefing schedule as to the issue remanded by the Appellate Court with briefing to be completed by May 15, 2023. On remand, on June 15, 2023, the District Court held that the restrictive covenant was enforceable as a condition precedent and, under this analysis, was reasonable as entered into between the parties. On July 27, 2023, the Plaintiff filed a Notice of Appeal with the Appellate Court, which the Company will oppose. A liability for the full amount of the award issued on October 19, 2021, plus accrued interest through March 28, 2023, was recognized and remains accrued in the Condensed Consolidated Balance Sheets as of December 31, 2022 and June 29, 2023.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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.

In addition to the items addressed above, 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.

Customer and Vendor Claims

The Company receives, and is currently 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, the Company takes into consideration multiple factors including without limitation its 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.

The Company has evaluated and refined management’s original estimate of costs related to rework on the B787 aircraft, including a preliminary assessment related to rework on the forward section of the fuselage, for which the Company identified an additional fit and finish issue in the prior year. The Company continues to coordinate with Boeing for necessary rework. The Company cannot reasonably estimate the amount of any potential claims related to this issue at this time.

On June 25, 2022 and February 28, 2023, the Company received separate notices of claims from a key customer seeking cost recovery primarily related to alleged product quality issues associated with the Company’s performance from 2018 through June of 2022 as well as onsite manufacturing support costs incurred by the customer. The Company has continued to evaluate the details included within these claims, however, the Company cannot currently reasonably estimate the amount of a range of possible losses due to various reasons, including, among others: (i) that there is uncertainty as to the outcome of these claims, (ii) that there are significant factual, commercial, and/or legal issues to be resolved, and (iii) the availability of data required to complete an assessment of the potential loss.

While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the factual and legal defenses available, it is the opinion of the Company that none of these items, when finally resolved, 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 specific period could be materially affected by one or more of these other matters.

Contingencies

In the second quarter of 2023, the Company updated its estimated cost to satisfy all customer firm orders on the B787, A350, and A220 production programs. Based on forecasted backlog and rates of production, each of these programs anticipates production will extend beyond the period of time for which the Company has recorded forward losses. The Company has recorded forward losses for forecasted production on the A220 and A350 programs through the end of 2025 and on the B787 program through January of 2026. As a result of the Company’s assessment of existing cost estimates and the impact macroeconomic factors may have on the Company's cost to complete all firm orders, as well as ongoing discussions with its customers, the Company believes it is reasonably possible one or more of these programs could be performed at a loss incremental to forward losses previously recorded for production outside of the timeframe highlighted above, and the cumulative range of such loss across these programs is between $0.0 and $291.0 million. As the Company does not currently believe incremental losses are evident on any of these programs, the Company has not recognized any such losses in its financial results for the period ended June 29, 2023.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

On April 12, 2023, the Company issued a notice of escapement to Boeing related to the quality issue on the B737 Vertical Fin Attach Fittings. The remediation of the quality issue requires the Company to rework B737 units within its production system and reimburse Boeing for repairs on previously delivered units in their factory and warranty costs related to units in service. As of June 29, 2023, the Company has completed the required rework on available units located at its factory in Wichita, KS. The impact to production costs is reflected within the reported total gross margins and did not materially change from the preliminary cost estimate of approximately $31.0 estimated as of March 31, 2023. Based upon informal communications to date with our customer, we believe Boeing has completed the required rework on approximately half of the affected units within its factory. The Company has not received a claim from Boeing for rework completed to date. However, the Company has made an estimate of the cost to Boeing for the units repaired to date of $23.0 for the period ended June 29, 2023. This amount is recorded as contra revenue. This estimate represents what the Company believes to be the low end of the range of its total potential liability. The Company cannot reasonably estimate the total potential claim it may receive from Boeing to complete the required repairs, and the total potential claim could materially differ from the Company’s estimate. Based on Boeing's determination that there is no safety of flight issue, and the Company’s expected disposition of potential rework for units previously delivered by Boeing to its customers which are subject to potential warranty coverage by the Company, the Company does not currently anticipate a material impact from those repairs on its results of operations in any specific period.

Guarantees

Contingent liabilities in the form of letters of guarantee have been provided by the Company. Outstanding guarantees were $24.7 and $13.9 at June 29, 2023 and December 31, 2022, respectively.

Restricted Cash - Collateral Requirements

The Company was required to maintain $22.1 and $19.6 of restricted cash as of June 29, 2023 and December 31, 2022, respectively, related to certain collateral requirements for obligations under its workers’ compensation programs. 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 and all other individual defendants with defense costs and provisional indemnity with respect to the Consolidated Class Action and Derivative Actions, as well as the Securities Class Action, 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.

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

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, the Company considers other factors including the experience of other entities in the same business and management judgment, among others. Service warranty and extraordinary work is reported in current liabilities and other liabilities on the Company's Condensed Consolidated Balance Sheets.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

The warranty balance presented in the table below includes unresolved warranty claims that are in dispute in regard 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 $2.3 as of June 29, 2023 and December 31, 2022. 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 $3.4 as of June 29, 2023 and December 31, 2022. As noted in the section on Contingencies above, at this time the Company does not currently anticipate a material impact related to any potential warranty claims related to the quality issue identified on the B737 Vertical Fin Attach Fittings.

The following is a roll forward of the service warranty and extraordinary rework balance at June 29, 2023:


Balance, December 31, 2022	$	74.9
Charges (release) to costs and expenses	(0.4)
Payouts	(1.5)
Exchange rate	0.2
Balance, June 29, 2023	$	73.2

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

21. Other Income (Expense), Net

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


	For the Three Months Ended				For the Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Kansas Development Finance Authority bond	$	0.7	$	0.7	$	1.4	$	1.3

Interest income	2.7		0.8		5.6		1.3
Foreign currency (losses) gains (1)	(4.8)		12.3		(13.3)		27.2
(Loss) gain on foreign currency forward contract	1.3		(4.7)		(2.1)		(4.0)
Loss on sale of accounts receivable	(12.1)		(4.1)		(23.3)		(6.5)
Pension (expense) income (2)	2.0		17.9		(60.7)		41.3
Excise tax on pension assets reversion (3)	—		(6.8)		(35.9)		(6.8)

Other (4)	0.3		18.5		1.0		18.5
Total	$	(9.9)	$	34.6	$	(127.3)	$	72.3

(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) See Note 16 Pension and Other Post-Retirement Benefits. Pension (expense) income for the six months ended June 29, 2023 includes a $64.6 non-cash, pre-tax non-operating settlement charge related to the PVP A termination.

(3) Excise tax related to the reversion of excess plan assets for the six months ended June 29, 2023 and the three and six months ended June 30, 2022. See Note 16 Pension and Other Post-Retirement Benefits.

(4) The three and six months ended June 30, 2022 include a $20.7 gain related to a deed of release and related cash payment that fully settled the existing repayable investment agreement between the Company and the U.K.'s Department for Business, Energy and Industrial Strategy. The repayable investment obligation, which was denominated in GBP, was included on the Company’s Condensed Consolidated Balance Sheet as of December 31, 2021, as $41.7 recorded to the Other current liabilities line item and $301.9 recorded to the Other non-current liabilities line item. In January 2022, the Company made repayments of $25.6 to the UK’s Department for Business Energy and Industrial Strategy for units sold, including interest, in respect to the agreement. In April 2022, the deed of release settled the remaining outstanding repayment obligation, including current year interest accrual and foreign currency measurement impacts, in exchange for a payment of $292.8. The portion of the payments related to interest expense and the portion of the payments related to principal repayment are included in net cash used in operating activities and net cash used in financing activities, respectively, on the Company's Condensed Consolidated Statement of Cash Flows for the period ended June 30, 2022.

22. Other Liabilities

Included on the Company's Condensed Consolidated Balance Sheet for the three and six months ended June 29, 2023 is a liability related to the customer financing of $180.0 from Boeing received in the three months ended June 29, 2023. $90.0 of the advance will be repaid in the first quarter of 2024 and is included in the Other current liabilities line item. The other $90.0 of the advance will be repaid in 2025 and is included in the Other non-current liabilities line item.

23. Segment Information

The Company operates in three principal segments: Commercial, Defense & Space and Aftermarket. Approximately 81% and 82% of the Company's net revenues for the three and six months ended June 29, 2023 came from the Company's two largest customers, Boeing and Airbus. Boeing represents a substantial portion of the Company's revenues across segments. Airbus represents a substantial portion of revenues in the Commercial segment. The Company's primary profitability measure to review a segment’s operating performance is segment operating income before corporate selling, general and administrative expenses and research and development.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

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. 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 Commercial segment includes design and manufacturing of forward, mid, and rear fuselage sections and systems, struts/pylons, nacelles (including thrust reversers) and related engine structural components, wings, and wing components (including flight control surfaces), as well as other miscellaneous structural parts for large commercial aircraft and/or business/regional jets. Sales from this segment are primarily to the aircraft OEMs or engine OEMs of large commercial aircraft and/or business/regional jet programs. Approximately 69% and 62% of Commercial segment net revenues came from the Company's contracts with Boeing for the six months ended June 29, 2023, and June 30, 2022, respectively. Approximately 24% and 30% of Commercial segment net revenues came from the Company's contracts with Airbus for the six months ended June 29, 2023, and June 30, 2022, respectively. The Commercial segment manufactures products at the Company's facilities in Wichita, Kansas; Tulsa, Oklahoma; Kinston, North Carolina; Prestwick, Scotland; Casablanca, Morocco; Belfast, Northern Ireland; and Subang, Malaysia. The Commercial segment also includes an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France.

The Company's Defense & Space segment includes design and manufacturing of fuselage, strut, nacelle, and wing aerostructures (primarily) for U.S. Government defense programs, including Boeing P-8, C40, and KC-46 Tanker, which are commercial aircraft that are modified for military use. The segment also includes fabrication, bonding, assembly, testing tooling, processing, engineering analysis, and training on fixed wing aircraft aerostructures, missiles and hypersonics work, including solid rocket motor throats and nozzles and re-entry vehicle thermal protections systems, forward cockpit and cabin, and fuselage work on rotorcraft aerostructures. Sales from this segment are primarily to the prime contractors on various U.S. Government defense program contracts for which the Company is a sub-contractor. A significant portion of the Company's Defense & Space segment revenues are represented by defense business that is classified by the U.S. Government and cannot be specifically described. A significant portion of Defense & Space segment net revenues came from the Company's contracts with two individual customers for the six months ended June 29, 2023, and June 30, 2022. The Defense & Space segment manufactures products at the Company's facilities in Wichita, KS; Tulsa, OK; Biddeford, ME; Woonsocket, RI; Belfast, Northern Ireland; and Prestwick, Scotland.

The Company's Aftermarket segment includes design, manufacturing, and marketing of spare parts and maintenance, repair, and overhaul ("MRO") services, repairs for flight control surfaces and nacelles, radome repairs, rotable assets, engineering services, advanced composite repair, and other repair and overhaul services. Approximately 46% and 47% of Aftermarket segment net revenues came from the Company's contracts with a single customer for the six months ended June 29, 2023, and June 30, 2022, respectively. The Aftermarket segment manufactures products at the Company's facilities in Wichita, KS; Tulsa, OK; Kinston, North Carolina; Dallas, TX; Prestwick, Scotland; Casablanca, Morocco; and Belfast, Northern Ireland.

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 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 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 loss for the six months ended June 29, 2023 and June 30, 2022:

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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


	Three Months Ended				Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Segment Revenues
Commercial	$	1,083.0	$	1,031.1	$	2,231.5	$	1,969.5
Defense & Space	189.6		146.4		378.0		304.9
Aftermarket	92.1		80.4		186.6		158.2
	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6
Segment Operating Income (Loss)
Commercial(1)	$	(72.9)	$	(45.1)	$	(118.4)	$	(48.5)
Defense & Space(2)	12.0		13.7		31.2		33.7
Aftermarket(3)	24.3		11.8		43.5		29.8
	$	(36.6)	$	(19.6)	$	(43.7)	$	15.0
SG&A	(70.6)		(70.2)		(148.0)		(134.7)

Research and development	(13.2)		(14.9)		(23.8)		(27.2)
Total operating loss	$	(120.4)	$	(104.7)	$	(215.5)	$	(146.9)

(1) The three and six months ended June 29, 2023 include excess capacity production costs of $51.8 and $92.7, respectively, related to the temporary B737 MAX, A320 and A220 production schedule changes, costs of $7.1 and $7.1, respectively, related to temporary production pause, and $0.9 and $6.3, respectively, of restructuring costs. The three and six months ended June 30, 2022 includes the impact of $23.9 of the total charge in relation to the suspension of activities in Russia as described in Management's Discussion and Analysis of Financial Condition and Results of Operations - Global Economic Conditions and COVID-19. The three and six months ended June 30, 2022 includes $43.1 and $89.9, respectively, of excess capacity costs related to the temporary B737 MAX and A220 production schedule changes, abnormal costs of $0.0 and $9.5, respectively, of temporary workforce adjustment costs as a result of the COVID-19 pandemic, net of U.S. employee retention credit and U.K government subsidies, and net $0.0 and ($25.5), respectively, of restructuring costs and other costs, including partial offset related to the Aviation Manufacturing Jobs Protection ("AMJP") Program.

(2) The three and six months ended June 29, 2023 include excess capacity production costs of $1.4 and $3.8 related to the temporary B737 production schedule changes, costs of $0.2 and $0.2, respectively, related to temporary production pause, and $0.0 and $0.8, respectively, of restructuring costs. The three and six months ended June 30, 2022 include excess capacity costs of $1.8 and $4.8, respectively, related to the B737 production schedule adjustment, and $0.0 and ($2.3), respectively, of restructuring costs, and other costs and partial offset related to AMJP.

(3) The three and six months ended June 29, 2023 include $0.0 and $0.0, respectively, of restructuring costs and ($2.4) and ($2.4), respectively, of benefit related to the settlement of a contingent consideration obligation related to the Applied Aerodynamics acquisition. The three and six months ended June 30, 2022 includes $4.2 of the total charge in relation to the suspension of activities in Russia as described in Management's Discussion and Analysis of Financial Condition and Results of Operations - Global Economic Conditions and COVID-19. The three and six months ended June 30, 2022 include $0.0 and $0.0, respectively, of restructuring costs and other costs, including partial offset related to AMJP, of $0.0 and ($1.9), respectively.

24. Restructuring Costs

The Company's results of operations for the three and six months ended June 29, 2023 include restructuring costs related to the Voluntary Separation Program ("VSP") that was offered to reduce structural costs by reducing indirect headcount. Participants in the VSP received a lump sum severance payment based on their years of Company service.

Restructuring costs are presented separately as a component of operating loss on the Condensed Consolidated Statements of Operations. The total restructuring costs for the three and six months ended June 29, 2023 were $0.9 and $7.2, respectively, of which, $6.3 was included in segment operating margins for the Commercial Segment and $0.9 was included in segment operating margins for the Defense & Space Segment.

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Spirit AeroSystems Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements (unaudited)

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

The Company's results of operations for the three and six months ended June 30, 2022 includes 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 first quarter of 2020, the Company's customers, including Boeing and Airbus, significantly reduced their overall production rates as a result of the COVID-19 pandemic and, in the case of Boeing, the B737 MAX grounding. The restructuring activity materially affected the scope of operations and manner in which business is conducted by the Company compared to periods prior to the restructuring activities.

The total restructuring costs for the three and six months ended June 30, 2022 were $0.0 and $0.2, respectively, and are included in segment operating margins for the Commercial Segment.

25. Supplier Financing

The Company has provided certain suppliers with access to a supply chain financing program through a facility with a third-party financing institution. The Company's suppliers' ability to access the program is primarily dependent upon the strength of the Company's financial condition and certain qualifying criteria. This program was primarily entered into as a result of the Company seeking payment term extensions with production suppliers, and the program allows these suppliers to monetize their receivables prior to the contractual payment date, subject to payment of a discount. The capacity of the program is limited to $97.0 at any point in time. If a supplier's request exceeds the program limit, then it will be honored when capacity is available. Under the supply chain financing program, the Company agrees to pay the third-party financing institution the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices, and suppliers have the ability to be paid from the third-party financing institution on an accelerated basis. The Company’s suppliers’ election to sell one or more of the Company’s confirmed obligations under the supply chain financing program is optional. The Company's responsibility is limited to making payment on the terms originally negotiated with its suppliers for up to 120 days, regardless of whether the suppliers elect to sell their receivables to the third-party financing institution. The Company or the third-party financing institution may terminate the agreement upon at least 45 days’ notice.

The balance of confirmed obligations outstanding to suppliers who elect to participate in the supply chain financing program is included in the Company’s accounts payable balance on the Company’s Condensed Consolidated Balance Sheets. As of June 29, 2023, the balance of confirmed obligations outstanding was $110.4, an increase of $8.4 over the balance as of December 31, 2022 of $102.0. In the comparable prior year period, confirmed obligations outstanding were $95.7 as of June 30, 2022, an increase of $36.8 over the balance as of December 31, 2021. The changes in each period primarily reflect purchases from suppliers related to production levels during the respective periods.

26. Acquisitions

T.E.A.M., Inc.

On November 23, 2022, Spirit AeroSystems Textiles, LLC, a fully owned subsidiary of Spirit AeroSystems, Inc. ("Spirit Textiles") closed its purchase of substantially all of the assets and all of the liabilities of T.E.A.M., Inc., a Rhode Island corporation, which is engaged in the business of manufacturing and engineering textiles, composites, and textile and composite products, for cash consideration of $31.3. 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, which is fully allocated to the Defense & Space segment. As of December 31, 2022, the Company had preliminarily concluded, but not finalized, its assessment and purchase price allocation of the acquisition. The final fair value determination was subject to a contractual post-closing working capital true-up, which the Company concluded in the three months ended March 30, 2023. The final purchase price allocation resulted in $0.6 adjustments to the assets acquired and the liabilities assumed that were recorded as of the acquisition date, which were included in the Condensed Consolidated Balance Sheet as of December 31, 2022. The adjusted assets acquired and the liabilities assumed included $8.3 of property, plant, and equipment, $1.7 of working capital, $13.5 of intangible assets and $7.7 allocated to goodwill, which is expected to be deductible for tax purposes. Operating income for the second quarter of 2023 was immaterial and reported within the Defense & Space segment.

There were no acquisition-related expenses for the six months ended June 29, 2023. Acquisition-related expenses were $0.1 for the for the six months ended June 30, 2022.

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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 on Form 10-Q (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 “Holdings” refer only to Spirit AeroSystems Holdings, Inc.

International Association of Machinists and Aerospace Workers Contract Actions

As noted in our 2022 Form 10-K, approximately 55% of our U.S. employees are represented by an agreement with the International Association of Machinists and Aerospace Workers (“IAM”) pursuant to an agreement with a then-existing expiration date of June 24, 2023. Active negotiations between the Company and the IAM Bargaining Committee began on May 1, 2023 and continued until IAM represented employees voted on the contract offer on June 21, 2023. The result of the vote was to reject the Company’s offer and to strike. In response, the Company suspended its Wichita operations impacted by IAM employees on June 22, 2023. IAM represented employees began to strike following the expiration of the contract on June 24, 2023. The Company and IAM representatives, with the assistance of a mediator from the Federal Mediation and Conciliation Service, engaged in further negotiations beginning on June 25, 2023. The result of this negotiation was a revised four-year contract offer, which was ratified by IAM represented employees on June 29, 2023. The Company began restoring operations on June 30, 2023, and fully resumed operations as the IAM workforce returned to work on July 5, 2023.

Following the vote to strike on June 22, 2023, the Company quickly implemented strategies to minimize, defer or eliminate discretionary spend, in the near term, however impacts of the disruption caused by the strike and associated production suspension may include claims related to contractual obligations, including the inability to deliver certain products to our customers on a timely basis, which may impact the Company’s ability to produce the operating cash flow to provide sufficient liquidity to fund our operating, investing, and financing activities.

The IAM negotiations impacted all programs at the Wichita, Kansas site, including the B737 program. Based on current estimates of future production rates, Spirit’s labor costs will be higher than the previous IAM contract by approximately $80.0 million annually. Financial impacts in the second quarter of 2023 include strike disruption charges of $7.3 million recorded to other operating expense on the Consolidated Statements of Operations, as well as $28.3 million reflected as changes in estimates during the period related to higher wages and other employee benefits resulting from the new contract. The work stoppage from the IAM strike will reduce full-year B737 deliveries to the range of 370 to 390 units, which will negatively impact expected revenue, earnings, and cash flow for 2023.

Global Economic Conditions and COVID-19

Global economic conditions impact our results of operations. Our business operations depend on, among other things, sufficient OEM orders (without suspension) from airlines and the financial resources of airlines, our suppliers, other companies, and individuals.

The continued fragility of the global aerospace supply chain may lead to interruptions in deliveries of or increased prices for components or raw materials used in our products, labor disruptions, and could delay production and/or materially adversely affect our business. Energy, freight, raw material, and other costs have been impacted by, and may continue to be impacted by, the war in Ukraine. Prolonged global inflationary pressures have also impacted these costs in addition to increased interest costs and labor costs. In certain situations, we have the ability to recover certain abnormal inflationary impacts through contractual agreements with our customers; however, we anticipate that we will experience reduced levels of profitability related to inflationary impacts until such time as the rate of inflation subsides to normal historical levels. Our associated estimates of such costs, where applicable, use the most recent information available. The economic impact of inflation, together with the impact of increases in interest rates and actions taken to attempt to reduce inflation, may have a significant effect on the global economy, air travel, our supply chain, and our customers, and, as a result, on our business.

In addition, Russia’s invasion of Ukraine, the resultant sanctions and other measures imposed by the U.S. and other governments, and other related impacts have resulted in economic and political uncertainty and risks. In response to the Russian invasion of Ukraine, and the associated U.S. sanctions, the Company suspended all sanctioned activities relating to Russia, primarily consisting of sales and service activities. In the twelve months ended December 31, 2022, we recorded an aggregate pre-tax loss of $29.1 million related to adjustments of certain assets and liabilities associated with sanctioned Russian business activities. The charges are included on the Consolidated Statements of Operations for the twelve months ended December 31, 2022. The suspended activities' impacts to prospective revenues, net income, net assets, cash flow from operations, and the Company's Consolidated Financial Position are not material. Continuation or significant expansion of economic disruption or escalation of the conflict, or other geopolitical events of a similar nature, could have a material adverse effect on orders from our customers, the public’s ability or willingness to continue to travel, and/or our results of operations.

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The lingering effects of the COVID-19 pandemic continue to have a significant negative impact on the aviation industry, our customers, and our business globally. Due to the uncertain nature of current conditions around the world, and the capability of conditions to evolve rapidly, we are unable to predict accurately the impact that COVID-19 will have on our business going forward.

We expect that our operating environment will continue to remain dynamic and evolve through 2023. We continue to monitor and evaluate related risks and uncertainties relating to macroeconomic conditions and the COVID-19 pandemic, including the items discussed in Item 1A. “Risk Factors” in our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 17, 2023 (the "2022 Form 10-K").

B737 Program

The B737 MAX program is a critical program to the Company. For the twelve months ended December 31, 2022, 2021, and 2020 approximately 45%, 35%, and 19% of our net revenues, respectively, were generated from sales of components to Boeing for the B737 aircraft, as compared to 53% for the twelve months ended December 31, 2019, which was the most recent period to exclude impacts from the B737 MAX grounding and the COVID-19 pandemic. 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 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 Special Business Provisions and the General Terms Agreement (collectively, the “Sustaining Agreement”) between Spirit and Boeing. The Sustaining Agreement 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. In November 2020, the FAA issued an order rescinding the grounding of the B737 MAX and published an Airworthiness Directive specifying design changes to be made before the aircraft returned to service. Boeing's deliveries of the B737 MAX resumed in the fourth quarter of 2020. Since November 2020, regulators from Brazil, Canada, the EU, U.K., India, and other countries have taken similar actions to unground the B737 MAX and permit return to service. Additionally, the Civil Aviation Administration of China released a report on April 14, 2023 which conveys the message that the B737 MAX has been reviewed and deliveries to carriers of new B737 MAX airplanes could resume. As of the end of June 2023, approximately 90% of China's B737 MAX fleet spread amongst twelve Chinese carriers have resumed passenger flights.

At this time, domestic air travel demand is near 2019 levels and we expect international air travel demand to approach 2019 levels in the near future. As a result, we expect that the B737 MAX and other narrowbody production rates will recover to pre-pandemic levels before widebody production rates. We expect that air travel demand will continue to improve from 2022 levels. For additional information, see Item 1A, “Risk Factors” in the 2022 Form 10-K.

The B737 MAX 7 and MAX 10 models are currently going through Federal Aviation Administration ("FAA") certification activities. In December 2022, an extension for certification of these two models to December 31, 2024 was granted when the U.S. Congress passed the Fiscal Year 2023 Omnibus Appropriations Bill. If Boeing is unable to achieve certification of these models or the entry into service is inconsistent with current assumptions, future revenues, earnings, and cash flows are likely to be adversely impacted.

On April 12, 2023, we issued a notice of escapement to Boeing related to the quality issue on the B737 Vertical Fin Attach Fittings. The remediation of the quality issue requires us to rework B737 units within our production system and reimburse Boeing for repairs on previously delivered units in their factory and warranty costs related to units in service. As of June 29, 2023, we have completed the required rework on available units located at our factory in Wichita, KS. The impact to production costs is reflected within the reported total gross margins and did not materially change from the preliminary cost estimate of approximately $31.0 million estimated as of March 31, 2023. Based upon communications to date with our customer, Boeing has completed the required rework on approximately half of the affected units within its factory. We have not received a claim from Boeing for rework completed to date. However, we have made an estimate of the cost to reimburse Boeing for the units repaired to date of $23.0 million for the period ended June 29, 2023. This amount is recorded as contra revenue. This estimate represents what we believe to be the low end of the range of our potential liability. However, we cannot reasonably estimate the total potential claim we may receive from Boeing to complete the required repairs, and the total potential claim could materially differ from our estimate. Based on Boeing's determination that there is no safety of flight issue, and our expected disposition of potential rework for units previously delivered by Boeing to its customers which are subject to potential warranty coverage by us, we do not currently anticipate a material impact from those repairs on our results of operations in any specific period.

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B787 Program

In the year ended December 31, 2020, production rate decreases from our customer on the B787 program resulted in incremental forward loss charges of $192.5 million. During the year ended December 31, 2021, the combination of further production rate decreases from our customer and estimated costs of rework and engineering changes resulted in incremental forward loss charges of $153.5 million. During the year ended December 31, 2022, our estimates for further production rate decreases and build schedule changes, supply chain costs, and other costs, including costs of rework, drove additional forward loss charges of $93.5 million. For the six months ended June 29, 2023, our updated estimates drove an additional $45.7 million of forward loss primarily related to the impact of the IAM agreement, additional labor and supply chain cost growth. Additional production rate changes, changes in cost assessments, claims, labor work stoppages, supply chain cost changes, or changes to the scope of quality issues and any associated rework, could result in an incremental increase or decrease to the total estimated loss provision. See also Note 20 Commitments, Contingencies and Guarantees.

Airbus Programs

In the year ended December 31, 2020, the A350 program recorded forward loss charges of $147.9 million associated with customer driven production rate changes. During the year ended December 31, 2021, the A350 program recorded forward loss charges of $55.2 million related to customer driven production rate changes and quality-related costs. The A350 program recorded additional forward loss charges of $105.7 million for the year ended December 31, 2022 related to estimated quality-related costs, non-recurring engineering and tooling costs, and additional labor, freight, and other cost requirements driven by parts shortages, production and quality issues, and customer production rate changes. For the six months ended June 29, 2023, our updated estimates drove a $42.3 million incremental estimated forward loss on the A350 program, driven by the impact of schedule changes and other supply chain cost growth.

The A220 wing program recorded additional forward losses of $25 million for the year ended December 31, 2022, primarily related to the bankruptcy of a supplier and associated failure of the supplier to deliver key parts on the program. For the six months ended June 29, 2023, our updated estimates drove a $108.3 million incremental estimated forward loss on the A220 wing program, driven by estimated supply chain costs including certain non-recurring cost estimates, schedule changes, and foreign exchange headwinds.

Critical Accounting Estimates

Goodwill

Goodwill is assessed for impairment annually on the first day of the fourth quarter, or whenever events or circumstances indicate that it is more likely than not that the estimated fair value of a reporting unit is below its carrying value.

For the year ended December 31, 2022, in accordance with our annual assessment policy, we opted to bypass the qualitative assessment and performed a quantitative assessment to test goodwill for impairment.

As part of our impairment assessment, we utilized a third-party to assist us with estimating the fair value of each of our respective reporting units under both the income approach and the market approach with equal weighing applied to the results of each approach. These approaches require making assumptions regarding long-term growth rates, revenue and earnings projections, estimation of cash flows, discount rates, and market and company-specific factors.

The results of our annual assessment indicated that the fair value substantially exceeded the carrying value for each reporting unit, and as a result, no impairment existed as of the annual assessment date during the fourth quarter of 2022. Further, we have not identified any indications of impairment that would prompt an interim impairment assessment for the quarter ended June 29, 2023.

Results of Operations

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

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	Three Months Ended				Six Months Ended
	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
	($ in millions)				($ in millions)
Revenue	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6
Cost of sales	1,395.5		1,277.5		2,827.7		2,417.4
Gross (loss) profit	(30.8)		(19.6)		(31.6)		15.2
Selling, general and administrative	70.6		70.2		148.0		134.7

Restructuring costs	0.9		—		7.2		0.2
Research and development	13.2		14.9		23.8		27.2
Other operating expense	4.9		—		4.9		—
Operating loss	(120.4)		(104.7)		(215.5)		(146.9)
Interest expense and financing fee amortization	(73.6)		(55.1)		(146.0)		(114.0)
Other (expense) income, net	(9.9)		34.6		(127.3)		72.3
Loss before income taxes and equity in net income (loss) of affiliates	(203.9)		(125.2)		(488.8)		(188.6)
Income tax (provision) benefit	(3.0)		3.5		1.3		14.5
Loss before equity in net income (loss) of affiliates	(206.9)		(121.7)		(487.5)		(174.1)
Equity in net income (loss) of affiliates	0.5		(0.5)		(0.2)		(0.9)
Net loss	$	(206.4)	$	(122.2)	$	(487.7)	$	(175.0)

Comparative shipset deliveries by model were as follows(1):


	Three Months Ended		Six Months Ended
Model	June 29, 2023	June 30, 2022	June 29, 2023	June 30, 2022
B737	74	71	169	131
B747	—	—	—	1
B767	9	8	17	16
B777	7	6	14	11
B787	10	4	16	7
Total Boeing	100	89	216	166
A220	14	16	27	34
A320 Family	152	147	294	302
A330	9	6	18	12
A350	13	11	25	26

Total Airbus	188	180	364	374
Total Business and Regional Jets	54	49	108	99
Total	342	318	688	639

(1) 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 A220 aircraft in a given period, the term “shipset” refers to sets of structural wing components produced or delivered for one aircraft in such period. For purposes of measuring production or shipset deliveries for all other 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. 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 were as follows:

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	Three Months Ended				Six Months Ended
Prime Customer	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
	($ in millions)				($ in millions)
Boeing	$	835.6	$	762.2	$	1,756.7	$	1,409.4
Airbus	274.7		281.1		542.4		585.0
Other	254.4		214.6		497.0		438.2
Total net revenues	$	1,364.7	$	1,257.9	$	2,796.1	$	2,432.6

Changes in Estimates

During the second quarter of 2023, we recognized unfavorable changes in estimates of $126.3 million, which included net forward loss charges of $104.7 million, and unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2023 of $21.6 million. The forward losses in the second quarter were primarily driven by supplier price negotiations and estimated supply chain costs including certain non-recurring cost estimates, schedule revisions, the impact of schedule changes and other supply chain cost growth on the A350 program, the impact of the new IAM union contract as well as additional labor and supply chain cost growth on the B787 program, and supply chain cost growth and foreign currency movement on the A220 program. The unfavorable cumulative catch-up adjustments primarily relate to increased labor costs resulting from the IAM union negotiations and increased supply chain costs on the B737 program, and production cost overruns, estimates of the impact of production schedule changes, and increased costs for materials, freight, labor and overhead on the A320 program. As referenced above, we utilize a periodic forecasting process to assess the progress and performance of our programs. We may continue to experience forward losses in the future as a result of production schedule impacts from our customers, increases in costs related to persistent inflation, or other factors resulting in cost estimates higher than our original forecast.

During the same period in the prior year, we recognized total unfavorable changes in estimates of $71.7 million, which included net forward loss charges of $63.7 million, and unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2022 of $8.0 million.

Three Months Ended June 29, 2023 as Compared to Three Months Ended June 30, 2022

Revenue. Net revenue for the three months ended June 29, 2023 was $1,364.7 million, an increase of $106.8 million, or 8.5%, compared to net revenue of $1,257.9 million for the same period in the prior year. The increase in revenue was primarily driven by increased Boeing deliveries and increased Defense and Space revenue, partially offset by lower revenue on the Airbus A220 program. Approximately 81% and 83% of Spirit’s net revenues for the second quarter of 2023 and 2022, respectively, came from our two largest customers, Boeing and Airbus.

Total deliveries to Boeing increased to 100 shipsets during the second quarter of 2023, compared to 89 shipsets delivered in the same period of the prior year, primarily driven by the continued production ramp up of the B737 program along with additional B787 deliveries. Total deliveries to Airbus increased to 188 shipsets during the second quarter of 2023, compared to 180 shipsets delivered in the same period of the prior year, primarily driven by an increase in A320 deliveries in the current quarter. Deliveries for business/regional jet components increased to 54 shipsets delivered during the second quarter of 2023, compared to 49 shipsets delivered in the same period of the prior year. In total, deliveries increased to 342 shipsets during the second quarter of 2023, compared to 318 shipsets delivered in the same period of the prior year.

Gross (Loss) Profit. Gross loss was ($30.8) million for the three months ended June 29, 2023, compared to gross loss of ($19.6) million for the same period in the prior year. The increase in loss from the prior year period was primarily driven by higher unfavorable cumulative catch-up adjustments and higher forward losses, as detailed below. In the second quarter of 2023, we recognized $53.2 million of excess capacity production costs driven by production schedule changes on B737 MAX, A220 and A320 programs, compared to excess capacity cost of $44.9 million in the same period of the prior year. In the second quarter of 2023, we recognized $21.6 million of unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2023, and $104.7 million of net forward loss charges. As mentioned in the Changes in Estimates section above, the forward losses recorded in the second quarter of 2023 were primarily driven by supplier price negotiations and estimated supply chain costs including certain non-recurring cost estimates, schedule revisions, and schedule changes and other supply chain cost growth on the A350 program, the impact of the new IAM union contract as well as additional labor and supply chain cost growth on the B787 program, and supply chain cost growth and foreign currency movement on the A220 program. The total gross loss impact related to the IAM agreement in the three months ended June 29, 2023 was $35.6 million. In the second quarter of 2022, we recorded $8.0 million of unfavorable cumulative catch-up adjustments related to periods prior to the second quarter of 2022, and $63.7 million of net forward loss charges primarily driven by increased estimates for production rate decreases and build schedule changes, supply chain costs, and other costs, including costs of rework on the B787 program, and anticipated production recovery costs related to the bankruptcy of a supplier and associated failure of the supplier to deliver key parts on the Company's A220 wing program.

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SG&A and Research and Development. Current period SG&A was higher than in the prior year period by $0.4 million, primarily due to increased bids and proposals in Defense & Space, partially offset by reductions in incentives and purchased services. Relatively less research and development activity drove expenses $1.7 million lower for the three months ended June 29, 2023, as compared to the same period in the prior year.

Restructuring Costs. Restructuring costs for cost alignment and headcount reductions increased $0.9 million for the three months ended June 29, 2023, as compared to the same period in the prior year. There was $0.9 million of restructuring costs recorded in the current period, and the variance primarily reflects the results of voluntary separation program activity in the current period.

Operating (Loss) Income. Operating loss for the three months ended June 29, 2023 was ($120.4) million, a decrease of $15.7 million, compared to operating loss of ($104.7) million for the same period in the prior year. The variance reflects the higher unfavorable cumulative catch-up adjustments and higher forward losses detailed above.

Interest Expense and Financing Fee Amortization. Interest expense and financing fee amortization for the three months ended June 29, 2023 increased $18.5 million compared to the same period in the prior year, driven by higher interest rates partially offset by lower interest expense on the repayable investment agreement with the Department for Business, Energy, and Industrial Strategy of the Government of the United Kingdom which was in place in the prior year period but fully settled in 2022. The three months ended June 29, 2023 includes $69.9 million of interest and fees paid or accrued in connection with long-term debt and $1.8 million in amortization of deferred financing costs and original issue discount, compared to $49.5 million of interest and fees paid or accrued in connection with long-term debt and $1.9 million in amortization of deferred financing costs and original issue discount for the same period in the prior year. See also Note 15 Debt.

Other Income (Expense), net. Other expense, net for the three months ended June 29, 2023 was ($9.9) million, compared to other income of $34.6 million for the same period in the prior year, an increase in expense of $44.5 million. The increase in other expense was primarily due to a gain recorded in the second quarter of 2022 of $20.7 million related to the settlement of the repayable investment agreement with the U.K. Department of Business, Energy and Industrial Strategy, as well as lower pension income and higher foreign currency losses of ($4.8) million recognized in the current period, versus a gain of $12.3 million in the same period of the prior year, and net pension related expense in the current year period of $2.0 million versus net pension related income of $17.9 million in the prior year period. The respective pension income/expense values are separately driven by special accounting impacts related to pension plan termination activities that were respectively undertaken in each period. See also Note 16 Pension and Other Post-Retirement Benefits.

Provision for Income Taxes. 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 assets 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 positive and negative evidence available, management determined that it was necessary to continue to maintain a valuation allowance against nearly all of its net U.S. and U.K. deferred tax assets as of June 29, 2023. The net valuation allowance was increased by $36.9 million in the U.S. and by $17.0 million in the U.K. for the three months ended June 29, 2023.

The income tax provision for the three months ended June 29, 2023 includes ($6.4) million for federal taxes, $1.6 million for state taxes and $7.8 million for foreign taxes. The income tax provision for the three months ended June 30, 2022 includes ($11.3) million for federal taxes, $4.4 million for state taxes and $3.4 million for foreign taxes. The effective tax rate for the three months ended June 29, 2023 is (1.46%) as compared to 2.74% for the same period in 2022. As we are reporting a pre-tax loss for the three months ended June 29, 2023, an increase in the effective tax rate results in an increase of income tax benefits while a decrease in the rate results in a reduction of income tax benefits.

The decrease from the U.S. statutory tax rate is attributable primarily to valuation allowances on deferred tax assets.

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Segments. The following table shows segment revenues and operating income for the three months ended June 29, 2023 and June 30, 2022:


	Three Months Ended
	June 29, 2023		June 30, 2022
	($ in millions)
Segment Revenues
Commercial	$	1,083.0	$	1,031.1
Defense & Space	189.6		146.4
Aftermarket	92.1		80.4
	$	1,364.7	$	1,257.9
Segment Operating (Loss) Income
Commercial	$	(72.9)	$	(45.1)
Defense & Space	12.0		13.7
Aftermarket	24.3		11.8
	$	(36.6)	$	(19.6)
SG&A	(70.6)		(70.2)

Research and development	(13.2)		(14.9)
Total operating loss	$	(120.4)	$	(104.7)

Commercial segment, Defense & Space segment, and Aftermarket segment represented approximately 79%, 14%, and 7%, respectively, of our net revenues for the three months ended June 29, 2023 and approximately 82%, 12%, and 6%, respectively, of our net revenues for the three months ended June 30, 2022.

Commercial segment. Commercial segment net revenues for the three months ended June 29, 2023 were $1,083.0 million, an increase of $51.9 million, or 5%, compared to the same period in the prior year. The increase in revenues was primarily driven by increased deliveries to Boeing in the current period.

Commercial segment operating margins were (7%) for the three months ended June 29, 2023, compared to (4%) for the same period in the prior year. The margin decreasing for the three months ended June 29, 2023, as compared to the prior year period, was primarily due to higher unfavorable changes in estimates recorded in the current period and the contra revenue recognized for a potential customer claim, partially offset by higher B737 deliveries and the absence of losses related to Russia sanctions recognized during the second quarter of 2022. In the second quarter of 2023, the segment recorded unfavorable cumulative catch-up adjustments of $15.7 million and net forward loss charges of $101.9 million. In comparison, during the second quarter of 2022, the segment recorded unfavorable cumulative catch-up adjustments of $7.9 million and net forward loss charges of $59.4 million. For the three months ended June 29, 2023, the Commercial segment included $51.8 million of excess capacity production costs, $7.1 million of temporary production pause charges, and $0.9 million net restructuring and other costs, compared with excess capacity costs of $43.1 million, net workforce reductions of $0.0 million, and restructuring costs of $0.0 million for the same period in the prior year. The margin for the three months ended June 30, 2022 includes the impact of $23.9 of the total charge, mentioned above, in relation to the suspension of activities related to customers in Russia due to the Russian invasion of Ukraine, and the associated sanctions.

Defense & Space segment. Defense & Space segment net revenues for the three months ended June 29, 2023 were $189.6 million, an increase of $43.2 million, or 30%, compared to the same period in the prior year. The variance from the prior year period includes the impact of additional revenues from progress on classified programs and increased production of the Boeing B737 program, the contracts for which include units produced for the Boeing P-8 program that are accounted for in the Defense & Space segment.

Defense & Space segment operating margins decreased to 6% for the three months ended June 29, 2023, compared to 9% for the same period in the prior year. The decrease in margin over the prior year period was primarily due to increased costs on the Boeing P-8 program resulting from the IAM union negotiations and higher supply chain cost estimates, as well as one-time charges on the Sikorsky CH-53K program. For the three months ended June 29, 2023 the Defense & Space segment included $1.4 million of excess capacity production costs, $0.2 million of temporary production pause charges, and restructuring costs of $0.0 million, compared with compared with excess capacity costs of $1.8 million and restructuring costs of $0.0 million for the same period in the prior year. The segment recorded unfavorable cumulative catch-up adjustments of $5.9 million for the three months ended June 29, 2023.

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The segment recorded net forward loss charges of $2.8 million for the three months ended June 29, 2023. In comparison, during the same period of the prior year, the segment recorded unfavorable cumulative catch-up adjustments of $0.1 million and net forward loss charges of $4.3 million.

Aftermarket segment. Aftermarket segment net revenues for the three months ended June 29, 2023 were $92.1 million, an increase of $11.7 million, or 15%, compared to the same period in the prior year. Aftermarket segment operating margins were 26% for the three months ended June 29, 2023, compared to 15% for the same period in the prior year. The increase in margins was driven primarily by higher margins on increased activity and the $2.4 million benefit from the settlement of a contingent consideration obligation related to a prior year acquisition as well as the absence of losses related to Russia sanctions that were recognized in the second quarter of 2022 of $4.2 million.

Six Months Ended June 29, 2023 as Compared to Six Months Ended June 30, 2022

Revenue. Net revenue for the six months ended June 29, 2023 was $2,796.1, an increase of $262.0, or 13.3%, compared to net revenue of $2,432.6 for the same period in the prior year. The increase in revenue was primarily driven by higher deliveries on Boeing and Defense programs, offset by Airbus deliveries. Approximately 82% and 82% of the Company's net revenues for the six months ended June 29, 2023 and June 30, 2022, respectively, came from our two largest customers, Boeing and Airbus.

Total deliveries to Boeing increased to 216 shipsets during the six months ended June 29, 2023, compared to 166 shipsets delivered in the same period of the prior year, primarily driven by the continued production ramp up of the B737 program along with additional B787 deliveries. Total deliveries to Airbus decreased to 364 shipsets during the six months ended June 29, 2023, compared to 374 shipsets delivered in the same period of the prior year, primarily driven by customer driven schedule changes and production delays. Deliveries for business/regional jet components increased to 108 shipsets during the six months ended June 29, 2023, compared to 99 shipsets delivered in the same period of the prior year. In total, deliveries increased to 688 shipsets during the six months ended June 29, 2023, compared to 639 shipsets delivered in the same period of the prior year.

Gross (Loss) Profit. Gross loss was ($31.6) million for the six months ended June 29, 2023, compared to gross profit of $15.2 million for the same period in the prior year. The decrease in profit over the same period of the prior year was primarily driven by higher negative changes in estimates in the current quarter, partially offset by higher profit on increased deliveries in B737. In the six months ended June 29, 2023, the Company recognized $96.5 million of excess capacity production costs driven by production schedule changes, compared to excess capacity production costs of $94.7 million and $9.5 million of net workforce adjustments as a result of COVID-19 in the same period of the prior year. In the six months ended June 29, 2023, the Company recognized $27.2 million of unfavorable cumulative catch-up adjustments related to periods prior to the six months ended June 29, 2023, and $214.7 million of net forward loss charges. The forward losses recorded in the period were primarily driven by supplier price negotiations and estimated supply chain costs including certain non-recurring cost estimates, schedule revisions, and schedule changes and other supply chain cost growth on the A350 program and additional labor, the impact of the IAM agreement and supply chain cost growth on the B787 program. The total gross loss impact related to the IAM agreement in the six months ended June 29, 2023 was $35.6 million. In the six months ended June 30, 2022, the Company recorded $24.4 million of unfavorable cumulative catch-up adjustments related to periods prior to the six months ended June 30, 2022, and $87.5 million of net forward loss charges on the B787, A350, and A220 programs.

SG&A and Research and Development. SG&A expense was $13.3 million higher for the six months ended June 29, 2023, compared to the same period in the prior year. The variance was driven by increases in headcount, incentives, and travel. Less research and development activity drove research and development expense $3.4 million lower for the six months ended June 29, 2023, as compared to the same period in the prior year.

Restructuring Costs. Restructuring costs of $7.2 million for cost alignment and headcount reductions increased $7.0 million for the six months ended June 29, 2023, compared to the same period in the prior year. The variance is primarily driven by the results of the voluntary separation program activity in the current period.

Operating (Loss) Income. Operating loss for the six months ended June 29, 2023 was ($215.5) million, an increase of $68.6 million, compared to the operating loss of ($146.9) million for the same period in the prior year. The increase reflects the effects of higher changes in estimates and forward loss charges as well as expenses related to the temporary production pause resulting from the IAM strike.

Interest Expense and Financing Fee Amortization. Interest expense and financing fee amortization for the six months ended June 29, 2023 increased $32.0 million compared to the same period in the prior year, driven by higher interest rates offset by lower interest expense on the repayable investment agreement with the Department of Business, Energy, and Industrial Strategy of the Government of the United Kingdom which was fully settled in the same period of the prior year (see Note 21 Other Income (Expense), Net).

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The six months ended June 29, 2023 includes $137.9 million of interest and fees paid or accrued in connection with long-term debt and $3.6 million in amortization of deferred financing costs and original issue discount, compared to $99.2 million of interest and fees paid or accrued in connection with long-term debt and $3.8 million in amortization of deferred financing costs and original issue discount for the same period in the prior year. See also Note 15 Debt.

Other Income (Expense), net. Other expense, net for the six months ended June 29, 2023 was ($127.3) million, compared to other income of $72.3 million for the same period in the prior year. The increase in other expense was primarily due to a gain recorded in the second quarter of 2022 related to the settlement of the repayable investment agreement with the U.K. Department of Business, Energy and Industrial Strategy, as well as lower pension income and higher foreign currency losses recognized in the current period.

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 positive and negative evidence available, management determined that it was necessary to continue to maintain a valuation allowance against nearly all of its net U.S. and U.K. deferred tax assets as of June 29, 2023. The net valuation allowance was increased by $69.0 million in the U.S. and by $35.6 million in the U.K. for the six months ended June 29, 2023.

The income tax provision for the six months ended June 29, 2023 includes ($4.2) million for federal taxes, ($2.6) million for state taxes and $5.5 million for foreign taxes. The income tax provision for the six months ended June 30, 2022 includes ($5.3) million for federal taxes, ($2.1) million for state taxes and ($7.1) million for foreign taxes. The effective tax rate for the six months ended June 29, 2023 is 0.27% as compared to 7.67% for the same period in 2022. As we are reporting a pre-tax loss for the six months ended June 29, 2023, an increase in the effective tax rate results in an increase of income tax benefits while a decrease in the rate results in a reduction of income tax benefits.

The decrease from the U.S. statutory rate is attributable primarily to nondeductible interest expense, nondeductible excise tax, valuation allowances on deferred tax assets, and foreign rate differences.

Segments. The following table shows segment revenues and operating income for the six months ended June 29, 2023 and June 30, 2022:


	Six Months Ended
		June 29, 2023		June 30, 2022
	($ in millions)
Segment Revenues
Commercial		$	2,231.5	$	1,969.5
Defense & Space		378.0		304.9
Aftermarket		186.6		158.2
		$	2,796.1	$	2,432.6
Segment Operating (Loss) Income
Commercial		$	(118.4)	$	(48.5)
Defense & Space		31.2		33.7
Aftermarket		43.5		29.8
		$	(43.7)	$	15.0
SG&A		(148.0)		(134.7)

Research and development		(23.8)		(27.2)
Total operating loss		$	(215.5)	$	(146.9)

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Commercial segment, Defense & Space segment, and Aftermarket segment represented approximately 80%, 14%, and 7%, respectively, of our net revenues for the six months ended June 29, 2023, and approximately 81%, 13%, and 7%, respectively, of our net revenues for the six months ended June 30, 2022.

Commercial segment. Commercial segment net revenues for the six months ended June 29, 2023 were $2,231.5 million, an increase of $262.0 million, or 13%, compared to the same period in the prior year. The increase in revenues was primarily driven by increased deliveries to Boeing in the current period.

Commercial segment operating margins were (5%) for the six months ended June 29, 2023, compared to (2%) for the same period in the prior year. The decrease in margin, compared to the same period in the prior year, was driven by higher unfavorable changes in estimates recorded in the period, supply chain issues and production costs on B767, A350 and A220, and the contra revenue recognized for a potential customer claim, partially offset by higher B737 deliveries and the absence of losses related to Russia sanctions recognized during the second quarter of 2022. For the six months ended June 29, 2023, the Commercial segment includes $92.7 million of excess capacity production costs, $7.1 million of temporary production pause charges, and $6.3 million, net, of restructuring and other costs, compared with excess capacity production costs of $89.9 million, net workforce adjustments of $9.5 as a result of COVID-19, and net restructuring and other costs of ($25.5) million, including partial offset related to the AMJP Program grant of ($28.4) million for the same period in the prior year. For the six months ended June 29, 2023, the segment recorded unfavorable cumulative catch-up adjustments of $20.9 million and net forward loss charges of $211.8 million. In comparison, for the six months ended June 30, 2022, the segment recorded unfavorable cumulative catch-up adjustments of $25.2 million and net forward loss charges of 85.2 million. The margin for the six months ended June 30, 2022 includes the impact of $23.9 million of the charge, mentioned above, in relation to the suspension of activities related to customers in Russia due to the Russian invasion of Ukraine, and the associated sanctions.

Defense & Space. Defense & Space segment net revenues for the six months ended June 29, 2023 were $378.0 million, an increase of $73.1 million, or 24%, compared to the same period in the prior year. The increase from the prior year includes the impact of additional revenues from progress on classified programs and increased production on the B737 program, the contracts for which include units produced for the Boeing P-8 program that are accounted for in the Defense & Space segment.

Defense & Space segment operating margins were 8% for the six months ended June 29, 2023, compared to 11% for the same period in the prior year. The decrease in operating income margin for the segment was primarily due to increased costs on the Boeing P-8 program resulting from the IAM union negotiations and higher supply chain cost estimates, as well as one-time charges on the Sikorsky CH-53K program. For the six months ended June 29, 2023, the Defense & Space segment includes $3.8 million of excess capacity production costs, $0.2 million of temporary production pause charges, and $0.8 million, net, of restructuring and other costs, compared with excess capacity production costs of $4.8 million and ($2.3) million, net, of restructuring and other costs, including partial offset related to the AMJP Program grant of ($2.3) million during the same period of the prior year. The segment recorded unfavorable cumulative catch-up adjustments of ($6.3) million and net forward losses of ($2.9) million for the six months ended June 29, 2023. In comparison, during the same period of the prior year, the segment recorded favorable cumulative catch-up adjustments of $0.8 million and net forward loss charges of ($2.3) million.

Aftermarket. Aftermarket segment net revenues for the six months ended June 29, 2023 were $186.6 million, an increase of $28.4 million, or 18%, compared to the same period in the prior year. Aftermarket segment operating margins were 23% for the six months ended June 29, 2023, compared to 19% for the same period in the prior year. For the six months ended June 29, 2023, the margin increase reflects increases in MRO product mix and the $2.4 million benefit from the settlement of a contingent consideration obligation related to a prior year acquisition as well as the absence of losses related to Russia sanctions that were recognized in the second quarter of 2022 of $4.2 million. In comparison, the operating margins for the Aftermarket segment during the six months ended June 30, 2022 includes ($1.9) million, net, of restructuring and other costs, including partial offset related to the AMJP Program grant of ($1.9) million, and the impact of $4.2 million of the charge, mentioned above, in relation to the suspension of activities related to customers in Russia due to the Russian invasion of Ukraine, and the associated sanctions.

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Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our principal sources of liquidity are operating cash flows from continuing operations and borrowings to finance our business operations. During the second quarter ending June 29, 2023, our operating cash flows from continuing operations were adversely impacted by the IAM strike and the associated production pause which began on June 22, 2023 and ended on July 5, 2023. Additionally, in recent periods, other adverse impacts to our operating cash flows have been caused by, among other things, the B737 MAX grounding, the COVID-19 pandemic, production rate changes for the B737 MAX program and other programs, supply chain disruptions, labor shortages and cost increases affecting our business. We expect those adverse impacts to continue through 2023 and beyond. In addition, we may incur additional cash costs during 2023 related to the B737 Vertical Fin Attach Fittings quality issue, including reimbursement of costs Boeing incurs to complete repairs in their factory on previously delivered units and warranty costs related to affected B737 units in service. At this time, we do not anticipate the warranty costs related to the affected units in service to be material in any respective period. For purposes of assessing our liquidity needs in this section, we have assumed that Boeing would not further reduce the B737 MAX production rate and that other customers generally would not further reduce their production rates and that we will not experience prolonged disruption or production inefficiencies as a result of the IAM strike and production pause. For risks that may affect that assumption, see Item 1A, “Risk Factors” in our 2022 Form 10-K.

During the quarter ended June 29, 2023, we received cash advances of $180.0 million from Boeing related to a memorandum of agreement with Boeing executed on April 28, 2023, which requires a repayment of $90.0 million on February 14, 2024, and $90.0 million on February 14, 2025. Our repayment obligation will be accelerated, and any outstanding amount advanced under the agreement will immediately become due and payable, in the event that (i) we fail to make any repayment in full on the applicable Repayment Date, (ii) we fail to submit a satisfactory written confirmation that we are able to and intend to make the required repayment thirty days prior to each Repayment Date, as required under the agreement, or (iii) we repudiate any performance obligation under the agreement or certain of our existing agreements with Boeing. Boeing will have the right to set off any unpaid amount due and payable under the memorandum of agreement from any amount owed to Boeing under any other agreement between the parties. The $90.0 million repayable on February 14, 2024 is reflected in the Other current liabilities line item on the Condensed Consolidated Balance Sheets while the $90.0 million repayable on February 14, 2025 is reflected in the Other non-current liabilities line item. Based on the specific terms and conditions within the final agreement, the $180.0 million receipt is shown as a financing cash flow while the repayment of the Boeing advance through equal payments in the first quarters of 2024 and 2025 will be reflected as usage of financing cash flow. See Note 22 Other Liabilities to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

During the quarter ended June 29, 2023, we received an advance payment from Airbus of $50.0 million under an agreement between Airbus S.A.S. and Spirit AeroSystems (Europe) Limited ("Spirit Europe") signed on June 23, 2023 (the "A350 Agreement"). The A350 Agreement provides for up to $100.0 million of advances that are required to be repaid along with a nominal fee to Airbus by way of offset against the purchase price of A350 FLE shipset deliveries in 2025. To the extent actual deliveries in 2025 are insufficient to offset the advance amount, any amount not offset against deliveries will be due and payable to Airbus on December 31, 2025. Related to the A350 Agreement, Spirit Europe has pledged certain program assets including work in process inventories and raw materials at Spirit's Scotland facility in an amount sufficient to cover the advances. We anticipate we will receive an additional $50.0 million in the fourth quarter of 2023. Based on the specific terms and conditions within the A350 Agreement, the $50.0 million receipt is shown as an operating cash flow. As the Airbus advance will be repaid through offset against shipset deliveries, those repayments will effectively reduce operating cash flow in 2025. See Note 12 Customer Advances to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

As of June 29, 2023, our debt balance was $3,870.9 million, including $56.0 million of debt classified as short-term. As of June 29, 2023, we had $525.7 million of cash and cash equivalents on the Condensed Consolidated Balance Sheet, which reflects a decrease of $132.9 million from the cash and cash equivalents balance of $658.6 million as of December 31, 2022.

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Notwithstanding the risks related to the brief strike highlighted above, based on current operating trends and the receipt of the cash advances referred to above, we believe our cash on hand and cash flows generated from operations, together with other sources of liquidity and our ability to vary our cost structure, will provide sufficient liquidity for the next twelve months and for the foreseeable future beyond the next twelve months. Beyond the next twelve months, this belief assumes that we will be able to refinance our indebtedness at or prior to maturity with new borrowings or other sources of liquidity. Limitations on our ability to access the capital or credit markets, the cost impacts of additional production rate changes or quality issues, difficulty with managing costs due to labor shortages, supply chain disruptions, inflation or other factors, or unfavorable terms or general reductions in liquidity, may adversely and materially impact our business, financial condition, and results of operations, and prevent us from being able to meet our obligations as they become due. There can be no assurance that we will be able to access the capital or credit markets or, if we do have such access, that it will be on favorable terms.

Further, we have experienced, and could continue to experience, significant fluctuations in our cash flows from period to period, particularly during the continued uncertainty in the timing of the aviation industry recovery and the current challenging macroeconomic environment. We use our cash for many activities, including operations, capital expenditures, debt service, working capital, and M&A integration activities. While we may be able to modify, defer or eliminate some of these uses to manage our cash consumption, other uses are relatively fixed and are difficult to modify in the short-term.

We have agreements to sell, on a revolving basis, certain trade accounts receivable balances with Boeing, Airbus, and Rolls-Royce to third-party financial institutions. These programs were primarily entered into as a result of Boeing and Airbus seeking payment term extensions with us, and they continue to allow us 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, Airbus’s, and Rolls-Royce's financial condition. If any of these financial institutions involved with these arrangements experiences financial difficulties, becomes unwilling to support Boeing, Airbus, or Rolls-Royce 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, which could have an adverse impact upon our operating results, financial condition, and cash flows. For the six months ended June 29, 2023, $1,698.6 million of accounts receivable were sold via these arrangements.

Cash Flows

The following table provides a summary of our cash flows for the six months ended June 29, 2023 and June 30, 2022:


	For the Six Months Ended
	June 29, 2023		June 30, 2022
	($ in millions)



Net cash used in operating activities	$	(229.0)	$	(331.7)
Net cash used in investing activities	(51.3)		(47.4)
Net cash provided by (used in) financing activities	145.1		(321.8)
Effect of exchange rate change on cash and cash equivalents	4.8		(7.6)
Net decrease in cash, cash equivalents and restricted cash for the period	(130.4)		(708.5)
Cash, cash equivalents, and restricted cash beginning of period	678.4		1,498.4
Cash, cash equivalents, and restricted cash, end of period	$	548.0	$	789.9

Six Months Ended June 29, 2023 as Compared to Six Months Ended June 30, 2022

Operating Activities. For the six months ended June 29, 2023, we had a net cash outflow of $229.0 million from operating activities, a decrease in net outflow of $102.7 million compared to a net cash outflow of $331.7 million for the same period in the prior year. The decrease in net cash outflow, period over period, primarily represents the excess pension plan asset reversion to cash discussed in Note 16 Pension and Other Post-Retirement Benefits as well as the receipt of $50 million of advances from customers in the current year.

Investing Activities. For the six months ended June 29, 2023, we had a net cash outflow of $51.3 million for investing activities, an increase in outflow of $3.9 million compared to a net cash outflow of $47.4 million for the same period in the prior year. The cash outflows for investing activities in both periods was driven by capital expenditures.

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Financing Activities. For the six months ended June 29, 2023, we had a net cash inflow of $145.1 million for financing activities, an increase in inflow of $466.9 million, compared to a net cash outflow of $321.8 million for the same period in the prior year. The increased cash inflow was primarily driven by the receipt of $180.0 million of advances from Boeing in the current year and the prior year $289.5 million principal repayment of the repayable investment agreement between the Company and the U.K.'s Department for Business, Energy, and Industrial Strategy. During the six months ended June 29, 2023, we did not pay any dividends, compared to a dividend of $2.2 million paid in the same period in the prior year. There were no repurchases of Common Stock under our share repurchase program during either the six months ended June 29, 2023 or June 30, 2022.

Pension and Other Post-Retirement Benefit Obligations

Effective October 1, 2021, we spun off a portion of the existing Pension Value Plan ("PVP A"), to a new plan called PVP B ("PVP B"). As part of the PVP B plan termination process, a lump sum offering was provided during 2021 for PVP B participants and the final asset distribution was completed in the first quarter of 2022. At June 29, 2023 and December 31, 2022, an excess pension plan asset reversion of $60.9 million and $71.1 million is recorded on the Restricted plan assets line item on the Company’s Condensed Consolidated Balance Sheets. Restricted plan assets are expected to be reduced over seven years as they are distributed to employees under a qualified benefit program.

Separately, during the six months ended June 29, 2023, we received an excess plan asset reversion of $179.5 million of cash from PVP A. This transaction was accounted for as a negative contribution and is included on the Pension plans employer contributions line item on the Consolidated Statements of Cash Flows for the six months ended June 29, 2023. Excise tax of $35.9 million related to the reversion of excess plan assets was separately recorded to the Other income (expense), net line item on the Consolidated Statements of Operations for the six months ended June 29, 2023. See also Note 21 Other Income (Expense), Net to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

As disclosed in the Company's 2022 Form 10-K, in July 2022 the Company adopted and communicated to participants a plan to terminate PVP A. In the first quarter of 2023, the Company recognized additional non-cash, pre-tax non-operating settlement accounting charges of $64.6 million related to the purchase of annuities for any participants not electing a lump-sum distribution.

Our U.S. pension plan remained fully funded at June 29, 2023. 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 to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information on the Company’s pension plans. Other than the reversion of excess plan assets noted above, which was accounted for as a negative contribution, the Company's expected contributions for the current year have not significantly changed from those described in the Company's 2022 Form 10-K. The Shorts’ Pension has been in a deficit position during recent years, and there is a risk that additional contributions will be required from the trustees or the U.K. Pension Regulator as described under Part I, Item 1A. "Risk Factors" of our 2022 Form 10-K.

Derivatives Accounted for as Hedges

Cash Flow Hedges – Foreign Currency Forward Contract

The Company has entered into a series of currency forward contracts, each designated as a cash flow hedge upon the date of execution, for the purpose of reducing the variability of cash flows and hedging against the foreign currency exposure for forecasted payroll, pension and vendor disbursements that are expected to be made in the British pound sterling at our operations located in Belfast, Northern Ireland. The hedging program implemented is intended to reduce foreign currency exposure, and the associated forward currency contracts hedge forecasted transactions through March 2024. Changes in the fair value of cash flow hedges are recorded in AOCI and recorded in earnings in the period in which the hedged transaction settles. The gain recognized in AOCI was $4.1 million for the six months ended June 29, 2023. Within the next 12 months, the Company expects to recognize a gain of $3.8 million in earnings related to the foreign currency forward contracts. As of June 29, 2023, the maximum term of the hedged forecasted transaction was 9 months.

See Note 14 Derivative and Hedging Activities to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

Debt and Other Financing Arrangements

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As of June 29, 2023, the outstanding balance of the senior secured Term Loan B Credit Agreement was $591.0 million and the carrying value was $572.8 million.

As of June 29, 2023, the outstanding balance of the 2023 Notes and the 2028 Notes was $0.0 million and $700.0 million, respectively, and the carrying value was $0.0 million and $696.2 million, respectively.

As of June 29, 2023, the outstanding balance of the Second Lien 2025 Notes, First Lien 2025 Notes, and 2026 Notes was $1,200.0 million, $20.8 million, and $300.0 million, respectively, and the carrying value was $1,192.9 million, $20.8 million, and $298.9 million.

As of June 29, 2023, the outstanding balance of the First Lien 2029 Notes was $900.0 million and the carrying value was $887.7 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 AeroSystems North Carolina, Inc., a wholly-owned subsidiary of the Company (“Spirit NC”) and the Company, and Spirit’s 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 June 29, 2023, indebtedness of our non-guarantor subsidiaries included $295.2 million of outstanding borrowings under intercompany agreements with guarantor subsidiaries and $17.4 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, the Company, and Spirit NC (together, the “obligor group”). Investments in and equity in the earnings of the Company's 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 the Company, 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 interests in any of the obligor group entities.

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Summarized Statements of Income	Six months ended June 29, 2023
($ millions)	Holdings and Spirit		Spirit NC
Net Sales to unrelated parties	$	2,187.9	$	—
Net Sales to Non-Guarantor Subsidiaries	10.9		15.8
Gross profit on sales to unrelated parties	61.4		—
Gross (loss) profit on sales to Non-Guarantor Subsidiaries	(5.9)		1.2
Loss from continuing operations	(330.9)		(2.5)
Net loss	$	(330.9)	$	(2.5)


Summarized Balance Sheets	Holdings and Spirit				Spirit NC
($ millions)	June 29, 2023		December 31, 2022		June 29, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	366.3	$	487.7	$	—	$	—
Receivables due from Non-Guarantor Subsidiaries	96.3		85.9		18.4		15.7
Receivables due from unrelated parties	248.7		242.7		—		0.6
Contract assets	529.9		449.8		—		—
Inventory, net	899.3		869.1		122.1		103.7
Other current assets	38.9		6.2		—		—
Total current assets	$	2,179.4	$	2,141.4	$	140.5	$	120.0
Loan receivable from Non-Guarantor Subsidiaries	295.2		355.2		—		—
Property, plant and equipment, net	1,445.4		1,503.1		191.1		205.2
Pension assets, net	65.8		249.2		—		—
Other non-current assets	292.8		314.7		5.2		5.2
Total non-current assets	$	2,099.2	$	2,422.2	$	196.3	$	210.4
Liabilities
Accounts payable to Non-Guarantor Subsidiaries	$	115.7	$	134.7	$	4.8	$	6.6
Accounts payable to unrelated parties	678.7		681.0		30.5		26.4
Accrued expenses	302.1		282.3		2.5		1.5
Current portion of long-term debt	46.9		67.6		1.1		1.1
Other current liabilities	549.9		328.7		0.6		0.5
Total current liabilities	$	1,693.3	$	1,494.3	$	39.5	$	36.1
Long-term debt	3,801.7		3,778.5		3.8		4.4
Contract liabilities, long-term	216.7		245.3		—		—
Forward loss provision, long-term	165.6		215.4		—		—
Other non-current liabilities	461.7		478.0		4.6		4.7
Total non-current liabilities	$	4,645.7	$	4,717.2	$	8.4	$	9.1

Supply Chain Financing Applicable to Suppliers

We have provided certain suppliers with access to a supply chain financing program through a facility with a third-party financing institution. Our suppliers’ ability to access the program is primarily dependent upon the strength of our financial condition and certain qualifying criteria. This program was primarily entered into as a result of 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. While our suppliers’ access to this supply chain financing program could be curtailed if our credit ratings are downgraded due to a potential reduction in the capacity of the facility, we do not expect that changes in the availability of supply chain financing to our suppliers will have a significant impact on our liquidity.

The balance of confirmed obligations to suppliers who elected to participate in the supply chain financing program included in our accounts payable balance as of June 29, 2023 and June 30, 2022 was $110.4 million and $95.7 million, respectively. Confirmed obligations to suppliers who elected to participate in the supply chain financing program increased by $8.4 million and $36.8 million during the six-month periods ended June 29, 2023 and June 30, 2022, respectively. The changes in each period primarily reflect purchases from suppliers related to production levels during the applicable period.

See Note 25 Supplier Financing to our condensed consolidated financial statements included in Part I of this Quarterly Report for more information.

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Advance Payments

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 June 29, 2023, the amount of advance payments received by us from Boeing under the B787 Supply Agreement and not yet repaid was approximately $198.1 million.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

You should read the 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. The section may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 the 2022 Form 10-K. 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:

•the continued fragility of the global aerospace supply chain including our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components, including increases in energy, freight, and other raw material costs as a result of inflation or continued global inflationary pressures;

•our ability and our suppliers’ ability, or willingness, to meet stringent delivery (including quality and timeliness) standards and accommodate changes in the build rates or model mix of aircraft under existing contractual commitments, including the ability or willingness to staff appropriately or expend capital for current production volumes and anticipated production volume increases;

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

•our ability, and our suppliers' ability, to attract and retain the skilled work force necessary for production and development in an extremely competitive market;

•the effect of economic conditions, including increases in interest rates and inflation, on the demand for our and our customers’ products and services, on the industries and markets in which we operate in the U.S. and globally, and on the global aerospace supply chain;

•the general effect of geopolitical conditions, including Russia’s invasion of Ukraine and the resultant sanctions being imposed in response to the conflict, including any trade and transport restrictions;

•our relationships with the unions representing many of our employees, including our ability to successfully negotiate new agreements, and avoid labor disputes and work stoppages with respect to our union employees;

•the impact of significant health events, such as pandemics, contagions, or other public health emergencies (including the COVID-19 pandemic) or fear of such events, on the demand for our and our customers’ products and services, the industries, and the 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 The Boeing Company (“Boeing”) and Airbus Group SE and its affiliates (collectively, “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 on short notice, and the potential impact of regulatory approvals of existing and derivative models;

•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;

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•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;

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

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

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

•any reduction in our credit ratings;

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

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

•legislative or regulatory actions, both domestic and foreign, impacting our operations, including the effect of changes in tax laws and rates and our ability to accurately calculate and estimate the effect of such changes;

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

•pension plan assumptions and future contributions;

•the effectiveness of our internal control over financial reporting;

•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;

•adequacy of our insurance coverage;

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

•our ability to effectively integrate recent acquisitions, along with other acquisitions 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;

•the risks of doing business internationally, including fluctuations in foreign currency exchange rates, impositions of tariffs or embargoes, 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 the 2022 Form 10-K for a more complete discussion of these and other factors that may affect our business.

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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 2022 Form 10-K which could materially affect our business, financial condition, or results of operations. 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 2022 Form 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 June 29, 2023 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

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 29, 2023 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 2022 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

“Item 1A. Risk Factors” of our 2022 Form 10-K includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. There have been no material changes from the risk factors described in our 2022 Form 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 of our Common Stock that is registered pursuant to Section 12 of the Exchange Act during the three months ended June 29, 2023.

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)

March 31, 2023 - May 4, 2023	19,644	$34.30	—	$925.0
May 5, 2023 - June 1, 2023	16,392	$25.29	—	$925.0
June 2, 2023 - June 29, 2023	596	$30.09	—	$925.0
Total	36,632	$30.59	—	$925.0

(1) 36,632 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 Company's Board-approved share repurchase program is $925.0 million. Share repurchases are currently on hold. The Credit Agreement imposes additional restrictions on the Company’s ability to repurchase shares.

Item 3. Defaults Upon Senior Securities Item 4.

None

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Mine Safety Disclosures

Not applicable

Item 5. Other Information

Certain of our officers or directors have made elections to participate in, and are participating in, our dividend reinvestment plan, employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5–1 trading arrangements (as defined in Item 408(c) of Regulation S-K.

During the quarter ended June 29, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

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Item 6. Exhibits

Exhibit
Number

Exhibit

Incorporated by Reference to the Following Documents

10.1 †

Amended and Restated 2014 Omnibus Incentive Plan

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.

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.

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).

Filed herewith.

Furnished herewith.

†

Indicates management contract or compensation plan or arrangement

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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

August 2, 2023

Mark J. Suchinski

Officer (Principal Financial Officer)

Signature

Title

Date

/s/ Damon Ward

Vice President, Corporate Controller

August 2, 2023

Damon Ward

(Principal Accounting Officer)

EX-10.1 2 spr_20230629-ex101.htm EX-10.1 Document

Spirit AeroSystems Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan

Article 1—Establishment, Purpose, and Duration

1.1Establishment. Spirit AeroSystems Holdings, Inc. (the “Company”) hereby amends and restates the Spirit AeroSystems Holdings, Inc. 2014 Omnibus Incentive Plan, as amended as of January 25, 2017 and October 23, 2019 (together, the “Prior Plan”), which is hereinafter to be known as the “Spirit AeroSystems Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan” (the “Plan”). The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Cash-Based Awards, and Other Stock-Based Awards, any of which may be designated as Performance Compensation Awards. The Plan will become effective upon stockholder approval (the “Effective Date”) for awards granted on or after the Effective Date. For the avoidance of doubt, Awards granted prior to the Effective Date pursuant to the Prior Plan will remain outstanding in accordance with their terms pursuant to the Prior Plan. The Plan will remain in effect as provided in Section 1.3 hereof.

1.2Purpose. The purpose of the Plan is to provide a means through which the Company and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants, and advisors of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s stockholders.

1.3Duration. Unless sooner terminated as provided herein, the Plan will terminate ten (10) years from the Effective Date. After the Plan is terminated, no new Awards may be granted but Awards previously granted will remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

Article 2—Definitions

When used in the Plan, the following terms will have the following meanings, unless the context clearly indicates otherwise:

2.1“Affiliate” means, with respect to any Person, (a) any director or executive officer of such Person; (b) any spouse, parent, sibling, descendant, or trust for the exclusive benefit of such Person or his or her spouse, parent, sibling, or descendant (or the spouse, parent, sibling or descendant of any director or executive officer of such Person); and (c) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, status as a general partner, or by contract or otherwise.

2.2“Annual Award Limit” or “Annual Award Limits” have the meaning given such terms in Section 4.4 of the Plan.

2.3“Award” means, individually or collectively, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, a Cash-Based Award, an Other Stock-Based Awards, or a Performance Compensation Award, in each case subject to the terms of the Plan.

2.4“Award Agreement” means any of the following: (a) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under the Plan, including any amendment or modification thereof; (b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof; or (c) a resolution or sub-plan adopted by the Board or Committee setting forth the terms and provisions applicable to an Award or class of Awards that have been or may be granted to a Participant or class of Participants under the Plan, including, but not limited to, a resolution or sub-plan that authorizes the making of future Awards under the Plan to a Participant or class of Participants upon terms and conditions set forth in the resolution or sub-plan and in any case including any amendment or modification of such resolution or sub-plan.

2.5“Beneficial Owner” or “Beneficial Ownership” will have the meaning ascribed to such terms in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.6“Board” or “Board of Directors” means the board of directors of the Company.

2.7“Cash-Based Award” means an Award denominated in cash but payable in cash or Shares or both, as described in Article 9.

2.8“Cause” means, unless an Award Agreement states otherwise, a good faith determination of the Committee or its designee that (A) the Company or an Affiliate has “cause” to bring about a Termination of a Participant’s employment or service, as defined in any employment or consulting agreement between the Participant and the Company or an Affiliate in effect at the time of such Termination, or (B) any of the following has occurred with respect to a Participant: (i) gross negligence or willful misconduct in the exercise of a Participant’s responsibilities; (ii) breach of fiduciary duty with respect to the Company or an Affiliate; (iii) material breach of any provision of an employment contract or consulting agreement; (iv) the commission of a felony crime or crime involving moral turpitude; (v) theft, fraud, misappropriation, or embezzlement (or reasonable suspicion of the same); (vi) willful violation of any federal, state, or local law (except traffic violations and other similar matters not involving moral turpitude); or (vii) refusal to obey any resolution or direction of the Participant’s supervisor or the Board.

2.9“Change in Control” means (i) a transaction pursuant to which a Person, or more than one Person acting as a group, acquires more than 50% of the total voting power of the stock of the Company (including, but not limited to, acquisition by merger, consolidation, recapitalization, reorganization or sale or transfer of the Company’s equity interests); (ii) a merger or consolidation involving the Company in which the Company is not the surviving entity; or (iii) a transaction that is a sale or transfer of all or substantially all of the assets of the Company or Spirit AeroSystems, Inc., if all or substantially all of the proceeds from such transaction are distributed to the stockholders of the Company.

2.10“Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor thereto. For purposes of the Plan, references to sections of the Code will be deemed to include references to any applicable regulations or other interpretative guidance under such sections and any amendments or successor provisions to such sections, regulations, or guidance.

2.11“Committee” means the Compensation Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer the Plan. If no such committee or subcommittee exists or has been designated by the Board, the Committee will mean the Board. The members of the Committee will be appointed from time to time by and will serve at the discretion of the Board. The Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

2.12“Common Stock” means the common stock of the Company and any stock or other securities into which such Common Stock may be converted or into which it may be exchanged.

2.13“Company” means Spirit AeroSystems Holdings, Inc., a Delaware corporation, and any successor thereto as provided in Article 15.

2.14“Detrimental Activity” means a good faith determination by the Committee or its designee that a Participant has engaged in any of the following: (i) the breach of any covenants relating to disclosure of confidential or proprietary information, noncompetition, nonsolicitation, non-disparagement, or other similar restrictions on conduct contained in any agreement between a Participant and the Company or its Affiliates (including any Award Agreement) or any written policies of the Company or its Affiliates; or (ii) any activity, including fraud or other conduct contributing to financial restatement or accounting irregularities, that the Committee determines in good faith is appropriate to include in any incentive compensation clawback policy adopted by the Committee and as in effect from time to time.

2.15“Designated Foreign Subsidiaries” means all Affiliates organized under the laws of any jurisdiction or country other than the United States that may be designated by the Board or the Committee from time to time.

2.16“Director” means any individual who is a member of the Board of Directors.

2.17“Disability” means, unless in the case of a particular Award the applicable Award Agreement states otherwise, the Company or an Affiliate having cause to terminate a Participant’s employment or service on account of “disability” as defined in any then-existing employment, consulting, or other similar agreement between the Participant and the Company or an Affiliate or, in the absence of such an employment, consulting, or other similar agreement, a condition entitling the Participant to receive benefits under a long-term disability plan of the Company or an Affiliate, or, in the absence of such a plan, a Participant’s inability to engage in any substantial gainful activity because of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of twelve (12) months or longer. Any determination of whether Disability exists will be made by the Committee in its sole discretion.

2.18“Dividend Equivalents” means a credit, made at the discretion of the Committee, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.

2.19“Effective Date” has the meaning given to such term in Section 1.1 of the Plan.

2.20“Eligible Person” means (i) any Employee of the Company or an Affiliate; (ii) any director or officer of the Company or an Affiliate; (iii) a consultant or advisor to the Company or an Affiliate who may be offered securities registrable pursuant to a registration statement on Form S-8 under the Securities Act; or (iv) any prospective Employees, directors, officers, consultants, or advisors who have accepted offers of employment, consultancy, or service from the Company or its Affiliates (and would satisfy the provisions of clauses (i) through (iii) above once he or she begins employment with or providing services to the Company or its Affiliate). Solely for purposes of this definition of “Eligible Person,” an “Affiliate” will be limited to (1) a Subsidiary, (2) a Parent, (3) any corporation, trade, or business 50% or more of the combined voting power of such entity’s outstanding securities is directly or indirectly controlled by the Company or any Subsidiary or Parent, (4) any corporation, trade, or business that directly or indirectly controls 50% or more of the combined voting power of the outstanding securities of the Company, and (5) any other entity in which the Company or any Subsidiary or Parent has a material equity interest and which is designated as an “Affiliate” by the Committee.

2.21“Employee” means any individual performing services for the Company or an Affiliate and designated as an employee of the Company or Affiliate on the payroll records thereof. An individual will not cease to be an Employee in the case of: (a) any approved leave of absence, or (b) transfers between locations of the Company or between the Company and any Affiliate. Neither service as a Director nor payment of a Director’s fee by the Company will be sufficient to constitute “employment” by the Company.

2.22“Employment” or “employment” means, without any inference for federal and other tax purposes, service as a part- or full-time officer, employee, consultant, advisor, or Board member of or to the Company or any of its Affiliates.

2.23“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.24“Excise Tax” has the meaning given such term in Section 15.22 of the Plan.

2.25“Exercise Price” has the meaning given such term in Section 6.2 of the Plan.

2.26“Extraordinary Items” means (a) extraordinary, unusual, and/or nonrecurring items of gain or loss; (b) gains or losses on the disposition of a business; (c) changes in tax or accounting regulations or laws; or (d) the effect of a merger or acquisition.

2.27“Fair Market Value” or “FMV” means:

(a)If the Shares are listed or admitted to trading on a securities exchange registered under the Exchange Act, the “Fair Market Value” of a Share as of a specified date will mean the per Share closing price of the Shares for the date as of which Fair Market Value is being determined (or, if there was no reported closing price on such date, on the last preceding date on which the closing price was reported) on the principal securities exchange on which the Shares are listed or admitted to trading.

(b)If the Shares are not listed or admitted to trading on any such exchange but are listed as a national market security on NASDAQ, traded in the over-the-counter market or listed or traded on any similar system then in use, the Fair Market Value of a Share will be the last sales price for the date as of which the Fair Market Value is being determined (or if there was no reported sale on such date, on the last preceding date on which any reported sale occurred) reported on such system. If the Shares are not listed or admitted to trading on any such exchange, are not listed as a national market security on NASDAQ and are not traded in the over-the-counter market or listed or traded on any similar system then in use, but are quoted on NASDAQ or any similar system then in use, the Fair Market Value of a Share will be the average of the closing high bid and low asked quotations on such system for the Shares on the date in question.

(c)In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the price of a Share as determined by the Committee in its sole discretion by application of a reasonable valuation method. The Committee may, in its sole discretion, seek the advice of outside experts in connection with any such determination.

2.28“Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.

2.29“Grant Price” means the price established at the time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

2.30“Immediate Family Members” has the meaning set forth in Section 12.2 of the Plan.

2.31“Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option that is intended to meet the requirements of Code Section 422 or any successor provision.

2.32“Indemnifiable Person” has the meaning set forth in Section 3.5 of the Plan.

2.33“Insider” will mean an individual who is, on the relevant date, an officer or Director of the Company, or a Beneficial Owner of more than 10% of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.34“NASDAQ” means the NASDAQ Stock Market, Inc.

2.35“Nonemployee Director” means a Director who is a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3)(i) of the Exchange Act.

2.36“Nonemployee Director Award” means any Award granted to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as the Board or Committee may establish in accordance with the Plan.

2.37“Nonqualified Stock Option” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

2.38“NYSE” means the New York Stock Exchange.

2.39“Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

2.40“Option Period” has the meaning given such term in Section 6.3(a) of the Plan.

2.41“Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.42“Other Stock-Based Award” means an equity-based or equity-related Award granted pursuant to Article 9.

2.43“Parent” means any parent corporation of the Company within the meaning of Code Section 424(e).

2.44“Participant” means any Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to the Plan.

2.45“Performance Compensation Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Article 10 of the Plan.

2.46“Performance Formula” means, for a Performance Period, the one or more objective formulae applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

2.47“Performance Goals” will mean, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Measures.

2.48“Performance Measures” mean measures as described in Article 10 on which the performance goals are based and which are approved by the Company’s stockholders pursuant to the Plan.

2.49“Performance Period” means the one or more periods of time of not less than twelve (12) months, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Compensation Award.

2.50“Permitted Transferee” has the meaning set forth in Section 12.2 of the Plan.

2.51“Person” means any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

2.52“Plan” means this Spirit AeroSystems Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan.

2.53“Plan Year” means the twelve (12)-month period beginning January 1 and ending December 31 each year.

2.54“Restricted Period” means the period of time determined by the Committee during which an Award is subject to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.

2.55“Restricted Stock” means an Award granted to a Participant pursuant to Article 8.

2.56“Restricted Stock Unit” or “RSU” means an unfunded and unsecured promise to deliver Shares, cash, other securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Article 8 of the Plan.

2.57“SAR Period” has the meaning given such term in Section 7.3(a) of the Plan.

2.58“SEC” means the United States Securities and Exchange Commission.

2.59“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Securities Act will be deemed to include any rules, regulations, or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations, or guidance.

2.60“Service Recipient” means, with respect to a Participant holding a given Award, either the Company or an Affiliate of the Company by which the original recipient of such Award is, or following a Termination was most recently, principally employed or to which such original recipient provides, or following a Termination was most recently providing, services, as applicable.

2.61“Share” means a share of Class A Common Stock of the Company.

2.62“Special Qualifying Director” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and (ii) an “independent director” under the rules of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, or a person meeting any similar requirement under any successor rule or regulation.

2.63“Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7.

2.64“Strike Price” has the meaning given such term in Section 7.2 of the Plan.

2.65“Subsidiary” means, with respect to a Person, including, but not limited to, the Company, (i) any corporation, association, or other business entity, whether domestic or foreign, of which more than 50% of the total voting power of shares of such entity’s voting securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership (or any comparable foreign entity) (A) the sole general partner (or functional equivalent thereof) or the managing general partner of which is such Person or a Subsidiary of such Person, or (B) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

2.66“Substitute Awards” has the meaning given such term in Section 4.3 of the Plan.

2.67“Sub Plans” means any sub-plan to the Plan that has been adopted by the Board or the Committee for the purpose of permitting the offering of Awards to employees of certain Designated Foreign Subsidiaries or otherwise outside of the United States, with each such sub-plan designed to comply with local laws applicable to offerings in such foreign jurisdictions. Although any Sub Plan may be designated a separate and independent plan from the Plan in order to comply with applicable local laws, the maximum number of Shares available under the Plan will apply in the aggregate to the Plan and any Sub Plan adopted hereunder.

2.68“Termination” means the termination of a Participant’s employment or service, as applicable, with the Service Recipient for any reason, including, but not limited to, due to death or Disability.

2.69“Total Payments” has the meaning given such term in Section 15.22 of the Plan.

Article 3—Administration

3.1Administration by the Committee. The Committee will be responsible for administering the Plan. With respect to an Award that is intended to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the full Board is not acting as the Committee under the Plan), each member of the Committee will, at the time he or she takes any action with respect to such Award, be a Special Qualifying Director. However, the fact that a Committee member fails to qualify as a Special Qualifying Director will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.

3.2Authority of the Committee. Subject to any express limitations set forth in the Plan and applicable law, the Committee will have full and exclusive discretionary power and authority to take such actions as it deems necessary and advisable with respect to the administration of the Plan including, but not limited to, the following:

(a)To designate Participants or otherwise determine from time to time which Eligible Persons will be granted Awards, when and how each Award will be granted, what type or combination of types of Awards will be granted, the provisions of each Award granted (which need not be identical), including the time or times when a person will be permitted to receive Shares pursuant to an Award and the number of Shares subject to an Award.

(b)To construe and interpret the Plan and Awards granted under it. The Committee, in the exercise of this power, may interpret, administer, or reconcile any inconsistency in, correct any defect in, or supply any omission from the Plan and any instrument or agreement relating to, or Award granted under, the Plan in a manner and to the extent the Committee deems necessary or appropriate.

(c)To establish, amend, suspend, or waive any rules or regulations and appoint such agents as the Committee deems necessary or appropriate for the proper administration of the Plan.

(d)To approve forms of Award Agreements for use under the Plan.

(e)To determine Fair Market Value of a Share.

(f)To amend the Plan or any Award Agreement, as provided in the Plan.

(g)To adopt Sub Plans applicable to stock awards regulated by the laws of a jurisdiction other than and outside of the United States. Such Sub Plans may take precedence over other provisions of the Plan, but unless otherwise superseded by the terms of such Sub Plans, the provisions of the Plan will govern.

(h)To authorize any person to execute on behalf of the Company any instrument required to effect the grant of a stock award previously granted by the Committee or the Board.

(i)To determine whether Awards will be settled in cash, Shares, other securities, other Awards, other property, or any combination thereof, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended.

(j)To determine whether Awards will be adjusted for Dividend Equivalents, except that Options and SARs may not be adjusted for Dividend Equivalents.

(k)To determine whether, to what extent, and under what circumstances the delivery of cash, Common Stock, other securities, other Awards, other property, or other amounts payable with respect to an Award may or must be deferred, either automatically or at the election of the Participant or of the Committee.

(l)To authorize a program permitting eligible Participants to surrender outstanding Awards in exchange for newly granted Awards.

(m)To impose such restrictions, conditions, or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares, including, without limitation: (i) restrictions under an insider trading policy, and (ii) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

(n)To provide, either at the time an Award is granted or by subsequent action, that an Award will contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash, or a combination thereof, the amount of which is determined by reference to the value of Shares.

(o)To make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

3.3Delegation by the Committee. Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any Person or Persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of the Company or any Affiliate or Subsidiary the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Committee herein, and which may be so delegated as a matter of law, except for grants of Awards to persons (i) who are members of the Board or (ii) who are subject to Section 16 of the Exchange Act.

3.4Decisions and Actions are Final. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions and actions under or with respect to the Plan or any Award or any documents evidencing Awards granted pursuant to the Plan will be within the sole discretion of the Committee, may be made at any time, and will be final, conclusive, and binding on all Persons or entities, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company.

3.5Indemnification. No member of the Board or the Committee or any Employee or agent of the Company or any Affiliate or Subsidiary (each such person an “Indemnifiable Person”) will be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission). Each Indemnifiable Person will be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit, or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made under the Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit, or proceeding against such Indemnifiable Person, and the Company will advance to such Indemnifiable Person any such expenses promptly upon written request, which request must include an undertaking by the Indemnifiable Person to repay the amount of such advance if it is ultimately determined, as provided below, that the Indemnifiable Person is not entitled to be indemnified. The Company will have the right, at its own expense, to assume and defend any such action, suit, or proceeding, and once the Company gives notice of its intent to assume the defense, the Company will have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification will not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. The foregoing right of indemnification will not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, individual indemnification agreement or contract, or otherwise or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.

3.6Action by the Board. Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. In any such case, the Board will have and may exercise all the authority granted to the Committee under the Plan. However, any such actions by the Board will be subject to the applicable rules of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted.

Article 4—Shares Subject to the Plan

4.1Number of Shares Authorized and Available for Awards. The number of Shares authorized and available for Awards under the Plan will be determined in accordance with the following provisions:

(a)Subject to Section 4.5 of the Plan, the maximum number of Shares available for issuance under the Plan will be 5,000,000 Shares.

(b)Subject to Section 4.5 of the Plan, the maximum number of Shares that may be issued pursuant to ISOs under the Plan will be 5,000,000 Shares.

4.2Share Usage. Shares covered by an Award will be counted as used, with limited exceptions. Other than with respect to Substitute Awards, undelivered Shares covered by an Award will again be available for grant only under, and to the extent of, the following circumstances: (i) an Award is cancelled; (ii) an Award expires or remains unexercised after the latest date on which exercise may occur; (iii) an Award is forfeited; (iv) an Award is terminated; or (v) an Award is not settled (e.g., because Performance Goals are not achieved or the Award otherwise fails to be earned). The following Shares will count against the maximum number of Shares available for issuance under the Plan, notwithstanding that the Shares may not be issued or delivered to a Participant: (a) Shares not issued or delivered as a result of the net settlement of an Option or SAR; (b) Shares used to pay the exercise price of an Option or SAR; (c) Shares withheld in satisfaction of a tax withholding obligation related to an Award; and (d) Shares purchased with the proceeds of an Option exercise price. Shares delivered by the Company in settlement of Awards may be authorized and unissued Shares, Shares held in the treasury of the Company, Shares purchased on the open market or by private purchase, or any combination of the foregoing.

4.3Substitute Awards. Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards will not count against the maximum number of Shares available for issuance under the Plan, except that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as “incentive stock options” within the meaning of Code Section 422 will count against the aggregate number of Shares available for Awards of Incentive Stock Options under the Plan. Subject to applicable stock exchange requirements, available shares under a stockholder approved plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect the acquisition or combination transaction) may be used for Awards under the Plan and will not reduce the number of Shares available for delivery under the Plan.

4.4Annual Award Limits. The following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”), as adjusted pursuant to Sections 4.5 of the Plan, will apply to grants of such Awards under the Plan:

(a)Options and SARs. The maximum aggregate number of Shares subject to Options and SARs granted to any one Participant in any one Plan Year will be 1,500,000.

(b)Restricted Stock and Restricted Stock Units. The maximum aggregate number of Shares subject to Restricted Stock and Restricted Stock Units granted to any one Participant in any one Plan Year will be 750,000.

(c)Cash-Based Awards. The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed $20,000,000, determined as of the Grant Date.

(d)Other Stock-Based Awards. The maximum aggregate amount awarded or credited with respect to Other Stock-Based Awards to any one Participant in any one Plan Year may not exceed 750,000 Shares, determined as of the Grant Date.

(e)Nonemployee Director Awards. Notwithstanding the foregoing, with respect to Nonemployee Director Awards, the following Annual Award Limits will apply: (i) the maximum aggregate number of Shares subject to Options and SARs granted to any one Nonemployee Director in any one Plan Year will be 80,000; (ii) the maximum aggregate number of Shares subject to Restricted Stock and Restricted Stock Units granted to any one Nonemployee Director in any on Plan Year will be 40,000; (iii) the maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Nonemployee Director in any one Plan Year will not exceed $500,000, determined as of the Grant Date; and (iv) the maximum aggregate amount awarded or credited with respect to Other Stock-Based Awards to any one Nonemployee Director in any one Plan Year will not exceed 40,000 Shares, determined as of the Grant Date.

4.5Changes in Capital Structure and Similar Events. In the event of (i) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of Common Stock or other securities of the Company, issuance of warrants or other rights to acquire shares of Common Stock or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the shares of Common Stock, or (ii) unusual or nonrecurring events (including, without limitation, a Change in Control) affecting the Company or any Affiliate or changes in applicable rules, rulings, regulations, or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles, or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate (e.g., in order to prevent dilution or enlargement of Participants’ rights under the Plan), then the Committee will make any such adjustments in such manner as it may deem equitable, including without limitation, any or all of the following:

(a)Adjusting any or all of (1) the maximum number of shares available for issuance under the Plan, or any other limit applicable under the Plan with respect to the number of Awards which may be granted hereunder, (2) the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including, without limitation, adjusting any or all of the limitations under this Article 4), and (3) the terms of any outstanding Award, including, without limitation, (A) the number of Shares or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (B) the Exercise Price or Strike Price with respect to any Award, or (C) any applicable performance measures (including, without limitation, Performance Measures and Performance Goals).

(b)Providing for a substitution or assumption of Awards (or awards of an acquiring company), accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time (which will not be required to be more than ten (10) days) for Participants to exercise outstanding Awards prior to the occurrence of such event (and any such Award not so exercised will terminate upon the occurrence of such event).

(c)Cancelling any one or more outstanding Awards and causing to be paid to the holders holding vested Awards (including any Awards that would vest as a result of the occurrence of such event but for such cancellation) the value of such Awards, if any, as determined by the Committee (which if applicable may be based upon the price per share of Common Stock received or to be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the shares of Common Stock subject to such Option or SAR over the aggregate Exercise Price or Strike Price of such Option or SAR, respectively (it being understood that, in such event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess of, the Fair Market Value of a share of Common Stock subject thereto may be canceled and terminated without any payment or consideration therefor).

Any adjustment in ISOs under this Section 4.5 (other than any cancellation of ISOs) will be made only to the extent not constituting a “modification” within the meaning of Code Section 424(h)(3). Further, any adjustments under this Section 4.5 will be made in a manner that does not (i) adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act, or (ii) result in a prohibited acceleration or otherwise cause adverse tax consequences under Code Section 409A. Any such adjustment will be conclusive and binding for all purposes.

Payments to holders pursuant to clause (c) above will be made in cash or, in the sole discretion of the Committee, in the form of such other consideration necessary for a Participant to receive property, cash, or securities (or combination thereof) as such Participant would have been entitled to receive upon the occurrence of the transaction if the Participant had been, immediately prior to such transaction, the holder of the number of Shares covered by the Award at such time (less any applicable Exercise Price or Strike Price).

Prior to any payment or adjustment contemplated under this Section 4.5, the Committee may require a Participant to (i) represent and warrant as to the unencumbered title to the Participant’s Awards, (ii) bear such Participant’s pro rata share of any post-closing indemnity obligations and be subject to the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and similar conditions as the other holders of Stock, (iii) deliver customary transfer documentation as reasonably determined by the Committee, and (iv) satisfy any applicable tax withholding obligations.

By accepting an Award under the Plan, a Participant agrees to any adjustment to the Award made pursuant to this Section 4.5 without further consideration or action.

Article 5—Eligibility and Participation

5.1Eligibility. Individuals eligible to participate in the Plan include all Eligible Persons.

5.2Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all Eligible Persons those individuals to whom Awards will be granted and will determine, in its sole discretion, the nature of any and all terms permissible by law and the amount of each Award.

Article 6—Stock Options

6.1Grants of Options. Each Option granted under the Plan will be evidenced by an Award Agreement. Each Option so granted will be subject to the conditions set forth in this Article 6, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options granted under the Plan will be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an ISO. ISOs will be granted only to Eligible Persons who are employees of the Company and its Affiliates, and no ISO will be granted to any Eligible Person who is ineligible to receive an ISO under the Code. No Option will be treated as an ISO unless the Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Code Section 422(b)(1). Any Option intended to be an ISO will not fail to be effective solely on account of a failure to obtain such approval, but rather such Option will be treated as a Nonqualified Stock Option unless and until such approval is obtained. In the case of an ISO, the terms and conditions of such grant will be subject to and comply with such rules as may be prescribed by Code Section 422. If for any reason an Option intended to be an ISO (or any portion thereof) does not qualify as an ISO, then, to the extent of such non-qualification, such Option or portion thereof will be regarded as a Nonqualified Stock Option appropriately granted under the Plan.

6.2Exercise Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the exercise price (“Exercise Price”) per Share for each Option will not be less than 100% of the Fair Market Value of such Share (determined as of the Grant Date), except that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate, the Exercise Price per Share will be no less than 110% of the Fair Market Value per share on the Grant Date.

6.3Vesting and Expiration.

(a)Options will vest and become exercisable in such manner and on such date or dates or upon such events determined by the Committee and will expire after such period, not to exceed ten (10) years, as may be determined by the Committee (the “Option Period”), except that if the Option Period (other than in the case of an Incentive Stock Option) would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), the Option Period will be automatically extended until the thirtieth (30th) day following the expiration of such prohibition. In no event will the Option Period exceed five (5) years from the Grant Date in the case of an Incentive Stock Option granted to a Participant who on the Grant Date owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate.

(b)Unless otherwise provided by the Committee, in the event of (i) a Participant’s Termination by the Company for Cause, all outstanding Options granted to such Participant will immediately terminate and expire; (ii) a Participant’s Termination due to death or Disability, after taking into account any accelerated vesting under the terms of the Plan or the Award Agreement, each outstanding unvested Option granted to such Participant will immediately terminate and expire, and each outstanding vested Option will remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the Option Period); and (iii) a Participant’s Termination for any other reason, after taking into account any accelerated vesting under the terms of the Plan or the Award Agreement, each outstanding unvested Option granted to such Participant will immediately terminate and expire, and each outstanding vested Option will remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the Option Period).

6.4Method of Exercise and Form of Payment. No Shares will be delivered pursuant to any exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any Federal, state, local, and non-U.S. statutory income and employment taxes required to be withheld. Options which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company (or telephonic instructions to the extent provided by the Committee) in accordance with the terms of the Option accompanied by payment of the Exercise Price. The Exercise Price will be payable (i) in cash, check, cash equivalent, and/or Shares valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of Shares in lieu of actual delivery of such shares to the Company), so long as such Shares are not subject to any pledge or other security interest; (ii) if there is a public market for the Shares at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered (including telephonically to the extent permitted by the Committee) a copy of irrevocable instructions to a stockbroker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price; or (iii) by such other method as the Committee may permit in its sole discretion, including without limitation: (A) in other property having a fair market value on the date of exercise equal to the Exercise Price, or (B) a “net exercise” procedure effected by withholding the minimum number of Shares otherwise deliverable in respect of an Option that are needed to pay the Exercise Price and the amount of required withholding taxes determined in accordance with Section 15.3 of the Plan. Any fractional Shares will be settled in cash.

6.5Compliance with Laws, etc. Notwithstanding the foregoing, in no event will a Participant be permitted to exercise an Option in a manner which the Committee determines would violate the Sarbanes-Oxley Act of 2002, or any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.

6.6Additional Rules for Incentive Stock Options.

(a)An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee for purposes of Treasury Regulation § 1.421-1(h) with respect to the Company or any Affiliate that qualifies as a “parent corporation” with respect to the Company within the meaning of Code Section 424(e) or a “subsidiary corporation” with respect to the Company within the meaning of Code Section 424(f).

(b)To the extent that the aggregate Fair Market Value of: (i) the Shares with respect to which Options designated as Incentive Stock Options, plus (ii) the Shares of common stock of the Company and any parent corporation or subsidiary corporation with respect to which other Incentive Stock Options are exercisable for the first time by a holder of an ISO during any calendar year under all plans of the Company and such parent and subsidiary corporations exceeds $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option or other Incentive Stock Option is granted.

(c)No Incentive Stock Options may be granted more than ten (10) years after the earlier of: (i) adoption of the Plan by the Board, or (ii) the Effective Date.

(d)Each Participant awarded an Incentive Stock Option under the Plan will notify the Company in writing immediately after the date he or she makes a disqualifying disposition of any Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Stock before the later of (A) two (2) years after the Grant Date of the Incentive Stock Option, or (B) one (1) year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any Common Stock acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Common Stock.

(e)No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, except that, at the discretion of the Committee, an ISO may be transferred to a grantor trust under which the Participant making the transfer is the sole beneficiary.

Article 7—Stock Appreciation Rights

7.1Grants of SARs. Each SAR granted under the Plan will be evidenced by an Award Agreement. Each SAR so granted will be subject to the conditions set forth in this Article 7, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Any Option granted under the Plan may include tandem SARs. The Committee also may award SARs to Eligible Persons independent of any Option.

7.2Strike Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the strike price (“Strike Price”) per Share for each SAR will not be less than 100% of the Fair Market Value of such Share (determined as of the Grant Date). Notwithstanding the foregoing, a SAR granted in tandem with (or in substitution for) an Option previously granted will have a Strike Price equal to the Exercise Price of the corresponding Option.

7.3Vesting and Expiration.

(a)A SAR granted in connection with an Option will become exercisable and will expire according to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option will vest and become exercisable and will expire in such manner and on such date or dates or upon such events determined by the Committee and will expire after such period, not to exceed ten (10) years, as may be determined by the Committee (the “SAR Period”). If the SAR Period would expire at a time when trading in the shares of Common Stock is prohibited by the Company’s insider trading policy or a Company-imposed “blackout period,” the SAR Period will be automatically extended until the thirtieth (30th) day following the expiration of such prohibition.

(b)Unless otherwise provided by the Committee, in the event of (i) a Participant’s Termination by the Company for Cause, all outstanding SARs granted to such Participant will immediately terminate and expire; (ii) a Participant’s Termination due to death or Disability, after taking into account any accelerated vesting under the terms of the Plan or the Award Agreement, each outstanding unvested SAR granted to such Participant will immediately terminate and expire, and each outstanding vested SAR will remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the SAR Period); and (iii) a Participant’s Termination for any other reason, after taking into account any accelerated vesting under the terms of the Plan or the Award Agreement, each outstanding unvested SAR granted to such Participant will immediately terminate and expire, and each outstanding vested SAR will remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the SAR Period).

7.4Method of Exercise. SARs which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded.

7.5Payment. Upon the exercise of a SAR, the Company will pay to the Participant an amount equal to the number of shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one share of Common Stock on the exercise date over the Strike Price, less an amount equal to the Federal, state, local, and non-U.S. statutory income and employment taxes withholding liability determined in accordance with Section 15.3 of the Plan. The Company will pay such amount in cash, in Shares valued at Fair Market Value, or any combination thereof, as determined by the Committee. Any fractional Shares will be settled in cash.

7.6Substitution of SARs for Nonqualified Stock Options. The Committee will have the authority in its sole discretion to substitute, without the consent of the affected Participant or any holder or beneficiary of SARs, SARs settled in Shares (or settled in shares or cash in the sole discretion of the Committee) for outstanding Nonqualified Stock Options, provided that (i) the substitution will not otherwise result in a modification of the terms of any such Nonqualified Stock Option, (ii) the number of Shares underlying the substituted SARs will be the same as the number of Shares underlying such Nonqualified Stock Options, and (iii) the Strike Price of the substituted SARs will be equal to the Exercise Price of such Nonqualified Stock Options. If, in the opinion of the Company’s independent public auditors, the foregoing provision creates adverse accounting consequences for the Company, such provision will be considered null and void.

Article 8—Restricted Stock and Restricted Stock Units

8.1Grants of Restricted Stock and RSUs. Each grant of Restricted Stock and Restricted Stock Units will be made pursuant to the terms of an Award Agreement (which Award Agreement need not be the same for each Participant). Each Restricted Stock and Restricted Stock Unit grant will be subject to the conditions set forth in the Plan and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.

8.2Stockholder Rights. Subject to the restrictions set forth in this Article 8 and subject to the express terms of any Award Agreement, a Participant generally will have the rights and privileges of a stockholder as to Restricted Stock, including without limitation the right to vote such Restricted Stock, except that, with respect to dividends, (i) in the case of Restricted Stock that is subject in whole or in part to performance-based vesting conditions, no dividends otherwise payable on such shares of Restricted Stock prior to the satisfaction of such performance-based vesting conditions will be paid or accumulated with respect to such Restricted Stock, and (ii) in the case of all other Restricted Stock, any dividends payable on such shares of Restricted Stock will be held and accumulated by the Company until the restrictions on such Restricted Stock lapse. To the extent dividends are accumulated with respect to shares of Restricted Stock, they will be held by the Company and delivered (without interest) to the Participant within thirty (30) days following the date on which the restrictions on such Restricted Stock lapse, and the right to any such accumulated dividends will be forfeited upon any forfeiture, or termination or other failure to earn the Award, of the Restricted Stock to which such accumulated dividends relate. To the extent shares of Restricted Stock are forfeited, any stock certificates issued to the Participant evidencing such shares will be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect thereto will terminate without further obligation on the part of the Company.

8.3Vesting; Acceleration of Lapse of Restrictions. The Restricted Period with respect to Restricted Stock and Restricted Stock Units will lapse in such manner and on such date or dates or upon such events as are set forth in the Plan or, to the extent not inconsistent therewith, as determined by the Committee, and the Committee will determine the treatment of the unvested portion of Restricted Stock and Restricted Stock Units upon Termination of the Participant granted the applicable Award, which may including accelerating vesting or removing restrictions with respect to Restricted Stock or Restricted Stock Units granted under the Plan, if the Committee determines, in its sole discretion, it is in the best interests of the Company or other Service Recipient to do so.

8.4Delivery of Restricted Stock and Settlement of Restricted Stock Units.

(a)Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in the Plan or the applicable Award Agreement will be of no further force or effect with respect to such shares, except as set forth in the Plan or the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company will deliver to the Participant, or his or her beneficiary, without charge, the stock certificate (or, if applicable, a notice evidencing a book entry notation) evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of Restricted Stock will be distributed to the Participant in cash or, at the sole discretion of the Committee, in Shares having a Fair Market Value (on the date of distribution) equal to the amount of such dividends, upon the release of restrictions on such share and, if such share is forfeited, the Participant will have no right to such dividends.

(b)Unless otherwise provided in the Plan or by the Committee in an Award Agreement, upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company will deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit granted pursuant to the applicable Award Agreement, except that the Committee may, in its sole discretion, elect to (i) pay cash or part cash and part Common Stock in lieu of delivering only Shares in respect of such Restricted Stock Units, or (ii) defer the delivery of Common Stock (or cash or part Common Stock and part cash, as the case may be) beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Code Section 409A. If a cash payment is made in lieu of delivering Shares, the amount of such payment will be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed with respect to such Restricted Stock Units. To the extent provided in the Plan or in an Award Agreement, the holder of outstanding Restricted Stock Units will be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares) either in cash or, at the sole discretion of the Committee, in Shares having a Fair Market Value equal to the amount of such dividends (and interest may, at the sole discretion of the Committee, be credited on the amount of cash Dividend Equivalents at a rate and subject to such terms as determined by the Committee), which accumulated Dividend Equivalents (and interest thereon, if applicable) will be payable at the same time as the underlying Restricted Stock Units are settled following the release of restrictions on such Restricted Stock Units, and, if such Restricted Stock Units are forfeited, the Participant will have no right to such dividend equivalent payments.

8.5Legends on Restricted Stock. The Company may, but will not be required to, issue certificates with respect to Restricted Stock granted under the Plan. Each certificate representing Restricted Stock awarded under the Plan, if any, will bear a legend substantially in the form of the following, in addition to any other information the Company deems appropriate, until the lapse of all restrictions with respect to such Common Stock:

TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF THE SPIRIT AEROSYSTEMS HOLDINGS, INC. 2014 OMNIBUS INCENTIVE PLAN. A COPY OF SUCH PLAN IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SPIRIT AEROSYSTEMS HOLDINGS, INC.

Article 9—Cash-Based Awards and Other Stock-Based Awards

9.1Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine, including, without limitation, designating Cash-Based Awards as Performance Compensation Awards.

9.2Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan in such amounts and subject to such terms and conditions as the Committee will determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares, and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

9.3Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award will specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award will be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may establish Performance Goals in its discretion. If the Committee exercises its discretion to establish Performance Goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Goals are met.

9.4Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award will be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.

9.5Termination of Service. The Committee will determine the extent to which the Participant will have the right to receive Cash-Based Awards or Other Stock-Based Awards following Termination. Such provisions will be determined in the sole discretion of the Committee, and such provisions may be included in an agreement entered into with each Participant, but they need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for Termination. In the absence of a specific provision in the Plan or in a Participant’s Award Agreement, in the event of a Participant’s Termination for any reason, any unvested Cash-Based Awards or Other Stock-Based Awards granted to such Participant under the Plan will be forfeited upon such Termination.

Article 10—Performance Compensation Awards

10.1General. The Committee will have the authority, at or before the time of grant of any Award, to designate such Award as a Performance Compensation Award subject to the achievement of Performance Goal(s). The Committee will also have the authority to make an award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award subject to the achievement of Performance Goal(s).

10.2Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee may select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Measures that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply, and the Performance Formula.

10.3Performance Measures. The Performance Measures that will be used to establish the Performance Goal(s) will be selected by the Committee and may include the following, which may be determined in accordance with Generally Accepted Accounting Principles (GAAP) or on a non-GAAP basis:

(a)Net earnings or net income (before or after taxes);

(b)Basic or diluted earnings per share (before or after taxes);

(c)Net operating profit or income (before or after taxes);

(d)Gross profit or gross profit growth;

(e)Return measures (including, but not limited to, return on investment, assets, capital, invested capital, equity, sales, or revenue);

(f)Cash flow measures (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, cash flow return on capital, and cash flow return on investment), which may, but are not required to be, measured on a per share basis;

(g)Earnings before interest and taxes (EBIT);

(h)Earnings before, interest, taxes, depreciation, and amortization (EBITDA);

(i)Productivity ratios;

(j)Share price (including, but not limited to, growth measures and total stockholder return);

(k)Cost control;

(l)Cost of capital, debt leverage year-end cash position, or book value;

(m)Margins (including, but not limited to, gross or operating margins);

(n)Operating efficiency;

(o)Market share;

(p)Objective measures of customer satisfaction or employee satisfaction;

(q)Working capital targets;

(r)Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital);

(s)Market share;

(t)Inventory control;

(u)Enterprise value;

(v)Sales or revenue (whether gross or net and including, but not limited to, growth in sales);

(w)Timely completion of new product rollout;

(x)Timely opening of new facilities;

(y)Objective measures of personal targets, goals, or completion of projects (including, but not limited to, succession and hiring projects, completion of specific acquisitions, dispositions, reorganizations, or other corporate transactions or capital-raising transactions, expansions of specific business operations, and meeting divisional or project budgets);

(z)Strategic objectives, development of new product lines, and related revenue, sales, and margin targets;

(aa)Financial controls;

(bb)Information technology;

(cc)Business development;

(dd)Financial structure;

(ee)Capital expenditures;

(ff)Depreciation and amortization; or

(gg)Any combination of the foregoing.

The Performance Measures may be based on the performance of the Company and/or one or more Affiliates, divisions, operational, and/or business units, product lines, business segments, administrative departments, or any combination of the foregoing.

Any one or more of the Performance Measures may be stated as a percentage of another Performance Measure, or used on an absolute or relative basis, as the Committee may deem appropriate, or any of the Performance Measures may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Measures specified in this Article 10.

10.4Modification of Performance Goals. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measure(s) without obtaining stockholder approval of such alterations, the Committee will have sole discretion to make such alterations without obtaining stockholder approval. Unless otherwise determined by the Committee at the time a Performance Compensation Award is granted, the Committee will specify adjustments or modifications to be made to the calculation of a Performance Goal for such Performance Period, based on and in order to appropriately reflect the following events:

(a)Asset write-downs;

(b)Litigations, claims, judgments, or settlements;

(c)Changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results;

(d)Any reorganization and restructuring programs;

(e)Extraordinary nonrecurring items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year;

(f)Acquisitions or divestitures;

(g)Any other specific, unusual, or nonrecurring events, or objectively determinable category thereof;

(h)Foreign exchange gains and losses;

(i)Discontinued operations and nonrecurring charges;

(j)A change in the Company’s fiscal year;

(k)Accruals for payments to be made in respect of the Plan or other specified compensation arrangements, and

(l)Any other event described in Section 4.5 of the Plan.

10.5Payment of Performance Compensation Awards.

(a)Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.

(b)Unless otherwise provided in the Plan or applicable Award Agreement, a Participant will be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (1) the Performance Goals for such period are achieved; and (2) all or some of the portion of such Participant’s Performance Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to such achieved Performance Goals.

(c)Following the completion of a Performance Period, the Committee will determine whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee will then determine the amount of each Participant’s Performance Compensation Award actually payable for the Performance Period and, in so doing, may apply discretion.

(d)In determining the actual amount of an individual Participant’s Performance Compensation Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of negative discretion. Unless otherwise provided in the applicable Award Agreement, the Committee will not have the discretion to (1) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained; or (2) increase a Performance Compensation Award above the applicable limitations set forth in Article 4 of the Plan.

10.6Timing of Award Payments. Unless otherwise provided in the applicable Award Agreement, Performance Compensation Awards granted for a Performance Period will be paid to Participants as soon as administratively practicable following completion of the certifications required by this Article 10. Any Performance Compensation Award that has been deferred will not (between the date as of which the Award is deferred and the payment date) increase (i) with respect to a Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee, or (ii) with respect to a Performance Compensation Award that is payable in Shares, by an amount greater than the appreciation of a share of Common Stock from the date such Award is deferred to the payment date. Any Performance Compensation Award that is deferred and is otherwise payable in Shares will be credited (during the period between the date as of which the Award is deferred and the payment date) with Dividend Equivalents (in a manner consistent with the methodology set forth in the last sentence of Section 8.4(b) of the Plan).

Article 11—Nonemployee Director Awards

The Board or Committee will determine and approve all Awards to Nonemployee Directors. The terms and conditions of any grant of Nonemployee Director Award will be set forth in an Award Agreement.

Article 12—Transferability of Awards and Shares

12.1Transfer and Exercise of Awards. Each Award will be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer, or encumbrance will be void and unenforceable against the Company or an Affiliate, except that the designation of a beneficiary will not constitute an assignment, alienation, pledge, attachment, sale, transfer, or encumbrance.

12.2Permitted Transferees. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to be transferred by a Participant, without consideration, subject to such rules as the Committee may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, to: (A) any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively the “Immediate Family Members”); (B) a trust solely for the benefit of the Participant and his or her Immediate Family Members; (C) a partnership or limited liability company whose only partners or stockholders are the Participant and his or her Immediate Family Members; or (D) a beneficiary to whom donations are eligible to be treated as “charitable contributions” for federal income tax purposes (each transferee described in clauses (A), (B), (C), and (D) above is hereinafter referred to as a “Permitted Transferee”), so long as the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of the Plan. The Committee’s exercise of discretion in permitting the transfer of an Award or Awards under this Section 12.2 and setting the terms, conditions, and restrictions upon which any such transfer may occur may differ among Participants and among Awards, there being no duty of consistency in the exercise of such discretion or the setting of such terms, conditions, or restrictions, and no Participant for whom the Committee has permitted a transfer of an Award will have any right or expectation that any transfer will be permitted with respect to any other Award.

12.3Terms Applicable to Permitted Transferees. The terms of any Award transferred in accordance with Section 12.2 of the Plan will apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award Agreement, to a Participant will be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees will not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees will not be entitled to exercise any transferred Option unless there is in effect a registration statement on an appropriate form covering the Shares to be acquired pursuant to the exercise of such Option, if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C) the Committee or the Company will not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; and (D) the consequences of the Termination of the Participant from the Company or an Affiliate under the terms of the Plan and the applicable Award Agreement will continue to be applied with respect to the Participant, including, without limitation, that an Option will be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.

12.4Restrictions on Share Transferability. Shares acquired by a Participant under the Plan will be subject to such conditions and restrictions on transfer (if any) as are set forth in the Company’s certificate of incorporation and bylaws, as well as any stockholders agreement and any other agreement entered into with respect to such Shares. The Committee may impose such additional restrictions on any Shares acquired by a Participant under the Plan as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, restrictions under the requirements of any stock exchange or market upon which such Shares are then listed or traded, or restrictions under any blue sky or state securities laws applicable to such Shares. Any voluntary or involuntary sale, assignment, transfer,

or exchange of Shares acquired under the Plan that fails to satisfy or comply with any applicable condition or restriction on such sale, assignment, transfer, or exchange will be void and of no effect and will not bind or be recognized by the Company.

Article 13—Effect of Change in Control

13.1Change in Control. Unless otherwise provided in an Award Agreement or under the terms of the Plan, in the event of a Change in Control, each Participant who incurs a Qualifying Termination either in anticipation of the Change in Control or during the period beginning thirty (30) days before the closing of the Change in Control and ending two (2) years after the date of the closing of the Change in Control will be treated as follows: (i) any unvested Awards granted to the Participant on or before the date of the closing of the Change in Control will immediately vest upon the Qualifying termination, except that if the vesting or exercisability of any Award would otherwise be subject to the achievement of performance conditions, the portion that will become fully vested and/or immediately exercisable will be based on (x) actual performance through the date of the Change in Control (or, if later, the date of the Qualifying Termination), as determined by the Committee, or (y) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee; and (ii) such Participant will have the unqualified right to exercise any Options or SARs that are outstanding as of the date of such Change in Control for a period of three (3) years after such Change in Control, except that in no instance may the term of the Awards, as so extended, extend beyond the end of the original term of the Award Agreement. The accelerated vesting of any Award will not affect the distribution date of any Award subject to Code Section 409A.

13.2Definitions. For purposes of this Article 13, the following terms have the following meanings:

(a)“Qualifying Termination” means a Participant’s Termination either (i) by the Service Recipient without Cause, or (ii) by the Participant for Good Reason.

(b)“Good Reason” means a voluntary Termination within ninety (90) days after the Participant is assigned to a Diminished Position, so long as the Participant has, within thirty (30) days after being assigned to such Diminished Position, notified the Service Recipient of the Participant’s intent to terminate as a result of such assignment and within thirty (30) days after receipt of that notice the Service Recipient has not reassigned the Participant to a position that is not a Diminished Position.

(c)“Diminished Position” means a position with the Service Recipient that reflects any of the following changes or actions, unless the Participant has consented to the change or action in writing: (A) a material diminution in the Participant’s base compensation; (B) a material diminution in the Participant’s authority, duties, or responsibilities or associated job title; (C) relocation of the Participant’s principal office with the Service Recipient to a location that is greater than 50 miles from the location of the Participant’s principal office immediately before such

relocation; or (D) any action or inaction with respect to the terms and conditions of the Participant’s service that constitutes a material breach by the Service Recipient of any written agreement between the Participant and the Service Recipient.

Article 14—Amendment and Termination

14.1Amendment and Termination of the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time, except that no such amendment, alteration, suspension, discontinuation, or termination will be made without stockholder approval if (i) such approval is necessary to comply with any regulatory requirement applicable to the Plan (including, without limitation, as necessary to comply with any rules or regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company may be listed or quoted) or for changes in GAAP to new accounting standards, or (ii) it would materially modify the requirements for participation in the Plan. Except as provided in Sections 4.5, 14.3, 15.9, or 15.19 of the Plan, any amendment, alteration, modification, suspension, discontinuance, or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted will not, to that extent, be effective without the consent of the affected Participant, holder, or beneficiary.

Notwithstanding the foregoing, no amendment will be made to the last sentence of Section 14.2 of the Plan (relating to “repricing”) without stockholder approval.

14.2Amendment of Award Agreements. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel, or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively (including after a Participant’s Termination from the Company), except that any such waiver, amendment, alteration, suspension, discontinuance, cancellation, or termination that would materially and adversely affect the rights of any Participant with respect to any Award theretofore granted will not, to that extent, be effective without the consent of the affected Participant. Without stockholder approval, except as otherwise permitted under Section 4.5 of the Plan, (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR, (ii) the Committee may not cancel any outstanding Option or SAR and replace it with a new Option or SAR (with a lower Exercise Price or Strike Price, as the case may be) or other Award or cash payment that is greater than the value of the cancelled Option or SAR, and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted.

14.3Amendment to Conform to Law. Notwithstanding any other provision of the Plan to the contrary, the Board or Committee may amend the Plan or an Award Agreement to take effect as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature and to the administrative regulations and rulings promulgated thereunder. By accepting

an Award under the Plan, a Participant agrees to any amendment made pursuant to this Section 14.3 to any Award granted under the Plan without further consideration or action.

Article 15—General Provisions

15.1Award Agreements. An Award under the Plan may be evidenced by an Award Agreement delivered to the Participant and specifying the terms and conditions of the Award and any rules applicable thereto, including without limitation, the effect on such Award of the death, Disability, or Termination of the Participant, or of such other events as may be determined by the Committee. For purposes of the Plan, an Award Agreement may be in any such form (written or electronic) as determined by the Committee (including, without limitation, a Board or Committee resolution, an employment agreement, a notice, a certificate or a letter) evidencing the Award. An Award Agreement need not be signed by the Participant or a duly authorized representative of the Company.

15.2Dividends and Dividend Equivalents. The Committee in its sole discretion may provide a Participant as part of an Award with dividends or Dividend Equivalents, payable in cash, Shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole discretion, including without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional Shares, Restricted Stock, or other Awards, except that no dividends or Dividend Equivalents will be payable in respect of outstanding (i) Options or SARs, or (ii) unearned Performance Compensation Awards or other unearned Awards subject to performance conditions (other than or in addition to the passage of time), although dividends and Dividend Equivalents may be accumulated in respect of unearned Awards and paid within thirty (30) days after such Awards are earned and become payable or distributable.

15.3Tax Withholding. A Participant will be required to pay to the Company or any Affiliate, and the Company or any Affiliate will have the right and is hereby authorized to withhold, from any cash, Shares, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Stock, other securities, or other property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholding and taxes. Without limiting the generality of the foregoing, the Committee may, in its sole discretion, permit or require a Participant to satisfy, in whole or in part, the foregoing withholding liability by any of the following methods (or any combination of the following methods): (A) delivering Shares (which are not subject to any pledge or other security interest) owned by the Participant having a Fair Market Value equal to such withholding liability; (B) having the Company withhold from the number of Shares otherwise issuable or deliverable pursuant to the exercise or settlement of the Award a number of Shares with a Fair Market Value equal to such withholding liability, except that with respect to Shares withheld pursuant to this clause (B), (i) the amount of Shares withheld may not exceed the minimum required statutory withholding liability unless the Participant elects to have an amount of Shares withheld equal to the maximum individual tax rate for the Participant in the applicable jurisdiction, (ii) in no event shall the Participant be permitted to elect to have an amount withheld in the form of Shares less than the minimum required statutory withholding liability for the Participant in the applicable jurisdiction, and (iii) in no event shall the Participant be permitted to elect to have an amount withheld in the form of Shares that exceeds the maximum individual tax rate for the Participant in the applicable jurisdiction; (C) requiring the Participant, as a condition precedent to transfer or release of the Shares, to make a payment to the Employer in an amount equal to the amount of the withholdings or reductions; or (D) such other method or combination of methods as the Committee deems appropriate, in its sole discretion. The Committee will have the right, in its sole discretion, to require, as a condition precedent to the transfer or release of any Shares awarded under the Plan, that the transferee execute a power of attorney or such other agreement or document as the Committee deems necessary or appropriate to facilitate, directly or indirectly, the withholding of taxes with respect to an Award under the Plan.

15.4No Claim to Awards; No Rights to Continued Employment; Waiver. No employee of the Company or an Affiliate, or other person, will have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. Neither the Plan nor any action taken hereunder will be construed as giving any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor will it be construed as giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or any Award Agreement. By accepting an Award under the Plan, a Participant will thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under the Plan or any Award Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is executed before, on, or after the Grant Date.

15.5International Participants. With respect to Participants who reside or work outside of the United States, the Committee may in its sole discretion amend the terms of the Plan or Sub-Plans or outstanding Awards with respect to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company, or its Affiliates.

15.6Designation and Change of Beneficiary. Each Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who will be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his or her death. A Participant may, from time to time, revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee will be controlling, except that no designation, or change or revocation thereof, will be effective unless received by the Committee prior to the Participant’s death and in no event will it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, or if a beneficiary designation previously filed is invalid or no longer effective, the beneficiary will be deemed to be the Participant’s surviving spouse to whom the Participant was lawfully married under the laws of any state or jurisdiction at the time of the Participant’s death or, if the Participant is unmarried at the time of death, the Participant’s estate.

15.7Termination. Except as otherwise provided in an Award Agreement, unless determined otherwise by the Committee at any point following such event: (i) neither a temporary absence from employment or service due to illness, vacation, or leave of absence (including, without limitation, a call to active duty for military service through a Reserve or National Guard unit) nor a transfer from employment or service with one Service Recipient to employment or service with another Service recipient (or vice-versa) will be considered a Termination; and (ii) if a Participant undergoes a Termination of employment, but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity, such change in status will not be considered a Termination for purposes of the Plan. Further, unless otherwise determined by the Committee, in the event that any Service Recipient ceases to be an Affiliate of the Company (by reason of sale, divestiture, spin-off, or other similar transaction), unless a Participant’s employment or service is transferred to another entity that would constitute a Service Recipient immediately following such transaction, such Participant will be deemed to have suffered a Termination hereunder as of the date of the consummation of such transaction.

15.8No Rights as a Stockholder. Except as otherwise specifically provided in the Plan or any Award Agreement, no person will be entitled to the privileges of ownership in respect of Shares which are subject to Awards hereunder until such shares have been issued or delivered to that person.

15.9Government and Other Regulations. The obligation of the Company to settle Awards in Shares or other consideration will be subject to all applicable laws, rules, and regulations and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company will be under no obligation to offer to sell or to sell, and will be prohibited from offering to sell or selling, any Shares pursuant to an Award unless such Shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such Shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company will be under no obligation to register for sale under the Securities Act any of the Shares to be offered or sold under the Plan. The Committee will have the authority to provide that all Shares or other securities of the Company or any Affiliate delivered under the Plan will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement, the

Federal securities laws, or the rules, regulations, and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted, and any other applicable Federal, state, local, or non-U.S. laws, rules, regulations, and other requirements, and, without limiting the generality of Article 8 of the Plan, the Committee may cause a legend or legends to be put on certificates representing Shares or other securities of the Company or any Affiliate delivered under the Plan to make appropriate reference to such restrictions or may cause such Shares or other securities of the Company or any Affiliate delivered under the Plan in book-entry form to be held subject to the Company’s instructions or subject to appropriate stop-transfer orders. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to any Award granted under the Plan that it, in its sole discretion, deems necessary or advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.

The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of Shares from the public markets, the Company’s issuance of Shares to the Participant, the Participant’s acquisition of Shares from the Company, and/or the Participant’s sale of Shares to the public markets, illegal, impracticable, or inadvisable. If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, the Company will pay to the Participant an amount in cash equal to the excess of (A) the aggregate Fair Market Value of the Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date or the date that the Shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Shares (in the case of any other Award). Such amount will be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof.

15.10Section 83(b) Elections. If a Participant, in connection with the acquisition of Shares under the Plan or otherwise, makes an election under Code Section 83(b), the Participant will notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to Code Section 83(b) or other applicable provision. The making of any such election will be in the sole discretion of any such Participant, except that the Committee may provide in an Award Agreement that an Award is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). Neither the Company nor any Subsidiary or Affiliate will have any liability or responsibility relating to or arising out of the filing or failure to file of any Section 83(b) election.

15.11Payments to Persons Other Than Participants. If the Committee determines that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his or her spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment will be a complete discharge of the liability of the Committee and the Company therefor.

15.12Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval will be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, and such arrangements may be either applicable generally or only in specific cases.

15.13No Trust or Fund Created. Neither the Plan nor any Award will create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person or entity, on the other hand. No provision of the Plan or any Award will require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor will the Company maintain separate bank accounts, books, records, or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants will have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they will have the same rights as other employees under general law.

15.14Reliance on Reports. Each member of the Committee and each member of the Board will be fully justified in acting or failing to act, as the case may be, and will not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of the Company and its Affiliates and/or any other information furnished in connection with the Plan by any agent of the Company or the Committee or the Board, other than himself.

15.15Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance, or other benefit plan of the Company except as otherwise specifically provided in such other plan.

15.16Governing Law. The Plan will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof.

15.17Severability. If any provision of the Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision will be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision will be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award will remain in full force and effect.

15.18Obligations Binding on Successors. The obligations of the Company under the Plan will be binding upon any successor corporation or organization resulting from the merger, consolidation, or other reorganization of the Company or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

15.19Code Section 409A. Notwithstanding any provision of the Plan to the contrary, it is intended that the provisions of the Plan comply with Code Section 409A, and all provisions of the Plan will be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with the Plan or any other plan maintained by the Company (including any taxes and penalties under Code Section 409A), and neither the Company nor any Affiliate will have any obligation to indemnify or otherwise hold such Participant (or any beneficiary) harmless from any or all of such taxes or penalties. With respect to any Award that is considered “deferred compensation” subject to Code Section 409A, references in the Plan to Termination (and substantially similar phrases) will mean “separation from service” within the meaning of Code Section 409A. For purposes of Code Section 409A, each of the payments that may be made in respect of any Award granted under the Plan is designated as separate payments, unless otherwise expressly provided in an Award Agreement.

Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), no payments in respect of any Awards that are “deferred compensation” subject to Code Section 409A and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Code Section 409A) will be made to such Participant prior to the date that is six (6) months after the date of such Participant’s “separation from service” or, if earlier, the Participant’s date of death. Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Code Section 409A that is also a business day.

Unless otherwise provided by the Committee, in the event that the timing of payments in respect of any Award (that would otherwise be considered “deferred compensation” subject to Code Section 409A) would be accelerated upon the occurrence of (A) a Change in Control, no such acceleration will be permitted unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Code Section 409A and any Treasury Regulations promulgated thereunder, or (B) a Disability, no such acceleration will be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Code Section 409A and any Treasury Regulations promulgated thereunder.

Notwithstanding any provision of the Plan or any Award Agreement to the contrary, if one or more of the payments or benefits to be received by a Participant pursuant to an Award would constitute deferred compensation subject to Code Section 409A and would cause the Participant to incur any penalty tax or interest under Code Section 409A, the Committee may reform the Plan and/or Award Agreement to comply with the requirements of Code Section 409A and to the extent practicable maintain the original intent of the Plan and/or Award Agreement.

By accepting an Award under the Plan, a Participant agrees to any amendments to the Award made pursuant to this Section 15.19 without further consideration or action.

15.20Clawback or Forfeiture. Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that the Committee may in its sole discretion cancel such Award if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after Termination, has engaged in or engages in any Detrimental Activity. The Committee may also provide that if the Participant otherwise has engaged in or engages in any Detrimental Activity, the Participant will forfeit any gain realized on the vesting or exercise of such Award and must repay the gain to the Company. The Committee may also provide that if the Participant receives any amount in excess of what the Participant should have received under the terms of the Award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant will be required to repay any such excess amount to the Company. Without limiting the foregoing, all Awards will be subject to reduction, cancellation, forfeiture, or recoupment to the extent necessary to comply with applicable law or any Company policy on the recovery of compensation, as it exists now or as later adopted and as amended and in effect from time to time.

15.21Expenses; Gender; Titles and Headings. The expenses of administering the Plan will be borne by the Company and its Affiliates. Masculine pronouns and other words of masculine gender will refer to both men and women. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings will control.

15.22Parachute Payments. If any Award, transfer, payment, or benefit provided to a Participant under the Plan, either alone or together with other awards, transfers, payments, or benefits provided to the Participant by the Service Recipient (including, without limitation, any accelerated vesting thereof) (the “Total Payments”), would constitute a “parachute payment” (as defined in Code Section 280G) and will be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Total Payments will be automatically reduced if and to the extent that a reduction in the Total Payments would result in the Participant retaining a larger amount than if the Participant received all of the Total Payments, in each case measured on an after-tax basis, taking into account federal, state, and local income taxes and, if applicable, the Excise Tax. The determination of any reduction in the Total Payments, including, but not limited to, the order in which and the extent to which each payment type included within Total Payments should be reduced, shall be made by the Committee on reliance upon such advice and analysis as the Committee may deem necessary or appropriate, such as the advice of the Company’s regular independent public accountants or another similar firm. Such determination may be made using reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.

* * *

EX-31.1 3 spr_20230629-ex311.htm EX-31.1 Document

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas C. Gentile III, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Spirit AeroSystems Holdings, Inc. (“registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


			/s/ Thomas C. Gentile III
			Thomas C. Gentile III
			President and Chief Executive Officer

Date: August 2, 2023

EX-31.2 4 spr_20230629-ex312.htm EX-31.2 Document

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark J. Suchinski, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Spirit AeroSystems Holdings, Inc. (“registrant”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


			/s/ Mark J. Suchinski
			Mark J. Suchinski
			Senior Vice President and Chief Financial Officer

Date: August 2, 2023

EX-32.1 5 spr_20230629-ex321.htm EX-32.1 Document

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 29, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas C. Gentile III, as President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


			/s/ Thomas C. Gentile III
			Thomas C. Gentile III
			President and Chief Executive Officer

Date: August 2, 2023

EX-32.2 6 spr_20230629-ex322.htm EX-32.2 Document

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 29, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark J. Suchinski, as Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


			/s/ Mark J. Suchinski
			Mark J. Suchinski
			Senior Vice President and Chief Financial Officer

Date: August 2, 2023