(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
|
||||
(Address of principal executive offices) |
(Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Item 8.01 |
Other Events. |
• | Part II, Item 6. Selected Financial Data |
• | Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Part II, Item 8. Financial Statements and Supplementary Data, including Report of Independent Registered Public Accounting Firm (on the Company’s Consolidated Financial Statements) |
• | Part I, Item 1. Financial Statements (Unaudited) |
• | Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 9.01 |
Financial Statements and Exhibits. |
Exhibit No. |
Description | |
23.1 |
||
99.1 |
||
Revised Part II, Item 6. Selected Financial Data Revised Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Revised Part II, Item 8. Financial Statements and Supplementary Data, including Report of Independent Registered Public Accounting Firm (on the Company’s Consolidated Financial Statements) | ||
99.2 |
||
Revised Part I, Item 1. Financial Statements (Unaudited) Revised Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Revised Part II, Item 8. Financial Statements and Supplementary Data, including Report of Independent Registered Public Accounting Firm (on the Company’s Consolidated Financial Statements) | ||
104.1 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Date: December 23, 2020 |
TRIUMPH GROUP, INC. | |||||
By: |
/s/ Thomas A. Quigley, III | |||||
Thomas A. Quigley, III | ||||||
Vice President, Investor Relations and Controller |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements of Triumph Group, Inc.:
Form S-8 No. 333-36957; Form S-8 No. 333-55056; Form S-8 No. 333-81665; Form S-8 No. 333-134861; Form S-8 No. 333-125888; Form S-8 No. 333-192538; Form S-8 No. 333-211676; Form S-8 No. 333-219486; Form S-8 No. 333-226640; Form S-3 No. 333-235454; Form S-3 No. 333-239-098; and Form S-3 No. 333-251429.
of our report dated May 28, 2020 (except for Notes 1, 12, 13, 15, 21 and 22, as to which the date is December 17, 2020), with respect to the consolidated financial statements of Triumph Group, Inc., included in this Current Report on Form 8-K.
/s/ Ernst & Young, LLP
Philadelphia, PA
December 23, 2020
Fiscal Year Ended March 31, |
||||||||||||||||||||
2020 (1) |
2019 (2) |
2018 (3) |
2017 (4)(6) |
2016 (5)(6) |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||||
Operating Data: |
||||||||||||||||||||
Net sales |
$ | 2,900,117 | $ | 3,364,930 | $ | 3,198,951 | $ | 3,532,799 | $ | 3,886,072 | ||||||||||
Cost of sales |
2,307,393 | 2,924,920 | 2,607,556 | 2,774,449 | 3,671,684 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
592,724 | 440,010 | 591,395 | 758,350 | 214,388 | ||||||||||||||||
Selling, general and administrative |
257,529 | 298,386 | 292,630 | 285,001 | 290,338 | |||||||||||||||
Depreciation and amortization |
138,168 | 149,904 | 158,368 | 176,946 | 177,755 | |||||||||||||||
Impairment of intangible assets |
66,121 | — | 535,227 | 266,298 | 874,361 | |||||||||||||||
Restructuring |
25,340 | 31,098 | 40,069 | 42,177 | 36,182 | |||||||||||||||
Loss on sale of assets and businesses |
56,916 | 235,301 | 30,741 | 19,124 | — | |||||||||||||||
(Gain) loss on legal judgment or settlement, net of expenses |
(9,257 | ) | — | — | — | 5,476 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) |
57,907 | (274,679 | ) | (465,640 | ) | (31,196 | ) | (1,169,724 | ) | |||||||||||
Non-service defined benefit income |
(40,587 | ) | (56,726 | ) | (97,079 | ) | (88,085 | ) | (78,618 | ) | ||||||||||
Interest expense and other |
122,129 | 114,619 | 99,442 | 80,501 | 68,041 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss from continuing operations, before income taxes |
(23,635 | ) | (332,572 | ) | (468,003 | ) | (23,612 | ) | (1,159,147 | ) | ||||||||||
Income tax expense (benefit) |
5,798 | (5,426 | ) | (36,457 | ) | 19,340 | (111,187 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss |
$ | (29,433 | ) | $ | (327,146 | ) | $ | (431,546 | ) | $ | (42,952 | ) | $ | (1,047,960 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss per share: |
||||||||||||||||||||
Loss from continuing operations: |
||||||||||||||||||||
Basic |
$ | (0.58 | ) | $ | (6.58 | ) | $ | (8.73 | ) | $ | (0.87 | ) | $ | (21.29 | ) | |||||
Diluted |
$ | (0.58 | ) | $ | (6.58 | ) | $ | (8.73 | ) | $ | (0.87 | ) | $ | (21.29 | ) | |||||
Cash dividends declared per share |
$ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | ||||||||||
Shares used in computing earnings per share: |
||||||||||||||||||||
Basic |
50,494 | 49,698 | 49,442 | 49,303 | 49,218 | |||||||||||||||
Diluted |
50,494 | 49,698 | 49,442 | 49,303 | 49,218 |
As of March 31, |
||||||||||||||||||||
2020 (1) |
2019 (2) |
2018 (3) |
2017 (4) |
2016 (5) |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Balance Sheet Data: |
||||||||||||||||||||
Working capital |
$ | 573,879 | $ | 265,795 | $ | 930,486 | $ | 438,659 | $ | 606,767 | ||||||||||
Total assets |
2,980,333 | 2,854,574 | 3,807,064 | 4,414,600 | 4,835,093 | |||||||||||||||
Long-term debt, including current portion |
1,807,507 | 1,488,821 | 1,438,284 | 1,196,300 | 1,417,320 | |||||||||||||||
Total stockholders’ (deficit) equity |
$ | (781,264 | ) | $ | (573,313 | ) | $ | 450,534 | $ | 846,473 | $ | 934,944 |
(1) | Includes the divestiture of Triumph Aerospace Structures’ manufacturing operations in Nashville, Tennessee, as well as the gain recognized as a result of the transfer of certain assets and liabilities to AeroSpace Technologies of Korea Inc. |
(2) | Includes the divestitures of Triumph Fabrications - San Diego, Inc.; Triumph Fabrications - Ft. Worth, Inc.; Triumph Structures – Kansas City, Inc.; Triumph Structures – Wichita, Inc.; Triumph Gear Systems – Toronto, ULC and Triumph Northwest (The Triumph Group Operations, Inc.); Triumph Aviation Services - NAAS Division, Inc.; Triumph Structures - East Texas, Inc. as well as all of the shares of Triumph Structures - Los Angeles, Inc.; and Triumph Processing, Inc.; as well as the loss recognized as a result of the transition of the Global 7500 program to Bombardier. |
(3) | Includes the divestitures of Triumph Processing- Embee Division (September 2017) and Triumph Structures- Long Island (March 2018). Additionally, the fiscal 2018 and prior period operating data has been adjusted as a result of Accounting Standards Update (“ASU”) 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Revenue From Contracts with Customers |
(4) | Includes the divestitures of Triumph Aerospace Systems-Newport News, Inc. (September 2016) and Triumph Air Repair, the Auxiliary Power Unit Overhaul Operations of Triumph Aviations Services - Asia, Ltd. and Triumph Engines - Tempe (December 2016). Additionally, the fiscal 2018 and prior period operating data has been adjusted as a result of ASU 2017-07. The fiscal 2018 and prior period operating data has not been adjusted as a result of ASU 2014-09; this affects the comparability of the information reflected in the selected financial data for this year. See Notes to the Consolidated Financial Statements. |
(5) | Includes the acquisition of Fairchild Controls Corporation (October 2015) from the date of acquisition, forward losses on the Bombardier and 747-8 programs of $561,158 (March 2016). Additionally, the fiscal 2018 and prior period operating data has been adjusted as a result of ASU 2017-07. The fiscal 2018 and prior period operating data has not been adjusted as a result of ASU 2014-09; this affects the comparability of the information reflected in the selected financial data for this year. See Notes to the Consolidated Financial Statements. |
(6) | Impact of the April 1, 2020 change in accounting method for market related value of fixed income assets under the defined benefit plan trust as referenced in Note 1, was not made to fiscal 2017 and fiscal 2016; this affects the comparability of the information reflected in the selected financial data for these years. |
• | Net sales for fiscal 2020 decreased 13.8% to $2.90 billion. |
• | Operating income for fiscal 2020 was $57.9 million. |
• | Included in operating income for fiscal 2020 was loss on sale of assets and businesses of $56.9 million and restructuring charges of $25.3 million. |
• | Net loss for fiscal 2020 was $29.4 million or $0.58 per diluted common share. |
• | Backlog decreased 14.5% over the prior year to $3.2 billion due to divestitures. |
• | Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Legal judgments and settlements, when applicable, may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of the adoption of ASU 2017-07 and certain pension related transactions such as curtailments, settlements, early retirement or other incentives) may be useful for investors to consider because they represent the cost of postretirement benefits to plan participants, net of the assumption of returns on the plan’s assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization expense (including goodwill and intangible asset impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of tradenames, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. |
• | Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. |
Fiscal year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Net loss (U.S. GAAP measure) |
$ | (29,433 | ) | $ | (327,146 | ) | $ | (431,546 | ) | |||
Legal judgment gain, net of expenses |
(9,257 | ) | — | — | ||||||||
Loss on sale of assets and businesses, net |
56,916 | 235,301 | 30,741 | |||||||||
Adoption of ASU 2017-07 |
— | 87,241 | — | |||||||||
Amortization of acquired contract liabilities |
(75,286 | ) | (67,314 | ) | (125,148 | ) | ||||||
Depreciation and amortization* |
204,289 | 149,904 | 693,595 | |||||||||
Interest expense and other |
122,129 | 114,619 | 99,442 | |||||||||
Curtailments, settlements and early retirement incentives |
14,293 | 4,032 | (25,722 | ) | ||||||||
Union represented employee incentives |
7,071 | — | — | |||||||||
Income tax expense (benefit) |
5,798 | (5,426 | ) | (36,457 | ) | |||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA (non-GAAP measure) |
$ | 296,520 | $ | 191,211 | $ | 204,905 | ||||||
Non-service defined benefit income (excluding settlements) |
(54,880 | ) | (60,758 | ) | (71,357 | ) | ||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDAP (non-GAAP measure) |
$ | 241,640 | $ | 130,453 | $ | 133,548 | ||||||
|
|
|
|
|
|
* | Includes impairment charges related to intangible assets |
Fiscal year ended March 31, 2020 |
||||||||||||||||
Total |
Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating income (loss) |
$ | 57,907 | $ | 141,341 | $ | 41,864 | $ | (125,298 | ) | |||||||
Legal judgment gain, net of expenses |
(9,257 | ) | — | — | (9,257 | ) | ||||||||||
Loss (gain) on sale of assets and businesses |
56,916 | — | (10,121 | ) | 67,037 | |||||||||||
Union represented employee incentives |
7,071 | — | 7,071 | — | ||||||||||||
Amortization of acquired contract liabilities |
(75,286 | ) | (34,486 | ) | (40,800 | ) | — | |||||||||
Depreciation and amortization* |
204,289 | 98,497 | 102,418 | 3,374 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 241,640 | $ | 205,352 | $ | 100,432 | $ | (64,144 | ) | |||||||
|
|
|
|
|
|
|
|
Fiscal year ended March 31, 2019 |
||||||||||||||||
Total |
Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating (loss) income |
$ | (274,679 | ) | $ | 201,094 | $ | (152,407 | ) | $ | (323,366 | ) | |||||
Loss on sale of assets and businesses |
235,301 | — | — | 235,301 | ||||||||||||
Adoption of ASU 2017-07 |
87,241 | — | 87,241 | — | ||||||||||||
Amortization of acquired contract liabilities |
(67,314 | ) | (34,121 | ) | (33,193 | ) | — | |||||||||
Depreciation and amortization |
149,904 | 35,373 | 111,431 | 3,100 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 130,453 | $ | 202,346 | $ | 13,072 | $ | (84,965 | ) | |||||||
|
|
|
|
|
|
|
|
Fiscal year ended March 31, 2018 |
||||||||||||||||
Total |
Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating (loss) income |
$ | (465,640 | ) | $ | 231,103 | $ | (568,164 | ) | $ | (128,579 | ) | |||||
Loss on sale of assets and businesses |
30,741 | — | — | 30,741 | ||||||||||||
Amortization of acquired contract liabilities |
(125,148 | ) | (38,293 | ) | (86,855 | ) | — | |||||||||
Depreciation and amortization* |
693,595 | 42,730 | 649,013 | 1,852 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 133,548 | $ | 235,540 | $ | (6,006 | ) | $ | (95,986 | ) | ||||||
|
|
|
|
|
|
|
|
* | Includes impairment charges related to intangible assets |
Year Ended March 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Net sales |
$ | 2,900,117 | $ | 3,364,930 | ||||
|
|
|
|
|||||
Segment operating income |
$ | 183,205 | $ | 48,687 | ||||
Corporate expense |
(125,298 | ) | (323,366 | ) | ||||
|
|
|
|
|||||
Total operating income (loss) |
57,907 | (274,679 | ) | |||||
Interest expense and other |
122,129 | 114,619 | ||||||
Non-service defined benefit income |
(40,587 | ) | (56,726 | ) | ||||
Income tax expense (benefit) |
5,798 | (5,426 | ) | |||||
|
|
|
|
|||||
Net loss |
$ | (29,433 | ) | $ | (327,146 | ) | ||
|
|
|
|
Year Ended March 31, |
||||||||
2019 |
2018 |
|||||||
(in thousands) |
||||||||
Net sales |
$ | 3,364,930 | $ | 3,198,951 | ||||
|
|
|
|
|||||
Segment operating income (loss) |
$ | 48,687 | $ | (337,061 | ) | |||
Corporate expenses |
(323,366 | ) | (128,579 | ) | ||||
|
|
|
|
|||||
Total operating loss |
(274,679 | ) | (465,640 | ) | ||||
Interest expense and other |
114,619 | 99,442 | ||||||
Non-service defined benefit income |
(56,726 | ) | (97,079 | ) | ||||
Income tax benefit |
(5,426 | ) | (36,457 | ) | ||||
|
|
|
|
|||||
Net loss |
$ | (327,146 | ) | $ | (431,546 | ) | ||
|
|
|
|
Year Ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Systems & Support |
||||||||||||
Commercial aerospace |
26.5 | % | 22.6 | % | 23.8 | % | ||||||
Military |
15.0 | 12.2 | 11.5 | |||||||||
Business Jets |
2.3 | 1.9 | 1.7 | |||||||||
Regional |
1.5 | 1.4 | 1.5 | |||||||||
Non-aviation |
1.3 | 0.8 | 0.8 | |||||||||
|
|
|
|
|
|
|||||||
Total Systems & Support net sales |
46.6 | % | 38.9 | % | 39.3 | % | ||||||
Aerospace Structures |
||||||||||||
Commercial aerospace |
30.3 | % | 30.4 | % | 33.9 | % | ||||||
Military |
4.0 | 7.1 | 8.6 | |||||||||
Business Jets |
16.0 | 21.7 | 16.8 | |||||||||
Regional |
3.1 | 1.1 | 0.7 | |||||||||
Non-aviation |
0.0 | 0.8 | 0.7 | |||||||||
|
|
|
|
|
|
|||||||
Total Aerospace Structures net sales |
53.4 | % | 61.1 | % | 60.7 | % | ||||||
Total Consolidated net sales |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Total Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
NET SALES |
||||||||||||||||||||
Systems & Support |
$ | 1,357,564 | $ | 1,325,011 | 2.5 | % | 46.8 | % | 39.4 | % | ||||||||||
Aerospace Structures |
1,555,887 | 2,062,404 | (24.6 | )% | 53.7 | % | 61.3 | % | ||||||||||||
Elimination of inter-segment sales |
(13,334 | ) | (22,485 | ) | 40.7 | % | (0.5 | )% | (0.7 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net sales |
$ | 2,900,117 | $ | 3,364,930 | (13.8 | )% | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
SEGMENT OPERATING (LOSS) INCOME |
||||||||||||||||||||
Systems & Support |
$ | 141,341 | $ | 201,094 | (29.7 | )% | 10.4 | % | 15.2 | % | ||||||||||
Aerospace Structures |
41,864 | (152,407 | ) | 127.5 | % | 2.7 | % | (7.4 | )% | |||||||||||
Corporate |
(125,298 | ) | (323,366 | ) | 61.3 | % | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total segment operating (loss) income |
$ | 57,907 | $ | (274,679 | ) | 121.1 | % | 2.0 | % | (8.2 | )% | |||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
Adjusted EBITDAP |
||||||||||||||||||||
Systems & Support |
$ | 205,352 | $ | 202,346 | 1.5 | % | 15.5 | % | 15.7 | % | ||||||||||
Aerospace Structures |
100,432 | 13,072 | 668.3 | % | 6.6 | % | 0.6 | % | ||||||||||||
Corporate |
(64,144 | ) | (84,965 | ) | 24.5 | % | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 241,640 | $ | 130,453 | 85.2 | % | 8.6 | % | 4.0 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Total Sales |
||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
NET SALES |
||||||||||||||||||||
Systems & Support |
$ | 1,325,011 | $ | 1,267,508 | 4.5 | % | 39.4 | % | 39.6 | % | ||||||||||
Aerospace Structures |
2,062,404 | 1,954,729 | 5.5 | % | 61.3 | % | 61.1 | % | ||||||||||||
Elimination of inter-segment sales |
(22,485 | ) | (23,286 | ) | 3.4 | % | (0.7 | )% | (0.7 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net sales |
$ | 3,364,930 | $ | 3,198,951 | 5.2 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Segment Sales |
||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
SEGMENT OPERATING INCOME (LOSS) |
||||||||||||||||||||
Systems & Support |
$ | 201,094 | $ | 231,103 | (13.0 | )% | 15.2 | % | 18.2 | % | ||||||||||
Aerospace Structures |
(152,407 | ) | (568,164 | ) | 73.2 | % | (7.4 | )% | (29.1 | )% | ||||||||||
Corporate |
(323,366 | ) | (128,579 | ) | (151.5 | )% | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total segment operating income (loss) |
$ | (274,679 | ) | $ | (465,640 | ) | 41.0 | % | (8.2 | )% | (14.6 | )% | ||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, |
% Change |
% of Segment Sales |
||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
Adjusted EBITDAP |
||||||||||||||||||||
Systems & Support |
$ | 202,346 | $ | 235,540 | (14.1 | )% | 15.7 | % | 19.2 | % | ||||||||||
Aerospace Structures |
13,072 | (6,006 | ) | 317.7 | % | 0.6 | % | (0.3 | )% | |||||||||||
Corporate |
(84,965 | ) | (95,986 | ) | 11.5 | % | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 130,453 | $ | 133,548 | (2.3 | )% | 4.0 | % | 4.3 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
Parent and Guarantor Summarized Financial Information |
As of and for the fiscal year ended March 31, 2020 |
|||
Current assets |
$ | 1,177,461 | ||
Noncurrent assets |
1,248,525 | |||
Current liabilities |
920,414 | |||
Noncurrent liabilities |
2,514,760 | |||
Due to/from Non-Guarantor Subsidiaries |
14,624 | |||
Net sales |
2,572,806 | |||
Gross profit |
520,096 | |||
Loss from continuing operations |
(52,149 | ) | ||
Net loss |
(55,355 | ) |
Payments Due by Period |
||||||||||||||||||||
Contractual Obligations |
Total |
Less than 1 Year |
1 - 3 Years |
4 - 5 Years |
After 5 Years |
|||||||||||||||
(in thousands) |
||||||||||||||||||||
Debt principal |
$ | 1,823,933 | $ | 7,336 | $ | 381,611 | $ | 927,216 | $ | 507,770 | ||||||||||
Debt interest (1) |
469,489 | 110,386 | 191,996 | 147,009 | 20,098 | |||||||||||||||
Operating leases |
84,983 | 16,843 | 25,595 | 15,353 | 27,192 | |||||||||||||||
Purchase obligations |
1,374,122 | 950,626 | 390,305 | 15,128 | 18,064 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
3,752,527 | 1,085,191 | 989,506 | 1,104,706 | 573,124 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed-rate interest only. |
Pension Benefits |
Other Postretirement Benefits |
|||||||
(in thousands) |
||||||||
Projected benefit obligation at March 31, 2020 |
$ | 2,254,985 | $ | 7,150 | ||||
Plan assets at March 31, 2020 |
1,598,045 | — | ||||||
Projected contributions by fiscal year |
||||||||
2021 |
— | 4,824 | ||||||
2022 |
81,800 | 813 | ||||||
2023 |
90,600 | 182 | ||||||
2024 |
85,800 | 171 | ||||||
2025 |
70,100 | 162 | ||||||
|
|
|
|
|||||
Total 2021 - 2025 |
$ | 328,300 | $ | 6,152 | ||||
|
|
|
|
Increase/(Decrease) in Pension Income |
||||||||
25 Basis Point Increase |
25 Basis Point Decrease |
|||||||
(In thousands) |
||||||||
Expected long-term rate of return on plan assets |
$ | 4,167 | $ | (4,167 | ) | |||
Discount rate |
$ | (104 | ) | $ | 235 |
Next 12 Months |
13 - 24 Months |
25 - 36 Months |
37 - 48 Months |
49 - 60 Months |
Thereafter |
Total |
||||||||||||||||||||||
Fixed rate cash flows (in thousands) |
$ | 7,336 | $ | 4,659 | $ | 301,952 | $ | 1,486 | $ | 525,730 | $ | 507,770 | $ | 1,348,933 | ||||||||||||||
Weighted average interest rate (%) |
6.58 | % | 5.71 | % | 6.10 | % | 6.98 | % | 7.23 | % | 7.92 | % | ||||||||||||||||
Variable rate cash flows (in thousands) |
$ | — | $ | — | $ | 75,000 | $ | 400,000 | $ | — | $ | — | $ | 475,000 | ||||||||||||||
Weighted average interest rate (%) |
4.61 | % | 4.61 | % | 4.69 | % | 4.97 | % | — | % | — | % |
Description of the Matter |
As described in Notes 2 and 4 of the consolidated financial statements, the Company’s Aerospace Structures reportable segment recognizes revenue for performance obligations that are satisfied over time using an input method with revenue recognized proportionately as costs are incurred relative to the total expected costs to satisfy the performance obligation (“estimate-at-completion”). This method of revenue recognition requires management to continuously update estimate-at-completion costs, changes to which affect the amount of profit and loss recognized each period. During fiscal year 2020, approximately $1.4 billion of the revenue for Aerospace Structures represent revenues from performance obligations that have been satisfied over time. |
Auditing the revenue recognition for performance obligations satisfied over time within the Aerospace Structures reportable segment, including its estimate-at-completion analyses, was especially challenging due to the significant judgment involved in evaluating the key assumptions, including materials, labor and overhead costs, made by management in its estimates of the total expected costs to satisfy the performance obligations. The estimate-at-completion analyses and resultant forecasted profit or loss of each performance obligation are sensitive to assumptions surrounding the Company’s ability to achieve the technical requirements, schedule requirements, internal and subcontractor performance projections, anticipated business volume, anticipated asset utilization, and anticipated labor agreements, as well as the accuracy of estimated inflation trends, each of which can materially change the key cost assumptions. | ||
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to recognize revenue for performance obligations that are satisfied over time within the Aerospace Structures reportable segment. In particular, we tested controls over management’s review of the key assumptions in the estimate-at-completion analyses, which are describe above. We also tested management’s controls over the completeness and accuracy of the data used in the estimate-at-completion analyses. To test the recognition of revenue for performance obligations that are satisfied over time within the Aerospace Structures reportable segment, our audit procedures included, among others, evaluating the key assumptions used to develop the estimate-at-completion analyses and the completeness and accuracy of the underlying data used in management’s calculations. For example, we compared estimated costs to satisfy performance obligations in the estimate-at-completion analyses to historical results and source documentation including supplier agreements, current and projected labor rates, expected inflation rates, as well as overhead costs including rent expense and depreciation of long-lived assets. We recalculated the revenue recognized and resulting profit or loss based on actual costs and estimate-at-completion assumptions. When testing the significant assumptions, we involved our engineering specialists to assist in evaluating key judgments including cost projections related to management’s determination of estimate-at-completion costs. In addition, we assessed the accuracy of the Company’s historical estimates by comparing them to actual costs incurred. When there was a significant change in estimate, we inspected underlying evidence for the reason for the change in the estimate and the timing of the change in estimate. |
Description of the Matter |
As described in Note 12 of the consolidated financial statements, at March 31, 2020 the Company had deferred tax assets for deductible temporary differences and tax attributes of $162 million (net of a $439 million valuation allowance). Deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Auditing the Company’s analysis of the realizability of its deferred tax assets required complex auditor judgment because the amounts are material to the financial statements and the assessment process involves significant judgment to apply changes in the tax law, determine the future reversal pattern of existing taxable temporary differences and other assumptions of future taxable income that may be affected by future market or economic conditions. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets. This included controls over management’s evaluation and application of the effects of changes in the tax law and the scheduling of the future reversal pattern of existing taxable temporary differences that have been identified as a source of future taxable income. To test the Company’s assessment of the realizability of deferred tax assets and the resulting valuation allowance, our audit procedures included, among others, testing the Company’s calculation of future taxable income from the reversal of existing temporary taxable differences and evaluating the scheduling of the reversal patterns. In addition, we compared taxable income in prior carryback years, if any, to the Company’s income tax returns; considered the feasibility of tax planning strategies; and, evaluated projected future taxable income exclusive of reversing temporary differences and carryforwards. We involved our tax professionals to assist in evaluating the application of tax law, including any changes in the tax law, in the Company’s consideration of the sources of future taxable income. |
Description of the Matter |
At March 31, 2020, the Company’s aggregate defined benefit pension and other post-retirement benefit obligation was $2.3 billion and the net periodic benefit income was $39 million. As described in Note 15 of the consolidated financial statements, the Company updates the estimates used to measure the defined benefit pension obligation and plan assets in the fourth quarter and upon a remeasurement event to reflect the actual return on plan assets and updated actuarial assumptions. The Company had a remeasurement event in the second quarter of fiscal year 2020. Auditing the defined benefit pension and other post-retirement benefit obligations and the related net periodic benefit income required complex auditor judgment and technical expertise due to the highly judgmental nature of the actuarial assumptions (e.g., discount rate, mortality rate, expected return on plan assets) used in the measurement process. These assumptions had a significant effect on the projected benefit obligation and the net periodic benefit income. Further, the accounting guidance for remeasurement events including plan amendments, curtailments and special termination benefits was complex and required significant judgment. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s determination of the defined benefit pension and other post-retirement benefit obligation calculations, the significant actuarial assumptions described above and the data inputs provided to the Company’s actuarial specialists, as well as management’s evaluation of the relevant authoritative accounting literature to recognize the effects of plan amendments, curtailments and special termination benefits. To test the defined benefit pension and other post-retirement benefit obligation, and the related net periodic benefit income, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions described above, the underlying data used by management and its actuaries and the appropriateness of management’s judgments in applying the authoritative accounting literature. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the defined benefit pension and other post-retirement obligation from prior year resulting from the change in service cost, interest cost, benefit payments, actuarial gains and losses, participant contributions, special termination benefits and plan amendments. In addition, we involved our actuarial specialists to assist in evaluating management’s methodology for determining the actuarial assumptions. For example, we evaluated management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the defined benefit pension obligation. As part of this assessment, we compared the projected defined benefit pension and other post-retirement obligation cash flows to prior year amounts and compared the current year benefits paid to the prior year projected cash flows. To evaluate the mortality rate, we assessed whether the information is consistent with publicly available information, and whether any market data adjusted for entity-specific adjustments were applied. We also tested the completeness and accuracy of the underlying data, including the participant data provided to the Company’s actuarial specialists. Lastly, to evaluate the expected return on plan assets, we assessed whether management’s assumptions were consistent with a range of returns for a portfolio of comparative investments. |
/s/ Ernst & Young, LLP |
March 31, |
||||||||
2020 |
2019 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Trade and other receivables, less allowance for doubtful accounts of $ |
||||||||
Contract assets |
||||||||
Inventory, net |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Goodwill |
||||||||
Intangible assets, net |
||||||||
Other, net |
||||||||
Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | $ | ||||||
Accounts payable |
||||||||
Contract liabilities |
||||||||
Accrued expenses |
||||||||
Total current liabilities |
||||||||
Long-term debt, less current portion |
||||||||
Accrued pension and other postretirement benefits |
||||||||
Deferred income taxes |
||||||||
Other noncurrent liabilities |
||||||||
Stockholders’ deficit: |
||||||||
Common stock, $ par value, |
||||||||
Capital in excess of par value |
||||||||
Treasury stock, at cost, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
Total liabilities and stockholders’ deficit |
$ | $ | ||||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Net sales |
$ | $ | $ | |||||||||
Operating costs and expenses: |
||||||||||||
Cost of sales (exclusive of depreciation shown separately below) |
||||||||||||
Selling, general and administrative |
||||||||||||
Depreciation and amortization |
||||||||||||
Legal judgment gain, net of expenses |
( |
) | — | — | ||||||||
Impairment of goodwill |
— | |||||||||||
Restructuring |
||||||||||||
Loss on sale of assets and businesses |
||||||||||||
Operating income (loss) |
( |
) | ( |
) | ||||||||
Non-service defined benefit income |
( |
) | ( |
) | ( |
) | ||||||
Interest expense and other, net |
||||||||||||
Loss from continuing operations before income taxes |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense (benefit) |
( |
) | ( |
) | ||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Loss per share—basic: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Weighted average common shares outstanding—basic |
||||||||||||
Loss per share—diluted: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Weighted average common shares outstanding—diluted |
||||||||||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Other comprehensive (loss) income: |
||||||||||||
Foreign currency translation adjustment |
( |
) | ||||||||||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Amounts arising during the period - net of tax (expense) benefit |
||||||||||||
Prior service credit (cost), net of taxes of $ |
( |
) | ||||||||||
Actuarial (loss) gain, net of taxes of $ |
( |
) | ( |
) | ||||||||
Reclassification to net loss - net of expense (benefit) |
||||||||||||
Amortization of net loss, net of taxes of $ |
||||||||||||
Recognized prior service credits, net of taxes of $ |
( |
) | ( |
) | ( |
) | ||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
( |
) | ( |
) | ||||||||
Cash flow hedges: |
||||||||||||
Unrealized (loss) gain arising during the period, net of tax benefit of $ |
( |
) | ||||||||||
Reclassification of loss included in net earnings, net of tax expense of $ |
( |
) | ( |
) | ( |
) | ||||||
Net unrealized loss on cash flow hedges, net of tax |
( |
) | ( |
) | ( |
) | ||||||
Total other comprehensive (loss) income |
( |
) | ( |
) | ||||||||
Total comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Outstanding Shares |
Common Stock All Classes |
Capital in Excess of Par Value |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings (Accumulated Deficit) |
Total |
||||||||||||||||||||||
March 31, 2017 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
Change in pension accounting method (Note 1) |
— | — | — | — | ( |
) | — | |||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | |||||||||||||||||||||||
Pension liability adjustment, net of income taxes of ($ |
— | — | — | — | — | |||||||||||||||||||||||
Change in fair value of derivatives |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $ |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Cash dividends ($ |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||
Employee stock purchase plan |
— | ( |
) | — | — | |||||||||||||||||||||||
March 31, 2018 |
( |
) | ( |
) | ||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Adoption of ASC 606 |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | |||||||||||||||||||||||
Pension liability adjustment, net of income taxes of ($ |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $ |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Cash dividends ($ |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Share-based compensation |
— | ( |
) | — | — | |||||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||
Employee stock purchase plan |
— | ( |
) | — | — | |||||||||||||||||||||||
Other |
— | — | ( |
) | — | |||||||||||||||||||||||
March 31, 2019 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Adoption of ASC 842 |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Pension liability adjustment, net of income taxes of $ |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $ |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Cash dividends ($ |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Share-based compensation |
— | ( |
) | — | — | |||||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||
Employee stock purchase plan |
— | ( |
) | — | — | |||||||||||||||||||||||
Contribution of treasury shares to pension plan |
— | ( |
) | — | — | |||||||||||||||||||||||
March 31, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Operating Activities |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||||||
Depreciation and amortization |
||||||||||||
Impairment of goodwill |
— | |||||||||||
Amortization of acquired contract liability |
( |
) | ( |
) | ( |
) | ||||||
Loss on sale of assets and businesses |
||||||||||||
Curtailments, settlements and early retirement incentives |
( |
) | ||||||||||
Other amortization included in interest expense |
||||||||||||
Provision (recovery) for doubtful accounts receivable |
( |
) | ( |
) | ||||||||
Provision (benefit) for deferred income taxes |
( |
) | ( |
) | ||||||||
Share-based compensation |
||||||||||||
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures: |
||||||||||||
Trade and other receivables |
( |
) | ( |
) | ||||||||
Contract assets |
( |
) | ||||||||||
Inventories |
( |
) | ( |
) | ( |
) | ||||||
Prepaid expenses and other current assets |
( |
) | ( |
) | ||||||||
Accounts payable, accrued expenses and income taxes payable |
( |
) | ( |
) | ( |
) | ||||||
Accrued pension and other postretirement benefits |
( |
) | ( |
) | ( |
) | ||||||
Other |
( |
) | ||||||||||
Net cash provided by (used in) operating activities |
( |
) | ( |
) | ||||||||
Investing Activities |
||||||||||||
Capital expenditures |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from sale of assets and businesses |
||||||||||||
Acquisitions, net of cash acquired |
— | — | ( |
) | ||||||||
Net cash provided by investing activities |
||||||||||||
Financing Activities |
||||||||||||
Net increase in revolving credit facility |
||||||||||||
Proceeds from issuance of long-term debt |
||||||||||||
Retirement of debt and capital lease obligations |
( |
) | ( |
) | ( |
) | ||||||
Payment of deferred financing costs |
( |
) | ( |
) | ( |
) | ||||||
Dividends paid |
( |
) | ( |
) | ( |
) | ||||||
Repurchase of restricted shares for minimum tax obligations |
( |
) | ( |
) | ( |
) | ||||||
Net cash provided by financing activities |
||||||||||||
Effect of exchange rate changes on cash |
( |
) | ( |
) | ||||||||
Net change in cash and cash equivalents |
( |
) | ||||||||||
Cash and cash equivalents at beginning of year |
||||||||||||
Cash and cash equivalents at end of year |
$ | $ | $ | |||||||||
1. |
BACKGROUND AND BASIS OF PRESENTATION |
Fiscal Years Ended |
||||||||||||
As Previously Reported, March 31, 2020 |
Impact of Change |
As Reported, March 31, 2020 |
||||||||||
Non-service defined benefit income |
$ | ( |
) | $ | ( |
) | ||||||
Loss from continuing operations before income taxes |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense |
— | |||||||||||
|
|
|
|
|
|
|||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net Loss per share - basic & diluted |
||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | ( |
) | $ | $ | ( |
) | |||||
Total other comprehensive loss |
$ | ( |
) | $ | $ | ( |
) | |||||
Comprehensive loss |
$ | ( |
) | $ | — | $ | ( |
) |
As Previously Reported, March 31, 2020 |
Impact of Change |
As Reported, March 31, 2020 |
||||||||||
Stockholders’ deficit: |
||||||||||||
Accumulated other comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Accumulated deficit |
( |
) | ( |
) | ||||||||
Total stockholders’ deficit |
$ | ( |
) | $ | — | $ | ( |
) |
Fiscal Years Ended |
||||||||||||
As Previously Reported, March 31, 2019 |
Impact of Change |
As Reported, March 31, 2019 |
||||||||||
Non-service defined benefit income |
$ | ( |
) | $ | ( |
) | ||||||
Loss from continuing operations before income taxes |
( |
) | ( |
) | ( |
) | ||||||
Income tax benefit |
( |
) | — | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net Income per share - basic & diluted |
||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | ( |
) | $ | $ | ( |
) | |||||
Total other comprehensive loss |
$ | ( |
) | $ | $ | ( |
) | |||||
Comprehensive loss |
$ | ( |
) | $ | — | $ | ( |
) |
As Previously Reported, March 31, 2019 |
Impact of Change |
As Reported, March 31, 2019 |
||||||||||
Stockholders’ deficit: |
||||||||||||
Accumulated other comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Accumulated deficit |
( |
) | ( |
) | ||||||||
Total stockholders’ deficit |
$ | ( |
) | $ | — | $ | ( |
) |
Fiscal Years Ended |
||||||||||||
As Previously Reported, March 31, 2018 |
Impact of Change |
As Reported, March 31, 2018 |
||||||||||
Non-service defined benefit income |
$ | ( |
) | $ | ( |
) | ||||||
Loss from continuing operations before income taxes |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense |
( |
) | — | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Net income |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net Income per share - basic & diluted |
||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | $ | $ | |||||||||
Total other comprehensive income |
$ | $ | $ | |||||||||
Comprehensive loss |
$ | ( |
) | $ | — | $ | ( |
) |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
March 31, |
||||||||
2020 |
2019 |
|||||||
Total trade receivables |
$ | $ | ||||||
Other receivables |
||||||||
|
|
|
|
|||||
Total trade and other receivables |
||||||||
Less: Allowance for doubtful accounts |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total trade and other receivables, net |
$ | $ | ||||||
|
|
|
|
3. |
DIVESTED OPERATIONS AND ASSETS HELD FOR SALE |
4. |
REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS |
Year Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Systems & Support |
||||||||
Satisfied over time |
$ | $ | ||||||
Satisfied at a point in time |
||||||||
Revenue from contracts with customers |
||||||||
Amortization of acquired contract liabilities |
||||||||
Total revenue |
||||||||
Aerospace Structures |
||||||||
Satisfied over time |
$ | $ | ||||||
Satisfied at a point in time |
||||||||
Revenue from contracts with customers |
||||||||
Amortization of acquired contract liabilities |
||||||||
Total revenue |
||||||||
$ | $ | |||||||
Year Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Systems & Support |
||||||||
Commercial aerospace |
$ | $ | ||||||
Military |
||||||||
Business jets |
||||||||
Regional |
||||||||
Non-aviation |
||||||||
Revenue from contracts with customers |
||||||||
Amortization of acquired contract liabilities |
||||||||
Total revenue |
$ | $ | ||||||
Aerospace Structures |
||||||||
Commercial aerospace |
$ | $ | ||||||
Military |
||||||||
Business jets |
||||||||
Regional |
||||||||
Non-aviation |
||||||||
Revenue from contracts with customers |
||||||||
Amortization of acquired contract liabilities |
||||||||
Total revenue |
||||||||
$ | $ | |||||||
March 31, 2020 |
March 31, 2019 |
Change |
||||||||||
Contract assets |
$ | $ | $ | ( |
) | |||||||
Contract liabilities |
( |
) | ( |
) | ||||||||
Net contract liability |
$ | ( |
) | $ | ( |
) | $ | |||||
Total |
Less than |
More than years |
||||||||||||||||||
Unsatisfied performance obligations |
$ | $ | $ | $ | $ |
5. |
INVENTORIES |
March 31, |
||||||||
2020 |
2019 |
|||||||
Raw materials |
$ | $ | ||||||
Work-in-process, including manufactured and purchased components |
||||||||
Finished goods |
||||||||
Rotable assets |
||||||||
Total inventories |
$ | $ | ||||||
6. |
PROPERTY AND EQUIPMENT |
March 31, |
||||||||
2020 |
2019 |
|||||||
Land |
$ | $ | ||||||
Construction-in-process |
||||||||
Buildings and improvements |
||||||||
Machinery and equipment |
||||||||
Less: accumulated depreciation |
||||||||
$ | $ | |||||||
7. |
GOODWILL AND OTHER INTANGIBLE ASSETS |
Systems & Support |
||||
March 31, 2019 |
$ | |||
Effect of exchange rate changes |
( |
) | ||
Impairment of goodwill |
( |
) | ||
March 31, 2020 |
$ | |||
Systems & Support |
||||
March 31, 2018 |
$ | |||
Goodwill associated with dispositions |
( |
) | ||
Effect of exchange rate changes |
( |
) | ||
March 31, 2019 |
$ | |||
March 31, 2020 |
||||||||||||||||
Weighted- Average Life (in Years) |
Gross Carrying Amount |
Accumulated Amortization |
Net |
|||||||||||||
Customer relationships |
$ | $ | ( |
) | $ | |||||||||||
Product rights, technology and licenses |
( |
) | ||||||||||||||
Noncompete agreements and other |
( |
) | ||||||||||||||
Tradenames |
( |
) | ||||||||||||||
Total intangibles, net |
$ | $ | ( |
) | $ | |||||||||||
March 31, 2019 |
||||||||||||||||
Weighted- Average Life (in Years) |
Gross Carrying Amount |
Accumulated Amortization |
Net |
|||||||||||||
Customer relationships |
$ | $ | ( |
) | $ | |||||||||||
Product rights, technology and licenses |
( |
) | ||||||||||||||
Noncompete agreements and other |
( |
) | ||||||||||||||
Tradenames |
( |
) | ||||||||||||||
Total intangibles, net |
$ | $ | ( |
) | $ | |||||||||||
8. |
ACCRUED EXPENSES |
March 31, |
||||||||
2020 |
2019 |
|||||||
Accrued pension |
$ | $ | ||||||
Accrued other postretirement benefits |
||||||||
Accrued compensation and benefits |
||||||||
Accrued interest |
||||||||
Accrued warranties |
||||||||
Accrued workers’ compensation |
||||||||
Accrued income tax |
||||||||
Operating lease liabilities |
— | |||||||
All other |
||||||||
Total accrued expenses |
$ | $ | ||||||
9. |
LEASES |
Lease Cost |
Financial Statement Classification |
Year ended March 31, 2020 |
||||
Operating lease cost |
Cost of sales or Selling, general and administrative expense | $ | ||||
Variable lease cost |
Cost of sales or Selling, general and administrative expense | |||||
Financing Lease Cost: |
||||||
Amortization of right-of-use assets |
Depreciation and amortization | |||||
Interest on lease liability |
Interest expense and other | |||||
Total lease cost (1) |
$ | |||||
(1) | Total lease cost does not include short-term leases or sublease income, both of which are immaterial. |
Year ended March 31, 2020 |
||||
Cash paid for amounts included in the measurement of lease liabilities |
||||
Operating cash flows used in operating leases |
$ | |||
Operating cash flows used in finance leases |
||||
Financing cash flows used in finance leases |
||||
ROU assets obtained in exchange for lease liabilities |
||||
Operating leases |
||||
Finance leases |
$ | |||
Leases |
Classification |
March 31, 2020 |
||||||
Assets |
||||||||
Operating lease ROU assets |
Other, net | $ | ||||||
Finance lease ROU assets, cost |
Property and equipment, net | |||||||
Accumulated amortization |
Property and equipment, net | ( |
) | |||||
Finance lease ROU assets, net |
||||||||
Total lease assets |
$ | |||||||
Liabilities |
||||||||
Current |
||||||||
Operating |
Accrued expenses | $ | ||||||
Finance |
Current portion of long-term debt |
|||||||
Noncurrent |
||||||||
Operating |
Other noncurrent liabilities | |||||||
Finance |
Long-term debt, less current portion |
|||||||
Total lease liabilities |
$ | |||||||
March 31, 2020 |
||||
Weighted average remaining lease term (years) |
||||
Operating leases |
||||
Finance leases |
||||
Weighted average discount rate |
||||
Operating leases |
% | |||
Finance leases |
% | |||
Operating leases |
Finance leases |
Total |
||||||||||
FY2021 |
$ | $ | $ | |||||||||
FY2022 |
||||||||||||
FY2023 |
||||||||||||
FY2024 |
||||||||||||
FY2025 |
||||||||||||
Thereafter |
||||||||||||
Total lease payments |
||||||||||||
Less: Imputed interest |
( |
) | ( |
) | ( |
) | ||||||
Total lease liabilities |
$ | $ | $ | |||||||||
10. |
LONG-TERM DEBT |
March 31, |
||||||||
2020 |
2019 |
|||||||
Revolving credit facility |
$ | $ | ||||||
Receivable securitization facility |
||||||||
Finance leases |
||||||||
Senior secured notes due 2024 |
— | |||||||
Senior notes due 2021 |
— | |||||||
Senior notes due 2022 |
||||||||
Senior notes due 2025 |
||||||||
Less: debt issuance costs |
( |
) | ( |
) | ||||
Less: current portion |
||||||||
$ | $ | |||||||
(i) | permits the Company to incur indebtedness in respect of the Senior Secured Notes due 2024 (the “2024 Notes”) in an aggregate principal amount of up to $ |
(ii) | lowers the aggregate amount of revolving credit commitments from $ |
(iii) | extends, with respect to extending banks representing approximately $ |
(iv) | adds an additional mandatory prepayment provision requiring that the Company prepay any outstanding revolving credit loans in an amount equal to (a) with respect to an Identified Asset Sale (as defined in the Credit Agreement) the greater of (x) $ |
(v) | modifies certain financial covenants and other terms. |
(i) | rank equal in right of payment to existing and future senior indebtedness of the Company and its subsidiary guarantors, including the obligations of the Company and its subsidiary guarantors under the Company’s credit facility; |
(ii) | are effectively subordinated to all obligations of the Company and its subsidiary guarantors that are either (A) secured by a lien on the Collateral (as defined below) that is senior or prior to the second-priority liens securing the 2024 Notes, including the first-priority liens securing borrowings under the Company’s credit facility and certain cash management and hedging obligations, or (B) secured by assets that do not constitute the Collateral, in each case to the extent of the value of the assets securing such obligations; |
(iii) | are senior in right of payment to existing and future subordinated indebtedness of the Company and its subsidiary guarantors; |
(iv) | are effectively senior to all existing and future unsecured debt of the Company and its subsidiary guarantors, but only to the extent of the value of the Collateral (after giving effect to any senior liens on the Collateral); and |
(v) | are structurally subordinated in right of payment to all indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee the 2024 Notes. |
March 31, 2020 |
March 31, 2019 |
|||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||
$ | $ | $ | $ |
11. |
OTHER NONCURRENT LIABILITIES |
March 31, |
||||||||
2020 |
2019 |
|||||||
Acquired contract liabilities, net |
$ | $ | ||||||
Accrued warranties |
||||||||
Accrued workers’ compensation |
||||||||
Noncurrent contract liabilities |
||||||||
Operating lease liabilities |
— | |||||||
Environmental contingencies |
||||||||
Income tax reserves |
||||||||
All other |
||||||||
Total other noncurrent liabilities |
$ | $ | ||||||
12. |
INCOME TAXES |
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Foreign |
$ | $ | ( |
) | $ | ( |
) | |||||
Domestic |
( |
) | ( |
) | ( |
) | ||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Current: |
||||||||||||
Federal |
$ | ( |
) | $ | ( |
) | $ | |||||
State |
||||||||||||
Foreign |
||||||||||||
Deferred: |
||||||||||||
Federal |
( |
) | ( |
) | ||||||||
State |
( |
) | ||||||||||
Foreign |
( |
) | ||||||||||
( |
) | ( |
) | |||||||||
$ | $ | ( |
) | $ | ( |
) | ||||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Statutory federal income tax rate |
% | % | % | |||||||||
State and local income taxes, net of federal tax benefit |
( |
) | ||||||||||
Goodwill impairment |
( |
) | — | ( |
) | |||||||
Disposition of business |
— | ( |
) | |||||||||
Miscellaneous permanent items and nondeductible accruals |
( |
) | ( |
) | ||||||||
Research and development tax credit |
||||||||||||
Foreign tax credits |
( |
) | ( |
) | ||||||||
Valuation allowance |
( |
) | ( |
) | ||||||||
Tax reform and CARES |
( |
) | ||||||||||
Global Intangible Low-Taxed Income |
( |
) | ( |
) | — | |||||||
Other (including foreign rate differential and FIN 48) |
( |
) | ( |
) | ||||||||
Effective income tax rate |
( |
)% | % | % | ||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss and other credit carryforwards |
$ | $ | ||||||
Inventory |
||||||||
Accruals and reserves |
||||||||
Interest carryforward |
||||||||
Pension and other postretirement benefits |
||||||||
Lease right-of-use assets |
— | |||||||
Prepaid expenses and other |
— | |||||||
Acquired contract liabilities, net |
||||||||
Valuation allowance |
( |
) | ( |
) | ||||
Net deferred tax assets |
||||||||
Deferred tax liabilities: |
||||||||
Deferred revenue |
||||||||
Property and equipment |
||||||||
Goodwill and other intangible assets |
||||||||
Lease liabilities |
— | |||||||
Prepaid expenses and other |
— | |||||||
Net deferred tax liabilities |
$ | $ | ||||||
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Adjustments for tax positions related to the current year |
||||||||||||
Adjustments for tax positions of prior years |
( |
) | ||||||||||
Ending balance |
$ | $ | $ | |||||||||
13. |
STOCKHOLDERS’ DEFICIT |
Currency Translation Adjustment |
Unrealized Gains and Losses on Derivative Instruments |
Defined Benefit Pension Plans and Other Postretirement Benefits |
Total (1) |
|||||||||||||
March 31, 2018 |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
AOCI before reclassifications |
( |
) | ( |
) | ( |
) | ||||||||||
Amounts reclassified from AOCI |
(3) |
( |
) | ( |
) | (2) |
||||||||||
Net current period OCI |
( |
) | ( |
) | ( |
) | ||||||||||
March 31, 2019 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
AOCI before reclassifications |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Amounts reclassified from AOCI |
— | ( |
) | ( |
) | (2) ( |
||||||||||
Net current period OCI |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
March 31, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
(1) | Net of tax. |
(2) | Includes amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic pension cost of which a portion is allocated to production as inventoried costs. |
(3) | Includes amounts transferred from cumulative translation adjustments as a result of the sale of Triumph Gear Systems – Toronto. |
14. |
LOSS PER SHARE |
Year ended March 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(thousands) |
||||||||||||
Weighted average common shares outstanding—basic |
||||||||||||
Net effect of dilutive stock options and non-vested stock (1) |
||||||||||||
Weighted average common shares outstanding—diluted |
||||||||||||
(1) | For the fiscal years ended March 31, 2020, 2019, and 2018, the shares that could potentially dilute earnings per share in the future but were not included in diluted weighted average common shares outstanding because to do so would have been anti-dilutive were immaterial. |
15. |
EMPLOYEE BENEFIT PLANS |
Pension Benefits |
Other Postretirement Benefits |
|||||||||||||||
Year ended March 31, |
Year ended March 31, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Change in projected benefit obligations |
||||||||||||||||
Projected benefit obligation at beginning of year |
$ | $ | $ | $ | ||||||||||||
Service cost |
||||||||||||||||
Interest cost |
||||||||||||||||
Actuarial loss (gain) |
( |
) | ||||||||||||||
Plan amendments |
( |
) | — | |||||||||||||
Curtailments |
— | — | — | |||||||||||||
Divestitures |
( |
) | — | — | — | |||||||||||
Participant contributions |
||||||||||||||||
Settlements |
( |
) | — | — | — | |||||||||||
Special termination benefits |
— | — | ||||||||||||||
Benefits paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Currency translation adjustment |
( |
) | ( |
) | — | — | ||||||||||
Projected benefit obligation at end of year |
$ | $ | $ | $ | ||||||||||||
Accumulated benefit obligation at end of year |
$ | $ | $ | $ | ||||||||||||
Assumptions used to determine benefit obligations at end of year |
||||||||||||||||
Discount rate |
% | % | % | % | ||||||||||||
Rate of compensation increase |
% | % | N/A | N/A |
Pension Benefits |
Other Postretirement Benefits |
|||||||||||||||
Year ended March 31, |
Year ended March 31, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Change in fair value of plan assets |
||||||||||||||||
Fair value of plan assets at beginning of year |
$ | $ | $ | — | $ | — | ||||||||||
Actual return on plan assets |
( |
) | — | — | ||||||||||||
Settlements |
( |
) | — | — | — | |||||||||||
Participant contributions |
||||||||||||||||
Divestitures |
( |
) | — | — | — | |||||||||||
Company contributions |
||||||||||||||||
Benefits paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Currency translation adjustment |
( |
) | ( |
) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Fair value of plan assets at end of year |
$ | $ | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Funded status (underfunded) |
||||||||||||||||
Funded status |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Reconciliation of amounts recognized on the consolidated balance sheets |
||||||||||||||||
Pension asset—noncurrent |
$ | $ | $ | — | $ | — | ||||||||||
Accrued benefit liability—current |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Accrued benefit liability—noncurrent |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net amount recognized |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Reconciliation of amounts recognized in accumulated other comprehensive income |
||||||||||||||||
Prior service credits |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||
Actuarial losses (gains) |
( |
) | ( |
) | ||||||||||||
Income tax (benefits) expenses related to above items |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Unamortized benefit plan costs (gains) |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
Pension Benefits |
Other Postretirement Benefits |
|||||||||||||||||||||||
Year Ended March 31, |
Year Ended March 31, |
|||||||||||||||||||||||
2020 |
2019 |
2018 |
2020 |
2019 |
2018 |
|||||||||||||||||||
Components of net periodic pension cost |
||||||||||||||||||||||||
Service cost |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Interest cost |
||||||||||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | — | — | — | |||||||||||||||
Amortization of prior service credit cost |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Amortization of net loss |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Curtailment loss (gain) |
— | ( |
) | — | ( |
) | ||||||||||||||||||
Settlements |
— | — | — | — | ||||||||||||||||||||
Special termination benefits |
— | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total net periodic benefit (income) expense |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Assumptions used to determine net periodic pension cost |
||||||||||||||||||||||||
Discount rate |
% | % | % | % | % | % | ||||||||||||||||||
Expected long-term rate of return on plan assets |
% | % | % | N/A | N/A | N/A | ||||||||||||||||||
Rate of compensation increase |
% | % | % | N/A | N/A | N/A |
• | As disclosed in Note 3, in March 2020, the Company transferred approximately $ |
• | In September 2019, the Company and the union which represents a portion of the workforce at the Company’s Grand Prairie, TX, facility, in conjunction with an announced shutdown of this facility, agreed to changes to the pension and retiree welfare plans for represented plan members. Effective April 1, 2020, all current retiree welfare benefits for the union-represented retirees and active employees will cease. A new benefit consisting of a one-time credit to Heath Reimbursement Accounts for the current retirees and their covered dependents will be provided. The Company and the union also agreed to increased pension benefits which are effective with the ratification of the agreement. This agreement resulted in a decrease of the projected other post-employment benefits (“OPEB”) benefit obligation of $ |
• | In August 2019, the Company and the union which represents a portion of the workforce at the Company’s Nashville, TN, facility agreed to changes to the pension and retiree welfare plans for represented plan members. Effective January 1, 2020, all current retiree welfare benefits for the union-represented retirees and active employees will cease. A new benefit consisting of a one-time credit to Heath Reimbursement Accounts for the current retirees and their covered dependents will be provided. The Company and the union also agreed to increased pension benefits which are effective on February 1, 2020, and the union also agreed to increased pension benefits which are effective with the ratification of the agreement. This agreement resulted in a decrease of the projected OPEB benefit obligation of $ |
• | In February 2019, the Company transferred its Global 7500 wing manufacturing operations to Bombardier. In conjunction with this transaction, the Company provided special termination pension benefits to certain pension participants who transferred employment from Triumph to Bombardier. This change resulted in the recognition of a charge of $ |
• | In March 2018, the Company ratified a new collective bargaining agreement with a group of union-represented employees, who were working without an agreement. The agreement resulted in plan amendments for one of our pension plans and our postretirement welfare benefit plan. These amendments eliminated future service under the plans and generated curtailments, which accelerated $ |
• | In November 2017, the Company announced an amendment to the postretirement welfare benefits plan for its non-represented employee participants. Effective January 1, 2018, the Company eliminated and reduced certain welfare benefits for non-represented retirees and active participants. Those changes resulted in a decrease in the OPEB obligation of $ |
Pension Benefits |
Other Postretirement Benefits |
|||||||
Amounts expected to be recognized in FY 2021 net periodic benefit costs |
||||||||
Prior service credit |
$ | $ | ( |
) | ||||
Actuarial loss |
$ | $ | ( |
) |
Year |
Pension Benefits |
Other Postretirement Benefits* |
||||||
2021 |
$ | $ | ||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
2026 – 2030 |
* | Net of expected Medicare Part D subsidies of $ |
Actual Allocation |
||||||||||
Target Allocation |
March 31, |
|||||||||
Asset Category |
Fiscal 2020 |
2020 |
2019 |
|||||||
Equity securities |
% | % | ||||||||
Fixed income securities |
||||||||||
Alternative investment funds |
||||||||||
Other |
||||||||||
Total |
% | % | ||||||||
March 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | — | $ | — | $ | ||||||||||
Equity securities |
||||||||||||||||
International |
— | — | ||||||||||||||
U.S. equity |
— | — | ||||||||||||||
U.S. commingled fund |
— | — | ||||||||||||||
International commingled fund |
— | — | ||||||||||||||
Fixed income securities |
||||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
Government securities |
— | — | ||||||||||||||
U.S. commingled fund |
— | — | ||||||||||||||
Other |
||||||||||||||||
Insurance contracts |
— | — | ||||||||||||||
Total investment in securities—assets |
$ | $ | $ | $ | ||||||||||||
U.S. equity commingled fund |
||||||||||||||||
International equity commingled fund |
||||||||||||||||
U.S. fixed income commingled fund |
||||||||||||||||
International fixed income commingled fund |
||||||||||||||||
Government securities commingled fund |
||||||||||||||||
Private equity and infrastructure |
||||||||||||||||
Other |
||||||||||||||||
Total investment measured at NAV as a practical expedient |
$ | |||||||||||||||
Receivables |
||||||||||||||||
Payables |
( |
) | ||||||||||||||
Total plan assets |
$ | |||||||||||||||
March 31, 2019 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | |||||||||||
Equity securities |
||||||||||||||||
International |
— | — | ||||||||||||||
U.S. equity |
— | — | ||||||||||||||
U.S. commingled fund |
— | — | ||||||||||||||
International commingled fund |
— | — | ||||||||||||||
Fixed income securities |
||||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
Government securities |
— | — | ||||||||||||||
U.S. commingled fund |
— | — | ||||||||||||||
Other |
||||||||||||||||
Insurance contracts |
— | — | ||||||||||||||
Total investment in securities—assets |
$ | $ | $ | $ | ||||||||||||
U.S. equity commingled fund |
||||||||||||||||
International equity commingled fund |
||||||||||||||||
U.S. fixed income commingled fund |
||||||||||||||||
Private equity and infrastructure |
||||||||||||||||
Other |
||||||||||||||||
Total investment measured at NAV as a practical expedient |
$ | |||||||||||||||
Receivables |
||||||||||||||||
Payables |
( |
) | ||||||||||||||
Total plan assets |
$ | |||||||||||||||
Pension Benefits |
Other Postretirement Benefits |
|||||||
Increase of 25 basis points |
||||||||
Obligation |
*$ | ( |
) | $ | ( |
) | ||
Net periodic expense |
( |
) | ||||||
Decrease of 25 basis points |
||||||||
Obligation |
*$ | $ | ||||||
Net periodic expense |
( |
) |
* | Excludes impact to plan assets due to the LDI investment approach discussed above under “Plan Assets, Investment Policy and Strategy.” |
16. |
STOCK COMPENSATION PLANS |
Shares |
Weighted- Average Grant Date Fair Value |
|||||||
Non-vested restricted awards and deferred stock units at March 31, 2019 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Non-vested restricted awards and deferred stock units at March 31, 2020 |
$ | |||||||
17. |
COMMITMENTS AND CONTINGENCIES |
18. |
RESTRUCTURING COSTS |
19. |
CUSTOMER CONCENTRATION |
20. |
COLLECTIVE BARGAINING AGREEMENTS |
21. |
SEGMENTS |
Year Ended March 31, 2020 |
||||||||||||||||
Total |
Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | $ | — | $ | $ | |||||||||||
Intersegment sales (eliminated in consolidation) |
— | ( |
) | |||||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
— | |||||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense and other, net |
( |
) | ||||||||||||||
Corporate expenses |
( |
) | ||||||||||||||
Share-based compensation expense |
( |
) | ||||||||||||||
Loss on sale of assets and businesses |
( |
) | ||||||||||||||
Amortization of acquired contract liabilities |
||||||||||||||||
Non-service defined benefit income |
||||||||||||||||
Union represented employee incentives |
( |
) | ||||||||||||||
Legal judgment gain, net |
||||||||||||||||
Impairment of goodwill |
( |
) | ||||||||||||||
Income before income taxes |
( |
) | ||||||||||||||
Total capital expenditures |
$ | $ | $ | $ | ||||||||||||
Total assets |
$ | $ | $ | $ |
Year Ended March 31, 2019 |
||||||||||||||||
Total |
Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | $ | — | $ | $ | |||||||||||
Intersegment sales (eliminated in consolidation) |
— | ( |
) | |||||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
— | |||||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense and other, net |
( |
) | ||||||||||||||
Corporate expenses |
( |
) | ||||||||||||||
Share-based compensation expense |
( |
) | ||||||||||||||
Loss on sale of assets and businesses |
( |
) | ||||||||||||||
Amortization of acquired contract liabilities |
||||||||||||||||
Non-service defined benefit income |
||||||||||||||||
Loss on adoption of ASU 2017-07 |
( |
) | ||||||||||||||
Income before income taxes |
( |
) | ||||||||||||||
Total capital expenditures |
$ | $ | $ | $ | ||||||||||||
Total assets |
$ | $ | $ | $ |
Year Ended March 31, 2018 |
||||||||||||||||
Total |
Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | $ | — | $ | $ | |||||||||||
Intersegment sales (eliminated in consolidation) |
— | ( |
) | |||||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
— | ( |
) | |||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense and other, net |
( |
) | ||||||||||||||
Corporate expenses |
( |
) | ||||||||||||||
Share-based compensation expense |
( |
) | ||||||||||||||
Loss on sale of assets and businesses |
( |
) | ||||||||||||||
Amortization of acquired contract liabilities |
||||||||||||||||
Non-service defined benefit income |
||||||||||||||||
Impairment of goodwill |
( |
) | ||||||||||||||
Income before income taxes |
( |
) | ||||||||||||||
Total capital expenditures |
$ | $ | $ | $ |
22. |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
Fiscal 2020 |
Fiscal 2019 |
|||||||||||||||||||||||||||||||
June 30 |
Sept. 30 |
Dec. 31 |
Mar. 31 |
June 30 |
Sept. 30 |
Dec. 31 |
Mar. 31 |
|||||||||||||||||||||||||
BUSINESS SEGMENT SALES |
||||||||||||||||||||||||||||||||
Systems & Support |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Aerospace Structures |
||||||||||||||||||||||||||||||||
Inter-segment Elimination |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL SALES |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
GROSS PROFIT (1) |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
OPERATING INCOME (LOSS) |
||||||||||||||||||||||||||||||||
Systems & Support |
$ | $ | $ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||||||||
Aerospace Structures |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Corporate |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL OPERATING INCOME (LOSS) |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
NET INCOME (LOSS) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Basic Income (Loss) per share |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Diluted Income (Loss) per share |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | Difference due to rounding. |
(1) | Gross profit includes depreciation. |
(2) | Includes impairment of goodwill of $ |
Balance at beginning of year |
Additions charged to (income) expense |
Other (1) |
Balance at end of year |
|||||||||||||
For year ended March 31, 2020: |
||||||||||||||||
Deferred tax assets valuation allowance |
$ | ( |
) | $ | ||||||||||||
For year ended March 31, 2019: |
||||||||||||||||
Deferred tax assets valuation allowance |
$ | $ | ||||||||||||||
For year ended March 31, 2018: |
||||||||||||||||
Deferred tax assets valuation allowance |
$ | ( |
) | $ |
(1) | Adjustments relate to changes in defined benefit pension plan and other postretirement benefit plan obligations. The adjustment in the year ended March 31, 2019, also included an adjustment of approximately $ |
June 30, 2020 |
March 31, 2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 30,909 | $ | 485,463 | ||||
Trade and other receivables, less allowance for credit losses of $7,181 and $4,293 |
256,848 | 359,487 | ||||||
Contract assets |
203,984 | 244,417 | ||||||
Inventory, net |
467,105 | 452,976 | ||||||
Assets held for sale |
195,073 | — | ||||||
Prepaid expenses and other current assets |
18,708 | 19,289 | ||||||
|
|
|
|
|||||
Total current assets |
1,172,627 | 1,561,632 | ||||||
Property and equipment, net |
370,820 | 418,141 | ||||||
Goodwill |
513,392 | 513,527 | ||||||
Intangible assets, net |
120,928 | 381,968 | ||||||
Other, net |
88,553 | 105,065 | ||||||
|
|
|
|
|||||
Total assets |
$ | 2,266,320 | $ | 2,980,333 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 7,555 | $ | 7,336 | ||||
Accounts payable |
299,269 | 457,694 | ||||||
Contract liabilities |
199,463 | 295,320 | ||||||
Accrued expenses |
199,267 | 227,403 | ||||||
Liabilities related to assets held for sale |
83,806 | — | ||||||
|
|
|
|
|||||
Total current liabilities |
789,360 | 987,753 | ||||||
Long-term debt, less current portion |
1,557,066 | 1,800,171 | ||||||
Accrued pension and other postretirement benefits |
643,256 | 660,065 | ||||||
Deferred income taxes |
7,487 | 7,439 | ||||||
Other noncurrent liabilities |
316,532 | 306,169 | ||||||
Stockholders’ deficit: |
||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 52,002,210 and 51,858,089 shares outstanding |
52 | 52 | ||||||
Capital in excess of par value |
796,186 | 804,830 | ||||||
Treasury stock, at cost, 458,710 and 602,831 shares |
(25,188 | ) | (36,217 | ) | ||||
Accumulated other comprehensive loss |
(739,164 | ) | (746,448 | ) | ||||
Accumulated deficit |
(1,079,267 | ) | (803,481 | ) | ||||
|
|
|
|
|||||
Total stockholders’ deficit |
(1,047,381 | ) | (781,264 | ) | ||||
|
|
|
|
|||||
Total liabilities and stockholders’ deficit |
$ | 2,266,320 | $ | 2,980,333 | ||||
|
|
|
|
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Net sales |
$ | 495,077 | $ | 730,231 | ||||
Operating costs and expenses: |
||||||||
Cost of sales (exclusive of depreciation shown separately below) |
393,843 | 582,233 | ||||||
Selling, general and administrative |
57,203 | 62,337 | ||||||
Depreciation and amortization |
28,602 | 44,050 | ||||||
Impairment of long-lived assets |
252,382 | — | ||||||
Restructuring |
15,439 | 2,964 | ||||||
Loss on sale of assets and businesses |
— | 3,136 | ||||||
|
|
|
|
|||||
747,469 | 694,720 | |||||||
|
|
|
|
|||||
Operating (loss) income |
(252,392 | ) | 35,511 | |||||
Non-service defined benefit income |
(12,416 | ) | (13,402 | ) | ||||
Interest expense and other, net |
34,957 | 27,491 | ||||||
|
|
|
|
|||||
(Loss) income from continuing operations before income taxes |
(274,933 | ) | 21,422 | |||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
|
|
|
|
|||||
(Loss) earnings per share—basic: |
||||||||
Net (loss) income |
$ | (5.32 | ) | $ | 0.34 | |||
|
|
|
|
|||||
Weighted average common shares outstanding—basic |
51,860 | 49,854 | ||||||
|
|
|
|
|||||
(Loss) earnings per share—diluted: |
||||||||
Net (loss) income |
$ | (5.32 | ) | $ | 0.34 | |||
|
|
|
|
|||||
Weighted average common shares outstanding—diluted |
51,860 | 50,295 | ||||||
|
|
|
|
|||||
Dividends declared and paid per common share |
$ | — | $ | 0.04 | ||||
|
|
|
|
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
Other comprehensive income (loss): |
||||||||
Foreign currency translation adjustment |
919 | (2,683 | ) | |||||
Defined benefit pension plans and other postretirement benefits: |
||||||||
Amounts arising during the period - net of tax (expense) benefit |
||||||||
Prior service (cost) credit, net of taxes of $0 and $0, respectively |
— | — | ||||||
Actuarial (loss) gain, net of taxes of $0 and $0, respectively |
— | — | ||||||
Reclassification to net (loss) income - net of expense (benefit) |
||||||||
Amortization of net (gain) loss, net of taxes of $0 and $0, respectively |
5,298 | 4,015 | ||||||
Recognized prior service cost (credits), net of taxes of $0 and $0, respectively |
(1,033 | ) | (1,442 | ) | ||||
|
|
|
|
|||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
4,265 | 2,573 | ||||||
|
|
|
|
|||||
Cash flow hedges: |
||||||||
Unrealized gain arising during the period, net of tax benefit of $0 and $0 respectively |
3,658 | 95 | ||||||
Reclassification of loss included in net earnings, net of tax expense of $0 and $0 respectively |
(1,558 | ) | (414 | ) | ||||
|
|
|
|
|||||
Net unrealized gain (loss) on cash flow hedges, net of tax |
2,100 | (319 | ) | |||||
|
|
|
|
|||||
Total other comprehensive income (loss) |
7,284 | (429 | ) | |||||
|
|
|
|
|||||
Total comprehensive (loss) income |
$ | (268,502 | ) | $ | 16,495 | |||
|
|
|
|
Outstanding Shares |
Common Stock All Classes |
Capital in Excess of Par Value |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total |
||||||||||||||||||||||
March 31, 2020 |
51,858,089 | $ | 52 | $ | 804,830 | $ | (36,217 | ) | $ | (746,448 | ) | $ | (803,481 | ) | $ | (781,264 | ) | |||||||||||
Net loss |
— | — | — | — | — | (275,786 | ) | (275,786 | ) | |||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | 919 | — | 919 | |||||||||||||||||||||
Pension liability adjustment, net of income taxes of $0 |
— | — | — | — | 4,265 | — | 4,265 | |||||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $0 |
— | — | — | — | 2,100 | — | 2,100 | |||||||||||||||||||||
Cash dividends ($0.16 per share) |
— | — | — | — | — | — | — | |||||||||||||||||||||
Share-based compensation |
158,274 | — | (6,670 | ) | 9,291 | — | — | 2,621 | ||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
(50,955 | ) | — | — | (474 | ) | — | — | (474 | ) | ||||||||||||||||||
Employee stock purchase plan |
36,802 | — | (1,974 | ) | 2,212 | — | — | 238 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
June 30, 2020 |
52,002,210 | $ | 52 | $ | 796,186 | $ | (25,188 | ) | $ | (739,164 | ) | $ | (1,079,267 | ) | $ | (1,047,381 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Shares |
Common Stock All Classes |
Capital in Excess of Par Value |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total |
||||||||||||||||||||||
March 31, 2019 |
49,887,268 | $ | 52 | $ | 867,545 | $ | (159,154 | ) | $ | (516,011 | ) | $ | (765,745 | ) | $ | (573,313 | ) | |||||||||||
Net income |
— | — | — | — | — | 16,924 | 16,924 | |||||||||||||||||||||
Adoption of ASC 842 |
— | — | — | — | — | (225 | ) | (225 | ) | |||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | (2,683 | ) | — | (2,683 | ) | |||||||||||||||||||
Pension liability adjustment, net of income taxes of ($0) |
— | — | — | — | 2,573 | — | 2,573 | |||||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $11 |
— | — | — | — | (319 | ) | — | (319 | ) | |||||||||||||||||||
Cash dividends ($0.04 per share) |
— | — | — | — | — | (1,998 | ) | (1,998 | ) | |||||||||||||||||||
Share-based compensation |
154,802 | — | (7,631 | ) | 9,534 | — | — | 1,903 | ||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
(51,406 | ) | — | — | (1,043 | ) | — | — | (1,043 | ) | ||||||||||||||||||
Employee stock purchase plan |
14,489 | — | (634 | ) | 896 | — | — | 262 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
June 30, 2019 |
50,005,153 | $ | 52 | $ | 859,280 | $ | (149,767 | ) | $ | (516,440 | ) | $ | (751,044 | ) | $ | (557,919 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Operating Activities |
||||||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization |
28,602 | 44,050 | ||||||
Impairment of long-lived assets |
252,382 | — | ||||||
Amortization of acquired contract liability |
(10,987 | ) | (16,939 | ) | ||||
Loss on sale of assets and businesses |
— | 3,136 | ||||||
Curtailments, settlements and early retirement incentives |
— | — | ||||||
Other amortization included in interest expense |
2,191 | 1,958 | ||||||
Provision for credit losses |
3,280 | 671 | ||||||
Provision for deferred income taxes |
— | 3,307 | ||||||
Share-based compensation |
2,786 | 2,426 | ||||||
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures: |
||||||||
Trade and other receivables |
86,004 | 41,247 | ||||||
Contract assets |
(63,391 | ) | 2,767 | |||||
Inventories |
(33,330 | ) | (56,623 | ) | ||||
Prepaid expenses and other current assets |
549 | 12,721 | ||||||
Accounts payable, accrued expenses, and contract liabilities |
(184,114 | ) | (35,426 | ) | ||||
Accrued pension and other postretirement benefits |
(5,054 | ) | (14,628 | ) | ||||
Other |
(665 | ) | (573 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by operating activities |
(197,533 | ) | 5,018 | |||||
|
|
|
|
|||||
Investing Activities |
||||||||
Capital expenditures |
(7,723 | ) | (8,090 | ) | ||||
Proceeds from (payments on) sale of assets and businesses |
792 | (2,570 | ) | |||||
Acquisitions, net of cash acquired |
— | — | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
(6,931 | ) | (10,660 | ) | ||||
|
|
|
|
|||||
Financing Activities |
||||||||
Net decrease in revolving credit facility |
(225,000 | ) | (30,000 | ) | ||||
Proceeds from issuance of long-term debt |
6,300 | 5,600 | ||||||
Retirement of debt and finance lease obligations |
(27,468 | ) | (30,572 | ) | ||||
Payment of deferred financing costs |
(4,277 | ) | (104 | ) | ||||
Dividends paid |
— | (1,998 | ) | |||||
Repurchase of restricted shares for minimum tax obligations |
(474 | ) | (1,043 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(250,919 | ) | (58,117 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash |
829 | (121 | ) | |||||
|
|
|
|
|||||
Net change in cash and cash equivalents |
(454,554 | ) | (63,880 | ) | ||||
Cash and cash equivalents at beginning of period |
485,463 | 92,807 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 30,909 | $ | 28,927 | ||||
|
|
|
|
Three Months Ended |
||||||||||||
As Previously Reported, June 30, 2020 |
Impact of Change |
As Reported, June 30, 2020 |
||||||||||
Non-service defined benefit income |
$ | (10,888 | ) | (1,528 | ) | $ | (12,416 | ) | ||||
Loss before income taxes |
(276,461 | ) | 1,528 | (274,933 | ) | |||||||
Income tax expense |
853 | — | 853 | |||||||||
|
|
|
|
|
|
|||||||
Net income |
$ | (277,314 | ) | $ | 1,528 | $ | (275,786 | ) | ||||
|
|
|
|
|
|
|||||||
Net Income per share - basic & diluted |
||||||||||||
Basic |
$ | (5.35 | ) | $ | 0.03 | $ | (5.32 | ) | ||||
Diluted |
$ | (5.35 | ) | $ | 0.03 | $ | (5.32 | ) | ||||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | 6,826 | $ | (1,528 | ) | $ | 5,298 | |||||
Total other comprehensive loss |
$ | 8,812 | $ | (1,528 | ) | $ | 7,284 | |||||
Comprehensive income |
$ | (268,502 | ) | $ | — | $ | (268,502 | ) |
As Previously Reported, June 30, 2020 |
Impact of Change |
As Reported, June 30, 2020 |
||||||||||
Stockholders’ deficit: |
||||||||||||
Accumulated other comprehensive loss |
$ | (710,616 | ) | $ | (28,548 | ) | $ | (739,164 | ) | |||
Accumulated deficit |
(1,107,815 | ) | 28,548 | (1,079,267 | ) | |||||||
Total stockholders’ deficit |
$ | (1,047,381 | ) | $ | — | $ | (1,047,381 | ) |
Three Months Ended |
||||||||||||
As Previously Reported, June 30, 2019 |
Impact of Change |
As Reported, June 30, 2019 |
||||||||||
Non-service defined benefit income |
$ | (14,875 | ) | 1,473 | $ | (13,402 | ) | |||||
Income before income taxes |
22,895 | (1,473 | ) | 21,422 | ||||||||
Income tax expense |
4,807 | (309 | ) | 4,498 | ||||||||
|
|
|
|
|
|
|||||||
Net income |
$ | 18,088 | $ | (1,164 | ) | $ | 16,924 | |||||
|
|
|
|
|
|
|||||||
Net Income per share - basic & diluted |
||||||||||||
Basic |
$ | 0.36 | $ | (0.02 | ) | $ | 0.34 | |||||
Diluted |
$ | 0.36 | $ | (0.02 | ) | $ | 0.34 | |||||
Defined benefit pension plans and other postretirement benefits: |
||||||||||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | 2,851 | $ | 1,164 | $ | 4,015 | ||||||
Total other comprehensive loss |
$ | (1,593 | ) | $ | 1,164 | $ | (429 | ) | ||||
Comprehensive income |
$ | 16,495 | $ | — | $ | 16,495 |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Systems & Support |
||||||||
Satisfied over time |
$ | 103,348 | $ | 129,242 | ||||
Satisfied at a point in time |
130,948 | 175,401 | ||||||
|
|
|
|
|||||
Revenue from contracts with customers |
234,296 | 304,643 | ||||||
Amortization of acquired contract liabilities |
3,719 | 8,125 | ||||||
|
|
|
|
|||||
Total revenue |
238,015 | 312,768 | ||||||
Aerospace Structures |
||||||||
Satisfied over time |
$ | 243,639 | $ | 372,237 | ||||
Satisfied at a point in time |
6,155 | 36,412 | ||||||
|
|
|
|
|||||
Revenue from contracts with customers |
249,794 | 408,649 | ||||||
Amortization of acquired contract liabilities |
7,268 | 8,814 | ||||||
|
|
|
|
|||||
Total revenue |
257,062 | 417,463 | ||||||
|
|
|
|
|||||
$ | 495,077 | $ | 730,231 | |||||
|
|
|
|
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Systems & Support |
||||||||
Commercial aerospace |
$ | 92,180 | $ | 175,319 | ||||
Military |
120,384 | 95,357 | ||||||
Business jets |
10,374 | 16,147 | ||||||
Regional |
5,875 | 10,373 | ||||||
Non-aviation |
5,483 | 7,447 | ||||||
|
|
|
|
|||||
Revenue from contracts with customers |
234,296 | 304,643 | ||||||
Amortization of acquired contract liabilities |
3,719 | 8,125 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 238,015 | $ | 312,768 | ||||
Aerospace Structures |
||||||||
Commercial aerospace |
$ | 140,971 | $ | 229,640 | ||||
Military |
38,256 | 27,600 | ||||||
Business jets |
65,952 | 121,149 | ||||||
Regional |
4,611 | 30,255 | ||||||
Non-aviation |
4 | 5 | ||||||
|
|
|
|
|||||
Revenue from contracts with customers |
249,794 | 408,649 | ||||||
Amortization of acquired contract liabilities |
7,268 | 8,814 | ||||||
|
|
|
|
|||||
Total revenue |
257,062 | 417,463 | ||||||
|
|
|
|
|||||
$ | 495,077 | $ | 730,231 | |||||
|
|
|
|
June 30, 2020 |
March 31, 2020 |
Change |
||||||||||
Contract assets |
$ | 223,157 | $ | 267,079 | $ | (43,922 | ) | |||||
Contract liabilities |
(342,604 | ) | (386,585 | ) | 43,981 | |||||||
|
|
|
|
|
|
|||||||
Net contract liability |
$ | (119,447 | ) | $ | (119,506 | ) | $ | 59 | ||||
|
|
|
|
|
|
Total |
Less than 1 year |
1-3 years |
4-5 years |
More than 5 years |
||||||||||||||||
Unsatisfied performance obligations |
$ | 3,527,122 | $ | 1,517,354 | $ | 1,357,902 | $ | 363,626 | $ | 288,240 |
Three Months Ended June 30, |
||||||||||
Lease Cost |
Financial Statement Classification |
2020 |
2019 |
|||||||
Operating lease cost |
Cost of sales or Selling, general and administrative expense | $ | 5,623 | $ | 6,502 | |||||
Variable lease cost |
Cost of sales or Selling, general and administrative expense | 2,097 | 1,842 | |||||||
Financing Lease Cost: |
||||||||||
Amortization of right-of-use |
Depreciation and amortization | 1,376 | 1,349 | |||||||
Interest on lease liability |
Interest expense and other | 406 | 170 | |||||||
|
|
|
|
|||||||
Total lease cost (1) |
$ | 9,502 | $ | 9,863 | ||||||
|
|
|
|
(1) | Total lease cost does not include short-term leases or sublease income, both of which are immaterial. |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||
Operating cash flows used in operating leases |
$ | 4,539 | $ | 4,849 | ||||
Operating cash flows used in finance leases |
407 | 171 | ||||||
Financing cash flows used in finance leases |
2,040 | 2,673 | ||||||
ROU assets obtained in exchange for lease liabilities |
||||||||
Operating leases |
4,858 | 1,831 | ||||||
Finance leases |
352 | 767 |
Leases |
Classification |
June 30, 2020 |
March 31, 2020 |
|||||||
Assets |
||||||||||
Operating lease ROU assets |
Other, net Assets held for sale |
$ | 62,562 | $ | 61,461 | |||||
Finance lease ROU assets, cost |
Property and equipment, net Assets held for sale |
41,565 | 39,461 | |||||||
Accumulated amortization |
Property and equipment, net Assets held for sale |
(19,997 | ) | (18,650 | ) | |||||
|
|
|
|
|||||||
Finance lease ROU assets, net |
21,568 | 20,811 | ||||||||
|
|
|
|
|||||||
Total lease assets |
$ | 84,130 | $ | 82,272 | ||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Current |
||||||||||
Operating |
Accrued expenses Liabilities related to assets held for sale |
$ | 13,256 | $ | 13,139 | |||||
Finance |
Current portion of long-term debt Liabilities related to assets held for sale |
7,558 | 7,336 | |||||||
Noncurrent |
||||||||||
Operating |
Other noncurrent liabilities Liabilities related to assets held for sale |
57,374 | 54,687 | |||||||
Finance |
Long-term debt, less current portion Liabilities related to assets held for sale |
16,589 | 16,597 | |||||||
|
|
|
|
|||||||
Total lease liabilities |
$ | 94,777 | $ | 91,759 | ||||||
|
|
|
|
June 30, 2020 |
March 31, 2020 |
|||||||
Weighted average remaining lease term (years) |
||||||||
Operating leases |
7.2 | 7.2 | ||||||
Finance leases |
6.7 | 6.9 | ||||||
Weighted average discount rate |
||||||||
Operating leases |
6.2 | % | 6.2 | % | ||||
Finance leases |
6.1 | % | 5.9 | % |
Operating leases |
Finance leases |
Total |
||||||||||
FY2021 (remaining of year) |
$ | 13,015 | $ | 6,759 | $ | 19,774 | ||||||
FY2022 |
15,632 | 6,308 | 21,940 | |||||||||
FY2023 |
12,190 | 3,354 | 15,544 | |||||||||
FY2024 |
9,364 | 2,702 | 12,066 | |||||||||
FY2025 |
8,100 | 1,356 | 9,456 | |||||||||
Thereafter |
30,099 | 9,905 | 40,004 | |||||||||
|
|
|
|
|
|
|||||||
Total lease payments |
88,400 | 30,384 | 118,784 | |||||||||
Less: Imputed interest |
(17,770 | ) | (6,237 | ) | (24,007 | ) | ||||||
|
|
|
|
|
|
|||||||
Total lease liabilities |
$ | 70,630 | $ | 24,147 | $ | 94,777 | ||||||
|
|
|
|
|
|
June 30, 2020 |
March 31, 2020 |
|||||||
Raw materials |
$ | 58,724 | $ | 32,552 | ||||
Work-in-process, |
295,874 | 312,953 | ||||||
Finished goods |
56,331 | 50,011 | ||||||
Rotable assets |
56,176 | 57,460 | ||||||
|
|
|
|
|||||
Total inventories |
$ | 467,105 | $ | 452,976 | ||||
|
|
|
|
June 30, 2020 |
March 31, 2020 |
|||||||
Revolving credit facility |
$ | 175,000 | $ | 400,000 | ||||
Receivable securitization facility |
55,800 | 75,000 | ||||||
Finance leases |
24,141 | 23,933 | ||||||
Senior secured notes due 2024 |
525,000 | 525,000 | ||||||
Senior notes due 2022 |
300,000 | 300,000 | ||||||
Senior notes due 2025 |
500,000 | 500,000 | ||||||
Less: debt issuance costs |
(15,320 | ) | (16,426 | ) | ||||
|
|
|
|
|||||
1,564,621 | 1,807,507 | |||||||
Less: current portion |
7,555 | 7,336 | ||||||
|
|
|
|
|||||
$ | 1,557,066 | $ | 1,800,171 | |||||
|
|
|
|
June 30, 2020 |
March 31, 2020 |
|||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||
$ | 1,564,621 | $ | 1,347,151 | $ | 1,807,507 | $ | 1,559,455 |
Three Months Ended June 30, |
||||||||
(in thousands) |
||||||||
2020 |
2019 |
|||||||
Weighted average common shares outstanding – basic |
51,860 | 49,854 | ||||||
Net effect of dilutive stock options and non-vested stock (1) |
— | 441 | ||||||
|
|
|
|
|||||
Weighted average common shares outstanding – diluted |
51,860 | 50,295 | ||||||
|
|
|
|
(1) | For the three months ended June 30, 2020 and 2019, the shares that could potentially dilute earnings per share in the future but were not included in diluted weighted average common shares outstanding because to do so would have been anti-dilutive were immaterial. |
Pension Benefits |
||||||||
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Components of net periodic benefit costs: |
||||||||
Service cost |
$ | 377 | $ | 581 | ||||
Interest cost |
16,087 | 18,661 | ||||||
Expected return on plan assets |
(34,105 | ) | (35,119 | ) | ||||
Amortization of prior service credits |
243 | (278 | ) | |||||
Amortization of net loss |
7,798 | 6,112 | ||||||
|
|
|
|
|||||
Net periodic benefit income |
$ | (9,600 | ) | $ | (10,043 | ) | ||
|
|
|
|
Other Postretirement Benefits |
||||||||
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Components of net periodic benefit costs: |
||||||||
Service cost |
$ | — | $ | 44 | ||||
Interest cost |
28 | 863 | ||||||
Amortization of prior service credits |
(1,276 | ) | (1,164 | ) | ||||
Amortization of gain |
(1,191 | ) | (2,442 | ) | ||||
Curtailment gain |
— | — | ||||||
|
|
|
|
|||||
Net periodic benefit income |
$ | (2,439 | ) | $ | (2,699 | ) | ||
|
|
|
|
Currency Translation Adjustment |
Unrealized Gains and Losses on Derivative Instruments |
Defined Benefit Pension Plans and Other Postretirement Benefits |
Total (1) |
|||||||||||||
March 31, 2020 |
$ | (62,045 | ) | $ | (4,303 | ) | $ | (680,100 | ) | $ | (746,448 | ) | ||||
AOCI before reclassifications |
919 | 3,658 | — | 4,577 | ||||||||||||
Amounts reclassified from AOCI |
— | (1,558 | ) | 4,265 | (2) |
2,707 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net current period OCI |
919 | 2,100 | 4,265 | 7,284 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2020 |
(61,126 | ) | (2,203 | ) | (675,835 | ) | (739,164 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
March 31, 2019 |
$ | (48,606 | ) | $ | (1,130 | ) | $ | (466,275 | ) | $ | (516,011 | ) | ||||
AOCI before reclassifications |
(2,683 | ) | 95 | — | (2,588 | ) | ||||||||||
Amounts reclassified from AOCI |
— | (414 | ) | 2,573 | (2) |
2,159 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net current period OCI |
(2,683 | ) | (319 | ) | 2,573 | (429 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2019 |
(51,289 | ) | (1,449 | ) | (463,702 | ) | (516,440 | ) | ||||||||
|
|
|
|
|
|
|
|
(1) | Net of tax. |
(2) | Includes amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic pension cost of which a portion is allocated to production as inventoried costs. |
Three Months Ended June 30, 2020 |
||||||||||||||||
Total |
Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | 495,077 | $ | — | $ | 238,015 | $ | 257,062 | ||||||||
Intersegment sales (eliminated in consolidation) |
— | (2,687 | ) | 1,872 | 815 | |||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
38,452 | — | 30,068 | 8,384 | ||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
(28,602 | ) | (856 | ) | (8,356 | ) | (19,390 | ) | ||||||||
Interest expense and other, net |
(34,957 | ) | ||||||||||||||
Corporate expenses |
(18,061 | ) | ||||||||||||||
Share-based compensation expense |
(2,786 | ) | ||||||||||||||
Amortization of acquired contract liabilities |
10,987 | |||||||||||||||
Non-service defined benefit income |
12,416 | |||||||||||||||
Impairment of long-lived assets |
(252,382 | ) | ||||||||||||||
|
|
|||||||||||||||
Income before income taxes |
(274,933 | ) | ||||||||||||||
|
|
|||||||||||||||
Total capital expenditures |
$ | 7,723 | $ | 411 | $ | 6,283 | $ | 1,029 | ||||||||
Total assets |
$ | 2,266,320 | $ | 118,849 | $ | 1,436,980 | $ | 710,491 |
Three Months Ended June 30, 2019 |
||||||||||||||||
Total |
Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | 730,231 | $ | — | $ | 312,768 | $ | 417,463 | ||||||||
Intersegment sales (eliminated in consolidation) |
— | (2,553 | ) | 838 | 1,715 | |||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
82,608 | — | 44,080 | 38,528 | ||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
(44,050 | ) | (834 | ) | (8,157 | ) | (35,059 | ) | ||||||||
Interest expense and other, net |
(27,491 | ) | ||||||||||||||
Corporate expenses |
(14,424 | ) | ||||||||||||||
Share-based compensation expense |
(2,426 | ) | ||||||||||||||
Loss on sale of assets and businesses |
(3,136 | ) | ||||||||||||||
Amortization of acquired contract liabilities |
16,939 | |||||||||||||||
Non-service defined benefit income |
13,402 | |||||||||||||||
|
|
|||||||||||||||
Income before income taxes |
21,422 | |||||||||||||||
|
|
|||||||||||||||
Total capital expenditures |
$ | 8,090 | $ | 233 | $ | 3,884 | $ | 3,973 |
• | Net sales were $495.1 million compared with $730.2 million for the prior year period. |
• | Operating loss was $252.4 million compared with operating income of $35.5 million for the prior year period. |
• | Net loss was $275.8 million, or ($5.32) per common share, compared with net income of $16.9 million, or $0.34 per diluted common share, for the prior year period. |
• | Backlog as of June 30, 2020, was $2.67 billion. Of our existing backlog, we estimate that approximately $1.18 billion will not be shipped by June 30, 2021. |
• | We used $197.5 million of cash in operating activities for the three months ended June 30, 2020, as compared with cash generated from operations of $5.0 million in the comparable prior year period. |
• | Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Legal judgments and settlements, when applicable, may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of the adoption of ASU 2017-07 and certain pension related transactions such as curtailments, settlements, early retirement or other incentives) may be useful for investors to consider because they represent the cost of postretirement benefits to plan participants, net of the assumption of returns on the plan’s assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization expense (including goodwill and intangible asset impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of tradenames, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day |
• | Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Net (loss) income (U.S. GAAP measure) |
$ | (275,786 | ) | $ | 16,924 | |||
Loss on sale of assets and businesses, net |
— | 3,136 | ||||||
Amortization of acquired contract liabilities |
(10,987 | ) | (16,939 | ) | ||||
Depreciation and amortization* |
280,984 | 44,050 | ||||||
Interest expense and other |
34,957 | 27,491 | ||||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Adjusted EBITDA (non-GAAP measure) |
$ | 30,021 | $ | 79,160 | ||||
Non-service defined benefit income (excluding settlements) |
(12,416 | ) | (13,402 | ) | ||||
|
|
|
|
|||||
Adjusted EBITDAP (non-GAAP measure) |
$ | 17,605 | $ | 65,758 | ||||
|
|
|
|
* | Includes impairment charges related to long-lived assets |
Three Months Ended June 30, 2020 |
||||||||||||||||
Total |
Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating (loss) income |
$ | (252,392 | ) | $ | 25,431 | $ | (256,120 | ) | $ | (21,703 | ) | |||||
Amortization of acquired contract liabilities |
(10,987 | ) | (3,719 | ) | (7,268 | ) | — | |||||||||
Depreciation and amortization* |
280,984 | 8,356 | 271,772 | 856 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 17,605 | $ | 30,068 | $ | 8,384 | $ | (20,847 | ) | |||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
||||||||||||||||
Total |
Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating income (loss) |
$ | 35,511 | $ | 44,048 | $ | 12,283 | $ | (20,820 | ) | |||||||
Loss on sale of assets and businesses |
3,136 | — | — | 3,136 | ||||||||||||
Amortization of acquired contract liabilities |
(16,939 | ) | (8,125 | ) | (8,814 | ) | — | |||||||||
Depreciation and amortization |
44,050 | 8,157 | 35,059 | 834 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 65,758 | $ | 44,080 | $ | 38,528 | $ | (16,850 | ) | |||||||
|
|
|
|
|
|
|
|
* | Includes impairment charges related to long-lived assets |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Net sales |
$ | 495,077 | $ | 730,231 | ||||
|
|
|
|
|||||
Segment operating (loss) income |
$ | (230,689 | ) | $ | 56,331 | |||
Corporate expense |
(21,703 | ) | (20,820 | ) | ||||
|
|
|
|
|||||
Total operating (loss) income |
(252,392 | ) | 35,511 | |||||
Interest expense and other |
34,957 | 27,491 | ||||||
Non-service defined benefit income |
(12,416 | ) | (13,402 | ) | ||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Net loss |
$ | (275,786 | ) | $ | 16,924 | |||
|
|
|
|
Three Months Ended June 30, |
% Change |
% of Total Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
NET SALES |
||||||||||||||||||||
Systems & Support |
$ | 239,887 | $ | 313,606 | (23.5 | )% | 48.5 | % | 43.0 | % | ||||||||||
Aerospace Structures |
257,877 | 419,178 | (38.5 | )% | 52.1 | % | 57.4 | % | ||||||||||||
Elimination of inter-segment sales |
(2,687 | ) | (2,553 | ) | (5.3 | )% | (0.5 | )% | (0.4 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net sales |
$ | 495,077 | $ | 730,231 | (32.2 | )% | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
SEGMENT OPERATING (LOSS) INCOME |
||||||||||||||||||||
Systems & Support |
$ | 25,431 | $ | 44,048 | (42.3 | )% | 10.6 | % | 14.1 | % | ||||||||||
Aerospace Structures |
(256,120 | ) | 12,283 | (2185.2 | )% | (99.3 | )% | 2.9 | % | |||||||||||
Corporate |
(21,703 | ) | (20,820 | ) | (4.2 | )% | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total segment operating (loss) income |
$ | (252,392 | ) | $ | 35,511 | (810.7 | )% | (51.0 | )% | 4.9 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
Adjusted EBITDAP |
||||||||||||||||||||
Systems & Support |
$ | 30,068 | $ | 44,080 | (31.8 | )% | 12.7 | % | 14.4 | % | ||||||||||
Aerospace Structures |
8,384 | 38,528 | (78.2 | )% | 3.4 | % | 9.4 | % | ||||||||||||
Corporate |
(20,847 | ) | (16,850 | ) | (23.7 | )% | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 17,605 | $ | 65,758 | (73.2 | )% | 3.6 | % | 9.2 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
Parent and Guarantor Summarized Financial Information |
As of and for the three months ended June 30, 2020 |
|||
Current assets |
$ | 837,566 | ||
Noncurrent assets |
940,591 | |||
Current liabilities |
756,863 | |||
Noncurrent liabilities |
2,256,674 | |||
Due to/from Non-Guarantor Subsidiaries |
12,350 | |||
Net sales |
452,295 | |||
Gross profit |
94,968 | |||
Loss from continuing operations |
(268,159 | ) | ||
Net loss |
(268,161 | ) |
Exhibit 99.2
TRIUMPH GROUP, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(dollars in thousands, except per share data)
June 30, 2020 |
March 31, 2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 30,909 | $ | 485,463 | ||||
Trade and other receivables, less allowance for credit losses of $7,181 and $4,293 |
256,848 | 359,487 | ||||||
Contract assets |
203,984 | 244,417 | ||||||
Inventory, net |
467,105 | 452,976 | ||||||
Assets held for sale |
195,073 | | ||||||
Prepaid expenses and other current assets |
18,708 | 19,289 | ||||||
|
|
|
|
|||||
Total current assets |
1,172,627 | 1,561,632 | ||||||
Property and equipment, net |
370,820 | 418,141 | ||||||
Goodwill |
513,392 | 513,527 | ||||||
Intangible assets, net |
120,928 | 381,968 | ||||||
Other, net |
88,553 | 105,065 | ||||||
|
|
|
|
|||||
Total assets |
$ | 2,266,320 | $ | 2,980,333 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS DEFICIT |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 7,555 | $ | 7,336 | ||||
Accounts payable |
299,269 | 457,694 | ||||||
Contract liabilities |
199,463 | 295,320 | ||||||
Accrued expenses |
199,267 | 227,403 | ||||||
Liabilities related to assets held for sale |
83,806 | | ||||||
|
|
|
|
|||||
Total current liabilities |
789,360 | 987,753 | ||||||
Long-term debt, less current portion |
1,557,066 | 1,800,171 | ||||||
Accrued pension and other postretirement benefits |
643,256 | 660,065 | ||||||
Deferred income taxes |
7,487 | 7,439 | ||||||
Other noncurrent liabilities |
316,532 | 306,169 | ||||||
Stockholders deficit: |
||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 52,002,210 and 51,858,089 shares outstanding |
52 | 52 | ||||||
Capital in excess of par value |
796,186 | 804,830 | ||||||
Treasury stock, at cost, 458,710 and 602,831 shares |
(25,188 | ) | (36,217 | ) | ||||
Accumulated other comprehensive loss |
(739,164 | ) | (746,448 | ) | ||||
Accumulated deficit |
(1,079,267 | ) | (803,481 | ) | ||||
|
|
|
|
|||||
Total stockholders deficit |
(1,047,381 | ) | (781,264 | ) | ||||
|
|
|
|
|||||
Total liabilities and stockholders deficit |
$ | 2,266,320 | $ | 2,980,333 | ||||
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
1
TRIUMPH GROUP, INC.
Condensed Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net sales |
$ | 495,077 | $ | 730,231 | ||||
Operating costs and expenses: |
||||||||
Cost of sales (exclusive of depreciation shown separately below) |
393,843 | 582,233 | ||||||
Selling, general and administrative |
57,203 | 62,337 | ||||||
Depreciation and amortization |
28,602 | 44,050 | ||||||
Impairment of long-lived assets |
252,382 | | ||||||
Restructuring |
15,439 | 2,964 | ||||||
Loss on sale of assets and businesses |
| 3,136 | ||||||
|
|
|
|
|||||
747,469 | 694,720 | |||||||
|
|
|
|
|||||
Operating (loss) income |
(252,392 | ) | 35,511 | |||||
Non-service defined benefit income |
(12,416 | ) | (13,402 | ) | ||||
Interest expense and other, net |
34,957 | 27,491 | ||||||
|
|
|
|
|||||
(Loss) income from continuing operations before income taxes |
(274,933 | ) | 21,422 | |||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
|
|
|
|
|||||
(Loss) earnings per sharebasic: |
||||||||
Net (loss) income |
$ | (5.32 | ) | $ | 0.34 | |||
|
|
|
|
|||||
Weighted average common shares outstandingbasic |
51,860 | 49,854 | ||||||
|
|
|
|
|||||
(Loss) earnings per sharediluted: |
||||||||
Net (loss) income |
$ | (5.32 | ) | $ | 0.34 | |||
|
|
|
|
|||||
Weighted average common shares outstandingdiluted |
51,860 | 50,295 | ||||||
|
|
|
|
|||||
Dividends declared and paid per common share |
$ | | $ | 0.04 | ||||
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
2
TRIUMPH GROUP, INC.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(unaudited)
(in thousands)
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
Other comprehensive income (loss): |
||||||||
Foreign currency translation adjustment |
919 | (2,683 | ) | |||||
Defined benefit pension plans and other postretirement benefits: |
||||||||
Amounts arising during the period - net of tax (expense) benefit |
||||||||
Prior service (cost) credit, net of taxes of $0 and $0, respectively |
| | ||||||
Actuarial (loss) gain, net of taxes of $0 and $0, respectively |
| | ||||||
Reclassification to net (loss) income - net of expense (benefit) |
||||||||
Amortization of net (gain) loss, net of taxes of $0 and $0, respectively |
5,298 | 4,015 | ||||||
Recognized prior service cost (credits), net of taxes of $0 and $0, respectively |
(1,033 | ) | (1,442 | ) | ||||
|
|
|
|
|||||
Total defined benefit pension plans and other postretirement benefits, net of taxes |
4,265 | 2,573 | ||||||
|
|
|
|
|||||
Cash flow hedges: |
||||||||
Unrealized gain arising during the period, net of tax benefit of $0 and $0 respectively |
3,658 | 95 | ||||||
Reclassification of loss included in net earnings, net of tax expense of $0 and $0 respectively |
(1,558 | ) | (414 | ) | ||||
|
|
|
|
|||||
Net unrealized gain (loss) on cash flow hedges, net of tax |
2,100 | (319 | ) | |||||
|
|
|
|
|||||
Total other comprehensive income (loss) |
7,284 | (429 | ) | |||||
|
|
|
|
|||||
Total comprehensive (loss) income |
$ | (268,502 | ) | $ | 16,495 | |||
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
3
TRIUMPH GROUP, INC.
Condensed Consolidated Statements of Stockholders Deficit
For the three months ended June 30, 2020
(unaudited)
(Dollars in thousands)
Outstanding Shares |
Common Stock All Classes |
Capital in Excess of Par Value |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total | ||||||||||||||||||||||
March 31, 2020 |
51,858,089 | $ | 52 | $ | 804,830 | $ | (36,217 | ) | $ | (746,448 | ) | $ | (803,481 | ) | $ | (781,264 | ) | |||||||||||
Net loss |
| | | | | (275,786 | ) | (275,786 | ) | |||||||||||||||||||
Foreign currency translation adjustment |
| | | | 919 | | 919 | |||||||||||||||||||||
Pension liability adjustment, net of income taxes of $0 |
| | | | 4,265 | | 4,265 | |||||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $0 |
| | | | 2,100 | | 2,100 | |||||||||||||||||||||
Cash dividends ($0.16 per share) |
| | | | | | | |||||||||||||||||||||
Share-based compensation |
158,274 | | (6,670 | ) | 9,291 | | | 2,621 | ||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
(50,955 | ) | | | (474 | ) | | | (474 | ) | ||||||||||||||||||
Employee stock purchase plan |
36,802 | | (1,974 | ) | 2,212 | | | 238 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
June 30, 2020 |
52,002,210 | $ | 52 | $ | 796,186 | $ | (25,188 | ) | $ | (739,164 | ) | $ | (1,079,267 | ) | $ | (1,047,381 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Shares |
Common Stock All Classes |
Capital in Excess of Par Value |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total | ||||||||||||||||||||||
March 31, 2019 |
49,887,268 | $ | 52 | $ | 867,545 | $ | (159,154 | ) | $ | (516,011 | ) | $ | (765,745 | ) | $ | (573,313 | ) | |||||||||||
Net income |
| | | | | 16,924 | 16,924 | |||||||||||||||||||||
Adoption of ASC 842 |
| | | | | (225 | ) | (225 | ) | |||||||||||||||||||
Foreign currency translation adjustment |
| | | | (2,683 | ) | | (2,683 | ) | |||||||||||||||||||
Pension liability adjustment, net of income taxes of ($0) |
| | | | 2,573 | | 2,573 | |||||||||||||||||||||
Change in fair value of foreign currency hedges, net of income taxes of $11 |
| | | | (319 | ) | | (319 | ) | |||||||||||||||||||
Cash dividends ($0.04 per share) |
| | | | | (1,998 | ) | (1,998 | ) | |||||||||||||||||||
Share-based compensation |
154,802 | | (7,631 | ) | 9,534 | | | 1,903 | ||||||||||||||||||||
Repurchase of restricted shares for minimum tax obligation |
(51,406 | ) | | | (1,043 | ) | | | (1,043 | ) | ||||||||||||||||||
Employee stock purchase plan |
14,489 | | (634 | ) | 896 | | | 262 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
June 30, 2019 |
50,005,153 | $ | 52 | $ | 859,280 | $ | (149,767 | ) | $ | (516,440 | ) | $ | (751,044 | ) | $ | (557,919 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
4
TRIUMPH GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
Three Months Ended June 30, |
||||||||
2020 | 2019 | |||||||
Operating Activities |
||||||||
Net (loss) income |
$ | (275,786 | ) | $ | 16,924 | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization |
28,602 | 44,050 | ||||||
Impairment of long-lived assets |
252,382 | | ||||||
Amortization of acquired contract liability |
(10,987 | ) | (16,939 | ) | ||||
Loss on sale of assets and businesses |
| 3,136 | ||||||
Curtailments, settlements and early retirement incentives |
| | ||||||
Other amortization included in interest expense |
2,191 | 1,958 | ||||||
Provision for credit losses |
3,280 | 671 | ||||||
Provision for deferred income taxes |
| 3,307 | ||||||
Share-based compensation |
2,786 | 2,426 | ||||||
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures: |
||||||||
Trade and other receivables |
86,004 | 41,247 | ||||||
Contract assets |
(63,391 | ) | 2,767 | |||||
Inventories |
(33,330 | ) | (56,623 | ) | ||||
Prepaid expenses and other current assets |
549 | 12,721 | ||||||
Accounts payable, accrued expenses, and contract liabilities |
(184,114 | ) | (35,426 | ) | ||||
Accrued pension and other postretirement benefits |
(5,054 | ) | (14,628 | ) | ||||
Other |
(665 | ) | (573 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by operating activities |
(197,533 | ) | 5,018 | |||||
|
|
|
|
|||||
Investing Activities |
||||||||
Capital expenditures |
(7,723 | ) | (8,090 | ) | ||||
Proceeds from (payments on) sale of assets and businesses |
792 | (2,570 | ) | |||||
Acquisitions, net of cash acquired |
| | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
(6,931 | ) | (10,660 | ) | ||||
|
|
|
|
|||||
Financing Activities |
||||||||
Net decrease in revolving credit facility |
(225,000 | ) | (30,000 | ) | ||||
Proceeds from issuance of long-term debt |
6,300 | 5,600 | ||||||
Retirement of debt and finance lease obligations |
(27,468 | ) | (30,572 | ) | ||||
Payment of deferred financing costs |
(4,277 | ) | (104 | ) | ||||
Dividends paid |
| (1,998 | ) | |||||
Repurchase of restricted shares for minimum tax obligations |
(474 | ) | (1,043 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(250,919 | ) | (58,117 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash |
829 | (121 | ) | |||||
|
|
|
|
|||||
Net change in cash and cash equivalents |
(454,554 | ) | (63,880 | ) | ||||
Cash and cash equivalents at beginning of period |
485,463 | 92,807 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 30,909 | $ | 28,927 | ||||
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
5
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
1. BACKGROUND AND BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Triumph Group, Inc. (Triumph) have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position and cash flows. The results of operations for the three months ended June 30, 2020 and 2019, are not necessarily indicative of results that may be expected for the year ending March 31, 2021. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the fiscal 2020 audited consolidated financial statements and notes thereto included in the Companys Form 10-K for the fiscal year ended March 31, 2020, filed with the Securities and Exchange Commission (the SEC) on May 28, 2020.
Triumph is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures and sells products for the global aerospace original equipment manufacturers (OEMs) of aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the Company) are organized based on the products and services that they provide. The Company has two reportable segments: Systems & Support and Aerospace Structures.
Systems & Support consists of the Companys operations that provide integrated solutions, including design, development, and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include hydraulic, mechanical and electromechanical actuation, power and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units and Full Authority Digital Electronic Control fuel systems; hydromechanical and electromechanical primary and secondary flight controls. Systems & Support also provides full life cycle solutions for commercial, regional and military aircraft. The Companys extensive product and service offerings include full post-delivery value chain services that simplify the maintenance, repair, and overhaul (MRO) supply chain. Through its ground support equipment maintenance, component MRO and post-production supply chain activities, Systems & Support is positioned to provide integrated planeside repair solutions globally. Capabilities include metallic and composite aircraft structures; nacelles; thrust reversers; interiors; auxiliary power units; and a wide variety of pneumatic, hydraulic, fuel and mechanical accessories. Repair services generally involve the replacement and/or remanufacturing of parts, which is similar to the original manufacture of the part. The processes that the Company performs related to repair and overhaul services are essentially the repair of wear parts or replacement of parts that are beyond economic repair. The repair service generally involves remanufacturing a complete part or a component of a part.
Aerospace Structures consists of the Companys operations that supply commercial, business, regional and military manufacturers with large metallic and composite structures and aircraft interior systems, including air ducting and thermal acoustic insulations systems. Products include wings; wing boxes; fuselage panels; horizontal and vertical tails; subassemblies such as floor grids; and aircraft interior systems, including air ducting and thermal acoustic insulations systems. Aerospace Structures also has the capability to engineer detailed structural designs in metal and composites. Capabilities include advanced composite and interior structures, joining processes such as welding, autoclave bonding, and conventional mechanical fasteners.
The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated from the consolidated financial statements.
Standards Recently Implemented
Adoption of ASU 2016-13
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The amendments in this ASU should be applied on a modified retrospective basis to all periods presented. The Company adopted ASU 2016-13 effective April 1, 2020, and the impact on our consolidated financial statements of adoption was not significant.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. ASU 2018-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level
6
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 effective April 1, 2020, and the adoption did not have a significant impact on its consolidated financial statement disclosures.
Standards Issued Not Yet Implemented
In August 2018, the FASB issued ASU 2018-14, CompensationRetirement BenefitsDefined Benefit PlansGeneral (Subtopic 715-20): Disclosure FrameworkChanges to the Disclosure Requirements for Defined Benefit Plans, which modifies the annual disclosure requirements for defined benefit pension plans and other postretirement plans. The ASU does not modify interim disclosure requirements. ASU 2018-14 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The amendments in this ASU should be applied on a retrospective basis to all periods presented. As the ASU does not modify interim disclosure requirements, the Company is currently evaluating the effect that ASU 2018-14 will have on its annual consolidated financial statements and related disclosures.
Impact of Change in Accounting Principle
Effective April 1, 2020, the Company changed its method of accounting for the determination of the market-related value of assets (MRVA) for a class of assets (fixed income securities) within the qualified U.S. defined benefit plan (the Plan) which is used in determining the expected return on asset component of net periodic benefit income. This class of assets is comprised solely of the fixed income securities asset class held in the portfolio for the Plan, which provides a natural hedge (liability-hedging assets) against the changes in the recorded amount of net periodic pension cost. Refer to Note 15 for the Companys fiscal year ended March 31, 2020 fair value disclosure by asset classification. The Companys previous method of accounting was to calculate the MRVA for all the Plans assets recognizing investment gains and losses into the MRVA over a five-year period. The Company has changed its method of accounting and elected to use the fair value of our fixed income assets, which represent approximately 44% of the Plans assets, to determine the MRVA beginning in the second quarter of fiscal 2021. This change in accounting principle is preferable as it results in an expected return on asset component of net periodic benefit income that more accurately reflects the changes in the fair values of the fixed income securities. No change is being made to the accounting principle for the other classes of pension assets, which represent the remaining 56% of the pension asset portfolio for the Plan. The gains and losses for these other plan assets will continue to be amortized into the MRVA over a five-year period.
The change in accounting principle requires retrospective application and prospective disclosure. The Company applied the change effective April 1, 2020, and recorded a cumulative adjustment to equity as for the earliest period presented. The tables below represent the impact of this change on the consolidated statements of operations (including earnings per share) and the consolidated statements of comprehensive loss for the periods presented below. The change in accounting principle had no impact on the consolidated statements of cash flows for these periods.
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal quarter ended June 30, 2020.
Three Months Ended | ||||||||||||
As Previously Reported, June 30, 2020 |
Impact of Change |
As Reported, June 30, 2020 |
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Non-service defined benefit income |
$ | (10,888 | ) | (1,528 | ) | $ | (12,416 | ) | ||||
Loss before income taxes |
(276,461 | ) | 1,528 | (274,933 | ) | |||||||
Income tax expense |
853 | | 853 | |||||||||
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Net income |
$ | (277,314 | ) | $ | 1,528 | $ | (275,786 | ) | ||||
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Net Income per share - basic & diluted |
||||||||||||
Basic |
$ | (5.35 | ) | $ | 0.03 | $ | (5.32 | ) | ||||
Diluted |
$ | (5.35 | ) | $ | 0.03 | $ | (5.32 | ) | ||||
Defined benefit pension plans and other postretirement benefits: |
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Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | 6,826 | $ | (1,528 | ) | $ | 5,298 | |||||
Total other comprehensive loss |
$ | 8,812 | $ | (1,528 | ) | $ | 7,284 | |||||
Comprehensive income |
$ | (268,502 | ) | $ | | $ | (268,502 | ) |
7
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
The table below represents the impact of the change in accounting principle on the consolidated balance sheet as of June 30, 2020.
As Previously Reported, June 30, 2020 |
Impact of Change |
As Reported, June 30, 2020 |
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Stockholders deficit: |
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Accumulated other comprehensive loss |
$ | (710,616 | ) | $ | (28,548 | ) | $ | (739,164 | ) | |||
Accumulated deficit |
(1,107,815 | ) | 28,548 | (1,079,267 | ) | |||||||
Total stockholders deficit |
$ | (1,047,381 | ) | $ | | $ | (1,047,381 | ) |
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal quarter ended June 30, 2019.
Three Months Ended | ||||||||||||
As Previously Reported, June 30, 2019 |
Impact of Change |
As Reported, June 30, 2019 |
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Non-service defined benefit income |
$ | (14,875 | ) | 1,473 | $ | (13,402 | ) | |||||
Income before income taxes |
22,895 | (1,473 | ) | 21,422 | ||||||||
Income tax expense |
4,807 | (309 | ) | 4,498 | ||||||||
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Net income |
$ | 18,088 | $ | (1,164 | ) | $ | 16,924 | |||||
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Net Income per share - basic & diluted |
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Basic |
$ | 0.36 | $ | (0.02 | ) | $ | 0.34 | |||||
Diluted |
$ | 0.36 | $ | (0.02 | ) | $ | 0.34 | |||||
Defined benefit pension plans and other postretirement benefits: |
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Total defined benefit pension plans and other postretirement benefits, net of taxes |
$ | 2,851 | $ | 1,164 | $ | 4,015 | ||||||
Total other comprehensive loss |
$ | (1,593 | ) | $ | 1,164 | $ | (429 | ) | ||||
Comprehensive income |
$ | 16,495 | $ | | $ | 16,495 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition and Contract Balances
The Companys revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the programs life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply agreements. Additionally, a majority of the Companys agreements with customers include options for future purchases. Such options primarily reduce the administrative effort of issuing subsequent purchase orders and do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in all current contracts.
The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customers ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.
8
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Companys performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs.
The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. The Companys contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery. However, a subset of the Companys current contracts includes significant financing components because the timing of the transfer of the underlying products and services under contract are at the customers discretion. For these contracts, the Company adjusts the transaction price to reflect the effects of the time value of money.
The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.
The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Companys products and services are not observable, the Company uses either the Expected Cost Plus a Margin or Adjusted Market Assessment approaches to estimate stand-alone selling price. Expected costs are typically derived from the available periodic forecast information.
Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or for work performed on a customer-owned asset.
With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic projections. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements.
Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligations percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required, and are included in contract liabilities on the accompanying consolidated balance sheets. The Company believes that the accounting estimates and assumptions made by management are appropriate given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic; however, actual results could differ materially from those estimates.
9
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
For the three months ended June 30, 2020, cumulative catch-up adjustments resulting from changes in contract values and estimated costs that arose during the fiscal year increased revenue and decreased operating loss, net loss and loss per share by approximately $1,560, $3,326, $3,326, and $0.06, respectively.
For the three months ended June 30, 2019, cumulative catch-up adjustments resulting from changes in estimates decreased net sales, operating income, net income, and earnings per share by approximately ($1,149), ($4,967), ($3,924), and ($0.08), respectively.
Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred.
Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition contract assets and liabilities. Refer to Note 4 for further discussion.
In connection with several prior acquisitions, the Company assumed existing long-term contracts. Based on review of these contracts at the acquisition date, the Company concluded that the terms of certain contracts were either more or less favorable than could be realized in market transactions as of the date of the acquisition. As a result, the Company recognized acquired contract liabilities, net of acquired contract assets as of the acquisition date of each respective acquisition, based on the present value of the difference between the contractual cash flows of the executory contracts and the estimated cash flows had the contracts been executed at the acquisition date. The liabilities principally relate to long-term contracts that were initially executed several years prior to the respective acquisition. The Company measured these net liabilities in the year they were acquired under the measurement provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurement, which is based on the price to transfer the obligation to a market participant at the measurement date, assuming that the net liabilities will remain outstanding in the marketplace. The portion of the Companys revenue resulting from transactions other than contracts with customers pertains to the amortization of these acquired contract liabilities.
Trade and Other Receivables, net
Trade and other receivables are recorded net of an allowance for expected credit losses. Trade and other receivables include amounts billed and currently due from customers and amounts retained by the customer pending contract completion. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company pools receivables that share underlying risk characteristics and records the allowance for expected credit losses based on a combination of prior experience, current economic conditions and managements expectations of future economic conditions, and specific collectibility matters when they arise. The Company writes off balances against the allowance for expected credit losses when collectibility is deemed remote. The Companys trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the customer base. For the three months ended June 30, 2020 and 2019, credit loss expense and write offs were immaterial.
Leases
The Company leases office space, manufacturing facilities, land, vehicles, and equipment. The Company determines if an agreement is or contains a lease at the lease inception date and recognizes right-of-use (ROU) assets and lease liabilities at the lease commencement date. A ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (short-term leases).
ROU assets represent the Companys right to use an underlying asset during the lease term, and lease liabilities represent the Companys obligation to make lease payments arising from the lease. The determination of the length of lease terms is affected by options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The existence of significant economic incentive is the primary consideration when assessing whether the Company is reasonably certain of exercising an option in a lease. Both finance and operating lease ROU assets and liabilities are recognized at commencement date and measured as the present value of lease payments to be made over the lease term. As the interest rate implicit in the lease is not readily available for most of the Companys leases, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The lease ROU asset recognized at commencement is adjusted for any lease payments related to initial direct costs, prepayments, and lease incentives.
For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, lease expense comprises the amortization of the ROU assets recognized on a straight-line basis generally over the shorter of the lease term or the estimated useful life of the underlying asset and interest on the lease liability. Variable lease payments not dependent on a rate or index are recognized when the event, activity, or circumstance in the lease agreement upon which those payments are contingent is probable of occurring and are presented in the same line of the consolidated balance sheet as the rent expense arising from fixed payments. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.
10
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Concentration of Credit Risk
The Companys trade and other accounts receivable are exposed to credit risk. However, the risk is limited due to the diversity of the customer base and the customer bases wide geographical area. Trade accounts receivable from The Boeing Company (Boeing) (representing commercial, military and space) represented approximately 17% and 21% of total trade accounts receivable as of June 30, 2020 and March 31, 2020, respectively. Trade and other accounts receivable from Bombardier Inc. (Bombardier) include receivables from transition services and represented approximately 19% and 16% as of June 30, 2020 and March 31, 2020, respectively. The Company had no other concentrations of credit risk of more than 10%.
Sales to Boeing for the three months ended June 30, 2020, were $188,137, or 38% of net sales, of which $52,022 and $136,114 were from the Systems & Support and Aerospace Structures, respectively. Sales to Boeing for the three months ended June 30, 2019, were $245,315, or 34% of net sales, of which $61,032 and $184,282 were from the Systems & Support and Aerospace Structures, respectively. The percentage increase in sales to Boeing as compared with the prior period is driven entirely by military sales.
Sales to Gulfstream Aerospace Corporation (Gulfstream) for the three months ended June 30, 2020, were $53,710, or 11% of net sales, of which $843 and $52,867 were from the Systems & Support and Aerospace Structures, respectively. Sales to Gulfstream for the three months ended June 30, 2019, were $102,315, or 14% of net sales, of which $855 and $101,459 were from the Systems & Support and Aerospace Structures, respectively.
No other single customer accounted for more than 10% of the Companys net sales. However, the loss of any significant customer, including Boeing and Gulfstream, could have a material adverse effect on the Company and its operating subsidiaries.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring long-lived asset impairment in the current period (see Note 10), and to its pension and postretirement plan assets (see Note 11).
Supplemental Cash Flow Information
For the three months ended June 30, 2020, the Company paid $360 for income taxes, net of income tax refunds received. For the three months ended June 30, 2019, the Company paid $1,280 as income tax refunds, net of refunds received.
11
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
3. DIVESTED OPERATIONS AND ASSETS HELD FOR SALE
Assets Held for Sale
In May 2020, the Companys Board of Directors committed to a plan (i) to sell its composites manufacturing operations located in Milledgeville, Georgia and Rayong, Thailand and (ii) to transfer the assets and certain liabilities associated with its Gulfstream G650 wing supply chain activities. In August 2020, the Company entered into a definitive agreement with the buyer of the composites manufacturing operations in Georgia and Thailand. Also in August 2020, the Company entered into a definitive agreement with Gulfstream to sell its G650 program scope of work. The transactions are expected to close in mid-fiscal 2021 and result in gains. As of June 30, 2020, the related assets and liabilities associated with these transactions are included within the Aerospace Structures reportable segment and are classified as held for sale on the accompanying condensed consolidating balance sheets.
Fiscal 2020 Divestitures
In December 2019, the Company completed the sale of its manufacturing operations at its Nashville, TN, facility for cash proceeds net of transaction costs of approximately $58,000, including approximately $7,000 allocated as a premium paid by the buyer in exchange for a specified performance guarantee. The Company recognized a loss of approximately $64,000, which is presented on the accompanying consolidated statements of operations within loss on sale of assets and businesses. The operating results of the Nashville manufacturing operations are included in Aerospace Structures through the date of divestiture. Additionally, as part of the transaction, the Company agreed to transfer to the buyer, within 120 days from the date of closing, certain defined benefit pension assets and obligations of approximately $55,000 associated with the Nashville manufacturing operations. In accordance with applicable defined benefit pension plan accounting guidance, the transfer was treated as a settlement for purposes of the Companys financial statements and resulted in accelerated recognition of previously unrecognized actuarial losses. The Company completed the transfer of the defined benefit pension assets and obligations in March 2020 and recognized a one-time settlement loss of approximately $28,000.
In September 2019, the Company completed the assignment of its E-2 Jets contract with Embraer for the manufacture of structural components for their program to AeroSpace Technologies of Korea Inc. (ASTK). As part of this transaction, the Company transferred certain assets and liabilities to ASTK and recognized a gain of approximately $10,000, which is presented on the accompanying consolidated statements of operations within loss on sale of assets and businesses. The assets and liabilities transferred were included within Aerospace Structures through the date of divestiture.
4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS
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. Additionally, the Company disaggregates revenue based upon the end market where products and services are transferred to the customer. The Companys principal operating segments and related revenue are discussed in Note 13, Segments.
12
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the three months ended June 30, 2020 and 2019:
Three Months Ended June 30, |
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2020 | 2019 | |||||||
Systems & Support |
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Satisfied over time |
$ | 103,348 | $ | 129,242 | ||||
Satisfied at a point in time |
130,948 | 175,401 | ||||||
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Revenue from contracts with customers |
234,296 | 304,643 | ||||||
Amortization of acquired contract liabilities |
3,719 | 8,125 | ||||||
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Total revenue |
238,015 | 312,768 | ||||||
Aerospace Structures |
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Satisfied over time |
$ | 243,639 | $ | 372,237 | ||||
Satisfied at a point in time |
6,155 | 36,412 | ||||||
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Revenue from contracts with customers |
249,794 | 408,649 | ||||||
Amortization of acquired contract liabilities |
7,268 | 8,814 | ||||||
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Total revenue |
257,062 | 417,463 | ||||||
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$ | 495,077 | $ | 730,231 | |||||
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13
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table shows disaggregated net sales by end market (excluding intercompany sales) for the three months ended June 30, 2020 and 2019:
Three Months Ended June 30, |
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2020 | 2019 | |||||||
Systems & Support |
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Commercial aerospace |
$ | 92,180 | $ | 175,319 | ||||
Military |
120,384 | 95,357 | ||||||
Business jets |
10,374 | 16,147 | ||||||
Regional |
5,875 | 10,373 | ||||||
Non-aviation |
5,483 | 7,447 | ||||||
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Revenue from contracts with customers |
234,296 | 304,643 | ||||||
Amortization of acquired contract liabilities |
3,719 | 8,125 | ||||||
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Total revenue |
$ | 238,015 | $ | 312,768 | ||||
Aerospace Structures |
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Commercial aerospace |
$ | 140,971 | $ | 229,640 | ||||
Military |
38,256 | 27,600 | ||||||
Business jets |
65,952 | 121,149 | ||||||
Regional |
4,611 | 30,255 | ||||||
Non-aviation |
4 | 5 | ||||||
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Revenue from contracts with customers |
249,794 | 408,649 | ||||||
Amortization of acquired contract liabilities |
7,268 | 8,814 | ||||||
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Total revenue |
257,062 | 417,463 | ||||||
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$ | 495,077 | $ | 730,231 | |||||
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Contract Assets and Liabilities
Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Companys contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current economic conditions and managements expectations of future economic conditions, and specific collectibility matters when they arise. Contract assets are presented net of this reserve on the consolidated balance sheets. For the three months ended June 30, 2020 and 2019, credit loss expense and write-offs related to contract assets were immaterial.
Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.
14
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively.
Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes our contract assets and liabilities balances:
June 30, 2020 |
March 31, 2020 |
Change | ||||||||||
Contract assets |
$ | 223,157 | $ | 267,079 | $ | (43,922 | ) | |||||
Contract liabilities |
(342,604 | ) | (386,585 | ) | 43,981 | |||||||
|
|
|
|
|
|
|||||||
Net contract liability |
$ | (119,447 | ) | $ | (119,506 | ) | $ | 59 | ||||
|
|
|
|
|
|
The Company recognized revenue due to changes in estimates associated with performance obligations satisfied or partially satisfied in previous periods of $1,560. The change in contract assets is the result of revenue recognized in excess of amounts billed during the three months ended June 30, 2020. The change in contract liabilities is the result of revenue recognized in excess of the receipt of additional customer advances during the three months ended June 30, 2020. Additionally, approximately $104,829 of contract assets and $20,517 of contract liabilities are classified as held for sale on the accompanying condensed consolidated balance sheets of June 30, 2020. For the three months ended June 30, 2020, the Company recognized $49,974 of revenue that was included in the contract liability balance at the beginning of the period. Noncurrent contract assets presented in other, net on the accompanying consolidated balance sheets as of June 30, 2020 and March 31, 2020, were $19,173 and $22,662, respectively. Noncurrent contract liabilities presented in other noncurrent liabilities on the accompanying consolidated balance sheets as of June 30, 2020 and March 31, 2020, were $143,141 and $91,265, respectively.
Performance Obligations
Customers generally contract with the Company for requirements in a segment relating to a specific program, and the Companys performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs. A single contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements.
As of June 30, 2020, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below.
Total | Less than 1 year |
1-3 years | 4-5 years | More than 5 years |
||||||||||||||||
Unsatisfied performance obligations |
$ | 3,527,122 | $ | 1,517,354 | $ | 1,357,902 | $ | 363,626 | $ | 288,240 |
15
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
5. LEASES
The components of lease expense for the three months ended June 30, 2020 and 2019, are disclosed in the table below.
Three Months Ended June 30, |
||||||||||
Lease Cost |
Financial Statement Classification |
2020 | 2019 | |||||||
Operating lease cost |
Cost of sales or Selling, general and administrative expense | $ | 5,623 | $ | 6,502 | |||||
Variable lease cost |
Cost of sales or Selling, general and administrative expense | 2,097 | 1,842 | |||||||
Financing Lease Cost: |
||||||||||
Amortization of right-of-use assets |
Depreciation and amortization | 1,376 | 1,349 | |||||||
Interest on lease liability |
Interest expense and other | 406 | 170 | |||||||
|
|
|
|
|||||||
Total lease cost (1) |
$ | 9,502 | $ | 9,863 | ||||||
|
|
|
|
(1) | Total lease cost does not include short-term leases or sublease income, both of which are immaterial. |
Supplemental cash flow information for the three months ended June 30, 2020 and 2019, is disclosed in the table below.
Three Months Ended June 30, |
||||||||
2020 | 2019 | |||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||
Operating cash flows used in operating leases |
$ | 4,539 | $ | 4,849 | ||||
Operating cash flows used in finance leases |
407 | 171 | ||||||
Financing cash flows used in finance leases |
2,040 | 2,673 | ||||||
ROU assets obtained in exchange for lease liabilities |
||||||||
Operating leases |
4,858 | 1,831 | ||||||
Finance leases |
352 | 767 |
16
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Supplemental balance sheet information related to leases as of June 30, 2020 and March 31, 2020, is disclosed in the table below.
Leases |
Classification |
June 30, 2020 |
March 31, 2020 |
|||||||
Assets |
||||||||||
Operating lease ROU assets |
Other, net Assets held for sale |
$ | 62,562 | $ | 61,461 | |||||
Finance lease ROU assets, cost |
Property and equipment, net Assets held for sale |
41,565 | 39,461 | |||||||
Accumulated amortization |
Property and equipment, net Assets held for sale |
(19,997 | ) | (18,650 | ) | |||||
|
|
|
|
|||||||
Finance lease ROU assets, net |
21,568 | 20,811 | ||||||||
|
|
|
|
|||||||
Total lease assets |
$ | 84,130 | $ | 82,272 | ||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Current |
||||||||||
Operating |
Accrued expenses Liabilities related to assets held for sale |
$ | 13,256 | $ | 13,139 | |||||
Finance |
Current portion of long-term debt Liabilities related to assets held for sale |
7,558 | 7,336 | |||||||
Noncurrent |
||||||||||
Operating |
Other noncurrent liabilities Liabilities related to assets held for sale |
57,374 | 54,687 | |||||||
Finance |
Long-term debt, less current portion Liabilities related to assets held for sale |
16,589 | 16,597 | |||||||
|
|
|
|
|||||||
Total lease liabilities |
$ | 94,777 | $ | 91,759 | ||||||
|
|
|
|
17
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Information related to lease terms and discount rates as of June 30, 2020 and March 31, 2020, is disclosed in the table below.
June 30, 2020 |
March 31, 2020 |
|||||||
Weighted average remaining lease term (years) |
||||||||
Operating leases |
7.2 | 7.2 | ||||||
Finance leases |
6.7 | 6.9 | ||||||
Weighted average discount rate |
||||||||
Operating leases |
6.2 | % | 6.2 | % | ||||
Finance leases |
6.1 | % | 5.9 | % |
The maturity of the Companys lease liabilities as of June 30, 2020, is disclosed in the table below.
Operating leases |
Finance leases |
Total | ||||||||||
FY2021 (remaining of year) |
$ | 13,015 | $ | 6,759 | $ | 19,774 | ||||||
FY2022 |
15,632 | 6,308 | 21,940 | |||||||||
FY2023 |
12,190 | 3,354 | 15,544 | |||||||||
FY2024 |
9,364 | 2,702 | 12,066 | |||||||||
FY2025 |
8,100 | 1,356 | 9,456 | |||||||||
Thereafter |
30,099 | 9,905 | 40,004 | |||||||||
|
|
|
|
|
|
|||||||
Total lease payments |
88,400 | 30,384 | 118,784 | |||||||||
Less: Imputed interest |
(17,770 | ) | (6,237 | ) | (24,007 | ) | ||||||
|
|
|
|
|
|
|||||||
Total lease liabilities |
$ | 70,630 | $ | 24,147 | $ | 94,777 | ||||||
|
|
|
|
|
|
18
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
6. INVENTORIES
Inventories are stated at the lower of cost (average-cost or specific-identification methods) or market. The components of inventories are as follows:
June 30, 2020 |
March 31, 2020 |
|||||||
Raw materials |
$ | 58,724 | $ | 32,552 | ||||
Work-in-process, including manufactured and purchased components |
295,874 | 312,953 | ||||||
Finished goods |
56,331 | 50,011 | ||||||
Rotable assets |
56,176 | 57,460 | ||||||
|
|
|
|
|||||
Total inventories |
$ | 467,105 | $ | 452,976 | ||||
|
|
|
|
7. LONG TERM DEBT
Long-term debt consists of the following:
June 30, 2020 |
March 31, 2020 |
|||||||
Revolving credit facility |
$ | 175,000 | $ | 400,000 | ||||
Receivable securitization facility |
55,800 | 75,000 | ||||||
Finance leases |
24,141 | 23,933 | ||||||
Senior secured notes due 2024 |
525,000 | 525,000 | ||||||
Senior notes due 2022 |
300,000 | 300,000 | ||||||
Senior notes due 2025 |
500,000 | 500,000 | ||||||
Less: debt issuance costs |
(15,320 | ) | (16,426 | ) | ||||
|
|
|
|
|||||
1,564,621 | 1,807,507 | |||||||
Less: current portion |
7,555 | 7,336 | ||||||
|
|
|
|
|||||
$ | 1,557,066 | $ | 1,800,171 | |||||
|
|
|
|
19
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Revolving Credit Facility
On May 22, 2020, the Company and its subsidiary co-borrowers and guarantors entered into a Twelfth Amendment to the Third Amended and Restated Credit Agreement (the Twelfth Amendment and the Credit Agreement as amended by the Twelfth Amendment, the Amended Credit Agreement) with the Administrative Agent and the Lenders party thereto. Among other things, the Twelfth Amendment:
(i) limits the amount of cash and cash equivalents in the United States the Company can hold on its balance sheet to $50,000, subject to certain limited exceptions;
(ii) authorizes the completion of asset sales with respect to previously identified Specified TAS Business Units (as defined in the Amended Credit Agreement);
(iii) provides for a reserve against the availability of up to 75% of the proceeds of Specified Asset Sales (as defined in the Amended Credit Agreement);
(iv) increases the interest rate margins applicable to the revolving credit loans by 0.50%;
(v) modifies the interest coverage ratio covenant to require a minimum interest coverage ratio of (i) 1.85 to 1.00 for the fiscal quarter ending June 30, 2020, (ii) 1.35 to 1.00 for the fiscal quarter ending September 30, 2020, (iii) 1.00 to 1.00 for the fiscal quarter ending December 31, 2020, (iv) 1.15 to 1.00 for the fiscal quarter ending March 31, 2021, (v) 1.75 to 1.00 for the fiscal quarter ending June 30, 2021, (vi) 2.00 to 1.00 for the fiscal quarter ending September 30, 2021, (vii) 2.25 to 1.00 for the fiscal quarters ending December 31, 2021 and March 31, 2022, and (viii) 2.75 to 1.00 for each fiscal quarter ending thereafter;
(vi) suspends the senior secured leverage ratio covenant through the fiscal quarter ending March 31, 2021 and modifies the senior secured leverage ratio for subsequent fiscal quarters to require the senior secured leverage ratio not to exceed (i) 4.50 to 1.00 for the fiscal quarter ending June 30, 2021, (ii) 3.75 to 1.00 for the fiscal quarter ending September 30, 2021, (iii) 3.50 to 1.00 for the fiscal quarters ending December 31, 2021 and March 31, 2022, and (iv) 3.25 to 1.00 for each fiscal quarter ending thereafter and;
(vii) modifies the first lien secured leverage ratio covenant so that the maximum permitted first lien leverage ratio steps down from 2.50 to 1.00 to 2.00 to 1.00, commencing with the fiscal quarter ending March 31, 2021.
Pursuant to the Amended Credit Agreement, the Company can borrow, repay and re-borrow revolving credit loans, and cause to be issued letters of credit, in an aggregate principal amount not to exceed $600,000 outstanding at any time. The loans borrowed under the Amended Credit Agreement bear interest at the Companys option, at a base rate plus a margin of 2.50% to 3.00%, or a eurodollar rate, plus a margin of 3.50% to 4.00%. The applicable interest rate is based upon the Companys ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization; provided, however, that during the Pricing Restriction Period (as defined in the Amended Credit Agreement), the loans will bear interest at the highest rate per annum. In addition, the Company is required to pay a commitment fee of 0.30% to 0.50% on the unused portion of the revolving credit commitments depending on the Companys total leverage ratio and whether a Pricing Restriction Period (as defined in the Amended Credit Agreement) is in effect. The Companys obligations under the Amended Credit Agreement are guaranteed by the Companys domestic subsidiaries.
The obligations under the Amended Credit Agreement and related documents are secured by liens on substantially all assets of the Company and its domestic subsidiaries pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of September 23, 2019, among the administrative agent, the Company and the subsidiaries of the Company party thereto.
At June 30, 2020, there were $175,000 in borrowings and $21,995 in letters of credit outstanding under the Credit Facility, primarily to support insurance policies. At March 31, 2020, there were $400,000 in outstanding borrowings and $22,338 in letters of credit outstanding under the Credit Facility, primarily to support insurance policies. The level of unused borrowing capacity under the Credit Facility varies from time to time depending in part upon its compliance with financial and other covenants set therein. The Amended Credit Agreement contains certain affirmative and negative covenants, including limitations on specified levels of indebtedness to earnings before interest, taxes, depreciation and amortization, and interest coverage requirements, and includes limitations on, among other things, liens, mergers, consolidations, sales of assets, and incurrence of debt. If an event of default were to occur under the Amended Credit Agreement, the lenders would be entitled to declare all amounts borrowed under it immediately due and payable. The occurrence of an event of default under the Credit Facility could also cause the acceleration of obligations under certain other agreements. The Company is currently in compliance with all such covenants. As of June 30, 2020, the Company had borrowing capacity under this agreement of $323,058 after reductions for borrowings, letters of credit outstanding under the facility and consideration of covenant limitations. On May 3, 2021, revolving credit commitments under the Amended Credit Agreement will decrease to approximately $407,000.
In connection with the Twelfth Amendment to the Credit Agreement, the Company incurred $4,266 of financing costs. These costs, along with the $10,830 of unamortized financing costs subsequent to the Eleventh Amendment, are being amortized over the remaining term of the Amended Credit Agreement on a lender-by-lender basis.
20
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Receivables Securitization Program
In December 2019, the Company amended its receivable securitization facility (the Securitization Facility) decreasing the purchase limit from $125,000 to $75,000 and extending the term through December 2022. In connection with the Securitization Facility, the Company sells on a revolving basis certain eligible accounts receivable to Triumph Receivables, LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financial institutions. The Company is the servicer of the trade accounts receivable under the Securitization Facility. As of June 30, 2020, the maximum amount available under the Securitization Facility was $75,000. Interest rates are based on LIBOR plus a program fee and a commitment fee. The program fee is 0.13% on the amount outstanding under the Securitization Facility. Additionally, the commitment fee is 0.50% on 100.00% of the maximum amount available under the Securitization Facility. The Company secures its trade accounts receivable, which are generally non-interest-bearing, in transactions that are accounted for as borrowings pursuant to ASC 860, Transfers and Servicing.
The agreement governing the Securitization Facility contains restrictions and covenants, including limitations on the making of certain restricted payments; creation of certain liens; and certain corporate acts such as mergers, consolidations and the sale of all or substantially all the Companys assets.
Senior Secured Notes Due 2024
On September 23, 2019, the Company issued $525,000 principal amount of 6.250% Senior Secured Notes due September 15, 2024 (the 2024 Notes). The 2024 Notes were sold at 100% of principal amount and have an effective interest yield of 6.250%. Interest on the 2024 Notes is payable semiannually in cash in arrears on March 15 and September 15 of each year. The 2024 Notes are secured by second-priority liens on all of the Companys and the subsidiary guarantors assets that secure all of the indebtedness under the Credit Facility and certain hedging and cash management obligations.
Senior Notes due 2021
On September 23, 2019, the Company called all outstanding 4.875% Senior Notes due 2021 (the 2021 Notes) and discharged the 2021 Notes by irrevocably depositing with the 2021 Notes trustee sufficient funds to pay all principal and accrued interest through October 23, 2019. On October 23, 2019, the Company redeemed $375,000 principal amount of the 2021 Notes with the proceeds of the 2024 Notes.
Senior Notes due 2022
On June 3, 2014, the Company issued $300,000 principal amount of 5.250% Senior Notes due June 1, 2022 (the 2022 Notes). The 2022 Notes were sold at 100% of principal amount and have an effective interest yield of 5.250%. Interest on the 2022 Notes accrues at the rate of 5.250% per annum and is payable semiannually in cash in arrears on June 1 and December 1 of each year.
Senior Notes Due 2025
On August 17, 2017, the Company issued $500,000 principal amount of 7.750% Senior Notes due August 15, 2025 (the 2025 Notes). The 2025 Notes were sold at 100% of principal amount and have an effective interest yield of 7.750%. Interest on the 2025 Notes accrues at the rate of 7.750% per annum and is payable semiannually in cash in arrears on February 15 and August 15 of each year.
Financial Instruments Not Recorded at Fair Value
Carrying amounts and the related estimated fair values of the Companys long-term debt not recorded at fair value in the consolidated financial statements are as follows:
June 30, 2020 | March 31, 2020 | |||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||
$ | 1,564,621 | $ | 1,347,151 | $ | 1,807,507 | $ | 1,559,455 |
The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the Companys existing debt arrangements or broker quotes on our existing debt (Level 2 inputs).
21
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Interest paid on indebtedness during the three months ended June 30, 2020 and 2019, amounted to $13,464 and $12,896, respectively.
8. EARNINGS PER SHARE
The following is a reconciliation between the weighted average outstanding shares used in the calculation of basic and diluted earnings per share:
Three Months Ended June 30, | ||||||||
(in thousands) | ||||||||
2020 | 2019 | |||||||
Weighted average common shares outstanding basic |
51,860 | 49,854 | ||||||
Net effect of dilutive stock options and non-vested stock (1) |
| 441 | ||||||
|
|
|
|
|||||
Weighted average common shares outstanding diluted |
51,860 | 50,295 | ||||||
|
|
|
|
(1) | For the three months ended June 30, 2020 and 2019, the shares that could potentially dilute earnings per share in the future but were not included in diluted weighted average common shares outstanding because to do so would have been anti-dilutive were immaterial. |
9. INCOME TAXES
The Company follows the Income Taxes topic of ASC 740, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Companys policy is to release the tax effects from accumulated other comprehensive income when the all of the related assets or liabilities that gave rise to the accumulated other comprehensive income have been derecognized.
The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year. Penalties and tax-related interest expense are reported as a component of income tax expense and are not significant.
As of June 30, 2020 and March 31, 2020, the total amount of unrecognized tax benefits was $18,971 and $18,965, respectively, most of which would impact the effective rate, if recognized. The Company does not anticipate that total unrecognized tax benefits will be reduced in the next 12 months.
As of June 30, 2020, the Company has a valuation allowance against principally all of its net deferred tax assets given insufficient positive evidence to support the realization of the Companys deferred tax assets. The Company intends to continue maintaining a valuation allowance on its deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. A reduction in the valuation allowance could result in a significant decrease in income tax expense in the period that the release is recorded. However, the exact timing and amount of the reduction in its valuation allowance is unknown at this time and will be subject to the earnings level the Company achieves during fiscal 2021 and future periods.
The effective income tax rate for the three months ended June 30, 2020, was (0.3)% as compared with 21.0% for the three months ended June 30, 2019. For the three months ended June 30, 2020, the effective tax rate reflected a limitation on the recognition of tax benefits due to the full valuation allowance.
With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for fiscal years ended before March 31, 2014, or foreign income tax examinations by tax authorities for fiscal years ended before March 31, 2013.
As of June 30, 2020, the Company is not subject to any income tax examinations. The Company has filed appeals in a prior state examination related to fiscal years ended March 31, 1999 through March 31, 2005. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.
10. LONG-LIVED ASSETS
As disclosed in Note 3, in May 2020, the Companys Board of Directors committed to a plan (i) to sell its composites manufacturing operations located in Milledgeville, Georgia and Rayong, Thailand and (ii) to transfer the assets and certain liabilities associated with its Gulfstream G650 wing supply chain activities. These planned divestitures represent the divestiture of certain assets and liabilities of an operating business within the Aerospace Structures segment that the Company has identified as an asset group pursuant to the provisions of ASC 360, Property, Plant, and Equipment. As a result, as of May 31, 2020, the Company concluded that the planned divestitures represent a significant change in the manner in which the related asset group was expected to be used, and that the asset group therefore needed to be tested for recoverability. The asset group primarily
22
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
consists of working capital, fixed assets and definite-lived intangible assets. The Company first determined that the relevant long-lived asset group was not recoverable by comparing the undiscounted cash flows expected to be generated by the long-lived asset group to the carrying value of the asset group. As a result, the Company estimated the fair value of the long-lived asset group and concluded that the asset group was impaired. The Company used a multi-period excess earnings approach to estimate the fair value of the long-lived asset group for purposes of testing the asset group for impairment. This method estimates fair value based on the expected future excess earnings stream attributable to the asset group. This method requires the use of several key assumptions, including revenue projections that consider historical and estimated future results, general economic and market conditions, as well as the impact of planned business and operational strategies. A discount rate of 15.0% was applied to the estimated future excess earnings and cash flows in order to estimate the fair value of the asset group as of the measurement date. The Company has determined that the lowest level of the inputs that are significant to the fair value measurement are unobservable inputs that fall within Level 3 of the fair value hierarchy.
In accordance with ASC 360, the Company allocated the resulting impairment to the specific long-lived assets within the asset group on a pro rata basis, except that the loss allocated to an individual long-lived asset of the group did not reduce the carrying amount of that asset below its estimated fair value. As a result, the Company recognized a total noncash impairment charge of $252,382, primarily allocated to definite-lived intangible assets, which is presented as Impairment of long-lived assets on the condensed consolidated statements of operations.
11. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company sponsors several defined benefit pension plans covering some of its employees. Certain employee groups are ineligible to participate in the plans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the defined benefit pension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation for certain years. It is the Companys policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under U.S. government regulations (and for non-U.S. plans, acceptable under local regulations), by making payments into a separate trust.
In addition to the defined benefit pension plans, the Company provides certain healthcare and life insurance benefits for eligible retired employees. Such benefits are unfunded. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meet specified age and years of service requirements. Election to participate for some employees must be made at the date of retirement. Qualifying dependents at the date of retirement may also be eligible for medical coverage. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees. From time to time, changes have been made to the benefits provided to various groups of plan participants. Premiums charged to most retirees for medical coverage prior to age 65 are based on years of service and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also have provisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, schedules of reasonable fees, preferred provider networks, coordination of benefits with other plans and a Medicare carve-out.
In accordance with the Compensation Retirement Benefits topic of ASC 715, the Company has recognized the funded status of the benefit obligation as of the date of the last re-measurement, on the accompanying condensed consolidated balance sheets. The funded status is measured as the difference between the fair value of the plans assets and the pension benefit obligation or accumulated postretirement benefit obligation, of the plan. In order to recognize the funded status, the Company determined the fair value of the plan assets. The majority of the plan assets are publicly traded investments, which were valued based on the market price as of the date of re-measurement. Investments that are not publicly traded were valued based on the estimated fair value of those investments based on our evaluation of data from fund managers and comparable market data.
Net Periodic Benefit Plan Costs
The components of net periodic benefit costs (income) for our postretirement benefit plans are shown in the following table:
Pension Benefits | ||||||||
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Components of net periodic benefit costs: |
||||||||
Service cost |
$ | 377 | $ | 581 | ||||
Interest cost |
16,087 | 18,661 | ||||||
Expected return on plan assets |
(34,105 | ) | (35,119 | ) | ||||
Amortization of prior service credits |
243 | (278 | ) | |||||
Amortization of net loss |
7,798 | 6,112 | ||||||
|
|
|
|
|||||
Net periodic benefit income |
$ | (9,600 | ) | $ | (10,043 | ) | ||
|
|
|
|
23
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Other Postretirement Benefits | ||||||||
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Components of net periodic benefit costs: |
||||||||
Service cost |
$ | | $ | 44 | ||||
Interest cost |
28 | 863 | ||||||
Amortization of prior service credits |
(1,276 | ) | (1,164 | ) | ||||
Amortization of gain |
(1,191 | ) | (2,442 | ) | ||||
Curtailment gain |
| | ||||||
|
|
|
|
|||||
Net periodic benefit income |
$ | (2,439 | ) | $ | (2,699 | ) | ||
|
|
|
|
12. STOCKHOLDERS DEFICIT
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss (AOCI) by component for the three months ended June 30, 2020 and 2019, were as follows:
Currency Translation Adjustment |
Unrealized Gains and Losses on Derivative Instruments |
Defined Benefit Pension Plans and Other Postretirement Benefits |
Total (1) | |||||||||||||
March 31, 2020 |
$ | (62,045 | ) | $ | (4,303 | ) | $ | (680,100 | ) | $ | (746,448 | ) | ||||
AOCI before reclassifications |
919 | 3,658 | | 4,577 | ||||||||||||
Amounts reclassified from AOCI |
| (1,558 | ) | 4,265 | (2) | 2,707 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net current period OCI |
919 | 2,100 | 4,265 | 7,284 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2020 |
(61,126 | ) | (2,203 | ) | (675,835 | ) | (739,164 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
March 31, 2019 |
$ | (48,606 | ) | $ | (1,130 | ) | $ | (466,275 | ) | $ | (516,011 | ) | ||||
AOCI before reclassifications |
(2,683 | ) | 95 | | (2,588 | ) | ||||||||||
Amounts reclassified from AOCI |
| (414 | ) | 2,573 | (2) | 2,159 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net current period OCI |
(2,683 | ) | (319 | ) | 2,573 | (429 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2019 |
(51,289 | ) | (1,449 | ) | (463,702 | ) | (516,440 | ) | ||||||||
|
|
|
|
|
|
|
|
(1) | Net of tax. |
(2) | Includes amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic pension cost of which a portion is allocated to production as inventoried costs. |
13. SEGMENTS
The Company reports financial performance based on the following two reportable segments: Systems & Support and Aerospace Structures. The Companys reportable segments are aligned with how the business is managed, and the Companys views of the markets it serves. The Chief Operating Decision Maker (the CODM) evaluates performance and allocates resources based upon review of segment information. The CODM utilizes earnings before interest, income taxes, depreciation and amortization, and pension (Adjusted EBITDAP) as a primary measure of segment profitability to evaluate performance of its segments and allocate resources.
Segment Adjusted EBITDAP is total segment revenue reduced by operating expenses (less depreciation and amortization) identifiable with that segment. Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Companys segments.
The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the Company does not disclose net sales by product or service because to do so would be impracticable.
24
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Selected financial information for each reportable segment is as follows:
Three Months Ended June 30, 2020 | ||||||||||||||||
Total | Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | 495,077 | $ | | $ | 238,015 | $ | 257,062 | ||||||||
Intersegment sales (eliminated in consolidation) |
| (2,687 | ) | 1,872 | 815 | |||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
38,452 | | 30,068 | 8,384 | ||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
(28,602 | ) | (856 | ) | (8,356 | ) | (19,390 | ) | ||||||||
Interest expense and other, net |
(34,957 | ) | ||||||||||||||
Corporate expenses |
(18,061 | ) | ||||||||||||||
Share-based compensation expense |
(2,786 | ) | ||||||||||||||
Amortization of acquired contract liabilities |
10,987 | |||||||||||||||
Non-service defined benefit income |
12,416 | |||||||||||||||
Impairment of long-lived assets |
(252,382 | ) | ||||||||||||||
|
|
|||||||||||||||
Income before income taxes |
(274,933 | ) | ||||||||||||||
|
|
|||||||||||||||
Total capital expenditures |
$ | 7,723 | $ | 411 | $ | 6,283 | $ | 1,029 | ||||||||
Total assets |
$ | 2,266,320 | $ | 118,849 | $ | 1,436,980 | $ | 710,491 |
Three Months Ended June 30, 2019 | ||||||||||||||||
Total | Corporate & Eliminations |
Systems & Support |
Aerospace Structures |
|||||||||||||
Net sales to external customers |
$ | 730,231 | $ | | $ | 312,768 | $ | 417,463 | ||||||||
Intersegment sales (eliminated in consolidation) |
| (2,553 | ) | 838 | 1,715 | |||||||||||
Segment profit and reconciliation to consolidated income before income taxes: |
||||||||||||||||
Adjusted EBITDAP |
82,608 | | 44,080 | 38,528 | ||||||||||||
Reconciliation of segment profit to income (loss) before income taxes |
||||||||||||||||
Depreciation and amortization |
(44,050 | ) | (834 | ) | (8,157 | ) | (35,059 | ) | ||||||||
Interest expense and other, net |
(27,491 | ) | ||||||||||||||
Corporate expenses |
(14,424 | ) | ||||||||||||||
Share-based compensation expense |
(2,426 | ) | ||||||||||||||
Loss on sale of assets and businesses |
(3,136 | ) | ||||||||||||||
Amortization of acquired contract liabilities |
16,939 | |||||||||||||||
Non-service defined benefit income |
13,402 | |||||||||||||||
|
|
|||||||||||||||
Income before income taxes |
21,422 | |||||||||||||||
|
|
|||||||||||||||
Total capital expenditures |
$ | 8,090 | $ | 233 | $ | 3,884 | $ | 3,973 |
During the three months ended June 30, 2020 and 2019, the Company had foreign sales of $92,197 and $175,340, respectively.
14. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations.
25
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
As the Company completes its restructuring plans as disclosed in Note 15, including the disposal of certain facilities, the Company may be exposed to additional costs such as environmental remediation obligations, lease termination costs, or supplier claims which may have a material effect on its financial position or results of operations when such matters arise and a reasonable estimate of the costs can be made.
15. RESTRUCTURING
As disclosed in the Companys Form 10-K for the fiscal year ended March 31, 2020, during the fiscal years ended March 31, 2017 and 2016, the Company committed to restructuring plans involving certain of its businesses, as well as the consolidation of certain of its facilities. With the exception of certain consolidations to be completed in future years, these plans were substantially complete as of March 31, 2020. The Company incurred costs of $15,439 associated with new restructuring plans during the three months ended June 30, 2020. We estimate that we will incur costs in each of our segments for third-party consulting costs and severance, primarily related to our cost-reductions, of approximately $25,000 to $27,000 for the fiscal year ended March 31, 2021.
26
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere herein.
OVERVIEW
We are a major supplier to the aerospace industry and have two reportable segments: (i) Systems & Support, whose companies revenues are derived from integrated solutions, including design, development and support of proprietary components, subsystems and systems, production of complex assemblies using external designs, as well as full life cycle solutions for commercial, regional and military aircraft; and (ii) Aerospace Structures, whose companies supply commercial, business, regional, and military manufacturers with large metallic and composite structures and produce close-tolerance parts primarily to customer designs and model-based definition, including a wide range of aluminium, hard metal and composite structure capabilities.
During the fiscal year ended March 31, 2020, the Company divested of a number of its assets and operations, including the sale of its manufacturing operations at its Nashville, TN, facility (the Nashville divestiture) and the assignment of its E-2 Jets contract with Embraer for the manufacture of structural components for their program to AeroSpace Technologies of Korea Inc. (ASTK). The operating results of the Nashville manufacturing operations are included in Aerospace Structures through the date of divestiture or assignment. Collectively, these transactions are referred to as the fiscal 2020 divestitures. The Company recognized combined net losses of $56.9 million associated with the fiscal 2020 divestitures, which are presented within loss on sale of assets and businesses, net on the consolidated statements of operations included on the Companys Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on May 28, 2020.
Significant financial results for the first quarter of the fiscal year ending March 31, 2021, include:
| Net sales were $495.1 million compared with $730.2 million for the prior year period. |
| Operating loss was $252.4 million compared with operating income of $35.5 million for the prior year period. |
| Net loss was $275.8 million, or ($5.32) per common share, compared with net income of $16.9 million, or $0.34 per diluted common share, for the prior year period. |
| Backlog as of June 30, 2020, was $2.67 billion. Of our existing backlog, we estimate that approximately $1.18 billion will not be shipped by June 30, 2021. |
| We used $197.5 million of cash in operating activities for the three months ended June 30, 2020, as compared with cash generated from operations of $5.0 million in the comparable prior year period. |
The Company has committed to several plans (which were initiated in fiscal 2016) that incorporated the restructuring of certain of its businesses as well as the consolidation of certain of its facilities. As of March 31, 2020, with the exception of three pending facility closures to be completed in fiscal 2021 or 2022 and the COVID-19 pandemic related actions discussed below, the Company has substantially completed these plans. For the three months ended June 30, 2020 and 2019, the Company incurred $15.4 million and $3.0 million in restructuring costs, respectively.
In March 2020, in response to anticipated headwinds resulting from the impact of COVID-19 on the aerospace industry, including the impact on global air travel, we implemented certain cost-reduction actions to improve our financial health, align capacity with expected demand, and ensure our long term competitiveness. This has included, amongst others, the reduction of indirect staff and temporary workers, reduction of overtime and the selective implementation of furloughs across our business to reduce costs while delivering on customer commitments. The actions taken to reduce headcount and reduce base pay are estimated to result in approximately $85.0 million of savings for fiscal 2021, net of severance costs. We are also reducing discretionary spending as well as reducing or deferring research and development and capital expenditures. In March 2020, we also suspended the declaration and/or payment of dividends until further notice. When combined with reductions in travel, corporate events, and other expenses, Triumph expects savings to operating cash flows of approximately $120.0 million in fiscal
27
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
2021, which does not reflect the restructuring charges described above. There can be no assurance that we will achieve such savings in the anticipated amounts and timeline. As of June 30, 2020, we have realized approximately $33.0 million of the approximately $120.0 million in savings to operating cash flows for fiscal 2021. Unrelated to COVID-19, the Company currently expects certain material cash outflows related to the completion of certain previously announced consolidation and shutdown costs with sunsetting programs within Aerospace Structures.
While the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, current expectations are that it will take 3-4 years for travel to return to calendar 2019 levels and a few years beyond that for the industry to return to long-term trend growth, although there can be no assurance that such period will not be longer. To balance the supply and demand given the COVID-19 shock and to preserve long-term potential and competitiveness, our customers have decided to reduce the production rates of several of their commercial aircraft programs. These rate decisions were based on assessments of the demand environment. There is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. The Company will work with its customers to closely monitor the key factors that affect backlog and future demand, including customers evolving manufacturing plans, the widebody replacement cycle and the cargo market, but such impact could be material and make it difficult to compare periods.
The Company expects COVID-19 to reduce demand for commercial aviation aftermarket due to the recent sharp decreases in flights; as well as reduce demand for commercial aviation production as OEMs have lowered their related delivery rate assumptions. The COVID-19-related reduction in OEM production rates may result in additional costs to produce and deliver our products, which may not be mitigated through our cost-reduction initiatives and could negatively impact earnings and cash flows, particularly with respect to our fixed-price contracts.
The Company is unable at this time to reasonably estimate potential future additional financial impacts or a range of loss, if any, due to continued uncertainties related to the impacts of COVID-19 on our operations, supply chain and customers, future changes to OEM production rates, supply chain impacts, and/or the results of negotiations with particular customers. Any such impacts, including any changes in our estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows.
28
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
For example, the Company expects that, in the event that its customers are unable to resume aircraft deliveries consistent with provided assumptions, the continued absence of revenue, earnings, and cash flows associated with those deliveries would continue to have a material impact on our operating results. In the event that future OEM production rate increases occur at a slower rate or take longer than the Company is currently assuming, the Company expects that the growth in inventory and other cash flow impacts associated with production would decrease. However, while any prolonged delays in planned OEM production rate increases could mitigate the impact on our liquidity, it could significantly increase the overall expected costs to manufacture our products, which would reduce operating margins and/or increase abnormal production costs in the future. Additionally, the declines in global air travel are expected to result in reduced demand for MRO services and uncertainty exists related to the length of time until air travel returns to historical levels.
From fiscal 2014 through fiscal 2020, our Aerospace Structures business unit had been performing design, development and initial manufacturing on several new programs, including the Gulfstream G500/G600 programs. Historically, low-rate production commences during flight testing, followed by an increase to full-rate production, assuming that successful testing and certification are achieved. While work progressed on these development programs, we have experienced difficulties in achieving estimated cost targets particularly in the areas of engineering and estimated recurring costs which resulted in forward losses. Additionally, from fiscal 2015 to fiscal 2019, our Aerospace Structures business unit experienced operating and forward losses on its production of the Boeing 747-8 fuselage for Boeing, Gulfstream G280 wing for Israel Aerospace Industries, Ltd (IAI) and Gulfstream G650 wing for Gulfstream. Further discussion is included below regarding the significant developments of each program.
Boeing 737 MAX
The Boeing 737 MAX program represented approximately 5% of revenue for the fiscal year ended March 31, 2020. The continued grounding of 737 MAX has had a minimal unfavorable effect on our results to date. Boeing has recently resumed production operations and updated the delivery rate assumptions. Boeings assumptions include the timing and conditions of return to service, the expected impact of COVID-19, as well as the timing of regulatory approvals that will enable 737 MAX deliveries to resume.
Boeing has stated it has approximately 450 airplanes in inventory at March 31, 2020, and has also assumed that the majority of 737 MAX airplanes produced during the grounding and included within inventory will be delivered during the first year after the resumption of deliveries, although at a slower pace than our previous assumptions due to COVID-19. The slower production and delivery rate ramp-ups reflect commercial airline industry uncertainty due to the impact of COVID-19. Based on the above assumption, Triumph expects to see declines in revenue across both of its operating segments in its fiscal 2021. A resurgence of COVID-19 that results in additional delays or shut downs could further exacerbate this expectation.
Boeing 747-8
As of March 31, 2020, Triumphs production on this program has substantially completed from its Hawthorne, California, facility, with the remaining production from its Grand Prairie, Texas, facility expected to complete in late fiscal 2021. Facility exit plans are underway at both locations and are expected to result in additional cost to exit of approximately $20.0 million through mid-fiscal 2022 and result in projected cash uses.
G280
In May 2020, the Company reached agreement to the accelerated transfer of the G280 wing program to IAI and Korean Aerospace Industries by mid-2020 at which point the leased Tulsa factory will be closed. The Company completed the final wing assembly in July 2020.
29
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
G650
In the first quarter of fiscal 2019, the Company reached an agreement with Gulfstream to optimize the supply chain on the Companys G650 work scope. The G650 wing box and wing completion work, which had been coproduced across three facilities at both companies, are being consolidated into Gulfstreams facilities in Savannah, Georgia. The Company completed the manufacturing of its final wing box in July 2019. In August 2020, the Company entered into a definitive agreement to sell its remaining G650 wing supply chain activity and engineering services to Gulfstream. This transaction is expected to close in the first half of fiscal 2021.
T-7 Red Hawk
In September 2017, the Company reached an agreement with Boeing to supply the wing, vertical tail and horizontal tail structures for the new T-7 Red Hawk, originally known as the Boeing T-X, for the U.S. Air Force. In September 2018, the U.S. Air Force awarded the contract to Boeing. In fiscal 2020, the Company continued supply chain analysis in support of Boeings preliminary design. Risks related to development and recurring productions costs are possible and could result in future forward losses.
Although none of the development or production programs noted above individually are expected to have a material impact on our net revenues, they do have the potential, either individually or in the aggregate, to materially and negatively impact our consolidated results of operations if future changes in estimates result in the need for a forward loss provision. Absent any such loss provisions, we do not anticipate that any of these programs will significantly dilute our future consolidated margins, although a prolonged impact of COVID-19 could result in changes in expectations.
In May 2020, the Companys Board of Directors committed to a plan (i) to sell its composites manufacturing operations located in Milledgeville, Georgia and Rayong, Thailand and (ii) to transfer the assets and certain liabilities associated with its Gulfstream G650 wing supply chain activities. In August 2020, the Company entered into a definitive agreement with the buyer of the composites manufacturing operations in Georgia and Thailand. Also in August 2020, the Company entered into a definitive agreement with Gulfstream to sell its G650 program scope of work. During the three months ended June 30, 2020, the assets that are the subject of these transactions represented, in the aggregate, approximately $52.5 million of the $495.1 million of consolidated net sales (or approximately 10.6% of consolidated net sales), entirely within Aerospace Structures. The transactions are expected to close in mid-fiscal 2021 and result in gains. We expect to generate aggregate proceeds from these transactions in the range of $100.0 million.
RESULTS OF OPERATIONS
The following includes a discussion of our consolidated and business segment results of operations. The Companys diverse structure and customer base do not provide for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variances between the respective periods.
Non-GAAP Financial Measures
We prepare and publicly release annual audited and quarterly unaudited financial statements prepared in accordance with U.S. GAAP. In accordance with Securities and Exchange Commission (the SEC) rules, we also disclose and discuss certain non-GAAP financial measures in our public filings and earning releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our net loss before interest, income taxes, amortization of acquired contract liabilities, legal settlements, loss on divestitures, depreciation and amortization; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension expense or benefit, including the effects of curtailments, settlements, and other early retirement incentives. We disclose Adjusted EBITDA on a consolidated and Adjusted EBITDAP on a consolidated and a reportable segment basis in our earnings releases, investor conference calls and
30
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations with our previously reported results of operations.
We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measures and, as such, we believe that the U.S. GAAP financial measure most directly comparable to such measures is net loss. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net loss the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under U.S. GAAP and should not be considered as a measure of liquidity, as an alternative to net loss, or as an indicator of any other measure of performance derived in accordance with U.S. GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as a substitute for any U.S. GAAP financial measure, including net loss. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to net loss set forth below, in our earnings releases, and in other filings with the SEC and to carefully review the U.S. GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the U.S. GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP are used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our U.S. GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities, partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our net loss has included significant charges for depreciation and amortization. Adjusted EBITDA and Adjusted EBITDAP exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP are measures of our ongoing operating performance because the isolation of noncash charges, such as depreciation and amortization, and nonoperating items, such as interest, income taxes, pension and other postretirement benefits, provides additional information about our cost structure and, over time, helps track our operating progress. In addition, investors, securities analysts, and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide financial measures by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using these non-GAAP financial measures as compared with net loss from continuing operations:
| Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
| Legal judgments and settlements, when applicable, may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
31
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
| Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of the adoption of ASU 2017-07 and certain pension related transactions such as curtailments, settlements, early retirement or other incentives) may be useful for investors to consider because they represent the cost of postretirement benefits to plan participants, net of the assumption of returns on the plans assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) necessarily reflect the current and ongoing cash earnings related to our operations. |
| Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
| Amortization expense (including goodwill and intangible asset impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of tradenames, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
| Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
| The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. |
| Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. |
32
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Management compensates for the above-described limitations of using non-GAAP measures only to supplement our U.S. GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.
The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net loss for the indicated periods (in thousands):
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net (loss) income (U.S. GAAP measure) |
$ | (275,786 | ) | $ | 16,924 | |||
Loss on sale of assets and businesses, net |
| 3,136 | ||||||
Amortization of acquired contract liabilities |
(10,987 | ) | (16,939 | ) | ||||
Depreciation and amortization* |
280,984 | 44,050 | ||||||
Interest expense and other |
34,957 | 27,491 | ||||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Adjusted EBITDA (non-GAAP measure) |
$ | 30,021 | $ | 79,160 | ||||
Non-service defined benefit income (excluding settlements) |
(12,416 | ) | (13,402 | ) | ||||
|
|
|
|
|||||
Adjusted EBITDAP (non-GAAP measure) |
$ | 17,605 | $ | 65,758 | ||||
|
|
|
|
* | Includes impairment charges related to long-lived assets |
The following tables show our Adjusted EBITDAP by reportable segment reconciled to our operating (loss) income for the indicated periods (in thousands):
Three Months Ended June 30, 2020 | ||||||||||||||||
Total | Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating (loss) income |
$ | (252,392 | ) | $ | 25,431 | $ | (256,120 | ) | $ | (21,703 | ) | |||||
Amortization of acquired contract liabilities |
(10,987 | ) | (3,719 | ) | (7,268 | ) | | |||||||||
Depreciation and amortization* |
280,984 | 8,356 | 271,772 | 856 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 17,605 | $ | 30,068 | $ | 8,384 | $ | (20,847 | ) | |||||||
|
|
|
|
|
|
|
|
33
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Three Months Ended June 30, 2019 | ||||||||||||||||
Total | Systems & Support |
Aerospace Structures |
Corporate/ Eliminations |
|||||||||||||
Operating income (loss) |
$ | 35,511 | $ | 44,048 | $ | 12,283 | $ | (20,820 | ) | |||||||
Loss on sale of assets and businesses |
3,136 | | | 3,136 | ||||||||||||
Amortization of acquired contract liabilities |
(16,939 | ) | (8,125 | ) | (8,814 | ) | | |||||||||
Depreciation and amortization |
44,050 | 8,157 | 35,059 | 834 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDAP |
$ | 65,758 | $ | 44,080 | $ | 38,528 | $ | (16,850 | ) | |||||||
|
|
|
|
|
|
|
|
* | Includes impairment charges related to long-lived assets |
The fluctuations from period to period within the amounts of the components of the reconciliations above are discussed further below within Results of Operations.
Three months ended June 30, 2020, compared with three months ended June 30, 2019
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Net sales |
$ | 495,077 | $ | 730,231 | ||||
|
|
|
|
|||||
Segment operating (loss) income |
$ | (230,689 | ) | $ | 56,331 | |||
Corporate expense |
(21,703 | ) | (20,820 | ) | ||||
|
|
|
|
|||||
Total operating (loss) income |
(252,392 | ) | 35,511 | |||||
Interest expense and other |
34,957 | 27,491 | ||||||
Non-service defined benefit income |
(12,416 | ) | (13,402 | ) | ||||
Income tax expense |
853 | 4,498 | ||||||
|
|
|
|
|||||
Net loss |
$ | (275,786 | ) | $ | 16,924 | |||
|
|
|
|
Net sales decreased by $235.2 million, or 32.2%, to $495.1 million for the three months ended June 30, 2020, from $730.2 million for the three months ended June 30, 2019. Organic sales adjusted for inter-segment sales decreased $205.5 million, or 29.3%, with additional declines from the Nashville divestiture of $29.7 million. Organic sales decreases included the planned reductions on sunsetting programs (i.e., 747-8, G280, G550), as well as the transitioned workscopes on the E-2 Jets and G650 programs, as well as the impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial narrowbody and widebody programs. These declines were partially offset by increases in military platforms.
34
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Cost of sales decreased by $188.4 million, or 32.4%, to $393.8 million for the three months ended June 30, 2020, from $582.2 million for the three months ended June 30, 2019. Organic cost of sales adjusted for inter-segment sales decreased $160.9 million, or 29.0% with additional declines from the Nashville divestiture of $27.4 million. Organic cost of sales decreased primarily due to the lower volumes described above. Organic gross margin for the three months ended June 30, 2020, was 20.3% compared with 20.7% for the three months ended June 30, 2019. The gross margin for the three months ended June 30, 2020, decreased primarily as a result of increased product costs due to the lower sales volumes partially offset by the results of the Companys restructuring and cost-reduction activities.
Gross margin for the three months ended June 30, 2020, included net favorable cumulative catch-up adjustments on long-term contracts of $3.3 million. The favorable cumulative catch-up adjustments to operating income included gross favorable adjustments of $28.0 million and gross unfavorable adjustments of $24.7 million. Gross margins for the three months ended June 30, 2019, included net unfavorable cumulative catch-up adjustments of $5.0 million.
Segment operating loss decreased by $287.0 million, or 509.5%, to $230.7 million for the three months ended June 30, 2020, from segment operating income of $56.3 million for the three months ended June 30, 2019. Organic segment operating loss decreased by $287.0 million, or 509.7%, primarily due to long-lived asset impairment charges of $252.4 million, decreased volumes above as well as increased restructuring costs of $7.4 million partially offset by lower travel costs $2.4 million. The Nashville divestiture contributed an immaterial amount of operating income in the three months ended June 30, 2019.
Corporate operations incurred expenses of $21.7 million for the three months ended June 30, 2020, as compared with $20.8 million for the three months ended June 30, 2019. The corporate expenses increased primarily due to restructuring costs of $5.6 million partially offset by decreased loss on sale of assets and businesses of $3.1 million.
Interest expense and other increased by $7.5 million, or 27.2%, to $35.0 million for the three months ended June 30, 2020, compared with $27.5 million for the three months ended June 30, 2019, due to higher interest rates and relative debt levels as well as a $3.0 million increase from the net unfavorable change in foreign currency exchange rate losses.
Non-service defined benefit income decreased by $1.0 million, or 7.3%, to $12.4 million for the three months ended June 30, 2020, compared with $13.4 million for the three months ended June 30, 2019. The decrease was primarily due to changes in actuarial assumptions and experience.
The effective income tax rate for the three months ended June 30, 2020, was (0.3)% compared with 21.0% for the three months ended June 30, 2019. For the three months ended June 30, 2020, the effective tax rate reflected a limitation on the recognition of tax benefits due to the full valuation allowance.
Business Segment Performance Three months ended June 30, 2020, compared with three months ended June 30, 2019
We report our financial performance based on the following two reportable segments: Systems & Support and Aerospace Structures. The Companys Chief Operating Decision Maker (CODM) utilizes Adjusted EBITDAP as a primary measure of profitability to evaluate performance of its segments and allocate resources.
35
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
The results of operations among our reportable segments vary due to differences in competitors, customers, extent of proprietary deliverables and performance. For example, Systems & Support, which generally includes proprietary products and/or arrangements where we become the primary source or one of a few primary sources to our customers, our unique manufacturing capabilities command a higher margin. Also, OEMs are increasingly focusing on assembly activities while outsourcing more manufacturing and repair to third parties, and as a result, are less of a competitive force than in previous years. This compares to Aerospace Structures, which generally includes long-term sole-source or preferred supplier contracts and the success of these programs provides a strong foundation for our business and positions us well for future growth on new programs and new derivatives.
Refer to Note 1 for further details regarding the operations and capabilities of each of our reportable segments.
We currently generate a majority of our revenue from clients in the commercial aerospace industry, the military, the business jet industry and the regional airline industry. Our growth and financial results are largely dependent on continued demand for our products and services from clients in these industries. If any of these industries experiences a downturn, our clients in these sectors may conduct less business with us. The loss of one or more of our major customers or an economic downturn in the commercial airline or the military and defense markets could have a material adverse effect on our business.
Three Months Ended June 30, |
% Change |
% of Total Sales | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
NET SALES |
||||||||||||||||||||
Systems & Support |
$ | 239,887 | $ | 313,606 | (23.5 | )% | 48.5 | % | 43.0 | % | ||||||||||
Aerospace Structures |
257,877 | 419,178 | (38.5 | )% | 52.1 | % | 57.4 | % | ||||||||||||
Elimination of inter-segment sales |
(2,687 | ) | (2,553 | ) | (5.3 | )% | (0.5 | )% | (0.4 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net sales |
$ | 495,077 | $ | 730,231 | (32.2 | )% | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
SEGMENT OPERATING (LOSS) INCOME |
||||||||||||||||||||
Systems & Support |
$ | 25,431 | $ | 44,048 | (42.3 | )% | 10.6 | % | 14.1 | % | ||||||||||
Aerospace Structures |
(256,120 | ) | 12,283 | (2185.2 | )% | (99.3 | )% | 2.9 | % | |||||||||||
Corporate |
(21,703 | ) | (20,820 | ) | (4.2 | )% | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total segment operating (loss) income |
$ | (252,392 | ) | $ | 35,511 | (810.7 | )% | (51.0 | )% | 4.9 | % | |||||||||
|
|
|
|
|
|
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|
|
36
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Three Months Ended June 30, |
% Change |
% of Segment Sales |
||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
Adjusted EBITDAP |
||||||||||||||||||||
Systems & Support |
$ | 30,068 | $ | 44,080 | (31.8 | )% | 12.7 | % | 14.4 | % | ||||||||||
Aerospace Structures |
8,384 | 38,528 | (78.2 | )% | 3.4 | % | 9.4 | % | ||||||||||||
Corporate |
(20,847 | ) | (16,850 | ) | (23.7 | )% | n/a | n/a | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 17,605 | $ | 65,758 | (73.2 | )% | 3.6 | % | 9.2 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
Systems & Support: Systems & Support net sales decreased by $73.7 million, or 23.5%, to $239.9 million for the three months ended June 30, 2020, from $313.6 million for the three months ended June 30, 2019. Sales decreased primarily due the impact of the COVID-19 pandemic and decreased sales volumes on commercial narrowbody and widebody programs, partially offset by increases in military platforms.
Systems & Support cost of sales decreased by $55.5 million, or 24.5%, to $171.1 million for the three months ended June 30, 2020, from $226.5 million for the three months ended June 30, 2019. Gross margin for the three months ended June 30, 2020, was 28.7% compared with 27.8% for the three months ended June 30, 2019. Cost of sales decreased due to the sales decrease noted above as well as sales mix and the results of the Companys restructuring and cost-reduction activities.
Systems & Support operating income decreased by $18.6 million, or 42.3%, to $25.4 million for the three months ended June 30, 2020, from $44.0 million for the three months ended June 30, 2019. Operating income decreased primarily due to the decreased sales noted above as well as increased restructuring costs.
Systems & Support operating income as a percentage of segment sales decreased to 10.6% for the three months ended June 30, 2020, as compared with 14.1% for the three months ended June 30, 2019, due to the factors described above. These same factors contributed to the decrease in Adjusted EBITDAP margin year over year.
37
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Aerospace Structures: Aerospace Structures net sales decreased by $161.3 million, or 38.5%, to $257.9 million for the three months ended June 30, 2020, from $419.2 million for the three months ended June 30, 2019. Organic net sales decreased by $131.6 million, with additional declines from the Nashville divestiture of $29.7 million. Organic net sales decreased due to the planned reductions on sunsetting programs (i.e., 747-8, G280, G550), the transitioned workscopes on the E-2 Jets and G650 programs, as well as the impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial narrowbody and widebody programs.
Aerospace Structures cost of sales decreased by $132.8 million, or 37.1%, to $225.5 million for the three months ended June 30, 2020, from $358.2 million for the three months ended June 30, 2019. Organic cost of sales decreased by $105.3 million, with an additional reduction in cost of sales from the Nashville divestiture of $27.4 million. Organic gross margin for the three months ended June 30, 2020, was 12.6% compared with 15.1% for the three months ended June 30, 2019. The decrease in organic cost of sales is due to decrease in sales noted above. The gross margin decline was impacted by extended shut-downs at certain facilities in the quarter due to COVID-19. The gross margin included net favorable cumulative catch-up adjustments of $3.3 million. The net favorable cumulative catch-up adjustments included gross favorable adjustments of $27.8 million and gross unfavorable adjustments of $24.5 million. The net unfavorable cumulative catch-up adjustment for the three months ended June 30, 2019, was $4.3 million.
Aerospace Structures operating loss decreased by $268.4 million, or 2185.2%, to $256.1 million for the three months ended June 30, 2020, from operating income of $12.3 million for the three months ended June 30, 2019. The decreased operating loss was nearly all organic and primarily the result of the decreases noted above as well as an increase in restructuring costs and the current period long-lived asset impairment charges of $252.4 million. The decrease in Adjusted EBITDAP year over year is due to the same factors that decreased operating income except for the long-lived asset impairment charges, which are excluded from Adjusted EBITDAP.
Aerospace Structures operating loss as a percentage of segment sales decreased to (99.3)% for the three months ended June 30, 2020, as compared with 2.9% for the three months ended June 30, 2019, due to the decrease in operating income as noted above. These same factors as noted above for the Adjusted EBITDAP contributed to the decrease in Adjusted EBITDAP margin year over year.
Liquidity and Capital Resources
Our working capital needs are generally funded through cash flows from operations and borrowings under our credit arrangements. During the three months ended June 30, 2020, we had a net cash outflow of $197.5 million from operating activities, a decrease of $202.6 million, compared with a net cash inflow of $5.0 million for the three months ended June 30, 2019. Cash flows from operations were unfavorably impacted by increased disbursements to our suppliers relative to the receipts from our customers, as we were unable to reduce volumes of our material purchases at the same rates that our sales declined from the impacts of COVID-19. Cash flows included increased inventory and contract asset levels and lower accounts payable. We anticipate that this trend will continue, but to a lesser degree in our second quarter, and we expect it to recover somewhat in the second half of the fiscal year assuming there are no additional extended shut-downs of operations due to the pandemic. Cash flows from operations also included approximately $10.0 million in the liquidation of prior period customer advances against current period deliveries.
The Company has committed to several plans (which were initiated in fiscal 2016) that incorporated the restructuring of certain of its businesses as well as the consolidation of certain of its facilities. As of March 31, 2020, with the exception of three pending facility closures to be completed in fiscal 2021 or 2022 and the COVID-19 pandemic related actions discussed below, the Company has substantially completed these plans.
38
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
In March 2020, in response to anticipated headwinds resulting from the impact of COVID-19 on the aerospace industry, including the impact on global air travel, we implemented certain cost-reduction actions to improve our financial health, align capacity with expected demand, and ensure our long term competitiveness. This has included, amongst others, the reduction of indirect staff and temporary workers, reduction of overtime and the selective implementation of furloughs across our business to reduce costs while delivering on customer commitments. The actions taken to reduce headcount and reduce base pay are estimated to result in approximately $85.0 million of savings for fiscal 2021, net of severance costs. We are also reducing discretionary spending as well as reducing or deferring research and development and capital expenditures. In March 2020, we also suspended the declaration and/or payment of dividends until further notice. When combined with reductions in travel, corporate events, and other expenses, Triumph expects savings to operating cash flows of approximately $120.0 million in fiscal 2021, which does not reflect the restructuring charges described above. There can be no assurance that we will achieve such savings in the anticipated amounts and timeline. As of June 30, 2020, we have realized approximately $33.0 million of the $120.0 million in savings to operating cash flows for fiscal 2021. Unrelated to COVID-19, the Company currently expects certain material cash outflows related to the completion of certain previously announced consolidation and shutdown costs with sunsetting programs within Aerospace Structures.
Cash flows used in investing activities for the three months ended June 30, 2020, decreased $3.7 million from the three months ended June 30, 2019. Cash flows used in investing activities for the three months ended June 30, 2020, included cash from the sales of assets and businesses of $0.8 million offset by capital expenditures of $7.7 million. Cash flows used in investing activities for the three months ended June 30, 2019, included cash paid as part of working capital settlements associated with the sales of assets and businesses of $2.6 million with additional investing outflows from capital expenditures of $8.1 million.
Cash flows used in financing activities for the three months ended June 30, 2020, were $250.9 million, compared with cash flows used in financing activities for the three months ended June 30, 2019, of $58.1 million. In March, the Company drew on its Credit Facility (as defined below), bringing the outstanding balance as of March 31, 2020, to $400.0 million. This was done as part of a comprehensive precautionary approach to increase the Companys cash position and maximize its financial flexibility, in light of the current volatility in the global markets resulting from the COVID-19 pandemic. In the three months ended June 30, 2020, we repaid approximately $225.0 million of the borrowings. Cash flows used in financing activities for the three months ended June 30, 2019, was the result of payments against debt obligations.
As of June 30, 2020, we had $30.9 million of cash on hand and $323.1 million was available under the Companys existing credit agreement (the Credit Facility). On June 30, 2020, approximately $22.0 million in letters of credit were outstanding under the Credit Facility, all of which were accruing interest at LIBOR plus applicable basis points totalling approximately 3.50% per annum. Amounts repaid under the Credit Facility may be reborrowed. As of July 31, 2020, we had $28.0 million cash on hand, $265.6 million of borrowings under the Credit Facility, and $28.0 million of outstanding letters of credit.
We have taken a number of actions to improve liquidity. We have implemented cost reduction actions as described above. We are also working with our customers and supply chain to accelerate receipts and conserve cash. We are also deferring certain employer payroll tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We will evaluate additional programs if passed by the federal government. Additionally, as disclosed in Note 7, on May 22, 2020, the Company and its subsidiary co-borrowers and guarantors entered into a Twelfth Amendment to Credit Agreement which, among other things, adjusted certain financial covenants within the agreement to provide additional flexibility to the Company with regard to meetings its financial obligations.
We believe, based on an assessment of current market conditions, that cash flows from operations and borrowings under the Amended Credit Agreement, or other sources of liquidity, will be sufficient to meet anticipated cash requirements for our current operations for at least the next 12 months. We are evaluating additional funding options from the U.S. government via the U.S. Treasury and various Federal Reserve programs. We have in the past and expect to continue to evaluate the debt and other capital markets and may seek to consummate one or more transactions including a refinancing of a portion of our outstanding indebtedness, the issuance of equity (including convertible securities), the repurchase or redemption of outstanding indebtedness, or may otherwise seek transactions to extend debt maturities or
39
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
obtain additional flexibility. Any of these transactions could impact our financial results. We may also use asset sale proceeds for one or more of these purposes in accordance with our outstanding agreements. These transactions could increase our total amount of secured indebtedness or be dilutive to stockholders. However, the COVID-19 crisis may constrain the debt and other capital markets and our ability to access the debt and other capital markets may be reduced. There can be no assurance that such funding sources will be available to us on terms favorable to us, if at all. In the event that the overall aviation market experiences delayed recoveries and divesture opportunities do not occur, the availability under the Amended Credit Agreement may change or be fully utilized and additional funding sources may be needed. There can be no assurances if or when we will consummate any such transactions or the timing thereof.
At June 30, 2020, there was $55.8 million outstanding under our Securitization Facility. Interest rates on the Securitization Facility are based on prevailing market rates for short-term commercial paper, plus a program fee and a commitment fee. The Securitization Facilitys net availability is not affected by the borrowing capacity of the Amended Credit Agreement.
The 5.25% Senior Notes due June 1, 2022 (the 2022 Notes), the 6.250% Senior Secured Notes due September 15, 2024 (the 2024 Notes), and the 7.750% Senior Notes due August 15, 2025 (the 2025 Notes) (collectively, the Senior Notes) are the Companys senior obligations and rank equally in right of payment with all of its other existing and future senior indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The Senior Notes are guaranteed on a full, joint and several basis by each of the Guarantor Subsidiaries.
Pursuant to the documentation governing the Senior Notes, the Company may redeem some or all of its Senior Notes prior to their stated maturities, subject to certain limitations set forth in the indenture governing the applicable Senior Notes and, in certain cases, subject to significant prepayment premiums; however, the Amended Credit Agreement restricts us from doing so. The Company is obligated to offer to repurchase the Senior Notes at specified prices as a result of certain change-of-control events and a sale of all or substantially all of its assets. These restrictions and prohibitions are subject to certain qualifications and exceptions.
For further information on the Companys long-term debt, see Note 7.
The indentures governing the Senior Notes, as well as the Amended Credit Agreement and Securitization Facility, contain covenants and restrictions that, among other things, limit the Companys ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on its assets; (ii) make dividend payments, other distributions or other restricted payments; (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments or investments; (iv) enter into sale and leaseback transactions; (v) merge, consolidate, transfer or dispose of substantially all of their assets; (vi) incur additional indebtedness; (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries (in the case of the Senior Notes); and (viii) enter into transactions with affiliates. The Company is currently in compliance with all financial covenants under its debt documents.
The only consolidated subsidiaries of the Company that are not guarantors of the 2022 Notes, the 2024 Notes and the 2025 Notes (the Non-Guarantor Subsidiaries) are: (i) the receivables securitization special purpose entity, and (ii) the foreign operating subsidiaries.
The 2024 Notes and the guarantees are secured, subject to permitted liens, by second-priority liens on all assets of the Company and its subsidiary guarantors (the Collateral) that secure all of the indebtedness under the Companys Credit Facility and certain hedging and cash management obligations. The 2024 Notes and the guarantees are not secured by the assets of Non-Guarantor Subsidiaries. Some of the Companys assets are excluded from the Collateral, including the Companys real property assets.
40
Triumph Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share data)
Parent and Guarantor Summarized Financial Information |
As of and for the three months ended June 30, 2020 |
|||
Current assets |
$ | 837,566 | ||
Noncurrent assets |
940,591 | |||
Current liabilities |
756,863 | |||
Noncurrent liabilities |
2,256,674 | |||
Due to/from Non-Guarantor Subsidiaries |
12,350 | |||
Net sales |
452,295 | |||
Gross profit |
94,968 | |||
Loss from continuing operations |
(268,159 | ) | ||
Net loss |
(268,161 | ) |
Critical Accounting Policies
The Companys critical accounting policies are discussed in Managements Discussion and Analysis of Financial Condition and Results of Operations and notes accompanying the condensed consolidated financial statements that appear in the Annual Report on Form 10-K for the fiscal year ended March 31, 2020. Except as otherwise disclosed in the condensed consolidated financial statements and accompanying notes included in this report, there were no material changes subsequent to the filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2020, in the Companys critical accounting policies or in the assumptions or estimates used to prepare the financial information appearing in this report.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our future operations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, and our beliefs concerning future performance and capital requirements based upon current available information. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like may, might, will, expect, anticipate, believe, potential, plan, estimate, and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations. For example, there can be no assurance that additional capital will not be required or that additional capital, if required, will be available on reasonable terms, if at all, at such times and in such amounts as may be needed by us. In addition to these factors, among other factors that could cause actual results to differ materially are uncertainties relating to our ability to execute on our restructuring plans, the integration of acquired businesses, divestitures of our business, general economic conditions affecting our business, dependence of certain of our businesses on certain key customers as well as competitive factors relating to the aviation industry. For a more detailed discussion of these and other factors affecting us, see the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on May 28, 2020.
41
Cover Page |
Dec. 17, 2020 |
---|---|
Document Information [Line Items] | |
Document Type | 8-K/A |
Amendment Flag | true |
Document Period End Date | Dec. 17, 2020 |
Entity File Number | 1-12235 |
Entity Registrant Name | TRIUMPH GROUP, INC. |
Entity Central Index Key | 0001021162 |
Entity Tax Identification Number | 51-0347963 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 899 Cassatt Road |
Entity Address, Address Line Two | Suite 210 |
Entity Address, City or Town | Berwyn |
Entity Address, State or Province | PA |
Entity Address, Postal Zip Code | 19312 |
City Area Code | 610 |
Local Phone Number | 251-1000 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Amendment Description | Triumph Group, Inc. (the “Company”) is filing this Amendment No. 1 on Form 8-K/A (this “Amendment”) to amend its Current Report on Form 8-K which was originally filed with the Securities and Exchange Commission on December 17, 2020 (the “Original Form 8-K”). Under Item 9.01 of the Original Form 8-K, the Company stated in Exhibit 99.3 that the interactive data file would be required within six business days. This Amendment No. 1 includes the interactive data file as required by Regulation S-T. This Amendment No. 1 does not modify or update Form 8-K information filed on December 17, 2020 in any way, nor does it reflect any subsequent information or events, other than to address the temporary hardship exemption provided by Rule 201 of Regulation S-T. |
Common Stock [Member] | |
Document Information [Line Items] | |
Title of 12(b) Security | Common Stock, par value $.001 per share |
Trading Symbol | TGI |
Security Exchange Name | NYSE |
Purchase Rights [Member] | |
Document Information [Line Items] | |
Title of 12(b) Security | Purchase Rights |
No Trading Symbol Flag | true |
Security Exchange Name | NYSE |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4,293 | $ 3,646 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,460,920 | 52,460,920 |
Common stock, shares outstanding | 51,858,089 | 49,887,268 |
Treasury stock, shares | 602,831 | 2,573,652 |
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement Of Income And Comprehensive Income [Abstract] | |||
Other Comprehensive (Income) Loss, Defined Benefit Plan, Prior Service Cost (Credit), Tax | $ 0 | $ 0 | $ 0 |
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During the Period, Tax | 0 | 0 | (283) |
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net (Gain) Loss, Tax | 0 | (656) | (5) |
Other Comprehensive Income (Loss), Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service (Cost) Credit, Tax | 0 | 0 | 0 |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax | 0 | (228) | (25) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | $ 0 | $ 228 | $ 14 |
Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement Of Stockholders Equity Parenthetical [Abstract] | |||
Other comprehensive (income) loss, defined benefit plan, after reclassification adjustment, tax | $ 0 | $ 656 | $ 288 |
Other comprehensive income (loss), tax | $ 0 | $ 228 | $ 11 |
Dividends declared and paid per common share (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.16 |
Background and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Background and Basis of Presentation |
Triumph Group, Inc. (“Triumph”) is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures and sells products for the global aerospace original equipment manufacturers (“OEMs”) of aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the “Company”) are organized based on the products and services that they provide. Effective February 17, 2020, the Company combined its Integrated Systems and Product Support operating segments into one operating segment, Systems & Support. Under this organizational structure, the Company has two reportable segments: Systems & Support and Aerospace Structures. Segment information for prior periods has been recast to conform to this organizational structure. Systems & Support consists of the Company’s operations that provide integrated solutions, including design, development, and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include hydraulic, mechanical and electromechanical actuation, power and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units and Full Authority Digital Electronic Control fuel systems; hydromechanical and electromechanical primary and secondary flight controls. Systems & Support also provides full life cycle solutions for commercial, regional and military aircraft. The Company’s extensive product and service offerings include full post-delivery value chain services that simplify the MRO supply chain. Through its ground support equipment maintenance, component MRO and post- production supply chain activities, Systems & Support is positioned to provide integrated planeside repair solutions globally. Capabilities include metallic and composite aircraft structures; nacelles; thrust reversers; interiors; auxiliary power units; and a wide variety of pneumatic, hydraulic, fuel and mechanical accessories. Repair services generally involve the replacement and/or remanufacturing of parts, which is similar to the original manufacture of the part. The processes that the Company performs related to repair and overhaul services are essentially the repair of wear parts or replacement of parts that are beyond economic repair. The repair service generally involves remanufacturing a complete part or a component of a part. Aerospace Structures consists of the Company’s operations that supply commercial, business, regional and military manufacturers with large metallic and composite structures and aircraft interior systems, including air ducting and thermal acoustic insulations systems. Products include wings, wing boxes, fuselage panels, horizontal and vertical tails, subassemblies such as floor grids, and aircraft interior systems, including air ducting and thermal acoustic insulations systems. Aerospace Structures also has the capability to engineer detailed structural designs in metal and composites. Capabilities include advanced composite and interior structures, joining processes such as welding, autoclave bonding, and conventional mechanical fasteners. The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated from the consolidated financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Standards Recently Implemented Adoption of ASU 2016-02 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) , Leases (Topic 842) Leases Adoption of the new standard resulted in the recognition of operating lease ROU assets and lease liabilities of $76,444 and $84,663, respectively, with the difference due to prepaid and deferred rent that were reclassified to the ROU asset value. An adjustment to opening retained earnings of $225 was also recognized. The standard did not materially affect the Company’s consolidated statements of operations or cash flows. See Note 9 for further details. Adoption of ASU 2018-02 In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Standards Issued Not Yet Implemented In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans Impact of Change in Accounting Principle Effective April 1, 2020, the Company changed its method of accounting for the determination of the market-related value of assets (“MRVA”) for a class of assets (fixed income securities) within the qualified U.S. defined benefit plan (the “Plan”) which is used in determining the expected return on asset component of net periodic benefit income. This class of assets is comprised solely of the fixed income securities asset class held in the portfolio for the Plan, which provides a natural hedge (liability-hedging assets) against the changes in the recorded amount of net periodic pension cost. Refer to Note 15 for the Company’s fiscal year ended fair value disclosure by asset classification. The Company’s previous method of accounting was to calculate the MRVA for all the Plan’s assets recognizing investment gains and losses into the MRVA over a five-year period. The Company has changed its method of accounting and elected to use the fair value of our fixed income assets, which represent approximately 44% of the Plan’s assets, to determine the MRVA beginning in the second quarter of fiscal 2021. This change in accounting principle is preferable as it results in an expected return on asset component of net periodic benefit income that more accurately reflects the changes in the fair values of the fixed income securities. No change is being made to the accounting principle for the other classes of pension assets, which represent the remaining 56% of the pension asset portfolio for the Plan. The gains and losses for these other plan assets will continue to be amortized into the MRVA over a five-year period. The change in accounting principle requires retrospective application and prospective disclosure. The Company applied the change effective April 1, 2020, and recorded a cumulative adjustment to equity as for the earliest period presented. The tables below represent the impact of this change on the consolidated statements of operations (including earnings per share) and the consolidated statements of comprehensive loss for the periods presented below. The change in accounting principle had no impact on the consolidated statements of cash flows for these periods. The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2020.
The table below represents the impact of the change in accounting principle on the consolidated balance sheet as of March 31, 2020.
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2019.
The table below represents the impact of the change in accounting principle on the consolidated balance sheet as of March 31, 2019.
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2018.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. Trade and Other Receivables, net Trade and other receivables are recorded net of an allowance for doubtful accounts. Trade and other receivables include amounts billed and currently due from customers and amounts retained by the customer pending contract completion. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company records the allowance for doubtful accounts based on prior experience and for specific collectibility matters when they arise. The Company writes off balances against the reserve when collectibility is deemed remote. The Company’s trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the customer base. Trade and other receivables, net composed of the following:
Goodwill and Intangible Assets The Company accounts for goodwill and intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed as required by ASC 350 to determine whether a goodwill impairment exists at the reporting unit. The quantitative test is used to compare the carrying amount of the reporting unit’s assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, then an impairment loss occurs. The impairment is measured by using the amount by which the carrying value exceeds the fair value not to exceed the amount of recorded goodwill. The determination of the fair value of its reporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. The Company is required to complete an impairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments. When performing the quantitative impairment test, the Company’s methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company’s cost of capital, otherwise known as the discounted cash flow method (“DCF”). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of its reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. The fair value estimates resulting from the application of these methodologies are based on inputs classified within Level 3 of the fair value hierarchy, as described below. During the fourth quarter of the fiscal year ended March 31, 2020, the Company performed its annual goodwill impairment assessment for each of its reporting units with no impairment identified. Subsequent to its annual testing date and at March 31, 2020, the Company identified indicators of impairment due to the decline in the Company’s share price as well as potential negative impacts due to the uncertainty of the impact of the COVID-19 pandemic. As a result of these indicators, the Company performed an interim assessment of goodwill, which included using a combination of both market and income approaches to estimate the fair value of each reporting unit. The Company concluded that its Product Support reporting unit had a fair value that was lower than its carrying value by an amount that exceeded the remaining goodwill for the reporting unit. Therefore, the Company recorded a noncash impairment charge during the fiscal quarter ended March 31, 2020, of $66,121, which is presented on the consolidated statements of operations as “Impairment of goodwill” for the fiscal year ended March 31, 2020. The decline in fair value is the result of expected declines in revenues from MRO services and the uncertainty in the rate and timing of recovery and therefore the timing of associated earnings and cash flows. The assessment of the Company’s Integrated Systems reporting unit indicated that its fair value exceeded its carrying amount. Finite-lived intangible assets are amortized over their useful lives ranging from 7 to 30 years. The Company continually evaluates whether events or circumstances have occurred that would indicate that the remaining estimated useful lives of long-lived assets, including intangible assets, may warrant revision or that the remaining balance may not be recoverable. Long-lived assets are evaluated for indicators of impairment. When factors indicate that long-lived assets, including intangible assets, should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets, including intangible assets, is used to measure recoverability based on the primary asset of the asset group. Some of the more important factors management considers include the Company’s financial performance relative to expected and historical performance, significant changes in the way the Company manages its operations, negative events that have occurred, and negative industry and economic trends. If the estimated undiscounted cash flows are less than the carrying amount, measurement of the impairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the present value of expected future cash flows associated with the use of the asset. Refer to below for the Company’s accounting policy regarding fair value measurements and the definition of fair value levels. Revenue Recognition and Contract Balances The Company adopted ASC 606 on April 1, 2018. The Company’s revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply agreements. Additionally, a majority of the Company’s agreements with customers include options for future purchases. Such options primarily reduce the administrative effort of issuing subsequent purchase orders and do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in all current contracts. The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes. Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for original equipment manufacturers (“OEMs”). The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. The Company’s contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery. However, a subset of the Company’s current contracts includes significant financing components because the timing of the transfer of the underlying products and services under contract are at the customers’ discretion. For these contracts, the Company adjusts the transaction price to reflect the effects of the time value of money. The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis. The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company uses either the “Expected Cost Plus a Margin” or “Adjusted Market Assessment” approaches to estimate stand-alone selling price. Expected costs are typically derived from the available periodic forecast information. Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or for work performed on a customer-owned asset. With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic projections. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements. Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required, and are included in contract liabilities on the accompanying consolidated balance sheets. The Company believes that the accounting estimates and assumptions made by management are appropriate given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic, however actual results could differ materially from those estimates. For the fiscal year ended March 31, 2020, cumulative catch-up adjustments resulting from changes in contract values and estimated costs that arose during the fiscal year increased revenue, operating loss, net loss and loss per share by approximately $12,011, ($22,844), ($22,844), and ($0.45), respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2020, included gross favorable adjustments of approximately $43,405 and gross unfavorable adjustments of approximately $66,249. For the fiscal year ended March 31, 2019, cumulative catch-up adjustments resulting from changes in estimates increased net sales, decreased operating loss, net loss and earnings per share by approximately $7,944, ($68,694), ($68,694), and ($1.38), respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2019, included gross favorable adjustments of approximately $46,074 and gross unfavorable adjustments of approximately $114,768. These cumulative catch-up adjustments do not include a noncash charge the Company recorded as a result of the adoption of ASU 2017-07 of $87,241 due to a change in estimate from a change in accounting principles, which is presented on the accompanying consolidated statements of operations within cost of sales. For the fiscal year ended March 31, 2018, cumulative catch-up adjustments resulting from changes in estimates decreased operating loss, net loss and decreased loss per share by approximately $19,677, $13,479, and $0.27, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2018, included gross favorable adjustments of approximately $85,844 and gross unfavorable adjustments of approximately $66,167. Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred. Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition contract assets and liabilities. Refer to Note 4 for further discussion. In connection with several of prior acquisitions, the Company assumed existing long-term contracts. Based on review of these contracts, the Company concluded that the terms of certain contracts to be either more or less favorable than could be realized in market transactions as of the date of the acquisition. As a result, the Company recognized acquired contract liabilities, net of acquired contract assets as of the acquisition date of each respective acquisition, based on the present value of the difference between the contractual cash flows of the executory contracts and the estimated cash flows had the contracts been executed at the acquisition date. The liabilities principally relate to long-term contracts that were initially executed several years prior to the respective acquisition. The Company measured these net liabilities in the year they were acquired under the measurement provisions of ASC 820, Fair Value Measurement The balance of the liability as of March 31, 2020, is $92,962 and, based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of the liability as follows: 2021 — $44,958; 2022 — $17,568; 2023 — $7,302; 2024 — $3,512; 2025 — $1,690; thereafter $17,932. Leases The Company leases office space, manufacturing facilities, land, vehicles, and equipment. The Company determines if an agreement is or contains a lease at the lease inception date and recognizes right-of-use assets and lease liabilities at the lease commencement date. A ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”). ROU assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The determination of the length of lease terms is affected by options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The existence of significant economic incentive is the primary consideration when assessing whether the Company is reasonably certain of exercising an option in a lease. Both finance and operating lease ROU assets and liabilities are recognized at commencement date and measured as the present value of lease payments to be made over the lease term. As the interest rate implicit in the lease is not readily available for most of the Company’s leases, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The lease ROU asset recognized at commencement is adjusted for any lease payments related to initial direct costs, prepayments, and lease incentives. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, lease expense comprises the amortization of the ROU assets recognized on a straight-line basis generally over the shorter of the lease term or the estimated useful life of the underlying asset and interest on the lease liability. Variable lease payments not dependent on a rate or index are recognized when the event, activity, or circumstance in the lease agreement upon which those payments are contingent is probable of occurring and are presented in the same line of the consolidated balance sheet as the rent expense arising from fixed payments. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets. Retirement Benefits Defined benefit pension plans are recognized in the consolidated financial statements on an actuarial basis. A significant element in determining the Company’s pension income (expense) is the expected long-term rate of return on plan assets. This expected return is an assumption as to the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected pension benefit obligation. The Company applies this assumed long-term rate of return to a calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension income (expense). The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pension income (expense). The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments are recognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significant number of employees for some or all of their future service. Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable. From time to time, the Company may enter into transactions that relieve it of primary responsibility for all or more than a minor portion of certain of its pension benefit obligations. When these transactions are effected through an irrevocable action that relieves the Company of primary responsibility for its pension or other postretirement benefit obligations and eliminates significant risks related to the obligation and the related assets used to effect the transaction, they are considered settlements, as defined by ASC 715, Compensation – Retirement Benefits. As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances impacting the pension costs. At March 31 of each year, the Company determines the fair value of its pension plan assets as well as the discount rate to be used to calculate the present value of plan liabilities. The discount rate is an estimate of the interest rate at which the pension benefits could be effectively settled. In estimating the discount rate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least the second-highest rating given by a recognized ratings agency. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring goodwill impairment in fiscal year 2018 and fiscal year 2020 (see Note 7), and to its pension and postretirement plan assets (see Note 15). Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. Management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes on its consolidated statements of operations. Supplemental Cash Flow Information For the fiscal year ended March 31, 2020, the Company paid $4,005 for income taxes, net of income tax refunds received. For the fiscal year ended March 31, 2019, the Company received $4,701 as income tax refunds, net of taxes paid. For the fiscal year ended March 31, 2018, the Company paid $11,190 for income taxes, net of income tax refunds received. |
Divested Operations and Assets Held For Sale |
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Mar. 31, 2020 | |||
Discontinued Operations and Disposal Groups [Abstract] | |||
Divested Operations and Assets Held For Sale |
Fiscal 2020 Divestitures In December 2019, the Company completed the sale of its manufacturing operations at its Nashville, TN, facility for cash proceeds net of transaction costs of approximately $58,000, including approximately $7,000 allocated as a premium paid by the buyer in exchange for a specified performance guarantee. The Company recognized a loss of approximately $64,000, which is presented on the accompanying consolidated statements of operations within loss on sale of assets and businesses. The operating results of the Nashville manufacturing operations are included in Aerospace Structures through the date of divestiture. Additionally, as part of the transaction, the Company agreed to transfer to the buyer, within 120 days from the date of closing, certain defined benefit pension assets and obligations of approximately $55,000 associated with the Nashville manufacturing operations. In accordance with applicable defined benefit pension plan accounting guidance, the transfer was treated as a settlement for purposes of the Company’s financial statements and resulted in accelerated recognition of previously unrecognized actuarial losses. The Company completed the transfer of the defined benefit pension assets and obligations in March 2020 and recognized a one-time settlement loss of approximately $28,000. In September 2019, the Company completed the assignment of its E-2 Jets contract with Embraer for the manufacture of structural components for their program to AeroSpace Technologies of Korea Inc. (“ASTK”). As part of this transaction, the Company transferred certain assets and liabilities to ASTK and recognized a gain of approximately $10,000, which is presented on the accompanying consolidated statements of operations within loss on sale of assets and businesses. The assets and liabilities transferred were included within Aerospace Structures through the date of divestiture. Fiscal 2019 Divestitures In March 2019, the Company sold all of the shares of Triumph Structures – Kansas City, Inc.; Triumph Structures – Wichita, Inc.; Triumph Gear Systems – Toronto; ULC; and Triumph Northwest (The Triumph Group Operations, Inc.) (together, “Machining”). Total cash proceeds net of transaction costs for the sale of Machining was approximately $43,000. A portion of the proceeds associated with the sale of Machining included consideration in the form of a note receivable of $10,000. Upon closing, the Company recognized a loss of approximately $116,000. An additional loss of approximately $3,000 was recognized during the fiscal 2020, as a result of working capital adjustments and additional transaction costs and is presented within loss on sale of assets and businesses on the accompanying condensed consolidated statements of operations. In March 2019, the Company sold all of the shares of (i) Triumph Fabrications - San Diego, Inc. and Triumph Fabrications - Ft. Worth, Inc. (together, “Fabrications”), and (ii) Triumph Aviation Services - NAAS Division, Inc. (“NAAS”). Total cash proceeds net of transaction costs for the sales of Fabrications and NAAS were approximately $133,000 and $18,000, respectively. As a result of the sales of Fabrications, the Company recognized a gain of approximately $54,000. The sale of NAAS resulted in an immaterial gain. In February 2019, the Company transitioned responsibility for the Global 7500 wing program manufacturing operations of Aerospace Structures to Bombardier at which point Bombardier assumed the program’s assets and obligations. As a result of this transfer, the Company recognized a loss of approximately $169,000. The Company continues to provide transition services related to infrastructure support reducing in scope over the next several months, as well as a lease of the building in Red Oak, Texas, dedicated to the manufacturer of the Global 7500 wing to Bombardier. In July and August 2018, respectively, the Company sold all of the shares of Triumph Structures - East Texas, Inc. as well as all of the shares of Triumph Structures - Los Angeles, Inc., and Triumph Processing, Inc. for combined cash proceeds net of transactions costs of approximately $43,000 and a note receivable of $7,000. The note receivable was collected in October 2018. As a result of these sales, the Company recognized losses of approximately $17,000, which are presented on the accompanying consolidated statements of operations within loss on sale of assets and businesses. Fiscal 2018 Divestitures In March 2018, the Company sold all of the shares of Triumph Structures - Long Island, LLC (“TS-LI”) for cash proceeds of $9,500 and a note receivable of $1,400. The note receivable was collected in July 2018. As a result of the sale of TS-LI, the Company recognized a loss of $10,370. The operating results of TS-LI were included in Aerospace Structures through the date of divestiture. In September 2017, the Company sold all of the shares of Triumph Processing - Embee Division, Inc. (“Embee”) for total cash proceeds of $64,986. As a result of the sale of Embee, the Company recognized a loss of $17,857. The operating results of Embee were included in Integrated Systems through the date of divestiture. |
Revenue Recognition and Contracts with Customers |
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Change in Contract with Customer, Asset and Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Contracts with Customers |
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. Additionally, the Company disaggregates revenue based upon the end market where products and services are transferred to the customer. The Company’s principal operating segments and related revenue are discussed in Note 13, Segments. The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the year ended March 31, 2020 and 2019:
The following table shows disaggregated net sales by end market (excluding intercompany sales) for the year ended March 31, 2020 and 2019:
Contract Assets and Liabilities Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company’s contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. The Company performs ongoing evaluations of the potential impairment of its contract assets based on prior experience and specific matters when they arise. No impairments to contract assets were recorded for the years ended March 31, 2020 or 2019. Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized. Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes our contract assets and liabilities balances:
The Company recognized revenue due to changes in estimates associated with performance obligations satisfied or partially satisfied in previous periods of $12,011. The decrease in contract assets is the result of $76,667 and $39,753 in contract assets liquidated as part of the assignment of the E2-Jets contract to ASTK and the sale of the Nashville manufacturing operations, respectively, partially offset by revenue recognized in excess of amounts billed during the year ended March 31, 2020. The decrease in contract liabilities is the result of revenue recognized in excess of the receipt of additional customer advances during the period as well as $12,641 in contract liabilities liquidated as part of the assignment of the E2-Jets contract to ASTK. For the period ended March 31, 2020, the Company recognized $89,012 of revenue that was included in the contract liability balance at the beginning of the period. Noncurrent contract assets presented in other, net on the accompanying consolidated balance sheets as of March 31, 2020 and 2019, were $22,662 and $34,185, respectively. Noncurrent contract liabilities presented in other noncurrent liabilities on the accompanying consolidated balance sheets as of March 31, 2020 and 2019, were $91,265 and $156,332, respectively. Performance Obligations Customers generally contract with the Company for requirements in a segment relating to a specific program, and the Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs. A single contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements. As of March 31, 2020, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
The Company records inventories at the lower of cost (average-cost or specific-identification methods) or market. The Company expenses general and administrative costs related to products and services provided essentially under commercial terms and conditions as incurred. The Company determines the costs of inventories sold by the first-in, first-out or average cost methods. The components of inventories are as follows:
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and equipment, which include equipment under finance lease and leasehold improvements, are recorded at cost and depreciated over the estimated useful lives of the related assets, or the lease term if shorter in the case of leasehold improvements, using the straight-line method. Buildings and improvements are depreciated over a period of 15 to 39.5years, and machinery and equipment are depreciated over a period of 7 to 15 years (except for furniture, fixtures and computer equipment which are depreciated over a period of 3 to 10 years). Net property and equipment is:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
The following is a summary of the changes in the carrying value of goodwill by reportable segment, for the fiscal years ended March 31, 2020 and 2019:
As of March 31, 2020 and 2019, Aerospace Structures had gross goodwill of $1,166,773 and $1,246,454, respectively, which was fully impaired. As of March 31, 2020 and 2019, Systems & Support had gross goodwill of $579,649 and $583,225, respectively, and accumulated goodwill impairment of $66,121 and $0, respectively. Intangible Assets The components of intangible assets, net are as follows:
Amortization expense for the fiscal years ended March 31, 2020, 2019, and 2018, was $48,311, $52,581, and $56,495, respectively. Amortization expense for the five fiscal years succeeding March 31, 2020, by year is expected to be as follows: 2021: $48,139; 2022: $47,898; 2023: $47,898; 2024: $47,898; 2025: $47,898, and thereafter: $142,237. |
Accrued Expenses |
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Accrued Expenses |
Accrued expenses consist of the following items:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The components of lease expense for the year ended March 31, 2020, are disclosed in the table below.
Supplemental cash flow information for the year ended March 31, 2020, is disclosed in the table below.
Supplemental balance sheet information related to leases as of March 31, 2020, is disclosed in the table below.
Information related to lease terms and discount rates as of March 31, 2020, is disclosed in the table below.
The maturity of the Company’s lease liabilities as of March 31, 2020, is disclosed in the table below.
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Long-term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt |
Long-term debt consists of the following:
Revolving Credit Facility On September 23, 2019, the Company and its subsidiary co-borrowers and guarantors entered into an Eleventh Amendment to the Credit Agreement (the “Eleventh Amendment” and the existing Credit Agreement as amended by the Eleventh Amendment, the “Credit Agreement”) with the Administrative Agent and the Lenders party thereto. Among other things, the Eleventh Amendment:
In connection with the Eleventh Amendment to the Credit Agreement, the Company incurred $6,944 of financing costs. These costs, along with the $6,222 of unamortized financing costs subsequent to the Tenth Amendment, are being amortized over the remaining term of the Credit Agreement on a lender-by-lender basis. As a result of the reduction in the capacity of the Credit Agreement, the Company wrote off a proportional amount of unamortized financing fees existing prior to the Eleventh Amendment. As of March 31, 2020, revolving credit commitments are $600,000. The obligations under the Credit Agreement and related documents are secured by liens on substantially all assets of the Company and its domestic subsidiaries pursuant to a Second Amended and Restated Guarantee and Collateral Agreement, dated as of November 19, 2013, among the administrative agent, the Company and the subsidiaries of the Company party thereto. Pursuant to the Credit Agreement, the Company can borrow, repay and re-borrow revolving credit loans, and cause to be issued letters of credit, in an aggregate principal amount not to exceed $600,000 outstanding at any time as such revolving credit commitments are or have been reduced as discussed above. The Credit Agreement bears interest at either: (i) London Interbank Offered Rate (“LIBOR”) plus between 1.50% and 3.50%; (ii) the prime rate; or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company’s ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization provided, however, that during the Pricing Restriction Period (as defined in the Credit Agreement), the loans will bear interest at the highest rate above LIBOR. In addition, the Company is required to pay a commitment fee of 0.50% on the unused portion of the Credit Agreement. The Company’s obligations under the Credit Agreement are guaranteed by the Company’s domestic subsidiaries. At March 31, 2020, there were $400,000 in borrowings and $22,338 in letters of credit outstanding under the Revolving Line of Credit provisions of the Credit Agreement, primarily to support insurance policies. We have since repaid approximately $200,000 of the borrowings. At March 31, 2019, there were $215,000 in outstanding borrowings and $30,773 in letters of credit outstanding under the Revolving Line of Credit provisions of the Credit Agreement, primarily to support insurance policies. The level of unused borrowing capacity under the Revolving Line of Credit provisions of the Credit Agreement varies from time to time depending in part upon its compliance with financial and other covenants set forth in the related agreement. The Credit Agreement contains certain affirmative and negative covenants, including limitations on specified levels of indebtedness to earnings before interest, taxes, depreciation and amortization, and interest coverage requirements, and includes limitations on, among other things, liens, mergers, consolidations, sales of assets, and incurrence of debt. If an event of default were to occur under the Credit Agreement, the lenders would be entitled to declare all amounts borrowed under it immediately due and payable. The occurrence of an event of default under the Credit Agreement could also cause the acceleration of obligations under certain other agreements. The Company is currently in compliance with all such covenants. As of March 31, 2020, the Company had borrowing capacity under this agreement of $70,271 after reductions for borrowings, letters of credit outstanding under the facility and consideration of covenant limitations. On May 22, 2020, the Company and its subsidiary co-borrowers and guarantors entered into an Twelfth Amendment to the Credit Agreement (the “Twelfth Amendment” and the existing Credit Agreement as amended by the Twelfth Amendment, the “Amended Credit Agreement”) with the Administrative Agent and the Lenders party thereto. Among other things, the Twelfth Amendment (i) limits the amount of cash in the United States the Company can hold on its balance sheet to $50,000, (ii) authorizes the sale of any Specified TAS Business Unit (as defined in the Amended Credit Agreement); (iii) provides for a reserve against the availability of up to 75% of the proceeds of Specified Asset Sales (as defined in the Amended Credit Agreement); and (iv) modifies certain financial covenants and other terms over the quarterly periods ending June 2020 through March 2022. Receivables Securitization Program In December 2019, the Company amended its receivable securitization facility (the “Securitization Facility”) decreasing the purchase limit from $125,000 to $75,000 and extending the term through December 2022. In connection with the Securitization Facility, the Company sells on a revolving basis certain eligible accounts receivable to Triumph Receivables, LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financial institutions. The Company is the servicer of the trade accounts receivable under the Securitization Facility. As of March 31, 2020, the maximum amount available under the Securitization Facility was $75,000. Interest rates are based on LIBOR plus a program fee and a commitment fee. The program fee is 0.13% on the amount outstanding under the Securitization Facility. Additionally, the commitment fee is 0.50% on 100.00% of the maximum amount available under the Securitization Facility. The Company secures its trade accounts receivable, which are generally non-interest-bearing, in transactions that are accounted for as borrowings pursuant to ASC 860, Transfers and Servicing The agreement governing the Securitization Facility contains restrictions and covenants, including limitations on the making of certain restricted payments; creation of certain liens; and certain corporate acts such as mergers, consolidations and the sale of all or substantially all the Company’s assets. Senior Secured Notes Due 2024 On September 23, 2019, the Company issued $525,000 principal amount of 6.250% Senior Secured Notes due September 15, 2024. The 2024 Notes were sold at 100% of principal amount and have an effective interest yield of 6.250%. Interest is payable semiannually in cash in arrears on March 15 and September 15 of each year, commencing on March 15, 2020. In connection with the issuance of the 2024 Notes, the Company incurred approximately $9,300 of costs, which were deferred and are being amortized over the term of the 2024 Notes. The 2024 Notes are second lien secured obligations of the Company and its subsidiary guarantors. The 2024 Notes:
The 2024 Notes are guaranteed on a full, senior secured, joint and several basis by each of the Company’s domestic restricted subsidiaries that is a borrower under the Company’s credit facility or that guarantees any of the Company’s debt or that of any of the Company’s domestic restricted subsidiaries under the Company’s credit facility and in the future by any of the Company’s domestic restricted subsidiaries that are borrowers under any credit facility or that guarantee any debt of the Company or any of its domestic restricted subsidiaries incurred under any credit facility (the “Guarantor Subsidiaries”). The Company may redeem the 2024 Notes, in whole or in part, at any time or from time to time on or after September 15, 2020, at specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date. At any time or from time to time prior to September 15, 2020, the Company may redeem the 2024 Notes, in whole or in part, at a redemption price equal to 100% of their principal amount plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. In addition, the Company may redeem up to 40% of the aggregate principal amount of the outstanding 2024 Notes prior to September 15, 2020, with the net cash proceeds from certain equity offerings at a redemption price equal to 106.250% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. If the Company experiences specific kinds of changes of control, the Company is required to offer to purchase all of the 2024 Notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The 2024 Notes were issued pursuant to an indenture dated as of September 23, 2019 (the “Indenture”). The Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions; (iii) make other restricted payments and investments; (iv) create liens; (v) incur restrictions on the ability of restricted subsidiaries to pay dividends or make certain other payments; (vi) sell assets, including capital stock of restricted subsidiaries; (vii) enter into sale and leaseback transactions; (viii) merge or consolidate with other entities; and (ix) enter into transactions with affiliates. Senior Notes due 2021 On September 23, 2019, the Company called all outstanding 4.875% Senior Notes due 2021 (the “2021 Notes”) and discharged the 2021 Notes by irrevocably depositing with the 2021 Notes trustee sufficient funds to pay all principal and accrued interest through October 23, 2019. On October 23, 2019, the Company redeemed $375,000 principal amount of the 2021 Notes with the proceeds of the 2024 Notes. Senior Notes due 2022 On June 3, 2014, the Company issued $300,000 principal amount of 5.25% Senior Notes due June 1, 2022 (the “2022 Notes”). The 2022 Notes were sold at 100% of principal amount and have an effective interest yield of 5.25%. Interest is payable semiannually in cash in arrears on June 1 and December 1 of each year, commencing on December 1, 2014. In connection with the issuance of the 2022 Notes, the Company incurred approximately $4,990 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2022 Notes. The 2022 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2022 Notes are guaranteed on a full, joint and several basis by each of the Guarantor Subsidiaries. The Company is obligated to offer to repurchase the 2022 Notes at a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any, as a result of certain change-of-control events and (ii) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain asset sales. These restrictions and prohibitions are subject to certain qualifications and exceptions. The 2022 Indenture contains covenants that, among other things, limit the Company’s ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose of substantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries, and (viii) enter into transactions with affiliates. Senior Notes Due 2025 On August 17, 2017, the Company issued $500,000 principal amount of 7.75% Senior Notes due August 15, 2025 (the “2025 Notes”). The 2025 Notes were sold at 100% of principal amount and have an effective interest yield of 7.75%. Interest is payable semiannually in cash in arrears on February 15 and August 15 of each year, commencing on February 15, 2018. In connection with the issuance of the 2025 Notes, the Company incurred approximately $8,779 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2025 Notes. The 2025 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2025 Notes are guaranteed on a full, joint and several basis by each of the Guarantor Subsidiaries. The Company may redeem some or all of the 2025 Notes prior to August 15, 2020, by paying a “make-whole” premium. The Company may redeem some or all of the 2025 Notes on or after August 15, 2020, at specified redemption prices. In addition, prior to August 15, 2020, the Company may redeem up to 35% of the 2025 Notes with the net proceeds of certain equity offerings at a redemption price equal to 107.75% of the aggregate principal amount plus accrued and unpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2025 Notes (the “2025 Indenture”). The Company is obligated to offer to repurchase the 2025 Notes at a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any, as a result of certain change-of-control events and (ii) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain asset sales. These restrictions and prohibitions are subject to certain qualifications and exceptions. The 2025 Indenture contains covenants that, among other things, limit the Company’s ability and the ability of any of the guarantor subsidiaries to (i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose of substantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries, and (viii) enter into transactions with affiliates. Financial Instruments Not Recorded at Fair Value Carrying amounts and the related estimated fair values of the Company’s long-term debt not recorded at fair value in the consolidated financial statements are as follows:
The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements or broker quotes on our existing debt (Level 2 inputs). Interest paid on indebtedness during the fiscal years ended March 31, 2020, 2019, and 2018, amounted to $99,438, $99,981 and $86,345, respectively. As of March 31, 2020, the maturities of long-term debt are as follows: 2021 — $7,336; 2022 — $4,659; 2023 — $376,952; 2024 — $401,486; 2025 — $525,730; and thereafter— $507,770 through 2032. |
Other Noncurrent Liabilities |
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Other Noncurrent Liabilities |
Other noncurrent liabilities are composed of the following items:
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The components of loss from continuing operations before income taxes are as follows:
The components of income tax (benefit) expense are as follows:
A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:
The components of deferred tax assets and liabilities are as follows:
The Company follows ASC 740, Income Taxes 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. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. 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 the Company’s prior earnings history, including the forward losses and intangible impairments previously recognized, management determined that it was necessary to establish a valuation allowance against principally all of its net deferred tax assets. Given the objective verifiable negative evidence of a three-year cumulative loss and the weighting of all available positive evidence, the Company excluded projected taxable income (aside from reversing taxable temporary differences) from the assessment of income that could be used as a source of taxable income to realize the deferred tax assets. During fiscal year 2020, the Company adjusted the valuation allowance against the consolidated net deferred tax asset by $39,654 primarily due to an increase in the net operating loss and changes to temporary differences related to the pension and other postretirement benefit plans. As of March 31, 2020, management determined that it was necessary to maintain a valuation allowance against principally all of its net deferred tax assets. As of March 31, 2020, the Company has net operating loss carryforwards of $658,146, $1,369,092, and $127,088 for U.S. federal, state, and foreign jurisdictions, respectively. The effective income tax rate for the fiscal year ended March 31, 2020, was (24.5)% as compared with 1.6% for the fiscal year ended March 31, 2019. The effective income tax rate for the fiscal year ended March 31, 2020, included the benefit of the R&D tax credit of $6,778, the benefit of the foreign tax rate differences of $5,375, and the change in the valuation allowance of $3,474 . Due to the current year pretax loss, the effective tax rate drivers on a percentage basis are amplified. Accordingly, a year-over-year comparison of the effective tax rate may not be indicative of changes in the Company’s tax position. The Company has been granted income tax holiday as an incentive to attract foreign investment by the Government of Thailand. The tax holidays expire in various years through 2026. We do not have any other tax holidays in the jurisdictions in which we operate. The income tax benefit attributable to the tax status of our subsidiaries in Thailand was approximately $1,932 or $0.04 per diluted share in fiscal 2020, $2,160 or $0.04 per diluted share in fiscal 2019 and $1,530 or $0.03 per diluted share in fiscal 2018. At March 31, 2020, cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been recorded is $150,780. As the Company currently intends to indefinitely reinvest all such earnings, no provision has been made for income taxes that may become payable upon distribution of such earnings, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss rules, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Our income tax expense was increased by $2,747 due to certain provisions relating to net operating loss carryforward periods. The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year. As of March 31, 2020 and 2019, the total amount of unrecognized tax benefits was $18,965 and $19,152, respectively, all of which would impact the effective rate, if recognized. The Company anticipates that total unrecognized tax benefits may be reduced by zero in the next 12 months. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for fiscal years ended before March 31, 2014, or foreign income tax examinations by tax authorities for fiscal years ended before March 31, 2013. As of March 31, 2020, the Company is not subject to any income tax examinations. The Company has filed appeals in a prior state examination related to fiscal years ended March 31, 1999 through March 31, 2005. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. A reconciliation of the liability for uncertain tax positions, which are included in deferred taxes for the fiscal years ended March 31, 2020 and 2019, follows:
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Stockholders' Deficit |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Deficit |
In March 2019, the Company adopted a tax benefits preservation plan (the “Plan”) designed to preserve Triumph’s ability to utilize its net operating loss carryforwards and other tax attributes (collectively, “Tax Benefits”). The Plan is similar to plans adopted by other public companies with significant Tax Benefits. The Company obtained stockholder approval for the Plan as well as an amendment to the Company’s amended and restated certificate of incorporation that permitted the issuance of Rights (as defined below) related to preferred stock, at its annual meeting of stockholders in 2019. Under the Plan, Triumph declared a dividend distribution of one right (a “Right”) for each share of its common stock outstanding at the close of business on March 25, 2019. The Rights trade with Triumph’s common shares and will expire on March 13, 2022. The Rights also will expire: (i) if the Rights are redeemed or exchanged as provided in the Plan; (ii) if the Board determines that the Plan is no longer necessary or desirable for the preservation of the Tax Benefits; or (iii) if the Board determines that no Tax Benefits, once realized, as applicable, may be carried forward (in which case, the Rights will expire on the first date of the relevant taxable year for which such determination is made). Pursuant to the Plan, if a stockholder (or group) becomes a 5% stockholder without meeting certain customary exceptions, the Rights become exercisable and entitle stockholders (other than the 5% stockholder or group causing the rights to become exercisable) to purchase additional shares of Triumph at a significant discount, resulting in significant dilution in the economic interest and voting power of the 5% stockholder or group causing the Rights to become exercisable. Stockholders owning five percent or more of Triumph’s outstanding shares at the time the Plan was adopted were grandfathered and will only cause the Rights to distribute and become exercisable if they acquire an additional one percent or more of Triumph’s outstanding shares. Under the Plan, the Board has the ability to determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights shall not become exercisable if such person becomes a 5% stockholder. The adoption of the Plan and the dividend distribution did not have an impact on our consolidated financial statements. In 2014, the Company’s Board of Directors authorized an increase in the Company’s existing stock repurchase program by up to 5,000,000 shares of its common stock in addition to the 500,800 shares authorized under prior authorizations. As of March 31, 2020, the Company remains able to purchase an additional 2,277,789 shares. Repurchases may be made from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program. The holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders of Triumph. The Company has preferred stock of $0.01 par value, 250,000 shares authorized. At March 31, 2020 and 2019, zero shares of preferred stock were outstanding. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss (“AOCI”) by component for the years ended March 31, 2020 and 2019, were as follows:
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Loss per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss per Share |
The following is a reconciliation between the weighted average common shares outstanding used in the calculation of basic and diluted loss per share:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans |
Defined Contribution Pension Plan The Company sponsors a defined contribution 401(k) plan, under which salaried and certain hourly employees may defer a portion of their compensation. Eligible participants may contribute to the plan up to the allowable amount as determined by the plan of their regular compensation before taxes. The Company generally matches contributions up to 75% of the first 6% of compensation contributed by the participant. All contributions and Company matches are invested at the direction of the employee in one or more investment options offered under the plan. Company matching contributions vest immediately and aggregated to $14,763, $13,685, and $13,616 for the fiscal years ended March 31, 2020, 2019, and 2018, respectively. Effective April 1, 2020, the Company suspended its 401(k) match program for fiscal year 2021. Defined Benefit Pension and Other Postretirement Benefit Plans The Company sponsors several defined benefit pension plans covering some of its employees. Most employees are ineligible to participate in the plans or have ceased to accrue additional benefits under the plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation for certain years. It is the Company’s policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under applicable government regulations, by making payments into a trust separate from us. In addition to the defined benefit pension plans, the Company provides certain health care benefits for eligible retired employees. Such benefits are unfunded as of March 31, 2020. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meet specified age and years of service requirements. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees. During the fiscal year, the Company reached agreement with two unions whose members make up the vast majority of participants eligible for retiree healthcare benefits. Under the terms of these agreements, the right to benefits under the current program ceased for all represented participants (actively employed and retired) by April 1, 2020. Company-funded notional health reimbursement accounts were provided to retired participants (and their dependents) whose eligibility for current benefits ended under the new agreement. The average size of each account is immaterial and the Company anticipates that these accounts will be fully drawn down in two years. These changes served to reduce the Company’s other postretirement benefit (“OPEB”) liability by approximately $99,000. In accordance with ASC 715, the Company has recognized the funded status of the benefit obligation as of March 31, 2020 and 2019, on the accompanying consolidated balance sheets. The funded status is measured as the difference between the fair value of the plans’ assets and the PBO or accumulated postretirement benefit obligation of the plan. The majority of the plan assets are publicly traded investments which were valued based on the market price as of the measurement date. Investments that are not publicly traded were valued based on the estimated fair value of those investments based on our evaluation of data from fund managers and comparable market data. The following table sets forth the Company’s consolidated defined benefit pension plans for its union and non-union employees as of March 31, 2020 and 2019, and the amounts recorded on the consolidated balance sheets at March 31, 2020 and 2019. Company contributions include amounts contributed directly to plan assets and indirectly as benefits paid from the Company’s assets. Benefit payments reflect the total benefits paid from the plans and the Company’s assets. Information on the plans includes both the domestic qualified and nonqualified plans and the foreign qualified plans.
The components of net periodic benefit cost for fiscal years ended March 31, 2020, 2019, and 2018, are as follows:
The discount rate is determined annually as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds. At the end of each year, the discount rate is primarily determined using the results of bond yield curve models based on a portfolio of high-quality bonds matching notional cash inflows with the expected benefit payments for each significant benefit plan. The expected return on plan assets is determined based on a market-related value of plan assets, which is a smoothed asset value. The market-related value of assets is calculated by recognizing investment performance that is different from that expected on a straight-line basis over five years. Actuarial gains and losses are amortized over the average remaining life expectancy of inactive participants for plans that are predominantly inactive and over the expected future service for active participants for other plans, but only to the extent unrecognized gains or losses exceed a corridor equal to 10% of the greater of the projected benefit obligation or market-related value of assets. The Company estimates the service and interest cost of its pension and OPEB plans by using the specific spot rates derived from the yield curve used to discount the cash flows reflected in the measurement of the benefit obligation. The Company believes this approach provides a precise measurement of service and interest costs due to the correlation between projected benefit cash flows to the corresponding spot yield curve rates. The Company amortizes actuarial gains and losses over the average life expectancy of inactive plan participants because almost all plan participants are inactive. During the fiscal year ended March 31, 2020, the Society of Actuaries released new base mortality tables and an updated projection scale. The Company has reflected these new releases in the measurement of our U.S. pension and OPEB plans as of March 31, 2020. This change resulted in a decrease in the benefit obligation. The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments are recognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significant number of employees for some or all of their future service. Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable. As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances impacting the pension costs. The following summarizes the key events whose effects on net periodic benefit cost and obligations are included in the tables above:
The following table shows those amounts expected to be recognized in net periodic benefit costs during the fiscal year ending March 31, 2021:
Expected Pension Benefit Payments The total estimated future benefit payments for the pension plans are expected to be paid from the plan assets and company funds. The OPEB payments reflect the Company’s portion of the funding. Estimated future benefit payments from plan assets and Company funds for the next ten years are as follows:
Plan Assets, Investment Policy and Strategy The table below sets forth the Company’s target asset allocation for fiscal 2020 and the actual asset allocations at March 31, 2020 and 2019.
Pension plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long-term. The investment goals are to exceed the assumed actuarial rate of return over the long-term within reasonable and prudent levels of risks and to meet future obligations. Asset/liability studies are conducted on a regular basis to provide guidance in setting investment goals for the pension portfolio and its asset allocation. The asset allocation aims to prudently achieve a strong, risk-adjusted return while seeking to minimize funding level volatility and improve the funded status of the plans. The pension plans currently employ a liability-driven investment (“LDI”) approach, where assets and liabilities move in the same direction. The goal is to limit the volatility of the funding status and cover part, but not all, of the changes in liabilities. Most of the liabilities’ changes are due to interest rate movements. To balance expected risk and return, allocation targets are established and monitored against acceptable ranges. All investment policies and procedures are designed to ensure that the plans’ investments are in compliance with the Employee Retirement Income Security Act of 1974 (“ERISA”). Guidelines are established defining permitted investments within each asset class. Each investment manager has contractual guidelines to ensure that investments are made within the parameters of their asset class or in the case of multi-asset class managers, the parameters of their multi-asset class strategy. Certain investments are not permitted at any time, including investment directly in employer securities and uncovered short sales. The tables below provide the fair values of the Company’s plan assets at March 31, 2020 and 2019, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category (refer to Note 2 for definition of levels).
Cash equivalents and other short-term investments are primarily held in registered short-term investment vehicles which are valued using a market approach based on quoted market prices of similar instruments. Public equity securities, including common stock, are primarily valued using a market approach based on the closing fair market prices of identical instruments in the principal market on which they are traded. Commingled funds that are open-ended mutual funds for which the fair value per share is determined and published by the respective mutual fund sponsor and is the basis for current observable transactions are categorized as Level 1 fair value measures. Investments in commingled funds and private equity and infrastructure funds are carried at net asset value (“NAV”) as a practical expedient to estimate fair value. The NAV is the total value of the fund divided by the number of shares outstanding. Adjustments to NAV, if any, are determined based on evaluation of data provided by fund managers, including valuation of the underlying investments derived using inputs such as cost, operating results, discounted future cash flows and market-based comparable data. In accordance with ASC 820-10, investments that are measured at NAV practical expedient are not classified in the fair value hierarchy; however, their fair value amounts are presented in these tables to permit reconciliation of the fair value hierarchy to the total plan assets disclosed in this footnote. Corporate, government agency bonds and mortgage-backed securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported observable trades for identical or comparable instruments. Other investments include private equity and infrastructure funds and insurance contracts. Investments in private equity and infrastructure funds are carried at estimated fair value based on NAV as a practical expedient and other appropriate adjustments to NAV as determined based on an evaluation of data provided by fund managers, including valuations of the underlying investments derived using inputs such as cost, operating results, discounted future cash flows, and market-based comparable data. Assumptions and Sensitivities The discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve. The effect of a 25 basis-point change in discount rates as of March 31, 2020, is shown below:
The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide for the benefits included in the benefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses and the potential to outperform market index returns. For fiscal 2021, the expected long-term rate of return is 5.00%- 8.00%. Anticipated Contributions to Defined Benefit and Postretirement Welfare Benefit Plans The Company does not expect to contribute to its qualified U.S. defined benefit pension plans during fiscal 2021. The Company expects to contribute $4,824 to its postretirement welfare benefits plan during fiscal 2021. No plan assets are expected to be returned to the Company in fiscal 2021. |
Stock Compensation Plans |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Plans |
The Company has stock incentive plans under which employees and non-employee directors may be granted equity awards to acquire shares of the Company’s common stock at the fair value at the time of the grant. The stock incentive and compensation plans under which outstanding equity awards have been granted to employees, officers and non-employee directors are the Triumph Group 2018 Equity Plan (the “2018 Plan”), the Triumph Group 2013 Equity and Cash Incentive Plan (the “2013 Plan”), the 2016 Directors’ Equity Compensation Plan, as amended (the “Directors’ Plan”), and the Amended and Restated Directors’ Stock Incentive Plan (the “Prior Directors’ Plan”). The Prior Directors’ Plan expired by its terms during fiscal 2017. The current stock incentive and compensation plans used for future awards are the 2013 Plan for employees, officers and consultants, the Directors’ Plan, and the 2018 Plan. The 2018 Plan, the 2013 Plan, the Directors’ Plan, and the Prior Directors’ Plan are collectively referred to in this note as the plans. Management and the compensation committee have utilized restricted stock and restricted stock units as its primary form of share-based incentive compensation. The restricted stock and restricted stock units are subject to graded vesting, generally over a three year period and are subject to forfeiture should the grantee’s employment be terminated prior to an applicable vesting date. The share-based payment expense arising from restricted stock and restricted stock unit expense is included in capital in excess of par value. The fair value of restricted shares under the Company’s restricted stock plans is determined by the product of the number of shares granted and the grant date market price of the Company’s common stock. The fair value of share-based compensation granted to employees was $13,249, $15,911, and $18,122 during the fiscal years ended March 31, 2020, 2019, and 2018, respectively. The awards contain service conditions and may also contain performance or market conditions that affect the number of shares that vest. The fair value of restricted stock and restricted stock unit awards is expensed on a straight-line basis over the requisite service period which is typically the vesting period. The Company recognized $11,062, $10,259 and $7,949 of share-based compensation expense during the fiscal years ended March 31, 2020, 2019, and 2018, respectively. The Company has classified share-based compensation within selling, general and administrative expenses to correspond with the same line item as the majority of the cash compensation paid to employees. At March 31, 2020 and 2019, 1,564,791 shares and 5,586,421 shares of common stock, respectively, were available for issuance under the plans. A summary of the status of the Company’s non-vested shares/units of restricted stock and deferred stock units as of March 31, 2020, and changes during the fiscal year ended March 31, 2020, is presented below.
The fair value of employee restricted stock which vested during fiscal 2020, 2019 and 2018 was $7,052, $7,031, and $2,081, respectively. Upon the vesting of restricted stock units, the Company first transfers treasury stock, then will issue new shares. Expected future compensation expense on restricted stock net of expected forfeitures, is approximately $10,320, which is expected to be recognized over the remaining weighted average vesting period of 1.5 years. |
Commitments and Contingencies |
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Mar. 31, 2020 | |||
Commitments And Contingencies [Abstract] | |||
Commitments and Contingencies |
Certain of the Company’s business operations and facilities are subject to a number of federal, state, local and foreign environmental laws and regulations. Former owners generally indemnify the Company for environmental liabilities related to the assets and businesses acquired which existed prior to the acquisition dates. In the opinion of management, there are no significant environmental contingent liabilities which would have a material effect on the financial condition or operating results of the Company which are not covered by such indemnification. As the Company completes its restructuring plans as disclosed in Note 18, including the disposal of certain facilities, the Company may be exposed to additional costs such as environmental remediation obligations, lease termination costs, or supplier claims which may have a material effect on its financial position or results of operations when such matters arise and a reasonable estimate of the costs can be made. The Company’s risk related to pension projected obligations as of March 31, 2020, is significant. This amount is currently in excess of the related plan assets. Benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments in real estate and other alternative investments. The market value of all of these investment categories may be adversely affected by external events and the movements and volatility in the financial markets, including such events as the current credit and real estate market conditions. Declines in the market values of our plan assets could expose the total asset balance to significant risk which may cause an increase to future funding requirements. Some raw materials and operating supplies are subject to price and supply fluctuations caused by market dynamics. The Company’s strategic sourcing initiatives seek to find ways of mitigating the inflationary pressures of the marketplace. In recent years, these inflationary pressures have affected the market for raw materials. However, the Company believes that raw material prices will remain stable through the remainder of fiscal 2021 and after that, experience increases that are in line with inflation. Additionally, the Company generally does not employ forward contracts or other financial instruments to hedge commodity price risk. The Company’s suppliers’ failure to provide acceptable raw materials, components, kits and subassemblies would adversely affect production schedules and contract profitability. The Company maintains an extensive qualification and performance surveillance system to control risk associated with such supply base reliance. The Company is dependent on third parties for certain information technology services. To a lesser extent, the Company is also exposed to fluctuations in the prices of certain utilities and services, such as electricity, natural gas, chemical processing and freight. The Company utilizes a range of long-term agreements and strategic aggregated sourcing to optimize procurement expense and supply risk in these categories. In the ordinary course of business, the Company is involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations. In fiscal year 2020, the Company was awarded $9,257 in a legal judgment associated with a longstanding litigation matter arising from a prior acquisition. |
Restructuring Costs |
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Relocation Costs [Abstract] | |||
Restructuring Costs |
The Company committed to various restructuring plans involving certain of its businesses, as well as the consolidation of certain of its facilities over the past several years. With the exception of certain consolidations to be completed in future years, these plans were substantially complete as of March 31, 2019. The Company incurred costs of $25,340 associated with new restructuring plans during fiscal year 2020. These costs, the majority of which are being incurred within the Systems & Support reportable segment and relate to third-party consulting costs, are substantially complete as of March 31, 2020. |
Customer Concentration |
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Customer Concentration [Abstract] | |||
Customer Concentration |
Trade and other accounts receivable from Boeing represented approximately 21% and 18% of total accounts receivable as of March 31, 2020 and 2019, respectively. Trade and other accounts receivable from Gulfstream represented approximately 6% and 11% of total accounts receivable as of March 31, 2020 and 2019, respectively. Trade and other accounts receivables from Bombardier represented approximately 16% and 13% of total accounts receivable as of March 31, 2020 and 2019, respectively, and include receivables from transition services. The Company had no other significant concentrations of credit risk. Sales to Boeing for fiscal 2020 were $983,762, or 34% of net sales, of which $254,659 and $729,103 were from Systems & Support and Aerospace Structures, respectively. Sales to Boeing for fiscal 2019 were $1,031,107, or 31% of net sales, of which $243,047 and $788,061 were from Systems & Support and Aerospace Structures, respectively. Sales to Boeing for fiscal 2018 were $1,004,274, or 31% of net sales, of which $216,122 and $788,151 were from Systems & Support and Aerospace Structures, respectively. Sales to Gulfstream for fiscal 2020 were $337,173, or 12% of net sales, of which $3,250 and $333,924 were from Systems & Support and Aerospace Structures, respectively. Sales to Gulfstream for fiscal 2019 were $361,451, or 11% of net sales, of which $3,068 and $358,382 were from Systems & Support and Aerospace Structures, respectively. Sales to Gulfstream for fiscal 2018 were $421,985, or 13% of net sales, of which $1,780 and $420,204 were from Systems & Support and Aerospace Structures, respectively. No other single customer accounted for more than 10% of the Company’s net sales; however, the loss of any significant customer, including Boeing and/or Gulfstream, could have a material adverse effect on the Company and its operating subsidiaries. The Company currently generates a majority of its revenue from clients in the commercial aerospace industry, the business jet industry and the military. The Company’s growth and financial results are largely dependent on continued demand for its products and services from clients in these industries. If any of these industries experiences a downturn, clients in these sectors may conduct less business with the Company. |
Collective Bargaining Agreements |
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Collective Bargaining Agreements [Abstract] | |||
Collective Bargaining Agreements |
Approximately 18% of the Company’s labor force is covered under collective bargaining agreements. As of March 31, 2020, none of the Company’s collectively bargained workforce are working under contracts that have expired, and 5% of the Company’s collectively bargained workforce are working under contracts that are set to expire within one year. During the fiscal year ended March 31, 2018, the Company ratified a collective bargaining agreement with its union employees with United Autoworkers of America and its Local Union 848 at its Red Oak, Texas, facility. During the fiscal year ended March 31, 2019, the Company ratified a collective bargaining agreement with its union employees with United Autoworkers of America and its Local Union 952 at its Tulsa, Oklahoma facility. Also occurring during the fiscal year ended March 31, 2019, the Stuart Florida facility production and maintenance employees elected the United Autoworkers of America, Local #2505, to represent them in collective bargaining with the Company. As of the March 31, 2020, the union and the Company have not reached an agreement. During the fiscal year ended March 31, 2020, effects and closure agreements were made for the Tulsa, Oklahoma, and Grand Prairie, Texas, locations. In addition, the Company and leadership of Aero Lodge No.735 of the International Association of Machinists and Aerospace Workers (“IAM”) agreed to negotiate a Memorandum of Agreement to sunset the retiree medical plans. Both the Company and the IAM leadership full endorsed this agreement, and local IAM members voted to ratify it on August 10, 2019. |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments |
The Company reports financial performance based on the following two reportable segments: Systems & Support and Aerospace Structures. The Company’s reportable segments are aligned with how the business is managed, and the Company’s views of the markets it serves. The Chief Operating Decision Maker (the “CODM”) evaluates performance and allocates resources based upon review of segment information. The CODM utilizes earnings before interest, income taxes, depreciation and amortization, and pension (“Adjusted EBITDAP”) as a primary measure of segment profitability to evaluate performance of its segments and allocate resources. Segment Adjusted EBITDAP is total segment revenue reduced by operating expenses (less depreciation and amortization) identifiable with that segment. Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Company’s segments, including loss on sale of assets and businesses of $67,037 for the year ended March 31, 2020. The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the Company does not disclose net sales by product or service because to do so would be impracticable. Selected financial information for each reportable segment is as follows:
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Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) |
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Schedule II - Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts | SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands)
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. |
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Trade and Other Receivables, net | Trade and Other Receivables, net Trade and other receivables are recorded net of an allowance for doubtful accounts. Trade and other receivables include amounts billed and currently due from customers and amounts retained by the customer pending contract completion. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company records the allowance for doubtful accounts based on prior experience and for specific collectibility matters when they arise. The Company writes off balances against the reserve when collectibility is deemed remote. The Company’s trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the customer base. Trade and other receivables, net composed of the following:
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Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company accounts for goodwill and intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed as required by ASC 350 to determine whether a goodwill impairment exists at the reporting unit. The quantitative test is used to compare the carrying amount of the reporting unit’s assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, then an impairment loss occurs. The impairment is measured by using the amount by which the carrying value exceeds the fair value not to exceed the amount of recorded goodwill. The determination of the fair value of its reporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. The Company is required to complete an impairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments. When performing the quantitative impairment test, the Company’s methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company’s cost of capital, otherwise known as the discounted cash flow method (“DCF”). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of its reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. The fair value estimates resulting from the application of these methodologies are based on inputs classified within Level 3 of the fair value hierarchy, as described below. During the fourth quarter of the fiscal year ended March 31, 2020, the Company performed its annual goodwill impairment assessment for each of its reporting units with no impairment identified. Subsequent to its annual testing date and at March 31, 2020, the Company identified indicators of impairment due to the decline in the Company’s share price as well as potential negative impacts due to the uncertainty of the impact of the COVID-19 pandemic. As a result of these indicators, the Company performed an interim assessment of goodwill, which included using a combination of both market and income approaches to estimate the fair value of each reporting unit. The Company concluded that its Product Support reporting unit had a fair value that was lower than its carrying value by an amount that exceeded the remaining goodwill for the reporting unit. Therefore, the Company recorded a noncash impairment charge during the fiscal quarter ended March 31, 2020, of $66,121, which is presented on the consolidated statements of operations as “Impairment of goodwill” for the fiscal year ended March 31, 2020. The decline in fair value is the result of expected declines in revenues from MRO services and the uncertainty in the rate and timing of recovery and therefore the timing of associated earnings and cash flows. The assessment of the Company’s Integrated Systems reporting unit indicated that its fair value exceeded its carrying amount. Finite-lived intangible assets are amortized over their useful lives ranging from 7 to 30 years. The Company continually evaluates whether events or circumstances have occurred that would indicate that the remaining estimated useful lives of long-lived assets, including intangible assets, may warrant revision or that the remaining balance may not be recoverable. Long-lived assets are evaluated for indicators of impairment. When factors indicate that long-lived assets, including intangible assets, should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets, including intangible assets, is used to measure recoverability based on the primary asset of the asset group. Some of the more important factors management considers include the Company’s financial performance relative to expected and historical performance, significant changes in the way the Company manages its operations, negative events that have occurred, and negative industry and economic trends. If the estimated undiscounted cash flows are less than the carrying amount, measurement of the impairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the present value of expected future cash flows associated with the use of the asset. Refer to below for the Company’s accounting policy regarding fair value measurements and the definition of fair value levels. |
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Revenue Recognition and Contract Balances | Revenue Recognition and Contract Balances The Company adopted ASC 606 on April 1, 2018. The Company’s revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply agreements. Additionally, a majority of the Company’s agreements with customers include options for future purchases. Such options primarily reduce the administrative effort of issuing subsequent purchase orders and do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in all current contracts. The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes. Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for original equipment manufacturers (“OEMs”). The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. The Company’s contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery. However, a subset of the Company’s current contracts includes significant financing components because the timing of the transfer of the underlying products and services under contract are at the customers’ discretion. For these contracts, the Company adjusts the transaction price to reflect the effects of the time value of money. The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis. The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company uses either the “Expected Cost Plus a Margin” or “Adjusted Market Assessment” approaches to estimate stand-alone selling price. Expected costs are typically derived from the available periodic forecast information. Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or for work performed on a customer-owned asset. With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic projections. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements. Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required, and are included in contract liabilities on the accompanying consolidated balance sheets. The Company believes that the accounting estimates and assumptions made by management are appropriate given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic, however actual results could differ materially from those estimates. For the fiscal year ended March 31, 2020, cumulative catch-up adjustments resulting from changes in contract values and estimated costs that arose during the fiscal year increased revenue, operating loss, net loss and loss per share by approximately $12,011, ($22,844), ($22,844), and ($0.45), respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2020, included gross favorable adjustments of approximately $43,405 and gross unfavorable adjustments of approximately $66,249. For the fiscal year ended March 31, 2019, cumulative catch-up adjustments resulting from changes in estimates increased net sales, decreased operating loss, net loss and earnings per share by approximately $7,944, ($68,694), ($68,694), and ($1.38), respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2019, included gross favorable adjustments of approximately $46,074 and gross unfavorable adjustments of approximately $114,768. These cumulative catch-up adjustments do not include a noncash charge the Company recorded as a result of the adoption of ASU 2017-07 of $87,241 due to a change in estimate from a change in accounting principles, which is presented on the accompanying consolidated statements of operations within cost of sales. For the fiscal year ended March 31, 2018, cumulative catch-up adjustments resulting from changes in estimates decreased operating loss, net loss and decreased loss per share by approximately $19,677, $13,479, and $0.27, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2018, included gross favorable adjustments of approximately $85,844 and gross unfavorable adjustments of approximately $66,167. Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred. Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition contract assets and liabilities. Refer to Note 4 for further discussion. In connection with several of prior acquisitions, the Company assumed existing long-term contracts. Based on review of these contracts, the Company concluded that the terms of certain contracts to be either more or less favorable than could be realized in market transactions as of the date of the acquisition. As a result, the Company recognized acquired contract liabilities, net of acquired contract assets as of the acquisition date of each respective acquisition, based on the present value of the difference between the contractual cash flows of the executory contracts and the estimated cash flows had the contracts been executed at the acquisition date. The liabilities principally relate to long-term contracts that were initially executed several years prior to the respective acquisition. The Company measured these net liabilities in the year they were acquired under the measurement provisions of ASC 820, Fair Value Measurement The balance of the liability as of March 31, 2020, is $92,962 and, based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of the liability as follows: 2021 — $44,958; 2022 — $17,568; 2023 — $7,302; 2024 — $3,512; 2025 — $1,690; thereafter $17,932. |
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Leases | Leases The Company leases office space, manufacturing facilities, land, vehicles, and equipment. The Company determines if an agreement is or contains a lease at the lease inception date and recognizes right-of-use assets and lease liabilities at the lease commencement date. A ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”). ROU assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The determination of the length of lease terms is affected by options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The existence of significant economic incentive is the primary consideration when assessing whether the Company is reasonably certain of exercising an option in a lease. Both finance and operating lease ROU assets and liabilities are recognized at commencement date and measured as the present value of lease payments to be made over the lease term. As the interest rate implicit in the lease is not readily available for most of the Company’s leases, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The lease ROU asset recognized at commencement is adjusted for any lease payments related to initial direct costs, prepayments, and lease incentives. |
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Retirement Benefits | Retirement Benefits Defined benefit pension plans are recognized in the consolidated financial statements on an actuarial basis. A significant element in determining the Company’s pension income (expense) is the expected long-term rate of return on plan assets. This expected return is an assumption as to the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected pension benefit obligation. The Company applies this assumed long-term rate of return to a calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension income (expense). The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pension income (expense). The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments are recognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significant number of employees for some or all of their future service. Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable. From time to time, the Company may enter into transactions that relieve it of primary responsibility for all or more than a minor portion of certain of its pension benefit obligations. When these transactions are effected through an irrevocable action that relieves the Company of primary responsibility for its pension or other postretirement benefit obligations and eliminates significant risks related to the obligation and the related assets used to effect the transaction, they are considered settlements, as defined by ASC 715, Compensation – Retirement Benefits. As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances impacting the pension costs. At March 31 of each year, the Company determines the fair value of its pension plan assets as well as the discount rate to be used to calculate the present value of plan liabilities. The discount rate is an estimate of the interest rate at which the pension benefits could be effectively settled. In estimating the discount rate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least the second-highest rating given by a recognized ratings agency. |
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Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring goodwill impairment in fiscal year 2018 and fiscal year 2020 (see Note 7), and to its pension and postretirement plan assets (see Note 15). |
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Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information For the fiscal year ended March 31, 2020, the Company paid $4,005 for income taxes, net of income tax refunds received. For the fiscal year ended March 31, 2019, the Company received $4,701 as income tax refunds, net of taxes paid. For the fiscal year ended March 31, 2018, the Company paid $11,190 for income taxes, net of income tax refunds received. |
Background and Basis of Presentation (Tables) |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of Change in Accounting Principle on Condensed Consolidated Financial Statements | The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2020.
The table below represents the impact of the change in accounting principle on the consolidated balance sheet as of March 31, 2020.
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2019.
The table below represents the impact of the change in accounting principle on the consolidated balance sheet as of March 31, 2019.
The tables below represent the impact of the change in accounting principle on the consolidated statement of operations and the consolidated statements of comprehensive loss for the fiscal year ended March 31, 2018.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Trade and Other Receivables Net | Trade and other receivables, net composed of the following:
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Revenue Recognition and Contracts with Customers (Tables) |
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Disaggregation of Revenue | The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the year ended March 31, 2020 and 2019:
The following table shows disaggregated net sales by end market (excluding intercompany sales) for the year ended March 31, 2020 and 2019:
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Summary of Contract Assets and Liabilities Balances | Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes our contract assets and liabilities balances:
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Schedule of Performance Obligations that are Expected to Be Recognized in Future | As of March 31, 2020, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below.
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Inventories (Tables) |
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Schedule of components of inventories | The components of inventories are as follows:
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Property and Equipment (Tables) |
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Schedule of Net Property and Equipment | Net property and equipment is:
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Goodwill and Other Intangible Assets (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the Carrying Value of Goodwill by Reportable Segment | The following is a summary of the changes in the carrying value of goodwill by reportable segment, for the fiscal years ended March 31, 2020 and 2019:
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Schedule of Components of Intangible Assets | The components of intangible assets, net are as follows:
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Accrued Expenses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses consist of the following items:
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Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components Lease Expense | The components of lease expense for the year ended March 31, 2020, are disclosed in the table below.
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Schedule of Supplemental Cash Flow Information | Supplemental cash flow information for the year ended March 31, 2020, is disclosed in the table below.
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Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases as of March 31, 2020, is disclosed in the table below.
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Schedule of Information Related to Lease Terms and Discount Rates | Information related to lease terms and discount rates as of March 31, 2020, is disclosed in the table below.
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Schedule of Maturity of Lease Liabilities | The maturity of the Company’s lease liabilities as of March 31, 2020, is disclosed in the table below.
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Long-term Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consists of the following:
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Schedule of Carrying Amounts and Estimated Fair Values of Long-term Debt | Carrying amounts and the related estimated fair values of the Company’s long-term debt not recorded at fair value in the consolidated financial statements are as follows:
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Other Noncurrent Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Noncurrent Liabilities |
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Loss from Continuing Operations before Income Taxes | The components of loss from continuing operations before income taxes are as follows:
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Components of Income Tax (Benefit) Expense | The components of income tax (benefit) expense are as follows:
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Schedule of Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate | A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:
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Components of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities are as follows:
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Schedule of Reconciliation of Liability for Uncertain Tax Positions | A reconciliation of the liability for uncertain tax positions, which are included in deferred taxes for the fiscal years ended March 31, 2020 and 2019, follows:
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Stockholders' Deficit (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss (“AOCI”) by component for the years ended March 31, 2020 and 2019, were as follows:
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Loss per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reconciliation between Weighted-average Common Shares Outstanding used in Calculation of Basis and Diluted Loss Per Share |
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Employee Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consolidated Defined Benefit Pension Plans | The following table sets forth the Company’s consolidated defined benefit pension plans for its union and non-union employees as of March 31, 2020 and 2019, and the amounts recorded on the consolidated balance sheets at March 31, 2020 and 2019. Company contributions include amounts contributed directly to plan assets and indirectly as benefits paid from the Company’s assets. Benefit payments reflect the total benefits paid from the plans and the Company’s assets. Information on the plans includes both the domestic qualified and nonqualified plans and the foreign qualified plans.
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Schedule of Change in Fair Value of Plan Assets |
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Schedule of Components of Net Periodic Benefit Cost | The components of net periodic benefit cost for fiscal years ended March 31, 2020, 2019, and 2018, are as follows:
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Schedule of Amounts Expected to Recognized in Net Periodic Benefit Costs | The following table shows those amounts expected to be recognized in net periodic benefit costs during the fiscal year ending March 31, 2021:
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Schedule of Estimated Future Benefit Payments from Plan Assets | The total estimated future benefit payments for the pension plans are expected to be paid from the plan assets and company funds. The OPEB payments reflect the Company’s portion of the funding. Estimated future benefit payments from plan assets and Company funds for the next ten years are as follows:
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Schedule of Allocation of Plan Assets | The table below sets forth the Company’s target asset allocation for fiscal 2020 and the actual asset allocations at March 31, 2020 and 2019.
The tables below provide the fair values of the Company’s plan assets at March 31, 2020 and 2019, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category (refer to Note 2 for definition of levels).
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Schedule of Effect of Twenty Five Basis-Point Change in Discount Rates | The effect of a 25 basis-point change in discount rates as of March 31, 2020, is shown below:
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Stock Compensation Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Status of Non-Vested Shares/Units of Restricted Stock and Deferred Stock Units | A summary of the status of the Company’s non-vested shares/units of restricted stock and deferred stock units as of March 31, 2020, and changes during the fiscal year ended March 31, 2020, is presented below.
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Segments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Selected Financial Information for Each Reportable Segment and Reconciliation of EBITDAP to Operating Income | Selected financial information for each reportable segment is as follows:
|
Quarterly Financial Information (Unaudited) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information |
|
Schedule II - Valuation and Qualifying Accounts (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Valuation and Qualifying Accounts |
|
Background and Basis of Presentation - Additional Information (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2020
USD ($)
Segment
|
Apr. 01, 2019
USD ($)
|
|
Accounting Changes And Error Corrections [Abstract] | ||
Number of reportable segments | Segment | 2 | |
Operating lease, right-of-use asset | $ 61,461 | $ 76,444 |
Operating lease, liability | $ 67,826 | $ 84,663 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
New accounting pronouncement or change in accounting principle, cumulative effect of change on equity or net assets | $ 225 |
Background and Basis of Presentation -Schedule of Impact of Change in Accounting Principle on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2017 |
---|---|---|---|---|
Stockholders' deficit: | ||||
Accumulated other comprehensive loss | $ (746,448) | $ (516,011) | ||
Accumulated deficit | (803,481) | (765,745) | ||
Total stockholders' deficit | (781,264) | (573,313) | $ 450,534 | $ 846,473 |
Previously Reported [Member] | ||||
Stockholders' deficit: | ||||
Accumulated other comprehensive loss | (719,428) | (487,684) | ||
Accumulated deficit | (830,501) | (794,072) | ||
Total stockholders' deficit | (781,264) | (573,313) | ||
Impact of Change [Member] | ||||
Stockholders' deficit: | ||||
Accumulated other comprehensive loss | (27,020) | (28,327) | ||
Accumulated deficit | $ 27,020 | $ 28,327 |
Summary of Significant Accounting Policies - Summary of Trade and Other Receivables Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
Total trade receivables | $ 314,007 | $ 336,888 |
Other receivables | 49,773 | 40,348 |
Total trade and other receivables | 363,780 | 377,236 |
Trade and other receivables, allowance for doubtful accounts (in dollars) | (4,293) | (3,646) |
Total trade and other receivables, net | $ 359,487 | $ 373,590 |
Revenue Recognition and Contracts with Customers - Summary of Contract Assets and Liabilities Balances (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Revenue From Contract With Customer [Abstract] | ||
Contract assets | $ 267,079 | $ 326,667 |
Contract liabilities | (386,585) | (450,051) |
Net contract liability | (119,506) | $ (123,384) |
Change in contract assets | (59,588) | |
Change in contract liabilities | 63,466 | |
Change in net contract liability | $ 3,878 |
Revenue Recognition and Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Contract With Customer Asset And Liability [Line Items] | ||
Contract with Customer, Asset, Explanation of Change | $ 76,667 | |
Contract with Customer, Liability, Explanation of Change | 12,641 | |
Contract with Customer, Liability, Revenue Recognized | 89,012 | |
Contract with Customer, Asset, Net, Noncurrent | 22,662 | $ 34,185 |
Contract with Customer, Liability, Noncurrent | 91,265 | 156,332 |
Revenue Benchmark [Member] | ||
Contract With Customer Asset And Liability [Line Items] | ||
Revenue recognized due to changes in estimates associated with performance obligations | 12,011 | $ 7,944 |
Nashville Manufacturing Operations [Member] | ||
Contract With Customer Asset And Liability [Line Items] | ||
Contract with Customer, Asset, Explanation of Change | $ 39,753 |
Revenue Recognition and Contracts with Customers - Schedule of Performance Obligations that are Expected to Be Recognized in Future (Details 1) $ in Thousands |
Mar. 31, 2020
USD ($)
|
---|---|
Revenue From Contract With Customer [Abstract] | |
Unsatisfied performance obligations | $ 3,875,679 |
Inventories - Schedule of Components of Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 32,552 | $ 35,883 |
Work-in-process | 312,953 | 277,996 |
Finished goods | 50,011 | 42,399 |
Rotable assets | 57,460 | 57,282 |
Total inventories | $ 452,976 | $ 413,560 |
Property and Equipment - Schedule of Net Property and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Land | $ 42,438 | $ 52,333 |
Construction-in-process | 19,231 | 25,310 |
Buildings and improvements | 285,407 | 320,289 |
Machinery and equipment | 701,018 | 814,040 |
Property and equipment, gross | 1,048,094 | 1,211,972 |
Less: accumulated depreciation | 629,953 | 668,262 |
Property and equipment, net | $ 418,141 | $ 543,710 |
Goodwill and Other Intangible Assets - Summary of the Changes in the Carrying Value of Goodwill By Reportable Segment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill [Line Items] | |||
March 31, 2019 | $ 583,225 | ||
Impairment of goodwill | (66,121) | $ (535,227) | |
March 31, 2020 | 513,527 | $ 583,225 | |
Systems & Support [Member] | |||
Goodwill [Line Items] | |||
March 31, 2019 | 583,225 | 592,828 | |
Goodwill associated with dispositions | (2,788) | ||
Effect of exchange rate changes | (3,577) | (6,815) | |
Impairment of goodwill | (66,121) | ||
March 31, 2020 | $ 513,527 | $ 583,225 | $ 592,828 |
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill [Line Items] | |||
Amortization of Intangible Assets | $ 48,311 | $ 52,581 | $ 56,495 |
Future amortization expense, 2021 | 48,139 | ||
Future amortization expense, 2022 | 47,898 | ||
Future amortization expense, 2023 | 47,898 | ||
Future amortization expense, 2024 | 47,898 | ||
Future amortization expense, 2025 | 47,898 | ||
Future amortization expense, Thereafter | 142,237 | ||
Aerospace Structures [Member] | |||
Goodwill [Line Items] | |||
Goodwill impaired accumulated impairment loss | 1,166,773 | 1,246,454 | |
Systems & Support [Member] | |||
Goodwill [Line Items] | |||
Goodwill impaired accumulated impairment loss | 66,121 | 0 | |
Gross goodwill | $ 579,649 | $ 583,225 |
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Accrued Liabilities [Abstract] | ||
Accrued pension | $ 753 | $ 742 |
Accrued other postretirement benefits | 4,775 | 10,758 |
Accrued compensation and benefits | 84,404 | 102,009 |
Accrued interest | 13,252 | 12,374 |
Accrued warranties | 30,079 | 18,977 |
Accrued workers' compensation | 16,583 | 17,635 |
Accrued income tax | 3,796 | 5,974 |
Operating lease liabilities | 13,139 | |
All other | 60,622 | 71,103 |
Total accrued expenses | $ 227,403 | $ 239,572 |
Leases - Schedule of Components Lease Expense (Details) $ in Thousands |
12 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Lessee Lease Description [Line Items] | |
Total lease cost | $ 40,545 |
Cost of sales or Selling, general and administrative expense [Member] | |
Lessee Lease Description [Line Items] | |
Operating lease cost | 24,539 |
Variable lease cost | 8,382 |
Depreciation and amortization [Member] | |
Lessee Lease Description [Line Items] | |
Amortization of right-of-use assets | 5,317 |
Interest expense and other [Member] | |
Lessee Lease Description [Line Items] | |
Interest on lease liability | $ 2,307 |
Leases - Schedule of Supplemental Cash Flow Information (Details) $ in Thousands |
12 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows used in operating leases | $ 21,430 |
Operating cash flows used in finance leases | 2,327 |
Financing cash flows used in finance leases | 8,370 |
ROU assets obtained in exchange for lease liabilities | |
Operating leases | 3,826 |
Finance leases | $ 1,039 |
Leases - Schedule of Information Related to Lease Terms and Discount Rates (Details) |
Mar. 31, 2020 |
---|---|
Leases [Abstract] | |
Operating leases | 7 years 2 months 12 days |
Finance leases | 6 years 10 months 24 days |
Operating leases | 6.20% |
Finance leases | 5.90% |
Leases - Additional Information (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating leases, future minimum payments due, current | $ 21,543 |
Operating leases, future minimum payments, due in two years | 18,516 |
Operating leases, future minimum payments, due in three years | 14,394 |
Operating leases, future minimum payments, due in four years | 11,037 |
Operating leases, future minimum payments, due in five years | 8,409 |
Operating leases, future minimum payments, due thereafter | $ 34,828 |
Long-term Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,807,507 | $ 1,488,821 |
Less: debt issuance costs | (16,426) | (13,171) |
Current portion of long-term debt | 7,336 | 8,201 |
Long-term debt, less current portion | 1,800,171 | 1,480,620 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 400,000 | 215,000 |
Receivable Securitization Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 75,000 | 80,700 |
Capital Lease Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 23,933 | 31,292 |
Senior Notes Due 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 525,000 | |
Senior Notes Due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 375,000 | |
Senior Notes Due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 300,000 | 300,000 |
Senior Notes Due 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 500,000 | $ 500,000 |
Long-term Debt - Schedule of Carrying Amounts and Estimated Fair Values of Long-term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,807,507 | $ 1,488,821 |
Reported Value Measurement [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,807,507 | 1,488,821 |
Estimate of Fair Value Measurement [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,559,455 | $ 1,568,037 |
Other Noncurrent Liabilities - Schedule of Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Other Liabilities, Noncurrent [Abstract] | ||
Acquired contract liabilities, net | $ 92,962 | $ 184,612 |
Accrued warranties | 31,036 | 39,418 |
Accrued workers' compensation | 13,603 | 13,501 |
Noncurrent contract liabilities | 91,265 | 156,332 |
Operating lease liabilities | 54,687 | |
Environmental contingencies | 18,060 | 16,040 |
Income tax reserves | 594 | 551 |
All other | 3,962 | 14,095 |
Total other noncurrent liabilities | $ 306,169 | $ 424,549 |
Income Taxes - Components of Loss from Continuing Operations before Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Examination [Line Items] | |||
(Loss) income from continuing operations, before income taxes | $ (23,635) | $ (332,572) | $ (468,003) |
Foreign [Member] | |||
Income Tax Examination [Line Items] | |||
(Loss) income from continuing operations, before income taxes | 33,399 | (18,336) | (57,673) |
Domestic [Member] | |||
Income Tax Examination [Line Items] | |||
(Loss) income from continuing operations, before income taxes | $ (57,034) | $ (314,236) | $ (410,330) |
Income Taxes - Components of Income Tax (Benefit) Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Current Federal tax expense (benefit) | $ (654) | $ (1,253) | $ 1,130 |
Current State tax expense (benefit) | 27 | 431 | 88 |
Current Foreign tax expense (benefit) | 3,602 | 3,335 | 5,433 |
Current income tax expense (benefit) | 2,975 | 2,513 | 6,651 |
Deferred Federal income tax expense (benefit) | 2,748 | (9,076) | (44,262) |
Deferred State income tax expense (benefit) | 73 | 1,593 | (14,672) |
Deferred Foreign income tax expense (benefit) | 2 | (456) | 15,826 |
Deferred income tax expense (benefit) | 2,823 | (7,939) | (43,108) |
Income tax (benefit) expense | $ 5,798 | $ (5,426) | $ (36,457) |
Income Taxes - Schedule of Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate | 21.00% | 21.00% | 31.50% |
State and local income taxes, net of federal tax benefit | (12.10%) | 4.60% | 3.20% |
Goodwill impairment | (37.40%) | (29.60%) | |
Disposition of business | 3.20% | (0.30%) | |
Miscellaneous permanent items and nondeductible accruals | 3.90% | (1.20%) | (0.20%) |
Research and development tax credit | 30.40% | 3.30% | 3.20% |
Foreign tax credits | (24.10%) | (0.70%) | 1.20% |
Valuation allowance | 29.30% | (28.60%) | (3.50%) |
Tax reform and CARES | (12.30%) | 0.40% | 5.10% |
Global Intangible Low-Taxed Income | (20.40%) | (1.30%) | |
Other (including foreign rate differential and FIN 48) | (2.80%) | 0.90% | (2.80%) |
Effective income tax rate | (24.50%) | 1.60% | 7.80% |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Net operating loss and other credit carryforwards | $ 318,341 | $ 309,961 |
Inventory | 17,521 | 17,849 |
Accruals and reserves | 40,492 | 41,091 |
Interest carryforward | 38,383 | 24,457 |
Pension and other postretirement benefits | 152,048 | 126,337 |
Lease right-of-use assets | 11,495 | |
Prepaid expenses and other | 241 | |
Acquired contract liabilities, net | 21,771 | 45,479 |
Deferred tax assets, gross | 600,292 | 565,174 |
Valuation allowance | (438,667) | (399,013) |
Net deferred tax assets | 161,625 | 166,161 |
Deferred revenue | 38,458 | 27,159 |
Property and equipment | 34,939 | 46,538 |
Goodwill and other intangible assets | 80,740 | 93,272 |
Lease liabilities | 14,928 | |
Prepaid expenses and other | 6,156 | |
Deferred tax liabilities | 169,065 | 173,125 |
Net deferred tax liabilities | $ 7,440 | $ 6,964 |
Income Taxes - Schedule of Reconciliation of Liability for Uncertain Tax Positions (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Beginning balance | $ 19,373 | $ 11,759 | $ 10,696 |
Adjustments for tax positions related to the current year | 1,057 | 7,364 | 1,032 |
Adjustments for tax positions of prior years | (1,303) | 250 | 31 |
Ending balance | $ 19,127 | $ 19,373 | $ 11,759 |
Stockholders' Deficit - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2014 |
|
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||
Common Stock, Voting Rights | one | ||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 5,000,000 | 500,800 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 2,277,789 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | ||
Preferred Stock, Shares Authorized | 250,000 | ||
Preferred Stock, Shares Outstanding | 0 | 0 | |
Common Stock [Member] | |||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||
Threshold stock percentage for rights become exercisable and entitle to purchase additional shares | 5.00% |
Loss per Share - Summary of Reconciliation between Weighted-average Common Shares Outstanding used in Calculation of Basis and Diluted Loss Per Share (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | |||
Weighted average common shares outstanding—basic | 50,494 | 49,698 | 49,442 |
Net effect of dilutive stock options and non-vested stock | 0 | 0 | 0 |
Weighted average common shares outstanding—diluted | 50,494 | 49,698 | 49,442 |
Employee Benefit Plans - Schedule of Amounts Expected to Recognized in Net Periodic Benefit Costs (Details) $ in Thousands |
Mar. 31, 2020
USD ($)
|
---|---|
Pension Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Prior service credit | $ 974 |
Actuarial loss | 32,899 |
Other postretirement [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Prior service credit | (5,105) |
Actuarial loss | $ (4,766) |
Employee Benefit Plans - Schedule of Estimated Future Benefit Payments from Plan Assets (Details) $ in Thousands |
Mar. 31, 2020
USD ($)
|
---|---|
Pension Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2021 | $ 200,097 |
2022 | 163,389 |
2023 | 159,963 |
2024 | 155,123 |
2025 | 150,985 |
2026 – 2030 | 690,383 |
Other postretirement [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2021 | 4,824 |
2022 | 813 |
2023 | 182 |
2024 | 171 |
2025 | 162 |
2026 – 2030 | $ 666 |
Employee Benefit Plans - Schedule of Estimated Future Benefit Payments from Plan Assets (Parenthetical) (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Mar. 31, 2021 |
---|---|---|
Forecast [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, expected future prescription drug subsidy receipt, next twelve months | $ 70 | $ 400 |
Stock Compensation Plans - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of share-based compensation granted to employees | $ 13,249 | $ 15,911 | $ 18,122 |
Share-based compensation expense | $ 11,062 | $ 10,259 | 7,949 |
Available for issuance of common stock | 1,564,791 | 5,586,421 | |
Fair value of employee stock vested in period | $ 7,052 | $ 7,031 | $ 2,081 |
Expected future compensation expense on restricted stock net of expected forfeitures | $ 10,320 | ||
Expected to be recognized over the remaining weighted-average vesting period | 1 year 6 months | ||
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years | ||
Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
Stock Compensation Plans - Summary of Status of Non-Vested Shares/Units of Restricted Stock and Deferred Stock Units (Details) |
12 Months Ended |
---|---|
Mar. 31, 2020
$ / shares
shares
| |
Share-based Payment Arrangement [Abstract] | |
Shares, Non-vested restricted awards and deferred stock units at March 31, 2019 | shares | 1,081,379 |
Shares, Granted | shares | 598,879 |
Shares, Vested | shares | (282,330) |
Shares, Forfeited | shares | (238,298) |
Shares, Non-vested restricted awards and deferred stock units at March 31, 2020 | shares | 1,159,630 |
Weighted- Average Grant Date Fair Value, Non-vested restricted awards and deferred stock units at March 31, 2019 | $ / shares | $ 26.01 |
Weighted- Average Grant Date Fair Value, Granted | $ / shares | 22.12 |
Weighted- Average Grant Date Fair Value, Vested | $ / shares | 24.98 |
Weighted- Average Grant Date Fair Value, Forfeited | $ / shares | 22.18 |
Weighted- Average Grant Date Fair Value, Non-vested restricted awards and deferred stock units at March 31, 2020 | $ / shares | $ 24.40 |
Commitments and Contingencies - Additional Information (Details) $ in Thousands |
12 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Commitments And Contingencies [Abstract] | |
Litigation judgment gain, net of expenses | $ 9,257 |
Restructuring Costs - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Restructuring and Related Activities [Abstract] | |||
Restructuring | $ 25,340 | $ 31,098 | $ 40,069 |
Customer Concentration - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Concentration Risk [Line Items] | |||||||||||
Revenues | $ 693,110 | $ 704,666 | $ 772,110 | $ 730,231 | $ 869,027 | $ 807,895 | $ 855,108 | $ 832,900 | $ 2,900,117 | $ 3,364,930 | $ 3,198,951 |
Systems & Support [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | 352,066 | 338,924 | 352,969 | 313,605 | 362,198 | 323,619 | 332,562 | 306,632 | |||
Aerospace Structures [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | $ 345,158 | $ 368,972 | $ 422,579 | $ 419,178 | $ 511,314 | $ 490,337 | $ 528,366 | $ 532,387 | |||
Revenue from Contract with Customer [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 10.00% | ||||||||||
Boeing [Member] | Trade Accounts Receivable [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 21.00% | 18.00% | |||||||||
Boeing [Member] | Net sales [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 34.00% | 31.00% | 31.00% | ||||||||
Revenues | $ 983,762 | $ 1,031,107 | $ 1,004,274 | ||||||||
Boeing [Member] | Net sales [Member] | Credit Concentration Risk [Member] | Systems & Support [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | 254,659 | 243,047 | 216,122 | ||||||||
Boeing [Member] | Net sales [Member] | Credit Concentration Risk [Member] | Aerospace Structures [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | $ 729,103 | $ 788,061 | $ 788,151 | ||||||||
Gulfstream [Member] | Trade Accounts Receivable [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 6.00% | 11.00% | |||||||||
Gulfstream [Member] | Net sales [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 12.00% | 11.00% | 13.00% | ||||||||
Revenues | $ 337,173 | $ 361,451 | $ 421,985 | ||||||||
Gulfstream [Member] | Net sales [Member] | Credit Concentration Risk [Member] | Systems & Support [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | 3,250 | 3,068 | 1,780 | ||||||||
Gulfstream [Member] | Net sales [Member] | Credit Concentration Risk [Member] | Aerospace Structures [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenues | $ 333,924 | $ 358,382 | $ 420,204 | ||||||||
Bombardier [Member] | Trade Accounts Receivable [Member] | Credit Concentration Risk [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Concentration Risk, Percentage | 16.00% | 13.00% |
Collective Bargaining Agreements - Additional Information (Details) - Unionized Employees Concentration Risk [Member] |
12 Months Ended |
---|---|
Mar. 31, 2020 | |
Workforce Subject To Collective Bargaining Arrangements [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 18.00% |
Workforce Subject To Collective Bargaining Arrangements set to Expire within One Year [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 5.00% |
Segments - Additional Information (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2020
USD ($)
Segment
|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||||||||||
Number of reportable segments | Segment | 2 | |||||||||||
Loss on sale of assets and businesses | $ (10,000) | $ 56,916 | $ 235,301 | $ 30,741 | ||||||||
Revenues | $ 693,110 | $ 704,666 | $ 772,110 | $ 730,231 | $ 869,027 | $ 807,895 | $ 855,108 | $ 832,900 | 2,900,117 | 3,364,930 | 3,198,951 | |
Foreign Sales [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 724,193 | 960,299 | $ 758,936 | |||||||||
Long-Lived assets in foreign countries | $ 205,243 | $ 294,990 | 205,243 | $ 294,990 | ||||||||
Corporate [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Loss on sale of assets and businesses | $ 67,037 |
Segments - Schedule of Selected Financial Information for Each Reportable Segment and Reconciliation of EBITDAP to Operating Income (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | $ 693,110 | $ 704,666 | $ 772,110 | $ 730,231 | $ 869,027 | $ 807,895 | $ 855,108 | $ 832,900 | $ 2,900,117 | $ 3,364,930 | $ 3,198,951 | |
Segment profit and reconciliation to consolidated income before income taxes: | ||||||||||||
Adjusted EBITDAP | 305,784 | 215,418 | 229,534 | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Depreciation and amortization | (138,168) | (149,904) | (158,368) | |||||||||
Interest expense and other, net | (122,129) | (114,619) | (99,442) | |||||||||
Corporate expenses | (53,082) | (74,706) | (88,037) | |||||||||
Share-based compensation expense | (11,062) | (10,259) | (7,949) | |||||||||
Loss on sale of assets and businesses | $ 10,000 | (56,916) | (235,301) | (30,741) | ||||||||
Amortization of acquired contract liabilities | 75,286 | 67,314 | 125,148 | |||||||||
Non-service defined benefit income | 40,587 | 56,726 | 97,079 | |||||||||
Union represented employee incentives | (7,071) | |||||||||||
Legal judgment gain, net | 9,257 | |||||||||||
Impairment of goodwill | (66,121) | (535,227) | ||||||||||
Income before income taxes | (23,635) | (332,572) | (468,003) | |||||||||
Total capital expenditures | 39,834 | 47,099 | 42,050 | |||||||||
Total assets | 2,980,333 | 2,854,574 | 2,980,333 | 2,854,574 | ||||||||
Systems & Support [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | 352,066 | 338,924 | 352,969 | 313,605 | 362,198 | 323,619 | 332,562 | 306,632 | ||||
Intersegment sales (eliminated in consolidation) | 6,803 | 15,537 | 13,868 | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Amortization of acquired contract liabilities | 34,486 | 34,121 | ||||||||||
Impairment of goodwill | (66,121) | |||||||||||
Aerospace Structures [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | 345,158 | $ 368,972 | $ 422,579 | $ 419,178 | 511,314 | $ 490,337 | $ 528,366 | $ 532,387 | ||||
Intersegment sales (eliminated in consolidation) | 6,531 | 6,948 | 9,418 | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Amortization of acquired contract liabilities | 40,800 | 33,193 | ||||||||||
ASU 2017-07 [Member] | ||||||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Loss on adoption of ASU 2017-07 | (87,241) | |||||||||||
Corporate & Eliminations [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | (13,334) | (22,485) | (23,286) | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Depreciation and amortization | (3,374) | (3,100) | (1,852) | |||||||||
Total capital expenditures | 1,502 | 784 | 4,179 | |||||||||
Total assets | 481,162 | 110,372 | 481,162 | 110,372 | ||||||||
Operating Segments [Member] | Systems & Support [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | 1,350,761 | 1,309,474 | 1,253,640 | |||||||||
Segment profit and reconciliation to consolidated income before income taxes: | ||||||||||||
Adjusted EBITDAP | 205,352 | 202,346 | 235,540 | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Depreciation and amortization | (32,376) | (35,373) | (42,730) | |||||||||
Total capital expenditures | 17,141 | 15,734 | 8,352 | |||||||||
Total assets | 1,478,679 | 1,487,163 | 1,478,679 | 1,487,163 | ||||||||
Operating Segments [Member] | Aerospace Structures [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales to external customers | 1,549,356 | 2,055,456 | 1,945,311 | |||||||||
Segment profit and reconciliation to consolidated income before income taxes: | ||||||||||||
Adjusted EBITDAP | 100,432 | 13,072 | (6,006) | |||||||||
Reconciliation of segment profit to income (loss) before income taxes | ||||||||||||
Depreciation and amortization | (102,418) | (111,431) | (113,786) | |||||||||
Total capital expenditures | 21,191 | 30,581 | $ 29,519 | |||||||||
Total assets | $ 1,020,492 | $ 1,257,039 | $ 1,020,492 | $ 1,257,039 |
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | $ 693,110 | $ 704,666 | $ 772,110 | $ 730,231 | $ 869,027 | $ 807,895 | $ 855,108 | $ 832,900 | $ 2,900,117 | $ 3,364,930 | $ 3,198,951 |
Gross Profit | 116,085 | 142,200 | 131,456 | 119,461 | 131,239 | 72,007 | 107,357 | 38,742 | |||
Operating income (loss) | (40,302) | 1,661 | 61,037 | 35,511 | (189,197) | (16,933) | (2,001) | (66,548) | 57,907 | (274,679) | (465,640) |
Net income (loss) | $ (75,385) | $ (13,206) | $ 42,234 | $ 16,924 | $ (201,385) | $ (32,147) | $ (15,878) | $ (77,736) | $ (29,433) | $ (327,146) | $ (431,546) |
Basic Income (Loss) per share | $ (1.46) | $ (0.26) | $ 0.84 | $ 0.34 | $ (4.05) | $ (0.65) | $ (0.32) | $ (1.57) | $ (0.58) | $ (6.58) | $ (8.73) |
Diluted Income (Loss) per share | $ (1.46) | $ (0.26) | $ 0.84 | $ 0.34 | $ (4.05) | $ (0.65) | $ (0.32) | $ (1.57) | $ (0.58) | $ (6.58) | $ (8.73) |
Systems & Support [Member] | |||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | $ 352,066 | $ 338,924 | $ 352,969 | $ 313,605 | $ 362,198 | $ 323,619 | $ 332,562 | $ 306,632 | |||
Operating income (loss) | (22,478) | 57,434 | 62,337 | 44,048 | 55,270 | 51,368 | 51,380 | 43,078 | |||
Aerospace Structures [Member] | |||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | 345,158 | 368,972 | 422,579 | 419,178 | 511,314 | 490,337 | 528,366 | 532,387 | |||
Operating income (loss) | (2,066) | 18,039 | 13,608 | 12,283 | (264) | (49,813) | (22,744) | (79,587) | |||
Elimination of Inter-segment Sales | |||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | (4,114) | (3,230) | (3,438) | (2,552) | (4,485) | (6,061) | (5,820) | (6,119) | |||
Corporate [Member] | |||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||
Operating income (loss) | $ (15,758) | $ (73,812) | $ (14,908) | $ (20,820) | $ (244,203) | $ (18,488) | $ (30,637) | $ (30,039) |
Quarterly Financial Information (Unaudited) (Parenthetical) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2018 |
|
Selected Quarterly Financial Information [Abstract] | ||
Goodwill impairment | $ 66,121 | $ 535,227 |
Systems & Support [Member] | ||
Selected Quarterly Financial Information [Abstract] | ||
Goodwill impairment | $ 66,121 |
Schedule II Valuation and Qualifying Accounts - Schedule of Valuation and Qualifying Accounts (Details) - Deferred Tax Assets [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Valuation And Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of year | $ 399,013 | $ 146,770 | $ 141,214 |
Additions charged to (income) expense | (3,474) | 93,311 | 6,885 |
Other | 43,128 | 158,932 | (1,329) |
Balance at end of year | $ 438,667 | $ 399,013 | $ 146,770 |
Schedule II Valuation and Qualifying Accounts - Schedule of Valuation and Qualifying Accounts - Additional Information (Details) |
12 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
ASC 606 [Member] | |
Valuation And Qualifying Accounts Disclosure [Line Items] | |
Adjustments relate to changes in defined benefit pension plan and other postretirement benefit plan obligations | $ 132,000 |
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