Acquisitions (Tables)

12 Months Ended

Dec. 31, 2020

Asco Acquisition

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

Acquisition-related expenses were $20.0 for the twelve months ended December 31, 2020 and $12.7 for the twelve months ended December 31, 2019, and are included in selling, general and administrative costs on the condensed and consolidated statement of operations.

FMI Acquisition [Text Block]

FMI

On January 10, 2020, Spirit completed the acquisition of 100% of the outstanding equity of FMI using cash on hand. The acquisition-date fair value of consideration transferred was $121.4, which included cash payment to the seller, payment of closing indebtedness, and payment of selling expenses.

Acquiring FMI aligns with the Company's strategic growth objectives to diversify its customer base and expand the current defense business. FMI is an industry-leader in the design and manufacture of complex composite solutions that are primarily used in aerospace applications. FMI's main operations focus on multidirectional reinforced composites that enable high-temperature applications such as thermal protection systems, re-entry vehicle nose tips, and rocket motor throats and nozzles.

Acquisition-related expenses were $0.5 for the twelve months ended December 31, 2020, and are included in selling, general and administrative costs on the condensed and consolidated statement of operations.

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


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

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

The intangible assets included above consist of the following:


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

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

FMI is typically engaged with government agencies through purchase orders and does not have any life of program commitments from customers. As a result of FMI’s existing developed technology and incumbent position on previous

purchase orders, FMI is positioned to capture future government programs. As such, the developed technology and contract assets were subsumed into one consolidated intangible asset (collectively referred to as the developed technology asset).

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

The goodwill amount of $76.0 recognized is attributable primarily to expected revenue synergies generated by the integration of the Company's products and technologies with those of FMI and intangible assets that do not qualify for separate recognition, such as the assembled workforce of FMI. None of the goodwill is expected to be deductible for income tax purposes. The goodwill is allocated $42.9 to the Fuselage Systems segment and $33.1 to the Propulsion Systems segment. This allocation was based upon the fair value of the projected earnings as of the acquisition date. The recognized goodwill was adjusted from $76.2 to $76.0 resulting from settlement of net working capital in second quarter of 2020. See Note 12, Other Assets, Goodwill, and Intangible Assets for more information on goodwill.

The Company’s consolidated income statement from the acquisition date to the period ending December 31, 2020 includes revenue and earnings of FMI of $58.8 and $7.7, respectively. The following summary, prepared on a pro forma basis, presents the unaudited consolidated results of operations for the twelve months ended December 31, 2020 and December 31, 2019 as if the acquisition of FMI had been completed as of the beginning of fiscal 2019, after including any post-acquisition adjustments directly attributable to the acquisition, and after including the impact of adjustments such as amortization of intangible assets, and interest expense on related borrowings and, in each case, the related income tax effects. These amounts have been calculated after substantively applying the Company’s accounting policies. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of the Company's results of operations had the Company owned FMI for the entire periods presented, nor does it purport to represent results for any future periods.


	For the Twelve Months Ended
	December 31, 2020		December 31, 2019
Revenue - as reported	$	3,404.8	$	7,863.1
Revenue - pro forma	3,405.6		7,913.8
Net (loss) income - as reported	$	(870.3)	$	530.1
Net (loss) income - pro forma	(870.2)		534.9
Earnings Per Share - Diluted - as reported	$	(8.38)	$	5.06
Earnings Per Share - Diluted - pro forma	(8.38)		5.11