Changes in Estimates

9 Months Ended

Sep. 30, 2021

. Changes in EstimatesThe Company has a periodic forecasting process in which management assesses the progress and performance of the Company’s programs. This process requires management to review each program’s progress by evaluating the program schedule, changes to identified risks and opportunities, changes to estimated revenues and costs for the accounting contracts, and any outstanding contract matters. Risks and opportunities include but are not limited to management’s judgment about the cost associated with the Company’s ability to achieve the schedule, technical requirements (e.g., a newly-developed product versus a mature product), and any other program requirements. Due to the span of years it may take to completely satisfy the performance obligations for the accounting contracts and the scope and nature of the work required to be performed on those

contracts, the estimation of total revenue and costs is subject to many variables and, accordingly, is subject to change based upon judgment. When adjustments in estimated total consideration or estimated total cost are required, any changes from prior estimates for fully satisfied performance obligations are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors including production efficiencies, assumed rate of production, the rate of overhead absorption, changes to scope of work, and contract modifications.

The full extent to which the effects of the COVID-19 pandemic will impact the Company's business, operations, results of operations and financial condition depends on future developments that are inherently uncertain. The Company has made reasonable estimates and judgments of the COVID-19 pandemic’s impact within its financial statements that the Company believes are reasonable, and there may be changes to those estimates in future periods related to changes in potential production volumes or timing of those production volumes. See also Note 20, Commitments, Contingencies and Guarantees.

During the third quarter ended September 30, 2021, the Company recognized unfavorable changes in estimates of $73.2, which included net forward loss charges of $70.4, and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2021 of $2.8. The forward losses in the third quarter relate primarily to the B787 program, driven by the Company's assessment of the latest B787 program demand received from Boeing through September 2021, including the impact of reduced production volumes and the corresponding amount of fixed overhead absorption applied to lower deliveries. The loss in the current period also includes an additional loss on the A350 program related to changes in the production schedule, and a loss on the Bell V-280 OTA program, the contract for which was recently awarded to the Company. The unfavorable cumulative catch-up adjustment was driven by the impact of production schedule changes on the estimate of production costs for the B737 program, and also includes increased costs estimated on non-recurring programs.

Changes in estimates are summarized below:


	For the Three Months Ended				For the Nine Months Ended
Changes in Estimates	September 30, 2021		October 1, 2020		September 30, 2021		October 1, 2020
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Fuselage	$	(1.6)	$	8.8	$	4.9	$	(18.9)
Propulsion	1.6		(4.6)		(2.0)		(8.6)
Wing	(2.9)		0.4		(5.6)		(3.1)
Other	0.1		—		0.2		—
Total (Unfavorable) Favorable Cumulative Catch-up Adjustment	$	(2.8)	$	4.6	$	(2.5)	$	(30.6)

Changes in Estimates on Loss Programs (Forward Loss) by Segment
Fuselage	$	(49.9)	$	(92.0)	$	(140.7)	$	(260.3)
Propulsion	(5.9)		(14.9)		(19.2)		(34.2)
Wing	(14.6)		(21.5)		(35.1)		(47.7)
Total Changes in Estimates (Forward Loss) on Loss Programs	$	(70.4)	$	(128.4)	$	(195.0)	$	(342.2)

Total Changes in Estimates	$	(73.2)	$	(123.8)	$	(197.5)	$	(372.8)
EPS Impact (diluted per share based upon 2021 forecasted effective tax rate)	$	(0.69)	$	(0.77)	$	(1.86)	$	(2.33)