Changes in Estimates

3 Months Ended

Mar. 31, 2022

. Changes in Estimates

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

During the first quarter ended March 31, 2022, the Company recognized unfavorable changes in estimates of $50.0, which included net forward charges of $23.8, and unfavorable cumulative catch-up adjustments of $26.2. The unfavorable cumulative catch-up adjustments were primarily driven by increased estimates for supply chain, raw material, and other costs on the Boeing B737 MAX program. The forward losses in the first quarter relate primarily to the estimated impact of further production rate decreases and costs of rework on the Boeing B787 program, and increased costs of quality and production rate decreases on the A350 program.

During the first quarter ended April 1, 2021, the Company recognized unfavorable changes in estimates of $78.2, which included net forward loss charges of $72.4, and unfavorable cumulative catch-up adjustments related to periods prior to the first quarter of 2021 of $5.8. The forward losses related primarily to cost performance on the B767 program, engineering analysis and estimated cost of re-work on the B787 program, and schedule changes, costs for tooling and build process quality improvements on the A350 program.

Changes in estimates are summarized below:


	For the Three Months Ended
Changes in Estimates		March 31, 2022		April 1, 2021
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
Commercial		$	(26.4)	$	(7.6)
Defense & Space		0.2		1.8
Aftermarket		—		—

Total (Unfavorable) Favorable Cumulative Catch-up Adjustment		$	(26.2)	$	(5.8)

Changes in Estimates on Loss Programs (Forward Loss) by Segment
Commercial		$	(25.8)	$	(67.6)
Defense & Space		2.0		(4.8)
Aftermarket		—		—
Total Changes in Estimates (Forward Loss) on Loss Programs		$	(23.8)	$	(72.4)

Total Change in Estimate		$	(50.0)	$	(78.2)
EPS Impact (diluted per share based upon applicable forecasted effective tax rate)		$	(0.40)	$	(0.74)