Inventory

12 Months Ended

Dec. 31, 2023

Inventory consists of raw materials used in the production process, work-in-process, which is direct material, direct labor, overhead, and capitalized preproduction costs. Raw materials are stated at lower of cost (principally on an actual or average cost basis) or net realizable value. Capitalized pre-production costs include certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. These costs are typically amortized over a period that is consistent with the satisfaction of the underlying performance obligations to which these relate. See Note 3, Summary of Significant Accounting Policies - Inventory.


	December 31, 2023		December 31, 2022
Raw materials	$	414.4	$	332.7
Work-in-process(1)	1,283.7		1,044.9
Finished goods	48.4		69.4
Product inventory	1,746.5		1,447.0
Capitalized pre-production	20.8		23.7
Total inventory, net	$	1,767.3	$	1,470.7

(1)Work-in-process inventory includes direct labor, direct material, and overhead on contracts for which revenue is recognized at a point in time, as well as sub-assembly parts that have not been issued to production on contracts for which revenue is recognized over time using the input method. For the periods ended December 31, 2023 and December 31, 2022, work-in-process inventory includes $262.0 and $392.2, respectively, of costs incurred in anticipation of specific contracts and no impairments were recorded in the period.

Product inventory, summarized in the table above, is shown net of valuation reserves of $150.2 and $136.8 as of December 31, 2023 and December 31, 2022, respectively.

Excess capacity and abnormal production costs are excluded from inventory and recognized as expense in the period incurred. Cost of sales for the twelve months ended December 31, 2023 includes $184.1 of excess capacity production costs related to temporary B737 MAX, A220, and A320 production schedule changes. Additional expenses that are excluded from inventory and expensed are abnormal production costs of $8.3 related to the temporary production pause, and ($2.4) of benefit related to the settlement of a contingent consideration obligation related to the Applied Aerodynamics acquisition, which are

both included in Other operating expense, and $7.2 of restructuring costs included in the Consolidated Statements of Operations. Cost of sales for the twelve months ended December 31, 2022 includes $157.3 of excess capacity production costs related to temporary B737 MAX, A220, and A320 production schedule changes, abnormal costs related to workforce adjustments as a result of COVID-19 production pause, net of a U.S. employee retention credit and U.K. government subsidies, for the twelve months ended December 31, 2022 of $9.6 and an offset of ($32.6) related to the AMJPP. Additional expenses that were excluded from inventory and expensed during the twelve months ended December 31, 2022 include $0.2 of restructuring costs.