Standards Recently Implemented

Adoption of ASU 2014-09

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) that supersedes Accounting Standards Codification ("ASC") Topic 605 (“legacy GAAP”). Subsequently, the FASB issued several updates to ASU 2014-09, which are pending content or otherwise codified in ASC Topic 606 (“ASC 606”). ASU 2014-09 includes new guidance on costs related to a contract, which is codified in ASC Subtopic 340-40 (“ASC 340-40”). The Company adopted ASC 606 using the modified retrospective method (“method”) effective as of April 1, 2018 (“date of initial application”). Under this method, the cumulative effect of the adoption of ASC 606 is recognized as an adjustment to retained earnings on the date of initial application (“Transition Adjustment”), and the comparative financial statements for prior periods are not adjusted and continue to be reported under legacy GAAP. The Transition Adjustment was a decrease to retained earnings of $584,900. Financial information for fiscal years 2019 and 2018 is presented under ASC 606 and under legacy GAAP, respectively. The tables below reflect adjusted fiscal year 2019 financial statement amounts as if the Company had been reporting under legacy GAAP for items that are materially different.

The adoption of ASC 606 does not impact the Company's cash flows or the underlying economics of the Company's contracts with customers. However, the pattern and timing of revenue and profit recognition, as well as financial statement presentation and disclosures, has changed.

The significant changes and the qualitative and quantitative impact of the adoption of ASC 606 are noted below:

a.Revenue from Contracts with Customers

Generally, the Company no longer uses the units-of-delivery method, and the historical use of contract blocks to define contracts for accounting purposes has been replaced by accounting contracts as identified under ASC 606. The Company's accounting contracts under ASC 606 are for the specific number of units for which orders have been received, which is typically for fewer units than what was used to define contract blocks under legacy GAAP. In most of the Company's contracts, the customer has options or requirements to purchase additional products and services that do not represent material rights since the options are at their standalone pricing.

The primary effect of the Company’s adoption of ASC 606 (outside of the Aerospace Structures segment) was to recognize revenue over time for certain of its contracts, which is a change from recognition based on shipping terms under the legacy GAAP accounting policy.

b.Capitalized Preproduction Costs

Under legacy GAAP, certain capitalized preproduction costs were deferred over the life of the contract block; in certain situations this is not permitted under ASC 606. Accordingly, capitalized preproduction costs of $865,843 (pre-tax), net of previously recognized forward loss reserves of $343,983 (pre-tax), were eliminated, resulting in a decrease to retained earnings as of April 1, 2018.

c.Contract Assets and Contract Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed. Contract assets in the amount of $565,414 were established in the Transition Adjustment.

Contract liabilities primarily represent cash received that is in excess of revenues recognized and is contingent upon the satisfaction of performance obligations. Contract liabilities in the amount of $288,287 were established in the Transition Adjustment, which reflects consideration received prior to the date of initial application that previously represented customer advances and additional forward losses due to change in block sizes. This liability will be recognized as revenue earlier if the options are not fully exercised, or immediately if the contract is terminated prior to the options being fully exercised.

d.Contract Costs

The Company’s accounting for preproduction, tooling and certain other costs has not changed since these costs generally do not fall within the scope of ASC 340-40, however certain related assets have been reclassified from inventory to property and equipment as they are costs to fulfill obligations beyond 1 year. Incurred production costs for anticipated contracts (satisfaction of performance obligations, which have commenced because the Company expects the customer to exercise options) continue to be classified as inventory.

e.Practical Expedients

The Company has adopted ASC 606 only for contracts that were not substantially completed under legacy GAAP on the date of initial application. For these contracts, the Company has reflected the aggregate effect of all modifications executed prior to the date of initial application when identifying satisfied and unsatisfied performance obligations, for determining the transaction price and for allocating the transaction price.

The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated financial statements for the three and six months ended September 30, 2018.



	For the Three Months Ended
	As Reported September 30, 2018			Impact of Adoption of ASC Topic 606			As Adjusted September 30, 2018
Net sales	$	855,108		$	(59,467	)	$	795,641
Cost of sales (exclusive of depreciation and amortization)	724,474			62,136			786,610
Selling, general and administrative	69,551			1,900			71,451
Interest expense and other	28,714			(1,756		)	26,958
Net loss *	(14,676		)	(121,747		)	(136,423		)

Loss per share
Basic	$	(0.30	)	$	(2.45	)	$	(2.75	)
Diluted	$	(0.30	)	$	(2.45	)	$	(2.75	)

	For the Six Months Ended
	As Reported September 30, 2018			Impact of Adoption of ASC Topic 606			As Adjusted September 30, 2018
Net sales	$	1,688,008		$	(115,704	)	$	1,572,304
Cost of sales (exclusive of depreciation and amortization)	1,494,688			88,989			1,583,677
Selling, general and administrative	151,208			3,253			154,461
Interest expense and other	54,206			(4,044		)	50,162
Net loss *	(91,210		)	(203,902		)	(295,112		)

Loss per share
Basic	$	(1.84	)	$	(4.11	)	$	(5.95	)
Diluted	$	(1.84	)	$	(4.11	)	$	(5.95	)

* The Company did not have a net tax effect on the Transition Adjustment due to having a full valuation allowance position.



	As Reported September 30, 2018			Impact of Adoption of ASC Topic 606			As Adjusted September 30, 2018
Assets
Trade and other receivables	$	377,138		$	(50,604	)	$	326,534
Contract assets, short term	569,934			(560,006		)	9,928
Inventories, net	533,583			741,797			1,275,380
Property and equipment, net	714,022			(34,601		)	679,421
Total assets	3,375,383			96,586			3,471,969
Liabilities
Contract liabilities	354,963			(291,840		)	63,123
Other noncurrent liabilities	374,931			7,424			382,355
Stockholders' (deficit) equity
Accumulated other comprehensive loss	(382,225		)	6			(382,219		)
Accumulated (deficit) retained earnings	(533,968		)	380,996			(152,972		)
Total liabilities and stockholders' (deficit) equity	3,375,383			96,586			3,471,969

Adoption of ASU 2017-07

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 requires an employer to report the service cost component of net periodic pension benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, with other cost components presented separately from the service cost component and outside of income from operations. ASU 2017-07 also allows only the service cost component of net periodic pension benefit cost to be eligible for capitalization when applicable. ASU 2017-07 was effective for years beginning after December 15, 2017. The Company adopted this standard on April 1, 2018, applying the presentation requirements retrospectively. We elected to apply the practical expedient, which allows us to reclassify amounts disclosed previously in the employee benefit plans note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. Provisions related to presentation of the service cost component eligibility for capitalization were applied prospectively.

The effect of the retrospective presentation change related to the net periodic benefit cost of our defined benefit pension and postretirement plans on our condensed consolidated statements of operations was as follows:



	For the Three Months Ended
	As Previously Reported September 30, 2017		Impact of Adoption of ASU 2017-07			As Adjusted September 30, 2017
Cost of sales	$	579,864	$	18,539		$	598,403
Selling, general and administrative	74,581		861			75,442
Pension settlement charge	523		(523		)	—
Non-service defined benefit income	—		(18,877		)	(18,877		)

	For the Six Months Ended
	As Previously Reported September 30, 2017		Impact of Adoption of ASU 2017-07			As Adjusted September 30, 2017
Cost of sales	$	1,207,210	$	37,000		$	1,244,210
Selling, general and administrative	153,883		1,806			155,689
Pension settlement charge	523		(523		)	—
Non-service defined benefit income	—		(38,283		)	(38,283		)

During the first quarter of the fiscal year ended March 31, 2019, the Company recorded a non-cash charge related to the adoption of ASU 2017-07 of $87,241 due to an inseparable change in estimate from a change in accounting principles. This charge is presented on the accompanying condensed consolidated statements of operations within "Cost of sales."

Adoption of ASU 2017-12

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, and eliminates the separate measurement and presentation of hedge ineffectiveness. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU 2017-12 as of April 1, 2018. The adoption of ASU 2017-12 did not have a material impact on the Company’s condensed consolidated financial statements.