Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | Jun. 30, 2021 | Nov. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | May 31, 2021 | ||
Entity File Number | 1-6263 | ||
Entity Registrant Name | AAR CORP | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 36-2334820 | ||
Entity Address, Address Line One | One AAR Place | ||
Entity Address, Address Line Two | 1100 N. Wood Dale Road | ||
Entity Address, City or Town | Wood Dale | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60191 | ||
City Area Code | 630 | ||
Local Phone Number | 227-2000 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 952 | ||
Entity Common Stock, Shares Outstanding | 35,404,605 | ||
Entity Central Index Key | 0000001750 | ||
Entity Interactive Data Current | Yes | ||
Current Fiscal Year End Date | --05-31 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Amendment Flag | false | ||
ICFR Auditor Attestation Flag | true | ||
Common Stock | NEW YORK STOCK EXCHANGE, INC. | |||
Document and Entity Information | |||
Title of 12(b) Security | Common Stock, $1.00 par value | ||
Trading Symbol | AIR | ||
Security Exchange Name | NYSE | ||
Common Stock | CHICAGO STOCK EXCHANGE, INC | |||
Document and Entity Information | |||
Title of 12(b) Security | Common Stock, $1.00 par value | ||
Trading Symbol | AIR | ||
Security Exchange Name | CHX |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Sales: | |||
Sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
Cost and operating expenses: | |||
Provision for doubtful accounts | 8.5 | 5.4 | 15.8 |
Selling, general and administrative | 182.4 | 220.6 | 215.4 |
Total cost and operating expenses | 1,567.3 | 2,028.8 | 1,953.2 |
Earnings (Loss) from joint ventures | 0.2 | (1.9) | (0.3) |
Operating income | 85.2 | 41.3 | 98.3 |
Loss on sale of business | (20.2) | ||
Other income (expense), net | 4.3 | (2.1) | (0.8) |
Interest expense | (5) | (9.3) | (9.5) |
Interest income | 0.2 | 0.5 | 1 |
Income from continuing operations before provision for income taxes | 64.5 | 30.4 | 89 |
Provision for income taxes | 18.2 | 5.6 | 4.9 |
Income from continuing operations | 46.3 | 24.8 | 84.1 |
Loss from discontinued operations, net of tax | (10.5) | (20.4) | (76.6) |
Net income | $ 35.8 | $ 4.4 | $ 7.5 |
Earnings per share - basic: | |||
Earnings from continuing operations | $ 1.31 | $ 0.71 | $ 2.42 |
Loss from discontinued operations | (0.30) | (0.59) | (2.22) |
Earnings per share - basic | 1.01 | 0.12 | 0.20 |
Earnings per share - diluted: | |||
Earnings from continuing operations | 1.30 | 0.71 | 2.40 |
Loss from discontinued operations | (0.30) | (0.58) | (2.19) |
Earnings per share - diluted | $ 1 | $ 0.13 | $ 0.21 |
Products | |||
Sales: | |||
Sales | $ 934.9 | $ 1,090 | $ 1,124.3 |
Cost and operating expenses: | |||
Cost | 773.8 | 900 | 915 |
Services | |||
Sales: | |||
Sales | 717.4 | 982 | 927.5 |
Cost and operating expenses: | |||
Cost | $ 602.6 | $ 902.8 | $ 807 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income | $ 35.8 | $ 4.4 | $ 7.5 |
Other comprehensive income (loss), net of tax: | |||
Currency translation adjustments, net of tax | 5.9 | 0.1 | (2.4) |
Unrecognized pension and post retirement costs, net of tax benefit (expense) of $5.2 in 2021, $(1.0) in 2020, and $(1.7) in 2019 | 20.4 | (3.8) | (6.5) |
Total other comprehensive income (loss), net of tax | 26.3 | (3.7) | (8.9) |
Comprehensive income (loss) | $ 62.1 | $ 0.7 | $ (1.4) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Unrecognized pension and post retirement costs, tax expense (benefit) | $ 5.2 | $ (1) | $ (1.7) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 51.8 | $ 404.7 |
Restricted cash | 8.4 | 20 |
Accounts receivable, net | 166.7 | 171.9 |
Contract assets | 71.9 | 49.3 |
Inventories | 540.6 | 623.1 |
Rotable assets and equipment on or available for short-term lease | 50.4 | 69.6 |
Assets of discontinued operations | 19.5 | 22.9 |
Prepaid expenses and other current assets | 27.7 | 77.2 |
Total current assets | 937 | 1,438.7 |
Property, plant and equipment, at cost: | ||
Land | 3.3 | 4.5 |
Buildings and improvements | 114.7 | 112.4 |
Equipment and furniture and fixtures | 262.2 | 265.3 |
Property, plant and equipment, gross | 380.2 | 382.2 |
Accumulated depreciation | (260.2) | (246.5) |
Property, plant and equipment, net | 120 | 135.7 |
Other assets: | ||
Goodwill and intangible assets, net | 123.8 | 121.7 |
Operating lease right-of-use assets, net | 75.8 | 89.7 |
Rotable assets supporting long-term programs | 184.3 | 211.7 |
Other non-current assets | 98.8 | 81.5 |
Total other assets | 482.7 | 504.6 |
Total assets | 1,539.7 | 2,079 |
Current liabilities: | ||
Accounts payable | 127.2 | 191.6 |
Accrued liabilities | 174.2 | 161.6 |
Liabilities of discontinued operations | 35.4 | 29.9 |
Total current liabilities | 336.8 | 383.1 |
Long-term debt | 133.7 | 600 |
Operating lease liabilities | 59.9 | 70.9 |
Deferred revenue on long-term contracts | 5.4 | 88 |
Other liabilities | 29.5 | 34.4 |
Total noncurrent liabilities | 228.5 | 793.3 |
Equity: | ||
Preferred stock, $1.00 par value, authorized 250,000 shares; none issued | ||
Common stock, $1.00 par value, authorized 100,000,000 shares; issued 45,300,786 shares at cost | 45.3 | 45.3 |
Capital surplus | 479.8 | 478.6 |
Retained earnings | 741.7 | 706 |
Treasury stock, 9,925,551 and 10,203,437 shares at cost, respectively | (274.1) | (282.7) |
Accumulated other comprehensive loss | (18.3) | (44.6) |
Total equity | 974.4 | 902.6 |
Total liabilities and equity | $ 1,539.7 | $ 2,079 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 31, 2021 | May 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 250,000 | 250,000 |
Preferred stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 45,300,786 | 45,300,786 |
Treasury stock, shares | 9,925,551 | 10,203,437 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions | Common Stock | Capital Surplus | Retained EarningsCumulative effect adjustment | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total EquityCumulative effect adjustment | Total Equity | Total |
Balance (ASC 606) at May. 31, 2018 | $ (20.4) | $ (20.4) | |||||||
Balance at May. 31, 2018 | $ 45.3 | $ 470.5 | $ 733.2 | $ (280.7) | $ (32) | $ 936.3 | |||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 7.5 | 7.5 | $ 7.5 | ||||||
Cash dividends | (10.5) | (10.5) | |||||||
Stock option activity | 3.5 | 4.1 | 7.6 | ||||||
Restricted stock activity | 5.4 | (0.8) | 4.6 | ||||||
Repurchase of shares | (10.3) | (10.3) | |||||||
Other comprehensive income (loss), net of tax | (8.9) | (8.9) | (8.9) | ||||||
Balance (ASC 842) at May. 31, 2019 | $ 2.5 | $ 2.5 | |||||||
Balance at May. 31, 2019 | 45.3 | 479.4 | 709.8 | (287.7) | (40.9) | 905.9 | |||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 4.4 | 4.4 | 4.4 | ||||||
Cash dividends | (10.7) | (10.7) | |||||||
Stock option activity | 3.1 | 8.3 | 11.4 | ||||||
Restricted stock activity | (3.9) | 0.8 | (3.1) | ||||||
Repurchase of shares | (4.1) | (4.1) | |||||||
Other comprehensive income (loss), net of tax | (3.7) | (3.7) | (3.7) | ||||||
Balance at May. 31, 2020 | 45.3 | 478.6 | 706 | (282.7) | (44.6) | 902.6 | 902.6 | ||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 35.8 | 35.8 | 35.8 | ||||||
Cash dividends | (0.1) | (0.1) | |||||||
Stock option activity | 3.6 | 3 | 6.6 | ||||||
Restricted stock activity | (2.4) | 5.6 | 3.2 | ||||||
Repurchase of shares | (5.6) | ||||||||
Other comprehensive income (loss), net of tax | 26.3 | 26.3 | 26.3 | ||||||
Balance at May. 31, 2021 | $ 45.3 | $ 479.8 | $ 741.7 | $ (274.1) | $ (18.3) | $ 974.4 | $ 974.4 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Cash flows provided from (used in) operating activities: | |||
Net income | $ 35.8 | $ 4.4 | $ 7.5 |
Less: Loss from discontinued operations | (10.5) | (20.4) | (76.6) |
Income from continuing operations | 46.3 | 24.8 | 84.1 |
Adjustments to reconcile income to net cash provided from (used in) operating activities: | |||
Depreciation and intangible amortization | 36.3 | 43.7 | 42.8 |
Stock-based compensation expense | 9.2 | 7.3 | 13.5 |
Provision for doubtful accounts | 8.5 | 5.4 | 15.8 |
Deferred tax provision (benefit) | 8.4 | 0.5 | (5) |
Loss (Earnings) from joint ventures | (0.2) | 1.9 | 0.3 |
Customer contract termination and restructuring costs | 2.2 | 31.3 | |
Impairment charges | 9.1 | 8.1 | |
Loss on sale of business | 20.2 | ||
Changes in certain assets and liabilities, net of acquisitions: | |||
Accounts receivable | (4.5) | 14.8 | (34.4) |
Contract assets | (26.4) | 9.9 | (9.7) |
Inventories | 74.9 | (94.5) | (80.9) |
Prepaid expenses and other current assets | 49.8 | (40.1) | (10.9) |
Rotable assets supporting long-term programs | 9.1 | (22.1) | (49.2) |
Accounts payable | (62.6) | 4.1 | 17.5 |
Accrued and other liabilities | 17.1 | 0.5 | 22.9 |
Deferred revenue on long-term programs | (83) | (14.6) | 44.4 |
Other | (5.9) | (0.1) | 9.3 |
Net cash provided from (used in) operating activities-continuing operations | 108.5 | (19.1) | 60.5 |
Net cash provided from (used in) operating activities-discontinued operations | (3.3) | (17) | 6.9 |
Net cash provided from (used in) operating activities | 105.2 | (36.1) | 67.4 |
Cash flows used in investing activities: | |||
Property, plant and equipment expenditures | (11.3) | (23.6) | (17.4) |
Proceeds from termination of life insurance policies | 10 | ||
Other | 0.8 | (1.2) | (1.1) |
Net cash used in investing activities-continuing operations | (0.5) | (24.8) | (18.5) |
Net cash used in investing activities-discontinued operations | (0.5) | ||
Net cash used in investing activities | (0.5) | (24.8) | (19) |
Cash flows provided from (used in) financing activities: | |||
Short-term borrowings (repayments), net | (470) | 459.5 | (10) |
Repayments on long-term borrowings | (25) | ||
Cash dividends | (0.1) | (10.7) | (10.5) |
Purchase of treasury stock | (4.1) | (10.3) | |
Stock compensation activity | 0.6 | 1.1 | 8.5 |
Other | (1.3) | ||
Net cash provided from (used in) financing activities-continuing operations | (469.5) | 444.5 | (47.3) |
Net cash used in financing activities-discontinued operations | (1.4) | ||
Net cash provided from (used in) financing activities | (469.5) | 444.5 | (48.7) |
Effect of exchange rate changes on cash | 0.3 | (0.2) | |
Increase (Decrease) in cash and cash equivalents | (364.5) | 383.6 | (0.5) |
Cash, cash equivalents, and restricted cash at beginning of year | 424.7 | 41.1 | 41.6 |
Cash, cash equivalents, and restricted cash at end of year | $ 60.2 | $ 424.7 | $ 41.1 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business AAR CORP. (the “Company”) is a diversified provider of services and products to the worldwide commercial aviation and government and defense markets. Services and products include: aviation supply chain and parts support programs; customer fleet management and operations; maintenance, repair and overhaul of airframes, landing gear, and certain other airframe components; design and manufacture of specialized pallets, shelters, and containers; aircraft modifications and aircraft and engine sales and leasing. We serve commercial, government and defense aircraft fleet operators, original equipment manufacturers, and independent service providers around the world, and various other domestic and foreign military customers. Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries after elimination of intercompany accounts and transactions. Certain reclassifications have been made to the 2020 presentation to conform to the 2021 presentation. New Accounting Pronouncements Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC 842”), which amended the existing accounting standards for lease accounting. ASC 842 requires lessees to recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet for most lease arrangements, including those classified as operating leases. In addition, ASC 842 requires new qualitative and quantitative disclosures about our leasing activities. We adopted ASC 842 on June 1, 2019 using the modified retrospective transition approach. Under that approach, prior periods have not been restated and continue to be reported under the accounting standards in effect for those periods. We elected the package of practical expedients, which must be elected as a package and applied consistently to all leases. This package permitted us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. In addition, we elected the practical expedients to not separate lease and non-lease components for both lessee and lessor relationships and to not apply the recognition requirements to leases with terms of less than twelve months. Upon adoption of ASC 842 on June 1, 2019, we recognized operating lease ROU assets of $123.2 million and operating lease liabilities of $116.8 million on our Consolidated Balance Sheet. These amounts included operating lease ROU assets of $26.6 million and operating lease liabilities of $25.3 million related to our discontinued operations. In addition, we recognized the remaining unamortized deferred gains of $2.5 million, net of tax, associated with sale-leaseback transactions as a cumulative effect adjustment to the opening balance of retained earnings as of June 1, 2019. The adoption of ASC 842 did not have a material impact on the Consolidated Statements of Operations or Cash Flows. 1. Summary of Significant Accounting Policies (Continued) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Revenue Recognition We adopted ASC 606 on June 1, 2018 using the modified retrospective method. Under that approach, prior periods were not restated and continue to be reported under the accounting standards in effect for those periods. We elected to use the practical expedient Revenue Recognition Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. Our unit of accounting for revenue recognition is a performance obligation included in our customer contracts. A performance obligation reflects the distinct good or service that we must transfer to a customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our contract with the customer is considered one performance obligation as it includes factors such as whether the good or service being provided is significantly integrated with other promises in the contract, whether the service provided significantly modifies or customizes another good or service or whether the good or service is highly interdependent or interrelated. If the contract has more than one performance obligation, we determine the standalone price of each distinct good or service underlying each performance obligation and allocate the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known. Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. The majority of our sales from products typically represent distinct performance obligations and are recognized at a point in time upon transfer of control to the customer, which generally occurs upon shipment. In connection with certain sales of products, we also provide logistics services, which include inventory management, replenishment, and other related services. The price of such services is generally included in the price of the products delivered to the customer, and revenues are recognized upon delivery of the product, at which point the customer has obtained control of the product. We do not account for these services separate from the related product sales as the services are inputs required to fulfill part orders received from customers. For our performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved can include customer volume, future labor costs and efficiencies, repair or overhaul costs, overhead costs, and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. For contracts that are deemed to be loss contracts, we establish forward loss reserves for total estimated costs that are in excess of total estimated consideration in the period in which they become known. 1. Summary of Significant Accounting Policies (Continued) When contracts are modified, we consider whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original goods or services provided, are accounted for as if they were part of that existing contract with the effect of the contract modification recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct, they are accounted for as a new contract and performance obligation, which are recognized prospectively. Under most of our U.S. government contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered and fair compensation for work performed, the costs of settling and paying other claims, and a reasonable profit on the costs incurred or committed. We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in Cost of sales on our Consolidated Statements of Income, and are not considered a performance obligation to our customers. Our reported sales on our Consolidated Statements of Income are net of any sales or related non-income taxes. We also utilize the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer. Cumulative Catch-up Adjustments Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. These changes are primarily adjustments to the estimated profitability for our long-term programs where we provide component inventory management and/or repair services. Favorable and unfavorable cumulative catch-up adjustments were as follows: May 31, 2021 2020 2019 Favorable cumulative catch-up adjustments $ 16.1 $ 6.1 $ 8.0 Unfavorable cumulative catch-up adjustments (4.1) (2.2) (2.1) Net cumulative catch-up adjustments $ 12.0 $ 3.9 $ 5.9 Contract Assets and Liabilities The timing of revenue recognition, customer billings, and cash collections results in a contract asset or contract liability at the end of each reporting period. When an unconditional right to consideration exists, we record an unbilled receivable. When amounts are dependent on factors other than the passage of time in order for payment from a customer to be due, we record a contract asset which consists of costs incurred where revenue recognized over time using the cost-to-cost model exceeds the amounts billed to customers. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of our performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. Contract assets and contract liabilities are determined on a contract-by-contract basis. 1. Summary of Significant Accounting Policies (Continued) Net contract assets and liabilities are as follows: May 31, 2021 2020 Change Contract assets – current $ 71.9 $ 49.3 $ 22.6 Contract assets – non-current 21.6 22.4 (0.8) Contract liabilities – current (25.9) (11.2) (14.7) Deferred revenue on long-term contracts (5.4) (88.0) 82.6 Net contract assets (liabilities) $ 62.2 $ (27.5) $ 89.7 Contract assets – non-current is reported within Other non-current assets, and Contract liabilities – current is reported within Accrued Liabilities on our Consolidated Balance Sheet. Changes in contract assets and contract liabilities primarily result from the timing difference between our performance of services and payments from customers. During the fiscal 2021 and 2020, we terminated or restructured certain commercial power-by-the-hour (“PBH”) customer contracts resulting in charges of $5.7 million and $31.3 million, respectively. Some of these contracts were deemed loss contracts requiring the establishment of forward loss reserves for the total estimated costs that are in excess of the total estimated consideration over the remainder of the contracts. As of May 31, 2021, our Consolidated Balance Sheet included remaining forward loss reserves of $3.0 million with $2.8 million classified as current in Accrued liabilities and $0.2 million classified as long-term in Other liabilities. One of our PBH customers notified us in June 2021 that the contract would be terminating earlier than originally anticipated. In conjunction with the early termination, we expect to recognize contract asset and rotable asset impairment charges of $5.0 to $10.0 million in the first quarter of fiscal 2022. To support our PBH customer contracts, we previously entered into an agreement with a component repair facility to outsource a portion of the component repair and overhaul services. The agreement included certain minimum repair volume guarantees which we have not met due to the impact of COVID-19 on commercial passenger aircraft flight hours. During fiscal 2021, we recognized a $4.5 million charge to reflect our estimated obligation over the remainder of the agreement for not achieving the minimum volume guarantees. As of May 31, 2021, our Consolidated Balance Sheet included remaining loss reserves of $2.9 million with $1.5 million classified as current in Accrued liabilities and $1.4 million classified as long-term in Other liabilities. Changes in our deferred revenue were as follows: Year ended May 31, 2021 2020 Deferred revenue at beginning of period $ (99.2) $ (96.4) Revenue deferred (251.4) (417.2) Revenue recognized 318.2 410.5 Other 1.1 3.9 Deferred revenue at end of period $ (31.3) $ (99.2) 1. Summary of Significant Accounting Policies (Continued) Remaining Performance Obligations As of May 31, 2021, we had approximately $750 million of remaining performance obligations, also referred to as firm backlog, which excludes unexercised contract options and potential orders under our indefinite-delivery, indefinite-quantity contracts. We expect that approximately 40% of this backlog will be recognized as revenue over the next 12 months, with approximately 45% of the remaining balance recognized over the next three years. The amount of remaining performance obligations, which is expected to be recognized as revenue beyond 12 months, primarily relates to our long-term, PBH programs where we provide component inventory management and/or repair services. Financial Instruments and Concentrations of Market or Credit Risk Financial instruments that potentially subject us to concentrations of market or credit risk consist principally of trade receivables. While our trade receivables are diverse and represent a number of entities and geographic regions, the majority are with the U.S. government and its contractors and entities in the aviation industry. The composition of our accounts receivable is as follows: May 31, 2021 2020 U.S. Government contracts: Trade receivables $ 24.1 $ 33.9 Unbilled receivables 25.2 27.4 49.3 61.3 All other customers: Trade receivables 104.9 81.7 Unbilled receivables 12.5 28.9 117.4 110.6 $ 166.7 $ 171.9 In addition, we currently have past due accounts receivable owed by former commercial program customers primarily related to our exit from customer contracts in certain geographies, including Colombia, Peru, and Spain. Our past due accounts receivable owed by these customers was $4.7 million as of May 31, 2021 which was net of allowance for doubtful accounts of $8.8 million. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts and trade notes payable approximate fair value because of the short-term maturity of these instruments. The carrying value of long-term debt bearing a variable interest rate approximates fair value. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts to reflect the expected uncollectibility of accounts receivable based on past collection history and specific risks identified among uncollected accounts. In determining the required allowance, we consider factors such as general and industry-specific economic conditions, customer credit history, and our customers’ current and expected future financial performance. The majority of our customers are recurring customers with an established payment history. Certain customers are required to undergo an extensive credit check prior to delivery of products or services. 1. Summary of Significant Accounting Policies (Continued) Our allowance for doubtful accounts also includes reserves for estimated product returns based on historical return rates. The reserve for estimated product returns is recognized as a reduction to sales with a corresponding reduction to cost of sales for the estimated cost of inventory that is expected to be returned. We perform regular evaluations of customer payment experience, current financial condition, and risk analysis. We may require collateral in the form of security interests in assets, letters of credit, and/or obligation guarantees from financial institutions for transactions executed on other than normal trade terms. We also maintain trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. In fiscal 2019, we recognized a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. The provision consisted of impairment of non-current contract assets of $7.6 million, allowance for doubtful accounts of $3.3 million, and other liabilities of $1.5 million. The change in our allowance for doubtful accounts was as follows: May 31, 2021 2020 2019 Balance, beginning of year $ 22.1 $ 16.0 $ 7.5 Provision charged to operations 8.5 5.4 15.8 Recoveries, deductions for accounts written off and other reclassifications (14.2) 0.7 (7.3) Balance, end of year $ 16.4 $ 22.1 $ 16.0 Goodwill and Other Intangible Assets In accordance with ASC 350, Intangibles–Goodwill and Other As of May 31, 2021, we had three reporting units, which included two in our Aviation Services segment (Aviation Supply Chain and Maintenance, Repair, and Overhaul) and one comprised of our Expeditionary Services segment. We utilized the qualitative assessment approach for all reporting units which considers general economic conditions, industry specific performance, changes in reporting unit carrying values, and assumptions used in the most recent fair value calculation. We concluded it was more likely than not that the fair value of each reporting unit exceeded its carrying value at May 31, 2021, and thus no impairment charges were recorded. In fiscal 2020, we elected to forego the qualitative assessment due to the unprecedented impact of the COVID-19 pandemic and utilized a quantitative assessment approach for all reporting units. We estimated the fair value of each reporting unit using primarily an income approach based on discounted cash flows. The assumptions we used to estimate the fair value of our reporting units were based on historical performance, as well as forecasts used in our business plan and required considerable management judgment in light of the impact of COVID-19. We used discount rates based on our consolidated weighted average cost of capital which is adjusted for each of our reporting units based on their specific risk, size, and industry characteristics. The fair value measurements used for our goodwill impairment testing use significant unobservable inputs, which reflected our own assumptions about the inputs that market participants would use in measuring fair value. The fair value of our reporting units is also impacted by our overall market capitalization and may be impacted by volatility in our stock price and assumed control premium, among other items. We concluded the fair value of each reporting unit exceeded its carrying values as of May 31, 2020, and thus no impairment charges were recorded. 1. Summary of Significant Accounting Policies (Continued) Changes in the carrying amount of goodwill by segment for fiscal 2021 and 2020 are as follows: Aviation Expeditionary Services Services Total Balance as of May 31, 2019 $ 96.9 $ 19.3 $ 116.2 Foreign currency translation adjustments (0.5) — (0.5) Balance as of May 31, 2020 96.4 19.3 115.7 Sale of Composites — (0.5) (0.5) Foreign currency translation adjustments 4.1 — 4.1 Balance as of May 31, 2021 $ 100.5 $ 18.8 $ 119.3 Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets, other than goodwill, are comprised of the following: May 31, 2021 Accumulated Amortizable Gross Amortization Net Customer relationships $ 23.0 $ (19.7) $ 3.3 Unamortized intangible assets: Trademarks 1.2 — 1.2 $ 24.2 $ (19.7) $ 4.5 May 31, 2020 Accumulated Amortizable Gross Amortization Net Customer relationships $ 21.4 $ (16.5) $ 4.9 Unamortized intangible assets: Trademarks 1.1 — 1.1 $ 22.5 $ (16.5) $ 6.0 In conjunction with the adoption of ASC 842 on June 1, 2019, our net intangible asset for lease agreements of $8.5 million was re-classified to the ROU asset. During fiscal 2020, we recognized an impairment charge of $5.4 million related to the exit of certain product lines across both our Aviation Services and Expeditionary Services segments. Customer relationships are being amortized over 5-20 years. Amortization expense recorded during fiscal 2021, 2020 and 2019 was $1.8 million, $2.3 million, and $3.9 million, respectively. The estimated aggregate amount of amortization expense for intangible assets in each of the next five fiscal years is $1.1 million in 2022, $0.5 million in 2023, $0.3 million in 2024, $0.3 million in 2025 and $0.3 million in 2026. Foreign Currency Our foreign subsidiaries utilize the local currency as their functional currency. All balance sheet accounts of foreign subsidiaries transacting business in currencies other than the U.S. dollar are translated at year-end exchange rates. Revenues and expenses are translated at average exchange rates during the year. Translation adjustments are excluded from the results of operations and are recorded in stockholders’ equity as a component of accumulated other comprehensive loss until such subsidiaries are liquidated. 1. Summary of Significant Accounting Policies (Continued) Cash Cash and cash equivalents consist of highly liquid instruments which have original maturities of three months or less when purchased. Restricted cash represents cash on hand required to be set aside by a contractual agreement related to receivable securitization arrangements. Generally, the restrictions related to the receivable securitization arrangements lapse at the time we remit the customer payments collected by us as servicer of previously sold customer receivables to the purchaser. Inventories Inventories are valued at the lower of cost or market (estimated net realizable value). Cost is determined by the specific identification, average cost, or first-in, first-out methods. From time-to-time, we purchase aircraft and engines for disassembly to individual parts and components. Costs are assigned to these individual parts and components utilizing list prices from original equipment manufacturers and recent sales history. Expenditures for the repair of parts and components are capitalized as inventory. The following is a summary of inventories: May 31, 2021 2020 Aircraft and engine parts, components and finished goods $ 468.4 $ 556.6 Raw materials and parts 53.0 45.9 Work-in-process 19.2 20.6 $ 540.6 $ 623.1 Rotable Assets and Equipment under Leases The cost of the asset under lease is the original purchase price plus overhaul costs. Depreciation is computed using the straight-line method over the estimated service life of the equipment. The balance sheet classification of equipment under lease is generally based on lease term, with fixed-term leases less than twelve months generally classified as short-term and all others generally classified as long-term. Equipment on short-term lease includes aircraft engines and parts on or available for lease to satisfy customers’ immediate short-term requirements. The leases are renewable with fixed terms, which generally vary from one Property, Plant and Equipment and Other Non-Current Assets We record property, plant and equipment at cost. Depreciation is computed on the straight-line method over useful lives of 10-40 years for buildings and improvements and 3-10 years for equipment, furniture fixtures capitalized software Repair and maintenance expenditures are expensed as incurred. Upon sale or disposal, cost and accumulated depreciation are removed from the accounts, and related gains and losses are included in results of operations. Rotable assets supporting long-term programs consist of rotable component parts used to support long-term supply chain programs. The assets are being depreciated on a straight-line basis over their estimated useful lives. 1. Summary of Significant Accounting Policies (Continued) In accordance with ASC 360, Property, Plant and Equipment In our Aviation Services segment, we evaluated future cash flows related to certain rotable assets supporting long-term programs in light of declines in commercial airline volumes and commercial program contract terminations We recognized asset impairment charges of $5.8 million related to these rotable assets in fiscal 2021. In our Expeditionary Services segment, we consolidated manufacturing facilities and recognized impairment and related charges of $2.6 million during fiscal 2021. In conjunction with the decision to exit certain product lines, we recognized rotable asset impairment charges of $1.9 million in fiscal 2020 in conjunction with reclassifying the rotable assets as inventory held for sale. In fiscal 2021, we recognized additional impairment charges of $1.4 million on these assets. Future rent due to us under non-cancelable leases during each of the next five fiscal years is $21.0 million in 2022, $21.7 million in 2023, $21.1 million in 2024, $21.1 million in 2025, and $19.1 million in 2026. Investments Investments where we have the ability to exercise significant influence, but do not control the entity, are accounted for under the equity method of accounting. Significant influence generally exists if we have a 20% to 50% ownership interest in the investee. Our share of the net earnings or loss of our investees is included in operating income on our Consolidated Statements of Income since the activities of the investees are closely aligned with our operations. Equity investments in entities over which we do not have the ability to exercise significant influence and whose securities do not have a readily determinable fair value are carried at cost less impairment, if any, adjusted for changes resulting from qualifying observable price changes. We evaluate our investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an investment is determined to be other than temporary, a loss is recorded in earnings in the current period. Our investments are classified in Other non-current assets on our Consolidated Balance Sheets. Distributions from joint ventures are classified as operating or investing activities in the Consolidated Statements of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution. Restructuring and Other Exit Costs We recognize charges for restructuring and other exit costs such as product line exits and facility closures at their fair value when incurred. In cases where employees are required to render service until they are terminated in order to receive the termination benefits and will be retained beyond the minimum retention period, we record the expense ratably over the future service period. During fiscal 2021 and 2020, we incurred severance and furlough-related costs of $9.0 million and $7.1 million, respectively, which were included as a component of Cost of sales and services and Selling, general and administrative on our Consolidated Statements of Income. 1. Summary of Significant Accounting Policies (Continued) Income Taxes We are subject to income taxes in the U.S., state, and several foreign jurisdictions. In the ordinary course of business, there can be transactions and calculations where the ultimate tax determination is uncertain. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Both positive and negative evidence are considered in forming our judgment as to whether a valuation allowance is appropriate, and more weight is given to evidence that can be objectively verified. Valuation allowances are reassessed whenever there are changes in circumstances that may cause a change in judgment. The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition of tax positions taken or expected to be taken in a tax return. Where necessary, we record a liability for the difference between the benefit recognized for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. Supplemental Information on Cash Flows Supplemental information on cash flows is as follows: For the Year Ended May 31, 2021 2020 2019 Interest paid $ 4.3 $ 8.6 $ 8.8 Income taxes paid 8.2 14.3 7.0 Income tax refunds and interest received 8.3 7.0 6.4 During fiscal 2021, treasury stock decreased $8.6 million reflecting restricted stock activity of $5.6 million and the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $3.0 million. During fiscal 2020, treasury stock decreased $5.0 million reflecting restricted stock activity of $0.8 million and the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $8.3 million partially offset by the repurchase of common shares of $4.1 million. During fiscal 2019, treasury stock increased $7.0 million reflecting the repurchase of common shares of $10.3 million, restricted stock activity of $0.8 million partially offset by the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $4.1 million. Use of Estimates We have made estimates and utilized certain assumptions relating to the reporting of assets and liabilities and the disclosures of contingent liabilities to prepare these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States. Actual results could differ fr |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
May 31, 2021 | |
Discontinued operation, Disposed of by sale | COCO | |
Discontinued Operations | |
Discontinued Operations | 2. Discontinued Operations During the third quarter of fiscal 2018, we decided to pursue the sale of our Contractor-Owned, Contractor-Operated (“COCO”) business previously included in our Expeditionary Services segment. Due to this strategic shift, the assets, liabilities, and results of operations of our COCO business have been reported as discontinued operations for all periods presented. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to our continuing operations. In the fourth quarter of fiscal 2020, we completed the sale of the last operating contract of the COCO business shortly after government approval. Our continuing involvement in the COCO business is limited to the lease of certain aircraft which is an obligation of the acquirer of this contract. The assets and liabilities of our discontinued operations are primarily comprised of right-of-use assets, lease-related liabilities and reserves for certain legal proceedings which are discussed in Note 15. |
Sale of Receivables
Sale of Receivables | 12 Months Ended |
May 31, 2021 | |
Sale of Receivables | |
Sale of Receivables | 3. Sale of Receivables On February 23, 2018, we entered into a Purchase Agreement with Citibank N.A. (“Purchaser”) for the sale, from time to time, of certain accounts receivable due from certain customers (the “Purchase Agreement”). Under the Purchase Agreement, the maximum amount of receivables sold is limited to $150 million and Purchaser may, but is not required to, purchase the eligible receivables we offer to sell. The term of the Purchase Agreement runs through February 22, 2022, however, the Purchase Agreement may also be terminated earlier under certain circumstances. The term of the Purchase Agreement shall be automatically extended for annual terms unless either party provides advance notice that they do not intend to extend the term. We have no retained interests in the sold receivables, other than limited recourse obligations in certain circumstances, and only perform collection and administrative functions for the Purchaser. We account for these receivable transfers as sales under ASC 860, Transfers and Servicing Receivables sold under the Purchase Agreement during fiscal 2021, 2020, and 2019 were $440.6 million, $746.4 million, and $744.2 million, respectively. Amounts remitted to the Purchaser on their behalf during fiscal 2021, 2020, and 2019 were $476.3 million, $758.3 million, and $729.7 million, respectively. As of May 31, 2021 and May 31, 2020, we had collected cash of $8.4 million and $20.0 million, respectively, which was not yet remitted to the Purchaser as of those dates and was classified as Restricted cash on our Consolidated Balance Sheets. We recognize discounts on the sale of our receivables and other fees related to the Purchase Agreement in Other expense, net on our Consolidated Statements of Income. During fiscal 2021, 2020 and 2019, we incurred discounts on the sale of our receivables and other fees of $0.4 million, $1.8 million and $2.2 million, respectively. |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
May 31, 2021 | |
Financing Arrangements | |
Financing Arrangements | 4. Financing Arrangements Debt Outstanding A summary of the carrying amount of our debt is as follows: May 31, 2021 2020 Revolving Credit Facility expiring September 25, 2024 with interest payable monthly $ 109.5 $ 579.5 Term loan due November 1, 2021 with interest payable monthly 25.7 22.5 Total debt 135.2 602.0 Debt issuance costs, net (1.5) (2.0) Long-term debt $ 133.7 $ 600.0 At May 31, 2021, our variable rate debt had a fair value that approximates its carrying value and is classified as Level 2 in the fair value hierarchy. On October 18, 2017, we entered into a Credit Agreement with the Canadian Imperial Bank of Commerce, as lender (the “Credit Agreement”). The Credit Agreement provided a Canadian $31 million term loan with the proceeds used to fund the acquisition of two maintenance, repair, and overhaul (“MRO”) facilities in Canada from Premier Aviation. The term loan is due in full at the expiration of the Credit Agreement on November 1, 2021 unless terminated earlier pursuant to the terms of the Credit Agreement. Interest is payable monthly on the term loan at the offered fluctuating Canadian Dollar Offer Rate plus 125 to 225 basis points based on certain financial measurements if a Bankers’ Acceptances loan, or at the offered fluctuating Prime Rate plus 25 to 125 basis points based on certain financial measurements, if a Prime Rate loan. We maintain a Revolving Credit Facility with various financial institutions, as lenders, and Bank of America, N.A., as administrative agent for the lenders, which provides the Company an aggregate revolving credit commitment of $600 million and matures September 25, 2024. Under certain circumstances, we have the ability to request, but our lenders are not required to grant, an increase to the revolving credit commitment by an aggregate amount of up to $300 million, not to exceed $900 million in total. Borrowings under the Revolving Credit Facility bear interest at the offered Eurodollar Rate plus 87.5 to 175 basis points based on certain financial measurements if a Eurodollar Rate loan, or at the offered fluctuating Base Rate plus 0 to 75 basis points based on certain financial measurements if a Base Rate loan. Borrowings outstanding under the Revolving Credit Facility at May 31, 2021 were $109.5 million and there were approximately $19.2 million of outstanding letters of credit, which reduced the availability of this facility to $471.3 million. The term loan under the Credit Agreement that matures on November 1, 2021 has been classified as a long-term liability due to our intent and ability to refinance this loan on a long-term basis using our Revolving Credit Facility. Our financing arrangements also require us to comply with leverage and interest coverage ratios, maintain a minimum net working capital level, and comply with certain affirmative and negative covenants, including those relating to financial reporting and notification, payment of indebtedness, cash dividends, taxes and other obligations, compliance with applicable laws, and limitations on additional liens, indebtedness, acquisitions, investments and disposition of assets. The Revolving Credit Facility also requires our significant domestic subsidiaries, and any subsidiaries that guarantee our other indebtedness, to provide a guarantee of payment under the Revolving Credit Facility. At May 31, 2021, we were in compliance with the financial and other covenants in our financing agreements. 4. Financing Arrangements (Continued) Borrowing activity under the Revolving Credit Facility during fiscal 2021, 2020 and 2019 is as follows: For the Year Ended May 31, 2021 2020 2019 Maximum amount borrowed $ 579.5 $ 579.5 $ 287.0 Average daily borrowings 257.5 280.7 207.8 Average interest rate during the year 1.20 % 2.62 % 3.41 % We also have $10.4 million available under foreign lines of credit as of May 31, 2021. |
Equity
Equity | 12 Months Ended |
May 31, 2021 | |
Equity | |
Equity | 5. Equity Stock-Based Compensation We have granted stock-based awards under the AAR CORP. 2013 Stock Plan, as Amended and Restated Effective July 13, 2020 (the “2013 Stock Plan”) and the AAR CORP. Stock Benefit Plan (“Stock Benefit Plan”) each of which has been approved by our stockholders. No further awards will be made under the Stock Benefit Plan. Under the 2013 Stock Plan, we are authorized to issue stock options to employees and non-employee directors that allow the grant recipients to purchase shares of common stock at a price not less than the fair market value of the common stock on the date of grant. Generally, stock options awarded expire ten years from the date of grant and are exercisable in three annual increments commencing one year after the date of grant. In addition to stock options, the 2013 Stock Plan also provides for the grant of time-based restricted stock awards and performance-based restricted stock awards. The 2013 Stock Plan also provides for the grant of stock appreciation units and restricted stock units; however, to date, no such awards have been granted. Restricted stock grants (whether time-based or performance-based) are designed, among other things, to align employee interests with the interests of stockholders and to encourage the recipient to build a career with us. Restricted stock typically vests over periods of one Substantially all stock options and restricted stock are subject to forfeiture prior to vesting if the employee’s employment terminates for any reason other than death, disability or retirement. Since inception, a total of 11,149,000 shares have been granted under the Stock Benefit Plan. We have granted a total of 5,058,230 shares under the 2013 Stock Plan. All future stock awards will be made under the 2013 Stock Plan. There were 1,850,828 shares available for grant under the 2013 Stock Plan as of May 31, 2021. 5. Equity (Continued) Stock Options During fiscal 2021, 2020, and 2019, we granted stock options with respect to 936,170 shares, 414,460 shares and 300,240 shares, respectively. The weighted average fair value per share of stock options granted during fiscal 2021, 2020 and 2019 was $5.89, $10.30 and $13.60, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: Stock Options Granted In Fiscal Year 2021 2020 2019 Risk-free interest rate 0.4 % 1.9 % 2.7 % Expected volatility of common stock 40.2 % 32.0 % 30.8 % Dividend yield 1.6 % 0.8 % 0.6 % Expected option term in years 4.8 4.5 4.5 The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on historical volatility of our common stock, and the expected option term represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The dividend yield represents our anticipated cash dividends at the grant date over the expected option term. A summary of stock option activity for the three years ended May 31, 2021 consisted of the following (shares in thousands): 2021 2020 2019 Weighted Weighted Weighted Average Average Average Shares Exercise Price Shares Exercise Price Shares Exercise Price Outstanding at beginning of year 1,851 $ 32.74 1,777 $ 30.37 2,082 $ 26.72 Granted 936 18.94 414 37.66 300 47.84 Exercised (110) 23.93 (300) 24.99 (571) 25.56 Cancelled (65) 25.59 (40) 36.72 (34) 42.02 Outstanding at end of year 2,612 $ 28.34 1,851 $ 32.74 1,777 $ 30.37 Options exercisable at end of year 1,371 $ 31.56 1,133 $ 28.32 981 $ 25.28 The total fair value of stock options that vested during fiscal 2021, 2020, and 2019 was $3.9 million, $3.7 million, and $5.6 million, respectively. The total intrinsic value of stock options exercised during fiscal 2021, 2020, and 2019 was $1.5 million, $6.2 million, and $12.2 million, respectively. The aggregate intrinsic value of options outstanding was $36.6 million and $0.5 million as of May 31, 2021 and 2020, respectively. The tax expense (benefit) realized from stock options exercised during fiscal 2021, 2020, and 2019 was $0.7 million, ($2.1) million, and ($2.7) million, respectively. Expense recognized in selling, general and administrative expenses for stock options during fiscal 2021, 2020, and 2019 was $4.0 million, $3.9 million, and $4.1 million, respectively. As of May 31, 2021, we had $5.4 million of unrecognized compensation expense related to stock options that will be expensed over an average period of 1.4 years. 5. Equity (Continued) Restricted Stock We provide executives and other key employees an opportunity to be awarded performance-based and time-based restricted stock. The performance-based awards are contingent upon the achievement of certain objectives, which generally include cumulative income, average return on capital, and relative total shareholder return over a three-year performance period. Performance-based restricted shares of 52,475, and 43,680 were granted to executives and key employees during fiscal 2020 and 2019, respectively. No performance-based restricted shares were granted in fiscal 2021. Time-based restricted shares of 144,255, 56,535, and 46,470 were granted to executives and key employees during fiscal 2021, 2020, and 2019, respectively. We also award time-based restricted stock to our non-employee directors as part of their annual compensation. Time-based restricted shares of 72,021, 44,123, and 29,128 were granted to members of the Board of Directors during fiscal 2021, 2020, and 2019, respectively. The fair value of restricted shares is the market value of our common stock on the date of grant. Expense recognized in selling, general and administrative expenses for all restricted share programs during fiscal 2021, 2020, and 2019 was $5.2 million, $3.4 million, and $9.4 million, respectively. Restricted share activity during fiscal 2021 was as follows (shares in thousands): Weighted Average Number of Fair Value Shares on Grant Date Nonvested at May 31, 2020 385 $ 31.70 Granted 290 23.43 Vested (292) 32.15 Forfeited (14) 26.60 Nonvested at May 31, 2021 369 30.12 As of May 31, 2021 we had $2.5 million of unearned compensation related to restricted shares that will be expensed over a weighted average period of 2.0 years. |
Income Taxes
Income Taxes | 12 Months Ended |
May 31, 2021 | |
Income Taxes | |
Income Taxes | 6. Income Taxes The provision for income tax on income from continuing operations includes the following components: For the Year Ended May 31, 2021 2020 2019 Current: Federal $ 5.2 $ 1.4 $ 4.8 State 1.2 0.9 0.1 Foreign 3.4 2.8 5.0 9.8 5.1 9.9 Deferred 8.4 0.5 (5.0) $ 18.2 $ 5.6 $ 4.9 6. Income Taxes (Continued) The provision for income taxes on pre-tax income differs from the amount computed by applying the U.S. federal statutory income tax rate of 21.0% for fiscal 2021, 2020 and 2019 to income from continuing operations before provision for income taxes due to the following: For the Year Ended May 31, 2021 2020 2019 Provision for income tax at the federal statutory rate $ 13.5 $ 6.4 $ 18.7 Tax expense (benefits) from stock-based compensation 0.7 (2.1) (2.7) State income taxes, net of federal benefit 2.4 1.1 1.9 Change in valuation allowance for state deferred tax assets — (0.1) (6.9) Effective settlement of prior tax positions — — (4.7) Other 1.6 0.3 (1.4) Provision for income tax $ 18.2 $ 5.6 $ 4.9 Income before provision for income taxes includes the following components: For the Year Ended May 31, 2021 2020 2019 Domestic $ 43.7 $ 23.6 $ 68.9 Foreign 20.8 6.8 20.1 $ 64.5 $ 30.4 $ 89.0 Our foreign earnings are comprised primarily of the results of our operations in the United Kingdom, Canada, and the Netherlands. Deferred tax assets and liabilities result primarily from the differences in the timing of the recognition of transactions for financial reporting and income tax purposes. Our deferred tax assets and liabilities consist of the following components: May 31, 2021 2020 Deferred tax assets: Operating lease liabilities $ 20.7 $ 24.9 Employee and retirement benefits 10.4 13.3 State net operating losses 6.8 9.4 Allowance for doubtful accounts 4.0 4.1 Credits and incentives 1.1 8.2 Other 1.5 5.0 Total deferred tax assets 44.5 64.9 Deferred tax liabilities: Tangible and intangible assets (31.9) (35.0) ROU operating lease assets (21.9) (26.2) Other (0.2) (0.2) Total deferred tax liabilities (54.0) (61.4) Net deferred tax assets (liabilities) $ (9.5) $ 3.5 6. Income Taxes (Continued) As of May 31, 2021, we have determined that the realization of our deferred tax assets is more likely than not and that a valuation allowance is not required. Our net operating losses have carry forward periods that range from 5 to 20 years. Our history of operating earnings, our expectations for continued future earnings, the nature of certain of our deferred tax assets and the scheduled reversal of deferred tax liabilities, primarily related to depreciation, support the recoverability of the majority of the deferred tax assets. Our net deferred tax assets are included in Other non-current assets on our Consolidated Balance Sheets. Income tax payable was $0.7 million at May 31, 2021 and was included in Accrued liabilities on the Consolidated Balance Sheet. Income tax receivable was $7.9 million at May 31, 2020 and was included in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Our federal income tax returns for fiscal years 2018 and subsequent are open for examination. Various states and foreign jurisdictions also remain open subject to their applicable statute of limitations. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
May 31, 2021 | |
Earnings per Share | |
Earnings per Share | 7. Earnings Per Share The computation of basic earnings per share is based on the weighted average number of common shares outstanding during each period. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options and shares issuable upon vesting of restricted stock awards. In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method 7. Earnings Per Share (Continued) The following tables provide a reconciliation of the computations of basic and diluted earnings per share information for each of the years in the three-year period ended May 31, 2021 (shares in millions). For the Year Ended May 31, 2021 2020 2019 Basic and Diluted EPS: Income from continuing operations $ 46.3 $ 24.8 $ 84.1 Less income attributable to participating shares (0.4) (0.1) (0.4) Income from continuing operations attributable to common stockholders 45.9 24.7 83.7 Loss from discontinued operations attributable to common stockholders (10.5) (20.4) (76.6) Net income attributable to common stockholders for earnings per share $ 35.4 $ 4.3 $ 7.1 Weighted average common shares outstanding - basic 35.0 34.8 34.5 Additional shares from assumed exercise of stock options 0.3 0.2 0.4 Weighted average common shares outstanding - diluted 35.3 35.0 34.9 Earnings per share – basic: Earnings from continuing operations $ 1.31 $ 0.71 $ 2.42 Loss from discontinued operations (0.30) (0.59) (2.22) Earnings per share - basic $ 1.01 $ 0.12 $ 0.20 Earnings per share – diluted: Earnings from continuing operations $ 1.30 $ 0.71 $ 2.40 Loss from discontinued operations (0.30) (0.58) (2.19) Earnings per share - diluted $ 1.00 $ 0.13 $ 0.21 At May 31, 2021, 2020 and 2019 respectively, outstanding options to purchase 1,054,400, 669,400 and 273,400 shares of common stock were not included in the computation of diluted earnings per share, because the exercise price of these options was greater than the average market price of the common shares for the year then ended. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
May 31, 2021 | |
Employee Benefit Plans | |
Employee Benefit Plans | 8. Employee Benefit Plans Defined Benefit Plans Prior to January 1, 2000, the pension plan for domestic salaried and non-union hourly employees (“U.S. Retirement Plan”) had a benefit formula based primarily on years of service and compensation. Effective January 1, 2000, we converted our defined benefit plan for substantially all domestic salaried and certain hourly employees to a cash balance pension plan. Under the cash balance pension plan, the retirement benefit is expressed as a dollar amount in an account that grows with annual pay-based credits and interest on the account balance. The interest crediting rate under our cash balance plan is determined quarterly and is equal to 100% of the average 30-year Our domestic plans also include a defined benefit pension plan for certain union hourly employees in which benefits are based primarily on a fixed amount per year of service. This plan was frozen in fiscal 2018. 8. Employee Benefit Plans (Continued) We also have a defined benefit pension plan covering certain employees in the Netherlands. Benefit formulas are based generally on years of service and compensation. We also have a benefit plan which provides benefits to certain retired outside directors. In fiscal 2001, we froze the plan for any new members of the Board of Directors and no current directors participate in this plan. The change to our projected benefit obligation and the fair value of our plan assets for our pension plans was as follows: May 31, 2021 2020 Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 159.1 $ 149.2 Service cost 2.5 2.8 Interest cost 3.1 3.8 Participant contributions 0.3 0.3 Net actuarial (gain) loss (4.4) 10.1 Benefits and administrative payments (4.8) (4.9) Settlements (2.0) (2.2) Curtailment (2.5) — Foreign currency translation adjustment 7.7 — Projected benefit obligation at end of year $ 159.0 $ 159.1 Change in the fair value of plan assets: Fair value of plan assets at beginning of year $ 131.8 $ 129.9 Actual return on plan assets 23.8 8.6 Employer contributions 2.7 0.4 Participant contributions 0.3 — Benefits and administrative payments, including settlements (6.8) (7.1) Foreign currency translation adjustment 6.6 — Fair value of plan assets at end of year $ 158.4 $ 131.8 Funded status at end of year $ (0.6) $ (27.3) Amounts recognized in the Consolidated Balance Sheets consisted of the following: May 31, 2021 2020 Other non-current assets $ 10.4 $ — Accrued liabilities (0.4) (0.4) Other liabilities (10.6) (26.9) Funded status at end of year $ (0.6) $ (27.3) Accumulated other comprehensive loss $ 37.8 $ 63.5 8. Employee Benefit Plans (Continued) The following tables provide the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for all pension plans with a projected benefit obligation or accumulated benefit obligation in excess of plan assets: , May 31, Projected benefit obligation in excess of plan assets 2021 2020 Projected benefit ohbligation $ 88.1 $ 159.1 Fair value of plan assets 77.1 131.8 May 31, Accumulated benefit obligation in excess of plan assets 2021 2020 Projected benefit obligation $ 88.1 $ 159.1 Accumulated benefit obligation 82.1 83.4 Fair value of plan assets 77.1 131.8 The accumulated benefit obligation for all pension plans was $153.0 million and $151.9 million at May 31, 2021 and 2020, respectively. Net Periodic Benefit Cost Pension expense charged to the Consolidated Statements of Income includes the following components: For the Year Ended May 31, 2021 2020 2019 Service cost $ 2.5 $ 2.8 $ 2.3 Interest cost 3.1 3.8 4.3 Expected return on plan assets (6.6) (6.8) (7.1) Settlements 0.9 1.5 0.1 Amortization of prior service credit — — (0.1) Recognized net actuarial loss 2.3 2.0 1.8 $ 2.2 $ 3.3 $ 1.3 The non-service cost components above are classified in Other income (expense), net on the Statements of Income. The estimated amount of net actuarial loss to be amortized from accumulated other comprehensive loss into expense during fiscal 2022 is $1.6 million. 8. Employee Benefit Plans (Continued) Assumptions The assumptions used in accounting for our plans are estimates of factors including, among other things, the amount and timing of future benefit payments. The following table presents the key weighted-average assumptions used in the measurement of our projected benefit obligations: May 31, 2021 2020 Discount rate: Domestic plans 2.87 % 2.83 % International plan 1.20 1.20 Rate of compensation increase: Domestic plans n/a n/a International plans 3.00 % 3.00 % A summary of the weighted-average assumptions used to determine net periodic pension expense is as follows: For the Year Ended May 31, 2021 2020 2019 Discount rate: Domestic plans 2.83 % 3.67 % 4.05 % International plan 1.20 1.50 1.90 Expected long-term rate on plan assets: Domestic plans 7.25 % 7.25 % 7.25 % International plan 2.50 2.90 3.60 The discount rate was determined by projecting the expected future benefit payments as defined for the projected benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date, and solving for the single equivalent discount rate that resulted in the same projected benefit obligation. Plan Assets The following table sets forth the actual asset allocation and target allocations for our U.S. pension plans: May 31, Target Asset 2021 2020 Allocation Equity securities 62 % 60 % 45 – 75 % Fixed income securities 18 20 15 – 45 % Other 20 20 0 – 25 % 100 % 100 % 8. Employee Benefit Plans (Continued) The assets of U.S pension plans are invested in compliance with the Employee Retirement Income Security Act of 1974. The investment goals are to provide a total return that, over the long term, optimizes the long-term return on plan assets at an acceptable risk, and to maintain a broad diversification across asset classes and among investment managers. We believe that there are no significant concentrations of risk within our plan assets as of May 31, 2021. The use of derivatives for the purpose of speculation are not permitted. The assets of the U.S. pension plans are invested primarily in equity and fixed income mutual funds, individual common stocks, and fund-of-funds hedge funds. The assets of the non-domestic plan are invested in funds-of-funds where each fund holds a portfolio of equity and fixed income mutual funds. To develop our expected long-term rate of return assumption on domestic plans, we use long-term historical return information for our targeted asset mix and current market conditions. The expected return for each asset class is weighted based on the target asset allocation to develop the expected long-term rate of return on plan assets assumption. While consideration is given to recent performance, the assumption represents a long-term, prospective rate of return. The following table sets forth by level, within the fair value hierarchy, pension plan assets at their fair value as of May 31, 2021: Level 1 (1) Level 2 (2) Level 3 (3) Total Equity securities: U.S. mutual funds $ 40.3 $ — $ — $ 40.3 International mutual funds 11.1 — — 11.1 Fixed income: Government securities and corporate bond mutual funds — 13.3 — 13.3 Funds-of-funds — 61.3 — 61.3 Insurance annuities — — 15.6 15.6 Cash and cash equivalents 0.7 — — 0.7 $ 52.1 $ 74.6 $ 15.6 142.3 Other investments measured at net asset value (4) 16.1 Total pension plan assets $ 158.4 8. Employee Benefit Plans (Continued) The following table sets forth by level, within the fair value hierarchy, pension plan assets at their fair value as of May 31, 2020: Level 1 (1) Level 2 (2) Level 3 (3) Total Equity securities: U.S. mutual funds $ 31.5 $ — $ — $ 31.5 International mutual funds 7.6 — — 7.6 Fixed income: Government securities and corporate bond mutual funds 8.4 4.7 — 13.1 Funds-of-funds — 54.6 — 54.6 Insurance annuities — — 11.7 11.7 Cash and cash equivalents 0.5 — — 0.5 $ 48.0 $ 59.3 $ 11.7 119.0 Other investments measured at net asset value (4) 12.8 Total pension plan assets $ 131.8 (1) Quoted prices in active markets for identical assets that we have the ability to access as of the reporting date. (2) Inputs other than quoted prices included within Level 1 that are directly observable for the asset or indirectly observable through corroboration with observable market data. (3) Unobservable inputs, such as internally developed pricing models or third party valuations for the asset due to little or no market activity for the asset. (4) Other investments measured at net asset value included alternative investments, such as hedge funds, which are valued using the net asset value as a practical expedient. The following table presents the reconciliation of Level 3 pension assets and other investments measured at net asset value for the fiscal years ended May 31, 2021 and 2020: Hedge Funds Fund-of-funds Insurance Annuities Total Balance as of May 31, 2019 $ 4.2 $ 7.9 $ 9.9 $ 22.0 Purchases — — 1.8 1.8 Sales (0.1) — — (0.1) Return on plan assets related to assets still held at May 31, 2020 0.2 0.6 — 0.8 Balance as of May 31, 2020 4.3 8.5 11.7 24.5 Purchases — — 3.9 3.9 Return on plan assets related to assets still held at May 31, 2021 0.8 2.5 — 3.3 Balance as of May 31, 2021 $ 5.1 $ 11.0 $ 15.6 $ 31.7 Valuation Techniques Used to Determine Fair Value Cash equivalents are investments with maturities of three months or less when purchased. The fair values are based on observable market prices and categorized as Level 1. 8. Employee Benefit Plans (Continued) With respect to individually held equity securities, including investments in U.S. and international securities, the trustees obtain prices from pricing services, whose prices are obtained from direct feeds from market exchanges, which we are able to independently corroborate. Equity securities held individually are primarily traded on exchanges that contain only actively traded securities, due to the volume trading requirements imposed by these exchanges. Equity securities are valued based on quoted prices in active markets and categorized as Level 1. Equity and fixed income mutual funds are maintained by investment companies that hold certain investments in accordance with a stated set of fund objectives, which are consistent with our overall investment strategy. The values of some of these funds are publicly quoted. For equity and fixed income mutual funds which are publicly quoted, the funds are valued based on quoted prices in active markets and have been categorized as Level 1. As certain of our funds-of-funds investments are also derived from quoted prices in active markets, we have categorized certain funds-of-funds investments as Level 2. Insurance annuities require the utilization of unobservable inputs, including undiscounted cash flow techniques which results in Level 3 treatment in the fair value hierarchy. Hedge fund investments include those seeking to maximize absolute returns using a broad range of strategies to enhance returns and provide additional diversification. The fair value of hedge funds is determined using net asset value or its equivalent subject to certain restrictions, such as a lock-up period and a redemption notice period. Future Benefit Payments and Funding The following table summarizes our estimated future pension payments by fiscal year: Fiscal Year 2027 to 2022 2023 2024 2025 2026 2031 Estimated future pension payments $ 6.8 $ 6.4 $ 6.0 $ 7.0 $ 7.3 $ 35.0 Our contribution policy for the domestic plans is to contribute annually, at a minimum, an amount which is deductible for federal income tax purposes and that is sufficient to meet actuarially computed pension benefits. For our Netherlands pension plan, our policy is to fund at least the minimum amount required by the local laws and regulations. We anticipate contributing approximately $2.3 million to our pension plans during fiscal 2022. Defined Contribution Plans Our defined contribution plans are intended to qualify as a 401(k) plans under the Internal Revenue Code. Employees may contribute up to 75% of their pretax compensation, subject to applicable regulatory limits and we may make discretionary matching contributions up to 5% of employee compensation. We modified the contribution structure in fiscal 2020 to eliminate the profit sharing contribution for future years. Our contributions vest on a pro-rata basis during the first three years of employment. We also maintain a non-qualified retirement plan that makes up 401(k) benefits that would otherwise be lost as a result of Internal Revenue Code limits and provides additional employer contributions for certain executives and key employees to supplement the benefits provided by the defined contribution plans. In response to the impact from COVID-19, we temporarily suspended our matching contributions to the defined contribution plans effective June 1, 2020. Contributions were reinstated effective December 1, 2020. Expense charged to the Consolidated Statements of Income for our matching contributions, including profit sharing contributions, was $4.0 million in fiscal 2021, $11.6 million in fiscal 2020 and $11.4 million in fiscal 2019 for these plans. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
May 31, 2021 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | 9. Accumulated Other Comprehensive Loss Changes in our accumulated other comprehensive loss (“AOCL”) by component for each of the years in the three-year period ended May 31, 2021 were as follows (all amounts are net of tax): Currency Translation Pension Adjustments Plans Total Balance as of June 1, 2018 $ 0.3 $ (32.3) $ (32.0) Other comprehensive loss before reclassifications (2.4) (8.0) (10.4) Amounts reclassified from AOCL — 1.5 1.5 Total other comprehensive loss (2.4) (6.5) (8.9) Balance as of May 31, 2019 (2.1) (38.8) (40.9) Other comprehensive income (loss) before reclassifications 0.1 (5.0) (4.9) Amounts reclassified from AOCL — 1.2 1.2 Total other comprehensive income (loss) 0.1 (3.8) (3.7) Balance as of May 31, 2020 (2.0) (42.6) (44.6) Other comprehensive income before reclassifications 5.9 4.4 10.3 Amounts reclassified from AOCL — 16.0 16.0 Total other comprehensive income 5.9 20.4 26.3 Balance as of May 31, 2021 $ 3.9 $ (22.2) $ (18.3) |
Other Non-current Assets
Other Non-current Assets | 12 Months Ended |
May 31, 2021 | |
Other Non-current Assets | |
Other Non-current Assets | 10. Other Non-current Assets At May 31, 2021 and 2020, other non-current assets consisted of the following: May 31, 2021 2020 License fees $ 25.0 $ 4.1 Contract assets 21.6 22.4 Investments in joint ventures 18.3 17.8 Assets under deferred compensation plan 12.6 13.1 Pension assets 10.4 — Cash surrender value of life insurance 5.5 15.6 Other 5.4 8.5 $ 98.8 $ 81.5 Investments in Joint Ventures Under the terms of servicing agreements with certain of our aircraft joint ventures, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide evaluation and inspection services prior to the purchase of an aircraft and remarketing services with respect to the divestiture of aircraft by the joint ventures. During fiscal 2021, 2020, and 2019, we were paid $1.0 million, $1.6 million, and $0.4 million, respectively, for such services. Our investments in joint ventures include $10.0 million for our 40% ownership interest in a joint venture in India to develop and operate an airframe maintenance facility. The facility is expected to receive regulatory certification in the first half of fiscal 2022 and would commence airframe maintenance operations shortly thereafter. 10. Other Non-current Assets (Continued) The investment balance as of May 31, 2021 includes $8.7 million related to the guarantee liability recognized in conjunction with our guarantee of 40% of the Indian joint venture’s debt. The Indian joint venture is accounted for using the equity method. In addition, each of the partners in the Indian joint venture has a loan to the joint venture proportionate to its equity ownership. Our loan to the Indian joint venture under this arrangement was $3.1 million as of May 31, 2021. In the fourth quarter of fiscal 2020, we decided to exit our joint venture which operates a landing gear wheel and brake repair and overhaul facility in Malaysia. In conjunction with the decision to exit the joint venture, we recognized an impairment charge of $1.9 million reflecting the anticipated net proceeds from our investment. The impairment charge is reported in Earnings (Loss) from joint ventures on the Consolidated Statement of Income. License Fees In June 2011, we entered into a ten-year agreement with Unison Industries (“Unison”) to be the exclusive worldwide aftermarket distributor for Unison’s electrical components, sensors, switches and other systems for aircraft and industrial uses. In June 2020, we entered into an extension and expansion of our agreement with Unison including a new termination date of December 31, 2031, an initial $25.0 million license fee paid in June 2020 to Unison, and annual license fees at a fixed percentage of our net sales of Unison products. The June 2020 payment of $25.0 million was capitalized and is being amortized on a straight-line basis over the term of the new agreement. As of May 31, 2021, the unamortized balance of the license is $23.8 million. Split-Dollar Life Insurance Arrangements We previously entered into split-dollar life insurance agreements to benefit certain former executives and officers. Under the terms of the arrangements, we made premium payments on the individuals’ behalf and we retained a collateral interest in the policies generally to the extent of the premiums we previously paid. As of May 31, 2021, our Consolidated Balance Sheet included $5.5 million in Other non-current assets for cumulative premiums paid and expected to be reimbursed upon termination of the policies. During the second quarter of fiscal 2021, certain split-dollar life insurance agreements were terminated and we received $12.0 million for reimbursement of both the life insurance premiums we previously paid and a portion of our prior tax payments made on the individuals’ behalf related to their imputed income on the policies. The reimbursement of the premiums paid of $10.0 million has been classified as cash flow from investing activities with the remainder included in cash flow from operating activities as it represents the reimbursement of a portion of the income taxes previously paid and expensed. In the second quarter of fiscal 2021, we recognized a benefit of $1.3 million in Selling, general and administrative expenses on the Consolidated Statement of Income for the net recovery of the taxes previously paid on behalf of the individuals. |
Leases
Leases | 12 Months Ended |
May 31, 2021 | |
Leases | |
Leases | 11. Leases We lease facilities, offices, vehicles, and equipment. We determine at inception whether an arrangement that provides us control over the use of an asset is a lease. ROU assets and lease liabilities are recognized on the Consolidated Balance Sheet at lease commencement date based on the present value of the future minimum lease payments over the lease term. Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. We estimate our incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. Our lease costs are allocated over the remaining lease term on a straight-line basis unless another systematic or rational basis is more representative of the pattern in which the underlying asset is expected to be used. ROU assets are evaluated for impairment in a manner consistent with the treatment of other long-lived assets. 11. Leases (Continued) Certain leases include options to renew or extend the terms of the lease, which are included in the determination of the ROU assets and lease liabilities when it is reasonably certain that the option will be exercised. Our leases may also include variable lease payments such as escalation clauses based on consumer price index rates, maintenance costs and utilities. Variable lease payments that depend on an index or a rate are included in the determination of ROU assets and lease liabilities using the index or rate at the lease commencement date, whereas variable lease payments that do not depend on an index or rate are recorded as lease expense in the period incurred. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants. The summary of our operating lease cost is as follows: For the Year Ended May 31, 2021 2020 Operating lease cost $ 16.4 $ 18.4 Short-term lease cost 1.7 5.3 Variable lease cost 3.5 7.4 $ 21.6 $ 31.1 Rental expense for facilities and equipment during fiscal year 2019 was $25.9 million. With the exception of a land lease for one of our airframe maintenance facilities that expires in 2108, our operating leases expire at various dates through 2034. Maturities of our operating lease payments as of May 31, 2021 are as follows: 2022 $ 13.7 2023 11.9 2024 9.9 2025 8.8 2026 7.7 Thereafter 32.9 Total undiscounted payments 84.9 Less: Imputed interest (13.5) Present value of minimum lease payments 71.4 Less: Operating lease liabilities – current (11.5) Operating lease liabilities – non-current $ 59.9 The current portion of operating lease liabilities are presented within Accrued liabilities on our Consolidated Balance Sheet. Excluding leases related to our discontinued operations, the weighted average remaining lease term and discount rate for our operating leases were approximately 8.5 years and 3.8%, respectively, as of May 31, 2021. Supplemental cash flow information related to leases was as follows: For the Year Ended May 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ 15.3 $ 16.5 Operating lease liabilities arising from obtaining ROU assets 5.2 13.0 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
May 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies We enter into purchase obligations, which arise in the ordinary course of business and represent a binding commitment to acquire inventory, including raw materials, parts and components, as well as equipment to support the operations of our business. The aggregate amount of purchase obligations due in each of the next five fiscal years is $102.2 million in 2022, $208.5 million in 2023, $53.0 million in 2024, $15.2 in 2025 and $2.0 million in 2026. We routinely issue letters of credit and performance bonds in the ordinary course of our business. These instruments are typically issued in conjunction with insurance contracts or other business requirements. The total of these instruments outstanding at May 31, 2021 was approximately $30.8 million which includes $11.6 million related to a guarantee of 40% of the outstanding debt of our Indian joint venture. We have recognized a current liability of $8.7 million based on the fair value of our guarantee obligation. We are involved in various claims and legal actions, including environmental matters, arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial condition or results of operations. Government Subsidies On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the U.S. in response to the COVID-19 pandemic. The CARES Act includes provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, and other areas. The payroll tax deferral requires that the deferred payroll taxes be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. As of May 31, 2021, we deferred $12.4 million of payroll taxes of which $6.2 million are included in Accrued Liabilities and $6.2 million in Other liabilities on our Consolidated Balance Sheet. During the three-month period ended August 31, 2020, we received $57.2 million from the U.S. Treasury Department through the Payroll Support Program under the CARES Act. This funding included a $48.5 million cash grant which is to be used exclusively for the continuation of payment of employee wages, salaries and benefits for employees of certain MRO facilities. The grant was recognized as contra-expense on our Consolidated Statement of Income as the eligible wages, salaries and benefits were incurred. In fiscal 2021, we recognized the full amount of the grant as contra-expense within Cost of sales and Selling, general and administrative expenses of $47.5 million and $1.0 million, respectively. The remaining funding of $8.7 million was a low interest 10-year Other countries have enacted legislation similar to the CARES Act to provide relief and stimulus measures to assist companies in mitigating the financial impact from COVID-19 and supporting their employees. During fiscal 2021, our foreign subsidiaries recognized subsidies of $7.9 million from foreign governments which have been deducted from the related expenses on our Consolidated Statement of Income. |
Sale of Composites Business
Sale of Composites Business | 12 Months Ended |
May 31, 2021 | |
Disposed of by sale | Composites Business | |
Sale of Business | |
Sale of Composites Business | 13. Sale of Composites Business On August 31, 2020, we completed the sale of our aerostructures and aerospace products operations located in Clearwater, Florida and Sacramento, California ("Composites"). The Composites business was formerly included in our Expeditionary Services segment. The sale of Composites is consistent with our multi-year strategy to focus our portfolio on our core services offerings and the transaction has allowed us to further prioritize our efforts in our principal businesses. We recognized a loss on the sale of the Composites business of $20.2 million which included consideration of $1.6 million. Consideration from the sale includes contingent consideration of up to $6.5 million based on the achievement of sales targets over the next three years. Consideration included in the loss on sale was comprised of net cash received of $0.3 million and the fair value of the earn-out consideration of $1.3 million. |
Business Segment Information
Business Segment Information | 12 Months Ended |
May 31, 2021 | |
Business Segment Information | |
Business Segment Information | 14. Business Segment Information Segment Reporting Consistent with how our chief operating decision making officer (Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two segments: Aviation Services Expeditionary Services The Aviation Services segment consists of aftermarket support and services offerings that provide spare parts and maintenance support for aircraft operated by our commercial and government/defense customers. Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance-based logistics programs, customer fleet management and operations, and aircraft component repair management services. The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components. Cost of sales consists principally of the cost of product, direct labor, and overhead. The Expeditionary Services segment consists of primarily manufacturing operations with sales derived from the design and manufacture of pallets, shelters, and containers used to support the U.S. military’s requirements for a mobile and agile force including engineering, design, and system integration services for specialized command and control systems. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead. The accounting policies for the segments are the same as those described in Note 1. Our chief operating decision making officer (Chief Executive Officer) evaluates performance based on the reportable segments and utilizes gross profit as a primary profitability measure. Gross profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around differences in products and services. 14. Business Segment Information (Continued) Selected financial information for each segment is as follows: For the Year Ended May 31, 2021 2020 2019 Net sales: Aviation Services $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services 98.6 107.8 131.2 $ 1,652.3 $ 2,072.0 $ 2,051.8 For the Year Ended May 31, 2021 2020 2019 Gross profit: Aviation Services $ 263.2 $ 267.3 $ 313.6 Expeditionary Services 12.7 1.9 16.2 $ 275.9 $ 269.2 $ 329.8 May 31, 2021 2020 Total assets: Aviation Services $ 1,357.2 $ 1,502.5 Expeditionary Services 73.0 103.6 Corporate and discontinued operations 109.5 472.9 $ 1,539.7 $ 2,079.0 For the Year Ended May 31, 2021 2020 2019 Capital expenditures: Aviation Services $ 8.1 $ 16.9 $ 15.1 Expeditionary Services 3.1 5.4 1.4 Corporate 0.1 1.3 0.9 Total continuing operations 11.3 23.6 17.4 Discontinued operations — — 0.5 $ 11.3 $ 23.6 $ 17.9 For the Year Ended May 31, 2021 2020 2019 Depreciation and amortization: 1 Aviation Services $ 33.7 $ 39.2 $ 37.5 Expeditionary Services 2.3 3.7 4.1 Corporate 9.5 8.1 14.7 $ 45.5 $ 51.0 $ 56.3 1 Includes amortization of stock-based compensation. 14. Business Segment Information (Continued) The following table reconciles segment gross profit to income from continuing operations before provision for income taxes. For the Year Ended May 31, 2021 2020 2019 Segment gross profit $ 275.9 $ 269.2 $ 329.8 Provision for doubtful accounts (8.5) (5.4) (15.8) Selling, general and administrative (182.4) (220.6) (215.4) Earnings (Loss) from joint ventures 0.2 (1.9) (0.3) Loss on sale of business (20.2) — — Other income (expenses), net 4.3 (2.1) (0.8) Interest expense (5.0) (9.3) (9.5) Interest income 0.2 0.5 1.0 Income from continuing operations before provision for income taxes $ 64.5 $ 30.4 $ 89.0 The U.S. Department of Defense, U.S. Department of State, other U.S. government agencies and their contractors are our only customers representing 10% or more of total sales in any of the last three fiscal years. Sales by segment for these customers are as follows: For the Year Ended May 31, 2021 2020 2019 Aviation Services $ 657.0 $ 588.7 $ 455.9 Expeditionary Services 81.8 79.5 90.3 $ 738.8 $ 668.2 $ 546.2 Percentage of total sales 44.7 % 32.2 % 26.6 % Sales across the major customer markets for each of our operating segments for the fiscal years ended May 31, 2021, 2020 and 2019 were as follows: For the Year Ended May 31, 2021 2020 2019 Aviation Services: Commercial $ 793.9 $ 1,268.9 $ 1,342.3 Government and defense 759.8 695.3 578.3 $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services: Commercial $ 12.5 $ 24.3 $ 31.6 Government and defense 86.1 83.5 99.6 $ 98.6 $ 107.8 $ 131.2 14. Business Segment Information (Continued) Sales by type of product/service was as follows: For the Year Ended May 31, 2021 2020 2019 Aviation supply chain $ 1,172.7 $ 1,434.3 $ 1,395.2 Maintenance, repair and overhaul services 381.0 529.9 525.4 Mobility products 98.6 107.8 131.2 $ 1,652.3 $ 2,072.0 $ 2,051.8 Geographic Data Sales by geographic region for the fiscal years ended May 31, 2021, 2020 and 2019 were as follows: For the Year Ended May 31, 2021 2020 2019 Aviation Services: North America $ 1,255.7 $ 1,505.6 $ 1,426.8 Europe/Africa 207.5 330.8 323.4 Other 90.5 127.8 170.4 $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services: North America $ 95.9 $ 98.4 $ 124.1 Europe/Africa 2.6 9.0 5.8 Other 0.1 0.4 1.3 $ 98.6 $ 107.8 $ 131.2 May 31, 2021 2020 Long-lived assets: United States $ 419.1 $ 423.9 Europe 83.1 102.1 Other 100.5 114.3 $ 602.7 $ 640.3 Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries) were approximately $370.5 million (22.4% of total sales), $591.8 million (28.6% of total sales) and $661.8 million (32.3% of total sales) in fiscal 2021, 2020 and 2019, respectively. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
May 31, 2021 | |
Legal Proceedings | |
Legal Proceedings | 15. Legal Proceedings We are not a party to any material pending legal proceeding (including any governmental or environmental proceeding) other than routine litigation incidental to our business except for the following: Department of Justice Investigation As previously reported, the U.S. Department of Justice (“DoJ”), acting through the U.S. Attorney’s Office for the Southern District of Illinois, conducted an investigation of AAR Airlift Group, Inc. (“Airlift”), a wholly-owned subsidiary of AAR CORP., under the federal civil False Claims Act (“FCA”). The investigation related to Airlift’s performance of several contracts awarded by the U.S. Transportation Command (“TRANSCOM”) concerning the operations and maintenance of rotary-wing and fixed-wing aircraft in Afghanistan and Africa, as well as several U.S. Navy contracts. In June 2018, the DoJ informed Airlift that part of the investigation was precipitated by a lawsuit filed under the qui tam provisions of the FCA by a former employee of Airlift. In June 2021, Airlift and the DoJ reached an agreement to settle the FCA investigation and related matters for approximately $11.5 million which concluded the DoJ investigation into Airlift’s contracts with TRANSCOM and the U.S. Navy. As part of the settlement, Airlift and AAR did not admit any wrongdoing. We recognized charges of $11.0 million in discontinued operations in fiscal 2021 related to this agreement and related matters. As of May 31, 2021, our reserve for the entire matter was $12.7 million. Self-Reporting of Potential Foreign Corrupt Practices Act Violations The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, in fiscal 2019, we self-reported these matters to the DoJ, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company is fully cooperating with the reviews by these agencies, although we are unable at this time to predict what action, if any, they may take. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries after elimination of intercompany accounts and transactions. Certain reclassifications have been made to the 2020 presentation to conform to the 2021 presentation. |
New Accounting Pronouncements Adopted | New Accounting Pronouncements Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC 842”), which amended the existing accounting standards for lease accounting. ASC 842 requires lessees to recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet for most lease arrangements, including those classified as operating leases. In addition, ASC 842 requires new qualitative and quantitative disclosures about our leasing activities. We adopted ASC 842 on June 1, 2019 using the modified retrospective transition approach. Under that approach, prior periods have not been restated and continue to be reported under the accounting standards in effect for those periods. We elected the package of practical expedients, which must be elected as a package and applied consistently to all leases. This package permitted us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. In addition, we elected the practical expedients to not separate lease and non-lease components for both lessee and lessor relationships and to not apply the recognition requirements to leases with terms of less than twelve months. Upon adoption of ASC 842 on June 1, 2019, we recognized operating lease ROU assets of $123.2 million and operating lease liabilities of $116.8 million on our Consolidated Balance Sheet. These amounts included operating lease ROU assets of $26.6 million and operating lease liabilities of $25.3 million related to our discontinued operations. In addition, we recognized the remaining unamortized deferred gains of $2.5 million, net of tax, associated with sale-leaseback transactions as a cumulative effect adjustment to the opening balance of retained earnings as of June 1, 2019. The adoption of ASC 842 did not have a material impact on the Consolidated Statements of Operations or Cash Flows. 1. Summary of Significant Accounting Policies (Continued) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Revenue Recognition We adopted ASC 606 on June 1, 2018 using the modified retrospective method. Under that approach, prior periods were not restated and continue to be reported under the accounting standards in effect for those periods. We elected to use the practical expedient |
Revenue Recognition | Revenue Recognition Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. Our unit of accounting for revenue recognition is a performance obligation included in our customer contracts. A performance obligation reflects the distinct good or service that we must transfer to a customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our contract with the customer is considered one performance obligation as it includes factors such as whether the good or service being provided is significantly integrated with other promises in the contract, whether the service provided significantly modifies or customizes another good or service or whether the good or service is highly interdependent or interrelated. If the contract has more than one performance obligation, we determine the standalone price of each distinct good or service underlying each performance obligation and allocate the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known. Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. The majority of our sales from products typically represent distinct performance obligations and are recognized at a point in time upon transfer of control to the customer, which generally occurs upon shipment. In connection with certain sales of products, we also provide logistics services, which include inventory management, replenishment, and other related services. The price of such services is generally included in the price of the products delivered to the customer, and revenues are recognized upon delivery of the product, at which point the customer has obtained control of the product. We do not account for these services separate from the related product sales as the services are inputs required to fulfill part orders received from customers. For our performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved can include customer volume, future labor costs and efficiencies, repair or overhaul costs, overhead costs, and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. For contracts that are deemed to be loss contracts, we establish forward loss reserves for total estimated costs that are in excess of total estimated consideration in the period in which they become known. 1. Summary of Significant Accounting Policies (Continued) When contracts are modified, we consider whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original goods or services provided, are accounted for as if they were part of that existing contract with the effect of the contract modification recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct, they are accounted for as a new contract and performance obligation, which are recognized prospectively. Under most of our U.S. government contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered and fair compensation for work performed, the costs of settling and paying other claims, and a reasonable profit on the costs incurred or committed. We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in Cost of sales on our Consolidated Statements of Income, and are not considered a performance obligation to our customers. Our reported sales on our Consolidated Statements of Income are net of any sales or related non-income taxes. We also utilize the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer. Cumulative Catch-up Adjustments Changes in estimates and assumptions related to our arrangements accounted for using the cost-to-cost method are recorded using the cumulative catch-up method of accounting. These changes are primarily adjustments to the estimated profitability for our long-term programs where we provide component inventory management and/or repair services. Favorable and unfavorable cumulative catch-up adjustments were as follows: May 31, 2021 2020 2019 Favorable cumulative catch-up adjustments $ 16.1 $ 6.1 $ 8.0 Unfavorable cumulative catch-up adjustments (4.1) (2.2) (2.1) Net cumulative catch-up adjustments $ 12.0 $ 3.9 $ 5.9 Contract Assets and Liabilities The timing of revenue recognition, customer billings, and cash collections results in a contract asset or contract liability at the end of each reporting period. When an unconditional right to consideration exists, we record an unbilled receivable. When amounts are dependent on factors other than the passage of time in order for payment from a customer to be due, we record a contract asset which consists of costs incurred where revenue recognized over time using the cost-to-cost model exceeds the amounts billed to customers. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of our performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. Contract assets and contract liabilities are determined on a contract-by-contract basis. 1. Summary of Significant Accounting Policies (Continued) Net contract assets and liabilities are as follows: May 31, 2021 2020 Change Contract assets – current $ 71.9 $ 49.3 $ 22.6 Contract assets – non-current 21.6 22.4 (0.8) Contract liabilities – current (25.9) (11.2) (14.7) Deferred revenue on long-term contracts (5.4) (88.0) 82.6 Net contract assets (liabilities) $ 62.2 $ (27.5) $ 89.7 Contract assets – non-current is reported within Other non-current assets, and Contract liabilities – current is reported within Accrued Liabilities on our Consolidated Balance Sheet. Changes in contract assets and contract liabilities primarily result from the timing difference between our performance of services and payments from customers. During the fiscal 2021 and 2020, we terminated or restructured certain commercial power-by-the-hour (“PBH”) customer contracts resulting in charges of $5.7 million and $31.3 million, respectively. Some of these contracts were deemed loss contracts requiring the establishment of forward loss reserves for the total estimated costs that are in excess of the total estimated consideration over the remainder of the contracts. As of May 31, 2021, our Consolidated Balance Sheet included remaining forward loss reserves of $3.0 million with $2.8 million classified as current in Accrued liabilities and $0.2 million classified as long-term in Other liabilities. One of our PBH customers notified us in June 2021 that the contract would be terminating earlier than originally anticipated. In conjunction with the early termination, we expect to recognize contract asset and rotable asset impairment charges of $5.0 to $10.0 million in the first quarter of fiscal 2022. To support our PBH customer contracts, we previously entered into an agreement with a component repair facility to outsource a portion of the component repair and overhaul services. The agreement included certain minimum repair volume guarantees which we have not met due to the impact of COVID-19 on commercial passenger aircraft flight hours. During fiscal 2021, we recognized a $4.5 million charge to reflect our estimated obligation over the remainder of the agreement for not achieving the minimum volume guarantees. As of May 31, 2021, our Consolidated Balance Sheet included remaining loss reserves of $2.9 million with $1.5 million classified as current in Accrued liabilities and $1.4 million classified as long-term in Other liabilities. Changes in our deferred revenue were as follows: Year ended May 31, 2021 2020 Deferred revenue at beginning of period $ (99.2) $ (96.4) Revenue deferred (251.4) (417.2) Revenue recognized 318.2 410.5 Other 1.1 3.9 Deferred revenue at end of period $ (31.3) $ (99.2) 1. Summary of Significant Accounting Policies (Continued) Remaining Performance Obligations As of May 31, 2021, we had approximately $750 million of remaining performance obligations, also referred to as firm backlog, which excludes unexercised contract options and potential orders under our indefinite-delivery, indefinite-quantity contracts. We expect that approximately 40% of this backlog will be recognized as revenue over the next 12 months, with approximately 45% of the remaining balance recognized over the next three years. The amount of remaining performance obligations, which is expected to be recognized as revenue beyond 12 months, primarily relates to our long-term, PBH programs where we provide component inventory management and/or repair services. |
Financial Instruments and Concentrations of Market or Credit Risk | Financial Instruments and Concentrations of Market or Credit Risk Financial instruments that potentially subject us to concentrations of market or credit risk consist principally of trade receivables. While our trade receivables are diverse and represent a number of entities and geographic regions, the majority are with the U.S. government and its contractors and entities in the aviation industry. The composition of our accounts receivable is as follows: May 31, 2021 2020 U.S. Government contracts: Trade receivables $ 24.1 $ 33.9 Unbilled receivables 25.2 27.4 49.3 61.3 All other customers: Trade receivables 104.9 81.7 Unbilled receivables 12.5 28.9 117.4 110.6 $ 166.7 $ 171.9 In addition, we currently have past due accounts receivable owed by former commercial program customers primarily related to our exit from customer contracts in certain geographies, including Colombia, Peru, and Spain. Our past due accounts receivable owed by these customers was $4.7 million as of May 31, 2021 which was net of allowance for doubtful accounts of $8.8 million. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts and trade notes payable approximate fair value because of the short-term maturity of these instruments. The carrying value of long-term debt bearing a variable interest rate approximates fair value. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts to reflect the expected uncollectibility of accounts receivable based on past collection history and specific risks identified among uncollected accounts. In determining the required allowance, we consider factors such as general and industry-specific economic conditions, customer credit history, and our customers’ current and expected future financial performance. The majority of our customers are recurring customers with an established payment history. Certain customers are required to undergo an extensive credit check prior to delivery of products or services. 1. Summary of Significant Accounting Policies (Continued) Our allowance for doubtful accounts also includes reserves for estimated product returns based on historical return rates. The reserve for estimated product returns is recognized as a reduction to sales with a corresponding reduction to cost of sales for the estimated cost of inventory that is expected to be returned. We perform regular evaluations of customer payment experience, current financial condition, and risk analysis. We may require collateral in the form of security interests in assets, letters of credit, and/or obligation guarantees from financial institutions for transactions executed on other than normal trade terms. We also maintain trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. In fiscal 2019, we recognized a provision for doubtful accounts of $12.4 million related to the bankruptcy of a European airline customer. The provision consisted of impairment of non-current contract assets of $7.6 million, allowance for doubtful accounts of $3.3 million, and other liabilities of $1.5 million. The change in our allowance for doubtful accounts was as follows: May 31, 2021 2020 2019 Balance, beginning of year $ 22.1 $ 16.0 $ 7.5 Provision charged to operations 8.5 5.4 15.8 Recoveries, deductions for accounts written off and other reclassifications (14.2) 0.7 (7.3) Balance, end of year $ 16.4 $ 22.1 $ 16.0 |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets In accordance with ASC 350, Intangibles–Goodwill and Other As of May 31, 2021, we had three reporting units, which included two in our Aviation Services segment (Aviation Supply Chain and Maintenance, Repair, and Overhaul) and one comprised of our Expeditionary Services segment. We utilized the qualitative assessment approach for all reporting units which considers general economic conditions, industry specific performance, changes in reporting unit carrying values, and assumptions used in the most recent fair value calculation. We concluded it was more likely than not that the fair value of each reporting unit exceeded its carrying value at May 31, 2021, and thus no impairment charges were recorded. In fiscal 2020, we elected to forego the qualitative assessment due to the unprecedented impact of the COVID-19 pandemic and utilized a quantitative assessment approach for all reporting units. We estimated the fair value of each reporting unit using primarily an income approach based on discounted cash flows. The assumptions we used to estimate the fair value of our reporting units were based on historical performance, as well as forecasts used in our business plan and required considerable management judgment in light of the impact of COVID-19. We used discount rates based on our consolidated weighted average cost of capital which is adjusted for each of our reporting units based on their specific risk, size, and industry characteristics. The fair value measurements used for our goodwill impairment testing use significant unobservable inputs, which reflected our own assumptions about the inputs that market participants would use in measuring fair value. The fair value of our reporting units is also impacted by our overall market capitalization and may be impacted by volatility in our stock price and assumed control premium, among other items. We concluded the fair value of each reporting unit exceeded its carrying values as of May 31, 2020, and thus no impairment charges were recorded. 1. Summary of Significant Accounting Policies (Continued) Changes in the carrying amount of goodwill by segment for fiscal 2021 and 2020 are as follows: Aviation Expeditionary Services Services Total Balance as of May 31, 2019 $ 96.9 $ 19.3 $ 116.2 Foreign currency translation adjustments (0.5) — (0.5) Balance as of May 31, 2020 96.4 19.3 115.7 Sale of Composites — (0.5) (0.5) Foreign currency translation adjustments 4.1 — 4.1 Balance as of May 31, 2021 $ 100.5 $ 18.8 $ 119.3 Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets, other than goodwill, are comprised of the following: May 31, 2021 Accumulated Amortizable Gross Amortization Net Customer relationships $ 23.0 $ (19.7) $ 3.3 Unamortized intangible assets: Trademarks 1.2 — 1.2 $ 24.2 $ (19.7) $ 4.5 May 31, 2020 Accumulated Amortizable Gross Amortization Net Customer relationships $ 21.4 $ (16.5) $ 4.9 Unamortized intangible assets: Trademarks 1.1 — 1.1 $ 22.5 $ (16.5) $ 6.0 In conjunction with the adoption of ASC 842 on June 1, 2019, our net intangible asset for lease agreements of $8.5 million was re-classified to the ROU asset. During fiscal 2020, we recognized an impairment charge of $5.4 million related to the exit of certain product lines across both our Aviation Services and Expeditionary Services segments. Customer relationships are being amortized over 5-20 years. Amortization expense recorded during fiscal 2021, 2020 and 2019 was $1.8 million, $2.3 million, and $3.9 million, respectively. The estimated aggregate amount of amortization expense for intangible assets in each of the next five fiscal years is $1.1 million in 2022, $0.5 million in 2023, $0.3 million in 2024, $0.3 million in 2025 and $0.3 million in 2026. |
Foreign Currency | Foreign Currency Our foreign subsidiaries utilize the local currency as their functional currency. All balance sheet accounts of foreign subsidiaries transacting business in currencies other than the U.S. dollar are translated at year-end exchange rates. Revenues and expenses are translated at average exchange rates during the year. Translation adjustments are excluded from the results of operations and are recorded in stockholders’ equity as a component of accumulated other comprehensive loss until such subsidiaries are liquidated. |
Cash | Cash Cash and cash equivalents consist of highly liquid instruments which have original maturities of three months or less when purchased. Restricted cash represents cash on hand required to be set aside by a contractual agreement related to receivable securitization arrangements. Generally, the restrictions related to the receivable securitization arrangements lapse at the time we remit the customer payments collected by us as servicer of previously sold customer receivables to the purchaser. |
Inventories | Inventories Inventories are valued at the lower of cost or market (estimated net realizable value). Cost is determined by the specific identification, average cost, or first-in, first-out methods. From time-to-time, we purchase aircraft and engines for disassembly to individual parts and components. Costs are assigned to these individual parts and components utilizing list prices from original equipment manufacturers and recent sales history. Expenditures for the repair of parts and components are capitalized as inventory. The following is a summary of inventories: May 31, 2021 2020 Aircraft and engine parts, components and finished goods $ 468.4 $ 556.6 Raw materials and parts 53.0 45.9 Work-in-process 19.2 20.6 $ 540.6 $ 623.1 |
Rotable Assets and Equipment under Leases | Rotable Assets and Equipment under Leases The cost of the asset under lease is the original purchase price plus overhaul costs. Depreciation is computed using the straight-line method over the estimated service life of the equipment. The balance sheet classification of equipment under lease is generally based on lease term, with fixed-term leases less than twelve months generally classified as short-term and all others generally classified as long-term. Equipment on short-term lease includes aircraft engines and parts on or available for lease to satisfy customers’ immediate short-term requirements. The leases are renewable with fixed terms, which generally vary from one |
Property, Plant and Equipment and Other Non-Current Assets | Property, Plant and Equipment and Other Non-Current Assets We record property, plant and equipment at cost. Depreciation is computed on the straight-line method over useful lives of 10-40 years for buildings and improvements and 3-10 years for equipment, furniture fixtures capitalized software Repair and maintenance expenditures are expensed as incurred. Upon sale or disposal, cost and accumulated depreciation are removed from the accounts, and related gains and losses are included in results of operations. Rotable assets supporting long-term programs consist of rotable component parts used to support long-term supply chain programs. The assets are being depreciated on a straight-line basis over their estimated useful lives. 1. Summary of Significant Accounting Policies (Continued) In accordance with ASC 360, Property, Plant and Equipment In our Aviation Services segment, we evaluated future cash flows related to certain rotable assets supporting long-term programs in light of declines in commercial airline volumes and commercial program contract terminations We recognized asset impairment charges of $5.8 million related to these rotable assets in fiscal 2021. In our Expeditionary Services segment, we consolidated manufacturing facilities and recognized impairment and related charges of $2.6 million during fiscal 2021. In conjunction with the decision to exit certain product lines, we recognized rotable asset impairment charges of $1.9 million in fiscal 2020 in conjunction with reclassifying the rotable assets as inventory held for sale. In fiscal 2021, we recognized additional impairment charges of $1.4 million on these assets. Future rent due to us under non-cancelable leases during each of the next five fiscal years is $21.0 million in 2022, $21.7 million in 2023, $21.1 million in 2024, $21.1 million in 2025, and $19.1 million in 2026. |
Investments | Investments Investments where we have the ability to exercise significant influence, but do not control the entity, are accounted for under the equity method of accounting. Significant influence generally exists if we have a 20% to 50% ownership interest in the investee. Our share of the net earnings or loss of our investees is included in operating income on our Consolidated Statements of Income since the activities of the investees are closely aligned with our operations. Equity investments in entities over which we do not have the ability to exercise significant influence and whose securities do not have a readily determinable fair value are carried at cost less impairment, if any, adjusted for changes resulting from qualifying observable price changes. We evaluate our investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an investment is determined to be other than temporary, a loss is recorded in earnings in the current period. Our investments are classified in Other non-current assets on our Consolidated Balance Sheets. Distributions from joint ventures are classified as operating or investing activities in the Consolidated Statements of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution. |
Restructuring and Other Exit Costs | Restructuring and Other Exit Costs We recognize charges for restructuring and other exit costs such as product line exits and facility closures at their fair value when incurred. In cases where employees are required to render service until they are terminated in order to receive the termination benefits and will be retained beyond the minimum retention period, we record the expense ratably over the future service period. During fiscal 2021 and 2020, we incurred severance and furlough-related costs of $9.0 million and $7.1 million, respectively, which were included as a component of Cost of sales and services and Selling, general and administrative on our Consolidated Statements of Income. |
Income Taxes | Income Taxes We are subject to income taxes in the U.S., state, and several foreign jurisdictions. In the ordinary course of business, there can be transactions and calculations where the ultimate tax determination is uncertain. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Both positive and negative evidence are considered in forming our judgment as to whether a valuation allowance is appropriate, and more weight is given to evidence that can be objectively verified. Valuation allowances are reassessed whenever there are changes in circumstances that may cause a change in judgment. The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition of tax positions taken or expected to be taken in a tax return. Where necessary, we record a liability for the difference between the benefit recognized for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. |
Supplemental Information on Cash Flows | Supplemental Information on Cash Flows Supplemental information on cash flows is as follows: For the Year Ended May 31, 2021 2020 2019 Interest paid $ 4.3 $ 8.6 $ 8.8 Income taxes paid 8.2 14.3 7.0 Income tax refunds and interest received 8.3 7.0 6.4 During fiscal 2021, treasury stock decreased $8.6 million reflecting restricted stock activity of $5.6 million and the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $3.0 million. During fiscal 2020, treasury stock decreased $5.0 million reflecting restricted stock activity of $0.8 million and the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $8.3 million partially offset by the repurchase of common shares of $4.1 million. During fiscal 2019, treasury stock increased $7.0 million reflecting the repurchase of common shares of $10.3 million, restricted stock activity of $0.8 million partially offset by the re-issuance of shares upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations, of $4.1 million. |
Use of Estimates | Use of Estimates We have made estimates and utilized certain assumptions relating to the reporting of assets and liabilities and the disclosures of contingent liabilities to prepare these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States. Actual results could differ from those estimates. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of favorable and unfavorable cumulative catch-up adjustments | May 31, 2021 2020 2019 Favorable cumulative catch-up adjustments $ 16.1 $ 6.1 $ 8.0 Unfavorable cumulative catch-up adjustments (4.1) (2.2) (2.1) Net cumulative catch-up adjustments $ 12.0 $ 3.9 $ 5.9 |
Schedule of net contract assets and liabilities | May 31, 2021 2020 Change Contract assets – current $ 71.9 $ 49.3 $ 22.6 Contract assets – non-current 21.6 22.4 (0.8) Contract liabilities – current (25.9) (11.2) (14.7) Deferred revenue on long-term contracts (5.4) (88.0) 82.6 Net contract assets (liabilities) $ 62.2 $ (27.5) $ 89.7 |
Schedule of changes in deferred revenue, after adoption of ASC 606 | Year ended May 31, 2021 2020 Deferred revenue at beginning of period $ (99.2) $ (96.4) Revenue deferred (251.4) (417.2) Revenue recognized 318.2 410.5 Other 1.1 3.9 Deferred revenue at end of period $ (31.3) $ (99.2) |
Schedule of composition of accounts receivable | May 31, 2021 2020 U.S. Government contracts: Trade receivables $ 24.1 $ 33.9 Unbilled receivables 25.2 27.4 49.3 61.3 All other customers: Trade receivables 104.9 81.7 Unbilled receivables 12.5 28.9 117.4 110.6 $ 166.7 $ 171.9 |
Schedule of change in our allowance for doubtful accounts | The change in our allowance for doubtful accounts was as follows: May 31, 2021 2020 2019 Balance, beginning of year $ 22.1 $ 16.0 $ 7.5 Provision charged to operations 8.5 5.4 15.8 Recoveries, deductions for accounts written off and other reclassifications (14.2) 0.7 (7.3) Balance, end of year $ 16.4 $ 22.1 $ 16.0 |
Schedule of goodwill by reportable segment | Aviation Expeditionary Services Services Total Balance as of May 31, 2019 $ 96.9 $ 19.3 $ 116.2 Foreign currency translation adjustments (0.5) — (0.5) Balance as of May 31, 2020 96.4 19.3 115.7 Sale of Composites — (0.5) (0.5) Foreign currency translation adjustments 4.1 — 4.1 Balance as of May 31, 2021 $ 100.5 $ 18.8 $ 119.3 |
Schedule of finite-lived intangible assets, other than goodwill | May 31, 2021 Accumulated Amortizable Gross Amortization Net Customer relationships $ 23.0 $ (19.7) $ 3.3 Unamortized intangible assets: Trademarks 1.2 — 1.2 $ 24.2 $ (19.7) $ 4.5 May 31, 2020 Accumulated Amortizable Gross Amortization Net Customer relationships $ 21.4 $ (16.5) $ 4.9 Unamortized intangible assets: Trademarks 1.1 — 1.1 $ 22.5 $ (16.5) $ 6.0 |
Summary of inventories | May 31, 2021 2020 Aircraft and engine parts, components and finished goods $ 468.4 $ 556.6 Raw materials and parts 53.0 45.9 Work-in-process 19.2 20.6 $ 540.6 $ 623.1 |
Schedule of supplemental information on cash flows | For the Year Ended May 31, 2021 2020 2019 Interest paid $ 4.3 $ 8.6 $ 8.8 Income taxes paid 8.2 14.3 7.0 Income tax refunds and interest received 8.3 7.0 6.4 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
May 31, 2021 | |
Financing Arrangements | |
Schedule of carrying amount of debt | May 31, 2021 2020 Revolving Credit Facility expiring September 25, 2024 with interest payable monthly $ 109.5 $ 579.5 Term loan due November 1, 2021 with interest payable monthly 25.7 22.5 Total debt 135.2 602.0 Debt issuance costs, net (1.5) (2.0) Long-term debt $ 133.7 $ 600.0 |
Schedule of borrowing activity under the Credit Agreement | For the Year Ended May 31, 2021 2020 2019 Maximum amount borrowed $ 579.5 $ 579.5 $ 287.0 Average daily borrowings 257.5 280.7 207.8 Average interest rate during the year 1.20 % 2.62 % 3.41 % |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
May 31, 2021 | |
Equity | |
Schedule of assumptions used in the Black-Scholes option pricing model to estimate the fair value of stock option grant | Stock Options Granted In Fiscal Year 2021 2020 2019 Risk-free interest rate 0.4 % 1.9 % 2.7 % Expected volatility of common stock 40.2 % 32.0 % 30.8 % Dividend yield 1.6 % 0.8 % 0.6 % Expected option term in years 4.8 4.5 4.5 |
Schedule of stock option activity | A summary of stock option activity for the three years ended May 31, 2021 consisted of the following (shares in thousands): 2021 2020 2019 Weighted Weighted Weighted Average Average Average Shares Exercise Price Shares Exercise Price Shares Exercise Price Outstanding at beginning of year 1,851 $ 32.74 1,777 $ 30.37 2,082 $ 26.72 Granted 936 18.94 414 37.66 300 47.84 Exercised (110) 23.93 (300) 24.99 (571) 25.56 Cancelled (65) 25.59 (40) 36.72 (34) 42.02 Outstanding at end of year 2,612 $ 28.34 1,851 $ 32.74 1,777 $ 30.37 Options exercisable at end of year 1,371 $ 31.56 1,133 $ 28.32 981 $ 25.28 |
Schedule of restricted share activity | Restricted share activity during fiscal 2021 was as follows (shares in thousands): Weighted Average Number of Fair Value Shares on Grant Date Nonvested at May 31, 2020 385 $ 31.70 Granted 290 23.43 Vested (292) 32.15 Forfeited (14) 26.60 Nonvested at May 31, 2021 369 30.12 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
May 31, 2021 | |
Income Taxes | |
Schedule of components of provision for income tax on income from continuing operations | For the Year Ended May 31, 2021 2020 2019 Current: Federal $ 5.2 $ 1.4 $ 4.8 State 1.2 0.9 0.1 Foreign 3.4 2.8 5.0 9.8 5.1 9.9 Deferred 8.4 0.5 (5.0) $ 18.2 $ 5.6 $ 4.9 |
Schedule of difference between the provision for income taxes on pre-tax income from the amount computed by applying the U.S. federal statutory tax rate | For the Year Ended May 31, 2021 2020 2019 Provision for income tax at the federal statutory rate $ 13.5 $ 6.4 $ 18.7 Tax expense (benefits) from stock-based compensation 0.7 (2.1) (2.7) State income taxes, net of federal benefit 2.4 1.1 1.9 Change in valuation allowance for state deferred tax assets — (0.1) (6.9) Effective settlement of prior tax positions — — (4.7) Other 1.6 0.3 (1.4) Provision for income tax $ 18.2 $ 5.6 $ 4.9 |
Schedule of income before provision for income taxes | For the Year Ended May 31, 2021 2020 2019 Domestic $ 43.7 $ 23.6 $ 68.9 Foreign 20.8 6.8 20.1 $ 64.5 $ 30.4 $ 89.0 |
Schedule of components of deferred tax assets and liabilities | May 31, 2021 2020 Deferred tax assets: Operating lease liabilities $ 20.7 $ 24.9 Employee and retirement benefits 10.4 13.3 State net operating losses 6.8 9.4 Allowance for doubtful accounts 4.0 4.1 Credits and incentives 1.1 8.2 Other 1.5 5.0 Total deferred tax assets 44.5 64.9 Deferred tax liabilities: Tangible and intangible assets (31.9) (35.0) ROU operating lease assets (21.9) (26.2) Other (0.2) (0.2) Total deferred tax liabilities (54.0) (61.4) Net deferred tax assets (liabilities) $ (9.5) $ 3.5 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
May 31, 2021 | |
Earnings per Share | |
Schedule of reconciliation of computations of basic and diluted earnings per share information | The following tables provide a reconciliation of the computations of basic and diluted earnings per share information for each of the years in the three-year period ended May 31, 2021 (shares in millions). For the Year Ended May 31, 2021 2020 2019 Basic and Diluted EPS: Income from continuing operations $ 46.3 $ 24.8 $ 84.1 Less income attributable to participating shares (0.4) (0.1) (0.4) Income from continuing operations attributable to common stockholders 45.9 24.7 83.7 Loss from discontinued operations attributable to common stockholders (10.5) (20.4) (76.6) Net income attributable to common stockholders for earnings per share $ 35.4 $ 4.3 $ 7.1 Weighted average common shares outstanding - basic 35.0 34.8 34.5 Additional shares from assumed exercise of stock options 0.3 0.2 0.4 Weighted average common shares outstanding - diluted 35.3 35.0 34.9 Earnings per share – basic: Earnings from continuing operations $ 1.31 $ 0.71 $ 2.42 Loss from discontinued operations (0.30) (0.59) (2.22) Earnings per share - basic $ 1.01 $ 0.12 $ 0.20 Earnings per share – diluted: Earnings from continuing operations $ 1.30 $ 0.71 $ 2.40 Loss from discontinued operations (0.30) (0.58) (2.19) Earnings per share - diluted $ 1.00 $ 0.13 $ 0.21 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
May 31, 2021 | |
Employee Benefit Plans | |
Schedule of change to the entity's projected benefit obligation and the fair value of plan assets for pension plans | May 31, 2021 2020 Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 159.1 $ 149.2 Service cost 2.5 2.8 Interest cost 3.1 3.8 Participant contributions 0.3 0.3 Net actuarial (gain) loss (4.4) 10.1 Benefits and administrative payments (4.8) (4.9) Settlements (2.0) (2.2) Curtailment (2.5) — Foreign currency translation adjustment 7.7 — Projected benefit obligation at end of year $ 159.0 $ 159.1 Change in the fair value of plan assets: Fair value of plan assets at beginning of year $ 131.8 $ 129.9 Actual return on plan assets 23.8 8.6 Employer contributions 2.7 0.4 Participant contributions 0.3 — Benefits and administrative payments, including settlements (6.8) (7.1) Foreign currency translation adjustment 6.6 — Fair value of plan assets at end of year $ 158.4 $ 131.8 Funded status at end of year $ (0.6) $ (27.3) |
Schedule of amounts recognized in the Consolidated Balance Sheets | May 31, 2021 2020 Other non-current assets $ 10.4 $ — Accrued liabilities (0.4) (0.4) Other liabilities (10.6) (26.9) Funded status at end of year $ (0.6) $ (27.3) Accumulated other comprehensive loss $ 37.8 $ 63.5 |
Schedule of projected and accumulated benefit obligation in excess of plan assets | , May 31, Projected benefit obligation in excess of plan assets 2021 2020 Projected benefit ohbligation $ 88.1 $ 159.1 Fair value of plan assets 77.1 131.8 May 31, Accumulated benefit obligation in excess of plan assets 2021 2020 Projected benefit obligation $ 88.1 $ 159.1 Accumulated benefit obligation 82.1 83.4 Fair value of plan assets 77.1 131.8 |
Schedule of components of pension expense charged to the consolidated statement of income | For the Year Ended May 31, 2021 2020 2019 Service cost $ 2.5 $ 2.8 $ 2.3 Interest cost 3.1 3.8 4.3 Expected return on plan assets (6.6) (6.8) (7.1) Settlements 0.9 1.5 0.1 Amortization of prior service credit — — (0.1) Recognized net actuarial loss 2.3 2.0 1.8 $ 2.2 $ 3.3 $ 1.3 |
Schedule of key weighted-average assumptions used in the measurement of the entity's projected benefit obligations | May 31, 2021 2020 Discount rate: Domestic plans 2.87 % 2.83 % International plan 1.20 1.20 Rate of compensation increase: Domestic plans n/a n/a International plans 3.00 % 3.00 % |
Schedule of the weighted average assumptions used to determine net periodic pension expense | For the Year Ended May 31, 2021 2020 2019 Discount rate: Domestic plans 2.83 % 3.67 % 4.05 % International plan 1.20 1.50 1.90 Expected long-term rate on plan assets: Domestic plans 7.25 % 7.25 % 7.25 % International plan 2.50 2.90 3.60 |
Schedule of actual asset allocation and target allocations | May 31, Target Asset 2021 2020 Allocation Equity securities 62 % 60 % 45 – 75 % Fixed income securities 18 20 15 – 45 % Other 20 20 0 – 25 % 100 % 100 % |
Schedule of fair value of pension plan assets | The following table sets forth by level, within the fair value hierarchy, pension plan assets at their fair value as of May 31, 2021: Level 1 (1) Level 2 (2) Level 3 (3) Total Equity securities: U.S. mutual funds $ 40.3 $ — $ — $ 40.3 International mutual funds 11.1 — — 11.1 Fixed income: Government securities and corporate bond mutual funds — 13.3 — 13.3 Funds-of-funds — 61.3 — 61.3 Insurance annuities — — 15.6 15.6 Cash and cash equivalents 0.7 — — 0.7 $ 52.1 $ 74.6 $ 15.6 142.3 Other investments measured at net asset value (4) 16.1 Total pension plan assets $ 158.4 8. Employee Benefit Plans (Continued) The following table sets forth by level, within the fair value hierarchy, pension plan assets at their fair value as of May 31, 2020: Level 1 (1) Level 2 (2) Level 3 (3) Total Equity securities: U.S. mutual funds $ 31.5 $ — $ — $ 31.5 International mutual funds 7.6 — — 7.6 Fixed income: Government securities and corporate bond mutual funds 8.4 4.7 — 13.1 Funds-of-funds — 54.6 — 54.6 Insurance annuities — — 11.7 11.7 Cash and cash equivalents 0.5 — — 0.5 $ 48.0 $ 59.3 $ 11.7 119.0 Other investments measured at net asset value (4) 12.8 Total pension plan assets $ 131.8 (1) Quoted prices in active markets for identical assets that we have the ability to access as of the reporting date. (2) Inputs other than quoted prices included within Level 1 that are directly observable for the asset or indirectly observable through corroboration with observable market data. (3) Unobservable inputs, such as internally developed pricing models or third party valuations for the asset due to little or no market activity for the asset. (4) Other investments measured at net asset value included alternative investments, such as hedge funds, which are valued using the net asset value as a practical expedient. |
Schedule of reconciliation of Level 3 pension assets and other investments measured at net asset value | Hedge Funds Fund-of-funds Insurance Annuities Total Balance as of May 31, 2019 $ 4.2 $ 7.9 $ 9.9 $ 22.0 Purchases — — 1.8 1.8 Sales (0.1) — — (0.1) Return on plan assets related to assets still held at May 31, 2020 0.2 0.6 — 0.8 Balance as of May 31, 2020 4.3 8.5 11.7 24.5 Purchases — — 3.9 3.9 Return on plan assets related to assets still held at May 31, 2021 0.8 2.5 — 3.3 Balance as of May 31, 2021 $ 5.1 $ 11.0 $ 15.6 $ 31.7 |
Schedule of estimated future pension payments | Fiscal Year 2027 to 2022 2023 2024 2025 2026 2031 Estimated future pension payments $ 6.8 $ 6.4 $ 6.0 $ 7.0 $ 7.3 $ 35.0 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
May 31, 2021 | |
Accumulated Other Comprehensive Loss | |
Schedule of changes in accumulated other comprehensive loss ("AOCL") by component | Currency Translation Pension Adjustments Plans Total Balance as of June 1, 2018 $ 0.3 $ (32.3) $ (32.0) Other comprehensive loss before reclassifications (2.4) (8.0) (10.4) Amounts reclassified from AOCL — 1.5 1.5 Total other comprehensive loss (2.4) (6.5) (8.9) Balance as of May 31, 2019 (2.1) (38.8) (40.9) Other comprehensive income (loss) before reclassifications 0.1 (5.0) (4.9) Amounts reclassified from AOCL — 1.2 1.2 Total other comprehensive income (loss) 0.1 (3.8) (3.7) Balance as of May 31, 2020 (2.0) (42.6) (44.6) Other comprehensive income before reclassifications 5.9 4.4 10.3 Amounts reclassified from AOCL — 16.0 16.0 Total other comprehensive income 5.9 20.4 26.3 Balance as of May 31, 2021 $ 3.9 $ (22.2) $ (18.3) |
Other Non-current Assets (Table
Other Non-current Assets (Tables) | 12 Months Ended |
May 31, 2021 | |
Other Non-current Assets | |
Schedule of other non-current assets | May 31, 2021 2020 License fees $ 25.0 $ 4.1 Contract assets 21.6 22.4 Investments in joint ventures 18.3 17.8 Assets under deferred compensation plan 12.6 13.1 Pension assets 10.4 — Cash surrender value of life insurance 5.5 15.6 Other 5.4 8.5 $ 98.8 $ 81.5 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
May 31, 2021 | |
Leases | |
Schedule of operating lease cost | For the Year Ended May 31, 2021 2020 Operating lease cost $ 16.4 $ 18.4 Short-term lease cost 1.7 5.3 Variable lease cost 3.5 7.4 $ 21.6 $ 31.1 |
Schedule of maturities of our lease payments | With the exception of a land lease for one of our airframe maintenance facilities that expires in 2108, our operating leases expire at various dates through 2034. Maturities of our operating lease payments as of May 31, 2021 are as follows: 2022 $ 13.7 2023 11.9 2024 9.9 2025 8.8 2026 7.7 Thereafter 32.9 Total undiscounted payments 84.9 Less: Imputed interest (13.5) Present value of minimum lease payments 71.4 Less: Operating lease liabilities – current (11.5) Operating lease liabilities – non-current $ 59.9 |
Schedule of supplemental cash flow information related to leases | For the Year Ended May 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ 15.3 $ 16.5 Operating lease liabilities arising from obtaining ROU assets 5.2 13.0 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
May 31, 2021 | |
Business Segment Information | |
Schedule of selected financial information for each reportable segment | Selected financial information for each segment is as follows: For the Year Ended May 31, 2021 2020 2019 Net sales: Aviation Services $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services 98.6 107.8 131.2 $ 1,652.3 $ 2,072.0 $ 2,051.8 For the Year Ended May 31, 2021 2020 2019 Gross profit: Aviation Services $ 263.2 $ 267.3 $ 313.6 Expeditionary Services 12.7 1.9 16.2 $ 275.9 $ 269.2 $ 329.8 May 31, 2021 2020 Total assets: Aviation Services $ 1,357.2 $ 1,502.5 Expeditionary Services 73.0 103.6 Corporate and discontinued operations 109.5 472.9 $ 1,539.7 $ 2,079.0 For the Year Ended May 31, 2021 2020 2019 Capital expenditures: Aviation Services $ 8.1 $ 16.9 $ 15.1 Expeditionary Services 3.1 5.4 1.4 Corporate 0.1 1.3 0.9 Total continuing operations 11.3 23.6 17.4 Discontinued operations — — 0.5 $ 11.3 $ 23.6 $ 17.9 For the Year Ended May 31, 2021 2020 2019 Depreciation and amortization: 1 Aviation Services $ 33.7 $ 39.2 $ 37.5 Expeditionary Services 2.3 3.7 4.1 Corporate 9.5 8.1 14.7 $ 45.5 $ 51.0 $ 56.3 1 Includes amortization of stock-based compensation. |
Schedule of reconciliation of segment gross profit to income from continuing operations before provision for income taxes | For the Year Ended May 31, 2021 2020 2019 Segment gross profit $ 275.9 $ 269.2 $ 329.8 Provision for doubtful accounts (8.5) (5.4) (15.8) Selling, general and administrative (182.4) (220.6) (215.4) Earnings (Loss) from joint ventures 0.2 (1.9) (0.3) Loss on sale of business (20.2) — — Other income (expenses), net 4.3 (2.1) (0.8) Interest expense (5.0) (9.3) (9.5) Interest income 0.2 0.5 1.0 Income from continuing operations before provision for income taxes $ 64.5 $ 30.4 $ 89.0 |
Schedule of sales to the U.S. Department of Defense, other U.S. government agencies and their contractors by segment | For the Year Ended May 31, 2021 2020 2019 Aviation Services $ 657.0 $ 588.7 $ 455.9 Expeditionary Services 81.8 79.5 90.3 $ 738.8 $ 668.2 $ 546.2 Percentage of total sales 44.7 % 32.2 % 26.6 % |
Schedule of sales across the major customer markets for each of our reportable segments | For the Year Ended May 31, 2021 2020 2019 Aviation Services: Commercial $ 793.9 $ 1,268.9 $ 1,342.3 Government and defense 759.8 695.3 578.3 $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services: Commercial $ 12.5 $ 24.3 $ 31.6 Government and defense 86.1 83.5 99.6 $ 98.6 $ 107.8 $ 131.2 |
Schedule of sales by type of product/service | For the Year Ended May 31, 2021 2020 2019 Aviation supply chain $ 1,172.7 $ 1,434.3 $ 1,395.2 Maintenance, repair and overhaul services 381.0 529.9 525.4 Mobility products 98.6 107.8 131.2 $ 1,652.3 $ 2,072.0 $ 2,051.8 |
Schedule of geographic data | For the Year Ended May 31, 2021 2020 2019 Aviation Services: North America $ 1,255.7 $ 1,505.6 $ 1,426.8 Europe/Africa 207.5 330.8 323.4 Other 90.5 127.8 170.4 $ 1,553.7 $ 1,964.2 $ 1,920.6 Expeditionary Services: North America $ 95.9 $ 98.4 $ 124.1 Europe/Africa 2.6 9.0 5.8 Other 0.1 0.4 1.3 $ 98.6 $ 107.8 $ 131.2 May 31, 2021 2020 Long-lived assets: United States $ 419.1 $ 423.9 Europe 83.1 102.1 Other 100.5 114.3 $ 602.7 $ 640.3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Jun. 01, 2018 | May 31, 2021 | May 31, 2020 | Jun. 01, 2019 | May 31, 2018 |
New accounting pronouncements adopted | |||||
Revenue, practical expedient application of ASC 606 | true | ||||
Operating lease ROU assets | $ 75.8 | $ 89.7 | |||
Operating lease liabilities | 59.9 | 70.9 | |||
Other liabilities | 29.5 | 34.4 | |||
Retained earnings | $ 741.7 | $ 706 | |||
ASC 606 | ASC 606 Adjustments | |||||
New accounting pronouncements adopted | |||||
Retained earnings | $ (20.4) | ||||
Cumulative effect adjustment | ASC 842 | |||||
New accounting pronouncements adopted | |||||
Retained earnings | $ 2.5 | ||||
Cumulative effect adjustment | ASC 842 | Right of use including discontinued operations | |||||
New accounting pronouncements adopted | |||||
Operating lease ROU assets | 123.2 | ||||
Operating lease liabilities | 116.8 | ||||
Cumulative effect adjustment | ASC 842 | Held for sale or Disposed | |||||
New accounting pronouncements adopted | |||||
Operating lease ROU assets | 26.6 | ||||
Operating lease liabilities | $ 25.3 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Summary of Significant Accounting Policies | |||
Practical Expedient, Incremental costs of obtaining a contract | true | ||
Practical Expedient, Remaining performance obligations | true | ||
Favorable cumulative catch-up adjustments | $ 16.1 | $ 6.1 | $ 8 |
Unfavorable cumulative catch-up adjustments | (4.1) | (2.2) | (2.1) |
Net cumulative catch-up adjustments | $ 12 | $ 3.9 | $ 5.9 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Contract Assets and Liabilities and Remaining Performance Obligations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Aug. 31, 2021 | May 31, 2021 | May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Contract Assets and Liabilities | |||||
Contract assets - current | $ 71.9 | $ 49.3 | |||
Contract assets - non-current | 21.6 | 22.4 | |||
Contract liabilities - current | (25.9) | (11.2) | |||
Deferred revenue on long-term contracts | (5.4) | (88) | |||
Net contract assets (liabilities) | 62.2 | (27.5) | |||
Change in contract assets - current | 22.6 | ||||
Change in contract assets - non-current | (0.8) | ||||
Change in contract liabilities - current | (14.7) | ||||
Change in contract liabilities - non-current | 82.6 | ||||
Change in net contract assets (liabilities) | 89.7 | ||||
Forward loss reserves | 16.4 | 22.1 | $ 16 | $ 7.5 | |
PBH forward loss reserve | 3 | ||||
Change in Contract with Customer, Liability | |||||
Deferred revenue at beginning of period | $ (31.3) | (99.2) | (96.4) | ||
Revenue deferred | (251.4) | (417.2) | |||
Revenue recognized | (318.2) | (410.5) | |||
Other | 1.1 | 3.9 | |||
Deferred revenue at end of period | (31.3) | (99.2) | |||
Remaining Performance Obligations | |||||
Remaining performance obligation | $ 750,000 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-06-01 | |||||
Remaining Performance Obligations | |||||
Remaining performance obligation (as a percent) | 40.00% | ||||
Expected timing of satisfaction of remaining performance obligation | 12 months | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-06-01 | |||||
Remaining Performance Obligations | |||||
Remaining performance obligation (as a percent) | 45.00% | ||||
Expected timing of satisfaction of remaining performance obligation | 3 years | ||||
Accrued liabilities | |||||
Contract Assets and Liabilities | |||||
PBH forward loss reserve | $ 2.8 | ||||
Other liabilities | |||||
Contract Assets and Liabilities | |||||
PBH forward loss reserve | 0.2 | ||||
PBH contracts | |||||
Contract Assets and Liabilities | |||||
Contract Charges on non-achievement of minimum volume guarantees | 4.5 | ||||
Customer contract termination and restructuring costs | 5.7 | $ 31.3 | |||
PBH forward loss reserve | 2.9 | ||||
PBH contracts | Accrued liabilities | |||||
Contract Assets and Liabilities | |||||
PBH forward loss reserve | 1.5 | ||||
PBH contracts | Other liabilities | |||||
Contract Assets and Liabilities | |||||
PBH forward loss reserve | $ 1.4 | ||||
PBH contracts | Minimum | Forecast | |||||
Contract Assets and Liabilities | |||||
Customer contract termination and restructuring costs | 5 | ||||
PBH contracts | Maximum | Forecast | |||||
Contract Assets and Liabilities | |||||
Customer contract termination and restructuring costs | $ 10 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Financial Instruments (Details) - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 | May 31, 2019 | May 31, 2018 |
Accounts receivable, net | $ 166.7 | $ 171.9 | ||
Allowance for doubtful accounts | 16.4 | 22.1 | $ 16 | $ 7.5 |
U.S. Government | ||||
Accounts receivable, net | 49.3 | 61.3 | ||
U.S. Government | Trade receivables | ||||
Accounts receivable | 24.1 | 33.9 | ||
U.S. Government | Unbilled receivables | ||||
Unbilled receivables | 25.2 | 27.4 | ||
All other customers | ||||
Accounts receivable, net | 117.4 | 110.6 | ||
All other customers | Trade receivables | ||||
Accounts receivable | 104.9 | 81.7 | ||
All other customers | Unbilled receivables | ||||
Unbilled receivables | 12.5 | $ 28.9 | ||
Accounts receivable | Former commercial program customers | ||||
Past due accounts receivable | 4.7 | |||
Allowance for doubtful accounts | $ 8.8 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Allowance for Doubtful Accounts | |||
Other liabilities | $ 29.5 | $ 34.4 | |
Balance, beginning of year | 22.1 | 16 | $ 7.5 |
Provision charged to operations | 8.5 | 5.4 | 15.8 |
Recoveries, deductions for accounts written off and other reclassifications | (14.2) | 0.7 | (7.3) |
Balance, end of year | $ 16.4 | 22.1 | 16 |
European airline customer | |||
Allowance for Doubtful Accounts | |||
Impairment of non-current contract assets | 7.6 | ||
Other liabilities | 1.5 | ||
Balance, beginning of year | $ 3.3 | ||
Provision charged to operations | 12.4 | ||
Balance, end of year | $ 3.3 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Goodwill (Details) $ in Millions | 12 Months Ended | |
May 31, 2021USD ($)item | May 31, 2020USD ($) | |
Goodwill by reportable segment | ||
Number of reporting units | item | 3 | |
Goodwill impairment charges | $ 0 | $ 0 |
Goodwill, Beginning Balance | 115.7 | 116.2 |
Sale of Composites | (0.5) | |
Foreign currency translation adjustments | 4.1 | (0.5) |
Goodwill, Ending Balance | $ 119.3 | 115.7 |
Aviation Services | ||
Goodwill by reportable segment | ||
Number of reporting units | item | 2 | |
Goodwill, Beginning Balance | $ 96.4 | 96.9 |
Foreign currency translation adjustments | 4.1 | (0.5) |
Goodwill, Ending Balance | $ 100.5 | 96.4 |
Expeditionary Services | ||
Goodwill by reportable segment | ||
Number of reporting units | item | 1 | |
Goodwill, Beginning Balance | $ 19.3 | 19.3 |
Sale of Composites | (0.5) | |
Goodwill, Ending Balance | $ 18.8 | $ 19.3 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Intangibles (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2021 | May 31, 2020 | May 31, 2019 | Jun. 01, 2019 | |
Amortizable intangible assets: | ||||
Accumulated Amortization | $ (19.7) | $ (16.5) | ||
Unamortized intangible assets: | ||||
Trademarks | 1.2 | 1.1 | ||
Intangible Assets, Gross (Excluding Goodwill) | 24.2 | 22.5 | ||
Intangible Assets, Net (Excluding Goodwill), Total | 4.5 | 6 | ||
Impairment charge related to exit of certain product line | 5.4 | |||
Amortization expense | 1.8 | 2.3 | $ 3.9 | |
Estimated aggregate amortization expense for intangible assets in each of the next five fiscal years | ||||
2022 | 1.1 | |||
2023 | 0.5 | |||
2024 | 0.3 | |||
2025 | 0.3 | |||
2026 | 0.3 | |||
Customer relationships | ||||
Amortizable intangible assets: | ||||
Gross carrying amount | 23 | 21.4 | ||
Accumulated Amortization | (19.7) | (16.5) | ||
Net carrying amount | $ 3.3 | $ 4.9 | ||
Minimum | Customer relationships | ||||
Unamortized intangible assets: | ||||
Useful life | 5 years | |||
Maximum | Customer relationships | ||||
Unamortized intangible assets: | ||||
Useful life | 20 years | |||
ASC 842 | ||||
Unamortized intangible assets: | ||||
Net intangible asset for lease agreements reclassified to ROU asset | $ 8.5 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 |
Inventories | ||
Aircraft and engine parts, components and finished goods | $ 468.4 | $ 556.6 |
Raw materials and parts | 53 | 45.9 |
Work-in-process | 19.2 | 20.6 |
Total inventories | $ 540.6 | $ 623.1 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Rotable Assets and Equipment under Leases (Details) | 12 Months Ended |
May 31, 2021 | |
Minimum | |
Rotable Assets and Equipment under leases | |
Period of short-term leases | 1 month |
Maximum | |
Rotable Assets and Equipment under leases | |
Period of short-term leases | 12 months |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Property, Plant and Equipment and Investments (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Investments | ||
Rotable asset impairment charges | $ 9.1 | $ 8.1 |
Future rent due to us under non-cancelable leases | ||
2022 | 21 | |
2023 | 21.7 | |
2024 | 21.1 | |
2025 | 21.1 | |
2026 | $ 19.1 | |
Building and improvements | Minimum | ||
Property, Plant and Equipment | ||
Useful life | 10 years | |
Building and improvements | Maximum | ||
Property, Plant and Equipment | ||
Useful life | 40 years | |
Equipment | Minimum | ||
Property, Plant and Equipment | ||
Useful life | 3 years | |
Equipment | Maximum | ||
Property, Plant and Equipment | ||
Useful life | 10 years | |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment | ||
Useful life | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment | ||
Useful life | 10 years | |
Capitalized software | Minimum | ||
Property, Plant and Equipment | ||
Useful life | 3 years | |
Capitalized software | Maximum | ||
Property, Plant and Equipment | ||
Useful life | 10 years | |
Rotable assets | ||
Investments | ||
Rotable asset impairment charges | $ 5.8 | $ 1.9 |
Additional impairment charges | 1.4 | |
Manufacturing facilities | ||
Investments | ||
Impairment and related charges | $ 2.6 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Restructuring and Other Exit Costs, Supplemental Information on Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Supplemental Information on Cash Flows | |||
Interest paid | $ 4.3 | $ 8.6 | $ 8.8 |
Income taxes paid | 8.2 | 14.3 | 7 |
Income tax refunds and interest received | 8.3 | 7 | $ 6.4 |
Cost of sales and services and Selling, general and administrative | |||
Restructuring and Impairment Costs | |||
Severance and furlough-related costs | $ 9 | $ 7.1 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Treasury Stock (Details) - Treasury Stock - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Total increase (decrease) in treasury stock | $ 8.6 | $ (5) | $ 7 |
Repurchase of treasury shares | 5.6 | 4.1 | 10.3 |
Restricted stock activity | 5.6 | 0.8 | (0.8) |
Re-issuance of treasury stock upon exercise of stock options, net of shares withheld to satisfy statutory tax obligations | $ 3 | $ 8.3 | $ 4.1 |
Sale of Receivables (Details)
Sale of Receivables (Details) - Purchase Agreement - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2021 | May 31, 2020 | May 31, 2019 | Feb. 23, 2018 | |
Sale of Receivables | ||||
Retained interests | $ 0 | |||
Sale of receivables | 440.6 | $ 746.4 | $ 744.2 | |
Remitted receivables | 476.3 | 758.3 | 729.7 | |
Amount collected | 8.4 | 20 | ||
Maximum | ||||
Sale of Receivables | ||||
Sale of receivables | $ 150 | |||
Other expense, net | ||||
Sale of Receivables | ||||
Discount and other fees | $ 0.4 | $ 1.8 | $ 2.2 |
Financing Arrangements (Details
Financing Arrangements (Details) $ in Millions | Oct. 18, 2017USD ($)facility | May 31, 2021USD ($) | May 31, 2020USD ($) | May 31, 2019USD ($) |
Financing Arrangements | ||||
Total debt | $ 135.2 | $ 602 | ||
Debt issuance costs, net | (1.5) | (2) | ||
Long-term debt | 133.7 | 600 | ||
Long-term debt | 133.7 | 600 | ||
Term loan | ||||
Financing Arrangements | ||||
Total debt | 25.7 | 22.5 | ||
Maximum borrowing capacity | $ 31 | |||
Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | ||||
Financing Arrangements | ||||
Total debt | 109.5 | 579.5 | ||
Foreign Line of Credit | ||||
Financing Arrangements | ||||
Amount outstanding | 10.4 | |||
CDOR | Minimum | ||||
Financing Arrangements | ||||
Basis spread on variable rate (as a percent) | 1.25% | |||
CDOR | Maximum | ||||
Financing Arrangements | ||||
Basis spread on variable rate (as a percent) | 2.25% | |||
Prime Rate | Minimum | ||||
Financing Arrangements | ||||
Basis spread on variable rate (as a percent) | 0.25% | |||
Prime Rate | Maximum | ||||
Financing Arrangements | ||||
Basis spread on variable rate (as a percent) | 1.25% | |||
Revolving credit facility | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | ||||
Financing Arrangements | ||||
Total debt | 109.5 | |||
Maximum borrowing capacity | 600 | |||
Line Of Credit Facility Additional Borrowing Capacity | 300 | |||
Line Of Credit Facility Maximum And Additional Borrowing Capacity | 900 | |||
Maximum amount borrowed | 579.5 | 579.5 | $ 287 | |
Average daily borrowings | $ 257.5 | $ 280.7 | $ 207.8 | |
Average interest rate during the year | 1.20% | 2.62% | 3.41% | |
Remaining borrowing capacity | $ 471.3 | |||
Revolving credit facility | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | Letter of Credit | ||||
Financing Arrangements | ||||
Total debt | $ 19.2 | |||
Revolving credit facility | Eurodollar rate | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | Minimum | ||||
Financing Arrangements | ||||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.875% | |||
Revolving credit facility | Eurodollar rate | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | Maximum | ||||
Financing Arrangements | ||||
Debt Instrument Basis Spread On Variable Rate After Amendment | 1.75% | |||
Revolving credit facility | Base rate | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | Minimum | ||||
Financing Arrangements | ||||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.00% | |||
Revolving credit facility | Base rate | Revolving Credit Facility expiring September 25, 2024 with interest payable monthly | Maximum | ||||
Financing Arrangements | ||||
Debt Instrument Basis Spread On Variable Rate After Amendment | 0.75% | |||
MRO facilities acquired in Canada owned by Premier Aviation | ||||
Financing Arrangements | ||||
Number of facilities acquired | facility | 2 |
Equity (Details)
Equity (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
May 31, 2021USD ($)item$ / sharesshares | May 31, 2020USD ($)$ / sharesshares | May 31, 2019USD ($)$ / sharesshares | |
Stock-Based Compensation | |||
Total number of shares granted since inception | 11,149,000 | ||
2013 Stock Plan | |||
Stock-Based Compensation | |||
Shares available for future grant | 1,850,828 | ||
Stock options | |||
Stock-Based Compensation | |||
Expiration term | 10 years | ||
First number of equal annual increments in which stock options are exercisable | item | 3 | ||
Commencement period after the date of grant for annual increments of stock options becoming exercisable | 1 year | ||
Weighted average fair value of stock options granted (in dollars per share) | $ / shares | $ 5.89 | $ 10.30 | $ 13.60 |
Assumptions used in the Black-Scholes option pricing models to estimate the fair value of each stock option grant | |||
Risk-free interest rate | 0.40% | 1.90% | 2.70% |
Expected volatility of common stock | 40.20% | 32.00% | 30.80% |
Dividend yield | 1.60% | 0.80% | 0.60% |
Expected option term in years | 4 years 9 months 18 days | 4 years 6 months | 4 years 6 months |
Shares | |||
Outstanding at beginning of year (in shares) | 1,851,000 | 1,777,000 | 2,082,000 |
Granted (in shares) | 936,170 | 414,460 | 300,240 |
Exercised (in shares) | (110,000) | (300,000) | (571,000) |
Cancelled (in shares) | (65,000) | (40,000) | (34,000) |
Outstanding at end of year (in shares) | 2,612,000 | 1,851,000 | 1,777,000 |
Options exercisable at end of year (in shares) | 1,371,000 | 1,133,000 | 981,000 |
Weighted Average Exercise Price | |||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 32.74 | $ 30.37 | $ 26.72 |
Granted (in dollars per share) | $ / shares | 18.94 | 37.66 | 47.84 |
Exercised (in dollars per share) | $ / shares | 23.93 | 24.99 | 25.56 |
Cancelled (in dollars per share) | $ / shares | 25.59 | 36.72 | 42.02 |
Outstanding at end of year (in dollars per share) | $ / shares | 28.34 | 32.74 | 30.37 |
Options exercisable at end of year (in dollars per share) | $ / shares | $ 31.56 | $ 28.32 | $ 25.28 |
Stock options, additional disclosures | |||
Total fair value of stock options vested | $ | $ 3.9 | $ 3.7 | $ 5.6 |
Total intrinsic value of stock options exercised | $ | 1.5 | 6.2 | 12.2 |
Aggregate intrinsic value of options outstanding | $ | 36.6 | 0.5 | |
Tax expense (benefit) realized from stock options exercised | $ | 0.7 | (2.1) | (2.7) |
Unearned compensation not yet recognized | $ | $ 5.4 | ||
Average remaining expensed period of unearned compensation | 1 year 4 months 24 days | ||
Stock options | Selling, general and administrative expenses | |||
Stock options, additional disclosures | |||
Compensation expense | $ | $ 4 | 3.9 | 4.1 |
Restricted stock | |||
Stock-Based Compensation | |||
Granted (in shares) | 290,000 | ||
Stock options, additional disclosures | |||
Unearned compensation not yet recognized | $ | $ 2.5 | ||
Average remaining expensed period of unearned compensation | 2 years | ||
Restricted stock | Selling, general and administrative expenses | |||
Stock options, additional disclosures | |||
Compensation expense | $ | $ 5.2 | $ 3.4 | $ 9.4 |
Restricted stock | 2013 Stock Plan | |||
Stock-Based Compensation | |||
Granted (in shares) | 5,058,230 | ||
Restricted stock | Minimum | |||
Stock-Based Compensation | |||
Vesting period | 1 year | ||
Restricted stock | Maximum | |||
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Performance-based restricted stock | |||
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Performance Based Restricted Stock | Executives and other key employees | |||
Stock-Based Compensation | |||
Granted (in shares) | 0 | 52,475 | 43,680 |
Equity - Restricted Stock (Deta
Equity - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Restricted stock | |||
Number of Shares | |||
Nonvested at the beginning of the period ( in shares) | 385,000 | ||
Granted (in shares) | 290,000 | ||
Vested (in shares) | (292,000) | ||
Forfeited (in shares) | (14,000) | ||
Nonvested at the end of the period (in shares) | 369,000 | 385,000 | |
Weighted Average Fair Value on Grant Date | |||
Nonvested at the beginning of the period (in dollars per share) | $ 31.70 | ||
Granted (in dollars per share) | 23.43 | ||
Vested (in dollars per share) | 32.15 | ||
Forfeited (in dollars per share) | 26.60 | ||
Nonvested at the end of the period (in dollars per share) | $ 30.12 | $ 31.70 | |
Unearned compensation not yet recognized | $ 2.5 | ||
Average remaining expensed period of unearned compensation | 2 years | ||
Restricted stock | Selling, general and administrative expenses | |||
Restricted Stock | |||
Compensation expense | $ 5.2 | $ 3.4 | $ 9.4 |
Performance Based Restricted Stock | Executives and other key employees | |||
Number of Shares | |||
Granted (in shares) | 0 | 52,475 | 43,680 |
Time Based Restricted Stock | Board of Directors | |||
Number of Shares | |||
Granted (in shares) | 72,021 | 44,123 | 29,128 |
Time Based Restricted Stock | Executives and other key employees | |||
Number of Shares | |||
Granted (in shares) | 144,255 | 56,535 | 46,470 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Current: | |||
U.S. federal statutory income tax rate (as a percent) | 21.00% | 21.00% | 21.00% |
Federal | $ 5,200 | $ 1,400 | $ 4,800 |
State | 1,200 | 900 | 100 |
Foreign | 3,400 | 2,800 | 5,000 |
Total current | 9,800 | 5,100 | 9,900 |
Deferred | 8,400 | 500 | (5,000) |
Provision for income tax | 18,200 | 5,600 | 4,900 |
Reasons for difference between the provision for income taxes on pre-tax income from the amount computed by applying the U.S. federal statutory tax rate | |||
Provision for income tax at the federal statutory rate | 13,500 | 6,400 | 18,700 |
Tax expense (benefits) from stock-based compensation | 700 | (2,100) | (2,700) |
State income taxes, net of federal benefit and refunds | 2,400 | 1,100 | 1,900 |
Change in valuation allowance for state deferred tax assets | (100) | (6,900) | |
Effective settlement of prior tax positions | (4,700) | ||
Other | 1,600 | 300 | (1,400) |
Provision for income tax | 18,200 | 5,600 | 4,900 |
Income before provision for income taxes | 64,500 | 30,400 | 89,000 |
Deferred tax assets: | |||
Operating lease liabilities | 20,700 | 24,900 | |
Employee and retirement benefits | 10,400 | 13,300 | |
State net operating losses | 6,800 | 9,400 | |
Allowance for doubtful accounts | 4,000 | 4,100 | |
Credits and incentives | 1,100 | 8,200 | |
Other | 1,500 | 5,000 | |
Total deferred tax assets | 44,500 | 64,900 | |
Deferred tax liabilities: | |||
Tangible and intangible assets | (31,900) | (35,000) | |
ROU operating lease assets | 21,900 | 26,200 | |
Other | (200) | (200) | |
Total deferred tax liabilities | (54,000) | (61,400) | |
Net deferred tax assets (liabilities) | 3,500 | ||
Net deferred tax assets (liabilities) | $ (9,500) | ||
Minimum | |||
Deferred tax liabilities: | |||
Period for net operating losses carry forward (in years) | 5 years | ||
Maximum | |||
Deferred tax liabilities: | |||
Period for net operating losses carry forward (in years) | 20 years | ||
Accrued Liabilities | |||
Deferred tax liabilities: | |||
Income tax payable | $ 700 | ||
Prepaid expenses and other current assets | |||
Deferred tax liabilities: | |||
Income tax receivable | 7,900 | ||
Domestic | |||
Reasons for difference between the provision for income taxes on pre-tax income from the amount computed by applying the U.S. federal statutory tax rate | |||
Income before provision for income taxes | 43,700 | 23,600 | 68,900 |
Foreign | |||
Reasons for difference between the provision for income taxes on pre-tax income from the amount computed by applying the U.S. federal statutory tax rate | |||
Income before provision for income taxes | $ 20,800 | $ 6,800 | $ 20,100 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Earnings per Share | |||
Effect to the participating securities as result of net loss | $ 0 | ||
Basic and Diluted EPS: | |||
Income (Loss) from continuing operations | 46.3 | $ 24.8 | $ 84.1 |
Less income attributable to participating shares | (0.4) | (0.1) | (0.4) |
Income from continuing operations attributable to common stockholders | 45.9 | 24.7 | 83.7 |
Loss from discontinued operations attributable to common stockholders | (10.5) | (20.4) | (76.6) |
Net income (loss) attributable to common stockholders for earnings per share | $ 35.4 | $ 4.3 | $ 7.1 |
Weighted Average Shares: | |||
Weighted average common shares outstanding - basic | 35,000,000 | 34,800,000 | 34,500,000 |
Additional shares from the assumed exercise of stock options | 300,000 | 200,000 | 400,000 |
Weighted average common shares outstanding - diluted | 35,300,000 | 35,000,000 | 34,900,000 |
Earnings per share - basic: | |||
Earnings from continuing operations | $ 1.31 | $ 0.71 | $ 2.42 |
Loss from discontinued operations | (0.30) | (0.59) | (2.22) |
Earnings per share - basic | 1.01 | 0.12 | 0.20 |
Earnings (Loss) per share - diluted: | |||
Earnings from continuing operations | 1.30 | 0.71 | 2.40 |
Loss from discontinued operations | (0.30) | (0.58) | (2.19) |
Earnings per share - diluted | $ 1 | $ 0.13 | $ 0.21 |
Antidilutive shares excluded from the computation of diluted earnings per share (in shares) | 1,054,400 | 669,400 | 273,400 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Estimated amounts that will be amortized from accumulated other comprehensive loss into expense over the next fiscal year | |||
Estimated amount of net actuarial loss | $ 1.6 | ||
Cash balance pension plan | |||
Employee benefit plans | |||
Interest crediting rate as a percentage of average 30-year treasury rate | 100.00% | ||
Average period of treasury rate used in determination of interest crediting rate | 30 years | ||
Average interest crediting rate (as a percent) | 4.46% | ||
Defined Benefit Pension Plans | |||
Change in projected benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 159.1 | $ 149.2 | |
Service cost | 2.5 | 2.8 | |
Interest cost | 3.1 | 3.8 | |
Participant contributions | 0.3 | 0.3 | |
Net actuarial (gain) loss | (4.4) | 10.1 | |
Benefits and administrative payments | (4.8) | (4.9) | |
Settlements | (2) | (2.2) | |
Curtailment | (2.5) | ||
Foreign currency translation adjustment | 7.7 | ||
Projected benefit obligation at end of year | 159 | 159.1 | $ 149.2 |
Change in the fair value of plan assets: | |||
Fair value of plan assets at beginning of year | 131.8 | 129.9 | |
Actual return on plan assets | 23.8 | 8.6 | |
Employer contributions | 2.7 | 0.4 | |
Participant contributions | 0.3 | 0.3 | |
Benefits and administrative payments, including settlements | (6.8) | (7.1) | |
Foreign currency translation adjustment | 6.6 | ||
Fair value of plan assets at end of year | 158.4 | 131.8 | 129.9 |
Funded status at end of year | (0.6) | (27.3) | |
Amounts recognized in the Consolidated Balance Sheets | |||
Other non-current assets | (10.4) | ||
Accrued liabilities | (0.4) | (0.4) | |
Other liabilities | (10.6) | (26.9) | |
Funded status at end of year | (0.6) | (27.3) | |
Accumulated other comprehensive loss | 37.8 | 63.5 | |
Accumulated benefit obligation in excess of plan assets | |||
Accumulated benefit obligation | 153 | 151.9 | |
Net Periodic Benefit Cost | |||
Service cost | 2.5 | 2.8 | 2.3 |
Interest cost | 3.1 | 3.8 | 4.3 |
Expected return on plan assets | (6.6) | (6.8) | (7.1) |
Settlements | 0.9 | 1.5 | 0.1 |
Amortization of prior service credit | (0.1) | ||
Recognized net actuarial loss | 2.3 | 2 | 1.8 |
Total | 2.2 | 3.3 | $ 1.3 |
Defined Benefit Pension Plans | Benefit obligation in excess of plan assets | |||
Projected benefit obligation in excess of plan assets | |||
Projected benefit obligation | 88.1 | 159.1 | |
Fair value of plan assets | 77.1 | 131.8 | |
Accumulated benefit obligation in excess of plan assets | |||
Projected benefit obligation | 88.1 | 159.1 | |
Fair value of plan assets | 77.1 | 131.8 | |
Accumulated benefit obligation | $ 82.1 | $ 83.4 | |
Domestic plans | |||
Key weighted-average assumptions used in the measurement of the company's projected benefit obligations | |||
Discount rate (as a percent) | 2.87% | 2.83% | |
Weighted-average assumptions used to determine net periodic pension expense | |||
Discount rate: (as a percent) | 2.83% | 3.67% | 4.05% |
Expected long-term rate on plan assets: (as a percent) | 7.25% | 7.25% | 7.25% |
Plan Assets | |||
Actual asset allocation (as a percent) | 100.00% | 100.00% | |
Domestic plans | Equity securities | |||
Plan Assets | |||
Actual asset allocation (as a percent) | 62.00% | 60.00% | |
Domestic plans | Fixed income securities | |||
Plan Assets | |||
Actual asset allocation (as a percent) | 18.00% | 20.00% | |
Domestic plans | Other | |||
Plan Assets | |||
Actual asset allocation (as a percent) | 20.00% | 20.00% | |
Domestic plans | Minimum | Equity securities | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 45.00% | ||
Domestic plans | Minimum | Fixed income securities | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 15.00% | ||
Domestic plans | Minimum | Other | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 0.00% | ||
Domestic plans | Maximum | Equity securities | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 75.00% | ||
Domestic plans | Maximum | Fixed income securities | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 45.00% | ||
Domestic plans | Maximum | Other | |||
Plan Assets | |||
Target Asset Allocation (as a percent) | 25.00% | ||
International plans | |||
Key weighted-average assumptions used in the measurement of the company's projected benefit obligations | |||
Discount rate (as a percent) | 1.20% | 1.20% | |
Rate of compensation increase (as a percent) | 3.00% | 3.00% | |
Weighted-average assumptions used to determine net periodic pension expense | |||
Discount rate: (as a percent) | 1.20% | 1.50% | 1.90% |
Expected long-term rate on plan assets: (as a percent) | 2.50% | 2.90% | 3.60% |
Employee Benefit Plans - Reconc
Employee Benefit Plans - Reconciliation of Pension Assets (Details) - Defined Benefit Pension Plans - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 | May 31, 2019 |
Employee benefit plans | |||
Fair value of plan assets | $ 158.4 | $ 131.8 | $ 129.9 |
U.S. mutual funds | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 40.3 | 31.5 | |
International mutual funds | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 11.1 | 7.6 | |
Government securities and corporate bond mutual funds | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 13.3 | 13.1 | |
Funds-of-funds | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 61.3 | 54.6 | |
Insurance Annuities | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 15.6 | 11.7 | |
Cash and cash equivalents | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 0.7 | 0.5 | |
Total Investments | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 142.3 | 119 | |
Total pension plan assets | Total | |||
Employee benefit plans | |||
Fair value of plan assets | 158.4 | 131.8 | |
Quoted prices in active markets (Level 1) | U.S. mutual funds | |||
Employee benefit plans | |||
Fair value of plan assets | 40.3 | 31.5 | |
Quoted prices in active markets (Level 1) | International mutual funds | |||
Employee benefit plans | |||
Fair value of plan assets | 11.1 | 7.6 | |
Quoted prices in active markets (Level 1) | Government securities and corporate bond mutual funds | |||
Employee benefit plans | |||
Fair value of plan assets | 8.4 | ||
Quoted prices in active markets (Level 1) | Cash and cash equivalents | |||
Employee benefit plans | |||
Fair value of plan assets | 0.7 | 0.5 | |
Quoted prices in active markets (Level 1) | Total Investments | |||
Employee benefit plans | |||
Fair value of plan assets | 52.1 | 48 | |
Significant other observable inputs (Level 2) | Government securities and corporate bond mutual funds | |||
Employee benefit plans | |||
Fair value of plan assets | 13.3 | 4.7 | |
Significant other observable inputs (Level 2) | Funds-of-funds | |||
Employee benefit plans | |||
Fair value of plan assets | 61.3 | 54.6 | |
Significant other observable inputs (Level 2) | Total Investments | |||
Employee benefit plans | |||
Fair value of plan assets | 74.6 | 59.3 | |
Significant other unobservable inputs (Level 3) | Insurance Annuities | |||
Employee benefit plans | |||
Fair value of plan assets | 15.6 | 11.7 | $ 9.9 |
Significant other unobservable inputs (Level 3) | Total Investments | |||
Employee benefit plans | |||
Fair value of plan assets | 15.6 | 11.7 | |
Measured at net asset value | Other investments measured at net asset value | Total | |||
Employee benefit plans | |||
Fair value of plan assets | $ 16.1 | $ 12.8 |
Employee Benefit Plans - Reco_2
Employee Benefit Plans - Reconciliation of Level 3 Pension Assets (Details) - Defined Benefit Pension Plans - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Change in the fair value of plan assets: | ||
Fair value of plan assets at beginning of year | $ 131.8 | $ 129.9 |
Fair value of plan assets at end of year | 158.4 | 131.8 |
Total | ||
Change in the fair value of plan assets: | ||
Fair value of plan assets at beginning of year | 24.5 | 22 |
Purchases | 3.9 | 1.8 |
Sales | (0.1) | |
Return on plan assets related to assets still held May 31 | 3.3 | 0.8 |
Fair value of plan assets at end of year | 31.7 | 24.5 |
Significant other unobservable inputs (Level 3) | Insurance Annuities | ||
Change in the fair value of plan assets: | ||
Fair value of plan assets at beginning of year | 11.7 | 9.9 |
Purchases | 3.9 | 1.8 |
Fair value of plan assets at end of year | 15.6 | 11.7 |
Measured at net asset value | Hedge Funds | ||
Change in the fair value of plan assets: | ||
Fair value of plan assets at beginning of year | 4.3 | 4.2 |
Sales | (0.1) | |
Return on plan assets related to assets still held May 31 | 0.8 | 0.2 |
Fair value of plan assets at end of year | 5.1 | 4.3 |
Measured at net asset value | Fund-of-funds | ||
Change in the fair value of plan assets: | ||
Fair value of plan assets at beginning of year | 8.5 | 7.9 |
Return on plan assets related to assets still held May 31 | 2.5 | 0.6 |
Fair value of plan assets at end of year | $ 11 | $ 8.5 |
Employee Benefit Plans - Future
Employee Benefit Plans - Future Benefit Payments and Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Defined Contribution Plan | |||
Vesting period | 3 years | ||
Expense charged to statement of income | $ 4 | $ 11.6 | $ 11.4 |
Maximum | |||
Defined Contribution Plan | |||
Maximum percentage of pretax compensation that can be contributed by employees' for 401 (k) defined contribution plan | 75.00% | ||
Maximum matching contribution of employer for 401 (k) defined contribution plan (as a percent) | 5.00% | ||
Defined Benefit Pension Plans | |||
Estimated future pension payments | |||
2022 | 6.8 | ||
2023 | 6.4 | ||
2024 | 6 | ||
2025 | 7 | ||
2026 | 7.3 | ||
2027 to 2031 | 35 | ||
Funded status | |||
Unfunded projected benefit obligation | 0.6 | $ 27.3 | |
Domestic plans | |||
Estimated future pension payments | |||
Anticipated contribution in next fiscal year | $ 2.3 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Accumulated Other Comprehensive Loss | |||
Balance at beginning of the period | $ (44.6) | $ (40.9) | $ (32) |
Other comprehensive income (loss) before reclassifications | 10.3 | (4.9) | (10.4) |
Amounts reclassified from AOCL | 16 | 1.2 | 1.5 |
Total other comprehensive income (loss), net of tax | 26.3 | (3.7) | (8.9) |
Balance at end of the period | (18.3) | (44.6) | (40.9) |
Currency Translation Adjustments | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of the period | (2) | (2.1) | 0.3 |
Other comprehensive income (loss) before reclassifications | 5.9 | 0.1 | (2.4) |
Amounts reclassified from AOCL | 0 | ||
Total other comprehensive income (loss), net of tax | 5.9 | 0.1 | (2.4) |
Balance at end of the period | 3.9 | (2) | (2.1) |
Pensions Plans | |||
Accumulated Other Comprehensive Loss | |||
Balance at beginning of the period | (42.6) | (38.8) | (32.3) |
Other comprehensive income (loss) before reclassifications | 4.4 | (5) | (8) |
Amounts reclassified from AOCL | 16 | 1.2 | 1.5 |
Total other comprehensive income (loss), net of tax | 20.4 | (3.8) | (6.5) |
Balance at end of the period | $ (22.2) | $ (42.6) | $ (38.8) |
Other Non-current Assets (Detai
Other Non-current Assets (Details) - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 |
Other Non-current Assets | ||
License fees | $ 25 | $ 4.1 |
Contract assets | 21.6 | 22.4 |
Investments in joint ventures | 18.3 | 17.8 |
Assets under deferred compensation plan | 12.6 | 13.1 |
Pension assets | 10.4 | |
Cash surrender value of life insurance | 5.5 | 15.6 |
Other | 5.4 | 8.5 |
Other non-current assets | $ 98.8 | $ 81.5 |
Other Non-current Assets - Inve
Other Non-current Assets - Investments in Joint Ventures (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2011 | Nov. 30, 2020 | May 31, 2020 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Investments in Joint Ventures | |||||||
Investments in joint ventures | $ 17.8 | $ 18.3 | $ 17.8 | ||||
License Fees | |||||||
Unamortized balance of the license | 4.1 | 25 | 4.1 | ||||
Cumulative premiums paid | 5.5 | ||||||
Proceeds from termination of split-dollar life insurance agreement | $ 12 | ||||||
Proceeds from termination of split-dollar life insurance agreements premiums paid | 10 | ||||||
Net recoveries of prior taxes paid on behalf of employees | $ 1.3 | ||||||
Unison Industries | |||||||
License Fees | |||||||
Agreement period (in years) | 10 years | ||||||
Payment of license fee | $ 25 | ||||||
License fee capitalized | $ 25 | ||||||
Unamortized balance of the license | 23.8 | ||||||
Owned Through Joint Ventures | |||||||
Investments in Joint Ventures | |||||||
Investments in joint ventures | $ 10 | ||||||
Membership interest in joint ventures (as a percent) | 40.00% | ||||||
Amount of guarantee liability recognized | $ 8.7 | ||||||
Percentage on outstanding debt | 40.00% | ||||||
Loan to joint venture | $ 3.1 | ||||||
License Fees | |||||||
Impairment charge | $ 1.9 | ||||||
Owned Through Joint Ventures | Aircraft | |||||||
Investments in Joint Ventures | |||||||
Payment of evaluation and inspection services | $ 1 | $ 1.6 | $ 0.4 |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Operating lease cost | ||
Operating lease cost | $ 16.4 | $ 18.4 |
Short-term lease cost | 1.7 | 5.3 |
Variable lease cost | 3.5 | 7.4 |
Total operating lease cost | $ 21.6 | $ 31.1 |
Leases - Facilities and equipme
Leases - Facilities and equipment (Details) $ in Millions | 12 Months Ended |
May 31, 2019USD ($) | |
Facilities and Equipment | |
Leases | |
Rental expense | $ 25.9 |
Leases - Maturities (Details)
Leases - Maturities (Details) - USD ($) $ in Millions | May 31, 2021 | May 31, 2020 |
Future minimum payments under operating leases | ||
2022 | $ 13.7 | |
2023 | 11.9 | |
2024 | 9.9 | |
2025 | 8.8 | |
2026 | 7.7 | |
Thereafter | 32.9 | |
Total undiscounted payments | 84.9 | |
Less: Imputed interest | (13.5) | |
Present value of minimum lease payments | $ 71.4 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Operating lease liabilities - non-current | $ 59.9 | $ 70.9 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Leases | ||
Weighted-average remaining lease term (years) | 8 years 6 months | |
Weighted-average discount rate | 3.80% | |
Cash paid for amounts included in the measurement of lease liabilities | $ 15.3 | $ 16.5 |
Operating lease liabilities arising from obtaining ROU assets | $ 5.2 | $ 13 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2020 | May 31, 2021 | |
Aggregate amount of purchase obligations due in each of the next five fiscal years | ||
2022 | $ 102.2 | |
2023 | 208.5 | |
2024 | 53 | |
2025 | 15.2 | |
2026 | 2 | |
Letters of credit and performance bonds outstanding | 30.8 | |
Deferred payroll taxes, CARES Act | 12.4 | |
Owned Through Joint Ventures | ||
Aggregate amount of purchase obligations due in each of the next five fiscal years | ||
Letters of credit and performance bonds outstanding | $ 11.6 | |
Percentage on outstanding debt | 40.00% | |
Amount of guarantee liability recognized | $ 8.7 | |
Covid-19 | Payroll Support Program Promissory Note | ||
Aggregate amount of purchase obligations due in each of the next five fiscal years | ||
Face amount of the debt | $ 8.7 | |
Debt instrument term | 10 years |
Commitments and Contingencies -
Commitments and Contingencies - Government Subsidies (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Aug. 31, 2020 | May 31, 2021 | |
Deferred payroll taxes, CARES Act | $ 12.4 | |
Funding received from Cares Act Payroll Support Program | $ 57.2 | |
Grant proceeds to be used for payment of employee wages, salaries and benefits under the CARES Act | 48.5 | |
Employment subsidies from foreign governments | 7.9 | |
Accrued Liabilities | ||
Deferred payroll taxes, CARES Act | 6.2 | |
Other liabilities | ||
Deferred payroll taxes, CARES Act | 6.2 | |
Covid-19 | Payroll Support Program Promissory Note | ||
Promissory note proceeds | $ 8.7 | |
Term of debt | 10 years | |
Covid-19 | Payroll Support Program Promissory Note | First five years | ||
Interest rate (as a percent) | 1.00% | |
Covid-19 | Payroll Support Program Promissory Note | Six to ten years | ||
Interest rate (as a percent) | 2.00% | |
Covid-19 | Payroll Support Program Promissory Note | First five years, interest in kind | ||
Interest rate (as a percent) | 3.00% | |
Covid-19 | Payroll Support Program Promissory Note | Remaining term, interest in kind | ||
Interest rate (as a percent) | 1.00% | |
Covid-19 | Cost of sales | ||
Contra-expense recognized for grant received from the Payroll Support Program under the CARES Act | 47.5 | |
Covid-19 | Selling, general and administrative expenses | ||
Contra-expense recognized for grant received from the Payroll Support Program under the CARES Act | $ 1 |
Sale of Composites Business (De
Sale of Composites Business (Details) - Composites Business $ in Millions | Aug. 31, 2020USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Loss on the sale of the composites business | $ 20.2 |
Consideration from sale | 1.6 |
Maximum contingent consideration | $ 6.5 |
Contingent consideration period for achievement of target sales | 3 years |
Cash consideration received | $ 0.3 |
Fair value of earn-out consideration | $ 1.3 |
Business Segment Information -
Business Segment Information - Segment reporting (Details) $ in Millions | 12 Months Ended | ||
May 31, 2021USD ($)segment | May 31, 2020USD ($) | May 31, 2019USD ($) | |
Business Segment Information | |||
Number of business segments | segment | 2 | ||
Net sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
Gross profit | 275.9 | 269.2 | 329.8 |
Total assets | 1,539.7 | 2,079 | |
Capital expenditures | 11.3 | 23.6 | 17.9 |
Depreciation and amortization, including amortization of stock-based compensation, Net | 45.5 | 51 | 56.3 |
Continuing operations | |||
Business Segment Information | |||
Capital expenditures | 11.3 | 23.6 | 17.4 |
Discontinued operations | |||
Business Segment Information | |||
Capital expenditures | 0.5 | ||
Aviation Services | |||
Business Segment Information | |||
Net sales | 1,553.7 | 1,964.2 | 1,920.6 |
Gross profit | 263.2 | 267.3 | 313.6 |
Total assets | 1,357.2 | 1,502.5 | |
Aviation Services | Continuing operations | |||
Business Segment Information | |||
Capital expenditures | 8.1 | 16.9 | 15.1 |
Depreciation and amortization, including amortization of stock-based compensation, Gross | 33.7 | 39.2 | 37.5 |
Expeditionary Services | |||
Business Segment Information | |||
Net sales | 98.6 | 107.8 | 131.2 |
Gross profit | 12.7 | 1.9 | 16.2 |
Total assets | 73 | 103.6 | |
Expeditionary Services | Continuing operations | |||
Business Segment Information | |||
Capital expenditures | 3.1 | 5.4 | 1.4 |
Depreciation and amortization, including amortization of stock-based compensation, Gross | 2.3 | 3.7 | 4.1 |
Corporate | Continuing operations | |||
Business Segment Information | |||
Capital expenditures | 0.1 | 1.3 | 0.9 |
Depreciation and amortization, including amortization of stock-based compensation, Gross | 9.5 | 8.1 | $ 14.7 |
Corporate | Discontinued operations | |||
Business Segment Information | |||
Total assets | $ 109.5 | $ 472.9 |
Business Segment Information _2
Business Segment Information - Reconciles of Segment Gross Profit to Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Reconciliation of segment gross profit to income from continuing operations before provision for income taxes | |||
Segment gross profit | $ 275.9 | $ 269.2 | $ 329.8 |
Provision for doubtful accounts | (8.5) | (5.4) | (15.8) |
Selling, general and administrative | (182.4) | (220.6) | (215.4) |
Earnings (Loss) from joint ventures | 0.2 | (1.9) | (0.3) |
Loss on sale of business | (20.2) | ||
Other income (expenses), net | 4.3 | (2.1) | (0.8) |
Interest expense | (5) | (9.3) | (9.5) |
Interest income | 0.2 | 0.5 | 1 |
Income from continuing operations before provision for income taxes | $ 64.5 | $ 30.4 | $ 89 |
Business Segment Information _3
Business Segment Information - Customers Percentage of Sales (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Business Segment Information | |||
Net sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
U.S. Department of Defense, other U.S. government agencies and their contractors | |||
Business Segment Information | |||
Net sales | 738.8 | 668.2 | 546.2 |
Aviation Services | |||
Business Segment Information | |||
Net sales | 1,553.7 | 1,964.2 | 1,920.6 |
Aviation Services | U.S. Department of Defense, other U.S. government agencies and their contractors | |||
Business Segment Information | |||
Net sales | 657 | 588.7 | 455.9 |
Expeditionary Services | |||
Business Segment Information | |||
Net sales | 98.6 | 107.8 | 131.2 |
Expeditionary Services | U.S. Department of Defense, other U.S. government agencies and their contractors | |||
Business Segment Information | |||
Net sales | $ 81.8 | $ 79.5 | $ 90.3 |
Customer | Total sales | U.S. Department of Defense, other U.S. government agencies and their contractors | |||
Business Segment Information | |||
Percentage of total sales | 44.70% | 32.20% | 26.60% |
Business Segment Information _4
Business Segment Information - Sales by Product and Services (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Net sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
Aviation supply chain | |||
Net sales | 1,172.7 | 1,434.3 | 1,395.2 |
Maintenance, repair and overhaul services | |||
Net sales | 381 | 529.9 | 525.4 |
Mobility products | |||
Net sales | $ 98.6 | $ 107.8 | $ 131.2 |
Business Segment Information _5
Business Segment Information - Geographic Data (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Business Segment Information | |||
Net sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
Long-lived assets | 602.7 | 640.3 | |
United States | |||
Business Segment Information | |||
Long-lived assets | 419.1 | 423.9 | |
Europe | |||
Business Segment Information | |||
Long-lived assets | 83.1 | 102.1 | |
Other | |||
Business Segment Information | |||
Long-lived assets | 100.5 | 114.3 | |
Foreign countries | |||
Business Segment Information | |||
Net sales | $ 370.5 | $ 591.8 | $ 661.8 |
Foreign countries | Total sales | Geographic concentration | |||
Business Segment Information | |||
Percentage of total sales | 22.40% | 28.60% | 32.30% |
Aviation Services | |||
Business Segment Information | |||
Net sales | $ 1,553.7 | $ 1,964.2 | $ 1,920.6 |
Aviation Services | North America | |||
Business Segment Information | |||
Net sales | 1,255.7 | 1,505.6 | 1,426.8 |
Aviation Services | Europe | |||
Business Segment Information | |||
Net sales | 207.5 | 330.8 | 323.4 |
Aviation Services | Other | |||
Business Segment Information | |||
Net sales | 90.5 | 127.8 | 170.4 |
Expeditionary Services | |||
Business Segment Information | |||
Net sales | 98.6 | 107.8 | 131.2 |
Expeditionary Services | North America | |||
Business Segment Information | |||
Net sales | 95.9 | 98.4 | 124.1 |
Expeditionary Services | Europe | |||
Business Segment Information | |||
Net sales | 2.6 | 9 | 5.8 |
Expeditionary Services | Other | |||
Business Segment Information | |||
Net sales | $ 0.1 | $ 0.4 | $ 1.3 |
Business Segment Information _6
Business Segment Information - Sales and Gross Profit (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Disaggregation of revenue by major customer markets | |||
Sales | $ 1,652.3 | $ 2,072 | $ 2,051.8 |
Gross profit | 275.9 | 269.2 | 329.8 |
Aviation Services | |||
Disaggregation of revenue by major customer markets | |||
Sales | 1,553.7 | 1,964.2 | 1,920.6 |
Gross profit | 263.2 | 267.3 | 313.6 |
Aviation Services | Commercial | |||
Disaggregation of revenue by major customer markets | |||
Sales | 793.9 | 1,268.9 | 1,342.3 |
Aviation Services | Government and defense | |||
Disaggregation of revenue by major customer markets | |||
Sales | 759.8 | 695.3 | 578.3 |
Expeditionary Services | |||
Disaggregation of revenue by major customer markets | |||
Sales | 98.6 | 107.8 | 131.2 |
Gross profit | 12.7 | 1.9 | 16.2 |
Expeditionary Services | Commercial | |||
Disaggregation of revenue by major customer markets | |||
Sales | 12.5 | 24.3 | 31.6 |
Expeditionary Services | Government and defense | |||
Disaggregation of revenue by major customer markets | |||
Sales | $ 86.1 | $ 83.5 | $ 99.6 |
Legal Proceedings - Additional
Legal Proceedings - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Feb. 28, 2021 | May 31, 2021 | |
Legal Proceedings | ||
Loss contingency, loss recognized in period | $ 11 | |
Litigation reserve | $ 12.7 | |
Litigation Settlement, Amount Awarded to Other Party | $ 11.5 |