UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 2, 2022

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from             to            

Commission File Number 001-32833

TransDigm Group Incorporated

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

41-2101738

(I.R.S. Employer Identification No.)

1301 East 9th Street,	Suite 3000,	Cleveland,	Ohio	44114
(Address of principal executive offices)				(Zip Code)

(216) 706-2960

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:
Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Common Stock, $0.01 par value	TDG	New York Stock Exchange

The number of shares outstanding of TransDigm Group Incorporated’s common stock, par value $.01 per share, was 54,234,656 as of August 1, 2022.

TABLE OF CONTENTS

			Page
PART I	FINANCIAL INFORMATION
ITEM 1		Financial Statements
		Condensed Consolidated Balance Sheets – July 2, 2022 and September 30, 2021	1
		Condensed Consolidated Statements of Income – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021	2
		Condensed Consolidated Statements of Comprehensive Income – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021	3
		Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021	4
		Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021	6
		Notes to Condensed Consolidated Financial Statements	7
ITEM 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3		Quantitative and Qualitative Disclosure About Market Risk	48
ITEM 4		Controls and Procedures	48
PART II	OTHER INFORMATION		49
ITEM 1		Legal Proceedings	49
ITEM 1A		Risk Factors	49
ITEM 2		Unregistered Sales of Equity Securities and Use of Proceeds: Purchases of Equity Securities by the Issuer	49
ITEM 5		Other Information	49
ITEM 6		Exhibits	50
SIGNATURES			51

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share amounts)

(Unaudited)

	July 2, 2022		September 30, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,808	$	4,787
Trade accounts receivable—Net	883		791
Inventories—Net	1,320		1,185
Prepaid expenses and other	297		267
Total current assets	6,308		7,030
PROPERTY, PLANT AND EQUIPMENT—NET	814		770
GOODWILL	8,728		8,568
OTHER INTANGIBLE ASSETS—NET	2,771		2,791
OTHER	198		156
TOTAL ASSETS	$	18,819	$	19,315
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt	$	77	$	277
Short-term borrowings—trade receivable securitization facility	350		349
Accounts payable	248		227
Accrued and other current liabilities	669		810
Total current liabilities	1,344		1,663
LONG-TERM DEBT	19,382		19,372
DEFERRED INCOME TAXES	588		485
OTHER NON-CURRENT LIABILITIES	473		705
Total liabilities	21,787		22,225
TD GROUP STOCKHOLDERS’ DEFICIT:
Common stock - $.01 par value; authorized 224,400,000 shares; issued 59,906,055 and 59,403,100 at July 2, 2022 and September 30, 2021, respectively	1		1
Additional paid-in capital	2,041		1,830
Accumulated deficit	(3,114)		(3,705)
Accumulated other comprehensive loss	(198)		(248)
Treasury stock, at cost; 5,688,639 and 4,198,226 shares at July 2, 2022 and September 30, 2021, respectively	(1,706)		(794)
Total TD Group stockholders’ deficit	(2,976)		(2,916)
NONCONTROLLING INTERESTS	8		6
Total stockholders’ deficit	(2,968)		(2,910)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	18,819	$	19,315

See notes to condensed consolidated financial statements

1

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in millions, except per share amounts)

(Unaudited) 

	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
NET SALES	$	1,398	$	1,218	$	3,919	$	3,519
COST OF SALES	582		563		1,706		1,731
GROSS PROFIT	816		655		2,213		1,788
SELLING AND ADMINISTRATIVE EXPENSES	184		172		537		531
AMORTIZATION OF INTANGIBLE ASSETS	33		36		102		101
INCOME FROM OPERATIONS	599		447		1,574		1,156
INTEREST EXPENSE—NET	269		263		799		798
REFINANCING COSTS	—		13		—		36
OTHER EXPENSE (INCOME)	21		(5)		15		(37)
GAIN ON SALE OF BUSINESSES—NET	(3)		(68)		(6)		(69)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	312		244		766		428
INCOME TAX PROVISION (BENEFIT)	73		(73)		165		(45)
INCOME FROM CONTINUING OPERATIONS	239		317		601		473
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX	—		—		1		—
NET INCOME	239		317		602		473
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(1)		—		(2)		(2)
NET INCOME ATTRIBUTABLE TO TD GROUP	$	238	$	317	$	600	$	471
NET INCOME APPLICABLE TO TD GROUP COMMON STOCKHOLDERS	$	238	$	317	$	554	$	398
Earnings per share attributable to TD Group common stockholders
Earnings per share from continuing operations—basic and diluted	$	4.10	$	5.43	$	9.42	$	6.83
Earnings per share from discontinued operations—basic and diluted	—		—		0.02		—
Earnings per share	$	4.10	$	5.43	$	9.44	$	6.83
Weighted-average shares outstanding:
Basic and diluted	58.0		58.4		58.7		58.4

See notes to condensed consolidated financial statements

2

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)

	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Net income	$	239	$	317	$	602	$	473
Less: Net income attributable to noncontrolling interests	(1)		—		(2)		(2)
Net income attributable to TD Group	$	238	$	317	$	600	$	471
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(155)		10		(208)		121
Unrealized gain on derivatives	24		2		252		58
Pension and postretirement benefit plans adjustment	6		—		6		—
Other comprehensive (loss) income, net of tax, attributable to TD Group	(125)		12		50		179
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO TD GROUP	$	113	$	329	$	650	$	650

See notes to condensed consolidated financial statements

3

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Amounts in millions, except share amounts)

(Unaudited)

	TD Group Stockholders
	Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Loss		Treasury Stock
	Number of Shares	Par Value				Accumulated Deficit				Number of Shares	Value		Noncontrolling Interests		Total
BALANCE—September 30, 2020	58,612,028	$	1	$	1,581	$	(4,359)	$	(401)	(4,198,226)	$	(794)	$	4	$	(3,968)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		3		3
Accrued unvested dividend equivalents and other	—	—		—		(5)		—		—	—		—		(5)
Compensation expense recognized for employee stock options	—	—		43		—		—		—	—		—		43
Exercise of employee stock options	240,979	—		32		—		—		—	—		—		32
Net income attributable to TD Group	—	—		—		50		—		—	—		—		50
Foreign currency translation adjustment, net of tax	—	—		—		—		111		—	—		—		111
Unrealized gain on derivatives, net of tax	—	—		—		—		13		—	—		—		13
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—January 2, 2021	58,853,007	$	1	$	1,656	$	(4,314)	$	(277)	(4,198,226)	$	(794)	$	7	$	(3,721)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		—		—
Accrued unvested dividend equivalents and other	—	—		—		(5)		—		—	—		—		(5)
Compensation expense recognized for employee stock options	—	—		21		—		—		—	—		—		21
Exercise of employee stock options	207,509	—		37		—		—		—	—		—		37
Net income attributable to TD Group	—	—		—		104		—		—	—		—		104
Foreign currency translation adjustment, net of tax	—	—		—		—		—		—	—		—		—
Unrealized gain on derivatives, net of tax	—	—		—		—		43		—	—		—		43
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—April 3, 2021	59,060,516	$	1	$	1,714	$	(4,215)	$	(234)	(4,198,226)	$	(794)	$	7	$	(3,521)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		(1)		(1)
Accrued unvested dividend equivalents and other	—	—		—		(8)		—		—	—		—		(8)
Compensation expense recognized for employee stock options	—	—		32		—		—		—	—		—		32
Exercise of employee stock options	212,195	—		37		—		—		—	—		—		37
Net income attributable to TD Group	—	—		—		317		—		—	—		—		317
Foreign currency translation adjustment, net of tax	—	—		—		—		10		—	—		—		10
Unrealized gain on derivatives, net of tax	—	—		—		—		2		—	—		—		2
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—July 3, 2021	59,272,711	$	1	$	1,783	$	(3,906)	$	(222)	(4,198,226)	$	(794)	$	6	$	(3,132)

See notes to condensed consolidated financial statements

4

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Amounts in millions, except share amounts)

(Unaudited)

	TD Group Stockholders
	Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Loss		Treasury Stock
	Number of Shares	Par Value				Accumulated Deficit				Number of Shares	Value		Noncontrolling Interests		Total
BALANCE—September 30, 2021	59,403,100	$	1	$	1,830	$	(3,705)	$	(248)	(4,198,226)	$	(794)	$	6	$	(2,910)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		1		1
Accrued unvested dividend equivalents and other	—	—		—		(3)		—		—	—		—		(3)
Compensation expense recognized for employee stock options	—	—		35		—		—		—	—		—		35
Exercise of employee stock options	215,817	—		40		—		—		—	—		—		40
Net income attributable to TD Group	—	—		—		163		—		—	—		—		163
Foreign currency translation adjustment, net of tax	—	—		—		—		(10)		—	—		—		(10)
Unrealized gain on derivatives, net of tax	—	—		—		—		58		—	—		—		58
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—January 1, 2022	59,618,917	$	1	$	1,905	$	(3,545)	$	(200)	(4,198,226)	$	(794)	$	7	$	(2,626)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		(1)		(1)
Accrued unvested dividend equivalents and other	—	—		—		(4)		—		—	—		—		(4)
Compensation expense recognized for employee stock options	—	—		39		—		—		—	—		—		39
Exercise of employee stock options	191,403	—		40		—		—		—	—		—		40
Stock repurchases under repurchase program	—	—		—		—		—		(1,046,815)	(667)		—		(667)
Net income attributable to TD Group	—	—		—		199		—		—	—		—		199
Foreign currency translation adjustment, net of tax	—	—		—		—		(43)		—	—		—		(43)
Unrealized gain on derivatives, net of tax	—	—		—		—		170		—	—		—		170
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—April 2, 2022	59,810,320	$	1	$	1,984	$	(3,350)	$	(73)	(5,245,041)	$	(1,461)	$	6	$	(2,893)
Changes in noncontrolling interest of consolidated subsidiaries, net	—	—		—		—		—		—	—		2		2
Accrued unvested dividend equivalents and other	—	—		—		(2)		—		—	—		—		(2)
Compensation expense recognized for employee stock options	—	—		38		—		—		—	—		—		38
Exercise of employee stock options	95,735	—		19		—		—		—	—		—		19
Stock repurchases under repurchase program	—	—		—		—		—		(443,598)	(245)		—		(245)
Net income attributable to TD Group	—	—		—		238		—		—	—		—		238
Foreign currency translation adjustment, net of tax	—	—		—		—		(155)		—	—		—		(155)
Unrealized gain on derivatives, net of tax	—	—		—		—		24		—	—		—		24
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		6		—	—		—		6
BALANCE—July 2, 2022	59,906,055	$	1	$	2,041	$	(3,114)	$	(198)	(5,688,639)	$	(1,706)	$	8	$	(2,968)

See notes to condensed consolidated financial statements

5

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

	Thirty-Nine Week Periods Ended
	July 2, 2022		July 3, 2021
OPERATING ACTIVITIES:
Net income	$	602	$	473
Income from discontinued operations, net of tax	(1)		—
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	85		87
Amortization of intangible assets and product certification costs	103		101
Amortization of debt issuance costs, original issue discount and premium	26		26
Amortization of inventory step-up	1		6
Amortization of loss contract reserves	(28)		(47)
Refinancing costs	—		36
Gain on sale of businesses, net	(6)		(69)
Non-cash stock compensation expense	115		105
Deferred income taxes	(1)		(55)
Foreign currency exchange (gain) loss	(22)		20
Gain on insurance proceeds from fire	—		(21)
Loss on settlement of the Esterline Retirement Plan (the “ERP”)	21		—
Contribution to the unfunded portion of the ERP	(16)		—
Changes in assets/liabilities, net of effects from acquisitions and sales of businesses:
Trade accounts receivable	(91)		23
Inventories	(108)		40
Income taxes payable (receivable)	21		(21)
Other assets	(23)		(35)
Accounts payable	23		(19)
Accrued interest	(18)		(3)
Accrued and other liabilities	(8)		(23)
Net cash provided by operating activities	675		624
INVESTING ACTIVITIES:
Capital expenditures	(86)		(80)
Acquisition of businesses, net of cash acquired	(422)		(951)
Net proceeds from sale of businesses	3		259
Insurance proceeds for fixed assets damaged from fire	—		24
Net cash used in investing activities	(505)		(748)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options	99		106
Dividend equivalent payments	(46)		(73)
Repurchases of common stock	(912)		—
Proceeds from issuance of senior subordinated notes, net	—		1,932
Repayments of senior subordinated notes, net	—		(1,982)
Proceeds from revolving credit facility	—		200
Repayment on revolving credit facility	(200)		(200)
Repayment on term loans	(56)		(56)
Financing costs and other, net	(1)		(1)
Net cash used in financing activities	(1,116)		(74)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(33)		10
NET DECREASE IN CASH AND CASH EQUIVALENTS	(979)		(188)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,787		4,717
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	3,808	$	4,529
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	791	$	774
Cash paid during the period for income taxes, net of refunds	$	138	$	51

See notes to condensed consolidated financial statements

6

TRANSDIGM GROUP INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THIRTY-NINE WEEK PERIODS ENDED JULY 2, 2022 AND JULY 3, 2021

(UNAUDITED)

1.    DESCRIPTION OF THE BUSINESS

TransDigm Group Incorporated (“TD Group”), through its wholly-owned subsidiary, TransDigm Inc., is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly every commercial and military aircraft in service today. TransDigm Inc., along with TransDigm Inc.’s direct and indirect wholly-owned operating subsidiaries (collectively, with TD Group, the “Company” or “TransDigm”), offers a broad range of proprietary aerospace products. TD Group has no significant assets or operations other than its 100% ownership of TransDigm Inc. TD Group’s common stock is listed on the New York Stock Exchange, or the NYSE, under the trading symbol “TDG.”

TransDigm's major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, engineered audio, radio and antenna systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, advanced sensor products, switches and relay panels, thermal protection and insulation, lighting and control technology, parachutes, high performance hoists, winches and lifting devices, and cargo loading, handling and delivery systems.

2.    UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes for the fiscal year ended September 30, 2021 included in TD Group’s Form 10-K filed on November 16, 2021. As disclosed therein, the Company’s annual consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The September 30, 2021 condensed consolidated balance sheet was derived from TD Group’s audited financial statements. The results of operations for the thirty-nine week period ended July 2, 2022 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation, none of which are material.

3.    ACQUISITIONS AND DIVESTITURES

Acquisitions

DART Aerospace – On March 14, 2022, the Company entered into a definitive agreement to acquire DART Aerospace (“DART”) for a total purchase price of $360 million. The acquisition was completed on May 25, 2022 and financed through existing cash on hand. DART operates from four primary facilities (Hawkesbury, Ontario, Canada; Portland, Oregon; Fort Collins, Colorado and Chihuahua, Mexico) and is a leading provider of highly engineered, unique helicopter mission equipment solutions that predominantly service civilian aircraft. The products are primarily proprietary with significant aftermarket content. DART's operating results are included within TransDigm's Airframe segment.

7

The Company accounted for the DART acquisition using the acquisition method and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. The Company made an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. As of July 2, 2022, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the DART acquisition are subject to adjustment until the end of the respective measurement period. The allocation of the purchase price is preliminary and will likely change in future periods, perhaps materially, as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company is in the process of obtaining a third-party valuation of certain intangible assets and tangible assets of DART. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. Pro forma net sales and results of operations for the acquisition had it occurred at the beginning of the thirty-nine week periods ended July 2, 2022 or July 3, 2021 are not material and, accordingly, are not provided.

The allocation of the estimated fair value of assets acquired and liabilities assumed in the DART acquisition as of the May 25, 2022 acquisition date is summarized in the table below (in millions):

Assets acquired (excluding cash):
Trade accounts receivable	$	16
Inventories	33
Prepaid expenses and other	4
Property, plant and equipment	9
Goodwill	236		(1)
Other intangible assets	112		(1)
Other	8
Total assets acquired (excluding cash)	418
Liabilities assumed:
Accounts payable	4
Accrued and other current liabilities	11
Deferred income taxes	35
Other non-current liabilities	8
Total liabilities assumed	58
Net assets acquired	$	360

(1)The Company expects that none of the approximately $236 million of goodwill and $112 million of other intangible assets recognized for the acquisition will be deductible for tax purposes.

Extant Aerospace Acquisitions – For the thirty-nine week period ended July 2, 2022, the Company's Extant Aerospace subsidiary, which is included in TransDigm’s Power & Control segment, completed the acquisition of substantially all of the assets and technical data rights of certain product lines, which met the definition of a business, for a total purchase price of $61 million. The allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company expects that approximately $24 million of goodwill and approximately $20 million of other intangible assets recognized for the acquisitions will be deductible for tax purposes over 15 years. Pro forma net sales and results of operations for the Extant Aerospace acquisitions had they occurred at the beginning of the thirty-nine week periods ended July 2, 2022 or July 3, 2021 are not material and, accordingly, are not provided.

8

Cobham Aero Connectivity – On November 24, 2020, the Company entered into a definitive agreement to acquire all the outstanding stock of Chelton Limited, Chelton Avionics Holdings, Inc. and Mastsystem Int'l Oy, collectively, Cobham Aero Connectivity (“CAC”), for a total purchase price of $945 million. The acquisition was substantially completed on January 5, 2021 and financed through existing cash on hand. The Company completed the remainder of the acquisition of CAC on February 12, 2021, also through existing cash on hand. CAC operates from two primary facilities (Marlow, United Kingdom and Prescott, Arizona) and is a leading provider of highly engineered antennas and radios for the aerospace end market. The products are primarily proprietary with significant aftermarket content and have a strong presence across major defense platforms as well as select commercial applications. CAC's operating results are included within TransDigm's Airframe segment.

The Company accounted for the CAC acquisition using the acquisition method of accounting and third-party valuation appraisals and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective dates of the acquisition. The total purchase price of CAC was allocated to the underlying assets acquired and liabilities assumed based upon the respective fair value at the dates of acquisition. To the extent the purchase price exceeded the fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill. The fair values of acquired intangibles and certain liabilities, such as loss contract reserves, are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions used to determine the fair values of acquired intangible assets include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue growth rates, EBITDA margins, royalty rates and technology obsolescence rates. Significant assumptions used to determine the fair value of the loss contract reserves using the discounted cash flow model include discount rates and forecasted costs to be incurred under the long-term contracts and at-market bid prices for respective contracts. These assumptions are forward looking and could be affected by future economic and market conditions.

The final allocation of the fair value of assets acquired and liabilities assumed in the CAC acquisition as of the acquisition dates, as well as measurement period adjustments recorded within the permissible one year measurement period, are summarized in the table below (in millions):

	Preliminary Allocation		Measurement Period Adjustments			Final Allocation
Assets acquired (excluding cash):
Trade accounts receivable	$	31	$	1		$	32
Inventories	27		2			29
Prepaid expenses and other	10		(3)			7
Property, plant and equipment	18		3			21
Goodwill	636		61			697		(1)
Other intangible assets	309		15			324		(1)
Other	34		(3)			31
Total assets acquired (excluding cash)	1,065		76			1,141
Liabilities assumed:
Accounts payable	15		3			18
Accrued and other current liabilities	38		6		(2)	44
Deferred income taxes	38		(7)			31
Other non-current liabilities	29		74		(2)	103
Total liabilities assumed	120		76			196
Net assets acquired