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Table of Contents
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 3, 2021
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 valueTDGNew York Stock Exchange
The number of shares outstanding of TransDigm Group Incorporated’s common stock, par value $.01 per share, was 55,112,432 as of July 29, 2021.


Table of Contents
INDEX
 
Page
Part IFINANCIAL INFORMATION
Item 1Financial Statements
Condensed Consolidated Balance Sheets – July 3, 2021 and September 30, 2020
Condensed Consolidated Statements of Income (Loss) – Thirteen and Thirty-Nine Week Periods Ended July 3, 2021 and June 27, 2020
Condensed Consolidated Statements of Comprehensive Income – Thirteen and Thirty-Nine Week Periods Ended July 3, 2021 and June 27, 2020
Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Thirteen and Thirty-Nine Week Periods Ended July 3, 2021 and June 27, 2020
Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended July 3, 2021 and June 27, 2020
Notes to Condensed Consolidated Financial Statements
Item 2Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3Quantitative and Qualitative Disclosure About Market Risk
Item 4Controls and Procedures
Part IIOTHER INFORMATION
Item 1Legal Proceedings
Item 1ARisk Factors
Item 2Unregistered Sales of Equity Securities and Use of Proceeds
Item 6Exhibits
SIGNATURES


Table of Contents
TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share amounts)
(Unaudited)
July 3, 2021September 30, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$4,529 $4,717 
Trade accounts receivable—Net694 720 
Inventories—Net1,225 1,283 
Prepaid expenses and other275 240 
Total current assets6,723 6,960 
PROPERTY, PLANT AND EQUIPMENT—Net777 752 
GOODWILL8,591 7,889 
OTHER INTANGIBLE ASSETS—Net2,838 2,610 
DEFERRED INCOME TAXES 17 
OTHER160 167 
TOTAL ASSETS$19,089 $18,395 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt$276 $276 
Short-term borrowings—trade receivable securitization facility350 349 
Accounts payable206 218 
Accrued and other current liabilities804 773 
Total current liabilities1,636 1,616 
LONG-TERM DEBT19,384 19,384 
DEFERRED INCOME TAXES420 430 
OTHER NON-CURRENT LIABILITIES781 933 
Total liabilities22,221 22,363 
TD GROUP STOCKHOLDERS’ DEFICIT:
Common stock - $.01 par value; authorized 224,400,000 shares; issued 59,272,711 and 58,612,028 at July 3, 2021 and September 30, 2020, respectively
1 1 
Additional paid-in capital1,783 1,581 
Accumulated deficit(3,906)(4,359)
Accumulated other comprehensive loss(222)(401)
Treasury stock, at cost; 4,198,226 shares at July 3, 2021 and September 30, 2020, respectively
(794)(794)
Total TD Group stockholders’ deficit(3,138)(3,972)
NONCONTROLLING INTERESTS6 4 
Total stockholders’ deficit(3,132)(3,968)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$19,089 $18,395 
See notes to condensed consolidated financial statements
1

Table of Contents
TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Amounts in millions, except per share amounts)
(Unaudited) 
 Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
 July 3, 2021June 27, 2020July 3, 2021June 27, 2020
NET SALES$1,218 $1,022 $3,519 $3,930 
COST OF SALES563 531 1,731 1,819 
GROSS PROFIT655 491 1,788 2,111 
SELLING AND ADMINISTRATIVE EXPENSES172 163 531 544 
AMORTIZATION OF INTANGIBLE ASSETS36 42 101 128 
INCOME FROM OPERATIONS447 286 1,156 1,439 
INTEREST EXPENSE—NET263 262 798 762 
REFINANCING COSTS13 1 36 27 
OTHER INCOME(5)(11)(37)(14)
GAIN ON SALE OF BUSINESSES—NET(68) (69) 
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES244 34 428 664 
INCOME TAX (BENEFIT) PROVISION(73)39 (45)112 
INCOME (LOSS) FROM CONTINUING OPERATIONS317 (5)473 552 
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (1) 66 
NET INCOME (LOSS)317 (6)473 618 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS  (2)(1)
NET INCOME (LOSS) ATTRIBUTABLE TO TD GROUP$317 $(6)$471 $617 
NET INCOME (LOSS) APPLICABLE TO TD GROUP COMMON STOCKHOLDERS$317 $(6)$398 $432 
Earnings (Loss) per share attributable to TD Group common stockholders:
Earnings (Loss) per share from continuing operations—basic and diluted$5.43 $(0.09)$6.83 $6.38 
(Loss) Earnings per share from discontinued operations—basic and diluted (0.01) 1.15 
Earnings (Loss) per share$5.43 $(0.10)$6.83 $7.53 
Cash dividends paid per common share$ $ $ $32.50 
Weighted-average shares outstanding:
Basic and diluted58.4 57.3 58.4 57.4 
See notes to condensed consolidated financial statements
2

Table of Contents
TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in millions)
(Unaudited)
 Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Net income (loss)$317 $(6)$473 $618 
Less: Net income attributable to noncontrolling interests  (2)(1)
Net income (loss) attributable to TD Group$317 $(6)$471 $617 
Other comprehensive income (loss), net of tax:
Foreign currency translation gain10 27 121 19 
Unrealized gain (loss) on derivatives2 (14)58 (136)
Pensions and other postretirement benefits   6 
Other comprehensive income (loss), net of tax, attributable to TD Group12 13 179 (111)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO TD GROUP$329 $7 $650 $506 
See notes to condensed consolidated financial statements
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TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Amounts in millions, except share amounts)
(Unaudited)

TD Group Stockholders
Common StockAdditional Paid-In
Capital
Accumulated Other Comprehensive LossTreasury Stock
Number
of Shares
Par
Value
Accumulated
Deficit
Number
of Shares
ValueNon-controlling InterestsTotal
BALANCE—September 30, 201957,623,311 $1 $1,379 $(3,120)$(379)(4,161,326)$(775)$10 $(2,884)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — (6)(6)
Special dividends and vested dividend equivalents declared— — — (1,864)— — — — (1,864)
Accrued unvested dividend equivalents and other— — — (19)— — — — (19)
Compensation expense recognized for employee stock options— — 23 — — — — — 23 
Exercise of employee stock options169,470 — 20 — — — — — 20 
Net income attributable to TD Group— — — 304 — — — — 304 
Foreign currency translation adjustments, net of tax— — — — 98 — — — 98 
Unrealized gain on derivatives, net of tax— — — — 23 — — — 23 
Pensions and other postretirement benefits adjustments, net of tax— — — — 6 — — — 6 
BALANCE—December 28, 201957,792,781 $1 $1,422 $(4,699)$(252)(4,161,326)$(775)$4 $(4,299)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — —   
Accrued unvested dividend equivalents and other— — — (21)— — — — (21)
Compensation expense recognized for employee stock options— — 17 — — — — — 17 
Exercise of employee stock options440,793 — 49 — — — — — 49 
Treasury stock purchased— — — — — (36,900)(19)— (19)
Net income attributable to TD Group— — — 319 — — — — 319 
Foreign currency translation adjustments, net of tax— — — — (106)— — — (106)
Unrealized loss on derivatives, net of tax— — — — (145)— — — (145)
Pensions and other postretirement benefits adjustments, net of tax— — — —  — — —  
BALANCE—March 28, 202058,233,574 $1 $1,488 $(4,401)$(503)(4,198,226)$(794)$4 $(4,205)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — —   
Accrued unvested dividend equivalents and other— — — (20)— — — — (20)
Compensation expense recognized for employee stock options— — 19 — — — — — 19 
Exercise of employee stock options147,292 — 20 — — — — — 20 
Net loss attributable to TD Group— — — (6)— — — — (6)
Foreign currency translation adjustments, net of tax— — — — 27 — — — 27 
Unrealized loss on derivatives, net of tax— — — — (14)— — — (14)
Pensions and other postretirement benefits adjustments, net of tax— — — —  — — —  
BALANCE—June 27, 202058,380,866 $1 $1,527 $(4,427)$(490)(4,198,226)$(794)$4 $(4,179)
See notes to condensed consolidated financial statements



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TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Amounts in millions, except share amounts)
(Unaudited)

TD Group Stockholders
Common StockAdditional Paid-In
Capital
Accumulated Other Comprehensive LossTreasury Stock
Number
of Shares
Par
Value
Accumulated
Deficit
Number
of Shares
ValueNon-controlling InterestsTotal
BALANCE—September 30, 202058,612,028 $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 options240,979 — 32 — — — — — 32 
Net income attributable to TD Group— — — 50 — — — — 50 
Foreign currency translation adjustments, net of tax— — — — 111 — — — 111 
Unrealized gain on derivatives, net of tax— — — — 13 — — — 13 
Pensions and other postretirement benefits adjustments, net of tax— — — —  — — —  
BALANCE—January 2, 202158,853,007 $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 options207,509 — 37 — — — — — 37 
Net income attributable to TD Group— — — 104 — — — — 104 
Foreign currency translation adjustments, net of tax— — — —  — — —  
Unrealized gain on derivatives, net of tax— — — — 43 — — — 43 
Pensions and other postretirement benefits adjustments, net of tax— — — —  — — —  
BALANCE—April 3, 202159,060,516 $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 options212,195 — 37 — — — — — 37 
Net income attributable to TD Group— — — 317 — — — — 317 
Foreign currency translation adjustments, net of tax— — — — 10 — — — 10 
Unrealized gain on derivatives, net of tax— — — — 2 — — — 2 
Pensions and other postretirement benefits adjustments, net of tax— — — —  — — —  
BALANCE—July 3, 202159,272,711 $1 $1,783 $(3,906)$(222)(4,198,226)$(794)$6 $(3,132)
See notes to condensed consolidated financial statements
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TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
Thirty-Nine Week Periods Ended
July 3, 2021June 27, 2020
OPERATING ACTIVITIES:
Net income$473 $618 
Income from discontinued operations, net of tax (66)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation87 83 
Amortization of intangible assets and product certification costs101 128 
Amortization of debt issuance costs, original issue discount and premium26 25 
Amortization of inventory step-up6  
Amortization of loss contract reserves(47)(32)
Refinancing costs36 27 
Gain on sale of businesses, net(69) 
Non-cash stock compensation expense105 59 
Deferred income taxes14 (17)
Foreign currency exchange loss20 5 
Gain on insurance proceeds from fire(21) 
Changes in assets/liabilities, net of effects from acquisitions and sales of businesses:
Trade accounts receivable23 347 
Inventories40 (126)
Income taxes receivable(90)(49)
Other assets(35)6 
Accounts payable(19)(48)
Accrued interest(3)109 
Accrued and other liabilities(23)(78)
Net cash provided by operating activities624 991 
INVESTING ACTIVITIES:
Capital expenditures(80)(62)
Acquisition of businesses, net of cash acquired(951) 
Net proceeds from sale of businesses259 904 
Insurance proceeds for fixed assets damaged from fire24  
Net cash (used in) provided by investing activities(748)842 
FINANCING ACTIVITIES:
Proceeds from exercise of stock options106 89 
Dividend equivalent payments(73)(1,928)
Treasury stock purchases (19)
Proceeds from revolving credit facility200 200 
Repayment on revolving credit facility(200) 
Repayment on term loans(56)(38)
Redemption of 6.50% senior subordinated notes due 2024, net(1,220) 
Redemption of 6.50% senior subordinated notes due 2025, net(762) 
Redemption of 6.00% senior subordinated notes due 2022, net (1,168)
Proceeds from 5.50% senior subordinated notes due 2027, net 2,625 
Proceeds from 8.00% senior secured notes due 2025, net 1,092 
Proceeds from 6.25% senior secured notes due 2026, net 401 
Proceeds from 4.625% senior subordinated notes due 2029, net1,189  
Proceeds from 4.875% senior subordinated notes due 2029, net743  
Financing costs and other, net(1)(9)
Net cash (used in) provided by financing activities(74)1,245 
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS10 4 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(188)3,082 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD4,717 1,467 
CASH AND CASH EQUIVALENTS, END OF PERIOD$4,529 $4,549 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest$774 $638 
Cash paid during the period for income taxes, net of refunds$51 $194 
See notes to condensed consolidated financial statements
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TRANSDIGM GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-NINE WEEK PERIODS ENDED JULY 3, 2021 AND JUNE 27, 2020
(UNAUDITED)
1.    DESCRIPTION OF THE BUSINESS AND IMPACT OF COVID-19 PANDEMIC
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.
Impact of COVID-19 Pandemic - Restructuring Costs
The commercial aerospace industry continues to be significantly disrupted, both domestically and internationally, by the COVID-19 pandemic resulting in ongoing business challenges. While global vaccination efforts are underway and commercial air travel demand has shown slight signs of recovery in recent months, the continued impact of COVID-19, including any increases in infection rates, new variants and renewed governmental action to slow the spread of COVID-19 cannot be estimated. Material actions to reduce costs in response to the impact that the pandemic has had on operating results include: (1) reducing the Company's workforce to align operations with customer demand through a reduction in force or through a realignment of certain business units; (2) implementing unpaid furloughs and salary reductions; (3) delaying non-essential capital projects and (4) minimizing discretionary spending.
For the thirteen week period ended July 3, 2021, COVID-19 restructuring costs of less than $1 million were incurred, all of which was recorded in selling and administrative expenses on the condensed consolidated statements of income (loss). For the thirty-nine week period ended July 3, 2021, COVID-19 restructuring costs of approximately $36 million were incurred, of which $26 million was recorded in cost of sales and $10 million was recorded in selling and administrative expenses on the condensed consolidated statements of income (loss). For the thirteen and thirty-nine week periods ended June 27, 2020, COVID-19 restructuring costs of approximately $24 million were incurred, of which $19 million was recorded in cost of sales and $5 million was recorded in selling and administrative expenses on the condensed consolidated statement of income (loss). These costs are primarily related to the Company's actions to reduce its workforce and consolidate certain facilities to align with customer demand.
Additionally, for the thirteen and thirty-nine week periods ended July 3, 2021, the Company incurred approximately $1 million and $4 million, respectively, in incremental costs related to the pandemic that are not expected to recur once the pandemic has subsided and are clearly separable from normal operations (e.g., additional cleaning and disinfecting of facilities by contractors above and beyond normal requirements, personal protective equipment). For the thirteen and thirty-nine week periods ended June 27, 2020, the Company incurred approximately $3 million in incremental costs related to the pandemic.
As of July 3, 2021 and September 30, 2020, the restructuring accrual associated with the costs incurred in response to the COVID-19 pandemic was approximately $26 million and $13 million, respectively. This accrual is recorded as a component of accrued and other current liabilities on the condensed consolidated balance sheets. The increase in the accrual is primarily driven by costs to reduce its workforce that have been incurred but not paid; partially offset by payments against the accrual. The Company expects to incur additional restructuring and incremental costs related to the COVID-19 pandemic though at a reduced level in comparison to fiscal 2020 and the first half of fiscal 2021. The Company continues to analyze its cost structure and may implement additional cost reduction measures as necessary due to the ongoing business challenges resulting from the COVID-19 pandemic.
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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 year ended September 30, 2020 included in TD Group’s Form 10-K filed on November 12, 2020. 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, 2020 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 3, 2021 are not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the prior year financial statements to conform to current year presentation.
3.    ACQUISITIONS AND DIVESTITURES
Acquisitions
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 an enterprise value of $965 million, inclusive of tax benefits. 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 in TransDigm's Airframe segment.
The acquisition strengthens and expands the Company’s position to design, produce and supply highly engineered proprietary aerospace components in niche markets with significant aftermarket content and provide opportunities to create value through the application of our three core value-driven operating strategies (obtaining profitable new business, improving our cost structure, and providing highly engineered value-added products to customers). The purchase price paid for the acquisition reflects the current earnings before interest, taxes, depreciation and amortization ("EBITDA") and cash flows, as well as the future EBITDA and cash flows expected to be generated by the business, which are driven in most cases by the recurring aftermarket consumption over the life of a particular aircraft, estimated to be approximately 25 to 30 years.
The Company accounted for the CAC acquisition using the acquisition method and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective dates 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 3, 2021, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the CAC acquisition are subject to adjustment until the end of the 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 during the allowable one year measurement period. The Company is in the process of obtaining a third-party valuation of certain intangible assets, tangible assets and liabilities of CAC. 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, EBITDA, growth rates, 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. Pro forma net sales and results of operations for the acquisition had it occurred at the beginning of the applicable thirty-nine week period ended July 3, 2021 or June 27, 2020 are not material and, accordingly, are not provided.
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The preliminary allocation of the estimated fair value of assets acquired and liabilities assumed in the CAC acquisition as of the acquisition date, as well as measurement period adjustments recorded as of July 3, 2021, are summarized in the table below (in millions):
PreliminaryMeasurement PeriodAdjusted Preliminary
AllocationAdjustmentsAllocation
Assets acquired (excluding cash):
Trade accounts receivable$31 $1 $32 
Inventories273 30 
Prepaid expenses and other10(4)6 
Property, plant and equipment183 21 
Goodwill63658 694 
(1)
Other intangible assets30916 325 
(1)
Other34 34 
Total assets acquired1,065 77 1,142 
Liabilities assumed:
Accounts payable153 18 
Accrued and other current liabilities3812 
(2)
50 
Deferred income taxes38(