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ACQUISITIONS | 3 Months Ended
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Dec. 28, 2024
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Raptor Scientific – On July 31, 2024, the Company acquired all the outstanding stock of Raptor Scientific for approximately $646 million, which includes a working capital settlement of $1 million received in the first quarter of fiscal 2025. The acquisition was financed through existing cash on hand. Raptor Scientific is a leading global manufacturer of complex test and measurement solutions primarily serving the aerospace and defense end markets. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. The operating results of Raptor Scientific are included within TransDigm's Airframe segment. As of December 28, 2024, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the acquisition of Raptor Scientific are subject to adjustment until the end of the respective measurement period, including those related to deferred taxes and income taxes. The Company accounted for the acquisition of Raptor Scientific using the acquisition method of accounting and a third-party valuation appraisal and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. The total purchase price was allocated to identifiable assets and liabilities based upon the respective fair value at the date of acquisition. The fair values of acquired intangibles are determined based on an income approach, using estimates and assumptions that are deemed reasonable by the Company. Certain assumptions include the discount rates and other 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 thirteen week period ended December 30, 2023 are not material and, accordingly, are not provided. The allocation of the estimated fair value of assets acquired and liabilities assumed in the acquisition of Raptor Scientific as of the July 31, 2024 acquisition date, as well as measurement period adjustments recorded within the permissible one year measurement period, is summarized in the table below (in millions):
|  | Preliminary |  | Measurement Period |  | Adjusted Preliminary |
|  | Allocation |  | Adjustments (2) |  | Allocation |
Assets acquired (excluding cash): |  |  |  |  |  |  |
Trade accounts receivable |  | $ | 9 |  |  | $ | — |  |  | $ | 9 |  |
Inventories |  | 22 |  |  | — |  |  | 22 |  |
Prepaid expenses and other |  | 4 |  |  | — |  |  | 4 |  |
Property, plant and equipment |  | 2 |  |  | — |  |  | 2 |  |
Goodwill |  | 426 |  |  | (5) |  |  | 421 |  | (1)
Other intangible assets |  | 197 |  |  | 4 |  |  | 201 |  | (1)
Other non-current assets |  | 5 |  |  | — |  |  | 5 |  |
Total assets acquired (excluding cash) |  | 665 |  |  | (1) |  |  | 664 |  |
Liabilities assumed: |  |  |  |  |  |  |
Accounts payable |  | 1 |  |  | — |  |  | 1 |  |
Accrued and other current liabilities |  | 13 |  |  | — |  |  | 13 |  |
Other non-current liabilities |  | 4 |  |  | — |  |  | 4 |  |
Total liabilities assumed |  | 18 |  |  | — |  |  | 18 |  |
Net assets acquired |  | $ | 647 |  |  | $ | (1) |  |  | $ | 646 |  |
(1)Of the approximately $421 million of goodwill recognized for the acquisition, the Company expects that approximately $406 million of goodwill will be deductible for tax purposes. Of the approximately $201 million of other intangible assets recognized for the acquisition, the Company expects that approximately $191 million will be deductible for tax purposes. The goodwill and intangible assets are expected to be deductible over 15 years. (2)Measurement period adjustments primarily related to the adjustments in the fair values of the acquired other intangible assets from the third-party valuation. The offset to the measurement period adjustments was to goodwill. CPI's Electron Device Business – On June 6, 2024, the Company acquired all the outstanding stock of the Electron Device Business of Communications & Power Industries (“CPI's Electron Device Business”) for approximately $1,386 million in cash, which includes a $1 million working capital settlement paid in the first quarter of fiscal 2025. The acquisition was financed through existing cash on hand. CPI’s Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. The operating results of CPI’s Electron Device Business are included within TransDigm's Power & Control segment. As of December 28, 2024, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the acquisition of CPI's Electron Device Business are subject to adjustment until the end of the respective measurement period, including those related to deferred taxes and income taxes. The Company accounted for the acquisition of CPI's Electron Device Business using the acquisition method of accounting and a third-party valuation appraisal and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. The total purchase price was allocated to identifiable assets and liabilities based upon the respective fair value at the date of acquisition. The Company utilized both the cost and market approaches to value property, plant and equipment, which consider external transactions and other comparable transactions, estimated replacement and reproduction costs, and estimated useful lives and consideration for physical, functional and economic obsolescence. The fair values of acquired intangibles are determined based on an income approach, using estimates and assumptions that are deemed reasonable by the Company. Certain assumptions include the discount rates and other 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 thirteen week period ended December 30, 2023 are not material and, accordingly, are not provided. The allocation of the estimated fair value of assets acquired and liabilities assumed in the acquisition of CPI's Electron Device Business as of the June 6, 2024 acquisition date, as well as measurement period adjustments recorded within the permissible one year measurement period, is summarized in the table below (in millions):
|  | Preliminary |  | Measurement Period |  | Adjusted Preliminary |
|  | Allocation |  | Adjustments (2) |  | Allocation |
Assets acquired (excluding cash): |  |  |  |  |  |  |
Trade accounts receivable |  | $ | 40 |  |  | $ | — |  |  | $ | 40 |  |
Inventories |  | 81 |  |  | (1) |  |  | 80 |  |
Prepaid expenses and other |  | 64 |  |  | — |  |  | 64 |  |
Property, plant and equipment |  | 137 |  |  | 32 |  |  | 169 |  |
Goodwill |  | 844 |  |  | (96) |  |  | 748 |  | (1)
Other intangible assets |  | 368 |  |  | 141 |  |  | 509 |  | (1)
Other non-current assets |  | 15 |  |  | (14) |  |  | 1 |  |
Total assets acquired (excluding cash) |  | 1,549 |  |  | 62 |  |  | 1,611 |  |
Liabilities assumed: |  |  |  |  |  |  |
Accounts payable |  | 18 |  |  | (1) |  |  | 17 |  |
Accrued and other current liabilities |  | 45 |  |  | 17 |  |  | 62 |  |
Deferred income taxes |  | 89 |  |  | 55 |  |  | 144 |  |
Other non-current liabilities |  | 12 |  |  | (10) |  |  | 2 |  |
Total liabilities assumed |  | 164 |  |  | 61 |  |  | 225 |  |
Net assets acquired |  | $ | 1,385 |  |  | $ | 1 |  |  | $ | 1,386 |  |
(1)None of the approximately $748 million of goodwill and $509 million of other intangible assets recognized for the acquisition is expected to be deductible for tax purposes. (2)Measurement period adjustments primarily related to the adjustments in the fair values of the acquired property, plant and equipment and other intangible assets from the third-party valuation and related impact on deferred income taxes. The offset to the measurement period adjustments was to goodwill. SEI Industries LTD – On May 21, 2024, the Company acquired all the outstanding stock of SEI Industries LTD (“SEI”) for approximately $171 million in cash, which included a working capital settlement of $1 million paid in the first quarter of fiscal 2025. The acquisition was financed through existing cash on hand. SEI, located in Delta, British Columbia, Canada, is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions, such as remote refueling, for both the commercial and defense aerospace end markets. The products are primarily proprietary with significant aftermarket content. SEI's operating results are presented within TransDigm's Airframe segment. As of December 28, 2024, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the acquisition of SEI are subject to adjustment until the end of the respective measurement period. The Company accounted for the SEI acquisition using the acquisition method of accounting and a third-party valuation appraisal and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. The total purchase price was allocated to identifiable assets and liabilities based upon the respective fair value at the date of acquisition. The fair values of acquired intangibles are determined based on an income approach, using estimates and assumptions that are deemed reasonable by the Company. Certain assumptions include the discount rates and other assumptions that form the basis of the forecasted results of the acquired business including revenue, 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 thirteen week period ended December 30, 2023 are not material and, accordingly, are not provided. The allocation of the estimated fair value of assets acquired and liabilities assumed in the SEI acquisition as of the May 21, 2024 acquisition date, as well as measurement period adjustments recorded within the permissible one year measurement period, is summarized in the table below (in millions):
|  | Preliminary |  | Measurement Period |  | Adjusted Preliminary |
|  | Allocation |  | Adjustments (2) |  | Allocation |
Assets acquired (excluding cash): |  |  |  |  |  |  |
Trade accounts receivable |  | $ | 2 |  |  | $ | 2 |  |  | $ | 4 |  |
Inventories |  | 11 |  |  | — |  |  | 11 |  |
Prepaid expenses and other |  | — |  |  | 1 |  |  | 1 |  |
Property, plant and equipment |  | 1 |  |  | — |  |  | 1 |  |
Goodwill |  | 109 |  |  | (6) |  |  | 103 |  | (1)
Other intangible assets |  | 68 |  |  | 7 |  |  | 75 |  | (1)
Total assets acquired (excluding cash) |  | 191 |  |  | 4 |  |  | 195 |  |
Liabilities assumed: |  |  |  |  |  |  |
Accounts payable |  | 1 |  |  | 1 |  |  | 2 |  |
Accrued and other current liabilities |  | 1 |  |  | — |  |  | 1 |  |
Deferred income taxes |  | 19 |  |  | 2 |  |  | 21 |  |
Total liabilities assumed |  | 21 |  |  | 3 |  |  | 24 |  |
Net assets acquired |  | $ | 170 |  |  | $ | 1 |  |  | $ | 171 |  |
(1)None of the approximately $103 million of goodwill and $75 million of other intangible assets recognized for the acquisition is expected to be deductible for tax purposes. (2)Measurement period adjustments primarily related to the adjustments in the fair values of the acquired other intangible assets from the third-party valuation. The offset to the measurement period adjustments was to goodwill. FPT Industries LLC – On March 1, 2024, the Company acquired all the outstanding stock of FPT Industries LLC (“FPT”) for approximately $57 million in cash. The acquisition was financed through existing cash on hand. FPT, which has facilities in the United Kingdom and Alabama, designs and manufactures an extensive range of specialist fuel tanks and flotation systems for both the commercial and defense aerospace end markets. The products are primarily proprietary with significant aftermarket content. FPT's operating results are presented within TransDigm's Airframe segment. The Company accounted for the FPT acquisition using the acquisition method of accounting and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. As of December 28, 2024, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the acquisition of FPT are subject to adjustment until the end of the respective measurement period. The Company expects that $9 million of the approximately $34 million of goodwill recognized for the acquisition will be deductible for tax purposes over 15 years. The Company expects that none of the approximately $19 million of other intangible assets recognized for the acquisition will be deductible for tax purposes. Pro forma net sales and results of operations for the acquisition, had it occurred at the beginning of the thirteen week period ended December 30, 2023 are not material and, accordingly, are not provided. The fiscal 2024 acquisitions of Raptor Scientific, CPI's Electron Device Business, SEI and FPT completed by the Company strengthen and expand 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 strategy (obtaining profitable new business, continually improving our cost structure, and providing highly engineered value-added products to customers). The purchase prices paid reflect the current EBITDA As Defined and cash flows, as well as the future EBITDA As Defined and cash flows expected to be generated by the businesses, 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. Extant Aerospace Acquisitions – For the thirteen week period ended December 28, 2024, the Company's Extant Aerospace subsidiary, which is included within TransDigm’s Power & Control segment, completed a series of acquisitions of substantially all of the assets and technical data rights of certain product lines, each meeting the definition of a business, for a total purchase price of $29 million. The Company accounted for the acquisitions using the acquisition method of accounting and included the results of operations of the acquisitions in its condensed consolidated financial statements from the effective date of each acquisition. The allocation of the purchase price remains preliminary and will likely change, though not materially, in future periods up to the expiration of the respective one year measurement period as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company expects that all of the approximately $17 million of goodwill and $10 million of other intangible assets recognized for the acquisitions will be deductible for tax purposes over 15 years. For the fiscal year ended ended September 30, 2024, the Company's Extant Aerospace subsidiary completed a series of acquisitions of substantially all of the assets and technical data rights of certain product lines, each meeting the definition of a business, for a total purchase price of $86 million. The allocation of the purchase price remains preliminary and will likely change, though not materially, in future periods up to the expiration of the respective one year measurement period as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company expects that all of the approximately $39 million of goodwill and $22 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 product line acquisitions, had they occurred at the beginning of the thirteen week periods ended December 28, 2024 or December 30, 2023 are not material and, accordingly, are not provided.

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