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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 March 30, 2024
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.)
1350 Euclid Avenue,Suite 1600,Cleveland,Ohio 44115
(Address of principal executive offices) (Zip Code)
(216) 706-2960
(Registrant’s telephone number, including area code)
1301 East 9th Street,Suite 3000, Cleveland,Ohio44114
(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 55,958,480 as of April 30, 2024.



TABLE OF CONTENTS
 
Page
PART IFINANCIAL INFORMATION
ITEM 1Financial Statements
Condensed Consolidated Balance Sheets – March 30, 2024 and September 30, 2023
Condensed Consolidated Statements of Income – Thirteen and Twenty-Six Week Periods Ended March 30, 2024 and April 1, 2023
Condensed Consolidated Statements of Comprehensive Income – Thirteen and Twenty-Six Week Periods Ended March 30, 2024 and April 1, 2023
Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Thirteen and Twenty-Six Week Periods Ended March 30, 2024 and April 1, 2023
Condensed Consolidated Statements of Cash Flows – Twenty-Six Week Periods Ended March 30, 2024 and April 1, 2023
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: Purchases of Equity Securities by the Issuer
ITEM 5Other Information
ITEM 6Exhibits
SIGNATURES


PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share amounts)
(Unaudited)
March 30, 2024September 30, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$4,288 $3,472 
Restricted cash550  
Trade accounts receivable—Net1,201 1,230 
Inventories—Net1,753 1,616 
Prepaid expenses and other490 420 
Total current assets8,282 6,738 
PROPERTY, PLANT AND EQUIPMENT—NET1,288 1,255 
GOODWILL9,051 8,988 
OTHER INTANGIBLE ASSETS—NET2,709 2,747 
OTHER NON-CURRENT ASSETS247 242 
TOTAL ASSETS$21,577 $19,970 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt$625 $71 
Short-term borrowings—trade receivable securitization facility450 349 
Accounts payable302 305 
Accrued and other current liabilities858 854 
Total current liabilities2,235 1,579 
LONG-TERM DEBT21,331 19,330 
DEFERRED INCOME TAXES606 627 
OTHER NON-CURRENT LIABILITIES427 412 
Total liabilities24,599 21,948 
TD GROUP STOCKHOLDERS’ DEFICIT:
Common stock - $.01 par value; authorized 224,400,000 shares; issued 61,622,411 and 60,995,513 at March 30, 2024 and September 30, 2023, respectively
1 1 
Additional paid-in capital2,664 2,440 
Accumulated deficit(3,870)(2,621)
Accumulated other comprehensive loss(118)(98)
Treasury stock, at cost; 5,688,639 shares at March 30, 2024 and September 30, 2023, respectively
(1,706)(1,706)
Total TD Group stockholders’ deficit(3,029)(1,984)
NONCONTROLLING INTERESTS7 6 
Total stockholders’ deficit(3,022)(1,978)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$21,577 $19,970 
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 Twenty-Six Week Periods Ended
 March 30, 2024April 1, 2023March 30, 2024April 1, 2023
NET SALES$1,919 $1,592 $3,708 $2,989 
COST OF SALES767 663 1,515 1,268 
GROSS PROFIT1,152 929 2,193 1,721 
SELLING AND ADMINISTRATIVE EXPENSES248 199 467 369 
AMORTIZATION OF INTANGIBLE ASSETS37 35 72 68 
INCOME FROM OPERATIONS867 695 1,654 1,284 
INTEREST EXPENSE—NET326 295 626 581 
REFINANCING COSTS28 5 28 9 
OTHER INCOME(6)(2)(8)(3)
INCOME FROM OPERATIONS BEFORE INCOME TAXES519 397 1,008 697 
INCOME TAX PROVISION115 93 222 164 
NET INCOME404 304 786 533 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(1) (1)(1)
NET INCOME ATTRIBUTABLE TO TD GROUP$403 $304 $785 $532 
NET INCOME APPLICABLE TO TD GROUP COMMON STOCKHOLDERS$403 $304 $684 $494 
Earnings per share attributable to TD Group common stockholders:
Basic and diluted$6.97 $5.32 $11.83 $8.65 
Cash dividends paid per common share$ $ $35.00 $ 
Weighted-average shares outstanding:
Basic and diluted57.8 57.1 57.8 57.1 
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 Twenty-Six Week Periods Ended
March 30, 2024April 1, 2023March 30, 2024April 1, 2023
Net income$404 $304 $786 $533 
Less: Net income attributable to noncontrolling interests(1) (1)(1)
Net income attributable to TD Group$403 $304 $785 $532 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment(60)43 31 180 
Unrealized gains (losses) on derivatives2 (31)(51)(9)
Pension and post-retirement benefit plans adjustment    
Other comprehensive (loss) income, net of tax, attributable to TD Group(58)12 (20)171 
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO TD GROUP$345 $316 $765 $703 
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 StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTreasury Stock
Number of
Shares
Par
Value
Number of
Shares
ValueNoncontrolling InterestsTotal
BALANCE—September 30, 202260,049,685 $1 $2,113 $(3,914)$(267)(5,688,639)$(1,706)$7 $(3,766)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — 1 1 
Accrued unvested dividend equivalents and other— — — (1)— — — — (1)
Compensation expense recognized for employee stock options— — 24 — — — — — 24 
Exercise of employee stock options121,490 — 27 — — — — — 27 
Net income attributable to TD Group— — — 228 — — — — 228 
Foreign currency translation adjustment, net of tax— — — — 137 — — — 137 
Unrealized gain on derivatives, net of tax— — — — 22 — — — 22 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—December 31, 202260,171,175 $1 $2,164 $(3,687)$(108)(5,688,639)$(1,706)$8 $(3,328)
Accrued unvested dividend equivalents and other— — — (1)— — — — (1)
Compensation expense recognized for employee stock options— — 28 — — — — — 28 
Exercise of employee stock options400,474 — 92 — — — — — 92 
Net income attributable to TD Group— — — 304 — — — — 304 
Foreign currency translation adjustment, net of tax— — — — 43 — — — 43 
Unrealized loss on derivatives, net of tax— — — — (31)— — — (31)
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—April 1, 202360,571,649 $1 $2,284 $(3,384)$(96)(5,688,639)$(1,706)$8 $(2,893)
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 StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTreasury Stock
Number of
Shares
Par
Value
Number of
Shares
ValueNoncontrolling InterestsTotal
BALANCE—September 30, 202360,995,513 $1 $2,440 $(2,621)$(98)(5,688,639)$(1,706)$6 $(1,978)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — 1 1 
Special dividends ($35 per share) and dividend equivalents— — — (2,020)— — — — (2,020)
Accrued unvested dividend equivalents and other— — — (7)— — — — (7)
Compensation expense recognized for employee stock options— — 26 — — — — — 26 
Exercise of employee stock options216,150 — 52 — — — — — 52 
Net income attributable to TD Group— — — 382 — — — — 382 
Foreign currency translation adjustment, net of tax— — — — 91 — — — 91 
Unrealized loss on derivatives, net of tax— — — — (53)— — — (53)
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—December 30, 202361,211,663 $1 $2,518 $(4,266)$(60)(5,688,639)$(1,706)$7 $(3,506)
Accrued unvested dividend equivalents and other— — — (7)— — — — (7)
Compensation expense recognized for employee stock options— — 33 — — — — — 33 
Exercise of employee stock options410,748 — 113 — — — — — 113 
Net income attributable to TD Group— — — 403 — — — — 403 
Foreign currency translation adjustment, net of tax— — — — (60)— — — (60)
Unrealized gain on derivatives, net of tax— — — — 2 — — — 2 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—March 30, 202461,622,411 $1 $2,664 $(3,870)$(118)(5,688,639)$(1,706)$7 $(3,022)
See notes to condensed consolidated financial statements
5

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
Twenty-Six Week Periods Ended
March 30, 2024April 1, 2023
OPERATING ACTIVITIES:
Net income$786 $533 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation71 61 
Amortization of intangible assets and product certification costs72 68 
Amortization of debt issuance costs, original issue discount and premium22 20 
Amortization of inventory step-up3 2 
Amortization of loss contract reserves(17)(19)
Refinancing costs28 9 
Non-cash stock and deferred compensation expense111 77 
Deferred income taxes(1) 
Foreign currency exchange losses5 22 
Changes in assets/liabilities, net of effects from acquisitions and sales of businesses:
Trade accounts receivable36 (33)
Inventories(114)(176)
Income taxes (receivable) payable(136)21 
Other assets(23)(26)
Accounts payable(9)6 
Accrued interest61 14 
Accrued and other liabilities(30)(72)
Net cash provided by operating activities865 507 
INVESTING ACTIVITIES:
Capital expenditures(84)(66)
Acquisition of businesses, net of cash acquired(87)(10)
Net cash used in investing activities(171)(76)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options165 119 
Dividends and dividend equivalent payments(2,038)(38)
Proceeds from issuance of senior secured notes, net5,887 2,066 
Repayments of senior secured notes(4,400) 
Proceeds from term loans, net2,689 6,235 
Proceeds from trade receivable securitization facility, net99  
Repayment on term loans(1,730)(7,303)
Financing costs and other, net(4)(11)
Net cash provided by financing activities668 1,068 
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH4 18 
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH1,366 1,517 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD3,472 3,001 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$4,838 $4,518 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest, net$545 $545 
Cash paid during the period for income taxes, net of refunds$350 $154 
See notes to condensed consolidated financial statements
6

TRANSDIGM GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TWENTY-SIX WEEK PERIODS ENDED MARCH 30, 2024 AND APRIL 1, 2023
(UNAUDITED)
1.    BASIS OF PRESENTATION
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Company”, “TD Group”, “TransDigm”, “we” or “us” refer to TransDigm Group Incorporated and its subsidiaries.
Principles of Consolidation
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, 2023 included in TD Group’s Annual Report on Form 10-K filed on November 9, 2023. 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, 2023 condensed consolidated balance sheet was derived from TD Group’s audited financial statements. The results of operations for the twenty-six week period ended March 30, 2024 are not necessarily indicative of the results to be expected for the full year.
Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to the current year presentation, none of which are material.
New Accounting Pronouncements Issued
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have an impact on our condensed consolidated financial statements and disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ASU 2023-07 expands disclosures about a public business entity's reportable segments and provides for more detailed information about a reportable segment's expenses. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. This standard is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning one year later. Early adoption is permitted. The Company is currently evaluating this standard to determine its impact on our disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. The ASU also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. The standard makes several other changes to income tax disclosure requirements. This standard is effective for annual periods beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. The Company is currently evaluating this standard to determine its impact on our disclosures.
7

2.    ACQUISITIONS
CPI Electron Device Business – On November 9, 2023, the Company entered into a definitive agreement to acquire all the outstanding stock of the Electron Device Business of Communications & Power Industries (“CPI”), a portfolio company of TJC, L.P., for approximately $1,385 million in cash. 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 acquisition is expected to close in fiscal 2024, subject to regulatory approval in the United States (“U.S.”) and customary closing conditions. In February 2024, TransDigm received regulatory approval from the United Kingdom. The acquisition is expected to be financed through existing cash on hand, inclusive of a portion of the cash proceeds from the new long-term debt issued in the first quarter of fiscal 2024. Refer to Note 7, “Debt,” for further disclosure of the aforementioned debt issuances.
Calspan Corporation – On May 8, 2023, the Company acquired all the outstanding stock of Calspan Corporation (“Calspan”) for approximately $730 million in cash, which includes a $1 million working capital settlement paid in the first quarter of fiscal 2024. The acquisition was financed through existing cash on hand. Calspan operates from seven primary facilities within the U.S. and is a leading independent provider of proprietary highly engineered testing and technology development services and systems primarily for the aerospace and defense industry. Calspan’s state of the art transonic wind tunnel is used across a range of important aftermarket-focused development activities for both the commercial and defense aerospace end markets. The services and systems are primarily proprietary with significant aftermarket content. Calspan's operating results are included within TransDigm's Airframe segment as of the May 8, 2023 acquisition date.
The Company accounted for the Calspan 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 date of the acquisition. The total purchase price of Calspan was allocated to the underlying assets acquired and liabilities assumed based upon the respective fair value at the date 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 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. 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 Calspan acquisition had it occurred at the beginning of the twenty-six week period ended April 1, 2023 are not material and, accordingly, are not provided.
As of March 30, 2024, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the Calspan acquisition are subject to adjustment until the end of the respective measurement period, including those related to deferred taxes and income taxes.

8

The allocation of the estimated fair value of assets acquired and liabilities assumed in the Calspan acquisition as of the May 8, 2023 acquisition date, as well as measurement period adjustments recorded within the permissible one year measurement period, are summarized in the table below (in millions):
PreliminaryMeasurement PeriodAdjusted Preliminary
Allocation
Adjustments (2)
Allocation
Assets acquired (excluding cash):
Trade accounts receivable$39 $ $39 
Inventories2  2 
Prepaid expenses and other40 (3)37 
Property, plant and equipment105 234 339 
Goodwill367 (87)280 
(1)
Other intangible assets243 (142)101 
(1)
Other non-current assets7  7 
Total assets acquired (excluding cash)803 2 805 
Liabilities assumed:
Accounts payable10 (1)9 
Accrued and other current liabilities50 4 54 
Deferred income taxes8 (3)5 
Other non-current liabilities6 1 7 
Total liabilities assumed74 1 75 
Net assets acquired$729 $1 $730 
(1)Of the approximately $280 million of goodwill recognized for the acquisition, the Company expects that approximately $222 million will be deductible for tax purposes. Of the approximately $101 million of other intangible assets recognized for the acquisition, the Company expects that approximately $86 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 property, plant and equipment and other intangible assets from the third-party valuation. A substantial portion of the measurement period adjustments to property, plant and equipment relates to the fair value of the transonic wind tunnel. The offset to the measurement period adjustments was to goodwill.
DART Aerospace Acquisition – On March 1, 2024, the Company's DART Aerospace subsidiary (“DART”), which is included within TransDigm’s Airframe segment, completed an acquisition of all the outstanding stock of FPT Industries (“FPT”) for approximately $57 million in cash. 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 $35 million of goodwill and $19 million of other intangible assets recognized for the acquisition will be deductible for tax purposes over 15 years.
Pro forma net sales and results of operations for the DART acquisition, had it occurred at the beginning of the twenty-six week periods ended March 30, 2024 or April 1, 2023 are not material and, accordingly, are not provided.
Extant Aerospace Acquisitions – For the twenty-six week period ended March 30, 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 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 $14 million of goodwill and $7 million of other intangible assets recognized for the acquisition will be deductible for tax purposes over 15 years.
9

For the fiscal year ended September 30, 2023, 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 $24 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 $12 million of goodwill and $6 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 twenty-six week periods ended March 30, 2024 or April 1, 2023 are not material and, accordingly, are not provided.
The acquisitions 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 and cash flows, as well as the future EBITDA 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.
3.    REVENUE RECOGNITION
TransDigm's sales are concentrated in the aerospace and defense industry. The Company’s customers include: distributors of aerospace components, commercial airlines, large commercial transport and regional and business aircraft original equipment manufacturers (“OEMs”), various armed forces of the U.S. and friendly foreign governments, defense OEMs, system suppliers, and various other industrial customers.
The Company recognizes revenue from contracts with customers using the five step model prescribed in ASC 606. A substantial portion of the Company's revenue is recorded at a point in time basis. Revenue is recognized from the sale of products or services when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to the customer. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Revenue is measured at the amount of consideration the Company expects to be paid in exchange for goods or services.
In certain contracts, control transfers to the customer over time, primarily in contracts where the customer is required to pay for the cost of both the finished and unfinished goods at the time of cancellation plus a reasonable profit relative to the work performed for products that were customized for the customer. Therefore, we recognize revenue over time for those agreements that have a right to margin and where the products being produced have no alternative use. 
Based on our production cycle, it is generally expected that goods related to the revenue will be shipped and billed within twelve months. For revenue recognized over time, we estimate the amount of revenue attributable to a contract earned at a given point during the production cycle based on certain costs, such as materials and labor incurred to date, plus the expected profit, which is a cost-to-cost input method.
We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price. Variable consideration is included in the estimated transaction price when there is a basis to reasonably estimate the amount, including whether the estimate should be constrained in order to avoid a significant reversal of revenue in a future period. These estimates are based on historical experience, anticipated performance under the terms of the contract and our best judgment at the time.
When contracts are modified to account for changes in contract specifications and requirements, the Company considers 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 good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively.
The Company’s payment terms vary by the type and location of the customer and the products or services offered. The Company does not offer any payment terms that would meet the requirements for consideration as a significant financing component.
10

Shipping and handling fees and costs incurred in connection with products sold are recorded in cost of sales in the condensed consolidated statements of income, and are not considered a performance obligation to our customers.
The Company pays sales commissions that relate to contracts for products or services that are satisfied at a point in time or over a period of one year or less and are expensed as incurred. These costs are reported as a component of selling and administrative expenses in the condensed consolidated statements of income.
Contract Assets and Liabilities – Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing or reimbursable costs related to a specific contract. Contract liabilities (Deferred revenue) relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. The following table summarizes our contract assets and liabilities balances (in millions):
March 30, 2024September 30, 2023
Contract assets, current (1)
$206 $191 
Contract assets, non-current (2)
 1 
Total contract assets206 192 
Contract liabilities, current (3)
114 79 
Contract liabilities, non-current (4)
7 8 
Total contract liabilities121 87 
Net contract assets$85 $105 
(1)Included in prepaid expenses and other on the condensed consolidated balance sheets.
(2)Included in other non-current assets on the condensed consolidated balance sheets.
(3)Included in accrued and other current liabilities on the condensed consolidated balance sheets.
(4)Included in other non-current liabilities on the condensed consolidated balance sheets.
The increase in the Company's total contract assets at March 30, 2024 compared to September 30, 2023 is primarily due to the timing and status of work in process and/or milestones of certain contracts. The increase in the Company's total contract liabilities at March 30, 2024 compared to September 30, 2023 is primarily due to the receipt of advance payments. For the twenty-six week period ended March 30, 2024, the revenue recognized that was previously included in contract liabilities was approximately $19 million.
Refer to Note 11, “Segments,” for disclosures related to the disaggregation of revenue.
Allowance for Credit Losses – The Company's allowance for credit losses is the allowance for uncollectible accounts. The allowance for uncollectible accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected.
The Company’s method for developing its allowance for credit losses is based on historical write-off experience, the aging of receivables, an assessment of the creditworthiness of customers, economic conditions and other external market information and supportable forward-looking information. The allowance also incorporates a provision for the estimated impact of disputes with customers. All provisions for allowances for uncollectible accounts are included in selling and administrative expenses. The determination of the amount of the allowance for uncollectible accounts is subject to judgment and estimation by management. If circumstances change or economic conditions deteriorate or improve, the allowance for uncollectible accounts could increase or decrease.
As of March 30, 2024 and September 30, 2023, the allowance for uncollectible accounts was $32 million and $31 million, respectively. The allowance for uncollectible accounts is assessed individually at each operating unit by the operating unit’s management team.
11

4.    EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data) using the two-class method:
Thirteen Week Periods Ended Twenty-Six Week Periods Ended
March 30, 2024April 1, 2023March 30, 2024April 1, 2023
Numerator for earnings per share:
Net income$404 $304 $786 $533 
Less: Net income attributable to noncontrolling interests(1) (1)(1)
Net income attributable to TD Group403 304 785 532 
Less: Dividends paid on participating securities (1)
  (101)(38)
Net income applicable to TD Group common stockholders—basic and diluted$403 $304 $684 $494 
Denominator for basic and diluted earnings per share under the two-class method:
Weighted-average common shares outstanding55.7 54.7 55.6 54.6 
Vested options deemed participating securities2.1 2.4 2.2 2.5 
Total shares for basic and diluted earnings per share57.8 57.1 57.8 57.1 
Earnings per share—basic and diluted$6.97 $5.32 $11.83 $8.65 
(1)Represents dividend equivalent payments of approximately $101 million, of which $18 million was accrued as of September 30, 2023 and the remaining $83 million was associated with the November 2023 $35.00 dividend declaration, and $38 million, respectively, for the twenty-six week periods ended March 30, 2024 and April 1, 2023. No special dividends were declared or paid on participating securities, including dividend equivalent payments, for the thirteen week periods ended March 30, 2024 and April 1, 2023.
5.    INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Cost of inventories is generally determined by the average cost and the first–in, first–out (“FIFO”) methods and includes material, labor and overhead related to the manufacturing process.
Inventories consist of the following (in millions):
March 30, 2024September 30, 2023
Raw materials and purchased component parts$1,222 $1,144 
Work-in-progress512 455 
Finished goods240 226 
Total1,974 1,825 
Reserves for excess and obsolete inventory(221)(209)
Inventories—Net$1,753 $1,616 
6.    INTANGIBLE ASSETS
Other intangible assets–net in the condensed consolidated balance sheets consist of the following (in millions):
 March 30, 2024September 30, 2023
 Gross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNet
Trademarks and trade names$1,017 $— $1,017 $1,019 $— $1,019 
Technology2,140 940 1,200 2,124 888 1,236 
Order backlog5 3 2 7 6 1 
Customer relationships639 153 486 623 136 487 
Other9 5 4 9 5 4 
Total$3,810 $1,101 $2,709 $3,782 $1,035 $2,747 
12

The aggregate amortization expense on identifiable intangible assets is approximately $37 million and $35 million for the thirteen week periods ended March 30, 2024 and April 1, 2023, respectively. The aggregate amortization expense on identifiable intangible assets is approximately $72 million and $68 million for the twenty-six week periods ended March 30, 2024 and April 1, 2023, respectively.
As disclosed in Note 2, “Acquisitions,” the estimated fair value of the net identifiable tangible and intangible assets acquired is based on the acquisition method of accounting. The fair value of the net identifiable tangible and intangible assets acquired will be finalized within the measurement period (not to exceed one year). Intangible assets acquired during the twenty-six week period ended March 30, 2024 are summarized in the table below (in millions):
Gross AmountAmortization Period
Intangible assets not subject to amortization:
Goodwill$49 
49 
Intangible assets subject to amortization:
Technology15 20 years
Order backlog1 1.5 years
Customer relationships10 20 years
26 
Total$75 
The following is a summary of changes in the carrying value of goodwill by segment from September 30, 2023 through March 30, 2024 (in millions):
Power & ControlAirframeNon-aviationTotal
Balance at September 30, 2023$4,194 $4,701 $93 $8,988 
Goodwill acquired during the period (Note 2)14 35  49 
Purchase price allocation adjustments (1)
 35  35 
Currency translation adjustments and other4 (25) (21)
Balance at March 30, 2024$4,212 $4,746 $93 $9,051 
(1)Related to the opening balance sheet adjustments recorded from the acquisition of Calspan completed during the third quarter of fiscal 2023, within the allowable measurement period (not to exceed one year). Refer to Note 2, “Acquisitions,” for further information.
The Company performs its annual impairment test for goodwill and other intangible assets as of the first day of the fourth fiscal quarter of each year, or more frequently, if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We have assessed the changes in events and circumstances through the second quarter of fiscal 2024 and concluded that no triggering events occurred that required interim quantitative testing.
13

7.    DEBT
The Company’s debt consists of the following (in millions):
March 30, 2024
Gross AmountDebt Issuance CostsOriginal Issue (Discount) or PremiumNet Amount
Short-term borrowings—trade receivable securitization facility$450 $ $ $450 
Term loans$7,230 $(27)$(46)$7,157 
7.50% senior subordinated notes due 2027 (“7.50% 2027 Notes”)
550 (2) 548 
5.50% senior subordinated notes due 2027 (“5.50% 2027 Notes”)
2,650 (11) 2,639 
6.75% secured notes due 2028 (“2028 Secured Notes”)
2,100 (17)(9)2,074 
4.625% senior subordinated notes due 2029 (“4.625% 2029 Notes”)
1,200 (7) 1,193 
4.875% senior subordinated notes due 2029 (“4.875% 2029 Notes”)
750 (5) 745 
6.375% secured notes due 2029 (“2029 Secured Notes”)
2,750 (25)(1)2,724 
6.875% secured notes due 2030 (“2030 Secured Notes”)
1,450 (13) 1,437 
7.125% secured notes due 2031 (“2031 Secured Notes”)
1,000 (9)(8)983 
6.625% secured notes due 2032 (“2032 Secured Notes”)
2,200 (20)2,180 
Government refundable advances17   17 
Finance lease obligations259   259 
22,156 (136)(64)21,956 
Less: current portion627 (2) 625 
Long-term debt$21,529 $(134)$(64)$21,331 

September 30, 2023
Gross AmountDebt Issuance CostsOriginal Issue (Discount) or PremiumNet Amount
Short-term borrowings—trade receivable securitization facility$350 $(1)$ $349 
Term loans$6,249 $(22)$(48)$6,179 
6.25% secured notes due 2026 (“2026 Secured Notes”)
4,400 (25)2 4,377 
7.50% 2027 Notes
550 (2) 548 
5.50% 2027 Notes
2,650 (12) 2,638 
2028 Secured Notes2,100 (19)(10)2,071 
4.625% 2029 Notes
1,200 (7) 1,193 
4.875% 2029 Notes
750 (5) 745 
2030 Secured Notes1,450 (14) 1,436 
Government refundable advances21   21 
Finance lease obligations193   193 
19,563 (106)(56)19,401 
Less: current portion71   71 
Long-term debt$19,492 $(106)$(56)$19,330 
Accrued interest, which is classified as a component of accrued and other current liabilities on the condensed consolidated balance sheets, was $186 million and $125 million as of March 30, 2024 and September 30, 2023, respectively.




14

First Quarter of Fiscal 2024 Activity
Amendment No. 13 and Incremental Term Loan Assumption Agreement – On November 28, 2023, the Company entered into Amendment No. 13 and Incremental Term Loan Assumption Agreement (herein, “Amendment No. 13”) to the Second Amended and Restated Credit Agreement dated as of June 4, 2014 (the “Credit Agreement”). Under the terms of Amendment No. 13, the Company, among other things, issued $1,000 million in Tranche J term loans maturing February 28, 2031. The Tranche J term loans bear interest at a rate of adjusted Term Secured Overnight Financing Rate (“Term SOFR”) plus 3.25%. The Tranche J term loans were issued at a discount of 0.25%, or approximately $3 million. The Tranche J term loans were fully drawn on November 28, 2023 and the other terms and conditions that apply to the Tranche J term loans are substantially the same as the terms and conditions that apply to the term loans immediately prior to Amendment No. 13. Principal payments commence on March 31, 2024, in which $3 million will be paid on a quarterly basis up to the maturity date.
The Company capitalized $10 million in debt issuance costs associated with the Tranche J term loans during the twenty-six week period ended March 30, 2024.
Issuance of $1,000 million Senior Secured Notes due 2031 On November 28, 2023, the Company entered into a purchase agreement in connection with a private offering of $1,000 million in aggregate principal amount of 7.125% senior secured notes due 2031 (the “2031 Secured Notes”) at an issue price of 99.25% of the principal amount, which represents an approximately $8 million discount. The 2031 Secured Notes were issued pursuant to an indenture, dated as of November 28, 2023, amongst TransDigm Inc., as issuer, TransDigm Group and the other subsidiaries of TransDigm Inc. named therein, as guarantors. The 2031 Secured Notes are guaranteed, on a senior secured basis, by TransDigm Group and each of TransDigm Inc.’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm or any of the guarantors in an aggregate principal amount of at least $200 million. The 2031 Secured Notes and guarantees rank equally in right of payment with all of TransDigm’s and the guarantors’ existing and future senior indebtedness, senior in right of payment to any of TransDigm’s and the guarantors’ existing and future indebtedness that is, by its terms, expressly subordinated in right of payment to the 2031 Secured Notes and guarantees, and structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries. The Company expects to use the proceeds of the offering of the 2031 Secured Notes, along with the proceeds from the Tranche J term loans further described above, together with cash on hand, primarily to fund the acquisition the Electron Device Business of CPI (see Note 2, “Acquisitions,” for further information).
The 2031 Secured Notes bear interest at a rate of 7.125% per annum, which accrues from November 28, 2023 and is payable in arrears on June 1st and December 1st of each year, commencing on June 1, 2024. The 2031 Secured Notes mature on December 1, 2031, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the indenture.
The Company capitalized $10 million in debt issuance costs associated with the 2031 Secured Notes during the twenty-six week period ended March 30, 2024.
Trade Receivable Securitization Facility – The Company’s trade receivable securitization facility (the “Securitization Facility”) effectively increases the Company’s borrowing capacity depending on the amount of the domestic operations’ trade accounts receivable. The Securitization Facility includes the right for the Company to exercise annual one year extensions as long as there have been no termination events as defined by the agreement. The Company uses the proceeds from the Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. The Securitization Facility is collateralized by substantially all of the Company’s domestic operations’ trade accounts receivable.
During the first quarter of fiscal 2024, the Company drew the remaining $100 million available under the Securitization Facility. As of March 30, 2024, the Company has borrowed $450 million under the Securitization Facility, which is fully drawn, and bears interest at a rate of Term SOFR plus 1.60%. At March 30, 2024, the applicable interest rate was 6.91%.
Second Quarter of Fiscal 2024 Activity
Amendment No. 14 and Incremental Revolving Credit Assumption Agreement – On February 27, 2024, the Company entered into Amendment No. 14 and Incremental Revolving Credit Assumption Agreement (herein, “Amendment No. 14”) to the Credit Agreement. Under the terms of Amendment No. 14, the Company, among other things, refinanced its revolving credit facility to (i) extend the maturity date from May 2026 to February 2029; (ii) increased the total commitments capacity thereunder from $810 million to $910 million; and (iii) decreased the applicable margin to Term SOFR plus 2.25% compared to Term SOFR plus 2.50% applicable prior to Amendment No. 14. As of March 30, 2024, the borrowings available under the revolving commitments were $847 million.
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The Company capitalized $1 million in debt issuance costs and wrote-off $3 million in unamortized debt issuance costs associated with the refinancing during the twenty-six week period ended March 30, 2024.
Issuance of $4,400 million of Senior Secured Notes – On February 27, 2024, the Company entered into two separate purchase agreements in connection with private offerings of $2,200 million in aggregate principal amount of 6.375% senior secured notes due 2029 (the “$2,200 million 2029 Secured Notes”) at an issue price of 100% of the principal amount and $2,200 million in aggregate principal amount of 6.625% senior secured notes due 2032 (the “2032 Secured Notes”) at an issue price of 100% of the principal amount. The proceeds were used to repurchase the 2026 Secured Notes further described below.
The $2,200 million 2029 Secured Notes and 2032 Secured Notes bear interest at the rate of 6.375% per annum and 6.625% per annum, respectively, which accrues from February 27, 2024 and is payable in arrears on March 1st and September 1st of each year, commencing on September 1, 2024. The $2,200 million 2029 Secured Notes mature on March 1, 2029 and the 2032 Secured Notes mature on March 1, 2032, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the applicable indenture.
The $2,200 million 2029 Secured Notes and 2032 Secured Notes were issued pursuant to an indenture, dated as of February 27, 2024 in each case, amongst TransDigm Inc., as issuer, TD Group and the subsidiaries of TransDigm party thereto, as guarantors. The secured notes are guaranteed, on a senior secured basis, by TD Group and each of TransDigm’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm or any of the guarantors in an aggregate principal amount of at least $200 million. The secured notes and the related guarantees rank equally in right of payment with all of TransDigm’s and the guarantors’ existing and future senior indebtedness, senior in right of payment to any of TransDigm’s and the guarantors’ existing and future indebtedness that is, by its terms, expressly subordinated in right of payment to the $2,200 million 2029 Secured Notes and 2032 Secured Notes and related guarantees, and structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries.
The Company capitalized approximately $20 million and $20 million in debt issuance costs associated with the $2,200 million 2029 Secured Notes and the 2032 Secured Notes, respectively, during the twenty-six week period ended March 30, 2024.
Amendment No. 15 Loan Modification Agreement and Refinancing Facility Agreement – On March 22, 2024, the Company entered into Amendment No. 15 Loan Modification Agreement and Incremental Term Loan Assumption Agreement (herein, “Amendment No. 15”) to the Credit Agreement. Under the terms of Amendment No. 15, the Company, among other things, (i) repriced all of its $4,525 million in existing Tranche I term loans maturing August 24, 2028 to bear interest at Term SOFR plus 2.75% compared to Term SOFR plus 3.25% applicable prior to Amendment No. 15; and (ii) repaid in full its existing approximately $1,708 million in Tranche H term loans maturing February 22, 2027 and replaced such loans with approximately $1,708 million in new Tranche K term loans maturing March 22, 2030. The Tranche K term loans were issued at a discount of 0.25%, or approximately $4 million, and bear interest at Term SOFR plus 2.75%. The Tranche K term loans were fully drawn on March 22, 2024.
The other terms and conditions that apply to the Tranche I and Tranche K term loans are substantially the same as the terms and conditions that applied to the term loans immediately prior to Amendment No. 15. Principal payments for the Tranche I and Tranche K term loans commence on June 30, 2024, in which $11 million and $4 million will be paid on a quarterly basis up to the maturity date of each respective tranche of term loans.
The Company expensed approximately $4 million in refinancing costs associated with Amendment No. 15 during the twenty-six week period ended March 30, 2024. Additionally, the Company wrote-off $2 million of original issue discount during the twenty-six week period ended March 30, 2024.
Redemption of $4,400 million 6.25% Senior Secured Notes due 2026 – On March 28, 2024, the Company redeemed all $4,400 million aggregate principal amount of its outstanding 2026 Secured Notes at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but not including, the redemption date, using the net proceeds of the offering of the $2,200 million 2029 Secured Notes and the 2032 Secured Notes, together with cash on hand. There was no early redemption premium.
The Company recorded refinancing costs of $19 million, consisting primarily of the write-off of $21 million in unamortized debt issuance costs, slightly offset by the write-off of unamortized premium of $2 million in conjunction with the redemption of the 2026 Secured Notes during the twenty-six week period ended March 30, 2024.
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Issuance of $550 million Senior Secured Notes due 2029 – On March 22, 2024, the Company entered into a purchase agreement in connection with a private offering of $550 million in aggregate principal amount consisting of 6.375% senior secured notes due 2029 (the “$550 million 2029 Secured Notes”) at an issue price of 99.75% of the principal amount, which represents an approximately $1 million discount. The $550 million 2029 Secured Notes are an additional issuance of the Company's existing $2,200 million 2029 Secured Notes (as further described above) and were issued under a supplemental indenture dated as of March 22, 2024, pursuant to which the Company previously issued the $2,200 million 2029 Secured Notes. The $550 million 2029 Secured Notes are the same class and series as, and otherwise identical to, the $2,200 million 2029 Secured Notes other than with respect to the date of issuance and issue price. The proceeds are classified as restricted cash on the condensed consolidated balance sheet as of March 30, 2024 as they were committed to be used to redeem the 7.50% 2027 Notes further described below.
The Company capitalized $5 million in debt issuance costs associated with the $550 million 2029 Secured Notes during the twenty-six week period ended March 30, 2024.
Subsequent Event - Redemption of $550 million Senior Subordinated Notes due 2027 – On March 22, 2024, the Company called all of its outstanding 7.50% 2027 Notes. As the notification of redemption was made in March 2024, the 7.50% 2027 Notes obligation is classified as current portion of long-term debt on the condensed consolidated balance sheets as of March 30, 2024. On April 22, 2024, the Company redeemed the principal amount of $550 million. There was no early redemption premium.
Government Refundable Advances – Government refundable advances consist of payments received from the Canadian government to assist in research and development related to commercial aviation. The requirement to repay this advance is based on year-over-year commercial aviation revenue growth for certain product lines at CMC Electronics, which is a wholly-owned subsidiary of TransDigm. As of March 30, 2024 and September 30, 2023, the outstanding balance of these advances was $17 million and $21 million, respectively.
Obligations under Finance Leases – The Company leases certain buildings and equipment under finance leases. The present value of the minimum finance lease payments, net of the current portion, represents a balance of $259 million and $193 million at March 30, 2024 and September 30, 2023, respectively. The increase in the current fiscal year is attributable to certain new leases of facilities and amendments to previous agreements qualifying as lease modifications resulting in a change in classification from an operating lease to a finance lease. Refer to Note 13, “Leases,” for further disclosure of the Company's lease obligations.
8.    INCOME TAXES
At the end of each reporting period, TD Group makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods.
During the thirteen week periods ended March 30, 2024 and April 1, 2023, the effective income tax rate was 22.2% and 23.4%, respectively. During the twenty-six week periods ended March 30, 2024 and April 1, 2023, the effective income tax rate was 22.0% and 23.5%, respectively. The Company’s lower effective income tax rate for the thirteen and twenty-six week periods ended March 30, 2024, was primarily due to a less significant impact on the rate from the valuation allowance applicable to the Company's net interest deduction limitation carryforward. The Company's effective income tax rate for the thirteen and twenty-six week periods ended March 30, 2024 was slightly higher than the federal statutory tax rate of 21% primarily due to an increase in the valuation allowance applicable to the Company's net interest deduction limitation carryforward, offset by the discrete impact of excess tax benefits associated with share-based payments.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations for years before fiscal 2018. The Company is currently under examination for its federal income taxes in Canada for fiscal years 2013 through 2019, in France for fiscal years 2020 through 2022, and in Germany for fiscal years 2014 through 2019. In addition, the Company is subject to state income tax examinations for fiscal years 2015 and later.
Unrecognized tax benefits at March 30, 2024 and September 30, 2023, the recognition of which would have an impact on the effective tax rate for each fiscal year, amounted to $17 million. The Company classifies all income tax-related interest and penalties as income tax expense, which were not significant for the thirteen and twenty-six week periods ended March 30, 2024 and April 1, 2023. As of March 30, 2024 and September 30, 2023, the Company accrued $6 million for the potential payment of interest and penalties. Within the next twelve months, it is reasonably possible that unrecognized tax benefits could be reduced by approximately $6 million resulting primarily from the resolution of tax examinations. Any increase in the amount of unrecognized tax benefits within the next twelve months is not expected to be material.
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9.    FAIR VALUE MEASUREMENTS
The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The following summarizes the carrying amounts and fair values of financial instruments (in millions):
March 30, 2024September 30, 2023
LevelCarrying
Amount
Fair ValueCarrying
Amount
Fair Value
Assets:
Cash and cash equivalents1$4,288 $4,288 $3,472 $3,472 
Restricted cash1550 550   
Interest rate swap agreements (1)
276 76 103 103 
Interest rate swap agreements (2)
212 12 41 41 
Interest rate cap agreements (2)
238 38 53 53 
Interest rate collar agreements (2)
214 14 17 17 
Liabilities:
Foreign currency forward exchange contracts (3)
22 2 5 5 
Interest rate swap agreements (4)
23 3 3 3 
Interest rate cap agreements (4)
21 1 1 1 
Short-term borrowings - trade receivable securitization facility (5)
2450 450 349 349 
Long-term debt, including current portion:
Term loans (5)
27,157 7,196 6,179 6,212 
2026 Secured Notes (5)
1  4,377 4,329 
7.50% 2027 Notes (5)
1548 550 548 549 
5.50% 2027 Notes (5)
12,639 2,584 2,638 2,484 
2028 Secured Notes (5)
12,074 2,129 2,071 2,069 
4.625% 2029 Notes (5)
11,193 1,115 1,193 1,047 
4.875% 2029 Notes (5)
1745 698 745 654 
2029 Secured Notes (5)
12,724 2,760   
2030 Secured Notes (5)
11,437 1,477 1,436 1,423 
2031 Secured Notes (5)
1983 1,030   
2032 Secured Notes (5)
12,180 2,222   
Government refundable advances2