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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 July 2, 2022
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to            
Commission File Number 001-32833
TransDigm Group Incorporated
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
41-2101738
(I.R.S. Employer Identification No.)
1301 East 9th Street,Suite 3000,Cleveland,Ohio 44114
(Address of principal executive offices) (Zip Code)
(216) 706-2960
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  Accelerated Filer
Non-Accelerated Filer
  Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol:Name of each exchange on which registered:
Common Stock, $0.01 par valueTDGNew York Stock Exchange
The number of shares outstanding of TransDigm Group Incorporated’s common stock, par value $.01 per share, was 54,234,656 as of August 1, 2022.


TABLE OF CONTENTS
 
Page
PART IFINANCIAL INFORMATION
ITEM 1Financial Statements
Condensed Consolidated Balance Sheets – July 2, 2022 and September 30, 2021
Condensed Consolidated Statements of Income – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021
Condensed Consolidated Statements of Comprehensive Income – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021
Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Thirteen and Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021
Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended July 2, 2022 and July 3, 2021
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


TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share amounts)
(Unaudited)
July 2, 2022September 30, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$3,808 $4,787 
Trade accounts receivable—Net883 791 
Inventories—Net1,320 1,185 
Prepaid expenses and other297 267 
Total current assets6,308 7,030 
PROPERTY, PLANT AND EQUIPMENT—NET814 770 
GOODWILL8,728 8,568 
OTHER INTANGIBLE ASSETS—NET2,771 2,791 
OTHER198 156 
TOTAL ASSETS$18,819 $19,315 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt$77 $277 
Short-term borrowings—trade receivable securitization facility350 349 
Accounts payable248 227 
Accrued and other current liabilities669 810 
Total current liabilities1,344 1,663 
LONG-TERM DEBT19,382 19,372 
DEFERRED INCOME TAXES588 485 
OTHER NON-CURRENT LIABILITIES473 705 
Total liabilities21,787 22,225 
TD GROUP STOCKHOLDERS’ DEFICIT:
Common stock - $.01 par value; authorized 224,400,000 shares; issued 59,906,055 and 59,403,100 at July 2, 2022 and September 30, 2021, respectively
1 1 
Additional paid-in capital2,041 1,830 
Accumulated deficit(3,114)(3,705)
Accumulated other comprehensive loss(198)(248)
Treasury stock, at cost; 5,688,639 and 4,198,226 shares at July 2, 2022 and September 30, 2021, respectively
(1,706)(794)
Total TD Group stockholders’ deficit(2,976)(2,916)
NONCONTROLLING INTERESTS8 6 
Total stockholders’ deficit(2,968)(2,910)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$18,819 $19,315 
See notes to condensed consolidated financial statements
1

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in millions, except per share amounts)
(Unaudited) 
 Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
 July 2, 2022July 3, 2021July 2, 2022July 3, 2021
NET SALES$1,398 $1,218 $3,919 $3,519 
COST OF SALES582 563 1,706 1,731 
GROSS PROFIT816 655 2,213 1,788 
SELLING AND ADMINISTRATIVE EXPENSES184 172 537 531 
AMORTIZATION OF INTANGIBLE ASSETS33 36 102 101 
INCOME FROM OPERATIONS599 447 1,574 1,156 
INTEREST EXPENSE—NET269 263 799 798 
REFINANCING COSTS 13  36 
OTHER EXPENSE (INCOME)21 (5)15 (37)
GAIN ON SALE OF BUSINESSES—NET(3)(68)(6)(69)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES312 244 766 428 
INCOME TAX PROVISION (BENEFIT)73 (73)165 (45)
INCOME FROM CONTINUING OPERATIONS239 317 601 473 
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX  1  
NET INCOME239 317 602 473 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(1) (2)(2)
NET INCOME ATTRIBUTABLE TO TD GROUP$238 $317 $600 $471 
NET INCOME APPLICABLE TO TD GROUP COMMON STOCKHOLDERS$238 $317 $554 $398 
Earnings per share attributable to TD Group common stockholders
Earnings per share from continuing operations—basic and diluted$4.10 $5.43 $9.42 $6.83 
Earnings per share from discontinued operations—basic and diluted  0.02  
Earnings per share$4.10 $5.43 $9.44 $6.83 
Weighted-average shares outstanding:
Basic and diluted58.0 58.4 58.7 58.4 
See notes to condensed consolidated financial statements
2

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in millions)
(Unaudited)
 Thirteen Week Periods Ended Thirty-Nine Week Periods Ended
July 2, 2022July 3, 2021July 2, 2022July 3, 2021
Net income$239 $317 $602 $473 
Less: Net income attributable to noncontrolling interests(1) (2)(2)
Net income attributable to TD Group$238 $317 $600 $471 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment(155)10 (208)121 
Unrealized gain on derivatives24 2 252 58 
Pension and postretirement benefit plans adjustment6  6  
Other comprehensive (loss) income, net of tax, attributable to TD Group(125)12 50 179 
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO TD GROUP$113 $329 $650 $650 
See notes to condensed consolidated financial statements
3

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Amounts in millions, except share amounts)
(Unaudited)
TD Group Stockholders
Common StockAdditional Paid-In
Capital
Accumulated Other Comprehensive LossTreasury Stock
Number
of Shares
Par
Value
Accumulated
Deficit
Number
of Shares
ValueNoncontrolling 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 adjustment, net of tax— — — — 111 — — — 111 
Unrealized gain on derivatives, net of tax— — — — 13 — — — 13 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—January 2, 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 adjustment, net of tax— — — —  — — —  
Unrealized gain on derivatives, net of tax— — — — 43 — — — 43 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—April 3, 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 adjustment, net of tax— — — — 10 — — — 10 
Unrealized gain on derivatives, net of tax— — — — 2 — — — 2 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—July 3, 202159,272,711 $1 $1,783 $(3,906)$(222)(4,198,226)$(794)$6 $(3,132)
See notes to condensed consolidated financial statements
4

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Amounts in millions, except share amounts)
(Unaudited)
TD Group Stockholders
Common StockAdditional Paid-In
Capital
Accumulated Other Comprehensive LossTreasury Stock
Number
of Shares
Par
Value
Accumulated
Deficit
Number
of Shares
ValueNoncontrolling InterestsTotal
BALANCE—September 30, 202159,403,100 $1 $1,830 $(3,705)$(248)(4,198,226)$(794)$6 $(2,910)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — 1 1 
Accrued unvested dividend equivalents and other— — — (3)— — — — (3)
Compensation expense recognized for employee stock options— — 35 — — — — — 35 
Exercise of employee stock options215,817 — 40 — — — — — 40 
Net income attributable to TD Group— — — 163 — — — — 163 
Foreign currency translation adjustment, net of tax— — — — (10)— — — (10)
Unrealized gain on derivatives, net of tax— — — — 58 — — — 58 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—January 1, 202259,618,917 $1 $1,905 $(3,545)$(200)(4,198,226)$(794)$7 $(2,626)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — (1)(1)
Accrued unvested dividend equivalents and other— — — (4)— — — — (4)
Compensation expense recognized for employee stock options— — 39 — — — — — 39 
Exercise of employee stock options191,403 — 40 — — — — — 40 
Stock repurchases under repurchase program— — — — — (1,046,815)(667)— (667)
Net income attributable to TD Group— — — 199 — — — — 199 
Foreign currency translation adjustment, net of tax— — — — (43)— — — (43)
Unrealized gain on derivatives, net of tax— — — — 170 — — — 170 
Pension and postretirement benefit plans adjustment, net of tax— — — —  — — —  
BALANCE—April 2, 202259,810,320 $1 $1,984 $(3,350)$(73)(5,245,041)$(1,461)$6 $(2,893)
Changes in noncontrolling interest of consolidated subsidiaries, net— — — — — — — 2 2 
Accrued unvested dividend equivalents and other— — — (2)— — — — (2)
Compensation expense recognized for employee stock options— — 38 — — — — — 38 
Exercise of employee stock options95,735 — 19 — — — — — 19 
Stock repurchases under repurchase program— — — — — (443,598)(245)— (245)
Net income attributable to TD Group— — — 238 — — — — 238 
Foreign currency translation adjustment, net of tax— — — — (155)— — — (155)
Unrealized gain on derivatives, net of tax— — — — 24 — — — 24 
Pension and postretirement benefit plans adjustment, net of tax— — — — 6 — — — 6 
BALANCE—July 2, 202259,906,055 $1 $2,041 $(3,114)$(198)(5,688,639)$(1,706)$8 $(2,968)
See notes to condensed consolidated financial statements
5

TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
Thirty-Nine Week Periods Ended
July 2, 2022July 3, 2021
OPERATING ACTIVITIES:
Net income$602 $473 
Income from discontinued operations, net of tax(1) 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation85 87 
Amortization of intangible assets and product certification costs103 101 
Amortization of debt issuance costs, original issue discount and premium26 26 
Amortization of inventory step-up1 6 
Amortization of loss contract reserves(28)(47)
Refinancing costs 36 
Gain on sale of businesses, net(6)(69)
Non-cash stock compensation expense115 105 
Deferred income taxes(1)(55)
Foreign currency exchange (gain) loss(22)20 
Gain on insurance proceeds from fire (21)
Loss on settlement of the Esterline Retirement Plan (the “ERP”)21  
Contribution to the unfunded portion of the ERP(16) 
Changes in assets/liabilities, net of effects from acquisitions and sales of businesses:
Trade accounts receivable(91)23 
Inventories(108)40 
Income taxes payable (receivable)21 (21)
Other assets(23)(35)
Accounts payable23 (19)
Accrued interest(18)(3)
Accrued and other liabilities(8)(23)
Net cash provided by operating activities675 624 
INVESTING ACTIVITIES:
Capital expenditures(86)(80)
Acquisition of businesses, net of cash acquired(422)(951)
Net proceeds from sale of businesses3 259 
Insurance proceeds for fixed assets damaged from fire 24 
Net cash used in investing activities(505)(748)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options99 106 
Dividend equivalent payments(46)(73)
Repurchases of common stock(912) 
Proceeds from issuance of senior subordinated notes, net 1,932 
Repayments of senior subordinated notes, net  (1,982)
Proceeds from revolving credit facility 200 
Repayment on revolving credit facility(200)(200)
Repayment on term loans(56)(56)
Financing costs and other, net(1)(1)
Net cash used in financing activities(1,116)(74)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(33)10 
NET DECREASE IN CASH AND CASH EQUIVALENTS(979)(188)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD4,787 4,717 
CASH AND CASH EQUIVALENTS, END OF PERIOD$3,808 $4,529 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest$791 $774 
Cash paid during the period for income taxes, net of refunds$138 $51 
See notes to condensed consolidated financial statements
6

TRANSDIGM GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-NINE WEEK PERIODS ENDED JULY 2, 2022 AND JULY 3, 2021
(UNAUDITED)
1.    DESCRIPTION OF THE BUSINESS
TransDigm Group Incorporated (“TD Group”), through its wholly-owned subsidiary, TransDigm Inc., is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly every commercial and military aircraft in service today. TransDigm Inc., along with TransDigm Inc.’s direct and indirect wholly-owned operating subsidiaries (collectively, with TD Group, the “Company” or “TransDigm”), offers a broad range of proprietary aerospace products. TD Group has no significant assets or operations other than its 100% ownership of TransDigm Inc. TD Group’s common stock is listed on the New York Stock Exchange, or the NYSE, under the trading symbol “TDG.”
TransDigm's major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, engineered audio, radio and antenna systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, advanced sensor products, switches and relay panels, thermal protection and insulation, lighting and control technology, parachutes, high performance hoists, winches and lifting devices, and cargo loading, handling and delivery systems.
2.    UNAUDITED INTERIM FINANCIAL INFORMATION
The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes for the fiscal year ended September 30, 2021 included in TD Group’s Form 10-K filed on November 16, 2021. As disclosed therein, the Company’s annual consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The September 30, 2021 condensed consolidated balance sheet was derived from TD Group’s audited financial statements. The results of operations for the thirty-nine week period ended July 2, 2022 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation, none of which are material.
3.    ACQUISITIONS AND DIVESTITURES
Acquisitions
DART Aerospace – On March 14, 2022, the Company entered into a definitive agreement to acquire DART Aerospace (“DART”) for a total purchase price of $360 million. The acquisition was completed on May 25, 2022 and financed through existing cash on hand. DART operates from four primary facilities (Hawkesbury, Ontario, Canada; Portland, Oregon; Fort Collins, Colorado and Chihuahua, Mexico) and is a leading provider of highly engineered, unique helicopter mission equipment solutions that predominantly service civilian aircraft. The products are primarily proprietary with significant aftermarket content. DART's operating results are included within TransDigm's Airframe segment.
7

The Company accounted for the DART acquisition using the acquisition method and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective date of the acquisition. The Company made an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. As of July 2, 2022, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed related to the DART acquisition are subject to adjustment until the end of the respective measurement period. The allocation of the purchase price is preliminary and will likely change in future periods, perhaps materially, as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company is in the process of obtaining a third-party valuation of certain intangible assets and tangible assets of DART. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. Pro forma net sales and results of operations for the acquisition had it occurred at the beginning of the thirty-nine week periods ended July 2, 2022 or July 3, 2021 are not material and, accordingly, are not provided.
The allocation of the estimated fair value of assets acquired and liabilities assumed in the DART acquisition as of the May 25, 2022 acquisition date is summarized in the table below (in millions):
Assets acquired (excluding cash):
Trade accounts receivable$16 
Inventories33 
Prepaid expenses and other4 
Property, plant and equipment9 
Goodwill236 
(1)
Other intangible assets112 
(1)
Other8 
Total assets acquired (excluding cash)418 
Liabilities assumed:
Accounts payable4 
Accrued and other current liabilities11 
Deferred income taxes35 
Other non-current liabilities8 
Total liabilities assumed58 
Net assets acquired$360 
(1)The Company expects that none of the approximately $236 million of goodwill and $112 million of other intangible assets recognized for the acquisition will be deductible for tax purposes.
Extant Aerospace Acquisitions – For the thirty-nine week period ended July 2, 2022, the Company's Extant Aerospace subsidiary, which is included in TransDigm’s Power & Control segment, completed the acquisition of substantially all of the assets and technical data rights of certain product lines, which met the definition of a business, for a total purchase price of $61 million. The allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized. The Company expects that approximately $24 million of goodwill and approximately $20 million of other intangible assets recognized for the acquisitions will be deductible for tax purposes over 15 years. Pro forma net sales and results of operations for the Extant Aerospace acquisitions had they occurred at the beginning of the thirty-nine week periods ended July 2, 2022 or July 3, 2021 are not material and, accordingly, are not provided.

8

Cobham Aero Connectivity – On November 24, 2020, the Company entered into a definitive agreement to acquire all the outstanding stock of Chelton Limited, Chelton Avionics Holdings, Inc. and Mastsystem Int'l Oy, collectively, Cobham Aero Connectivity (“CAC”), for a total purchase price of $945 million. The acquisition was substantially completed on January 5, 2021 and financed through existing cash on hand. The Company completed the remainder of the acquisition of CAC on February 12, 2021, also through existing cash on hand. CAC operates from two primary facilities (Marlow, United Kingdom and Prescott, Arizona) and is a leading provider of highly engineered antennas and radios for the aerospace end market. The products are primarily proprietary with significant aftermarket content and have a strong presence across major defense platforms as well as select commercial applications. CAC's operating results are included within TransDigm's Airframe segment.
The Company accounted for the CAC acquisition using the acquisition method of accounting and third-party valuation appraisals and included the results of operations of the acquisition in its condensed consolidated financial statements from the effective dates of the acquisition. The total purchase price of CAC was allocated to the underlying assets acquired and liabilities assumed based upon the respective fair value at the dates of acquisition. To the extent the purchase price exceeded the fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill. The fair values of acquired intangibles and certain liabilities, such as loss contract reserves, are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions used to determine the fair values of acquired intangible assets include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue growth rates, EBITDA margins, royalty rates and technology obsolescence rates. Significant assumptions used to determine the fair value of the loss contract reserves using the discounted cash flow model include discount rates and forecasted costs to be incurred under the long-term contracts and at-market bid prices for respective contracts. These assumptions are forward looking and could be affected by future economic and market conditions.
The final allocation of the fair value of assets acquired and liabilities assumed in the CAC acquisition as of the acquisition dates, as well as measurement period adjustments recorded within the permissible one year measurement period, are summarized in the table below (in millions):
Preliminary AllocationMeasurement Period AdjustmentsFinal
Allocation
Assets acquired (excluding cash):
Trade accounts receivable$31 $1 $32 
Inventories272 29 
Prepaid expenses and other10(3)7 
Property, plant and equipment183 21 
Goodwill63661 697 
(1)
Other intangible assets30915 324 
(1)
Other34(3)31 
Total assets acquired (excluding cash)