TransDigm Group (TDG) 10-K risk factor changes: FY2020 vs FY2019

*Set forth below are [removed: important] [added: material] risks and uncertainties that could negatively affect our business and financial condition and could cause our actual results to differ materially from those expressed in forward-looking statements contained in this [removed: report.*][added: report.]

Our commercial business is directly affected by, among other factors, changes in [removed: revenue passenger miles (RPMs),] [added: RPMs,] the size and age of the worldwide aircraft fleet, the percentage of the fleet that is out-of-warranty and changes in the profitability of the commercial airline industry.

For example, in [added: addition to] the [removed: past,] [added: current COVID-19 pandemic and] the [added: adverse impact it has had on the] airline [added: industry, past examples in which the airline] industry has been [removed: severely] [added: negatively] affected [removed: by the downturn] [added: include downturns] in the global economy, higher fuel prices, [removed: the] increased security concerns among airline customers following the events of September 11, 2001, the Severe Acute Respiratory Syndrome [removed: (SARS)] [added: (“SARS”)] epidemic, and [removed: the] conflicts [removed: abroad, and could be impacted by future geopolitical or other worldwide events, such as war, terrorist acts, or a worldwide infectious disease outbreak.][added: abroad.]

In addition, global market and economic conditions have been challenging [removed: with] [added: due to] turbulence in the U.S. and international markets and economies and have prolonged declines in business and consumer spending.

As a result of the substantial reduction in airline traffic resulting from [removed: these] [added: the aforementioned] events, the airline industry incurred large losses and financial difficulties.

An adverse change in demand could impact our results of operations, collection of accounts receivable and our [added: expected cash flow generation from current and acquired businesses which may adversely impact our financial condition and access to capital markets.]

Our sales to manufacturers of large commercial aircraft, such as The Boeing Company, Airbus S.A.S, and related OEM suppliers, as well as manufacturers of business jets [removed: (which collectively accounted for approximately 26% of our net sales in fiscal year 2019)] have historically experienced periodic downturns.

[removed: The Boeing Company] [added: In fiscal year 2019, one customer individually] accounted for approximately 11% of [removed: our] [added: the Company’s] net [removed: sales in fiscal year 2019.][added: sales.]

[removed: Our] [added: In fiscal year 2020, no customer individually accounted for 10% or more of the Company’s net sales; however, our] top ten customers for fiscal year [removed: 2019] [added: 2020] accounted for approximately [removed: 42%] [added: 44%] of our net sales.

A material reduction in purchasing by one of our larger customers for any reason, including but not limited to economic downturn, decreased production, strike or resourcing, could have a material adverse effect on [removed: our net sales, gross margin] [added: results of operations, financial position] and [removed: net income.][added: cash flows.]

The military and defense market is significantly dependent upon government budget trends, particularly the [removed: U.S. Department of Defense (the “DOD”)] [added: DOD] budget.

In addition to normal business risks, our supply of products to the [removed: United States] [added: U.S.] Government is subject to unique risks largely beyond our control.

DOD budgets could be negatively impacted by several factors, including, but not limited to, a change in defense spending policy [removed: by] [added: as a result of] the [removed: current] presidential [removed: administration,] [added: election or otherwise,] the U.S. Government’s budget deficits, spending [removed: priorities,] [added: priorities (e.g., allocating more spending to combat] the [added: effects of the COVID-19 pandemic), the] cost of sustaining the U.S. military presence internationally and possible political pressure to reduce U.S. Government military spending, each of which could cause the DOD budget to remain unchanged or to decline.

Future acquisitions could result in margin dilution and further likely result in the incurrence of additional debt and contingent liabilities and an increase in interest and amortization [added: expenses or periodic impairment charges related to goodwill and other intangible assets as well as significant charges relating to integration costs.]

The successful integration of new [removed: businesses] [added: businesses, with the most significant recent acquisition being the Esterline acquisition in March 2019,] depends on our ability to manage these new businesses and cut excess costs.

[removed: | • |] [added: -] suspend us from receiving new contracts based on alleged violations of procurement laws or regulations; [removed: |]

[removed: | • |] [added: -] terminate existing contracts; [removed: |]

[removed: | • |] [added: -] revoke required security clearances; [removed: |]

[removed: | • |] [added: -] reduce the value of existing contracts; and [removed: |]

[removed: | • |] [added: -] audit our contract-related costs and fees, including allocated indirect costs. [removed: |]

As a result of these reviews, audits and inquiries, we could be subject to providing further refunds to the U.S. [removed: Government or] [added: Government,] we could be asked to enter into an arrangement whereby our prices would be based on cost, the DOD could seek to pursue alternative sources of supply for our parts, or the U.S. [removed: government] [added: Government] could take other adverse actions with respect to our contracts.

If a government inquiry or investigation uncovers improper or illegal activities, we could be subject to civil or criminal penalties or administrative sanctions, including contract termination, fines, forfeiture of fees, suspension of payment and suspension or debarment from doing business with U.S. [removed: government] [added: Government] agencies, any of which could materially adversely affect our reputation, business, financial [removed: condition and] [added: condition,] results of [removed: operations.][added: operations and cash flows.]

The aerospace industry is highly regulated in the [removed: United States] [added: U.S.] and in other countries.

In order to sell our [removed: components,] [added: products,] we and the [removed: components] [added: products] we manufacture must be certified by the FAA, the DOD and similar agencies in foreign countries and by individual manufacturers.

[removed: Also, as] [added: As] of September 30, [removed: 2019,] [added: 2020,] we had approximately [removed: $718.5] [added: $520.6] million of unused commitments under our revolving loan facility.

Although our senior secured credit facility and the indentures governing the various senior [added: secured and senior] subordinated notes outstanding (the “Indentures”) contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these qualifications and exceptions could be substantial.

An increase in our [removed: substantial] indebtedness could also have other important consequences to investors.

[removed: | • |] [added: -] increase our vulnerability to general economic downturns and adverse competitive and industry conditions; [removed: |]

[removed: | • |] [added: -] increase the risk we are subjected to downgrade or put on a negative watch by the ratings agencies; [removed: |]

[removed: | • |] [added: -] require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital requirements, capital expenditures, acquisitions, research and development efforts and other general corporate requirements; [removed: |]

[removed: | • |] [added: -] limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; [removed: |]

[removed: | • |] [added: -] place us at a competitive disadvantage compared to competitors that have less debt; and [removed: |]

[removed: | • |] [added: -] limit, along with the financial and other restrictive covenants contained in the documents governing our indebtedness, among other things, our ability to borrow additional funds, make investments and incur liens. [removed: |]

All of our debt under the senior secured credit facility, which includes [removed: $7.5] [added: $7.4] billion in term loans and a revolving loan facility of $760 million, bears interest at variable rates primarily based on the London interbank offered rate [removed: (LIBOR)] [added: (“LIBOR”)] for deposits of U.S. dollars.

In addition, on July 27, 2017, the Financial Conduct Authority [removed: (FCA)] [added: (“FCA”)] in the [removed: U.K.] [added: United Kingdom (“U.K.”)] announced that it would phase out LIBOR as a benchmark by the end of calendar year 2021.

The expected [removed: discontinuation] [added: cessation] of LIBOR may require us to amend certain [added: other] agreements [removed: governing our debt and,] [added: and] although the [removed: U.S. and other jurisdictions are working] [added: Secured Overnight Financing Rate (“SOFR”) is expected] to [removed: replace LIBOR with] [added: be the] alternative [removed: reference rates,] [added: rate that replaces LIBOR,] we cannot predict what [removed: alternative index,] margin adjustments and related terms would be negotiated with our counterparties.

Our [removed: substantial level of] indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness, including the Indentures.

Our ability to make payments on and to refinance our indebtedness, including the Indentures, amounts borrowed under the senior secured credit facility, amounts due under our [removed: Securitization Facility,] [added: trade receivable securitization facility (“Securitization Facility”),] and to fund our operations, will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

[removed: | • |] [added: -] incur or guarantee additional indebtedness or issue preferred stock; [removed: |]

[removed: | • |] [added: -] pay distributions on, redeem or repurchase our capital stock or redeem or repurchase our subordinated debt; [removed: |]

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and financial condition.*

Risks Related to our Strategy

In fiscal year 2018, two customers individually accounted for approximately 11% and 10% of the Company’s net sales.

As of September 30, 2020, our total indebtedness, excluding approximately $39.4 million of letters of credit outstanding, was approximately $20.0 billion, which was 124.8% of our total book capitalization.

We incurred approximately $3.1 billion in net new incremental borrowings during fiscal 2020 both for general corporate purposes and as a precautionary response to macroeconomic conditions caused by the COVID-19 pandemic.

In order to mitigate the interest rate risk of these variable rate borrowings, we are entered into interest rate swap and cap agreements that covers a significant portion of the existing variable rate debt.

As a result, in February 2020, we amended our senior secured credit facility to incorporate an alternative reference rate effective upon the cessation date of LIBOR.

We will also take the necessary steps to amend our interest rate swap and cap agreements.

Reduction in force actions, such as the actions taken to reduce our workforce to align operations with customer demand as a result of the COVID-19 pandemic, could result in difficulty in rehiring capable employees to refill the positions eliminated as needed once business recovers.

Risks Related to our Operations

In particular, commercial and business jet market channel sales have been negatively impacted by the ongoing COVID-19 pandemic.

Downturns adversely affect our results of operations, financial position and cash flows.

The COVID-19 pandemic has also disrupted the global supply chain to a certain extent.

Issues with the global supply chain can also rise due to some of the aforementioned risks as well as global health crises, such as the COVID-19 pandemic.

In June 2016, the U.K. held a referendum in which voters approved an exit from the European Union (“E.U.”) commonly referred to as “Brexit.” The U.K. subsequently withdrew from the European Union on January 31, 2020, subject to a transition period that is set to end on December 31, 2020.

Although it is unknown what the terms of the U.K.'s relationship with the E.U. will be, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and increased regulatory complexities.

These changes could cause disruptions to and create uncertainty surrounding our business and the business of existing and future customers and suppliers as well as have an impact on our employees based in Europe, which could adversely impact our business.

The actual effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently.

Further, negative publicity relating to the results of any audit, inquiry or subsequent hearing or the like could negatively impact our stock price.

Risks Related to Legal and Regulatory Matters

Risks Related to Financial Matters

General Risks

We face risks related to the current COVID-19 pandemic and other health pandemics, epidemics and outbreaks*.*

The global outbreak of COVID-19 is currently impacting countries, communities, supply chains, and markets.

The COVID-19 pandemic has adversely impacted our commercial OEM and commercial aftermarket sales and will continue to do so for an indeterminate length of time.

The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, results of operations, financial condition or cash flows will ultimately be impacted.

Because this situation is ongoing and because the duration and severity of the outbreak are unclear, it is difficult to forecast the impact on the Company’s future results.

However, we currently expect COVID-19 to have a significant adverse impact on our sales, net income and EBITDA as Defined continuing at least into fiscal 2021 under the assumption that the COVID-19 outbreak will adversely affect our non-defense customers and their demand for our products and services for at least the near term.

The COVID-19 pandemic has also disrupted our operations.

The outbreak of COVID-19 has heightened the risk that a significant portion of our workforce will suffer illness or otherwise be unable to work.

Furthermore, in light of our reduction in workforce to align operations with customer demand caused by the COVID-19 pandemic, we cannot assure that we will be able to rehire our entire workforce once our business has recovered.

Certain of our facilities have experienced temporary disruptions as a result of the COVID-19 pandemic, and we cannot predict whether our facilities will experience more significant disruptions in the future.

Furthermore, our acquisition strategy, which is a key element of our overall business strategy, may be impacted by our efforts to maintain the Company’s liquidity position in response to the COVID-19 pandemic.

Finally, future public health crises are possible and could involve some or all of the risks described above.

Additional examples include future geopolitical or other worldwide events, such as war, terrorist acts, or additional worldwide infectious disease outbreaks.

Global health crises such as the current COVID-19 pandemic, with the breadth of its impact worldwide, could also cause significant volatility in the market price.

expected cash flow generation from current and acquired businesses which may adversely impact our financial condition and access to capital markets.

Downturns adversely affect our net sales, gross margin and net income.

Our largest customer for fiscal year 2019 was The Boeing Company (which includes Aviall, Inc.).

In 2019, The Boeing Company announced a production rate decrease on the Boeing 737 MAX from 52 to 42 airplanes per month.

The Company does not anticipate the current production rate decrease to have a material impact on the Company’s financial results.

expenses or periodic impairment charges related to goodwill and other intangible assets as well as significant charges relating to integration costs.

We are subject to many of the foregoing risks in connection with our acquisition of Esterline completed in March 2019, and these risks may be exacerbated due to the scale and complexity of that acquisition as compared to our recent acquisitions.

The acquisition has required and will continue to require extensive integration efforts.

These efforts could result in significant unforeseen costs and require substantial attention from our senior management.

If we are unable to successfully integrate Esterline or the acquisition otherwise does not perform to our expectations, our results of operations and financial condition may be adversely affected.

It is also possible that the substantial management attention required by, and the indebtedness incurred in connection with the transaction could cause us to forgo other acquisition opportunities, particularly if we encounter unexpected costs or the acquisition otherwise does not perform to our expectations.

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As of September 30, 2019, our total indebtedness, excluding approximately $41.5 million of letters of credit outstanding, was approximately $16.9 billion, which was 120.7% of our total book capitalization as a result of special dividends being funded, in part, with indebtedness and the addition of approximately $4.0 billion in net new incremental borrowings during fiscal 2019 in connection with the financing of the Esterline acquisition.

For example, on October 29, 2019, the Company entered into a purchase agreement in connection with a private offering of $2.65 billion aggregate principal amount in 5.50% senior subordinated notes due November 15, 2027.

The settlement of the debt financing transaction occurred on November 13, 2019.

The notes were issued at a price of 100% of their principal amount.

The Company will use a portion of the net proceeds from the offering of the notes to redeem all of its outstanding (aggregate principal amount of $1.15 billion) 6.000% senior subordinated notes due 2022.

For example, if the usage of the revolving loan facility exceeds 35% of the total revolving commitments, the Company will be required to maintain a maximum consolidated net leverage ratio of net debt, as defined, to trailing four-quarter EBITDA As Defined.

Interest rate swap and cap agreements are used to manage interest rate risk associated with variable rate borrowings under our credit facilities.

loss may remain unknown for substantial periods of time.

Future sales of our common stock in the public market could lower our share price.

We may sell additional shares of common stock into the public markets or issue convertible debt securities to raise capital in the future.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the public markets or the perception that these sales could occur.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities to raise capital at a time and price that we deem appropriate.

Our corporate documents and Delaware law contain certain provisions that could discourage, delay or prevent a change in control of our company.

Provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable.

For example, our amended and restated certificate of incorporation authorizes our Board of Directors to issue up to 149,600,000 shares of “blank check” preferred stock.

Without stockholder approval, the Board of Directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock.

With these rights, holders of preferred stock could make it more difficult for a third party to acquire us.

Our amended and restated certificate of incorporation also provides that the affirmative vote of the holders of at least 75% of the voting power of our issued and outstanding capital stock, voting together as a single class, is required for the alteration, amendment or repeal of certain provisions of our amended and restated certificate of incorporation and certain provisions of our amended and restated bylaws, including the provisions relating to our stockholders’ ability to call special meetings, notice provisions for stockholder business to be conducted at an annual meeting, requests for stockholder lists and corporate records, nomination and removal of directors, and filling of vacancies on our Board of Directors.

We are also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law.

Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control.

For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.

*The following discussion of our financial condition and results of operations should be read together with “Selected Financial Data” and TD Group’s consolidated financial statements and the related notes included elsewhere in this report.

The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under the heading entitled “Risk Factors” included elsewhere in this report.

These risks could cause our actual results to differ materially from any future performance suggested below.*

Overview

For fiscal year 2020, we generated net sales of $5,103 million, gross profit of $2,647 million or 51.9% of sales, and net income attributable to TD Group of $699 million.

While the COVID-19 pandemic has significantly impacted our operations in the short-term, we believe we have achieved steady, long-term growth in sales and improvements in operating performance since our formation in 1993 due to our competitive strengths and through execution of our value-driven operating strategy.

More specifically, focusing our businesses on our value-driven operating strategy of obtaining profitable new business, carefully controlling the cost structure and pricing our highly engineered value-added products to fairly reflect the value we provide and the resources required to do so has historically resulted in improvements in gross profit and income from operations over the long term.

Our selective acquisition strategy has also contributed to the growth of our business.

The integration of certain acquisitions into our existing businesses combined with implementing our proven operating strategy has historically resulted in improvements of the financial performance of the acquired business.

We believe our key competitive strengths include:

Large and Growing Installed Product Base with Aftermarket Revenue Stream. We provide components to a large and growing installed base of aircraft to which we supply aftermarket products.

We estimate that our products are installed on over 100,000 commercial transport, regional transport, military and general aviation fixed wing turbine aircraft and rotary wing aircraft.

Diversified Revenue Base. We believe that our diversified revenue base reduces our dependence on any particular product, platform or market channel and has been a significant factor in maintaining our financial performance.

Our products are installed on almost all of the major commercial aircraft platforms now in production.

We expect to continue to develop new products for military and commercial applications.

As a result of the COVID-19 pandemic, many of our businesses have taken the opportunity to explore new business opportunities by working on developing highly engineered solutions for emerging needs arising from the pandemic.

Product solutions currently being explored include anti-viral or antimicrobial technology, air purification, and touchless technologies, among others.

Barriers to Entry.

We believe that the niche nature of our markets, the industry’s stringent regulatory and certification requirements, the large number of products that we sell and the investments necessary to develop and certify products create potential disincentives to competition for certain products.

Our business strategy is made up of two key elements: (1) a value-driven operating strategy focused around our three core value drivers and (2) a selective acquisition strategy.

Value-Driven Operating Strategy. Our three core value drivers are:

- *Obtaining Profitable New Business.* We attempt to obtain profitable new business by using our technical expertise and application skill and our detailed knowledge of our customer base and the individual niche markets in which we operate.

We have regularly been successful in identifying and developing both aftermarket and OEM products to drive our growth.

- *Improving Our Cost Structure.* We are committed to maintaining and continuously improving our lean cost structure through detailed attention to the cost of each of the products that we offer and our organizational structure, with a focus on reducing the cost of each.

- *Providing Highly Engineered Value-Added Products to Customers.* We focus on the engineering, manufacturing and marketing of a broad range of highly engineered niche products that we believe provide value to our customers.

We believe we have been consistently successful in communicating to our customers the value of our products.

This has generally enabled us to price our products to fairly reflect the value we provide and the resources required to do so.

Selective Acquisition Strategy. We selectively pursue the acquisition of proprietary aerospace component businesses when we see an opportunity to create value through the application of our three core value-driven operating strategies.

The aerospace industry, in particular, remains highly fragmented, with many of the companies in the industry being small private businesses or small non-core operations of larger businesses.

We have significant experience among our management team in executing acquisitions and integrating acquired businesses into our company and culture.

As of the date of this report, we have successfully acquired approximately 85 businesses and product lines since our formation in 1993.

Many of these acquisitions have been integrated into an existing TransDigm production facility, which enables a higher production capacity utilization, which in turn improves gross profit levels due to the ability to spread the fixed manufacturing overhead costs over higher production volume.

Acquisitions and divestitures during the most recent three fiscal years are more fully described in Note 2, “Acquisitions and Divestitures,” in the notes to the consolidated financial statements included herein.

*Impact of the COVID-19 Pandemic*

The COVID-19 pandemic caused a significant adverse impact on our sales, net income and EBITDA as Defined for fiscal 2020 and is expected to continue to do so into fiscal 2021.

This is under the assumption that the COVID-19 pandemic will continue to adversely impact customer demand for all market channels, with commercial OEM and commercial aftermarket being the most adversely impacted due to the pandemic's impact on air travel worldwide.

The defense market channel is also impacted to a lesser extent due to certain supply chain disruptions as well as the "stay at home" orders, quarantines, etc. impacting the government procurement workforce which has slowed production and/or orders.

Also, government funding reprioritization such as shifting funds to efforts to combat the impact of the pandemic provides for uncertainty.

The magnitude of the impact of COVID-19 remains unpredictable and we, therefore, continue to anticipate potential supply chain disruptions, employee absenteeism and short-term suspensions of manufacturing facilities, and additional health and safety costs related to the COVID-19 pandemic that could unfavorably impact our business.

Longer term, because the duration of the pandemic is unclear, it is difficult to forecast a precise impact on the Company’s future results.

Our financial instruments that are subject to interest rate risk [added: is] principally [removed: include fixed-rate and floating-rate long-term] [added: our variable rate] debt.

At September 30, [removed: 2019,] [added: 2020,] we had borrowings under our term loans of approximately [removed: $7,524] [added: $7,449] million that were subject to interest rate risk.

As of September 30, [removed: 2019,] [added: 2020,] approximately [removed: 83%] [added: 84%] of our debt was fixed rate debt.

The effect of a hypothetical one percentage point increase in interest rates would increase the annual interest costs under our term loans by approximately $75 million based on the amount of outstanding borrowings at September 30, [removed: 2019.][added: 2020.]

The weighted average interest rate on the [removed: $7,524] [added: $7,449] million of borrowings under our term loans on September 30, [removed: 2019] [added: 2020] was [removed: 4.8%.][added: 3.2%.]

Interest rate swaps and caps used to hedge and offset, respectively, the variable interest rates on the credit facility are described in Note 21, “Derivatives and Hedging Activities,” [added: in the notes] to [removed: our] [added: the] consolidated financial statements included herein.

For information about the fair value of the aggregate principal amount of borrowings under our term loans and the fair value of the Notes, see Note 20, “Fair Value Measurements,” [added: in the notes] to [removed: our] [added: the] consolidated financial statements included herein.

A 10% change in foreign currency exchange rates would not have resulted in a material impact to net income for the fiscal years ended September 30, [added: 2020,] 2019 and 2018.

The information required by this Item is contained on pages F-1 through [removed: F-59] [added: F-48] of this Report.

In 2017, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer compel banks to submit the rates required to calculate LIBOR and other interbank offered rates, which have been widely used as reference rates for various securities and financial contracts, including loans, debt and derivatives.

Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the SOFR.

In February 2020, in connection with Amendment No. 7 to the Credit Agreement, we amended the Credit Agreement to include a provision for the determination of an alternative reference interest rate.

The discontinuation of LIBOR will also require our derivative agreements to be amended.

Once the alternative interest rate has replaced LIBOR, our future interest expense could be impacted.

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| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |

None.

[removed: We believe we are] [added: 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 all commercial and military aircraft in service today.

We estimate that approximately 90% of our net sales for fiscal year [removed: 2019] [added: 2020] were generated by proprietary products.

[removed: In addition for] [added: For] fiscal year [removed: 2019,] [added: 2020,] we estimate that we generated approximately 80% of our net sales from products in which we are the sole source provider.

We estimate that approximately [removed: 52%] [added: 49%] of our net sales in fiscal year [removed: 2019] [added: 2020] were generated from aftermarket sales, the vast majority of which come from the commercial and military aftermarkets.

[removed: These] [added: Historically, these] aftermarket revenues have [removed: historically] produced a higher gross margin and been more stable than sales to original equipment [removed: manufacturers, or OEMs.][added: manufacturers (“OEMs”).]

We primarily design, produce and supply highly engineered proprietary aerospace components [removed: (and certain systems/subsystems)] with significant aftermarket content.

We typically choose not to compete for non-proprietary “build to print” business because it frequently offers lower margins than proprietary [added: products.]

[removed: Some of our more significant] [added: Our 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, [removed: NiCad] batteries and chargers, engineered latching and locking devices, [removed: rods and locking devices,] engineered [added: rods, engineered] connectors and [removed: elastomers,] [added: elastomer sealing solutions,] databus and power controls, cockpit security components and systems, specialized [added: and advanced] cockpit displays, aircraft audio systems, specialized lavatory components, seat belts and safety restraints, engineered [added: and customized] interior surfaces and related components, advanced sensor products, switches and relay panels, [removed: advanced displays,] thermal protection and insulation, lighting and control technology, [removed: military personnel] parachutes, high performance hoists, winches and lifting devices, and cargo loading, handling and delivery systems.

Major product offerings 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, [added: batteries and chargers,] databus and power controls, advanced sensor products, switches and relay panels, high performance hoists, winches and lifting [removed: devices] [added: devices,] and cargo [removed: loading and] [added: loading,] handling [added: and delivery] systems.

Major product offerings include engineered latching and locking devices, [removed: rods and locking devices,] engineered [added: rods, engineered] connectors and [removed: elastomers,] [added: elastomer sealing solutions,] cockpit security components and systems, [added: specialized and advanced cockpit displays,] aircraft audio systems, specialized lavatory components, seat belts and safety restraints, engineered [added: and customized] interior surfaces and related components, [removed: advanced displays,] thermal [removed: protection,] [added: protection and insulation,] lighting and control [removed: technology, military personnel parachutes] [added: technology] and [removed: cargo delivery systems.][added: parachutes.]

Major product offerings include [added: headsets for high-noise, medium-noise, and dismounted applications,] seat belts and safety restraints for ground transportation applications, mechanical/electro-mechanical actuators and controls for space applications, hydraulic/electromechanical actuators and fuel valves for land based gas turbines, and refueling systems for heavy equipment used in mining, construction and other industries and turbine controls for the energy and oil and gas markets.

For financial information about our segments, see Note 17, “Segments,” [added: in the notes] to the consolidated financial statements included herein.

Our major distributors are [removed: Aviall, Inc. (a subsidiary of The] Boeing [removed: Company)] [added: Distribution Inc. (formerly known as Aviall, Inc.)] and Satair A/S (a subsidiary of Airbus S.A.S.).

We maintain approximately [removed: 110] [added: 105] manufacturing facilities.

The aggregate of engineering expense and research and development expense represents approximately [removed: 9%] [added: 11%] of our operating units’ aggregate costs, or approximately [removed: 5%] [added: 6%] of our consolidated net sales for fiscal year [removed: 2019.][added: 2020.]

Refer to Note 3, “Summary of Significant Accounting Policies,” [added: in the notes] to the consolidated financial statements included herein with respect to total costs of research and development.

We predominantly serve customers in the commercial, regional, business jet and general aviation aftermarket, which [removed: accounts] [added: accounted] for approximately [removed: 32%] [added: 26%] of [removed: total sales;] [added: net sales for fiscal year 2020;] the commercial aerospace OEM market, comprising large commercial transport manufacturers and regional and business jet manufacturers, which [removed: accounts] [added: accounted] for approximately 26% of [removed: total sales;] [added: net sales for fiscal year 2020;] and the defense market, which [removed: accounts] [added: accounted] for approximately [removed: 37%] [added: 43%] of [removed: total sales.][added: net sales for fiscal year 2020.]

Our top ten customers for fiscal year [removed: 2019] [added: 2020] accounted for approximately [removed: 42%] [added: 44%] of our net sales.

The demand for our commercial aftermarket parts and services depends on, among other things, the breadth of our installed OEM base, revenue passenger miles (“RPMs”), the size and age of the worldwide aircraft fleet, the percentage of the worldwide fleet [added: that is in warranty, and airline profitability.]

Companies engaged in supplying defense-related equipment and services to [removed: U.S.] [added: United States] Government [added: (“U.S. Government”)] agencies are subject to business risks specific to the defense industry.

We also maintain several [removed: FAA approved] [added: FAA-approved] repair stations.

The commercial aerospace industry, including the aftermarket and OEM [removed: market,] [added: markets,] is impacted by the health of the global economy and geopolitical events around the world.

[removed: Our] [added: Historically, our] presence in both the commercial aerospace and military sectors of the aerospace industry [removed: may] [added: has served to] mitigate the impact on our business of any specific industry risk.

[added: However, due to differences] between the profitability of our products sold to OEM and aftermarket customers, variation in product mix can cause variation in gross margin.

[removed: There] [added: Outside of the significant market disruption caused by COVID-19, there] are many short-term factors (including [added: customer] inventory [removed: corrections,] [added: level adjustments,] unannounced changes in order patterns, strikes, facility shutdowns caused by fires, [removed: hurricanes] [added: hurricanes, health crises] or other incidents and mergers and acquisitions) that can cause short-term disruptions in our quarterly shipment patterns as compared to previous quarters and the same periods in prior years.

The key [removed: growth] [added: market] factors in the commercial aftermarket include worldwide RPMs and the size and activity level of the worldwide fleet of aircraft and the percentage of the fleet that is in warranty.

As a result and consistent with prior years, our fiscal [removed: 2020] [added: 2021] shipments will be a function of, among other things, the estimated [removed: 2020 and] 2021 [added: and 2022] commercial airframe production rates.

Our military business fluctuates from year to year, and is dependent, to a degree, on government budget constraints, the timing of orders, macro and micro dynamics with respect to [added: the U.S.] Department of Defense [added: (“DOD”)] procurement policy and the extent of global conflicts.

As of September 30, [removed: 2019,] [added: 2020,] the Company estimated its sales order backlog at [removed: $3,437] [added: $3,145] million compared to an estimated sales order backlog of [removed: $2,026] [added: $3,437] million as of September 30, [removed: 2018.][added: 2019.]

The majority of the purchase orders outstanding as of September 30, [removed: 2019] [added: 2020] are scheduled for delivery within the next twelve months.

Accordingly, the Company’s backlog as of September 30, [removed: 2019] [added: 2020] may not necessarily represent the actual amount of shipments or sales for any future period.

For information regarding environmental accruals, [removed: see] [added: refer to] Note 15, [removed: “Environmental Liabilities,”] [added: “Commitments and Contingencies,” in the notes] to the consolidated financial statements included herein.

As of September 30, [removed: 2019,] [added: 2020,] we had approximately [removed: 18,300] [added: 14,200] full-time, part-time and temporary [removed: employees from business units in continuing operations.][added: employees.]

Approximately [removed: 18%] [added: 17%] of our full-time and part-time employees were represented by labor unions.

Collective bargaining agreements between us and these labor unions expire at various dates ranging from November [removed: 2019] [added: 2020] to [removed: May 2023.][added: November 2024.]

TD Group’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including any amendments, will be made available free of charge on the Company’s website, *www.transdigm.com*, as soon as reasonably practicable, following the filing of the reports with the Securities and Exchange [removed: Commission.][added: Commission (“SEC”).]

The SEC also maintains a website, [removed: www.sec.gov,] [added: *www.sec.gov*,] that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus ("COVID-19") surfaced in Wuhan, China, and has since spread to other countries, including the United States.

In March 2020, the World Health Organization characterized COVID-19 as a pandemic.

The pandemic has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments and other measures.

As a result, demand for travel declined at a rapid pace and has remained depressed.

The exact timing and pace of the recovery is indeterminable as certain markets have reopened, some of which have since experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines.

Governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impact of COVID-19.

The commercial aerospace industry, in particular, has been significantly disrupted, both domestically and internationally.

The impact of COVID-19 is fluid and continues to evolve, and the shape and speed of recovery for the commercial aerospace industry remains uncertain.

We took immediate and aggressive action to minimize the spread of COVID-19 in our workplaces and reduce costs.

Since the early days of the pandemic, we have been following guidance from the World Health Organization and the U.S. Center for Disease Control to protect employees and prevent the spread of the virus within all of our facilities globally.

Some of the actions implemented include: flexible work-from-home scheduling; alternate shift schedules; pre-shift temperature screenings, where allowed by law; social distancing; appropriate personal protective equipment; facility deep cleaning; and paid quarantine time for impacted employees.

Material actions to reduce costs included: (1) reducing our workforce to align operations with customer demand; (2) implementing unpaid furloughs and salary reductions; and (3) delaying non-essential capital projects and minimizing discretionary spending.

At the same time, we addressed the ongoing needs of our business to continue to serve our customers.

As a result of the COVID-19 pandemic, many of our businesses have taken the opportunity to explore new business opportunities by working on developing highly engineered solutions for emerging needs arising from the pandemic.

Product solutions currently being explored include anti-viral or antimicrobial technology, air purification, and touchless technologies, among others.

The primary measurement used by management to review and assess the operating performance of each segment is EBITDA As Defined.

The Company defines EBITDA As Defined as earnings before interest, taxes, depreciation and amortization plus certain non-operating items recorded as corporate expenses including refinancing costs, acquisition-related costs, transaction-related costs, foreign currency gains and losses, and non-cash compensation charges incurred in connection with the Company’s stock incentive plans.

Acquisition-related costs represent accounting adjustments to inventory associated with acquisitions of businesses and product lines that were charged to cost of sales when the inventory was sold; costs incurred to integrate acquired businesses and product lines into the Company’s operations, facility relocation costs and other acquisition-related costs; transaction-related costs comprising deal fees; legal, financial and tax diligence expenses and valuation costs that are required to be expensed as incurred and other acquisition accounting adjustments.

Non-aerospace sales comprised approximately 5% of our net sales for fiscal year 2020.

As a result of the COVID-19 pandemic and its adverse impact on air travel worldwide, the commercial aerospace industry has been significantly disrupted.

The defense aerospace market has been impacted by the COVID-19 pandemic to a lesser extent than the commercial aerospace market due to certain supply chain disruptions as well as “stay at home” orders, quarantines, etc. impacting the government procurement workforce which has slowed production and/or orders.

The significant adverse impact of the COVID-19 pandemic on the commercial aerospace market channels has led to the defense market comprising a greater percentage of our net sales in fiscal 2020 than typical.

In our prior five fiscal years, fiscal 2015 through fiscal 2019, defense market sales ranged from 29 to 37% of net sales.

When the commercial aerospace industry recovers from the disruption caused by the COVID-19 pandemic, we would expect defense market sales to account for a percentage of net sales that is relatively in line with our historical results prior to the COVID-19 pandemic.

None of our customers individually accounted for greater than 10% of our sales for fiscal year 2020.

The COVID-19 pandemic has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter-in-place” and “stay at home” orders, travel restrictions, business curtailments and other measures.

As a result, demand for travel declined at a rapid pace and remains depressed.

The exact timing and pace of the recovery is indeterminable as certain markets have reopened, some of which have experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines.

The commercial aerospace industry, in particular, has been significantly disrupted by the pandemic, both domestically and internationally.

The commercial aerospace industry has experienced a steep decline in RPMs in 2020 due to the pandemic’s impact on worldwide air travel demand.

Also, as a result of the pandemic and decreased demand in commercial air travel, the commercial OEM sector has experienced reductions in commercial OEM production rates, including reductions at the two largest commercial OEMs, The Boeing Company and Airbus S.A.S, in addition to various airlines deferring or cancelling orders.

The impact of COVID-19 is fluid and continues to evolve, and the shape and speed of the recovery for the commercial aerospace industry remains uncertain.

The defense aerospace market has been impacted by the COVID-19 pandemic to a lesser extent than the commercial aerospace market due to certain supply chain disruptions as well as “stay at home” orders, quarantines, etc. impacting the government procurement workforce which has slowed production and/or orders.

The magnitude of the impact of COVID-19 on our market channels, particularly commercial OEM and commercial aftermarket, remains unpredictable and we, therefore, continue to anticipate potential supply chain disruptions, employee absenteeism and short-term suspensions of manufacturing facilities, and additional health and safety costs related to the COVID-19 pandemic that could unfavorably impact our business.

Longer term, because the duration of the pandemic is unclear, it is difficult to forecast a precise impact on our future results.

As a result of the COVID-19 pandemic and the stringent measures implemented to help control the spread of the virus, demand for air travel declined at a rapid pace and has remained depressed.

The reduced demand has led to a significant reduction in flights and an increase in parked aircraft.

Certain airlines have also retired a portion of their fleets.

Certain markets have reopened, some of which have experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines.

TransDigm Inc. was formed in 1993 in connection with a leveraged buyout transaction.

TD Group was formed in 2003 to facilitate a leveraged buyout of TransDigm Inc. The Company was owned by private equity funds until its initial public offering in 2006.

TD Group’s common stock is publicly traded on the New York Stock Exchange, or NYSE, under the ticker symbol “TDG.”

products.

Acquisition of Esterline Technologies Corporation

On March 14, 2019, TransDigm completed the acquisition of all the outstanding stock of Esterline Technologies Corporation (“Esterline”) for $122.50 per share in cash, plus the repayment of Esterline debt.

The purchase price, net of cash acquired of approximately $398.2 million, totaled approximately $3,923.9 million.

Of the $3,923.9 million purchase price, $3,536.3 million was paid at closing and the remaining $387.6 million was classified as restricted cash for the redemption of Esterline’s outstanding senior notes due 2023 (herein the "2023 Notes").

The 2023 Notes were redeemed on April 15, 2019.

Esterline, through its subsidiaries, is an industry leader in specialized manufacturing for the aerospace and defense industry, primarily within three core disciplines: advanced materials, avionics and controls and sensors and systems.

The acquisition of Esterline expands TransDigm's platform of proprietary and sole source content for the aerospace and defense industry and the Esterline products have significant aftermarket exposure.

For further details on the acquisitions and divestitures that occurred during fiscal 2019, refer to Note 2, “Acquisitions and Divestitures,” to the consolidated financial statements included herein.

The Esterline businesses were acquired towards the end of the second quarter of fiscal 2019 and preliminarily assessed as a separate segment of the Company.

During the third quarter of fiscal 2019, the Esterline businesses were integrated into TransDigm's existing Power & Control, Airframe and Non-aviation segments.

Non-aerospace sales comprise approximately 5% of our total sales.

For the fiscal year ended September 30, 2019, The Boeing Company (which includes Aviall, Inc., a distributor of commercial aftermarket parts to airlines throughout the world) accounted for approximately 11% of our net sales.

that is in warranty, and airline profitability.

The commercial aerospace industry has shown strength with increases in revenue passenger miles, or RPMs, since 2010, and positive growth continued through 2019 with increase in RPMs , as well as general growth in the large commercial OEM sector (aircraft with 100 or more seats) with order announcements by The Boeing Company and Airbus S.A.S leading to planned increases in production.

The primary exception to this was the production rate decrease on the Boeing 737 MAX, although not material to TransDigm’s financial results.

The 2020 leading indicators or industry consensus suggest a continuation of current trends in the commercial transport market sector supported by continued RPM growth and increases in production at the OEM level.

However, due to differences

The commercial transport market sector, the largest sector in the commercial OEM market, declined in 2019 primarily due to the 737 MAX production rate cuts at The Boeing Company.

However, the rate cuts did not have a material impact on our commercial OEM revenue as our revenue growth outperformed the general market.

We have been experiencing increased sales in the large commercial OEM sector (aircraft with 100 or more seats) driven by an increase in production by The Boeing Company and Airbus S.A.S tied to previous order announcements.

Industry consensus indicates this production increase will continue in 2020 but may begin to moderate or modestly decline in 2021.

The increase in backlog is due to growth from recent acquisitions, particularly the Esterline acquisition, and organic growth in the commercial aftermarket, commercial OEM and defense markets.

Foreign Operations

Although we manufacture a significant portion of our products in the United States, we manufacture some products in Belgium, Canada, China, the Dominican Republic, France, Germany, Hong Kong, Hungary, India, Japan, Malaysia, Mexico, Morocco, Norway, Singapore, Sri Lanka, Sweden and the United Kingdom.

Although the majority of sales of our products are made to customers (including distributors) located in the United States, our products are ultimately sold to and used by customers (including airlines and other end users of aircraft) throughout the world.

A number of risks inherent in international operations could have a material adverse effect on our results of operations, including currency fluctuations, difficulties in staffing and managing multi-national operations, general economic and political uncertainties and potential for social unrest in countries in which we operate, limitations on our ability to enforce legal rights and remedies, restrictions on the repatriation of funds, change in trade policies, tariff regulation, difficulties in obtaining export and import licenses and the risk of government financed competition.

None.

We and certain of our current or former officers and directors are defendants in a consolidated securities class action captioned *In re TransDigm Group, Inc. Securities Litigation*, Case No. 1:17-cv-01677-DCN (N.D. Ohio).

The cases were originally filed on August 10, 2017, and September 18, 2017 and were consolidated on December 5, 2017.

The plaintiffs allege that the defendants made false or misleading statements with respect to, or failed to disclose, the impact of certain alleged business practices in connection with sales to the U.S. government on the Company’s growth and profitability.

The plaintiffs assert claims under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act, and seek unspecified monetary damages and other relief.

In addition, we, as nominal defendant, and certain of our current or former officers and directors are defendants in a shareholder derivative action captioned *Sciabacucchi v.

Howley et al.*, No. 1:17-cv-1971-DCN (N.D. Ohio).

The case was filed on September 19, 2017.

The plaintiffs allege breach of fiduciary duty and other claims arising out of substantially the same actions or inactions alleged in the securities class actions described above.

This action has been stayed pending the outcome of a motion to dismiss on the securities class action.

Although we are only a nominal defendant in the derivative action, we could have indemnification obligations and/or be required to advance the costs and expenses of the officer and director defendants in the action.

We intend to vigorously defend these matters and believe they are without merit.

We also believe we have sufficient insurance coverage available for these matters.

Therefore, we do not expect these matters to have a material adverse impact on our financial condition or results of operations.

However, given the preliminary status of the litigation, it is difficult to predict the likelihood of an adverse outcome or estimate a range of any potential loss.

| | |

| --- | --- |

| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |

Market Information

Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “TDG.”

Holders

As of October 21, 2019, there were 33 stockholders of record of our common stock and approximately 134,000 of beneficial stockholders, which includes an estimated amount of stockholders who have their shares held in their accounts by banks and brokers.

Dividend Policy

During fiscal 2019, TD Group’s Board of Directors authorized and declared a special cash dividend of $30.00 (in August 2019) on each outstanding share of common stock and cash dividend equivalent payments under options granted under its stock incentive plans.

No dividends were declared during fiscal 2018.

We do not anticipate declaring regular quarterly or annual cash dividends on our common stock in the near future.

Any declaration of special cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions under the senior secured credit facility and Indentures, the availability of surplus under Delaware law and other factors deemed relevant by our Board of Directors.

TD Group is a holding company and conducts all of its operations through direct and indirect subsidiaries.

Unless TD Group receives dividends, distributions, advances, transfers of funds or other payments from our subsidiaries, TD Group will be unable to pay any dividends on our common stock in the future.

The ability of any subsidiaries to take any of the foregoing actions is limited by the terms of our senior secured credit facility and Indentures and may be limited by future debt or other agreements that we may enter into.

Also, the Company currently has an accumulated deficit which could limit or restrict our ability to pay dividends in the future.

Performance Graph

Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the shares of common stock of TD Group with the cumulative total return of a hypothetical investment in each of the S&P 500 Index, the S&P Aerospace & Defense Select Index and the S&P MidCap 400 Aerospace & Defense Index.

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on September 30, 2014, and its relative performance is tracked through September 30, 2019

The following performance graph and related information shall not be deemed “soliciting material” nor to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent we specifically incorporate it by reference into such filing.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among TransDigm Group Inc., the S&P 500 Index, S&P Aerospace & Defense Select Index and

the S&P MidCap 400 Aerospace & Defense Index


*$100 invested on 9/30/14 in stock or index, including reinvestment of dividends.

Copyright 2019 Standard & Poor’s, a division of S&P Global.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended September 30, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| 1301 East 9th Street, | [added: | |] Suite 3000, | [added: | |] Cleveland, | [added: | |] Ohio | | [added: | | | |] 44114 | [added: | |]

| (Address of principal executive offices) | | | | | [added: | | | | | | | | | |] (Zip Code) | [added: | |]

[removed: (216) 706-2960][added: (216) 706-2960]

| Title of each class | | [added: | | | |] Trading symbol | | [added: | | | |] Name of exchange on which registered | [added: | |]

| Common Stock, $0.01 par value | | [added: | | | |] TDG | | [added: | | | |] New York Stock Exchange | [added: | |]

| Large Accelerated Filer | [added: | |] ☒ | | [added: | | | |] Accelerated Filer | [added: | |] ☐ | [added: | |]

| Non-Accelerated Filer | [added: | |] ☐ | | [added: | | | |] Smaller Reporting Company | [added: | |] ☐ | [added: | |]

| Emerging Growth Company | [added: | |] ☐ | | | | [added: | | | | | | | |]

| 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. | | | | [added: | | | | | | | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of March 31, [removed: 2019,] [added: 2020,] based upon the last sale price of such voting and non-voting common stock on that date, was [removed: $24,193,750,882.][added: $17,842,940,279.]

The number of shares outstanding of TransDigm Group Incorporated’s common stock, par value $.01 per share, was [removed: 53,548,349] [added: 54,435,882] as of [removed: November 17, 2019.][added: October 28, 2020.]

Documents incorporated by reference: Certain sections of the registrant’s definitive Proxy Statement to be filed in connection with its [removed: 2020] [added: 2021] Annual Meeting of [removed: Shareholders,] [added: Shareholders] are incorporated by reference into Part III of this Annual Report on Form 10-K.

| | | [added: | | | |] Page | [added: | |]

| PART I | | | [added: | | | | | |]

| [ITEM [removed: 1](#s867B13244ACB59FC8543AF52B80EB823)] [added: 1](#i3f294937cd344ba19d2a164edc97691f_16)] | [removed: [BUSINESS](#s867B13244ACB59FC8543AF52B80EB823)] | [removed: [1](#s867B13244ACB59FC8543AF52B80EB823)] | [added: [BUSINESS](#i3f294937cd344ba19d2a164edc97691f_16) | | | [1](#i3f294937cd344ba19d2a164edc97691f_16) | | |]

| [ITEM [removed: 1A](#s9F85F180A0A15B358D1984552026E5D3)] [added: 1A](#i3f294937cd344ba19d2a164edc97691f_19)] | [added: | |] [RISK [removed: FACTORS](#s9F85F180A0A15B358D1984552026E5D3)] [added: FACTORS](#i3f294937cd344ba19d2a164edc97691f_19)] | [removed: [6](#s9F85F180A0A15B358D1984552026E5D3)] | [added: | [9](#i3f294937cd344ba19d2a164edc97691f_19) | | |]

| [ITEM [removed: 1B](#s9240D31B972B5A439B49A0BE078C22E6)] [added: 1B](#i3f294937cd344ba19d2a164edc97691f_22)] | [added: | |] [UNRESOLVED STAFF [removed: COMMENTS](#s9240D31B972B5A439B49A0BE078C22E6)] [added: COMMENTS](#i3f294937cd344ba19d2a164edc97691f_22)] | [removed: [14](#s9240D31B972B5A439B49A0BE078C22E6)] | [added: | [17](#i3f294937cd344ba19d2a164edc97691f_22) | | |]

| [ITEM [removed: 2](#s36BB92727BAF5782838AF15C684555E4)] [added: 2](#i3f294937cd344ba19d2a164edc97691f_25)] | [removed: [PROPERTIES](#s36BB92727BAF5782838AF15C684555E4)] | [removed: [15](#s36BB92727BAF5782838AF15C684555E4)] | [added: [PROPERTIES](#i3f294937cd344ba19d2a164edc97691f_25) | | | [18](#i3f294937cd344ba19d2a164edc97691f_25) | | |]

| [ITEM [removed: 3](#s7DB3E3040151587A9B244F549A8E7D81)] [added: 3](#i3f294937cd344ba19d2a164edc97691f_28)] | [added: | |] [LEGAL [removed: PROCEEDINGS](#s7DB3E3040151587A9B244F549A8E7D81)] [added: PROCEEDINGS](#i3f294937cd344ba19d2a164edc97691f_28)] | [removed: [17](#s7DB3E3040151587A9B244F549A8E7D81)] | [added: | [20](#i3f294937cd344ba19d2a164edc97691f_28) | | |]

| PART II | | | [added: | | | | | |]

| [ITEM [removed: 5](#s3614FC17B6F658BC9E25B2AA13A94558)] [added: 5](#i3f294937cd344ba19d2a164edc97691f_34)] | [added: | |] [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s3614FC17B6F658BC9E25B2AA13A94558)] [added: SECURITIES](#i3f294937cd344ba19d2a164edc97691f_34)] | [removed: [17](#s3614FC17B6F658BC9E25B2AA13A94558)] | [added: | [20](#i3f294937cd344ba19d2a164edc97691f_34) | | |]

| [ITEM [removed: 6](#sA98B47901CD55D12B4BB14B6D9367CAD)] [added: 6](#i3f294937cd344ba19d2a164edc97691f_37)] | [added: | |] [SELECTED FINANCIAL [removed: DATA](#sA98B47901CD55D12B4BB14B6D9367CAD)] [added: DATA](#i3f294937cd344ba19d2a164edc97691f_37)] | [removed: [20](#sA98B47901CD55D12B4BB14B6D9367CAD)] | [added: | [22](#i3f294937cd344ba19d2a164edc97691f_37) | | |]

| [ITEM [removed: 7](#sA5F2338305D852FD929519F29FBD41B9)] [added: 7](#i3f294937cd344ba19d2a164edc97691f_40)] | [added: | |] [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sA5F2338305D852FD929519F29FBD41B9)] [added: OPERATIONS](#i3f294937cd344ba19d2a164edc97691f_40)] | [removed: [27](#sA5F2338305D852FD929519F29FBD41B9)] | [added: | [28](#i3f294937cd344ba19d2a164edc97691f_40) | | |]

| [ITEM [removed: 7A](#sA87D9A4CFF1E59E8BC2844E9306B6244)] [added: 7A](#i3f294937cd344ba19d2a164edc97691f_52)] | [added: | |] [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#sA87D9A4CFF1E59E8BC2844E9306B6244)] [added: RISK](#i3f294937cd344ba19d2a164edc97691f_52)] | [removed: [41](#sA87D9A4CFF1E59E8BC2844E9306B6244)] | [added: | [44](#i3f294937cd344ba19d2a164edc97691f_52) | | |]

| [ITEM [removed: 8](#s37C40FE1F88458458998DB68D2981E86)] [added: 8](#i3f294937cd344ba19d2a164edc97691f_55)] | [added: | |] [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s37C40FE1F88458458998DB68D2981E86)] [added: DATA](#i3f294937cd344ba19d2a164edc97691f_55)] | [removed: [41](#s37C40FE1F88458458998DB68D2981E86)] | [added: | [44](#i3f294937cd344ba19d2a164edc97691f_55) | | |]

| [ITEM [removed: 9](#s2B6EAC9AC3275FCAA93788406B127611)] [added: 9](#i3f294937cd344ba19d2a164edc97691f_58)] | [added: | |] [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s2B6EAC9AC3275FCAA93788406B127611)] [added: DISCLOSURE](#i3f294937cd344ba19d2a164edc97691f_58)] | [removed: [41](#s2B6EAC9AC3275FCAA93788406B127611)] | [added: | [44](#i3f294937cd344ba19d2a164edc97691f_58) | | |]

| [ITEM [removed: 9A](#s6BBA7F07324E5DB69A5CB8289F8CD047)] [added: 9A](#i3f294937cd344ba19d2a164edc97691f_61)] | [added: | |] [CONTROLS AND [removed: PROCEDURES](#s6BBA7F07324E5DB69A5CB8289F8CD047)] [added: PROCEDURES](#i3f294937cd344ba19d2a164edc97691f_61)] | [removed: [42](#s6BBA7F07324E5DB69A5CB8289F8CD047)] | [added: | [45](#i3f294937cd344ba19d2a164edc97691f_61) | | |]

| [ITEM [removed: 9B](#s3A1AB497404954BB91D38B2FE094796A)] [added: 9B](#i3f294937cd344ba19d2a164edc97691f_67)] | [added: | |] [OTHER [removed: INFORMATION](#s3A1AB497404954BB91D38B2FE094796A)] [added: INFORMATION](#i3f294937cd344ba19d2a164edc97691f_67)] | [removed: [44](#s3A1AB497404954BB91D38B2FE094796A)] | [added: | [47](#i3f294937cd344ba19d2a164edc97691f_67) | | |]

| PART III | | | [added: | | | | | |]

| [ITEM [removed: 10](#s677C9FCEE6FA5C708AE9FEC9348FCFFF)] [added: 10](#i3f294937cd344ba19d2a164edc97691f_73)] | [added: | |] [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s677C9FCEE6FA5C708AE9FEC9348FCFFF)] [added: GOVERNANCE](#i3f294937cd344ba19d2a164edc97691f_73)] | [removed: [44](#s677C9FCEE6FA5C708AE9FEC9348FCFFF)] | [added: | [47](#i3f294937cd344ba19d2a164edc97691f_73) | | |]

| [ITEM [removed: 11](#sB11C91D4528959A9B130159DEB54B192)] [added: 11](#i3f294937cd344ba19d2a164edc97691f_76)] | [added: | |] [EXECUTIVE [removed: COMPENSATION](#sB11C91D4528959A9B130159DEB54B192)] [added: COMPENSATION](#i3f294937cd344ba19d2a164edc97691f_76)] | [removed: [45](#sB11C91D4528959A9B130159DEB54B192)] | [added: | [48](#i3f294937cd344ba19d2a164edc97691f_76) | | |]

| [ITEM [removed: 12](#sDEA93CA27E5C511294EF6AB6C14B26D4)] [added: 12](#i3f294937cd344ba19d2a164edc97691f_79)] | [added: | |] [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#sDEA93CA27E5C511294EF6AB6C14B26D4)] [added: MATTERS](#i3f294937cd344ba19d2a164edc97691f_79)] | [removed: [46](#sDEA93CA27E5C511294EF6AB6C14B26D4)] | [added: | [48](#i3f294937cd344ba19d2a164edc97691f_79) | | |]

| [ITEM [removed: 13](#sDFB502EC61D15BB6B96E826AA1801FDA)] [added: 13](#i3f294937cd344ba19d2a164edc97691f_82)] | [added: | |] [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sDFB502EC61D15BB6B96E826AA1801FDA)] [added: INDEPENDENCE](#i3f294937cd344ba19d2a164edc97691f_82)] | [removed: [46](#sDFB502EC61D15BB6B96E826AA1801FDA)] | [added: | [49](#i3f294937cd344ba19d2a164edc97691f_82) | | |]

| [ITEM [removed: 14](#s67240B30E3CA5C3AB11C70ABFF295B31)] [added: 14](#i3f294937cd344ba19d2a164edc97691f_85)] | [added: | |] [PRINCIPAL ACCOUNTING FEES AND [removed: SERVICES](#s67240B30E3CA5C3AB11C70ABFF295B31)] [added: SERVICES](#i3f294937cd344ba19d2a164edc97691f_85)] | [removed: [46](#s67240B30E3CA5C3AB11C70ABFF295B31)] | [added: | [49](#i3f294937cd344ba19d2a164edc97691f_85) | | |]

| PART IV | | | [added: | | | | | |]

| [ITEM [removed: 15](#s49ECE2E40AAB50E4B201D6334BB9980C)] [added: 15](#i3f294937cd344ba19d2a164edc97691f_91)] | [added: | |] [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES](#s49ECE2E40AAB50E4B201D6334BB9980C)] [added: SCHEDULES](#i3f294937cd344ba19d2a164edc97691f_91)] | [removed: [47](#s49ECE2E40AAB50E4B201D6334BB9980C)] | [added: | [50](#i3f294937cd344ba19d2a164edc97691f_91) | | |]

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| Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | | | | | | | | | | | | ☒ | | |

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All statements other than statements of historical fact included that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business.

These forward-looking statements may be contained throughout this Annual Report on Form 10-K.

These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to, among other things, our operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Many factors mentioned in our discussion in this Annual Report on Form 10-K, including the risks outlined under “Risk Factors,” will be important in determining future results.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not know whether our expectations will prove correct.

They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those described under “Risk Factors” in the Annual Report on Form 10-K.

Since our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking statements will occur or, if any of them does occur, what impact they will have on our business, results of operations, financial condition and cash flows.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.

We do not undertake any obligation to update these forward-looking statements or the risk factors contained in this Annual Report on Form 10-K to reflect new information, future events or otherwise, except as may be required under federal securities laws.*

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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Discussions containing such forward-looking statements may be found in Items 1, 1A, 2, 3, 5, 7 and 7A hereof and elsewhere within this Report generally.

Although the Company (as defined below) believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made in this Report.

The more important of such risks and uncertainties are set forth under the caption “Risk Factors” and elsewhere in this Report.

Many such factors are outside the control of the Company.

Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs.

We do not undertake, and specifically decline, any obligation, to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.*

TransDigm’s principal owned properties (defined as greater than 20,000 square feet or related to a principal operation) as of September 30, [removed: 2019] [added: 2020] are as follows:

| Location | [added: | |] Reporting Segment | [removed: Square Footage] | | [added: Square Footage | | |]

| Brea, [removed: CA] [added: CA(1)] | [added: | |] Airframe | [added: | |] 315,000 | | [added: |]

| Stillington, United Kingdom | [added: | |] Airframe | [added: | |] 274,800 | | [added: |]

| Montreal, Canada | [added: | |] Airframe | [added: | |] 271,700 | | [added: |]

| Miesbach, Germany | [added: | |] Power & Control | [added: | |] 242,000 | | [added: |]

| Liberty, [removed: SC] [added: SC(1)] | [added: | |] Power & Control | [added: | |] 219,000 | | [added: |]

| Waco, TX | [added: | |] Power & Control | [added: | |] 218,800 | | [added: |]

| Ingolstadt, Germany | [added: | |] Airframe | [added: | |] 191,900 | | [added: |]

| Kent, [removed: OH] [added: OH(1)] | [added: | |] Airframe | [added: | |] 185,000 | | [added: |]

| Liverpool, NY | [added: | |] Power & Control | [added: | |] 176,800 | | [added: |]

| Bridport, United Kingdom | [added: | |] Airframe | [added: | |] 174,700 | | [added: |]

| Union Gap, [removed: WA] [added: WA(1)] | [added: | |] Airframe | [added: | |] 142,000 | | [added: |]

| Coachella, [removed: CA] [added: CA(1)] | [added: | |] Power & Control | [added: | |] 140,000 | | [added: |]

| [removed: Marolles,] [added: Sarralbe,] France | [added: | |] Power & Control | [removed: 139,900] | | [added: 77,900 | | |]

| Phoenix, AZ | [added: | |] Airframe | [added: | |] 138,700 | | [added: |]

| Paks, Hungary | [added: | |] Airframe | [added: | |] 137,800 | | [added: |]

| Los Angeles, CA | [added: | |] Power & Control | [added: | |] 131,000 | | [added: |]

| Kortrijk, Belgium | [added: | |] Airframe | [added: | |] 130,000 | | [added: |]

| Bohemia, [removed: NY] [added: NY(1)] | [added: | |] Power & Control | [added: | |] 124,000 | | [added: |]

| Buena Park, CA | [added: | |] Power & Control | [added: | |] 115,000 | | [added: |]

| [removed: Westbury, NY] [added: Addison, IL(1)] | [added: | |] Power & Control | [removed: 112,300] | | [added: 83,300 | | |]

| Llangeinor, United Kingdom | [added: | |] Airframe | [added: | |] 110,000 | | [added: |]

| Bourges, France | [added: | |] Power & Control | [removed: 109,500] | | [added: 109,400 | | |]

| Kent, [removed: WA] [added: WA(1)] | [added: | |] Airframe | [added: | |] 100,000 | | [added: |]

| Valencia, [removed: CA] [added: CA(1)] | [added: | |] Airframe | [added: | |] 88,400 | | [added: |]

| Letchworth, United Kingdom | [added: | |] Airframe | [added: | |] 88,200 | | [added: |]

| Placentia, CA | [added: | |] Airframe | [added: | |] 86,600 | | [added: |]

| [removed: Addison, IL] [added: Whippany, NJ] | [added: | |] Power & Control | [removed: 83,300] | | [added: 115,300 | | |]

| Herstal, Belgium | [added: | |] Airframe | [added: | |] 73,700 | | [added: |]

| Niort, France | [added: | |] Airframe | [added: | |] 69,000 | | [added: |]

| Painesville, OH | [added: | |] Power & Control | [removed: 63,900] | | [added: 94,200 | | |]

| Clearwater, FL | [added: | |] Power & Control | [removed: 61,000] | | [added: 64,200 | | |]

| South Euclid, OH | [added: | |] Power & Control | [added: | |] 60,000 | | [added: |]

| Wichita, KS | [added: | |] Power & Control | [added: | |] 57,000 | | [added: |]

| Branford, CT | [added: | |] Airframe | [added: | |] 52,000 | | [added: |]

| Xenia, OH | [added: | |] Airframe | [added: | |] 51,000 | | [added: |]

| Avenel, NJ | [added: | |] Power & Control | [added: | |] 48,500 | | [added: |]

| Rancho Cucamonga, [removed: CA] [added: CA(1)] | [added: | |] Power & Control | [added: | |] 47,000 | | [added: |]

| [removed: Sarralbe, France] [added: Tempe, AZ] | [added: | |] Power & Control | [removed: 45,200] | | [added: 40,200 | | |]

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| Westbury, NY | | | Power & Control | | | 106,800 | | |

(1)Subject to mortgage liens under our senior secured credit facility, our 6.25% senior secured notes due March 15, 2026 and our 8.00% senior secured notes due December 15, 2025.

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| Location | | | Reporting Segment | | | Square Footage | | |

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| Champagne, France | Airframe | 189,100 | |

| Sarralbe, France | Non-aviation | 32,700 | |

| Deerfield Beach, FL | Non-aviation | 20,000 | |

The Brea, Liberty, Kent (Ohio), Union Gap, Bohemia, Addison, Kent (Washington), 88,400 square feet Valencia, Coachella and 47,000 square feet Rancho Cucamonga properties are subject to mortgage liens under our senior secured credit facility and our 6.25% secured notes due March 15, 2026.

| Tanger, Morocco | Non-aviation | 115,200 | |

| Whippany, NJ | Power & Control | 114,300 | |

| Paso Robles, CA | Non-aviation | 72,600 | |

| Tijuana, Mexico | Non-aviation | 61,300 | |

| La Ferte Benard, France | Non-aviation | 42,000 | |

| Tempe, AZ | Power & Control | 40,200 | |

| Santiago, Dominican Republic | Non-aviation | 40,000 | |

| Bangalore, India | Non-aviation | 28,200 | |

| Ashford, United Kingdom | Power & Control | 28,000 | |

| Pennsauken, NJ | Airframe | 20,500 | |

Market Information

Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “TDG.”

Holders

As of October 16, 2020, there were 32 stockholders of record of our common stock and approximately 124,000 beneficial stockholders, which includes an estimated number of stockholders who have their shares held in their accounts by banks and brokers.

Dividend Policy

During fiscal 2020, TD Group’s Board of Directors declared a special cash dividend of $32.50 (in December 2019) on each outstanding share of common stock and cash dividend equivalent payments under options granted under its equity compensation plans.

During fiscal 2019, TD Group’s Board of Directors declared a special cash dividend of $30.00 (in August 2019) on each outstanding share of common stock and cash dividend equivalent payments under options granted under its equity compensation plans.

We do not anticipate declaring regular quarterly or annual cash dividends on our common stock in the near future.

Any declaration of special cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions under the senior secured credit facility and Indentures, the availability of surplus under Delaware law and other factors deemed relevant by our Board of Directors.

TD Group is a holding company and conducts all of its operations through direct and indirect subsidiaries.

Unless TD Group receives dividends, distributions, advances, transfers of funds or other payments from our subsidiaries, TD Group will be unable to pay any dividends on our common stock in the future.

The ability of any subsidiaries to take any of the foregoing actions is limited by the terms of our senior secured credit facility and Indentures and may be limited by future debt or other agreements that we may enter into.

Performance Graph

Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the shares of common stock of TD Group with the cumulative total return of a hypothetical investment in each of the S&P 500 Index and the S&P Aerospace & Defense Select Index.

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on September 30, 2015, and its relative performance is tracked through September 30, 2020.

The following performance graph and related information shall not be deemed “soliciting material” nor to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent we specifically incorporate it by reference into such filing.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among TransDigm Group Inc., the S&P 500 Index and S&P Aerospace & Defense Select Index


*$100 invested on 9/30/15 in stock or index, including reinvestment of dividends.

Copyright 2020 Standard & Poor’s, a division of S&P Global.

All rights reserved.

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| | | | 9/30/15 | | | | | | 9/30/16 | | | | | | 9/30/17 | | | | | | 9/30/18 | | | | | | 9/30/19 | | | | | | 9/30/20 | | |

| TransDigm Group Inc. | | | 100.00 | | | | | | 136.11 | | | | | | 142.55 | | | | | | 207.60 | | | | | | 307.21 | | | | | | 296.48 | | |

| S&P 500 Index | | | 100.00 | | | | | | 115.43 | | | | | | 136.91 | | | | | | 161.43 | | | | | | 168.30 | | | | | | 193.80 | | |

| S&P Aerospace & Defense Select Index | | | 100.00 | | | | | | 119.68 | | | | | | 166.61 | | | | | | 210.56 | | | | | | 228.84 | | | | | | 189.07 | | |

Purchases of Equity Securities by the Issuer or Affiliated Purchaser

On November 8, 2017, our Board of Directors, authorized a stock repurchase program permitting repurchases of our outstanding shares not to exceed $650 million in the aggregate, subject to any restrictions specified in the Credit Agreement and/or Indentures governing the existing Notes as described within the *Liquidity and Capital Resources* section of Item 7.

“Management’s Discussion and Analysis of Financial Conditions and Results of Operations.”

During March 2020, the Company repurchased 36,900 shares of its common stock at a gross cost of $18.9 million at the weighted average cost of $512.67 under the $650 million stock repurchase plan.

No repurchases were made under the program during the fiscal year ended September 30, 2019.

As of September 30, 2020, $631.1 million in repurchases are allowable under the program subject to any restrictions specified in the Credit Agreement and Indentures governing the existing Notes.

The following table sets forth selected historical consolidated financial and other data of TD Group for the fiscal years ended September 30, [removed: 2015] [added: 2016] to [removed: 2019,] [added: 2020,] which have been derived from TD Group’s audited consolidated financial statements.

Separate historical financial information of TransDigm Inc. is not presented since the [removed: 6.00%] [added: 6.50%] Senior Subordinated Notes issued [removed: in] June 2014 (the [removed: “2022] [added: “2024] Notes”), the 6.50% Senior Subordinated Notes issued [removed: June 2014] [added: May 2015] (the [removed: “2024] [added: “2025] Notes”), the [removed: 6.50% Senior Subordinated] [added: 8.00% Secured] Notes issued [removed: May 2015] [added: April 2020] (the “2025 [added: Secured] Notes”), the 6.375% Senior Subordinated Notes issued June 2016 (the “6.375% 2026 Notes”), the 6.25% Senior Secured Notes issued [removed: in January 2019] [added: April 2020] (the [removed: “2026 Secured] [added: “6.25% 2026 New] Notes”) and the [removed: 7.50%] [added: 6.25%] Senior [removed: Subordinated] [added: Secured] Notes issued [removed: February] [added: January] 2019 [removed: (the “2027 Notes”) (also together] [added: (collectively,] with the [removed: 2022 Notes, the 2024 Notes, the 2025 Notes, the 6.375%] [added: 6.25%] 2026 [added: New] Notes, [added: referred to herein as] the [removed: 2026] [added: “2026] Secured [added: Notes”), the 7.50% Senior Subordinated] Notes [added: issued February 2019 (the “7.50% 2027 Notes”)] and the [added: 5.50% Senior Subordinated Notes issued November 2019 (the “5.50%] 2027 [removed: Notes, the “Notes”)] [added: Notes”)] are fully and unconditionally guaranteed on a senior subordinated [removed: basis] [added: or senior secured basis, as defined in the respective Indenture,] by TD Group, TransDigm UK [added: Holding plc (“TransDigm UK”)] and all of TransDigm Inc.’s Domestic Restricted Subsidiaries and because TD Group has no significant operations or assets separate from its investment in TransDigm Inc.

Separate financial information of TransDigm UK [removed: Holdings plc (“TransDigm UK”)] is not presented because TransDigm UK’s 6.875% Senior Subordinated Notes issued in May 2018 (the “6.875% 2026 Notes”) are fully and unconditionally guaranteed on a senior subordinated basis by TD Group, TransDigm Inc., and all of TransDigm Inc.’s Domestic Restricted Subsidiaries.

Acquisitions of businesses [removed: and product lines] completed by TD Group during the last five fiscal years are as follows:

| Date | [added: | |] Acquisition | [added: | |]

| January 4, 2016 | [added: | |] Breeze-Eastern Corporation (“Breeze-Eastern”) | [added: | |]

| June 23, 2016 | [added: | |] Data Device Corporation (“DDC”) | [added: | |]

| September 23, 2016 | [added: | |] Young & Franklin Inc. / Tactair Fluid Controls Inc. (“Y&F/Tactair”) | [added: | |]

| February 22, 2017 | [added: | |] Schroth Safety Products Group [removed: (“Schroth”)] [added: (“Schroth”)(1)] | [added: | |]

| May 5, 2017, May 31, 2017 and June 1, 2017 | [added: | |] North Hills Signal Processing Corp, Cablecraft Motion Controls LLC and Preece Incorporated (together, the “Third Quarter 2017 Acquisitions”) | [added: | |]

| March 15, 2018 | [added: | |] Kirkhill Elastomers (“Kirkhill”) | [added: | |]

| April 24, 2018 et al. | [added: | |] Extant Components Group Holdings, Inc. (together with related subsequent product line acquisitions, “Extant”) | [added: | |]

| July 13, 2018 | [added: | |] Skandia Inc. (“Skandia”) | [added: | |]

| March 14, 2019 | [added: | |] Esterline Technologies Corporation [removed: (“Esterline”)] [added: (“Esterline”)(2)] | [added: | |]

The results of operations of the acquired businesses [removed: and product lines] are included in TD Group’s consolidated financial statements from the effective date of each acquisition.

[removed: On July 21,] [added: Additionally, on December 20,] 2019, TransDigm [removed: entered into a binding offer (the “Put Agreement”) with Eaton Corporation plc (“Eaton”) for the the acquisition by Eaton of] [added: completed] the [removed: shares] [added: divestiture] of Souriau SAS, Souriau USA Inc. and Sunbank Family of Companies LLC (collectively, [removed: “Souriau-Sunbank”).][added: “Souriau-Sunbank”) to Eaton Corporation plc (“Eaton”) for approximately $920 million.]

[removed: Therefore,] Souriau-Sunbank [removed: is] [added: was] classified as held-for-sale [removed: as of] [added: beginning] September 30, 2019.

Further disclosure related to [added: Schroth, EIT and] Souriau-Sunbank’s discontinued operations is included within Note 23, “Discontinued Operations,” [added: in the notes] to the consolidated financial [removed: statements.][added: statements included herein.]

[added: (2)] On September 20, 2019, TransDigm completed the divestiture of its Esterline Interface Technology (“EIT”) group of businesses to an affiliate of KPS Capital Partners, LP for approximately $190 million.

EIT was acquired by TransDigm as part of its acquisition of Esterline Technologies [removed: Corporation in March 2019.][added: Corporation.]

[removed: Further disclosure related] [added: Refer] to [removed: EIT’s discontinued operations is included within] Note 23, “Discontinued Operations,” [added: in the notes] to the consolidated financial [removed: statements.][added: statements included herein for further information.]

[removed: In] [added: (1)In] connection with the settlement of a Department of Justice investigation into the competitive effects of the [added: Schroth] acquisition, [removed: during] the [removed: fourth quarter of 2017, the] Company committed to dispose of the Schroth [removed: business.][added: business during the fourth quarter of 2017.]

On January 26, 2018, the Company completed the sale of Schroth in a management buyout to a private equity fund and certain members of Schroth management for approximately [removed: $61.4] [added: $61] million, which included a working capital adjustment of $0.3 million that was paid in July 2018.

| | [added: | |] Fiscal Years Ended September 30, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| | [added: | |] (in [removed: thousands,] [added: millions,] except per share amounts ) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Statement of Income Data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Net sales | [added: | |] $ | [removed: 5,223,203] [added: 5,103] | | | [added: | |] $ | [removed: 3,811,126] [added: 5,223] | | | [added: | |] $ | [removed: 3,504,286] [added: 3,811] | | | [added: | |] $ | [removed: 3,171,411] [added: 3,504] | | | [added: | |] $ | [removed: 2,707,115] [added: 3,171] | |

| Income from operations(1) | [removed: 1,926,546] | | [added: 1,751] | | [removed: 1,655,380] | | | | [removed: 1,482,846] [added: 1,926] | | | | [removed: 1,267,299] | | [added: 1,655] | | [removed: 1,071,529] | | | [added: | 1,483 | | | | | | 1,267 | | |]

| Interest expense—net | [removed: 859,753] | | [added: 1,029] | | [removed: 663,008] | | | | [removed: 602,589] [added: 859] | | | | [removed: 483,850] | | [added: 663] | | [removed: 418,785] | | | [added: | 602 | | | | | | 484 | | |]

| Income [removed: (loss)] [added: (Loss)] from discontinued operations, net of tax(4) | [removed: 50,432] | | [added: 47] | | [removed: (4,474] | | [removed: )] | | [removed: (31,654] [added: 51] | | [removed: )] | | [removed: —] | | [added: (5)] | | [added: | | | | (32) | | | | | |] — | | |

| [added: Less:] Net income attributable to noncontrolling interests | [removed: (1,541] | | [removed: )] [added: (1)] | | [removed: —] | | | | [added: (2) | | | | | |] — | | | | [added: | |] — | | | | [added: | |] — | | |

| Denominator for basic and diluted earnings per share under the two-class method: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Total shares for basic and diluted earnings per share | [removed: 56,265] | | [added: 57.3] | | [removed: 55,597] | | | | [removed: 55,530] [added: 56.3] | | | | [removed: 56,157] | | [added: 55.6] | | [removed: 56,606] | | | [added: | 55.6 | | | | | | 56.1 | | |]

| [removed: Net earnings] [added: Earnings] per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| [removed: Net earnings] [added: Earnings] per share from continuing operations—basic and diluted | [added: | |] $ | [removed: 12.94] [added: 8.14] | | | [added: | |] $ | [removed: 16.28] [added: 12.94] | | | [added: | |] $ | [removed: 8.45] [added: 16.28] | | | [added: | |] $ | [removed: 10.39] [added: 8.45] | | | [added: | |] $ | [removed: 7.84] [added: 10.39] | |

| [removed: Net earnings (loss)] [added: Earnings (Loss)] per share from discontinued operations—basic and diluted | [added: | | 0.82 | | | | | |] 0.90 | | | | [removed: (0.08] | | [removed: )] [added: (0.08)] | | [removed: (0.57] | | [removed: )] | | [removed: —] [added: (0.57)] | | | | [added: | |] — | | |

| [removed: Net earnings] [added: Earnings] per [removed: share(5)] [added: share(6)] | [added: | |] $ | [removed: 13.84] [added: 8.96] | | | [added: | |] $ | [removed: 16.20] [added: 13.84] | | | [added: | |] $ | [removed: 7.88] [added: 16.20] | | | [added: | |] $ | [removed: 10.39] [added: 7.88] | | | [added: | |] $ | [removed: 7.84] [added: 10.39] | |

| Cash dividends paid per common share | [added: | |] $ | [removed: 30.00] [added: 32.50] | | | [added: | |] $ | [removed: —] [added: 30.00] | | | [added: | |] $ | [removed: 46.00] [added: —] | | | [added: | |] $ | [removed: —] [added: 46.00] | | | [added: | |] $ | — | |

| | [added: | |] As of September 30, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Gross profit(1) | | | 2,647 | | | | | | 2,809 | | | | | | 2,177 | | | | | | 1,985 | | | | | | 1,728 | | |

| Selling and administrative expenses | | | 727 | | | | | | 748 | | | | | | 450 | | | | | | 413 | | | | | | 383 | | |

| Amortization of intangible assets | | | 169 | | | | | | 135 | | | | | | 72 | | | | | | 89 | | | | | | 78 | | |

| Refinancing costs | | | 28 | | | | | | 3 | | | | | | 6 | | | | | | 40 | | | | | | 16 | | |

| Other (income) expense(2) | | | (46) | | | | | | 1 | | | | | | — | | | | | | 3 | | | | | | (1) | | |

| Income from continuing operations before income taxes | | | 740 | | | | | | 1,063 | | | | | | 986 | | | | | | 838 | | | | | | 768 | | |

| Income tax provision(3) | | | 87 | | | | | | 222 | | | | | | 24 | | | | | | 209 | | | | | | 182 | | |

| Income from continuing operations | | | 653 | | | | | | 841 | | | | | | 962 | | | | | | 629 | | | | | | 586 | | |

| Net income | | | 700 | | | | | | 892 | | | | | | 957 | | | | | | 597 | | | | | | 586 | | |

| Net income attributable to TD Group | | | $ | 699 | | | | | $ | 890 | | | | | $ | 957 | | | | | $ | 597 | | | | | $ | 586 | |

| Net income applicable to TD Group common stockholders(5) | | | $ | 514 | | | | | $ | 779 | | | | | $ | 901 | | | | | $ | 438 | | | | | $ | 583 | |

| Weighted-average common shares outstanding | | | 53.9 | | | | | | 53.1 | | | | | | 52.3 | | | | | | 52.6 | | | | | | 53.3 | | |

| Vested options deemed participating securities | | | 3.4 | | | | | | 3.2 | | | | | | 3.3 | | | | | | 3.0 | | | | | | 2.8 | | |

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| | | | (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | | $ | 4,717 | | | | | $ | 1,467 | | | | | $ | 2,073 | | | | | $ | 651 | | | | | $ | 1,587 | |

| Working capital | | | 5,344 | | | | | | 3,327 | | | | | | 2,757 | | | | | | 1,263 | | | | | | 2,178 | | |

| Total assets | | | 18,395 | | | | | | 16,255 | | | | | | 12,197 | | | | | | 9,976 | | | | | | 10,726 | | |

| Total net debt | | | 20,009 | | | | | | 16,899 | | | | | | 12,878 | | | | | | 11,763 | | | | | | 10,196 | | |

(2)Other income for the fiscal year ended September 30, 2020 primarily relates to proceeds or proceeds receivable from business interruption insurance settlements and non-service related components of net periodic benefit costs on the Company’s defined benefit pension plans.

Fiscal years 2019 through 2016 represent the non-service related components of net periodic benefit costs on the Company’s defined benefit pension plans.

(3)Income tax expense as a percentage of income before income taxes was approximately 11.7%, 20.9%, 2.4%, 24.9% and 23.7%, respectively, for the fiscal years ended September 30, 2020, 2019, 2018, 2017 and 2016.

Fiscal 2020 income tax expense was impacted by the enactment of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act on March 27, 2020 in response to the COVID-19 pandemic.

The most significant impact of the CARES Act for the Company is an increase of the IRC 163(j) interest disallowance limitations from 30% to 50% of adjusted taxable income which allows the Company to deduct additional interest expense for fiscal years 2020 and 2021.

Fiscal 2018 income tax expense was impacted by the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017.

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| March 26, 2015 | Telair Cargo Group (comprised of Telair International GmbH (“Telair Int’l”), Telair US LLC and Nordisk Aviation Products) |

| March 31, 2015 | Franke Aquarotter GmbH (“Adams Rite Aerospace GmbH”) |

| May 14, 2015 | Pexco LLC (“Pexco Aerospace”) |

| August 19, 2015 | PneuDraulics, Inc. (“PneuDraulics”) |

Pursuant to the terms of the Put Agreement, after completion of the consultation process with the Business’ French works council, TransDigm had the right to require Eaton to enter into a securities purchase agreement (the “Purchase Agreement”) providing for the purchase by Eaton from TransDigm of the shares of Souriau-Sunbank.

The Purchase Agreement was entered into by the parties on October 28, 2019.

Pursuant to the terms of the Purchase Agreement, Eaton will purchase the shares of the Souriau-Sunbank for a cash purchase price of approximately $920 million.

The transaction is subject to execution and delivery of the Purchase Agreement and other definitive agreements, the satisfaction or waiver of customary closing conditions and receipt of required regulatory approvals, all of which have been received other than

the French foreign investment approval.

The parties expect to complete the transaction during the first quarter of fiscal 2020.

Therefore, Schroth was classified as held-for-sale beginning in the fourth quarter of fiscal 2017.

Further disclosure related to Schroth’s discontinued operations is included within Note 23, “Discontinued Operations,” to the consolidated financial statements.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Gross profit(1) | 2,809,271 | | | | 2,177,510 | | | | 1,984,627 | | | | 1,728,063 | | | | 1,449,845 | | |

| Selling and administrative expenses | 747,773 | | | | 449,676 | | | | 412,555 | | | | 383,319 | | | | 324,097 | | |

| Amortization of intangible assets | 134,952 | | | | 72,454 | | | | 89,226 | | | | 77,445 | | | | 54,219 | | |

| Refinancing costs | 3,013 | | | | 6,396 | | | | 39,807 | | | | 15,794 | | | | 18,393 | | |

| Other expense (income)(2) | 915 | | | | 419 | | | | 3,020 | | | | (461 | | ) | | (2,473 | | ) |

| Income from continuing operations before income taxes | 1,062,865 | | | | 985,557 | | | | 837,430 | | | | 768,116 | | | | 636,824 | | |

| Income tax provision(3) | 221,986 | | | | 24,021 | | | | 208,889 | | | | 181,702 | | | | 189,612 | | |

| Income from continuing operations including noncontrolling interests | 840,879 | | | | 961,536 | | | | 628,541 | | | | 586,414 | | | | 447,212 | | |

| Net income including noncontrolling interests | 891,311 | | | | 957,062 | | | | 596,887 | | | | 586,414 | | | | 447,212 | | |

| Net income attributable to TD Group | $ | 889,770 | | | $ | 957,062 | | | $ | 596,887 | | | $ | 586,414 | | | $ | 447,212 | |

| Net income applicable to TD Group common stock | $ | 778,749 | | | $ | 900,914 | | | $ | 437,630 | | | $ | 583,414 | | | $ | 443,847 | |

| Weighted-average common shares outstanding | 53,091 | | | | 52,345 | | | | 52,517 | | | | 53,326 | | | | 53,112 | | |

| Vested options deemed participating securities | 3,174 | | | | 3,252 | | | | 3,013 | | | | 2,831 | | | | 3,494 | | |

| | (in thousands) | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | $ | 1,467,486 | | | $ | 2,073,017 | | | $ | 650,561 | | | $ | 1,586,994 | | | $ | 714,033 | |

| Working capital(6,7) | 3,326,491 | | | | 2,756,905 | | | | 1,262,558 | | | | 2,178,094 | | | | 1,128,993 | | |

| Total assets(6,7) | 16,254,731 | | | | 12,197,467 | | | | 9,975,661 | | | | 10,726,277 | | | | 8,303,935 | | |

| Total debt(7) | 16,898,953 | | | | 12,877,282 | | | | 11,762,661 | | | | 10,195,607 | | | | 8,349,602 | | |

| (2) | The prior period operating data has been adjusted as a result of Accounting Standards Update ("ASU") 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). |

| (4) | The fiscal 2019 results include the divestitures of Souriau-Sunbank (expected first quarter of fiscal 2020) and EIT (September 2019). The fiscal 2018 and 2017 results include the divestiture of Schroth (January 2018). Refer to Note 23, “Discontinued Operations,” to the consolidated financial statements for further information. |

| (6) | In connection with adopting ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” for reporting periods ended after October 1, 2015, the Company reclassified $45,375 from current deferred income tax assets in our consolidated balance sheets as of September 2015, to non-current deferred income tax liabilities. |

| (7) | In connection with adopting ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” for reporting periods ended after October 1, 2015, the Company reclassified $77,740 from debt issuance costs in our consolidated balance sheets as of September 2015, to the current portion of long-term and long-term-term debt. |

| Operating activities | $ | 1,015,472 | | | $ | 1,022,173 | | | $ | 788,733 | | | $ | 683,298 | | | $ | 520,938 | |

| Investing activities | (3,888,980 | | ) | | (683,577 | | ) | | (287,003 | | ) | | (1,443,046 | | ) | | (1,679,149 | | ) |

None.

As of September 30, [removed: 2019,] [added: 2020,] TD Group carried out an evaluation, under the supervision and with the participation of TD Group’s management, including its President, Chief Executive Officer and Director (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of TD Group’s disclosure controls and procedures.

Using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) [removed: (COSO)] [added: (“COSO”)] in Internal Control-Integrated Framework, TransDigm’s management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2019.][added: 2020.]

Based on our assessment, management concluded that the Company’s internal control over financial reporting was effective as of September 30, [removed: 2019.][added: 2020.]

The effectiveness of the Company’s internal control over financial reporting as of September 30, [removed: 2019] [added: 2020] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included elsewhere in this Annual Report on Form 10-K and is incorporated herein by reference.

There have been no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of fiscal [removed: 2019] [added: 2020] that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

[removed: The] [added: To the Shareholders and the] Board of Directors [removed: and Shareholders] of

We have audited TransDigm Group Incorporated’s [removed: ("the Company")] internal control over financial reporting as of September 30, [removed: 2019,] [added: 2020,] based on criteria established in Internal [removed: Control-] [added: Control—] Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, [removed: the Company] [added: TransDigm Group Incorporated (the Company)] maintained, in all material respects, effective internal control over financial reporting as of September 30, [removed: 2019,] [added: 2020,] based on the COSO [removed: criteria.][added: criteria.]

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (PCAOB),] [added: (“PCAOB”),] the consolidated balance sheets of the Company as of September 30, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, [removed: cash flows and] changes in stockholders’ deficit [added: and cash flows] for each of the three years in the period ended September 30, [removed: 2019] [added: 2020,] and the related notes and financial statement schedule listed in the Index at Item 15(a) [removed: of the Company] and our report dated November [removed: 19, 2019] [added: 12, 2020] expressed an unqualified opinion thereon.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying [removed: management's report] [added: Management's Report] on [removed: internal control over financial reporting in Item 9A of the Form 10-K.][added: Internal Control Over Financial Reporting.]

In response to the COVID-19 pandemic, a number of employees began working remotely during the second half of fiscal 2020.

We are continually monitoring and assessing the changing business environment resulting from COVID-19 on our internal controls to minimize the impact on their design and operating effectiveness.

Management has taken measures to ensure that our disclosure controls and procedures and internal controls over financial reporting remained effective and were not materially affected during this period.

November 12, 2020

During fiscal 2019, we completed the acquisition of all of the outstanding stock of Esterline and of assets of certain product lines.

The results of operations are included in our consolidated financial statements from the date of acquisition.

As permitted by the Securities and Exchange Commission rules and regulations, we have excluded these acquisitions from our assessment of the effectiveness of our internal control over financial reporting as of September 30, 2019.

Total assets as of September 30, 2019, net sales and income from continuing operations before income taxes for the fiscal year ended September 30, 2019 for these fiscal 2019 acquisitions constituted approximately 26%, 18% and 6%, respectively, of each of these key measures as reported in our consolidated financial statements.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquisitions of Esterline and of assets of certain product lines, which are included in the 2019 consolidated financial statements of TransDigm Group Incorporated and constituted 26% of total assets as of September 30, 2019, 18% of net sales and 6% of income from continuing operations before income taxes for the year then ended.

Our audit of internal control over financial reporting of TransDigm Group Incorporated also did not include an evaluation of the internal control over financial reporting of the acquisitions of Esterline and of assets of certain product lines.

November 19, 2019

| Name | [added: | |] Age | | [added: | | | |] Position | [added: | |]

| W. Nicholas Howley | [removed: 67] | | [added: 68 | | | | | |] Executive Chairman of the Board of Directors | [added: | |]

| Kevin Stein | [removed: 53] | | [added: 54 | | | | | |] President, Chief Executive Officer and Director | [added: | |]

| Robert S. Henderson | [removed: 63] | | [added: 64 | | | | | |] Vice Chairman | [added: | |]

| Jorge L. Valladares III | [removed: 45] | | [added: 46 | | | | | |] Chief Operating Officer | [added: | |]

| Michael Lisman | [removed: 37] | | [added: 38 | | | | | |] Chief Financial Officer | [added: | |]

| Sarah Wynne | [removed: 45] | | [added: 46 | | | | | |] Chief Accounting Officer | [added: | |]

| Bernt G. Iversen II | [removed: 62] | | [added: 63 | | | | | |] Executive Vice President—Mergers & Acquisitions and Business Development | [added: | |]

| Halle Terrion | [removed: 51] | | [added: 52 | | | | | |] General Counsel, Chief Compliance Officer & Secretary | [added: | |]

The [removed: information regarding compliance with Section 16 of the Securities Exchange Act] [added: procedure by which stockholders may recommend nominees to our Board] of [removed: 1934] [added: Directors] will be set forth under the caption [removed: entitled “Section 16(a) Beneficial Ownership Reporting Compliance”] [added: “Other Information Regarding the Board of Directors”] in our Proxy Statement, which is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics, which applies to all of our directors, officers, and employees and a Code of Ethics for Senior Financial Officers which includes additional ethical obligations for our senior financial management (which includes our executive chairman, president and chief executive officer, vice chairman, chief operating officer, chief financial officer, chief accounting officer, division presidents, controllers, treasurer, and [removed: chief] [added: directors of] internal [removed: auditor).][added: audit).]

Please refer to the information set forth [removed: under the caption “Corporate Governance—Codes of Ethics & Whistleblower Policy”] in our Proxy Statement, which is incorporated herein by reference.

The [removed: procedure by which stockholders may recommend nominees to] [added: information regarding the audit committee of] our Board of Directors [added: and audit committee financial experts] will be set forth under the caption [removed: “Corporate Governance-Board Committees—Nominating and Corporate Governance Committee”] [added: “Other Information Regarding the Board of Directors”] in our Proxy Statement, which is incorporated herein by reference.

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Section 16(a) Beneficial Ownership Reporting Compliance

The information regarding the audit committee of our Board of Directors and audit committee financial experts will be set forth under the caption “Corporate Governance-Board Committees—Audit Committee” in our Proxy Statement, which is incorporated herein by reference.

The information required by this item will be set forth under the captions “Executive [removed: Compensation”, “Compensation of Directors”, “Compensation Committee Interlocks and Insider Participation”] [added: Compensation”] and [removed: “Compensation Committee Report”] [added: “Other Information Regarding the Board of Directors”] in our Proxy Statement, which is incorporated herein by reference.

| Plan category | [added: | |] Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and [removed: Rights (a)] [added: Rights (a)] | | | [added: | | |] Weighted-Average Exercise Price of Outstanding Options, Warrants and [removed: Rights (b)] [added: Rights (b)] | | | | [added: | |] Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column [removed: (a)) (c)] [added: (a)) (c)] | | | [added: | | |]

[removed: | (1) | Includes] [added: (1)Includes] information related to the 2003 stock option plan, the 2006 stock incentive plan and the 2014 stock option plan. [removed: |]

[removed: | (2) | This amount represents 77,829, 3,134,022 and 3,167,458 shares subject to outstanding stock options under our 2003 stock option plan, 2006 stock incentive plan and 2014 stock option plan, respectively.] No further grants may be made under our 2003 stock option plan and 2006 stock incentive plan, although outstanding stock options continue in force in accordance with their terms. [removed: |]

[removed: | (3) | This amount represents remaining shares available for award under our 2014 stock option plan and 2019 stock option plan. In August 2019, the 2019 stock option plan was adopted by the Board of Directors of TD Group and was subsequently approved by stockholders on October 3, 2019.] The [removed: 2019 stock option plan permits TD Group to award stock options to our key employees, directors or consultants. The] total number shares of TD Group common stock reserved for issuance or delivery under the 2019 stock option plan is 4,000,000, subject to adjustment in the event of any stock dividend or split, reorganization, recapitalization, merger, share exchange or any other similar corporate transaction or event. [removed: No shares have been issued from TD Group’s 2019 stock option plan. |]

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| Equity compensation plans approved by security holders(1) | | | 5,850,366 | | | (2) | | | $ | 290.69 | | | | | 5,316,998 | | | (3) | | |

(2)This amount represents 829, 2,235,680 and 3,613,857 shares subject to outstanding stock options under our 2003 stock option plan, 2006 stock incentive plan and 2014 stock option plan, respectively.

(3)This amount represents remaining shares available for award under our 2014 stock option plan and 2019 stock option plan.

In August 2019, the 2019 stock option plan was adopted by the Board of Directors of TD Group and was subsequently approved by stockholders on October 3, 2019.

The 2019 stock option plan permits TD Group to award stock options to our key employees, directors or consultants.

No grants have been made under TD Group’s 2019 stock option plan as of September 30, 2020.

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| Equity compensation plans approved by security holders(1) | 6,379,309 | | (2) | $ | 238.64 | | | 5,797,892 | | (3) |

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| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |

The information required by this item will be set forth under the captions entitled “Certain Relationships and Related Transactions,” “Compensation of Directors,” and “Independence of Directors” in our Proxy Statement, which is incorporated herein by reference.

The information required by this item will be set forth under the captions entitled “Certain Relationships and Related Transactions,” “Compensation of Directors,” and “Independence of Directors” in our Proxy Statement, which is incorporated herein by reference.

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| Report of Independent Registered Public Accounting Firm | [removed: [F-1](#s6AD264ACB3F45947BB1702F6FBBA815C)] | [added: | F-[1](#i3f294937cd344ba19d2a164edc97691f_100) | | |]

| Consolidated Balance Sheets as of September 30, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | [removed: [F-3](#s66D4DCA01DB951F39363FABD5D3B2137)] | [added: | F-[3](#i3f294937cd344ba19d2a164edc97691f_103) | | |]

| Consolidated Statements of Income for Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [F-4](#s1FC3696A91C85DEEAC3316CA55F5F7FF)] | [added: | F-[4](#i3f294937cd344ba19d2a164edc97691f_109) | | |]

| Consolidated Statements of Comprehensive Income for Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [F-5](#s7E99B14CD1C159B6B1CB02D91B624D9D)] | [added: | F-[5](#i3f294937cd344ba19d2a164edc97691f_112) | | |]

| Consolidated Statements of Changes in Stockholders’ Deficit for Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [F-6](#s9C263647343F5FEFB65F92096A144434)] | [added: | F-[6](#i3f294937cd344ba19d2a164edc97691f_115) | | |]

| Consolidated Statements of Cash Flows for Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [F-7](#sBDFF1726BFCC558BB446F97658641B27)] | [added: | F-[7](#i3f294937cd344ba19d2a164edc97691f_118) | | |]

| Notes to Consolidated Financial Statements for Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [added: | |] pages F-8 to [removed: F-58] [added: F-47] | [added: | |]

| (a) (2) Financial Statement Schedules | | [added: | | | |]

| Valuation and Qualifying Accounts for the Fiscal Years Ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | [removed: [F-59](#sFE08A94B0A9D5853BCA40FB7F879BFA7)] | [added: | F-[48](#i3f294937cd344ba19d2a164edc97691f_226) | | |]

| Exhibit No. | | [added: | | | |] Description | | [added: | | | |] Filed Herewith or Incorporated by Reference From | [added: | |]

| [removed: [2.1](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000060/ex21esterlinemergeragreeme.htm)] [added: [10.5](http://www.sec.gov/Archives/edgar/data/1260221/000119312513414943/d619108dex101.htm)] | | [removed: Agreement and Plan of Merger] [added: | | | | Employment Agreement,] dated [removed: as of] October [removed: 9, 2018, by and among Esterline Technologies Corporation,] [added: 28, 2013, between] TransDigm Group Incorporated and [removed: Thunderbird Merger Sub Inc.] [added: Jorge Valladares*] | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 8-K, filed October [removed: 11, 2018] [added: 29, 2013] (File No. [removed: 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000060/ex21esterlinemergeragreeme.htm)] [added: 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312513414943/d619108dex101.htm)] | [added: | |]

| [removed: [2.2](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000060/ex22esterlinefirstamendmen.htm)] [added: [10.7](http://www.sec.gov/Archives/edgar/data/1260221/000119312512178299/d339391dex105.htm)] | | [added: | | | |] First Amendment to [removed: Agreement and Plan of Merger] [added: Employment Agreement,] dated [removed: as of October 10, 2018, by and among Esterline Technologies Corporation,] [added: April 20, 2012, between] TransDigm Group Incorporated and [removed: Thunderbird Merger Sub Inc.] [added: Bernt Iversen*] | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 8-K, filed [removed: October 11, 2018] [added: April 24, 2012] (File No. [removed: 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000060/ex22esterlinefirstamendmen.htm)] [added: 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312512178299/d339391dex105.htm)] | [added: | |]

| [3.1](http://www.sec.gov/Archives/edgar/data/1260221/000119312514163517/d716424dex31.htm) | | [added: | | | |] Second Amended and Restated Certificate of Incorporation, filed April 28, 2014, of TransDigm Group Incorporated | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 8-K, filed April 28, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514163517/d716424dex31.htm) | [added: | |]

| [3.2](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000010/ex31tdgthirdamendedandrest.htm) | | [added: | | | |] Third Amended and Restated Bylaws of TransDigm Group Incorporated | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 8-K, filed January 30, 2018 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000126022118000010/ex31tdgthirdamendedandrest.htm) | [added: | |]

| [3.3](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | | [added: | | | |] Certificate of Incorporation, filed July 2, 1993, of NovaDigm Acquisition, Inc. (now known as TransDigm Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed January 29, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | [added: | |]

| [3.4](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | | [added: | | | |] Certificate of Amendment, filed July 22, 1993, of the Certificate of Incorporation of NovaDigm Acquisition, Inc. (now known as TransDigm Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed January 29, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | [added: | |]

| [3.5](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | | [added: | | | |] Bylaws of NovaDigm Acquisition, Inc. (now known as TransDigm Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed January 29, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-002648.txt) | [added: | |]

| [3.6](http://www.sec.gov/Archives/edgar/data/1260221/000119312509165052/dex31.htm) | | [added: | | | |] Certificate of Incorporation, filed July 10, 2009, of Acme Aerospace, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed August 5, 2009 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312509165052/dex31.htm) | [added: | |]

| [3.7](http://www.sec.gov/Archives/edgar/data/1260221/000119312509165052/dex32.htm) | | [added: | | | |] By-laws of Acme Aerospace, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed August 5, 2009 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312509165052/dex32.htm) | [added: | |]

| [3.8](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Articles of Incorporation, filed July 30, 1986, of ARP Acquisition Corporation (now known as Adams Rite Aerospace, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.9](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Certificate of Amendment, filed September 12, 1986, of the Articles of Incorporation of ARP Acquisition Corporation (now known as Adams Rite Aerospace, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.10](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Certificate of Amendment, filed January 27, 1992, of the Articles of Incorporation of Adams Rite Products, Inc. (now known as Adams Rite Aerospace, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.11](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Certificate of Amendment, filed December 31, 1992, of the Articles of Incorporation of Adams Rite Products, Inc. (now known as Adams Rite Aerospace, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.12](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Certificate of Amendment, filed August 11, 1997, of the Articles of Incorporation of Adams Rite Sabre International, Inc. (now known as Adams Rite Aerospace, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.13](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | | [added: | | | |] Amended and Restated Bylaws of Adams Rite Aerospace, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Holding Company’s Form S-4, filed April 23, 1999 (File No. 333-71397)](http://www.sec.gov/Archives/edgar/data/1077670/0001047469-99-016106.txt) | [added: | |]

| [3.14](http://www.sec.gov/Archives/edgar/data/714124/000104746907005464/a2178691zex-3_66.htm) | | [added: | | | |] Certificate of Incorporation, filed June 18, 2007, of AeroControlex Group, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Group Incorporated’s Form S-4, filed July 6, 2007 (File No. 333-144366)](http://www.sec.gov/Archives/edgar/data/714124/000104746907005464/a2178691zex-3_66.htm) | [added: | |]

| [3.15](http://www.sec.gov/Archives/edgar/data/714124/000104746907005464/a2178691zex-3_67.htm) | | [added: | | | |] By-laws of AeroControlex Group, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Inc.’s and TransDigm Group Incorporated’s Form S-4, filed July 6, 2007 (File No. 333-144366)](http://www.sec.gov/Archives/edgar/data/714124/000104746907005464/a2178691zex-3_67.htm) | [added: | |]

| [3.16](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex31.htm) | | [added: | | | |] Certificate of Formation, filed September 25, 2013, of Aerosonic LLC | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex31.htm) | [added: | |]

| [3.17](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex32.htm) | | [added: | | | |] Limited Liability Company Agreement of Aerosonic LLC | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex32.htm) | [added: | |]

| [3.18](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex311.htm) | | [added: | | | |] Certificate of Incorporation, filed November 13, 2009, of Airborne Acquisition, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex311.htm) | [added: | |]

| [3.19](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex312.htm) | | [added: | | | |] Bylaws of Airborne Acquisition, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex312.htm) | [added: | |]

| [3.20](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex35.htm) | | [added: | | | |] Amended and Restated Certificate of Incorporation, filed January 25, 2010, of HDT International Holdings, Inc. (now known as Airborne Global, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex35.htm) | [added: | |]

| [3.21](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex36.htm) | | [added: | | | |] Certificate of Amendment of Certificate of Incorporation, filed February 24, 2010, of HDT International Holdings, Inc. (now known as Airborne Global, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex36.htm) | [added: | |]

| [3.22](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex37.htm) | | [added: | | | |] Certificate of Amendment of Certificate of Incorporation, filed December 10, 2013, of HDT Global, Inc. (now known as Airborne Global, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex37.htm) | [added: | |]

| [3.23](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex38.htm) | | [added: | | | |] Bylaws of HDT International Holdings, Inc. (now known as Airborne Global, Inc.) | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex38.htm) | [added: | |]

| [3.24](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex39.htm) | | [added: | | | |] Certificate of Incorporation, filed November 13, 2009, of Airborne Holdings, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex39.htm) | [added: | |]

| [3.25](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex310.htm) | | [added: | | | |] Bylaws of Airborne Holdings, Inc. | | [added: | | | |] [Incorporated by reference to TransDigm Group Incorporated’s Form 10-Q, filed February 5, 2014 (File No. 001-32833)](http://www.sec.gov/Archives/edgar/data/1260221/000119312514036175/d640363dex310.htm) | [added: | |]