Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with 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

We believe we are a leading global designer, producer and supplier of highly engineered proprietary aerospace components with significant aftermarket content. We seek to develop highly customized products to solve specific needs for aircraft operators and manufacturers. We attempt to differentiate ourselves based on engineering, service and manufacturing capabilities. We believe that our products have strong brand names within the industry and that we have a reputation for high quality, reliability and strong customer support. We believe we have achieved steady, long-term growth in sales and improvements in operating performance 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 via productivity and cost improvements 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.

We maintain a disciplined acquisition strategy focused on proprietary commercial aerospace component businesses with significant aftermarket content, where we see a clear path to create value and earn private equity-like returns by applying our three core value drivers. Integrating acquired businesses into our existing operations and applying our operating strategy has historically improved the financial performance of the acquired businesses.

For fiscal year 2026, we generated net sales of $10,557 million, gross profit of $6,254 million or 59.2% of net sales, and net income attributable to TD Group of $2,107 million.

Our commercial aftermarket sales are primarily a function of air travel demand. Commercial aftermarket sales increased in fiscal 2026 compared to fiscal 2025 primarily due to overall demand, which resulted in higher flight hours and utilization of passenger and freight aircraft, despite the softening in industry capacity and RPKs arising from the conflict in the Middle East. Sales also benefited from customers completing deferred maintenance work. We are monitoring the ongoing conflict in the Middle East and the adverse effects on global energy supplies and prices, global supply chains and commercial air travel. To date, we have not seen a significant change in commercial aftermarket order activity relative to the levels prior to the start of the conflict, as demand remains strong. We continue to monitor the evolving macroeconomic environment. However, at this time we do not expect the conflict or its related effects to result in a material adverse effect on our business, financial condition and results of operations.

Our commercial transport OEM shipments and sales generally run ahead of aircraft delivery schedules. Consistent with prior years, our fiscal 2026 shipments were a function of, among other things, the estimated 2026 and 2027 commercial aircraft production rates for Boeing and Airbus. Airline demand for new aircraft remains high and the OEMs, particularly Boeing and Airbus, continued to steadily increase aircraft production in recent quarters. Commercial OEM sales increased in fiscal 2026 compared to fiscal 2025 primarily due to the aircraft production increases by Boeing and Airbus.

Our defense sales fluctuate from year-to-year, and are dependent, to a degree, on government budget constraints, the timing of orders, macro and micro dynamics with respect to the DOW procurement policy and the extent of global conflicts. Likewise, delays in government spending outlays and government funding reprioritization can impact demand. For a variety of reasons, the military spending outlook is very uncertain, though recent DOW budgets have trended upwards due to recent geopolitical challenges and conflicts, and current military modernization efforts. Defense sales increased in fiscal 2026 compared to fiscal 2025 primarily due to continued growth in defense spending in both domestic and international markets.

Results of Operations

The following table sets forth, for the periods indicated, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (amounts in millions, except per share data):

			Fiscal Years Ended September 30,
			2026						% of Net Sales						2025						% of Net Sales
Net sales			$	10,557					100.0		%				$	8,831					100.0		%
Cost of sales			4,303						40.8		%				3,520						39.9		%
Selling and administrative expenses			1,191						11.3		%				945						10.7		%
Amortization of intangible assets			252						2.4		%				201						2.3		%
Income from operations			4,811						45.6		%				4,165						47.2		%
Interest expense-net			2,008						19.0		%				1,572						17.8		%
Refinancing costs			28						0.3		%				11						0.1		%
Other expense (income)			11						0.1		%				(47)						(0.5)		%
Income tax provision			656						6.2		%				555						6.3		%
Income from continuing operations			2,108						20.0		%				2,074						23.5		%
Less: Net income attributable to noncontrolling interests			(1)						—		%				—						—		%
Net income attributable to TD Group			$	2,107					20.0		%				$	2,074					23.5		%
Net income applicable to TD Group common stockholders			$	2,048		(1)			19.4		%				$	1,866		(1)			21.1		%
Earnings per share attributable to TD Group common stockholders:
Basic and diluted			$	35.51		(2)									$	32.08		(2)
Cash dividends declared per common share			$	—											$	90.00
Weighted-average shares outstanding—basic and diluted			57.6												58.2
Other Data:
EBITDA			$	5,217		(3)									$	4,568		(3)
EBITDA As Defined			$	5,563		(3)			52.7		%				$	4,760		(3)			53.9		%

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalents of $59 million and $208 million for the fiscal years ended September 30, 2026 and 2025, respectively.

(2)Earnings per share is calculated by dividing net income applicable to TD Group common stockholders by the basic and diluted weighted average common shares outstanding. Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated using unrounded numbers.

(3)Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

Changes in Results of Operations

Fiscal year ended September 30, 2026 compared with fiscal year ended September 30, 2025

Total Company

• Net Sales****.** Net organic sales and acquisition sales and the related dollar and percentage changes for the fiscal years ended September 30, 2026 and 2025 were as follows (amounts in millions):

			Fiscal Years Ended																		% Change Net Sales
			September 30, 2026						September 30, 2025						Change
Organic sales			$	9,832					$	8,831					$	1,001					11.3		%
Acquisition sales			725						—						725						8.2		%
Net sales			$	10,557					$	8,831					$	1,726					19.5		%

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the consolidated financial statements included herein for information on the Company’s recent acquisitions.

The increase in organic sales of approximately $1,000 million for the fiscal year ended September 30, 2026, compared with the fiscal year ended September 30, 2025, was due to increases in defense sales of approximately $400 million (10%), commercial aftermarket sales of approximately $350 million (13%) and commercial OEM sales of approximately $250 million (14%).

• Cost of Sales and Gross Profit****.** Cost of sales increased by $783 million or 22.2%, to $4,303 million for the fiscal year ended September 30, 2026 compared to $3,520 million for the fiscal year ended September 30, 2025. Cost of sales and the related percentage of net sales for the fiscal years ended September 30, 2026 and 2025 were as follows (amounts in millions):

			Fiscal Years Ended
			September 30, 2026						September 30, 2025						Change						% Change
Cost of sales - excluding costs below			$	4,077					$	3,336					$	741					22.2		%
% of net sales			38.6		%				37.8		%
Depreciation			163						141						22						15.6		%
% of net sales			1.5		%				1.6		%
Acquisition transaction and integration-related expenses			45						18						27						150.0		%
% of net sales			0.4		%				0.2		%
Non-cash stock and deferred compensation expense			16						15						1						6.7		%
% of net sales			0.2		%				0.2		%
Foreign currency losses			2						10						(8)						(80.0)		%
% of net sales			—		%				0.1		%
Total cost of sales			$	4,303					$	3,520					$	783					22.2		%
% of net sales			40.8		%				39.9		%
Gross profit (Net sales less Total cost of sales)			$	6,254					$	5,311					$	943					17.8		%
Gross profit percentage (Gross profit / Net sales)			59.2		%				60.1		%

Cost of sales during the fiscal year ended September 30, 2026 increased as a percentage of net sales. This was primarily due to the dilutive impact of the fiscal 2026 acquisitions on the gross margin. Offsetting the adverse impact the fiscal 2026 acquisitions had on gross profit was a favorable sales mix (particularly, higher commercial aftermarket sales as a percentage of net sales) and the application of our three core value drivers (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs spread over a higher production volume.

*•*Selling and Administrative Expenses. Selling and administrative expenses increased by $246 million to $1,191 million for the fiscal year ended September 30, 2026. The related percentage of net sales for the fiscal years ended September 30, 2026 and 2025 was as follows (amounts in millions):

			Fiscal Years Ended
			September 30, 2026						September 30, 2025						Change						% Change
Selling and administrative expenses - excluding costs below			$	993					$	779					$	214					27.5		%
% of net sales			9.4		%				8.8		%
Non-cash stock and deferred compensation expense			142						142						—						—		%
% of net sales			1.3		%				1.6		%
Acquisition transaction and integration-related expenses			56						24						32						133.3		%
% of net sales			0.5		%				0.3		%
Total selling and administrative expenses			$	1,191					$	945					$	246					26.0		%
% of net sales			11.3		%				10.7		%

Selling and administrative expenses during the fiscal year ended September 30, 2026 increased as a percentage of net sales. This was primarily due to the fiscal 2026 acquisitions and additional costs incurred to support the higher net sales growth.

*•*Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount, premium, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and collars designated and qualifying as cash flow hedges. Interest expense-net increased $436 million, or 27.7%, to $2,008 million for the fiscal year ended September 30, 2026 from $1,572 million for the comparable period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in outstanding borrowings and lower interest income. Refer to Note 10, “Debt,” in the notes to the consolidated financial statements included herein for information on our debt. The weighted average interest rate for cash interest payments on total borrowings outstanding was 6.2% and 6.3% for the fiscal years ended September 30, 2026 and September 30, 2025, respectively.

*•*Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 23.7% for the fiscal year ended September 30, 2026 compared to 21.1% for the fiscal year ended September 30, 2025. Refer to Note 12, “Income Taxes,” in the notes to the consolidated financial statements included herein for additional information.

•Earnings per Share.** Basic and diluted earnings per share was $35.51 for the fiscal year ended September 30, 2026 and $32.08 for the fiscal year ended September 30, 2025. Net income attributable to TD Group for the fiscal year ended September 30, 2026 of $2,107 million was decreased by dividend equivalent payments of $59 million, or $1.03 per share, resulting in net income applicable to TD Group common stockholders of $2,048 million. Net income attributable to TD Group for the fiscal year ended September 30, 2025 of $2,074 million was decreased by dividend equivalent payments of $208 million, or $3.58 per share, resulting in net income applicable to TD Group common stockholders of $1,866 million.

Business Segments

• Segment Net Sales****.** Net sales by segment for the fiscal years ended September 30, 2026 and 2025 were as follows (amounts in millions):

			Fiscal Years Ended September 30,
			2026						% of Net Sales						2025						% of Net Sales						Change						% Change
Power & Control			$	5,773					54.7		%				$	4,559					51.6		%				$	1,214					26.6		%
Airframe			4,603						43.6		%				4,112						46.6		%				491						11.9		%
Non-aviation			181						1.7		%				160						1.8		%				21						13.1		%
Net sales			$	10,557					100.0		%				$	8,831					100.0		%				$	1,726					19.5		%

Net sales for the Power & Control segment increased $1,214 million primarily from increases in sales in all three market channels.

Net sales for the Airframe segment increased $491 million primarily from increases in sales in all three market channels.

• EBITDA As Defined****.** Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the fiscal years ended September 30, 2026 and 2025 were as follows (amounts in millions):

			Fiscal Years Ended September 30,
			2026						% of Segment Net Sales						2025						% of Segment Net Sales						Change						% Change
Power & Control			$	3,098					53.7		%				$	2,595					56.9		%				$	503					19.4		%
Airframe			2,499						54.3		%				2,210						53.7		%				289						13.1		%
Non-aviation			79						43.6		%				67						41.9		%				12						17.9		%
Total segment EBITDA As Defined			5,676						53.8		%				4,872						55.2		%				804						16.5		%
Less: Unallocated corporate EBITDA As Defined			113						1.1		%	(1)			112						1.3		%	(1)			1						0.9		%
Total Company EBITDA As Defined			$	5,563					52.7		%	(1)			$	4,760					53.9		%	(1)			$	803					16.9		%

(1)Calculated as a percentage of consolidated net sales.

EBITDA As Defined for the Power & Control and Airframe segments increased $503 million and $289 million, respectively, due to the increase in net sales described above, along with our application of our three core value-driven operating strategy.

EBITDA As Defined from acquisitions for the Power & Control and Airframe segments contributed approximately $195 million in aggregate to the increase in EBITDA As Defined. EBITDA As Defined from acquisitions represents EBITDA As Defined from acquired businesses for the period up to one year from the respective acquisition date.

Unallocated corporate EBITDA As Defined consists primarily of corporate expenses which include compensation, benefits, professional services and other administrative costs incurred by our corporate offices.

Fiscal year ended September 30, 2025 compared with fiscal year ended September 30, 2024

For our results of operations for fiscal 2025 compared with fiscal 2024, refer to the discussion in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Form 10-K for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission on November 12, 2025.

Liquidity and Capital Resources

We historically have maintained a capital structure comprising a mix of equity and debt financing. We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations and/or through refinancing in the debt markets prior to the maturity dates of our debt.

The following tables present selected balance sheet, cash flow and other financial data relevant to the liquidity or capital resources of the Company for the periods specified below (amounts in millions):

			September 30, 2026						September 30, 2025
Selected Balance Sheet Data:
Cash and cash equivalents			$	2,279					$	2,808
Working capital (Total current assets less total current liabilities)			5,014						4,830
Total assets			28,014						22,909
Total debt (1)			34,763						30,015
TD Group stockholders’ deficit			(10,000)						(9,686)

(1)Includes debt issuance costs, original issue discount and premium. Refer to Note 10, “Debt,” in the notes to the consolidated financial statements included herein for additional information.

			Fiscal Years Ended September 30,
			2026						2025
Selected Cash Flow and Other Financial Data:
Cash flows provided by (used in):
Operating activities			$	2,187					$	2,038
Investing activities			(4,662)						(595)
Financing activities			1,954						(4,900)
Capital expenditures			274						222
Ratio of earnings to fixed charges (1)			2.4x						2.7x

(1)For purposes of computing the ratio of earnings to fixed charges, earnings consist of income from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt issuance costs, original issue discount and premium and the “interest component” of rental expense.

Significant Transactions of Fiscal 2026 and Subsequent Events

Debt Financing

Below is further information on the significant debt financing transactions occurring in fiscal 2026:

*•*On February 13, 2026, the Company issued $2,000 million of new debt, consisting of $1,200 million in aggregate principal amount of senior subordinated notes due 2034 at an issue price of 100% that bear interest at 6.125% (the “$1,200 million 6.125% 2034 Notes”) and $800 million of Tranche N term loans (the “Initial Tranche N term loans”) that bear interest at Term SOFR plus 2.50%.

The net proceeds from the February 13, 2026 new debt issuances were used, along with cash on hand, to fund the purchase price of the acquisition of Jet Parts Engineering (“JPE”) and Victor Sierra Aviation Holdings (“VSA”) and for related transaction fees and expenses.

• On April 17, 2026, the Company issued $1,500 million of new debt, consisting of (1) $500 million in additional 6.125% senior subordinated notes due 2034 at an issue price of 100.375% (the “Additional 6.125% 2034 Notes”), which resulted in a premium of approximately $2 million, and (2) $1,000 million of additional Tranche N term loans (the “Additional Tranche N term loans”) bearing interest at Term SOFR plus 2.50% (collectively, the Additional Tranche N term loans and the Initial Tranche N term loans are referred to herein as the “Tranche N term loans”). The Additional 6.125% 2034 Notes and the $1,200 million 6.125% 2034 Notes, are together referred to as the “6.125% 2034 Notes,” and the Additional Tranche N term loans and the Initial Tranche N term loans are together referred to as the “Tranche N term loans.”

The net proceeds from the April 17, 2026 new debt were intended to be used, along with cash on hand, to fund the purchase price of the proposed acquisition of Stellant Systems, Inc., common stock repurchases and for general corporate purposes. Notwithstanding the July 13, 2026 announcement that the Company withdrew from its proposed acquisition of Stellant Systems, Inc., there was no special mandatory redemption of the April 17, 2026 debt issuances and they remain outstanding. The Company had previously entered into a definitive agreement to acquire all the outstanding stock of Stellant Systems, Inc. on December 30, 2025.

• On July 10, 2026, the Company amended its trade receivable securitization facility (the “Securitization Facility”) to, among other things, (i) increase the borrowing capacity from $725 million to $1,000 million; and (ii) extend the maturity date to July 9, 2027. The Company subsequently drew $150 million available under the Securitization Facility in the fourth quarter of fiscal 2026. As of September 30, 2026, the Company has drawn $875 million and has $125 million of available borrowing capacity under its Securitization Facility.

• On September 14, 2026, the Company announced a cash tender offer for any and all of its outstanding $2,100 million aggregate principal amount of 6.750% Senior Secured Notes due 2028 (the “2028 Secured Notes”). On September 29, 2026, the Company purchased approximately $1,831 million aggregate principal amount of the 2028 Secured Notes that had been validly tendered before the early tender deadline of September 25, 2026. Holders received total consideration of $1,008.00 (plus accrued and unpaid interest) per $1,000 principal amount. The total consideration included an early tender premium of $30.00 per $1,000 principal amount. The Company paid a premium in excess of par of approximately $15 million, which is expensed as refinancing costs. Approximately $269 million aggregate principal amount of the 2028 Secured Notes remained outstanding as of September 30, 2026. Subsequent to September 30, 2026, approximately $2 million aggregate principal amount of the 2028 Secured Notes were validly tendered and repurchased by the Company prior to the expiration of the tender offer on October 13, 2026.

• On September 28, 2026, the Company issued $3,000 million of new debt, consisting of senior secured notes due 2035 at an issue price of 100% that bear interest at 6.750% (the “2035 Secured Notes”). The net proceeds from the 2035 Secured Notes were used to repurchase the tendered 2028 Secured Notes (as further described above) and for general corporate purposes.

Acquisitions

During fiscal 2026, the Company completed approximately $4,400 million in acquisitions of businesses, net of cash acquired. Below is further information on the acquisitions occurring in fiscal 2026:

• On October 6, 2025, the Company completed the acquisition of all the outstanding stock of Simmonds for approximately $757 million in cash. The acquisition was financed using cash on hand.

• On April 7, 2026, the Company completed the acquisition of approximately 95% of the outstanding stock of JPE and approximately 96% of the outstanding stock of VSA for approximately $2,142 million in cash, net of cash acquired. The definitive agreement to acquire JPE and VSA was entered into on January 13, 2026. The acquisition was financed using cash on hand and the net proceeds from the debt offerings completed in February 2026 (as further described above).

• On September 28, 2026, the Company completed the acquisition of approximately 99% of the outstanding stock of Prince & Izant (“P&I”) for approximately $1,058 million in cash, net of cash acquired. The definitive agreement to acquire P&I was entered into on July 27, 2026. The acquisition was financed using cash on hand.

• During fiscal 2026, the Company completed several acquisitions consisting of substantially all of the assets and technical data rights of certain product lines or all the outstanding stock of certain businesses (collectively, referred to herein as the “Other Acquisitions”), each meeting the definition of a business, for a total aggregate purchase price of $434 million in cash. These acquisitions represent bolt-ons to existing TransDigm operating units. Each of the acquisitions was financed using cash on hand.

On September 21, 2026, the Company announced that its operating unit, Extant Aerospace, entered into a definitive agreement to acquire certain assets comprising a portfolio of commercial rotorcraft, land systems and business jet products, including a manufacturing facility located in California, for approximately $240 million in cash. The acquisition is expected to close during fiscal 2027, subject to standard regulatory approvals and the satisfaction of customary closing conditions.

Common Stock Repurchases

In November 2025, the Board authorized an additional $5.0 billion in share repurchases of common stock permissible under the Company’s existing stock repurchase program, subject to any restrictions specified in the Credit Agreement and indentures governing the existing Subordinated and Secured Notes. There is no expiration date for the existing stock repurchase program.

In fiscal 2026, the Company repurchased, in aggregate, 2,316,439 shares of common stock at an average price of $1,187.21 per share for a total amount of $2,750 million. The repurchased shares of common stock are classified as treasury stock in the statement of changes in stockholders’ deficit. As of September 30, 2026, $3,038 million remained available for repurchase under the existing stock repurchase program. Whether the Company undertakes additional stock repurchases or other aforementioned activities will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.

---

If the Company has excess cash, it generally prioritizes allocating the excess cash in the following manner: (1) investing capital in existing businesses, (2) acquisitions of businesses, (3) payment of a special dividend and/or repurchases of our common stock and (4) prepayment of indebtedness or repurchase of debt.

The Company’s ability to make scheduled interest payments on, or to refinance, the Company’s indebtedness, or to fund non-acquisition related capital expenditures and research and development efforts, will depend on the Company’s ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control.

The Company’s objective is to maintain an allocation of at least 75% fixed rate and no more than 25% variable rate debt thereby limiting its exposure to changes in near-term interest rates. Interest rate swaps and collars used to hedge and offset, respectively, the variable interest rates on our term loans are further described in Note 18, “Derivatives and Hedging Activities,” in the notes to the consolidated financial statements included herein. As of September 30, 2026, approximately 75% of our gross debt was fixed rate.

As of September 30, 2026, the Company has significant cash liquidity as illustrated in the table presented below (in millions):

			As of September 30, 2026
Cash and cash equivalents			$	2,279
Availability on revolving credit facility			865
Cash liquidity			$	3,144

We believe our significant cash liquidity will allow us to meet our anticipated funding requirements. We expect to meet our short-term cash liquidity requirements (including interest obligations and capital expenditures) through net cash from operating activities, cash on hand and, if needed, draws on the revolving credit facility. Long-term cash liquidity requirements consist primarily of obligations under our long-term debt agreements. There is no maturity on any tranche of term loans or notes until August 2028 (fiscal 2028). The $875 million outstanding under the Securitization Facility matures on July 9, 2027.

The Company estimates its capital expenditures in fiscal year 2027 to be approximately 2.75% to 3.50% of net sales. The Company’s capital expenditures incurred from year-to-year are funded using existing cash on hand and are primarily for projects that are consistent with our three core value drivers (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) such as automation projects.

In connection with the continued application of our three core value-driven operating strategy, we expect our efforts will continue to generate strong margins and provide sufficient cash provided by operating activities to meet our interest obligations and liquidity needs. We believe our cash provided by operating activities and available borrowing capacity will enable us to make strategic business acquisitions, pay dividends to our stockholders and make opportunistic investments in our own stock, subject to any restrictions in our existing Credit Agreement and market conditions.

The Company may issue additional debt if prevailing market conditions are favorable to doing so. In addition, the Company may increase its borrowings in connection with acquisitions, if cash flow from operating activities becomes insufficient to fund current operations or for other short-term cash needs or for common stock repurchases or dividends. Our future leverage will also be impacted by the then current conditions of the credit markets.

Operating Activities. The Company generated $2,187 million of net cash from operating activities during fiscal 2026 compared to $2,038 million during fiscal 2025.

The change in trade accounts receivable during fiscal 2026 was a use of cash of $258 million compared to a use of cash of $212 million in fiscal 2025. The increase is primarily attributable to increased revenue. The Company actively manages its accounts receivable, the related agings and collection efforts.

The change in inventories during fiscal 2026 was a use of cash of $272 million compared to a use of cash of $146 million in fiscal 2025. The increase is due to an increase in raw materials to support fiscal 2027 sales demand. The Company manages inventory levels in support of customer needs.

The change in accounts payable during fiscal 2026 was a source of cash of $73 million compared to a source of cash of $38 million in fiscal 2025. The change is due to the timing of payments to suppliers.

Investing Activities. Net cash used in investing activities was $4,662 million during fiscal 2026, consisting of the acquisitions of Simmonds, JPE and VSA, P&I and other acquisitions of businesses aggregating to $4,389 million and capital expenditures of $274 million; partially offset by other investing transactions inflows of $1 million.

Net cash used in investing activities was $595 million during fiscal 2025, consisting of the acquisition of Servotronics, Inc. (“Servotronics”) and other acquisitions of businesses aggregating to $419 million and capital expenditures of $222 million; partially offset by other investing transactions inflows of $46 million.

Financing Activities. Net cash provided by financing activities was $1,954 million during fiscal 2026. The source of cash was primarily attributable to the net proceeds of short-term and long-term debt transactions, including fees and other financing costs, aggregating to $4,608 million plus proceeds from stock option exercises of $155 million; partially offset by repurchases of common stock of $2,750 million and dividend equivalent payments of $59 million.

Net cash used in financing activities was $4,900 million during fiscal 2025. The use of cash was attributable to dividend and dividend equivalent payments of $9,629 million plus repurchases of common stock of $500 million; partially offset by the net proceeds of short-term and long-term debt transactions, including fees and other financing costs, aggregating to $5,063 million plus proceeds from stock option exercises of $166 million.

Description of Senior Secured Term Loans and Indentures

Senior Secured Term Loans Facilities

TransDigm has $12,803 million in fully drawn term loans (the “Term Loans Facility”) as of September 30, 2026 and a $910 million revolving credit facility. The Term Loans Facility consists of five tranches of term loans with maturity dates ranging from March 22, 2030 to February 13, 2033, and requires quarterly aggregate principal payments of $32 million. Refer to Note 10, “Debt” in the notes to the consolidated financial statements included herein for information on our term loans.

The revolving commitments consist of two tranches which include up to $139 million of multicurrency revolving commitments. At September 30, 2026, the Company had $45 million in letters of credit outstanding and $865 million was available for borrowing under the revolving commitments. Draws on the revolving commitments are subject to an interest rate of Term SOFR plus 2.25%. The unused portion of the revolving commitments is subject to a fee of 0.50% per annum. The maturity date of the revolving credit facility is February 27, 2029.

The interest rates per annum applicable to the Term Loans Facility under the Credit Agreement are, at TransDigm’s option, equal to either an alternate base rate or an adjusted Term SOFR for one, three or six-month interest periods chosen by TransDigm, in each case plus an applicable margin percentage. The adjusted Term SOFR related to the Term Loans Facility is not subject to a floor. Refer to Note 18, “Derivatives and Hedging Activities,” in the notes to the consolidated financial statements included herein for information about how our interest rate swaps and collar agreements are used to hedge and offset, respectively, the variable interest rate portion of our debt.

Indentures

The following table represents the senior subordinated and secured notes outstanding as of September 30, 2026:

Description						Aggregate Principal						Maturity Date						Interest Rate
2028 Secured Notes (2)						$269 million						August 15, 2028						6.750%
4.625% 2029 Notes (1)						$1,200 million						January 15, 2029						4.625%
2029 Secured Notes (2)						$2,750 million						March 1, 2029						6.375%
4.875% 2029 Notes (1)						$750 million						May 1, 2029						4.875%
2030 Secured Notes (2)						$1,450 million						December 15, 2030						6.875%
2031 Secured Notes (2)						$1,000 million						December 1, 2031						7.125%
2032 Secured Notes (2)						$2,200 million						March 1, 2032						6.625%
2033 Secured Notes (2)						$1,500 million						January 15, 2033						6.000%
6.375% 2033 Notes (1)						$2,650 million						May 31, 2033						6.375%
2034 Secured Notes (2)						$500 million						January 31, 2034						6.250%
6.750% 2034 Notes (1)						$2,000 million						January 31, 2034						6.750%
6.125% 2034 Notes (1)						$1,700 million						July 31, 2034						6.125%
2035 Secured Notes (2)						$3,000 million						January 31, 2035						6.750%

(1)Collectively, referred to as the “Subordinated Notes” herein.

(2)Collectively, referred to as the “Secured Notes” herein.

The Subordinated Notes and Secured Notes do not require principal payments prior to their maturity. Interest under the Subordinated Notes and Secured Notes is payable semi-annually. The Subordinated Notes represent our unsecured obligations ranking subordinate to our senior debt, as defined in the applicable indentures. The Secured Notes represent our secured obligations ranking equally to all existing and future senior debt, as defined in the applicable indentures. The Subordinated Notes and Secured Notes contain many of the restrictive covenants included in the Credit Agreement. TransDigm is in compliance with all of the covenants contained in the Subordinated Notes and Secured Notes.

Guarantor Information

TransDigm Inc. is the issuer of the Subordinated Notes and the Secured Notes. The notes are fully and unconditionally guaranteed, on a joint and several basis, as described below.

The Subordinated Notes are unsecured obligations of TransDigm Inc. They are subordinated in right of payment to all of TransDigm Inc.’s existing and future senior indebtedness, including the Secured Notes and borrowings under the senior secured credit facilities. They rank equally in right of payment with all of TransDigm Inc.’s existing and future senior subordinated indebtedness, and rank senior in right of payment to all of TransDigm Inc.’s future indebtedness that is expressly subordinated to the Subordinated Notes.

The 4.625% 2029 Notes and the 4.875% 2029 Notes are fully and unconditionally guaranteed, on a joint and several, senior subordinated unsecured basis, by TransDigm Group, TransDigm UK Holdings Limited (“TransDigm UK”) and TransDigm Inc.’s domestic restricted subsidiaries named in the applicable indentures. The 6.375% 2033 Notes, the 6.750% 2034 Notes and the 6.125% 2034 Notes are fully and unconditionally guaranteed, on a joint and several, senior subordinated unsecured basis, by TransDigm Group and each of TransDigm Inc.’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm Inc.’s senior secured credit facilities, or that issues or guarantees any capital markets indebtedness of TransDigm Inc. or any of the guarantors in an aggregate principal amount of at least $200 million (each as defined in the applicable indentures). As of the date of this Form 10-K, those guarantors consist of the domestic subsidiaries of TransDigm Inc. named in the applicable indentures and TransDigm UK, as listed in Exhibit 22.1 to this Form 10-K.

The guarantees of the Subordinated Notes are subordinated in right of payment to all of the guarantors’ existing and future senior indebtedness, rank equally with all of their existing and future senior subordinated indebtedness, and rank senior to all of their future indebtedness that is expressly subordinated to the guarantees of the Subordinated Notes. The Subordinated Notes are structurally subordinated to all of the liabilities of TransDigm Inc.’s non-guarantor subsidiaries.

The Secured Notes are senior secured obligations of TransDigm Inc. They rank equally in right of payment with all of TransDigm Inc.’s existing and future senior indebtedness, including indebtedness under the senior secured credit facilities, and rank senior in right of payment to all of TransDigm Inc.’s existing and future indebtedness that is expressly subordinated to the Secured Notes, including the Subordinated Notes.

The 2028 Secured Notes are fully and unconditionally guaranteed, on a joint and several, senior secured basis by TransDigm Group, TransDigm UK and TransDigm Inc.’s domestic restricted subsidiaries named in the applicable indentures. The 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, 2032 Secured Notes, 2033 Secured Notes, 2034 Secured Notes and 2035 Secured Notes are fully and unconditionally guaranteed, on a joint and several, senior secured basis by TransDigm Group and each of TransDigm Inc.’s direct and indirect restricted subsidiaries (as defined in the applicable indenture) that is a borrower or guarantor under TransDigm Inc.’s senior secured credit facilities, or that issues or guarantees any capital markets indebtedness of TransDigm Inc. or any of the guarantors in an aggregate principal amount of at least $200 million (each as defined in the applicable indentures). As of the date of this Form 10-K, the guarantors of those series consist of the same entities as the guarantors of the 2028 Secured Notes. The guarantees of the Secured Notes rank equally in right of payment with all of the guarantors’ existing and future senior indebtedness, including their guarantees under the senior secured credit facilities, and rank senior in right of payment to all of their existing and future indebtedness that is expressly subordinated to the guarantees of the Secured Notes, including their guarantees of the Subordinated Notes. The Secured Notes are structurally subordinated to all of the liabilities of TransDigm Inc.’s non-guarantor subsidiaries.

Separate financial statements of TransDigm Inc. are not presented because the Subordinated Notes and Secured Notes are fully and unconditionally guaranteed, on a joint and several, senior subordinated unsecured basis (Subordinated Notes) and senior secured basis (Secured Notes) by the guarantors described above. TransDigm Group has no significant operations or assets separate from its investment in TransDigm Inc.

The summarized financial information below is presented on a combined basis for TransDigm Group, TransDigm Inc. and the other guarantors, which includes TransDigm UK. Intercompany balances and transactions between TransDigm Group, TransDigm Inc. and the other guarantors have been eliminated. Investments in, and equity in the earnings of, non-guarantor subsidiaries have been excluded, and amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are presented separately.

(in millions)			As of September 30, 2026						As of September 30, 2025
Current assets			$	4,653					$	4,494
Goodwill			10,145						8,340
Other non-current assets			5,636						4,003
Current liabilities			1,350						1,048
Non-current liabilities			34,854						30,014
Redeemable noncontrolling interests			78						—
Amounts due (from) to subsidiaries that are non-issuers and non-guarantors-net			(2,554)						(2,316)

			Fiscal Year Ended
(in millions)			September 30, 2026
Net sales			$	8,520
Sales to subsidiaries that are non-issuers and non-guarantors			34
Cost of sales			3,410
Expense from subsidiaries that are non-issuers and non-guarantors-net			73
Income from continuing operations			1,379
Net income attributable to TD Group			1,378

Certain Restrictive Covenants in Our Debt Documents

The Credit Agreement and the indentures governing the Subordinated Notes and Secured Notes contain restrictive covenants that, among other things, limit the incurrence of additional indebtedness, the payment of special dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of certain other indebtedness.

The restrictive covenants included in the Credit Agreement are subject to amendments executed periodically. The most recent amendment that impacted the restrictive covenants contained in the Credit Agreement is Amendment No. 15, executed on March 22, 2024.

Under the terms of the Credit Agreement, TransDigm is entitled, on one or more occasions, to request additional term loans or additional revolving commitments to the extent that the existing or new lenders agree to provide such incremental term loans or additional revolving commitments provided that, among other conditions, our consolidated net leverage ratio would be no greater than 7.25x and the consolidated secured net debt ratio would be no greater than 5.00x, in each case, after giving effect to such incremental term loans or additional revolving commitments.

If any such default occurs, the lenders under the Credit Agreement and the holders of the Subordinated Notes and Secured Notes may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under the Credit Agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under the Credit Agreement, the lenders thereunder and the holders of the Secured Notes will have the right to proceed against the collateral granted to them to secure the debt, which includes our available cash, and they will also have the right to prevent us from making debt service payments on the Notes.

With the exception of the revolving credit facility, the Company has no maintenance covenants in its existing term loan and indenture agreements. Under the Credit Agreement, if the usage of the revolving credit facility exceeds 40% (or, currently, $364 million) of the total revolving commitments, the Company is required to maintain a maximum consolidated net leverage ratio of net debt to trailing four-quarter EBITDA As Defined of 7.50x (or, solely with respect to the first four fiscal quarters ending after the consummation of any material acquisition, 8.00x) as of the last day of the fiscal quarter.

As of September 30, 2026, the Company was in compliance with all of its debt covenants and expects to remain in compliance with its debt covenants in subsequent periods.

Trade Receivable Securitization Facility

During fiscal 2014, the Company established the Securitization Facility. The Company’s Securitization Facility effectively increases the Company’s borrowing capacity depending on the amount of the domestic operations’ trade accounts receivable. The Securitization Facility includes the right for the Company to exercise annual one year extensions as long as there have been no termination events as defined by the agreement. The Company uses the proceeds from the Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs.

On July 10, 2026, the Company amended the Securitization Facility to, among other things, (i) increase the borrowing capacity from $725 million to $1,000 million; and (ii) extend the maturity date to July 9, 2027. The Company subsequently drew $150 million available under the Securitization Facility in the fourth quarter of fiscal 2026.

As of September 30, 2026, the total drawn on the Securitization Facility is $875 million and the borrowing capacity available is $125 million. As of September 30, 2026 and 2025, the applicable interest rate was 5.09% and 5.67%, respectively. The Securitization Facility is collateralized by substantially all of the Company’s domestic operations’ trade accounts receivable.

Contractual Obligations and Commitments

The following table summarizes the Company’s cash requirements from all significant contractual obligations as of September 30, 2026 (in millions):

						Total						Payment Due by Period
						Contractual						Less than						Between						Between						Over
						Obligations						1 Year						1-3 Years						3-5 Years						5 Years
Senior Subordinated and Secured Notes (1)						$	20,969					$	—					$	4,969					$	1,450					$	14,550
Term Loans Facility (2)						12,803						130						259						6,967						5,447
Scheduled interest payments (3)						12,005						2,266						4,253						3,309						2,177
Securitization Facility						875						875						—						—						—
Finance leases						662						29						61						63						509
Operating leases						121						27						38						21						35
Total contractual cash obligations						$	47,435					$	3,327					$	9,580					$	11,810					$	22,718

(1)Represents principal maturities which excludes interest, debt issuance costs, original issue discount and premium.

(2)Refer to Note 10, “Debt,” in the notes to the consolidated financial statements included herein for information on the maturity date of each tranche of term loans. The Term Loans Facility requires quarterly aggregate principal payments of approximately $32 million.

(3)Assumes that the variable interest rate on our existing term loans under our Term Loans Facility ranges from approximately 6.29% to 7.38% based on anticipated movements in Term SOFR, which given the ongoing volatility in rates, are highly uncertain. In addition, interest payments include the impact of the existing interest rate swap and collar agreements described in Note 18, “Derivatives and Hedging Activities,” in the notes to the consolidated financial statements included herein.

Off-Balance Sheet Arrangements

The Company utilizes letters of credit to back certain payment and performance obligations. Letters of credit are subject to limits based on amounts outstanding under the Company’s revolving credit facility. As of September 30, 2026, the Company had $45 million in letters of credit outstanding.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”), which often requires the judgment of management in the selection and application of certain accounting principles and methods. Management believes that the quality and reasonableness of our most critical policies enable the fair presentation of our financial position and results of operations. However, investors are cautioned that the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

Below are those policies applied in preparing our financial statements that management believes are the most dependent on the application of estimates and assumptions. For additional significant accounting policies, see Note 1, “Summary of Significant Accounting Policies,” in the notes to the consolidated financial statements included herein.

Revenue Recognition – The Company recognizes revenue from contracts with customers using the five step model prescribed in ASC 606. A substantial portion of the Company's revenue is recorded at a point-in-time basis. Revenue is recognized from the sale of products or services when obligations under the terms of the contract are satisfied and control of promised goods or services has transferred to the customer. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Revenue is measured at the amount of consideration the Company expects to be paid in exchange for goods or services. In a limited number of contracts, control transfers to the customer over time, primarily in contracts where the customer is required to pay for the cost of both the finished and unfinished goods at the time of cancellation plus a reasonable profit relative to the work performed for products that were customized for the customer. Therefore, we recognize revenue over time for those agreements that have a right to margin and where the products being produced have no alternative use. For agreements with multiple performance obligations, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes based on the standalone selling price of each performance obligation. The primary method used to estimate a standalone selling price is the price observed in standalone sales to customers for the same product or service. We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price. Variable consideration is included in the estimated transaction price when there is a basis to reasonably estimate the amount, including whether the estimate should be constrained in order to avoid a significant reversal of revenue in a future period. These estimates are based on historical experience, anticipated performance under the terms of the contract and our best judgment at the time.

Goodwill and Other Intangible Assets – In accordance with ASC 805, “Business Combinations,” the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed are recognized as goodwill. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of the Company’s intent to do so. Other intangible assets consist of identifiable intangibles acquired or recognized in accounting for the acquisitions (trademarks, trade names, technology, customer relationships, order backlog and other intangible assets). The valuations of the acquired assets and liabilities will impact the determination of future operating results. Management determines fair value using a discounted future cash flow analysis or other accepted valuation techniques. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, discount rates, customer attrition rates, royalty rates, asset lives and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors. Fair value adjustments to the Company’s assets and liabilities are recognized and the results of operations of the acquired business are included in our consolidated financial statements from the effective date of the merger or acquisition.

Goodwill and identifiable intangible assets are recorded at their estimated fair value on the date of acquisition and are reviewed at least annually for impairment based on cash flow projections and fair value estimates.

U.S. GAAP requires that the annual, and any interim, goodwill impairment assessment be performed at the reporting unit level. Our reporting units have been identified at the operating unit level, which is one level below our operating segments. Substantially all goodwill was determined and recognized for each reporting unit pursuant to the accounting for the merger or acquisition as of the date of each transaction. With respect to acquisitions integrated into an existing reporting unit, any acquired goodwill is combined with the goodwill of the reporting unit.

Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we consider in determining whether to perform a quantitative test.

When we evaluate the potential for goodwill impairment using a qualitative assessment, we consider factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative impairment test. For the quantitative test, management determines the estimated fair value through the use of a discounted cash flow valuation model incorporating discount rates commensurate with the risks involved for each reporting unit. If the estimated fair value of the reporting unit is less than the current carrying value, impairment of goodwill of the reporting unit is recognized. The key assumptions used in the discounted cash flow valuation model for impairment testing include discount rates, revenue growth rates and EBITDA margins, cash flow projections and terminal value rates. Discount rates are set by using the weighted average cost of capital (“WACC”) methodology. The WACC methodology considers market and industry data in determining the appropriate discount rates to be used, inclusive of company-specific risk factors. The Company utilizes a third party valuation firm to assist in the determination of the WACC. The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such a business.

Management, considering industry and company-specific historical and projected data, develops growth rates, sales projections and cash flow projections for each reporting unit. Terminal value rate determination follows a common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and low long-term growth rates.

The impairment test for indefinite-lived intangible assets consists of a comparison between the estimated fair values and carrying values. If the carrying amounts of intangible assets that have indefinite useful lives exceed their estimated fair values, an impairment loss will be recognized in an amount equal to the difference. Management utilizes the royalty savings valuation method to determine the estimated fair value for each indefinite-lived intangible asset. In this method, management estimates the royalty savings arising from the ownership of the intangible asset. The key assumptions used in estimating the royalty savings for impairment testing include discount rates, royalty rates, growth rates, sales projections and terminal value rates. Discount rates used are similar to the rates developed by the WACC methodology, inclusive of considering any differences in company-specific risk factors between reporting units and the indefinite-lived intangible assets. Royalty rates are established by management with the advice of valuation experts. Management, considering industry and company-specific historical and projected data, develops growth rates and sales projections for each significant intangible asset. Terminal value rate determination follows common methodology of capturing the present value of perpetual sales estimates beyond the last projected period assuming a constant WACC and low long-term growth rates.

The discounted cash flow and royalty savings valuation methodologies require management to make certain assumptions based upon information available at the time the valuations are performed. Actual results could differ from these assumptions. Management believes the assumptions used are reflective of what a market participant would have used in calculating fair value considering the current economic conditions.

As of the first day of the fourth quarter of fiscal 2026, the date of the annual impairment test, no indefinite-lived intangible assets or goodwill was determined to be impaired. As economic and market conditions have not changed significantly since the first day of the fourth quarter and no other indicators of impairment were identified, this conclusion remains appropriate as of September 30, 2026.

Income Taxes – The Company estimates income taxes in each jurisdiction in which it operates. This involves estimating taxable earnings, specific taxable and deductible items, the likelihood of generating sufficient future taxable income to utilize deferred tax assets and possible exposures related to future tax audits. To the extent these estimates change, adjustments to deferred and accrued income taxes are made in the period in which the changes occur. Historically, such adjustments have not been significant.

New Accounting Pronouncements

For information about new accounting pronouncements, see Note 1, “Summary of Significant Accounting Policies,” in the notes to the consolidated financial statements included herein.

Non-GAAP Financial Measures

We present below certain financial information based on our EBITDA and EBITDA As Defined. References to “EBITDA” mean earnings before interest, taxes, depreciation and amortization, and references to “EBITDA As Defined” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and EBITDA As Defined and the reconciliations of net cash provided by operating activities to EBITDA and EBITDA As Defined presented below.

Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP. We present EBITDA and EBITDA As Defined because we believe they are useful indicators for evaluating operating performance and liquidity.

Our management believes that EBITDA and EBITDA As Defined are useful as indicators of liquidity because securities analysts, investors, rating agencies and others use EBITDA to evaluate a company’s ability to incur and service debt. In addition, EBITDA As Defined is useful to investors because the revolving credit facility under our senior secured credit facility requires compliance under certain circumstances, on a pro forma basis, with a financial covenant that measures the ratio of the amount of our secured indebtedness to the amount of our Consolidated EBITDA defined in the same manner as we define EBITDA As Defined herein.

In addition to the above, our management uses EBITDA As Defined to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses EBITDA As Defined to evaluate acquisitions.

Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:

• neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements;

• the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined;

• neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and

• EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.

Because of these limitations, EBITDA and EBITDA As Defined should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA or EBITDA As Defined in isolation and specifically by using other U.S. GAAP measures, such as net income, net sales and operating profit, to measure our operating performance. Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP, and neither should be considered as an alternative to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculation of EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net income to EBITDA and EBITDA As Defined (in millions):

			Fiscal Years Ended September 30,
			2026						2025
Net Income			$	2,108					$	2,074
Adjustments:
Depreciation and amortization expense			445						367
Interest expense-net			2,008						1,572
Income tax provision			656						555
EBITDA			5,217						4,568
Adjustments:
Acquisition transaction and integration-related expenses (1)			101						42
Non-cash stock and deferred compensation expense (2)			158						157
Refinancing costs (3)			28						11
Other, net (4)			59						(18)
EBITDA As Defined			$	5,563					$	4,760

(1)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.
(2)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.
(3)						Represents costs expensed related to debt financing activities, including new issuances, extinguishments, refinancings and amendments to existing agreements.
(4)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

The following table sets forth a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined (in millions):

			Fiscal Years Ended September 30,
			2026						2025
Net cash provided by operating activities			$	2,187					$	2,038
Adjustments:
Changes in assets and liabilities, net of effects from acquisitions and sales of businesses			647						589
Interest expense-net (1)			1,961						1,534
Income tax provision-current			608						565
Refinancing costs (2)			(28)						(11)
Gain on sale of businesses, net			—						10
Non-cash stock and deferred compensation expense (3)			(158)						(157)
EBITDA			5,217						4,568
Adjustments:
Acquisition transaction and integration-related expenses (4)			101						42
Non-cash stock and deferred compensation expense (3)			158						157
Refinancing costs (2)			28						11
Other, net (5)			59						(18)
EBITDA As Defined			$	5,563					$	4,760

(1)						Represents interest expense, net of interest income, excluding the amortization of debt issuance costs and discount on debt.
(2)						Represents costs expensed related to debt financing activities, including new issuances, extinguishments, refinancings and amendments to existing agreements.
(3)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.
(4)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.
(5)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.