Net income

Less: Income (loss) from discontinued operations, net of tax(a)

Income from continuing operations

Add:

Depreciation and amortization

Interest expense, net

Interest tax provision

EBITDA

Adjustments:

Inventory purchase accounting adjustments(b)

Acquisition integration costs(c)

Acquisition transaction-related expenses(d)

Non-cash stock and deferred compensation expense(e)

Refinancing costs(f)

Other items, net(g)

EBITDA As Defined

Pro forma adjustments(h)

Pro forma EBITDA As Defined

During the fourth quarter of fiscal 2017, we committed to disposing of Schroth Safety Products Group (“Schroth”) in connection with the settlement of a Department of Justice investigation into the competitive effects of the acquisition. Therefore, Schroth was classified as held-for-sale beginning September 30, 2017. On January 26, 2018, we completed the sale of Schroth in a management buyout to a private equity fund and certain members of Schroth management for approximately $61.4 million, which includes a working capital adjustment of $0.3 million that was settled in July 2018.

Represents accounting adjustments to inventory associated with acquisitions of businesses and product lines that were charged to cost of sales when the inventory was sold.

Represents costs incurred to integrate acquired businesses and product lines into TransDigm Group Incorporated’s operations, facility relocation costs and other acquisition-related costs.

Represents transaction-related costs comprising deal fees; legal, financial and tax due diligence expenses; and valuation costs that are required to be expensed as incurred.

Represents the compensation expense recognized by TransDigm Group Incorporated under its stock incentive plans.

Represents costs expensed related to debt financing activities, including new issuances, extinguishments, refinancings and amendments to existing agreements.

Primarily represents foreign currency transaction gain or loss, payroll withholding taxes on dividend equivalent payments and stock option exercises, and gain or loss on sale of fixed assets.

Represents management’s estimates of the impact of the transactions relating to Kirkhill, Extant, Skandia and Esterline had such transactions occurred at the beginning of the year ended September 30, 2018.