Business Combinations

6 Months Ended

Jul. 01, 2022

Acquisitions [Abstract]

Business Combination Disclosure

4. BUSINESS COMBINATIONS AND INVESTMENTS

Near Earth Autonomy

On June 22, 2022, the Company invested $10.0 million in Near Earth Autonomy, Inc. ("Near Earth"), in exchange for a minority interest in the outstanding equity of Near Earth and one seat on its Board of Directors. This investment supports Near Earth's mission to accelerate its technology to establish an industry standard in autonomous solutions for the next generation of aviation and leverages the Company's core competency in precision parts manufacturing as the preferred manufacturer of autonomous parts and components for Near Earth. Since 2019, Near Earth has been a partner on the autonomous technology for the Company's K-MAX TITAN unmanned aerial system and the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle.

In accordance with ASC 321, Investments - Equity Securities, the Company elected to apply the measurement alternative and accounted for the investment as an equity interest, initially measured at cost. The investment was included in Investment in Near Earth Autonomy on the Company's Condensed Consolidated Balance Sheets as of July 1, 2022. Upon observable transaction prices or impairment, the Company will remeasure the investment at fair value.

Aircraft Wheel & Brake

On May 21, 2022, the Company entered into an asset purchase agreement with Parker-Hannifin Corporation ("Parker"), pursuant to which the Company will acquire Parker's Aircraft Wheel and Brake division for a total purchase price of $440.0 million payable in cash, subject to a customary working capital adjustment. Parker is divesting this portion of its business in order to secure approval from certain governmental authorities in connection with its previously announced offer to acquire Meggitt PLC ("Meggitt").

The Company has obtained a financing commitment, subject to customary conditions, that will provide it with sufficient cash to consummate the closing. The closing of this transaction is expected to occur before December 31, 2022. The timing of closing will be contingent upon the receipt of regulatory approvals, including the European Commission’s process with respect to its consideration of Parker’s acquisition of Meggitt.

Bal Seal

On January 3, 2020, the Company acquired all of the equity interests of Bal Seal Engineering ("Bal Seal"), of Foothill Ranch, California, at a purchase price of $317.5 million. Upon closing, the Company funded $24.7 million associated with employee retention plans at Bal Seal. This amount and related interest was included in restricted cash on the Company's Consolidated Balance Sheets as of December 31, 2020. Eligible participants received an allocation of the escrow balance one year following the acquisition date, which was reflected in the Company's cash flows from operating activities for the six-month fiscal period ended July 2, 2021.