Triumph Group
Annual Report 2013

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Triumph Group, Inc. Annual Report 2013 Designed to be Different. Built to Perform. TRIUMPH. O NE NAME. MANY SOL UTION S. In fiscal 2013, Triumph achieved its best year ever – setting new records for revenue, earnings and cash flow. Highlights include: In fiscal 2013, revenues increased 9% and income from continuing operations before pension actions grew 25% over fiscal 2012. Organic sales growth for the fiscal year was 8%. All of Triumph’s three business segments reported healthy year-over-year operating margin expansion. Triumph generated over $430 million in cash flow from operations before pension contributions of $110 million – reflecting effective working capital management and quality earnings. The acquisitions of Embee, Inc. and Goodrich Pump and Engine Control Systems expanded Triumph’s range of capabilities and helped achieve greater balance among Triumph’s three business segments. The additional acquisition of Primus Composites was announced shortly after the fiscal year closed. Two of Triumph’s non-core Aftermarket Services’ Instruments Companies were divested. Jeffry Frisby assumed new responsibilities as Triumph’s CEO, succeeding company founder Richard Ill, who continues as Chairman. Major Markets as of March 31, 2013 57% Commercial Aerospace 28% Military 12% Business 2% Non-Aviation 1% Regional Top Ten Platforms as of March 31, 2013 (based on backlog) 1. Boeing 747 2. Gulfstream G450, G550 3. Boeing 777 4. Boeing 787 5. Boeing 737 6. Airbus A330, A340 7. Boeing C-17 8. Boeing V-22 9. Boeing 767 10. Sikorsky UH-60 About Triumph Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs, and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems – providing integrated solutions for the global aerospace market. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers. Triumph is comprised of 46 highly specialized manufacturing companies, operating at 64 locations worldwide. The company is organized into three groups: Aerostructures, Aerospace Systems and Aftermarket Services. Triumph’s mission is to be the premier aerospace and defense company recognized by customers as their supplier of choice for the aerospace assemblies, subassemblies, components and services Triumph provides. To achieve its goals, Triumph protects the integrity of the individual Triumph companies while providing each company with the benefits of being part of a large corporation. In return, each company is accountable for superior operating and financial results and for contributing to the overall success of the enterprise. This operating philosophy provides flexibility to capitalize on the changing market environment while delivering superior customer satisfaction. All companies share the Triumph name and a common dedication to the core values of Integrity, Innovation, Quality and Service, Flawless Execution and Commitment. Financial Highlights (Dollars in thousands, except per share data) Results for Year Sales Income from Continuing Operations % of Sales Income Tax Expense Interest Expense & Other Operating Income % of Sales Amortization of Acquired Contract Liabilities Depreciation & Amortization Adjusted Earnings before Interest, Taxes, Depreciation & Amortization4 % of Sales Net Income % of Sales Earnings per Share – Diluted: Income from Continuing Operations Loss from Discontinued Operations Net Income March 13 $ 3,702,702 March 12 $ 3,407,929 March 11 $ 2,905,348 $ 297,347 8% 165,710 68,156 $ 531,2131 14% (25,644) 129,506 $ 669,556 18% $ 281,622 8% 155,955 77,138 $ 514,7152 15% (26,684) 119,724 $ 567,355 17% $ 152,411 5% 82,066 79,559 $ 314,0363 11% (29,214) 99,657 $ 384,479 13% $ 297,3471 8% $ 280,8572 8% $ 149,8993 5% $ $ 5.671 — 5.67 $ $ 5.432 (0.01) 5.41* $ $ 3.213 (0.05) 3.16 Weighted Shares – Diluted (in thousands) 52,446 51,873 47,488 Capital Expenditures Year-End Position Working Capital Property & Equipment at cost Property & Equipment, net Debt Cash Net Debt Stockholders’ Equity Capital Net Debt to Capital Ratio Book Value per Common Share Employees Sales per Employee $ 126,890 $ 93,969 $ 90,025 $ 889,913 $ 741,105 $ 436,638 $ 1,296,488 $ 815,548 $ 1,329,863 32,037 $ 1,297,826 2,045,158 $ 3,342,984 39% $ 1,135,344 $ 733,380 $ 1,158,862 29,662 $ 1,129,200 1,793,369 $ 2,922,569 39% $ 1,056,711 $ 734,879 $ 1,312,004 39,328 $ 1,272,676 1,632,217 $ 2,904,893 44% $ $ 40.80 $ 36.21 $ 33.64 13,900 266 12,602 270 $ 12,097 240 $ 1 Includes $34.5 million in curtailment loss and early retirement incentives ($22.2 milion after tax or $0.42 per diluted share) and $2.7 million of integration expenses associated with the acquisition of Vought ($1.7 million after tax or $0.03 per diluted share). 2 Includes $40.4 million of net curtailment gain ($26.1 milion after tax or $0.50 per diluted share) and $6.3 million of acquisition and integration expenses associated with the Vought acquisition ($4.0 million after tax or $0.08 per diluted share). 3 Includes $20.9 million of acquisition and integration expenses associated with the Vought acquisition ($15.7 million after tax or $0.33 per diluted share). 4 Management believes that adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) provides useful information with respect to our overall operating performance, debt service capacity and ability to fund capital expenditures. * Difference due to rounding. Sales Cash Flow from Operations* Adjusted EBITDA Backlog 3 0 7 , 3 8 0 4 , 3 5 0 9 , 2 0 3 4 9 4 3 7 7 2 0 7 6 7 6 5 4 8 3 8 7 1 , 4 5 0 3 , 4 7 2 5 , 4 11 12 13 11 12 13 11 12 13 11 12 13 * Cash Flow from Operations in 2013, 2012 and 2011 was $430, $349 and $277 million before pension contributions of $110, $122 and $135 million, respectively. 1 Fellow Stockholders: Fifteen years ago, when I signed on with Triumph as the president of one of its newly-acquired companies, I had no clear idea where that decision would lead me. Triumph at the time was a small group of aerospace manufacturing companies with annual sales of around $250 million. In the ensuing years, under the leadership of founding CEO Rick Ill, that small group of companies grew through a combination of acquisition and organic growth to become a premier supplier in the aerospace industry. Keys to that success were a novel operating philosophy and a simple business strategy which never changed. When I assumed responsibility as CEO in fiscal 2013, Triumph was a $3.7 billion, Tier-One-Capable supplier with over 13,000 employees and 64 locations around the globe. And Triumph celebrated its 20th anniversary by achieving its best year ever – the latest in a 9-year history of “best years ever” – along with a commensurate increase in shareholder value. The question many have asked me is, “What comes next for Triumph?” Indeed, what happens next for this company “Designed to be Different” and “Built to Perform?” As we look to the future, we remain dedicated to the unique business model primarily responsible for our 2 success. Our strategy consists of five goals which have remained constant for two decades: • To continually add products and services, • To expand operating capacity, • To acquire aggressively, • To market our complete portfolio of capabilities, and • To expand our international presence. Our unique operating philosophy protects the integrity of the individual Triumph companies while providing each company with the benefits of being part of a large corporation. In return, each company is accountable for producing superior operating and financial results, and for contributing to the overall success of the enterprise. This philosophy allows us to continue to operate as a large corporation while retaining the flexibility to react as a small company to meet the needs of our customers. Triumph companies are highly entrepreneurial – adapting our corporate strategies to the needs of individual customers and markets through a highly skilled workforce. In fiscal 2013, we carefully examined our business model and took actions to achieve greater balance and resiliency to ensure that Triumph will continue to compete successfully in today’s challenging environment. These actions centered around four key areas: • Expanding and balancing our product and service portfolio, • Aggressively marketing Triumph’s capabilities, • Supporting leadership development in our companies, and • Enhancing Triumph’s financial strength. Balancing our portfolio Recent years have brought about rapid growth at Triumph, including acquiring Vought Aircraft Industries in 2010 – an action which more than doubled our revenues and propelled us into the ranks of top-tier aerospace suppliers. Prior to the Vought acquisition, Triumph was known as a broad-based federation of highly specialized aerospace suppliers. The acquisition of such a large aerostructures company led some to believe that our vision had changed. Our vision has not changed. While the Vought acquisition was much larger than any we had previously completed, it was entirely consistent with our strategy to add important new capabilities which allowed us to meet a broader range of our customers’ needs – now as a Tier-One-Capable supplier. In fact, since the acquisition, we have restructured the Vought organization to bring it in line with the Triumph model by creating six separate operating companies, each with its own management team accountable for conducting business in accordance with our operating philosophy. Triumph is now Tier-One-Capable, but we are not Tier-One-Dependent. Our mission is to be recognized by our customers as their supplier of choice at all levels Triumph. Designed to be different. Built to perform. of the aerospace supply chain – from fully integrated aerostructures to the smallest of parts, and with services extending from research and design to manufacturing and aftermarket support. Triumph will continue its aggressive acquisition strategy, driven by the needs of our customers and our goal to provide them with a complete portfolio of capabilities and solutions. Triumph is “One Name” with “Many Solutions”, offering customers a full range of services that they can access as needed backed by our reputation for innovative collaboration, technological leadership and uncompromising ethics. There is no question that the Vought acquisition altered the balance among Triumph’s three business segments – Aerostructures, Aerospace Systems and Aftermarket Services. To begin to restrike an optimal balance and to further expand our capabilities, we acquired two outstanding companies in fiscal 2013 and acquired a third shortly after the year-end close. • Triumph Processing – Embee Division, Inc., formerly Embee, Inc., extends our ability to provide advanced coatings and finishes for precision engineered parts used in hydraulics, landing gear and electronic actuation systems. • Triumph Engine Control Systems, LLC, formerly Goodrich Pump & Engine Control Systems, is a leading fuel systems supplier with significant aftermarket potential – adding an important new capability to Triumph’s range of products and services. In May 2013, Triumph acquired Primus Composites, now operating as Triumph Structures – Farnborough, Ltd. and Triumph Structures (Thailand) Ltd., extending Triumph’s structural composites capabilities in the United Kingdom and Asia and providing an international customer base. Marketing aggressively Triumph has created a diverse, global organization comprising the aerospace industry’s finest specialty product and service suppliers. Today it’s more important than ever to promote these capabilities aggressively and to expand Triumph’s presence at all levels of the supply chain. Increasingly, we are leveraging the strong customer relationships developed by our individual companies as we encourage customers to harness the power of the entire Triumph network to meet a broader range of needs. In fiscal 2013 we completed an in-depth review of Triumph’s products, capabilities and technologies and matched them with known opportunities in all segments of the aerospace marketplace – commercial, military, business, and aftermarket. As a result of that analysis, we identified a broad range of specific, actionable opportunities that we continue to pursue. Developing strong leaders As Triumph has grown, it has become increasingly important to build a common identity among all our operating companies with a common passion for our Core Values which define Triumph: Integrity, Innovation, Quality and Service, Flawless Execution, and Commitment. Indeed, Triumph’s reputation in the global marketplace is a reflection of the individual reputations of each of our companies in their markets and the local communities 2013 ACQUISITION Triumph Processing – Embee Division, Inc. Triumph Processing – Embee Division, Inc. was founded in 1948 as a two-person shop focused on hard chrome plating, and over the last six decades has expanded to provide over 70 advanced metal finishing services. Based in Santa Ana, California, the company has 400 employees. The company’s aerospace services focus on landing gear, hydraulic components, electronic actuation systems and spare parts – with a core competency of finishing high quality precision parts with tight tolerances. 3 Triumph. Designed to be different. Built to perform. they support. As customers interact with our companies, we strive to provide a consistent Triumph experience at all locations. There is no doubt that leadership within our companies is more important, and more complex, than ever. Company executives are increasingly called upon to represent the interests of the larger Triumph organization, and to collaborate with our customers and with one another to meet multi-faceted product and service requirements. In addition, the requirements of a highly skilled workforce demand effective and proficient management and leadership. Triumph’s future success will benefit by engaged and committed employees who are inspired by leaders presenting an exciting vision of the future. Our intention is to both preserve the integrity of our operating companies as well as provide our leaders with the tools and skills required to guide Triumph’s future path. This important work continued in fiscal 2013 with a company-wide employee engagement survey to provide baseline data on our employees’ understanding of Triumph’s Core Values and business philosophy. By analyzing the results across a wide range of metrics, we are providing carefully-targeted support to our company leaders as they work to enhance a highly-motivated, customer-focused workforce. Enhancing financial strength Triumph’s financial strength is paramount in maintaining our relationships with our stakeholders – customers, employees, investors, suppliers, and the communities where our employees live and work. All depend in some manner on Triumph’s ability to deliver on our commitments, to take advantage of opportunities, and to build for the future. Through the years Triumph has achieved an enviable record of consistent growth in revenue and earnings. We are especially proud of our strong cash flow, which reflects company-wide proficiency in aggressive expense control, strong asset management, and continued margin expansion. While we acquired significant debt in the Vought acquisition, as well as unfunded pension liabilities, we are making excellent progress in reducing these obligations. Our strong cash position allowed us to allocate $110 million toward our Vought pension liabilities, and we are proactively managing the plans to fulfill our obligations while avoiding unnecessary cost. Triumph continues to invest in new facilities and technology. In 2013 we will complete construction of a new 240,000-square-foot, state-of-the-art manufacturing facility in Red Oak Texas, for production of the Bombardier Global 7000/8000 integrated wing assembly. Work is also underway to more than triple the size of the Red Oak facility in order to relocate a range of operations currently based at our aging Jefferson Street facility in nearby Dallas. We continue to seek opportunities to expand our physical presence across the globe, either through acquisition or the expansion of existing facilities. These actions will allow Triumph to locate services closer to our customers and to take advantage of low-cost production environments where feasible. 2013 ACQUISITION Triumph Engine Control Systems, LLC Triumph Engine Control Systems, LLC adds aerospace fuel systems to Triumph’s expanding product line. Based in West Hartford, Connecticut, the company is a leading independent aerospace fuel system supplier for the commercial, military, helicopter and business jet markets. With a workforce of approximately 530 employees, the company’s key products and services include electronic engine controls, fuel metering units and main fuel pumps for both original equipment manufacturers and the aftermarket. 4 Triumph. Designed to be different. Built to perform. 2013 WINGS PROGRAM Wings Program Promotes Local Community Outreach In fiscal 2013, Triumph employees found opportunities to enrich the local communities where they live and work through the Triumph Wings Program. Triumph employees contributed 8,758 volunteer hours to a wide range of projects involving schools, shelters, parks, senior centers, and community organizations. Triumph Aerostructures in Chengdu, China supplied books, shelving, sports equipment, musical instruments, warm clothing, and backpacks to an elementary school serving the minority Yi population of Sichuan province. The school, devastated by an earthquake, had no supplies until the Triumph team arrived. Looking ahead Triumph is extremely well positioned for continued growth in an aerospace marketplace that remains full of potential opportunity, albeit with some areas of potential headwind. • Build rates for commercial aircraft continue to increase – fueled by the need for new capacity in Asia and the Middle East and the growth of low-cost carriers. As the economies of the United States and Europe improve, legacy carriers are beginning to order replacement aircraft. The commercial rotorcraft market remains strong. • The military aircraft and rotorcraft market remains stable, even though future prospects are expected to moderate because of pressures on the U.S. military budget. However, even if production rates decline, Triumph’s efficiency and cost competitiveness provide opportunities for increasing market share. The emerging market for UAVs continues to grow as additional military and commercial uses are identified. • Continued improvement is expected in the business jet market as economic fears continue to abate and corporate sales rebound. Modest growth is expected in the small cabin aircraft market. The aftermarket continues to expand in response to increasing passenger miles, aging fleets, and the trend toward consolidation and outsourcing among commercial airlines. Triumph is investigating opportunities to expand our market presence by establishing facilities near aircraft service locations in the United States, Europe and Asia. This allows us to position our $35 million inventory of rotables and spares nearer to the point of use. I want to emphasize, however, that Triumph does not solely rely on economic and market conditions for financial success. Our unique structure allows our companies to respond immediately to changing market conditions so that Triumph can prosper in virtually any scenario. Looking ahead, I believe strongly that Triumph’s future depends on our collective ability to leverage our full range of products, capabilities and services to solve problems in ways that none of our competitors can match. Our future depends on the thousands of decisions – some large, some small – made by our more than 13,000 employees, each and every day. Our future depends on recognizing the role of every single employee in making the Triumph promise real. In the past year I’ve had the privilege of visiting nearly every one of Triumph’s facilities across the globe and meeting with many of our employees. I explain that my vision is to turn the Triumph organization chart upside down. While employees are obviously responsible and accountable for their job performance, I am responsible and accountable to them for creating an environment where they can fulfill their highest aspirations, and in so doing contribute to Triumph’s phenomenal success for many years to come. I’m privileged to lead and to serve this great company as we enter our third decade of growth. Jeffry D. Frisby President and CEO 5 Triumph. Designed to be Different. Built to Perform. Triumph’s 46 companies offer the ability to design, fabricate or overhaul virtually any type of part, component or assembly. This breadth of experience and capabilities makes Triumph unique among aerospace industry suppliers. SIMPLE TO COMPLEX Triumph participates at all levels of the aerospace supply chain – from single components to complex aerostructures and their contents. SINGLE POINT OF CONTACT Customers may utilize the services of a single Triumph company, or work with project teams comprising multiple companies to address complex requirements and solutions – all through a single point of contact. DIVERSE SERVICES Triumph services range from build-to-print using Triumph’s state-of-the art manufacturing technologies to a full range of research and development, engineering and testing capabilities. BROAD MARKET PARTICIPATION Triumph is experienced in all major aerospace markets – commercial, military, business jets and regional jets; unmanned vehicles and rotorcraft. 6 AEROSTRUCTURES • Precision machining and fabrication • Wings • Fuselage sections and panels • Empennages • Doors • Flight control surfaces • Helicopter cabins • Composite structures • Testing AEROSPACE SYSTEMS • Hydraulics • Gears/Gear Boxes • Thermal controls • Electro-mechanical actuation • Control systems • Fuel controls AFTERMARKET SERVICES • Aerostructures > Flight control surfaces > Thrust reversers > Nacelle components • Auxiliary power units • Gear systems • Fuel components • Electrical system components • Actuators • Interiors TECHNOLOGY LEADERSHIP Triumph companies continuously monitor emerging technologies and match them to the needs of our customers in order to improve performance, reduce weight and noise, minimize maintenance requirements and increase efficiency. LIFE CYCLE SERVICE Triumph provides a full range of Maintenance, Repair and Overhaul services – providing total life cycle support to our customers. GLOBAL REACH AND SCOPE Triumph companies are located throughout the world – positioning resources close to our customers for rapid response. FINANCIAL STRENGTH Triumph’s $3.7 billion in revenue provides the scale required to make significant commitments to programs, technologies and manufacturing capabilities. THINK BIG, ACT SMALL All companies enjoy the benefits be being part of a large, diversified, financially strong organization, yet individual companies have the flexibility and agility of smaller companies to act quickly to meet customer needs. 7 Triumph Aerostructures Group The Aerostructures Group designs, integrates, tests, manufactures and assembles structural components made of metallic and composite materials, including aircraft wings, fuselage sections, tail assemblies, engine nacelles, and flight control surfaces, as well as helicopter cabins. 88 Products and Services • Integrated structures including wings and wing panels, fuselage sections and panels, empennages, nacelles and rotorcraft cabins • Machined parts and subassemblies • Sheet metal parts and subassemblies • Composite parts and subassemblies • Metal surface treatments and finishing • Engineering design analysis and build packages • Prototype structures • Structural instrumentation and testing Major Markets (as of March 31, 2013) 58% Commercial Aerospace 25% Military 15% Business 1% Non-Aviation 1% Regional Investments and Initiatives • Completed construction of a fully-automated, state-of-the-art manufacturing facility in Red Oak, TX, for the production of the Bombardier 7000/8000 wing assembly. • Began the phase II expansion at Red Oak to • relocate former Vought Jefferson Street operations to the new state-of-the-art facility, creating new business opportunities and significant cost savings. Invested in new processes and methods to increase efficiency, including a new flow line for flight control surfaces at Triumph Aerostructures – Vought Commercial Division – Stuart; a new stringer line at Triumph Aerostructures – Vought Integrated 48% Military Programs Division – Nashville; and new state-of- 4% Business the-art machining capabilities at Triumph Structures 7% Non-Aviation – Los Angeles and Triumph Structures – Kansas City. 3% Regional 38% Commercial Aerospace Locations Triumph Aerospace Systems – Wichita Triumph Aerostructures – Vought Commercial Division – Grand Prairie (Marshall Street) Triumph Aerostructures – Vought Commercial Division – Hawthorne Triumph Aerostructures – Vought Commercial Division – Stuart Triumph Aerostructures – Vought Integrated Programs Division – Dallas (Jefferson Street) Triumph Aerostructures – Vought Integrated Programs Division – Milledgeville Triumph Aerostructures – Vought Integrated Programs Division – Nashville 11% Military 80% Commercial Aerospace Triumph Aerostructures – State-of-the-art, high-speed milling systems at Triumph Structures – Los Angeles produce a wide variety of complex precision aluminum and hard metal structural components and subassemblies, serving commercial and military aerospace customers. Components range in size up to 120 feet. Vought Integrated Programs Division – Red Oak 4% Business 3% Non-Aviation Triumph Composite Systems 2% Regional Triumph Fabrications – Fort Worth Triumph Fabrications – Hot Springs Triumph Fabrications – San Diego Triumph Fabrications – Shelbyville Triumph Insulation Systems Triumph Processing Triumph Structures – East Texas Triumph Structures – Everett Triumph Structures – Farnborough, Ltd. Triumph Structures – Kansas City Triumph Structures – Long Island Triumph Structures – Los Angeles Triumph Structures (Thailand) Ltd. Triumph Structures – Wichita 9 Triumph Aerospace Systems Group The Aerospace Systems Group designs, engineers, manufactures and services advanced aerospace control systems, including geared products, electro-mechanical and hydraulic systems, actuation systems, thermal controls and engine fuel controls, latches and locks, and mechanical controls. 1010 58% Commercial Aerospace Products and Services • Hydraulic, electro-mechanical and mechanical systems • Complex gear systems • Electro-mechanical actuation and 1% Non-Aviation 15% Business 25% Military motion control systems 1% Regional • Cockpit controls • UAV flight control computers • Heat exchangers/thermal systems • Propulsion system components • Engineering, design, analysis and build packages • Complex prototype systems and wind tunnel test hardware • Systems engineering, integration, instrumentation and testing • Precision machined parts and assemblies • Composite parts and assemblies • Comprehensive processing services Major Markets (as of March 31, 2013) 38% Commercial Aerospace 48% Military 4% Business 7% Non-Aviation 3% Regional Investments and Initiatives • Invested in electromechanical actuation systems capabilities at Triumph Actuation Systems – Connecticut; Triumph Actuation Systems – Clemmons; and Triumph Aerospace Systems – Seattle. • Upgraded gear systems design, development and manufacturing capabilities at Triumph Gear Systems – Park City. • Expanded landing gear operations at Triumph Aerospace Systems – Seattle. • Added new fuel control system capabilities with the acquisition of Triumph Engine Control Systems. 80% Commercial Aerospace 11% Military 2% Regional 4% Business 3% Non-Aviation Locations Triumph Actuation & Motion Control Systems – UK Triumph Actuation Systems – Clemmons Triumph Actuation Systems – Freeport Triumph Actuation Systems – Connecticut Triumph Actuation Systems – Valencia Triumph Aerospace Systems – Newport News Triumph Aerospace Systems – Seattle Triumph Controls Triumph Controls – France Triumph Controls – Germany Triumph Controls – UK Triumph Engine Control Systems Triumph Fabrications – Phoenix Triumph Fabrications – St. Louis Triumph Gear Systems – Macomb Triumph Gear Systems – Park City Triumph Northwest Triumph Processing – Embee Division Triumph Thermal Systems Nose landing gear retract actuators are produced using advanced lean manufacturing methods, including machining cells integrated with single piece flow assembly and test cells, at Triumph Actuation Systems – Valencia. The company designs, manufactures and repairs complex hydraulic and hydromechanical aircraft components and systems. 11 Triumph Aftermarket Services Group The Aftermarket Services Group provides third-party Maintenance, Repair and Overhaul (MRO) services, as well as replacement parts and inventory management services, for the global commercial and military aviation industry, principally airlines and air cargo carriers. 12 58% Commercial Aerospace 25% Military 15% Business 1% Non-Aviation 1% Regional 38% Commercial Aerospace 48% Military 4% Business 7% Non-Aviation 3% Regional Products and Services • Auxiliary power units • Engine components • Electrical power generation systems • Engine accessories • Environmental control systems • Airframe and structures • • Transmissions and gearboxes • Hydraulic systems and components • Pneumatic, oil, fuel and heat transfer systems Interiors and components • Rotables and spares Major Markets (as of March 31, 2013) 80% Commercial Aerospace 11% Military 4% Business 3% Non-Aviation 2% Regional Investments and Initiatives • Added plane-side repair services in Atlanta, GA and started up plane-side services in Indianapolis, IN. • Expanded composite repair capabilities in Thailand with the addition of an autoclave at Triumph Aviation Services – Asia. • Relocated Triumph Air Repair in Phoenix, AZ, to an expanded facility with added test cell capacity. Locations Triumph Accessory Services – Grand Prairie Triumph Accessory Services – Wellington Triumph Air Repair Triumph Airborne Structures Triumph Aviation Services – Asia Triumph Engines – Tempe Triumph Interiors At Triumph Airborne Structures in Hot Springs, AR, a commercial aircraft nacelle is repaired by replacing the inner panel of an inlet cowl. The company has the capability to perform major repairs on nacelle components, flight control surfaces and aerostructures. 13 Company Directory Triumph Accessory Services – Grand Prairie Provides maintenance services for engine and airframe accessories including a variety of engine gearboxes, pneumatic starters, valves and drive units, hydraulic actuators, lube system pumps, fuel nozzles, fuel pumps and fuel controls. Kevin Murphy, President E-mail: kmurphy@triumphgroup.com Phone: 972-623-9328 Grand Prairie, Texas Triumph Actuation Systems – Valencia Designs, manufactures and repairs complex hydraulic and hydromechanical aircraft components and systems, such as accumulators, actuators, complex valve packages and landing gear retract actuators. Bill Boyd, President E-mail: bboyd@triumphgroup.com Phone: 661-295-1015 Valencia, California Triumph Aerospace Systems – Triumph Accessory Services – Newport News Offers a fully integrated range of capabilities, including systems engineering, conceptual engineering, mechanical design and analysis, prototype and limited-rate production, instrumentation assembly and testing services and complex structural composite design and manufacturing. Stephanie Mumford, President E-mail: smumford@triumphgroup.com Phone: 757-873-1344 Newport News, Virginia Phone: 858-537-2020 San Diego, California Phone: 256-544-4106 Huntsville, Alabama Triumph Aerospace Systems – Seattle System engineering and integration for landing gear, hydraulic, deployment, cargo door and electromechanical type systems. Capabilities include design, analysis and testing to support these types of systems and components. Don Fowler, President E-mail: dfowler@triumphgroup.com Phone: 425-636-9000 Redmond, Washington Phone: 585-475-0277 Rochester, New York Triumph Aerospace Systems – Wichita Designs and manufactures aircraft windows, sheet metal assemblies (wing spars and leading edges), pilot/co-pilot control wheels, cockpit sunvisors, and structural composite parts for the aerospace industry. Jim Lee, President E-mail: jlee@triumphgroup.com Phone: 800-379-6840 Wichita, Kansas Wellington Provides maintenance services for aircraft heavy accessories and airborne electrical power generation devices, including constant speed drives, integrated drive generators, air cycle machines and electrical generators. Jim Berberet, President E-mail: jberberet@triumphgroup.com Phone: 620-326-2235 Wellington, Kansas Triumph Actuation & Motion Control Systems – UK Designs and builds proprietary advanced control products for flight actuation and motor control applications in all electric aircraft and unmanned aerial vehicles (UAVs). Mark McDonald, President E-mail: mmcdonald@triumphgroup.com Phone: 011 44 1244 550 0022 Buckley, United Kingdom Triumph Actuation Systems – Clemmons Triumph Actuation Systems – Freeport Designs, manufactures and repairs complex hydraulic and hydromechanical aircraft components and systems, such as variable displacement pumps and motors, linear actuators and valves, and cargo door actuation systems. Richard Reed, President E-mail: rreed@triumphgroup.com Phone: 336-766-9036 Clemmons, North Carolina Phone: 516-378-0162 Freeport, New York Triumph Actuation Systems – Connecticut Designs, manufactures and repairs complex hydraulic, hydromechanical and mechanical components and systems, such as nose wheel steering motors, helicopter blade lag dampers, mechanical hold-open rods, coupling and latching devices, as well as mechanical and electro-mechanical actuation products. Thomas Holzthum, President E-mail: tholzthum@triumphgroup.com Phone: 860-242-5568 Bloomfield, Connecticut Phone: 860-739-4926 East Lyme, Connecticut Phone: 203-748-0027 Bethel, Connecticut 14 Triumph Air Repair Repairs and overhauls auxiliary power units (APUs) and related accessories; sells, leases and exchanges APUs, related components and other aircraft material. Guy LaRosa, President E-mail: gclarosa@triumphgroup.com Phone: 602-437-1144 Chandler, Arizona Triumph Aviation Services – Asia Repairs and overhauls complex aircraft operational components, such as auxiliary power units (APUs), nacelles, constant speed drives, fan reversers and related accessories. Remy Maitam, President E-mail: rmaitam@triumphgroup.com Phone: 011 66 38 465 070 Chonburi, Thailand Triumph Composite Systems Designs and manufactures structural and non-structural composites for the aviation industry, including environmental control systems ducting, floor panels, structural thermoplastic clips/brackets as well as a variety of composite interior components. Tim Stevens, President E-mail: tstevens@triumphgroup.com Phone: 509-623-8100 Spokane, Washington Triumph Controls Designs and manufactures mechanical and electromechanical control systems. Bill Bernardo, President E-mail: bbernardo@triumphgroup.com Phone: 215-699-4861 North Wales, Pennsylvania Phone: 317-421-8760 Shelbyville, Indiana Triumph Controls – France Manufactures mechanical ball bearing control assemblies for the aerospace, ground transportation, defense and marine industries. Pierre Vauterin, President E-mail: pvauterin@triumphgroup.com Phone: 011 33 1 4375 2053 Alfortville, France Triumph Controls – Germany Triumph Controls – UK Produces and repairs cable control systems for ground, flight, engine management and cabin comfort features in aircraft. Bill Bernardo, President E-mail: bbernardo@triumphgroup.com Phone: 011 49 205 69130 Heiligenhaus, Germany Phone: 011 44 1268 270 195 Basildon, United Kingdom Triumph Aerostructures – Vought Aircraft Division Designs and manufactures major airframe structures such as wings, fuselage subassemblies, empennages, nacelles and other components for prime manufacturers of aircraft. Triumph Aerostructures – Vought Commercial Division Ron Muckley, President E-mail: rmuckley@triumphgroup.com Triumph Aerostructures – Vought Commercial Division – Grand Prairie (Marshall Street) Norman Jordan, President E-mail: ndjordan@triumphgroup.com Phone: 972-946-2011 Grand Prairie, Texas Triumph Aerostructures – Vought Commercial Division – Hawthorne Donald Jones, President E-mail: dmjones@triumphgroup.com Phone: 310-332-5469 Hawthorne, California Triumph Aerostructures – Vought Commercial Division – Stuart Brett Fulford, President E-mail: bafulford@triumphgroup.com Phone: 772-220-5301 Stuart, Florida Triumph Aerostructures – Vought Integrated Programs Division Jeff McRae, President E-mail: jmcrae@triumphgroup.com Triumph Aerostructures – Vought Integrated Programs Division – Dallas (Jefferson Street) Bubba Long, President E-mail: blong@triumphgroup.com Phone: 972-946-2011 Dallas, Texas Triumph Aerostructures – Vought Integrated Programs Division – Milledgeville Merlin Fechner, President E-mail: mfechner@triumphgroup.com Phone: 478-454-4200 Milledgeville, Georgia Phone: 615-361-2000 Triumph Aerostructures – Vought Integrated Programs Division – Nashville Steve Blackwell, President E-mail: sblackwell@triumphgroup.com Phone: 615-361-2000 Nashville, Tennessee Triumph Airborne Structures Repairs and overhauls fan reversers, nacelle components, flight control surfaces and other aerostructures. Larry Potts, President E-mail: lpotts@triumphgroup.com Phone: 501-262-1555 Hot Springs, Arkansas Triumph Engine Control Systems Manufactures aerospace fuel systems including electronic engine controls, fuel metering units and main pumps. Alec Searle, President E-mail: ajsearle@triumphgroup.com Phone: 860-236-0651 West Hartford, CT Triumph Engines – Tempe Designs, engineers, manufactures, repairs and overhauls aftermarket aerospace gas turbine engine components and provides repair services and aftermarket parts and services to aircraft operators, maintenance providers and third-party overhaul facilities. Guy LaRosa, President E-mail: gclarosa@triumphgroup.com Phone: 602-438-8760 Tempe, Arizona Triumph Fabrications – Fort Worth Manufactures metallic/composite bonded components and assemblies. Tony Johnson, President E-mail: tjohnson@triumphgroup.com Phone: 817-451-0620 Fort Worth, Texas Triumph Fabrications – Hot Springs Produces complex sheet metal parts and assemblies, titanium hot forming and performs chem-milling and other metal finishing processes. Tony Johnson, President E-mail: tjohnson@triumphgroup.com Phone: 501-321-9325 Hot Springs, Arkansas Triumph Fabrications – Phoenix Triumph Fabrications – San Diego Produces complex welded and riveted sheet metal assemblies for aerospace applications. Components include exhaust systems, ducting, doors, panels, control surfaces and engine components. Mark Gobin, President E-mail: mgobin@triumphgroup.com Phone: 619-440-2504 El Cajon, California Phone: 480-639-1100 Chandler, Arizona Triumph Fabrications – Shelbyville Produces aircraft fuselage skins, leading edges and web assemblies through the stretch forming of sheet, extrusion, rolled shape and light plate metals. George Bakker, President E-mail: gbakker@triumphgroup.com Phone: 317-398-6684 Shelbyville, Indiana Triumph Fabrications – St. Louis Provides maintenance and manufactured solutions for aviation drive train, mechanical, hydraulic and electrical hardware items including gearboxes, cargo hooks and vibration absorbers. Also, produces fabricated textile items such as seat cushions and sound insulation blankets for military rotary-wing platforms. Mike Morrow, President E-mail: mmorrow@triumphgroup.com Phone: 618-259-6089 East Alton, Illinois Phone: 803-534-8555 Orangeburg, South Carolina Triumph Gear Systems – Macomb Triumph Gear Systems – Park City Specializes in the design, development, manufacture, sale and repair of gearboxes, high-lift flight control actuators, gear-driven actuators and gears for the aerospace industry. Dan Hennen, President E-mail: dhennen@triumphgroup.com Phone: 586-781-2800 Macomb, Michigan Dan Hennen, President E-mail: dhennen@triumphgroup.com Pat Coward, General Manager E-mail: pcoward@triumphgroup.com Phone: 435-649-1900 Park City, Utah Triumph Group – Mexico Provides rough machining of gears, actuators and structural components, as well as assembly, fabrication, engineering and composites to Triumph companies and certain customers. Ron Scruggs, President E-mail: rscruggs@triumphgroup.com Phone: 011 55 478 985 4311 Zacatecas, Mexico Triumph Insulation Systems Produces insulation systems provided to original equipment manufacturers, airlines, maintenance, repair and overhaul organizations and air cargo carriers. Also provides products in the ancillary aircraft interiors and spares markets. Scott Holland, President E-mail: sholland@triumphgroup.com Phone: 949-250-4999 Hawthorne, California Mexicali, Mexico Beijing, China Triumph Interiors Refurbishes and repairs aircraft interiors such as sidewalls, ceiling panels, galleys and overhead storage bins and manufactures a full line of interior lighting and plastic components. Bob McHugh, President E-mail: rmchugh@triumphgroup.com Phone: 412-788-4229 Oakdale, Pennsylvania Phone: 972-623-3344 Grand Prairie, Texas Phone: 770-997-1576 Atlanta, Georgia Triumph Northwest Machines and fabricates refractory, reactive, heat and corrosion-resistant precision products. Clyde Forrest, President E-mail: cforrest@triumphgroup.com Phone: 541-926-5517 Albany, Oregon Triumph Structures – Farnborough, Ltd. Triumph Structures (Thailand) Ltd. Manufacture of composite and metallic propulsion and structural composite components and assemblies. Also, machines and processes metal components. Doug Fletcher, President E-mail: dpfletcher@triumphgroup.com Triumph Processing Provides high-quality finishing services to the aerospace, military and commercial industries. Peter J. LaBarbera, President E-mail: plabarbera@triumphgroup.com Phone: 323-563-1338 Lynwood, California Triumph Processing – Embee Division Provides comprehensive processing services on precision engineered parts for hydraulics, landing gear, spare parts and electronic actuation systems. Jim Pinterelli, President E-mail: jpintarelli@triumphgroup.com Phone: 714-546-9842 Santa Ana, California Triumph San Antonio Support Center Provides maintenance services for aircraft ground support equipment. Jim Berberet, President E-mail: jberberet@triumphgroup.com Phone: 210-932-6819 San Antonio, Texas Triumph Structures – East Texas Manufactures structural components specializing in complex precision machining primarily for commercial and military aerospace programs. Bryan Johnston, President E-mail: bjohnston@triumphgroup.com Phone: 903-983-1592 Kilgore, Texas Triumph Structures – Everett Precision machining of complex aluminum and hard metal structural components and subassemblies, serving commercial and military aerospace customers, ranging in size from a few inches to 120 feet long. MaryLou Thomas, Interim President E-mail: mthomas@triumphgroup.com Phone: 425-438-7100 Everett, Washington Phone: 714-674-3300 Brea, California Paul Jerram, President E-mail: pjerram@triumphgroup.com Phone: 011 44 1252 304 000 Farnborough, England Alex Beysen, President E-mail: abeysen@triumphgroup.com Phone: 011 66 33 658 700 Rayong, Thailand Triumph Structures – Kansas City Manufactures precision machined parts and mechanical assemblies for the aerospace and defense industries. Kerry Parker, President E-mail: kparker@triumphgroup.com Phone: 816-763-8600 Grandview, Missouri Triumph Structures – Long Island Manufactures high quality structural and dynamic parts and assemblies for commercial and military aerospace programs. Lenny Gross, President E-mail: lgross@triumphgroup.com Phone: 516-997-5757 Westbury, New York Triumph Structures – Los Angeles Manufactures long structural components such as stringers, cords, floor beams and spars for the aviation industry. Machines, welds and assembles large complex precision structural components. Lanny Shirk, President E-mail: lshirk@triumphgroup.com Phone: 714-674-3300 Brea, California Phone: 626-965-1630 City of Industry, California Phone: 626-965-1630 Walnut, California Triumph Structures – Wichita Specializes in complex, high speed monolithic precision machining, turning, subassemblies and sheet metal fabrication, serving domestic and international aerospace customers. Harry Thurmond, Interim President E-mail: hthurmond@triumphgroup.com Phone: 316-942-0432 Wichita, Kansas Triumph Thermal Systems Designs, manufactures and repairs engine and aircraft thermal transfer systems and components. Mike Giangiordano, President E-mail: mgiangiordano@triumphgroup.com Phone: 419-273-2511 Forest, Ohio 15 Corporate Officers & Directors Shareholder Information Equal Opportunity at Triumph Triumph Group, Inc. is committed to providing equal opportunities in the workplace. Forward–Looking Statements In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company notes that certain statements contained in this report are forward- looking in nature. These forward-looking statements include matters such as our expectations for our industry, our markets, our Company’s business strategy and potential and other future- oriented matters. Such matters inherently involve many risks and uncertainties that may cause actual results to differ materially from expected results. For additional information, please refer to the Company’s Securities and Exchange Commission filings including its Form 10-K for the fiscal year ended March 31, 2013. Certifications The certifications by the Chief Executive Officer and Chief Financial Officer of Triumph Group, Inc. required under Section 302 of the Sarbanes-Oxley Act of 2002 have been filed as exhibits to Triumph Group, Inc.’s 2013 Annual Report on Form 10-K. In addition, on August 7, 2012 and November 7, 2012, the Chief Executive Officer of Triumph Group, Inc. certified to the New York Stock Exchange (NYSE) that he is not aware of any violation by the Company of NYSE corporate governance listing standards, as required by Section 303A.12(a) of the NYSE Corporate Governance Rules. Triumph Group, Inc. Corporate Headquarters Triumph Group, Inc. 899 Cassatt Road Suite 210 Berwyn, PA 19312 610-251-1000 www.triumphgroup.com Annual Meeting July 18, 2013 at 9:00 a.m. Triumph Group, Inc. 899 Cassatt Road, Suite 210 Berwyn, PA 19312 Financial Information A copy of the Company’s Form 10-K filed with the Securities and Exchange Commission may be obtained without charge upon written request. Requests for Triumph Group, Inc.’s 10-K or other shareholder inquiries should be directed to: Sheila G. Spagnolo Vice President – Tax and Investor Relations Triumph Group, Inc. 899 Cassatt Road, Suite 210 Berwyn, PA 19312 610-251-1000 Fiscal 2013 Stock Prices Per Common Share High $79.77 $53.46 Low Year-End $78.50 Common Stock Triumph Group, Inc. Common Stock is listed on the NYSE. Ticker symbol: TGI Independent Auditors Ernst & Young LLP 2001 Market Street Suite 4000 Philadelphia, PA 19103 Transfer Agent Computershare, Inc. 250 Royall Street Canton, MA 02021 Within the U.S., Canada and Puerto Rico: 800-622-6757 Outside the U.S., Canada and Puerto Rico: 781-575-4735 TDD/TTY for hearing impaired: 800-952-9245 E-mail: web.queries@computershare.com www.computershare.com/investor Executive Officers RICHARD C. ILL Chairman JEFFRY D. FRISBY President and Chief Executive Officer M. DAVID KORNBLATT Executive Vice President and Chief Financial Officer JOHN B. WRIGHT, II Vice President, General Counsel and Secretary ELISABETH H. BARRETT Vice President – Human Resources R. JAMES CUDD Vice President – Business Development KEVIN E. KINDIG Vice President and Treasurer THOMAS A. QUIGLEY, III Vice President and Controller SHEILA G. SPAGNOLO Vice President – Tax and Investor Relations Vice Presidents MICHAEL R. ABRAM, Vice President MICHAEL PERHAY, Vice President THOMAS E. POWERS, Vice President DANNY N. SIMS, Vice President MARYLOU B. THOMAS, Vice President Directors PAUL BOURGON President, Aeroengine Division, SKF USA ELMER L. DOTY Senior Advisor, The Carlyle Group JOHN G. DROSDICK Chairman, President and Chief Executive Officer, Sunoco, Inc. (Retired) RALPH E. EBERHART Chairman and President, Armed Forces Benefit Association General, U.S. Air Force (Retired) JEFFRY D. FRISBY President and Chief Executive Officer, Triumph Group, Inc. RICHARD C. GOZON President, Thomas Jefferson University RICHARD C. ILL Chairman, Triumph Group, Inc. WILLIAM L. MANSFIELD Chairman and Chief Executive Officer, The Valspar Corporation (Retired) ADAM J. PALMER Managing Director, The Carlyle Group JOSEPH M. SILVESTRI Managing Partner, Court Square Capital GEORGE SIMPSON Chief Executive Officer, Marconi, PLC (Retired) 16 TRIUMPH GROUP, INC. 899 Cassatt Road Suite 210 Berwyn, PA 19312 610-251-1000 www.triumphgroup.com 18 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549____________________________________________________________________________FORM 10-K(Mark One) xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March 31, 2013oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File No. 1-12235Triumph Group, Inc.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)51-0347963(I.R.S. EmployerIdentification Number)899 Cassatt Road, Suite 210, Berwyn, Pennsylvania 19312(Address of principal executive offices, including zip code)Registrant's telephone number, including area code:(610) 251-1000____________________________________________________________________________Securities registered pursuant to Section 12(b) of the Act:Common Stock, par value $.001 per share(Title of each class)New York Stock Exchange(Name of each exchange on which registered)Securities registered pursuant to Section 12(g) of the Act: None____________________________________________________________________________Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No oIndicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No xIndicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No oIndicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes x No oIndicate 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'sknowledge, 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. oIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "largeaccelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one)Large accelerated filer xAccelerated filer oNon-accelerated filer o(Do not check if asmaller reporting company)Smaller reporting company oIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o No xAs of September 30, 2012, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $3,042 million. Such aggregatemarket value was computed by reference to the closing price of the Common Stock as reported on the New York Stock Exchange on September 30, 2012. For purposes of making thiscalculation only, the Registrant has defined affiliates as including all directors and executive officers.The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, on May 15, 2013 was 51,589,382.____________________________________________________________________________Documents Incorporated by ReferencePortions of the following document are incorporated herein by reference:The Proxy Statement of Triumph Group, Inc. to be filed in connection with our 2013 Annual Meeting of Stockholders is incorporated in part in Part III hereof, as specified herein. Table of ContentsTable of ContentsItem No. PagePART I3Item 1.Business3 General3 Products and Services3 Proprietary Rights5 Raw Materials and Replacement Parts5 Operating Locations5 Sales, Marketing and Engineering11 Backlog11 Dependence on Significant Customer11 United States and International Operations11 Competition12 Government Regulation and Industry Oversight12 Environmental Matters12 Employees13 Research and Development Expenses13 Executive Officers13 Available Information14Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments22Item 2.Properties23Item 3.Legal Proceedings25Item 4.Mine Safety Disclosures26 PART II27Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities27Item 6.Selected Financial Data29Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations30Item 7A.Quantitative and Qualitative Disclosures About Market Risk54Item 8.Financial Statements and Supplementary Data55Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure117Item 9A.Controls and Procedures117Item 9B.Other Information120 PART III120Item 10.Directors, Executive Officers and Corporate Governance120Item 11.Executive Compensation120Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters120Item 13.Certain Relationships and Related Transactions, and Director Independence120Item 14.Principal Accountant Fees and Services120 PART IV121Item 15.Exhibits, Financial Statement Schedules1212 Table of ContentsPART IItem 1.BusinessThis report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our futureoperations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, andmanagement's beliefs concerning future performance and capital requirements based upon current available information. Actual results could differ materiallyfrom management's current expectations. Additional capital may be required and, if so, may not be available on reasonable terms, if at all, at the times and inthe amounts we need. In addition to these factors and others described elsewhere in this report, other factors that could cause actual results to differ materiallyinclude competitive and cyclical factors relating to the aerospace industry, dependence of some of our businesses on key customers, requirements of capital,product liabilities in excess of insurance, uncertainties relating to the integration of acquired businesses, general economic conditions affecting our businesssegment, technological developments, limited availability of raw materials or skilled personnel, changes in governmental regulation and oversight andinternational hostilities and terrorism. For a more detailed discussion of these and other factors affecting us, see the Risk Factors described in Item 1A of thisAnnual Report on Form 10-K. We do not undertake any obligation to revise these forward-looking statements to reflect future events.GeneralTriumph Group, Inc. ("Triumph" or the "Company") was incorporated in 1993 in Delaware. Our companies design, engineer, manufacture, repair,overhaul and distribute a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. We serve a broad, worldwidespectrum of the aviation industry, including original equipment manufacturers, or OEMs, of commercial, regional, business and military aircraft and aircraftcomponents, as well as commercial and regional airlines and air cargo carriers.Effective March 18, 2013, a wholly-owned subsidiary of the Company, Triumph Engine Control Systems, LLC, acquired the assets of Goodrich Pump& Engine Control Systems, Inc. ("GPECS"), a leading independent aerospace fuel system supplier for the commercial, military, helicopter and business jetmarkets. The acquisition of GPECS provides new capabilities in a market where we did not previously participate and further diversifies our customer basein electronic engine controls, fuel metering units and main fuel pumps for both OEM and aftermarket/spares end markets. The results for Triumph EngineControl Systems, LLC are included in the Aerospace Systems Group segment from the date of acquisition.Effective December 19, 2012, the Company acquired all of the outstanding shares of Embee, Inc. ("Embee"), renamed Triumph Processing - EmbeeDivision, Inc., which is a leading commercial metal finishing provider offering more than seventy metal finishing, inspecting and testing processes primarilyfor the aerospace industry. The acquisition of Embee expands our current capabilities to provide comprehensive processing services on precision engineeredparts for hydraulics, landing gear, spare parts and electronic actuation systems. The results for Triumph Processing - Embee Division, Inc. are included inthe Aerospace Systems Group segment from the date of acquisition.In June 2010, we acquired Vought Aircraft Industries, Inc. ("Vought") from The Carlyle Group. The acquisition of Vought established the Company as aleading global manufacturer of aerostructures for commercial, military and business jet aircraft.Products and ServicesWe offer a variety of products and services to the aerospace industry through three groups of operating segments: (i) Triumph Aerostructures Group,whose companies' revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structuralcomponents for the global aerospace original equipment manufacturers, or OEM, market; (ii) Triumph Aerospace Systems Group, whose companies design,engineer and manufacture a wide range of proprietary and build-to-print components, assemblies and systems also for the OEM market; and (iii) TriumphAftermarket Services Group, whose companies serve aircraft fleets, notably commercial airlines, the U.S. military and cargo carriers, through themaintenance, repair and overhaul of aircraft components and accessories manufactured by third parties.Our Aerostructures Group utilizes its capabilities to design, manufacture and build complete metallic and composite aerostructures and structuralcomponents. This group also includes companies performing complex manufacturing, machining and forming processes for a full range of structuralcomponents, as well as complete assemblies and subassemblies. This group services the full spectrum of aerospace customers, which include aerospaceOEMs and the top-tier manufacturers who supply them and airlines, air cargo carriers, and domestic and foreign militaries.3 Table of ContentsThe products that companies within this group design, manufacture, build and repair include:Acoustic and thermal insulation systemsEngine nacellesAircraft wingsFlight control surfacesComposite and metal bondingHelicopter cabinsComposite ducts and floor panelsStretch-formed leading edges and fuselage skinsComprehensive processing servicesWindows and window assembliesEmpennagesWing spars and stringersOur Aerospace Systems Group utilizes its capabilities to design and engineer mechanical, electromechanical, hydraulic and hydromechanical controlsystems, while continuing to broaden the scope of detailed parts and assemblies that we supply to the aerospace market. Customers typically return suchsystems to us for repairs and overhauls and spare parts. This group services the full spectrum of aerospace customers, which include aerospace OEMs andthe top-tier manufacturers who supply them and airlines, air cargo carriers, and domestic and foreign militaries.The products that companies within this group design, engineer, build and repair include:Aircraft and engine mounted accessory drivesHeat exchangersCargo hooksHigh lift actuationCockpit control leversHydraulic systems and componentsComprehensive processing servicesLanding gear actuation systemsControl system valve bodiesLanding gear components and assembliesElectronic engine controlsMain engine gear box assembliesExhaust nozzles and ductingMain fuel pumpsGeared transmissionsSecondary flight control systemsFuel metering unitsVibration absorbersOur Aftermarket Services Group performs maintenance, repair and overhaul services ("MRO") and supplies spare parts for the commercial and militaryaviation industry and primarily services the world's airline and air cargo carrier customers. This group also designs, engineers, manufactures, repairs andoverhauls aftermarket aerospace gas turbines engine components, offers comprehensive MRO solutions, leasing packages, exchange programs and parts andservices to airline, air cargo and third-party overhaul facilities. We also continue to develop Federal Aviation Administration, or FAA, approved DesignatedEngineering Representative, or DER, proprietary repair procedures for the components we repair and overhaul, which range from detailed components tocomplex subsystems. Companies in our Aftermarket Services Group repair and overhaul various components for the aviation industry including:Air cycle machinesBlades and vanesAPUsCabin interior panes, shades, light lenses and other plastic componentsConstant speed drivesCombustorsEngine and airframe accessoriesStatorsFlight control surfacesTransition ductsIntegrated drive generatorsSidewallsNacellesLight assembliesRemote sensorsOverhead binsThrust reversers 4 Table of ContentsCertain financial information about our three segments can be found in Note 22 of "Notes to Consolidated Financial Statements."Proprietary RightsWe benefit from our proprietary rights relating to designs, engineering and manufacturing processes and repair and overhaul procedures. For someproducts, our unique manufacturing capabilities are required by the customer's specifications or designs, thereby necessitating reliance on us for theproduction of such specially designed products.We view our name and mark, as well as the Vought and Embee tradenames, as significant to our business as a whole. Our products are protected by aportfolio of patents, trademarks, licenses or other forms of intellectual property that expire at various dates in the future. We continually develop and acquirenew intellectual property and consider all of our intellectual property to be valuable. However, based on the broad scope of our product lines, managementbelieves that the loss or expiration of any single intellectual property right would not have a material effect on our results of operations, our financial position orour business segments. Our policy is to file applications and obtain patents for our new products as appropriate, including product modifications andimprovements. While patents generally expire 20 years after the patent application filing date, new patents are issued to us on a regular basis.In our overhaul and repair businesses, OEMs of equipment that we maintain for our customers increasingly include language in repair manuals that relateto their equipment asserting broad claims of proprietary rights to the contents of the manuals used in our operations. There can be no assurance thatOEMs will not try to enforce such claims including the possible use of legal proceedings. In the event of such legal proceedings, there can be no assurance thatsuch actions against the Company will be unsuccessful. However, we believe that our use of manufacture and repair manuals is lawful.Raw Materials and Replacement PartsWe purchase raw materials, primarily consisting of extrusions, forgings, castings, aluminum and titanium sheets and shapes and stainless steel alloys,from various vendors. We also purchase replacement parts, which are utilized in our various repair and overhaul operations. We believe that the availability ofraw materials to us is adequate to support our operations.Operating LocationsWe conduct our business through operating segments. The following chart describes the operations, customer base and certain other information withrespect to our principal operating locations at March 31, 2013:OperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTRIUMPH AEROSTRUCTURES GROUPTriumph AerospaceSystems—Wichita(1)Triumph AerospaceSystems—Wichita, Inc.Wichita, KSDesigns and manufacturesaircraft windows, sheet metalassemblies (wing spars andleading edges), pilot/co-pilotcontrol wheels, cockpit sunvisors, and structuralcomposite parts for theaerospace industry.Commercial and GeneralAviation OEMs; GeneralAviation Aftermarket.194TriumphAerostructures—Vought Aircraft DivisionTriumphAerostructures, LLCDallas, TXGrand Prairie, TXRed Oak, TX Hawthorne, CATorrance, CANashville, TNStuart, FLMilledgeville, GADevelops and manufactures awide range of complexaerostructures such as aircraftfuselages, wing and tailassemblies, wing panels andskins, engine nacelles, flightcontrol surfaces and helicoptercabins.Commercial, General Aviationand Military OEMs.5,4975 Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph CompositeSystemsTriumph CompositeSystems, Inc.Spokane, WADesigns and manufacturesstructural and non-structuralcomposites for the aviationindustry, includingenvironmental control systemsducting, floor panels,structural thermoplasticclips/brackets as well as avariety of composite interiorcomponents.Commercial, General Aviation,and Military OEMs;Commercial Aftermarket.610Triumph Fabrications—Fort Worth(1)Triumph Fabrications—FortWorth, Inc.Fort Worth, TXManufacturesmetallic/composite bondedcomponents and assemblies.Commercial, General Aviationand Military OEMs andAftermarket.152Triumph Fabrications—HotSpringsTriumph Fabrications—HotSprings, Inc.Hot Springs, ARProduces complex sheet metalparts and assemblies, titaniumhot forming, and performschem-milling and other metalfinishing processes.Commercial, General Aviationand Military OEMs andAftermarket.332Triumph Fabrications—ShelbyvilleThe Triumph GroupOperations, Inc.Shelbyville, INProduces aircraft fuselageskins, leading edges and webassemblies through the stretchforming of sheet, extrusion,rolled shape and light platemetals.Commercial, General Aviationand Military OEMs.117Triumph Fabrications—San Diego(1)Triumph Fabrications—SanDiego, Inc.El Cajon, CAProduces complex welded andriveted sheet metal assembliesfor aerospace applications.Components include exhaustsystems, ducting, doors,panels, control surfaces andengine components.Commercial, General Aviationand Military OEMs.153Triumph InsulationSystemsTriumph InsulationSystems, LLCHawthorne, CAMexicali, MexicoBeijing, China(2)Produces insulation systemsprovided to original equipmentmanufactures, airlines,maintenance, repair andoverhaul organizations and aircargo carriers. Also providesproducts in the ancillaryaircraft interiors and sparesmarkets.Commercial and MilitaryOEMs.1,128Triumph ProcessingTriumph Processing, Inc.Lynwood, CAProvides high-quality finishingservices to the aerospace,military and commercialindustries.Commercial, General Aviation,and Military OEMs.89Triumph Structures—EastTexasTriumph Structures—EastTexas, Inc.Kilgore, TXManufactures structuralcomponents specializing incomplex precision machiningprimarily for commercial andmilitary aerospace programs.Commercial and MilitaryOEMs.124Triumph Structures—EverettTriumph Structures—Everett, Inc.Everett, WAPrecision machining of complexaluminum and hard metalstructural components andsubassemblies, servingcommercial and militaryaerospace customers, rangingin size from a few inches to120 feet long.Commercial, General Aviationand Military OEMs.2326 Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Structures—Kansas CityTriumph Structures—KansasCity, Inc.Grandview, MOManufactures precisionmachined parts and mechanicalassemblies for the aviation,aerospace and defenseindustries.Commercial and MilitaryOEMs.161Triumph Structures—Long IslandTriumph Structures—LongIsland, LLCWestbury, NYManufactures high-qualitystructural and dynamic partsand assemblies for commercialand military aerospaceprograms.Commercial and MilitaryOEMs.143Triumph Structures—LosAngelesTriumph Structures—LosAngeles, Inc.Brea, CACity of Industry, CAWalnut, CAManufactures long structuralcomponents, such asstringers, cords, floor beamsand spars, for the aviationindustry. Machines, weldsand assembles large, complex,precision structuralcomponents.Commercial, General Aviationand Military OEMs.287Triumph Structures—WichitaTriumph Structures—Wichita, Inc.Wichita, KSSpecializes in complex, high-speed monolithic precisionmachining, turning,subassemblies, and sheetmetal fabrication, servingdomestic and internationalaerospace customers.Commercial and MilitaryOEMs.134TRIUMPH AEROSPACE SYSTEMS GROUPTriumph Actuation &Motion Control SystemsTriumph Actuation & MotionControl Systems—UK, Ltd.Buckley, UKDesigns and builds proprietaryadvanced control products forflight actuation and motorcontrol applications in allelectrical aircraft andUnmanned Aerial Vehicles("UAVs").Commercial, General Aviation,and Military OEMs.47Triumph ActuationSystems—Clemmons(1)Triumph ActuationSystems—FreeportTriumph ActuationSystems, LLCClemmons, NCFreeport, NYDesigns, manufactures andrepairs complex hydraulic andhydromechanical aircraftcomponents and systems,such as variable displacementpumps and motors, linearactuators and valves, andcargo door actuation systems.Commercial, General Aviation,and Military OEMs;Commercial Airlines, GeneralAviation and MilitaryAftermarket.267Triumph ActuationSystems—ConnecticutTriumph Actuation Systems—Connecticut, LLCBloomfield, CTEast Lyme, CTBethel, CTDesigns, manufactures andrepairs complex hydraulic,hydromechanical andmechanical components andsystems, such as nose wheelsteering motors, helicopterblade lag dampers, mechanicalhold open rods, coupling andlatching devices, as well asmechanical andelectromechanical actuationproducts.Commercial, General Aviation,and Military OEMs; MilitaryAftermarket.1527 Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph ActuationSystems—Valencia(1)Triumph Actuation Systems—Valencia, Inc.Valencia, CADesigns, manufactures andrepairs complex hydraulic andhydromechanical aircraftcomponents and systems,such as accumulators,actuators, complex valvepackages, and landing gearretract actuators.Commercial, General Aviation,and Military OEMs.197Triumph AerospaceSystems—Newport NewsTriumph Aerospace Systems—Newport News, Inc.Newport News, VASan Diego, CAOffers a fully integrated rangeof capabilities, includingsystems engineering,conceptual engineering,mechanical design andanalysis, prototype andlimited-rate production,instrumentation, assembly andtesting services and complexstructural composite designand manufacturing.Commercial and MilitaryOEMs; Commercial andMilitary Aftermarket.95Triumph AerospaceSystems—SeattleTriumph Actuation Systems—Connecticut, LLCRedmond, WARochester, NYSystem engineering andintegration for landing gear,hydraulic, deployment, cargodoor and electro-mechanicaltype systems. Capabilitiesinclude design, analysis andtesting to support these typesof systems and components.Commercial, General Aviationand Military OEMs.128Triumph Controls(1)Triumph Controls, LLCNorth Wales, PAShelbyville, INDesigns and manufacturesmechanical andelectromechanical controlsystems.Commercial, General Aviationand Military OEMs andAftermarket.154Triumph Controls—FranceConstruction Breveteesd'Alfortville SASAlfortville, FranceManufactures mechanical ballbearing control assemblies forthe aerospace, groundtransportation, defense andmarine industries.Commercial and MilitaryOEMs, GroundTransportation and MarineOEMs.68Triumph Controls—GermanyTriumph Controls—UKTriumph Controls—Germany, GmbHTriumph Controls—UK, Ltd.Heiligenhaus, GermanyBasildon, UKProduces and repairs cablecontrol systems for ground,flight, engine management andcabin comfort features inaircraft.Commercial and MilitaryOEMs.43Triumph Engine ControlSystemsTriumph Engine ControlsSystems, LLCWest Hartford, CTManufactures aerospace fuelsystems including electronicengine controls, fuel meteringunits and main pumps.Commercial, General Aviationand Military OEMs andAftermarket.564Triumph Fabrications—St. LouisTriumph Fabrications—St. Louis, Inc.East Alton, ILOrangeburg, SCProvides maintenance andmanufactured solutions foraviation drive train,mechanical, hydraulic andelectrical hardware itemsincluding gearboxes, cargohooks and vibration absorbers.Also, produces fabricatedtextile items such as seatcushions and sound insulationblankets for military rotary-wing platforms.Commercial, General Aviationand Military Aftermarket.668 Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Fabrications—PhoenixTriumph EngineeredSolutions, Inc.Chandler, AZProduces complex welded andriveted sheet metal assembliesfor aerospace applications.Components include exhaustsystems, ducting, doors,panels, control surfaces andengine components.Commercial, General Aviationand Military OEMs.78Triumph Gear Systems—Park City(1)Triumph Gear Systems—Macomb(1)Triumph Gear Systems, Inc.Triumph Gear Systems—Macomb, Inc.Park City, UTMacomb, MISpecializes in the design,development, manufacture,sale and repair of gearboxes,high-lift flight controlactuators, gear-drivenactuators and gears for theaerospace industry.Commercial and MilitaryOEMs and Aftermarket.478Triumph NorthwestThe Triumph GroupOperations, Inc.Albany, ORMachines and fabricatesrefractory, reactive, heat andcorrosion-resistant precisionproducts.Military, Medical andElectronic OEMs.29Triumph Processing —Embee DivisionTriumph Processing - EmbeeDivision, Inc.Santa Ana, CAProvides comprehensiveprocessing services on precisionengineered parts forhydraulics, landing gear, spareparts and electronic actuationsystems.Commercial and MilitaryOEMs and SpecialtyAutomotive, Medical Deviceand Electronic Industries387Triumph ThermalSystems(1)Triumph ThermalSystems, Inc.Forest, OHDesigns, manufactures andrepairs engine and aircraftthermal transfer systems andcomponents.Commercial, General Aviationand Military OEMs.187TRIUMPH AFTERMARKET SERVICES GROUPTriumph AccessoryServices—Wellington(1)The Triumph GroupOperations, Inc.Wellington, KSProvides maintenance servicesfor aircraft heavy accessoriesand airborne electrical powergeneration devices, includingconstant speed drives,integrated drive generators, aircycle machines and electricalgenerators.Commercial, General Aviationand Military Aftermarket.148Triumph AccessoryServices—Grand Prairie(1)Triumph Accessory Services—Grand Prairie, Inc.Grand Prairie, TXProvides maintenance servicesfor engine and airframeaccessories including a varietyof engine gearboxes,pneumatic starters, valves anddrive units, hydraulicactuators, lube systempumps, fuel nozzles, fuelpumps and fuel controls.Commercial and MilitaryAftermarket.124Triumph Air Repair(1)The Triumph GroupOperations, Inc.Chandler, AZRepairs and overhaulsauxiliary power units (APUs)and related accessories; sells,leases and exchanges APUs,related components and otheraircraft material.Commercial, General Aviationand Military Aftermarket.105Triumph AirborneStructures(1)Triumph AirborneStructures, Inc.Hot Springs, ARRepairs and overhauls fanreversers, nacelle components,flight control surfaces andother aerostructures.Commercial Aftermarket.1769 Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Aviation Services—Asia(1)Triumph Aviation ServicesAsia Ltd.Chonburi, ThailandRepairs and overhauls complexaircraft operationalcomponents, such as auxiliarypower units (APUs), nacelles,constant speed drives, fanreversers and relatedaccessories.Commercial Aftermarket.136Triumph Engines—Tempe(1)Triumph EngineeredSolutions, Inc.Tempe, AZDesigns, engineers,manufactures, repairs andoverhauls aftermarketaerospace gas turbine enginecomponents and providesrepair services and aftermarketparts and services to aircraftoperators, maintenanceproviders, and third-partyoverhaul facilities.Commercial, General Aviationand Military Aftermarket.91Triumph Instruments—Burbank(1) (3)Triumph Instruments—Burbank, Inc.Burbank, CAVan Nuys, CARepairs and overhauls aircraftavionics, electrical accessories,power systems andinstrumentation. Distributesand repairs smoke detectors,multiple OEM avionic andinstrument components as wellas industrial instrumentation,controls, valves, miscellaneouscomponents and switches. Install, service and upgradeavionics.Commercial, General Aviationand Military Aftermarket.64Triumph Instruments—Ft. Lauderdale(1) (3)Triumph Instruments, Inc.Ft. Lauderdale, FLSpecalizes in exchange,overhaul, and repair ofelectronic, electromechanical,gyroscopic, and pneumaticaircraft instruments, avionics,and antennas.Commercial, General Aviationand Military Aftermarket.41Triumph Interiors(1)Triumph Interiors, LLCAtlanta, GA Oakdale, PAGrand Prairie, TXRefurbishes and repairsaircraft interiors such assidewalls, ceiling panels,galleys and overhead storagebins and manufactures a fullline of interior lighting andplastic components.Commercial Aftermarket.217Triumph San AntonioSupport CenterThe Triumph GroupOperations, Inc.San Antonio, TXProvides maintenance servicesfor aircraft ground supportequipment.Military Aftermarket.38CORPORATE AND OTHERTriumph Group, Inc.Triumph Group, Inc.Berwyn, PAParent companyN/A110Triumph Group—MexicoTriumph Group—Mexico, S.de R.L. de C.V.Zacatecas, MexicoProvides rough machining ofgears, actuators and structuralcomponents, as well asassembly, fabrications,engineering and composites toTriumph companies and certaincustomers.Commercial and GeneralAviation OEMs357(1)Designates FAA-certified repair station.(2)Through an affiliate, Triumph Insulation Systems, LLC holds an 80% controlling interest in a venture, operating in Beijing, China, with Beijing Kailan AviationTechnology Co., Ltd., an unrelated party based in China.10 Table of Contents(3)These operations were sold in April 2013 and the associated assets and liabilities are treated as Assets Held for Sale at March 31, 2013. See Note 4 of "Notes to ConsolidatedFinancial Statements."Sales, Marketing and EngineeringWhile each of our operating companies maintains responsibility for selling and marketing its specific products, we have developed two marketing teamsat the group level who are focused on cross-selling our broad capabilities. One team supports the Aerostructures and Aerospace Systems Groups and the otherthe Aftermarket Services Group. These teams are responsible for selling systems, integrated assemblies and repair and overhaul services, reaching across ouroperating companies, to our OEM, military, airline and air cargo customers. In certain limited cases, we use independent, commission-based representatives toserve our customers' changing needs and the current trends in some of the markets and geographic regions in which we operate. During the fiscal year endedMarch 31, 2013, we terminated our relationship with Triumph Wichita Support Center, a third-party sales organization which had been dedicated solely to asales effort on behalf of Triumph Group companies.The two group-level marketing teams operate as the front-end of the selling process, establishing or maintaining relationships, identifying opportunities toleverage our brand, and providing service for our customers. Each individual operating company is responsible for its own technical support, pricing,manufacturing and product support. Also, within the Aerospace Systems Group, we have created a group engineering function to provide integrated solutionsto meet our customer needs by designing systems that integrate the capabilities of our companies.A significant portion of our government and defense contracts are awarded on a competitive bidding basis. We generally do not bid or act as the primarycontractor, but will typically bid and act as a subcontractor on contracts on a fixed-price basis. We generally sell to our other customers on a fixed-price,negotiated contract or purchase order basis.BacklogWe have a number of long-term agreements with several of our customers. These agreements generally describe the terms under which the customer mayissue purchase orders to buy our products and services during the term of the agreement. These terms typically include a list of the products or repair servicescustomers may purchase, initial pricing, anticipated quantities and, to the extent known, delivery dates. In tracking and reporting our backlog, however, weonly include amounts for which we have actual purchase orders with firm delivery dates or contract requirements generally within the next 24 months, whichprimarily relate to sales to our OEM customer base. Purchase orders issued by our aftermarket customers are usually completed within a short period of time.As a result, our backlog data relates primarily to the OEM customers. The backlog information set forth below does not include the sales that we expect togenerate from long-term agreements for which we do not have actual purchase orders with firm delivery dates.As of March 31, 2013, our continuing operations had outstanding purchase orders representing an aggregate invoice price of approximately $4,527million, of which $3,663 million, $832 million and $32 million relate to the Aerostructures Group, the Aerospace Systems Group and the AftermarketServices Group, respectively. As of March 31, 2012, our continuing operations had outstanding purchase orders representing an aggregate invoice price ofapproximately $4,305 million, of which $3,583 million, $690 million and $32 million relate to the Aerostructures Group, the Aerospace Systems Group andthe Aftermarket Services Group, respectively. Of the existing backlog of $4,527 million, approximately $1,709 million will not be shipped by March 31,2014.Dependence on Significant CustomerFor the fiscal years ended March 31, 2013, 2012 and 2011, the Boeing Company ("Boeing") represented approximately 49%, 47% and 45%,respectively, of our net sales, covering virtually every Boeing plant and product. A significant reduction in sales to Boeing could have a material adverseimpact on our financial position, results of operations, and cash flows.United States and International OperationsOur revenues from continuing operations to customers in the United States for the fiscal years ended March 31, 2013, 2012 and 2011 were approximately$3,199 million, $2,944 million, and $2,511 million, respectively. Our revenues from our continuing operations to customers in all other countries for thefiscal years ended March 31, 2013, 2012 and 2011 were approximately $504 million, $464 million, and $395 million, respectively.As of March 31, 2013 and 2012, our long-lived assets for continuing operations located in the United States were approximately $3,458 million and$3,046 million, respectively. As of March 31, 2013 and 2012, our long-lived assets for continuing operations located in all other countries were approximately$99 million and $90 million, respectively.11 Table of ContentsCompetitionWe compete primarily with Tier 1 and Tier 2 aerostructures manufacturers, systems integrators and the manufacturers that supply them, some of whichare divisions or subsidiaries of other large companies, in the manufacture of aircraft structures, systems components and subassemblies. OEMs areincreasingly focusing on assembly and integration activities while outsourcing more manufacturing, and therefore are less of a competitive force than inprevious years.Competition for the repair and overhaul of aviation components comes from three primary sources, some of whom possess greater financial and otherresources than we have: OEMs, major commercial airlines, government support depots and other independent repair and overhaul companies. Some majorcommercial airlines continue to own and operate their own service centers, while others have begun to sell or outsource their repair and overhaul services toother aircraft operators or third parties. Large domestic and foreign airlines that provide repair and overhaul services typically provide these services not onlyfor their own aircraft but for other airlines as well. OEMs also maintain service centers which provide repair and overhaul services for the components theymanufacture. Many governments maintain aircraft support depots in their military organizations that maintain and repair the aircraft they operate. Otherindependent service organizations also compete for the repair and overhaul business of other users of aircraft components.Participants in the aerospace industry compete primarily on the basis of breadth of technical capabilities, quality, turnaround time, capacity and price.Government Regulation and Industry OversightThe aerospace industry is highly regulated in the United States by the FAA and in other countries by similar agencies. We must be certified by the FAAand, in some cases, by individual OEMs, in order to engineer and service parts and components used in specific aircraft models. If material authorizations orapprovals were revoked or suspended, our operations would be adversely affected. New and more stringent government regulations may be adopted, orindustry oversight heightened, in the future and these new regulations, if enacted, or any industry oversight, if heightened, may have an adverse impact on us.We must also satisfy the requirements of our customers, including OEMs, that are subject to FAA regulations, and provide these customers withproducts and repair services that comply with the government regulations applicable to aircraft components used in commercial flight operations. The FAAregulates commercial flight operations and requires that aircraft components meet its stringent standards. In addition, the FAA requires that variousmaintenance routines be performed on aircraft components, and we currently satisfy these maintenance standards in our repair and overhaul services. Severalof our operating locations are FAA-approved repair stations.Generally, the FAA only grants licenses for the manufacture or repair of a specific aircraft component, rather than the broader licenses that have beengranted in the past. The FAA licensing process may be costly and time-consuming. In order to obtain an FAA license, an applicant must satisfy all applicableregulations of the FAA governing repair stations. These regulations require that an applicant have experienced personnel, inspection systems, suitable facilitiesand equipment. In addition, the applicant must demonstrate a need for the license. Because an applicant must procure manufacturing and repair manuals fromthird parties relating to each particular aircraft component in order to obtain a license with respect to that component, the application process may involvesubstantial cost.The license approval processes for the European Aviation Safety Agency (EASA was formed in 2002 and is handling most of the responsibilities of thenational aviation authorities in Europe, such as the United Kingdom Civil Aviation Authority), which regulates this industry in the European Union, the CivilAviation Administration of China, and other comparable foreign regulatory authorities are similarly stringent, involving potentially lengthy audits.Our operations are also subject to a variety of worker and community safety laws. For example, the Occupational Safety and Health Act of 1970, orOSHA, mandates general requirements for safe workplaces for all employees in the United States. In addition, OSHA provides special procedures andmeasures for the handling of hazardous and toxic substances. Specific safety standards have been promulgated for workplaces engaged in the treatment,disposal or storage of hazardous waste. We believe that our operations are in material compliance with OSHA's health and safety requirements.Environmental MattersOur business, operations and facilities are subject to numerous stringent federal, state, local and foreign environmental laws and regulation bygovernment agencies, including the Environmental Protection Agency, or the EPA. Among other matters, these regulatory authorities impose requirements thatregulate the emission, discharge, generation, management, transportation and disposal of hazardous materials, pollutants and contaminants, govern publicand private response actions to hazardous or regulated substances which may be or have been released to the environment, and require us to obtain andmaintain licenses and permits in connection with our operations. This extensive regulatory framework imposes significant12 Table of Contentscompliance burdens and risks on us. Although management believes that our operations and our facilities are in material compliance with such laws andregulations, future changes in these laws, regulations or interpretations thereof or the nature of our operations or regulatory enforcement actions which mayarise, may require us to make significant additional capital expenditures to ensure compliance in the future.Certain of our facilities, including facilities acquired and operated by us or one of our subsidiaries have at one time or another been under activeinvestigation for environmental contamination by federal or state agencies when acquired, and at least in some cases, continue to be under investigation orsubject to remediation for potential environmental contamination. We are frequently indemnified by prior owners or operators and/or present owners of thefacilities for liabilities which we incur as a result of these investigations and the environmental contamination found which pre-dates our acquisition of thesefacilities, subject to certain limitations. We also maintain a pollution liability policy that provides coverage for material liabilities associated with the clean-upof on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in each case,to the extent not otherwise indemnified. This policy applies to all of our manufacturing and assembly operations worldwide. However, if we are required to paythe expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a materialadverse effect on us.EmployeesAs of March 31, 2013, we employed 13,900 persons, of whom 3,264 were management employees, 143 were sales and marketing personnel, 663 weretechnical personnel, 884 were administrative personnel and 8,946 were production workers.Several of our subsidiaries are parties to collective bargaining agreements with labor unions. Under those agreements, we currently employ approximately3,798 full-time employees. Currently, approximately 27% of our permanent employees are represented by labor unions and approximately 63% of net sales arederived from the facilities at which at least some employees are unionized. Our inability to negotiate an acceptable contract with any of these labor unions couldresult in strikes by the affected workers and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workerswere to engage in a strike or other work stoppage, or other employees were to become unionized, we could experience a significant disruption of our operationsand higher ongoing labor costs, which could have an adverse effect on our business and results of operations.We have not experienced any material labor-related work stoppage and consider our relations with our employees to be good.Research and Development ExpensesCertain information about our research and development expenses for the fiscal years ended March 31, 2013, 2012 and 2011 is available in Note 2 of"Notes to Consolidated Financial Statements."Executive OfficersNameAge PositionJeffry D. Frisby58 President and Chief Executive Officer and DirectorM. David Kornblatt53 Executive Vice President, Chief Financial OfficerJohn B. Wright, II59 Vice President, General Counsel and SecretaryThomas A. Quigley, III36 Vice President and ControllerJeffry D. Frisby has been our President and Chief Executive Officer since July 2012 and served as President and Chief Operating Officer from July 2009to July 2012. Mr. Frisby has been a director of Triumph since July 2012. Mr. Frisby joined the Company in 1998 as President of Frisby Aerospace, Inc.upon its acquisition by Triumph. In 2000, Mr. Frisby was named Group President of the Triumph Control Systems Group and was later named GroupPresident of our Aerospace Systems Group upon its formation in April 2003. Mr. Frisby serves on the Board of Directors of Quaker Chemical Corporation.M. David Kornblatt became Executive Vice President in July 2009 and had been Senior Vice President and Chief Financial Officer since June 2007.Mr. Kornblatt continues to serve as Chief Financial Officer. From 2006 until joining us, Mr. Kornblatt served as Senior Vice President—Finance and ChiefFinancial Officer at Carpenter Technology Corporation, a manufacturer and distributor of specialty alloys and various engineered products. From 2003 to2005, he was Vice President and Chief Financial Officer at York International, prior to its acquisition by Johnson Controls in December 2005. Before that,13 Table of ContentsMr. Kornblatt was the Director of Taxes-Europe for The Gillette Company in London, England for three years. Mr. Kornblatt is a director of UniversalStainless & Alloy Products, Inc.John B. Wright, II has been a Vice President and our General Counsel and Secretary since 2004. From 2001 until he joined us, Mr. Wright was a partnerwith the law firm of Ballard Spahr, LLP, where he practiced corporate and securities law.Thomas A. Quigley, III has been our Vice President and Controller since November 2012, and serves as the Company's principal accounting officer. Mr.Quigley has served as the Company's SEC Reporting Manager since January 2009. From June 2002 until joining Triumph in 2009, Mr. Quigley held variousroles within the audit practice of KPMG LLP, including Senior Audit Manager.Available InformationFor more information about us, visit our website at www.triumphgroup.com. The contents of the website are not part of this Annual Report on Form 10-K.Our electronic filings with the Securities and Exchange Commission, or SEC (including all Forms 10-K, 10-Q and 8-K, and any amendments to thesereports) are available free of charge through our website immediately after we electronically file with or furnish them to the SEC. These filings may also be readand copied at the SEC's Public Reference Room which is located at 100 F Street, N.E., Washington, D.C. 20549. Information about the operation of the PublicReference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and informationstatements, and other information regarding issuers who file electronically with the SEC at www.sec.gov.14 Table of ContentsItem 1A.Risk FactorsFactors that have an adverse impact on the aerospace industry may adversely affect our results of operations and liquidity.A substantial percentage of our gross profit and operating income derives from commercial aviation. Our operations have been focused on designing,engineering, manufacturing, repairing and overhauling a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems.Therefore, our business is directly affected by economic factors and other trends that affect our customers in the aerospace industry, including a possibledecrease in outsourcing by OEMs and aircraft operators or projected market growth that may not materialize or be sustainable. We are also significantlydependent on sales to the commercial aerospace market, which has been cyclical in nature with significant downturns in the past. When these economic andother factors adversely affect the aerospace industry, they tend to reduce the overall customer demand for our products and services, which decreases ouroperating income. Economic and other factors that might affect the aerospace industry may have an adverse impact on our results of operations and liquidity.We have credit exposure to a number of commercial airlines, some of which have encountered financial difficulties. In addition, an increase in energy costsand the price of fuel to the airlines could result in additional pressure on the operating costs of airlines. The market for jet fuel is inherently volatile and issubject to, among other things, changes in government policy on jet fuel production, fluctuations in the global supply of crude oil and disruptions in oilproduction or delivery caused by sudden hostility in oil-producing areas. Airlines are sometimes unable to pass on increases in fuel prices to customers byincreasing fares due to the competitive nature of the airline industry, and this compounds the pressure on operating costs. Other events of general impact suchas natural disasters, war, terrorist attacks against the industry or pandemic health crises may lead to declines in the worldwide aerospace industry that couldadversely affect our business and financial condition.In addition, demand for our maintenance, repair and overhaul services is strongly correlated with worldwide flying activity. A significant portion of theMRO activity required on commercial aircraft is mandated by government regulations that limit the total time or number of flights that may elapse betweenscheduled MRO events. As a result, although short-term deferrals are possible, MRO activity is ultimately required to continue to operate the aircraft inrevenue-producing service. Therefore, over the intermediate and long-term, trends in the MRO market are closely related to the size and utilization level of theworldwide aircraft fleet, as reflected by the number of available seat miles, commonly referred to as ASMs, and cargo miles flown. Consequently, conditionsor events which contribute to declines in worldwide ASMs and cargo miles flown, such as those mentioned above, could negatively impact our MRObusiness.Demand for military and defense products is dependent upon government spending.The military and defense market is largely dependent upon government budgets, particularly the U.S. defense budget, and an increase in defensespending may not be allocated to programs that would benefit our business. Moreover, the new military aircraft programs in which we participate may notenter full-scale production as expected. A change in the levels of defense spending or levels of military flight operations could curtail or enhance our prospectsin the military and defense market depending upon the programs affected.A substantial portion of our net sales were derived from the military and defense market, which includes primarily indirect sales to the U.S. Government.As a result, our exposure to the military and defense market is significant.The programs in which we participate must compete with other programs and policy imperatives for consideration during the budget and appropriationprocess. Concerns about increased deficit spending, along with continued economic challenges, continue to place pressure on U.S. and international customerbudgets. While we believe that our programs are well aligned with national defense and other priorities, shifts in domestic and international spending and taxpolicy, changes in security, defense, and intelligence priorities, the affordability of our products and services, general economic conditions and developments,and other factors may affect a decision to fund or the level of funding for existing or proposed programs.Congress and the Administration failed to change or further delay the sequestration of appropriations in government fiscal year (GFY) 2013 imposed bythe Budget Control Act of 2011 (Budget Act) and sequestration went into effect on March 1, 2013. As a result, our customers' budgets will be reducedsignificantly and there may be a direct significant reduction in our customers' contract awards. While we understand customers have started to plan for thissequestration, the specific effects of sequestration are not yet available and cannot be determined by us. The automatic across-the-board cuts fromsequestration will approximately double the amount of the ten-year $487 billion reduction in defense spending that began in GFY 2012 already required by theBudget Act, including the budget for Overseas Contingencies Operations and any unobligated balances from prior years, and would have significantconsequences to our business and industry. Non-DoD agencies could also have significantly reduced budgets. It is likely there will be some disruption of ourongoing programs, impacts to our supply chain and contractual actions (including partial or complete terminations). Consequently, we expect thatsequestration, or other budgetary cuts in lieu of sequestration, will have negative effect on our corporation.15 Table of ContentsWe currently have agreements in place with Boeing for orders to support C-17 production through March 2014 and Boeing has authorized and fundedTriumph to begin long lead procurement for an additional 10 units that would extend our production through March 2015. Boeing currently has confirmedorders with the U.S. Air Force, India and various other foreign governments to support production of C-17 through 2014 at a rate of approximately 10 aircraftper year. We do not anticipate that the U.S. Air Force will support the procurement of additional C-17 beyond those currently ordered. Boeing has reported thatthere is interest for additional orders from India, other foreign governments and other potential customers. However, there can be no assurance that theseadditional orders will materialize. Our business could be adversely impacted if Boeing does not secure future orders from the U.S. Air Force, foreign militariesor other customers. The loss of the C-17 program and the failure to win additional work to replace the C-17 program could materially reduce our cash flowand results of operations.Cancellations, reductions or delays in customer orders may adversely affect our results of operations.Our overall operating results are affected by many factors, including the timing of orders from large customers and the timing of expenditures tomanufacture parts and purchase inventory in anticipation of future sales of products and services. A large portion of our operating expenses are relativelyfixed. Because several of our operating locations typically do not obtain long-term purchase orders or commitments from our customers, they must anticipatethe future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with customers as to their anticipated futurerequirements. These historic patterns may be disrupted by many factors, including changing economic conditions, inventory adjustments, or work stoppagesor labor disruptions at our customers' locations. Cancellations, reductions or delays in orders by a customer or group of customers could have a materialadverse effect on our business, financial condition and results of operations.Our acquisition strategy exposes us to risks, including the risk that we may not be able to successfully integrate acquired businesses.We have a consistent strategy to grow, in part, through the acquisition of additional businesses in the aerospace industry and are continuously evaluatingvarious acquisition opportunities, including those outside the United States and those that may have a material impact on our business. Our ability to grow byacquisition is dependent upon, among other factors, the availability of suitable acquisition candidates. Growth by acquisition involves risks that couldadversely affect our operating results, including difficulties in integrating the operations and personnel of acquired companies, the risk of diverting theattention of senior management from our existing operations, the potential amortization of acquired intangible assets, the potential impairment of goodwill andthe potential loss of key employees of acquired companies. We may not be able to consummate acquisitions on satisfactory terms or, if any acquisitions areconsummated, successfully integrate these acquired businesses.A significant decline in business with a key customer could have a material adverse effect on us.The Boeing Company, or Boeing Commercial, Military and Space, represented approximately 49% of our net sales for the fiscal year ended March 31,2013, covering virtually every Boeing plant and product. As a result, a significant reduction in purchases by Boeing could have a material adverse impact onour financial position, results of operations, and cash flows. In addition, some of our other group companies rely significantly on particular customers, theloss of which could have an adverse effect on those businesses.Future volatility in the financial markets may impede our ability to successfully access capital markets and ensure adequate liquidity and mayadversely affect our customers and suppliers.Future turmoil in the capital markets may impede our ability to access the capital markets when we would like, or need, to raise capital or restrict ourability to borrow money on favorable terms. Such market conditions could have an adverse impact on our flexibility to react to changing economic andbusiness conditions and on our ability to fund our operations and capital expenditures in the future. In addition, interest rate fluctuations, financial marketvolatility or credit market disruptions may also negatively affect our customers' and our suppliers' ability to obtain credit to finance their businesses onacceptable terms. As a result, our customers' need for and ability to purchase our products or services may decrease, and our suppliers may increase theirprices, reduce their output or change their terms of sale. If our customers' or suppliers' operating and financial performance deteriorates, or if they are unable tomake scheduled payments or obtain credit, our customers may not be able to pay, or may delay payment of, accounts receivable owed to us, and oursuppliers may restrict credit or impose different payment terms. Any inability of customers to pay us for our products and services or any demands bysuppliers for different payment terms may adversely affect our earnings and cash flow.16 Table of ContentsOur international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violationof which could adversely affect our operations.We must comply with all applicable export control laws and regulations of the United States and other countries. United States laws and regulationsapplicable to us include the Arms Export Control Act, the International Traffic in Arms Regulations ("ITAR"), the Export Administration Regulations ("EAR")and the trade sanctions laws and regulations administered by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC"). EARrestricts the export of dual-use products and technical data to certain countries, while ITAR restricts the export of defense products, technical data and defenseservices. The U.S. Government agencies responsible for administering EAR and ITAR have significant discretion in the interpretation and enforcement of theseregulations. We cannot provide services to certain countries subject to United States trade sanctions unless we first obtain the necessary authorizations fromOFAC. In addition, we are subject to the Foreign Corrupt Practices Act which generally bars bribes or unreasonable gifts to foreign governments or officials.Violations of these laws or regulations could result in significant additional sanctions, including fines, more onerous compliance requirements, moreextensive debarments from export privileges, loss of authorizations needed to conduct aspects of our international business and criminal penalties and mayharm our ability to enter into contracts with the U.S. government. A future violation of ITAR or the other regulations enumerated above could materiallyadversely affect our business, financial condition and results of operations.Our expansion into international markets may increase credit, currency and other risks, and our current operations in international marketsexpose us to such risks.As we pursue customers in Asia, South America and other less developed aerospace markets throughout the world, our inability to ensure thecreditworthiness of our customers in these areas could adversely impact our overall profitability. In addition, with operations in China, France, Germany,Mexico, Thailand and the United Kingdom, and customers throughout the world, we will be subject to the legal, political, social and regulatory requirementsand economic conditions of other jurisdictions. In the future, we may also make additional international capital investments, including further acquisitions ofcompanies outside the United States or companies having operations outside the United States. Risks inherent to international operations include, but are notlimited to, the following:•difficulty in enforcing agreements in some legal systems outside the United States;•imposition of additional withholding taxes or other taxes on our foreign income, tariffs or other restrictions on foreign trade and investment, includingcurrency exchange controls;•fluctuations in exchange rates which may affect demand for our products and services and may adversely affect our profitability in U.S. dollars;•inability to obtain, maintain or enforce intellectual property rights;•changes in general economic and political conditions in the countries in which we operate;•unexpected adverse changes in the laws or regulatory requirements outside the United States, including those with respect to environmentalprotection, export duties and quotas;•failure by our employees or agents to comply with U.S. laws affecting the activities of U.S. companies abroad;•difficulty with staffing and managing widespread operations; and•difficulty of and costs relating to compliance with the different commercial and legal requirements of the countries in which we operate.We may need additional financing for acquisitions and capital expenditures and additional financing may not be available on terms acceptable tous.A key element of our strategy has been, and continues to be, internal growth supplemented by growth through the acquisition of additional aerospacecompanies and product lines. In order to grow internally, we may need to make significant capital expenditures, such as investing in facilities in low-costcountries, and may need additional capital to do so. Our ability to grow is dependent upon, and may be limited by, among other things, access to markets andconditions of markets, availability under the Credit Facility and the Securitization Facility, each as defined below, and by particular restrictions contained inthe Credit Facility and our other financing arrangements. In that case, additional funding sources may be needed, and we may not be able to obtain theadditional capital necessary to pursue our internal growth and acquisition strategy or, if we can obtain additional financing, the additional financing may notbe on financial terms that are satisfactory to us.17 Table of ContentsCompetitive pressures may adversely affect us.We have numerous competitors in the aerospace industry. We compete primarily with the top-tier systems integrators and the manufacturers that supplythem, some of which are divisions or subsidiaries of OEMs and other large companies that manufacture aircraft components and subassemblies. Our OEMcompetitors, which include Boeing, Airbus, Bell Helicopter, Bombardier, Cessna, General Electric, Gulfstream, Honeywell, Lockheed Martin, NorthropGrumman, Raytheon, Rolls Royce and Sikorsky, may choose not to outsource production of aerostructures or other components due to, among other things,their own direct labor and overhead considerations, capacity utilization at their own facilities and desire to retain critical or core skills. Consequently,traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce apart in-house or to outsource. We also face competition from non-OEM component manufacturers, including Alenia Aeronautica, Fuji Heavy Industries, GKNWestland Aerospace (U.K.), UTC Aerospace Systems, Kawasaki Heavy Industries, Mitsubishi Heavy Industries, Spirit AeroSystems and Stork Aerospace.Competition for the repair and overhaul of aviation components comes from three primary sources: OEMs, major commercial airlines and other independentrepair and overhaul companies.We may need to expend significant capital to keep pace with technological developments in our industry.The aerospace industry is constantly undergoing development and change and it is likely that new products, equipment and methods of repair andoverhaul service will be introduced in the future. In order to keep pace with any new developments, we may need to expend significant capital to purchase newequipment and machines or to train our employees in the new methods of production and service.The construction of aircraft is heavily regulated and failure to comply with applicable laws could reduce our sales or require us to incuradditional costs to achieve compliance, and we may incur significant expenses to comply with new or more stringent governmental regulation.The aerospace industry is highly regulated in the United States by the FAA and in other countries by similar agencies. We must be certified by the FAAand, in some cases, by individual OEMs in order to engineer and service parts, components and aerostructures used in specific aircraft models. If any of ourmaterial authorizations or approvals were revoked or suspended, our operations would be adversely affected. New or more stringent governmental regulationsmay be adopted, or industry oversight heightened in the future, and we may incur significant expenses to comply with any new regulations or any heightenedindustry oversight.Some contractual arrangements with customers may cause us to bear significant up-front costs that we may not be able to recover.Many new aircraft programs require that major suppliers bear the cost of design, development and engineering work associated with the development ofthe aircraft usually in exchange for a long-term agreement to supply critical parts once the aircraft is in production. If the aircraft fails to reach the fullproduction stage or we fail to win the long-term contract, the outlays we have made in research and development and other start-up costs may not generate ouranticipated return on investment.We may not realize our anticipated return on capital commitments made to expand our capabilities.We continually make significant capital expenditures to implement new processes and to increase both efficiency and capacity. Some of these projectsrequire additional training for our employees and not all projects may be implemented as anticipated. If any of these projects do not achieve the anticipatedincrease in efficiency or capacity, our returns on these capital expenditures may be lower than expected.Any product liability claims in excess of insurance may adversely affect our financial condition.Our operations expose us to potential liability for personal injury or death as a result of the failure of an aircraft component that has been serviced by us orthe failure of an aircraft component designed or manufactured by us. While we believe that our liability insurance is adequate to protect us from theseliabilities, our insurance may not cover all liabilities. Additionally, as the number of insurance companies providing general aviation product liabilityinsurance coverage has decreased in recent years, insurance coverage may not be available in the future at a cost acceptable to us. Any material liability notcovered by insurance or for which third-party indemnification is not available could have a material adverse effect on our financial condition.18 Table of ContentsThe lack of available skilled personnel may have an adverse effect on our operations.From time to time, some of our operating locations have experienced difficulties in attracting and retaining skilled personnel to design, engineer,manufacture, repair and overhaul sophisticated aircraft components. Our ability to operate successfully could be jeopardized if we are unable to attract andretain a sufficient number of skilled personnel to conduct our business.Any exposure to environmental liabilities may adversely affect us.Our business, operations and facilities are subject to numerous stringent federal, state, local and foreign environmental laws and regulations, and we aresubject to potentially significant fines or penalties, including criminal sanctions, if we fail to comply with these requirements. In addition, we could be affectedby future laws and regulations, including those imposed in response to climate change concerns and other actions commonly referred to as "green initiatives."Compliance with current and future environmental laws and regulations currently requires and is expected to continue to require significant operating andcapital costs.Pursuant to certain environmental laws, a current or previous owner or operator of a contaminated site may be held liable for the entire cost ofinvestigation, removal or remediation of hazardous materials at such property, whether or not the owner or operator knew of, or was responsible for, thepresence of any hazardous materials. Although management believes that our operations and facilities are in material compliance with such laws andregulations, future changes in such laws, regulations or interpretations thereof or the nature of our operations or regulatory enforcement actions which mayarise, may require us to make significant additional capital expenditures to ensure compliance in the future. Certain of our facilities, including facilitiesacquired and operated by us or one of our subsidiaries, have at one time or another been under active investigation for environmental contamination by federalor state agencies when acquired and, at least in some cases, continue to be under investigation or subject to remediation for potential or identified environmentalcontamination. Lawsuits, claims and costs involving environmental matters are likely to continue to arise in the future. Individual facilities of ours have alsobeen subject to investigation on occasion for possible past waste disposal practices which might have contributed to contamination at or from remote third-party waste disposal sites. In some instances, we are indemnified by prior owners or operators and/or present owners of the facilities for liabilities which weincur as a result of these investigations and the environmental contamination found which pre-dates our acquisition of these facilities, subject to certainlimitations, including but not limited to specified exclusions, deductibles and limitations on the survival period of the indemnity. We also maintain a pollutionliability policy that provides coverage, subject to specified limitations, for specified material liabilities associated with the clean-up of certain on-site pollutionconditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in each case, to the extent nototherwise indemnified. However, if we are required to pay the expenses related to environmental liabilities because neither indemnification nor insurancecoverage is available, these expenses could have a material adverse effect on our financial position, results of operations, and cash flows.We are currently involved in intellectual property litigation, which could have a material and adverse impact on our profitability, and we couldbecome so involved again in the future.We and other companies in our industry possess certain proprietary rights relating to designs, engineering, manufacturing processes and repair andoverhaul procedures. In the event that we believe that a third party is infringing upon our proprietary rights, we may bring an action to enforce such rights. Inaddition, third parties may claim infringement by us with respect to their proprietary rights and may initiate legal proceedings against us in the future. Theexpense and time of bringing an action to enforce such rights or defending against infringement claims can be significant, as in the case of the litigation arisingout of the claims of Eaton Corporation discussed in "Item 3. Legal Proceedings." Intellectual property litigation involves complex legal and factual questionswhich makes the outcome of any such proceedings subject to considerable uncertainty. Not only can such litigation divert management's attention, but it canalso expose the Company to damages and potential injunctive relief which, if granted, may preclude the Company from making, using or selling particularproducts or technology. The expense and time associated with such litigation may have a material and adverse impact on our profitability.We do not own certain intellectual property and tooling that is important to our business.In our overhaul and repair businesses, OEMs of equipment that we maintain for our customers increasingly include language in repair manuals relating totheir equipment asserting broad claims of proprietary rights to the contents of the manuals used in our operations. Although we believe that our use ofmanufacture and repair manuals is lawful, there can be no assurance that OEMs will not try to enforce such claims, including through the possible use oflegal proceedings, or that any such actions will be unsuccessful.19 Table of ContentsOur business also depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our contracts withour OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated if we violate certain of theserestrictions. Our loss of a contract with an OEM customer and the related license rights to use an OEM's intellectual property or tooling would materiallyadversely affect our business.Our fixed-price contracts may commit us to unfavorable terms.A significant portion of our net sales are derived from fixed-price contracts under which we have agreed to provide components or aerostructures for aprice determined on the date we entered into the contract. Several factors may cause the costs we incur in fulfilling these contracts to vary substantially fromour original estimates, and we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on these contracts. In a fixed-price contract, we must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts.Because our ability to terminate contracts is generally limited, we may not be able to terminate our performance requirements under these contracts at all orwithout substantial liability and, therefore, in the event we are sustaining reduced profits or losses, we could continue to sustain these reduced profits or lossesfor the duration of the contract term. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs duringperformance of a fixed-price contract may reduce our profitability or cause significant losses.Any significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue.We are highly dependent on the availability of essential raw materials such as carbon fiber, aluminum and titanium, and purchased engineeredcomponent parts from our suppliers, many of which are available only from single customer-approved sources. Moreover, we are dependent upon the abilityof our suppliers to provide raw materials and components that meet our specifications, quality standards and delivery schedules. Our suppliers' failure toprovide expected raw materials or component parts could require us to identify and enter into contracts with alternate suppliers that are acceptable to both usand our customers, which could result in significant delays, expenses, increased costs and management distraction and adversely affect production schedulesand contract profitability.We have from time to time experienced limited interruptions of supply, and we may experience a significant interruption in the future. Our continuedsupply of raw materials and component parts are subject to a number of risks including:•availability of capital to our suppliers;•the destruction of our suppliers' facilities or their distribution infrastructure;•a work stoppage or strike by our suppliers' employees;•the failure of our suppliers to provide raw materials or component parts of the requisite quality;•the failure of essential equipment at our suppliers' plants;•the failure or shortage of supply of raw materials to our suppliers;•contractual amendments and disputes with our suppliers; and•geopolitical conditions in the global supply base.In addition, some contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject totermination on a relatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions, and substantialincreases in prices could increase our operating costs, which, as a result of our fixed-price contracts, we may not be able to recoup through increases in theprices of our products.Due to economic difficulty, we may face pressure to renegotiate agreements resulting in lower margins. Our suppliers may discontinue provision ofproducts to us at attractive prices or at all, and we may not be able to obtain such products in the future from these or other providers on the scale and withinthe time periods we require. Furthermore, substitute raw materials or component parts may not meet the strict specifications and quality standards we and ourcustomers demand, or that the U.S. Government requires. If we are not able to obtain key products on a timely basis and at an affordable cost, or weexperience significant delays or interruptions of their supply, revenues from sales of products that use these supplies will decrease.20 Table of ContentsOur operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.Our manufacturing facilities could be damaged or disrupted by a natural disaster, information technology or cyber-attack, war, or terrorist activity. Wemaintain property damage and business interruption insurance at the levels typical in our industry, however, a major catastrophe, such as an earthquake,hurricane, flood, tornado or other natural disaster at any of our sites, any destruction, manipulation or improper use of our data, information systems ornetworks, or war or terrorist activities in any of the areas where we conduct operations could result in a prolonged interruption of our business. Any disruptionresulting from these events could cause significant delays in shipments of products and the loss of sales and customers and we may not have insurance toadequately compensate us for any of these events.Significant consolidation by aerospace industry suppliers could adversely affect our business.The aerospace industry has recently experienced consolidation among suppliers. Suppliers have consolidated and formed alliances to broaden theirproduct and integrated system offerings and achieve critical mass. This supplier consolidation is in part attributable to aircraft manufacturers more frequentlyawarding long-term sole-source or preferred supplier contracts to the most capable suppliers, thus reducing the total number of suppliers. This consolidationcould cause us to compete against certain competitors with greater financial resources, market penetration and purchasing power. When we purchasecomponent parts and services from suppliers to manufacture our products, consolidation reduces price competition between our suppliers, which coulddiminish incentives for our suppliers to reduce prices. If this consolidation continues, our operating costs could increase and it may become more difficult forus to be successful in obtaining new customers.Due to the size and long-term nature of many of our contracts, we are required by GAAP to estimate sales and expenses relating to these contractsin our financial statements, which may cause actual results to differ materially from those estimated under different assumptions or conditions.Our financial statements are prepared in conformity with accounting principles generally accepted in the United States. These principles require ourmanagement to make estimates and assumptions regarding our contracts that affect the reported amounts of revenue and expenses during the reporting period.Contract accounting requires judgment relative to assessing risks, estimating contract sales and costs, and making assumptions for schedule and technicalissues. Due to the size and nature of many of our contracts, the estimation of total sales and cost at completion is complicated and subject to many variables.While we base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances at the time made,actual results may differ materially from those estimated.We may be subject to work stoppages at our facilities or those of our principal customers and suppliers, which could seriously impact theprofitability of our business.At March 31, 2013, we employed 13,900 people, of which 27.3% belonged to unions. Our unionized workforces and those of our customers andsuppliers may experience work stoppages. For example, the International Association of Machinists-represented employees at Vought's Nashville, Tennessee,plant engaged in a strike that continued for approximately 16 weeks during 2008 and 2009 (prior to our acquisition of Vought). A contingency plan wasimplemented that allowed production to continue in Nashville during the course of that strike. Additionally, our union contract with Local 848 of the UnitedAuto Workers with employees at our Dallas and Grand Prairie, Texas, facilities expires in October 2013. If we are unable to negotiate a new contract with thatworkforce, our operations may be disrupted and we may be prevented from completing production and delivery of products from those facilities, which wouldnegatively impact our results of operations.Many aircraft manufacturers, airlines and aerospace suppliers have unionized workforces. Strikes, work stoppages or slowdowns experienced by aircraftmanufacturers, airlines or aerospace suppliers could reduce our customers' demand for our products or prevent us from completing production. In turn, thismay have a material adverse effect on our financial condition, results of operations and cash flows.Financial market conditions may adversely affect the benefit plan assets for our defined benefit plans, increase funding requirements andmaterially impact our statements of financial position and cash flows.Our benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments otheralternative investments. The current market values of all of these investments, as well as the related benefit plan liabilities are impacted by the movements andvolatility in the financial markets. In accordance with the Compensation—Retirement Benefits topic of the Accounting Standards Codification (ASC), wehave recognized the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability in our balance sheet, and will recognizechanges in that funded status in the year in which the changes occur. The funded status is measured as the difference between the fair value of the plan'sassets and the projected benefit obligation. A decrease in the fair value of these plan assets21 Table of Contentsor a decrease in interest rates resulting from movements in the financial markets will increase the under-funded status of the plans recorded in our statement offinancial position and result in additional cash funding requirements to meet the minimum required funding levels.The U.S. Government is a significant customer of our largest customers, and we and they are subject to specific U.S. Government contractingrules and regulations.As a result of the acquisition of Vought, we have become a more significant provider of aerostructures to military aircraft manufacturers. The militaryaircraft manufacturers' business, and by extension, our business, is affected by the U.S. Government's continued commitment to programs under contractwith our customers. The terms of defense contracts with the U.S. Government generally permit the government to terminate contracts partially or completely,either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery ofunrecovered costs incurred or committed, settlement expenses and profit on the work completed prior to termination. Termination for default provisionsprovide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. On contractswhere the price is based on cost, the U.S. Government may review our costs and performance, as well as our accounting and general business practices.Based on the results of such audits, the U.S. Government may adjust our contract-related costs and fees, including allocated indirect costs. In addition, underU.S. Government purchasing regulations, some of our costs, including most financing costs, portions of research and development costs, and certainmarketing expenses may not be subject to reimbursement.We bear the potential risk that the U.S. Government may unilaterally suspend our customers or us from new contracts pending the resolution of allegedviolations of procurement laws or regulations. Sales to the U.S. Government are also subject to changes in the government's procurement policies in advance ofdesign completion. An unexpected termination of, or suspension from, a significant government contract, a reduction in expenditures by the U.S. Governmentfor aircraft using our products, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume of contracts awarded tous, or substantial cost overruns could have a material adverse effect on our financial condition, results of operations and cash flows.We are subject to the requirements of the National Industrial Security Program Operating Manual for facility security clearance, which is aprerequisite for our ability to perform on classified contracts for the U.S. Government.A Department of Defense, or DoD, facility security clearance is required in order to be awarded and perform on classified contracts for the DoD andcertain other agencies of the U.S. Government, which is a significant part of our business. We have obtained clearance at appropriate levels that requirestringent qualifications, and we may be required to seek higher level clearances in the future. We cannot assure you that we will be able to maintain oursecurity clearance. If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform our present classifiedcontracts or be able to enter into new classified contracts, which could affect our ability to compete for and capture new business.Item 1B.Unresolved Staff CommentsNone.22 Table of ContentsItem 2.PropertiesAs of March 31, 2013, we owned or leased the following facilities.LocationDescription SquareFootage Owned/LeasedTRIUMPH AEROSTRUCTURES GROUP Hot Springs, ARManufacturing facility/office 217,300 OwnedBrea, CAManufacturing facility 90,000 LeasedChatsworth, CAManufacturing facility/office 101,900 OwnedCity of Industry, CAManufacturing facility/office 75,000 LeasedEl Cajon, CAManufacturing facility/office 122,400 LeasedHawthorne, CAManufacturing facility 1,348,700 LeasedLynwood, CAProcessing and finishing facility/office 59,700 LeasedLynwood, CAOffice/warehouse/aerospace metal processing 105,000 LeasedTorrance, CAProcessing facility 84,700 LeasedWalnut, CAManufacturing facility/office 105,000 LeasedBejing, ChinaManufacturing facility/office 43,700 LeasedStuart, FLManufacturing facility 519,700 LeasedMilledgeville, GAManufacturing facility/assembly facility 566,200 OwnedShelbyville, INManufacturing facility/office 193,900 OwnedWichita, KSManufacturing facility/office 190,000 LeasedMexicali, MexicoManufacturing facility/office 261,000 LeasedGrandview, MOManufacturing facility/office 78,000 OwnedWestbury, NYManufacturing facility/office 93,500 LeasedWestbury, NYAerospace metal processing 12,500 LeasedNashville, TNManufacturing facility/assembly facility/office 2,198,700 OwnedDallas, TXHigh-speed wind tunnel 28,900 OwnedDallas, TXManufacturing facility/office 4,855,300 LeasedFort Worth, TXManufacturing facility/office 114,100 OwnedGrand Prairie, TXManufacturing facility 804,500 LeasedKilgore, TXManufacturing facility/office 83,000 OwnedRed Oak, TXManufacturing facility/office 255,000 OwnedEverett, WAManufacturing facility 153,000 LeasedSpokane, WAManufacturing facility/office 392,000 Owned23 Table of ContentsLocationDescription SquareFootage Owned/LeasedTRIUMPH AEROSPACE SYSTEMS GROUP Chandler, AZManufacturing facility/office 34,300 LeasedSanta Ana, CAProcessing and finishing facility/office 105,145 OwnedSan Diego, CAForce measurement systems facility 7,000 LeasedValencia, CAManufacturing facility/office 87,000 LeasedBethel, CTOffice 1,700 LeasedBloomfield, CTManufacturing facility/office 29,800 LeasedEast Lyme, CTManufacturing facility/office 59,600 OwnedWest Hartford, CTManufacturing facility/office 250,000 OwnedAlfortville, FranceManufacturing facility/office 7,500 LeasedHeiligenhaus, GermanyManufacturing facility/office 19,214 LeasedEast Alton, ILMachine shop/office 25,000 LeasedShelbyville, INManufacturing facility/office 100,000 OwnedWichita, KSManufacturing facility/office 130,300 LeasedMacomb, MIManufacturing facility/office 86,000 LeasedFreeport, NYManufacturing facility/office/warehouse 29,000 OwnedRochester, NYEngineering office 5,000 LeasedClemmons, NCManufacturing facility/repair/office 110,000 OwnedForest, OHManufacturing facility/office 125,000 OwnedAlbany, ORMachine shop/office 25,000 OwnedNorth Wales, PAManufacturing facility/office 111,400 OwnedOrangeburg, SCMachine shop 52,000 OwnedBasildon, UKManufacturing facility/office 9,110 LeasedBuckley, UKManufacturing facility/office 8,000 LeasedPark City, UTManufacturing facility/office 180,000 OwnedNewport News, VAEngineering/manufacturing/office 93,000 LeasedRedmond, WAManufacturing facility/office 19,400 Leased24 Table of ContentsLocationDescription SquareFootage Owned/LeasedTRIUMPH AFTERMARKET SERVICES GROUP Hot Springs, ARMachine shop/office 219,700 OwnedChandler, AZThermal processing facility/office 15,000 LeasedChandler, AZRepair and overhaul/office 91,013 LeasedPhoenix, AZRepair and overhaul/office 30,000 LeasedTempe, AZManufacturing facility/office 13,500 OwnedTempe, AZMachine shop 9,300 OwnedTempe, AZMachine shop 32,000 OwnedBurbank, CA (1)Instrument shop/warehouse/office 23,000 LeasedFt. Lauderdale, FL (1)Instrument shop/warehouse/office 11,700 LeasedAtlanta, GAManufacturing facility/office 32,000 LeasedWellington, KSRepair and overhaul/office 65,000 LeasedOakdale, PAProduction/warehouse/office 68,000 LeasedDallas, TXProduction/office 28,600 LeasedGrand Prairie, TXRepair and overhaul shop/office 60,000 LeasedSan Antonio, TXRepair and overhaul/office 30,000 LeasedChonburi, ThailandRepair and overhaul shop/office 85,000 OwnedCORPORATE AND OTHER Berwyn, PAOffice 17,000 LeasedZacatecas, MexicoManufacturing facility/office 270,000 Owned(1) These operations were sold in April 2013 and the associated assets and liabilities are treated as Assets Held for Sale at March 31, 2013. See Note 4 of"Notes to the Consolidated Financial Statements."We believe that our properties are adequate to support our operations for the foreseeable future.Item 3.Legal ProceedingsOn July 9, 2004, Eaton Corporation and several Eaton subsidiaries filed a complaint against us, our subsidiary, Frisby Aerospace, LLC (now namedTriumph Actuation Systems, LLC), certain related subsidiaries and certain employees of ours and our subsidiaries. The complaint was filed in the CircuitCourt of the First Judicial District of Hinds County, Mississippi and alleged nineteen causes of action under Mississippi law (“the civil case”). In particular,the complaint alleged the misappropriation of trade secrets and intellectual property allegedly belonging to Eaton relating to hydraulic pumps and motors usedin military and commercial aviation. Triumph Actuation Systems and the individual defendants filed separate responses to Eaton's claims. TriumphActuation Systems filed counterclaims against Eaton alleging common law unfair competition, interference with existing and prospective contracts, abuse ofprocess, defamation, violation of North Carolina's Unfair and Deceptive Trade Practices Act, and violation of the false advertising provisions of the LanhamAct. We and defendant Jeff Frisby, President of Triumph Actuation Systems at the time the engineer defendants were hired, moved to dismiss the complaintfor lack of personal jurisdiction.In the course of protracted discovery and related litigation over the conduct of discovery, on January 4, 2008, the judge in the civil case, Judge BobbyDeLaughter, recused himself on his own motion. The case was reassigned to Chief Judge W. Swan Yerger. On January 24, 2008, Triumph Actuation Systemsfiled a motion to stay all discovery in order to review and reconsider Judge DeLaughter's prior orders based on the ongoing federal investigation of an alleged exparte and inappropriate relationship between Judge DeLaughter and Ed Peters, a lawyer representing Eaton for whom Judge DeLaughter had worked prior tohis appointment to the bench. Judge DeLaughter was thereafter suspended from the bench and indicted by a federal grand jury sitting in the Northern Districtof Mississippi. On July 30, 2009, Judge DeLaughter pled guilty to a count of obstruction of justice contained in the indictment and, on November 13, 2009,was sentenced to 18 months in federal prison.25 Table of ContentsTriumph Actuation Systems filed other motions relating to this alleged inappropriate relationship with Mr. Peters, including a motion for sanctions. JudgeYerger ordered that this conduct be examined and undertook, along with a newly appointed Special Master, to review Judge DeLaughter's rulings in the casefrom the time Mr. Peters became involved. On December 22, 2010, the court entered a final order dismissing with prejudice all of the claims that had beenasserted by Eaton. The order of dismissal fully ended the litigation of claims by Eaton in the civil case. On December 28, 2010, Eaton filed a notice of appealto the Mississippi Supreme Court appealing the order of dismissal and other matters.On December 28, 2010, Triumph, Triumph Actuation Systems and the engineer defendants filed a motion for leave to amend the counterclaims whichremained pending to include causes of action based on the Eaton misconduct that led to the dismissal of their claims. Judge Yerger retired from the bench onDecember 31, 2010, and the matter was reassigned to Judge Jeffrey Weill. On March 14, 2011, Judge Weill granted the motion for leave to amend thecounterclaims which were filed on March 18, 2011. Second Supplemental and Amended Counterclaims were filed on February 14, 2013 and discovery isunderway, with trial on the counterclaims scheduled to commence on November 4, 2013.On February 1, 2011, Triumph Actuation Systems filed a complaint in the District Court for the Middle District of North Carolina against EatonCorporation and several of its subsidiaries alleging three counts of antitrust violations under the Sherman Act based on the various actions and misconduct ofEaton and its subsidiaries in the Mississippi civil case. Eaton filed counterclaims, essentially repeating the claims that had been dismissed by Judge Yerger inthe Mississippi civil case. A motion by Triumph Actuation Systems to dismiss Eaton's counterclaims is awaiting the decision of the court.Given the fact of Eaton's appeal of the dismissal of its claims, it is too early to determine what, if any, exposure to liability Triumph Actuation Systemsor the Company might face as a result of the civil suit. We intend to continue to vigorously defend the dismissal of Eaton's claims on appeal and to vigorouslyprosecute the counterclaims brought by Triumph Actuation Systems.In addition to the foregoing, in the ordinary course of our business, we are involved in disputes, claims, lawsuits, and governmental and regulatoryinquiries that we deem to be immaterial. Some may involve claims or potential claims of substantial damages, fines or penalties. While we cannot predict theoutcome of any pending or future litigation or proceeding, we do not believe that any pending matter will have a material effect, individually or in the aggregate,on our financial position or results of operations, although no assurances can be given to that effect.Item 4.Mine Safety DisclosuresNot applicable.26 Table of ContentsPART IIItem 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesRange of Market PriceOur Common Stock is traded on the New York Stock Exchange under the symbol "TGI." The following table sets forth the range of high and low pricesfor our Common Stock for the periods indicated: High LowFiscal 2012 1st Quarter$50.47 $39.842nd Quarter54.82 42.783rd Quarter60.90 43.924th Quarter66.77 58.16Fiscal 2013 1st Quarter$66.89 $53.462nd Quarter63.88 55.713rd Quarter67.51 60.794th Quarter79.77 65.73On May 15, 2013, the reported closing price for our Common Stock was $74.37. As of May 15, 2013, there were approximately 128 holders of recordof our Common Stock and we believe that our Common Stock was beneficially owned by approximately 30,000 persons.Dividend PolicyDuring fiscal 2013 and 2012, we paid cash dividends of $0.16 per share and $0.14 per share, respectively. However, our declaration and payment ofcash dividends in the future and the amount thereof will depend upon our results of operations, financial condition, cash requirements, future prospects,limitations imposed by credit agreements or indentures governing debt securities and other factors deemed relevant by our Board of Directors. No assurancecan be given that cash dividends will continue to be declared and paid at historical levels or at all. Certain of our debt arrangements, including the CreditFacility, restrict our paying dividends and making distributions on our capital stock, except for the payment of stock dividends and redemptions of anemployee's shares of capital stock upon termination of employment. On April 30, 2013, the Company announced that its Board of Directors declared a regularquarterly dividend of $0.04 per share on its outstanding Common Stock. The dividend is next payable June 15, 2013 to stockholders of record as of May 31,2013.Repurchases of StockThe following summarizes repurchases made pursuant to the Company's share repurchase plan during the three years ended March 31, 2013. InDecember 1998, we announced a program to repurchase up to 500,000 shares of our common stock. In February 2008, the Company's Board of Directorsauthorized an increase in the Company's existing stock repurchase program by up to an additional 500,000 shares of its common stock. From the inception ofthe program through March 31, 2013, we have repurchased a total of 499,200 shares (prior to fiscal 2012 stock split) for a total purchase price of$19.2 million. As a result, as of May 15, 2013, the Company remains able to purchase an additional 500,800 shares. Repurchases may be made from timeto time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limit has been set forcompletion of the program.PeriodTotal number ofshares purchased Average pricepaid per share Total number ofshares purchasedas part of publiclyannounced plans Maximum numberof shares that mayyet be purchasedunder the plansApril 1, 2010 - March 31, 2013— N/A 499,200 500,80027 Table of ContentsEquity Compensation Plan InformationThe information required regarding equity compensation plan information is included in our Proxy Statement in connection with our 2013 Annual Meetingof Stockholders to be held on July 18, 2013, under the heading "Equity Compensation Plan Information" and is incorporated herein by reference.The following graph compares the cumulative 5-year total return provided stockholders on Triumph Group, Inc.'s common stock relative to thecumulative total returns of the Russell 2000 index and the S&P Aerospace & Defense index. An investment of $100 (with reinvestment of all dividends) isassumed to have been made in our common stock and in each of the indexes on March 31, 2008 and its relative performance is tracked through March 31,2013.COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*Among Triumph Group, Inc., The Russell 2000 IndexAnd The S&P Aerospace & Defense Index* $100 invested on March 31, 2008 in stock or index, including reinvestment of dividends. Fiscal year ended March 31.** During fiscal year ended March 31, 2013, we moved from the Russell 2000 index to the Russell 1000 index. 3/08 3/09 3/10 3/11 3/12 3/13Triumph Group, Inc. 100.00 67.35 124.02 156.84 222.78 279.80Russell 2000100.00 62.50 101.72 127.96 127.73 148.55S&P Aerospace & Defense100.00 58.17 99.43 109.93 114.92 133.30 The stock price performance included in this graph is not necessarily indicative of future stock price performance.28 Table of ContentsItem 6.Selected Financial DataThe following selected financial data should be read in conjunction with the Consolidated Financial Statements and related Notes thereto and"Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein. Fiscal Years Ended March 31, 2013(1) 2012(2) 2011(3) 2010(4) 2009(5) (in thousands, except per share data)Operating Data: Net sales$3,702,702 $3,407,929 $2,905,348 $1,294,780 $1,240,378Cost of sales2,763,488 2,564,995 2,231,864 927,211 877,744 939,214 842,934 673,484 367,569 362,634Selling, general and administrative expense241,349 242,553 238,889 157,870 162,109Depreciation and amortization129,506 119,724 99,657 54,418 48,611Acquisition and integration expenses2,665 6,342 20,902 — —Curtailments and early retirement incentives34,481 (40,400) — — —Operating income531,213 514,715 314,036 155,281 151,914Interest expense and other68,156 77,138 79,559 28,865 16,929Gain on early extinguishment of debt— — — (39) (880)Income from continuing operations, before income taxes463,057 437,577 234,477 126,455 135,865Income tax expense165,710 155,955 82,066 41,167 43,124Income from continuing operations297,347 281,622 152,411 85,288 92,741Loss from discontinued operations— (765) (2,512) (17,526) (4,745)Net income$297,347 $280,857 $149,899 $67,762 $87,996Earnings per share: Income from continuing operations: Basic$5.99 $5.77 $3.39 $2.59 $2.83Diluted(6)$5.67 $5.43 $3.21 $2.56 $2.80Cash dividends declared per share$0.16 $0.14 $0.08 $0.08 $0.08Shares used in computing earnings per share: Basic49,663 48,821 45,006 32,918 32,768Diluted(6)52,446 51,873 47,488 33,332 33,168 As of March 31, 2013(1) 2012(2) 2011(3) 2010(4) 2009(5) (in thousands)Balance Sheet Data: Working capital$889,913 $741,105 $436,638 $487,411 $372,159Total assets5,183,505 4,597,224 4,477,234 1,692,578 1,591,207Long-term debt, including current portion1,329,863 1,158,862 1,312,004 505,780 459,396Total stockholders' equity$2,045,158 $1,793,369 $1,632,217 $860,686 $788,563(1)Includes the acquisitions of Goodrich Pump & Engine Control Systems (March 2013) and Embee, Inc. (December 2012) from the date of each respective acquisition. SeeNote 3 to the Consolidated Financial Statements.(2)Includes the acquisition of Aviation Network Services, LLC. (October 2011) from the date of acquisition. See Note 3 to the Consolidated Financial Statements.(3)Includes the acquisition of Vought Aircraft Industries, Inc. (June 2010) from the date of acquisition. See Note 3 to the Consolidated Financial Statements.(4)Includes the acquisition of DCL Avionics, Inc. (January 2010) and Fabritech, Inc. (March 2010) from the date of each respective acquisition.(5)Includes the acquisition of Merritt Tool Company, Inc., Saygrove Defence and Aerospace Group Limited, The Mexmil Company, LLC and acquisition of the aviation segmentof Kongsberg Automotive Holdings ASA from the date of each respective acquisition (March 2009).(6)Diluted earnings per share for the fiscal years ended March 31, 2013, 2012 and 2011, included 2,400,439, 2,606,189, and 2,040,896 shares, respectively, related to thedilutive effects of the Company's Convertible Notes.29 Table of ContentsItem 7.Management's Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto contained elsewhere herein.OVERVIEWWe are a major supplier to the aerospace industry and have three operating segments: (i) Triumph Aerostructures Group, whose companies' revenues arederived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structural components for the global aerospaceoriginal equipment manufacturers, or OEM, market; (ii) Triumph Aerospace Systems Group, whose companies design, engineer and manufacture a widerange of proprietary and build-to-print components, assemblies and systems also for the OEM market; and (iii) Triumph Aftermarket Services Group, whosecompanies serve aircraft fleets, notably commercial airlines, the U.S. military and cargo carriers, through the maintenance, repair and overhaul of aircraftcomponents and accessories manufactured by third parties.Effective March 18, 2013, a wholly-owned subsidiary of the Company, Triumph Engine Control Systems, LLC, acquired the assets of GoodrichCorporation (Goodrich Pump & Engine Control Systems) ("GPECS"), a leading independent aerospace fuel system supplier for the commercial, military,helicopter and business jet markets. The acquisition of GPECS provides new capabilities in a market where we did not previously participate and furtherdiversifies our customer base in electronic engine controls, fuel metering units and main fuel pumps for both OEM and aftermarket/spares end markets. Theresults for Triumph Engine Control Systems, LLC are included in the Aerospace Systems Group segment from the date of acquisition.Effective December 19, 2012, the Company acquired all of the outstanding shares of Embee, Inc. ("Embee"), renamed Triumph Processing - EmbeeDivision, Inc., which is a leading commercial metal finishing provider offering more than seventy metal finishing, inspecting and testing processes primarilyfor the aerospace industry. The acquisition of Embee expands our current capabilities to provide comprehensive processing services on precision engineeredparts for hydraulics, landing gear, spare parts and electronic actuation systems. The results for Triumph Processing - Embee Division, Inc. are included inthe Aerospace Systems Group segment from the date of acquisition. The acquisitions of GPECS and Embee are collectively referred to hereafter as the "fiscal2013 acquisitions."Financial highlights for the fiscal year ended March 31, 2013 include:•Net sales for fiscal 2013 increased 8.6% to $3.70 billion, including an 8.0% increase due to organic growth.•Operating income in fiscal 2013 increased 3.2% to $531.2 million.•Non-GAAP operating income excluding curtailments and early retirement incentives for fiscal 2013 was $565.7 million compared to $474.3 millionfor fiscal 2012, increase of $91.4 million, or 19.2%.•Net income for fiscal 2013 increased 5.9% to $297.3 million.•Backlog increased 5.2% over the prior year to $4.53 billion. For the fiscal year ended March 31, 2012, backlog increased substantially from whatwe had previously reported. During our fiscal fourth quarter, we detected an inadvertent error in how one portion of our 24-month backlog was beingreported.For the fiscal year ended March 31, 2013, net sales totaled $3.70 billion, an 8.6% increase from fiscal year 2012 net sales of $3.41 billion. Net incomefor fiscal year 2013 increased 5.9% to $297.3 million, or $5.67 per diluted common share, versus $280.9 million, or $5.41 per diluted common share, forfiscal year 2012. As discussed in further detail below under "Results of Operations," the increase in net income is attributable to the increase in sales offset bythe curtailments and early retirement incentives of $34.5 million.Our working capital needs are generally funded through cash flows from operations and borrowings under our credit arrangements. For the fiscal yearended March 31, 2013, we generated $320.9 million of cash flows from operating activities, used $467.4 million in investing activities and received $148.6million from financing activities. Cash flows from operating activities in fiscal year 2013 included $109.8 million in pension contributions versus $122.2million in fiscal year 2012.We continue to remain focused on growing our core businesses as well as growing through strategic acquisitions. Our organic sales increased in fiscal2013 due to continuing improvement to the overall economy, increased build rates by Boeing and Airbus, increased passenger traffic from previouslydepressed levels and MRO market share gain. Our Company has an aggressive but selective acquisition approach that adds capabilities and increases ourcapacity for strong and consistent internal growth.30 Table of ContentsCongress and the Administration failed to change or further delay the sequestration of appropriations in government fiscal year (GFY) 2013 imposed byBudget Control Act of 2011 (Budget Act) and sequestration went into effect on March 1, 2013. Our customers' budgets will be reduced significantly and theremay be a direct significant reduction in our customers' contract awards. While we understand customers have started to plan for sequestration, the specificeffects of sequestration are not yet available and cannot be determined by us. The automatic across-the-board cuts from sequestration will approximatelydouble the amount of the ten-year $487 billion reduction in defense spending that began in GFY 2012 already required by the Budget Act, including the budgetfor Overseas Contingencies Operations and any unobligated balances from prior years, and would have significant consequences to our business andindustry. Non-DoD agencies could also have significantly reduced budgets. It is likely there will be some disruption of our ongoing programs, impacts to oursupply chain and contractual actions (including partial or complete terminations). Consequently, we expect that sequestration, or other budgetary cuts in lieuof sequestration, will have a negative effect on our corporation.In fiscal 2012, we began efforts to establish a new facility in Red Oak, Texas to expand our manufacturing capacity, particularly under the BombardierGlobal 7000/8000 program. In fiscal 2013, we started construction on a second facility in association with our relocation from our Jefferson Street facilities. Asof March 31, 2013, we have incurred approximately $53.5 million in capital expenditures and $71.2 million in inventory costs associated with theBombardier Global 7000/8000 program, for which we have not yet begun to deliver.On May 6, 2013, the Company acquired four related entities collectively comprising the Primus Composites business from Precision Castparts Corp.The acquired business, which includes two manufacturing facilities in Farnborough, England and Rayong, Thailand, will operate as Triumph Structures -Farnborough and Triumph Structures - Thailand and be included in the Aerostructures Group. Together, Triumph Structures - Farnsborough and TriumphStructures - Thailand constitute a global supplier of composite and metallic propulsion and structural composites and assemblies. In addition to its compositeoperations, the Thailand operation also machines and processes metal components. Primus Composites employs approximately 650 employees.RESULTS OF OPERATIONSThe following includes a discussion of our consolidated and business segment results of operations. The Company's diverse structure and customer basedo not provide for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variances betweenthe respective periods.Non-GAAP Financial MeasuresWe prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and ExchangeCommission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in ourpublic releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA, which is our income from continuing operations beforeinterest, income taxes, amortization of acquired contract liabilities, curtailments and early retirement incentives and depreciation and amortization. We discloseAdjusted EBITDA on a consolidated and a reportable segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclosedifferent non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to ourpreviously reported results of operations.We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable toit is income from continuing operations. In calculating Adjusted EBITDA, we exclude from income from continuing operations the financial items that webelieve should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlinedbelow the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions.Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to netincome (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors andpotential investors in our securities should not rely on Adjusted EBITDA as a substitute for any GAAP financial measure, including net income (loss) orincome from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of AdjustedEBITDA to income from continuing operations set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAPfinancial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well asour quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA.31 Table of ContentsAdjusted EBITDA is used by management to internally measure our operating and management performance and by investors as a supplementalfinancial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believeprovides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 15 yearsexpanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, whichincluded acquisitions, our income from continuing operations has included significant charges for depreciation and amortization. Adjusted EBITDA excludesthese charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. Webelieve the disclosure of Adjusted EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year.We also believe Adjusted EBITDA is a measure of our ongoing operating performance because the isolation of non-cash charges, such as depreciation andamortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helpstrack our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA to provide a financial measureby which to compare our operating performance against that of other companies in our industry.Set forth below are descriptions of the financial items that have been excluded from our income from continuing operations to calculate Adjusted EBITDAand the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:•Curtailments and early retirement incentives may be useful for investors to consider because it represents the current period impact of the change inthe defined benefit obligation due to the reduction in future service costs as well as the incremental cost of retirement incentive benefits paid toparticipants. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.•Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value ofoff-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings relatedto our operations.•Amortization expense may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and thediminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related toour operating cost structure.•Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in ouroperations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.•The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows.However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of ourbusiness.•Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and thechange in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we donot consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement ourGAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.32 Table of ContentsThe following table shows our Adjusted EBITDA reconciled to our income from continuing operations for the indicated periods (in thousands): Fiscal year ended March 31, 2013 2012 2011Income from continuing operations$297,347 $281,622 $152,411Amortization of acquired contract liabilities(25,644) (26,684) (29,214)Depreciation and amortization129,506 119,724 99,657Curtailments and early retirement incentives34,481 (40,400) —Interest expense and other68,156 77,138 79,559Income tax expense165,710 155,955 82,066Adjusted EBITDA$669,556 $567,355 $384,479 The following tables show our Adjusted EBITDA by reportable segment reconciled to our operating income for the indicated periods (in thousands): Fiscal year ended March 31, 2013 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$531,213 $469,873 $103,179 $45,380 $(87,219)Curtailments and early retirement incentives34,481 — — — 34,481Amortization of acquired contract liabilities(25,644) (25,457) (187) — —Depreciation and amortization129,506 95,884 19,870 9,118 4,634Adjusted EBITDA$669,556 $540,300 $122,862 $54,498 $(48,104) Fiscal year ended March 31, 2012 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$514,715 $403,414 $90,035 $31,859 $(10,593)Curtailments and early retirement incentives(40,400) — — — (40,400)Amortization of acquired contract liabilities(26,684) (26,684) — — —Depreciation and amortization119,724 89,113 17,363 9,487 3,761Adjusted EBITDA$567,355 $465,843 $107,398 $41,346 $(47,232) Fiscal year ended March 31, 2011 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$314,036 $267,783 $75,292 $28,774 $(57,813)Amortization of acquired contract liabilities(29,214) (29,214) — — —Depreciation and amortization99,657 69,451 17,183 11,101 1,922Adjusted EBITDA$384,479 $308,020 $92,475 $39,875 $(55,891)33 Table of ContentsThe fluctuations from period to period within the amounts of the components of the reconciliations above are discussed further below within Results ofOperations.Fiscal year ended March 31, 2013 compared to fiscal year ended March 31, 2012 Year Ended March 31, 2013 2012 (in thousands)Net sales$3,702,702 $3,407,929Segment operating income$618,432 $525,308Corporate general and administrative expenses(87,219) (10,593)Total operating income531,213 514,715Interest expense and other68,156 77,138Income tax expense165,710 155,955Income from continuing operations297,347 281,622Loss from discontinued operations, net— (765)Net income$297,347 $280,857Net sales increased by $294.8 million, or 8.6%, to $3.7 billion for the fiscal year ended March 31, 2013 from $3.4 billion for the fiscal year endedMarch 31, 2012. The results for fiscal 2013 included an increase in organic sales of $272.6 million, or 8.0%, due to the expected increase in commercialproduction rates of various customer programs. The fiscal 2013 acquisitions contributed $22.2 million in increased net sales.Cost of sales increased by $198.5 million, or 7.7%, to $2.8 billion for the fiscal year ended March 31, 2013 from $2.6 billion for the fiscal year endedMarch 31, 2012. This increase in cost of sales resulted from the increase in sales. Gross margin for the fiscal year ended March 31, 2013 was 25.4%compared with 24.7% for the fiscal year ended March 31, 2012. Gross margin was favorably impacted by decreased pension and other postretirement benefitexpense ($14.6 million), changes in the overall sales mix, as well as the margin on nonrecurring customer settlements ($9.5 million). These favorable itemswere partially offset by the net unfavorable cumulative catch-up adjustments on long-term contracts discussed further below.Segment operating income increased by $93.1 million, or 17.7%, to $618.4 million for the fiscal year ended March 31, 2013 from $525.3 million for thefiscal year ended March 31, 2012. The segment operating income increase was a direct result of the sales volume increases and contribution from the fiscal2013 acquisitions ($5.0 million). These improvements were partially offset by net unfavorable cumulative catch-up adjustments ($14.6 million), increasedlegal fees ($1.5 million) and production delay and related costs due to Hurricane Sandy ($1.6 million). The unfavorable cumulative catch-up adjustments tooperating income included gross favorable adjustments of $15.9 million and gross unfavorable adjustments of $30.5 million. The cumulative catch-upadjustments were principally due to provisions for technical problems on production lots on early-stage programs and revisions in our mix of various materialand labor costs related to our efforts to gain efficiencies through expansion of our in-sourcing capabilities. Segment operating income for the fiscal year endedMarch 31, 2012 included net favorable cumulative catch-up adjustments of $18.3 million.Corporate expenses increased by $76.6 million, or 723.4% (almost entirely attributed to net curtailment increases of $74.9 million) to $87.2 million forthe fiscal year ended March 31, 2013 from $10.6 million for the fiscal year ended March 31, 2012. Corporate expenses increased primarily due to pensioncurtailment losses and early retirement incentives ($34.5 million) for the fiscal year ended March 31, 2013, as compared to a curtailment gain, net of specialtermination benefits associated with amendments made to certain defined benefit plans of $40.4 million for the fiscal year ended March 31, 2012. Corporateexpenses also included $4.1 million in acquisition-related transaction costs associated with the fiscal 2013 acquisitions.Interest expense and other decreased by $9.0 million, or 11.6%, to $68.2 million for the fiscal year ended March 31, 2013 compared to $77.1 million forthe prior year. This decrease was due to lower average debt outstanding during the fiscal year ended March 31, 2013 due to the net decrease of the CreditFacility, along with lower interest rates. During the fiscal year ended March 31, 2012, interest expense and other included the write-off of $7.7 million ofunamortized discounts and deferred financing fees associated with the extinguishment of the Term Loan and an additional $2.5 million amortization ofdiscount on the Convertible Notes offset by a $2.9 million favorable fair value adjustment due to the reduction of the fair value of a contingent earnout liabilityassociated with a prior acquisition due to reductions in the projected earnings over the respective earnout periods. The discount on the Convertible Notes wasfully amortized as of September 30, 2011.34 Table of ContentsThe effective income tax rate was 35.8% for the fiscal year ended March 31, 2013 and 35.6% for the fiscal year ended March 31, 2012. The effectiveincome tax rate for the fiscal year ended March 31, 2013 reflects the retroactive reinstatement of the research and development tax credit back to January 2012.The income tax provision for the fiscal year ended March 31, 2013 included $2.2 million of tax expense due to the recapture of domestic productiondeductions taken in earlier years associated with a refund claim of $25.2 million filed in the second quarter. The refund claim receivable is included in"Other, net" in the consolidated balance sheet as of March 31, 2013. The income tax provision for the fiscal year ended March 31, 2012 included $1.6 millionof tax expense due to the recapture of domestic production deductions taken in prior carryback periods, offset by a $1.2 million net tax benefit related toprovision to return adjustments upon filing our fiscal 2011 tax return. The effective income tax rate for fiscal 2012 was impacted by the expiration of theresearch and development tax credit as of December 31, 2011 and the absence of the domestic production deduction due to the Company's net operating lossposition for the fiscal year ended March 31, 2012.In July 2011, the Company completed the sale of Triumph Precision Castings Co. for proceeds of $3.9 million, resulting in no gain or loss on thedisposition. For the fiscal year ended March 31, 2013, there was no gain or loss from discontinued operations.Fiscal year ended March 31, 2012 compared to fiscal year ended March 31, 2011 Year Ended March 31, 2012 2011 (in thousands)Net sales$3,407,929 $2,905,348Segment operating income$525,308 $371,849Corporate general and administrative expenses(10,593) (57,813)Total operating income514,715 314,036Interest expense and other77,138 79,559Income tax expense155,955 82,066Income from continuing operations281,622 152,411Loss from discontinued operations, net(765) (2,512)Net income$280,857 $149,899Net sales increased by $502.6 million, or 17.3%, to $3.4 billion for the fiscal year ended March 31, 2012 from $2.9 billion for the fiscal year endedMarch 31, 2011. The results for fiscal 2012 include full-year contribution from the acquisition of Vought, as compared to results from June 16, 2010 throughMarch 31, 2011 in fiscal 2011. The acquisitions of Vought and ANS contributed $1.9 billion in net sales in fiscal 2012, as compared to $1.5 billion in netsales in fiscal 2011. Excluding the effects of the acquisitions of Vought and ANS, organic sales increased $90.9 million, or 6.6%, due to the expected increasein commercial production rates of various customer programs. The fiscal year ended March 31, 2011 was negatively impacted by challenges such as thedecreased demand for business jets and regional jets as well as commercial rate reductions (particularly in the 777 program).Cost of sales increased by $333.1 million, or 14.9%, to $2.6 billion for the fiscal year ended March 31, 2012 from $2.2 billion for the fiscal year endedMarch 31, 2011. This increase resulted from the acquisitions noted above, which contributed an additional $264.9 million. Gross margin for the fiscal yearended March 31, 2012 was 24.7% compared with 23.2% for the fiscal year ended March 31, 2011. The improvement in gross margin was due to synergiesrelated to acquisition of Vought, lower pension and other postretirement benefit expenses and favorable cumulative catch-up adjustments on long-term contractsdiscussed further below.Segment operating income increased by $153.5 million, or 41.3%, to $525.3 million for the fiscal year ended March 31, 2012 from $371.8 million forthe fiscal year ended March 31, 2011. The operating income increase was due to the contribution from the acquisitions noted above ($133.2 million) andincreased organic sales ($14.3 million). The contribution of Vought included net favorable cumulative catch-up adjustments to operating income ($18.3million) and lower pension and other postretirement benefit expenses ($34.9 million). Segment operating income also improved due to decreases in overall headcount resulting in lower compensation and benefits primarily as a result of the continued integration of Vought ($19.1 million). The favorable cumulativecatch-up adjustments to operating income included gross favorable adjustments of $29.5 million and gross unfavorable adjustments of $11.3 million. Thecumulative catch-up adjustments were due to lower overall overhead cost assumptions, revisions in our mix of various material and labor costs related to ourefforts to gain efficiencies through35 Table of Contentsexpansion of our in-sourcing capabilities and the reduction in provisions for technical problems on production lots at or near completion, net of ERP systemimplementation expenses.Corporate expenses decreased by $47.2 million, or 81.7%, to $10.6 million for the fiscal year ended March 31, 2012 from $57.8 million for the fiscalyear ended March 31, 2011. Corporate expenses decreased primarily due to $40.4 million in defined benefit pension plan curtailment gain, net of specialtermination benefits associated with amendments made to certain defined benefit plans. Corporate expenses also included $6.3 million in acquisition-relatedtransaction and integration costs associated with the acquisition of Vought for the fiscal year ended March 31, 2012, as compared to $20.9 million for thefiscal year ended March 31, 2011. Absent the aforementioned improvements to corporate expenses were increases due to increased compensation and benefits($4.9 million) due to increased corporate head count as a result of growth as compared to the prior year, and an increase of $1.9 million of costs related to ourMexican facility compared to the prior-year period.Interest expense and other decreased by $2.4 million, or 3.0%, to $77.1 million for the fiscal year ended March 31, 2012 compared to $79.6 million forthe prior year. This decrease was due to lower average debt outstanding during the fiscal year ended March 31, 2012 due to the extinguishment of the term loancredit agreement (the "Term Loan") in April 2011, along with lower interest rates on our revolving credit facility. Interest expense and other includes the write-off of $7.7 million of unamortized discounts and deferred financing fees associated with the extinguishment of the Term Loan, offset by a $2.9 millionfavorable fair value adjustment due to the reduction of the fair value of a contingent earnout liability associated with a prior acquisition due to reductions in theprojected earnings over the respective earnout periods. The Company also considered these changes in projected earnings to be an indicator of impairment ofthe long-lived assets directly related to this acquisition and, as a result, tested these long-lived assets for recoverability and concluded that the assets wererecoverable. The fiscal year ended March 31, 2011 also included an additional $4.0 million for amortization of discount on the Convertible Notes. Thediscount on the Convertible Notes was fully amortized as of September 30, 2011.The effective tax rate was 35.6% for the fiscal year ended March 31, 2012 and 35.0% for the fiscal year ended March 31, 2011. The income taxprovision for the fiscal year ended March 31, 2012 included $1.6 million of tax expense due to the recapture of domestic production deductions taken in priorcarryback periods, offset by a $1.2 million net tax benefit related to provision to return adjustments upon filing our fiscal 2011 tax return. The effectiveincome tax rate was impacted by the expiration of the research and development tax credit as of December 31, 2011 and the absence of the domestic productiondeduction due to the Company's net operating loss position for the fiscal year ended March 31, 2012. The effective income tax rate for the fiscal year endedMarch 31, 2011 was impacted by the $20.9 million in acquisition and integration expenses, which were only partially deductible for tax purposes, offset bythe retroactive reinstatement of the research and development tax credit back to January 1, 2010.In July 2011, the Company completed the sale of Triumph Precision Castings Co. for proceeds of $3.9 million, resulting in no gain or loss on thedisposition. Loss from discontinued operations before income taxes was $1.2 million for the fiscal year ended March 31, 2012, compared with a loss fromdiscontinued operations before income taxes of $3.9 million for the fiscal year ended March 31, 2011. Loss from discontinued operations for the fiscal yearended March 31, 2011 includes a $2.3 million charge related to the termination of an agreement. The income tax benefit for discontinued operations was $0.4million for the fiscal year ended March 31, 2012 compared to a benefit of $1.4 million for the prior year.Business Segment PerformanceWe report our financial performance based on the following three reportable segments: the Aerostructures Group, the Aerospace Systems Group and theAftermarket Services Group. The Company's Chief Operating Decision Maker ("CODM") utilizes Adjusted EBITDA as a primary measure of profitability toevaluate performance of its segments and allocate resources.The results of operations among our reportable segments vary due to differences in competitors, customers, extent of proprietary deliverables andperformance. For example, our Aerostructures segment generally includes long-term sole-source or preferred supplier contracts and the success of theseprograms provides a strong foundation for our business and positions us well for future growth on new programs and new derivatives. This compares to ourAerospace Systems segment which generally includes proprietary products and/or arrangements where we become the primary source or one of a few primarysources to our customers, where our unique manufacturing capabilities command a higher margin. Also, OEMs are increasingly focusing on assemblyactivities while outsourcing more manufacturing and repair to third parties, and as a result, are less of a competitive force than in previous years. In contrast,our Aftermarket Services segment provides MRO services on components and accessories manufactured by third parties, with more diverse competition,including airlines, OEMs and other third-party service providers. In addition, variability in the timing and extent of customer requests performed in theAftermarket Services segment can provide for greater volatility and less predictability in revenue and earnings than that experienced in the Aerostructures andAerospace Systems segments.36 Table of ContentsThe Aerostructures segment consists of the Company's operations that manufacture products primarily for the aerospace OEM market. TheAerostructures segment's revenues are derived from the design, manufacture, assembly and integration of both build-to-print and proprietary metallic andcomposite aerostructures and structural components, including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces aswell as helicopter cabins. Further, the segment's operations also design and manufacture composite assemblies for floor panels and environmental controlsystem ducts. These products are sold to various aerospace OEMs on a global basis.The Aerospace Systems segment consists of the Company's operations that also manufacture products primarily for the aerospace OEM market. Thesegment's operations design a wide range of proprietary and build-to-print components and engineer mechanical and electromechanical controls, such ashydraulic systems, main engine gearbox assemblies, engine control systems, accumulators, mechanical control cables, non-structural cockpit componentsand metal processing. These products are sold to various aerospace OEMs on a global basis.The Aftermarket Services segment consists of the Company's operations that provide maintenance, repair and overhaul services to both commercial andmilitary markets on components and accessories manufactured by third parties. Maintenance, repair and overhaul revenues are derived from services onauxiliary power units, airframe and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic driveunits. In addition, the segment's operations repair and overhaul thrust reversers, nacelle components and flight control surfaces. The segment's operations alsoperform repair and overhaul services and supply spare parts for various types of gauges for a broad range of commercial airlines on a worldwide basis.We currently generate a majority of our revenue from clients in the commercial aerospace industry, the military, the business jet industry and the regionalairline industry. Our growth and financial results are largely dependent on continued demand for our products and services from clients in these industries. Ifany of these industries experiences a downturn, our clients in these sectors may conduct less business with us. The following table summarizes our net salesby end market by business segment. The loss of one or more of our major customers or an economic downturn in the commercial airline or the military anddefense markets could have a material adverse effect on our business.37 Table of Contents Year Ended March 31, 2013 2012 2011Aerostructures Commercial aerospace43.9% 39.4% 35.4%Military18.9 23.5 26.4Business Jets11.2 11.3 9.7Regional0.5 0.5 0.6Non-aviation0.7 0.7 1.0Total Aerostructures net sales75.2% 75.4% 73.1%Aerospace Systems Commercial aerospace6.3% 5.9% 5.7%Military7.9 7.7 9.3Business Jets0.7 0.8 0.8Regional0.4 0.5 0.7Non-aviation1.2 1.1 1.0Total Aerospace Systems net sales16.5% 16.0% 17.5%Aftermarket Services Commercial aerospace6.8% 6.6% 7.0%Military1.0 0.9 1.2Business Jets0.3 0.4 0.4Regional0.1 0.2 0.2Non-aviation0.1 0.5 0.6Total Aftermarket Services net sales8.3% 8.6% 9.4%Total Consolidated net sales100.0% 100.0% 100.0%We continue to experience a higher proportion of our sales mix in the commercial aerospace end market. We recently have experienced a slight decrease inour military end market. Due to the continued strength in the commercial aerospace end market and the planned reductions in defense spending under theBudget Act and the sequestration discussed above, we expect the declining trend in the military end market to continue.Business Segment Performance—Fiscal year ended March 31, 2013 compared to fiscal year ended March 31, 2012 Year Ended March 31, %Change % of Total Sales 2013 2012 2013 2012 (in thousands) NET SALES Aerostructures $2,781,344 $2,571,576 8.2% 75.1 % 75.4 %Aerospace Systems 615,771 551,800 11.6% 16.6 % 16.2 %Aftermarket Services 314,507 292,674 7.5% 8.5 % 8.6 %Elimination of inter-segment sales (8,920) (8,121) 9.8% (0.2)% (0.2)%Total net sales $3,702,702 $3,407,929 8.6% 100.0 % 100.0 %38 Table of Contents Year Ended March 31, %Change % of SegmentSales 2013 2012 2013 2012 (in thousands) SEGMENT OPERATING INCOME Aerostructures $469,873 $403,414 16.5% 16.9% 15.7%Aerospace Systems 103,179 90,035 14.6% 16.8% 16.3%Aftermarket Services 45,380 31,859 42.4% 14.4% 10.9%Corporate (87,219) (10,593) 723.4% n/a n/aTotal segment operating income $531,213 $514,715 3.2% 14.3% 15.1% Year Ended March 31, %Change % of SegmentSales 2013 2012 2013 2012Adjusted EBITDA Aerostructures $540,300 $465,843 16.0% 19.4% 18.1%Aerospace Systems 122,862 107,398 14.4% 20.0% 19.5%Aftermarket Services 54,498 41,346 31.8% 17.3% 14.1%Corporate (48,104) (47,232) 1.8% n/a n/a $669,556 $567,355 18.0% 18.1% 16.6%Aerostructures: The Aerostructures segment net sales increased by $209.8 million, or 8.2%, to $2.8 billion for the fiscal year ended March 31, 2013from $2.6 billion for the fiscal year ended March 31, 2012. The increase was entirely organic and was due to increases in our customers' production rates onexisting programs and recent product introductions.Aerostructures cost of sales increased by $153.8 million, or 7.8%, to $2.1 billion for the fiscal year ended March 31, 2013 from $2.0 billion for thefiscal year ended March 31, 2012. The increase primarily resulted from the increase in sales, as noted above. Gross margin for the fiscal year endedMarch 31, 2013 was 23.6% compared with 23.4% for the fiscal year ended March 31, 2012. While the gross margin percent was relatively flat, during thefiscal year ended March 31, 2013 there were offsetting charges consisting of net unfavorable cumulative catch-up adjustments with gross favorableadjustments of $15.9 million and gross unfavorable adjustments of $30.5 million, lower pension and other postretirement benefit expense of $14.6 millionand nonrecurring customer settlements of $9.5 million. Segment cost of sales for the fiscal year ended March 31, 2012 included net favorable cumulativecatch-up adjustments of $18.3 million.Aerostructures segment operating income increased by $66.5 million, or 16.5%, to $469.9 million for the fiscal year ended March 31, 2013 from$403.4 million for the fiscal year ended March 31, 2012. Operating income increased due to the increase in sales and gross margin mentioned above. Inaddition, operating income improved due to lower compensation and benefits ($3.1 million) as a result of continued integration including early retirementsoffered to salaried employees and expanded in-sourcing. Additionally, these same factors contributed to the increase in Adjusted EBITDA year over year.Aerostructures segment operating income as a percentage of segment sales increased to 16.9% for the fiscal year ended March 31, 2013 as compared with15.7% for the fiscal year ended March 31, 2012, due to increased sales, lower compensation and benefits and lower pension and other postretirement benefitexpenses discussed above, which also caused the improvements in the Adjusted EBITDA margin.Aerospace Systems: The Aerospace Systems segment net sales increased by $64.0 million, or 11.6%, to $615.8 million for the fiscal year endedMarch 31, 2013 from $551.8 million for the fiscal year ended March 31, 2012. The fiscal 2013 acquisitions contributed $22.2 million of increased sales.Organic net sales increased due to continued improvements in the broader commercial market and benefits from large outsourcing programs.Aerospace Systems cost of sales increased by $38.9 million, or 10.3%, to $415.0 million for the fiscal year ended March 31, 2013 from $376.1 millionfor the fiscal year ended March 31, 2012. The increase resulted from increased net sales. Gross margin for the fiscal year ended March 31, 2013 was 32.6%compared with 31.8% for the fiscal year ended March 31,39 Table of Contents2012. The improvement in gross margin was due to changes in our sales mix, as well as increased efficiencies in production associated with a higher volumeof work.Aerospace Systems segment operating income increased by $13.1 million, or 14.6%, to $103.2 million for the fiscal year ended March 31, 2013 from$90.0 million for the fiscal year ended March 31, 2012. Operating income increased primarily due to increases in gross margin due to sales mix and increasedefficiencies in production associated with higher volume of work and increased sales, offset by increased legal fees ($2.1 million), increased developmentcosts ($2.1 million), increased amortization expense ($1.6 million) due to additional intangible assets from the fiscal 2013 acquisitions and production delayand related costs due to Hurricane Sandy ($1.5 million). These same factors, except for the increased amortization expense, contributed to the increase inAdjusted EBITDA year over year.Aerospace Systems segment operating income as a percentage of segment sales increased to 16.8% for the fiscal year ended March 31, 2013 as comparedwith 16.3% for the fiscal year ended March 31, 2012, due to improvements in gross margin and operating income as noted above, which also caused theimprovements in Adjusted EBITDA margin.Aftermarket Services: The Aftermarket Services segment net sales increased by $21.8 million, or 7.5%, to $314.5 million for the fiscal year endedMarch 31, 2013 from $292.7 million for the fiscal year ended March 31, 2012. Organic sales increased $13.7 million, or 4.7%, and the acquisition ofAviation Network Services, LLC ("ANS") contributed $8.2 million in net sales. Organic net sales increased primarily due to higher military sales and marketshare gains.Aftermarket Services cost of sales increased by $7.9 million, or 3.5%, to $229.5 million for the fiscal year ended March 31, 2013 from $221.6 millionfor the fiscal year ended March 31, 2012. The increase resulted primarily from increased sales. Gross margin for the fiscal year ended March 31, 2013 was27.0% compared with 24.3% for the fiscal year ended March 31, 2012. The increase in gross margin was impacted by the changes in our sales mix andincreased efficiencies in production associated with higher volume of work.Aftermarket Services segment operating income increased by $13.5 million, or 42.4%, to $45.4 million for the fiscal year ended March 31, 2013 from$31.9 million for the fiscal year ended March 31, 2012. Operating income increased primarily due to the improved gross margin noted above. These samefactors contributed to the increase in Adjusted EBITDA year over year.Aftermarket Services segment operating income as a percentage of segment sales increased to 14.4% for the fiscal year ended March 31, 2013 as comparedwith 10.9% for the fiscal year ended March 31, 2012, due to the gross margin improvements noted above, which also caused improvements in AdjustedEBITDA margin.Business Segment Performance—Fiscal year ended March 31, 2012 compared to fiscal year ended March 31, 2011 Year Ended March 31, %Change % of Total Sales 2012 2011 2012 2011 (in thousands) NET SALES Aerostructures $2,571,576 $2,126,040 21.0% 75.5 % 73.2 %Aerospace Systems 551,800 513,435 7.5% 16.2 % 17.7 %Aftermarket Services 292,674 272,728 7.3% 8.6 % 9.4 %Elimination of inter-segment sales (8,121) (6,855) 18.5% (0.2)% (0.2)%Total net sales $3,407,929 $2,905,348 17.3% 100.0 % 100.0 % Year Ended March 31, %Change % of SegmentSales 2012 2011 2012 2011 (in thousands) SEGMENT OPERATING INCOME Aerostructures $403,414 $267,783 50.6% 15.7% 12.6%Aerospace Systems 90,035 75,292 19.6% 16.3% 14.7%Aftermarket Services 31,859 28,774 10.7% 10.9% 10.6%Corporate (10,593) (57,813) (81.7)% n/a n/aTotal segment operating income $514,715 $314,036 63.9% 15.1% 10.8%40 Table of Contents Year Ended March 31, %Change % of TotalSales 2012 2011 2012 2011Adjusted EBITDA Aerostructures $465,843 $308,020 51.2 % 18.1% 14.5%Aerospace Systems 107,398 92,475 16.1 % 19.5% 18.0%Aftermarket Services 41,346 39,875 3.7 % 14.1% 14.6%Corporate (47,232) (55,891) (15.5)% n/a n/a $567,355 $384,479 47.6 % 16.6% 13.2%Aerostructures: The Aerostructures segment net sales increased by $445.5 million, or 21.0%, to $2.6 billion for the fiscal year ended March 31,2012 from $2.1 billion for the fiscal year ended March 31, 2011. The increase was primarily due to the acquisition of Vought ($407.4 million), in addition toan increase in organic sales of $38.1 million, or 6.4% due to the increase in commercial production rates of various customer programs. The fiscal year endedMarch 31, 2011, was negatively impacted by the decreased demand for business jets and regional jets as well as commercial rate reductions (particularly inthe 777 program).Aerostructures cost of sales increased by $295.7 million, or 17.7%, to $1.97 billion for the fiscal year ended March 31, 2012 from $1.68 billion for thefiscal year ended March 31, 2011. The increase primarily resulted from the acquisition of Vought, which contributed an additional $262.7 million to cost ofsales. Gross margin for the fiscal year ended March 31, 2012 was 23.4% compared with 21.2% for the fiscal year ended March 31, 2011. The improvementin gross margin was due to synergies related to the acquisition of Vought, lower pension and other postretirement benefit expenses and favorable cumulativecatch-up adjustments on long-term contracts discussed further below.Aerostructures segment operating income increased by $135.6 million, or 50.6%, to $403.4 million for the fiscal year ended March 31, 2012 from$267.8 million for the fiscal year ended March 31, 2011. Operating income increased due to the increase in organic sales ($4.0 million) and contribution fromthe acquisition of Vought ($131.6 million). The contribution of Vought included cumulative catch-up adjustments to operating income with gross favorableadjustments of $29.5 million and gross unfavorable adjustments of $11.3 million, as well as lower pension and other postretirement benefit expenses of$34.9 million, due to expected returns on plan assets exceeding interest cost, plus the amortization of prior service credits impacted by Fiscal 2011 planamendments. The contribution of Vought also included improvements due to decreases in overall head count resulting in lower compensation and benefitsprimarily as a result of the continued integration ($18.5 million). These same factors contributed to the increase in Adjusted EBITDA year over year.Aerostructures segment operating income as a percentage of segment sales increased to 15.7% for the fiscal year ended March 31, 2012 as compared with12.6% for the fiscal year ended March 31, 2011, due to the net favorable cumulative catch-up adjustments and lower pension and other postretirement benefitexpenses discussed above, which also caused the improvements in Adjusted EBITDA margin.Aerospace Systems: The Aerospace Systems segment net sales increased by $38.4 million, or 7.5%, to $551.8 million for the fiscal year endedMarch 31, 2012 from $513.4 million for the fiscal year ended March 31, 2011. Net sales increased due to continued improvements in the broader commercialmarket and benefits from large outsourcing programs.Aerospace Systems cost of sales increased by $17.2 million, or 4.8%, to $376.1 million for the fiscal year ended March 31, 2012 from $358.9 millionfor the fiscal year ended March 31, 2011. The increase resulted primarily from increased net sales. Gross margin for the fiscal year ended March 31, 2012was 31.8% compared with 30.1% for the fiscal year ended March 31, 2011. The improvement in gross margin was due to changes in our sales mix, as well asincreased efficiencies in production associated with higher volume of work.Aerospace Systems segment operating income increased by $14.7 million, or 19.6%, to $90.0 million for the fiscal year ended March 31, 2012 from$75.3 million for the fiscal year ended March 31, 2011. Operating income increased primarily due to increases in gross margin ($9.0 million) due to sales mixand increased efficiencies in production associated with higher volume of work and increased sales ($12.2 million), offset by increased legal fees ($2.4million) due in part to the inclusion in the prior year of the net recovery of $0.8 million of prior legal costs and increased development costs ($4.6 million).These same factors contributed to the increase in Adjusted EBITDA year over year.41 Table of ContentsAerospace Systems segment operating income as a percentage of segment sales increased to 16.3% for the fiscal year ended March 31, 2012 as comparedwith 14.7% for the fiscal year ended March 31, 2011, due to improvements in gross margin as noted above, which also caused the improvements in AdjustedEBITDA margin.Aftermarket Services: The Aftermarket Services segment net sales increased by $19.9 million, or 7.3%, to $292.7 million for the fiscal year endedMarch 31, 2012 from $272.7 million for the fiscal year ended March 31, 2011. The acquisition of ANS contributed $4.2 million of increased net sales.Organic net sales increased due to continued improvement in global commercial air traffic and decreases in airline inventory de-stocking.Aftermarket Services cost of sales increased by $17.1 million, or 8.3%, to $221.6 million for the fiscal year ended March 31, 2012 from $204.6 millionfor the fiscal year ended March 31, 2011. The increase resulted primarily from increased net sales. Gross margin for the fiscal year ended March 31, 2012was 24.3% compared to 25.0% for the fiscal year ended March 31, 2011. The decline in gross margin was impacted by the changes in our sales mix, partiallyoffset by increased efficiencies in production associated with higher volume of work.Aftermarket Services segment operating income increased by $3.1 million, or 10.7%, to $31.9 million for the fiscal year ended March 31, 2012 from$28.8 million for the fiscal year ended March 31, 2011. Operating income increased primarily due to contribution from the acquisition of ANS ($1.6 million)and increased efficiencies in production associated with higher volume of work ($0.9 million). Also, the period was favorably impacted by decreaseddepreciation and amortization expense ($1.6 million) as certain intangible assets became fully depreciated during fiscal 2011, offset by $1.1 million inincreased bad debt reserves associated with the bankruptcies of American Airlines, Pinnacle and Aveos. These same factors contributed to the increase inAdjusted EBITDA year over year; however, the growth in Adjusted EBITDA was less than the growth in operating income, as depreciation and amortizationwas lower in fiscal year 2012 versus fiscal year 2011.Aftermarket Services segment operating income as a percentage of segment sales increased to 10.9% for the fiscal year ended March 31, 2012 ascompared with 10.6% for the fiscal year ended March 31, 2011, due to the increase in sales volume and related efficiencies noted above. However, theAdjusted EBITDA margin declined as $1.6 million of our operating income improvement was due to lower depreciation and amortization, which does notimpact Adjusted EBITDA.Liquidity and Capital ResourcesOur working capital needs are generally funded through cash flow from operations and borrowings under our credit arrangements. During the year endedMarch 31, 2013, we generated approximately $320.9 million of cash flow from operating activities, used approximately $467.4 million in investing activitiesand received approximately $148.6 million from financing activities. Cash flows from operating activities included $109.8 million in pension contributionsin fiscal 2013, compared to $122.2 million in fiscal 2012.For the fiscal year ended March 31, 2013, we had a net cash inflow of $320.9 million from operating activities, an inflow increase of $93.1 million,compared to a net cash inflow of $227.8 million for the fiscal year ended March 31, 2012. During fiscal 2013, net cash provided by operating activities wasprimarily due to increased receipts on accounts receivable of approximately $314.4 million driven by additional sales from the expected increases incommercial production rates on various programs.We continue to invest in inventory for new programs and additional production costs for ramp-up activities in support of increasing build rates on severalprograms. During fiscal 2013, inventory build for capitalized pre-production costs on new programs, including the Bombardier Global 7000/8000 program,was $51.8 million, an increase of $32.4 million, compared to the prior year. Additionally, inventory build for mature programs, including costs associatedwith announced increasing build rates on several programs was approximately $47.9 million, a decrease of $6.4 million compared to the same period in theprior year. Unliquidated progress payments netted against inventory decreased $40.3 million due to timing of receipts. Capitalized pre-production costs areexpected to continue to increase, while our production is expected to remain flat over the next few quarters.Cash flows used in investing activities for the fiscal year ended March 31, 2013 increased $397.6 million from the fiscal year ended March 31, 2012principally due to the Fiscal 2013 Acquisitions ($350.4 million). Cash flows from financing activities for the fiscal year ended March 31, 2013 increased$314.9 million from the fiscal year ended March 31, 2012 principally due to the proceeds from the issuance of Senior Notes ($375.0 million) offset by theredemption of certain Convertible Notes ($19.3 million).As of March 31, 2013, $872.7 million was available under our revolving credit facility (the “Credit Facility”). On March 31, 2013, an aggregate amountof approximately $95.8 million was outstanding under the Credit Facility, all of which42 Table of Contentswas accruing interest at LIBOR plus applicable basis points totaling 2.00% per annum. Amounts repaid under the Credit Facility may be reborrowed.On May 23, 2012, the Company amended the Credit Facility with its lenders to (i) increase the availability under the Credit Facility to $1,000.0 million,with a $50.0 million accordion feature, from $850.0 million, (ii) extend the maturity date to May 23, 2017 and (iii) amend certain other terms and covenants.The amendment resulted in a more favorable pricing grid and a more streamlined package of covenants and restrictions.Pursuant to the Credit Facility, the Company can borrow, repay and re-borrow revolving credit loans, and cause to be issued letters of credit, in anaggregate principal amount not to exceed $1,000.0 million outstanding at any time. The Credit Facility bears interest at either: (i) LIBOR plus between 1.50%and 2.75%; (ii) the prime rate; or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company's ratio of totalindebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.30%and 0.50% on the unused portion of the Credit Facility. The Company's obligations under the Credit Facility are guaranteed by the Company's domesticsubsidiaries.The level of unused borrowing capacity under the Company's revolving Credit Facility varies from time to time depending in part upon its compliancewith financial and other covenants set forth in the related agreement. The Credit Facility contains certain affirmative and negative covenants includinglimitations on specified levels of indebtedness to earnings before interest, taxes, depreciation and amortization, and interest coverage requirements, andincludes limitations on, among other things, liens, mergers, consolidations, sales of assets, payment of dividends and incurrence of debt. As of March 31,2013, the Company was in compliance with all such covenants.In February 2013, the Company issued the 2021 Notes for $375.0 million in principal amount. The 2021 Notes were sold at 100% of principal amountand have an effective interest yield of 4.875%. Interest on the 2021 Notes is payable semiannually in cash in arrears on April 1 and October 1 of each year. Weused the net proceeds to repay borrowings under our Credit Facility and pay related fees and expenses, and for general corporate purposes. In connection withthe issuance of the 2021 Notes, the Company incurred approximately $6.3 million of costs, which were deferred and are being amortized on the effectiveinterest method over the term of the notes.Cash flows from operating activities for the fiscal year ended March 31, 2012 increased $85.5 million or 60.1%, from the fiscal year ended March 31,2011. This increase was comprised of an increase in cash flows from earnings of $189.4 million, partially offset by cash used for working capital of $106.1million. Cash from earnings is net income exclusive of non-cash charges such as depreciation, amortization and deferred taxes.For the fiscal year ended March 31, 2012, we had a net cash inflow of $227.8 million from operating activities, an inflow increase of $85.5 millioncompared to a net cash inflow of $142.3 million for the fiscal year ended March 31, 2011. During fiscal 2012, net cash provided by operating activities wasprimarily due to increased receipts of approximately $578.8 million due to the full-year contribution from the fiscal 2011 acquisition of Vought. During fiscal 2012, we began to invest in inventory for new programs and additional production costs for ramp-up activities in support of increasingbuild rates on several programs. During fiscal 2012, inventory build for capitalized pre-production costs on new programs, including the Bombardier Global7000/8000 program, was $19.4 million. Additionally, inventory build for mature programs, including costs associated with announced increasing build rateson several programs was approximately $54.3 million. Unliquidated progress payments netted against inventory increased $26.2 million due to timing ofreceipts. Net cash inflows from operating activities for the fiscal year ended March 31, 2012 included the receipt of an income tax refund of $29.3 million as aresult of carrying back prior year's tax losses incurred as part of the acquisition of Vought from fiscal 2011.Cash flows used in investing activities for the fiscal year ended March 31, 2012 decreased $349.2 million from the fiscal year ended March 31, 2011.Our cash flows used in investing activities decreased as the fiscal year ended March 31, 2011 included the acquisition of Vought ($333.1 million). Cash flowsused in investing activities for the fiscal year ended March 31, 2012 included $20.0 million in funds received from escrow on the acquisition of Vought for thesettlement of opening balance sheet liabilities, offset by $7.3 million in cash payments for the acquisition of Aviation Network Services, LLC. Cash flowsfrom financing activities for the fiscal year ended March 31, 2012 decreased $324.6 million from the fiscal year ended March 31, 2011 due to theextinguishment of the Term Loan ($350.0 million), the redemption of certain Convertible Notes ($50.4 million), and the payment of contingent earnouts anddeferred acquisition payments ($7.3 million).At March 31, 2013, $27.4 million of cash and cash equivalents were held by foreign subsidiaries and were primarily denominated in foreign currencies.If these amounts would be remitted as dividends, the Company may be subject to additional U.S. taxes, net of allowable foreign tax credits. We currentlyexpect to utilize the balances to fund our foreign operations,43 Table of Contentsincluding $11.3 million used in May 2013 in part to fund the acquisition of Triumph Structures-Farnborough and Triumph Structures-Thailand.In June 2010, the Company issued the 2018 Notes for $350.0 million in principal amount. The 2018 Notes were sold at 99.27% of principal amount fornet proceeds of $347.5 million, and have an effective interest yield of 8.75%. Interest on the 2018 Notes is payable semiannually in cash in arrears onJanuary 15 and May 15 of each year. We used the net proceeds as partial consideration of the acquisition of Vought. In connection with the issuance of the2018 Notes, the Company incurred approximately $7.3 million of costs, which were deferred and are being amortized on the effective interest method over theterm of the notes.Also in June 2010, the Company entered into a six-year Term Loan for $350.0 million in principal amount. The proceeds of the Term Loan, which were99.50% of the principal amount, were used to consummate the acquisition of Vought. In connection with the closing on the Term Loan, the Company incurredapproximately $7.1 million of costs, which were deferred and were to be amortized into expense over the term of the Term Loan. As noted above, however, theTerm Loan was extinguished in April 2011.In February 2013, the Company amended its $175.0 million receivable securitization facility (the "Securitization Facility") extending the term throughFebruary 2016. Under the Securitization Facility, the Company sells on a revolving basis certain accounts receivable to Triumph Receivables, LLC, a whollyowned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financialinstitutions. The Company is the servicer of the accounts receivable under the Securitization Facility. As of March 31, 2013, the maximum amount availableunder the Securitization Facility was $175.0 million of which there was $150.0 million outstanding. Interest rates are based on prevailing market rates forshort-term commercial paper plus a program fee and a commitment fee. The program fee is 0.43% on the amount outstanding under the Securitization Facility.Additionally, the commitment fee is 0.43% on 102% of the maximum amount available under the Securitization Facility. The Company securitizes its accountsreceivable, which are generally non-interest bearing, in transactions that are accounted for as borrowings pursuant to the Transfers and Servicing topic of theASC. The agreement governing the Securitization Facility contains restrictions and covenants which include limitations on the making of certain restrictedpayments, creation of certain liens, and certain corporate acts such as mergers, consolidations and the sale of substantially all assets.In November 2009, the Company issued $175.0 million principal amount of 8% senior subordinated notes due 2017 (the "2017 Notes"). The 2017Notes were sold at 98.558% of principal amount for net proceeds of $172.5 million, and have an effective interest rate of 8.25%. Interest on the 2017 Notesis payable semiannually in cash in arrears on May 15 and November 15 of each year. In connection with the issuance of the 2017 Notes, the Companyincurred approximately $4.4 million of costs, which were deferred and are being amortized on the effective interest method over the term of the notes.In March 2009, we entered into a 7-year Master Lease Agreement (the "Leasing Facility") creating a capital lease of certain existing property andequipment, resulting in net proceeds of $58.5 million after deducting debt issuance costs of approximately $0.2 million. The net proceeds from the LeasingFacility were used to repay a portion of the outstanding indebtedness under our Credit Facility. The debt issuance costs have been recorded as other assets inthe accompanying Consolidated Balance Sheets and are being amortized over the term of the Leasing Facility. The Leasing Facility bears interest at a weighted-average fixed rate of 6.2% per annum.During February 2008, we exercised existing authority to make stock repurchases and repurchased 220,000 shares of our outstanding shares under theprogram for an aggregate consideration of $12.3 million, funded by borrowings under our Credit Facility. In February 2008, the Company's Board ofDirectors then authorized an increase in our existing stock repurchase program by up to an additional 500,000 shares of our common stock. As a result, as ofMay 29, 2013, we remain able to purchase an additional 500,800 shares. Repurchases may be made from time to time in open market transactions, blockpurchases, privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program.On September 18, 2006, we issued $201.3 million in convertible notes (the "Convertible Notes"). The Convertible Notes are direct, unsecured, seniorsubordinated obligations of the Company, and rank (i) junior in right of payment to all of our existing and future senior indebtedness, (ii) equal in right ofpayment with any other future senior subordinated indebtedness, and (iii) senior in right of payment to all subordinated indebtedness.The Company received net proceeds from the sale of the Convertible Notes of approximately $195.0 million after deducting offering expenses ofapproximately $6.3 million. The use of the net proceeds from the sale was for prepayment of our then-outstanding Senior Notes, including a "make whole"premium, fees and expenses in connection with the prepayment,44 Table of Contentsand to repay a portion of the outstanding indebtedness under our Credit Facility. Debt issuance costs were fully amortized as of September 30, 2011.The Convertible Notes bear interest at a fixed rate of 2.625% per annum, payable in cash semiannually in arrears on each April 1 and October 1beginning April 1, 2007. During the period commencing on October 6, 2011 and ending on, but excluding, April 1, 2012 and each six-month period fromOctober 1 to March 31 or from April 1 to September 30 thereafter, the Company will pay contingent interest during the applicable interest period if the averagetrading price of a note for the five consecutive trading days ending on the third trading day immediately preceding the first day of the relevant six-month periodequals or exceeds 120% of the principal amount of the Convertible Notes. The contingent interest payable per note in respect of any six-month period will equal0.25% per annum calculated on the average trading price of a note for the relevant five trading day period. This contingent interest feature represents anembedded derivative. The value of the derivative was determined to be de minimis. Accordingly, no value has been assigned at issuance or at March 31, 2013.The Convertible Notes mature on October 1, 2026 unless earlier redeemed, repurchased or converted. The Company may redeem the Convertible Notesfor cash, either in whole or in part, anytime on or after October 6, 2011 at a redemption price equal to 100% of the principal amount of the Convertible Notesto be redeemed plus accrued and unpaid interest, including contingent interest and additional amounts, if any, up to but not including the date of redemption.In addition, holders of the Convertible Notes will have the right to require the Company to repurchase for cash all or a portion of their Convertible Notes onOctober 1, 2011, 2016 and 2021, at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued andunpaid interest, including contingent interest and additional amounts, if any, up to, but not including, the date of repurchase. The Convertible Notes areconvertible into the Company's common stock at a rate equal to 36.8162 shares per $1 principal amount of the Convertible Notes (equal to an initialconversion price of approximately $27.16 per share), subject to adjustment as described in the Indenture. Upon conversion, the Company will deliver to theholder surrendering the Convertible Notes for conversion, for each $1 principal amount of Convertible Notes, an amount consisting of cash equal to the lesserof $1 and the Company's total conversion obligation and, to the extent that the Company's total conversion obligation exceeds $1, at the Company's election,cash or shares of the Company's common stock in respect of the remainder.The Convertible Notes are eligible for conversion upon meeting certain conditions as provided in the indenture agreement. For the periods from January 1,2011 through March 31, 2013, the Convertible Notes were eligible for conversion. In March and April 2013, the Company received notice of conversion fromholders of $77.3 million in principal value of the Convertible Notes. These conversions were settled in first quarter of fiscal 2014 with the principal settled incash and the conversion benefit settled through the issuance of approximately 1,844,714 shares. In April 2013, the Company delivered a notice to holders ofthe Convertible Notes to the effect that, for at least 20 trading days during the 30 consecutive trading days preceding March 31, 2013, the closing price of theCompany's common stock was greater than or equal to 130% of the conversion price of such notes on the last trading day. Under the terms of the ConvertibleNotes, the increase in the Company's stock price triggered a provision, which gave holders of the Convertible Notes a put option through June 30, 2013.Accordingly, the balance sheet classification of the Convertible Notes will be short term for as long as the put option remains in effect.To be included in the calculation of diluted earnings per share, the average price of the Company's common stock for the fiscal year must exceed theconversion price per share of $27.16. The average price of the Company's common stock for the fiscal years ended March 31, 2013, 2012 and 2011 was$64.30, $53.26 and $39.48, respectively. Therefore, 2,400,439 , 2,606,189 and 2,040,896 additional shares, respectively, were included in the dilutedearnings per share calculation.If the Company undergoes a fundamental change, holders of the Convertible Notes will have the right, subject to certain conditions, to require theCompany to repurchase for cash all or a portion of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the ConvertibleNotes to be repurchased plus accrued and unpaid interest, including contingent interest and additional amounts, if any.Prior to fiscal 2011, the Company paid $19.4 million to purchase $22.2 million in principal amount of the Convertible Notes. During the fiscal yearsended March 31, 2013 and 2012, the Company settled the conversion of $19.3 million and $50.4 million, respectively, in principal value of the ConvertibleNotes, as requested by the respective holders, with the principal settled in cash and the conversion benefit settled through the issuance of 395,269 and772.438 shares, respectively.The indentures under the Company's debt agreements and the Credit Facility contain restrictions and covenants which include limitations on theCompany's ability to incur additional indebtedness, issue stock options or warrants, make certain restricted payments and acquisitions, create liens, enterinto transactions with affiliates, sell substantial portions of its assets and pay cash dividends. Additional covenants require compliance with financial tests,including leverage and interest coverage ratio.45 Table of ContentsCapital expenditures were $126.9 million for the fiscal year ended March 31, 2013 which includes the construction of our facilities in Red Oak, Texas.We funded these expenditures through cash from operations and borrowings under the Credit Facility. We expect capital expenditures and investments in newmajor programs of approximately $340.0 million to $360.0 million for our fiscal year ending March 31, 2014, of which $115.0 million will be reflected ininventory. The expenditures are expected to be used mainly to expand capacity or replace old equipment at several facilities.Our expected future cash flows for the next five years for long-term debt, leases and other obligations are as follows: Payments Due by PeriodContractual ObligationsTotal Less than1 Year 1 - 3 Years 4 - 5 Years After5 Years (in thousands)Debt principal(1)$1,333,386 $133,930 $178,412 $283,213 $737,831Debt-interest(2)350,646 66,763 129,400 119,766 34,717Operating leases91,536 20,953 43,045 9,018 18,520Contingent payments3,600 1,600 900 1,100 —Purchase obligations1,715,542 1,076,575 618,556 20,092 319Total$3,494,710 $1,299,821 $970,313 $433,189 $791,387_______________________________________________(1)Included in the Company's consolidated balance sheet at March 31, 2013, plus discounts on 2017 Notes and 2018 Notes of $1.7 million and $1.9million, respectively, being amortized to expense through November 2017 and July 2018, respectively.(2)Includes fixed-rate interest only.The above table excludes unrecognized tax benefits of $7.7 million as of March 31, 2013 since we cannot predict with reasonable certainty the timing ofcash settlements with the respective taxing authorities.During the fiscal year ended March 31, 2013, the Company committed to relocate the operations of its largest facility in Dallas, TX and to expand its RedOak, Texas ("Red Oak") facility to accommodate this relocation. The Company incurred approximately $18.1 million in capital expenditures during the fiscalyear ended March 31, 2013 associated with this plan, and expects total capital expenditures to be between approximately $90.8 million to $102.0 millionrelated to the expansion of Red Oak. The Company incurred approximately $1.8 million of expenses related to the relocation during fiscal year 2013 andexpects to incur approximately $28.0 million to $40.0 million for the fiscal year end March 31, 2014. The relocation is expected to be completed in early fiscal2015.In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at March 31, 2012 as detailed in thefollowing table. Our other postretirement benefits are not required to be funded in advance, so benefit payments are paid as they are incurred. Our expected netcontributions and payments are included in the table below: PensionBenefits OtherPostretirementBenefits (in thousands)Projected benefit obligation at March 31, 2013$2,390,201 $347,555Plan assets at March 31, 20132,030,210 —Projected contributions by fiscal year 2014115,700 33,057201540,000 28,703201640,000 28,291201740,000 28,0132018— 27,547Total 2014 - 2018$235,700 $145,61146 Table of ContentsCurrent plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements forrepresented employees.We believe that cash generated by operations and borrowings under the Credit Facility will be sufficient to meet anticipated cash requirements for ourcurrent operations for the foreseeable future. However, we have a stated policy to grow through acquisitions and are continuously evaluating variousacquisition opportunities. As a result, we currently are pursuing the potential purchase of a number of candidates. In the event that more than one of thesetransactions is successfully consummated, the availability under the Credit Facility might be fully utilized and additional funding sources may be needed.There can be no assurance that such funding sources will be available to us on terms favorable to us, if at all.On May 6, 2013, the Company acquired Primus Composites from Precision Castparts Corp. for $33.5 million in cash and $30.0 million in assumeddebt settled at closing.Loans under the Credit Facility bear interest, at the Company's option, by reference to a base rate or a rate based on LIBOR, in either case plus anapplicable margin determined quarterly based on the Company's Total Leverage Ratio (as defined in the Credit Facility) as of the last day of each fiscal quarter.The Company is also required to pay a quarterly commitment fee on the average daily unused portion of the Credit Facility for each fiscal quarter and fees inconnection with the issuance of letters of credit. All outstanding principal and interest under the Credit Facility will be due and payable on the Maturity Date.The Credit Facility contains representations, warranties, events of default and covenants customary for financings of this type including, withoutlimitation, financial covenants under which the Company is obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certainminimum Interest Coverage Ratio, maximum Total Leverage Ratio and maximum Senior Leverage Ratio (in each case as defined in the Credit Facility).CRITICAL ACCOUNTING POLICIESCritical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results ofoperations, and that require the use of complex and subjective estimates based upon past experience and management's judgment. Because of the uncertaintyinherent in such estimates, actual results may differ from these estimates. Below are those policies applied in preparing our financial statements thatmanagement believes are the most dependent on the application of estimates and assumptions. For additional accounting policies, see Note 2 of "Notes toConsolidated Financial Statements."Allowance for Doubtful AccountsTrade receivables are presented net of an allowance for doubtful accounts. In determining the appropriate allowance, we consider a combination of factors,such as industry trends, our customers' financial strength and credit standing, and payment and default history. The calculation of the required allowancerequires a judgment as to the impact of these and other factors on the ultimate realization of our trade receivables. We believe that these estimates are reasonableand historically have not resulted in material adjustments in subsequent periods when the estimates are adjusted to actual amounts.InventoriesThe Company records inventories at the lower of cost or estimated net realizable value. Costs on long-term contracts and programs in progress representrecoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead and advances to suppliers. Pursuant tocontract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, inventories related to such contracts asa result of advances, performance-based payments, and progress payments. The Company reflects those advances and payments as an offset against therelated inventory balances. The Company expenses general and administrative costs related to products and services provided essentially under commercialterms and conditions as incurred. The Company determines the costs of inventories by the first-in, first-out or average cost methods.Advance payments and progress payments received on contracts-in-process are first offset against related contract costs that are included in inventory,with any remaining amount reflected in current liabilities.Work-in-process inventory includes capitalized pre-production costs. Company policy allows for the capitalization of pre-production costs after itestablishes a contractual arrangement with a customer that explicitly states that the cost of recovery of pre-production costs is allowed. Capitalized pre-production costs include nonrecurring engineering, planning and design, including applicable overhead, incurred before production is manufactured on aregular basis. Significant customer-directed work changes can also cause pre-production costs to be incurred. These costs are typically recovered over acontractually determined number of ship set deliveries and the Company believes these amounts will be fully recovered. The balance of capitalized pre-production costs at March 31, 2013 was $71.2 million. We are still in the early development stages for the47 Table of ContentsBombardier Global 7000/8000 program, as these aircrafts are not scheduled to enter service until 2014 or later. Transition of this program from development torecurring production levels is dependent upon the success of the program at achieving flight testing and certification, as well as the ability of the BombardierGlobal 7000/8000 program to generate acceptable levels of aircraft sales.Revenue and Profit RecognitionRevenues are recognized in accordance with the contract terms when products are shipped, delivery has occurred or services have been rendered, pricingis fixed or determinable, and collection is reasonably assured.A significant portion of our contracts are within the scope of Accounting Standards Codification ("ASC") 605-35, Revenue—Construction-Type andProduction-Type Contracts, and revenue and costs on contracts are recognized using the percentage-of-completion method of accounting. Accounting for therevenue and profit on a contract requires estimates of (1) the contract value or total contract revenue, (2) the total costs at completion, which is equal to the sumof the actual incurred costs to date on the contract and the estimated costs to complete the contract's scope of work and (3) the measurement of progress towardscompletion. Depending on the contract, we measure progress toward completion using either the cost-to-cost method or the units-of-delivery method, with thegreat majority measured under the units-of-delivery method.•Under the cost-to-cost method, progress toward completion is measured as the ratio of total costs incurred to our estimate of total costs at completion.We recognize costs as incurred. Profit is determined based on our estimated profit margin on the contract multiplied by our progress towardcompletion. Revenue represents the sum of our costs and profit on the contract for the period.•Under the units-of-delivery method, revenue on a contract is recorded as the units are delivered and accepted during the period at an amount equal tothe contractual selling price of those units. The costs recorded on a contract under the units-of-delivery method are equal to the total costs atcompletion divided by the total units to be delivered. As our contracts can span multiple years, we often segment the contracts into production lots forthe purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units delivered and the estimated costsfor the units delivered.Adjustments to original estimates for a contract's revenues, estimated costs at completion and estimated total profit are often required as work progressesunder a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or ifcontract modifications occur. These estimates are also sensitive to the assumed rate of production. Generally, the longer it takes to complete the contractquantity, the more relative overhead that contract will absorb. The impact of revisions in cost estimates is recognized on a cumulative catch-up basis in theperiod in which the revisions are made. Provisions for anticipated losses on contracts are recorded in the period in which they become evident ("forwardlosses") and are first offset against costs that are included in inventory, with any remaining amount reflected in accrued contract liabilities in accordance withASC 605-35. Revisions in contract estimates, if significant, can materially affect our results of operations and cash flows, as well as our valuation ofinventory. Furthermore, certain contracts are combined or segmented for revenue recognition in accordance with ASC 605-35.For the fiscal year ended March 31, 2013, cumulative catch-up adjustments resulting from changes in estimates decreased operating income, net incomeand earnings per share by approximately $(14.6) million, $(9.3) million and $(0.18), respectively. The cumulative catch-up adjustments to operating incomefor the fiscal year ended March 31, 2013 included gross favorable adjustments of approximately $15.9 million and gross unfavorable adjustments ofapproximately $30.5 million. For the fiscal year ended March 31, 2012, cumulative catch-up adjustments resulting from changes in estimates increasedoperating income, net income and earnings per share by approximately $18.3 million, $11.8 million and $0.23, respectively. The cumulative catch-upadjustments to operating income for the fiscal year ended March 31, 2012 included gross favorable adjustments of approximately $29.5 million and grossunfavorable adjustments of approximately $11.3 million.Amounts representing contract change orders or claims are only included in revenue when such change orders or claims have been settled with ourcustomer and to the extent that units have been delivered. Additionally, some contracts may contain provisions for revenue sharing, price re-determination,requests for equitable adjustments, change orders or cost and/or performance incentives. Such amounts or incentives are included in contract value when theamounts can be reliably estimated and their realization is reasonably assured.Although fixed-price contracts, which extend several years into the future, generally permit us to keep unexpected profits if costs are less than projected,we also bear the risk that increased or unexpected costs may reduce our profit or cause the Company to sustain losses on the contract. In a fixed-price contract,we must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts and in projectingthe ultimate level of revenue that may otherwise be achieved.48 Table of ContentsOur failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-pricecontract may reduce the profitability of a fixed-price contract or cause a loss. We believe we have recorded adequate provisions in the financial statements forlosses on fixed-price contracts, but we cannot be certain that the contract loss provisions will be adequate to cover all actual future losses.Included in net sales of the Aerostructures Group is the non-cash amortization of acquired contract liabilities recognized as fair value adjustments throughpurchase accounting of the acquisition of Vought. For the fiscal years ended March 31, 2013, 2012 and 2011, we recognized $25.5 million, $26.7 millionand $29.2 million, respectively, in net sales in our consolidated statements of income.The Aftermarket Services Group provides repair and overhaul services, certain of which are provided under long-term power-by-the-hour contracts,comprising approximately 6% of the segment's fiscal 2013 net sales. The Company applies the proportional performance method to recognize revenue underthese contracts. Revenue is recognized over the contract period as units are delivered based on the relative value in proportion to the total estimated contractconsideration. In estimating the total contract consideration, management evaluates the projected utilization of its customer's fleet over the term of the contract,in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization of the fleet bycustomers, among other factors, may have an impact on these estimates and require adjustments to estimates of revenue to be realized.Goodwill and Intangible AssetsGoodwill and intangible assets with indefinite lives are not amortized; rather, they are tested for impairment on at least an annual basis. Additionally,intangible assets with finite lives continue to be amortized over their useful lives. Upon acquisition, critical estimates are made in valuing acquired intangibleassets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects whencompleted; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates.Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as aresult, actual results may differ from the assumptions used in determining fair values.The Company's operating segments of Aerostructures, Aerospace Systems and Aftermarket Services are also its reporting units under ASC 350,Intangibles—Goodwill and Other. The Chief Executive Officer and the Chief Financial Officer comprise the Company's CODM. The Company's CODMevaluates performance and allocates resources based upon review of segment information. Each of the operating segments is comprised of a number ofoperating units which are considered to be components under ASC 350. The components, for which discrete financial information exists, are aggregated forpurposes of goodwill impairment testing. The Company's acquisition strategy is to acquire companies that complement and enhance the capabilities of theoperating segments of the Company. Each acquisition is assigned to either the Aerostructures reporting unit, the Aerospace Systems reporting unit or theAftermarket Services reporting unit. The goodwill that results from each acquisition is also assigned to the reporting unit to which the acquisition is allocated,because it is that reporting unit which is intended to benefit from the synergies of the acquisition.The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involvesdetermining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount,including goodwill. If based on this qualitative assessment, the Company determines it is not more likely than not that the fair value of a reporting unit is lessthan its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approachrequired by ASC 350 to determine whether a goodwill impairment exists at the reporting unit.The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair valueexceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the secondstep is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being applied togoodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reportingunits is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairmenttest for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact onthese estimates and require interim impairment assessments.When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts futurenet cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). Theseestimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued marketacceptance of the products49 Table of Contentsand services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the futurecost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determiningthe fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified.We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2013, 2012 or 2011. In the fourth quarter offiscal 2013, the qualitative assessment performed for each of the Company's indefinite-lived intangible assets indicated that it is more likely than not that thefair value of the indefinite-lived intangible assets exceeded its carrying amount and, therefore, the quantitative assessment was not performed.As of March 31, 2013 and 2012, the Company had a $438.6 million and $425.0 million indefinite-lived intangible asset associated with the Vought andEmbee tradenames. The Company assesses whether indefinite-lived intangible assets impairment exists using both the qualitative and quantitativeassessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair valueof an indefinite-lived intangible asset is less than its carrying amount. If based on this qualitative assessment the Company determines it is not more likelythan not that the fair value of an indefinite-lived intangible asset is less than its carrying amount or if the Company elects not to perform a qualitativeassessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible asset impairment exists. We test the indefinite-livedintangible assets for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under therelief from royalty method. Any excess carry value over the amount of fair value is recognized as an impairment.We incurred no impairment of indefinite-lived intangible assets as a result of our annual indefinite-lived intangible assets impairment tests in fiscal years2013, 2012 or 2011. In the fourth quarter of Fiscal 2013, the qualitative assessment performed for each of the Company's three reporting units indicated that itis more likely than not that the fair value of the reporting unit exceeded its carrying amount, including indefinite-lived intangible assets, and, therefore, thequantitative assessment was not performed.Finite-lived intangible assets are amortized over their useful lives ranging from 5 to 30 years. We continually evaluate whether events or circumstanceshave occurred that would indicate that the remaining estimated useful lives of our long-lived assets, including intangible assets, may warrant revision or thatthe remaining balance may not be recoverable. Intangible assets are evaluated for indicators of impairment. When factors indicate that long-lived assets,including intangible assets, should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets, including intangible assets, is used to measure recoverability. Some of the more important factors we consider include our financial performancerelative to our expected and historical performance, significant changes in the way we manage our operations, negative events that have occurred, and negativeindustry and economic trends. If the carrying amount is less than the estimated fair value, measurement of the impairment will be based on the differencebetween the carrying value and fair value of the asset group, generally determined based on the present value of expected future cash flows associated with theuse of the asset.During the fiscal year ended March 31, 2012, a $2.9 million favorable fair value adjustment was recorded due to the reduction of the fair value of acontingent earnout liability associated with a prior acquisition due to changes in the projected earnings over the respective earnout periods. The Company alsoconsidered these changes in projected earnings to be an indicator of impairment of the long-lived assets directly related to this acquisition and, as a result,tested these long-lived assets for recoverability and concluded that the asset group was recoverable. For the fiscal years ended March 31, 2013, 2012 and 2011,there were no reductions to the remaining useful lives and no write-downs of long-lived assets, including intangible assets, were required.Acquired Contract Liabilities, netIn connection with our acquisition of Vought, we assumed existing long-term contracts. Based on our review of these contracts, we concluded that theterms of certain contracts to be either more or less favorable than could be realized in market transactions as of the date of the acquisition. As a result, werecognized acquired contract liabilities, net of acquired contract assets of $124.5 million at the acquisition date of Vought based on the present value of thedifference between the contractual cash flows of the executory contracts and the estimated cash flows had the contracts been executed at the acquisition date.The liabilities principally relate to long-term life of program contracts that were initially executed by Vought over 15 years ago, as well as loss contracts forwhich Vought had recognized significant pre-acquisition contract loss reserves.In connection with our acquisition of GPECS, we assumed existing long-term contracts. Based on our review of the long-term contracts of GPECS, weconcluded that the terms of certain contracts to be either more or less favorable than could be realized in market transactions as of the date of the acquisition.As a result, we recognized provisional acquired contract50 Table of Contentsliabilities, net of acquired contract assets of $80.0 million at the acquisition date based on the present value of the difference between the contractual cash flowsof the executory contracts and the estimated cash flows had the contracts been executed at the acquisition date. We measured these net liabilities under themeasurement provisions of ASC 820, Fair Value Measurements and Disclosures, which is based on the price to transfer the obligation to a marketparticipants at the measurement date, assuming that the net liabilities will remain outstanding in the marketplace. The liabilities principally relate to long-termlife of program contracts were initially executed by GPECS 5 - 8 years ago. These net liabilities will be amortized in accordance with the underlying economicpattern of obligations, as reflected by the net cash outflows incurred on the long-term contracts assumed. As we finalize the fair value of acquired long-termcontracts, additional purchase price adjustments will be recorded during the measurement period during fiscal 2014. Fair value estimates are based on acomplex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine theestimated fair value assigned to each long-term contracts can materially impact our results of operations. The finalization of the purchase accountingassessment will result in changes in the valuation of the long-term contracts and may have a material impact on our results of operations and financialposition.The acquired contract liabilities, net for Vought and GPECS are being amortized as non-cash revenues over the terms of the respective contracts. TheCompany recognized net amortization of contract liabilities of approximately $25.6 million, $26.7 million and $29.2 million in the fiscal years endedMarch 31, 2013, 2012 and 2011, respectively, and such amounts have been included in revenues in our results of operations. The balance of the liability asof March 31, 2013 is approximately $123.0 million and, based on the expected delivery schedule of the underlying contracts, the Company estimates annualamortization of the liability as follows 2014—$28.1 million; 2015—$20.6 million; 2016—$16.0 million; 2017—$15.2 million; 2018—$8.5 million;Thereafter—$34.6 million.Postretirement PlansThe liabilities and net periodic cost of our pension and other postretirement plans are determined using methodologies that involve several actuarialassumptions, the most significant of which are the discount rate, the expected long-term rate of asset return, the assumed average rate of compensation increaseand rate of growth for medical costs. The actuarial assumptions used to calculate these costs are reviewed annually or when a remeasurement is necessary.Assumptions are based upon management's best estimates, after consulting with outside investment advisors and actuaries, as of the measurement date.The assumed discount rate utilized is based on a point-in-time estimate as of our annual measurement date or as of remeasurement dates as needed. Thisrate is determined based upon a review of yield rates associated with long-term, high-quality corporate bonds as of the measurement date and use of modelsthat discount projected benefit payments using the spot rates developed from the yields on selected long-term, high-quality corporate bonds. The effects ofhypothetical changes in the discount rate for a single year may not be representative and may be asymmetrical or nonlinear for future years because of theapplication of the accounting corridor. The accounting corridor is a defined range within which amortization of net gains and losses is not required. Thediscount rate at March 31, 2013 decreased to 4.07% from 4.62% at March 31, 2012.The assumed expected long-term rate of return on assets is the weighted-average rate of earnings expected on the funds invested or to be invested to providefor the benefits included in the Projected Benefit Obligation ("PBO"). The expected average long-term rate of return on assets is based on several factorsincluding actual historical market index returns, anticipated long-term performance of individual asset classes with consideration given to the relatedinvestment strategy, plan expenses and the potential to outperform market index returns. This rate is utilized principally in calculating the expected return onplan assets component of the annual pension expense. To the extent the actual rate of return on assets realized over the course of a year differs from theassumed rate, that year's annual pension expense is not affected. The gain or loss reduces or increases future pension expense over the average remainingservice period of active plan participants expected to receive benefits. The expected long-term rate of return for fiscal 2014 and 2013, respectively, is 8.25%,compared to 8.50% for fiscal 2012.The assumed average rate of compensation increase represents the average annual compensation increase expected over the remaining employment periodsfor the participating employees. This rate is utilized principally in calculating the PBO and annual pension expense.In addition to our defined benefit pension plans, we provide certain healthcare and life insurance benefits for some retired employees. Such benefits areunfunded as of March 31, 2013. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meetspecified age and years of service requirements. Election to participate for eligible employees must be made at the date of retirement. Qualifying dependents atthe date of retirement are also eligible for medical coverage. Current plan documents reserve our right to amend or terminate the plans at any time, subject toapplicable collective bargaining requirements for represented employees. From time to time, we have made changes to the benefits provided to various groups ofplan participants. Premiums charged to most retirees for medical coverage prior to51 Table of Contentsage 65 are based on years of service and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to thismedical inflation cost-sharing feature, the plans also have provisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, schedulesof reasonable fees, preferred provider networks, coordination of benefits with other plans, and a Medicare carve-out.In accordance with the ASC 715, Compensation—Retirement Benefits topic of the ASC, we recognized the funded status of our benefit obligation. Thisfunded status is remeasured as of our annual remeasurement date. The funded status is measured as the difference between the fair value of the plan's assetsand the PBO or accumulated postretirement benefit obligation of the plan. In order to recognize the funded status, we determined the fair value of the planassets. The majority of our plan assets are publicly traded investments which were valued based on the market price as of the date of remeasurement.Investments that are not publicly traded were valued based on the estimated fair value of those investments as of the remeasurement date based on ourevaluation of data from fund managers and comparable market data.The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments arerecognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significantnumber of employees for some or all of their future service.Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognizedwhen the related employees are terminated or a plan amendment is adopted, whichever is applicable.As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs thatresults in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events andcircumstances impacting the pension costs.The following summarizes the key events whose effects on our net periodic benefit cost and obligations that occurred during the fiscal years endedMarch 31, 2013 and 2012:•In April 2012, the Company completed an early retirement incentive offer with a portion of its second largest union-represented group of productionand maintenance employees. The early retirement incentive offer provided for an increase in the pension benefits payable to covered employees whoretire no later than November 30, 2012. This early retirement incentive resulted in a special termination benefit expense of $1.2 million and ispresented on the accompanying Consolidated Statement of Income as "Curtailments and early retirement incentive expense."•In July 2012, the Company completed a similar early retirement incentive offer to its non-represented employee participants. This early retirementincentive provided for an increase in the termination benefits payable through the pension plan to covered employees who retire no later thanNovember 30, 2012. This early retirement incentive resulted in a special termination benefit expense of $2.0 million and is presented on theaccompanying consolidated statement of income as a component of "Curtailments and early retirement incentive expense," as well as severancecharges of $1.2 million included in "Acquisition and integration expenses" on the accompanying Consolidated Statement of Income.•In October 2012, the Company completed an early retirement incentive offer with a portion of its largest union-represented group of production andmaintenance employees. The early retirement offer provided for an increase in the pension benefits to covered employees who retire no later thanMarch 31, 2013. This early retirement incentive resulted in a special termination benefit expense of $2.0 million and is presented on theaccompanying Consolidated Statement of Income within "Curtailments and early retirement incentives."•In February 2013, the Company completed a second early retirement incentive offer with an expanded portion of its largest union-represented group ofproduction and maintenance employees. The early retirement offer provided for the same increase, as the October 2012 offer, in pension benefits tocovered employees who retire no later than September 1, 2013. This early retirement incentive resulted in a special termination benefit expense of $5.7million. In addition, the Company concluded that the February 2013 offer and the October 2012 offer represented such similar actions that theyneeded to be combined to assess whether the resulting change in the remaining service period indicated that a curtailment had occurred. TheCompany concluded that a curtailment had occurred and recorded a curtailment loss of $21.8 million included in "Curtailments and early retirementincentives" on the Consolidated Statement of Income for the fiscal year ended March 31, 2013.•In February 2013, the Company committed to a plan to relocate from its largest operating facility. In connection with this relocation plan, theCompany will exit this facility's Fabrications operations resulting in the termination of a number of defined benefit plan participants. The Companyconcluded that these terminations will result in a52 Table of Contentssignificant reduction in the remaining service period and recorded a curtailment loss of $1.8 million included in "Curtailments and early retirementincentives" on the Consolidated Statement of Income for the fiscal year ended March 31, 2013.•In December 2011, the Company negotiated the termination of one its smaller defined benefit plans. This termination resulted in a $1.6 millionspecial termination benefit, included in the "Curtailments and early retirement incentives", on the Consolidated Statement of Income for the fiscalyear ended March 31, 2012.•In February 2012, the Company's second largest union-represented group of production and maintenance employees ratified a new collectivebargaining agreement. The agreement provides actively employed participants the option to elect a lump-sum distribution upon retirement effectiveApril 1, 2012. This change resulted in reduction to the projected benefit obligation of approximately $7.1 million.•In March 2012, the Company announced an amendment to the retirement plans of its non-represented employee participants. Effective April 1, 2013,most actively employed participants with 30 years of service and certain highly compensated employees as of April 1, 2012 will no longer continue toaccrue a benefit. Those changes resulted in a reduction of the projected pension obligation of approximately $56.7 million and a related curtailmentgain of $42.4 million included in "Curtailment and early retirement incentives", on the Consolidated Statement of Income for the fiscal year endedMarch 31, 2012.Pension income, excluding curtailments and special termination benefits (early retirement incentives) for the fiscal year ended March 31, 2013 was $26.0million compared with pension income of $14.0 million for the fiscal year ended March 31, 2012 and $18.8 million for the fiscal year ended March 31, 2011.For the fiscal year ending March 31, 2014, the Company expects to recognize pension income of approximately $31.0 million. Excluding the effect of the netcurtailments in fiscal 2013, the increase in expected pension income in fiscal year 2014 results principally from asset performance in fiscal year 2013exceeding the expected long-term rate of return on plan assets.Recently Issued Accounting PronouncementsIn July 2012, the Financial Accounting Standards Board ("FASB") issued authoritative guidance included in ASC Topic 350, Intangibles-Goodwill andOther. This guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-livedintangible asset is impaired, as a basis for determining whether it is necessary to perform the quantitative impairment test described in FASB ASC Topic 350,Intangibles-Goodwill and Other. This guidance allows the Company to adopt the topic early to use it in its annual impairment testing for the fiscal yearending March 31, 2013. The Company does not expect this guidance to have a significant impact on the Company's consolidated balance sheets, statements ofincome, or statements of cash flows.In December 2011, the FASB issued Accounting Standards Update ("ASU") 2011-11, Balance Sheet (Topic 210): Disclosures about OffsettingAssets and Liabilities ("ASU 2011-11"). The amendments in this update will require an entity to disclose information about offsetting and relatedarrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amendments are intendedis to enhance required disclosures by improving information about financial instruments and derivative instruments that are either offset in accordance withFASB guidance or are subject to an enforceable master netting arrangement; irrespective of whether they are offset in accordance with FASB guidance. Theprovisions of ASU 2011-11 are effective for annual reporting periods beginning on or after January 1, 2013. The adoption of the provisions of ASU 2011-11is not expected to have a material impact on the Company's consolidated financial statements.Effective March 31, 2012, the Company retrospectively adopted ASU 2011-05, Presentation of Comprehensive Income ("ASU 2011-05"). ASU 2011-05 was issued to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items that are recorded inOther Comprehensive Income ("OCI"). This guidance requires that all non-owner changes in stockholders' equity be presented either in a single continuousstatement of comprehensive income or in two separate but consecutive statements where the first statement includes the components of net income and thesecond statement includes the components of OCI. Regardless of whether an entity chooses to present comprehensive income in a single continuous statementor in two separate but consecutive statements, the guidance also would have required an entity to present on the face of the financial statements reclassificationadjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and thecomponents of other comprehensive income are presented. However, subsequent to the issuance of ASU 2011-05, this requirement that companies presentreclassification adjustments for each component of OCI in both net income and OCI on the face of the financial statements was deferred for furtherevaluation. The deferral did not change the requirement to present items of net income, items of other comprehensive income and total comprehensive incomein either one continuous statement or two separate consecutive statements. The Company has elected to present two separate consecutive statements. Theadoption of this53 Table of Contentsstandard resulted in a change in presentation and additional footnote disclosure that did not have a significant impact on the Company.Forward-Looking StatementsThis report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our futureoperations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, andmanagement's beliefs concerning future performance and capital requirements based upon current available information. Such statements are based onmanagement's beliefs as well as assumptions made by and information currently available to management. When used in this document, words like "may,""might," "will," "expect," "anticipate," "believe," "potential," and similar expressions are intended to identify forward-looking statements. Actual resultscould differ materially from management's current expectations. For example, there can be no assurance that additional capital will not be required or thatadditional capital, if required, will be available on reasonable terms, if at all, at such times and in such amounts as may be needed by us. In addition to thesefactors, among other factors that could cause actual results to differ materially, are uncertainties relating to the integration of acquired businesses, generaleconomic conditions affecting our business segments, dependence of certain of our businesses on certain key customers, the risk that we will not realize all ofthe anticipated benefits from acquisitions as well as competitive factors relating to the aerospace industry. For a more detailed discussion of these and otherfactors affecting us, see the risk factors described in "Item 1A. Risk Factors."Item 7A.Quantitative and Qualitative Disclosures About Market RiskCommodity Price RiskSome contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject to termination on arelatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions, and substantial increases in pricescould increase our operating costs, which, as a result of our fixed-price contracts, we may not be able to recoup through increases in the prices of our products.We generally do not employ forward contracts or other financial instruments to hedge commodity price risk, although we continue to review a full range ofbusiness options focused on strategic risk management for all material commodities.Any failure by our suppliers to provide acceptable raw materials, components, kits or subassemblies could adversely affect our production schedulesand contract profitability. We assess qualification of suppliers and continually monitor them to control risk associated with such supply base reliance.To a lesser extent, we also are exposed to fluctuations in the prices of certain utilities and services, such as electricity, natural gas, chemicals and freight.We utilize a range of long-term agreements to minimize procurement expense and supply risk in these areas.Foreign Exchange RiskIn addition, even when revenues and expenses are matched, we must translate foreign denominated results of operations, assets and liabilities for ourforeign subsidiaries to U.S. dollars in our consolidated financial statements. Consequently, increases and decreases in the value of the U.S. dollar ascompared to the respective foreign currencies will affect our reported results of operations and the value of our assets and liabilities on our consolidated balancesheet, even if our results of operations or the value of those assets and liabilities has not changed in its original currency. These transactions couldsignificantly affect the comparability of our results between financial periods and/or result in significant changes to the carrying value of our assets, liabilitiesand stockholders' equity.We are subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. We use foreigncurrency forward contracts to hedge the price risk associated with forecasted foreign denominated payments related to our ongoing business. Foreign currencyforward contracts are sensitive to changes in foreign currency exchange rates. At March 31, 2013, a 10% change in the exchange rate in our portfolio of foreigncurrency contracts would not have material impact on our unrealized gains. Consistent with the use of these contracts to neutralize the effect of exchange ratefluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlyingtransactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments do not create material marketrisk.54 Table of ContentsInterest Rate RiskOur primary exposure to market risk consists of changes in interest rates on borrowings. An increase in interest rates would adversely affect ouroperating results and the cash flow available after debt service to fund operations and expansion. In addition, an increase in interest rates would adverselyaffect our ability to pay dividends on our common stock, if permitted to do so under certain of our debt arrangements, including the Credit Facility. Wemanage exposure to interest rate fluctuations by optimizing the use of fixed and variable rate debt. As of March 31, 2013, approximately 62% of our debt isfixed-rate debt. Our financing policy states that we generally maintain between 50% and 75% of our debt as fixed-rate debt. The information belowsummarizes our market risks associated with debt obligations and should be read in conjunction with Note 10 of "Notes to Consolidated FinancialStatements."The following table presents principal cash flows and the related interest rates. Fixed interest rates disclosed represent the weighted-average rate as ofMarch 31, 2013. Variable interest rates disclosed fluctuate with the LIBOR, federal funds rates and other weekly rates and represent the weighted-average rateat March 31, 2013.Expected Years of Maturity Next12 Months 13 - 24Months 25 - 36Months 37 - 48Months 49 - 60Months Thereafter TotalFixed-rate cash flows (in thousands)$124,703 $13,964 $14,442 $4,026 $183,339 $735,344 $1,075,818Weighted-average interest rate (%)6.63% 6.85% 6.87% 6.88% 6.78% 4.54% Variable-rate cash flows (in thousands)$— $150,000 $— $— $95,849 $2,178 $248,027Weighted-average interest rate (%)1.19% 1.19% 1.19% 1.74% 1.74% 2.50% There are no other significant market risk exposures.Item 8.Financial Statements and Supplementary Data55 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Triumph Group, Inc.We have audited the accompanying consolidated balance sheets of Triumph Group, Inc. as of March 31, 2013 and 2012, and the related consolidatedstatements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2013. Our auditsalso included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TriumphGroup, Inc. at March 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period endedMarch 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, whenconsidered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Triumph Group, Inc.'sinternal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated May 29, 2013 expressed an unqualified opinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 29, 201356 Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share data) March 31, 2013 2012ASSETS Current assets: Cash and cash equivalents$32,037 $29,662Trade and other receivables, less allowance for doubtful accounts of $5,372 and $3,900433,926 440,608Inventories, net of unliquidated progress payments of $124,128 and $164,450987,702 817,956Rotable assets34,853 34,554Deferred income taxes99,546 114,962Prepaid expenses and other23,525 23,344Assets held for sale14,747 —Total current assets1,626,336 1,461,086Property and equipment, net815,548 733,380Goodwill1,745,321 1,546,138Intangible assets, net929,413 829,676Deferred income taxes, noncurrent627 527Other, net66,260 26,417Total assets$5,183,505 $4,597,224LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt$133,930 $142,237Accounts payable327,634 266,124Accrued expenses272,238 311,620Liabilities related to assets held for sale2,621 —Total current liabilities736,423 719,981Long-term debt, less current portion1,195,933 1,016,625Accrued pension and other postretirement benefits, noncurrent671,175 700,125Deferred income taxes, noncurrent331,061 230,837Other noncurrent liabilities203,755 136,287Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 50,123,035 and 49,590,273 shares issued;50,123,035 and 49,531,740 shares outstanding50 50Capital in excess of par value848,372 833,935Treasury stock, at cost, 0 and 58,533 shares— (1,716)Accumulated other comprehensive loss(60,972) (9,306)Retained earnings1,257,708 970,406Total stockholders' equity2,045,158 1,793,369Total liabilities and stockholders' equity$5,183,505 $4,597,224See notes to consolidated financial statements.57 Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data) Year ended March 31, 2013 2012 2011Net sales$3,702,702 $3,407,929 $2,905,348Operating costs and expenses: Cost of sales (exclusive of depreciation shown separately below)2,763,488 2,564,995 2,231,864Selling, general and administrative241,349 242,553 238,889Depreciation and amortization129,506 119,724 99,657Acquisition and integration expenses2,665 6,342 20,902Curtailments and early retirement incentives34,481 (40,400) — 3,171,489 2,893,214 2,591,312Operating income531,213 514,715 314,036Interest expense and other68,156 77,138 79,559Income from continuing operations before income taxes463,057 437,577 234,477Income tax expense165,710 155,955 82,066Income from continuing operations297,347 281,622 152,411Loss from discontinued operations, net— (765) (2,512)Net income$297,347 $280,857 $149,899Earnings per share—basic: Income from continuing operations$5.99 $5.77 $3.39Loss from discontinued operations, net— (0.02) (0.06)Net income$5.99 $5.75 $3.33Weighted-average common shares outstanding—basic49,663 48,821 45,006Earnings per share—diluted: Income from continuing operations$5.67 $5.43 $3.21Loss from discontinued operations, net— (0.01) (0.05)Net income$5.67 $5.41*$3.16Weighted-average common shares outstanding—diluted52,446 51,873 47,488*Difference due to rounding.See notes to consolidated financial statements.58 Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Dollars in thousands) Year ended March 31, 2013 2012 2011Net income$297,347 $280,857 $149,899Other comprehensive (loss) income: Foreign currency translation adjustment(1,832) (2,852) 3,798Pension and postretirement adjustments, net of income taxes of ($29,710), ($77,523) and $70,349,respectively(49,833) (127,289) 114,780Change in fair value of cash flow hedge, net of income taxes of ($1), $222 and $698, respectively(1) 364 1,188Total other comprehensive (loss) income(51,666) (129,777) 119,766Total comprehensive income$245,681 $151,080 $269,665See notes to consolidated financial statements.59 Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Dollars in thousands) OutstandingShares CommonStockAll Classes Capital inExcess ofPar Value TreasuryStock AccumulatedOtherComprehensive(Loss) Income RetainedEarnings TotalBalance at March 31, 201033,346,508 $33 $314,854 $(7,921) $705 $553,015 $860,686Net income— — — — — 149,899 149,899Foreign currency translation adjustment— — — — 3,798 — 3,798Pension liability adjustment, net of income taxes of$70,349— — — — 114,780 — 114,780Change in fair value of derivatives, net of incometaxes of $698— — — — 1,188 — 1,188Vought acquisition consideration14,992,330 15 504,852 — — — 504,867Reclassification adjustment to temporary equity forexercisable put on convertible notes— — (2,506) — — — (2,506)Exercise of stock options160,552 — — 4,639 — (1,755) 2,884Cash dividends ($0.08 per share)— — — — — (3,574) (3,574)Share-based compensation65,942 1 1,906 — — — 1,907Repurchase of restricted shares for minimum taxobligation(51,910) — (59) (1,803) — — (1,862)Excess tax benefit from exercise of stock options— — 150 — — — 150Balance at March 31, 201148,513,422 49 819,197 (5,085) 120,471 697,585 1,632,217Net income— — — — — 280,857 280,857Foreign currency translation adjustment— — — — (2,852) — (2,852)Pension liability adjustment, net of income taxes of$77,523— — — — (127,289) — (127,289)Change in fair value of derivatives, net of incometaxes of $222— — — — 364 — 364Issuance of stock upon conversion of convertiblenotes772,438 — 5,524 — — — 5,524Reclassification adjustment to temporary equity forexercisable put on convertible notes— — 2,506 — — — 2,506Exercise of stock options136,254 — — 3,978 — (1,137) 2,841Cash dividends ($0.14 per share)— — — — — (6,899) (6,899)Share-based compensation123,890 1 4,828 — — — 4,829Repurchase of restricted shares for minimum taxobligation(14,264) — — (609) — — (609)Excess tax benefit from exercise of stock options— — 1,880 — — — 1,880Balance at March 31, 201249,531,740 50 833,935 (1,716) (9,306) 970,406 1,793,369Net income— — — — — 297,347 297,347Foreign currency translation adjustment— — — — (1,832) — (1,832)Pension liability adjustment, net of income taxes of($29,710)— — — — (49,833) — (49,833)Change in fair value of derivatives, net of incometaxes of $1— — — — (1) — (1)Issuance of stock upon conversion of convertiblenotes395,269 — 2,597 — — — 2,597Exercise of stock options128,356 — 622 3,556 — (2,040) 2,138Cash dividends ($0.16 per share)— — — — — (8,005) (8,005)Share-based compensation97,947 — 6,590 — — — 6,590Repurchase of restricted shares for minimum taxobligation(30,277) — — (1,840) — — (1,840)Excess tax benefit from exercise of stock options— — 4,628 — — — 4,628Balance at March 31, 201350,123,035 $50 $848,372 $— $(60,972) $1,257,708 $2,045,158See notes to consolidated financial statements.60 Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) Year ended March 31, 2013 2012 2011Operating Activities Net income$297,347 $280,857 $149,899Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization129,506 119,724 99,657Amortization of acquired contract liability(25,644) (26,684) (29,214)Curtailments and early retirement incentives34,481 (40,400) —Accretion of debt discount548 4,529 7,609Other amortization included in interest expense3,638 9,601 4,205Provision for doubtful accounts receivable1,974 1,282 152Provision for deferred income taxes186,767 153,453 82,083Employee stock compensation6,367 4,988 3,622Changes in other current assets and liabilities, excluding the effects of acquisitions: Accounts receivable24,718 (82,062) (15,875)Inventories(140,025) (47,487) (21,045)Rotable assets1,683 (8,206) (1,021)Prepaid expenses and other current assets752 (4,821) 13,411Accounts payable, accrued expenses and income taxes payable(57,861) 17,604 (27,131)Accrued pension and other postretirement benefits(142,975) (157,111) (124,339)Changes in discontinued operations— 241 7Other(358) 2,273 284Net cash provided by operating activities320,918 227,781 142,304Investing Activities Capital expenditures(126,890) (93,969) (90,025)Reimbursements of capital expenditures from insurance and other5,156 3,437 —Proceeds from sale of assets3,993 8,758 4,213Acquisitions, net of cash acquired(349,632) 11,951 (333,228)Net cash used in investing activities(467,373) (69,823) (419,040)Financing Activities Net (decrease) increase in revolving credit facility(224,151) 235,000 85,000Proceeds from issuance of long-term debt528,135 92,253 846,105Retirement of debt and capital lease obligations(142,338) (484,538) (745,852)Payment of deferred financing costs(8,838) (3,999) (22,790)Dividends paid(8,005) (6,899) (3,574)Net repayment of government grant(1,090) (2,180) (1,695)Repurchase of restricted shares for minimum tax obligations(1,840) (609) (1,861)Proceeds from exercise of stock options, including excess tax benefit of $4,628, $1,880, and $150 in 2013,2012, and 20116,766 4,721 3,034Net cash provided by (used in) financing activities148,639 (166,251) 158,367Effect of exchange rate changes on cash191 (1,373) 479Net change in cash and cash equivalents2,375 (9,666) (117,890)Cash and cash equivalents at beginning of year29,662 39,328 157,218Cash and cash equivalents at end of year$32,037 $29,662 $39,328See notes to consolidated financial statements.61 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except per share data)1.BACKGROUND AND BASIS OF PRESENTATIONTriumph Group, Inc. ("Triumph" or the "Company") is a Delaware corporation which, through its operating subsidiaries, designs, engineers,manufactures and sells products for the global aerospace original equipment manufacturers ("OEMs") of aircraft and aircraft components and repairs andoverhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis. Triumph and itssubsidiaries (collectively, the "Company") is organized based on the products and services that it provides. Under this organizational structure, the Companyhas three reportable segments: the Aerostructures Group, the Aerospace Systems Group and the Aftermarket Services Group.The Aerostructures segment consists of the Company's operations that manufacture products primarily for the aerospace OEM market. TheAerostructures segment's revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structuralcomponents, including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces, and helicopter cabins. Further, the segment'soperations also design and manufacture composite assemblies for floor panels and environmental control system ducts. These products are sold to variousaerospace OEMs on a global basis.The Aerospace Systems segment consists of the Company's operations that also manufacture products primarily for the aerospace OEM market. Thesegment's operations design and engineer mechanical and electromechanical controls, such as hydraulic systems, main engine gearbox assemblies,accumulators, mechanical control cables and non-structural cockpit components. These products are sold to various aerospace OEMs on a global basis.The Aftermarket Services segment consists of the Company's operations that provide maintenance, repair and overhaul services to both commercial andmilitary markets on components and accessories manufactured by third parties. Maintenance, repair and overhaul revenues are derived from services onauxiliary power units, airframe and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic driveunits. In addition, the segment's operations repair and overhaul thrust reversers, nacelle components and flight control surfaces. The segment's operations alsoperform repair and overhaul services and supply spare parts for various types of cockpit instruments and gauges for a broad range of commercial airlines ona worldwide basis.Repair services generally involve the replacement of parts and/or the remanufacture of parts, which is similar to the original manufacture of the part. Theprocesses that the Company performs related to repair and overhaul services are essentially the repair of wear parts or replacement of parts that are beyondeconomic repair. The repair service generally involves remanufacturing a complete part or a component of a part.On June 9, 2011, the Company’s Board of Directors approved a two-for-one split of the Company’s common stock. The stock split resulted in theissuance of one additional share for each share issued and outstanding. The stock split was effective on July 14, 2011, to stockholders of record at the close ofbusiness on June 22, 2011. Additionally, the Board of Directors approved a 100% increase in the quarterly cash dividend rate on the Company’s commonstock to $0.04 per common share from $0.02 per common share on a post-split basis. All share and per share information included in the accompanyingconsolidated financial statements and notes thereto have been retroactively adjusted to reflect the impact of the stock split.The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned and/or controlled subsidiaries. Intercompanyaccounts and transactions have been eliminated from the consolidated financial statements.The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from thoseestimates.Reclassifications have been made to prior-year amounts in order to conform to the current-year presentation related to the completion of the measurementperiod adjustments for the acquisition of ANS (Note 3). In addition, the Company corrected an immaterial error related to the March 31, 2012 classification ofdeferred tax assets related to net operating loss carryforwards expected to be utilized within one year, which resulted in an increase in current deferred tax assetsand an increase in noncurrent deferred tax liabilities of $42,585.62 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash EquivalentsCash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalentsapproximates carrying value.Trade and Other Receivables, netTrade and other receivables are recorded net of an allowance for doubtful accounts. Trade and other receivables include amounts billed and currently duefrom customers, amounts currently due but unbilled, certain estimated contract changes and amounts retained by the customer pending contract completion.Unbilled amounts are generally billed and collected within one year. The Company performs ongoing credit evaluations of its customers and generally does notrequire collateral. The Company records the allowance for doubtful accounts based on prior experience and for specific collectibility matters when they arise.The Company writes off balances against the reserve when collectibility is deemed remote. The Company's trade and other receivables are exposed to creditrisk; however, the risk is limited due to the diversity of the customer base.Trade and other receivables, net comprised of the following: March 31, 2013 2012Billed$420,380 $436,877Unbilled12,120 3,269Total trade receivables432,500 440,146Other receivables6,798 4,362Total trade and other receivables439,298 444,508Less: Allowance for doubtful accounts(5,372) (3,900)Total trade and other receivables, net$433,926 $440,608InventoriesThe Company records inventories at the lower of cost (average-cost or specific-identification methods) or market. Costs on long-term contracts andprograms in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead andadvances to suppliers. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in,inventories related to such contracts as a result of advances, performance-based payments, and progress payments. The Company reflects those advances andpayments as an offset against the related inventory balances. The Company expenses general and administrative costs related to products and servicesprovided essentially under commercial terms and conditions as incurred. The Company determines the costs of inventories by the first-in, first-out or averagecost methods.Work-in-process inventory includes capitalized pre-production costs. Company policy allows for the capitalization of pre-production costs after itestablishes a contractual arrangement with a customer that explicitly states that the cost of recovery of pre-production costs is allowed.Capitalized pre-production costs include nonrecurring engineering, planning and design, including applicable overhead, incurred before production ismanufactured on a regular basis. Significant customer-directed work changes can also cause pre-production costs to be incurred. These costs are generallyrecovered over a contractually determined number of ship set deliveries and the Company believes these amounts will be fully recovered. The balance ofcapitalized pre-production costs at March 31, 2013 and 2012 was $71,167 and $19,385, respectively. We are still in the early-development stages for theBombardier Global 7000/8000 program, as these aircrafts are not scheduled to enter service until 2014 or later. Transition of this program from development torecurring production levels is dependent upon the success of the program at achieving flight testing and certification, as well as the ability of the BombardierGlobal 7000/8000 program to generate acceptable levels of aircraft sales. The failure to achieve these milestones and levels of sales and any significant costoverruns may result in an impairment of the capitalized pre-production costs.63 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Advance Payments and Progress PaymentsAdvance payments and progress payments received on contracts-in-process are first offset against related contract costs that are included in inventory,with any excess amount reflected in current liabilities under the Accrued expenses caption within the accompanying Consolidated Balance Sheets.Property and EquipmentProperty and equipment, which includes equipment under capital lease and leasehold improvements, are recorded at cost and depreciated over theestimated useful lives of the related assets, or the lease term if shorter in the case of leasehold improvements, by the straight-line method. Buildings andimprovements are depreciated over a period of 15 to 39.5 years, and machinery and equipment are depreciated over a period of 7 to 15 years (except forfurniture, fixtures and computer equipment which are depreciated over a period of 3 to 10 years).Goodwill and Intangible AssetsThe Company accounts for purchased goodwill and intangible assets in accordance with Accounting Standards Codification ("ASC") 350, Intangibles—Goodwill and Other. Under ASC 350, purchased goodwill and intangible assets with indefinite lives are not amortized; rather, they are tested forimpairment on at least an annual basis. Intangible assets with finite lives are amortized over their useful lives. Upon acquisition, critical estimates are made invaluing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimatingcash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships willcontinue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertainand unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values.The Company's operating segments of Aerostructures, Aerospace Systems and Aftermarket Services are also its reporting units. The Chief ExecutiveOfficer and the Chief Financial Officer comprise the Company's Chief Operating Decision Maker ("CODM"). The Company's CODM evaluates performanceand allocates resources based upon review of segment information. Each of the operating segments is comprised of a number of operating units which areconsidered to be components. The components, for which discrete financial information exists, are aggregated for purposes of goodwill impairment testing.The Company's acquisition strategy is to acquire companies that complement and enhance the capabilities of the operating segments of the Company. Eachacquisition is assigned to either the Aerostructures reporting unit, the Aerospace Systems reporting unit or the Aftermarket Services reporting unit. Thegoodwill that results from each acquisition is also assigned to the reporting unit to which the acquisition is allocated, because it is that reporting unit which isintended to benefit from the synergies of the acquisition.The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involvesdetermining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount,including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is lessthan its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approachrequired by ASC 350 to determine whether a goodwill impairment exists at the reporting unit.The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair valueexceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the secondstep is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being applied togoodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reportingunits is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairmenttest for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact onthese estimates and require interim impairment assessments.When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts futurenet cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). Theseestimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued marketacceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost ofdevelopment, the future cost structure of the businesses, and future technological changes. The Company also incorporates64 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in thereporting period in which it has been identified.We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2013, 2012 or 2011. In the fourth quarter offiscal 2013, the qualitative assessment performed for each of the Company's three reporting units indicated that it is more likely than not that the fair value ofthe reporting unit exceeded its carrying amount, including goodwill, and, therefore, the quantitative assessment was not performed.As of March 31, 2013 and 2012, the Company had a $438,616 and $425,000 indefinite-lived intangible assets associated with the tradenames acquiredin the acquisitions of Vought Aircraft Industries, Inc. ("Vought") and Embee Inc. ("Embee"). The Company assesses whether indefinite-lived intangible assetsimpairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstancesexist that indicate it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If based on this qualitativeassessment, the Company determines it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount orif the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible assetimpairment exists. We test the indefinite-lived intangible assets for impairment by comparing the carrying value to the fair value based on current revenueprojections of the related operations, under the relief from royalty method. Any excess of the carrying value over the amount of fair value is recognized as animpairment.We incurred no impairment of indefinite-lived intangible assets as a result of our annual indefinite-lived intangible assets impairment tests in fiscal years2013, 2012 or 2011. In the fourth quarter of Fiscal 2013, the qualitative assessment performed for each of the Company's indefinite-lived intangible assetsindicated that it is more likely than not that the fair value of the indefinite-lived intangible assets exceeded its carrying amount and, therefore, the quantitativeassessment was not performed.Finite-lived intangible assets are amortized over their useful lives ranging from 5 to 32 years. The Company continually evaluates whether events orcircumstances have occurred that would indicate that the remaining estimated useful lives of long-lived assets, including intangible assets, may warrantrevision or that the remaining balance may not be recoverable. Intangible assets are evaluated for indicators of impairment. When factors indicate that long-lived assets, including intangible assets, should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaininglife of the long-lived assets, including intangible assets, is used to measure recoverability. Some of the more important factors management considers includethe Company's financial performance relative to expected and historical performance, significant changes in the way the Company manages its operations,negative events that have occurred, and negative industry and economic trends. If the carrying amount is less than the estimated fair value, measurement of theimpairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the present value ofexpected future cash flows associated with the use of the asset.During the fiscal year ended March 31, 2012, a $2,870 favorable fair value adjustment was recorded due to the reduction of the fair value of a contingentearnout liability associated with a prior acquisition due to changes in the projected earnings over the respective earnout periods. The Company also consideredthese changes in projected earnings to be an indicator of impairment of the long-lived assets directly related to this acquisition and, as a result, tested theselong-lived assets for recoverability and concluded that the asset group was recoverable. For the fiscal years ended March 31, 2013, 2012 and 2011, exclusiveof the charges recorded in connection with the assets held for sale, there were no reductions to the remaining useful lives and no write-downs of long-livedassets, including intangible assets, were required.Deferred Financing CostsFinancing costs are deferred and amortized to Interest expense and other in the accompanying Consolidated Statements of Income over the related financingperiod using the effective interest method or the straight-line method when it does not differ materially from the effective interest method. Deferred financingcosts, net of accumulated amortization of $22,906 and $17,710, respectively, are recorded in Other, net in the accompanying Consolidated Balance Sheets asof March 31, 2013 and 2012. Make-whole payments in connection with early debt retirements are classified as cash flows used in financing activities.Acquired Contract Liabilities, netIn connection with the acquisition of Vought, the Company assumed existing long-term contracts. Based on review of these contracts, the Companyconcluded that the terms of certain contracts were either more or less favorable than could be realized in market transactions as of the date of the acquisition.As a result, the Company recognized acquired contract liabilities, net of acquired contract assets of $124,548 at the acquisition date of Vought based on thepresent value of the difference between the contractual cash flows of the executory contracts and the estimated cash flows had the contracts been executed at the65 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)acquisition date. The liabilities principally relate to long-term life of program contracts that were initially executed by Vought over 15 years ago, as well as losscontracts for which Vought had recognized significant pre-acquisition contract loss reserves.In connection with the acquisition of Goodrich Corporation (Goodrich Pumps and Engine Control Systems) ("GPECS"), the Company assumed existinglong-term contracts. Based on review of the long-term contracts of GPECS, the Company concluded that the terms of certain contracts to be either more or lessfavorable than could be realized in market transactions as of the date of the acquisition. As a result, the Company recognized provisional acquired contractliabilities, net of acquired contract assets of $80,000 at the acquisition date based on the present value of the difference between the contractual cash flows ofthe executory contracts and the estimated cash flows had the contracts been executed at the acquisition date. The Company measured these net liabilities underthe measurement provisions of ASC 820, Fair Value Measurements and Disclosures, which is based on the price to transfer the obligation to a marketparticipant at the measurement date, assuming that the net liabilities will remain outstanding in the marketplace. The net liabilities principally relate to long-term life of program contracts were initially executed by GPECS 5 to 8 years ago. These net liabilities will be amortized in accordance with the underlyingeconomic pattern of obligations, as reflected by the net cash outflows incurred on the long-term contracts assumed. As the Company finalizes the fair value ofacquired long-term contracts from GPECS, additional purchase price adjustments will be recorded during the measurement period during fiscal 2014. Fairvalue estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. Thejudgments used to determine the estimated fair value assigned to each long-term contracts can materially impact our results of operations. The finalization ofthe purchase accounting assessment will result in changes in the valuation of the long-term contracts and may have a material impact on our results ofoperations and financial position.The acquired contract liabilities, net for Vought and GPECS are being amortized as non-cash revenues over the terms of the respective contracts. TheCompany recognized net amortization of contract liabilities of $25,644, $26,684 and $29,214 in the fiscal years ended March 31, 2013, 2012 and 2011,respectively, and such amounts have been included in revenues in results of operations. The balance of the liability as of March 31, 2013 is $123,006 and,based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of the liability as follows: 2014—$28,060;2015—$20,593; 2016—$16,034; 2017—$15,184; and 2018—$8,490.Revenue RecognitionRevenues are generally recognized in accordance with the contract terms when products are shipped, delivery has occurred or services have been rendered,pricing is fixed or determinable, and collection is reasonably assured. The Company's policy with respect to sales returns and allowances generally providesthat the customer may not return products or be given allowances, except at the Company's option. Accruals for sales returns, other allowances and estimatedwarranty costs are provided at the time of shipment based upon past experience.A significant portion of the Company's contracts are within the scope of ASC 605-35, Revenue—Construction-Type and Production-Type Contracts,and revenue and costs on contracts are recognized using the percentage-of-completion method of accounting. Accounting for the revenue and profit on a contractrequires estimates of (1) the contract value or total contract revenue, (2) the total costs at completion, which is equal to the sum of the actual incurred costs todate on the contract and the estimated costs to complete the contract's scope of work and (3) the measurement of progress towards completion. Depending on thecontract, the Company measures progress toward completion using either the cost-to-cost method or the units-of-delivery method, with the great majoritymeasured under the units-of-delivery method.•Under the cost-to-cost method, progress toward completion is measured as the ratio of total costs incurred to estimated total costs at completion. Costsare recognized as incurred. Profit is determined based on estimated profit margin on the contract multiplied by progress toward completion. Revenuerepresents the sum of costs and profit on the contract for the period.•Under the units-of-delivery method, revenue on a contract is recorded as the units are delivered and accepted during the period at an amount equal tothe contractual selling price of those units. The costs recorded on a contract under the units-of-delivery method are equal to the total costs atcompletion divided by the total units to be delivered. As contracts can span multiple years, the Company often segments the contracts into productionlots for the purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units delivered and theestimated costs for the units delivered.Adjustments to original estimates for a contract's revenues, estimated costs at completion and estimated total profit are often required as work progressesunder a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or ifcontract modifications occur. These estimates are also sensitive to the assumed rate of production. Generally, the longer it takes to complete the contractquantity, the more relative66 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)overhead that contract will absorb. The impact of revisions in cost estimates is recognized on a cumulative catch-up basis in the period in which the revisionsare made. Provisions for anticipated losses on contracts are recorded in the period in which they become probable ("forward losses") and are first offset againstcosts that are included in inventory, with any remaining amount reflected in accrued contract liabilities in accordance with ASC 605-35. Revisions in contractestimates, if significant, can materially affect results of operations and cash flows, as well as valuation of inventory. Furthermore, certain contracts arecombined or segmented for revenue recognition in accordance with ASC 605-35.For the fiscal year ended March 31, 2013, cumulative catch-up adjustments resulting from changes in estimates decreased operating income, net incomeand earnings per share by approximately $(14,560), $(9,350) and $(0.18), respectively. The cumulative catch-up adjustments to operating income for thefiscal year ended March 31, 2013 included gross favorable adjustments of approximately $15,913 and gross unfavorable adjustments of approximately$(30,473). For the fiscal year ended March 31, 2012, cumulative catch-up adjustments resulting from changes in estimates increased operating income, netincome and earnings per share by approximately $18,264, $11,755 and $0.23, respectively. The cumulative catch-up adjustments to operating income forthe fiscal year ended March 31, 2012 included gross favorable adjustments of approximately $29,549 and gross unfavorable adjustments of approximately$11,285. For the fiscal year ended March 31, 2011, there were no significant changes in estimates to our contracts accounted for under the percentage-of-completion method that materially impacted the Company's results of operations, cash flows, or inventory valuation.Amounts representing contract change orders or claims are only included in revenue when such change orders or claims have been settled with thecustomer and to the extent that units have been delivered. Additionally, some contracts may contain provisions for revenue sharing, price re-determination,requests for equitable adjustments, change orders or cost and/or performance incentives. Such amounts or incentives are included in contract value when theamounts can be reliably estimated and their realization is reasonably assured.Although fixed-price contracts, which extend several years into the future, generally permit the Company to keep unexpected profits if costs are less thanprojected, the Company also bears the risk that increased or unexpected costs may reduce profit or cause the Company to sustain losses on the contract. In afixed-price contract, the Company must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs the Company will incur inperforming these contracts and in projecting the ultimate level of revenue that may otherwise be achieved.Failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-pricecontract may reduce the profitability of a fixed-price contract or cause a loss. The Company believes that it has recognized adequate provisions in the financialstatements for losses on fixed-price contracts, but cannot be certain that the contract loss provisions will be adequate to cover all actual future losses.Included in net sales of the Aerostructures Group is the non-cash amortization of acquired contract liabilities recognized as fair value adjustments throughpurchase accounting of the acquisition of Vought. For the fiscal years ended March 31, 2013, 2012 and 2011, the Company recognized $25,644, $26,684and $29,214, respectively, in net sales in the accompanying Consolidated Statements of Income.The Aftermarket Services Group providers repair and overhaul services, certain of which services are provided under long-term power-by-the-hourcontracts, comprising approximately 6% of the segment's net sales. The Company applies the proportional performance method to recognize revenue underthese contracts. Revenue is recognized over the contract period as units are delivered based on the relative value in proportion to the total estimated contractconsideration. In estimating the total contract consideration, management evaluates the projected utilization of its customer's fleet over the term of the contract,in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization of the fleet bycustomers, among other factors, may have an impact on these estimates and require adjustments to estimates of revenue to be realized.Shipping and Handling CostsThe cost of shipping and handling products is included in cost of products sold.Research and Development ExpenseResearch and development expense (which includes certain amounts subject to reimbursement from customers) was approximately $61,270, $50,116and $50,465 for the fiscal years ended March 31, 2013, 2012 and 2011, respectively.Retirement BenefitsDefined benefit pension plans are recognized in the consolidated financial statements on an actuarial basis. A significant element in determining theCompany's pension income (expense) is the expected long-term rate of return on plan assets. This67 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)expected return is an assumption as to the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in theprojected pension benefit obligation. The Company applies this assumed long-term rate of return to a calculated value of plan assets, which recognizes changesin the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension income(expense). The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects thecalculated value of plan assets and, ultimately, future pension income (expense).The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments arerecognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significantnumber of employees for some or all of their future service.Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognizedwhen the related employees are terminated or a plan amendment is adopted, whichever is applicable.As required under ASC 715, Compensation - Retirement Benefits, the Company remeasures plan assets and obligations during an interim periodwhenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgmentand consideration of events and circumstances impacting the pension costs.At March 31 of each year, the Company determines the fair value of its pension plan assets as well as the discount rate to be used to calculate the presentvalue of plan liabilities. The discount rate is an estimate of the interest rate at which the pension benefits could be effectively settled. In estimating the discountrate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to be available during the period tomaturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least the second-highest rating given by arecognized ratings agency.Fair Value MeasurementsFair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous marketfor the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assetsand liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and alsoconsiders assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may beused to measure fair value: Level 1—Quoted market prices in active markets for identical assets or liabilities; Level 2—Observable market-based inputs orunobservable inputs that are corroborated by market data; and Level 3—Unobservable inputs that are not corroborated by market data. The Company hasapplied fair value measurements to its derivatives and contingent consideration (see Note 19) and to its pension and postretirement plan assets (see Note 15).Foreign Currency TranslationThe determination of the functional currency for Triumph's foreign subsidiaries is made based on appropriate economic factors. The functional currencyof the Company's subsidiary Triumph Aviation Services—Asia is the U.S. dollar since that is the currency in which that entity primarily generates andexpends cash. The functional currency of the Company's remaining subsidiaries is the local currency, since that is the currency in which those entitiesprimarily generate and expend cash. Assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date. Income andexpense items are translated at average monthly rates of exchange. The resultant translation adjustments are included in accumulated other comprehensiveincome (see Note 13). Gains and losses arising from foreign currency transactions of these subsidiaries are included in net income.Income TaxesThe Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assetsand liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of theCompany's assets and liabilities. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not berealized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its consolidated statementsof income.Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Companyuses a two-step process to evaluate tax positions. The first step requires an entity to68 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize inthe financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution ofissues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company infuture periods.Recently Issued Accounting PronouncementsIn July 2012, the Financial Accounting Standards Board ("FASB") issued authoritative guidance included in ASC Topic 350. This guidance permits anentity to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired, as abasis for determining whether it is necessary to perform the quantitative impairment test described in FASB ASC Topic 350. The Company elected to earlyadopt the guidance for the annual impairment test performed during the year ended March 31, 2013. This guidance did not have a material impact on theCompany's consolidated balance sheets, statements of income, or statements of cash flows.In December 2011, the FASB issued Accounting Standards Update ("ASU") 2011-11, Balance Sheet (Topic 210): Disclosures about OffsettingAssets and Liabilities ("ASU 2011-11"). This update will require an entity to disclose information about offsetting and related arrangements to enable usersof its financial statements to understand the effect of those arrangements on its financial position. The update is intended to enhance required disclosures byimproving information about financial instruments and derivative instruments that are either offset in accordance with FASB guidance or are subject to anenforceable master netting arrangement; irrespective of whether they are offset in accordance with FASB guidance. The provisions of ASU 2011-11 areeffective for annual reporting periods beginning on or after January 1, 2013. The adoption of the provisions of ASU 2011-11 is not expected to have a materialimpact on the Company's consolidated financial statements.Effective March 31, 2012, the Company retrospectively adopted ASU 2011-05, Presentation of Comprehensive Income ("ASU 2011-05"). ASU 2011-05 was issued to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items that are recorded inOther Comprehensive Income ("OCI"). This guidance requires that all non-owner changes in stockholders' equity be presented either in a single continuousstatement of comprehensive income or in two separate but consecutive statements where the first statement includes the components of net income and thesecond statement includes the components of OCI. Regardless of whether an entity chooses to present comprehensive income in a single continuous statementor in two separate but consecutive statements, the guidance also would have required an entity to present on the face of the financial statements reclassificationadjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and thecomponents of other comprehensive income are presented. However, subsequent to the issuance of ASU 2011-05, this requirement that companies presentreclassification adjustments for each component of OCI in both net income and OCI on the face of the financial statements was deferred for furtherevaluation. The deferral did not change the requirement to present items of net income, items of other comprehensive income and total comprehensive incomein either one continuous statement or two separate consecutive statements. The Company has elected to present two separate consecutive statements. Theadoption of this standard resulted in a change in presentation and additional footnote disclosure that did not have a significant impact on the Company.Stock-Based CompensationThe Company recognizes compensation expense for share-based awards based on the fair value of those awards at the date of grant. Stock-basedcompensation expense for fiscal years ended March 31, 2013, 2012 and 2011 was $6,367, $4,988 and $3,622, respectively. The benefits of tax deductionsin excess of recognized compensation expense were $4,628, $1,880 and $150 for fiscal years ended March 31, 2013, 2012 and 2011, respectively. Includedin the stock-based compensation for fiscal years ended March 31, 2013 and 2012, is $1,649 and $1,873, respectively, classified as a liability as of March31, 2013 and 2012 associated with each year's grant. The Company has classified share-based compensation within selling, general and administrativeexpenses to correspond with the same line item as the majority of the cash compensation paid to employees. Upon the exercise of stock options or vesting ofrestricted stock, the Company first transfers treasury stock, then will issue new shares. (See Note 16 for further details.)Supplemental Cash Flow InformationFor the fiscal year ended March 31, 2013, the Company paid $3,109 for income taxes, net of income tax refunds received. For the fiscal year endedMarch 31, 2012, the Company received $29,439 in income tax refunds, net of income tax payments. The Company paid $3,688 for income taxes, net ofrefunds received for the fiscal years ended March 31, 2011. The Company made interest payments of $62,229, $72,563 and $58,750 for fiscal yearsended March 31, 2013, 2012 and 2011, respectively, including $12,401 of interest on debt assumed in the acquisition of Vought during the fiscal year endedMarch 31, 2011.69 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)During the fiscal years ended March 31, 2013, 2012 and 2011, the Company financed $66, $84 and $11,569 of property and equipment additionsthrough capital leases, respectively. During the fiscal year ended March 31, 2013 and 2012, the Company issued 395,269 and 772,438 shares, respectively,in connection with certain redemptions of convertible senior subordinated notes (Note 10). During the fiscal year ended March 31, 2011, the Company issued14,992,330 shares valued at $504,867 as partial consideration for the acquisition of Vought (Note 3).Warranty ReservesA reserve has been established to provide for the estimated future cost of warranties on our delivered products. The Company periodically reviews thereserves and adjustments are made accordingly. A provision for warranty on products delivered is made on the basis of historical experience and identifiedwarranty issues. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship. The majority of theCompany's agreements include a three-year warranty, although certain programs have warranties up to 20 years. Warranty reserves are included in accruedexpenses and other noncurrent liabilities.The following is a rollforward of the warranty reserves for the fiscal years ended March 31, 2013 and 2012.Balance, March 31, 2011 $19,711Charges to costs and expenses 3,261Write-offs, net of recoveries (8,483)Exchange rate changes (16)Balance, March 31, 2012 14,473Charges to costs and expenses 517Write-offs, net of recoveries (2,470)Acquired warranty obligations 4,512Exchange rate changes (12)Balance, March 31, 2013 $17,0203.ACQUISITIONSFISCAL 2013 ACQUISTIONSAcquisition of Goodrich Corporation (Goodrich Pump & Engine Control Systems)Effective March 18, 2013, a wholly-owned subsidiary of the Company, Triumph Engine Control Systems, LLC, acquired the assets of GoodrichCorporation (Goodrich Pump & Engine Control Systems) ("GPECS"), a leading independent aerospace fuel system supplier for the commercial, military,helicopter and business jet markets. The acquisition of GPECS provides new capabilities in a market where the Company does not currently participate andfurther diversifies its customer base in electronic engine controls, fuel metering units and main fuel pumps for both OE and aftermarket/spares end markets.The results for Triumph Engine Control Systems, LLC are included in the Aerospace Systems Group segment from the date of acquisition.The purchase price for the GPECS acquisition was $208,650. Goodwill in the amount of $122,756 was recognized for this acquisition and iscalculated as the excess of consideration transferred over the net assets recognized and represents the future economic benefits arising from other assetsacquired that could not be individually identified and separately recognized such as assembled workforce. The goodwill is deductible for tax purposes. TheCompany has also identified intangible assets related to customer relationships valued at approximately $79,589 with a weighted-average life of 12.0 years.The accounting for a business combination is dependent upon obtaining valuations and other information for certain assets and liabilities which have notyet been completed or obtained to a point where definitive estimates can be made. The process for estimating the fair values of identified intangible assets,certain tangible assets and assumed liabilities require the use of judgment to determine the appropriate assumptions.As the acquisition occurred near the end of our fiscal year, substantially all of the purchase price allocation for GPECS is provisional. As the Companyfinalizes estimates of the fair value of assets acquired and liabilities assumed, additional purchase70 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)price adjustments will be recorded during the measurement period not to exceed one year beyond the acquisition date. These adjustments may have a materialimpact on the Company's results of operations and financial position.The table below presents the provisional estimated fair value of assets acquired and liabilities assumed on the acquisition date based on the bestinformation it has received to date, in accordance with ASC 805. These estimates will be revised as the Company receives final appraisal of tangible andintangible assets, certain liabilities assumed and other information related to the GPECS acquisition. Accordingly, the amounts below report the Company'sbest estimate of the fair value based on the information available at this time: March 18, 2013Accounts receivable$15,922Inventory41,219Prepaid expenses and other663Property and equipment27,335Goodwill122,756Intangibles assets79,589Deferred taxes34,022Total assets$321,506 Accounts payable$16,207Accrued expenses11,160Acquired contract liabilities, net80,000Other noncurrent liabilities5,489Total liabilities$112,856Based on the information accumulated to date, the Company's current assessment of the probable outcome of environmental and legal contingencies, theCompany has recognized provisional liabilities which resulted in an amount of $4,600. The provisional amounts recognized are based on the Company's bestestimates using information that it has obtained as of the reporting date. The Company will finalize its estimates once it is able to determine that it has obtainedall necessary information that existed as of the acquisition date related to these matters or one year following the acquisition of GPECS, whichever is earlier.The GPECS acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financial statements fromthe effective date of acquisition. The GPECS acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. TheCompany incurred $2,936 in acquisition-related costs in connection with the GPECS acquisition, which is recorded in selling, general and administrativeexpenses in the accompanying Consolidated Statement of Income.Acquisition of Embee Inc.Effective December 19, 2012, the Company acquired all of the outstanding shares of Embee, Inc. ("Embee"), renamed Triumph Processing — EmbeeDivision, Inc., which is a leading commercial metal finishing provider offering more than seventy metal finishing, inspecting and testing processes primarilyfor the aerospace industry. The acquisition of Embee expands the Company's current capabilities to provide comprehensive processing services on precisionengineered parts for hydraulics, landing gear, spare parts and electronic actuation systems. The results for Triumph Processing — Embee Division, Inc. areincluded in the Aerospace Systems Group segment.The purchase price for the Embee acquisition was $141,732. Goodwill in the amount of $69,306 was recognized for this acquisition and is calculated asthe excess of consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that couldnot be individually identified and separately recognized such as assembled workforce. The goodwill is deductible for tax purposes. The Company has alsoidentified intangible assets valued at $56,066 with a weighted-average life of 10.0 years. The Company has recorded its best estimate of the value of the assetsand liabilities; however, the allocation of the purchase price for Embee is not complete. The purchase consideration will be finalized upon the settlement ofworking capital adjustments with the prior owners. The Company is also awaiting final appraisal of tangible assets, intangible assets and certain contingentliabilities related to the Embee acquisition. Accordingly, the Company71 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)has adjusted the value of intangible assets, property and equipment and contingent liabilities to draft appraisals. Therefore, the allocation of the purchase priceof the Embee acquisition is not complete.The table below presents the provisional estimated fair value of assets acquired and liabilities assumed on the acquisition date based on the bestinformation it has received to date, in accordance with ASC 805: December 19, 2012Cash$750Accounts receivable6,921Inventory411Prepaid expenses and other450Property and equipment14,396Goodwill69,306Intangibles assets56,066Deferred taxes435Other assets6,738Total assets$155,473 Accounts payable$1,591Accrued expenses2,458Other noncurrent liabilities9,692Total liabilities$13,741Based on the information accumulated to date, and the Company's current assessment of the probable outcome of environmental contingencies, theCompany has recognized a provisional liability and an estimated indemnification asset, which resulted in a net amount of $3,505. The provisional amountsrecognized are based on the Company's best estimate using information that it has obtained as of the reporting date. The Company will finalize its estimateonce it is able to determine that it has obtained all necessary information that existed as of the acquisition date related to this matter or one year following theacquisition of Embee, whichever is earlier.The following table is a summary of the fair value estimates of the identifiable intangible assets and their estimated useful lives: Estimated Useful LifeEstimated Fair ValueTradenameIndefinite-lived$13,616Customer relationships10 years42,450 $56,066The Embee acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financial statements fromthe effective date of acquisition. The Embee acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. The Companyincurred $805 in acquisition-related costs in connection with the Embee acquisition, which is recorded in selling, general and administrative expenses in theaccompanying Consolidated Statement of Income.72 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The acquisitions of GPECS and Embee are herein referred to as the "fiscal 2013 acquisitions." The following table presents information for the fiscal2013 acquisitions that is included in the Company's Consolidated Statement of Income from the respective dates of acquisitions through the end of fiscal 2013: Fiscal Year Ended March 31, 2013Net sales $22,190Operating income $5,018The unaudited pro forma results presented below include the effects of the fiscal 2013 acquisitions as if they had been consummated as of April 1, 2011.The pro forma results include the amortization associated with an estimate of acquired intangible assets and interest expense on debt to fund these acquisitions,as well as fair value adjustments for property and equipment and off-market contracts. To better reflect the combined operating results, nonrecurring chargesdirectly attributable to the transaction have been excluded. In addition, the unaudited pro forma results do not include any expected benefits of the acquisitions.Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved hadthe acquisitions been consummated as of April 1, 2011 and have been included in the Company's results of operations for fiscal years 2013 and 2012. (unaudited) Year Ended March31, 2013 2012Net Sales $3,906,527 $3,614,951Income from continuing operations 308,650 286,728Income from continuing operations, per share—basic $6.21 $5.87Income from continuing operations, per share—diluted $5.89 $5.53Aviation Network Services, LLCIn October 2011, the Company's wholly owned subsidiary Triumph Interiors, LLC acquired the assets of Aviation Network Services, LLC ("ANS"), aleading provider of repair and refurbishment of aircraft interiors primarily for commercial airlines. ANS provides Triumph Interiors, LLC with additionalcapacity and expanded product offerings, such as the repair and refurbishment of passenger service units and other interior products. The results of TriumphInteriors, LLC continue to be included in the Company's Aftermarket Services segment.The purchase price for ANS of $9,180 included cash paid at closing, less cash received upon settlement of working capital adjustments and theestimated acquisition-date fair value of contingent consideration. The estimated acquisition-date fair value of contingent consideration relates to an earnout atthe date of acquisition contingent upon the achievement of certain earnings levels during the earnout period. The maximum amounts payable in respect of fiscal2013, 2014 and 2015 are $1,100, $900 and $1,000, respectively. The estimated fair value of the earnout at the date of acquisition is $1,926 and classified asa Level 3 liability in the fair value hierarchy. The excess of the purchase price over the estimated fair value of the net assets acquired of $3,517 was recordedas goodwill. The Company has also identified intangible assets of $4,222 with a weighted-average life of 9.9 years. During the fourth quarter of fiscal 2012,the Company finalized the purchase price allocation. The finalization of the Company's purchase accounting assessment did not result in significantmeasurement period adjustments and did not have a material impact on the Company's Consolidated Balance Sheet, Statement of Income, or Statement ofCash Flows.73 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The following condensed balance sheet represents the amounts assigned to each major asset and liability caption in the aggregate for the acquisition ofANS: October 31, 2011Trade and other receivables$625Inventory545Prepaid expenses and other12Deferred taxes118Property and equipment264Goodwill3,517Intangible assets4,222Total assets$9,303 Accounts payable$79Accrued expenses44Other noncurrent liabilities1,926Total liabilities$2,049The ANS acquisition has been accounted for under the acquisition method of accounting and, accordingly, is included in the consolidated financialstatements from the date of acquisition. The ANS acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. TheCompany incurred $168 in acquisition-related costs in connection with the ANS acquisition recorded in acquisition and integration expenses in theaccompanying Consolidated Statement of Income.Vought Aircraft Industries, Inc.On June 16, 2010, the Company acquired by merger all of the outstanding shares of Vought, now operating as Triumph Aerostructures—VoughtCommercial Division, Triumph Aerostructures—Vought Integrated Programs Division and Triumph Structures—Everett, for cash and stock considerationtotaling $1,052,817. The acquisition of Vought establishes the Company as a leading global manufacturer of aerostructures for commercial, military andbusiness jet aircraft. During the fiscal year ended March 31, 2011, the Company incurred $20,902 in acquisition-related expenses in connection with theacquisition of Vought, including $4,583 of bridge financing fees on undrawn commitments. Such commitments expired upon closing of the acquisition ofVought.4.DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALEIn April 2013, the Company sold the assets and liabilities of Triumph Instruments - Burbank and Triumph Instruments - Ft. Lauderdale ("TriumphInstruments") for total proceeds of $11,426 including cash received at closing of $9,676, a note of $1,500, and the remaining amount held in escrow,resulting in a loss of $1,462 recognized during the quarter ended March 31, 2013. The assets and liabilities of Triumph Instruments were classified as heldfor sale as of March 31, 2013. The loss on the sale of the assets and liabilities of Triumph Instruments is included in the Consolidated Statements of Incomewithin selling, general and administrative expenses for the year ended March 31, 2013. Their operating results are included in the Aftermarket Services Groupthrough the date of disposal. The Company expects to have significant continuing involvement in the business and markets of the disposed entities, as definedby ASC 250-20, Discontinued Operations; and therefore as a result, the disposal group does not meet the criteria to be classified as discontinued operations.To measure the amount of impairment, the Company compared the fair value of assets and liabilities at the evaluation date to the carrying amount at theend of the month prior to the evaluation date. The sale of the Triumph Instruments assets and liabilities are categorized as Level 2 within the fair valuehierarchy. The key assumption included the negotiated sales price of the assets and the assumptions of the liabilities (see Note 19 below for definition oflevels).74 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Assets and liabilities held for sale are comprised of the following: March 31, 2013Assets held for sale: Trade and other receivables, net$2,545Inventories7,668Rotable assets1,957Property, plant and equipment2,431Other146Total assets held for sale$14,747Liabilities related to assets held for sale: Accounts payable$1,515Accrued expenses945Other noncurrent liabilities161Total liabilities related to assets held for sale$2,621In September 2007, the Company decided to sell Triumph Precision Castings Co. ("TPC"), a casting facility in its Aftermarket Services segment thatspecializes in producing high-quality hot gas path components for aero and land-based gas turbines.In July 2011, the Company completed the sale of TPC for proceeds of $3,902, plus contingent consideration, resulting in no gain or loss on the disposal.Revenues of discontinued operations were $286 and $1,832 for the fiscal years ended March 31, 2012 and 2011, respectively. The loss fromdiscontinued operations was $765 and $2,512, net of income tax benefit of $412 and $1,351 for the fiscal years ended March 31, 2012 and 2011,respectively. Interest expense of $68 and $267 was allocated to discontinued operations for the fiscal years ended March 31, 2012 and 2011, respectively,based upon the actual borrowings of the operations, and such interest expense is included in the loss from discontinued operations.In December 2010, the Company sold certain contracts and related assets of the Milwaukee sales office of Triumph Accessory Services—Wellington atnet book value for total proceeds of $3,072, with $2,458 received at closing and $614 received upon expiration of the escrow in December 2011, resulting inno gain or loss on sale.5.INVENTORIESInventories are stated at the lower of cost (average-cost or specific-identification methods) or market. The components of inventories are as follows: March 31, 2013 2012Raw materials$70,242 $53,103Work-in-process965,825 887,686Finished goods75,763 41,617Less: unliquidated progress payments(124,128) (164,450)Total inventories$987,702 $817,956According to the provisions of U.S. Government contracts, the customer has title to, or a security interest in, substantially all inventories related to suchcontracts. Included above is total net inventory on government contracts of $59,616 and $63,570, respectively, at March 31, 2013 and 2012.Work-in-process inventory includes capitalized pre-production costs. Capitalized pre-production costs include nonrecurring engineering, planning anddesign, including applicable overhead, incurred before production is manufactured on a regular basis. Significant customer-directed work changes can alsocause pre-production costs to be incurred. These costs are typically recovered over a contractually determined number of ship set deliveries and the Companybelieves these amounts will75 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)be fully recovered. The balance of capitalized pre-production costs at March 31, 2013 and 2012 was $71,167 and $19,385, respectively, related to theCompany's contract with Bombardier for the Global 7000/8000 program.The Company is still in the early-development stages for the Bombardier Global 7000/8000 program, as these aircrafts are not scheduled to enter serviceuntil 2014 or later. Transition of this program from development to recurring production levels is dependent upon the success of the program at achieving flighttesting and certification, as well as the ability of the Bombardier Global 7000/8000 program to generate acceptable levels of aircraft sales. The failure to achievethese milestones and level of sales or significant cost overruns may result in an impairment of the capitalized pre-production costs.6.PROPERTY AND EQUIPMENTNet property and equipment at March 31, 2013 and 2012 is: March 31, 2013 2012Land$46,745 $36,995Construction in process81,949 29,523Buildings and improvements269,205 234,088Furniture, fixtures and computer equipment119,773 113,523Machinery and equipment778,816 721,215 1,296,488 1,135,344Less accumulated depreciation480,940 401,964 $815,548 $733,380Depreciation expense for the fiscal years ended March 31, 2013, 2012 and 2011 was $93,848, $85,811 and $68,891, respectively, which includesdepreciation of assets under capital lease. Included in furniture, fixtures and computer equipment above is $69,811 and $67,112, respectively, of capitalizedsoftware at March 31, 2013 and 2012, which were offset by accumulated depreciation of $33,087 and $22,275, respectively.76 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)7.GOODWILL AND OTHER INTANGIBLE ASSETSThe following is a summary of the changes in the carrying value of goodwill by reportable segment, for the fiscal years ended March 31, 2013 and 2012: Aerostructures AerospaceSystems AftermarketServices TotalBalance, March 31, 2012$1,307,709 $182,443 $55,986 $1,546,138Goodwill recognized in connection with acquisitions— 192,062 — 192,062Purchase accounting adjustments8,741 — — 8,741Effect of exchange rate changes— (1,620) — (1,620)Balance, March 31, 2013$1,316,450 $372,885 $55,986 $1,745,321 Aerostructures AerospaceSystems AftermarketServices TotalBalance, March 31, 2011$1,294,478 $183,633 $52,469 $1,530,580Goodwill recognized in connection with acquisitions1,949 — 3,517 5,466Purchase price adjustments(215) — — (215)Purchase accounting adjustments11,497 — — 11,497Effect of exchange rate changes— (1,190) — (1,190)Balance, March 31, 2012$1,307,709 $182,443 $55,986 $1,546,138The fiscal year ended March 31, 2013 purchase accounting adjustment of $8,741 relates to an earnout on an acquisition accounted for prior to theadoption of ASC 805 for which the earnings target was achieved during the period.The fiscal year ended March 31, 2012 purchase accounting adjustments of $11,497 relate to immaterial errors identified and corrected subsequent to theend of the measurement period.Intangible AssetsThe components of intangible assets, net are as follows: March 31, 2013 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships15.3 $578,699 $(98,528) $480,171Product rights and licenses12.0 37,776 (27,731) 10,045Noncompete agreements and other8.8 2,205 (1,624) 581TradenameIndefinite-lived 438,616 — 438,616Total intangibles, net $1,057,296 $(127,883) $929,413 March 31, 2012 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships16.3 $460,054 $(70,169) $389,885Product rights and licenses12.0 37,776 (24,208) 13,568Noncompete agreements and other13.0 7,327 (6,104) 1,223TradenameIndefinite-lived 425,000 — 425,000Total intangibles, net $930,157 $(100,481) $829,67677 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Amortization expense for the fiscal years ended March 31, 2013, 2012 and 2011 was $35,658, $33,913 and $30,766, respectively. Amortizationexpense for the five fiscal years succeeding March 31, 2013 by year is expected to be as follows: 2014: $44,376; 2015: $43,485; 2016: $43,419; 2017:$39,710; 2018: $37,068 and thereafter: $282,740.8.ACCRUED EXPENSESAccrued expenses are composed of the following items: March 31, 2013 2012Accrued pension$3,923 $3,938Deferred revenue, advances and progress billings32,302 29,916Accrued other postretirement benefits32,430 36,526Accrued compensation116,382 123,141Accrued interest16,714 14,773Warranty reserve11,550 11,416Accrued workers' compensation15,402 13,365Accrued insurance12,738 13,534All other30,797 65,011Total accrued expenses$272,238 $311,62078 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)9.LEASESAt March 31, 2013, future minimum payments under noncancelable operating leases with initial or remaining terms of more than one year were asfollows: 2014—$20,953; 2015—$16,725; 2016—$14,951; 2017—$11,369; 2018—$9,018 and thereafter—$18,520 through 2027. In the normalcourse of business, operating leases are generally renewed or replaced by other leases.At March 31, 2013, future minimum sublease rentals are as follows: 2014—$547; 2015—$557; 2016—$567; 2017—$557 and 2018—$291.Total rental expense was $38,349, $39,625 and $43,865 for the fiscal years ended March 31, 2013, 2012 and 2011, respectively.10.LONG-TERM DEBTLong-term debt consists of the following: March 31, 2013 2012Revolving credit facility$95,849 $320,000Receivable securitization facility150,000 120,000Equipment leasing facility61,449 61,301Secured promissory notes8,741 —Senior subordinated notes due 2017173,344 173,061Senior notes due 2018348,133 347,867Senior notes due 2021375,000 —Convertible senior subordinated notes109,369 128,655Other debt7,978 7,978 1,329,863 1,158,862Less: current portion133,930 142,237 $1,195,933 $1,016,625Revolving Credit FacilityOn May 23, 2012, the Company amended and restated its existing credit agreement (the “Credit Facility”) with its lenders to (i) increase the availabilityunder the Credit Facility to $1,000,000, with a $50,000 accordion feature, from $850,000, (ii) extend the maturity date to May 23, 2017 and (iii) amendcertain other terms and covenants. The amendment results in a more favorable pricing grid and a more streamlined package of covenants and restrictions. Inconnection with the amendment to the Credit Facility, the Company incurred approximately $2,100 of financing costs. These costs, along with the $7,000 ofunamortized financing costs prior to the closing, are being amortized over the remaining term of the Credit Facility.On April 5, 2011, in connection with a prior amendment and restatement of the Credit Facility, the Company repaid in full its then-outstanding term loancredit agreement (the "Term Loan") at face value of $350,000, plus accrued interest. As a result, the Company recognized a pre-tax loss on extinguishment ofdebt of $7,712 associated with the write-off of the remaining unamortized discount and deferred financing fees on the Term Loan included in interest expenseand other for the year ended March 31, 2012.The obligation under the Credit Facility and related documents are secured by liens on substantially all assets of the Company and its domesticsubsidiaries pursuant to an Amended and Restated Guarantee and Collateral Agreement, dated as of April 5, 2011, among the Company, and the subsidiariesof the Company party thereto.Pursuant to the Credit Facility, the Company can borrow, repay and re-borrow revolving credit loans, and cause to be issued letters of credit, in anaggregate principal amount not to exceed $1,000,000 outstanding at any time. The Credit Facility bears interest at either: (i) LIBOR plus between 1.50% and2.75%; (ii) the prime rate; or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company’s ratio of totalindebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.30%and79 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)0.50% on the unused portion of the Credit Facility. The Company’s obligations under the Credit Facility are guaranteed by the Company’s domesticsubsidiaries.At March 31, 2013, there were $95,849 in outstanding borrowings and $31,415 in letters of credit under the Credit Facility primarily to supportinsurance policies. At March 31, 2012, there were $320,000 in borrowings and $33,240 in letters of credit outstanding. The level of unused borrowingcapacity under the Credit Facility varies from time to time depending in part upon the Company's compliance with financial and other covenants set forth inthe related agreement. The Credit Facility contains certain affirmative and negative covenants including limitations on specified levels of indebtedness toearnings before interest, taxes, depreciation and amortization, and interest coverage requirements, and includes limitations on, among other things, liens,mergers, consolidations, sales of assets, payment of dividends and incurrence of debt. If an event of default were to occur under the Credit Facility, the lenderswould be entitled to declare all amounts borrowed under it immediately due and payable. The occurrence of an event of default under the Credit Facility couldalso cause the acceleration of obligations under certain other agreements. The Company is in compliance with all such covenants as of March 31, 2013. As ofMarch 31, 2013, the Company had borrowing capacity under the Credit Facility of $872,736 after reductions for borrowings and letters of credit outstandingunder the Credit Facility.Receivables Securitization ProgramIn February 2013, the Company amended its $175,000 receivable securitization facility (the "Securitization Facility"), extending the term throughFebruary 2016. In connection with the Securitization Facility, the Company sells on a revolving basis certain eligible accounts receivable to TriumphReceivables, LLC, a wholly owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduitssponsored by financial institutions. The Company is the servicer of the accounts receivable under the Securitization Facility. As of March 31, 2013, themaximum amount available under the Securitization Facility was $175,000. Interest rates are based on prevailing market rates for short-term commercialpaper plus a program fee and a commitment fee. The program fee is 0.43% on the amount outstanding under the Securitization Facility. Additionally, thecommitment fee is 0.43% on 102% of the maximum amount available under the Securitization Facility. At March 31, 2013, $150,000 was outstanding underthe Securitization Facility. In connection with amending the Securitization Facility, the Company incurred approximately $196 of financing costs. Thesecosts, along with the $537 of unamortized financing costs prior to the amendment, are being amortized over the life of the Securitization Facility. TheCompany securitizes its accounts receivable, which are generally non-interest bearing, in transactions that are accounted for as borrowings pursuant to theTransfers and Servicing topic of the ASC.The agreement governing the Securitization Facility contains restrictions and covenants which include limitations on the making of certain restrictedpayments, creation of certain liens, and certain corporate acts such as mergers, consolidations and the sale of substantially all assets. The Company is incompliance with all such covenants as of March 31, 2013.Equipment Leasing Facility and Other Capital LeasesDuring March 2009, the Company entered into a seven-year Master Lease Agreement ("Leasing Facility") creating a capital lease of certain existingproperty and equipment. The net proceeds from the Leasing Facility were used to repay a portion of the outstanding indebtedness under the Company's 2009Credit Agreement. The Leasing Facility bears interest at a weighted-average fixed rate of 6.2% per annum.During the fiscal years ended March 31, 2013, 2012 and 2011, the Company entered into new capital leases in the amounts of $66, $84 and $11,569,respectively, to finance a portion of the Company's capital additions for the respective years.Senior Subordinated Notes Due 2017On November 16, 2009, the Company issued $175,000 principal amount of 8.00% Senior Subordinated Notes due 2017 (the "2017 Notes"). The 2017Notes were sold at 98.56% of principal amount and have an effective interest yield of 8.25%. Interest on the 2017 Notes is payable semiannually in cash inarrears on May 15 and November 15 of each year. In connection with the issuance of the 2017 Notes, the Company incurred approximately $4,390 of costs,which were deferred and are being amortized on the effective interest method over the term of the 2017 Notes.The 2017 Notes are senior subordinated unsecured obligations of the Company and rank subordinated to all of the existing and future senior indebtednessof the Company and the Guarantor Subsidiaries (defined below), including borrowings under the Company's existing Credit Facility, and pari passu with theCompany's and the Guarantor Subsidiaries' existing and future senior subordinated indebtedness. The 2017 Notes are guaranteed, on a full, joint and severalbasis, by each of the Company's domestic restricted subsidiaries that guarantees any of the Company's debt or that of any of the Company's restrictedsubsidiaries under the Credit Facility, and in the future by any domestic restricted subsidiaries that guarantee any of the Company's debt or that of any of theCompany's domestic restricted subsidiaries incurred under any credit facility (collectively,80 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)the "Guarantor Subsidiaries"), in each case on a senior subordinated basis. If the Company is unable to make payments on the 2017 Notes when they aredue, each of the Guarantor Subsidiaries would be obligated to make them instead.The Company has the option to redeem all or a portion of the 2017 Notes at any time prior to November 15, 2013 at a redemption price equal to 100% ofthe principal amount of the 2017 Notes redeemed plus an applicable premium set forth in the Indenture and accrued and unpaid interest, if any. The 2017Notes are also subject to redemption, in whole or in part, at any time on or after November 15, 2013, at redemption prices equal to (i) 104% of the principalamount of the 2017 Notes redeemed, if redeemed prior to November 15, 2014, (ii) 102% of the principal amount of the 2017 Notes redeemed, if redeemedprior to November 15, 2015 and (iii) 100% of the principal amount of the Notes redeemed, if redeemed thereafter, plus accrued and unpaid interest. Inaddition, at any time prior to November 15, 2012, the Company may redeem up to 35% of the principal amount of the 2017 Notes with the net cash proceedsof qualified equity offerings at a redemption price equal to 108% of the aggregate principal amount plus accrued and unpaid interest, if any, subject to certainlimitations set forth in the indenture governing the 2017 Notes (the "Indenture").Upon the occurrence of a change of control, the Company must offer to purchase the 2017 Notes from holders at 101% of their principal amount plusaccrued and unpaid interest, if any, to the date of purchase.The Indenture contains covenants that, among other things, limit the Company's ability and the ability of any of the Guarantor Subsidiaries to (i) grantliens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the GuarantorSubsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose ofsubstantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restrictedsubsidiaries, and (viii) enter into transactions with affiliates.Senior Notes due 2018On June 16, 2010, in connection with the acquisition of Vought, the Company issued $350,000 principal amount of 8.63% Senior Notes due 2018 (the"2018 Notes"). The 2018 Notes were sold at 99.27% of principal amount and have an effective interest yield of 8.75%. Interest on the 2018 Notes accrues atthe rate of 8.63% per annum and is payable semiannually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2011. Inconnection with the issuance of the 2018 Notes, the Company incurred approximately $7,307 of costs, which were deferred and are being amortized on theeffective interest method over the term of the 2018 Notes.The 2018 Notes are the Company's senior unsecured obligations and rank equally in right of payment with all of its other existing and future seniorunsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2018 Notes are guaranteed on a full,joint and several basis by each of the Guarantor Subsidiaries.The Company may redeem some or all of the 2018 Notes prior to July 15, 2014 by paying a "make-whole" premium. The Company may redeem some orall of the 2018 Notes on or after July 15, 2014 at specified redemption prices. In addition, prior to July 15, 2013, the Company may redeem up to 35% of the2018 Notes with the net proceeds of certain equity offerings at a redemption price equal to 108.63% of the aggregate principal amount plus accrued and unpaidinterest, if any, subject to certain limitations set forth in the indenture governing the 2018 Notes (the "2018 Indenture").The Company is obligated to offer to repurchase the 2018 Notes at a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any,as a result of certain change of control events and (ii) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain assetsales. These restrictions and prohibitions are subject to certain qualifications and exceptions.The 2018 Indenture contains covenants that, among other things, limit the Company's ability and the ability of any of the Guarantor Subsidiaries to(i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the GuarantorSubsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose ofsubstantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restrictedsubsidiaries, and (viii) enter into transactions with affiliates.81 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Senior Notes due 2021On February 26, 2013, the Company issued $375,000 principal amount of 4.875% Senior Notes due 2021 (the "2021 Notes"). The 2021 Notes weresold at 100% of principal amount and have an effective interest yield of 4.875%. Interest on the Notes accrues at the rate of 4.875% per annum and is payablesemiannually in cash in arrears on April 1 and October 1 of each year, commencing on October 1, 2013. In connection with the issuance of the 2021 Notes,the Company incurred approximately $6,327 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2021Notes.The 2021 Notes are the Company's senior unsecured obligations and rank equally in right of payment with all of its other existing and future seniorunsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2021 Notes are guaranteed on a full,joint and several basis by each of the Guarantor Subsidiaries.The Company may redeem some or all of the 2021 Notes prior to April 1, 2017 by paying a "make-whole" premium. The Company may redeem some orall of the 2021 Notes on or after April 1, 2017 at specified redemption prices. In addition, prior to April 1, 2016, the Company may redeem up to 35% of the2021 Notes with the net proceeds of certain equity offerings at a redemption price equal to 104.875% of the aggregate principal amount plus accrued andunpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2021 Notes (the "2021 Indenture").The Company is obligated to offer to repurchase the 2021 Notes at a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any,as a result of certain change of control events and (ii) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain assetsales. These restrictions and prohibitions are subject to certain qualifications and exceptions.The 2021 Indenture contains covenants that, among other things, limit the Company's ability and the ability of any of the Guarantor Subsidiaries to(i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the GuarantorSubsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose ofsubstantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restrictedsubsidiaries, and (viii) enter into transactions with affiliates.Convertible Senior Subordinated NotesOn September 18, 2006, the Company issued $201,250 in convertible senior subordinated notes (the "Convertible Notes"). The Convertible Notes aredirect, unsecured, senior subordinated obligations of the Company, and rank (i) junior in right of payment to all of the Company's existing and future seniorindebtedness, (ii) equal in right of payment with any other future senior subordinated indebtedness, and (iii) senior in right of payment to all subordinatedindebtedness.The Company received net proceeds from the sale of the Convertible Notes of approximately $194,998 after deducting debt issuance costs ofapproximately $6,252. The issuance costs were allocated to the respective liability and equity components, with the liability component recorded as otherassets and the equity component recorded as a reduction of equity in the accompanying Consolidated Balance Sheets. Debt issuance costs were fully amortizedas of September 30, 2011.The Convertible Notes bear interest at a fixed rate of 2.63% per annum, payable in cash semiannually in arrears on each April 1 and October 1 beginningApril 1, 2007. During the period commencing on October 6, 2011 and ending on, but excluding, April 1, 2012 and each semiannual period from October 1 toMarch 31 or from April 1 to September 30 thereafter, the Company pays contingent interest during the applicable interest period if the average trading price of anote for the five consecutive trading days ending on the third trading day immediately preceding the first day of the relevant semiannual period equals orexceeds 120% of the principal amount of the Convertible Notes. The contingent interest payable per note in respect of any semiannual period will equal 0.25%per annum calculated on the average trading price of a note for the relevant five trading day period. This contingent interest feature represents an embeddedderivative. The value of the derivative was not material at March 31, 2013 due to overall market volatility, recent conversions by holders of the ConvertibleNotes, as well as the Company's ability to call the Convertible Notes at any time after October 6, 2011.Prior to fiscal 2011, the Company paid $19,414 to purchase $22,200 in principal amount of the Convertible Notes.The Convertible Notes mature on October 1, 2026 unless earlier redeemed, repurchased or converted. The Company may redeem the Convertible Notesfor cash, either in whole or in part, anytime on or after October 6, 2011 at a redemption price equal to 100% of the principal amount of the Convertible Notesto be redeemed plus accrued and unpaid interest, including contingent interest and additional amounts, if any, up to but not including the date of redemption.In addition, holders of the Convertible Notes will have the right to require the Company to repurchase for cash all or a portion of their Convertible Notes82 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)on October 1, 2011, 2016 and 2021, at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued andunpaid interest, including contingent interest and additional amounts, if any, up to, but not including, the date of repurchase. The Convertible Notes areconvertible into the Company's common stock at a rate equal to 36.8162 shares per $1 principal amount of the Convertible Notes (equal to an initialconversion price of approximately $27.16 per share), subject to adjustment as described in the Indenture. Upon conversion, the Company will deliver to theholder surrendering the Convertible Notes for conversion, for each $1 principal amount of Convertible Notes, an amount consisting of cash equal to the lesserof $1 and the Company's total conversion obligation and, to the extent that the Company's total conversion obligation exceeds $1, at the Company's election,cash or shares of the Company's common stock in respect of the remainder.A holder may surrender its Convertible Notes for conversion: (i) during any fiscal quarter if the last reported sale price of the Company's common stockfor at least twenty trading days during the period of thirty consecutive trading days ending on the last trading day of the previous fiscal quarter is more than130% of the applicable conversion price per share of the Company's common stock on such trading day; (ii) during the five business days immediatelyfollowing any five consecutive trading-day period in which the trading price per $1 principal amount of a note for each day of that period was less than 98%of the product of the closing price of the Company's common stock and the conversion rate of the Convertible Notes on each such day; (iii) if the Companyhas called the Convertible Notes for redemption; (iv) on the occurrence of a specified corporate transaction as provided in the indenture governing the Notes(i.e., change in control, distribution of rights or warrants to purchase common stock below market value, distribution of assets (including cash) with a pershare value exceeding 10% of the market value of common stock); or (v) during the two-month period prior to maturity (starting August 1, 2026). The lastreported sale price of the Company's common stock on any date means the closing sales price per share on such date as reported by the New York StockExchange.The Convertible Notes are eligible for conversion upon meeting certain conditions as provided in the indenture governing the Convertible Notes. For theperiods from January 1, 2011 through March 31, 2013, the Convertible Notes were eligible for conversion. During the fiscal years ended March 31, 2013 and2012, the Company settled the conversion of $19,286 and $50,395, respectively, in principal value of the Convertible Notes, as requested by the respectiveholders, with the principal settled in cash and the conversion benefit settled through the issuance of 395,269 and 772,438 shares, respectively. In Marchthrough May 2013, the Company received notice of conversion from holders of $77,260 in principal value of the Convertible Notes. These conversions weresettled in the first quarter of fiscal 2014 with the principal settled in cash and the conversion benefit settled through the issuance of 1,844,714 shares. In April2013, the Company delivered a notice to holders of the Convertible Notes to the effect that, for at least twenty trading days during the thirty consecutive tradingdays preceding March 31, 2013, the closing price of the Company's common stock was greater than or equal to 130% of the conversion price of such notes onthe last trading day. Under the terms of the Convertible Notes, the increase in the Company's stock price triggered a provision, which gave holders of theConvertible Notes a put option through June 30, 2013. Accordingly, the balance sheet classification of the Convertible Notes will be short term for as long asthe put option remains in effect.To be included in the calculation of diluted earnings per share, the average price of the Company's common stock for the fiscal year must exceed theconversion price per share of $27.16. The average price of the Company's common stock for the fiscal years ended March 31, 2013, 2012 and 2011 was$64.30, $53.26 and $39.48, respectively. Therefore, 2,400,439, 2,606,189 and 2,040,896 additional shares, respectively, were included in the dilutedearnings per share calculation.Term Loan Credit AgreementThe Company entered into a Term Loan dated as of June 16, 2010, which proceeds were used to partially finance the acquisition of Vought. The TermLoan provided for a six-year term loan in a principal amount of $350,000, repayable in equal quarterly installments at a rate of 1.00% of the original principalamount per year, with the balance payable on the final maturity date. The proceeds of the loans under the Term Loan, which were 99.50% of the principalamount, were used to consummate the acquisition of Vought. In connection with the closing on the Term Loan, the Company incurred approximately $7,133of costs, which were deferred and were being amortized into expense over the term of the Term Loan.The obligations under the Term Loan were guaranteed by substantially all of the Company's domestic subsidiaries and secured by liens on substantiallyall of the Company's and the guarantors' assets pursuant to a Guarantee and Collateral Agreement (the "Term Loan Guarantee and Collateral Agreement") andcertain other collateral agreements, in each case subject to the Intercreditor Agreement. Borrowings under the Term Loan bear interest, at the Company's option,at either the base rate (subject to a 2.50% floor), plus a margin between 1.75% and 2.00%, or at the Eurodollar Rate (subject to a 1.50% floor), plus a margindriven by net leverage between 2.75% and 3.00%.83 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)On April 5, 2011, in connection with the amendment and restatement of the Credit Facility, the Company extinguished the Term Loan at face value of$350,000, plus accrued interest. As a result, the Company recognized a pre-tax loss on extinguishment of debt of $7,712 associated with the write-off of theremaining unamortized discount and deferred financing fees on the Term Loan included in Interest expense and other.Interest paid on indebtedness during the fiscal years ended March 31, 2013, 2012 and 2011 amounted to $62,229, $72,563 and $58,750, respectively.Interest capitalized during the fiscal years ended March 31, 2013, 2012 and 2011 was $1,114, $1,077 and $1,289, respectively.As of March 31, 2013, the maturities of long-term debt are as follows: 2014—$133,930; 2015—$163,966; 2016—$14,446; 2017—$4,027;2018—$279,186; and thereafter—$737,831 through 2021.11.OTHER NONCURRENT LIABILITIESOther noncurrent liabilities are composed of the following items: March 31, 2013 2012Acquired contract liabilities, net$123,006 $68,650Deferred grant income26,205 28,295Accrued workers' compensation18,793 20,861Environmental contingencies14,133 2,288Accrued warranties5,470 3,057Income tax reserves2,060 1,531Contingent consideration2,614 2,019All other11,474 9,586Total other noncurrent liabilities$203,755 $136,28712.INCOME TAXESThe components of pretax income are as follows: Year ended March 31, 2013 2012 2011Foreign$11,829 $10,200 $10,423Domestic451,228 427,377 224,054 $463,057 $437,577 $234,47784 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The components of income tax expense are as follows: Year ended March 31, 2013 2012 2011Current: Federal$(24,403) $2,012 $(2,955)State1,830 352 1,331Foreign1,516 138 1,607 (21,057) 2,502 (17)Deferred: Federal176,187 137,642 74,084State10,789 16,359 7,999Foreign(209) (548) — 186,767 153,453 82,083 $165,710 $155,955 $82,066A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: Year ended March 31, 2013 2012 2011Statutory federal income tax rate35.0% 35.0% 35.0%State and local income taxes, net of federal tax benefit1.8 2.5 2.6Miscellaneous permanent items and nondeductible accruals(0.3) (0.8) 0.1Research and development tax credit(1.1) (0.7) (1.4)Foreign tax credits— (0.1) —Other0.4 (0.3) (1.3)Effective income tax rate35.8% 35.6% 35.0% 85 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The components of deferred tax assets and liabilities are as follows: March 31, 2013 2012Deferred tax assets: Net operating loss and other credit carryforwards$93,941 $144,616Inventory12,072 13,354Accruals and reserves45,413 57,504Pension and other postretirement benefits273,386 302,262Acquired contract liabilities, net47,991 25,960Other849 2,796 473,652 546,492Valuation allowance(549) (347)Net deferred tax assets473,103 546,145Deferred tax liabilities: Long-term contract accounting205,463 154,846Property and equipment151,340 153,086Goodwill and other intangible assets327,037 332,759Prepaid expenses and other20,151 20,802 703,991 661,493Net deferred tax liabilities$230,888 $115,348As of March 31, 2013, the Company has federal and state net operating loss carryforwards of $531,479 expiring in various years through 2032. TheCompany also has a foreign net operating loss carryforward of $3,676. There was an increase in total valuation allowance for fiscal 2013 in the amount of$202, primarily associated with the establishment of the valuation allowance on foreign net operating loss carryforwards.The effective income tax rate for the fiscal year ended March 31, 2013 was 35.8% as compared to 35.6% for the fiscal year ended March 31, 2012. Theeffective income tax rate for the fiscal year ended March 31, 2013 reflects the retroactive reinstatement of the research and development tax credit back toJanuary 1, 2012. In fiscal 2013, the Company filed a refund claim for approximately $25,189 as a result of carrying back tax losses to prior years and isincluded in other long term assets on the accompanying Consolidated Balance Sheet. The income tax provision for the fiscal year ended March 31, 2013included $2,219 of tax expense due to the recapture of domestic production deductions taken in those carry back periods.The Company has been granted an income tax holiday as an incentive to attract foreign investment by the Government of Thailand. The tax holidayexpires in November 2014. We do not have any other tax holidays in the jurisdictions in which we operate. The income tax benefit attributable to the tax statusof our subsidiary in Thailand was approximately $1,549 or $0.03 per diluted share in fiscal 2013, $2,514 or $0.05 per diluted share in fiscal 2012 and$1,972 or $0.04 per diluted share in fiscal 2011.Cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been recorded, is $36,804 atMarch 31, 2013. As the Company currently intends to indefinitely reinvest all such earnings, no provision has been made for income taxes that may becomepayable upon distribution of such earnings, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability.The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year. Penalties and tax-relatedinterest expense are reported as a component of income tax expense. As of March 31, 2013 and 2012, the total amount of accrued income tax-related interest andpenalties was $236 and $239, respectively.As of March 31, 2013 and 2012, the total amount of unrecognized tax benefits was $7,728 and $7,199, respectively, of which $5,945 and $5,415,respectively, would impact the effective rate, if recognized. The Company anticipates that total unrecognized tax benefits may be reduced by $43 in the next12 months.86 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for fiscal years ended before March 31, 2009, state orlocal examinations for fiscal years ended before March 31, 2007, or foreign income tax examinations by tax authorities for fiscal years ended before March 31,2008.As of March 31, 2013, the Company was subject to examination in two state jurisdictions for the fiscal years ended March 31, 2007 through March 31,2011. The Company has filed appeals in a prior state examination related to fiscal years ended March 31, 1999 through March 31, 2005. The fiscal yearended March 31, 2011 is currently being examined by the Internal Revenue Service. The Company was also subject to two foreign jurisdictions for fiscalyears ended March 31, 2010 through March 31, 2012. Because of net operating losses acquired as part of the acquisition of Vought, the Company is subject toU.S. federal income tax examinations and various state jurisdiction examinations for the years ended December 31, 2004 and after related to previously filedVought tax returns. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.During the fiscal years ended March 31, 2013, 2012 and 2011, the Company added $3, $82 and $23 of interest and penalties related to activity foridentified uncertain tax positions, respectively.A reconciliation of the liability for uncertain tax positions for the fiscal years ended March 31, 2013 and 2012 follows: Ending Balance—March 31, 2011$6,937Additions for tax positions related to the current year345Additions for tax positions of prior years—Reductions for tax positions of prior years(149)Reductions as a result of a lapse of statute of limitations—Settlements—Ending Balance—March 31, 20127,133Additions for tax positions related to the current year544Additions for tax positions of prior years33Reductions for tax positions of prior years—Reductions as a result of a lapse of statute of limitations—Settlements—Ending Balance—March 31, 2013$7,71013.STOCKHOLDERS' EQUITYIn February 2008, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to an additional500,000 shares of its common stock. As a result, as of May 29, 2013, the Company remains able to purchase an additional 500,800 shares. Repurchasesmay be made from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limithas been set for completion of the program.During the fiscal year ended March 31, 2013 and 2012, the Company settled the conversion of $19,286 and $50,395, respectively, in principal valueof the Convertible Notes, as requested by the respective holders, with the principal settled in cash and the conversion benefit settled through the issuance of395,269 shares and 772,438 shares, respectively.In June 2010, the Company issued 14,992,330 shares of common stock as partial consideration for the acquisition of Vought (see Note 3).The holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders of Triumph.The Company has preferred stock of $0.01 par value, 250,000 shares authorized. At March 31, 2013 and 2012, zero shares of preferred stock wereoutstanding.87 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Accumulated Other Comprehensive LossThe components of accumulated other comprehensive loss are as follows: March 31, 2013 2012Pension and postretirement adjustments, net of income taxes of $38,769 and $9,060, respectively$(64,616) $(14,783)Unrealized gains (losses) on derivatives, net of income taxes of ($79) and ($80), respectively131 132Foreign currency translation adjustments3,513 5,345 $(60,972) $(9,306)The effect of reclassifications into and out of accumulated other comprehensive (loss) income related to pension and other postretirement adjustments are asfollows: March 31, 2013 2012 2011Amounts arising during the period - gains (losses), net of tax expense(benefits): Prior service credit, net of taxes of $0, ($2,715) and ($43,081), respectively— 4,430 70,339Actuarial (loss) gain, net of taxes of $27,375, $58,737, and ($26,687),respectively(45,976) (95,832) 43,587Reclassifications from accumulated other comprehensive income -(gains) losses, net of tax expense (benefits): Amortization of net loss, net of taxes of ($119), ($41) and ($47), respectively199 67 76Recognized prior service costs (credits), net of taxes of $2,453, $22,036 and($476), respectively(4,056) (35,954) 778 $(49,833) $(127,289) $114,78088 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)14.EARNINGS PER SHAREThe following is a reconciliation between the weighted-average common shares outstanding used in the calculation of basic and diluted earnings per share: Year ended March 31, 2013 2012 2011 (thousands)Weighted-average common shares outstanding—basic49,663 48,821 45,006Net effect of dilutive stock options and nonvested stock382 446 440Net effect of convertible debt2,401 2,606 2,042Weighted-average common shares outstanding—diluted52,446 51,873 47,48815.EMPLOYEE BENEFIT PLANSDefined Contribution Pension PlanThe Company sponsors a defined contribution 401(k) plan, under which salaried and certain hourly employees may defer a portion of theircompensation. Eligible participants may contribute to the plan up to the allowable amount as determined by the plan of their regular compensation before taxes.The Company generally matches contributions up to 60% of the first 6% of compensation contributed by the participant, calculated as 100% of the first 2%contributed, plus 40% of the next 4% contributed. All contributions and Company matches are invested at the direction of the employee in one or more mutualfunds. Company matching contributions vest immediately and aggregated $19,509, $19,701 and $22,853 for the fiscal years ended March 31, 2013, 2012and 2011, respectively.Defined Benefit Pension and Other Postretirement Benefit PlansThe Company sponsors several defined benefit pension plans covering some of its employees. Certain employee groups are ineligible to participate in theplans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the definedbenefit pension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on averagecompensation for certain years. It is the Company's policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methodsand assumptions acceptable under U.S. Government regulations, by making payments into a trust separate from us.In addition to the defined benefit pension plans, the Company provides certain healthcare and life insurance benefits for eligible retired employees. Suchbenefits are unfunded as of March 31, 2013. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if theymeet specified age and years of service requirements. Election to participate for some employees must be made at the date of retirement. Qualifying dependentsat the date of retirement are also eligible for medical coverage. Current plan documents reserve the right to amend or terminate the plans at any time, subject toapplicable collective bargaining requirements for represented employees. From time to time, changes have been made to the benefits provided to various groupsof plan participants. Premiums charged to most retirees for medical coverage prior to age 65 are based on years of service and are adjusted annually forchanges in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also haveprovisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, schedules of reasonable fees, preferred provider networks,coordination of benefits with other plans and a Medicare carve-out.The Company also sponsors an unfunded supplemental executive retirement plan ("SERP") that provides retirement benefits to certain key employees.In accordance with ASC 715, the Company has recognized the funded status of the benefit obligation as of March 31, 2013, in the accompanyingConsolidated Balance Sheet. The funded status is measured as the difference between the fair value of the plans' assets and the PBO or accumulated postretirement benefit obligation of the plan. The majority of the plan assets are publicly traded investments which were valued based on the market price as of themeasurement date. Investments that are not publicly traded were valued based on the estimated fair value of those investments based on our evaluation of datafrom fund managers and comparable market data.89 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The following table sets forth the Company's consolidated defined benefit pension plans for its union and non-union employees and its SERP as of March31, 2013 and 2012, and the amounts recorded in the Consolidated Balance Sheets at March 31, 2013 and 2012. Company contributions include amountscontributed directly to plan assets and indirectly as benefits are paid from the Company's assets. Benefit payments reflect the total benefits paid from the plansand the Company's assets. Information on the plans includes both the qualified and nonqualified plans. Pension Benefits OtherPostretirementBenefits Year ended March 31, Year ended March 31, 2013 2012 2013 2012Change in projected benefit obligations Projected benefit obligation at beginning of year$2,241,741 $2,022,561 $380,802 $369,826Service cost18,503 16,456 3,538 3,393Interest cost98,348 108,059 15,762 18,473Actuarial loss (gain)179,046 290,276 (25,523) 26,951Acquisitions1,000 — 2,008 —Plan amendments— (7,145) — —Participant contributions— — 6,760 5,662Curtailments19,812 (56,701) — —Special termination benefits10,819 1,625 — 421Benefits paid(179,068) (133,390) (35,792) (43,924)Projected benefit obligation at end of year$2,390,201 $2,241,741 $347,555 $380,802Accumulated benefit obligation at end of year$2,365,235 $2,214,640 $347,555 $380,802Weighted-average assumptions used to determine benefitobligations at end of year Discount rate4.07% 4.62% 3.79% 4.35%Rate of compensation increase3.50% 3.50% N/A N/A90 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) Pension Benefits OtherPostretirementBenefits Year ended March 31, Year ended March 31, 2013 2012 2013 2012Change in fair value of plan assets Fair value of plan assets at beginning of year$1,881,954 $1,659,592 $— $—Actual return on plan assets217,506 233,559 — —Participant contributions— — 6,760 5,662Company contributions109,818 122,193 29,032 38,262Benefits paid(179,068) (133,390) (35,792) (43,924)Fair value of plan assets at end of year$2,030,210 $1,881,954 $— $—Funded status (underfunded) Funded status$(359,991) $(359,787) $(347,555) $(380,802)Reconciliation of amounts recognized in the consolidatedbalance sheets Accrued benefit liability—current$(3,923) $(3,938) $(32,448) $(36,526)Accrued benefit liability—noncurrent(356,068) (355,849) (315,107) (344,276)Net amount recognized$(359,991) $(359,787) $(347,555) $(380,802)Reconciliation of amounts recognized in accumulated othercomprehensive income Prior service costs$(39,181) $(41,160) $(17,740) $(22,270)Actuarial losses151,582 53,026 8,724 34,247Income tax (benefits) related to above items(42,152) (4,509) 3,383 (4,551)Unamortized benefit plan costs (gains)$70,249 $7,357 $(5,633) $7,42691 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The components of net periodic benefit cost for fiscal years ended March 31, 2013, 2012 and 2011 are as follows: Pension Benefits OtherPostretirement Benefits Year Ended March 31, Year Ended March 31, 2013 2012 2011 2013 2012 2011Components of net periodicpension cost Service cost$18,503 $16,456 $17,020 $3,538 $3,393 $3,115Interest cost98,348 108,059 93,162 15,762 18,473 16,672Expected return on plan assets(137,334) (127,603) (93,121) — — —Amortization of prior service(credit) cost(5,829) (11,014) 1,631 (4,529) (4,529) (377)Amortization of net loss318 109 123 — — —Curtailment loss (gain)23,662 (42,446) — — — —Special termination benefits10,819 1,625 — — 421 —Total net periodic benefit (income)expense$8,487 $(54,814) $18,815 $14,771 $17,758 $19,410Weighted-average assumptionsused to determine net periodicpension cost Discount rate4.62% 5.58% 6.00% 4.35% 5.25% 5.58%Expected long-term rate on assets8.25% 8.50% 8.50% N/A N/A N/ARate of compensation increase3.50% 3.50% 3.50% N/A N/A N/AThe discount rate is determined annually as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporatebonds. At the end of each year, the discount rate is primarily determined using the results of bond yield curve models based on a portfolio of high-qualitybonds matching notional cash inflows with the expected benefit payments for each significant benefit plan.The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments arerecognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significantnumber of employees for some or all of their future service.Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognizedwhen the related employees are terminated or a plan amendment is adopted, whichever is applicable.As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occur thatresults in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events andcircumstances impacting the pension costs.The following summarizes the key events whose effects on net periodic benefit cost and obligations are included in the tables above:•In April 2012, the Company completed an early retirement incentive offer with a portion of its second largest union-represented group of productionand maintenance employees. The early retirement incentive offer provided for an increase in the pension benefits payable to covered employees whoretire no later than November 30, 2012. This early retirement incentive resulted in a special termination benefit expense of $1,150 and is presented onthe accompanying Consolidated Statement of Income as "Curtailments and early retirement incentives."•In July 2012, the Company completed a similar early retirement incentive offer to its non-represented employee participants. This early retirementincentive provided for an increase in the termination benefits payable through the pension plan to covered employees who retire no later thanNovember 30, 2012. This early retirement incentive resulted in a special termination benefit expense of $1,957 and is presented on theaccompanying Consolidated92 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Statement of Income as "Curtailments and early retirement incentives," as well as severance charges of $1,182 included in "Acquisition andintegration expenses" on the accompanying Consolidated Statement of Income.•In October 2012, the Company completed an early retirement incentive offer with a portion of its largest union-represented group of production andmaintenance employees. The early retirement offer provided for an increase in the pension benefits to covered employees who retire no later thanMarch 31, 2013. This early retirement incentive resulted in a special termination benefit expense of $2,030 and is presented on the accompanyingConsolidated Statement of Income within "Curtailments and early retirement incentives."•In February 2013, the Company completed a second early retirement incentive offer with an expanded portion of its largest union-represented group ofproduction and maintenance employees. The early retirement offer provided for the same increase, as the October 2012 offer, in pension benefits tocovered employees who retire no later than September 1, 2013. This early retirement incentive resulted in a special termination benefit expense of$5,682. In addition, the Company concluded that the February 2013 offer and the October 2012 offer represented such similar actions that theyneeded to be combined to assess whether the resulting change in the remaining service period indicated that a curtailment had occurred. TheCompany concluded that a curtailment had occurred and recorded a curtailment loss of $21,843 included in "Curtailments and early retirementincentives" on the Consolidated Statement of Income for the fiscal year ended March 31, 2013.•In February 2013, the Company committed to a plan to relocate from its largest operating facility. In connection with this relocation plan, theCompany will exit this facility's Fabrications operations resulting in the termination of a number of defined benefit plan participants. The Companyconcluded that these terminations will result in a significant reduction in the remaining service period and recorded a curtailment loss of $1,819included in "Curtailments and early retirement incentives" on the Consolidated Statement of Income for the fiscal year ended March 31, 2013.•In December 2011, the Company negotiated the termination of one of its smaller defined benefit plans. This termination resulted in a $1,625 specialtermination benefit, included in "Curtailments and early retirement incentives" on the Consolidated Statement of Income for the fiscal year endedMarch 31, 2012.•In February 2012, the Company's second largest union-represented group of production and maintenance employees ratified a new collectivebargaining agreement. The agreement provides actively employed participants the option to elect a lump-sum distribution upon retirement effectiveApril 1, 2012. This change resulted in a reduction to the projected benefit obligation of approximately $7,145.•In March 2012, the Company announced an amendment to the retirement plans of its non-represented employee participants. Effective April 1, 2013,most actively employed participants with 30 years of service and certain highly compensated employees as of April 1, 2012 will no longer continue toaccrue a benefit. Those changes resulted in a reduction of the projected pension obligation of $56,701 and a related curtailment gain of $42,446included in "Curtailments and early retirement incentives" on the Consolidated Statement of Income for the fiscal year ended March 31, 2012.The following table shows those amounts expected to be recognized in net periodic benefit costs during the fiscal year ending March 31, 2014: PensionBenefits OtherPostretirementBenefitsAmounts expected to be recognized in FY 2014 net periodic benefit costs Prior service cost ($4,183 and $2,830 net of tax, respectively)$(6,692) $(4,530)Actuarial loss ($11,173 net of tax)17,876 —93 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Expected Pension Benefit PaymentsThe total estimated future benefit payments for the pension plans are expected to be paid from the plan assets and company funds. The otherpostretirement plan benefit payments reflect the Company's portion of the funding. Estimated future benefit payments from plan assets and Company fundsfor the next ten years are as follows:YearPensionBenefits OtherPostretirementBenefits*2014$219,122 $33,0572015165,402 28,7032016161,633 28,2912017159,458 28,0132018157,215 27,5472019 - 2023758,887 125,594* Net of expected Medicare Part D subsidies of $1.8 million to $1.9 million per yearPlan Assets, Investment Policy and StrategyThe table below sets forth the Company's target asset allocation for fiscal 2014 and the actual asset allocations at March 31, 2013 and 2012. ActualAllocation TargetAllocation March 31,Asset CategoryFiscal 2014 2013 2012Equity securities50 - 65% 48% 50%Fixed income securities20 - 45% 47 44Alternative investment funds2 - 10% 5 6Total 100% 100%Pension plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over thelong-term. The investment goals are to exceed the assumed actuarial rate of return over the long-term within reasonable and prudent levels of risks and to meetfuture obligations.Asset / liability studies are conducted on a regular basis to provide guidance in setting investment goals for the pension portfolio and its asset allocation.The asset allocation aims to prudently achieve a strong, risk-adjusted return while seeking to minimize funding level volatility and improve the funded statusof the plans. The pension plans currently employ a liability-driven investment (LDI) approach, where assets and liabilities move in the same direction. Thegoal is to limit the volatility of the funding status and cover part, but not all, of the changes in liabilities. Most of the liabilities' changes are due to interest ratemovements.To balance expected risk and return, allocation targets are established and monitored against acceptable ranges. All investment policies and procedures aredesigned to ensure that the plans' investments are in compliance with the Employee Retirement Income Security Act of 1974 (ERISA). Guidelines areestablished defining permitted investments within each asset class. Each investment manager has contractual guidelines to ensure that investments are madewithin the parameters of their asset class or in the case of multi-asset class managers, the parameters of their multi-asset class strategy. Certain investments arenot permitted at any time including investment directly in employer securities and uncovered short sales.94 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The tables below provides the fair values of the Company's plan assets at March 31, 2013 and 2012 by asset category. The table also identifies the levelof inputs used to determine the fair value of assets in each category (see Note 19 below for definition of levels).March 31, 2013 Level 1 Level 2 Level 3 TotalAssets Cash and cash equivalents$33,851 $800 $— $34,651Equity securities International213,785 — — 213,785US equity62,071 — — 62,071US commingled fund625,671 — — 625,671International commingled fund31,879 29,367 — 61,246Fixed income securities Corporate bonds— 14,572 — 14,572Government securities— 161,879 — 161,879Commingled fund664,609 84,651 — 749,260Other fixed income— 10,234 — 10,234Other Private equity and infrastructure— — 95,015 95,015Total investment in securities—assets$1,631,866 $301,503 $95,015 $2,028,384Receivables 2,120Payables (294)Total plan assets $2,030,21095 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)March 31, 2012 Level 1 Level 2 Level 3 TotalAssets Cash and cash equivalents$152,009 $73,675 $— $225,684Equity securities International147,784 — — 147,784US equity24,250 — — 24,250US commingled fund45,019 165,308 — 210,327International commingled fund567 111,394 — 111,961Fixed income securities Corporate bonds— 115,316 — 115,316Government securities— 180,385 — 180,385Commingled fund— 413,268 — 413,268Mortgage-backed securities— 114,271 — 114,271Other fixed income— 60,396 — 60,396Other Futures— 13,192 — 13,192Private equity and infrastructure— — 109,727 109,727Real estate— — — —Commingled fund swaps— 166,411 — 166,411Total investment in securities—assets$369,629 $1,413,616 $109,727 $1,892,972Liabilities Other investments Futures$— $(3,523) $— $(3,523)Total investment in securities—liabilities$— $(3,523) $— $(3,523)Net investment in securities$369,629 $1,410,093 $109,727 $1,889,449Receivables 13,002Payables (20,497)Total plan assets $1,881,954Cash equivalents and other short-term investments are primarily held in registered short-term investment vehicles which are valued using a marketapproach based on quoted market prices of similar instruments.Public equity securities, including common stock, are primarily valued using a market approach based on the closing fair market prices of identical orcomparable instruments, in the principal market on which they are traded. Commingled equity funds are public investment vehicles valued using the net assetvalue (NAV) provided by the fund manager. The NAV is the total value of the fund divided by the number of shares outstanding. Commingled equity fundsare categorized as Level 1 if traded at their NAV on a nationally recognized securities exchange or categorized as Level 2 if the NAV is corroborated byobservable market data (e.g., purchases or sale activity).Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads andreported trades.Other investments include the net unrealized gain/loss for the Company's futures, the fair value of the swaps, as well as private equity and real estate.Futures are financial contracts obligating the Company to purchase assets at a predetermined date and time. Swaps are an exchange of one security for anotherto change the maturity or the quality of the investments. These securities are valued using the most accurate pricing service. Private equity, real estate values,and infrastructure investments, which are not readily marketable, are carried at estimated fair value as determined based on an evaluation of data provided byfund managers, including valuations of the underlying investments derived using inputs such as cost, operating results, discounted future cash flows, andmarket-based comparable data.96 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The following table represents a rollforward of the balances of our pension plan assets that are valued using Level 3 inputs: March 31, 2012Balance Net Purchases(Sales) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2013BalancePrivate equity funds$109,727 $(17,743) $2,241 $790 $95,015 March 31, 2011Balance Net Purchases(Sales) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2012BalancePrivate equity funds$98,674 $1,163 $(1,729) $11,619 $109,727Real estate51,734 (54,510) 2,776 — —Total$150,408 $(53,347) $1,047 $11,619 $109,727Assumptions and SensitivitiesThe discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds.The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.The effect of a 25 basis-point change in discount rates as of March 31, 2013 is shown below: Pension Benefits OtherPostretirementBenefitsIncrease of 25 basis points Obligation*$(63,100) $(7,400)Net periodic expense 1,100 500Decrease of 25 basis points Obligation*$64,900 $7,700Net periodic expense 8,200 (500)* Excludes impact to plan assets due to the LDI investment approach discussed above under "Plan Assets, Investment Policy and Strategy."The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide for the benefits included in thebenefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, theanticipated long-term asset allocation of the plans, historical plan return data, plan expenses and the potential to outperform market index returns. The expectedlong-term rate of return on assets was 8.25%. For fiscal 2014, the expected long-term rate of return is 8.25%.A significant factor used in estimating future per capita cost of covered healthcare benefits for our retirees and us is the healthcare cost trend rateassumption. The rate used at March 31, 2013 was 8.00% and is assumed to decrease gradually to 4.50% by fiscal 2019 and remain at that level thereafter.The effect of a one-percentage-point change in the healthcare cost trend rate in each year is shown below: Other Postretirement Benefits One-Percentage-Point Increase One-Percentage-Point DecreaseNet periodic expense$(661) $(606)Obligation(11,303) (11,159)Anticipated Contributions to Defined Benefit PlansAssuming a normal retirement age of 65, the Company expects to contribute $119,623 to its defined benefit pension plans and $33,058 to its OPEBduring fiscal 2014. No plan assets are expected to be returned to the Company in fiscal 2014.97 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)16.STOCK COMPENSATION PLANSThe Company has stock incentive plans under which employees and non-employee directors may be granted options to purchase shares of theCompany's common stock at the fair value at the time of the grant. Employee options and non-employee director options are fully vested as of March 31, 2013.There were no employee or non-employee director options granted during fiscal years ended March 31, 2013, 2012 and 2011. The Company recognizedcompensation expense for the fair values of these awards on a straight-line basis over the requisite service period of these awards.In fiscal 2006, the Company approved the granting of restricted stock as its primary form of share-based incentive. The restricted shares are subject toforfeiture should the grantee's employment be terminated prior to the fourth anniversary of the date of grant, and are included in capital in excess of par value.Restricted shares generally vest in full after three or four years. The fair value of restricted shares under the Company's restricted stock plans is determined bythe product of the number of shares granted and the grant date market price of the Company's common stock. Certain of these awards contain performanceconditions, in addition to service conditions. The fair value of restricted shares is expensed on a straight-line basis over the requisite service period of three orfour years.The Company recognized $6,367, $4,988 and $3,622 of share-based compensation expense during the fiscal years ended March 31, 2013, 2012 and2011, respectively. The total income tax benefit recognized for share-based compensation arrangements for fiscal years ended March 31, 2013, 2012 and 2011was $2,228, $1,746 and $1,268, respectively.A summary of the Company's stock option activity and related information for its option plans for the fiscal year ended March 31, 2013 was as follows: Options Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm (in Years) AggregateIntrinsic ValueOutstanding at March 31, 2012201,244 $16.42 Granted— — Exercised(128,356) 16.65 Forfeited(2,000) 22.46 Outstanding at March 31, 201370,888 $15.85 1.6 $3,435Exercisable at March 31, 201370,888 $15.85 1.6 $3,435As of March 31, 2013 and 2012, all stock options are fully vested with no expected future compensation expense related to them. The intrinsic value ofstock options exercised during the fiscal years ended March 31, 2013, 2012 and 2011 was $6,281, $4,928 and $3,702, respectively.At March 31, 2013 and 2012, 2,306,925 shares and 2,425,782 shares of common stock, respectively, were available for issuance under the plans. Asummary of the status of the Company's nonvested shares of restricted stock and deferred stock units as of March 31, 2013 and changes during the fiscalyear ended March 31, 2013, is presented below: Shares Weighted-Average GrantDate Fair ValueNonvested restricted stock and deferred stock units at March 31, 2012370,292 $33.34Granted118,857 62.25Vested(117,376) 21.26Forfeited(8,310) 45.97Nonvested restricted stock and deferred stock units at March 31, 2013363,463 $46.41The fair value of restricted stock which vested during fiscal 2013 was $7,458. The tax benefit from vested restricted stock was $1,840, $609 and$1,862 during the fiscal years ended March 31, 2013, 2012 and 2011, respectively. The weighted-average grant date fair value of share-based grants in thefiscal years ended March 31, 2013, 2012 and 2011 was $62.25, $42.76 and $38.19, respectively. Expected future compensation expense on restricted stocknet of expected forfeitures, is approximately $3,854, which is expected to be recognized over the remaining weighted-average vesting period of 1.6 years.98 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)In April 2013, 71,631 restricted shares were granted following the determination of net earnings per share and return on net assets for fiscal 2013. Certainof these awards contain performance conditions, in addition to service conditions. Expected future compensation expenses on this April 2013 grant, net ofexpected forfeitures, is approximately $3,830, which is expected to vest over the remaining vesting period of 2.5 years.During the fiscal years ended March 31, 2013, 2012 and 2011, 17,000, 6,650 and 11,000 deferred stock units were granted to the non-employeemembers of the Board of Directors, respectively, under the Directors' Plan. Each deferred stock unit represents the contingent right to receive one share of theCompany's common stock. The deferred stock units vest over a three or four-year period and the shares of common stock underlying vested deferred stockunits will be delivered on January 1 of the year following the year in which the non-employee director terminates service as a Director of the Company.17.COMMITMENTS AND CONTINGENCIESTrade Secret Litigation over Claims of Eaton CorporationOn July 9, 2004, Eaton Corporation and several of its subsidiaries ("Eaton") sued the Company, a subsidiary and certain employees of the Companyand the subsidiary on claims alleging misappropriation of trade secrets and intellectual property allegedly belonging to Eaton relating to the design andmanufacture of hydraulic pumps and motors used in military and commercial aviation. The subsidiary and the individual engineer defendants answeredEaton's claims and filed counterclaims, while the Company and an officer of the Company moved to dismiss for lack of personal jurisdiction. In the course ofdiscovery in the suit, the court began an investigation of allegations of wrongdoing by Eaton in its conduct of the litigation. Eaton denied, and continues todeny, these allegations. On December 22, 2010, however, the court dismissed all of Eaton's claims with prejudice based on the court's conclusion that a fraudhad been perpetrated on the court by counsel for Eaton of which Eaton was aware or should have been aware. Meanwhile, the Company, several subsidiaries,and the employees sued by Eaton are now pursuing claims (including antitrust claims) and counterclaims against Eaton based on the Eaton misconduct thatled to the dismissal of Eaton's claims. Given the court's dismissal of Eaton's claims, we cannot conclude that a loss arising from Eaton's claims is probable;however, given the unusual nature and complexity of the case, we also cannot conclude that the probability of loss is remote, nor can we reasonably estimatethe possible loss, or range of loss, that could be incurred by the Company if Eaton were to prevail on appeal and in the litigation that would follow. Even ifEaton were to prevail on appeal, however, we believe we have substantial defenses and would expect to defend the claims vigorously.OtherCertain of the Company's business operations and facilities are subject to a number of federal, state, local and foreign environmental laws andregulations. Former owners generally indemnify the Company for environmental liabilities related to the assets and businesses acquired which existed prior tothe acquisition dates. In the opinion of management, there are no significant environmental contingent liabilities which would have a material effect on thefinancial condition or operating results of the Company which are not covered by such indemnification.The Company's risk related to pension projected obligations as of March 31, 2013 is significant. This amount is currently in excess of the related planassets. Benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments in realestate and other alternative investments. The market value of all of these investment categories may be adversely affected by external events and the movementsand volatility in the financial markets including such events as the current credit and real estate market conditions. Declines in the market values of our planassets could expose the total asset balance to significant risk which may cause an increase to future funding requirements. The Company's risk related toOPEB projected obligations as of March 31, 2013 is also significant.Some raw materials and operating supplies are subject to price and supply fluctuations caused by market dynamics. The Company's strategic sourcinginitiatives seek to find ways of mitigating the inflationary pressures of the marketplace. In recent years, these inflationary pressures have affected the marketfor raw materials. However, the Company believes that raw material prices will remain stable through the remainder of fiscal 2013 and after that, experienceincreases that are in line with inflation. Additionally, the Company generally does not employ forward contracts or other financial instruments to hedgecommodity price risk.99 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The Company's suppliers' failure to provide acceptable raw materials, components, kits and subassemblies would adversely affect production schedulesand contract profitability. The Company maintains an extensive qualification and performance surveillance system to control risk associated with suchsupply base reliance. The Company is dependent on third parties for certain information technology services. To a lesser extent, the Company is also exposedto fluctuations in the prices of certain utilities and services, such as electricity, natural gas, chemical processing and freight. The Company utilizes a range oflong-term agreements and strategic aggregated sourcing to optimize procurement expense and supply risk in these categories.In the ordinary course of business, the Company is also involved in disputes, claims, lawsuits, and governmental and regulatory inquiries that it deemsto be immaterial. Some may involve claims or potential claims of substantial damages, fines or penalties. While the Company cannot predict the outcome ofany pending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a materialeffect, individually or in the aggregate, on its financial position or results of operations.18.RELOCATION COSTSDuring the fiscal year ended March 31, 2013, the Company committed to relocate the operations of its largest facility in Dallas, TX and to expand its RedOak, Texas ("Red Oak") facility to accommodate this relocation. The Company incurred approximately $18,113 in capital expenditures during the fiscal yearended March 31, 2013 associated with this plan, and expects total capital expenditures to be between approximately $90,800 to $102,000 related to theexpansion of Red Oak. The Company incurred approximately $1,795 of expenses related to the relocation during fiscal year 2013 and expects to incurapproximately $28,000 to $40,000 for the fiscal year end March 31, 2014. The relocation is expected to be completed in early fiscal 2015.19.FAIR VALUE MEASUREMENTSThe Company follows the Fair Value Measurement and Disclosures topic of the ASC, which requires additional disclosures about the Company'sassets and liabilities that are measured at fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputsand minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:Level 1.Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2.Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities inmarkets that are not active, or inputs other than quoted prices that are observable for the asset or liabilityLevel 3.Unobservable inputs for the asset or liabilityRecurring MeasurementsThe following table provides the liabilities reported at fair value in Other noncurrent liabilities and assets reported at fair value in Prepaid and other currentassets, each measured on a recurring basis: March 31, 2013 Quoted Pricesin ActiveMarkets forIdentical Assets SignificantOtherObservableInputs SignificantUnobservableInputsDescriptionTotal (Level 1) (Level 2) (Level 3)Contingent consideration liabilities$(2,614) $— $— $(2,614)Derivative assets$209 $— $209 $—100 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) March 31, 2012 Quoted Pricesin ActiveMarkets forIdentical Assets SignificantOtherObservableInputs SignificantUnobservableInputsDescriptionTotal (Level 1) (Level 2) (Level 3)Contingent consideration liabilities$(2,019) $— $— $(2,019)Derivative assets$212 $— $212 $—The following table presents quantitative information for liabilities recorded at fair value using Level 3 inputs: March 31, 2013Balance Valuation Technique Unobservable input RangeContingent consideration$(2,614) Discounted cash flow Earnings of acquired company $0 - $3,000 March 31, 2012Balance Valuation Technique Unobservable input RangeContingent consideration$(2,019) Discounted cash flow Earnings of acquired company $0 - $3,000The fair value of the contingent consideration at the date of the acquisition of ANS was $1,926 which was estimated using the income approach based onsignificant inputs that are not observable in the market. The recorded balance of such contingent consideration as of March 31, 2013 and 2012 was $2,614and $2,019, respectively. The maximum amount of the ANS earnout that could be earned is $3,000. Key assumptions included a discount rate andprobability assessments of each milestone payment being made. The assumptions used to develop the estimate have not changed since the date of acquisition,with the exception of the present value factor.Due to changes in the projected earnings over the related contingent consideration period, the Company concluded that the fair value of the contingentconsideration for the acquisition of Fabritech, which was acquired in March 2010, was zero as of March 31, 2013. The maximum amount of the earnout thatcould be earned is $16,000. As a result, a benefit of $2,870 was recognized and included within "Interest expense and other" for the fiscal year ended March31, 2012. In addition, the Company considered these changes in projected earnings to be an indicator of impairment of the associated long-lived asset group(whose carrying value was $9,265 at December 31, 2011) and, as a result, tested these long-lived assets for recoverability as of December 31, 2011 andconcluded the long-lived asset group was recoverable.Derivative liabilities included in the table above relate to derivative financial instruments that the Company uses to manage its exposure to fluctuations inforeign currency exchange rates. Foreign currency exchange contracts are entered into to manage the exchange rate risk of forecasted foreign currencydenominated cash payments. The foreign currency exchange contracts are designated as cash flow hedges. The classification of gains and losses resultingfrom changes in the fair values of derivatives is dependent on the intended use of the derivative and its resulting designation. Adjustments to reflect changes infair values of derivatives attributable to the effective portion of hedges that are considered highly effective hedges are reflected net of income taxes inaccumulated other comprehensive income (loss) until the hedged transaction is recognized in earnings. Changes in the fair value of the derivatives that areattributable to the ineffective portion of the hedges, or of derivatives that are not considered to be highly effective hedges, if any, are immediately recognized inearnings within "Interest expense and other." The aggregate notional amount of our outstanding foreign currency exchange contracts at March 31, 2013 was$8,118.The effect of derivative instruments in the Consolidated Statements of Income is as follows: Amount of Gain (Loss) in OCI(Effective Portion)Year ended March 31, Reclassification AdjustmentGain (Loss) AmountYear ended March 31, Reclassification AdjustmentGain (Loss) Location(Effective Portion) Cash Flow Hedges2013 2012 2013 2012DerivativesInterest expense and other $(1) $(364) $(102) $156The amount of ineffectiveness on derivatives is not significant. The Company estimates that approximately $131 of losses presently in accumulated othercomprehensive income (loss) will be reclassified into earnings during fiscal 2014.101 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The following table represents a rollforward of the balances of our liabilities recorded at fair value that are valued using Level 3 inputs: March 31, 2012Balance Net Purchases(Sales), Issues (Settlements) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2013BalanceContingent consideration$2,019 $— $595 $— $2,614 March 31, 2011Balance Net Purchases(Sales), Issues(Settlements) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2012BalanceContingent consideration$2,870 $1,926 $(2,777) $— $2,019The Financial Instruments topic of the ASC requires disclosure of the estimated fair value of certain financial instruments. These estimated fair valuesas of March 31, 2013 and 2012 have been determined using available market information and appropriate valuation methodologies. Considerable judgment isrequired to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company couldrealize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on theseestimates of fair value.Nonrecurring MeasurementsThe sale of the Triumph Instruments assets and liabilities are categorized as level 2 within the fair value hierarchy (Note 4).Financial Instruments Not Recorded at Fair ValueThe carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable and accounts payable,approximate fair value because of their short maturities (level 1 inputs). Carrying amounts and the related estimated fair values of the Company's financialinstruments not recorded at fair value in the financial statements are as follows: March 31, 2013 March 31, 2012 CarryingValue FairValue CarryingValue FairValueLong-term debt$1,329,863 $1,594,800 $1,158,862 $1,385,264The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the Company'sexisting debt arrangements or broker quotes on our existing debt (Level 2 inputs).20.CUSTOMER CONCENTRATIONTrade accounts receivable from The Boeing Company ("Boeing") represented approximately 32% and 37% of total accounts receivable as of March 31,2013 and 2012, respectively. The Company had no other significant concentrations of credit risk. Sales to Boeing for fiscal 2013 were $1,829,200, or 49% ofnet sales, of which $1,719,485, $73,794 and $35,921 were from the Aerostructures segment, the Aerospace Systems segment and the Aftermarket Servicessegment, respectively. Sales to Boeing for fiscal 2012 were $1,589,432, or 47% of net sales, of which $1,493,786, $65,159 and $30,487 were from theAerostructures segment, the Aerospace Systems segment and the Aftermarket Services segment, respectively. Sales to Boeing for fiscal 2011 were $1,317,398,or 45% of net sales, of which $1,226,246, $58,207 and $32,945 were from the Aerostructures segment, the Aerospace Systems segment and theAftermarket Services segment, respectively. No other single customer accounted for more than 10% of the Company's net sales; however, the loss of anysignificant customer, including Boeing, could have a material adverse effect on the Company and its operating subsidiaries.The Company currently generates a majority of its revenue from clients in the commercial aerospace industry, the military, and the regional airlineindustry. The Company's growth and financial results are largely dependent on continued demand for its products and services from clients in theseindustries. If any of these industries experiences a downturn, clients in these sectors may conduct less business with the Company.102 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)21.COLLECTIVE BARGAINING AGREEMENTSApproximately 27% of the Company's labor force is covered under collective bargaining agreements. Approximately 64% of the Company's collectivelybargained workforce are working under contracts set to expire within one year.22.SEGMENTSThe Company reports financial performance based on the following three reportable segments: the Aerostructures Group, the Aerospace Systems Groupand the Aftermarket Services Group. The Company's CODM utilizes Adjusted EBITDA as a primary measure of profitability to evaluate performance of itssegments and allocate resources.The Aerostructures segment consists of the Company's operations that manufacture products primarily for the aerospace OEM market. TheAerostructures segment's revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structuralcomponents, including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces as well as helicopter cabins. Further, thesegment's operations also design and manufacture composite assemblies for floor panels and environmental control system ducts. These products are sold tovarious aerospace OEMs on a global basis.The Aerospace Systems segment consists of the Company's operations that also manufacture products primarily for the aerospace OEM market. Thesegment's operations design and engineer mechanical and electromechanical controls, such as hydraulic systems, main engine gearbox assemblies,accumulators, mechanical control cables and non-structural cockpit components. These products are sold to various aerospace OEMs on a global basis.The Aftermarket Services segment consists of the Company's operations that provide maintenance, repair and overhaul services to both commercial andmilitary markets on components and accessories manufactured by third parties. Maintenance, repair and overhaul revenues are derived from services onauxiliary power units, airframe and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic driveunits. In addition, the segment's operations repair and overhaul thrust reversers, nacelle components and flight control surfaces. The segment's operations alsoperform repair and overhaul services and supply spare parts for various types of cockpit instruments and gauges for a broad range of commercial airlines ona worldwide basis.Segment Adjusted EBITDA is total segment revenue reduced by operating expenses (less depreciation and amortization) identifiable with that segment.Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Company's segments, including curtailments andearly retirement incentives on the Company's defined benefit plans, such as the $34,481 curtailment loss and early retirement incentives for the fiscal yearended March 31, 2013.The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the Companydoes not disclose net sales by product or service because to do so would be impracticable.Selected financial information for each reportable segment and the reconciliation of Adjusted EBITDA to operating income before interest is as follows:103 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) Year Ended March 31, 2013 2012 2011Net sales: Aerostructures$2,781,344 $2,571,576 $2,126,040Aerospace systems615,771 551,800 513,435Aftermarket services314,507 292,674 272,728Elimination of inter-segment sales(8,920) (8,121) (6,855) $3,702,702 $3,407,929 $2,905,348Income before income taxes: Operating income (loss): Aerostructures$469,873 $403,414 $267,783Aerospace systems103,179 90,035 75,292Aftermarket services45,380 31,859 28,774Corporate(87,219) (10,593) (57,813) 531,213 514,715 314,036Interest expense and other68,156 77,138 79,559 $463,057 $437,577 $234,477Depreciation and amortization: Aerostructures$95,884 $89,113 $69,451Aerospace systems19,870 17,363 17,183Aftermarket services9,118 9,487 11,101Corporate4,634 3,761 1,922 $129,506 $119,724 $99,657Amortization of acquired contract liabilities, net: Aerostructures$25,457 $26,684 $29,214Aerospace systems187 — — $25,644 $26,684 $29,214Adjusted EBITDA: Aerostructures$540,300 $465,843 $308,020Aerospace systems122,862 107,398 92,475Aftermarket services54,498 41,346 39,875Corporate(48,104) (47,232) (55,891) $669,556 $567,355 $384,479 Year Ended March 31, 2013 2012 2011Capital expenditures: Aerostructures$90,466 $64,633 $57,390Aerospace systems19,388 14,747 11,534Aftermarket services14,820 8,682 4,656Corporate2,216 5,907 16,445 $126,890 $93,969 $90,025104 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) March 31, 2013 2012Total Assets: Aerostructures$3,707,527 $3,635,676Aerospace systems1,040,032 556,485Aftermarket services327,609 317,322Corporate108,337 87,741 $5,183,505 $4,597,224During fiscal years ended March 31, 2013, 2012 and 2011, the Company had foreign sales of $504,079, $463,864 and $394,827, respectively. TheCompany reports as foreign sales those sales with delivery points outside of the United States. As of March 31, 2013 and 2012, the Company had foreignlong-lived assets of $98,828 and $90,336, respectively.23.SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORSThe Company's 2017 Notes, the 2018 Notes and the 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by GuarantorSubsidiaries. The total assets, stockholder's equity, revenue, earnings and cash flows from operating activities of the Guarantor Subsidiaries exceeded amajority of the consolidated total of such items as of and for the periods reported. The only consolidated subsidiaries of the Company that are not guarantorsof the 2017 Notes, the 2018 Notes and the 2021 Notes (the "Non-Guarantor Subsidiaries") are: (i) the receivables securitization special purpose entity, and(ii) the foreign operating subsidiaries. The following tables present condensed consolidating financial statements including Triumph Group, Inc. (the"Parent"), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries. Such financial statements include balance sheets as of March 31, 2013 and2012, statements of income and comprehensive income for the fiscal years ended March 31, 2013, 2012 and 2011, and statements of cash flows for the fiscalyears ended March 31, 2013, 2012 and 2011.105 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)SUMMARY CONSOLIDATING BALANCE SHEETS: March 31, 2013 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalCurrent assets: Cash and cash equivalents$3,110 $1,537 $27,390 $— $32,037Trade and other receivables, net1,141 171,128 261,657 — 433,926Inventories— 956,880 30,822 — 987,702Rotable assets— 24,903 9,950 — 34,853Deferred income taxes— 99,546 — — 99,546Prepaid expenses and other5,533 15,102 2,890 — 23,525Assets held for sale— 14,747 — — 14,747Total current assets9,784 1,283,843 332,709 — 1,626,336Property and equipment, net9,999 753,974 51,575 — 815,548Goodwill and other intangible assets, net335 2,628,883 45,516 — 2,674,734Other, net58,526 7,968 393 — 66,887Intercompany investments and advances741,172 325,786 1,528 (1,068,486) —Total assets$819,816 $5,000,454 $431,721 $(1,068,486) $5,183,505Current liabilities: Current portion of long-term debt$109,648 $24,282 $— $— $133,930Accounts payable9,400 309,571 8,663 — 327,634Accrued expenses35,894 226,830 9,514 — 272,238Liabilities related to assets held forsale— 2,621 — — 2,621Total current liabilities154,942 563,304 18,177 — 736,423Long-term debt, less current portion998,200 47,733 150,000 — 1,195,933Intercompany debt(2,396,495) 2,193,874 202,621 — —Accrued pension and otherpostretirement benefits, noncurrent7,264 663,911 — — 671,175Deferred income taxes and other10,747 525,318 (1,249) — 534,816Total stockholders' equity2,045,158 1,006,314 62,172 (1,068,486) 2,045,158Total liabilities and stockholders'equity$819,816 $5,000,454 $431,721 $(1,068,486) $5,183,505106 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)SUMMARY CONSOLIDATING BALANCE SHEETS: March 31, 2012 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalCurrent assets: Cash and cash equivalents$7,969 $2,237 $19,456 $— $29,662Trade and other receivables, net225 209,146 231,237 — 440,608Inventories— 789,913 28,043 — 817,956Rotable assets— 24,468 10,086 — 34,554Deferred income taxes— 114,962 — — 114,962Prepaid and other5,956 13,156 4,232 — 23,344Total current assets14,150 1,153,882 293,054 — 1,461,086Property and equipment, net10,444 674,036 48,900 — 733,380Goodwill and other intangible assets, net1,006 2,325,876 48,932 — 2,375,814Other, net25,060 1,488 396 — 26,944Intercompany investments and advances555,684 318,713 1,957 (876,354) —Total assets$606,344 $4,473,995 $393,239 $(876,354) $4,597,224Current liabilities: Current portion of long-term debt$128,996 $13,241 $— $— $142,237Accounts payable2,548 257,136 6,440 — 266,124Accrued expenses46,123 256,413 9,084 — 311,620Total current liabilities177,667 526,790 15,524 — 719,981Long-term debt, less current portion847,049 49,576 120,000 — 1,016,625Intercompany debt(2,227,499) 2,032,973 194,526 — —Accrued pension and otherpostretirement benefits, noncurrent7,119 693,006 — — 700,125Deferred income taxes and other8,639 359,829 (1,344) — 367,124Total stockholders' equity1,793,369 811,821 64,533 (876,354) 1,793,369Total liabilities and stockholders'equity$606,344 $4,473,995 $393,239 $(876,354) $4,597,224107 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2013 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $3,608,064 $99,593 $(4,955) $3,702,702Operating costs and expenses: Cost of sales— 2,703,416 65,027 (4,955) 2,763,488Selling, general and administrative8,530 213,408 19,411 — 241,349Depreciation and amortization2,430 122,626 4,450 — 129,506Acquisition-related588 2,077 — — 2,665Curtailments and early retirementincentives34,481 — — — 34,481 46,029 3,041,527 88,888 (4,955) 3,171,489Operating (loss) income(46,029) 566,537 10,705 — 531,213Intercompany interest and charges(191,025) 187,713 3,312 — —Interest expense and other61,962 9,463 (3,269) — 68,156Income from continuing operations,before income taxes83,034 369,361 10,662 — 463,057Income tax expense24,782 139,799 1,129 — 165,710Income from continuing operations58,252 229,562 9,533 — 297,347Loss on discontinued operations, net— — — — —Net income58,252 229,562 9,533 — 297,347Other comprehensive income (loss)— (49,834) (1,832) — (51,666)Total comprehensive income$58,252 $179,728 $7,701 $— $245,681108 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2012 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $3,310,929 $104,229 $(7,229) $3,407,929Operating costs and expenses: Cost of sales— 2,492,513 79,711 (7,229) 2,564,995Selling, general and administrative33,936 190,145 18,472 — 242,553Depreciation and amortization1,933 112,477 5,314 — 119,724Acquisition and integration6,342 — — — 6,342Curtailments and early retirementincentives(40,400) — — — (40,400) 1,811 2,795,135 103,497 (7,229) 2,893,214Operating (loss) income(1,811) 515,794 732 — 514,715Intercompany interest and charges(188,865) 185,282 3,583 — —Interest expense and other75,959 4,322 (3,143) — 77,138Income from continuing operations,before income taxes111,095 326,190 292 — 437,577Income tax expense22,467 133,371 117 — 155,955Income from continuing operations88,628 192,819 175 — 281,622Loss on discontinued operations, net— (765) — — (765)Net income88,628 192,054 175 — 280,857Other comprehensive income232 (127,157) (2,852) — (129,777)Total comprehensive income$88,860 $64,897 $(2,677)$— $151,080109 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2011 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $2,813,506 $97,630 $(5,788) $2,905,348Operating costs and expenses: Cost of sales— 2,169,678 67,974 (5,788) 2,231,864Selling, general and administrative34,989 189,486 14,414 — 238,889Depreciation and amortization1,922 94,235 3,500 — 99,657Acquisition and integration20,902 — — — 20,902 57,813 2,453,399 85,888 (5,788) 2,591,312Operating (loss) income(57,813) 360,107 11,742 — 314,036Intercompany interest and charges(163,530) 160,290 3,240 — —Interest expense and other74,343 8,292 (3,076) — 79,559Income from continuing operations,before income taxes31,374 191,525 11,578 — 234,477Income tax expense11,758 69,121 1,187 — 82,066Income from continuing operations19,616 122,404 10,391 — 152,411Loss on discontinued operations, net— (2,512) — — (2,512)Net income19,616 119,892 10,391 — 149,899Other comprehensive income (loss)1,188 114,780 3,798 — 119,766Total comprehensive income$20,804 $234,672 $14,189 $— $269,665110 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS: Fiscal year ended March 31, 2013 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet income$58,252 $229,562 $9,533 $— $297,347Adjustments to reconcile net income tonet cash provided by (used in)operating activities42,111 4,046 (22,586) — 23,571Net cash provided by (used in)operating activities100,363 233,608 (13,053) — 320,918Capital expenditures(1,315) (119,949) (5,626) — (126,890)Reimbursements of capital expenditures— 5,156 — — 5,156Proceeds from sale of assets andbusinesses— 3,985 8 — 3,993Cash used for businesses andintangible assets acquired— (349,632) — — (349,632)Net cash provided by (used in)investing activities(1,315) (460,440) (5,618) — (467,373)Net increase in revolving credit facility(224,151) — — — (224,151)Proceeds on issuance of debt375,000 14,435 138,700 — 528,135Retirements and repayments of debt(19,594) (14,044) (108,700) — (142,338)Payments of deferred financing costs(8,838) — — (8,838)Dividends paid(8,005) — — — (8,005)Repayment of governmental grant— (1,090) — — (1,090)Repurchase of restricted shares forminimum tax obligation(1,840) — — — (1,840)Proceeds from exercise of stockoptions, including excess tax benefit6,766 — — — 6,766Intercompany financing and advances(223,245) 226,831 (3,586) — —Net cash (used in) provided byfinancing activities(103,907) 226,132 26,414 — 148,639Effect of exchange rate changes on cashand cash equivalents— — 191 — 191Net change in cash and cashequivalents(4,859) (700) 7,934 — 2,375Cash and cash equivalents atbeginning of year7,969 2,237 19,456 — 29,662Cash and cash equivalents at end ofyear$3,110 $1,537 $27,390 $— $32,037111 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS: Fiscal year ended March 31, 2012 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet income$88,628 $192,054 $175 $— $280,857Adjustments to reconcile net income tonet cash provided by (used in)operating activities(22,063) (16,455) (14,558) — (53,076)Net cash provided by (used in)operating activities66,565 175,599 (14,383) — 227,781Capital expenditures(2,891) (85,441) (5,637) — (93,969)Reimbursements of capital expenditures— 3,437 — — 3,437Proceeds from sale of assets andbusinesses4,952 3,690 116 — 8,758Cash used for businesses andintangible assets acquired— 11,951 — — 11,951Net cash used in investing activities2,061 (66,363) (5,521) — (69,823)Net increase in revolving credit facility235,000 — — — 235,000Proceeds on issuance of debt— 5,853 86,400 — 92,253Retirements and repayments of debt(398,908) (16,857) (68,773) — (484,538)Payments of deferred financing costs(3,999) — — — (3,999)Dividends paid(6,899) — — — (6,899)Repayment of governmental grant— (2,180) — — (2,180)Repurchase of restricted shares forminimum tax obligation(609) — — — (609)Proceeds from exercise of stockoptions, including excess tax benefit4,721 — — — 4,721Intercompany financing and advances92,767 (95,568) 2,801 — —Net cash (used in) provided byfinancing activities(77,927) (108,752) 20,428 — (166,251)Effect of exchange rate changes on cashand cash equivalents— — (1,373) — (1,373)Net change in cash and cashequivalents(9,301) 484 (849) — (9,666)Cash and cash equivalents atbeginning of year17,270 1,753 20,305 — 39,328Cash and cash equivalents at end ofyear$7,969 $2,237 $19,456 $— $29,662112 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS: Fiscal year ended March 31, 2011 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet income$19,616 $119,892 $10,391 $— $149,899Adjustments to reconcile net income tonet cash provided by operatingactivities34,398 (14,850) (27,143) — (7,595)Net cash provided by operatingactivities54,014 105,042 (16,752) — 142,304Capital expenditures(16,445) (72,237) (1,343) — (90,025)Proceeds from sale of assets andbusinesses— 4,156 57 — 4,213Cash used for businesses andintangible assets acquired— (333,228) — — (333,228)Net cash used in investing activities(16,445) (401,309) (1,286) — (419,040)Net decrease in revolving credit facility85,000 — — — 85,000Proceeds on issuance of debt695,695 10 150,400 — 846,105Retirements and repayments of debt(593,104) (25,761) (126,987) — (745,852)Payments of deferred financing costs(22,790) — — — (22,790)Dividends paid(3,574) — — — (3,574)Repayment of governmental grant— (1,695) — — (1,695)Repurchase of restricted shares forminimum tax obligation(1,861) — — — (1,861)Proceeds from exercise of stockoptions, including excess tax benefit3,034 — — — 3,034Intercompany financing and advances(331,136) 323,754 7,382 — —Net cash (used in) provided byfinancing activities(168,736) 296,308 30,795 — 158,367Effect of exchange rate changes on cashand cash equivalents— — 479 — 479Net change in cash and cashequivalents(131,167) 41 13,236 — (117,890)Cash and cash equivalents atbeginning of year148,437 1,712 7,069 — 157,218Cash and cash equivalents at end ofyear$17,270 $1,753 $20,305 $— $39,328113 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)24.QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Fiscal 2013 Fiscal 2012 June 30 Sept. 30 Dec. 31 (6) Mar. 31 (4) (7) June 30 Sept. 30 Dec. 31 Mar. 31 (5)BUSINESSSEGMENT SALES Aerostructures$669,853 $713,978 $676,791 $720,722 $643,306 $587,977 $626,046 $714,247Aerospace Systems140,512 150,139 141,059 184,061 133,010 133,775 133,291 151,724Aftermarket Services79,977 76,061 74,587 83,881 70,368 70,547 68,639 83,120Inter-segmentElimination(2,654) (1,997) (1,872) (2,396) (1,621) (1,771) (2,014) (2,715)TOTAL SALES$887,688 $938,181 $890,565 $986,268 $845,063 $790,528 $825,962 $946,376GROSS PROFIT(1)$214,869 $212,797 $204,872 $219,738 $176,965 $179,705 $187,296 $219,629OPERATING INCOME Aerostructures$120,138 $121,384 $117,450 $110,901 $87,974 $92,489 $103,947 $119,004Aerospace Systems23,465 25,712 20,562 33,440 22,417 22,644 18,623 26,351Aftermarket Services11,807 10,767 9,856 12,950 6,961 7,015 6,917 10,966Corporate(14,468) (14,917) (13,509) (44,325) (11,972) (13,692) (11,847) 26,918TOTAL OPERATINGINCOME$140,942 $142,946 $134,359 $112,966 $105,380 $108,456 117,640 $183,239INCOME (LOSS)FROM Continuing Operations$76,332 $80,190 $75,223 $65,602 $50,904 $58,564 $65,903 $106,251Discontinued Operations— — — — (689) (76) — —NET INCOME$76,332 $80,190 $75,223 $65,602 $50,215 $58,488 $65,903 $106,251Basic Earnings (Loss)per share(2) Continuing Operations$1.54 $1.61 $1.51 $1.32 $1.05 $1.20 $1.35 $2.16Discontinued Operations— — — — (0.01) — — —Net Income$1.54 $1.61 $1.51 $1.32 $1.04 $1.20 $1.35 $2.16Diluted Earnings (Loss)per share(2)(3) Continuing Operations$1.46 $1.53 $1.43 $1.24 $0.99 $1.13 $1.27 $2.03Discontinued Operations— — — — (0.01) — — —Net Income$1.46 $1.53 $1.43 $1.24 $0.98 $1.13 $1.27 $2.03*Difference due to rounding.(1)Gross profit includes depreciation.(2)The sum of the earnings for Continuing Operations and Discontinued Operations does not necessarily equal the earnings for the quarter due torounding.(3)The sum of the diluted earnings per share for the four quarters does not necessarily equal the total year diluted earnings per share due to the dilutiveeffect of the potential common shares related to the convertible debt.(4)Includes a pre-tax curtailment loss, net of $29,344 due to reductions in the expected remaining service period under the Company's defined benefitplans as disclosed in Note 15.114 Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)(5)Includes a pre-tax curtailment gain, net of $40,400 due to amendments made to the Company's defined benefit plans as disclosed in Note 15.(6)Includes the results of Embee from December 19, 2012 (date of acquisition) through March 31, 2013.(7)Includes the results of GPECS from March 18, 2013 (date of acquisition) through March 31, 2013.25.SUBSEQUENT EVENTSOn May 6, 2013, the Company acquired four related entities collectively comprising the Primus Composites business from Precision Castparts Corp. for$33,530 in cash and $30,000 in assumed debt settled at closing. The acquired business, which includes two manufacturing facilities in Farnborough,England and Rayong, Thailand, will operate as Triumph Structures -Farnborough and Triumph Structures - Thailand and be included in the AerostructuresGroup. Together, Triumph Structures -Farnsborough and Triumph Structures - Thailand constitute a global supplier of composite and metallic propulsionand structural composites and assemblies. In addition to its composite operations, the Thailand operation also machines and processes metal components.In April 2013, the Company sold the assets and liabilities of Triumph Instruments - Burbank and Triumph Instruments - Ft. Lauderdale for totalproceeds of $11,426 including cash received at closing of $9,676, a note of $1,500, and the remaining amount held in escrow, resulting in a loss of $1,462recognized during the quarter ended March 31, 2013. The assets and liabilities of Triumph Instruments - Burbank and Triumph Instruments - Ft. Lauderdalewere classified as held for sale as of March 31, 2013. Their operating results are included in the Aftermarket Services Group through the date of disposal.In March through May 2013, the Company received notice of conversion from holders of $77,260 in principal value of the Convertible Notes. Theseconversions were settled in the first quarter of fiscal 2014 with the principal and accrued but unpaid interest settled in cash and the conversion benefit settledthrough the issuance of approximately 1,844,714 shares.115 Table of ContentsTRIUMPH GROUP, INC.SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS(Dollars in thousands) Balance atbeginning ofyear Additionscharged toexpense Additions(1) (Deductions)(2) Balance atend of yearFor year ended March 31, 2013: Allowance for doubtful accountsreceivable $3,900 1,974 70 (572) $5,372For year ended March 31, 2012: Allowance for doubtful accountsreceivable $3,196 1,282 528 (1,106) $3,900For year ended March 31, 2011: Allowance for doubtful accountsreceivable $4,276 152 16 (1,248) $3,196(1)Additions consist of trade and other receivable recoveries and miscellaneous adjustments.(2)Deductions represent write-offs of related account balances.116 Table of ContentsItem 9.Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNone.Item 9A.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated andcommunicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regardingrequired disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was requiredto apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.As of March 31, 2013, we completed an evaluation, under the supervision and with the participation of our management, including our principalexecutive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on theforegoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonableassurance level as of March 31, 2013.117 Table of ContentsMANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGThe management of Triumph Group, Inc. ("Triumph") is responsible for establishing and maintaining adequate internal control over financial reportingas defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Triumph's internal control system over financial reporting is designedto provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith U.S. generally accepted accounting principles. The company's internal control over financial reporting includes those policies and procedures that:(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany;(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets thatcould have a material effect on the financial statements.Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of anyevaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in condition, or that the degree ofcompliance with the policies or procedures may deteriorate.Triumph's management assessed the effectiveness of Triumph's internal control over financial reporting as of March 31, 2013. In making thisassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on management's assessment and those criteria, management believes that Triumph maintained effective internal control overfinancial reporting as of March 31, 2013.Management's assessment of and conclusion on the effectiveness of the Company's internal control over financial reporting did not include the internalcontrol of Triumph Engine Control Systems, LLC and Triumph Processing - Embee Division, Inc., which were acquired in March 2013 and December2012, respectively. The acquisitions, which are more fully discussed in Note 3 to the consolidated financial statements for fiscal 2013, are included in thefiscal 2013 consolidated financial statements of Triumph Group, Inc. and represented total assets of approximately $477 million or 9% at March 31, 2013,and revenues of approximately $22 million or 0.6% for the year ended March 31, 2013. Under guidelines established by the SEC, companies are allowed toexclude acquisitions from their first assessment of internal control over financial reporting following the date of acquisition.Triumph's independent registered public accounting firm, Ernst & Young LLP, has audited the Company's effectiveness of Triumph's internal controlover financial reporting. This report appears on the following page./s/ JEFFRY D. FRISBY Jeffry D. FrisbyPresident and Chief Executive Officer /s/ M. DAVID KORNBLATT M. David KornblattExecutive Vice President andChief Financial Officer /s/ THOMAS A. QUIGLEY, III Thomas A. Quigley, IIIVice President and Controller May 29, 2013118 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Triumph Group, Inc.We have audited Triumph Group, Inc.'s internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Triumph Group, Inc.'smanagement is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control overfinancial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express anopinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on theeffectiveness of internal control over financial reporting did not include the internal controls of Triumph Processing - Embee and Triumph Engine ControlsSystems, which are included in the fiscal year 2013 consolidated financial statements of Triumph Group, Inc. and constituted $477 million and $353 millionof total and net assets, respectively, as of March 31, 2013 and $22 million and $3 million of revenues and net income, respectively, for the year then ended.Our audit of internal control over financial reporting of Triumph Group, Inc. also did not include an evaluation of the internal control over financial reportingof Triumph Processing - Embee and Triumph Engine Control Systems.In our opinion, Triumph Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2013, basedon the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of Triumph Group, Inc., as of March 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes instockholders' equity, and cash flows for each of the three years in the period ended March 31, 2013 of Triumph Group, Inc. and our report dated May 29,2013 expressed an unqualified opinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 29, 2013119 Table of ContentsChanges in Internal Control Over Financial ReportingIn addition to management's evaluation of disclosure controls and procedures as discussed above, we continue to review and enhance our policies andprocedures for internal control over financial reporting.We have developed and implemented a formal set of internal controls and procedures for financial reporting in accordance with the SEC's rules regardingmanagement's report on internal controls. As a result of continued review and testing by management and by our internal and independent auditors, additionalchanges may be made to our internal controls and procedures. However, we did not make any changes to our internal control over financial reporting in ourfourth quarter of fiscal 2013 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.Item 9B.Other InformationNone.PART IIIItem 10.Directors, Executive Officers and Corporate GovernanceThe information required for directors is incorporated herein by reference to our definitive Proxy Statement for our 2013 Annual Meeting of Stockholders,which shall be filed within 120 days after the end of our fiscal year (the "2013 Proxy Statement"). Information required by this item concerning executiveofficers is included in Part I of this Annual Report on Form 10-K.Section 16(a) Beneficial Ownership Reporting ComplianceThe information required regarding Section 16(a) beneficial ownership reporting compliance is incorporated herein by reference to the 2013 ProxyStatement.Code of Business ConductThe information required regarding our Code of Business Conduct is incorporated herein by reference to the 2013 Proxy Statement.Stockholder NominationsThe information required with respect to any material changes to the procedures by which stockholders may recommend nominees to the Company'sboard of directors is incorporated herein by reference to the 2013 Proxy Statement.Audit Committee and Audit Committee Financial ExpertThe information required with respect to the Audit Committee and Audit Committee financial experts is incorporated herein by reference to the 2013 ProxyStatement.Item 11.Executive CompensationThe information required regarding executive compensation is incorporated herein by reference to the 2013 Proxy Statement.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required under this item is incorporated herein by reference to the 2013 Proxy Statement.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required under this item is incorporated herein by reference to the 2013 Proxy Statement.Item 14.Principal Accountant Fees and ServicesThe information required under this item is incorporated herein by reference to the 2013 Proxy Statement.120 Table of ContentsPART IVItem 15. Exhibits, Financial Statement Schedules(a) Financial Statements(1) The following consolidated financial statements are included in Item 8 of this report: Triumph Group, Inc.PageReport of Ernst & Young LLP, Independent Registered Public Accounting Firm56Consolidated Balance Sheets as of March 31, 2013 and 201257Consolidated Statements of Income for the Fiscal Years Ended March 31, 2013, 2012 and 201158Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended March 31, 2013, 2012 and 201160Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2013, 2012 and 201161Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2013, 2012 and 201159Notes to Consolidated Financial Statements62(2) The following financial statement schedule is included in this report: PageSchedule II—Valuation and Qualifying Accounts116All other schedules have been omitted as not applicable or because the information is included elsewhere in the Consolidated Financial Statements or notesthereto.(3) The following is a list of exhibits. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference.ExhibitNumber Description2.1 Agreement and Plan of Merger by and among Triumph Group, Inc., Vought Aircraft Industries, Inc., Spitfire MergerCorporation and TC Group, L.L.C., as the Holder Representative March 23, 2010.(11)3.1 Amended and Restated Certificate of Incorporation of Triumph Group, Inc.(7)3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of Triumph Group, Inc.(17)3.3 Amended and Restated By-Laws of Triumph Group, Inc.(19)4.1 Form of certificate evidencing Common Stock of Triumph Group, Inc.(1)4.2 Indenture, dated as of September 18, 2006, between Triumph Group, Inc. and The Bank of New York Trust Company,N.A. relating to the 2.625% Convertible Senior Subordinated Notes Due 2026.(2)4.3 Form of the 2.625% Convertible Senior Subordinated Note Due 2026. (Included as Exhibit A to Exhibit 4.2).(2)4.4 Registration Rights Agreement, dated as of September 18, 2006, between Triumph Group, Inc. and Banc of AmericaSecurities LLC.(2)4.5 Indenture, dated as of November 16, 2009, between Triumph Group, Inc. and U.S. Bank National Association, astrustee, relating to the 8% Senior Subordinated Notes due 2017.(12)4.6 Form of 8% Senior Subordinated Notes due 2017.(12)4.7 Registration Rights Agreement, dated November 16, 2009, by and among Triumph Group, Inc., the Guarantors partythereto, and the other parties thereto.(12)4.8 Indenture, dated as of June 16, 2010, between Triumph Group, Inc. and U.S. Bank National Association, as trustee,relating to the 8.625% Senior Subordinated Notes Due 2018.(13)4.9 Registration Rights Agreement, dated as of June 16, 2010, by and among Triumph Group, Inc., RBC Capital MarketsCorporation, UBC Securities LLC, PNC Capital Markets LLC, BB&T Capital Markets, a division of Scott &Stringfellow LLC and US Bancorp Investments Inc.(13)4.10 Indenture, dated as of February 26, 2013, between Triumph Group, Inc. and U.S. Bank National Association, astrustee.(18)121 Table of ContentsExhibitNumber Description4.11 Form of 4.875% Senior Subordinated Notes due 2021.(18)4.12 Registration Rights Agreement, dated February 26, 2013 between Triumph Group, Inc. and the parties namedtherein.(18)10.1 Amended and Restated Directors' Stock Incentive Plan.(3)10.2*Form of Deferred Stock Unit Award Agreement under the Amended and Restated Directors' Stock Incentive Plan.10.3*#2004 Stock Incentive Plan.10.4#Triumph Group, Inc. Supplemental Executive Retirement Plan effective January 1, 2003.(6)10.5*Compensation for the non-employee members of the Board of Directors of Triumph Group, Inc.10.6#Form of Stock Award Agreement under the 2004 Stock Incentive Plan.(7)10.7#Form of letter confirming Stock Award Agreement under the 2004 Stock Incentive Plan.(7)10.8#Description of the Triumph Group, Inc. Annual Cash Bonus Plan.(8)10.9#Change of Control Employment Agreement with: Richard C. Ill, M. David Kornblatt, John B. Wright, II and Kevin E.Kindig.(9)10.10#Restricted Stock Award Agreement for M. David Kornblatt.(10)10.11 Form of Receivables Purchase Agreement, by and among the Triumph Group, Inc., as Initial Servicer, TriumphReceivables, LLC, as Seller, the various Purchasers and Purchase Agents from time to time party thereto and PNCNational Association, as Administrative Agent.(5)10.12 Stockholders Agreement, dated as of March 23, 2010, among Triumph Group, Inc., Carlyle Partners III, L.P., CarlylePartners II, L.P., Carlyle International Partners II, L.P., Carlyle-Aerostructures Partners, L.P., CHYP Holdings, L.L.C.,Carlyle-Aerostructures Partners II, L.P., CP III Coinvestment, L.P., C/S International Partners, Carlyle-AerostructuresInternational Partners, L.P., Carlyle-Contour Partners, L.P., Carlyle SBC Partners II, L.P., Carlyle InternationalPartners III, L.P., Carlyle-Aerostructures Management, L.P., Carlyle-Contour International Partners, L.P., CarlyleInvestment Group, L.P. and TC Group, L.L.C.(11)10.13 Amended and Restated Guarantee and Collateral Agreement, dated as of April 5, 2011, made by Triumph Group, Inc.and certain of its subsidiaries in favor of PNC Bank, National Association, as Administrative and Collateral Agent forthe other Secured Parties.(4)10.14 Third Amendment to Receivables Purchase Agreement, dated as of June 21, 2010, by and among TriumphReceivables LLC, Triumph Group, Inc., Market Street Funding LLC and PNC Bank, National Association.(14)10.15 Triumph Group, Inc. Executive Incentive Plan, effective September 28, 2010.(15)10.16#Form of letter informing Triumph Group, Inc. executives they are eligible to participate in the Company's Long TermIncentive Plan.(16)10.17#Form of letter informing Triumph Group, Inc. executives they have earned an award under the Company's Long TermIncentive Plan and the amount of the award.(16)10.18#Change of Control Employment Agreement with Jeffry Frisby.(16)10.19 Second Amended and Restated Credit Agreement, dated as of May 23, 2012, by and among Triumph Group, Inc.,substantially all of its domestic subsidiaries and certain of its foreign subsidiaries, PNC Bank National Association, asAdministrative Agent, the lenders party thereto, PNC Capital Markets LLC, RBS Securities Inc., J.P. Morgan Securities,LLC, RBC Capital Markets and Sovereign Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, Citizens Bankof Pennsylvania, JPMorgan Chase Bank, N.A., Royal Bank of Canada, and Sovereign Bank, N.A., as SyndicationAgents, The Bank of Tokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., andManufacturers and Traders Trust Company, as Documentation Agents. (3)10.20 Sixth Amendment to Receivables Purchase Agreement, dated as of February 26, 2013, by and among TriumphReceivables LLC, Triumph Group, Inc., Market Street Funding LLC and PNC Bank, National Association.(18)21.1*Subsidiaries of Triumph Group, Inc.23.1*Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.31.1*Principal Executive Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Actof 1934, as amended.31.2*Principal Financial Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Actof 1934, as amended.122 Table of ContentsExhibitNumber Description32.1*Principal Executive Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Actof 1934, as amended, and 18 U.S.C. Section 1350.32.2*Principal Financial Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Actof 1934, as amended, and 18 U.S.C. Section 1350.101*The following financial information from Triumph Group, Inc.'s Annual Report on Form 10-K for the fiscal year endedMarch 31, 2012 formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2012 and 2011; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2012, 2011 and 2010; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2012, 2011 and 2010; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2012, 2011 and 2010; (v) Consolidated Statements of Comprehensive Incomefor the fiscal years ended March 31, 2012, 2011 and 2010; and (vi) Notes to the Consolidated Financial Statements.________________________________(1)Incorporated by reference to our Registration Statement on Form S-1 (Registration No. 333-10777) declared effective on October 24, 1996.(2)Incorporated by reference to our Current Report on Form 8-K filed on September 22, 2006.(3)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.(4)Incorporated by reference to our Current Report on Form 8-K filed on April 11, 2011.(5)Incorporated by reference to our Current Report on Form 8-K filed on August 12, 2008.(6)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2003.(7)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2009.(8)Incorporated by reference to our Current Report on Form 8-K filed on July 31, 2007.(9)Incorporated by reference to our Current Report on Form 8-K filed on March 13, 2008(10)Incorporated by reference to our Current Report on Form 8-K filed on June 14, 2007.(11)Incorporated by reference to our Current Report on Form 8-K filed on March 23, 2010.(12)Incorporated by reference to our Current Report on Form 8-K filed on November 19, 2009.(13)Incorporated by reference to our Current Report on Form 8-K filed on June 22, 2010.(14)Incorporated by reference to our Current Report on Form 8-K filed on June 25, 2010.(15)Incorporated by reference to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010.(16)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.(17)Incorporated by reference to our Current Report on Form 8-K filed on July 20, 2012.(18)Incorporated by reference to our Current Report on Form 8-K filed on March 1, 2013.(19)Incorporated by reference to our Current Report on Form 8-K/A filed on August 2, 2012.*Filed herewith.#Compensation plans and arrangements for executives and others. 123 Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to besigned by the undersigned, thereunto duly authorized. TRIUMPH GROUP, INC. /s/ JEFFRY D. FRISBYDated:May 29, 2013By:Jeffry D. FrisbyPresident and Chief Executive Officer(Principal Executive Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalfof the Registrant and in the capacities and on the dates indicated./s/ JEFFRY D. FRISBY President, Chief Executive Officer and Director(Principal Executive Officer)May 29, 2013Jeffry D. Frisby /s/ M. DAVID KORNBLATT Executive Vice President and Chief Financial Officer(Principal Financial Officer)May 29, 2013M. David Kornblatt /s/ THOMAS A. QUIGLEY Vice President and Controller (PrincipalAccounting Officer)May 29, 2013Thomas A. Quigley /s/ RICHARD C. ILL Chairman and DirectorMay 29, 2013Richard C. Ill /s/ PAUL BOURGON DirectorMay 29, 2013 Paul Bourgon /s/ ELMER L. DOTY DirectorMay 29, 2013Elmer L. Doty /s/ JOHN G. DROSDICK DirectorMay 29, 2013John G. Drosdick /s/ RALPH E. EBERHART DirectorMay 29, 2013Ralph E. Eberhart /s/ RICHARD C. GOZON DirectorMay 29, 2013Richard C. Gozon /s/ WILLIAM L. MANSFIELD DirectorMay 29, 2013William L. Mansfield /s/ ADAM J. PALMER DirectorMay 29, 2013Adam J. Palmer /s/ JOSEPH M. SILVESTRI DirectorMay 29, 2013Joseph M. Silvestri /s/ GEORGE SIMPSON DirectorMay 29, 2013George Simpson 124 Table of ContentsEXHIBIT INDEXExhibitNumber Description2.1 Agreement and Plan of Merger by and among Triumph Group, Inc., Vought Aircraft Industries, Inc., Spitfire MergerCorporation and TC Group, L.L.C., as the Holder Representative March 23, 2010.(11)3.1 Amended and Restated Certificate of Incorporation of Triumph Group, Inc.(7)3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of Triumph Group, Inc.(17)3.3 Amended and Restated By-Laws of Triumph Group, Inc.(1)4.1 Form of certificate evidencing Common Stock of Triumph Group, Inc.(19)4.2 Indenture, dated as of September 18, 2006, between Triumph Group, Inc. and The Bank of New York Trust Company,N.A. relating to the 2.625% Convertible Senior Subordinated Notes Due 2026.(2)4.3 Form of the 2.625% Convertible Senior Subordinated Note Due 2026. (Included as Exhibit A to Exhibit 4.2).(2)4.4 Registration Rights Agreement, dated as of September 18, 2006, between Triumph Group, Inc. and Banc of AmericaSecurities LLC.(2)4.5 Indenture, dated as of November 16, 2009, between Triumph Group, Inc. and U.S. Bank National Association, astrustee, relating to the 8% Senior Subordinated Notes due 2017.(12)4.6 Form of 8% Senior Subordinated Notes due 2017.(12)4.7 Registration Rights Agreement, dated November 16, 2009, by and among Triumph Group, Inc., the Guarantors partythereto, and the other parties thereto.(12)4.8 Indenture, dated as of June 16, 2010, between Triumph Group, Inc. and U.S. Bank National Association, as trustee,relating to the 8.625% Senior Subordinated Notes Due 2018.(13)4.9 Registration Rights Agreement, dated as of June 16, 2010, by and among Triumph Group, Inc., RBC Capital MarketsCorporation, UBC Securities LLC, PNC Capital Markets LLC, BB&T Capital Markets, a division of Scott &Stringfellow LLC and US Bancorp Investments Inc.(13)4.10 Indenture, dated as of February 26, 2013, between Triumph Group, Inc. and U.S. Bank National Association, astrustee.(18)4.11 Form of 4.875% Senior Subordinated Notes due 2021.(18)4.12 Registration Rights Agreement, dated February 26, 2013 between Triumph Group, Inc. and the parties namedtherein.(18)10.1 Amended and Restated Directors' Stock Incentive Plan.(3)10.2*Form of Deferred Stock Unit Award Agreement under the Amended and Restated Directors' Stock Incentive Plan.10.3*#2004 Stock Incentive Plan.10.4#Triumph Group, Inc. Supplemental Executive Retirement Plan effective January 1, 2003.(6)10.5*Compensation for the non-employee members of the Board of Directors of Triumph Group, Inc.10.6#Form of Stock Award Agreement under the 2004 Stock Incentive Plan.(7)10.7#Form of letter confirming Stock Award Agreement under the 2004 Stock Incentive Plan.(7)10.8#Description of the Triumph Group, Inc. Annual Cash Bonus Plan.(8)10.9#Change of Control Employment Agreement with: Richard C. Ill, M. David Kornblatt, John B. Wright, II and Kevin E.Kindig.(9)10.10#Restricted Stock Award Agreement for M. David Kornblatt.(10)10.11 Form of Receivables Purchase Agreement, by and among the Triumph Group, Inc., as Initial Servicer, TriumphReceivables, LLC, as Seller, the various Purchasers and Purchase Agents from time to time party thereto and PNCNational Association, as Administrative Agent.(5)125 Table of ContentsExhibitNumber Description10.12 Stockholders Agreement, dated as of March 23, 2010, among Triumph Group, Inc., Carlyle Partners III, L.P., CarlylePartners II, L.P., Carlyle International Partners II, L.P., Carlyle-Aerostructures Partners, L.P., CHYP Holdings, L.L.C.,Carlyle-Aerostructures Partners II, L.P., CP III Coinvestment, L.P., C/S International Partners, Carlyle-AerostructuresInternational Partners, L.P., Carlyle-Contour Partners, L.P., Carlyle SBC Partners II, L.P., Carlyle InternationalPartners III, L.P., Carlyle-Aerostructures Management, L.P., Carlyle-Contour International Partners, L.P., CarlyleInvestment Group, L.P. and TC Group, L.L.C.(11)10.13 Amended and Restated Guarantee and Collateral Agreement, dated as of April 5, 2011, made by Triumph Group, Inc.and certain of its subsidiaries in favor of PNC Bank, National Association, as Administrative and Collateral Agent forthe other Secured Parties.(4)10.14 Third Amendment to Receivables Purchase Agreement, dated as of June 21, 2010, by and among TriumphReceivables LLC, Triumph Group, Inc., Market Street Funding LLC and PNC Bank, National Association.(14)10.15 Triumph Group, Inc. Executive Incentive Plan, effective September 28, 2010.(15)10.16#Form of letter informing Triumph Group, Inc. executives they are eligible to participate in the Company's Long TermIncentive Plan.(16)10.17#Form of letter informing Triumph Group, Inc. executives they have earned an award under the Company's Long TermIncentive Plan and the amount of the award.(16)10.18#Change of Control Employment Agreement with Jeffry Frisby.(16)10.19 Second Amended and Restated Credit Agreement, dated as of May 23, 2012, by and among Triumph Group, Inc.,substantially all of its domestic subsidiaries and certain of its foreign subsidiaries, PNC Bank National Association, asAdministrative Agent, the lenders party thereto, PNC Capital Markets LLC, RBS Securities Inc., J.P. Morgan Securities,LLC, RBC Capital Markets and Sovereign Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, Citizens Bankof Pennsylvania, JPMorgan Chase Bank, N.A., Royal Bank of Canada, and Sovereign Bank, N.A., as SyndicationAgents, The Bank of Tokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., andManufacturers and Traders Trust Company, as Documentation Agents. (3)10.20 Sixth Amendment to Receivables Purchase Agreement, dated as of February 26, 2013, by and among TriumphReceivables LLC, Triumph Group, Inc., Market Street Funding LLC and PNC Bank, National Association.(18)21.1*Subsidiaries of Triumph Group, Inc.23.1*Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.31.1*Principal Executive Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Actof 1934, as amended.31.2*Principal Financial Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Actof 1934, as amended.32.1*Principal Executive Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Actof 1934, as amended, and 18 U.S.C. Section 1350.32.2*Principal Financial Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Actof 1934, as amended, and 18 U.S.C. Section 1350.101*The following financial information from Triumph Group, Inc.'s Annual Report on Form 10-K for the fiscal year endedMarch 31, 2012 formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2012 and 2011; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2012, 2011 and 2010; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2012, 2011 and 2010; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2012, 2011 and 2010; (v) Consolidated Statements of Comprehensive Incomefor the fiscal years ended March 31, 2012, 2011 and 2010; and (vi) Notes to the Consolidated Financial Statements._______________________________________________(1)Incorporated by reference to our Registration Statement on Form S-1 (Registration No. 333-10777) declared effective on October 24, 1996.(2)Incorporated by reference to our Current Report on Form 8-K filed on September 22, 2006.(3)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.(4)Incorporated by reference to our Current Report on Form 8-K filed on April 11, 2011.126 Table of Contents(5)Incorporated by reference to our Current Report on Form 8-K filed on August 12, 2008.(6)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2003.(7)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2009.(8)Incorporated by reference to our Current Report on Form 8-K filed on July 31, 2007.(9)Incorporated by reference to our Current Report on Form 8-K filed on March 13, 2008(10)Incorporated by reference to our Current Report on Form 8-K filed on June 14, 2007.(11)Incorporated by reference to our Current Report on Form 8-K filed on March 23, 2010.(12)Incorporated by reference to our Current Report on Form 8-K filed on November 19, 2009.(13)Incorporated by reference to our Current Report on Form 8-K filed on June 22, 2010.(14)Incorporated by reference to our Current Report on Form 8-K filed on June 25, 2010.(15)Incorporated by reference to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010.(16)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.(17)Incorporated by reference to our Current Report on Form 8-K filed on July 20, 2012.(18)Incorporated by reference to our Current Report on Form 8-K filed on March 1, 2013.(19)Incorporated by reference to our Current Report on Form 8-K/A filed on August 2, 2012.*Filed herewith.#Compensation plans and arrangements for executives and others.127 EXHIBIT 10.2TRIUMPH GROUP, INC.AMENDED AND RESTATED DIRECTORS' STOCK INCENTIVE PLANDEFERRED STOCK UNIT AWARD AGREEMENTTriumph Group, Inc. (the “Company”) hereby awards to the director named below (the “Participant”) the number of deferred stock units of the Company (the“Units”) in accordance with and subject to the terms, conditions and restrictions of this Agreement together with the provisions of the Amended and RestatedDirectors' Stock Incentive Plan (the “Plan”) of the Company, which Plan is incorporated herein by reference (all capitalized terms used herein having themeanings assigned in the Plan unless otherwise herein defined):Name and Address of Participant: Number of Units Awarded: Relevant Dates: The following dates are applicable for this Agreement:______________________________________________________________________________________________________Grant Date: ______________________________________________________________________________________________________ Vesting Date: ______________________________________________________________________________________________________ Additional Terms and Conditions:1.Each Unit represents a hypothetical share of the Company's common stock, $.001 par value per share (the "Stock"), and will at all times be equal invalue to a share of Stock. The Units will be credited to the Participant in an account established for the Participant.2.The Units will vest on the earlier of the vesting date set forth above or the death of the Participant; provided, however, that in the event of a cessationof membership on the Board, unvested Units will be forfeited or continue to vest pursuant to Section 8.2 of the Plan. Vested Units will not bedistributed in Stock to the Participant until the later of (a) January 1 of the year following the year in which his or her service as a director of theCompany is terminated or (b) within ninety (90) days following the date that the Units vest; provided that in no case will the Participant be entitled toreceive Dividend Equivalents.3.This award is subject to the terms of the Plan, the terms and conditions of which will govern this Award to the extent not otherwise provided in thisAgreement. A copy of the Plan is being delivered to the Participant with this Agreement.- HIGHLY RESTRICTED - EXHIBIT 10.3 TRIUMPH GROUP, INC.2004 STOCK INCENTIVE PLAN1.Purpose of the Plan.The purpose of this Plan is to encourage ownership in the Company by key personnel whose long-term employment is considered essential tothe Company's continued progress and, thereby, encourage recipients to act in the shareowner's interest and share in the Company's success.2.Definitions.As used herein, the following definitions shall apply:(a)“Affiliate” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has asignificant ownership interest as determined by the Committee.(b)“Award” means a Stock Award or Option granted in accordance with the terms of the Plan.(c)“Awardee” means an Employee of the Company or any Affiliate who has been granted an Award under the Plan.(d)“Award Agreement” means a Stock Award Agreement and/or Option Agreement, which may be in written or electronic format,in such form and with such terms as may be specified by the Committee, evidencing the terms and conditions of an individualAward. Each Award Agreement is subject to the terms and conditions of the Plan.(e)“Board” means the Board of Directors of the Company.(f)“Change in Control” means any of the following, unless the Committee provides otherwise:(i)any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary ofanother entity whose shareowners did not own all or substantially all of the Common Stock in substantially the sameproportions as immediately prior to such transaction);(ii)the sale of all or substantially all of the Company's assets to any other person or entity (other than a wholly-ownedsubsidiary);(iii)the acquisition of beneficial ownership of a controlling interest (including, without limitation, power to vote) theoutstanding shares of Common Stock by any person or entity (including a “group” as defined by or under Section13(d)(3) of the Exchange Act);(iv)the dissolution or liquidation of the Company; or(v)a contested election of directors, as a result of which or in connection with which the persons who were Directors beforesuch election or their nominees cease to constitute a majority of the Board.(g)“Code” means the Internal Revenue Code of 1986, as amended.(h)“Committee” means the Compensation Committee of the Board.(i)“Common Stock” means the common stock of the Company.(j)“Company” means Triumph Group, Inc., a Delaware corporation, or its successor.(k)“Employee” means a regular, active employee of the Company or any Affiliate.(l)“Exchange Act” means the United States Securities Exchange Act of 1934, as amended. (m)“Fair Market Value” means, with respect to a Share, unless the Committee determines otherwise, the closing price of a Share inNew York Stock Exchange Composite Transaction on the relevant date, or if no sale shall have made on such exchange on thatdate, the closing price of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which therewas a sale.(n)“Grant Date” means the date as of which an Award is granted.(o)“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of section 422 ofthe Code and the regulations promulgated thereunder.(p)“Nonstatutory Stock Option” means an Option that is not intended to qualify as an Incentive Stock Option.(q)“Option” means a right granted under Section 8 to purchase a number of Shares at such exercise price, at such times, and on suchother terms and conditions as are specified in the agreement or other documents evidencing the Award (the “Option Agreement”).Both Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.(r)“Participant” means the Awardee or any person (including any estate) to whom an Award has been assigned or transferred aspermitted hereunder.(s)“Plan” means Triumph Group, Inc. 2004 Stock Incentive Plan, as set forth herein and as amended from time to time.(t)“Retirement” means retirement from active employment with the Company or a Subsidiary pursuant to the relevant provisions ofthe applicable pension plan of such entity or as otherwise determined by the Committee.(u)“Share” means a share of Common Stock, as adjusted, if applicable, in accordance with Section 13 of the Plan.(v)“Stock Award” means an award or issuance of Shares made under Section 11 of the Plan.(w)“Subsidiary” means any company (other than the Company) in an unbroken chain of companies beginning with the Company,provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50%or more of the total combined voting power of all classes of stock in one of the other companies in such chain.(x)“Termination of Employment” shall mean, with respect to any Employee, the Employee's ceasing to be an Employee; provided,however, that for Incentive Stock Option purposes, Termination of Employment will occur when the Awardee ceases to be anemployee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of theCompany or one of its Subsidiaries. The Committee shall determine whether any corporate transaction, such as a sale or spin-off ofa division or business unit, or a joint venture, shall be deemed to result in a Termination of Employment.(y)“Total and Permanent Disability” shall have the meaning set forth in Section 22(e)(3) of the Code.(z)“Total Shareholder Return” shall mean the increase in value of a company over a period of time, plus dividends paid by suchcompany during such period.3.Stock Subject to the Plan.(a)Aggregate Limits. Subject to Section 13, the aggregate number of Shares subject to Awards granted under the Plan is 3,200,000Shares (1,600,000 Shares prior to the stock split, effective July 15, 2011 (the “Stock Split”)) provided, however, that theaggregate number of Shares issued under the Plan as Stock Awards shall not exceed 960,000 (480,000 Shares prior to the StockSplit). Shares subject to Awards that are cancelled, expire or are forfeited shall be available for re-grant under the Plan. Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the openmarket, or authorized but unissued Shares.(b)Code Section 162(m) and 422 Limits. Subject to Section 13, the aggregate number of Shares subject to Awards granted underthis Plan during any calendar year to any one Awardee shall not exceed 150,000 (75,000 Shares prior to the Stock Split), except thatin connection with his or her initial service, an Awardee may be granted Awards covering up to an additional 100,000 Shares (50,000Shares prior to the Stock Split). Subject to Section 13, the aggregate number of Shares that may be subject to all Incentive StockOptions granted under the Plan is 3,200,000 Shares (1,600,000 Shares prior to the Stock Split). Notwithstanding anything to thecontrary in the Plan, the limitations set forth in this Section 3(b) shall be subject to adjustment under Section 13(a) only to theextent that such adjustment will not affect the status of any Award intended to qualify as “performance based compensation” underCode section 162(m) or the ability to grant or the qualification of Incentive Stock Options under the Plan.4.Administration of The Plan.(a)Procedure.(i)Administrator. The Plan shall be administered by the Committee.(ii)Section 162. To the extent that the Committee determines it to be desirable to qualify Awards granted hereunder as“performance-based compensation” within the meaning of section 162(m) of the Code, Awards to “covered employees”within the meaning of section 162(m) of the Code or Employees that the Committee determines may be “coveredemployees” in the future shall be made by a Committee of two or more “outside directors” within the meaning of section162(m) of the Code.(iii)Delegation of Authority for the Day-to-Day Administration of the Plan. Except to the extent prohibited byapplicable law (including applicable stock exchange rules), the Committee may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in the Plan. Such delegation may be revoked at anytime.(b)Powers of the Committee. Subject to the other provisions of the Plan, the Committee shall have the authority, in its discretion:(i)to select the Employees to whom Awards are to be granted hereunder;(ii)to determine the number of Shares to be covered by each Award granted hereunder;(iii)to determine the type of Award to be granted to the selected Employees;(iv)to approve forms of Award Agreements for use under the Plan;(v)to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder;(vi)to correct administrative errors;(vii)to construe and interpret the terms of the Plan and Awards granted under to the Plan;(viii)to adopt rules and procedures relating to the operation and administration of the Plan to accommodate the specificrequirements of local laws and procedures;(ix)to prescribe, amend and rescind rules and regulations relating to the Plan;(x)to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability, provided,however, that any such amendment is subject to Section 14 and may not impair any outstanding Award unless agreed to inwriting by the Participant; (xi)to allow Participants to satisfy withholding tax amounts by electing (in such form and under such conditions as theCommittee may provide) to have the Company withhold from the Shares to be issued upon exercise of a NonstatutoryStock Option or vesting of a Stock Award that number of Shares having a Fair Market Value equal to the minimum amountrequired to be withheld;(xii)to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Awardpreviously granted by the Committee;(xiii)to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resalesby a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award,including without limitation: (A) restrictions under an insider trading policy; and (B) restrictions as to the use of aspecified brokerage firm for such resales or other transfers; and(xiv)to make all other determinations deemed necessary or advisable for administering the Plan and any Award granted hereunder (c)Effect of Committee's Decision. All decisions, determinations and interpretations by the Committee regarding the Plan, any rulesand regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on allParticipants. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making suchdecisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or otheremployee of the Company and such attorneys, consultants and accountants as it may select.5.Eligibility.Awards may be granted only to Employees.6.Term of Plan.The Plan shall become effective upon its approval by shareholders of the Company. It shall continue in effect for a term of ten (10) yearsfrom the later of the date the Plan or any amendment to add shares to the Plan is approved by shareholders of the Company unless terminated earlierunder Section 14.7.Term of Award.The term of each Award shall be determined by the Committee and stated in the Award Agreement. In the case of an Option, the term shall beno longer than ten (10) years from the Grant Date.8.Options.Each Option shall be evidenced by an Option Agreement, the terms and conditions of which are consistent with the following:(a)Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be no less than100% of the Fair Market Value per Share on the Grant Date.(b)No Option Repricings. Other than in connection with a change in the Company's capitalization (as described in Section 13(a)), theexercise price of an Option may not be reduced without shareholder approval.(c)Vesting Period and Exercise Dates. Options granted under this Plan shall vest and/or be exercisable at such time and in suchinstallments during the period prior to the expiration of the Option's term as determined by the Committee.(d)Form of Consideration. The Committee shall determine the acceptable form of consideration for exercising an Option, includingthe method of payment, either through the terms of the Option Agreement or at the time of exercise of an Option. Acceptable formsof consideration may include: (i)cash;(ii)check or wire transfer (denominated in U.S. Dollars);(iii)subject to any conditions or limitations established by the Committee, other Shares which (A) in the case of Sharesacquired upon the exercise of an Option, have been owned by the Participant for more than six months on the date ofsurrender and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares asto which said Option shall be exercised;(iv)consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Committee;(v)such other consideration and method of payment for the issuance of Shares to the extent permitted by applicable law; or(vi)any combination of the foregoing methods of payment.9.Option Limitations/Terms.(a)Eligibility for Incentive Stock Options. Only employees (as determined in accordance with section 3401(c) of the Code and theregulations promulgated thereunder) of the Company or any of its Subsidiaries may be granted Incentive Stock Options.(b)$100,000 Limitation for Incentive Stock Options. Notwithstanding the designation “Incentive Stock Option” in an OptionAgreement, if and to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Optionsare exercisable for the first time by the Awardee during any calendar year (under all plans of the Company and any of itsSubsidiaries) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 9(b),Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Sharesshall be determined as of the Grant Date.(c)Effect of Termination of Employment on Options.(i)Generally. Unless otherwise provided in the Option Agreement, upon an Awardee's Termination of Employment otherthan as a result of circumstances described in Sections 9(c)(ii), (iii) and (iv) below, any outstanding Option granted tosuch Awardee, whether vested or unvested, to the extent not theretofore exercised, shall terminate 90 days after the date ofthe Awardee's Termination of Employment.(ii)Disability or Retirement of Awardee. Unless otherwise provided in the Option Agreement, upon an Awardee'sTermination of Employment as a result of the Awardee's disability (as determined by the Committee) or Retirement alloutstanding exercisable Options granted to such Awardee shall remain exercisable until the expiration of the stated term ofthe Option. If the Participant does not exercise such Option within the time specified, the Option (to the extent notexercised) shall automatically terminate.(iii)Death of Awardee. Unless otherwise provided in the Option Agreement, upon an Awardee's Termination of Employmentas a result of the Awardee's death, all outstanding exercisable Options granted to such Awardee shall remain exercisableuntil the expiration of the stated term of the Option. If an Option is held by the Awardee when he or she dies, the Optionmay be exercised by the beneficiary designated by the Awardee, the executor or administrator of the Awardee's estate or, ifnone, by the person(s) entitled to exercise the Option under the Awardee's will or the laws of descent or distribution. If theOption is not so exercised within the time specified, such Option (to the extent not exercised) shall automatically terminate.(iv)Voluntary Severance Incentive Program. Upon an Awardee's Termination of Employment as a result of participationin a voluntary severance incentive program of the Company or a Subsidiary approved by the Board or a Committee, unlessprovided otherwise pursuant to the terms of such voluntary severance incentive program, all outstanding Options granted to the Awardee shall immediatelybecome fully vested and shall remain exercisable until the expiration of the stated term of the Option. If the Participant doesnot exercise such Option within the time specified, the Option (to the extent not exercised) shall automatically terminate.(v)Divestiture. If an Awardee will cease to be an Employee because of a divestiture by the Company, prior to suchTermination of Employment, the Committee may, in its sole discretion, make some or all of the outstanding Optionsgranted to the Awardee become fully vested, and such Options shall remain exercisable until the expiration of the statedterm of the Option. The determination of whether a divestiture will occur shall be made by the Committee in its solediscretion. If the Participant does not exercise such Option within the time specified, the Option (to the extent notexercised) shall automatically terminate.(vi)Work Force Restructuring or Similar Program. If an Awardee will cease to be an Employee because of a work forcerestructuring or similar program, prior to such Termination of Employment, the Committee may, in its sole discretion,make some or all of the outstanding Options granted to the Awardee become fully vested and such Options shall remainexercisable until the expiration of the stated term of the Option. The determination of whether a work force restructuringwill occur shall be made by the Committee in its sole discretion. If the Participant does not exercise such Option within thetime specified, the Option (to the extent not exercised) shall automatically terminate.10.Exercise of Option.(a)Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions asdetermined by the Committee and set forth in the Option Agreement(b)An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance withthe Option Agreement) from the person entitled to exercise the Option; (ii) full payment for the Shares with respect to which therelated Option is exercised; and (iii) with respect to Nonstatutory Stock Options, payment of all applicable withholding taxes(c)Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in thename of the Participant and his or her spouse. Unless provided otherwise by the Committee or pursuant to this Plan, until the Sharesare issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of theCompany), no right to vote or receive dividends or any other rights as a shareowner shall exist with respect to the Shares subject toan Option, notwithstanding the exercise of the Option.(d)An Option may not be exercised for a fraction of a Share11.Stock Awards.Each Stock Award shall be evidenced by a Stock Award Agreement, the terms and conditions of which are consistent with the following:(a)Restrictions and Performance Criteria. Stock Awards shall vest at such time and in such installments as determined by theCommittee; provided, however, that in the case of Stock Awards issued to corporate officers and Employees designated as “GroupPresidents,” the vesting of Stock Awards may be subject to the attainment of performance goals, including attainment of certainlevels of Total Shareholder Return of the Company relative to Total Shareholder Return of a peer group of companies.(b)Forfeiture. Unless otherwise provided in the Stock Award Agreement, upon the Awardee's Termination of Employment (other thanas provided below in Sections 11(d), (e) and (f)), the Shares subject to a Stock Award that have not become vested pursuant to theStock Award Agreement shall be forfeited. For clarity, termination of employment due to death shall be covered by this paragraph.(c)Disability or Retirement of Awardee. Unless otherwise provided in the Stock Award Agreement, if an Awardee's Termination ofEmployment is due to the Awardee's disability or Retirement, all outstanding Stock Awards granted to such Awardee shall continueto vest, provided the following conditions are met:(i)The Awardee shall not render services for any organization or engage directly or indirectly in any business which, in theopinion of the Committee, competes with, or is in conflict with the interest of, the Company. The Awardee shall be free,however, to purchase as an investment or otherwise stock or other securities of such organizations as long as they are listedupon a recognized securities exchange or traded over-the-counter, or as long as such investment does not represent asubstantial investment in the opinion of the Committee or a significant (greater than 3%) interest in the particularorganization. For the purposes of this subsection, a company (other than an Affiliate) which is engaged in the business ofproducing, leasing or selling products or providing services of the type now or at any time hereafter made or provided bythe Company or any of its Affiliates shall be deemed to compete with the Company;(ii)The Awardee shall not, without prior written authorization from the Company, use in other than the business of theCompany or any of its Affiliates, any confidential information or material relating to the business of the Company or itsAffiliates, either during or after employment with the Company or any of its Affiliates;(iii)The Awardee shall disclose promptly and assign to the Company or one of its Affiliates, as appropriate, all right, title andinterest in any invention or idea, patentable or not, made or conceived by the Awardee during employment by the Companyor any of its Affiliates, relating in any manner to the actual or anticipated business, research or development work of theCompany or any of its Affiliates and shall do anything reasonably necessary to enable the Company or one of its Affiliates,as appropriate, to secure a patent where appropriate in the United States and in foreign countries; and(iv)An Awardee retiring due to age shall render, as a consultant and not as an Employee, such advisory or consultative servicesto the Company as shall be reasonably requested in writing from time to time by the Committee, consistent with the state ofthe retired Awardee's health and any employment or other activities in which such Awardee may be engaged. For purposesof this Plan, the Awardee shall not be required to devote a major portion of time to such services and shall be entitled toreimbursement for any reasonable out-of-pocket expenses incurred in connection with the performance of such services.(d)Voluntary Severance Incentive Program. Upon an Awardee's Termination of Employment as a result of participation in avoluntary severance incentive program of the Company or an Affiliate approved by the Committee, then unless provided otherwisepursuant to the terms of such voluntary severance incentive program, all outstanding Stock Awards granted to such Awardee shallimmediately vest and all forfeiture provisions shall lapse.(e)Divestiture. If an Awardee will cease to be an Employee because of a divestiture by the Company, prior to such Termination ofEmployment, the Committee may, in its sole discretion, accelerate the vesting of all or a portion of any outstanding Stock Awardgranted to such Awardee and provide that all forfeiture provisions with respect to such Stock Awards shall lapse. The determinationof whether a divestiture will occur shall be made by the Committee in its sole discretion.(f)Work Force Restructuring or Similar Program. If an Awardee will cease to be an Employee because of a work forcerestructuring, prior to such Termination of Employment, the Committee may, in its sole discretion, accelerate the vesting of all or aportion of any outstanding Stock Award granted to such Awardee and provide that all forfeiture provisions with respect to suchStock Awards shall lapse. The determination of whether a work force restructuring will occur and whether the Awardee ceases to be an Employee because of such work force restructuring shall be made by the Committee in its solediscretion.(g)Rights as a Shareholder. The Participant shall have the rights equivalent to those of a shareholder and shall be a shareholder onlyafter Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent ofthe Company) to the Participant.12.Other Provisions Applicable to Awards.(a)Non-Transferability of Awards. Unless provided otherwise in an Award Agreement, an Award may not be sold, pledged, assigned,hypothecated, transferred, or disposed of in any manner other than by beneficiary designation, will or by the laws of descent ordistribution.(b)Certification. Prior to the payment of any compensation under an Award intended to qualify as “performance-based compensation”under Section 162(m) of the Code, the Committee shall certify the extent to which any performance criteria and any other materialterms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of the CommonStock).13.Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale.(a)Changes in Capitalization. Subject to any required action by the shareholders of the Company, (i) the number and kind of Sharescovered by each outstanding Award, (ii) the price per Share subject to each such outstanding Award and (iii) the Share limitationsset forth in Section 3, shall be proportionately adjusted for any increase or decrease in the number or kind of issued shares resultingfrom a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increaseor decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided,however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receiptof consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding andconclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securitiesconvertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, thenumber or price of shares of Common Stock subject to an Award.(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Committee shall notify eachParticipant as soon as practicable prior to the effective date of such proposed transaction. The Committee in its discretion mayprovide for an Option to be fully vested and exercisable until ten (10) days prior to such transaction. In addition, the Committee mayprovide that any restrictions on any Award shall lapse prior to the transaction, provided the proposed dissolution or liquidation takesplace at the time and in the manner contemplated. To the extent it has not been previously exercised, an Award will terminateimmediately prior to the consummation of such proposed transaction.(c)Change in Control. In the event there is a Change in Control of the Company, as determined by the Committee, the Committee may,in its discretion, (i) provide for the assumption or substitution of, or adjustment to, each outstanding Award; (ii) accelerate thevesting of Options and terminate any restrictions on Stock Awards; and (iii) provide for the cancellation of Awards in exchange fora cash payment to the Participant.14.Amendment and Termination of the Plan.(a)Amendment and Termination. The Committee may amend, alter or discontinue the Plan or any Award Agreement, but any suchamendment shall be subject to approval of the shareowners of the Company in the manner and to the extent required by applicablelaw (including applicable stock exchange requirements). In addition, without limiting the foregoing, unless approved by theshareowners of the Company, no such amendment shall be made that would: (i)materially increase the maximum number of Shares for which Awards may be granted under the Plan, other than anincrease pursuant to Section 13;(ii)reduce the minimum exercise price for Options granted under the Plan;(iii)reduce the exercise price of outstanding Options; or(iv)change the class of persons eligible to receive Awards under the Plan.(b)Effect of Amendment or Termination. No amendment, suspension or termination of the Plan shall impair the rights of any Award,unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by theParticipant and the Company. Termination of the Plan shall not affect the Committee's ability to exercise the powers granted to ithereunder with respect to Awards granted under the Plan prior to the date of such termination.(c)Effect of the Plan on Other Arrangements. Neither the adoption of the Plan by the Board or the Committee nor the submission ofthe Plan to the shareowners of the Company for approval shall be construed as creating any limitations on the power of the Board orthe Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the grantingof restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable orapplicable only in specific cases.15.Designation of Beneficiary.(a)An Awardee may file a written designation of a beneficiary who is to receive the Awardee's rights pursuant to Awardee's Award orthe Awardee may include his or her Awards in an omnibus beneficiary designation for all benefits under the Plan. To the extent thatAwardee has completed a designation of beneficiary, such beneficiary designation shall remain in effect with respect to any Awardhereunder until changed by the Awardee to the extent enforceable under applicable law.(b)Such designation of beneficiary may be changed by the Awardee at any time by written notice in a form approved by the Committee.In the event of the death of an Awardee and in the absence of a beneficiary validly designated under the Plan who is living at the timeof such Awardee's death, the Company shall allow the executor or administrator of the estate of the Awardee to exercise the Award,or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, mayallow the spouse or one of the dependents or relatives of the Awardee to exercise the Award to the extent permissible underApplicable Law.16.No Right to Awards or to Employment.No person shall have any claim or right to be granted an Award and the grant of any Award shall not be construed as giving an Awardee theright to continue in the employ of the Company or its Affiliates. Further, the Company and its Affiliates expressly reserve the right, at any time, todismiss any Employee or Awardee at any time without liability or any claim under the Plan, except as provided herein or in any Award Agreemententered into hereunder.17.Legal Compliance.Shares shall not be issued pursuant to the exercise of an Option or Stock Award unless the exercise of such Option or Stock Award and theissuance and delivery of such Shares shall comply with applicable laws and shall be further subject to the approval of counsel for the Company withrespect to such compliance.18.Inability to Obtain Authority.To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction,which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company shall berelieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 19.Reservation of Shares.The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfythe requirements of the Plan.20.Notice.Any written notice to the Company required by any provisions of this Plan shall be addressed to the Secretary of the Company and shall beeffective when received.21.Governing Law; Interpretation of Plan and Awards.(a)This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws, but not the choiceof law rules, of the state of Delaware(b)In the event that any provision of the Plan or any Award granted under the Plan is declared to be illegal, invalid or otherwiseunenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to renderit legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be affectedexcept to the extent necessary to reform or delete such illegal, invalid or unenforceable provision(c)The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute apart of the Plan, nor shall they affect its meaning, construction or effect(d)The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respectivepermitted heirs, beneficiaries, successors and assigns(e)All questions arising under the Plan or under any Award shall be decided by the Committee in its total and absolute discretion22.Limitation on Liability.The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, an Employee, anAwardee or any other persons as to:(a)The Non-Issuance of Shares. The non-issuance or sale of Shares as to which the Company has been unable to obtain from anyregulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and saleof any shares hereunder; and(b)Tax Consequences. Any tax consequence expected, but not realized, by any Participant, Employee, Awardee or other person due tothe receipt, exercise or settlement of any Option or other Award granted hereunder. Exhibit 10.6TRIUMPH GROUP, INC.NOMINATING AND CORPORATE GOVERNANCE COMMITTEE MEETINGNon-employee Director Compensation SummaryApril 25, 2013Annual Retainer forNon-employee BoardMemberAdditional Retainer forCommittee ChairsAdditional Retainer forLead DirectorMeeting FeesTelephonic Meeting FeeAnnual Equity Award $60,000Audit Comm. Chair:$5,000; Comp. Comm.Chair: $4,000; OtherComm. Chairs; $3,000.$5,000N/AN/AEquity grants with a grantdate value of approx.$70,000 (one time newmember grant at max of5,000 shares) Exhibit 21.1Subsidiaries of Triumph Group, Inc.Triumph Brands, Inc. Triumph Group Charitable Foundation Triumph Group Acquisition Corp. Triumph Group Acquisition Holdings, Inc. Triumph Controls - Germany GmbH Triumph Processing, Inc. Triumph Actuation Systems -Connecticut, LLC Triumph Aerospace Systems Group, LLC Triumph Precision Castings Co. Triumph Fabrications - Fort Worth, Inc. Triumph Actuation Systems, LLC Triumph Controls, LLC Triumph Instruments, Inc. Triumph Structures - Los Angeles, Inc. Triumph Engineered Solutions, Inc. Triumph Structures -Kansas City, Inc. Nu-Tech Brands, Inc. CBA Acquisition, LLC Triumph Controls (Europe) SAS Constructions Brevetees d'Alfortville (SAS) Triumph Fabrications - San Diego, Inc. Triumph Aerospace Systems - Wichita, Inc. Triumph Gear Systems -Macomb, Inc. Triumph Airborne Structures, LLC Triumph Fabrications - Hot Springs, LLC Triumph Turbine Services, Inc. Triumph Engineering Services, Inc. Triumph Aviations Inc. Triumph Actuation Systems -Valencia, Inc. The Triumph Group Operations, Inc. Triumph Gear Systems, Inc. Triumph Thermal Systems, LLC Triumph Composite Systems, Inc. Triumph Aftermarket Services Group, LLC HT Parts, L.L.C. Triumph Metals Company Triumph Aviation Services Asia, Ltd. Triumph Structures -Wichita, Inc. Triumph Interiors, LLC Triumph Aerospace Systems -Newport News, Inc. Triumph Accessory Services - Grand Prairie, Inc. Triumph Structures - East Texas, Inc. Triumph Precision, Inc. Triumph Insulation Systems, LLC Triumph Insulation Systems - Germany GmbH The Mexmil Holding Company LLC Placas Termodinamicas S.A. de C.V. Triumph Structures - Long Island, LLC Triumph Investment Holdings, Inc. Triumph Receivables, LLC Triumph Instruments -Burbank, Inc. Triumph Aerospace Systems Group - UK, Ltd. Triumph Controls - UK, Ltd. Triumph Group Holdings - UK, Ltd. Triumph Actuation & Motion Controls Systems - UK, Ltd. KAMEX Ltd. Mexmil China, LLC Triumph Group Holdings - Mexico, LLC Triumph Group Investment -Mexico, LLC Triumph Real Estate - Mexico, LLC Triumph Group -Mexico S. de R.L. de C.V. Triumph Group -Mexico Inmobiliaria, S de R.L. de C.V. Triumph Fabrications - St. Louis, Inc. Triumph Aerostructures, LLC VAC Industries, Inc. Triumph Structures - Everett, Inc. Triumph Aerostructures Holdings, LLC Triumph Aerostructures Real Estate Investment Co., LLC Triumph Vought Aircraft Technical Services (Chengdu) Co. Ltd. Triumph Processing - Embee Division, Inc. Triumph Engine Control Systems, LLC Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:1)Registration Statements (Form S-8 No. 333-36957 and Form S-8 No. 333-50056) pertaining to the 1996 Stock Option Planof Triumph Group, Inc.,2)Registration Statements (Form S-8 No. 333-81665 and Form S-8 No. 333-134861) pertaining to the Amended and RestatedDirectors' Stock Incentive Plan of Triumph Group, Inc.,3)Registration Statement (Form S-8 No. 333-125888) pertaining to the 2004 Stock Incentive Plan of Triumph Group, Inc.,4)Registration Statement (Form S-3 No. 333-174289) of Triumph Group, Inc.;of our reports dated May 29, 2013, with respect to the consolidated financial statements and schedule of Triumph Group, Inc. and theeffectiveness of internal control over financial reporting of Triumph Group, Inc. included in this Annual Report (Form 10-K) ofTriumph Group, Inc. for the year ended March 31, 2013./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 29, 2013 Exhibit 31.1CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OFTHE SECURITIES AND EXCHANGE ACT OF 1934I, Jeffry D. Frisby, certify that:1.I have reviewed this annual report on Form 10-K of Triumph Group, Inc.;2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourthfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financialreporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: May 29, 2013 /s/ JEFFRY D. FRISBY Jeffry D. FrisbyPresident and Chief Executive Officer (PrincipalExecutive Officer) Exhibit 31.2CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OFTHE SECURITIES AND EXCHANGE ACT OF 1934I, M. David Kornblatt, certify that:1.I have reviewed this annual report on Form 10-K of Triumph Group, Inc.;2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourthfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financialreporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: May 29, 2013 /s/ M. DAVID KORNBLATT M. David KornblattExecutive Vice President, Chief Financial Officer (Principal FinancialOfficer) Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Triumph Group, Inc. (the "Company") on Form 10-K for the year ended March 31, 2013 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I, Jeffry D. Frisby, President and Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ JEFFRY D. FRISBY JEFFRY D. FRISBYPresident and Chief Executive Officer(Principal Executive Officer) May 29, 2013________________________________________________________________________________________________________________________A signed original of this written statement required by Section 906 has been provided to Triumph Group, Inc. and will be retained by TriumphGroup, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Triumph Group, Inc. (the "Company") on Form 10-K for the year ended March 31, 2013 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I, M. David Kornblatt, Executive Vice President, Chief Financial Officer of theCompany, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ M. DAVID KORNBLATT M. David KornblattExecutive Vice President, Chief Financial Officer (Principal FinancialOfficer) May 29, 2013________________________________________________________________________________________________________________________A signed original of this written statement required by Section 906 has been provided to Triumph Group, Inc. and will be retained by TriumphGroup, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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