Triumph Group
Annual Report 2014

Plain-text annual report

Triumph Group, Inc. Annual Report 2014 Designed to be Different. Built to Perform. Positioned for Growth. TRI UMPH. O NE NAME. M AN Y SOLU TIONS . In fiscal 2014, Triumph continued to leverage its successful entrepreneurial business model to set the stage for continued growth and expansion as a key player in the global aerospace market. • Revenues increased 2% to $3.8 billion in fiscal 2014. Net income was $206.3 million, and earnings per share were $3.91. • Triumph generated over $181.5 million in cash flow from operations before pension contributions of $46.3 million. • Triumph successfully completed the closure of the Triumph Aerostructures Jefferson Street facility in Dallas and start-up of a new state- of-the-art manufacturing center in nearby Red Oak, Texas – resulting in annual cost savings of approximately $40 million. • Execution issues associated with Triumph’s Boeing 747-8 program were addressed and production was stabilized. While the impact was contained and non-recurring, it significantly affected fiscal 2014 financial results. • Excluding the impact of the Red Oak initiative and the 747-8 program, all of Triumph’s three business segments reported healthy operating margins. • The acquisition of General Donlee Canada, Inc., added new capabilities in engine and main rotor shaft technology to Triumph’s Aerospace Systems Group. • A range of new contract awards has positioned Triumph for continued growth, including new opportunities with Boeing, Airbus, Embraer, and other aerospace manufacturers. • In February, the Board of Directors increased Triumph’s share repurchase authority to 5.5 million shares, and a 300,000 share buyback was executed during the fourth quarter for approximately $19.1 million. Aerostructures Top Ten Platforms as of March 31, 2014 1. Boeing 747 2. Boeing 777 3. Gulfstream 4. Boeing C-17 5. Airbus A330, A340 6. Boeing 737 Aerospace Systems Top Ten Platforms as of March 31, 2014 1. Boeing 737 2. Boeing CH-47 3. Bell Helicopter 429 4. Boeing 777 5. Sikorsky UH-60 6. Airbus A320, A321 7. Boeing 767, Tanker 7. Boeing V-22 8. Boeing 787 9. Boeing V-22 8. Lockheed Martin C-130 9. Boeing 787 10. Bombardier Global 7000/8000 10. Sikorsky CH-53K (Represents 88% of Aerostructures backlog) (Represents 48% of Aerospace Systems backlog) About the Cover: The cover illustration featured on Triumph’s 2014 Annual Report captures the scope and potential of today’s global aerospace marketplace in a single dramatic image. The visualization, created by Geographic Information Systems (GIS) Specialist Michael Markieta, plots more than 58,000 flight paths connecting all airports across the globe. For more information, visit www.spatialanalysis.ca. Major Markets as of March 31, 2014 57% Commercial Aerospace 28% Military 11% Business 2% Non-Aviation 2% Regional 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 45 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 aerostructures, aerospace assemblies, subassemblies and components 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 14 $ 3,763,254 March 13 $ 3,702,702 March 12 $ 3,407,929 $ 206,256 5% 105,977 87,771 $ 400,0041 11% (42,629) 164,277 $ 522,818 14% $ 297,347 8% 165,710 68,156 $ 531,2132 14% (25,644) 129,506 $ 669,556 18% $ 281,622 8% 155,955 77,138 $ 514,7153 15% (26,684) 119,724 $ 567,355 17% $ 206,2561 5% $ 297,3472 8% $ 280,8573 8% $ $ 3.911 — 3.91 $ $ 5.672 — 5.67 $ $ 5.433 (0.01) 5.41* Weighted Shares – Diluted (in thousands) 52,787 52,446 51,873 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 $ 206,414 $ 126,890 $ 93,969 $ 1,142,144 $ 892,818 $ 741,105 $ 1,473,805 $ 930,973 $ 1,550,383 28,998 $ 1,521,385 2,283,911 $ 3,805,296 40% $ 1,296,024 $ 815,084 $ 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% $ $ 43.79 $ 40.80 $ 36.21 13,828 272 13,900 266 $ 12,602 270 $ 1 Includes $2.1 million in net curtailments, settlements and early retirement incentives ($1.4 million after tax or $0.03 per diluted share) and $70.3 million of cost associated with the relocation from our largest facility ($45.6 million after tax of $0.86 per diluted share). 2 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). 3 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). 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 3 6 7 , 3 8 0 4 , 3 0 3 4 9 4 3 1 8 1 0 7 6 7 6 5 3 2 5 1 5 7 , 4 7 2 5 , 4 5 0 3 , 4 12 13 14 12 13 14 12 13 14 12 13 14 * Cash Flow from Operations in 2014, 2013 and 2012 was $181, $430 and $349 million before pension contributions of $46, $110 and $122 million, respectively. 1 Fellow Stockholders: In our first 20 years, Triumph created a strong and diverse organization comprised of the world’s finest aerospace manufacturers and suppliers. We established ourselves as a major participant in the marketplace based on unique capabilities that set us apart from our competitors. Our growth is based on a simple business strategy which has guided Triumph since its inception: • 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 our 45 individual Triumph companies while providing each company with the benefits of being part of a large organization. In return, each company is accountable for producing superior operating and financial results, and for contributing to the overall success of the enterprise. 2 Today, Triumph competes at every level of the aerospace supply chain. We are able to produce virtually any aircraft component – from a single part to a complex wing or rotorcraft assembly, and our services range from product development to testing to manufacturing to aftermarket services. In fiscal 2014, we continued to build on this solid foundation to position Triumph for growth in the next 20 years and beyond. Fiscal 2014 was a transition year for Triumph in which we made important investments in our future. Although our financial results did not achieve the highs of recent years, the fundamentals of our business remain solid. Revenues increased 2% to $3.8 billion, while both operating income and earnings per share were significantly lower than the results achieved in the previous fiscal year. Two key factors – both of them isolated and non-recurring – contributed to these results. Part of the shortfall was anticipated, as we closed an outdated and inefficient manufacturing facility in Dallas and started up operations in our new state-of-the-art manufacturing center in nearby Red Oak, Texas. The shutdown of the Jefferson Street facility – acquired in the 2010 Vought acquisition – was a major accomplishment, completed ahead of schedule. The move will result in significant cost savings and increased competitiveness for our Aerostructures Group for many years to come. Our financial results were also affected by execution issues associated with our Boeing 747-8 program. These issues were confined to this specific program and, by the end of the fiscal year, the program was stabilized and on schedule. The fundamentals of our business remain solid. Excluding these non-recurring issues, all three of our operating groups – Aerostructures, Aerospace Systems, and Aftermarket Services – maintained healthy margins. We remain focused on creating shareholder value. In February, we increased our share repurchase authority to approximately 5.5 million shares and executed a 300,000 share buyback during the fourth quarter to provide immediate returns to our stockholders. We also believe that Triumph is well positioned to take advantage of significant growth opportunities in our core markets to increase future returns to our stockholders. The Triumph Advantage Today’s aerospace marketplace is more demanding and competitive than ever before, and there is little indication that this will change. All participants in the global supply chain are seeking new ways to leverage technology to increase quality while reducing costs. Triumph. Designed to be different. Built to perform. Positioned for growth. In this highly fluid environment, we believe our “Designed to be Different” business model provides a distinct competitive advantage, with important benefits that are unique to Triumph. • Each Triumph company is focused on specific capabilities and markets, and has great freedom to grow the business based on that specialized understanding. • Each Triumph company is diligent in controlling costs in order to achieve maximum efficiency and productivity. • Each Triumph company maintains its own customer base, and also works with other Triumph companies on cross-selling and collaborative opportunities. • Each Triumph company is agile, flexible, and highly responsive to customer needs. • Each Triumph company maintains an entrepreneurial work environment that values and supports the growth and development of every employee. • Each Triumph company is highly skilled in managing working capital in order to deliver significant cash flow from operations, which funds Triumph’s continued growth. • Each Triumph company is committed to a common set of values which define Triumph as an organization. Triumph’s Core Values Triumph always leads with our core values, which guide everything we do. We have five core values: Integrity, Innovation, Quality and Service, Flawless Execution, and Commitment. INTEGRITy Integrity throughout the Triumph organization is absolute. Integrity means we always deliver what we promise. No exceptions. This does not mean we live in a challenge-free world, as our experience in fiscal 2014 demonstrates. However, when problems occur, we accept responsibility and move quickly to address and resolve them. To support this effort, we’ve assembled a Global Rapid Response Team comprisied of experts from throughout the Triumph companies – experts in technology, quality, supply chain, logistics, finance, and all the disciplines required to assure that we always meet and exceed our customers’ demands. Triumph’s ability to access and focus the talent of our entire network to provide solutions for our customers is unsurpassed in our industry. INNOVATION The construction of our new Red Oak manufacturing center provides Triumph Aerostructures with a state-of-the-art manufacturing and assembly facility and a major new asset for attracting new programs. 2014 RESTRuCTuRInG Triumph Integrated Aircraft Interiors Triumph Composite Systems in Spokane, Washington, and Triumph Insulation Systems in Hawthorne, California, joined together as Triumph Integrated Aircraft Interiors, with ambitious plans for growth. While the companies produce complementary products, there’s little overlap among customers – creating excellent collaboration and cross- selling opportunities. This initiative is an example of the entrepreneurial energy within the Triumph organization, as companies work together to meet a broader range of customer needs. 3 Triumph. Designed to be different. Built to perform. Positioned for growth. The move to Red Oak was a massive undertaking – requiring the transport of huge pieces of tooling and equipment to the new facility 30 miles away. This major effort was successfully completed ahead of schedule in March 2014. The Red Oak initiative will produce approximately $40 million in annual cost savings – not including anticipated increases in productivity. Equally important, Red Oak enhances the ability of Triumph Aerostructures to attract new business based on this far more competitive cost structure. In fiscal 2014, we also continued our ongoing efforts to rebalance our portfolio to compensate for our 2010 acquisition of Vought Aircraft Industries, an aerostructures company that more than doubled our size. All three groups – Aerostructures, Aerospace Systems, and Aftermarket Services – play an important and essential role in our “One Name. Many Solutions.” value proposition. To further strengthen our Aerospace Systems Group, in October, Triumph acquired General Donlee Canada, Inc., a Toronto-based manufacturer of engine shafts, thrust links, rotorcraft masts, and landing gear components. The company, with approximately $60 million in annual revenue, 200 employees, and a wealth of proprietary technology, now operates as Triumph Gear Systems – Toronto. Collaboration among Triumph companies is also critical in driving growth and increasing market share. We had a great example of this in 2014 when we combined the operations of Triumph Composite Systems and Triumph Insulation Systems at the request of the companies’ management teams. There was a natural fit between insulation systems and the composite ducting utilized in aircraft interiors, with little customer overlap and enormous potential for cross-selling. The combined company – Triumph Integrated Aircraft Interiors – has ambitious plans to significantly increase revenues over the next decade. This is just one example of how individual Triumph companies act as business incubators to develop and refine new ideas which promote efficiency, increase quality, reduce costs, and increase revenue – all by creating real value for the customer. QuALITy AND SERVICE The foundation for continued growth is the strength of our existing customer relationships. Suppliers who deliver high-quality products on time at the lowest possible cost to the customer are able to increase market share and grow. As new opportunities arise, we want customers to choose Triumph because our record of performance leaves them no other choice. Today’s aerospace market remains extremely fluid as customers seek suppliers with the ability to combine technology, productivity and service to create exceptional value. This provides the opportunity to increase Triumph’s market share by attracting the next generation of aerospace programs. The best indicator of Triumph’s reputation for quality and service is the broad and diverse range of recent “wins” which will contribute to Triumph’s future growth. We significantly increased our content with Embraer, as Triumph Aerostructures – Vought Aircraft Division was selected to design and build the center fuselage section III, the rear fuselage section and various tail section components for Embraer’s second- generation E-Jet family. This is a key win for Triumph and expands our presence in the next-generation jet market. In a multi-year contract, Triumph Aerostructures – Vought Aircraft Division was selected by Airbus to furnish the wing reinforcement kit that allows for the installation of Sharklets on the Airbus A319 and A320 in-service aircraft. The Sharklets extend the range and increase the fuel efficiency of both aircraft. In addition, Triumph will provide machined and assembled structural components for the fuselage structure which support the cabin storage bins and aircraft systems for the Airbus A350 XWB. We continue to expand our Airbus 350 content in both Aerostructures and Aerospace Systems, including a significant award to Triumph Insulation Systems. Even as new production of the Boeing C-17 Globemaster III comes to an end, Boeing has extended a three-year contract with Triumph Aerospace Systems and Triumph Aftermarket Services to provide overhaul and maintenance services for the C-17’s auxiliary power units, fan thrust reversers, pitch trim actuators, landing gear manifold and ramp actuators. Importantly, our Triumph companies are reviewing and pursuing a robust pipeline of opportunity at all levels of the aerospace supply chain on an ongoing basis. We are also very conscious of the need to expand our global footprint so that we can best serve our growing international customer base. Where we once saw Triumph as a u.S.-based company with international operations, increasingly we see ourselves as a global company. We have increased our presence in Europe, and we are leveraging the global presence of some of our recently-acquired companies to raise our profile in the Asia-Pacific and South American markets. 4 2014 ACCOMPLISHMEnT Red Oak Facility Triumph successfully completed the closure of the Triumph Aerostructures Jefferson Street facility in Dallas and start-up of a new state- of-the-art manufacturing center in nearby Red Oak, Texas. This effort was completed ahead of schedule and is expected to produce approximately $40 million in annual cost savings. The Red Oak complex encompasses 1.1 million square feet on 123 acres, 30 miles south of the former Jefferson Street facility. More than 1,100 skilled workers design, build, and assemble major composite and metal integrated airframe systems for commercial and military aircraft programs. Core products include tail sections, wings, cabin structures, nacelles, thrust reversers, and other components for prime aircraft manufacturers. The efficient design of the Red Oak center is expected to yield vast improvements in productivity. For example, a site tour of the sprawling Jefferson Street complex, with 282 separate buildings, required 21/2 hours and a golf cart. Today visual inspection of the Red Oak facility can be completed in a 20-minute walking tour. 5 Triumph. Designed to be different. Built to perform. Positioned for growth. FLAWLESS EXECuTION Triumph’s commitment to excellence is absolute – requiring a renewed sense of urgency and a relentless focus on execution. We seek to “raise the bar” on performance at every Triumph company. This means focusing on priorities and sweating the details, with a determined sense of urgency in everything we do. We are placing even more emphasis on our management and employee development programs – because our future depends on it. Every Triumph company is required to develop a succession plan, and every employee is encouraged to create a “flight plan” for their own personal and career development. Looking ahead, we will continue to strive for perfection every day. COMMITMENT Commitment is implicit in all our core values, and in our relationships with all our stakeholders – customers, employees, investors, suppliers, and the communities where we live and work. Our commitment to enhancing shareholder value is unwavering. It has been our top priority since Triumph’s inception more than 20 years ago. It’s the ultimate measure of our success and the foundation of our commitment to all our stakeholders. We believe that proper capital allocation is essential to meeting our long-term strategic goals. We will continue to invest in strategic acquisitions, as well as key programs and technologies that will position Triumph for growth and profitability, while maintaining a strong balance sheet. In addition, we will take advantage of opportunities to appropriately return capital to our stockholders. In February 2014, our Board of Directors increased Triumph’s share repurchase authority to 5.5 million shares, and a 300,000 share buyback was executed during the fourth quarter for approximately $19.1 million. We believe returning capital to our stockholders is an attractive option for increasing shareholder value as part of a balanced investment approach to drive sustainable long-term returns. Looking Ahead Triumph is well positioned to benefit from a strong commercial aerospace market, though competition will remain intense – with relentless demands for increased productivity. • Commercial airlines have largely recovered from the global recession, and have returned to their historical growth rates. The increase in passengers has created demand for additional flights and aircraft, especially in Asia, and production rates are increasing. • The high cost of fuel remains a major driver in the marketplace, accounting for nearly 40% of total operating costs for the airlines. This has increased demand for fuel-efficient engines and lightweight materials in airframe construction, particularly composites. The demand for fuel efficiency is expected to significantly increase both the production of new aircraft as well as retrofits. • The military market for fixed wing aircraft and rotorcraft remains relatively flat but stable, as spending competes with other governmental priorities in the united States and elsewhere. Boeing’s termination of the C-17 Globemaster III program will impact Triumph, though aftermarket support will continue. The unmanned Aerial Vehicle (uAV) market, in which Triumph participates, continues to grow. Importantly, the key military programs in which Triumph participates are stable and funded. 2014 ACQuISITIOn Triumph Gear Systems – Toronto Triumph Gear Systems – Toronto is a leading solution provider of complex machined products – targeting niche markets in need of sophisticated manufacturing capabilities, with emphasis on the aerospace, oil and gas, nuclear, and industrial sectors. now part of Triumph’s Aerospace Systems Group, the company adds key expertise in engine and main rotor shafts. With 200 employees and $60 million in annual sales, key customers include GE Aviation and Bell Helicopter. 6 2014 WInGS PROGRAM Triumph Companies Promote Local Community Involvement Fiscal 2014 marked the third year of Triumph’s Wings Program, in which Triumph employees provided volunteer services to the communities where they live and work. Employees received time off and seed money to develop projects in collaboration with local community organizations. For example, 30 employees of Triumph Actuation Systems in East Lyme, CT, built and installed a playground at McCook Point Park for the East Lyme Parks and Recreation Department. • The business jet market is on the upswing as recession concerns In Closing abate and multinational corporations require on-demand transportation to manage global operations. The small aircraft segment remains flat at fairly low levels, though there are some signs of recovery. Production rates for regional jets are expected to rise. • The aftermarket continues to grow as airlines concentrate on their core business and increasingly look to outsourcing to maintain their fleets. Tight margins exacerbated by high fuel costs place even greater emphasis on cost control, an area where Triumph has proven expertise. Triumph’s growing global presence positions inventory and services close to the customer. Industry trends generally favor Triumph and our decentralized, entrepreneurial business model. We carefully protect the agility of our individual companies and their ability to meet our customers’ requirements – collaborating whenever possible to meet a broader range of needs under the “One name. Many solutions.” banner. Transitions I am very pleased to report that Triumph’s financial health remains in excellent care following the election in February of Jeffrey L. McRae as Senior Vice President and Chief Financial Officer. Jeff succeeds M. David Kornblatt, who has assumed new duties with Triumph as Director of Corporate Development. Jeff joined Triumph in 2010 as part of the Vought acquisition, when he was named CFO for Triumph Aerostructures – Vought Aircraft Division. Subsequently he served as President of Triumph Aerostructures – Vought Integrated Programs Division and as President of Triumph Aerostructures – Vought Aircraft Division. Jeff has been a valuable member of Triumph’s senior management team, and we are most fortunate to have the benefit of his insights and expertise. Our challenge today is to leverage Triumph’s unique attributes to build and sustain our distinct competitive advantage in order to grow market share. ultimately, Triumph’s success depends on the expertise and commitment of our people – the nearly 14,000 Triumph employees around the world. All of us must focus relentlessly on execution with a sense of urgency and passion as never before. It is through these actions that we will keep entrepreneurship alive at Triumph. I want our company to be known as the world’s largest small business. I want Triumph to be a rare and unique example of a large company which remains flexible, innovative and responsive. I want Triumph to retain the feel of a family business where every employee is personally invested in the future of the enterprise. As we build this one-of-a-kind work culture, I’m confident in Triumph’s ability to grow and thrive. Only by exceeding the expectations of our customers and investors will we achieve the expectations we have set for ourselves. Jeffry D. Frisby President and CEO 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. Major Markets (as of March 31, 2014) 59% Commercial Aerospace 25% Military 14% Business 1% Non-Aviation 1% Regional Products and Services • Integrated structures including wings and wing panels, fuselage sections and panels, empennages, nacelles and rotorcraft cabins • Aircraft interiors including insulation systems, ducting, carpet kits, monument assemblies and structural components • 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 8 8 Investments and Initiatives • Relocated all production and assembly operations from the now-closed Jefferson Street facility in Dallas to Triumph’s new Red Oak, Texas, manufacturing center – while maintaining on-time delivery schedules. • Combined Triumph Insulation Systems and Triumph Composite Systems as Triumph Integrated Aircraft Interiors in order to more effectively utilize low-cost production facilities and offer customers an integrated product portfolio. • Entered the final stages of design in preparation for initiating production on the Bombardier Global 7000/8000 program. • Continued the design work for the aft fuselage of the Embraer E2 regional aircraft begun in 2013. Production is planned to start in 2017. • Moved high-labor-content composite manufacturing to Mexico and Thailand to free up capacity at Triumph’s U.S. and U.K. facilities. 36% Commercial Aerospace 50% Military 4% Business 6% Non-Aviation 4% Regional 83% Commercial Aerospace 10% Military 1% Business 3% Non-Aviation 3% Regional Triumph Aerostructures – Vought Aircraft Division – Nashville produces Airbus A330 wing components including leading edge assemblies, upper panel assemblies and spars. This Triumph facility is the largest single U.S. supplier to Airbus for A330 structure. The Nashville site specializes in long and large machining and assembly of aircraft parts. Locations Triumph Aerostructures – Vought Aircraft Division Triumph Aerostructures – Grand Prairie (Marshall Street) Triumph Aerostructures – Hawthorne Triumph Aerostructures – Milledgeville Triumph Aerostructures – Nashville Triumph Aerostructures – Red Oak Triumph Aerostructures – Stuart Triumph Integrated Aircraft Interiors Triumph Composite Systems Triumph Insulation Systems Triumph Fabrications – Fort Worth Triumph Fabrications – Hot Springs Triumph Fabrications – San Diego Triumph Fabrications – Shelbyville Triumph Processing Triumph Structures – East Texas Triumph Structures – Everett Triumph Structures – Farnborough 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, electromechanical and hydraulic systems, actuation systems, thermal controls and engine fuel controls, latches and locks, and mechanical controls. 59% Commercial Aerospace 25% Military 14% Business 1% Non-Aviation 1% Regional Major Markets (as of March 31, 2014) 36% Commercial Aerospace 50% Military 4% Business 6% Non-Aviation 4% Regional Products and Services • Hydraulic, electro-mechanical and mechanical systems • Complex gear systems • Electro-mechanical actuation and motion control systems • 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 • Electronic engine controls 10 10 Investments and Initiatives • Added manufacturing process expertise and technology used in the production of engine shafts, thrust links, rotorcraft masts and landing gear components with the acquisition of Triumph Gear Systems – Toronto (formerly General Donlee). • Began construction of a major expansion of the Triumph Gear Systems – Macomb manufacturing facilities. • Expanded Triumph’s high performance electric motor development program from proof of design to applications development and testing. • Relocated the Triumph Controls – France manufacturing operations to a new facility to improve productivity as the result of an optimized manufacturing process layout. • Continued underlying technology investments in electromechanical actuation, high performance pumps, fluid metering and control, gear systems and hydraulic actuators. 83% Commercial Aerospace 10% Military 1% Business 3% Non-Aviation 3% Regional Triumph Processing – Embee Division provides precision metal finishing services to a wide variety of manufacturers and industries. Among the extensive services offered are seven different anodizing processes that are performed in a dedicated 5,000-square-foot production center. Shown here is the anodizing of machined metal detail parts for corrosion prevention. 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 – Orangeburg Triumph Gear Systems – Macomb Triumph Gear Systems – Park City Triumph Gear Systems – Toronto Triumph Northwest Triumph Processing – Embee Division Triumph Thermal 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. 59% Commercial Aerospace 25% Military 14% Business 1% Non-Aviation 1% Regional 36% Commercial Aerospace 50% Military 4% Business 6% Non-Aviation 4% 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 12 Major Markets (as of March 31, 2014) 83% Commercial Aerospace 10% Military 1% Business 3% Non-Aviation 3% Regional Investments and Initiatives • Introduced plane-side component repair services and logistics support in Indianapolis, IN. • Continued development of Triumph’s post-production spares program to manage MRO requirements for the life of the aircraft. • Created customer-specific point-of-use rotable programs to reduce turn times and eliminate logistics drivers. • Emphasized Triumph’s integrated services capabilities to manage a broader range of customers’ MRO requirements. A world-class welder puts the finishing touches on the core of a heat transfer device at Triumph Accessory Services – Wellington, which provides maintenance services to military, regional and commercial customers for aircraft and engine accessories and airborne electrical power generation units. 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 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, lubrication 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 Aerostructures – Vought Aircraft Division Designs and manufactures major airframe structures such as wings, fuselage subassemblies, empennages, nacelles and other components for prime aircraft manufacturers. Norman Jordan, President E-mail: ndjordan@triumphgroup.com Phone: 817-804-9400 Arlington, Texas Triumph Actuation & Motion Control Triumph Aerostructures – Triumph Accessory Services – 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 280810 Flintshire, United Kingdom Triumph Aerospace Systems – 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 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 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 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 electromechanical actuation products. Thomas Holzthum, President E-mail: tholzthum@triumphgroup.com Tim Broderick, General Manager E-mail: tbroderick@triumphgroup.com Phone: 860-242-5568 Bloomfield, Connecticut Phone: 860-739-4926 East Lyme, Connecticut Phone: 203-748-0027 Bethel, Connecticut Grand Prairie (Marshall Street) Doug K. Wright, President E-mail: dkwright@triumphgroup.com Phone: 972-595-9900 Grand Prairie, Texas Triumph Aerostructures – Hawthorne Marty Jones, President E-mail: dmjones@triumphgroup.com Phone: 310-332-5469 Hawthorne, California Triumph Aerostructures – Milledgeville Merlin Fechner, President E-mail: mfechner@triumphgroup.com Phone: 478-454-4200 Milledgeville, Georgia Triumph Aerostructures – Nashville Steve Blackwell, President E-mail: sblackwell@triumphgroup.com Phone: 615-361-2000 Nashville, Tennessee Triumph Aerostructures – Red Oak Bubba Long, President E-mail: blong@triumphgroup.com Phone: 972-515-8276 Red Oak, Texas Triumph Aerostructures – Stuart Brett Fulford, President E-mail: bafulford@triumphgroup.com Phone: 772-220-5301 Stuart, Florida Triumph Airborne Structures Repairs and overhauls fan reversers, nacelle components, flight control surfaces and other aerostructures for military and commercial aircraft. Larry Potts, President E-mail: lpotts@triumphgroup.com Phone: 501-262-1555 Hot Springs, Arkansas Triumph Air Repair Repairs and overhauls auxiliary power units (APUs), Line Replaceable Units (LRUs) and related accessories. Sells, leases and exchanges APUs, related components and provides on-wing inspections and field repairs. Guy LaRosa, President E-mail: gclarosa@triumphgroup.com Phone: 602-437-1144 Chandler, Arizona 14 Triumph Aviation Services – Asia Repairs and overhauls complex aircraft operational components such as auxiliary power units (APUs), fan reversers, nacelle components, pneumatics and electromechanical aircraft accessories. Remy Maitam, President E-mail: rmaitam@triumphgroup.com Phone: 011 66 38 465 070 Chonburi, Thailand 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 Designs and manufactures mechanical ball bearing and cable control assemblies and command mechanisms for the aerospace, ground transportation, defense, nuclear and marine industries. Bill Bernardo, President E-mail: bbernardo@triumphgroup.com Pierre Vauterin, President & Managing Director E-mail: pvauterin@triumphgroup.com Phone: 011 33 1 4375 2053 Villeneuve Le Roi, France Triumph Controls – Germany 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 Martin Sievers, Managing Director E-mail: msievers@triumphgroup.com Phone: 011 49 205 658 2550 Heiligenhaus, 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 Elliott Sheehan, Managing Director E-mail: esheehan@triumphgroup.com) Phone: 011 44 1268 270 195 Basildon, United Kingdom 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 as well as titanium hot-formed parts, and performs chem-milling and other metal finishing processes. Tony Johnson, President E-mail: tjohnson@triumphgroup.com Phone: 501-622-6200 Hot Springs, Arkansas Triumph Fabrications – Orangeburg 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 acoustic insulation blankets for military rotorcraft platforms. Pat Coward, President E-mail: pcoward@triumphgroup.com Phone: 618-259-6089 Orangeburg, South Carolina 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 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 Pat Coward, President E-mail: pcoward@triumphgroup.com Phone: 435-649-1900 Park City, Utah Triumph Gear Systems – Toronto Manufactures precision-machined engine shafts, thrust links, rotor masts and landing gear components for the aerospace industry, as well as related machined components for the nuclear, oil and gas industries. Garen Mikirditsian, President E-mail: gmikirditsian@triumphgroup.com Phone: 416-743-4417 Ontario, Canada Triumph Group – Mexico Provides rough/finish machining of gears, actuators and structural components as well as fabrication and assembly of non-structural composite components for Triumph companies and other external customers. Alex Olmedo, General Manager E-mail: aolmedo@triumphgroup.com Phone: 011 55 478 985 4311 Zacatecas, Mexico Triumph Integrated Aircraft Interiors Designs, develops, tests, manufactures and installs interior systems and components. Also provides Insulfab® proprietary film and cover materials for aircraft insulation systems to other manufacturers and suppliers. MaryLou Thomas, President E-mail: mthomas@triumphgroup.com Phone: 949-250-4999 Phoenix, Arizona 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: 949-250-4999 Phoenix, Arizona Phone: 509-623-8100 Spokane, Washington 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. Howard Sanderson, Business Development E-mail: hsanderson@triumphgroup.com Phone: 949-250-4999 Phoenix, Arizona Taylorsville, North Carolina Mexicali, Mexico Beijing, China Hamburg, Germany Triumph Interiors Refurbishes and repairs aircraft interior components and systems including side wall and ceiling panels, galleys, overhead storage bins, doors, and manufactures a full line of interior lighting and plastic components. Bob McHugh, President E-mail: rmchugh@triumphgroup.com Phone: 412-788-4200 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. Tom Ervin, President E-mail: tervin@triumphgroup.com Phone: 541-926-5517 Albany, Oregon Triumph Processing Provides high-quality finishing services to the aerospace industry in support of military and commercial aircraft programs. 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 Pintarelli, 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 and assemblies primarily for commercial and military aerospace programs. Bryan Johnston, President E-mail: bjohnston@triumphgroup.com Phone: 903-983-1592 Kilgore, Texas Triumph Structures – Everett Produces medium to large precision- machined components as well as integrated subassemblies serving commercial and military aerospace customers. Ron Scruggs, President E-mail: rscruggs@triumphgroup.com Phone: 425-438-7100 Everett, Washington Triumph Structures – Kansas City Manufactures precision machined parts and mechanical assemblies for the aviation, 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, soft and hard structural components such as stringers, chords, floor beams, skins and spars for the aviation industry. Machines, welds and assembles large complex precision structural components. Lanny Shirk, President E-mail: lshirk@triumphgroup.com Phone: 626-965-1630 Brea, California Phone: 714-448-2327 City of Industry, California Phone: 818-341-1314 Chatsworth, California Phone: 626-965-1630 Walnut, California Triumph Structures – Wichita Specializes in complex, high-speed monolithic precision machining, turning, subassembly and sheet metal fabrication serving domestic and international aerospace customers. Harry Thurmond, President E-mail: hthurmond@triumphgroup.com Phone: 316-942-0432 Wichita, Kansas Triumph Structures – Farnborough Triumph Structures (Thailand), Ltd. Manufactures composite and metallic propulsion and structural components. Provides processing for machined parts. 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 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 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, 2014. 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 2014 Annual Report on Form 10-K. In addition, on July 29, 2013, 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. Corporate Officers & Directors Shareholder Information 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, 2014 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 2014 Stock Prices Per Common Share $85.00 High Low $61.52 year-End $64.58 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. PO Box 30170 College Station, TX 77842-3170 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 JEFFREY L. McRAE Senior Vice President and Chief Financial Officer JOHN B. WRIGHT, II Vice President, General Counsel and Secretary R. JAMES CUDD Vice President – Business Development M. ROBIN DeROGATIS Vice President – Human Resources KEVIN E. KINDIG Vice President and Treasurer THOMAS A. QUIGLEY, III Vice President and Controller SHEILA G. SPAGNOLO Vice President – Tax and Investor Relations Division President NORMAN JORDAN President – Triumph Aerostructures – Vought Aircraft Division Vice Presidents MICHAEL R. ABRAM, Vice President THOMAS HOLzTHUM, 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 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 Executive Vice President, Weyerhaeuser Company (Retired) 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, 2014oroTRANSITION 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, 2013, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $3,578 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, 2013. 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 1, 2014 was 52,151,782.____________________________________________________________________________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 2014 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 Engineering10 Backlog11 Dependence on Significant Customer11 United States and International Operations11 Competition11 Government Regulation and Industry Oversight12 Environmental Matters12 Employees13 Research and Development Expenses13 Executive Officers13 Available Information14Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments23Item 2.Properties24Item 3.Legal Proceedings26Item 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 Risk51Item 8.Financial Statements and Supplementary Data52Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure109Item 9A.Controls and Procedures109Item 9B.Other Information112 PART III112Item 10.Directors, Executive Officers and Corporate Governance112Item 11.Executive Compensation112Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters112Item 13.Certain Relationships and Related Transactions, and Director Independence112Item 14.Principal Accountant Fees and Services112 PART IV113Item 15.Exhibits, Financial Statement Schedules1132Table of ContentsPART IItem 1.BusinessCautionary Note Regarding 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. 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", the "Company", "we", "us", or "our") 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 abroad, worldwide spectrum of the aviation industry, including original equipment manufacturers, or OEMs, of commercial, regional, business and militaryaircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.Effective October 4, 2013, the Company acquired all of the issued and outstanding shares of General Donlee Canada, Inc. ("General Donlee"). GeneralDonlee is based in Toronto, Canada and is a leading manufacturer of precision machined products for the aerospace, nuclear and oil and gas industries. Theacquired business now operates as Triumph Gear Systems-Toronto and its results are included in the Aerospace Systems Group.Effective May 6, 2013, the Company acquired four related entities collectively comprising the Primus Composites business ("Primus") from PrecisionCastparts Corp. The acquired business, which includes two manufacturing facilities in Farnborough, England and Rayong, Thailand, operates as TriumphStructures - Farnborough and Triumph Structures - Thailand and is included in the Aerostructures segment from the date of acquisition. Together, TriumphStructures - Farnborough and Triumph Structures - Thailand constitute a global supplier of composite and metallic propulsion and structural composites andassemblies. In addition to its composite operations, the Thailand operation also machines and processes metal components.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 operating segments: (i) Triumph Aerostructures Group, whosecompanies' revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structural componentsfor the global aerospace original equipment manufacturers, or OEM, market; (ii) Triumph Aerospace Systems Group, whose companies design, engineer andmanufacture a wide range of proprietary and build-to-print components, assemblies and systems also for the OEM market; and (iii) Triumph Aftermarket3Table of ContentsServices Group, whose companies serve aircraft fleets, notably commercial airlines, the U.S. military and cargo carriers, through the maintenance, repair andoverhaul 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.The 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 turbine 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:4Table of ContentsAir 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 Certain financial information about our three segments can be found in Note 21 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, 2014:OperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTRIUMPH AEROSTRUCTURES GROUPTriumphAerostructures—Vought Aircraft DivisionTriumphAerostructures, LLCArlington, TXGrand Prairie, TXRed Oak, TXHawthorne, CATorrence, CA Nashville, TNStuart, GAMilledgeville, 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.4,7255Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Fabrications—Fort Worth(1)Triumph Fabrications—FortWorth, Inc.Fort Worth, TXManufacturesmetallic/composite bondedcomponents and assemblies.Commercial, General Aviationand Military OEMs andAftermarket.200Triumph 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.344Triumph 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.112Triumph 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.150Triumph Integrated AircraftInteriorsTriumph 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.615Triumph InsulationSystems, LLCCalexico, CAHawthorne, CATaylorsville, NCHamburg, GermanyMexicali, 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.1,066Triumph ProcessingTriumph Processing, Inc.Lynwood, CAProvides high-quality finishingservices to the aerospace,military and commercialindustries.Commercial, General Aviation,and Military OEMs.91Triumph Structures—EastTexasTriumph Structures—EastTexas, Inc.Kilgore, TXManufactures structuralcomponents specializing incomplex precision machiningprimarily for commercial andmilitary aerospace programs.Commercial and MilitaryOEMs.106Triumph 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.1466Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Structures—InternationalTriumph Structures—FarnboroughTriumph Structures—ThailandFarnborough, EnglandRayong, ThailandGlobal supplier of compositeand metallic propulsion andstructural compositesassemblies.Commercial and GeneralAviation OEMs.746Triumph Structures—Kansas CityTriumph Structures—KansasCity, Inc.Grandview, MOManufactures precisionmachined parts and mechanicalassemblies for the aviation,aerospace and defenseindustries.Commercial and MilitaryOEMs.119Triumph Structures—Long IslandTriumph Structures—LongIsland, LLCWestbury, NYManufactures high-qualitystructural and dynamic partsand assemblies for commercialand military aerospaceprograms.Commercial and MilitaryOEMs.139Triumph Structures—LosAngelesTriumph Structures—LosAngeles, Inc.Brea, CAChatsworth, 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.336Triumph 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.167TRIUMPH 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.42Triumph 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.274Triumph 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.1517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.196Triumph 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.93Triumph 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.116Triumph Controls(1)Triumph Controls, LLCNorth Wales, PAShelbyville, INDesigns and manufacturesmechanical andelectromechanical controlsystems.Commercial, General Aviationand Military OEMs andAftermarket.147Triumph Controls—FranceConstruction Breveteesd'Alfortville SASAlfortville, FranceManufactures mechanical ballbearing control assemblies forthe aerospace, groundtransportation, defense andmarine industries.Commercial and MilitaryOEMs, GroundTransportation and MarineOEMs.66Triumph 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.50Triumph Engine ControlSystemsTriumph Engine ControlsSystems, LLCWest Hartford, CTManufactures aerospace fuelsystems including electronicengine controls, fuel meteringunits and main pumps.Commercial, General Aviationand Military OEMs andAftermarket.543Triumph Fabrications—OrangeburgTriumph Fabrications—OrangeburgOrangeburg, 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.598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.97Triumph 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.477Triumph Gear Systems—TorontoTriumph Gear Systems—Toronto ULCToronto, CanadaManufacture superiorprecision aircraft engine shafts,engine links, helicopter masts,components for landing gears;and perform highly complexprecision machining and gearingwork for a variety ofindustries.Commercial and MilitaryOEMs and Aftermarket.190Triumph NorthwestThe Triumph GroupOperations, Inc.Albany, ORMachines and fabricatesrefractory, reactive, heat andcorrosion-resistant precisionproducts.Military, Medical andElectronic OEMs.25Triumph 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 Industries403Triumph ThermalSystems(1)Triumph ThermalSystems, Inc.Forest, OHDesigns, manufactures andrepairs engine and aircraftthermal transfer systems andcomponents.Commercial, General Aviationand Military OEMs.192TRIUMPH 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.118Triumph 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.1359Table of ContentsOperationSubsidiaryOperatingLocationBusinessType of CustomersNumber ofEmployeesTriumph Air Repair(1)The Triumph GroupOperations, Inc.Chandler, AZPhoenix, AZRepairs and overhaulsauxiliary power units (APUs)and related accessories; sells,leases and exchanges APUs,related components and otheraircraft material.Commercial, General Aviationand Military Aftermarket.93Triumph AirborneStructures(1)Triumph AirborneStructures, Inc.Hot Springs, ARIndianapolis, INRepairs and overhauls fanreversers, nacelle components,flight control surfaces andother aerostructures.Commercial Aftermarket.175Triumph 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.147Triumph 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.94Triumph 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.218Triumph San AntonioSupport CenterThe Triumph GroupOperations, Inc.San Antonio, TXProvides maintenance servicesfor aircraft ground supportequipment.Military Aftermarket.33CORPORATE AND OTHERTriumph Group, Inc.Triumph Group, Inc.Berwyn, PAParent companyN/A123Triumph 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 OEMs509(1)Designates FAA-certified repair station.(2)Through an affiliate, Triumph Insulation Systems, LLC acquired a 100% controlling interest in a venture, operating in Beijing, China, from Beijing Kailan AviationTechnology Co., Ltd., an unrelated party based in China, during the fiscal year ended March 31, 2014.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 Support10Table of ContentsCenter, a third-party sales organization which had been dedicated solely to a sales 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, 2014, our continuing operations had outstanding purchase orders representing an aggregate invoice price of approximately $4,751million, of which $3,796 million, $923 million and $32 million relate to the Aerostructures Group, the Aerospace Systems Group and the AftermarketServices Group, respectively. As of March 31, 2013, our continuing operations had outstanding purchase orders representing an aggregate invoice price ofapproximately $4,527 million, of which $3,663 million, $832 million and $32 million related to the Aerostructures Group, the Aerospace Systems Groupand the Aftermarket Services Group, respectively. Of the existing backlog of $4,751 million, approximately $2,017 million will not be shipped by March 31,2015.Dependence on Significant CustomerFor the fiscal years ended March 31, 2014, 2013 and 2012, the Boeing Company ("Boeing") represented approximately 45%, 49% and 47%,respectively, of our net sales, covering virtually every Boeing plant and product. A significant reduction in sales to Boeing would 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, 2014, 2013 and 2012 were approximately$3,142 million, $3,199 million, and $2,944 million, respectively. Our revenues from our continuing operations to customers in all other countries for thefiscal years ended March 31, 2014, 2013 and 2012 were approximately $622 million, $504 million, and $464 million, respectively.As of March 31, 2014 and 2013, our long-lived assets for continuing operations located in the United States were approximately $3,482 million and$3,500 million, respectively. As of March 31, 2014 and 2013, our long-lived assets for continuing operations located in all other countries were approximately$289 million and $99 million, respectively.CompetitionWe 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 overhaul11Table of Contentsservices for the components they manufacture. Many governments maintain aircraft support depots in their military organizations that maintain and repair theaircraft they operate. Other independent 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"), 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. EASA wasformed in 2002 and is handling most of the responsibilities of the national aviation authorities in Europe, such as the United Kingdom Civil AviationAuthority.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, ("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 significant compliance burdens and risks onus. Although management believes that our operations and our facilities are in material compliance with such laws and regulations, future changes in theselaws, regulations or interpretations thereof or the nature of our operations or regulatory enforcement actions which may arise, may require us to makesignificant 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 suits12Table of Contents(including Superfund liabilities at third-party sites), in each case, to the extent not otherwise indemnified. This policy applies to all of our manufacturing andassembly operations worldwide. However, if we are required to pay the expenses related to environmental liabilities because neither indemnification norinsurance coverage is available, these expenses could have a material adverse effect on us.EmployeesAs of March 31, 2014, we employed 13,828 persons, of whom 3,434 were management employees, 134 were sales and marketing personnel, 559 weretechnical personnel, 872 were administrative personnel and 8,829 were production workers.Several of our subsidiaries are parties to collective bargaining agreements with labor unions. Under those agreements, we currently employ approximately2,918 full-time employees. Currently, approximately 21% of our permanent employees are represented by labor unions and approximately 61% of net sales arederived from the facilities at which at least some employees are unionized. Of the 2,918 employees represented by unions, 546 employees are working undercontracts that have expired or will expire within one year and 510 employees in our Red Oak, Texas facility have not yet negotiated an initial contract. Ourinability to negotiate an acceptable contract with any of these labor unions could result in strikes by the affected workers and increased operating costs as aresult of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike or other work stoppage, or other employees were tobecome unionized, we could experience a significant disruption of our operations and higher ongoing labor costs, which could have an adverse effect on ourbusiness 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, 2014, 2013 and 2012 is available in Note 2 of"Notes to Consolidated Financial Statements."Executive OfficersNameAge PositionRichard C. Ill70 ChairmanJeffry D. Frisby59 President and Chief Executive Officer and DirectorJeffrey L. McRae50 Senior Vice President, Chief Financial OfficerJohn B. Wright, II60 Vice President, General Counsel and SecretaryThomas A. Quigley, III37 Vice President and ControllerRichard C. Ill was elected Chairman in July 2009, and had been our President and Chief Executive Officer and a director since 1993. Mr. Ill retired asChief Executive Officer of the Company in July 2012 and has remained as the Company's Chairman. Mr. Ill is a director of P.H. Glatfelter Company,Mohawk Industries, Inc. and Baker Industries and a trustee of the Eisenhower Fellowships.Jeffry 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.Jeffrey L. McRae became Senior Vice President and Chief Financial Officer in February 2014. Mr. McRae was named President of TriumphAerostructures – Vought Aircraft Division in October 2013, having previously served as President of Triumph Aerostructures – Vought Integrated ProgramsDivision and Chief Financial Officer for Triumph Aerostructures – Vought Aircraft Division, a position he had assumed upon the completion of Triumph’sacquisition of Vought Aircraft Industries, Inc. in June 2010. Prior to the acquisition, Mr. McRae had served as Vought’s Vice President of Business Operations,and had been employed by the Company since 2007.13Table of ContentsJohn 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, ("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 military aircraft programs in which we participate may not enterfull-scale production as expected. A change in the levels of defense spending or levels of military flight operations could curtail or enhance our prospects in themilitary 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.In August 2011, the Budget Control Act (the "Act") reduced the United States defense top-line budget by approximately $490 billion through 2021. TheAct further reduced the defense top-line budget by an additional $500 billion through 2021 if Congress did not enact $1.2 trillion in further budget reductionsby January 15, 2012. Should Congress in future years provide funding above the yearly spending limits of the Act, sequestration will automatically takeeffect and cancel any excess amount above the limits. The annual spending limits of the Act will remain unless and until the current law is changed.On March 1, 2013, sequestration was implemented for the U.S. government fiscal year 2013. The lack of agreement between Congress and theAdministration to end sequestration, certain Office of Management and Budget reports and communications from the U.S. Department of Defense ("U.S.DoD") indicate that there are likely to be reductions to our military business. Reductions, cancellations or delays impacting existing contracts or programscould have a material effect on our results of operations, financial position and/or cash flows. While the U.S. DoD would sustain the bulk of sequestrationcuts affecting us, civil programs and agencies could be significantly impacted as well.15Table of ContentsAs previously announced by Boeing in September 2013 and then subsequently revised in March 2014, the decision has been made to cease production ofthe C-17 Globemaster ("C-17") during calendar year 2015. Major production related to this program is expected to cease during the first quarter of fiscal 2016.We 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 have received inquiries regarding proposal for spares which could extend production through the end of fiscal 2016, as we believe the UnitedStates Air Force will want to have continued contractor support for the C-17 program. The loss of the C-17 program and the failure to win additional work toreplace the C-17 program could materially reduce our cash flow and 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.Boeing, or Boeing Commercial, Military and Space, represented approximately 45% of our net sales for the fiscal year ended March 31, 2014, coveringvirtually every Boeing plant and product. As a result, a significant reduction in purchases by Boeing could have a material adverse impact on our financialposition, results of operations, and cash flows. In addition, some of our other group companies rely significantly on particular customers, the loss of whichcould 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 Canada, China, France,Germany, Mexico, Thailand and the United Kingdom, and customers throughout the world, we will be subject to the legal, political, social and regulatoryrequirements and economic conditions of other jurisdictions. In the future, we may also make additional international capital investments, including furtheracquisitions of companies outside the United States or companies having operations outside the United States. Risks inherent to international operationsinclude, but are not limited 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 in Note 10 of the "Notes to Consolidated FinancialStatements") and by particular restrictions contained in the Credit Facility and our other financing arrangements. In that case, additional funding sources maybe needed, and we may not be able to obtain the additional capital necessary to pursue our internal growth and acquisition strategy or, if we can obtainadditional financing, the additional financing may not be 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 FokkerTechnologies. Competition for the repair and overhaul of aviation components comes from three primary sources: OEMs, major commercial airlines and otherindependent repair 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.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 on programs such as Boeing 747-8 ("747-8").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 ("GAAP"). These principlesrequire our management to make estimates and assumptions regarding our contracts that affect the reported amounts of revenue and expenses during thereporting period. Contract accounting requires judgment relative to assessing risks, estimating contract sales and costs, and making assumptions for scheduleand technical issues. Due to the size and nature of many of our contracts, the estimation of total sales and cost at completion is complicated and subject tomany variables. While we base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances atthe time made, actual results may differ materially from those estimated.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 to19Table of Contentspay the expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a materialadverse 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. Intellectual property litigationinvolves complex legal and factual questions which makes the outcome of any such proceedings subject to considerable uncertainty. Not only can suchlitigation divert management's attention, but it can also expose the Company to damages and potential injunctive relief which, if granted, may preclude theCompany from making, using or selling particular products or technology. The expense and time associated with such litigation may have a material andadverse 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 include language in repair manuals relating to theirequipment asserting broad claims of proprietary rights to the contents of the manuals used in our operations. Although we believe that our use of manufactureand repair manuals is lawful, there can be no assurance that OEMs will not try to enforce such claims, including through the possible use of legalproceedings, or that any such actions will be unsuccessful.Our 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.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.20Table of ContentsDue 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.Our 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, war, or terrorist activity. We maintain property damage and businessinterruption insurance at the levels typical in our industry, however, a major catastrophe, such as an earthquake, hurricane, fire, flood, tornado or othernatural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations could result in a prolonged interruption of ourbusiness. Any disruption resulting from these events could cause significant delays in shipments of products and the loss of sales and customers and we maynot have insurance to adequately compensate us for any of these events.If we are unable to protect our information technology infrastructure against service interruptions, data corruption, cyber-based attacks ornetwork security breaches, our operations could be disrupted.We rely on information technology networks and systems to manage and support a variety of business activities, including procurement and supplychain, engineering support, and manufacturing. Our information technology systems, some of which are managed by third-parties, may be susceptible todamage, disruptions or shutdown due to failures during the process of upgrading or replacing software, databases or components thereof, power outages,hardware failures, computer viruses, attacks by computer hackers, telecommunications failures, user errors or catastrophic events. In addition, securitybreaches could result in unauthorized disclosures of confidential information. If our information technology systems suffer severe damage, disruption orshutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our manufacturing process could be disrupted resultingin late deliveries or even no deliveries if there is a total shutdown.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.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, 2014, we employed 13,828 people, of which 21.1% 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 Grand Prairie, Texas, facility expired in October 2013, and the employees at this facility are currently working without acontract . If we are unable to negotiate a new contract with that workforce, our operations may be disrupted and we may be prevented from completingproduction and delivery of products from those facilities, which would negatively 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.21Table of ContentsFinancial 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 assets or a decrease in interest rates resulting from movements in thefinancial markets will increase the under-funded status of the plans recorded in our statement of financial position and result in additional cash fundingrequirements 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.U.S. DoD, facility security clearance is required in order to be awarded and perform on classified contracts for the DoD and certain other agencies of theU.S. Government, which is a significant part of our business. We have obtained clearance at appropriate levels that require stringent qualifications, and wemay be required to seek higher level clearances in the future. We cannot assure you that we will be able to maintain our security clearance. If for some reasonour security clearance is invalidated or terminated, we may not be able to continue to perform our present classified contracts or be able to enter into newclassified contracts, which could affect our ability to compete for and capture new business.New regulations related to conflict minerals have and will continue to force us to incur additional expenses, may make our supply chain morecomplex, and could adversely impact our business.The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains provisions to improve transparency and accountability concerningthe supply of certain minerals and metals, known as conflict minerals, originating from the Democratic Republic of Congo (the "DRC") and adjoiningcountries. As a result, in August 2012, the SEC adopted annual investigation, disclosure and reporting requirements for those companies that manufacture orcontract to manufacture products that contain conflict minerals that originated from the DRC and adjoining countries. As initial disclosure requirementscommence in May 2014 (with respect to 2013), we have and will continue to incur compliance costs, including costs related to determining the sources ofconflict minerals used in our products and other potential changes to processes or sources of supply as a consequence of such verification activities. Theimplementation of these rules could adversely affect the sourcing, supply and pricing of materials used in certain of our products. As there may be only alimited number of suppliers offering "conflict22Table of Contentsfree" minerals, we cannot be sure that we will be able to obtain necessary conflict-free minerals from such suppliers in sufficient quantities or at competitiveprices. Also, we may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free.Item 1B.Unresolved Staff CommentsNone.23Table of ContentsItem 2.PropertiesAs of March 31, 2014, we owned or leased the following facilities:LocationDescription SquareFootage Owned/LeasedTRIUMPH AEROSTRUCTURES GROUP Hot Springs, ARManufacturing facility/office 195,200 OwnedBrea, CAManufacturing facility 90,000 LeasedCalexico, CAWarehouse 4,600 LeasedChatsworth, CAManufacturing facility/office 101,900 OwnedCity of Industry, CAManufacturing facility/office 75,000 LeasedEl Cajon, CAManufacturing facility/office 94,300 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 86,000 LeasedWalnut, CAManufacturing facility/office 207,000 LeasedBejing, ChinaManufacturing facility/office 57,500 LeasedFarnborough, EnglandManufacturing facility/office 31,600 LeasedStuart, FLManufacturing facility 519,700 LeasedMilledgeville, GAManufacturing facility/assembly facility 566,200 OwnedMilledgeville, GAManufacturing facility/assembly facility 66,000 LeasedHamburg, GermanyOffice 1,200 LeasedShelbyville, INManufacturing facility/office 193,900 OwnedWichita, KSManufacturing facility/office 172,275 LeasedMexicali, MexicoManufacturing facility/office 261,000 OwnedGrandview, MOManufacturing facility/office 78,000 OwnedTaylorsville, NCManufacturing facility/office 52,100 LeaseWestbury, NYManufacturing facility/office 93,500 LeasedWestbury, NYAerospace metal processing 12,500 LeasedWestbury, NYOffice 10,700 OwnedNashville, TNManufacturing facility/assembly facility/office 2,198,700 OwnedArlington, TXOffice 111,400 LeasedDallas, TXHigh-speed wind tunnel 28,900 OwnedFort Worth, TXManufacturing facility/office 114,100 OwnedGrand Prairie, TXManufacturing facility 804,500 LeasedKilgore, TXManufacturing facility/office 83,000 OwnedRed Oak, TXManufacturing facility/office 904,500 OwnedRayong, ThailandManufacturing facility/office 158,000 LeasedEverett, WAManufacturing facility 153,000 LeasedSpokane, WAManufacturing facility/office 392,000 Owned24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 LeasedToronto, CanadaManufacturing facility/office 76,800 OwnedBethel, 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 18,200 LeasedHeiligenhaus, GermanyManufacturing facility/office 19,214 LeasedShelbyville, INManufacturing facility/office 100,000 OwnedMacomb, MIManufacturing facility/office 86,000 LeasedFreeport, NYManufacturing facility/office/warehouse 29,000 OwnedRochester, NYEngineering office 3,900 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 41,800 Leased25Table of ContentsLocationDescription SquareFootage Owned/LeasedTRIUMPH AFTERMARKET SERVICES GROUP Hot Springs, ARMachine shop/office 219,700 OwnedHot Springs, ARMachine shop/office 257,500 OwnedChandler, AZThermal processing facility/office 15,000 LeasedChandler, AZRepair and overhaul/office 91,013 LeasedPhoenix, AZRepair and overhaul/office 48,900 LeasedTempe, AZManufacturing facility/office 59,500 OwnedTempe, AZMachine shop 7,000 OwnedAtlanta, GAManufacturing facility/office 32,000 LeasedIndianapolis, INMachine shop/office 21,000 LeasedWellington, KSRepair and overhaul/office 83,400 LeasedOakdale, PAProduction/warehouse/office 48,000 LeasedGrand Prairie, 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 OwnedWe believe that our properties are adequate to support our operations for the foreseeable future.Item 3.Legal ProceedingsIn the ordinary course of our business, we are involved in disputes, claims, lawsuits, and governmental and regulatory inquiries that we deem to beimmaterial. Some may involve claims or potential claims of substantial damages, fines or penalties. While we cannot predict the outcome of any pending orfuture litigation or proceeding, we do not believe that any pending matter will have a material effect, individually or in the aggregate, on our financial positionor 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 2013 1st Quarter$66.89 $53.462nd Quarter63.88 55.713rd Quarter67.51 60.794th Quarter79.77 65.73Fiscal 2014 1st Quarter$81.80 $71.022nd Quarter85.50 67.903rd Quarter76.37 68.564th Quarter79.90 61.41On May 1, 2014, the reported closing price for our common stock was $65.17. As of May 1, 2014, there were approximately 102 holders of record ofour common stock and we believe that our common stock was beneficially owned by approximately 30,000 persons.Dividend PolicyDuring fiscal 2014 and 2013, we paid cash dividends of $0.16 per share and $0.16 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 29, 2014, 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 on June 15, 2014 to stockholders of record as ofMay 30, 2014.Repurchases of StockThe following summarizes repurchases made pursuant to the Company's share repurchase plan during the three years ended March 31, 2014. 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. In February 2014, theCompany's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to an additional 5,000,000 shares of itscommon stock. From the inception of the program through March 31, 2013, we have repurchased 499,200 shares (prior to fiscal 2012 stock split) for apurchase price of $19.2 million. During the fiscal year ended March 31, 2014, we repurchased 300,000 shares (subsequent to fiscal 2012 stock split) for apurchase price of $19.1 million. Repurchases may be made from time to time in open market transactions, block purchases, privately negotiated transactionsor otherwise at prevailing prices. No time limit has been set for completion of the program. In May 2014, under the existing stock repurchase program, theCompany repurchased 324,841 shares for $22.1 million. As a result, as of May 17, 2014, the Company remains able to purchase an additional 4,875,959shares.PeriodTotal number ofshares purchased Average pricepaid per share Total number ofshares purchasedas part of publiclyannounced plans Maximum numberof shares that mayyet be purchasedunder the plansMarch 1, 2014 - March 31, 2014300,000 $63.78 799,200 5,200,80027Table of ContentsEquity Compensation Plan InformationThe information required regarding equity compensation plan information will be included in our Proxy Statement in connection with our 2014 AnnualMeeting of Stockholders to be held on July 18, 2014, 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 our common stock relative to the cumulative total returns ofthe Russell 1000 and Russell 2000 indexes and the S&P Aerospace & Defense index. An investment of $100 (with reinvestment of all dividends) is assumed tohave been made in our common stock and in each of the indexes on March 31, 2009 and its relative performance is tracked through March 31, 2014.COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*Among Triumph Group, Inc., The Russell 1000 and Russell 2000 IndexesAnd The S&P Aerospace & Defense Index* $100 invested on March 31, 2009 in stock or index, including reinvestment of dividends.** During fiscal year ended March 31, 2013, we moved from the Russell 2000 index to the Russell 1000 index. Fiscal year ended March 31 3/09 3/10 3/11 3/12 3/13 3/14Triumph Group, Inc. 100.00 184.14 232.87 330.77 415.43 342.52Russell 1000100.00 151.60 176.91 190.82 218.35 267.29Russell 2000100.00 162.77 204.75 204.37 237.69 296.87S&P Aerospace & Defense100.00 170.93 188.98 197.56 229.16 328.21 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 Year Ended March 31, 2014(1) 2013(2) 2012(3) 2011(4) 2010(5) (in thousands, except per share data)Operating Data: Net sales$3,763,254 $3,702,702 $3,407,929 $2,905,348 $1,294,780Cost of sales2,911,802 2,763,488 2,564,995 2,231,864 927,211 851,452 939,214 842,934 673,484 367,569Selling, general and administrative expense254,715 241,349 242,553 238,889 157,870Depreciation and amortization164,277 129,506 119,724 99,657 54,418Relocation costs31,290 — — — —Acquisition and integration expenses— 2,665 6,342 20,902 —Curtailments, settlements and early retirement incentives1,166 34,481 (40,400) — —Operating income400,004 531,213 514,715 314,036 155,281Interest expense and other87,771 68,156 77,138 79,559 28,865Gain on early extinguishment of debt— — — — (39)Income from continuing operations, before income taxes312,233 463,057 437,577 234,477 126,455Income tax expense105,977 165,710 155,955 82,066 41,167Income from continuing operations206,256 297,347 281,622 152,411 85,288Loss from discontinued operations— — (765) (2,512) (17,526)Net income$206,256 $297,347 $280,857 $149,899 $67,762Earnings per share: Income from continuing operations: Basic$3.99 $5.99 $5.77 $3.39 $2.59Diluted(6)$3.91 $5.67 $5.43 $3.21 $2.56Cash dividends declared per share$0.16 $0.16 $0.14 $0.08 $0.08Shares used in computing earnings per share: Basic51,711 49,663 48,821 45,006 32,918Diluted(6)52,787 52,446 51,873 47,488 33,332 As of March 31, 2014(1) 2013(2) 2012(3) 2011(4) 2010(5) (in thousands)Balance Sheet Data: Working capital$1,142,144 $892,818 $741,105 $436,638 $487,411Total assets5,553,283 5,239,179 4,597,224 4,477,234 1,692,578Long-term debt, including current portion1,550,383 1,329,863 1,158,862 1,312,004 505,780Total stockholders' equity$2,283,911 $2,045,158 $1,793,369 $1,632,217 $860,686(1)Includes the acquisitions of Insulfab Product Line (Chase Corporation) (October 2013), General Donlee Canada, Inc. (October 2013) and Primus Composites (May 2013) fromthe date of each respective acquisition. See Note 3 to the Consolidated Financial Statements.(2)Includes the acquisitions of Goodrich Pump & Engine Control Systems, Inc. (March 2013) and Embee, Inc. (December 2012) from the date of each respective acquisition. SeeNote 3 to the Consolidated Financial Statements.(3)Includes the acquisition of Aviation Network Services, LLC. (October 2011) from the date of acquisition.(4)Includes the acquisition of Vought Aircraft Industries, Inc. (June 2010) from the date of acquisition.(5)Includes the acquisition of DCL Avionics, Inc. (January 2010) and Fabritech, Inc. (March 2010) from the date of each respective acquisition.(6)Diluted earnings per share for the fiscal years ended March 31, 2014, 2013, 2012 and 2011, included 811,083, 2,400,439, 2,606,189 and 2,040,896 shares, respectively,related to the dilutive 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 October 4, 2013, the Company acquired all of the issued and outstanding shares of General Donlee. General Donlee is based in Toronto, Canadaand is a leading manufacturer of precision machined products for the aerospace, nuclear and oil and gas industries. The acquired business now operates asTriumph Gear Systems-Toronto and its results are included in the Aerospace Systems Group.Effective May 6, 2013, the Company acquired four related entities collectively comprising Primus from Precision Castparts Corp. The acquiredbusiness, which includes two manufacturing facilities in Farnborough, England and Rayong, Thailand, operates as Triumph Structures - Farnborough andTriumph Structures - Thailand and is included in the Aerostructures segement from the date of acquisition. Together, Triumph Structures - Farnborough andTriumph Structures - Thailand constitute a global supplier of composite and metallic propulsion and structural composites and assemblies. In addition to itscomposite operations, the Thailand operation also machines and processes metal components.Financial highlights for the fiscal year ended March 31, 2014 include:•Net sales for fiscal 2014 increased 1.6% to $3.76 billion, including a 6.1% decrease in organic sales.•Operating income in fiscal 2014 decreased 24.7% to $400.0 million.•Net income for fiscal 2014 decreased 30.6% to $206.3 million.•Backlog increased 4.9% over the prior year to $4.75 billion.For the fiscal year ended March 31, 2014, net sales totaled $3.76 billion, a 1.6% increase from fiscal year 2013 net sales of $3.70 billion. Net income forfiscal year 2014 decreased 30.6% to $206.3 million, or $3.91 per diluted common share, versus $297.3 million, or $5.67 per diluted common share, forfiscal year 2013. As discussed in further detail below under "Results of Operations," the decrease in net income is attributable to additional 747-8 programcosts ($85.0 million) and cost associated with the relocation from our Jefferson Street facility ($70.3 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, 2014, we generated $135.1 million of cash flows from operating activities, used $246.7 million in investing activities and received $103.2million from financing activities. Cash flows from operating activities in fiscal year 2014 included $46.3 million in pension contributions versus $109.8million in fiscal year 2013.We continue to remain focused on growing our core businesses as well as growing through strategic acquisitions. Our organic sales decreased in fiscal2014 due to production rate cuts by our customers on the 747-8 and 767 program as it transitions from the commercial variant to the tanker and a decrease inmilitary sales. Our Company has an aggressive but selective acquisition approach that adds capabilities and increases our capacity for strong and consistentinternal growth.In August 2011, the Budget Control Act (the "Act") reduced the United States defense top-line budget by approximately $490 billion through 2021. TheAct further reduced the defense top-line budget by an additional $500 billion through 2021 if Congress did not enact $1.2 trillion in further budget reductionsby January 15, 2012. Should Congress in future years provide funding above the yearly spending limits of the Act, sequestration will automatically takeeffect and cancel any excess amount above the limits. The annual spending limits of the Act will remain unless and until the current law is changed.On March 1, 2013, sequestration was implemented for the U.S. Government fiscal year 2013. The lack of agreement between Congress and theAdministration to end sequestration, certain Office of Management and Budget reports and30Table of Contentscommunications from the U.S. Department of Defense ("U.S. DoD") indicate that there are likely to be reductions to our military business. Reductions,cancellations or delays impacting existing contracts or programs could have a material effect on our results of operations, financial position and/or cash flows.While the U.S. DoD would sustain the bulk of sequestration cuts affecting us, civil programs and agencies could be significantly impacted as well.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, 2014, we have incurred approximately $86.6 million in capital expenditures and $111.9 million in inventory costs associated with theBombardier Global 7000/8000 program, for which we have not yet begun to deliver. The move was substantially completed during the fiscal year ended March31, 2014.As disclosed during fiscal 2014, we identified additional program costs in the current year of approximately $85.0 million, primarily related to the 747-8program which we expected to record during fiscal 2014. These changes in program cost estimates were largely due to production rate changes, continuedinefficiency, rework, high overtime levels, increased costs from suppliers and expedited delivery charges. While we have experienced improvements inperformance metrics since the issues were identified, we have not yet recovered to the levels previously expected or as quickly as expected. These amounts haveresulted primarily from reductions to the profitability estimates of our recent 747-8 production lots. Both the current and future production lots are expected tobe profitable and not result in loss reserves.While we are currently projecting the recurring production contracts to be profitable, there is still a substantial amount of risk similar to what we haveexperienced on these programs (particularly the 747-8). Particularly, our ability to manage risks related to supplier performance, execution of cost reductionstrategies, hiring and retaining skilled production and management personnel, quality and manufacturing execution, program schedule delays and many otherrisks, will determine the ultimate performance of these programs.The next twelve months will be a critical time for these programs as we attempt to return to baseline performance for the recurring cost structure.Recognition of forward-losses in the future periods continues to be a significant risk and will depend upon several factors including our market forecast,possible airplane program delays, our ability to successfully perform under revised design and manufacturing plans, achievement of forecasted costreductions as we continue production and our ability to successfully resolve claims and assertions with our customers and suppliers.Our union contract with Local 848 of the United Auto Workers with employees at our Dallas and Grand Prairie, Texas, facilities expired in October 2013.The employees are currently working without a contract. If we are unable to negotiate a new contract with that workforce, our operations may be disrupted andwe may be prevented from completing production and delivery of products from those facilities, which would negatively impact our results. A contingencyplan has been developed that would allow production to continue in the event of a strike.As previously announced by Boeing in September 2013 and then subsequently revised in March 2014 to curtail production by an additional threemonths, the decision has been made to cease production of the C-17 during calendar year 2015. Major production related to this program is expected to ceaseby the end of fiscal 2015 We have received inquiries regarding proposal for spares which could extend production through the end of fiscal 2016, as webelieve the United States Air Force will want to have continued contractor support for the C-17 program.Effective March 18, 2013, a wholly-owned subsidiary of the Company, Triumph Engine Control Systems, LLC, acquired the assets of GPECS, aleading independent aerospace fuel system supplier for the commercial, military, helicopter and business jet markets. The acquisition of GPECS provides newcapabilities in a market where we did not previously participate and further diversifies our customer base in electronic engine controls, fuel metering units andmain fuel pumps for both OEM and aftermarket/spares end markets. The results for Triumph Engine Control Systems, LLC are included in the AerospaceSystems Group segment from the date of acquisition.Effective December 19, 2012, the Company acquired all of the outstanding shares of Embee, renamed Triumph Processing - Embee Division, Inc.,which is a leading commercial metal finishing provider offering more than seventy metal finishing, inspecting and testing processes primarily for theaerospace industry. The acquisition of Embee expands our current capabilities to provide comprehensive processing services on precision engineered parts forhydraulics, landing gear, spare parts and electronic actuation systems. The results for Triumph Processing - Embee Division, Inc. are included in theAerospace Systems Group segment from the date of acquisition. The acquisitions of GPECS and Embee are collectively referred to hereafter as the "fiscal 2013acquisitions."31Table of ContentsRESULTS 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, settlements and early retirement incentives and depreciation and amortization.We disclose Adjusted 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 maydisclose different 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.Adjusted 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, settlements and early retirement incentives may be useful for investors to consider because it represents the current period impact of thechange in the defined benefit obligation due to the reduction in future service costs as well as the incremental cost of retirement incentive benefits paidto participants. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.32Table of Contents•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.The following table shows our Adjusted EBITDA reconciled to our income from continuing operations for the indicated periods (in thousands): Fiscal year ended March 31, 2014 2013 2012Income from continuing operations$206,256 $297,347 $281,622Amortization of acquired contract liabilities(42,629) (25,644) (26,684)Depreciation and amortization164,277 129,506 119,724Curtailments, settlements and early retirement incentives1,166 34,481 (40,400)Interest expense and other87,771 68,156 77,138Income tax expense105,977 165,710 155,955Adjusted EBITDA$522,818 $669,556 $567,355 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, 2014 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$400,004 $252,910 $149,721 $42,265 $(44,892)Curtailments, settlements and early retirement incentives1,166 — — — 1,166Amortization of acquired contract liabilities(42,629) (25,207) (17,422) — —Depreciation and amortization164,277 114,302 37,453 7,529 4,993Adjusted EBITDA$522,818 $342,005 $169,752 $49,794 $(38,733) 33Table of Contents Fiscal year ended March 31, 2013 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$531,213 $469,873 $103,179 $45,380 $(87,219)Curtailments, settlements 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, settlements 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)The 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, 2014 compared to fiscal year ended March 31, 2013 Year Ended March 31, 2014 2013 (in thousands)Net sales$3,763,254 $3,702,702Segment operating income$444,896 $618,432Corporate general and administrative expenses(44,892) (87,219)Total operating income400,004 531,213Interest expense and other87,771 68,156Income tax expense105,977 165,710Net income$206,256 $297,347Net sales increased by $60.6 million, or 1.6%, to $3.8 billion for the fiscal year ended March 31, 2014 from $3.7 billion for the fiscal year endedMarch 31, 2013. The fiscal 2014 and fiscal 2013 acquisitions, net of current year and prior year divestitures contributed $282.6 million. Organic salesdecreased $222.0 million, or 6.1%, due to production rate cuts by our customers on the 747-8 program and, as it transitions from the commercial variant tothe tanker, the 767 program, and a decrease in military sales. The prior fiscal year was positively impacted by our customers' increased production rates onexisting programs and new product introductions.Cost of sales increased by $148.3 million, or 5.4%, to $2.9 billion for the fiscal year ended March 31, 2014 from $2.8 billion for the fiscal year endedMarch 31, 2013. This increase in cost of sales was largely due to increased sales. Gross margin for the fiscal year ended March 31, 2014 was 22.6%compared with 25.4% for the fiscal year ended March 31, 2013. This change was impacted by reductions in profitability estimates on the 747-8 program,driven largely by the identification of additional 747-8 program costs ($85.0 million) identified during the year, additional program costs resulting fromdisruption and accelerated depreciation associated with the relocation from our Jefferson Street Facilities ($38.4 million), price concessions ($4.0 million) and anon-recurring termination customer settlement ($9.5 million) which had a favorable impact on the prior year gross margin.34Table of ContentsGross margin included net unfavorable cumulative catch-up adjustments on long-term contracts ($53.2 million) resulting from changes in contract valuesand estimated costs that arose during the fiscal year. The unfavorable cumulative catch-up adjustments to operating income included gross favorableadjustments of $14.3 million and gross unfavorable adjustments of $67.5 million, of which $29.8 million was related to the additional 747-8 program costsfrom reductions to profitability estimates on the 747-8 production lots that were completed during the fiscal year discussed above and $15.6 million ofdisruption and accelerated depreciation costs related to our exit from the Jefferson Street facilities which reduced profitability estimates on production lotscompleted during the year. These decreases were offset by lower pension and other postretirement benefit expense of $12.7 million. Gross margins for fiscal2013 included net unfavorable cumulative catch-up adjustments of $14.6 million.Segment operating income decreased by $173.5 million, or 28.1%, to $444.9 million for the fiscal year ended March 31, 2014 from $618.4 million forthe fiscal year ended March 31, 2013. The organic operating income decreased $173.7 million, or 30.2%, and was a direct result of the decrease in organicsales, the decreased gross margins noted above, moving costs related to the relocation from our Jefferson Street facilities ($31.3 million), and legal fees ($4.3million), offset by an insurance claim related to Hurricane Sandy ($6.8 million).Corporate expenses decreased by $42.3 million, or 48.5% to $44.9 million for the fiscal year ended March 31, 2014 from $87.2 million for the fiscal yearended March 31, 2013. Corporate expenses decreased primarily due to pension curtailment losses and early retirement incentives ($34.5 million) for the fiscalyear ended March 31, 2013, offset by a pension settlement charge ($2.1 million) for the fiscal year ended March 31, 2014. Corporate expenses also includedlower compensation expense of $4.6 million due to decreased performance.Interest expense and other increased by $19.6 million, or 28.8%, to $87.8 million for the fiscal year ended March 31, 2014 compared to $68.2 millionfor the prior year. Interest expense and other for the fiscal year ended March 31, 2014 increased due to the redemption of the 2017 Notes, which included $11.0million of pre-tax losses associated with the 4% redemption premium, and the write-off of the remaining related unamortized discount and deferred financingfees. Interest expense and other for the fiscal year ended March 31, 2014 also increased due to higher average debt outstanding during the period as compared tothe fiscal year ended March 31, 2013.The effective income tax rate was 33.9% for the fiscal year ended March 31, 2014 and 35.8% for the fiscal year ended March 31, 2013. The income taxprovision for the fiscal year ended March 31, 2014 was reduced to reflect unrecognized tax benefits of $0.7 million and an additional research anddevelopment tax credit carryforward and NOL carryforward of $2.3 million. The effective income tax rate for the fiscal year ended March 31, 2013 reflects theretroactive reinstatement of the research and development tax credit back to January 2012. The income tax provision for the fiscal year ended March 31, 2013included $2.2 million of tax expense due to the recapture of domestic production deductions taken in earlier years associated with a refund claim of $25.2million filed in the second quarter of fiscal 2013. The refund claim receivable is included in "Other, net" in the consolidated balance sheet as of March 31,2014 and 2013.In January 2014, the Company sold all of its shares of Triumph Aerospace Systems-Wichita, Inc. for total cash proceeds of $23.0 million, whichresulted in no gain or loss from the sale.In April 2013, the Company sold the assets and liabilities of Triumph Instruments-Burbank and Triumph Instruments-Ft. Lauderdale for total proceedsof $11.2 million, resulting in a loss of $1.5 million.The Company expects to have significant continuing involvement in the businesses and markets of the disposed entities and therefore, the disposalgroups did not meet the criteria to be classified as discontinued operations.35Table of ContentsFiscal 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.The 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 reinstatement36Table of Contentsof 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 oftax expense due to the recapture of domestic production deductions taken in earlier years associated with a refund claim of $25.2 million filed in the secondquarter. 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 fiscalyear ended March 31, 2012 included $1.6 million of 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 to provision to return adjustments upon filing our fiscal 2011 tax return. The effective income tax rate for fiscal2012 was impacted by the expiration of the research and development tax credit as of December 31, 2011 and the absence of the domestic production deductiondue to the Company's net operating loss position 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.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.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 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, 2014 2013 2012Aerostructures Commercial aerospace42.3% 43.9% 39.4%Military16.1 18.9 23.5Business Jets10.0 11.2 11.3Regional0.4 0.5 0.5Non-aviation0.5 0.7 0.7Total Aerostructures net sales69.3% 75.2% 75.4%Aerospace Systems Commercial aerospace8.5% 6.3% 5.9%Military11.4 7.9 7.7Business Jets1.0 0.7 0.8Regional1.0 0.4 0.5Non-aviation1.3 1.2 1.1Total Aerospace Systems net sales23.2% 16.5% 16.0%Aftermarket Services Commercial aerospace6.3% 6.8% 6.6%Military0.7 1.0 0.9Business Jets— 0.3 0.4Regional0.2 0.1 0.2Non-aviation0.3 0.1 0.5Total Aftermarket Services net sales7.5% 8.3% 8.6%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. While we have recently seen an increase in ourmilitary end market, we experienced a slight decrease in our organic military end market, which has been offset by our recent acquisitions. Due to thecontinued strength in the commercial aerospace end market and the planned reductions in defense spending under the Budget Act and the sequestrationdiscussed above, we expect the declining trend in the military end market to continue.Business Segment Performance—Fiscal year ended March 31, 2014 compared to fiscal year ended March 31, 2013 Year Ended March 31, %Change % of Total Sales 2014 2013 2014 2013 (in thousands) NET SALES Aerostructures $2,612,439 $2,781,344 (6.1)% 69.4 % 75.1 %Aerospace Systems 871,751 615,771 41.6 % 23.2 % 16.6 %Aftermarket Services 287,343 314,507 (8.6)% 7.6 % 8.5 %Elimination of inter-segment sales (8,279) (8,920) (7.2)% (0.2)% (0.2)%Total net sales $3,763,254 $3,702,702 1.6 % 100.0 % 100.0 %38Table of Contents Year Ended March 31, %Change % of SegmentSales 2014 2013 2014 2013 (in thousands) SEGMENT OPERATING INCOME Aerostructures $252,910 $469,873 (46.2)% 9.7% 16.9%Aerospace Systems 149,721 103,179 45.1 % 17.2% 16.8%Aftermarket Services 42,265 45,380 (6.9)% 14.7% 14.4%Corporate (44,892) (87,219) (48.5)% n/a n/aTotal segment operating income $400,004 $531,213 (24.7)% 10.6% 14.3% Year Ended March 31, %Change % of SegmentSales 2014 2013 2014 2013 (in thousands) Adjusted EBITDA Aerostructures $342,005 $540,300 (36.7)% 13.1% 19.4%Aerospace Systems 169,752 122,862 38.2 % 19.5% 20.0%Aftermarket Services 49,794 54,498 (8.6)% 17.3% 17.3%Corporate (38,733) (48,104) (19.5)% n/a n/a $522,818 $669,556 (21.9)% 13.9% 18.1%Aerostructures: The Aerostructures segment net sales decreased by $168.9 million, or 6.1%, to $2.6 billion for the fiscal year ended March 31, 2014from $2.8 billion for the fiscal year ended March 31, 2013. Organic sales decreased $228.9 million, or 8.3%, and the acquisition of Primus contributed$65.5 million in net sales. Organic sales decreased due to production rate cuts by our customers on the 747-8 program and as it transitions from thecommercial variant to the tanker, the 767 program and a decrease in military sales.Aerostructures cost of sales increased by $5.3 million, or 0.3%, to $2.1 billion for the fiscal year ended March 31, 2014 from $2.1 billion for the fiscalyear ended March 31, 2013. Organic cost of sales decreased $51.7 million, or 2.5% and the acquisition of Primus contributed $61.0 million to cost of sales.Organic cost of sales declined due to decreased organic revenues discussed above partially offset by reductions in profitability estimates on the 747-8programs, driven largely by the identification of additional program costs ($85.0 million) identified during the year and additional program costs resultingfrom disruption and accelerated depreciation associated with the relocation from our Jefferson Street facilities ($38.4 million).Organic gross margin for the fiscal year ended March 31, 2014 was 18.9% compared with 23.8% for the fiscal year ended March 31, 2013. The organicgross margin included net unfavorable cumulative catch-up adjustments resulting from changes in contract values and estimated costs that arose during thefiscal year. The net unfavorable cumulative catch-up adjustments included gross favorable adjustments of $14.3 million and gross unfavorable adjustmentsof $67.5 million, of which $29.8 million was related to the additional 747-8 program costs from reductions to profitability estimates on the 747-8 productionlots that were completed during the fiscal year and $15.6 million of disruption and accelerated depreciation costs related to our exit from the Jefferson Streetfacilities which reduced profitability estimates on production lots completed during the year. These decreases were offset by lower pension and otherpostretirement benefit expense of $12.7 million. Segment cost of sales for the fiscal year ended March 31, 2013 included net unfavorable cumulative catch-upadjustments of $14.6 million.Aerostructures segment operating income decreased by $217.0 million, or 46.2%, to $252.9 million for the fiscal year ended March 31, 2014 from$469.9 million for the fiscal year ended March 31, 2013. Operating income was directly affected by the decrease in organic sales, the decreased organic grossmargins noted above, and moving costs related to the relocation from our Jefferson Street facilities ($31.3 million). Additionally, these same factors contributedto the decrease in Adjusted EBITDA year over year.Aerostructures segment operating income as a percentage of segment sales decreased to 9.7% for the fiscal year ended March 31, 2014 as compared with16.9% for the fiscal year ended March 31, 2013, due to decreased sales, additional 747-839Table of Contentsprogram costs, relocation costs related to our exit from the Jefferson Street facilities, offset by lower compensation and benefits and lower pension and otherpostretirement benefit expenses discussed above, which also caused the decline in the Adjusted EBITDA margin.Aerospace Systems: The Aerospace Systems segment net sales increased by $256.0 million, or 41.6%, to $871.8 million for the fiscal year endedMarch 31, 2014 from $615.8 million for the fiscal year ended March 31, 2013. The acquisition of General Donlee and the fiscal 2013 acquisitionscontributed $248.2 million of increased sales. Organic net sales increased $7.8 million, or 1.3%.Aerospace Systems cost of sales increased by $156.8 million, or 37.8%, to $571.8 million for the fiscal year ended March 31, 2014 from $415.0million for the fiscal year ended March 31, 2013. Organic cost of sales increased $11.6 million, or 2.9%, the acquisition of General Donlee and the fiscal2013 acquisitions contributed $145.3 million in cost of sales. Organic gross margin for the fiscal year ended March 31, 2014 was 31.2% compared with32.2% for the fiscal year ended March 31, 2013.Aerospace Systems segment operating income increased by $46.5 million, or 45.1%, to $149.7 million for the fiscal year ended March 31, 2014 from$103.2 million for the fiscal year ended March 31, 2013. Operating income increased primarily due to the acquisition of General Donlee and fiscal 2013acquisitions and by an insurance claim related to Hurricane Sandy ($6.8 million). These same factors contributed to the increase in Adjusted EBITDA yearover year.Aerospace Systems segment operating income as a percentage of segment sales increased to 17.2% for the fiscal year ended March 31, 2014 as comparedwith 16.8% for the fiscal year ended March 31, 2013, increased primarily due to the acquisition of General Donlee and fiscal 2013 acquisitions, as notedabove. Adjusted EBITDA margin decreased due to the insurance gain from Hurricane Sandy.Aftermarket Services: The Aftermarket Services segment net sales decreased by $27.2 million, or 8.6%, to $287.3 million for the fiscal year endedMarch 31, 2014 from $314.5 million for the fiscal year ended March 31, 2013. Organic sales decreased $1.6 million, or 0.6%, and the previously divestedTriumph Instruments companies contributed $25.5 million in net sales for the fiscal year ended March 31, 2013.Aftermarket Services cost of sales decreased by $15.6 million, or 6.8%, to $213.9 million for the fiscal year ended March 31, 2014 from $229.5million for the fiscal year ended March 31, 2013. The organic cost of sales increased $3.0 million, or 1.4%, and the previously divested Triumph Instrumentscompanies contributed $18.5 million to cost of sales for the fiscal year ended March 31, 2013. Organic gross margin for the fiscal year ended March 31, 2014was 25.6% compared with 27.0% for the fiscal year ended March 31, 2013. The decrease in gross margin was impacted by decreased military sales andchanges in sales mix.Aftermarket Services segment operating income decreased by $3.1 million, or 6.9%, to $42.3 million for the fiscal year ended March 31, 2014 from$45.4 million for the fiscal year ended March 31, 2013. Operating income decreased primarily due to the decrease in 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 14.7% for the fiscal year ended March 31, 2014 as comparedwith 14.4% for the fiscal year ended March 31, 2013.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 % 75.5 %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 %40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 TotalSales 2013 2012 2013 2012 (in thousands) Adjusted 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 31,41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 ($1.5 million) due to additional intangible assets from the fiscal 2013 acquisitions and production delayand related costs due to Hurricane Sandy ($1.6 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.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, 2014, we generated approximately $135.1 million of cash flow from operating activities, used approximately $246.7 million in investing activitiesand received approximately $103.2 million from financing activities. Cash flows from operating activities included $46.3 million in pension contributions infiscal 2014, compared to $109.8 million in fiscal 2013.For the fiscal year ended March 31, 2014, we had a net cash inflow of $135.1 million from operating activities, an inflow decrease of $185.8 million,compared to a net cash inflow of $320.9 million for the fiscal year ended March 31, 2013. During fiscal 2014, the decrease in net cash inflows were primarilydue to relocation costs related to our exit from the Jefferson Street facilities ($31.3 million), disruption related to relocation from the Jefferson Street facilities($24.7 million), additional 747-8 program costs ($85 million), offset by increased receipts on accounts receivable of approximately $14.2 million driven byadditional sales from the fiscal 2014 and fiscal 2013 acquisitions.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 and build ahead for the relocation from our largest facilities. During fiscal 2014, inventory build for capitalized pre-production costs on newprograms, including the Bombardier Global 7000/8000 and the Embraer E-Jet programs, were $58.9 million and $19.5 million, respectively. Additionally,inventory build ahead of programs impacted by our facility relocation was approximately $22.8 million. Unliquidated progress payments netted againstinventory increased $40.9 million due to timing of receipts. Capitalized pre-production costs are expected to continue to increase, while our production isexpected to remain flat over the next few quarters.Cash flows used in investing activities for the fiscal year ended March 31, 2014 decreased $220.6 million from the fiscal year ended March 31, 2013.Cash flows used in investing activities included the fiscal 2014 acquisitions of $94.5 million, as compared to $349.6 million for fiscal 2013 acquisitions,and $86.6 million in capital expenditures associated with our new facilities in Red Oak, Texas.42Table of ContentsCash flows from financing activities for the fiscal year ended March 31, 2014 decreased $45.4 million from the fiscal year ended March 31, 2013principally due to additional borrowings on our Credit Facility and the addition of the Term Loan to fund the acquisitions of General Donlee and Primus, theredemption of the 2017 Notes and purchase of shares ($19.1 million) offset by the redemption of certain Convertible Notes ($96.5 million).As of March 31, 2014, $769.1 million was available under the Credit Facility. On March 31, 2014, an aggregate amount of approximately $194.4million was outstanding under the Credit Facility, all of which was accruing interest at LIBOR plus applicable basis points totaling 2.00% per annum.Amounts repaid under the Credit Facility may be reborrowed.On November 19, 2013, the Company amended the Credit Facility with its lenders to (i) provide for a $375.0 million Term Loan with a maturity date ofMay 14, 2019, (ii) maintain a Revolving Line of Credit under the Credit Facility to $1,000.0 million and increase the accordion feature to $250.0 million, and(iii) amend certain other terms and covenants. The amendment resulted in a more favorable pricing grid and a more streamlined package of covenants andrestrictions.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 31,2014, 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.For further information on the Company's long-term debt, see Note 10 of "Notes to Consolidated Financial Statements".During the fiscal year ended March 31, 2013, we generated approximately $320.9 million of cash flow from operating activities, used approximately$467.4 million in investing activities and received approximately $148.6 million from financing activities. Cash flows from operating activities included$109.8 million in pension contributions in 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 $51.9 million, an increase of $32.7 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 the 2021 Notes ($375.0 million) offset by theredemption of certain Convertible Notes ($19.3 million).At March 31, 2014, $25.0 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.Capital expenditures were $206.4 million for the fiscal year ended March 31, 2014 which includes the construction of our facilities in Red Oak, Texas.We funded these expenditures through cash from operations and borrowings under the Credit43Table of ContentsFacility. We expect capital expenditures and investments in new major programs of approximately $240.0 million to $260.0 million for our fiscal year endingMarch 31, 2015, of which $125.0 million will be reflected in inventory. The expenditures are expected to be used mainly to expand capacity or replace oldequipment 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)$1,551,960 $49,575 $236,128 $874,514 $391,743Debt-interest(2)294,417 62,012 123,029 98,011 11,365Operating leases129,974 21,038 34,332 22,357 52,247Contingent payments1,900 900 1,000 — —Purchase obligations1,679,184 1,212,396 435,620 30,959 209Total$3,657,435 $1,345,921 $830,109 $1,025,841 $455,564_______________________________________________(1)Included in the Company's consolidated balance sheet at March 31, 2014, plus discount on 2018 Notes of $1.6 million, being amortized to expensethrough July 2018.(2)Includes fixed-rate interest only.The above table excludes unrecognized tax benefits of $7.7 million as of March 31, 2014 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, Texas and to expand itsRed Oak, Texas ("Red Oak") facility to accommodate this relocation. The Company incurred approximately $86.6 million and $18.1 million in capitalexpenditures during the fiscal years ended March 31, 2014 and 2013, respectively, associated with this plan. The Company incurred approximately $69.7million and $1.8 million of expenses related to the relocation, disruption and accelerated depreciation during fiscal years March 31, 2014 and 2013,respectively. The relocation was substantially completed during the fiscal year ended March 31, 2014.In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at March 31, 2014 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, 2014$2,160,708 $311,012Plan assets at March 31, 20141,933,269 —Projected contributions by fiscal year 2015114,822 26,572201640,000 26,411201740,000 26,4212018— 26,3052019— 26,289Total 2015 - 2019$194,822 $131,998Current 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 grow44Table of Contentsthrough acquisitions and are continuously evaluating various acquisition opportunities, while opportunistically buying back shares to return capital to ourshareholders. As a result, we currently are pursuing the potential purchase of a number of candidates. In the event that more than one of these transactions issuccessfully consummated, the availability under the Credit Facility might be fully utilized and additional funding sources may be needed. There can be noassurance that such funding sources will be available to us on terms favorable to us, if at all.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 ismanufactured on a regular basis. Significant customer-directed work changes can also cause pre-production costs to be incurred. These costs are typicallyrecovered over a contractually determined number of ship set deliveries and the Company believes these amounts will be fully recovered (see Note 5 of "Notesto Consolidated Financial Statements for further discussion).45Table of ContentsRevenue 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, 2014, cumulative catch-up adjustments resulting from changes in contract values and estimated costs that aroseduring the fiscal year decreased operating income, net income and earnings per share by approximately $(53.2) million, $(35.1) million and $(0.67),respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2014 included gross favorable adjustments ofapproximately $14.3 million and gross unfavorable adjustments of approximately $67.5 million. For the fiscal year ended March 31, 2013, cumulative catch-up adjustments resulting from changes in estimates decreased operating income, net income and earnings per share by approximately $(14.6) million, $(9.4)million and $(0.18), respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2013 included gross favorableadjustments of approximately $15.9 million and gross unfavorable adjustments of approximately $30.5 million. For the fiscal year ended March 31, 2012,cumulative catch-up adjustments resulting from changes in estimates increased operating income, net income and earnings per share by approximately $18.3million, $11.8 million and $0.23, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2012 includedgross favorable adjustments of approximately $29.5 million and gross unfavorable 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 the46Table of Contentsdifficulty of estimating all of the costs we will incur in performing these contracts and in projecting the ultimate level of revenue that may otherwise beachieved.Our 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.While the Company is currently projecting its recurring production contracts to be profitable, there is still a substantial amount of risk similar to what theCompany has experienced on certain programs. Particularly, the Company's ability to manage risks related to supplier performance, execution of costreduction strategies, hiring and retaining skilled production and management personnel, quality and manufacturing execution, program schedule delays andmany other risks, will determine the ultimate performance of these programs.For example, significant cost growth experienced on the 747-8 program during fiscal 2014 resulted in lower than expected margins during the year, but thecurrent year deliveries were still profitable. We have assessed the profitability of future production related to the 747-8 program and currently project that theprogram will continue to be profitable. However, if significant cost growth is experienced and cost reduction strategies are not successfully implemented, profitmargin on the 747-8 program could continue to deteriorate or a loss might be incurred on future recurring production blocks. 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 acquisitions of Vought and Primus. For the fiscal years ended March 31, 2014, 2013 and 2012, we recognized $25.2 million,$25.5 million and $26.7 million, respectively, in net sales in our consolidated statements of income.Included in net sales of the Aerospace Systems Group is the non-cash amortization of acquired contract liabilities recognized as fair value adjustmentsthrough purchase accounting of the acquisition of GPECS. For the fiscal years ended March 31, 2014 and 2013, we recognized $17.4 million and $0.2million, 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 5% 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.47Table of ContentsThe 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 incorporates market multiples for comparablecompanies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has beenidentified.We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal 2014, 2013 or 2012. In the fourth quarter of fiscal2014, the Company chose to perform the quantitative assessment, in lieu of the qualitative assessment for each of the Company's three reporting units, whichindicated that the fair value of the reporting unit exceeded its carrying amount, including goodwill.As of March 31, 2014 and 2013, the Company had a $438.4 million indefinite-lived intangible asset associated with the Vought and Embee tradenames.The Company assesses whether indefinite-lived intangible assets impairment exists using both the qualitative and quantitative assessments. The qualitativeassessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of an indefinite-lived intangibleasset is less than its carrying amount. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of anindefinite-lived intangible asset is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment isperformed to determine whether an indefinite-lived intangible asset impairment exists. We test the indefinite-lived intangible assets for impairment bycomparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excesscarry 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 years2014, 2013 or 2012. In the fourth quarter of fiscal 2014, the Company chose to perform the quantitative assessment, in lieu of the qualitative assessment, foreach of the Company's indefinite-lived intangible assets, which indicated that the fair value of the indefinite-lived intangible assets exceeded its carryingamount.Finite-lived intangible assets are amortized over their useful lives ranging from 5 to 32 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 projected48Table of Contentsearnings over the respective earnout periods. The Company also considered 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 wasrecoverable. For the fiscal years ended March 31, 2014, 2013 and 2012, 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 several of our acquisitions, 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 as of the acquisition date of each respective acquisition, based on the present value ofthe difference 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 5 - 15 years ago (see Note 3 of "Notes to ConsolidatedFinancial Statements" for further discussion).The acquired contract liabilities, net, are being amortized as non-cash revenues over the terms of the respective contracts. The Company recognized netamortization of contract liabilities of approximately $42.6 million, $25.5 million and $26.7 million in the fiscal years ended March 31, 2014, 2013 and2012, respectively, and such amounts have been included in revenues in our results of operations. The balance of the liability as of March 31, 2014 isapproximately $141.5 million and, based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of theliability as follows 2015—$30.8 million; 2016—$26.9 million; 2017—$21.6 million; 2018—$16.8 million; 2019—$17.1 million; Thereafter—$28.4million.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, 2014 increased to 4.32% from 4.07% at March 31, 2013.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 2015, 2014 and 2013, respectively, is8.25%.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, 2014. 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 to49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 ASC 715, Compensation—Retirement Benefits topic, we recognized the funded status of our benefit obligation. This funded statusis remeasured as of our annual remeasurement date. The funded status is measured as the difference between the fair value of the plan's assets and the PBO oraccumulated postretirement benefit obligation of the plan. In order to recognize the funded status, we determined the fair value of the plan assets. The majorityof our plan assets are publicly traded investments which were valued based on the market price as of the date of remeasurement. Investments that are notpublicly traded were valued based on the estimated fair value of those investments as of the remeasurement date based on our evaluation of data from fundmanagers 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.See Note 15 of "Notes to Consolidated Financial Statements" for a summary of the key events that affected on our net periodic benefit cost andobligations that occurred during the fiscal years ended March 31, 2014, 2013 and 2012.Pension income, excluding curtailments, settlements and special termination benefits (early retirement incentives) for the fiscal year ended March 31, 2014was $35.0 million compared with pension income of $26.0 million for the fiscal year ended March 31, 2013 and $14.0 million for the fiscal year endedMarch 31, 2012. For the fiscal year ending March 31, 2015, the Company expects to recognize pension income of approximately $31.0 million. Excluding theeffect of the net curtailments in fiscal 2013, the increase in expected pension income in fiscal year 2014 results principally from asset performance in fiscalyear 2013 exceeding the expected long-term rate of return on plan assets.Recently Issued Accounting PronouncementsIn July 2013, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update 2013-11 ("ASU") 2013-11, Presentation ofUnrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11").ASU 2013-11 provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net operating loss carryforward, asimilar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In that case, theliability associated with the unrecognized tax benefit is presented in the financial statements as a reduction to the related deferred tax asset for a net operatingloss carryforward, a similar tax loss or a tax credit carryforward. The provisions of ASU 2013-11 are effective for fiscal years, and interim periods withinthose years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-11 is not expected to have a material impact on the Company'sconsolidated financial statements.In February 2013, The FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU201-02"). ASU 2013-02 amended ASC 220 to require companies to report, in one place, information about reclassifications out of other comprehensive income(loss) to net income by their respective income statement line item. For items not reclassified to net income in their entirety, the Company is required to referenceother disclosures that provide greater detail about these reclassifications. The Company adopted the guidance effective April 1, 2013. Other than the additionaldisclosures, the adoption of the guidance did not have an impact on the Company's financial statements.In July 2012, The FASB issued authoritative guidance included in ASC Topic 350, Intangibles-Goodwill and Other. This guidance permits an entity tofirst 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 a basis fordetermining whether it is necessary to perform the quantitative impairment test described in FASB ASC Topic 350, Intangibles-Goodwill and Other. Thisguidance allows the Company to50Table of Contentsadopt the topic early to use it in its annual impairment testing for the fiscal year ending 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.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, 2014, 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.51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, 2014, approximately 53% of our debt wasfixed-rate debt. Our financing policy states that we generally maintain between 50% and 75% of our debt as fixed-rate debt, however, a portion of our variabledebt is fixed through an interest rate swap. The information below summarizes our market risks associated with debt obligations and should be read inconjunction with Note 10 of "Notes to Consolidated Financial Statements."The following table presents principal cash flows and the related interest rates. Fixed interest rates disclosed represent the weighted-average rate as ofMarch 31, 2014. Variable interest rates disclosed fluctuate with the LIBOR, federal funds rates and other weekly rates and represent the weighted-average rateat March 31, 2014.Expected Years of Maturity Next12 Months 13 - 24Months 25 - 36Months 37 - 48Months 49 - 60Months Thereafter TotalFixed-rate cash flows (in thousands)$44,829 $37,308 $34,072 $40,877 $646,260 $389,371 $1,192,717Weighted-average interest rate (%)5.34% 5.40% 5.46% 5.54% 5.38% 2.48% Variable-rate cash flows (in thousands)$— $— $162,400 $194,406 $— $2,178 $358,984Weighted-average interest rate (%)1.32% 1.32% 1.32% 1.73% 0.03% 2.50% There are no other significant market risk exposures.Item 8.Financial Statements and Supplementary Data52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, 2014 and 2013, 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, 2014. 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, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period endedMarch 31, 2014, 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, 2014, based on criteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated May 17, 2014 expressed an unqualifiedopinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 17, 201453Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share data) March 31, 2014 2013ASSETS Current assets: Cash and cash equivalents$28,998 $32,037Trade and other receivables, less allowance for doubtful accounts of $6,535 and $5,372517,707 448,865Inventories, net of unliquidated progress payments of $165,019 and $124,1281,111,767 985,535Rotable assets41,666 34,853Deferred income taxes57,308 99,546Prepaid expenses and other24,897 24,481Assets held for sale— 14,747Total current assets1,782,343 1,640,064Property and equipment, net930,973 815,084Goodwill1,791,831 1,721,720Intangible assets, net978,182 995,519Other, net69,954 66,792Total assets$5,553,283 $5,239,179LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt$49,575 $133,930Accounts payable317,334 327,008Accrued expenses273,290 283,687Liabilities related to assets held for sale— 2,621Total current liabilities640,199 747,246Long-term debt, less current portion1,500,808 1,195,933Accrued pension and other postretirement benefits, noncurrent508,524 671,175Deferred income taxes, noncurrent385,085 310,794Other noncurrent liabilities234,756 268,873Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 52,459,020 and 50,123,035 shares issued;52,159,020 and 50,123,035 shares outstanding52 50Capital in excess of par value866,281 848,372Treasury stock, at cost, 300,000 and 0 shares(19,134) —Accumulated other comprehensive loss(18,908) (60,972)Retained earnings1,455,620 1,257,708Total stockholders' equity2,283,911 2,045,158Total liabilities and stockholders' equity$5,553,283 $5,239,179See notes to consolidated financial statements.54Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data) Year ended March 31, 2014 2013 2012 Net sales$3,763,254 $3,702,702 $3,407,929 Operating costs and expenses: Cost of sales (exclusive of depreciation shown separately below)2,911,802 2,763,488 2,564,995 Selling, general and administrative254,715 241,349 242,553 Depreciation and amortization164,277 129,506 119,724 Relocation costs31,290 — — Integration expenses— 2,665 6,342 Curtailments, settlements and early retirement incentives1,166 34,481 (40,400) 3,363,250 3,171,489 2,893,214 Operating income400,004 531,213 514,715 Interest expense and other87,771 68,156 77,138 Income from continuing operations before income taxes312,233 463,057 437,577 Income tax expense105,977 165,710 155,955 Income from continuing operations206,256 297,347 281,622 Loss from discontinued operations, net— — (765) Net income$206,256 $297,347 $280,857 Earnings per share—basic: Income from continuing operations$3.99 $5.99 $5.77 Loss from discontinued operations, net— — (0.02) Net income$3.99 $5.99 $5.75 Weighted-average common shares outstanding—basic51,711 49,663 48,821 Earnings per share—diluted: Income from continuing operations$3.91 $5.67 $5.43 Loss from discontinued operations, net— — (0.01) Net income$3.91 $5.67 $5.41*Weighted-average common shares outstanding—diluted52,787 52,446 51,873 *Difference due to rounding.See notes to consolidated financial statements.55Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Dollars in thousands) Year ended March 31, 2014 2013 2012Net income$206,256 $297,347 $280,857Other comprehensive (loss) income: Foreign currency translation adjustment(3,315) (1,832) (2,852)Defined benefit pension plans and other postretirement benefits: Amounts arising during the period - gains (losses), net of tax (expense) benefit: Prior service credit, net of taxes $21, $0 and ($2,715), respectively(37) — 4,430 Actuarial gain (loss), net of taxes ($27,546), $27,375, and $58,737, respectively45,995 (45,976) (95,832)Reclassification from net income - (gains) losses, net of tax expense (benefit): Amortization of net loss, net of taxes of ($5,647), ($119), and ($41), respectively9,402 199 67 Recognized prior service credits, net of taxes of $6,814, $2,453 and $22,036, respectively(11,346) (4,056) (35,954)Total defined benefit pension plans and other postretirement benefits, net of taxes44,014 (49,833) (127,289)Cash flow hedges: Unrealized gain arising during period, net of tax (expense) benefit of ($884), ($25) and $0, respectively1,384 41 — Reclassification of (gain) loss included in net earnings, net of tax expense (benefit) of $11, $26 and($222), respectively(19) (42) 364Net unrealized gain (loss) on cash flow hedges, net of tax1,365 (1) 364Total other comprehensive (loss) income42,064 (51,666) (129,777)Total comprehensive income$248,320 $245,681 $151,080See notes to consolidated financial statements.56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, 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 foreign currency hedges, netof income taxes 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 foreign currency hedges, netof income taxes 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 2,045,158Net income— — — — — 206,256 206,256Foreign currency translation adjustment— — — — (3,315) — (3,315)Pension liability adjustment, net of income taxes of$26,358— — — — 44,014 — 44,014Change in fair value of interest rate swap, net oftaxes, ($945)— — — — 1,481 — 1,481Change in fair value of foreign currency hedges, netof income taxes of $72— — — — (116) — (116)Issuance of stock upon conversion of convertiblenotes2,290,755 2 14,000 — — — 14,002Purchase of 300,000 shares of common stock(300,000) — — (19,134) — — (19,134)Exercise of stock options18,170 — 290 — — — 290Cash dividends ($0.16 per share)— — — — — (8,344) (8,344)Share-based compensation61,413 — 6,306 — — — 6,306Repurchase of restricted shares for minimum taxobligation(34,353) — (2,726) — — — (2,726)Excess tax benefit from exercise of stock options— — 39 — — — 39Balance at March 31, 201452,159,020 $52 $866,281 $(19,134) $(18,908) $1,455,620 $2,283,911See notes to consolidated financial statements.57Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) Year ended March 31, 2014 2013 2012Operating Activities Net income$206,256 $297,347 $280,857Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization164,277 129,506 119,724Amortization of acquired contract liability(42,629) (25,644) (26,684)Curtailments, settlements and early retirement incentives1,166 34,481 (40,400)Accretion of debt discount1,946 548 4,529Other amortization included in interest expense6,702 3,638 9,601Provision for doubtful accounts receivable2,191 1,974 1,282Provision for deferred income taxes102,869 186,767 153,453Employee stock compensation4,653 6,367 4,988Changes in other current assets and liabilities, excluding the effects of acquisitions: Accounts receivable(46,378) 24,718 (82,062)Inventories(94,341) (140,025) (47,487)Rotable assets(6,813) 1,683 (8,206)Prepaid expenses and other current assets(406) 752 (4,821)Accounts payable, accrued expenses and income taxes payable(60,209) (57,861) 17,604Accrued pension and other postretirement benefits(100,929) (142,975) (157,111)Changes in discontinued operations— — 241Other(3,218) (358) 2,273Net cash provided by operating activities135,137 320,918 227,781Investing Activities Capital expenditures(206,414) (126,890) (93,969)Reimbursements of capital expenditures from insurance and other9,086 5,156 3,437Proceeds from sale of assets45,047 3,993 8,758Acquisitions, net of cash acquired(94,456) (349,632) 11,951Net cash used in investing activities(246,737) (467,373) (69,823)Financing Activities Net increase (decrease) in revolving credit facility98,557 (224,151) 235,000Proceeds from issuance of long-term debt451,003 528,135 92,253Retirement of debt and capital lease obligations(416,645) (142,338) (484,538)Payment of deferred financing costs(3,297) (8,838) (3,999)Purchase of common stock(19,134) — —Dividends paid(8,344) (8,005) (6,899)Net proceeds (repayment) of government grant3,456 (1,090) (2,180)Repurchase of restricted shares for minimum tax obligations(2,726) (1,840) (609)Proceeds from exercise of stock options, including excess tax benefit of $39, $4,628, and $1,880 in 2014,2013, and 2012329 6,766 4,721Net cash provided by (used in) financing activities103,199 148,639 (166,251)Effect of exchange rate changes on cash5,362 191 (1,373)Net change in cash and cash equivalents(3,039) 2,375 (9,666)Cash and cash equivalents at beginning of year32,037 29,662 39,328Cash and cash equivalents at end of year$28,998 $32,037 $29,662See notes to consolidated financial statements.58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,enginecontrol systems, accumulators, mechanical control cables and non-structural cockpit components. These products are sold to various aerospace OEMs on aglobal 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.The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts andtransactions 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 GPECS (Note 3).59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, 2014 2013Billed$487,747 $435,319Unbilled12,333 12,120Total trade receivables500,080 447,439Other receivables24,162 6,798Total trade and other receivables524,242 454,237Less: Allowance for doubtful accounts(6,535) (5,372)Total trade and other receivables, net$517,707 $448,865InventoriesThe 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 (see Note 5 for furtherdiscussion).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.60Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 incorporates market multiples for comparablecompanies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has beenidentified.We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2014, 2013 or 2012. In the fourth quarter offiscal 2014, the Company chose to perform the quantitative assessment, in lieu of the qualitative assessment for each of the Company's three reporting units,which indicated that the fair value of the reporting unit exceeded its carrying amount, including goodwill.61Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)As of March 31, 2014 and 2013, the Company had a $438,400 indefinite-lived intangible asset associated with the tradenames acquired in theacquisitions 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 years2014, 2013 or 2012. In the fourth quarter of fiscal 2014, the Company chose to perform the quantitative assessment, in lieu of the qualitative assessment, foreach of the Company's indefinite-lived intangible assets, which indicated that the fair value of the indefinite-lived intangible assets exceeded its carryingamount.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 fair value adjustment was recorded due to the reduction of the fair value of a contingent earnoutliability associated with a prior acquisition due to changes in the projected earnings over the respective earnout periods. The Company also considered thesechanges 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-livedassets for recoverability and concluded that the asset group was recoverable. For the fiscal years ended March 31, 2014, 2013 and 2012, exclusive of thecharges recorded in connection with the assets held for sale, there were no reductions to the remaining useful lives and no write-downs of long-lived assets,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 $19,499 and $22,906, respectively, are recorded in Other, net in the accompanying Consolidated Balance Sheetsas of March 31, 2014 and 2013. 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 a 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 theacquisition 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 GPECS, the Company assumed existing long-term contracts. Based on a 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 $113,117 at the acquisition date of GPECS based on thepresent value of the62Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)difference 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 GPECS 5 to 8 years ago.In connection with the acquisition of Primus Composites ("Primus"), the Company assumed existing long-term contracts. Based on a review of the long-term contracts of Primus, the Company concluded that the terms of certain contracts to be either more or less favorable than could be realized in markettransactions as of the date of the acquisition. As a result, the Company recognized provisional acquired contract liabilities, net of acquired contract assets of$26,280 at the acquisition date based on the present value of the difference between the contractual cash flows of the executory contracts and the estimatedcash flows had the contracts been executed at the acquisition date. The net liabilities principally relate to long-term life of program contracts were initiallyexecuted by Primus 5 to 8 years ago.The Company measured these net liabilities under the measurement provisions of ASC 820, Fair Value Measurements and Disclosures, which isbased on the price to transfer the obligation to a market participant at the measurement date, assuming that the net liabilities will remain outstanding in themarketplace. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates andassumptions. The judgments used to determine the estimated fair value assigned to each long-term contracts can materially impact our results of operations.The acquired contract liabilities, net for Vought, GPECS and Primus are being amortized as non-cash revenues over the terms of the respective contracts.The Company recognized net amortization of contract liabilities of $42,629, $25,457 and $26,684 in the fiscal years ended March 31, 2014, 2013 and2012, respectively, and such amounts have been included in revenues in results of operations. The balance of the liability as of March 31, 2014 is $141,505and, based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of the liability as follows:2015—$30,775; 2016—$26,914; 2017—$21,596; 2018—$16,772; and 2019—$17,055.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 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 probable ("forwardlosses") and are first offset against costs that are included in inventory, with any remaining amount63Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)reflected in accrued contract liabilities in accordance with ASC 605-35. Revisions in contract estimates, if significant, can materially affect results ofoperations and cash flows, as well as valuation of inventory. Furthermore, certain contracts are combined or segmented for revenue recognition in accordancewith ASC 605-35.For the fiscal year ended March 31, 2014, cumulative catch-up adjustments resulting from changes in contract values and estimated costs that aroseduring the fiscal year decreased operating income, net income and earnings per share by approximately $(53,166), $(35,121) and $(0.67), respectively. Thecumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2014 included gross favorable adjustments of approximately$14,341 and gross unfavorable adjustments of approximately $(67,507). For the fiscal year ended March 31, 2013, cumulative catch-up adjustmentsresulting from changes in estimates decreased operating income, net income and earnings per share by approximately $(14,560), $(9,350) and $(0.18),respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2013 included gross favorable adjustments ofapproximately $15,913 and gross unfavorable adjustments of approximately $(30,473). For the fiscal year ended March 31, 2012, cumulative catch-upadjustments resulting from changes in estimates increased operating income, net income and earnings per share by approximately $18,264 $11,755 and$0.23, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2012 included gross favorable adjustmentsof approximately $29,549 and gross unfavorable adjustments of approximately $(11,285).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.While the Company is currently projecting its recurring production contracts to be profitable, there is still a substantial amount of risk similar to what theCompany has experienced on certain programs. Particularly, the Company's ability to manage risks related to supplier performance, execution of costreduction strategies, hiring and retaining skilled production and management personnel, quality and manufacturing execution, program schedule delays andmany other risks, will determine the ultimate performance of these programs.For example, significant cost growth experienced on the 747-8 program during fiscal 2014 resulted in lower than expected margins during the year, but thecurrent year deliveries were still profitable. We have assessed the profitability of future production related to the 747-8 program and currently project that theprogram will continue to be profitable. However, if significant cost growth is experienced and cost reduction strategies are not successfully implemented, profitmargin on the 747-8 program could continue to deteriorate or a loss might be incurred on future recurring production blocks. Included in net sales of the Aerostructures and Aerospace Systems group is the non-cash amortization of acquired contract liabilities recognized as fairvalue adjustments through purchase accounting of various acquisitions. For the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized$42,629, $25,457 and $26,684, respectively, in net sales in the accompanying Consolidated Statements of Income.The Aftermarket Services Group provides repair and overhaul services, certain of which services are provided under long-term power-by-the-hourcontracts, comprising approximately 5% 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.64Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 $61,657, $61,270and $50,116 for the fiscal years ended March 31, 2014, 2013 and 2012, 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. This expected return is an assumption as to the average rate ofearnings expected on the funds invested or to be invested to provide for the benefits included in the projected pension benefit obligation. The Company appliesthis assumed long-term rate of return to a calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner overfive years. This produces the expected return on plan assets that is included in pension income (expense). The difference between this expected return and theactual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pensionincome (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—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices inactive markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputsother than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs for the asset or liability. The Company has appliedfair value measurements to its interest rate swap (see Note 10) and to its pension and postretirement plan assets (see Note 15).Foreign Currency TranslationThe determination of the functional currency for the Company's foreign subsidiaries is made based on appropriate economic factors. The functionalcurrency of the Company's subsidiaries Triumph Aviation Services—Asia and Triumph Structures—Thailand is the U.S. dollar since that is the currencyin which that entity primarily generates and expends cash. The functional currency of the Company's remaining subsidiaries is the local currency, since thatis the currency in which those entities primarily generate and expend cash. Assets and liabilities of these subsidiaries are translated at the rates of exchange atthe balance sheet date. Income and expense items are translated at average monthly rates of exchange. The resultant translation65Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)adjustments are included in accumulated other comprehensive income (see Note 13). Gains and losses arising from foreign currency transactions of thesesubsidiaries 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 to determine whether it is more likely than not (greater than 50% chance) thatthe tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from theamounts accrued and may materially impact the financial statements of the Company in future periods.Recently Issued Accounting PronouncementsIn July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2013-11 ("ASU") 2013-11, Presentation ofUnrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11").ASU 2013-11 provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net operating loss carryforward, asimilar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In that case, theliability associated with the unrecognized tax benefit is presented in the financial statements as a reduction to the related deferred tax asset for a net operatingloss carryforward, a similar tax loss or a tax credit carryforward. The provisions of ASU 2013-11 are effective for fiscal years, and interim periods withinthose years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-11 is not expected to have a material impact on the Company'sconsolidated financial statements.In February 2013, The FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU201-02"). ASU 2013-02 amended ASC 220 to require companies to report, in one place, information about reclassifications out of other comprehensive income(loss) to net income by their respective income statement line item. For items not reclassified to net income in their entirety, the Company is required to referenceother disclosures that provide greater detail about these reclassifications. The Company adopted the guidance effective April 1, 2013. Other than the additionaldisclosures, the adoption of the guidance did not have an impact on the Company's financial statements.In July 2012,The FASB issued authoritative guidance included in ASC Topic 350. This guidance permits an entity to first assess qualitative factors todetermine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired, as a basis for determining whether it isnecessary to perform the quantitative impairment test described in FASB ASC Topic 350. The Company elected to early adopt the guidance for the annualimpairment test performed during the year ended March 31, 2013. This guidance did not have a material impact on the Company's consolidated balancesheets, statements of income, or statements of cash flows.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, 2014, 2013 and 2012 was $4,653, $6,367 and $4,988, respectively. The benefits of tax deductionsin excess of recognized compensation expense were $39, $4,628 and $1,880 for fiscal years ended March 31, 2014, 2013 and 2012, respectively. Included inthe stock-based compensation for fiscal years ended March 31, 2014 and 2013, is $0 and $1,649, respectively, classified as a liability as of March 31, 2014and 2013 associated with each year's grant. The Company has classified share-based compensation within selling, general and administrative expenses tocorrespond with the same line item as the majority of the cash compensation paid to employees. Upon the exercise of stock options or vesting of restrictedstock, the Company first transfers treasury stock, then will issue new shares. (see Note 16 for further details.)66Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Supplemental Cash Flow InformationFor the fiscal years ended March 31, 2014 and 2013, the Company paid $4,157 and $3,109, respectively, for income taxes, net of income tax refundsreceived. For the fiscal year ended March 31, 2012, the Company received $29,439 in income tax refunds, net of income tax payments. The Company madeinterest payments of $81,100, $62,229 and $72,563 for fiscal years ended March 31, 2014, 2013 and 2012.During the fiscal years ended March 31, 2014, 2013 and 2012, the Company financed $36, $66 and $84 of property and equipment additions throughcapital leases, respectively. During the fiscal years ended March 31, 2014, 2013 and 2012, the Company issued 2,290,755, 395,269 and 772,438 shares,respectively, in connection with certain redemptions of convertible senior subordinated notes (see Note 10).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 warranty reserves for the fiscal years ended March 31, 2014 and 2013 were $25,651 and $17,020,respectively.3.ACQUISITIONSFISCAL 2014 ACQUISITIONSAcquisition of Insulfab Product Line (Chase Corporation)Effective October 7, 2013, the Company's wholly-owned subsidiary, Triumph Insulation Systems, LLC, acquired substantially all of the assetscomprising the Insulfab product line from Chase Corporation ("Insulfab"). Insulfab primarily focuses on manufacturing high-quality, engineered barrierlaminates used in aerospace applications. The results for Triumph Insulation Systems, LLC will continue to be included in the Aerostructures Group.The Company paid $7,394 in cash at closing for Insulfab, and in January 2014, paid $2,516 in cash after the working capital was finalized. Goodwillin the amount of $4,660 was recognized for this acquisition and is calculated as the excess of consideration transferred over the net assets recognized andrepresents future economic benefits arising from other assets acquired that could not be individually identified and separately recognized such as assembledworkforce. The goodwill is deductible for tax purposes.Acquisition of General Donlee Canada, Inc.Effective October 4, 2013, the Company acquired all of the issued and outstanding shares of General Donlee Canada, Inc. ("General Donlee"). GeneralDonlee is based in Toronto, Canada and is a leading manufacturer of precision machined products for the aerospace, nuclear and oil and gas industries. Theacquired business now operates as Triumph Gear Systems-Toronto ULC and its results are included in the Aerospace Systems Group.The purchase price for the General Donlee acquisition was $56,622 plus assumed debt of $32,382, which was settled at closing. Additionally, onOctober 7, 2013, the Company, at its option, called General Donlee's Convertible Notes for $26,000, which were paid on November 12, 2013. Goodwill in theamount of $46,468 was recognized for this acquisition and is calculated as the excess of consideration transferred over the net assets recognized andrepresents future economic benefits arising from other assets acquired that could not be individually identified and separately recognized such as assembledworkforce. The goodwill is not deductible for tax purposes. The Company has also identified intangible assets related to customer relationships valued atapproximately $24,607 with a weighted-average life of 15.0 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 Company finalizes estimates of the fair value of assets acquired and liabilities assumed, substantially all of the purchase price allocation forGeneral Donlee is provisional. Additional purchase price adjustments will be recorded during the67Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)measurement period not to exceed one year beyond the acquisition date. These adjustments may have a material impact on the Company's results of operationsand 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 Accounting Standards Codification Topic 805, Business Combinations ("ASC 805"). The Companyis awaiting final appraisal of tangible assets, intangible assets and certain contingent liabilities related to the General Donlee acquisition. Accordingly, theCompany has recorded the value of intangible assets and property and equipment to draft appraisals. The allocation of the purchase price of the GeneralDonlee acquisition is not complete and the amounts below represent the Company's best estimates of the fair value based on the current information: October 4, 2013Accounts receivable$10,976Inventory15,645Prepaid expenses and other184Property and equipment31,495Goodwill46,468Intangible assets24,607 Total assets$129,375 Accounts payable$2,841Accrued expenses3,620Deferred taxes11,336Debt54,956 Total liabilities$72,753The provisional amounts recognized above are based on the Company's best estimates using information that it has obtained as of the reporting date. TheCompany will finalize its estimates once it is able to determine that it has obtained all necessary information that existed as of the acquisition date related tothese matters or one year following the acquisition of General Donlee, whichever is earlier.The General Donlee acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financialstatements from the effective date of the acquisition. The General Donlee acquisition was funded by the Company's long-term borrowings in place at the date ofacquisition. The Company incurred $754 in acquisition-related costs in connection with the General Donlee acquisition, which is recorded in selling, generaland administrative expenses in the accompanying Consolidated Statements of Income.Acquisition of Primus CompositesEffective May 6, 2013, the Company acquired four related entities collectively comprising the Primus Composites ("Primus") business from PrecisionCastparts Corp. The acquired business, which includes two manufacturing facilities in Farnborough, England and Rayong, Thailand, operates as TriumphStructures - Farnborough and Triumph Structures - Thailand and is included in the Aerostructures Group. Together, Triumph Structures - Farnborough andTriumph Structures - Thailand constitute a global supplier of composite and metallic propulsion and structural composites and assemblies. In addition to itscomposite operations, the Thailand operation also machines and processes metal components.The purchase price for the Primus acquisition was $33,530 in cash and $30,000 in assumed debt settled at closing. Goodwill in the amount of $29,138was recognized for this acquisition and is calculated as the excess of consideration transferred over the net assets recognized and represents future economicbenefits arising from other assets acquired that could not be individually identified and separately recognized such as assembled workforce. The goodwill isnot deductible for tax purposes. The Company has also identified intangible assets related to customer relationships valued at approximately $3,514 with aweighted-average life of 16.0 years. Prior to the anniversary of the acquisition date, the Company finalized the purchase price allocation.68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 ofPrimus, in accordance with ASC 805. May 6, 2013Cash$2,201Accounts receivable17,392Inventory21,053Prepaid expenses and other883Property and equipment28,457Goodwill29,138Intangible assets3,514Other noncurrent assets13,138 Total assets$115,776 Accounts payable$10,027Accrued expenses15,939Other noncurrent liabilities26,280 Total liabilities$52,246The Company finalized its estimates after it was able to determine that it had obtained all necessary information that existed as of the acquisition daterelated to these matters.The Primus acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financial statements fromthe effective date of the acquisition. The Primus acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. TheCompany incurred $743 in acquisition-related costs in connection with the Primus acquisition, which is recorded in selling, general and administrativeexpenses in the accompanying Consolidated Statements of Income.The acquisitions of Insulfab, General Donlee and Primus are referred to in this report as the "fiscal 2014 acquisitions."The following table presents information for the fiscal 2014 acquisitions which are included in the Company's Consolidated Statement of Income fromtheir respective dates of acquisitions through the end of fiscal 2014: For the Year Ended March 31,2014Net sales $89,200Operating income (loss) (1,620)FISCAL 2013 ACQUISITIONSAcquisition 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 $99,651 was recognized for this acquisition and is calculatedas the excess of consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired thatcould not be individually identified and separately recognized such as69Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)assembled workforce. The goodwill is deductible for tax purposes. The Company has also identified intangible assets related to customer relationships valuedat approximately $146,200 with a weighted-average life of 18.7 years. During the fourth quarter of fiscal 2014, the Company finalized the purchase priceallocation. During the fiscal year ended March 31, 2014, the Company recognized an increase of $14,848 in the value of accounts receivable, an increase of$66,611 in the value of intangible assets as a result of the recognition of a definite-lived technology intangible asset and changes in the fair value of customerrelationships acquired, an increase of $20,275 in the value of other noncurrent assets, an increase of $11,597 in the value of accrued expenses, an increaseof $33,117 in the value of acquired contract liabilities, net and an increase of $32,000 in the value of other noncurrent liabilities as a result of changes in fairvalue. Additionally, the Company recognized other immaterial adjustments to various assets acquired and liabilities assumed as of the acquisition date. Thesepurchase price adjustments decreased the recognized goodwill by $23,105 and have been reflected retrospectively as of March 31, 2013 in the accompanyingConsolidated Balance Sheet. The effect on net income for these adjustments to the previously recorded provisional amounts for the fiscal year ended March 31,2013 was not material.The following condensed balance sheet represents the amounts assigned to each major asset and liability caption in the aggregate for the acquisition ofGPECS, in accordance with ASC 805. March 18, 2013Accounts receivable$30,770Inventory39,202Prepaid expenses and other568Property and equipment26,906Goodwill99,651Intangibles assets146,200Deferred taxes54,297Total assets$397,594 Accounts payable$15,581Accrued expenses22,757Acquired contract liabilities, net113,117Other noncurrent liabilities37,489Total liabilities$188,944The following table is a summary of the fair value estimates of the identifiable intangible assets and their estimated useful lives: Estimated Useful LifeEstimated Fair ValueTechnology10 years$19,100Customer relationships20 years127,100 $146,200Based on the information accumulated during the measurement period, the Company's assessment of the probable outcome of environmental and legalcontingencies, the Company has recognized liabilities and estimated indemnification asset which resulted in a net liability of $19,055. The amountsrecognized are based on the Company's best estimates using information that it has obtained through the measurement period. The Company finalized itsestimate after it was able to determine that it had obtained all necessary information that existed as of the acquisition date related to this matter.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.70Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 $141,864. The Company received $888 as part of the finalization of working capital. Goodwill in theamount of $68,809 was recognized for this acquisition and is calculated as the excess of consideration transferred over the net assets recognized andrepresents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized such asassembled workforce. The goodwill is deductible for tax purposes. The Company has also identified intangible assets valued at $55,561 with a weighted-average life of 10.0 years. During the third quarter of fiscal 2014, the Company finalized the purchase price allocation. The finalization of the Company'spurchase accounting assessment did not result in significant measurement period adjustments and did not have a material impact on the Company'sConsolidated Balance Sheet, Statement of Income, or Statement of Cash Flows.The following condensed balance sheet represent the amounts assigned to each major asset and liability caption in the aggregate for the acquisition ofEmbee, in accordance with ASC 805: December 19, 2012Cash$750Accounts receivable7,013Inventory261Prepaid expenses and other517Property and equipment14,360Goodwill68,809Intangible assets55,561Other assets7,165Total assets$154,436 Accounts payable$1,591Accrued expenses2,309Other noncurrent liabilities9,560Total liabilities$13,460Based on the information accumulated during the measurement period, and the Company's current assessment of the probable outcome of environmentalcontingencies, the Company has recognized a liability and an estimated indemnification asset, which resulted in a net amount of $3,505. The amountsrecognized are based on the Company's best estimate using information that it has obtained through the measurement period. The Company finalized itsestimate after it was able to determine that it had obtained all necessary information that existed as of the acquisition date related to this matter.71Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The following table is a summary of the fair value of the identifiable intangible assets and their estimated useful lives: Estimated Useful LifeEstimated Fair ValueTradenameIndefinite-lived$13,400Favorable leaseholds3 years48Customer relationships10 years42,113 $55,561The 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.The acquisitions of GPECS and Embee are herein referred to as the "fiscal 2013 acquisitions."The unaudited pro forma results presented below include the effects of the fiscal 2014 and fiscal 2013 acquisitions as if they had been consummated as ofApril 1, 2012 and 2011, respectively. The pro forma results include the amortization associated with an estimate of acquired intangible assets and interestexpense on debt to fund these acquisitions, as well as fair value adjustments for property and equipment and off-market contracts. To better reflect thecombined operating results, nonrecurring charges directly attributable to the transaction have been excluded. In addition, the unaudited pro forma results donot include any expected benefits of the acquisitions. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results ofoperations or results that might have been achieved had the fiscal 2014 and fiscal 2013 acquisitions been consummated as of April 1, 2012 and 2011,respectively, and had been included in the Company's results of operations for the full fiscal years 2014 and 2013. (unaudited) Year Ended March31, 2014 2013Net Sales $3,790,885 $4,021,259Income from continuing operations 206,893 314,355Income from continuing operations, per share—basic $4.00 $6.33Income from continuing operations, per share—diluted $3.92 $5.994.DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALESale of Triumph Aerospace Systems - WichitaIn January 2014, the Company sold all of the shares of Triumph Aerospace Systems-Wichita, Inc. ("TAS-Wichita") for total cash proceeds of $23,000.As a result of the sale of TAS-Wichita, the Company recognized no gain or loss. The operating results of TAS-Wichita were included in the AerostructuresGroup through the date of disposal.Sale of Triumph Instruments - Burbank and Triumph Instruments - Ft. LauderdaleIn April 2013, the Company sold the assets and liabilities of Triumph Instruments - Burbank and Triumph Instruments - Ft. Lauderdale ("TriumphInstruments") for total proceeds of $11,200 including cash received at closing of $9,676, a note of $1,500, and the remaining amount held in escrow andreceived in the second quarter of fiscal 2014, resulting in a loss of $1,462 recognized during the year ended March 31, 2013. The assets and liabilities ofTriumph Instruments were classified as held for sale as of March 31, 2013. The loss on the sale of the assets and liabilities of Triumph Instruments isincluded in the Consolidated Statements of Income within selling, general and administrative expenses for the year ended March 31, 2013. The operatingresults are included in the Aftermarket Services Group through the date of disposal.72Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The Company expects to have significant continuing involvement in the business and markets of the disposed entities, as defined by 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 related to Triumph Instruments, the Company compared the fair value of assets and liabilities at the evaluationdate to the carrying amount at the end of the month prior to the evaluation date. The sale of the Triumph Instruments assets and liabilities are categorized asLevel 2 within the fair value hierarchy. The key assumption included the negotiated sales price of the assets and the assumptions of the liabilities (see Note 2for definition of levels).Sale of Triumph Precision Casting Co.In 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 for the fiscal year ended March 31, 2012. The loss from discontinued operations was $765 net ofincome tax benefit of $412 for the fiscal year ended March 31, 2012. Interest expense of $68 was allocated to discontinued operations for the fiscal year endedMarch 31, 2012, based upon the actual borrowings of the operations, and such interest expense is included in the loss from discontinued operations.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, 2014 2013Raw materials$106,552 $99,126Work-in-process1,102,626 963,658Finished goods67,608 46,879Less: unliquidated progress payments(165,019) (124,128)Total inventories$1,111,767 $985,535According 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 $64,418 and $59,616, respectively, at March 31, 2014 and 2013.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 will be fully recovered. The balance of capitalized pre-production costs at March 31, 2014 and 2013 was $131,358 and $71,167,respectively, related to the Company's contracts with Bombardier for the Global 7000/8000 program ("Bombardier") and Embraer for the second generation E-Jet ("Embraer").The Company is still in the early-development stages for the Bombardier and Embraer programs, as these aircrafts are not scheduled to enter service until2016 and 2018, respectively, or later. Transition of these programs from development to recurring production levels is dependent upon the success of theprograms at achieving flight testing and certification, as well as the ability of the Bombardier and Embraer programs to generate acceptable levels of aircraftsales. The failure to achieve these milestones and level of sales or significant cost overruns may result in an impairment of the capitalized pre-production costs.73Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)6.PROPERTY AND EQUIPMENTNet property and equipment at March 31, 2014 and 2013 is: March 31, 2014 2013Land$74,835 $46,745Construction in process68,904 81,949Buildings and improvements353,096 269,205Furniture, fixtures and computer equipment135,986 119,773Machinery and equipment840,984 778,352 1,473,805 1,296,024Less accumulated depreciation542,832 480,940 $930,973 $815,084Depreciation expense for the fiscal years ended March 31, 2014, 2013 and 2012 was $117,553, $93,848 and $85,811, respectively, which includesdepreciation of assets under capital lease. Included in furniture, fixtures and computer equipment above is $80,361 and $69,811, respectively, of capitalizedsoftware at March 31, 2014 and 2013, which were offset by accumulated depreciation of $43,793 and $33,087, respectively.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, 2014 and 2013: Aerostructures AerospaceSystems AftermarketServices TotalBalance, March 31, 2013$1,316,450 $349,284 $55,986 $1,721,720Goodwill recognized in connection with acquisitions33,798 46,468 — 80,266Goodwill associated with disposition(10,123) — — (10,123)Purchase accounting adjustments33 — — 33Effect of exchange rate changes(165) 100 — (65)Balance, March 31, 2014$1,339,993 $395,852 $55,986 $1,791,831 Aerostructures AerospaceSystems AftermarketServices TotalBalance, March 31, 2012$1,307,709 $182,443 $55,986 $1,546,138Goodwill recognized in connection with acquisitions— 168,461 — 168,461Purchase accounting adjustments8,741 — — 8,741Effect of exchange rate changes— (1,620) — (1,620)Balance, March 31, 2013$1,316,450 $349,284 $55,986 $1,721,720The fiscal years ended March 31, 2014 and 2013, purchase accounting adjustments of $33 and $8,741, respectively, relate to an earnout on anacquisition accounted for prior to the adoption of ASC 805 for which the earnings target was achieved during the period.74Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Intangible AssetsThe components of intangible assets, net are as follows: March 31, 2014 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships16.7 $650,210 $(136,970) $513,240Product rights, technology and licenses11.7 52,405 (28,437) 23,968Noncompete agreements and other13.6 3,679 (1,105) 2,574TradenamesIndefinite-lived 438,400 — 438,400Total intangibles, net $1,144,694 $(166,512) $978,182 March 31, 2013 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships15.3 $625,873 $(98,483) $527,390Product rights, technology and licenses12.0 56,876 (27,775) 29,101Noncompete agreements and other8.8 2,253 (1,625) 628TradenamesIndefinite-lived 438,400 — 438,400Total intangibles, net $1,123,402 $(127,883) $995,519Amortization expense for the fiscal years ended March 31, 2014, 2013 and 2012 was $46,724, $35,658 and $33,913, respectively. Amortizationexpense for the five fiscal years succeeding March 31, 2014 by year is expected to be as follows: 2015: $45,812; 2016: $45,804; 2017: $42,078; 2018:$40,382; 2019: $37,751 and thereafter: $226,573.8.ACCRUED EXPENSESAccrued expenses are composed of the following items: March 31, 2014 2013Accrued pension$3,960 $3,923Deferred revenue, advances and progress billings20,428 32,302Accrued other postretirement benefits26,038 32,430Accrued compensation92,857 116,382Accrued interest17,966 16,714Warranty reserve13,628 11,550Accrued workers' compensation15,010 15,402Accrued insurance11,105 12,738Legal contingencies38,000 —All other34,298 42,246Total accrued expenses$273,290 $283,68775Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)9.LEASESAt March 31, 2014, future minimum payments under noncancelable operating leases with initial or remaining terms of more than one year were asfollows: 2015—$21,038; 2016—$18,953; 2017—$15,379; 2018—$13,002; 2019—$9,355 and thereafter—$52,247 through 2027. In the normalcourse of business, operating leases are generally renewed or replaced by other leases.Total rental expense was $41,508, $38,349 and $39,625 for the fiscal years ended March 31, 2014, 2013 and 2012, respectively.10.LONG-TERM DEBTLong-term debt consists of the following: March 31, 2014 2013Revolving credit facility$194,406 $95,849Term loan375,000 —Receivable securitization facility162,400 150,000Equipment leasing facility74,342 61,449Secured promissory notes— 8,741Senior subordinated notes due 2017— 173,344Senior notes due 2018348,423 348,133Senior notes due 2021375,000 375,000Convertible senior subordinated notes12,834 109,369Other debt7,978 7,978 1,550,383 1,329,863Less: current portion49,575 133,930 $1,500,808 $1,195,933Revolving Credit FacilityOn November 19, 2013, the Company amended and restated its existing credit agreement (the “Credit Facility”) with its lenders to (i) provide for a$375,000 term loan with a maturity date of May 14, 2019 (the "2013 Term Loan"), (ii) maintain a Revolving Line of Credit under the Credit Facility of$1,000,000, with a $250,000 accordion feature, (iii) extend the maturity date to November 19, 2018, and (iv) amend certain other terms and covenants. Inconnection with the amendment to the Credit Facility, the Company incurred approximately $2,795 of financing costs. These costs, along with the $6,507 ofunamortized financing costs prior to the amendment, are being amortized over the remaining term of the Credit Facility.The Company will repay the outstanding principal amount of the 2013 Term Loan in quarterly installments, on the first business day of each January,April, July and October, commencing April 2014.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 November 19, 2013, among the administrative agent, theCompany and the subsidiaries of 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 1.38% and2.50%; (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 0.25%and 0.45% on the unused portion of the Credit Facility. The Company’s obligations under the Credit Facility are guaranteed by the Company’s domesticsubsidiaries.76Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)At March 31, 2014, there were $194,406 in outstanding borrowings and $36,445 in letters of credit under the Credit Facility primarily to supportinsurance policies. At March 31, 2013, there were $95,849 in borrowings and $31,415 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, 2014. As ofMarch 31, 2014, the Company had borrowing capacity under the Credit Facility of $769,149 after reductions for borrowings and letters of credit outstandingunder the Credit Facility.In connection with the Company amending and restating the Credit Facility to add the 2013 Term Loan, the Company also entered into an interest rateswap agreement through November 2018 to reduce its exposure to interest on the variable rate portion of its long-term debt. On the date of inception, theCompany designated the interest rate swap as a cash flow hedge in accordance with FASB guidance on accounting for derivatives and hedges and linked theinterest rate swap to the 2013 Term Loan. The Company formally documented the hedging relationship between 2013 Term Loan and the interest rate swap, aswell as its risk-management objective and strategy for undertaking the hedge, the nature of the risk being hedged, how the hedging instrument's effectivenesswill be assessed and a description of the method of measuring the ineffectiveness. The Company also formally assesses, both at the hedge's inception and on aquarterly basis, whether the derivative item is highly effective offsetting changes in cash flows.As of March 31, 2014, the interest rate swap agreement had a notional amount of $375,000 and a fair value of $2,426, which is recorded in othercomprehensive income net of applicable taxes (Level 2). The interest rate swap settles on a monthly basis when interest payments are made. These settlementsoccur through the maturity date.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, 2014, 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, 2014, $162,400 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 was incompliance with all such covenants as of March 31, 2014.Equipment Leasing Facility and Other Capital LeasesDuring March 2009, the Company entered into a seven-year Master Lease Agreement (the "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, 2014, 2013 and 2012, the Company entered into new capital leases in the amounts of $36, $66 and $84,respectively, to finance a portion of the Company's capital additions for the respective years. During the fiscal years ended March 31, 2014, 2013 and 2012,the Company obtained financing for existing fixed assets in the amount of $30,503, $14,435 and $5,853, respectively.77Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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.On November 15, 2013, the Company completed the redemption of the 2017 Notes. The principal amount of $175,000 was redeemed at a price of 104%plus accrued and unpaid interest. As a result of the redemption, the Company recognized a pre-tax loss on redemption of $11,069, consisting of earlytermination premium, unamortized discount and deferred financing fees and is presented on the accompanying Consolidated Statements of Income as acomponent of "Interest expense and other."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 Company's domestic restricted subsidiaries that guarantees any of the Company's debt or that of any of the Company'srestricted subsidiaries under the Credit Facility, and in the future by any domestic restricted subsidiaries that guarantee any of the Company's debt or that ofany of the Company's domestic restricted subsidiaries incurred under any credit facility (collectively, the "Guarantor Subsidiaries"), in each case on a seniorsubordinated basis.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.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.78Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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, 2014 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 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 36.8572 shares per $1 principal amount of the Convertible Notes (equal to an initialconversion price of approximately $27.13 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 the79Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)last trading day of the previous fiscal quarter is more than 130% of the applicable conversion price per share of the Company's common stock on such tradingday; (ii) during the five business days immediately following any five consecutive trading-day period in which the trading price per $1 principal amount of anote 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 theConvertible Notes on each such day; (iii) if the Company has called the Convertible Notes for redemption; (iv) on the occurrence of a specified corporatetransaction as provided in the indenture governing the Notes (i.e., change in control, distribution of rights or warrants to purchase common stock belowmarket value, distribution of assets (including cash) with a per share value exceeding 10% of the market value of common stock); or (v) during the two-monthperiod prior to maturity (starting August 1, 2026). The last reported sale price of the Company's common stock on any date means the closing sales price pershare on such date as reported by the New York Stock Exchange.The Convertible Notes are eligible for conversion upon meeting certain conditions as provided in the indenture governing the Convertible Notes. SinceJanuary 1, 2011, the Convertible Notes were eligible for conversion. During the fiscal years ended March 31, 2014, 2013 and 2012, the Company settled theconversion of $96,535, $19,286 and $50,395, respectively, in principal value of the Convertible Notes, as requested by the respective holders, with theprincipal settled in cash and the conversion benefit settled through the issuance of 2,290,755, 395,269 and 772,438 shares, respectively. In March throughMay 2014, the Company received notice of conversion from holders of $2,658 in principal value of the Convertible Notes. These conversions were settled inthe first quarter of fiscal 2015 with the principal and the conversion benefit settled in cash. In April 2014, the Company delivered a notice to holders of theConvertible Notes to the effect that, for at least twenty trading days during the thirty consecutive trading days preceding March 31, 2014, the closing price ofthe Company'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 theConvertible Notes, the increase in the Company's stock price triggered a provision, which gave holders of the Convertible Notes a put option through June 30,2014. 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 $27.13. The average price of the Company's common stock for the fiscal years ended March 31, 2014, 2013 and 2012 was$73.94, $64.30 and $53.26, respectively. Therefore, 811,083, 2,400,439 and 2,606,189 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 (the "Term Loan"), which proceeds were used to partially finance the acquisition ofVought. The Term Loan 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 theoriginal principal amount 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 principal amount, were used to consummate the acquisition of Vought. In connection with the closing on the Term Loan, the Company incurredapproximately $7,133 of 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%.On April 5, 2011, in connection with the amendment and restatement of the current Credit Facility, the Company extinguished the Term Loan at facevalue 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-offof the remaining unamortized discount and deferred financing fees on the Term Loan included in Interest expense and other.80Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Financial Instruments Not Recorded at Fair ValueCarrying amounts and the related estimated fair values of the Company's long-term debt not recorded at fair value in the financial statements are asfollows:March 31, 2014 March 31, 2013CarryingValue FairValue CarryingValue FairValue$1,550,383 $1,580,447 $1,329,863 $1,594,800The 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).Interest paid on indebtedness during the fiscal years ended March 31, 2014, 2013 and 2012 amounted to $81,100, $62,229 and $72,563, respectively.Interest capitalized during the fiscal years ended March 31, 2014, 2013 and 2012 was $4,246, $1,114 and $1,077, respectively.As of March 31, 2014, the maturities of long-term debt are as follows: 2015—$44,829; 2016—$37,308; 2017—$196,472; 2018—$235,283;2019—$646,260; and thereafter—$391,549 through 2021.11.OTHER NONCURRENT LIABILITIESOther noncurrent liabilities are composed of the following items: March 31, 2014 2013Acquired contract liabilities, net$141,505 $156,022Deferred grant income21,905 26,205Accrued workers' compensation18,077 18,793Environmental contingencies9,959 11,633Accrued warranties12,022 5,470Income tax reserves3,196 2,060Contingent consideration1,740 2,614Legal contingencies9,500 34,500All other16,852 11,576Total other noncurrent liabilities$234,756 $268,87312.INCOME TAXESThe components of pretax income are as follows: Year ended March 31, 2014 2013 2012Foreign$3,482 $11,829 $10,200Domestic308,751 451,228 427,377 $312,233 $463,057 $437,57781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, 2014 2013 2012Current: Federal$672 $(24,403) $2,012State1,346 1,830 352Foreign1,090 1,516 138 3,108 (21,057) 2,502Deferred: Federal100,191 176,187 137,642State3,102 10,789 16,359Foreign(424) (209) (548) 102,869 186,767 153,453 $105,977 $165,710 $155,955A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: Year ended March 31, 2014 2013 2012Statutory federal income tax rate35.0% 35.0% 35.0%State and local income taxes, net of federal tax benefit0.9 1.8 2.5Miscellaneous permanent items and nondeductible accruals0.5 (0.3) (0.8)Research and development tax credit(1.8) (1.1) (0.7)Foreign tax credits— — (0.1)Other(0.7) 0.4 (0.3)Effective income tax rate33.9% 35.8% 35.6% 82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, 2014 2013Deferred tax assets: Net operating loss and other credit carryforwards$196,599 $93,941Inventory6,687 12,556Accruals and reserves34,339 65,230Pension and other postretirement benefits186,941 273,386Acquired contract liabilities, net48,540 47,991Other737 849 473,843 493,953Valuation allowance(1,424) (549)Net deferred tax assets472,419 493,404Deferred tax liabilities: Long-term contract accounting317,377 205,171Property and equipment141,788 151,307Goodwill and other intangible assets333,892 327,395Prepaid expenses and other7,139 20,151 800,196 704,024Net deferred tax liabilities$327,777 $210,620As of March 31, 2014, the Company has federal and state net operating loss carryforwards of $966,376 expiring in various years through 2033. TheCompany also has a foreign net operating loss carryforward of $11,348. There was an increase in total valuation allowance for fiscal 2014 in the amount of$875, primarily associated with the establishment of the valuation allowance on state and foreign net operating loss carryforwards.The effective income tax rate for the fiscal year ended March 31, 2014 was 33.9% as compared to 35.8% for the fiscal year ended March 31, 2013. Theeffective income tax rate for the fiscal year ended March 31, 2014 was reduced to reflect unrecognized tax benefits of $704 and additional research anddevelopment tax credit carryforward and NOL carryforward of $2,345. In fiscal 2013, the Company filed a refund claim for approximately $25,189 as aresult of carrying back tax losses to prior years which is included in other long term assets on the accompanying Consolidated Balance Sheet.The Company has been granted income tax holiday as an incentive to attract foreign investment by the Government of Thailand. The tax holidays expirein various years through 2026. We do not have any other tax holidays in the jurisdictions in which we operate. The income tax benefit attributable to the taxstatus of our subsidiary in Thailand was approximately $347 or $0.01 per diluted share in fiscal 2014, $1,549 or $0.03 per diluted share in fiscal 2013 and$2,514 or $0.05 per diluted share in fiscal 2012.Cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been recorded, is $42,123 atMarch 31, 2014. 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, 2014 and 2013, the total amount of accrued income tax-related interest andpenalties was $204 and $236, respectively.As of March 31, 2014 and 2013, the total amount of unrecognized tax benefits was $8,865 and $7,728, respectively, of which $7,082 and $5,945,respectively, would impact the effective rate, if recognized. The Company anticipates that total unrecognized tax benefits may be reduced by $0 in the next12 months.83Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)With a 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, 2009, or foreign income tax examinations by tax authorities for fiscal years ended before March 31,2009.As of March 31, 2014, the Company was subject to examination in one state jurisdictions for the fiscal years ended March 31, 2009 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 one foreign jurisdictions for fiscal yearended March 31, 2012. Because of net operating losses acquired as part of the acquisition of Vought, the Company is subject to U.S. federal income taxexaminations and various state jurisdiction examinations for the years ended December 31, 2004 and after related to previously filed Vought tax returns. TheCompany believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.During the fiscal years ended March 31, 2014, 2013 and 2012, the Company added $32, $3 and $82 of interest and penalties related to activity foridentified uncertain tax positions, respectively.A reconciliation of the liability for uncertain tax positions, which are included in noncurrent liabilities for the fiscal years ended March 31, 2014 and 2013follows: Ending Balance—March 31, 2012$7,133Additions 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, 20137,710Additions for tax positions related to the current year774Additions for tax positions of prior years1,475Reductions for tax positions of prior years(666)Reductions as a result of a lapse of statute of limitations—Settlements—Ending Balance—March 31, 2014$9,29313.STOCKHOLDERS' EQUITYIn February 2014, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to 5,000,000shares of its common stock in addition to the 500,800 shares authorized under prior authorizations. In March 2014, the Company repurchased 300,000 of itscommon stock for $19,134. As a result, as of May 17, 2014, the Company remains able to purchase an additional 5,200,800 shares. Repurchases may bemade from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limit hasbeen set for completion of the program.During the fiscal year ended March 31, 2014 and 2013, the Company settled the conversion of $96,535 and $19,286, 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 of2,290,755 shares and 395,269 shares, respectively.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, 2014 and 2013, zero shares of preferred stock wereoutstanding.84Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Accumulated Other Comprehensive LossChanges in accumulated other comprehensive loss ("AOCI") by component for the years ended March 31, 2014 and 2013 were as follows: CurrencyTranslationAdjustmentUnrealized Gains andLosses on DerivativeInstrumentsDefined Benefit PensionPlans and OtherPostretirement Benefits Total (1)Balance March 31, 2012 $5,345$132$(14,783) $(9,306) OCI before reclassifications (1,832)41(45,976) (47,767) Amounts reclassified from AOCI —(42)(3,857)(2)(3,899) Net current period OCI (1,832)(1)(49,833) (51,666)Balance March 31, 2013 3,513131(64,616) (60,972) OCI before reclassifications (3,315)1,38445,958 44,027 Amounts reclassified from AOCI —(19)(1,944)(3)(1,963) Net current period OCI (3,315)1,36544,014 42,064Balance March 31, 2014 $198$1,496$(20,602) $(18,908)(1) Net of tax.(2) Primarily relates to amortization of actuarial losses for the year ended March 31, 2013 totaling $199 (net of tax of $119) which is included in the net periodic pension cost of which aportion is allocated to production as inventoried costs.(3) Primarily relates to amortization of actuarial losses for the year ended March 31, 2014 totaling $9,402 (net of tax of $5,647) which is included in the net periodic pension cost ofwhich a portion is allocated to production as inventoried costs.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, 2014 2013 2012 (thousands)Weighted-average common shares outstanding—basic51,711 49,663 48,821Net effect of dilutive stock options and nonvested stock265 382 446Net effect of convertible debt811 2,401 2,606Weighted-average common shares outstanding—diluted52,787 52,446 51,87315.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 $21,208, $19,509 and $19,701 for the fiscal years ended March 31, 2014, 2013and 2012, respectively.85Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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, 2014. 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, 2014, 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.86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, 2014 and 2013, and the amounts recorded in the Consolidated Balance Sheets at March 31, 2014 and 2013. 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 domestic qualified and nonqualified plans and the foreign qualified plans. Pension Benefits OtherPostretirementBenefits Year ended March 31, Year ended March 31, 2014 2013 2014 2013Change in projected benefit obligations Projected benefit obligation at beginning of year$2,390,201 $2,241,741 $347,555 $380,802Service cost12,854 18,503 3,060 3,538Interest cost92,938 98,348 12,552 15,762Actuarial loss (gain)(24,361) 179,046 (22,078) (25,523)Acquisitions13,324 1,000 — 2,008Plan amendments58 — — —Participant contributions— — 6,449 6,760Curtailments(7,851) 19,812 — —Settlements(171,450) — — —Special termination benefits— 10,819 — —Benefits paid(144,078) (179,068) (36,526) (35,792)Currency translation adjustment(927) — — —Projected benefit obligation at end of year$2,160,708 $2,390,201 $311,012 $347,555Accumulated benefit obligation at end of year$2,148,824 $2,365,235 $311,012 $347,555Weighted-average assumptions used to determine benefitobligations at end of year Discount rate4.32% 4.07% 4.14% 3.79%Rate of compensation increase3.50% 3.50% N/A N/A87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, 2014 2013 2014 2013Change in fair value of plan assets Fair value of plan assets at beginning of year$2,030,210 $1,881,954 $— $—Actual return on plan assets160,297 217,506 — —Settlements(171,450) — — —Participant contributions— — 6,449 6,760Company contributions46,347 109,818 30,077 29,032Acquisitions12,853 — — —Benefits paid(144,078) (179,068) (36,526) (35,792)Currency translation adjustment(910) — — —Fair value of plan assets at end of year$1,933,269 $2,030,210 $— $—Funded status (underfunded) Funded status$(227,439) $(359,991) $(311,012) $(347,555)Reconciliation of amounts recognized in the consolidatedbalance sheets Pension asset—noncurrent$71 $— $— $—Accrued benefit liability—current(3,960) (3,923) (26,038) (32,448)Accrued benefit liability—noncurrent(223,550) (356,068) (284,974) (315,107)Net amount recognized$(227,439) $(359,991) $(311,012) $(347,555)Reconciliation of amounts recognized in accumulated othercomprehensive income Prior service credits$(25,493) $(39,181) $(13,211) $(17,740)Actuarial losses (gains)85,076 151,582 (13,354) 8,724Income tax (benefits) related to above items(22,462) (42,152) 9,968 3,383Unamortized benefit plan costs (gains)$37,121 $70,249 $(16,597) $(5,633)88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, 2014, 2013 and 2012 are as follows: Pension Benefits OtherPostretirement Benefits Year Ended March 31, Year Ended March 31, 2014 2013 2012 2014 2013 2012Components of net periodicpension cost Service cost$12,854 $18,503 $16,456 $3,060 $3,538 $3,393Interest cost92,938 98,348 108,059 12,552 15,762 18,473Expected return on plan assets(147,545) (137,334) (127,603) — — —Amortization of prior servicecredit cost(6,731) (5,829) (11,014) (4,529) (4,529) (4,529)Amortization of net loss13,487 318 109 — — —Curtailment (gain) loss(395) 23,662 (42,446) — — —Settlements1,561 — — — — —Special termination benefits— 10,819 1,625 — — 421Total net periodic benefit (income)expense$(33,831) $8,487 $(54,814) $11,083 $14,771 $17,758Weighted-average assumptionsused to determine net periodicpension cost Discount rate4.07% 4.62% 5.58% 3.79% 4.35% 5.25%Expected long-term rate on assets8.25% 8.25% 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 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 net periodic benefit cost and obligations are included in the tables above:•In March 2014, the Company announced an amendment to the retirement plan of its non-represented employee participants. Effective April 1, 2015,actively accruing participants with 30 years of service will no longer continue to accrue a benefit. Those changes resulted in a decrease in the projectedpension obligation of $14,355 and a related curtailment gain of $8,427 included in "Curtailments, settlements and early retirement incentives" onthe Consolidated Statement of Income for the fiscal year ended March 31, 2014.•In March 2014, in connection with the Company's relocation plan, the Company has restructured the remaining workforce resulting in thetermination of a number of defined benefit plan participants. The Company concluded that these terminations will result in a significant reduction inthe remaining service period and recorded a curtailment loss89Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)of $8,031 included in "Curtailments and early retirement incentives" on the Consolidated Statement of Income for the fiscal year ended March 31,2014. This curtailment loss included an increase in the projected pension obligation of $6,503. Additionally, as part of the layoffs, the Companyrecorded an early retirement incentive severance charge of $916 included in "Selling, General and Administrative" on the Consolidated Statement ofIncome for the fiscal year ended March 31, 2014.•In December 2013, the Company completed an incentive offer in the form of lump-sum payments to non-represented deferred vested employees whowere not of retirement age in lieu of any future benefits. In addition, cumulative lump-sum payments to union-represented plan participants forpreviously offered early retirement incentives exceeded the service and interest costs of the respective plan. The aforementioned changes led to aremeasurement of the affected plan's assets and obligations as of December 2013, which resulted in a $118,391 decrease in projected benefitobligation. Additionally, these distributions resulted in settlement charges of $1,561 and are presented on the accompanying ConsolidatedStatements of Income as "Early retirement incentive expense."•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 Consolidated Statement of Income as "Curtailments and early retirement incentives," as well as severance charges of $1,182 includedin "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 $2,030 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 highly90Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)compensated employees as of April 1, 2012 will no longer continue to accrue a benefit. Those changes resulted in a reduction of the projected pensionobligation of $56,701 and a related curtailment gain of $42,446 included in "Curtailments and early retirement incentives" on the ConsolidatedStatement 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, 2015: PensionBenefits OtherPostretirementBenefitsAmounts expected to be recognized in FY 2015 net periodic benefit costs Prior service cost ($3,303 and $2,830 net of tax, respectively)$(5,288) $(4,530)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*2015$185,075 $26,5722016164,801 26,4112017161,963 26,4212018158,813 26,3052019155,058 26,2892020 - 2024738,709 119,374* Net of expected Medicare Part D subsidies of $1,000 to $1,500 per year.Plan 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, 2014 and 2013. ActualAllocation TargetAllocation March 31,Asset CategoryFiscal 2015 2014 2013Equity securities50 - 65% 47% 48%Fixed income securities20 - 45% 48 47Alternative investment funds2 - 10% 5 5Total 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 Employee91Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Retirement Income Security Act of 1974 ("ERISA"). Guidelines are established defining permitted investments within each asset class. Each investmentmanager has contractual guidelines to ensure that investments are made within 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 are not permitted at any time including investment directly in employer securities anduncovered short sales.The tables below provide the fair values of the Company's plan assets at March 31, 2014 and 2013 by asset category. The table also identifies the level ofinputs used to determine the fair value of assets in each category (see Note 2 for definition of levels).March 31, 2014 Level 1 Level 2 Level 3 TotalAssets Cash and cash equivalents$26,261 $805 $— $27,066Equity securities International196,008 — — 196,008US equity70,520 — — 70,520US commingled fund563,116 — — 563,116International commingled fund26,579 42,497 — 69,076Fixed income securities Corporate bonds— 19,628 — 19,628Government securities— 163,241 — 163,241Commingled fund636,476 88,125 — 724,601Other fixed income— 8,362 — 8,362Other Private equity and infrastructure— — 89,113 89,113Total investment in securities—assets$1,518,960 $322,658 $89,113 $1,930,731Receivables 2,568Payables (30)Total plan assets $1,933,26992Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 — 749,260Mortgage-backed securities— 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 $2,030,210Cash 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.The following table represents a rollforward of the balances of our pension plan assets that are valued using Level 3 inputs: March 31, 2013Balance Net Purchases(Sales) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2014BalancePrivate equity funds$95,015 $(18,976) $11,157 $1,917 $89,113 March 31, 2012Balance Net Purchases(Sales) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2013BalancePrivate equity funds$109,727 $(17,743) $2,241 $790 $95,01593Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Assumptions and SensitivitiesThe discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds.The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.The effect of a 25 basis-point change in discount rates as of March 31, 2014 is shown below: Pension Benefits OtherPostretirementBenefitsIncrease of 25 basis points Obligation*$(60,800) $(6,474)Net periodic expense (10,300) 425Decrease of 25 basis points Obligation*$62,700 $6,732Net periodic expense 10,500 (443)* 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 2015, 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, 2014 was 7.50% 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$643 $(563)Obligation12,429 (10,980)Anticipated Contributions to Defined Benefit PlansAssuming a normal retirement age of 65, the Company expects to contribute $114,822 to its defined benefit pension plans and $26,572 to its OPEBduring fiscal 2015. No plan assets are expected to be returned to the Company in fiscal 2015.16.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, 2014.There were no employee or non-employee director options granted during fiscal years ended March 31, 2014, 2013 and 2012.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 third or fourth anniversary of the date of grant, and are included in capital in excess of parvalue. Restricted shares generally vest in full after three or four years. The fair value of restricted shares under the Company's restricted stock plans isdetermined by the product of the number of shares granted and the grant date market price of the Company's common stock. Certain of these awards containperformance conditions, in addition to service conditions. The fair value of restricted shares is expensed on a straight-line basis over the requisite serviceperiod of three or four years.94Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The Company recognized $4,653, $6,367 and $4,988 of share-based compensation expense during the fiscal years ended March 31, 2014, 2013 and2012, respectively. The total income tax benefit recognized for share-based compensation arrangements for fiscal years ended March 31, 2014, 2013 and 2012was $1,629, $2,228 and $1,746, respectively.A summary of the Company's stock option activity and related information for its option plans for the fiscal year ended March 31, 2014 was as follows: Options Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm (in Years) AggregateIntrinsic ValueOutstanding at March 31, 201370,888 $15.85 Exercised(18,170) 16.01 Forfeited(3,000) 16.90 Outstanding at March 31, 201449,718 $15.72 0.8 $2,894Exercisable at March 31, 201449,718 $15.72 0.8 $2,894As of March 31, 2014 and 2013, 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, 2014, 2013 and 2012 was $1,043, $6,281 and $4,928, respectively.At March 31, 2014 and 2013, 2,227,227 shares and 2,306,925 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, 2014 and changes during the fiscalyear ended March 31, 2014, is presented below: Shares Weighted-Average GrantDate Fair ValueNonvested restricted stock and deferred stock units at March 31, 2013363,463 $46.41Granted79,698 79.8Vested(159,540) 40.24Forfeited(12,410) 56.97Nonvested restricted stock and deferred stock units at March 31, 2014271,211 $59.37The fair value of restricted stock which vested during fiscal 2014 was $14,678. The tax benefit from vested restricted stock was $2,726, $1,840 and$609 during the fiscal years ended March 31, 2014, 2013 and 2012, respectively. The weighted-average grant date fair value of share-based grants in thefiscal years ended March 31, 2014, 2013 and 2012 was $79.80, $62.25 and $42.76, respectively. Expected future compensation expense on restricted stocknet of expected forfeitures, is approximately $3,272, which is expected to be recognized over the remaining weighted-average vesting period of 1.5 years.During the fiscal years ended March 31, 2014, 2013 and 2012, 7,875, 17,000 and 6,650 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. In the course of discovery in the suit, the court began an investigation of allegations of wrongdoing by Eaton in itsconduct of the litigation. On December 22, 2010, the court dismissed all of Eaton's claims with prejudice based on the court's conclusion that a fraud had beenperpetrated on the court by counsel for Eaton of which Eaton was aware or should have been aware. Eaton appealed, but on November 21, 2013, the SupremeCourt of Mississippi, in a unanimous en banc decision, affirmed the lower95Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)court’s dismissal. Eaton has moved for a rehearing of the Mississippi Supreme Court's affirmance but on March 20, 2014, the Supreme Court denied Eaton'smotion for rehearing. 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 that led to the dismissal of Eaton's claims. Given the Mississippi Supreme Court’s decisionaffirming the dismissal of Eaton's claims and the denial of Eaton's motion for rehearing, we have concluded that the probability of a loss arising from Eaton'sclaims is remote.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, 2014 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 potential riskrelated to OPEB projected obligations as of March 31, 2014 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 2015 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.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 $86,640 and $18,113 in capital expenditures duringthe fiscal years ended March 31, 2014 and 2013, respectively, associated with this plan. The Company incurred $31,290 of moving expenses related to therelocation during the fiscal year ended March 31, 2014, shown separately on the Consolidated Statements of Income. The relocation was substantiallycompleted during the fiscal year ended March 31, 2014.96Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)19.CUSTOMER CONCENTRATIONTrade accounts receivable from The Boeing Company ("Boeing") represented approximately 32% and 32% of total accounts receivable as of March 31,2014 and 2013, respectively. The Company had no other significant concentrations of credit risk. Sales to Boeing for fiscal 2014 were $1,689,635, or 45%of net sales, of which $1,576,113, $87,374 and $26,148 were from the Aerostructures segment, the Aerospace Systems segment and the AftermarketServices segment, respectively. Sales to Boeing for fiscal 2013 were $1,829,200, or 49% of net sales, of which $1,719,485, $73,794 and $35,921 werefrom the Aerostructures segment, the Aerospace Systems segment and the Aftermarket Services segment, 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 the Aerostructures segment, the Aerospace Systems segment andthe Aftermarket 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.20.COLLECTIVE BARGAINING AGREEMENTSApproximately 21% of the Company's labor force is covered under collective bargaining agreements. Approximately 36% of the Company's collectivelybargained workforce are working under contracts that have expired or are set to expire within one year.21.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, enginecontrol systems, accumulators, mechanical control cables and non-structural cockpit components. These products are sold to various aerospace OEMs on aglobal 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 $1,166 curtailments, settlements and early retirement incentives for the fiscalyear ended March 31, 2014.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:97Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) Year Ended March 31, 2014 2013 2012Net sales: Aerostructures$2,612,439 $2,781,344 $2,571,576Aerospace systems871,751 615,771 551,800Aftermarket services287,343 314,507 292,674Elimination of inter-segment sales(8,279) (8,920) (8,121) $3,763,254 $3,702,702 $3,407,929Income before income taxes: Operating income (loss): Aerostructures$252,910 $469,873 $403,414Aerospace systems149,721 103,179 90,035Aftermarket services42,265 45,380 31,859Corporate(44,892) (87,219) (10,593) 400,004 531,213 514,715Interest expense and other87,771 68,156 77,138 $312,233 $463,057 $437,577Depreciation and amortization: Aerostructures$114,302 $95,884 $89,113Aerospace systems37,453 19,870 17,363Aftermarket services7,529 9,118 9,487Corporate4,993 4,634 3,761 $164,277 $129,506 $119,724Amortization of acquired contract liabilities, net: Aerostructures$25,207 $25,457 $26,684Aerospace systems17,422 187 — $42,629 $25,644 $26,684Adjusted EBITDA: Aerostructures$342,005 $540,300 $465,843Aerospace systems169,752 122,862 107,398Aftermarket services49,794 54,498 41,346Corporate(38,733) (48,104) (47,232) $522,818 $669,556 $567,355 Year Ended March 31, 2014 2013 2012Capital expenditures: Aerostructures$167,198 $90,466 $64,633Aerospace systems21,935 19,388 14,747Aftermarket services13,940 14,820 8,682Corporate3,341 2,216 5,907 $206,414 $126,890 $93,96998Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) March 31, 2014 2013Total Assets: Aerostructures$3,880,645 $3,707,527Aerospace systems1,255,033 1,095,706Aftermarket services316,643 327,609Corporate100,962 108,337 $5,553,283 $5,239,179During fiscal years ended March 31, 2014, 2013 and 2012, the Company had foreign sales of $621,625, $504,079 and $463,864, respectively. TheCompany reports as foreign sales those sales with delivery points outside of the United States. As of March 31, 2014 and 2013, the Company had foreignlong-lived assets of $289,027 and $98,828, respectively.22.SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORSThe Company's the 2018 Notes and the 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by Guarantor Subsidiaries. Thetotal assets, stockholder's equity, revenue, earnings and cash flows from operating activities of the Guarantor Subsidiaries exceeded a majority of theconsolidated total of such items as of and for the periods reported. The only consolidated subsidiaries of the Company that are not guarantors of the 2018Notes and the 2021 Notes (the "Non-Guarantor Subsidiaries") are: (i) the receivables securitization special purpose entity, and (ii) the foreign operatingsubsidiaries. The following tables present condensed consolidating financial statements including Triumph Group, Inc. (the "Parent"), the GuarantorSubsidiaries, and the Non-Guarantor Subsidiaries. Such financial statements include balance sheets as of March 31, 2014 and 2013, statements of incomeand comprehensive income for the fiscal years ended March 31, 2014, 2013 and 2012, and statements of cash flows for the fiscal years ended March 31,2014, 2013 and 2012.99Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)SUMMARY CONSOLIDATING BALANCE SHEETS: March 31, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalCurrent assets: Cash and cash equivalents$2,820 $1,149 $25,029 $— $28,998Trade and other receivables, net1,591 226,407 289,709 — 517,707Inventories— 1,041,719 70,048 — 1,111,767Rotable assets— 28,113 13,553 — 41,666Deferred income taxes— 57,291 17 — 57,308Prepaid expenses and other6,977 13,674 4,246 — 24,897Total current assets11,388 1,368,353 402,602 — 1,782,343Property and equipment, net9,933 801,560 119,480 — 930,973Goodwill and other intangible assets, net— 2,625,121 144,892 — 2,770,013Other, net58,536 7,860 3,558 — 69,954Intercompany investments and advances4,094,443 84,180 12,333 (4,190,956) —Total assets$4,174,300 $4,887,074 $682,865 $(4,190,956) $5,553,283Current liabilities: Current portion of long-term debt$31,844 $17,731 $— $— $49,575Accounts payable1,150 296,968 19,216 — 317,334Accrued expenses36,034 212,984 24,272 — 273,290Total current liabilities69,028 527,683 43,488 — 640,199Long-term debt, less current portion1,279,694 58,714 162,400 — 1,500,808Intercompany debt525,216 2,021,330 304,613 (2,851,159) —Accrued pension and otherpostretirement benefits, noncurrent6,795 501,716 13 — 508,524Deferred income taxes and other9,656 586,174 24,011 — 619,841Total stockholders' equity2,283,911 1,191,457 148,340 (1,339,797) 2,283,911Total liabilities and stockholders'equity$4,174,300 $4,887,074 $682,865 $(4,190,956) $5,553,283100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, net1,141 186,067 261,657 — 448,865Inventories— 954,713 30,822 — 985,535Rotable assets— 24,903 9,950 — 34,853Deferred income taxes— 99,546 — — 99,546Prepaid and other5,533 16,058 2,890 — 24,481Assets held for sale— 14,747 — — 14,747Total current assets9,784 1,297,571 332,709 — 1,640,064Property and equipment, net9,999 753,510 51,575 — 815,084Goodwill and other intangible assets, net335 2,671,388 45,516 — 2,717,239Other, net58,526 7,873 393 — 66,792Intercompany investments and advances3,137,667 325,786 2,777 (3,466,230) —Total assets$3,216,311 $5,056,128 $432,970 $(3,466,230) $5,239,179Current liabilities: Current portion of long-term debt$109,648 $24,282 $— $— $133,930Accounts payable9,400 308,945 8,663 — 327,008Accrued expenses35,894 238,279 9,514 — 283,687Liabilities related to assets held forsale— 2,621 — — 2,621Total current liabilities154,942 574,127 18,177 — 747,246Long-term debt, less current portion998,200 47,733 150,000 — 1,195,933Intercompany debt— 2,193,874 202,621 (2,396,495) —Accrued pension and otherpostretirement benefits, noncurrent7,264 663,911 — — 671,175Deferred income taxes and other10,747 570,169 — (1,249) 579,667Total stockholders' equity2,045,158 1,006,314 62,172 (1,068,486) 2,045,158Total liabilities and stockholders'equity$3,216,311 $5,056,128 $432,970 $(3,466,230) $5,239,179101Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $3,569,094 $197,987 $(3,827) $3,763,254Operating costs and expenses: Cost of sales— 2,760,627 155,002 (3,827) 2,911,802Selling, general and administrative36,670 192,422 25,623 — 254,715Depreciation and amortization2,782 152,593 8,902 — 164,277Relocation costs— 31,290 — — 31,290Curtailments, settlements and earlyretirement incentives1,166 — — — 1,166 40,618 3,136,932 189,527 (3,827) 3,363,250Operating (loss) income(40,618) 432,162 8,460 — 400,004Intercompany interest and charges(215,079) 207,397 7,682 — —Interest expense and other86,094 6,103 (4,426) — 87,771Income from continuing operations,before income taxes88,367 218,662 5,204 — 312,233Income tax expense20,478 85,061 438 — 105,977Net income67,889 133,601 4,766 — 206,256Other comprehensive income (loss)1,481 43,898 (3,315) — 42,064Total comprehensive income$69,370 $177,499 $1,451 $— $248,320102Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2013 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $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 and integration588 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 — 165,710Net income58,252 229,562 9,533 — 297,347Other comprehensive income— (49,834) (1,832) — (51,666)Total comprehensive income$58,252 $179,728 $7,701$— $245,681103Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2012 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $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 income (loss)232 (127,157) (2,852) — (129,777)Total comprehensive income$88,860 $64,897 $(2,677) $— $151,080104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, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet income$67,889 $133,601 $4,766 $— $206,256Adjustments to reconcile net income tonet cash provided by (used in)operating activities108,816 (170,631) (3,502) (5,802) (71,119)Net cash provided by (used in)operating activities176,705 (37,030) 1,264 (5,802) 135,137Capital expenditures(2,381) (185,794) (18,239) — (206,414)Reimbursements of capital expenditures— 9,086 — — 9,086Proceeds from sale of assets andbusinesses— 45,038 9 — 45,047Cash used for businesses andintangible assets acquired— (6,505) (87,951) — (94,456)Net cash provided by (used in)investing activities(2,381) (138,175) (106,181) — (246,737)Net increase in revolving credit facility98,557 — — — 98,557Proceeds on issuance of debt375,000 30,503 45,500 — 451,003Retirements and repayments of debt(271,812) (27,218) (117,615) — (416,645)Purchase of common stock(19,134) — — — (19,134)Payments of deferred financing costs(3,297) — — — (3,297)Dividends paid(8,344) — — — (8,344)Proceeds from governmental grant— 3,456 — — 3,456Repurchase of restricted shares forminimum tax obligation(2,726) — — — (2,726)Proceeds from exercise of stockoptions, including excess tax benefit329 — — — 329Intercompany financing and advances(343,187) 168,076 169,309 5,802 —Net cash (used in) provided byfinancing activities(174,614) 174,817 97,194 5,802 103,199Effect of exchange rate changes on cashand cash equivalents— — 5,362 — 5,362Net change in cash and cashequivalents(290) (388) (2,361) — (3,039)Cash and cash equivalents at beginningof year3,110 1,537 27,390 — 32,037Cash and cash equivalents at end ofyear$2,820 $1,149 $25,029 $— $28,998105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 used in investing activities(1,315) (460,440) (5,618) — (467,373)Net decrease 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 $— $32,037106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 operatingactivities(22,063) (16,455) (14,558) — (53,076)Net cash provided by operatingactivities66,565 175,599 (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 $— $29,662107Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)23.QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Fiscal 2014 Fiscal 2013 June 30 (7) Sept. 30 Dec. 31 (8) Mar. 31 June 30 Sept. 30 Dec. 31 (5) Mar. 31 (4) (6)BUSINESSSEGMENT SALES Aerostructures$651,888 $690,748 $637,202 $632,601 $669,853 $713,978 $676,791 $720,722Aerospace Systems219,526 205,483 211,402 235,339 140,512 150,139 141,059 184,061Aftermarket Services74,353 72,971 69,556 70,463 79,977 76,061 74,587 83,881Inter-segmentElimination(2,084) (1,857) (2,344) (1,993) (2,654) (1,997) (1,872) (2,396)TOTAL SALES$943,683 $967,345 $915,816 $936,410 $887,688 $938,181 $890,565 $986,268GROSS PROFIT(1)$222,303 $171,143 $166,518 $182,243 $214,869 $212,797 $204,872 $219,738OPERATING INCOME Aerostructures$100,387 $64,425 $52,412 $35,686 $120,138 $121,384 $117,450 $110,901Aerospace Systems42,643 31,740 32,504 42,834 23,465 25,712 20,562 33,440Aftermarket Services11,279 10,102 9,297 11,587 11,807 10,767 9,856 12,950Corporate(12,963) (13,296) (9,434) (9,199) (14,468) (14,917) (13,509) (44,325)TOTAL OPERATINGINCOME$141,346 $92,971 $84,779 $80,908 $140,942 $142,946 134,359 $112,966 NET INCOME$79,043 $49,516 $35,393 $42,304 $76,332 $80,190 75,223 $65,602 Basic Earnings (Loss)per share(2)$1.56 $0.96 $0.68 $0.81 $1.54 $1.61 $1.51 $1.32 Diluted Earnings (Loss)per share(2)(3)$1.50 $0.94 $0.67 $0.80 $1.46 $1.53 $1.43 $1.24*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.(5)Includes the results of Embee from December 19, 2012 (date of acquisition) through March 31, 2013.(6)Includes the results of GPECS from March 18, 2013 (date of acquisition) through March 31, 2013.(7)Includes the results of Primus from May 6, 2013 (date of acquisition) through March 31, 2014.(8)Includes the results of General Donlee from October 4, 2013 (date of acquisition) through March 31, 2014.24.SUBSEQUENT EVENTSIn May 2014, under the existing stock repurchase program, the Company repurchased 324,841 shares for $22,122.108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, 2014: Allowance for doubtful accountsreceivable $5,372 2,191 6 (1,034) $6,535For 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) $3,900(1)Additions consist of trade and other receivable recoveries and miscellaneous adjustments.(2)Deductions represent write-offs of related account balances.Item 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, 2014, 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, 2014.109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, 2014. In making thisassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (COSO)in Internal Control—Integrated Framework. Based on management's assessment and those criteria, management believes that Triumph maintained effectiveinternal control over financial reporting as of March 31, 2014.Management's assessment of and conclusion on the effectiveness of Triumph's internal control over financial reporting did not include the internalcontrols of Triumph Gear Systems - Toronto, which was acquired in October 2013. The acquisition, which is more fully discussed in Note 3 to theconsolidated financial statements for fiscal 2014, is included in the fiscal 2014 consolidated financial statements of Triumph Group, Inc. and represented totalassets of approximately $122 million or 2% at March 31, 2014, and revenues of approximately $24 million or 1% for the year ended March 31, 2014. Underguidelines established by the SEC, companies are allowed to exclude acquisitions from their first assessment of internal control over financial reportingfollowing the date of acquisition.Triumph's independent registered public accounting firm, Ernst & Young LLP, has audited Triumph's effectiveness of Triumph's internal control overfinancial reporting. This report appears on the following page./s/ JEFFRY D. FRISBY Jeffry D. FrisbyPresident and Chief Executive Officer /s/ JEFFREY L. MCRAE Jeffrey L. McRaeSenior Vice President andChief Financial Officer /s/ THOMAS A. QUIGLEY, III Thomas A. Quigley, IIIVice President and Controller May 17, 2014110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, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria).Triumph Group, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectivenessof internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion 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 Gear Systems - Toronto, which is included in thefiscal year 2014 consolidated financial statements of Triumph Group, Inc. and constituted $122 million and $58 million of total and net assets, respectively,as of March 31, 2014 and $24 million and $1 million of revenues and net income, respectively, for the year then ended. Our audit of internal control overfinancial reporting of Triumph Group, Inc. also did not include an evaluation of the internal control over financial reporting of Triumph Gear Systems -Toronto.In our opinion, Triumph Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2014, 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, 2014 and 2013, and the related consolidated statements of income, comprehensive income, stockholders'equity, and cash flows for each of the three years in the period ended March 31, 2014 of Triumph Group, Inc. and our report dated May 17, 2014 expressedan unqualified opinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 17, 2014111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 thefourth quarter of fiscal 2014 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 2014 Annual Meeting of Stockholders,which shall be filed within 120 days after the end of our fiscal year (the "2014 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 2014 ProxyStatement.Code of Business ConductThe information required regarding our Code of Business Conduct is incorporated herein by reference to the 2014 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 2014 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 2014 ProxyStatement.Item 11.Executive CompensationThe information required regarding executive compensation is incorporated herein by reference to the 2014 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 2014 Proxy Statement.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required under this item is incorporated herein by reference to the 2014 Proxy Statement.Item 14.Principal Accountant Fees and ServicesThe information required under this item is incorporated herein by reference to the 2014 Proxy Statement.112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 Firm53Consolidated Balance Sheets as of March 31, 2013 and 201254Consolidated Statements of Income for the Fiscal Years Ended March 31, 2013, 2012 and 201155Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended March 31, 2013, 2012 and 201157Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2013, 2012 and 201158Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2013, 2012 and 201156Notes to Consolidated Financial Statements59(2) The following financial statement schedule is included in this report: PageSchedule II—Valuation and Qualifying Accounts108All 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)113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.(21)10.3#2004 Stock Incentive Plan.(21)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.(21)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 and John B. Wright, II.(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)114Table of ContentsExhibitNumber Description10.21 Form of Third Amended and Restated Credit Agreement by and among Triumph Group, Inc., and the other Borrowersparty thereto and the Guarantors party thereto and the Banks party thereto and PNC Bank, National Association, asAdministrative Agent, PNC Capital Markets LLC, J.P. Morgan Securities, LLC, RBC Capital Markets, RBS Citizens,N.A., and Santander Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank N.A., RoyalBank of Canada, Citizens Bank of Pennsylvania, and Santander Bank, N.A., as Syndication Agents, the Bank ofTokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., and Manufacturers and Traders TrustCompany, as Documentation Agents, dated as of November 19, 2013. (20)10.22 Form of Second Amended and Restated Guarantee and Collateral Agreement made by Triumph Group, Inc., and certainof its Subsidiaries in favor of PNC Bank, National Association, as Administrative Agent and as Collateral Agent for theother Secured Parties identified herein, dated as of November 19, 2013. (20)10.23*#Triumph Group, Inc. 2013 Equity and Cash Incentive Plan.10.24*#Form of letter regarding eligibility to participate in the Triumph Group, Inc. Restricted Stock Plan.10.25*#Form of letter regarding grant of award under the Triumph Group, Inc. Excutive Incentive Plan.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, 2014 formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2014 and 2013; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2014, 2013 and 2012; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2014, 2013 and 2012; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2014, 2013 and 2012; (v) Consolidated Statements of Comprehensive Incomefor the fiscal years ended March 31, 2014, 2013 and 2012; 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, 2010.115Table of Contents(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.(20)Incorporated by reference to our Current Report on Form 8-K filed on November 25, 2013.(21)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2013.*Filed herewith.#Compensation plans and arrangements for executives and others. 116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 17, 2014By: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 17, 2014Jeffry D. Frisby /s/ JEFFREY L. MCRAE Senior Vice President and Chief Financial Officer(Principal Financial Officer)May 17, 2014Jeffrey L. McRae /s/ THOMAS A. QUIGLEY Vice President and Controller (PrincipalAccounting Officer)May 17, 2014Thomas A. Quigley /s/ RICHARD C. ILL Chairman and DirectorMay 17, 2014Richard C. Ill /s/ PAUL BOURGON DirectorMay 17, 2014 Paul Bourgon /s/ JOHN G. DROSDICK DirectorMay 17, 2014John G. Drosdick /s/ RALPH E. EBERHART DirectorMay 17, 2014Ralph E. Eberhart /s/ RIHCARD C. GOZON DirectorMay 17, 2014Richard C. Gozon /s/ WILLIAM L. MANSFIELD DirectorMay 17, 2014William L. Mansfield /s/ ADAM J. PALMER DirectorMay 17, 2014Adam J. Palmer /s/ JOSEPH M. SILVESTRI DirectorMay 17, 2014Joseph M. Silvestri /s/ GEORGE SIMPSON DirectorMay 17, 2014George Simpson 117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.(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)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.(21)10.3#2004 Stock Incentive Plan.(21)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.(21)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 and John B. Wright, II.(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)118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)10.21 Form of Third Amended and Restated Credit Agreement by and among Triumph Group, Inc., and the other Borrowersparty thereto and the Guarantors party thereto and the Banks party thereto and PNC Bank, National Association, asAdministrative Agent, PNC Capital Markets LLC, J.P. Morgan Securities, LLC, RBC Capital Markets, RBS Citizens,N.A., and Santander Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank N.A., RoyalBank of Canada, Citizens Bank of Pennsylvania, and Santander Bank, N.A., as Syndication Agents, the Bank ofTokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., and Manufacturers and Traders TrustCompany, as Documentation Agents, dated as of November 19, 2013. (20)10.22 Form of Second Amended and Restated Guarantee and Collateral Agreement made by Triumph Group, Inc., and certainof its Subsidiaries in favor of PNC Bank, National Association, as Administrative Agent and as Collateral Agent for theother Secured Parties identified herein, dated as of November 19, 2013. (20)10.23*#Triumph Group, Inc. 2013 Equity and Cash Incentive Plan.10.24*#Form of letter regarding eligibility to participate in the Triumph Group, Inc. Restricted Stock Plan.10.25*#Form of letter regarding grant of award under the Triumph Group, Inc. Executive Incentive Plan.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 1350.119Table of ContentsExhibitNumber Description101*The following financial information from Triumph Group, Inc.'s Annual Report on Form 10-K for the fiscal year endedMarch 31, 2014 formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2014 and 2013; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2014, 2013 and 2012; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2014, 2013 and 2012; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2014, 2013 and 2012; (v) Consolidated Statements of Comprehensive Incomefor the fiscal years ended March 31, 2014, 2013 and 2012; 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.(20)Incorporated by reference to our Current Report on Form 8-K filed on November 25, 2013.(21)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2013.*Filed herewith.#Compensation plans and arrangements for executives and others.120Exhibit 10.23Appendix BTRIUMPH GROUP, INC.2013 EQUITY AND CASH INCENTIVE PLAN1.Purpose of the Plan.The purpose of the Plan is to encourage ownership in the Company by officers and other key personnel whose long-term employment isconsidered essential to the Company’s continued progress and, thereby, encourage recipients to act in the stockholders’ interest and share in theCompany’s success.2.Definitions.As used herein, the following definitions shall apply:(a)“Affiliate” means any entity that is, directly or indirectly, controlled by, under common control with or controlling the Companyor any entity in which the Company has a significant ownership interest as determined by the Committee.(b)“Award” means a Cash Award, Stock Award, RSU 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)“, an RSU Award AgreementAgreement, which may be in written or electronic format, in such form and with such terms as may be specified by the Committee, evidencing theterms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan.(e)“Board” means the Board of Directors of the Company.(f)“Cash Award” means an Award made under Section 11 of this Plan on such terms and conditions as are specified in theagreement or other documents evidencing the Award (the “Cash Award Agreement”).(g)“Change in Control” means any of the following:i.Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of thethen-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company VotingSecurities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (i) anyacquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition pursuant to a transaction that complies with (iii)(A),(iii)(B) and (iii)(C) of this definition;ii.Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reasonto constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereofwhose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors thencomprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for thispurpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election1contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Personother than the Board of Directors;iii.Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving theCompany or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets orstock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such BusinessCombination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stockand the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of thethen-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), asthe case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction,owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the OutstandingCompany Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or anyemployee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly orindirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combinationor the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior tothe Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governingbody) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initialagreement or of the action of the Board of Directors providing for such Business Combination; oriv.Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.The Committee, in its discretion, may determine that if any of the foregoing events occurs, it will not be considered a Change in Control forpurposes of outstanding Awards under this Plan.(h)“Code” means the Internal Revenue Code of 1986, as amended.(i)“Committee” means the Compensation and Management Development Committee of the Board.(j)“Common Stock” means the common stock of the Company.(k)“Company” means Triumph Group, Inc., a Delaware corporation, or its successor.(l)“Disability” means that the Awardee is unable to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6months; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section 8 of this Plan, the term Disabilityshall have the meaning ascribed to it under section 22(e)(3) of the Code. Whether an individual has a Disability shall be determined by the Committee.Except in situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 8, theCommittee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by theCompany or any Affiliate in which an Awardee participates.(m)“Employee” means a regular, active employee of the Company or any Affiliate.(n)“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.2(o)“Fair Market Value” means, with respect to a Share, unless the Committee determines otherwise, the closing price of a Sharein New York Stock Exchange Composite Transaction on the relevant date, or if no sale shall have made on such exchange on that date, the closingprice of a Share in New York Stock Exchange Composite Transaction on the last preceding day on which there was a sale.(p)“Grant Date” means the date as of which an Award is granted.(q)“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.(r)“Nonstatutory Stock Option” means an Option that is not intended to qualify as an Incentive Stock Option.(s)“Option” means a right granted under Section 8 to purchase a number of Shares at such exercise price, at such times, and onsuch other terms and conditions as are specified in the agreement or other documents evidencing the Award (the “Option Agreement”). Both Optionsintended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.(t)“Participant” means the Awardee or any person (including any estate) to whom an Award has been assigned or transferred aspermitted hereunder.(u)“Performance Goals” means the following objective financial or operating goals established by the Committee in accordancewith section 162(m) of the Code, for a Performance Period with respect to any Award under the Plan, used individually or in ratios or othercombinations: (i) specific targeted amounts of, or changes in, return on net assets (“RONA”); (ii) earnings per share on a basic or fully diluted basis;(iii) operating income; (iv) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (v) working capital; (vi) sales growth; (vii)internal rate of return on capital expenditures; or (viii) attainment of certain levels of TSR of the Company either alone or relative to TSR of aselected group of companies. Performance Goal(s) may be applied on an absolute Company, division, subsidiary or Affiliate basis or relative toperformance of peer group companies or other external measure of the selected Performance Goal. A Performance Goal may include or exclude itemsthat measure specific objectives, such as the cumulative effect of changes in generally accepted accounting principles, losses resulting fromdiscontinued operations, securities gains and losses, restructuring, merger-related and other nonrecurring costs, amortization of goodwill and otherintangible assets, extraordinary gains or losses and any unusual, nonrecurring gain or loss that is separately quantified in the Company’s financialstatements. Performance Goals expressed on a per-share basis shall, in case of a recapitalization, stock dividend, stock split or reverse stock splitaffecting the number of outstanding shares of the Company, be mathematically adjusted by the Committee so that the change in outstanding shares ofthe Company does not cause a substantive change in the applicable Performance Goal. The Committee may adjust Performance Goals for any otherobjective events or occurrences which occur during an Award Period, including, but not limited to, changes in applicable tax laws or accountingprinciples.(v)“Performance Period” means the period established by the Committee for an Award for which Performance Goals areestablished.(w)“Plan” means this Triumph Group, Inc. 2013 Equity and Cash Incentive Plan, as set forth herein and as amended from time totime.(x)“Repriced” means (i) any transaction performed with the intent or effect of (A) reducing the exercise price of any outstandingOption, (B) cancelling or exchanging outstanding Options in exchange for cash, other Awards or replacement Options, including through a tenderoffer process, with exercise prices that are less than the exercise price of the cancelled or exchanged Options, or (C) any similar share exchangetransaction involving outstanding Awards; or (ii) any transaction defined as repricing under the New York Stock Exchange rules for listedcompanies.3(y)“Retirement” means retirement from active employment with the Company or a Subsidiary pursuant to its relevant policy onretirement as determined by the Committee.(z)“RSU” means a restricted stock unit as set forth in Section 10 of this Plan.(aa)“RSU Award” means an Award of RSUs in accordance with Section 10 of this Plan on such terms and conditions as arespecified in the agreement or other documents evidencing the Award (the “RSU Award Agreement”).(ab)“Share” means a share of Common Stock, as adjusted, if applicable, in accordance with Section 15 of the Plan.(ac)“Stock Award” means an award or issuance of Shares made under Section 9 of the Plan.(ad)“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 totalcombined voting power of all classes of stock in one of the other companies in such chain.(ae)“Termination of Employment” means, 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 an employee (asdetermined in accordance with section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or one of its Subsidiaries.The Committee shall determine whether any corporate transaction, such as a sale or spin-off of a division or business unit, or a joint venture, shall bedeemed to result in a Termination of Employment.(af)“TSR” means Total Shareholder Return, the increase in value of a company over a period of time, plus dividends paid by suchcompany during such period.3.Shares Subject to the Plan.(a)Aggregate Limits. Subject to Section 15(a), the aggregate number of Shares subject to Awards granted under the Plan is5,000,000 Shares; provided, however, that the aggregate number of Shares issued under the Plan as Stock Awards or RSUs shall not exceed3,500,000 Shares. Any Shares subject to Awards that are cancelled, expire or are forfeited without the issuance of any Shares shall be available forre-grant under the Plan. Notwithstanding anything to the contrary contained herein, Shares subject to an Award under the Plan shall not again be madeavailable for issuance or delivery under the Plan if such Shares are (i) Shares tendered in payment of the Option exercise price, or (ii) Sharesdelivered to or withheld by the Company to satisfy any tax withholding obligation. Shares issued in payment of any Award may either be authorizedand unissued Shares or treasury Shares.(b)Code Sections 162(m), 422 and 409A. Subject to Section 15(a), the aggregate number of Shares subject to stock-basedAwards granted under the Plan during any calendar year to any one Awardee shall not exceed 150,000, except that in connection with his or her initialservice, an Awardee may be granted Awards covering up to an additional 100,000 Shares. Subject to Section 15(a), the aggregate number of Sharesthat may be subject to all Incentive Stock Options granted under the Plan is 5,000,000 Shares. The maximum aggregate Cash Award to any oneAwardee for any designated Performance Period is $5,000,000. Notwithstanding anything to the contrary in the Plan, the limitations set forth in thisSection 3(b) shall be subject to adjustment under Section 15(a) only to the extent that such adjustment will not affect the status of any Awardintended to qualify as “performance based compensation” under section 162(m) of the Code, the ability to grant or constitute a “modification” in thecase of Incentive Stock Options as defined in section 424 of the Code, or in the case of Nonstatutory Stock Options, constitute a “modification”within the meaning of section 409A of the Code. 4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 ofsection 162(m) of the Code or Employees that the Committee determines may be “covered employees” in the future shall be made by a Committee oftwo or more “outside directors” within the meaning of section 162(m) of the Code. Without limiting the foregoing, Awards made under the Plan to“covered employees” as a result of a determination of the Committee that such Awards are earned under the Company’s 2010 Executive IncentivePlan, or any similar future incentive compensation plan, shall be issued in compliance with section 162(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 ofthe Plan and any of the functions assigned to it in the Plan. Such delegation may be revoked at any time.(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 or exercisability; provided,however, that any such amendment is subject to Section 16 and may not impair any outstanding Award unless agreed to in writing 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 Nonstatutory Stock Option or vesting orlapse of forfeiture of a Stock Award or RSU Award, that number of Shares having a Fair Market Value equal to the minimum amount required to bewithheld;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;5xiii.to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of anyresales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including withoutlimitation: (A) restrictions under an insider trading policy; and (B) restrictions as to the use of a specified brokerage firm for such resales or othertransfers;xiv.to determine the duration and purpose of leaves of absences which may be granted to an Awardee without constitutingtermination of their employment or service for purposes of the Plan, which periods shall be no shorter than the periods generally applicable toEmployees under the Company's employment policies, subject to the requirements of section 409A of the Code; andxv.to make all other determinations deemed necessary or advisable for administering the Plan and any Award grantedhereunder.(c)Effect of Committee’s Decision. All decisions, determinations and interpretations by the Committee regarding the Plan, anyrules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on all Participants. TheCommittee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations andinterpretations including, without limitation, the recommendations or advice of any officer or other employee 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 stockholders of the Company at the 2013 Annual Meeting of stockholders. It shallcontinue in effect for a term of ten (10) years from the effective date of the Plan, unless an amendment to extend the term is approved by stockholdersof the Company under Section 16.7.Term of Awards.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.(a)General. Each Option shall be evidenced by an Option Agreement, the terms and conditions of which are consistent with thefollowing:i.Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be noless than 100% of the Fair Market Value per Share on the Grant Date.ii.No Option Repricings. Other than in connection with a change in the Company’s capitalization (as described inSection 15(a)), the exercise price of an Option may not be Repriced without stockholder approval.iii.Vesting Period, Performance Goals and Exercise Dates. Options granted under the Plan shall vest and beexercisable at such time, subject to achievement of designated Performance Goals or in such installments during the period prior to the expiration ofthe Option’s term as determined by the Committee.iv.Form of Consideration. The Committee shall determine the acceptable form of consideration for exercising anOption, including the 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:6(1)cash;(2)check or wire transfer (denominated in U.S. Dollars);(3)subject to any conditions or limitations established by the Committee, Shares which have a Fair Market Valueon the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised or applicable withholding taxesat the minimum applicable rate arising as a result of such exercise;(4)consideration received by the Company under a broker-assisted sale and remittance program acceptable to theCommittee;(5)such other consideration and method of payment for the issuance of Shares to the extent permitted byapplicable law; or(6)any combination of the foregoing methods of payment.(b)Option Limitations/Terms.i.Eligibility for Incentive Stock Options. Only employees (as determined in accordance with section 3401(c) of theCode and the regulations promulgated thereunder) of the Company or any of its Subsidiaries may be granted Incentive Stock Options.ii.$100,000 Limitation for Incentive Stock Options. Notwithstanding the designation “Incentive Stock Option” in anOption Agreement, if and to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options areexercisable for the first time by the Awardee during any calendar year (under all plans of the Company and any of its Subsidiaries) exceeds $100,000,such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 8(b), Incentive Stock Options shall be taken into accountin the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the Grant Date.(c)Effect of Termination of Employment on Options.i.General. Unless otherwise provided in the Option Agreement, upon an Awardee’s Termination of Employment other thanas a result of circumstances described in Section 13, any outstanding vested Option granted to such Awardee, to the extent not theretofore exercised,shall terminate 90 days after the date of the Awardee’s Termination of Employment. Any unvested Options terminate upon an Awardee’s Terminationof Employment unless otherwise determined by the Committee.ii.Specific Termination Events. The impact of specific termination events set forth in Section 13 shall apply to Optionsunless varied in an Option Agreement.(d)Exercise of an Option.i.Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under suchconditions as determined by the Committee and set forth in the Option Agreement.ii.An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (inaccordance with the 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.iii.Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by theParticipant, in the name of the Participant and his or her spouse. Unless provided otherwise by the Committee or pursuant to the Plan, until the Sharesare issued (as evidenced by the appropriate entry on the books of7the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareowner shallexist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option.iv.An Option may not be exercised for a fraction of a Share.9.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 Goals. Stock Awards shall be earned, and forfeiture restrictions shall lapse, at such time, insuch installments, or subject to such Performance Goal(s) as established under Section 12(a) and with such Performance Period as determined by theCommittee.(b)Forfeiture. Unless otherwise provided in the Stock Award Agreement, upon the Awardee’s Termination of Employment (otherthan as provided below in Section 13), the Shares subject to a Stock Award that have not been earned pursuant to the Stock Award Agreement shall beforfeited.(c)Rights as a Stockholder. The Awardee shall be a stockholder (as evidenced by the appropriate entry on the books of theCompany or of a duly authorized transfer agent of the Company) upon the grant of the Stock Award; provided, however, such rights are forfeited ifthe Shares subject to the Stock Award are forfeited, and no certificate representing ownership of the Shares shall be issued to the Awardee until suchlapse of forfeiture occurs.10.RSU Awards.The terms and conditions of a grant of a RSU Award shall be reflected in a RSU Award Agreement. RSUs shall be earned, and forfeiturerestrictions shall lapse, at such time, in such installments, or subject to such Performance Goal(s) and with such Performance Period as determined bythe Committee. No Shares shall be issued at the time a RSU Award is granted, and the Company will not be required to set aside a fund for thepayment of any such RSU Award. A Participant shall have no voting or dividend rights with respect to any RSUs granted hereunder until the Sharesunderlying the RSU Award are earned and issued.(a)Restrictions. A RSU Award shall be subject to (i) forfeiture until the expiration of the restricted period established by theCommittee, or satisfaction of any applicable Performance Goals as established under Section 12(a) during a designated Performance Period, to theextent provided in the applicable RSU Award Agreement, and to the extent such RSUs are forfeited, all rights of the Awardee to such RSUs shallterminate without further obligation on the part of the Company, and (ii) such other terms and conditions as may be set forth in the applicable RSUAward Agreement.(b)Settlement of Restricted Stock Units. Upon the expiration of the restricted period with respect to any outstanding RSUs, andsatisfaction of the applicable Performance Goals for the Performance Period, the Company shall deliver to the Awardee, or his or her beneficiary,without charge, one Share for each such outstanding RSU for which forfeiture restrictions have lapsed; provided, however, that, if explicitlyprovided in the applicable RSU Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Shares in lieu ofdelivering only Shares for such RSUs. If a cash payment is made in lieu of delivering Shares, the amount of such payment shall be equal to the FairMarket Value of the Shares as of the date on which the restricted period lapsed with respect to such RSUs, or the date on which the Committeedetermines that the applicable Performance Goals have been met.11.Cash Awards(a)General. For each Cash Award, the Committee shall determine (i) the Cash Award opportunity, established as a percentage ofbase salary, (ii) the Performance Goals applicable to each Cash Award, established in accordance with Section 12(a), (iii) the Performance Period,and (iv) such forfeiture provisions, additional vesting8requirements or other terms of the Cash Award as are consistent with this Plan. In no event may an Awardee earn a Cash Award that is more than 200%of his or her Cash Award opportunity at target.(b)Determination and Payment of an Earned Cash Award.i.As soon as practicable following the end of the Performance Period, the Committee shall determine the extent to which aCash Award is earned, and how it is to be paid. Payment can occur in cash, with or without further forfeiture or other restrictions on the timing ofpayment, Shares, or by issuance of Stock Awards or RSUs under this Plan.ii.Upon approval and certification by the Committee of the earned Cash Awards following the end of the PerformancePeriod, payment of the individual Cash Awards will be made, less the withholding of appropriate taxes, between April 1 and June 15 immediatelyfollowing end of the Performance Period. In the event that an Awardee dies prior to receiving payment of a Cash Award which has been earned, theCompany shall pay such Cash Award to the beneficiary designated in writing by the Awardee to the Committee, or in the absence of a designatedbeneficiary, to the Awardee’s estate. In the event that an Awardee becomes Disabled, or terminates employment due to Retirement after thePerformance Period but before the payment date, the Awardee will receive payment of the Cash Award as he or she would have received or beensubject to if he or she had remained employed with the Company through the payment date.(c)Change in Control. In the event of a Change in Control during the Performance Period, the amount payable in respect of aCash Award shall be equal to the Awardee’s highest earned Cash Award under the Plan, the 2010 Executive Incentive Plan, annual bonus plan, or anycomparable bonus under any predecessor or successor plan, during the last three full fiscal years prior to the Change in Control. In the sole discretionof the Committee, all or a portion of the Cash Award that becomes payable pursuant to this Section 11(c) may be paid in Shares which shall be issuedunder this Plan. If any portion of such Cash Award is paid in Shares, the number of Shares to be delivered shall be determined by dividing the portionof the Cash Award payable in Shares by the Fair Market Value of a Share on the date of the Change in Control. If the Change in Control occurs afterthe end of the Performance Period, the Committee will determine and direct the payment of the Cash Award in accordance with Section 11(b).12.Performance-Based AwardsThe following provisions apply to all Awards to which Performance Goals are applied:(a)Performance Goals. No later than ninety (90) days after the beginning of a Performance Period the Committee will establish, inwriting, the Performance Goals and the Performance Period. In establishing the Performance Goals, the Committee shall take the necessary steps toensure compliance, as applicable, with section 162(m) of the Code. Such Performance Goals may vary by Awardee and by Award. The Committee,in its discretion (and within the time prescribed by section 162(m) of the Code), may adjust or modify the calculation of Performance Goals toprevent dilution or enlargement of the rights of Awardees: (i) in the event of, in recognition of, or in anticipation of, any unanticipated, unusualnonrecurring or extraordinary corporate item, transaction, event, or development; or (ii) in response to, or in anticipation of, changes in applicablelaws, regulations, accounting principles, or business conditions.(b)Covered Employees. Unless otherwise determined by the Committee, if any provision of the Plan or any Award granted to anindividual who is a “covered employee” as such term is defined under section 162(m) of the Code and guidance thereunder would not comply withsection 162(m) of the Code, such provision or Award shall be construed or deemed amended to conform to section 162(m) of the Code.(c)Certification of Performance-Based Awards. For each Award intended as “performance-based compensation” undersection 162(m) of the Code, the Committee shall certify in writing that the applicable Performance Goals, and any other material terms and conditionsof the Award, have been satisfied for the applicable Performance9Period. In making this determination, the Committee will be entitled to rely upon an appropriate officer’s certificate from the Company’s ChiefFinancial Officer.13.Impact of Termination of Employment EventsThe following Termination of Employment events shall have the following consequences for outstanding Share-based Awards.(a)Disability or Retirement of an Awardee.i.Options. Unless otherwise provided in the Award Agreement, and subject to Section 13(f), upon an Awardee’sTermination of Employment as a result of the Awardee’s Disability or Retirement all outstanding exercisable Options granted to such Awardee shallremain exercisable until the expiration of the stated term of the Option.ii.Stock Awards and RSU Awards. Unless otherwise provided in the Stock Award Agreement, if an Awardee’sTermination of Employment is due to the Awardee’s Total and Permanent Disability or Retirement, all outstanding Stock Awards and RSU Awardsgranted to such Awardee shall continue to vest until the end of the restricted period or Performance Period, as applicable.(b)Death of Awardee.i.Options. Unless otherwise provided in the Option Agreement, upon an Awardee’s Termination of Employment as a resultof the Awardee’s death, all outstanding exercisable Options granted to such Awardee shall remain exercisable until the expiration of the stated term ofthe Option. If an Option is held by the Awardee when he or she dies, the Option may be exercised by the beneficiary designated by the Awardee, theexecutor or administrator of the Awardee’s estate or, if none, by the person(s) entitled to exercise the Option under the Awardee’s will or the laws ofdescent or distribution.ii.Stock Awards and RSU Awards. Unless varied in the Award Agreement, any outstanding Stock Awards and RSUAwards shall be forfeited upon the death of the Awardee.(c)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 a Subsidiary approved by the Board or a Committee of the Board, unless providedotherwise pursuant to the terms of such voluntary severance incentive program:i.all outstanding Options granted to the Awardee shall immediately become fully vested and shall remain exercisable untilthe expiration of the stated term of the Option; andii.all outstanding Stock Awards and RSU Awards granted to such Awardee shall immediately vest and all forfeitureprovisions shall lapse.(d)Divestiture. If an Awardee will cease to be an Employee because of a divestiture by the Company (the determination of whethera divestiture will occur shall be made by the Committee in its sole discretion), prior to such Termination of Employment, the Committee may, in itssole discretion:i.fully vest some or all of the outstanding Options granted to the Awardee, and such Options shall remain exercisable untilthe expiration of the stated term of the Option; andii.accelerate the vesting of all or a portion of any outstanding Stock Award or RSU Award granted to such Awardee andprovide that all forfeiture provisions with respect to such Stock Awards or RSU Awards shall lapse.(e)Work Force Restructuring or Similar Program. If an Awardee will cease to be an Employee because of a work forcerestructuring or similar program (the determination of whether a work force restructuring will occur10shall be made by the Committee in its sole discretion), prior to such Termination of Employment, the Committee may, in its sole discretioni.vest some or all of the outstanding Options granted to the Awardee, and such Options shall remain exercisable until theexpiration of the stated term of the Option; andii.accelerate the vesting of all or a portion of any outstanding Stock Award or RSU Award granted to such Awardee andprovide that all forfeiture provisions with respect to such Stock Awards or RSU Awards shall lapse.(f)Post-Termination of Employment Restrictions. The following provisions will apply to the extended excercisability, vesting,or continuation of any Award following a Termination of Employment: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 aninvestment or otherwise stock or other securities of such organizations as long as they are listed upon a recognized securities exchange or traded over-the-counter, or as long as such investment does not represent a substantial investment in the opinion of the Committee or a significant (greater than3%) interest in the particular organization. For the purposes of this subsection, a company (other than an Affiliate) which is engaged in the businessof producing, leasing or selling products or providing services of the type now or at any time hereafter made or provided by the Company or any of itsAffiliates 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 its Affiliates, either during orafter 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 Company or any of its Affiliates,relating in any manner to the actual or anticipated business, research or development work of the Company or any of its Affiliates and shall doanything reasonably necessary to enable the Company or one of its Affiliates, as appropriate, to secure a patent where appropriate in the United Statesand in foreign countries; andiv.An Awardee retiring due to age shall render, as a consultant and not as an Employee, such advisory or consultativeservices to the Company as shall be reasonably requested in writing from time to time by the Committee, consistent with the state of the retiredAwardee’s health and any employment or other activities in which such Awardee may be engaged. For purposes of the Plan, the Awardee shall not berequired to devote a major portion of time to such services and shall be entitled to reimbursement for any reasonable out-of-pocket expenses incurredin connection with the performance of such services.(g)Performance-Based Awards. Notwithstanding any provision of this Section 13, any more specific provisions of this Planrelated to the impact of Termination of Employment on performance-based Awards shall control.(h)Options. If the Participant does not exercise an Option within the additional time specified in accordance with this Section 13,the Option (to the extent not exercised) shall automatically terminate at the end of the extended exercise period.14.Withholding.The Company shall have the right to make all payments and distributions pursuant to the Plan to a Participant, net of any applicable Federal,state and local taxes required to be paid or withheld. The Company shall have the right to withhold from wages, Cash Award payments, or otheramounts otherwise payable to such Awardee such withholding taxes as may be required by law, or to otherwise require the Participant to pay suchwithholding taxes.1115.Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale; Change in Control.(a)Changes in Capitalization. Subject to any required action by the stockholders of the Company, (i) the number and kind ofShares covered by each outstanding Award, (ii) the price per Share subject to each such outstanding Award and (iii) the Share limitations set forth inSection 3, shall be proportionately adjusted for any increase or decrease in the number or kind of issued shares resulting from a stock split, reversestock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares ofCommon Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of theCompany shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Committee, whosedetermination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares ofstock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made withrespect to, the number or price of shares of Common Stock subject to an Award. Any adjustments made under this Section 15(a) shall be made in amanner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awardsintended to qualify as “performance-based compensation” under section 162(m) of the Code, any adjustments or substitutions will not cause theCompany to be denied a tax deduction on account of section 162(m) of the Code.(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Committee shallnotify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Committee in its discretion may provide foran Option to be fully vested and exercisable until ten (10) days prior to such transaction. In addition, the Committee may provide that any restrictionson any Award shall lapse prior to the transaction, provided the proposed dissolution or liquidation takes place at the time and in the mannercontemplated. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposedtransaction.(c)Change in Control. In the event there is a Change in Control of the Company, as determined by the Committee, the Committeemay, in its discretion, (i) provide for the assumption or substitution of, or adjustment to, each outstanding Award; (ii) accelerate the vesting ofOptions and terminate any restrictions on Stock Awards or RSU Awards; and (iii) provide for the cancellation of Awards in exchange for a cashpayment to the Participant. Notwithstanding the foregoing, the more specific provisions affecting Cash Awards set forth in Section 11 shall controlwith respect to Cash Awards.16.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 stockholders of the Company in the manner and to the extent required by applicable law (includingapplicable stock exchange requirements). In addition, without limiting the foregoing, unless approved by the stockholders of the Company, no suchamendment 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 15;ii.reduce the minimum exercise price for Options granted under the Plan;iii.Reprice any outstanding Awards, other than in connection with a change in the Company’s capitalization (as described inSection 15(a)); oriv.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 anyParticipant under an outstanding Award, unless agreed to in a writing signed by the Participant12and the Company. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Awardsgranted 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 thesubmission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or theCommittee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock orstock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.17.Non-Transferability of Awards.Unless provided otherwise in an Award Agreement, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed ofin any manner other than by beneficiary designation, will or by the laws of descent or distribution.18.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 that Awardee hascompleted a designation of beneficiary, such beneficiary designation shall remain in effect with respect to any Award hereunder until changed by theAwardee 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 theCommittee. 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 time ofsuch Awardee’s death, the Company shall allow the executor or administrator of the estate of the Awardee to exercise the Award, or if no suchexecutor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may allow the spouse or one of thedependents or relatives of the Awardee to exercise the Award to the extent permissible under Applicable Law.19.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.20.Clawback.The Company shall have the right to recoup or “claw back” any payment made with respect to an Award under the Plan to the extentnecessary to comply with applicable Federal securities laws.21.No Section 83(b) Election.No Awardee may make an election under section 83(b) of the Code with respect to any Stock Award or RSU Award granted hereunder.22.Legal Compliance.Shares shall not be issued pursuant to the exercise of an Award unless the issuance and delivery of such Shares shall comply with applicablelaws and shall be further subject to the approval of counsel for the Company with respect to such compliance. Without limiting the foregoing, the Planis intended to comply with section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Committeeshall make a good faith effort to interpret and administer the Plan in compliance therewith. Any payments described in the Plan that are due13within the “short-term deferral period” as defined in section 409A of the Code shall not be treated as deferred compensation unless applicable lawrequire otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties undersection 409A of the Code, (a) amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during thesix (6) month period immediately following the Awardee’s Termination of Employment shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier), and (b) amounts payable upon the termination ofan Awardee’s Termination of Employment shall only be payable if such termination constitutes a "separation from service" within the meaning ofsection 409A of the Code. Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action toprevent the assessment of any excise tax or penalty on any Participant under section 409A of the Code and neither the Company nor the Committeewill have any liability to any Participant for such tax or penalty.23.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.24.Reservation of Shares.The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfythe requirements of the Plan.25.Notice.Any written notice to the Company required by any provisions of the Plan shall be addressed to the Secretary of the Company and shall beeffective when received.26.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 thechoice of 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 render it legal, valid andenforceable, or otherwise deleted, and the remainder of the provisions of the Plan or Award shall not be affected except to the extent necessary toreform 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 discretion.27.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:14(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 sale of any shareshereunder; and(b)Tax Consequences. Any tax consequence expected, but not realized, by any Participant, Employee, Awardee or other person dueto the receipt, exercise or settlement of any Option or other Award granted hereunder.15Exhibit 10.24[Date][Name][Address]Dear ___________:I am pleased to inform you that you are eligible to participate in the Triumph Restricted Stock Plan for fiscal ____. Under this plan, youare receiving an award with the potential to earn $__________ in long term incentive compensation for the ____ fiscal year. This awardvalue is equivalent to _____% of your base salary. The award, if earned (as described below), provides for the potential receipt of sharesof restricted stock granted under Triumph’s Group 2013 Equity and Cash Incentive Plan (equal to ___% of the award value) and cash(equal to ___% of the award value). The number of shares of restricted stock to be issued if the award is earned will be based upon theTriumph Group stock price at the time the Compensation and Management Development Committee of the Board (the “Committee”)determines that the award has been earned.This award will be earned by you if Triumph achieves [performance metric] for fiscal _____ of at least $____. The determination as towhether the award is earned will be made by the Committee within 90 days after the end of fiscal ____. If earned, the award will besubject to forfeiture restrictions and will “vest” and become payable to you on __________, at which time you will receive the cashportion of the award and the shares, fully released from all forfeiture restrictions, as long as you remain employed by Triumph or one ofits affiliates through that vesting date.If you have any questions about this award, please contact _____________ at Corporate (_____________).Thank you for your efforts and your contribution to the success of Triumph Group, Inc.Sincerely,Exhibit 10.25[Date][Name][Address]Dear ___________:I am pleased to confirm that, at the ______________ meeting of the Compensation and Management Development Committee (the“Committee”) of the Company’s Board of Directors, you were selected to receive an incentive award under the Triumph Group, Inc.Executive Incentive Plan (the “Executive Plan”) for fiscal ____. All defined terms used in this award notice without definition have themeanings set forth in the Executive Plan, a copy of which is provided with this award notice or has been previously provided to you.Under the Executive Plan, you received an award with the potential to earn $_____________ at Target, based upon the Company’sachievement of [a performance goal] selected by the Committee. For fiscal ____, the [performance goal] selected by the Committee atthe ___________ meeting was ____________, with a Target Performance Goal of ____%, a Threshold Performance Goal of ____%and an Overachievement Performance Goal of ____%. The Performance Period for this incentive award is from ___________ to__________. The Award Period for this incentive award is from __________ to ____________.As soon as practicable after the end of the Performance Period, the Committee shall determine the level at which the Performance Goalwas achieved and determine the exact Earned Incentive Award in accordance with the terms of the Executive Plan. Please note, inaccordance with the terms of the Executive Plan, one-third of the Earned Incentive Award shall remain subject to forfeiture until theend of the three-year Award Period and shall be forfeited if at least the Threshold Performance Goal is not achieved for the AwardPeriod.The value of the Earned Incentive Award shall be divided between an Earned Cash Award (___% of the Earned Incentive Award) and anEarned Stock Award (___% of the Earned Incentive Award). The number of shares of restricted stock to be issued as the Earned StockAward will be based upon the Triumph Group stock price at the time the Committee determines the Performance Goal achievement.The Earned Incentive Award issued under the Triumph Group, Inc. 2013 Equity and Cash Incentive Plan (the “2013 Plan”) and shall besubject to restrictions and forfeiture in accordance with the terms of the 2013 Plan for the remainder of the Award Period. At the end ofthe Award Period, and subject to the forfeiture restrictions and other provisions of the Executive Plan and the 2013 Plan, the EarnedIncentive Award will be paid to you. Such payment will be made to you between ____________ and ____________.If you have any questions about this award, please contact ____________ at Corporate (____________).Thank you for your efforts and your contribution to the success of Triumph Group, Inc.Sincerely,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 Triumph Controls France SAS Triumph Fabrications - San Diego, 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 Integrated Aircraft Interiors, 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. Triumph China Holdings, 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 Integrated Aircraft Interiors Inmobiliaria, S. de R.L. de C.V. Triumph Fabrications - Orangeburg, 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 Holdings, Inc. Triumph Engine Control Systems, LLC Triumph Gear Systems-Toronto ULC Triumph Strucutres International, Ltd. SBP Holdings Limited Triumph Structures-Farnborough, LLC Triumph Structures-Thailand, LLC Triumph Group Luxembourg Finance Sarl Triumph Group Luxembourg Holding Sarl Triumph Group Acquisition Financing, 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-8 No. 333-192537) pertaining to the 2013 Stock Purchase Plan of Triumph Group, Inc.,5)Registration Statement (Form S-8 No. 333-192538) pertaining to the 2013 Equity and Cash Incentive Plan of Triumph Group,Inc., and6)Registration Statement (Form S-3 No. 333-174289) of Triumph Group, Inc.;of our reports dated May 16, 2014, 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, 2014./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 17, 2014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 17, 2014 /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, Jeffrey L. McRae, 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 17, 2014 /s/ JEFFREY L. MCRAE Jeffrey L. McRaeSenior 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, 2014 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 17, 2014________________________________________________________________________________________________________________________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, 2014 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey L. McRae, Senior Vice President, Chief Financial 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/ JEFFREY L. MCRAE Jeffrey L. McRaeSenior Vice President, Chief Financial Officer (Principal FinancialOfficer) May 17, 2014________________________________________________________________________________________________________________________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.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549____________________________________________________________________________FORM 10-K/A(Mark One) xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March 31, 2014oroTRANSITION 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, 2013, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $3,578 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, 2013. 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 1, 2014 was 52,151,782.____________________________________________________________________________Documents Incorporated by ReferenceNone.EXPLANATORY NOTEThis amendment on Form 10-K/A (this "Amendment") amends the Triumph Group, Inc. ("Triumph", the "Company", "we", "us" or "our")Annual Report on Form 10-K for the fiscal year ended March 31, 2014, originally filed on May 19, 2014 (the "Initial Filing"). We are filing this Amendmentto correct a date included in the consent from our Independent Registered Public Accounting Firm. The Initial Filing was filed with the consent referencing thedate of the Independent Registered Public Accounting Firm's reports as May 16, 2014; the correct date of the Independent Registered Public Accounting Firm'sreports included in the consent as incorporated in this Amendment is May 17, 2014.Except as described above, no other changes have been made to the Initial Filing. The Initial Filing continues to speak as of the date filed.SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized. Date:May 17, 2014TRIUMPH GROUP, INC. By:/s/ THOMAS A. QUIGLEY, III Thomas A. Quigley, III Vice President and ControllerConsent 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-8 No. 333-192537) pertaining to the 2013 Stock Purchase Plan of Triumph Group, Inc.,5)Registration Statement (Form S-8 No. 333-192538) pertaining to the 2013 Equity and Cash Incentive Plan of Triumph Group,Inc., and6)Registration Statement (Form S-3 No. 333-174289) of Triumph Group, Inc.;of our reports dated May 17, 2014, 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, 2014./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 17, 2014

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