Triumph Group
Annual Report 2015

Plain-text annual report

Triumph Group, Inc. Annual Report 2015 One name. Many solutions. In fiscal 2015, Triumph strengthened each of its three operating groups with strategic acquisitions and continued to leverage the strength of its portfolio of companies to enhance profitability and shareholder value. • Sales for the fiscal year increased 3% to approximately $3.9 billion. Net income was $238.7 million, and earnings per diluted share were $4.68. Excluding non-recurring costs, net income for fiscal 2015 was $292.1 million, or $5.73 earnings per diluted share. • Triumph generated $579.7 million in cash flow from operations before pension contributions of $112.3 million. • Triumph founder Richard C. Ill was named President and Chief Executive Officer, succeeding Jeffry D. Frisby, who stepped down. General Ralph “Ed” Eberhart was named Chairman of the Board, and the Board initiated a search for a permanent CEO. • Triumph assumed production of the Gulfstream G650 and G280 wing programs from Spirit AeroSystems, which further establishes Triumph as a leader in fully integrated wing design, engineering and production. • Triumph acquired GE Aviation’s hydraulic actuation business. The business is a technology leader in proprietary actuation systems, which augments Triumph’s existing hydraulic systems capabilities. • Triumph Aftermarket Services added plane-side fuel system maintenance to its portfolio and expanded its footprint across North America and Europe with the acquisition of North American Aircraft Services. • Triumph Aerostructures – Vought Aircraft Division-Red Oak delivered the initial Bombardier Global 7000/8000 wing assembly test unit. • In fiscal 2015, Triumph repurchased 2.9 million shares of stock for approximately $184 million, at an average cost of $63 per share. Major Markets as of March 31, 2015 58% Commercial Aerospace 26% Military 12% Business 2% Regional 2% Non-Aviation Aerostructures Group Top Ten Platforms as of March 31, 2015 (represents 89% of Group’s backlog) 1. Gulfstream 2. Boeing 747 3. Boeing 777 4. Airbus A330, A340 5. Boeing 767, Tanker 6. Boeing C-17 7. Boeing 787 8. Boeing 737 Aerospace Systems Group Top Ten Platforms as of March 31, 2015 (represents 55% of Group’s backlog) 1. Boeing 787 2. Airbus A320, A321 3. Boeing 737 4. Boeing V-22 5. Airbus A380 6. Boeing 777 7. Boeing CH-47 8. Bell Helicopter 429 9. Bombardier Global 7000/8000 9. Lockheed Martin C-130 10. Boeing V-22 10. Sikorsky UH-60 About Triumph Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs, and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems – providing integrated solutions for the global aerospace market. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers. Triumph is comprised of 46 highly specialized manufacturing companies, operating at 72 locations worldwide. The company is organized into three groups: Aerostructures, Aerospace Systems and Aftermarket Services. Triumph’s mission is to be the premier aerospace and defense company recognized by customers as their supplier of choice for the aerospace assemblies, subassemblies 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 promotes the entrepreneurial spirit of our companies and 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 Net Income % 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 Earnings per Share – Diluted: Net Income March 15 $ 3,888,722 March 14 $ 3,763,254 March 13 $ 3,702,702 $ 238,6971 6% 110,597 85,379 $ 434,6733 11% (75,733) 158,323 $ 382,570 10% $ 206,2562 5% 105,977 87,771 $ 400,0041 11% (42,629) 164,277 $ 522,818 14% $ 297,3473 8% 165,710 68,156 $ 531,2132 14% (25,644) 129,506 $ 669,556 18% $ 4.681 $ 3.912 $ 5.673 Weighted Shares – Diluted (in thousands) 51,005 52,787 52,446 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 $ 110,004 $ 206,414 $ 126,890 $ 1,147,171 $ 1,141,741 $ 892,818 $ 1,593,282 $ 948,902 $ 1,379,396 32,617 $ 1,346,779 2,135,784 $ 3,482,563 39% $ 1,474,262 $ 931,430 $ 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% $ $ 43.35 $ 43.79 $ 40.80 15,153 257 13,828 272 $ 13,900 266 $ 1 Includes $134.7 million in gain on legal settlement ($87.3 million after tax or $1.71 per diluted share), $152.0 million in provision for forward losses ($98.5 million after tax or $1.93 per diluted share), $22.6 million in refinancing costs ($14.7 million after tax or $0.29 per diluted share), $24.0 million of cost associated with the relocation from our largest facility ($15.6 million after tax or $0.30 per diluted share) and $18.5 million in other one-time charges ($12.0 million after tax or $0.24 per diluted share). 2 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). 3 Includes $34.5 million in curtailment loss and early retirement incentives ($22.2 million 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). 4 Management believes that adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) provides useful information with respect to our overall operating performance, debt service capacity and ability to fund capital expenditures. * Difference due to rounding. (Dollars in millions) Sales 3 0 7 , 3 3 6 7 , 3 9 8 8 , 3 Cash Flow from Operations* Net Income 0 8 5 7 9 2 1 3 4 1 8 1 9 3 2 6 0 2 Backlog 1 5 7 , 4 7 2 5 , 4 8 2 0 , 5 13 14 15 13 14 15 133 142 151 13 14 15 * Cash Flow from Operations in 2015, 2014, and 2013 was $580, $181, and $431 million before pension contributions of $112, $46, and $110 million, respectively. 1 Message from the President Fiscal 2015 Financial Results • Net income for fiscal 2015 was $238.7 million, or $4.68 earnings per diluted share. – These results include a gain from a positive legal settlement, a number of non-recurring costs, and a charge to reduce the risks associated with the Boeing 747-8 program. • Excluding these items, net income for fiscal 2015 was $292.1 million, or $5.73 earnings per diluted share. • Generated strong cash flow from operations of $579.7 million before pension contributions of $112.3 million. • Repurchased 2.9 million shares of stock during the fiscal year for approximately $184 million – returning capital to shareholders. – This share buyback, combined with our strategic acquisitions and investing in the business, reflects our balanced approach to capital deployment while maintaining a healthy balance sheet and liquidity. • Order backlog at year-end was over $5 billion – an all-time high. This is a clear indication of the strength of our product portfolio and provides us with momentum going forward. 2 On April 8, 2015, we announced a management transition in which I assumed responsibilities as President and CEO – succeeding Jeffry Frisby, who stepped down. General Ralph “Ed” Eberhart was named non-executive Chairman of our Board of Directors, and the Board began a search for a permanent CEO. As Triumph’s founder and leader for more than 20 years, I’m honored to return to this executive role during this important transition period. I have a deep and personal commitment to the great company we’ve built through the years, and I’m excited about the opportunity to again lead Triumph in the next stage of its development as a premier aerospace manufacturer and supplier. Fellow Stockholders: Fiscal 2015 was a challenging but productive year for the Triumph Group. Our financial results were disappointing, largely due to proactive steps taken to reduce risk and to invest in Triumph’s future. Our actions in fiscal 2015 set the stage for a comprehensive initiative in fiscal 2016 to leverage the strength of Triumph’s portfolio of companies to increase profitability and enhance shareholder value. Fiscal 2015 Achievements • Triumph Aerostructures Group secured an approximately $250 million contract to build wing structural components for the Gulfstream G500/600 business jet. Triumph Aerospace Systems is also participating in new Gulfstream business, as Triumph Actuation Systems-Connecticut was awarded an approximately $80 million contract by UTC Aerospace Systems to design and build the G500/600 nose wheel steering system. • We delivered the initial Bombardier Global 7000/8000 wing assembly test unit. • We completed the transition of our move from the outdated and inefficient Vought plant at Jefferson Street, Dallas, to our newly constructed facility in Red Oak, Texas. This state-of-the-art manufacturing facility enhances the Aerostructures Group’s ability to drive manufacturing performance and attract new business. • We achieved a range of new business “wins” totaling in excess of $150 million in annual revenue, including Airbus A350 cabin brackets, the Airbus A320neo and A330neo cowl opening actuator, metallic machined parts and assemblies, engine gear systems, and helicopter gear systems and shafts. • We announced the favorable settlement of protracted trade secret litigation with Eaton Corporation. Eaton agreed to pay Triumph $135.3 million following the dismissal with prejudice of all claims by the Mississippi Supreme Court. This removes any doubt concerning Triumph’s right to compete legitimately in the market for aerospace hydraulic pumps and motors and hydraulic systems. We also completed three strategic acquisitions during the fiscal year – each with important significance. All three share common characteristics in that they immediately contributed to Triumph’s earnings and helped us achieve greater balance among our groups, among our customers and among the platforms and programs Triumph supports. • In June 2014, Triumph acquired GE Aviation’s hydraulic actuation business, a technology leader providing proprietary technology to Boeing, Airbus and other major airframers. The acquisition complements our existing capabilities in hydraulic systems, broadens our customer base, and expands Triumph’s footprint in the United Kingdom and Europe. With 475 employees, the company now operates as Triumph Actuation Systems – Yakima and Triumph Actuation Systems – UK and IOM, in our Aerospace Systems Group. • In October 2014, we added plane-side fuel system maintenance to our Triumph Aftermarket Services capabilities with the acquisition of North American Aircraft Services, or “NAAS.” Approximately 300 employees are located at 26 FBO business units throughout North America and Europe. NAAS does extensive business with Boeing, Airbus, Northrop Grumman, Southwest Airlines, Fedex and UPS. The company now operates as Triumph Aviation Services – NAAS Division, based in San Antonio, Texas, as part of our Aftermarket Services Group. The acquisition of GE Aviation’s hydraulic actuation business added to Triumph Aerospace Systems’ extensive expertise in hydraulic control systems and expanded its footprint in the UK and Europe. Now operating as Triumph Actuation Systems – Yakima and Triumph Actuation Systems – UK and IOM, the business provides a range of proprietary technology to Boeing, Airbus and other aircraft manufacturers. The company specializes in landing gear actuation systems, door actuation systems, nose wheel steering systems, hydraulic fuses, manifolds, flight control actuation systems, and locking mechanisms for the commercial, military and business jet markets. Pictured is the nose wheel steering assembly for the Boeing 787 Dreamliner. 3  The NAAS acquisition is a perfect strategic fit in that it allows Triumph to offer plane-side services across a broad geographic area. Our objective is to leverage this point-of-use service model to provide customers with plane-side solutions across multiple product categories. • In January 2015, Triumph assumed production of the Gulfstream G650 and G280 wing programs from Spirit AeroSystems. Under terms of the agreement, Triumph received a $160 million upfront cash payment from Spirit, plus assets required to run the business, which we believe will be sufficient to cover the anticipated future cash flow needs of the programs. revenue from these programs by recapturing work that Gulfstream had brought in-house prior to our transaction with Spirit. The business, based in Tulsa, Oklahoma, now operates as Triumph Aerostructures-Vought Aircraft Division- Tulsa, as part of our Aerostructures Group. The Gulfstream transaction further establishes Triumph as a leader in fully integrated wing design, engineering and production, while improving customer balance and program and platform diversity within the Aerostructures Group. We took on these programs at an extremely The Triumph Legacy advantageous entry point, past the critical design and investment phases. We expect to improve the build process based on our experience with the Gulfstream 450/550 programs, and to drive cost improvements by collaborating with external suppliers and leveraging Triumph’s internal supply chain. Our efforts have already resulted in improvements in labor performance and quality. Additionally, we will secure 100% of the Since 1993, we have built Triumph company-by-company to create a diverse and highly flexible organization which can compete and win at any level of the aerospace supply chain. We’ve assembled one of the most sophisticated design, development, and manufacturing companies in the world. Our proprietary technology is the envy of our competitors. With the acquisition of North American Aircraft Services, or “NAAS,” Triumph Aftermarket Services added fuel systems maintenance to its portfolio of services. Now operating as Triumph Aviation Services – NAAS Division, the company provides fuel systems maintenance and repair, on-call aircraft line maintenance, aircraft structural repair and modification, and ground support equipment maintenance. NAAS provides plane- side, point-of-use services at 26 sites in the United States, Canada, the UK, Ireland, France, and Spain – extending the group’s global reach. Customers include Boeing, Airbus, Northrop Grumman, Southwest Airlines, Fedex and UPS. Above, an employee checks an aircraft for fuel leaks at an NAAS service center. 4 Triumph Aerostructures – Vought Aircraft Division – Tulsa assumed production of the Gulfstream G650 and G280 wing programs from Spirit Aerosystems. The addition of these programs positions Triumph as a leader in fully integrated wing design, engineering and production, and furthers its standing as a strategic Tier One Capable aerostructures supplier. Above, the Gulfstream G650 wing assembly is shown in production at the Tulsa manufacturing facility. It’s a humbling realization to know we can build practically any part, component, assembly or structure our customers might require – from design to manufacturing to aftermarket service and support. As Triumph has matured to become a nearly $4 billion global enterprise, it’s become clear that our management philosophy and practices must evolve in order to enhance both profitability and shareholder value. Triumph has been guided since its inception by a unique operating philosophy based on placing accountability and responsibility for performance at the lowest possible level. We believe in local management that understands the technology, personally relates to the customers and knows the names of the people on the shop floor. This approach capitalizes on the entrepreneurial spirit of our companies and ultimately benefits Triumph as a whole. Every Triumph operating company should have the flexibility to make the decisions required to grow and to meet their financial objectives. We must, however, take advantage of our companies being part of a larger corporation. This is not just a choice or a strategy. It’s an economic imperative for Triumph to continue to grow and achieve our full potential. Fiscal 2016 Priorities In fiscal 2016 we will undertake an extensive review of all aspects of Triumph’s operations with a focus on five key areas: • Improving execution, • Increasing profitability, • Expanding margins, • Generating strong cash flow, and • Leveraging the strength of our portfolio of companies and capabilities. We will carefully examine execution and profitability across the entire Triumph organization and take action as necessary to reduce costs, eliminate duplication, consolidate resources, and optimize utilization of working capital. Additional corporate policies will be considered and implemented in other functional areas, with the purpose of promoting cohesion and efficiency among our companies and enhancing the performance of Triumph as a whole. 5 We will also explore the potential to leverage the combined strength of our companies to achieve economies of scale – centralizing functions where we can and standardizing practices where we should. A prime example is supply chain management, where our effort will be led by our recently-appointed Vice President – Supply Chain. The objective is not to reduce the autonomy of our companies, but rather to take advantage of the opportunities to share ideas and adopt the technologies and best practices that will allow Triumph to better serve our customers and deliver value to shareholders. I remain committed to preserving accountability throughout the organization – so Triumph remains flexible and avoids bureaucracy that blocks initiative, creativity and innovation in meeting the needs of our customers. However, for Triumph to remain strong and vibrant, our business philosophy must evolve to take advantage of economies of scale. Looking Ahead All participants in the aerospace supply chain are facing identical pressures to reduce costs and preserve margins, while anticipating and successfully adapting to emerging challenges. • We expect continued growth in the commercial aerospace market as demand for air travel continues to grow – particularly in the developing world. Older aircraft must eventually be replaced or retrofitted to achieve greater fuel efficiency and lower operating costs. Carriers will likely favor narrow-body aircraft to achieve greater flexibility and efficiency in serving smaller and mid-sized markets. • Beyond the general need for fuel efficiency, fuel prices are unlikely to have a major effect on new orders, given lengthy order backlogs and the unpredictability of energy markets. • The large business jet market remains robust, and there are signs that the small and mid-size market may be recovering as used aircraft inventories shrink. Production rates for regional jets remain steady. • The military aerospace market will remain stable, with mounting pressure from the armed services to focus on fewer programs. Manufacturers are looking to foreign sales to support production rates. The ability of suppliers to deliver products on time and at the contracted price will be more important than ever. • The demand for aftermarket services will remain strong, as seat miles continue to increase and older aircraft remain in service. The provision of ancillary financial and technology services allows suppliers to deliver seamless and cost effective customer support at the point of need. The steps Triumph is taking to leverage our portfolio of companies provide a blueprint for success in today’s highly competitive commercial and military aerospace market. In Closing In fiscal 2016 we are beginning a new chapter in Triumph’s history. This chapter requires everyone at Triumph to dedicate ourselves – with a new sense of urgency – to the core values which have made our company great. Every year, Triumph’s Wings Program provides seed money to fund local community projects led by Triumph employees around the world. For employees at Triumph Interiors in Oakdale, PA, this year’s beneficiary was the West Allegheny Community Library. Employees designed and built a series of garden boxes to create a “Pizza Garden” for children participating in the library’s summer program. The children planted vegetables that, come harvest time, they will use to create toppings for their lunchtime pizza – providing an opportunity to learn an important and valuable skill that will last a lifetime. 6 Triumph’s expertise in precision aerospace systems creates the opportunity to migrate technologies into other industries which allow Triumph companies to diversify their client base. At left, a Detector Drive System (DDS) manufactured by Triumph Controls in North Wales, PA, will be used in a nuclear power facility in Sweden to manage fuel usage. The DDS enables the reactor engineer to better assess fuel consumption by being able to obtain a 3D representation, known as a map, of the fission activity among the fuel bundles in the reactor’s core. This is critical for the safe and efficient operation of the reactor. We must re-commit ourselves to our values of: • Integrity, • Innovation, • Quality and Service, • Flawless Execution, and • Commitment. Never before have these qualities been so important. My sincere thanks to the 15,000 Triumph employees across the globe who believe in Triumph, who believe in their local companies, and who believe in themselves. Thank you to our shareholders, customers and suppliers for their continued support as we work to improve our company. We especially want to thank Jeff Frisby for his stewardship as CEO during a critical period in Triumph’s development. His contributions to our success since 1998, when we acquired Frisby Aerospace, have been significant. While there’s work to be done at Triumph to realize our full potential, our Board of Directors and management team are intensely focused on leveraging the strength of our portfolio to control costs, increase profitability and create value. Together we will succeed. Together we will prosper. And together we will win. RICHARD C. ILL President and Chief Executive Officer 7 Triumph Opportunity Triumph Aerostructures Group > Triumph 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. Triumph Aerospace Systems companies offer state-of-the art proprietary technology to aircraft manufacturers and subcontractors, with strong aftermarket service requirements. At right, a side brace actuator assembly in production at Triumph Actuation Systems – Yakima. Triumph Aftermarket Services Group > Triumph 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. 88 Triumph Aerostructures – Vought Aircraft Division’s state-of-the-art manufacturing facility in Red Oak, Texas, enhances the group’s ability to drive manufacturing performance and attract new business. A Gulfstream G550 wing assembly is shown at left. < Triumph Aerospace Systems Group Triumph 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. The diversity of Triumph Aftermarket Services companies provides unique opportunities for bundling products and services to meet specific customer needs. At left, an employee of Triumph Aviation Services – NAAS Division provides plane-side service. 9 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 Accessory Services – Wellington Provides maintenance, repair and overhaul (MRO) services for aircraft, engine and auxiliary power unit accessories including, hydraulic, heat transfer, pneumatic valves, constant speed drives, integrated drive generators, starters, air cycle machines and generators. Jim Berberet, President E-mail: jberberet@triumphgroup.com Phone: 620-326-2235 Wellington, Kansas Triumph Actuation Systems – Clemmons Designs, manufactures and provides aftermarket support for complex hydraulic and hydromechanical aircraft components and systems. Products include variable displacement pumps and motors, hydraulic power packs, door actuators, valves, and cargo door actuation systems. Dan Sims, President E-mail: dsims@triumphgroup.com Phone: 336-766-9036 Clemmons, North Carolina 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. Tim Broderick, President E-mail: tbroderick@triumphgroup.com Phone: 860-242-5568 Bloomfield, Connecticut Phone: 860-739-4926 East Lyme, Connecticut Phone: 203-748-0027 Bethel, Connecticut 10 Triumph Actuation Systems – UK & IOM Designs and builds proprietary advanced control products for flight control actuation, landing gear actuation, marine actuation and motor control equipment in both hydraulic and electro-mechanical applications. Products include uplocks (both hydraulic and electromechanical actuation), complex electro-hydraulic control valves and electro- mechanical actuators. Mark McDonald, President E-mail: mmcdonald@triumphgroup.com Phone: 011 44 1244 280810 Flintshire, United Kingdom Cheltenham, United Kingdom Onchan, Isle of Man 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 Actuation Systems – Yakima Creates high performance solutions to complex hydraulic system requirements, with a focus on complex actuation (single, duplex and triplex locking), flow fuses (both rate and volume limiting) and Repeatable Release Hold Back Bars. Thomas Holzthum, President E-mail: tholzthum@triumphgroup.com Phone: 509-248-5000 or 860-983-8099 Yakima, Washington 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 Systems engineering and integration services for all types of hydraulic and electromechanical motion control systems such as hydraulic, flight control, deployment, cargo door, landing gear etc. Products and capabilities include AC & DC motors, controllers, EMA’s, software, engineering services and design, analysis and testing to support these types of systems and products. Don P. Fowler, President E-mail: dfowler@triumphgroup.com Phone: 425-636-9000 Redmond, Washington Rochester, New York Triumph Aerostructures – Vought Aircraft Division Designs and manufactures major airframe structures such as wings, fuselage sections, fuselage subassemblies, empennages, nacelles and other components for prime manufacturers of aircraft. Norman Jordan, President E-mail: ndjordan@triumphgroup.com Phone: 817-804-9400 Arlington, Texas Triumph Aerostructures - 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 Aerostructures - Tulsa Steve Blackwell, President E-mail: sblackwell@triumphgroup.com Phone: 615-361-2000 Tulsa, Oklahoma Triumph Airborne Structures Repairs, overhauls and manufactures bonded honeycomb structural components including reversers, nacelle components, flight control surfaces, doors, panels and other aerostructures for military, general aviation 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 APU’s, related components and provides on-wing inspections and field repairs. Guy LaRosa, President E-mail: gclarosa@triumphgroup.com Phone: 602-437-1144 Phoenix, Arizona Triumph Aviation Services – Asia Repairs and overhauls complex aircraft operational components, such as auxiliary power units (APUs), fan reversers, nacelle components, pneumatics and electro- mechanical aircraft accessories. Remy Maitam, President E-mail: rmaitam@triumphgroup.com Phone: 011 66 38 465 070 Chonburi, Thailand Triumph Aviation Services – NAAS Division Offers a wide range of plane-side touch labor services in support of carrier/operator flight operations as well as technical support services to a varied range of aerospace heavy maintenance operations across its global network. Provides aircraft fuel tank maintenance,repair and modification support, fuel cell overhaul and repair, and line maintenance services at domestic airport locations as well as remote location support. Scott Hagler, President E-mail: rshagler@triumphgroup.com Phone: 210-805-0049 San Antonio, Texas Phone: 011 44 1202 6511333 Bournemouth, United Kingdom Phone: 011 353 61717171 Shannon, Ireland 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, Connecticut 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. Mark Gobin, President E-mail: mgobin@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 Andy Peveto, General Manager E-mail: abpeveto@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 James Devries, General Manager E-mail: jmdevries@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. Tony Johnson, President E-mail: tjohnson@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. Pat Coward, President E-mail: pcoward@triumphgroup.com Phone: 435-649-1900 Park City, Utah James C. Diez, General Manager E-mail: jcdiez@triumphgroup.com 586-781-2800 Macomb, Michigan 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. Bruce Van Nus, President E-mail: dbvannus@triumphgroup.com Phone: 416-743-4417 Ontario, Canada 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. Tim Stevens, President E-mail: tstevens@triumphgroup.com Phone: 949-250-4999 Tempe, 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. Patrick Jones, General Manager E-mail: pjones@triumphgroup.com Phone: 509-623-8100 Spokane, Washington Triumph Group – Mexico Provides rough machining of gears, actuations and structure components, as well as assembly, fabrications, engineering and composites to Triumph companies and certain customers. Gabriel Gallardo, General Manager E-mail: gagallardo@triumphgroup.com Phone: 011 55 478 985 4311 Zacatecas, Mexico Triumph Insulation Systems Produces insulation systems provided to original equipment manufacturers, airlines, maintenance, repair and overhaul organizations and air cargo carriers. Also provides products in the ancillary aircraft interiors and spares markets. Howard Sanderson, Business Development E-mail: hsanderson@triumphg roup.com Phone: 949-250-4999 Tempe, Arizona Taylorsville, North Carolina Hamburg, Germany Mexicali, Mexico Saint Nazaire, France Toulouse, France Triumph Interiors Refurbishes and repairs aircraft interiors such as sidewalls, ceiling panels, galleys and overhead storage bins and manufactures a full line of PMA 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 Del Chapman, President E-mail: dachapman@triumphgroup.com 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, Inc. 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- machining components as well as integrated subassemblies in both production and aftermarket for 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, NY Freeport, New York Triumph Structures – Los Angeles Manufactures long, soft and hard structural components such as stringers, cords, 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, subassemblies and sheet metal fabrication, serving domestic and international aerospace customers. Joe Scheer, President E-mail: jscheer@triumphgroup.com Phone: 316-942-0432 Wichita, Kansas Triumph Structures – Farnborough Triumph Structures (Thailand) Ltd. Manufacture of composite and metallic propulsion and structural composite components and assemblies. Also, machines and processes metal components. Peter Varnsverry, President E-mail: psvarnsverry@triumphgroup.com Phone: 011 44 1252 304 000 Farnborough, England Ron Vuz, President E-mail: vuzro@triumphgroup.com 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 11 Corporate Officers & Directors Executive Officers RICHARD C. ILL 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 M. ROBIN DeROGATIS Vice President – Human Resources KEVIN E. KINDIG Vice President and Treasurer DANIEL J. OSTROSKY Vice President – Supply Chain 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 RICK ROSENJACK, 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, Triumph Group, Inc. RICHARD C. GOZON Executive Vice President, Weyerhaeuser Company (Retired) 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) 12 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 17, 2015 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 2015 Stock Prices Per Common Share $71.62 High $53.96 Low Year-End $59.72 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 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, 2015. 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 2015 Annual Report on Form 10-K. In addition, on July 30, 2014, 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. Integrity Innovation Quality and service Flawless execution Commitment All Triumph companies share the Triumph name and a common dedication to these core values. TRIUMPH GROUP, INC. 899 Cassatt Road Suite 210 Berwyn, PA 19312 610-251-1000 www.triumphgroup.com 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, 2015oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACTOF 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, 2014, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $3,248 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, 2014. 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 18, 2015 was 49,273,525.____________________________________________________________________________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 2015 Annual Meeting of Stockholders is incorporated in part in Part III hereof, as specifiedherein.Table of ContentsTable of ContentsItem No. PagePART I3Item 1.Business3 General3 Products and Services4 Proprietary Rights5 Raw Materials and Replacement Parts5 Sales, Marketing and Engineering5 Backlog6 Dependence on Significant Customer6 United States and International Operations6 Competition6 Government Regulation and Industry Oversight6 Environmental Matters7 Employees7 Research and Development Expenses8 Executive Officers8 Available Information8Item 1A.Risk Factors9Item 1B.Unresolved Staff Comments17Item 2.Properties17Item 3.Legal Proceedings18Item 4.Mine Safety Disclosures18 PART II18Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities18Item 6.Selected Financial Data20Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations22Item 7A.Quantitative and Qualitative Disclosures About Market Risk45Item 8.Financial Statements and Supplementary Data47Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure103Item 9A.Controls and Procedures103Item 9B.Other Information106 PART III106Item 10.Directors, Executive Officers and Corporate Governance106Item 11.Executive Compensation106Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters106Item 13.Certain Relationships and Related Transactions, and Director Independence106Item 14.Principal Accountant Fees and Services106 PART IV107Item 15.Exhibits, Financial Statement Schedules1072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 December 30, 2014, a wholly-owned subsidiary of the Company, Triumph Aerostructures-Tulsa LLC, doing business as TriumphAerostructures-Vought Aircraft Division-Tulsa, completed the acquisition of the Gulfstream G650 and G280 wing programs (the "Tulsa Programs") located inTulsa, Oklahoma, from Spirit AeroSystems, Inc. The acquisition of the Tulsa Programs establishes the Company as a leader in fully integrated wing design,engineering and production and advances its standing as a strategic Tier One Capable aerostructures supplier. The acquired business operates as TriumphAerostructures-Vought Aircraft Division-Tulsa and its results are included in the Aerostructures Group from the date of acquisition.Effective October 17, 2014, the Company acquired all of the outstanding shares of North American Aircraft Services, Inc. and its affiliates ("NAAS").NAAS is based in San Antonio, Texas, with fixed-based operator units throughout the United States as well as international locations and delivers linemaintenance and repair, fuel leak detection and fuel bladder cell repair services. The acquired business operates as Triumph Aviation Services-NAASDivision and its results are included in Aftermarket Services Group from the date of acquisition.Effective June 27, 2014, the Company acquired the hydraulic actuation business of GE Aviation ("GE"). GE's hydraulic actuation business consists ofthree facilities located in Yakima, Washington; Cheltenham, England and the Isle of Man and is a technology leader in actuation systems. GE's key productofferings include complete landing gear actuation systems, door actuation, nose-wheel steerings, hydraulic fuses, manifolds flight control actuation andlocking mechanisms for the commercial, military and business jet markets. The acquired business operates as Triumph Actuation Systems-Yakima andTriumph Actuation Systems-UK & IOM and its results are included in Aerospace Systems Group from the date of acquisition.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.3Table of ContentsProducts 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 OEM market; (ii) Triumph Aerospace Systems Group, whose companies design, engineer and manufacture a wide range ofproprietary and build-to-print components, assemblies and systems also for the OEM market; and (iii) Triumph Aftermarket Services Group, whose companiesserve aircraft fleets, notably commercial airlines, the U.S. military and cargo carriers, through the maintenance, repair and overhaul of aircraft components andaccessories 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 panelsPrecision machined partsComprehensive processing servicesStretch-formed leading edges and fuselage skinsEmpennagesWing 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 and thetop-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 drivesThermal control systems and componentsCargo 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 transmissions and drive train componentsSecondary 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"), approvedDesignated Engineering Representative, or ("DER"), proprietary repair procedures for the components we repair and overhaul, which range from detailedcomponents to complex subsystems. Companies in our Aftermarket Services Group repair and overhaul various components for the aviation industryincluding:4Table of ContentsAir cycle machinesBlades and vanesAPUsCabin panes, shades, light lenses and other componentsConstant speed drivesCombustorsEngine and airframe accessoriesStatorsFlight control surfacesTransition ductsIntegrated drive generatorsSidewallsNacellesLight assembliesRemote sensorsOverhead binsThrust reversersFuel bladder cellsCertain financial information about our three segments is set forth 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 financialposition or our business segments. Our policy is to file applications and obtain patents for our new products as appropriate, including product modificationsand improvements. 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 assurancethat such 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 availabilityof raw materials to us is adequate to support our operations.Sales, Marketing and EngineeringWhile each of our operating companies maintains responsibility for selling and marketing its specific products, we have developed two marketing teamsat the group level who are focused on cross-selling our broad capabilities. One team supports the Aerostructures and Aerospace Systems Groups and the otherthe Aftermarket Services Group. These teams are responsible for selling systems, integrated assemblies and repair and overhaul services, reaching across ouroperating companies, to our OEM, military, airline and air cargo customers. In certain limited cases, we use independent, commission-based representatives toserve our customers' changing needs and the current trends in some of the markets and geographic regions in which we operate. During the fiscal year endedMarch 31, 2013, we terminated our relationship with Triumph Wichita Support Center, a third-party sales organization which had been dedicated solely to asales effort on behalf of Triumph Group companies.The two group-level marketing teams operate as the front-end of the selling process, establishing or maintaining relationships, identifying opportunitiesto leverage 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.5Table of ContentsA 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, 2015, we had outstanding purchase orders representing an aggregate invoice price of approximately $5,028 million, of which $3,742million, $1,244 million and $42 million relate to the Aerostructures Group, the Aerospace Systems Group and the Aftermarket Services Group, respectively.As of March 31, 2014, our continuing operations had outstanding purchase orders representing an aggregate invoice price of approximately $4,751 million,of which $3,796 million, $923 million and $32 million related to the Aerostructures Group, the Aerospace Systems Group and the Aftermarket ServicesGroup, respectively. Of the existing backlog of $5,028 million, approximately $1,825 million will not be shipped by March 31, 2016.Dependence on Significant CustomerFor the fiscal years ended March 31, 2015, 2014 and 2013, the Boeing Company ("Boeing") represented approximately 42%, 45% and 49%,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 customers in the United States for the fiscal years ended March 31, 2015, 2014 and 2013 were approximately $3,136 million, $3,142million, and $3,199 million, respectively. Our revenues from customers in all other countries for the fiscal years ended March 31, 2015, 2014 and 2013 wereapproximately $753 million, $622 million, and $504 million, respectively.As of March 31, 2015 and 2014, our long-lived assets located in the United States were approximately $3,658 million and $3,482 million, respectively.As of March 31, 2015 and 2014, our long-lived assets located in all other countries were approximately $367 million and $289 million, respectively.CompetitionWe compete primarily with Tier 1 and Tier 2 aerostructures manufacturers, systems integrators and the manufacturers that supply them, some of which aredivisions or subsidiaries of other large companies, in the manufacture of aircraft structures, systems components and subassemblies. OEMs are increasinglyfocusing on assembly and integration activities while outsourcing more manufacturing and, therefore, are less of a competitive force than in previous years.Competition for the repair and overhaul of aviation components comes from three primary sources, some of whom possess greater financial and otherresources than we have: OEMs, major commercial airlines, government support depots and other independent repair and overhaul companies. Some majorcommercial airlines continue to own and operate their own service centers, while others have begun to sell or outsource their repair and overhaul services toother aircraft operators or third parties. Large domestic and foreign airlines that provide repair and overhaul services typically provide these services not onlyfor their own aircraft but for other airlines as well. OEMs also maintain service centers which provide repair and overhaul services for the components theymanufacture. Many governments maintain aircraft support depots in their military organizations that maintain and repair the aircraft they operate. Otherindependent service organizations also compete for the repair and overhaul business of other users of aircraft components.Participants in the aerospace industry compete primarily on the basis of breadth of technical capabilities, quality, turnaround time, capacity and price.6Table of ContentsGovernment 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 with productsand repair services that comply with the government regulations applicable to aircraft components used in commercial flight operations. The FAA regulatescommercial flight operations and requires that aircraft components meet its stringent standards. In addition, the FAA requires that various maintenanceroutines be performed on aircraft components, and we currently satisfy these maintenance standards in our repair and overhaul services. Several of ouroperating 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, suitablefacilities and equipment. In addition, the applicant must demonstrate a need for the license. Because an applicant must procure manufacturing and repairmanuals from third parties relating to each particular aircraft component in order to obtain a license with respect to that component, the application processmay involve substantial 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. EASAwas formed 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-up of on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in eachcase, to the extent not otherwise indemnified. This policy applies to all of our manufacturing and assembly operations worldwide. However, if we are requiredto pay the expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have amaterial adverse effect on us.7Table of ContentsEmployeesAs of March 31, 2015, we employed 15,153 persons, of whom 3,594 were management employees, 133 were sales and marketing personnel, 873 weretechnical personnel, 825 were administrative personnel and 9,728 were production workers. Our segments were composed of the following employees:Aerostructures Group - 9,507 persons, Aerospace Systems Group - 3,659 persons, Aftermarket Services Group - 1,289 persons, and Corporate and TriumphGroup Mexico - 698 persons.Several of our subsidiaries are parties to collective bargaining agreements with labor unions. Under those agreements, we currently employapproximately 2,942 full-time employees. Currently, approximately 19% of our permanent employees are represented by labor unions and approximately58% of net sales are derived from the facilities at which at least some employees are unionized. Of the 2,942 employees represented by unions, 1,237employees are working under contracts that have expired or will expire within one year and 771 employees in our Red Oak, Texas and 447 employees in ourTulsa, Oklahoma facilities have not yet negotiated initial contracts. Our inability to negotiate an acceptable contract with any of these labor unions couldresult in strikes by the affected workers and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workerswere to engage in a strike or other work stoppage, or other employees were to become unionized, we could experience a significant disruption of ouroperations and higher ongoing labor costs, which could have an adverse effect on our business and results of operations.We have not experienced any material labor-related work stoppage and consider our relations with our employees to be good.Research and Development ExpensesCertain information about our research and development expenses for the fiscal years ended March 31, 2015, 2014 and 2013 is available in Note 2 of"Notes to Consolidated Financial Statements."Executive OfficersNameAge PositionRichard C. Ill71 President and Chief Executive Officer and DirectorJeffrey L. McRae51 Senior Vice President, Chief Financial OfficerJohn B. Wright, II61 Vice President, General Counsel and SecretaryThomas A. Quigley, III38 Vice President and ControllerRichard C. Ill was reappointed President and Chief Executive Officer on April 8, 2015 upon the resignation of Jeffrey D. Frisby from those positions.Previously, Mr. Ill served as Chairman beginning in July 2009, and had been our President and Chief Executive Officer since 1993 when he also began hisservice as a director. Mr. Ill retired as Chief Executive Officer of the Company in July 2012 and had remained as the Company's Chairman. Mr. Ill is a directorof P.H. Glatfelter Company, Mohawk Industries, Inc. and Baker Industries and a trustee of the Eisenhower Fellowships.Jeffrey L. McRae has been our Senior Vice President and Chief Financial Officer since 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 BusinessOperations, and had been employed by the Company since 2007.John B. Wright, II has been a Vice President and our General Counsel and Secretary since 2004. From 2001 until he joined us, Mr. Wright was a partnerwith the law firm of Ballard Spahr LLP, where he practiced corporate and securities law.Thomas A. Quigley, III has been our Vice President and Controller since November 2012, and serves as the Company's principal accounting officer. Mr.Quigley has served as the Company's SEC Reporting Manager since January 2009. From June 2002 until joining Triumph in 2009, Mr. Quigley held variousroles within the audit practice of KPMG LLP, including Senior Audit Manager.Available InformationFor more information about us, visit our website at www.triumphgroup.com. The contents of the website are not part of this Annual Report on Form 10-K.Our electronic filings with the Securities and Exchange Commission, ("SEC") (including all Forms 10-K, 10-Q and 8-K, and any amendments to these reports)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 read andcopied at the SEC's Public8Table of ContentsReference Room which is located at 100 F Street, N.E., Washington, D.C. 20549. Information about the operation of the Public Reference Room can beobtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and otherinformation regarding issuers who file electronically with the SEC at www.sec.gov.Item 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 ofthe worldwide aircraft fleet, as reflected by the number of available seat miles, commonly referred to as ASMs, and cargo miles flown. Consequently,conditions or events which contribute to declines in worldwide ASMs and cargo miles flown, such as those mentioned above, could negatively impact ourMRO business.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 inthe military and defense market depending upon the programs affected.A substantial portion of our net sales were derived from the military and defense market, which includes primarily indirect sales to the U.S. Government.As a result, our exposure to the military and defense market is significant.The programs in which we participate must compete with other programs and policy imperatives for consideration during the budget and appropriationprocess. Concerns about increased deficit spending, along with continued economic challenges, continue to place pressure on U.S. and internationalcustomer budgets. While we believe that our programs are well aligned with national defense and other priorities, shifts in domestic and internationalspending and tax policy, changes in security, defense, and intelligence priorities, the affordability of our products and services, general economic conditionsand developments, and other factors may affect a decision to fund or the level of funding for existing or proposed programs.U.S. government appropriation levels remain subject to significant uncertainty. In August 2011, the Budget Control Act (The Act) established limits onU.S. government discretionary spending, including a reduction of defense spending by approximately $490 billion between the 2012 and 2021 U.S.government fiscal years. The Act also provided that the defense budget would face “sequestration” cuts of up to an additional $500 billion during that sameperiod to the extent that discretionary spending limits are exceeded. While the impact of sequestration cuts was reduced with respect to fiscal 2014 and fiscal2015 following the enactment of The Bipartisan Budget Act in December 2013, significant uncertainty remains with respect to overall levels of defensespending. It is likely that U.S. government discretionary spending levels for fiscal 2016 and beyond will continue to be subject to significant pressure,including risk of future sequestration cuts.9Table of ContentsSignificant uncertainty also continues with respect to program-level appropriations for the U.S. Department of Defense (U.S. DoD) and other governmentagencies, within the overall budgetary framework described above. Future budget cuts, including cuts mandated by sequestration, or future procurementdecisions associated with the authorization and appropriations process could result in reductions, cancellations and/or delays of existing contracts orprograms. Any of these impacts could have a material effect on the results of the Company’s operations, financial position and/or cash flows.In addition to the risks described above, if Congress is unable to pass appropriations bills in a timely manner, a government shutdown could result whichcould have impacts above and beyond those resulting from budget cuts or sequestration impacts. For example, requirements to furlough employees in theU.S. DoD or other government agencies could result in payment delays, impair our ability to perform work on existing contracts, and/or negatively impactfuture orders. The Consolidated and Further Continuing Appropriations Act, 2015 enacted December 2014, funds most U.S. government agencies throughSeptember 2015, including the U.S. DoD, and the Federal Aviation Administration (FAA).As previously announced by Boeing in September 2013 and then subsequently revised in March 2014, the decision had been made to cease productionof the C-17 Globemaster ("C-17") during calendar year 2015. Major production related to this program will be completed during the second quarter of fiscal2016. We have received orders for spares and maintenance parts which will allow production to continue through the end of fiscal 2017. The loss of the C-17program and the failure to win additional work to replace the C-17 program could materially adversely affect 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 continuouslyevaluating various acquisition opportunities, including those outside the United States and those that may have a material impact on our business. Ourability to grow by acquisition is dependent upon, among other factors, the availability of suitable acquisition candidates. Growth by acquisition involvesrisks that could adversely affect our operating results, including difficulties in integrating the operations and personnel of acquired companies, the risk ofdiverting the attention of senior management from our existing operations, the potential amortization of acquired intangible assets, the potential impairmentof goodwill and the potential loss of key employees of acquired companies. We may not be able to consummate acquisitions on satisfactory terms or, if anyacquisitions are consummated, 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 42% of our net sales for the fiscal year ended March 31, 2015, 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. We expect that during the fiscal year ended March 31, 2016, Gulfstream will become a significant customer,exceeding 10% of sales. In addition, some of our other group companies rely significantly on particular customers, the loss of which could have an adverseeffect on those businesses.The profitability of certain development programs depends significantly on the assumptions surrounding satisfactory settlement of claims and assertions.For certain of our new development programs, we regularly commence work or incorporate customer requested changes prior to negotiating pricing termsfor engineering work or the product which has been modified. We typically have the legal right to negotiate pricing for customer directed changes. In thosecases, we assert to our customers our contractual rights to obtain the additional revenue or cost reimbursement we expect to receive upon finalizing pricingterms. An expected recovery value of these assertions is incorporated into our contract profitability estimates when applying contract accounting. Our10Table of Contentsinability to recover these expected values, among other factors, could result in the recognition of a forward loss on these programs and could have a materialadverse effect on our results of operations.We incur risk associated with new programs.New programs with new technologies typically carry risks associated with design responsibility, development of new production tools, hiring andtraining of qualified personnel, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and uniquecontractual requirements, supplier performance, ability of the customer to meet its contractual obligations to us, and our ability to accurately estimate costsassociated with such programs. In addition, any new aircraft program may not generate sufficient demand or may experience technological problems orsignificant delays in the regulatory certification or manufacturing and delivery schedule. If we were unable to perform our obligations under new programs tothe customer's satisfaction or manufacture products at our estimated costs, if we were to experience unexpected fluctuations in raw material prices or supplierproblems leading to cost overruns, if we were unable to successfully perform under revised design and manufacturing plans or successfully resolve claims andassertions, or if a new program in which we had made a significant investment was terminated or experienced weak demand, delays or technologicalproblems, our business, financial condition and results of operations could be materially adversely affected. This risk includes the potential for default,quality problems, or inability to meet weight requirements and could result in low margin or forward loss contracts, and the risk of having to write-offinventory if it were deemed to be unrecoverable over the life of the program. In addition, beginning new work on existing programs also carries risksassociated with the transfer of technology, knowledge and tooling.In order to perform on new programs we may be required to construct or acquire new facilities requiring additional up-front investment costs. In the caseof significant program delays and/or program cancellations, we could be required to bear certain unrecoverable construction and maintenance costs and incurpotential impairment charges for the new facilities. Also, we may need to expend additional resources to determine an alternate revenue generating use for thefacilities. Likewise, significant delays in the construction or acquisition of a plant site could impact production schedules.Future volatility in the financial markets may impede our ability to successfully access capital markets and ensure adequate liquidity and may adverselyaffect 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 our suppliersmay restrict credit or impose different payment terms. Any inability of customers to pay us for our products and services or any demands by suppliers fordifferent payment terms may adversely affect our earnings and cash flow.Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation ofwhich 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"). EAR restricts the export of dual-use products and technical data to certain countries, while ITAR restricts the export of defense products, technicaldata and defense services. The U.S. Government agencies responsible for administering EAR and ITAR have significant discretion in the interpretation andenforcement of these regulations. We cannot provide services to certain countries subject to United States trade sanctions unless we first obtain the necessaryauthorizations from OFAC. In addition, we are subject to the Foreign Corrupt Practices Act which generally bars bribes or unreasonable gifts to foreigngovernments 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.11Table of ContentsOur expansion into international markets may increase credit, currency and other risks, and our current operations in international markets expose us tosuch 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,including currency 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 to us.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 ConsolidatedFinancial Statements") and by particular restrictions contained in the Credit Facility and our other financing arrangements. In that case, additional fundingsources may be needed, and we may not be able to obtain the additional capital necessary to pursue our internal growth and acquisition strategy or, if we canobtain additional financing, the additional financing may not be on financial terms that are satisfactory to us.Competitive 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, Fokker Technologies, FujiHeavy Industries, GKN Westland Aerospace (U.K.), Kawasaki Heavy Industries, Mitsubishi Heavy Industries, Spirit AeroSystems and UTC AerospaceSystems. Competition for the repair and overhaul of aviation components comes from three primary sources: OEMs, major commercial airlines and otherindependent repair and overhaul companies.12Table of ContentsWe 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 purchasenew equipment 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 incur additional coststo 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.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 usor the 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.The 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 orlosses for the duration of the contract term. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or controlcosts during performance of a fixed-price contract may reduce our profitability or cause significant losses on programs similar in nature to the forward lossesincurred on the Boeing 747-8 ("747-8 program") contract.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 contracts in ourfinancial 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 size13Table of Contentsand nature of many of our contracts, the estimation of total sales and cost at completion is complicated and subject to many variables. While we base ourestimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances at the time made, actual results maydiffer 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 beaffected by future laws and regulations, including those imposed in response to climate change concerns and other actions commonly referred to as "greeninitiatives." Compliance with current and future environmental laws and regulations currently requires and is expected to continue to require significantoperating and capital 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 byfederal or state agencies when acquired and, at least in some cases, continue to be under investigation or subject to remediation for potential or identifiedenvironmental contamination. Lawsuits, claims and costs involving environmental matters are likely to continue to arise in the future. Individual facilities ofours have also been subject to investigation on occasion for possible past waste disposal practices which might have contributed to contamination at or fromremote third-party waste disposal sites. In some instances, we are indemnified by prior owners or operators and/or present owners of the facilities for liabilitieswhich we incur as a result of these investigations and the environmental contamination found which pre-dates our acquisition of these facilities, subject tocertain limitations, including but not limited to specified exclusions, deductibles and limitations on the survival period of the indemnity. We also maintain apollution liability policy that provides coverage, subject to specified limitations, for specified material liabilities associated with the clean-up of certain on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in each case, tothe extent not otherwise indemnified. 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 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 could become soinvolved 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 contractswith our OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated if we violate certainof these restrictions. Our loss of a contract with an OEM customer and the related license rights to use an OEM's intellectual property or tooling wouldmaterially adversely affect our business.14Table of ContentsAny significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue.We are highly dependent on the availability of essential raw materials such as carbon fiber, aluminum and titanium, and purchased engineeredcomponent parts from our suppliers, many of which are available only from single customer-approved sources. Moreover, we are dependent upon the abilityof our suppliers to provide raw materials and components that meet our specifications, quality standards and delivery schedules. Our suppliers' failure toprovide expected raw materials or component parts could require us to identify and enter into contracts with alternate suppliers that are acceptable to both usand our customers, which could result in significant delays, expenses, increased costs and management distraction and adversely affect production schedulesand contract profitability.We have from time to time experienced limited interruptions of supply, and we may experience a significant interruption in the future. Our continuedsupply of raw materials and component parts are subject to a number of risks including:•availability of capital to our suppliers;•the destruction of our suppliers' facilities or their distribution infrastructure;•a work stoppage or strike by our suppliers' employees;•the failure of our suppliers to provide raw materials or component parts of the requisite quality;•the failure of essential equipment at our suppliers' plants;•the failure or shortage of supply of raw materials to our suppliers;•contractual amendments and disputes with our suppliers; and•geopolitical conditions in the global supply base.In addition, some contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject totermination on a relatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions, and substantialincreases in prices could increase our operating costs, which, as a result of our fixed-price contracts, we may not be able to recoup through increases in theprices of our products.Due to economic difficulty, we may face pressure to renegotiate agreements resulting in lower margins. Our suppliers may discontinue provision ofproducts to us at attractive prices or at all, and we may not be able to obtain such products in the future from these or other providers on the scale and withinthe time periods we require. Furthermore, substitute raw materials or component parts may not meet the strict specifications and quality standards we and ourcustomers demand, or that the U.S. Government requires. If we are not able to obtain key products on a timely basis and at an affordable cost, or weexperience significant delays or interruptions of their supply, revenues from sales of products that use these supplies will decrease.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 other naturaldisaster 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.Our business could be negatively affected by cyber or other security threats or other disruptions.Our businesses depend heavily on information technology and computerized systems to communicate and operate effectively. The Company's systemsand technologies, or those of third parties on which we rely, could fail or become unreliable due to equipment failures, software viruses, cyber threats, terroristacts, natural disasters, power failures or other causes. These threats arise in some cases as a result of our role as a defense contractor.Cybersecurity threats are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to our sensitiveinformation, including that of our customers, suppliers, subcontractors, and joint venture partners, and other electronic security breaches that could lead todisruptions in mission critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.15Table of ContentsAlthough we utilize various procedures and controls to monitor and mitigate these threats, there can be no assurance that these procedures and controlswill be sufficient to prevent security threats from materializing. If any of these events were to materialize, the costs related to cyber or other security threats ordisruptions may not be fully insured or indemnified and could have a material adverse effect on our reputation, operating results, and financial condition.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 the profitability ofour business.At March 31, 2015, we employed 15,153 people, of which 19.4% 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. Our union employees with Local 848 at our Red Oak, Texasand Local 952 at our Tulsa, Oklahoma, facilities of the United Auto Workers are currently working without a contract. If we are unable to negotiate a contractwith those workforces, our operations may be disrupted and we may be prevented from completing production and delivery of products from those facilities,which would negatively impact our results. Contingency plans has been developed that would allow production to continue in the event of a strike.Many aircraft manufacturers, airlines and aerospace suppliers have unionized workforces. Strikes, work stoppages or slowdowns experienced by aircraftmanufacturers, airlines or aerospace suppliers could reduce our customers' demand for our products or prevent us from completing production. In turn, thismay have a material adverse effect on our financial condition, results of operations and cash flows.Financial market conditions may adversely affect the benefit plan assets for our defined benefit plans, increase funding requirements and materiallyimpact 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 inother alternative investments. The current market values of all of these investments, as well as the related benefit plan liabilities are impacted by themovements and volatility in the financial markets. In accordance with the Compensation—Retirement Benefits topic of the Accounting StandardsCodification ("ASC"), we have recognized the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability in ourbalance sheet, and will recognize changes in that funded status in the year in which the changes occur. The funded status is measured as the differencebetween the fair value of the plan's assets and the projected benefit obligation. A decrease in the fair value of these plan assets or a decrease in interest ratesresulting from movements in the financial markets will increase the under-funded status of the plans recorded in our statement of financial position and resultin additional cash funding requirements to meet the minimum required funding levels.The U.S. Government is a significant customer of our largest customers, and we and they are subject to specific U.S. Government contracting rules andregulations.As a result of the acquisition of Vought Aircraft Industries, Inc in 2010, we have become a more significant provider of aerostructures to military aircraftmanufacturers. The military aircraft manufacturers' business, and by extension, our business, is affected by the U.S. Government's continued commitment toprograms under contract with our customers. The terms of defense contracts with the U.S. Government generally permit the government to terminate contractspartially or completely, either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provideonly for our recovery of unrecovered costs incurred or committed, settlement expenses and profit on the work completed prior to termination. Termination fordefault provisions provide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from anothersource. On contracts where the price is based on cost, the U.S. Government may review our costs and performance, as well as our accounting and generalbusiness practices. Based on the results of such audits, the U.S. Government may adjust our contract-related costs and fees, including allocated16Table of Contentsindirect costs. In addition, under U.S. Government purchasing regulations, some of our costs, including most financing costs, portions of research anddevelopment costs, and certain marketing 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 advanceof design completion. An unexpected termination of, or suspension from, a significant government contract, a reduction in expenditures by the U.S.Government for aircraft using our products, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume ofcontracts awarded to us, 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 a prerequisitefor 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 more complex,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 requirementscommenced 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 "conflict free" minerals, we cannot be sure that we will be able to obtain necessary conflict-free minerals from suchsuppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if we determine that certain of our products containminerals not determined to be conflict free.Item 1B.Unresolved Staff CommentsNone.Item 2.PropertiesAs of March 31, 2015, our segments owned or leased the following facilities with the following square footage:(Square feet in thousands)Owned Leased TotalAerostructures Group4,841 4,858 9,699Aerospace Systems Group1,294 586 1,880Aftermarket Services Group716 578 1,294Corporate and Other270 17 287 Total7,121 6,039 13,160At March 31, 2015, our segments occupied 7.4 million square feet of floor space at the following major locations:•Aerostructures Group: Nashville, Tennessee; Hawthorne, California; Red Oak, Texas; Grand Prairie, Texas; Milledgeville, Georgia; and Stuart,Florida•Aerospace Systems Group: West Hartford, Connecticut; and Park City, Utah17Table of Contents•Aftermarket Services Group: Hot Springs, Arkansas•Corporate and Triumph Group Mexico: Zacatecas, MexicoWe 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 financialposition or results of operations, although no assurances can be given to that effect.Item 4.Mine Safety DisclosuresNot applicable.PART 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 prices forour common stock for the periods indicated: High LowFiscal 2014 1st Quarter$81.80 $71.022nd Quarter85.50 67.903rd Quarter76.37 68.564th Quarter79.90 61.41Fiscal 2015 1st Quarter$72.31 $61.862nd Quarter70.38 62.003rd Quarter70.93 59.534th Quarter67.84 51.18On May 18, 2015, the reported closing price for our common stock was $68.30. As of May 18, 2015, 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 2015 and 2014, we paid cash dividends of $0.16 per share and $0.16 per share, respectively. However, our declaration and payment of cashdividends 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 28, 2015, the Company announced that its Board of Directors declared aregular quarterly dividend of $0.04 per share on its outstanding Common Stock. The dividend is next payable on June 15, 2015 to stockholders of record asof May 29, 2015.18Table of ContentsRepurchases of StockIn December 1998, we announced a program to repurchase up to 500,000 shares of our common stock. In February 2008, the Company's Board ofDirectors authorized an increase in the Company's existing stock repurchase program by up to an additional 500,000 shares of its common stock. In February2014, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to an additional 5,000,000 sharesof its common 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 years ended March 31, 2015 and 2014, we repurchased 2,923,011 and 300,000 shares, respectively, for apurchase price of $184.4 million and $19.1 million, respectively. Repurchases may be made from time to time in open market transactions, block purchases,privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program. As a result, as of May 21, 2015,the Company remains able to purchase an additional 2,277,789 shares.The following summarizes repurchases made pursuant to the Company's share repurchase plan during the quarter ended March 31, 2015.PeriodTotal number ofshares purchased Average pricepaid per share Total number ofshares purchasedas part of publiclyannounced plans Maximum numberof shares that mayyet be purchasedunder the plansJanuary 1 - 31, 2015— $— — 3,477,789February 1 - 28, 20151,000,000 $58.01 3,522,211 2,477,789March 1 - 31, 2015200,000 $58.68 3,722,211 2,277,789Total1,200,000 $58.12 3,722,211 2,277,789Equity Compensation Plan InformationThe information required regarding equity compensation plan information will be included in our Proxy Statement in connection with our 2015 AnnualMeeting of Stockholders to be held on July 17, 2015, under the heading "Equity Compensation Plan Information" and is incorporated herein by reference19Table of ContentsThe following graph compares the cumulative 5-year total return provided stockholders on our common stock relative to the cumulative total returns ofthe Russell 1000 index and the S&P Aerospace & Defense index. An investment of $100 (with reinvestment of all dividends) is assumed to have been madein our common stock and in each of the indexes on March 31, 2010, and its relative performance is tracked through March 31, 2015.COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*Among Triumph Group, Inc., and The Russell 1000 IndexesAnd The S&P Aerospace & Defense Index* $100 invested on March 31, 2010 in stock or index, including reinvestment of dividends. Fiscal year ended March 31 3/10 3/11 3/12 3/13 3/14 3/15Triumph Group, Inc. 100.00 126.46 179.63 225.61 186.01 172.43Russell 1000100.00 116.69 125.87 144.03 176.31 198.76S&P Aerospace & Defense100.00 110.58 115.58 134.07 192.01 219.24 The stock price performance included in this graph is not necessarily indicative of future stock price performance.20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, 2015(1) 2014(2) 2013(3) 2012(4) 2011(5) (in thousands, except per share data)Operating Data: Net sales$3,888,722 $3,763,254 $3,702,702 $3,407,929 $2,905,348Cost of sales3,141,453 2,911,802 2,763,488 2,564,995 2,231,864 747,269 851,452 939,214 842,934 673,484Selling, general and administrative expense285,773 254,715 241,349 242,553 238,889Depreciation and amortization158,323 164,277 129,506 119,724 99,657Relocation costs3,193 31,290 — — —Acquisition and integration expenses— — 2,665 6,342 20,902Curtailments, settlements and early retirement incentives— 1,166 34,481 (40,400) —Gain on legal settlement, net of expenses(134,693) — — — —Operating income434,673 400,004 531,213 514,715 314,036Interest expense and other85,379 87,771 68,156 77,138 79,559Income from continuing operations, before income taxes349,294 312,233 463,057 437,577 234,477Income tax expense110,597 105,977 165,710 155,955 82,066Income from continuing operations238,697 206,256 297,347 281,622 152,411Loss from discontinued operations— — — (765) (2,512)Net income$238,697 $206,256 $297,347 $280,857 $149,899Earnings per share: Income from continuing operations: Basic$4.70 $3.99 $5.99 $5.77 $3.39Diluted(6)$4.68 $3.91 $5.67 $5.43 $3.21Cash dividends declared per share$0.16 $0.16 $0.16 $0.14 $0.08Shares used in computing earnings per share: Basic50,796 51,711 49,663 48,821 45,006Diluted(6)51,005 52,787 52,446 51,873 47,488 As of March 31, 2015(1) 2014(2) 2013(3) 2012(4) 2011(5) (in thousands)Balance Sheet Data: Working capital$1,147,171 $1,141,741 $892,818 $741,105 $436,638Total assets6,069,443 5,553,386 5,239,179 4,597,224 4,477,234Long-term debt, including current portion1,379,396 1,550,383 1,329,863 1,158,862 1,312,004Total stockholders' equity$2,135,784 $2,283,911 $2,045,158 $1,793,369 $1,632,217(1)Includes the acquisitions of Spirit AeroSytems Holdings, Inc. - Gulfstream G650 and G280 Wings Programs (December 2014), North American Aircraft Services, Inc.(October 2014) and GE Aviation - Hydraulic Actuation (June 2014) from the date of each respective acquisition. See Note 3 to the Consolidated Financial Statements.(2)Includes the acquisitions of Insulfab Product Line (Chase Corporation) (October 2013), General Donlee Canada, Inc. (October 2013) and Primus Composites (May 2013)from the date of each respective acquisition. Includes the divestitures of Triumph Aerospace Systems - Wichita (January 2014) and Triumph Instruments (April 2013) fromthe date of respective divestiture. See Note 3 and 4 to the Consolidated Financial Statements, respectively.(3)Includes the acquisitions of Goodrich Pump & Engine Control Systems, Inc. (March 2013) and Embee, Inc. (December 2012) from the date of each respective acquisition.See Note 3 to the Consolidated Financial Statements.(4)Includes the acquisition of Aviation Network Services, LLC. (October 2011) from the date of acquisition.(5)Includes the acquisition of Vought Aircraft Industries, Inc. (June 2010) from the date of acquisition.21Table of Contents(6)Diluted earnings per share for the fiscal years ended March 31, 2015, 2014, 2013, 2012 and 2011, included 40,177, 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.Item 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 wide rangeof 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 December 30, 2014, a wholly-owned subsidiary of the Company, Triumph Aerostructures-Tulsa LLC, doing business as TriumphAerostructures-Vought Aircraft Division-Tulsa, completed the acquisition of the Gulfstream G650 and G280 wing programs (the "Tulsa Programs") located inTulsa, Oklahoma, from Spirit AeroSystems, Inc. The acquisition of the Tulsa Programs establishes the Company as a leader in fully integrated wing design,engineering and production and advances its standing as a strategic Tier One Capable aerostructures supplier. The acquired business will operate as TriumphAerostructures-Vought Aircraft Division-Tulsa and its results are included in the Aerostructures Group from the date of acquisition.Effective October 17, 2014, the Company acquired the ownership of all of the outstanding shares of North American Aircraft Services, Inc. and itsaffiliates ("NAAS"). NAAS is based in San Antonio, Texas, with fixed-based operator units throughout the United States as well as international locations anddelivers line maintenance and repair, fuel leak detection and fuel bladder cell repair services. The acquired business will operate as Triumph AviationServices-NAAS Division and its results are included in Aftermarket Services Group from the date of acquisition.Effective June 27, 2014, the Company acquired the hydraulic actuation business of GE Aviation ("GE"). GE's hydraulic actuation business consists ofthree facilities located in Yakima, Washington, Cheltenham, England and the Isle of Man and is a technology leader in actuation systems. GE's key productofferings include complete landing gear actuation systems, door actuation, nose-wheel steerings, hydraulic fuses, manifolds flight control actuation andlocking mechanisms for the commercial, military and business jet markets. The acquired business will operate as Triumph Actuation Systems-Yakima andTriumph Actuation Systems-UK & IOM and its results are included in Aerospace Systems Group from the date of acquisition.On June 18, 2014, the Company announced it had settled all pending litigation involving the Company, its subsidiary, certain employees of theCompany and its subsidiary and Eaton Corporation and several of its subsidiaries ("Eaton"). As part of the settlement, Eaton agreed to pay the Company$135.3 million in cash. During the fiscal year ended March 31, 2015, the Company received payment representing a gain on legal settlement, net of expense,of $134.7 million, which is included on the Condensed Consolidated Statements of Income.Financial highlights for the fiscal year ended March 31, 2015 include:•Net sales for fiscal 2015 increased 3.3% to $3.89 billion, including a 4.8% decrease in organic sales.•Operating income in fiscal 2015 increased 8.7% to $434.7 million.•Net income for fiscal 2015 increased 15.7% to $238.7 million.•Backlog increased 5.8% over the prior year to $5.03 billion.For the fiscal year ended March 31, 2015, net sales totaled $3.89 billion, a 3.3% increase from fiscal year 2014 net sales of $3.76 billion. Net income forfiscal year 2015 increased 15.7% to $238.7 million, or $4.68 per diluted common share, versus $206.3 million, or $3.91 per diluted common share, for fiscalyear 2014. As previously mentioned above, included in net income is a gain on legal settlement, net of expenses and as discussed in further detail below,forward losses on the 747-8 program.22Table of ContentsOur working capital needs are generally funded through cash flows from operations and borrowings under our credit arrangements. For the fiscal yearended March 31, 2015, we generated $467.3 million of cash flows from operating activities, used $67.9 million in investing activities and used $395.2million in financing activities. Cash flows from operating activities in fiscal year 2015 included $112.3 million in pension contributions versus $46.3million in fiscal year 2014.We continue to remain focused on growing our core businesses as well as growing through strategic acquisitions. Our organic sales decreased in fiscal2015 due to production rate cuts by our customers on the 747-8, V-22, G450/G550 and C-17 programs. Our Company has an aggressive but selectiveacquisition approach that adds capabilities and increases our capacity for strong and consistent internal growth.U.S. government appropriation levels remain subject to significant uncertainty. In August 2011, the Budget Control Act ("The Act") established limits onU.S. government discretionary spending, including a reduction of defense spending by approximately $490 billion between the 2012 and 2021 U.S.government fiscal years. The Act also provided that the defense budget would face “sequestration” cuts of up to an additional $500 billion during that sameperiod to the extent that discretionary spending limits are exceeded. While the impact of sequestration cuts was reduced with respect to fiscal 2014 and fiscal2015 following the enactment of The Bipartisan Budget Act in December 2013, significant uncertainty remains with respect to overall levels of defensespending. It is likely that U.S. government discretionary spending levels for fiscal 2016 and beyond will continue to be subject to significant pressure,including risk of future sequestration cuts.Significant uncertainty also continues with respect to program-level appropriations for the U.S. Department of Defense (U.S. DoD) and other governmentagencies, within the overall budgetary framework described above. Future budget cuts, including cuts mandated by sequestration, or future procurementdecisions associated with the authorization and appropriations process could result in reductions, cancellations and/or delays of existing contracts orprograms. Any of these impacts could have a material effect on the results of the Company’s operations, financial position and/or cash flows.In addition to the risks described above, if Congress is unable to pass appropriations bills in a timely manner, a government shutdown could result whichcould have impacts above and beyond those resulting from budget cuts or sequestration impacts. For example, requirements to furlough employees in theU.S. DoD or other government agencies could result in payment delays, impair our ability to perform work on existing contracts, and/or negatively impactfuture orders. The Consolidated and Further Continuing Appropriations Act, 2015 enacted December 2014, funds most U.S. government agencies throughSeptember 2015, including the U.S. DoD, and the Federal Aviation Administration (FAA).During the third quarter of the fiscal year ended March 31, 2015, we recognized a provision a provision of approximately $152.0 million for forwardlosses associated with our long-term contract on the 747-8 program. These forward losses are largely due to changes in future estimated production rates,labor and overhead costs, pension income and expedited delivery charges.•In December 2014, our customer, Boeing, announced a future production rate reduction for the 747-8 program from 1.5 shipsets per month to 1.3shipsets per month. This production rate cut will result in additional future disruption and overhead cost absorption across our related productionfacilities.•While we have experienced improvements in labor performance metrics on our work associated with the 747-8 program in recent quarters, we havenot recovered to the levels previously experienced or as quickly as expected, and no longer believe that we can recover to the level required toavoid future losses. Our increased labor assumptions will also result in increased overhead cost absorption to the 747-8 program.•In October 2014, the Society of Actuaries released updated mortality tables to reflect recent improvements in longevity. The mortality tables are akey assumption in the valuation of our defined benefit obligations and related net period pension benefit income. These new mortality tables willlower estimated future pension benefit income amounts, thereby negatively impacting our future cost estimates associated with the 747-8 program.•Although we have made improvements on the quality and timeliness of deliveries as compared to the prior year, we continue to incur charges relatedto expedited delivery and have included estimates for additional costs in the future.While we have recognized a provision for forward losses during the fiscal year ended March 31, 2015, there is still risk with other programs, similar innature to what we have experienced on the 747-8 program. Particularly, our 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.23Table of ContentsThe next twelve months will be a critical time for this program as we attempt to return to a baseline performance for the recurring cost structure.Recognition of additional forward losses in the future periods continues to be a risk and will depend upon several factors, including our market forecast,possible airplane program delays, our ability to successfully perform under current 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.Since there has been lower-than-expected demand for large commercial passenger and freighter aircraft and there have been fewer 747-8 orders than ourcustomer has anticipated, there is risk that the program will not be extended beyond our current contract. If we are unable to replace this work, with new orsimilar manufacture content, there is risk of additional costs associated with exiting the facilities where this program is manufactured, such as assetimpairment, supplier and lease termination charges, as well as severance and retention payments to employees and contractors, which if not mitigated couldresult in additional future charges of up to $75.0 million. This estimate includes approximately $25.0 million of non-cash exposures, but excludes anypotential changes in pension benefit obligations.As disclosed during fiscal 2014, we identified additional program costs during the quarter ended September 30, 2013 of approximately $85.0 million,primarily related to the 747-8 program. At the time, both the current and future production lots were expected to be profitable and not result in loss reserves.Our union employees with Local 848 at our Red Oak, Texas and Local 952 at our Tulsa, Oklahoma, facilities of the United Auto Workers are currentlyworking without a contract. If we are unable to negotiate a contract with those workforces, our operations may be disrupted and we may be prevented fromcompleting production and delivery of products from those facilities, which would negatively impact our results. Contingency plans have been developedthat would allow production to continue in the event of a strike.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.As of March 31, 2015, we have incurred approximately $238.9 million in inventory costs associated with the Bombardier Global 7000/8000 program, forwhich we have not yet begun to deliver. Additionally, we incurred approximately $155.6 million in capital expenditures associated with construction of thetwo aforementioned facilities. The move from Jefferson Street was substantially completed during the fiscal year ended March 31, 2014.We currently have a few new programs that are either in the pre-production phase or the early stages of recurring production. We expect that inventorybalances will continue to grow between $60.0 million - $80.0 million during fiscal 2016. Inventory costs are evaluated for recoverability through theirinclusion in the total costs used in the calculation of each contract's estimated profit margin. When the estimated total contract costs exceed total estimatedcontract revenues, an inventory reserve is established.Contract block quantity is projected to fully absorb the balance of deferred production inventory. Capitalized pre-production and deferred productioninventories are at risk to the extent that we do not achieve the orders in the forecasted blocks or if future actual costs exceed current projected estimates, asthose categories of inventory are recoverable over future deliveries. In the case of capitalized pre-production this may be over multiple blocks. Should ordersnot materialize in future periods to fulfill the block, potential forward loss charges may be necessary to the extent the final delivered quantity does not absorbdeferred inventory costs.As previously announced by Boeing in September 2013 and then subsequently revised in March 2014, the decision has been made to cease productionof the C-17 during calendar year 2015. Major production related to this program is expected to cease in fiscal 2016. We have received orders for spares andmaintenance parts which will extend production through the end of fiscal 2017.Effective October 4, 2013, the Company acquired all of the issued and outstanding shares of General Donlee. General Donlee is based in Toronto,Canada and is a leading manufacturer of precision machined products for the aerospace, nuclear and oil and gas industries. The acquired business nowoperates 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 Primus from Precision Castparts Corp. The acquired business,which includes two manufacturing facilities in Farnborough, England and Rayong, Thailand, operates as Triumph Structures-Farnborough and TriumphStructures-Thailand and is included in the Aerostructures segment from the date of acquisition. Together, Triumph Structures-Farnborough and TriumphStructures-Thailand constitute a global supplier of composite and metallic propulsion and structural composites and assemblies. In addition to its composite24Table of Contentsoperations, the Thailand operation also machines and processes metal components. In November 2013, the operations in Farnborough lost its NationalAerospace and Defense Contractors Accreditation Program ("NADCAP") certification. This loss in certification has resulted in unanticipated delays inproduction and deliveries, lower performance impact across the facility and has slowed our planned transition of work to a sister company in Thailand. Theseitems have resulted in approximately $13.9 million of charges related to losses, as well as an inventory writedown during the fiscal year ended March 31,2015.RESULTS OF OPERATIONSThe following includes a discussion of our consolidated and business segment results of operations. The Company's diverse structure and customer basedo not provide for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variancesbetween the respective periods.Non-GAAP Financial MeasuresWe prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities andExchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financialmeasures in our public releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA, which is our income from continuingoperations before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives anddepreciation and amortization. We disclose Adjusted EBITDA on a consolidated and a reportable segment basis in our earnings releases, investor conferencecalls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by othercompanies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate andcompare our future results of operations to our previously 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 haveoutlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of theseexclusions. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as analternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance withGAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA as a substitute for any GAAP financial measure, including netincome (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review thereconciliation of Adjusted EBITDA to income from continuing operations set forth below, in our earnings releases and in other filings with the SEC and tocarefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filedwith the SEC, as well as our 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 20 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 EBITDAexcludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation andamortization. We believe the disclosure of Adjusted EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter andfrom year to year. We also believe Adjusted EBITDA is a measure of our ongoing operating performance because the isolation of non-cash charges, such asdepreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and,over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA to provide afinancial measure by 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 AdjustedEBITDA and the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:25Table of Contents•Legal settlements may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe theseearnings necessarily reflect the current and ongoing cash earnings related to our operations.•Curtailments, settlements and early retirement incentives may be useful for investors to consider because it represents the current period impact ofthe change in the defined benefit obligation due to the reduction in future service costs as well as the incremental cost of retirement incentivebenefits paid to participants. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.•Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value ofoff-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earningsrelated to 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 ofour business.•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, 2015 2014 2013Income from continuing operations$238,697 $206,256 $297,347Gain on legal settlement, net of expenses(134,693) — —Amortization of acquired contract liabilities(75,733) (42,629) (25,644)Depreciation and amortization158,323 164,277 129,506Curtailments, settlements and early retirement incentives— 1,166 34,481Interest expense and other85,379 87,771 68,156Income tax expense110,597 105,977 165,710Adjusted EBITDA$382,570 $522,818 $669,556 The following tables show our Adjusted EBITDA by reportable segment reconciled to our operating income for the indicated periods (in thousands):26Table of Contents Fiscal year ended March 31, 2015 Total Aerostructures AerospaceSystems AftermarketServices Corporate/EliminationsOperating income$434,673 $127,495 $184,042 $47,931 $75,205Gain on legal settlement, net of expenses(134,693) — — — (134,693)Amortization of acquired contract liabilities(75,733) (38,719) (37,014) — —Depreciation and amortization158,323 100,096 45,200 8,559 4,468Adjusted EBITDA$382,570 $188,872 $192,228 $56,490 $(55,020) 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 retirementincentives1,166 — — — 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) 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 retirementincentives34,481 — — — 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)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, 2015 compared to fiscal year ended March 31, 2014 Year Ended March 31, 2015 2014 (in thousands)Net sales$3,888,722 $3,763,254Segment operating income$359,468 $444,896Corporate general and administrative income (expenses)75,205 (44,892)Total operating income434,673 400,004Interest expense and other85,379 87,771Income tax expense110,597 105,977Net income$238,697 $206,256Net sales increased by $125.5 million, or 3.3%, to $3.9 billion for the fiscal year ended March 31, 2015 from $3.8 billion for the fiscal year endedMarch 31, 2014. The fiscal 2015 and fiscal 2014 acquisitions, net of prior year divestitures, contributed $306.1 million. Organic sales decreased $180.6million, or 4.6%, due to production rate cuts by our customers on the 747-8, V-22, Gulfstream and C-17 programs. The prior fiscal year was negativelyimpacted by our customers' decreased production rates on existing programs and decreased military sales.27Table of ContentsCost of sales increased by $229.7 million, or 7.9%, to $3.1 billion for the fiscal year ended March 31, 2015 from $2.9 billion for the fiscal year endedMarch 31, 2014. The fiscal 2015 and fiscal 2014 acquisitions, net of prior year divestitures contributed $264.2 million. Despite the decrease in organic costof sales, the organic cost of sales included a provision for forward losses of $152.0 million on the 747-8 program and losses as a result of losing NADCAPcertification at one of our facilities, as discussed above. Organic gross margin for the fiscal year ended March 31, 2015 was 20.1% compared with 23.1% forthe fiscal year ended March 31, 2014. The prior year was impacted by additional programs costs on the 747-8 program and disruption and accelerateddepreciation associated with the relocation from our Jefferson Street Facilities. Excluding these charges, the comparable gross margin would have been25.4% and 26.5%, respectively.Gross margin included net unfavorable cumulative catch-up adjustments on long-term contracts and a provision for forward losses as noted above($156.0 million). The unfavorable cumulative catch-up adjustments to operating income included gross favorable adjustments of $4.7 million and grossunfavorable adjustments of $160.7 million, of which $152.0 million was related to forward losses associated with the 747-8 program. The cumulative catch-up adjustments for the fiscal year ended March 31, 2015 were due primarily to labor cost growth, partially offset by other minor improvements. Gross marginsfor fiscal 2014 included net unfavorable cumulative catch-up adjustments of $53.3 million, which $29.8 million was related to the additional 747-8 programcosts from reductions to profitability estimates on the 747-8 production lots that were completed during fiscal 2014 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 fiscal 2014. These decreases were partially offset by lower pension and other postretirement benefit expense of $12.7 million.Segment operating income decreased by $85.4 million, or 19.2%, to $359.5 million for the fiscal year ended March 31, 2015 from $444.9 million for thefiscal year ended March 31, 2014. The organic operating income decreased $100.9 million, or 22.6%, and was a result of the decreased organic sales, theprovision for forward losses and gross margin changes noted above, partially offset by decreased moving costs related to the relocation from our JeffersonStreet facilities ($28.1 million), and legal fees ($4.5 million).Corporate operations yielded income of $75.2 million for the fiscal year ended March 31, 2015 as opposed to expenses of $44.9 million for the fiscalyear ended March 31, 2014. This result is due to the legal settlement between the Company and Eaton, which created a net gain of $134.7 million, partiallyoffset by increased due diligence and acquisition related expenses ($9.8 million).Interest expense and other decreased by $2.4 million, or 2.7%, to $85.4 million for the fiscal year ended March 31, 2015 compared to $87.8 million forthe prior year. Interest expense and other for the fiscal year ended March 31, 2015 decreased due to due to lower average debt outstanding during the periodas compared to the fiscal year ended March 31, 2014. Interest expense and other for the fiscal year ended March 31, 2015 included the redemption of the2018 Notes, which included $22.6 million for pre-tax losses associated with the 4.79% redemption premium, and write-off of the remaining relatedunamortized discount and deferred financing fees. The fiscal year ended March 31, 2014 included 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.The effective income tax rate was 31.7% for the fiscal year ended March 31, 2015 and 33.9% for the fiscal year ended March 31, 2014. The income taxprovision for the fiscal year ended March 31, 2015 was reduced to reflect the release of previously reserved for unrecognized tax benefits of $1.1 million, thebenefit of $2.8 million from a decrease of the state deferred tax rate and the benefit of $6.0 million from the retroactive reinstatement of the R&D tax credit toJanuary 1, 2014. For the fiscal year ended March 31, 2014, the income tax provision was reduced to reflect the release of previously reserved forunrecognized tax benefits of $0.7 million and additional research and development tax credit carryforward and NOL carryforward of $2.3 million.In January 2014, the Company sold all of its shares of Triumph Aerospace Systems-Wichita, Inc. for total cash proceeds of $23.0 million, which resultedin 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 proceeds of$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.28Table of ContentsFiscal 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 expense105,977 165,710Income from continuing operations206,256 297,347Loss from discontinued operations, net— —Net 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% comparedwith 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 largelyby the identification of additional 747-8 program costs ($85.0 million) identified during the year, additional program costs resulting from disruption andaccelerated depreciation associated with the relocation from our Jefferson Street Facilities ($38.4 million), price concessions ($4.0 million) and a non-recurring termination customer settlement ($9.5 million) which had a favorable impact on the prior year gross margin.Gross margin included net unfavorable cumulative catch-up adjustments on long-term contracts ($53.2 million) resulting from changes in contractvalues and 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 thefiscal year ended March 31, 2013, offset by a pension settlement charge ($2.1 million) for the fiscal year ended March 31, 2014. Corporate expenses alsoincluded lower 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 million forthe 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% redemption29Table of Contentspremium, and the write-off of the remaining related unamortized discount and deferred financing fees. Interest expense and other for the fiscal year endedMarch 31, 2014 also increased due to higher average debt outstanding during the period as compared to the 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 31,2013 included $2.2 million of tax expense due to the recapture of domestic production deductions taken in earlier years associated with a refund claim of$25.2 million filed in the second quarter of fiscal 2013. The refund claim receivable is included in "Other, net" in the consolidated balance sheet as of March31, 2014 and 2013.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 Aerostructuresand Aerospace Systems segments.The Aerostructures segment consists of the Company's operations that manufacture products primarily for the aerospace OEM market. The Aerostructuressegment's revenues are derived from the design, manufacture, assembly and integration of both build-to-print and proprietary metallic and compositeaerostructures and structural components, including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces as well ashelicopter cabins. Further, the segment's operations also design and manufacture composite assemblies for floor panels and environmental control systemducts. 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.30Table of Contents Year Ended March 31, 2015 2014 2013Aerostructures Commercial aerospace38.6% 42.3% 43.9%Military14.0 16.1 18.9Business Jets11.0 10.0 11.2Regional0.4 0.4 0.5Non-aviation0.4 0.5 0.7Total Aerostructures net sales64.4% 69.3% 75.2%Aerospace Systems Commercial aerospace13.2% 8.5% 6.3%Military10.6 11.4 7.9Business Jets1.4 1.0 0.7Regional1.0 1.0 0.4Non-aviation1.7 1.3 1.2Total Aerospace Systems net sales27.9% 23.2% 16.5%Aftermarket Services Commercial aerospace6.2% 6.3% 6.8%Military1.0 0.7 1.0Business Jets— — 0.3Regional0.5 0.2 0.1Non-aviation— 0.3 0.1Total Aftermarket Services net sales7.7% 7.5% 8.3%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. Due to the continued strength in thecommercial aerospace end market and the planned reductions in defense spending under the Budget Act and the sequestration discussed above, we expectthe declining trend in the military end market to continue.Business Segment Performance—Fiscal year ended March 31, 2015 compared to fiscal year ended March 31, 2014 Year Ended March 31, %Change % of Total Sales 2015 2014 2015 2014 (in thousands) NET SALES Aerostructures $2,507,878 $2,612,439 (4.0)% 64.5 % 69.4 %Aerospace Systems 1,089,117 871,750 24.9 % 28.0 % 23.2 %Aftermarket Services 304,013 287,343 5.8 % 7.8 % 7.6 %Elimination of inter-segment sales (12,286) (8,278) 48.4 % (0.3)% (0.2)%Total net sales $3,888,722 $3,763,254 3.3 % 100.0 % 100.0 %31Table of Contents Year Ended March 31, %Change % of SegmentSales 2015 2014 2015 2014 (in thousands) SEGMENT OPERATING INCOME Aerostructures $127,495 $252,910 (49.6)% 5.1% 9.7%Aerospace Systems 184,042 149,721 22.9 % 16.9% 17.2%Aftermarket Services 47,931 42,265 13.4 % 15.8% 14.7%Corporate 75,205 (44,892) (267.5)% n/a n/aTotal segment operating income $434,673 $400,004 8.7 % 11.2% 10.6% Year Ended March 31, %Change % of SegmentSales 2015 2014 2015 2014 (in thousands) Adjusted EBITDA Aerostructures $188,872 $342,005 (44.8)% 7.5% 13.1%Aerospace Systems 192,228 169,752 13.2 % 17.6% 19.5%Aftermarket Services 56,490 49,794 13.4 % 18.6% 17.3%Corporate (55,020) (38,733) 42.0 % n/a n/a $382,570 $522,818 (26.8)% 9.8% 13.9%Aerostructures: The Aerostructures segment net sales decreased by $104.6 million, or 4.0%, to $2.5 billion for the fiscal year ended March 31, 2015from $2.6 billion for the fiscal year ended March 31, 2014. Organic sales decreased $173.2 million, or 6.9%, and the acquisitions of the Tulsa Programs andPrimus, net of prior year divestiture contributed $68.6 million in net sales. Organic sales decreased due to production rate cuts by our customers on the 747-8,V-22, G450/G550 and C-17 programs.Aerostructures cost of sales increased by $60.9 million, or 2.9%, to $2.2 billion for the fiscal year ended March 31, 2015 from $2.1 billion for the fiscalyear ended March 31, 2014. The fiscal 2015 and fiscal 2014 acquisitions, net of prior year divestitures contributed $79.9 million. Despite the decrease inorganic cost of sales, the organic cost of sales included a provision for forward losses of $152.0 million on the 747-8 program and losses as a result of losingNADCAP certification at one of our facilities, as discussed above. Excluding the aforementioned forward losses, the organic cost of sales decreased due to thedecrease in net sales noted above. The cost of sales for the fiscal year ended March 31, 2014 included 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, 2015 was 13.7% compared with 18.9% for the fiscal year ended March 31, 2014. The organicgross margin included net unfavorable cumulative catch-up adjustments and a provision for forward losses of $152.0 million The net unfavorable cumulativecatch-up adjustments included gross favorable adjustments of $4.7 million and gross unfavorable adjustments of $160.7 million, which includes forwardlosses of $152.0 million associated with the 747-8 program. The cumulative catch-up adjustments for the fiscal year ended March 31, 2015, excluding theeffects of the forward losses, were due primarily to labor cost growths, partially offset by other minor improvements. The net unfavorable cumulative catch-upadjustment for the fiscal year ended March 31, 2014 was $53.2 million, which included $29.8 million related to additional 747-8 program costs fromreductions to profitability estimates on the 747-8 production lots that were completed during the fiscal year ended March 31, 2014 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 fiscal year ended March 31, 2014. Excluding these charges, the comparable gross margin would have been 21.0% and 23.8%, respectively.Aerostructures segment operating income decreased by $125.4 million, or 49.6%, to $127.5 million for the fiscal year ended March 31, 2015 from$252.9 million for the fiscal year ended March 31, 2014. Operating income was directly affected32Table of Contentsby the decrease in organic sales, the decreased organic gross margins noted above, offset by decreased moving costs related to the relocation from ourJefferson Street facilities ($28.1 million). Additionally, these same factors contributed to the decrease in Adjusted EBITDA year over year.Aerostructures segment operating income as a percentage of segment sales decreased to 5.1% for the fiscal year ended March 31, 2015 as compared with9.7% for the fiscal year ended March 31, 2014, due to the decrease in sales and gross margin as discussed above, which also caused the decline in theAdjusted EBITDA margin.Aerospace Systems: The Aerospace Systems segment net sales increased by $217.4 million, or 24.9%, to $1.09 billion for the fiscal year endedMarch 31, 2015 from $871.8 million for the fiscal year ended March 31, 2014. The GE and General Donlee acquisitions contributed $225.4 million of netsales. Organic net sales decreased $8.0 million, or 0.9%, primarily due to decreased production associated with the V-22 program.Aerospace Systems cost of sales increased by $166.7 million, or 29.2%, to $738.5 million for the fiscal year ended March 31, 2015 from $571.8 millionfor the fiscal year ended March 31, 2014. Organic cost of sales decreased $9.7 million, or 1.8%, while the acquisitions of GE and General Donlee contributed$176.5 million in cost of sales. Organic gross margin for the fiscal year ended March 31, 2015 was 35.3% compared with 34.7% for the fiscal year endedMarch 31, 2014 due to changes in sales mix.Aerospace Systems segment operating income increased by $34.3 million, or 22.9%, to $184.0 million for the fiscal year ended March 31, 2015 from$149.7 million for the fiscal year ended March 31, 2014. Operating income increased primarily due to the acquisitions of GE and General Donlee and bydecreased legal fees ($7.1 million). These same factors contributed to the increase in Adjusted EBITDA year over year.Aerospace Systems segment operating income as a percentage of segment sales decreased to 16.9% for the fiscal year ended March 31, 2015 as comparedwith 17.2% for the fiscal year ended March 31, 2014, due to the effects of the acquisitions of GE and General Donlee. The same factors contributed to thedecrease in Adjusted EBITDA margin year over year.Aftermarket Services: The Aftermarket Services segment net sales increased by $16.7 million, or 5.8%, to $304.0 million for the fiscal year endedMarch 31, 2015 from $287.3 million for the fiscal year ended March 31, 2014. Organic sales increased $4.6 million, or 1.6%, and the acquisition of NAASoffset by the previously divested Triumph Instruments companies contributed $12.1 million.Aftermarket Services cost of sales increased by $6.2 million, or 2.9%, to $220.1 million for the fiscal year ended March 31, 2015 from $213.9 million forthe fiscal year ended March 31, 2014. The organic cost of sales decreased $1.7 million, or 0.8%, and the acquisition of NAAS net of the previously divestedTriumph Instruments companies contributed $7.9 million to cost of sales. Organic gross margin for the fiscal year ended March 31, 2015 was 27.3%compared with 25.6% for the fiscal year ended March 31, 2014. The increase in gross margin was impacted by the increase in efficiencies in productionassociated with the higher volume of work.Aftermarket Services segment operating income increased by $5.7 million, or 13.4%, to $47.9 million for the fiscal year ended March 31, 2015 from$42.3 million for the fiscal year ended March 31, 2014. Operating income increased primarily due to the increased sales and gross margin noted above andthe acquisition of NAAS net of the previously divested Triumph Instruments companies ($1.6 million). These same factors contributed to the increase inAdjusted EBITDA year over year.Aftermarket Services segment operating income as a percentage of segment sales increased to 15.8% for the fiscal year ended March 31, 2015 ascompared with 14.7% for the fiscal year ended March 31, 2014, due to the improved gross margin noted above.33Table of ContentsBusiness 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 871,750 615,771 41.6 % 23.2 % 16.6 %Aftermarket Services 287,343 314,507 (8.6)% 7.6 % 8.5 %Elimination of inter-segment sales (8,278) (8,920) (7.2)% (0.2)% (0.2)%Total net sales $3,763,254 $3,702,702 1.6 % 100.0 % 100.0 % 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 TotalSales 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 $65.5million in net sales. Organic sales decreased due to production rate cuts by our customers on the 747-8 program and as it transitions from the commercialvariant 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 $29.834Table of Contentsmillion was related to the additional 747-8 program costs from reductions to profitability estimates on the 747-8 production lots that were completed duringthe fiscal year and $15.6 million of disruption and accelerated depreciation costs related to our exit from the Jefferson Street facilities which reducedprofitability estimates on production lots completed during the year. These decreases were offset by lower pension and other postretirement benefit expenseof $12.7 million. Segment cost of sales for the fiscal year ended March 31, 2013 included net unfavorable cumulative catch-up adjustments 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 factorscontributed to 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 747-8 program costs, relocation costs related to our exit from the JeffersonStreet facilities, offset by lower compensation and benefits and lower pension and other postretirement benefit expenses discussed above, which also causedthe 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 $415.0 millionfor 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 fiscal 2013acquisitions contributed $145.3 million in cost of sales. Organic gross margin for the fiscal year ended March 31, 2014 was 31.2% compared with 32.2% forthe 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, primarily due to the acquisition of General Donlee and fiscal 2013 acquisitions, as noted above.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 $229.5 millionfor 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 $45.4million for the fiscal year ended March 31, 2013. Operating income decreased primarily due to the decrease in gross margin noted above. These same factorscontributed 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 ascompared with 14.4% for the fiscal year ended March 31, 2013.35Table of ContentsLiquidity 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, 2015, we generated approximately $467.3 million of cash flow from operating activities, used approximately $67.9 million in investing activitiesand used approximately $395.2 million in financing activities. Cash flows from operating activities included $112.3 million in pension contributions infiscal 2015, compared to $46.3 million in fiscal 2014.For the fiscal year ended March 31, 2015, we had a net cash inflow of $467.3 million from operating activities, an inflow increase of $332.2 million,compared to a net cash inflow of $135.1 million for the fiscal year ended March 31, 2014. During fiscal 2015, the increase in net cash provided by operatingactivities was primarily due to the cash received from legal settlement ($134.7 million), increased receipts from customers and others relating to additionalsales from fiscal 2015 and fiscal 2014 acquisitions ($110.4 million), an income tax refund ($26.0 million), and decreased disbursements to employees,suppliers and others ($114.9 million) due to timing, offset by increased pension contributions ($66.0 million).We continue to invest in inventory for new programs and additional production costs for ramp-up activities in support of increasing build rates onseveral programs and build ahead for the relocation from our largest facilities. During fiscal 2015, inventory build for capitalized pre-production costs on newprograms, including the Bombardier Global 7000/8000 and the Embraer E-Jet programs, were $127.0 million and $48.7 million, respectively. Offsetting thisinventory build was a provision for forward losses on our long-term contract on the 747-8 program of $152.0 million. Unliquidated progress payments nettedagainst inventory increased $24.9 million due to timing of receipts. Capitalized pre-production costs are expected to continue to increase, while ourproduction is expected to remain consistent over the next few quarters.Cash flows used in investing activities for the fiscal year ended March 31, 2015 decreased $178.8 million from the fiscal year ended March 31, 2014.Cash flows used in investing activities included the cash received from the acquisition of Tulsa Programs ($160.0 million) offset by the acquisitions of GE($65.0 million), NAAS ($43.7 million) and the working capital finalization of Primus ($13.0 million). The fiscal year ended March 31, 2014, included thefiscal 2014 acquisitions of $94.5 million and capital expenditures of $86.6 million associated with our new facilities in Red Oak, Texas.Cash flows used in financing activities for the fiscal year ended March 31, 2015 were $395.2 million, compared to cash flows provided by financingactivities for the fiscal year ended March 31, 2014 of $103.2 million. Cash flows used in financing activities for the fiscal year ended March 31, 2015included the redemption of the 2018 Notes, settlement of the Convertible Senior Subordinated Notes ("Convertible Notes") redemptions and the purchase ofour common stock ($184.4 million), offset by the issuance of the 2022 Notes.As of March 31, 2015, $816.4 million was available under the Company's existing credit agreement ("Credit Facility"). On March 31, 2015, an aggregateamount of approximately $148.3 million in outstanding borrowing and approximately $35.4 million in letters of credit were outstanding under the CreditFacility, all of which were accruing interest at LIBOR plus applicable basis points totaling 2.00% per annum. Amounts repaid under the Credit Facility maybe reborrowed.In November 2014, the Company amended its $225.0 million the receivable securitization facility (the “Securitization Facility”), increasing thepurchase limit from $175.0 million to $225.0 million and extending the term through November 2017.In May 2014, the Company amended its existing Credit Facility with its lenders to (i) to increase the maximum amount allowed for the SecuritizationFacility and (ii) amend certain other terms and covenants.In November 2013, the Company amended the Credit Facility with its lenders to (i) provide for a $375.0 million Term Loan with a maturity date of May14, 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 31,2015, the Company was in compliance with all such covenants.In June 2014, the Company issued the 2022 Notes for $300.0 million in principal amount. The 2022 Notes were sold at 100% of principal amount andhave an effective yield of 5.25%. Interest on the 2022 Notes is payable semiannually in cash in arrears on June 1 and December 1 of each year. We used thenet proceeds to redeem the 2018 Notes and pay related fees and36Table of Contentsexpenses. In connection with the issuance of the 2022 Notes, the Company incurred approximately $5.0 million of costs, which were deferred and are beingamortized on the effective interest method over the term of the notes.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.We used the net proceeds to repay borrowings under our Credit Facility and pay related fees and expenses, and for general corporate purposes. In connectionwith the 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 year ended March 31, 2014, we generated approximately $135.1 million of cash flow from operating activities, used approximately $246.7million in investing activities and received approximately $103.2 million from financing activities. Cash flows from operating activities included $46.3million in pension contributions in fiscal 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 ($85.0 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 onseveral programs 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 consistent 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.Cash 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).At March 31, 2015, $31.6 million of cash and cash equivalents were held by foreign subsidiaries and were primarily denominated in foreign currencies. Ifthese amounts would be remitted as dividends, the Company may be subject to additional U.S. taxes, net of allowable foreign tax credits. We currently expectto utilize the balances to fund our foreign operations.Capital expenditures were $110.0 million for the fiscal year ended March 31, 2015. We funded these expenditures through cash from operations andborrowings under the Credit Facility. We expect capital expenditures of approximately $130.0 million to $160.0 million and investments in new majorprograms of $60.0 million to $80.0 million of which will be reflected in inventory for our fiscal year ending March 31, 2016. The expenditures are expectedto be used mainly to expand capacity or replace old equipment at several facilities.37Table of ContentsOur 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$1,379,397 $42,255 $331,089 $310,362 $695,691Debt-interest(1)235,718 46,754 93,671 77,281 18,012Operating leases152,553 25,975 43,463 32,201 50,914Contingent payments1,000 1,000 — — —Purchase obligations1,998,254 1,479,113 444,461 74,405 275Total$3,766,922 $1,595,097 $912,684 $494,249 $764,892_______________________________________________(1)Includes fixed-rate interest only.The above table excludes unrecognized tax benefits of $7.7 million as of March 31, 2015 since we cannot predict with reasonable certainty the timing ofcash settlements with the respective taxing authorities.In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at March 31, 2015 as detailed inthe following table. Our other postretirement benefits are not required to be funded in advance, so benefit payments are paid as they are incurred. Ourexpected net contributions and payments are included in the table below: PensionBenefits OtherPostretirementBenefits (in thousands)Projected benefit obligation at March 31, 2015$2,479,319 $239,267Plan assets at March 31, 20152,156,148 —Projected contributions by fiscal year 2015181,617 20,4822016174,814 19,7142017171,769 19,0832018167,056 19,0222019165,079 18,373Total 2015 - 2019$860,335 $96,674Current plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements forrepresented employees.We believe that cash generated by operations and borrowings under the Credit Facility will be sufficient to meet anticipated cash requirements for ourcurrent operations for the foreseeable future. However, we have a stated policy to grow through acquisitions and are continuously evaluating variousacquisition opportunities, while opportunistically buying back shares to return capital to our shareholders. As a result, we currently are pursuing the potentialpurchase of a number of candidates. In the event that more than one of these transactions is successfully consummated, the availability under the CreditFacility might be fully utilized and additional funding sources may be needed. There can be no assurance that such funding sources will be available to us onterms 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 fiscalquarter. 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 andfees in connection with the issuance of letters of credit. All outstanding principal and interest under the Credit Facility will be due and payable on thematurity date.38Table of ContentsThe 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 offactors, such as industry trends, our customers' financial strength and credit standing, and payment and default history. The calculation of the requiredallowance requires a judgment as to the impact of these and other factors on the ultimate realization of our trade receivables. We believe that these estimatesare reasonable and 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"Notes to Consolidated Financial Statements" for further discussion).Revenue and Profit RecognitionRevenues are recognized in accordance with the contract terms when products are shipped, delivery has occurred or services have been rendered, pricingis fixed or determinable, and collection is reasonably assured.A significant portion of our contracts are within the scope of Accounting Standards Codification ("ASC") 605-35, Revenue—Construction-Type andProduction-Type Contracts, and revenue and costs on contracts are recognized using the percentage-of-completion method of accounting. Accounting forthe revenue 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 tothe sum of 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 ofprogress towards completion. Depending on the contract, we measure progress toward completion using either the cost-to-cost method or the units-of-delivery method, with the great 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 atcompletion. We recognize costs as incurred. Profit is determined based on our estimated profit margin on the contract multiplied by our progresstoward completion. Revenue represents the sum of our costs and profit on the contract for the period.39Table of Contents•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 equalto the 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 lotsfor the purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units delivered and the estimatedcosts 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, orif contract 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, 2015, 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 $(156.0) million, $(106.6) million and $(2.09),respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2015 included gross favorable adjustments ofapproximately $4.7 million and gross unfavorable adjustments of approximately $160.7 million, which includes a provision of $152.0 million for forwardlosses on the 747-8 program. For the fiscal year ended March 31, 2014, cumulative catch-up adjustments resulting from changes in estimates decreasedoperating income, net income and earnings per share by approximately $(53.2) million, $(35.1) million and $(0.67), respectively. The cumulative catch-upadjustments to operating income for the fiscal year ended March 31, 2014 included gross favorable adjustments of approximately $14.3 million and grossunfavorable adjustments of approximately $67.5 million. For the fiscal year ended March 31, 2013, cumulative catch-up adjustments resulting from changesin estimates decreased operating income, net income and earnings per share by approximately $(14.6) million, $(9.4) million and $(0.18), respectively. Thecumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2013 included gross favorable adjustments of approximately $15.9million and gross unfavorable adjustments of approximately $30.5 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-pricecontract, we must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts and inprojecting the ultimate level of revenue that may otherwise be achieved.During the fiscal year ended March 31, 2015, the Company recognized a provision for forward losses of $152.0 million associated with the Company'slong-term contract on the 747-8 program. These forward losses are largely due to changes in future estimated production rates, labor and overhead costs,pension income and expedited delivery charges.•In December 2014, our customer, Boeing, announced a future production rate reduction for the 747-8 program from 1.5 shipsets per month to 1.3shipsets per month. This production rate cut will result in additional future disruption and overhead cost absorption across our related productionfacilities.•While the Company has experienced improvements in labor performance metrics on our work associated with the 747-8 program in recent quarters,the Company has not recovered to the levels previously experienced or as quickly as expected, and no longer believes that the Company canrecover to the level required to avoid future losses. The Company's increased labor assumptions will also result in increased overhead costabsorption to the 747-8 program.•In October 2014, the Society of Actuaries released updated mortality tables to reflect recent improvements in longevity. The mortality tables are akey assumption in the valuation of our defined benefit obligations and related net40Table of Contentsperiod pension benefit income. These new mortality tables will lower estimated future pension benefit income amounts, thereby negativelyimpacting our future cost estimates associated with the 747-8 program.•Although the Company has made significant improvements on the quality and timeliness of deliveries as compared to the prior year, the Companycontinues to incur charges related to expedited delivery and have included estimates for additional costs in the future.While the Company has recently recognized a provision for forward losses, there is still risk similar in nature to what the Company has experienced onthe 747-8 program. In particular, the Company's ability to manage risks related to supplier performance, execution of cost reduction strategies, hiring andretaining skilled production and management personnel, quality and manufacturing execution, program schedule delays and many other risks, will determinethe ultimate performance of these programs.The Aftermarket Services Group provides repair and overhaul services, certain of which are provided under long-term power-by-the-hour contracts,comprising approximately 7% of the segment's fiscal 2015 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 thecontract, in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization ofthe fleet by customers, 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 acquiredintangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows fromprojects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; anddiscount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain andunpredictable and, as a result, 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 isallocated, because it is that reporting unit which is intended to benefit from the synergies of the acquisition.The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involvesdetermining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carryingamount, including goodwill. If based on this qualitative assessment, the Company determines it is not more likely than not that the fair value of a reportingunit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-stepapproach required 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 ourreporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete animpairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have animpact on these estimates and require interim impairment assessments.41Table of ContentsWhen 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 2015, 2014 or 2013. In the fourth quarter of fiscal2015, 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, 2015 and 2014, 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-livedintangible asset is less than its carrying amount. If based on this qualitative assessment the Company determines it is not more likely than not that the fairvalue of an indefinite-lived intangible asset is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitativeassessment is performed to determine whether an indefinite-lived intangible asset impairment exists. We test the indefinite-lived intangible assets forimpairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royaltymethod. Any excess carry value over the amount of fair value is recognized as an impairment.We incurred no impairment of indefinite-lived intangible assets as a result of our annual indefinite-lived intangible assets impairment tests in fiscal years2015, 2014 or 2013. In the fourth quarter of fiscal 2015, 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 3 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 thelong-lived assets, including intangible assets, is used to measure recoverability. Some of the more important factors we consider include our financialperformance relative to our expected and historical performance, significant changes in the way we manage our operations, negative events that haveoccurred, and negative industry and economic trends. If the carrying amount is less than the estimated fair value, measurement of the impairment will bebased on the difference between the carrying value and fair value of the asset group, generally determined based on the present value of expected future cashflows associated with the use of the asset.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 acquisitiondate. The liabilities principally relate to long-term life of program contracts that were initially executed at several years prior to the respective acquisition(see Note 3 of "Notes to Consolidated Financial 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 $75.7 million, $42.6 million and $25.6 million in the fiscal years ended March 31, 2015, 2014 and2013, respectively, and such amounts have been included in revenues in our results of operations. The balance of the liability as of March 31, 2015 isapproximately $645.0 million and, based on the expected delivery schedule of the underlying contracts, the Company estimates annual amortization of theliability as follows 2016—$130.1 million; 2017—$127.0 million; 2018—$119.2 million; 2019—$115.6 million; 2020—$69.1 million; Thereafter—$84.0million.42Table of ContentsPostretirement 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 and rate of growth for medical costs. The actuarialassumptions used to calculate these costs are reviewed annually or when a remeasurement is necessary. Assumptions are based upon management's bestestimates, 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 a yield curve associated with high-quality corporate bonds as of the measurement date and the use of models thatdiscount projected benefit payments using the spot rates across the yield curve. The effects of hypothetical changes in the discount rate for a single year maynot be representative and may be asymmetrical or nonlinear for future years because of the application of the accounting corridor. The accounting corridor isa defined range within which amortization of net gains and losses is not required. The discount rate at March 31, 2015 decreased to 3.78% from 4.32% atMarch 31, 2014.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 toprovide for the benefits included in the Projected Benefit Obligation ("PBO"). The expected average long-term rate of return on assets is based on severalfactors including 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 remaining lifeexpectancy of inactive plan participants. The expected long-term rate of return for fiscal 2015, 2014 and 2013, respectively, was 8.25%.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, 2015. 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 dependentsat the date of retirement are also eligible for medical coverage. Current plan documents reserve our right to amend or terminate the plans at any time, subjectto applicable collective bargaining requirements for represented employees. From time to time, we have made changes to the benefits provided to variousgroups of 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.In accordance with ASC 715, Compensation—Retirement Benefits topic, we recognized the funded status of our benefit obligation. This funded status isremeasured 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. Themajority of our plan assets are publicly traded investments which were valued based on the market price as of the date of remeasurement. Investments that arenot publicly traded were valued based on the estimated fair value of those investments as of the remeasurement date based on our evaluation of data fromfund managers and comparable market data.The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments arerecognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significantnumber of employees for some or all of their future service.Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains arerecognized when 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, 2015, 2014 and 2013.43Table of ContentsPension income, excluding curtailments, settlements and special termination benefits (early retirement incentives) for the fiscal year ended March 31,2015 was $52.4 million compared with pension income of $35.0 million for the fiscal year ended March 31, 2014 and $26.0 million for the fiscal year endedMarch 31, 2013. For the fiscal year ending March 31, 2016, the Company expects to recognize pension income of approximately $56.0 million.Recently Issued Accounting PronouncementsIn April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest—Imputation of Interest: Simplifying the Presentationof Debt Issuance Costs ("ASU-2015-03"). ASU 2015-03 requires companies to present debt issuance costs as a direct deduction from the carrying value of thatdebt liability. ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption isallowed for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., thebalance sheet for each period is adjusted). The adoption of this standard is not expected to have a material impact on the Company’s financial position,results of operations or cash flows.In January 2015, the FASB issued ASU 2015-1, Income Statement - Extraordinary and Unusual Items ("ASU 2015-1"). ASU 2015-1 eliminates fromGAAP the concept of extraordinary items. The update is effective for the Company for the interim and annual periods beginning after December 15, 2015.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standardrequires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financialstatements are issued. An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as agoing concern.” ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, withearly adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operationsor cash flows.In May 2014, the FASB issued guidance codified in Accounting Standards Codification ("ASC") 606, Revenue Recognition - Revenue from Contractswith Customers, which amends the guidance in former ASC 605, Revenue Recognition. The objective of ASC 606 is to establish a single comprehensivemodel for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognitionguidance. The principle of ASC 606 is that an entity will recognize revenue at the transfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled. ASC 606 is effective for interim and annual reporting periods beginning after December15, 2016 and can be adopted by the Company using either a full retrospective or modified retrospective approach, with early adoption prohibited. TheCompany is currently evaluating ASC 606 and has not determined the impact it may have on the Company’s consolidated results of operations, financialposition or cash flows nor decided on the method of adoption.In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU2014-08"). ASU 2014-08 provides new guidance on the accounting and reporting of discontinued operations. Under the new guidance, only disposalsrepresenting a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on theorganization’s operations and financial results. Additionally, the new guidance requires additional disclosures about discontinued operations. The update iseffective for the Company for the interim and annual periods beginning after December 15, 2014. The adoption of the provisions of ASU 2014-08 is notexpected to have a material impact on the Company's consolidated financial statements.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 results coulddiffer 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 differ44Table of Contentsmaterially, are uncertainties relating to the integration of acquired businesses, general economic conditions affecting our business segments, dependence ofcertain of our businesses on certain key customers, the risk that we will not realize all of the anticipated benefits from acquisitions as well as competitivefactors relating to the aerospace industry. For a more detailed discussion of these and other factors affecting us, see the risk factors described in "Item 1A. RiskFactors."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 schedules andcontract 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 as comparedto the respective foreign currencies will affect our reported results of operations and the value of our assets and liabilities on our consolidated balance sheet,even if our results of operations or the value of those assets and liabilities has not changed in its original currency. These transactions could significantlyaffect the comparability of our results between financial periods and/or result in significant changes to the carrying value of our assets, liabilities andstockholders' 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. Foreigncurrency forward contracts are sensitive to changes in foreign currency exchange rates. At March 31, 2015, a 10% change in the exchange rate in ourportfolio of foreign currency contracts would not have material impact on our unrealized gains. Consistent with the use of these contracts to neutralize theeffect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement ofthe underlying transactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments do not creatematerial market risk.Interest 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, 2015, approximately 56% 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 ourvariable debt is fixed through an interest rate swap. The information below summarizes our market risks associated with debt obligations and should be readin conjunction 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, 2015. Variable interest rates disclosed fluctuate with the LIBOR, federal funds rates and other weekly rates and represent the weighted-average rateat March 31, 2015.45Table of ContentsExpected Years of Maturity Next12 Months 13 - 24Months 25 - 36Months 37 - 48Months 49 - 60Months Thereafter TotalFixed-rate cash flows (in thousands)$42,235 $36,805 $46,024 $299,354 $11,006 $693,272 $1,128,696Weighted-average interest rate (%)4.29% 4.31% 4.35% 4.63% 5.00% 2.20% Variable-rate cash flows (in thousands)$— $— $248,256 $— $— $2,178 $250,434Weighted-average interest rate (%)1.57% 1.57% 1.57% 0.04% 0.04% 2.50% There are no other significant market risk exposures.46Table of ContentsItem 8.Financial Statements and Supplementary DataReport of Independent Registered Public Accounting FirmThe 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, 2015 and 2014, 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, 2015. Our auditsalso included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of theCompany's management. 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 standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide 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, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period endedMarch 31, 2015, 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, 2015, based on criteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 21, 2015 expressed an unqualifiedopinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 21, 201547Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share data) March 31, 2015 2014ASSETS Current assets: Cash and cash equivalents$32,617 $28,998Trade and other receivables, less allowance for doubtful accounts of $6,475 and $6,535521,846 517,304Inventories, net of unliquidated progress payments of $189,923 and $165,0191,272,879 1,111,767Rotable assets48,820 41,666Deferred income taxes145,352 57,308Prepaid expenses and other23,100 24,897Total current assets2,044,614 1,781,940Property and equipment, net948,902 931,430Goodwill2,030,594 1,791,891Intangible assets, net972,389 978,171Other, net72,944 69,954Total assets$6,069,443 $5,553,386LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt$42,255 $49,575Accounts payable427,448 317,334Accrued expenses427,740 273,290Total current liabilities897,443 640,199Long-term debt, less current portion1,337,141 1,500,808Accrued pension and other postretirement benefits, noncurrent538,381 508,524Deferred income taxes, noncurrent406,641 385,188Other noncurrent liabilities754,053 234,756Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,020 and 52,459,020 shares issued;49,273,053 and 52,159,020 shares outstanding51 52Capital in excess of par value851,940 866,281Treasury stock, at cost, 3,187,867 and 300,000 shares(203,514) (19,134)Accumulated other comprehensive loss(198,910) (18,908)Retained earnings1,686,217 1,455,620Total stockholders' equity2,135,784 2,283,911Total liabilities and stockholders' equity$6,069,443 $5,553,386See notes to consolidated financial statements.48Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data) Year ended March 31, 2015 2014 2013Net sales$3,888,722 $3,763,254 $3,702,702Operating costs and expenses: Cost of sales (exclusive of depreciation shown separately below)3,141,453 2,911,802 2,763,488Selling, general and administrative285,773 254,715 241,349Depreciation and amortization158,323 164,277 129,506Relocation costs3,193 31,290 —Integration expenses— — 2,665Curtailments, settlements and early retirement incentives— 1,166 34,481Gain on legal settlement, net of expenses(134,693) — — 3,454,049 3,363,250 3,171,489Operating income434,673 400,004 531,213Interest expense and other85,379 87,771 68,156Income from continuing operations before income taxes349,294 312,233 463,057Income tax expense110,597 105,977 165,710Net income$238,697 $206,256 $297,347Earnings per share—basic: Net income$4.70 $3.99 $5.99Weighted-average common shares outstanding—basic50,796 51,711 49,663Earnings per share—diluted: Net income$4.68 $3.91 $5.67Weighted-average common shares outstanding—diluted51,005 52,787 52,446See notes to consolidated financial statements.49Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Dollars in thousands) Year ended March 31, 2015 2014 2013Net income$238,697 $206,256 $297,347Other comprehensive (loss) income: Foreign currency translation adjustment(46,949) (3,315) (1,832)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 $19, $21 and $0, respectively(31) (37) —Actuarial (loss) gain, net of taxes $71,060, ($27,546), and $27,375, respectively(122,636) 45,995 (45,976)Reclassification from net income - (gains) losses, net of tax expense (benefit): Amortization of net loss, net of taxes of $0, ($5,647) and ($119), respectively— 9,402 199Recognized prior service credits, net of taxes of $3,684, $6,814 and $2,453, respectively(6,133) (11,346) (4,056)Total defined benefit pension plans and other postretirement benefits, net of taxes(128,800) 44,014 (49,833)Cash flow hedges: Unrealized (loss) gain arising during period, net of tax benefit (expense) of $2,463, ($884) and ($25),respectively(4,098) 1,384 41Reclassification of gain included in net earnings, net of tax expense of $42, $11 and $26, respectively(155) (19) (42)Net unrealized (loss) gain on cash flow hedges, net of tax(4,253) 1,365 (1)Total other comprehensive (loss) income(180,002) 42,064 (51,666)Total comprehensive income$58,695 $248,320 $245,681See notes to consolidated financial statements.50Table of Contents TRIUMPH 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, 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 taxesof ($29,710)— — — — (49,833) — (49,833)Change in fair value of foreign currency hedges,net of 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 taxesof $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,net of income taxes, $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 2,283,911Net income— — — — — 238,697 238,697Foreign currency translation adjustment— — — — (46,949) (46,949)Pension liability adjustment, net of income taxesof ($74,763)— — — — (128,800) — (128,800)Change in fair value of interest rate swap, net oftaxes, $2,014— — — — (3,156) — (3,156)Change in fair value of foreign currency hedges,net of income taxes of $490— — — — (1,097) — (1,097)Settlement of convertible notes— (1) (19,386) — — — (19,387)Deferred tax impact of convertible debtredemption— — 2,725 — — — 2,725Purchase of 2,923,011 shares of common stock(2,923,011) — — (184,380) — — (184,380)Exercise of stock options45,782 — 720 — — — 720Cash dividends ($0.16 per share)— — — — — (8,100) (8,100)Share-based compensation1,600 — 1,272 — — — 1,272Repurchase of restricted shares for minimum taxobligation(10,338) — (673) — — — (673)Excess tax benefit from exercise of stock options— — 1,001 — — — 1,001Balance at March 31, 201549,273,053 $51 $851,940 $(203,514) $(198,910) $1,686,217 2,135,784See notes to consolidated financial statements.51Table of ContentsTRIUMPH GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) Year ended March 31, 2015 2014 2013Operating Activities Net income$238,697 $206,256 $297,347Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization158,323 164,277 129,506Amortization of acquired contract liability(75,733) (42,629) (25,644)Curtailments, settlements and early retirement incentives— 1,166 34,481Accretion of debt discount1,577 1,946 548Other amortization included in interest expense8,135 6,702 3,638Provision for doubtful accounts receivable172 2,191 1,974Provision for deferred income taxes105,277 102,869 186,767Employee stock compensation1,272 4,653 6,367Changes in other current assets and liabilities, excluding the effects of acquisitions: Accounts receivable69,500 (46,378) 24,718Inventories49,536 (94,341) (140,025)Rotable assets(7,153) (6,813) 1,683Prepaid expenses and other current assets1,589 (406) 752Accounts payable, accrued expenses and income taxes payable95,167 (60,209) (57,861)Accrued pension and other postretirement benefits(180,569) (100,929) (142,975)Other1,542 (3,218) (358)Net cash provided by operating activities467,332 135,137 320,918Investing Activities Capital expenditures(110,004) (206,414) (126,890)Reimbursements of capital expenditures from insurance and other653 9,086 5,156Proceeds from sale of assets3,167 45,047 3,993Acquisitions, net of cash acquired38,281 (94,456) (349,632)Net cash used in investing activities(67,903) (246,737) (467,373)Financing Activities Net (decrease) increase in revolving credit facility(46,150) 98,557 (224,151)Proceeds from issuance of long-term debt508,960 451,003 528,135Retirement of debt and capital lease obligations(655,860) (416,645) (142,338)Payment of deferred financing costs(6,487) (3,297) (8,838)Purchase of common stock(184,380) (19,134) —Dividends paid(8,100) (8,344) (8,005)Net (repayment) proceeds of government grant(3,198) 3,456 (1,090)Repurchase of restricted shares for minimum tax obligations(673) (2,726) (1,840)Proceeds from exercise of stock options, including excess tax benefit of $1,001, $39, and $4,628 in 2015,2014, and 2013720 329 6,766Net cash (used in) provided by financing activities(395,168) 103,199 148,639Effect of exchange rate changes on cash(642) 5,362 191Net change in cash and cash equivalents3,619 (3,039) 2,375Cash and cash equivalents at beginning of year28,998 32,037 29,662Cash and cash equivalents at end of year$32,617 $28,998 $32,037See notes to consolidated financial statements.52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") is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures and sells productsfor the global aerospace original equipment manufacturers ("OEMs") of aircraft and aircraft components and repairs and overhauls aircraft components andaccessories for commercial airline, air cargo carrier and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the "Company") isorganized based on the products and services that it provides. Under this organizational structure, the Company has three reportable segments: theAerostructures 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. The Aerostructuressegment's revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structural components,including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces, and helicopter cabins. Further, the segment's operationsalso design and manufacture composite assemblies for floor panels and environmental control system ducts. These products are sold to various aerospaceOEMs 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 on aworldwide 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.53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 doesnot require collateral. The Company records the allowance for doubtful accounts based on prior experience and for specific collectibility matters when theyarise. The Company writes off balances against the reserve when collectibility is deemed remote. The Company's trade and other receivables are exposed tocredit risk; however, the risk is limited due to the diversity of the customer base.Trade and other receivables, net comprised of the following: March 31, 2015 2014Billed$475,913 $487,344Unbilled39,222 12,333Total trade receivables515,135 499,677Other receivables13,186 24,162Total trade and other receivables528,321 523,839Less: Allowance for doubtful accounts(6,475) (6,535)Total trade and other receivables, net$521,846 $517,304InventoriesThe 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 forfurther discussion).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.54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 for impairmenton at least an annual basis. Intangible assets with finite lives are amortized over their useful lives. Upon acquisition, critical estimates are made in valuingacquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flowsfrom projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; anddiscount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain andunpredictable 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 whichis intended to benefit from the synergies of the acquisition.The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involvesdetermining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carryingamount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reportingunit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-stepapproach required 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 ourreporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete animpairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have animpact on these 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.The Company incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2015, 2014 or 2013. In the fourthquarter of fiscal 2015, the Company chose to perform the quantitative assessment, in lieu of the qualitative assessment for each of the Company's threereporting units, which indicated that the fair value of the reporting unit exceeded its carrying amount, including goodwill.55Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)As of March 31, 2015 and 2014, 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 thisqualitative assessment, the Company determines it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carryingamount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-livedintangible asset impairment exists. We test the indefinite-lived intangible assets for impairment by comparing the carrying value to the fair value based oncurrent revenue projections of the related operations, under the relief from royalty method. Any excess of the carrying value over the amount of fair value isrecognized as an impairment.The Company incurred no impairment of indefinite-lived intangible assets as a result of our annual indefinite-lived intangible assets impairment tests infiscal years 2015, 2014 or 2013. In the fourth quarter of fiscal 2015, the Company chose to perform the quantitative assessment, in lieu of the qualitativeassessment, for each of the Company's indefinite-lived intangible assets, which indicated that the fair value of the indefinite-lived intangible assets exceededits carrying amount.Finite-lived intangible assets are amortized over their useful lives ranging from 3 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 ofthe impairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the present valueof expected future cash flows associated with the use of the asset.Deferred Financing CostsFinancing costs are deferred and amortized to Interest expense and other in the accompanying Consolidated Statements of Income over the relatedfinancing period using the effective interest method or the straight-line method when it does not differ materially from the effective interest method. Deferredfinancing costs, net of accumulated amortization of $17,850 and $19,499, respectively, are recorded in Other, net in the accompanying Consolidated BalanceSheets as of March 31, 2015 and 2014. Make-whole payments in connection with early debt retirements are classified as cash flows used in financingactivities.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 acquisitiondate. The liabilities principally relate to long-term life of program contracts that were initially executed at several years prior to the respective acquisition(see Note 3 of "Notes to Consolidated Financial Statements" for further discussion).The Company measured these net liabilities under the measurement provisions of ASC 820, Fair Value Measurements and Disclosures, which is basedon 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.Included in the net sales of the Aerostructure and Aerospace Systems group is the non-cash amortization of acquired contract liabilities recognized as fairvalue adjustments through purchase accounting from various acquisitions. The Company recognized net amortization of contract liabilities of $75,733,$42,629 and $25,644 in the fiscal years ended March 31, 2015, 2014 and 2013, respectively, and such amounts have been included in revenues in results ofoperations. The balance of the liability as of March 31, 2015 is $644,950 and, based on the expected delivery schedule of the underlying contracts, theCompany estimates annual amortization of the liability as follows: 2016—$130,087; 2017—$127,003; 2018—$119,207; 2019—$115,550; and2020—$69,090.56Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Revenue RecognitionRevenues are generally recognized in accordance with the contract terms when products are shipped, delivery has occurred or services have beenrendered, pricing is fixed or determinable, and collection is reasonably assured. The Company's policy with respect to sales returns and allowances generallyprovides that the customer may not return products or be given allowances, except at the Company's option. Accruals for sales returns, other allowances andestimated warranty 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, andrevenue 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 onthe contract, 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.Costs are recognized as incurred. Profit is determined based on estimated profit margin on the contract multiplied by progress toward completion.Revenue represents 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 equalto the 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 intoproduction lots for the purposes of accumulating and allocating cost. Profit is recognized as the difference between revenue for the units deliveredand the estimated 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, orif contract 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 amount reflected in accrued contract liabilities in accordance withASC 605-35. Revisions in contract estimates, if significant, can materially affect results of operations and cash flows, as well as valuation of inventory.Furthermore, certain contracts are combined or segmented for revenue recognition in accordance with ASC 605-35.For the fiscal year ended March 31, 2015, 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 $(156,048), $(106,639) and $(2.09), respectively. Thecumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2015 included gross favorable adjustments of approximately$4,653 and gross unfavorable adjustments of approximately $(160,701), which includes a provision for forward losses of $151,992, as discussed below ingreater detail. For the fiscal year ended March 31, 2014, cumulative catch-up adjustments resulting from changes in estimates decreased operating income,net income and earnings per share by approximately $(53,166), $(35,121) and $(0.67), respectively. The cumulative catch-up adjustments to operatingincome for the fiscal year ended March 31, 2014 included gross favorable adjustments of approximately $14,341 and gross unfavorable adjustments ofapproximately $(67,507). For the fiscal year ended March 31, 2013, cumulative catch-up adjustments resulting from changes in estimates decreasedoperating income, net income and earnings per share by approximately $(14,560) $(9,350) and $(0.18), respectively. The cumulative catch-up adjustments tooperating income for the fiscal year ended March 31, 2013 included gross favorable adjustments of approximately $15,913 and gross unfavorableadjustments of approximately $(30,473).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.57Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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.During the third quarter of the fiscal year ended March 31, 2015, the Company recognized a provision for forward losses of $151,992 associated with theCompany's long-term contract on the 747-8 program. These forward losses are largely due to changes in future estimated production rates, labor and overheadcosts, pension income and expedited delivery charges.•In December 2014, our customer, The Boeing Company (“Boeing”), announced a future production rate reduction for the 747-8 program from 1.5shipsets per month to 1.3 shipsets per month. This production rate cut will result in additional future disruption and overhead cost absorption acrossour related production facilities.•While the Company has experienced improvements in labor performance metrics on our work associated with the 747-8 program in recent quarters,the Company has not recovered to the levels previously experienced or as quickly as expected, and no longer believes that the Company canrecover to the level required to avoid future losses. The Company's increased labor assumptions will also result in increased overhead costabsorption to the 747-8 program.•In October 2014, the Society of Actuaries released updated mortality tables to reflect recent improvements in longevity. The mortality tables are akey assumption in the valuation of our defined benefit obligations and related net period pension benefit income. These new mortality tables willlower estimated future pension benefit income amounts, thereby negatively impacting our future cost estimates associated with the 747-8 program.•Although the Company has made improvements on the quality and timeliness of deliveries as compared to the prior year, the Company continues toincur charges related to expedited delivery and have included estimates for additional costs in the future.While the Company has recently recognized a provision for forward losses, there is still risk similar in nature to what the Company has experienced onthe 747-8 program. In particular, the Company's ability to manage risks related to supplier performance, execution of cost reduction strategies, hiring andretaining skilled production and management personnel, quality and manufacturing execution, program schedule delays and many other risks, will determinethe ultimate performance of these programs.The Aftermarket Services Group provides repair and overhaul services, certain of which services are provided under long-term power-by-the-hourcontracts, comprising approximately 7% 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 thecontract, in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization ofthe fleet by customers, among other factors, may have an impact on these estimates and require adjustments to estimates of revenue to be realized.Shipping and Handling CostsThe cost of shipping and handling products is included in cost of products sold.Research and Development ExpenseResearch and development expense (which includes certain amounts subject to reimbursement from customers) was approximately $81,205, $61,657 and$61,270 for the fiscal years ended March 31, 2015, 2014 and 2013, 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 Companyapplies this 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 systematicmanner over five years. This produces the expected return on plan assets that is included in pension income (expense). The difference between this expectedreturn and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately,future pension income (expense).58Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share 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 arerecognized when 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 thediscount rate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to be available during theperiod to maturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least the second-highest rating given bya recognized 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 currency inwhich that entity primarily generates and expends cash. The functional currency of the Company's remaining subsidiaries is the local currency, since that isthe 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 translation adjustments are included inaccumulated other comprehensive income (see Note 13). Gains and losses arising from foreign currency transactions of these subsidiaries are included in netincome.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 notbe realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its consolidatedstatements of 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)that the 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 themore-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.59Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Recently Issued Accounting PronouncementsIn April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest—Imputation of Interest: Simplifying the Presentationof Debt Issuance Costs ("ASU-2015-03"). ASU 2015-03 requires companies to present debt issuance costs as a direct deduction from the carrying value of thatdebt liability. ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption isallowed for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., thebalance sheet for each period is adjusted). The adoption of this standard is not expected to have a material impact on the Company’s financial position,results of operations or cash flows.In January 2015, the FASB issued ASU 2015-1, Income Statement - Extraordinary and Unusual Items ("ASU 2015-1"). ASU 2015-1 eliminates fromGAAP the concept of extraordinary items. The update is effective for the Company for the interim and annual periods beginning after December 15, 2015.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standardrequires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financialstatements are issued. An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as agoing concern.” ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, withearly adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operationsor cash flows.In May 2014, the FASB issued guidance codified in Accounting Standards Codification ("ASC") 606, Revenue Recognition - Revenue from Contractswith Customers, which amends the guidance in former ASC 605, Revenue Recognition. The objective of ASC 606 is to establish a single comprehensivemodel for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognitionguidance. The principle of ASC 606 is that an entity will recognize revenue at the transfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled. ASC 606 is effective for interim and annual reporting periods beginning after December15, 2016 and can be adopted by the Company using either a full retrospective or modified retrospective approach, with early adoption prohibited. TheCompany is currently evaluating ASC 606 and has not determined the impact it may have on the Company’s consolidated results of operations, financialposition or cash flows nor decided on the method of adoption.In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU2014-08"). ASU 2014-08 provides new guidance on the accounting and reporting of discontinued operations. Under the new guidance, only disposalsrepresenting a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on theorganization’s operations and financial results. Additionally, the new guidance requires additional disclosures about discontinued operations. The update iseffective for the Company for the interim and annual periods beginning after December 15, 2014. The adoption of the provisions of ASU 2014-08 is notexpected to have a material impact on the Company's consolidated financial statements.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, 2015, 2014 and 2013 was $1,272, $4,653 and $6,367, respectively. The benefits of tax deductions inexcess of recognized compensation expense were $39 and $4,628 for fiscal years ended March 31, 2014 and 2013, respectively. The Company has classifiedshare-based compensation within selling, general and administrative expenses to correspond with the same line item as the majority of the cash compensationpaid to employees. Upon the exercise of stock options or vesting of restricted stock, the Company first transfers treasury stock, then will issue new shares. (seeNote 16 for further details).Supplemental Cash Flow InformationFor the fiscal year ended March 31, 2015, the Company received $22,241 for income tax refunds, net of payments. For the fiscal years ended March 31,2014 and 2013, Company paid $4,157 and $3,109, respectively, for income taxes, net of income tax refunds received. The Company made interest paymentsof $82,425, $81,100 and $62,229 for fiscal years ended March 31, 2015, 2014 and 2013.60Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)During the fiscal years ended March 31, 2015, 2014 and 2013, the Company financed $52, $36 and $66 of property and equipment additions throughcapital leases, respectively. During the fiscal years ended March 31, 2014 and 2013, the Company issued 2,290,755 and 395,269 shares, respectively, inconnection 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 the Company'sagreements include a three-year warranty, although certain programs have warranties up to 20 years. Warranty reserves are included in accrued expenses andother noncurrent liabilities. The warranty reserves for the fiscal years ended March 31, 2015 and 2014 were $78,972 and $25,651, respectively. This increaseis primarily due to acquisitions (see Note 3).3.ACQUISITIONSFISCAL 2015 ACQUISITIONSAssumption of Spirit AeroSystems Holdings, Inc. - Gulfstream G650 and G280 Wing ProgramsEffective December 30, 2014, a wholly-owned subsidiary of the Company, Triumph Aerostructures - Tulsa LLC, doing business as TriumphAerostructures-Vought Aircraft Division-Tulsa, completed the acquisition of the Gulfstream G650 and G280 wing programs (the "Tulsa Programs") located inTulsa, Oklahoma, from Spirit AeroSystems, Inc. The acquisition of the Tulsa Programs establishes the Company as a leader in fully integrated wing design,engineering and production and advances its standing as a strategic Tier One Capable aerostructures supplier. The acquired business will operate as TriumphAerostructures-Vought Aircraft Division-Tulsa and its results are included in the Aerostructures Group from the date of acquisition.The Company received $160,000 in cash plus assets required to run the business from Spirit-Tulsa to cover the anticipated future cash flow needs of theprograms. Goodwill in the amount of $74,837 was provisionally recognized for this acquisition and is calculated as the excess of consideration transferredover the net assets recognized and represents future economic benefits arising from other assets acquired that could not be individually identified andseparately recognized such as assembled workforce. The goodwill is not deductible for tax purposes.The accounting for the business combination is provisional and dependent upon obtaining valuations and other information for certain assets andliabilities which have not yet been identified, completed or obtained to a point where definitive estimates can be made. The process for estimating the fairvalues of identified intangible assets, certain tangible assets and assumed liabilities requires 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 for theTulsa Programs is provisional. Additional purchase price adjustments will be recorded during the measurement period not to exceed one year beyond theacquisition date. These adjustments may have a material impact on the Company's results of operations and financial position.The table below presents the provisional estimated fair value of assets acquired and liabilities assumed on the acquisition date based on the bestinformation the Company has received to date, in accordance with Accounting Standards Codification Topic 805, Business Combinations ("ASC 805").These estimates will be revised as the Company receives final appraisal of tangible and intangible assets, certain liabilities assumed and other informationrelated to the Tulsa Programs acquisition. Accordingly, the amounts below report the Company's best estimate of fair value based on the informationavailable at this time:61Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) December 30, 2014Accounts receivable$4,929Inventory72,363Property and equipment14,781Goodwill74,837Deferred taxes53,131Other noncurrent assets18,161 Total assets$238,202 Accrued expenses$17,227Acquired contract liabilities358,735Other noncurrent liabilities22,240 Total liabilities$398,202Based on the information accumulated through the reporting date, the Company has recognized an accrued warranty liability of $28,281 and a relatedindemnification asset of $23,090 for amounts reimbursed by the seller. The provisional amounts recognized are based on the Company's best estimate usinginformation that it has obtained as of the reporting date. The Company will finalize its estimate once it is able to determine that it has obtained all necessaryinformation that existed as of the acquisition date related to this matter or one year following the acquisition of the Tulsa Programs whichever is earlier.The Tulsa Programs acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financialstatements from the effective date of acquisition. The Company incurred $5,000 in acquisition-related costs in connection with the Tulsa Programsacquisition, which is recorded in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.Acquisition of North American Aircraft Services, Inc.Effective October 17, 2014, the Company acquired the ownership of all of the outstanding shares of North American Aircraft Services, Inc. and itsaffiliates ("NAAS"). NAAS is based in San Antonio, Texas, with fixed-based operator units throughout the United States as well as international locations anddelivers line maintenance and repair, fuel leak detection and fuel bladder cell repair services. The acquired business will operate as Triumph AviationServices - NAAS Division and its results are included in Aftermarket Services Group from the date of acquisition.The purchase price for the NAAS acquisition was $44,520, net of working capital adjustment of $167. Goodwill in the amount of $25,159 wasrecognized 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 an intangible asset related to customer relationships valued at $17,000 with a weighted-average life of 11.0 years.The accounting for the business combination is dependent upon valuations and other information for certain assets and liabilities which have not yetbeen 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 requires the use of judgment to determine the appropriate assumptions.As the Company finalizes estimates of the fair value of assets acquired and liabilities assumed, the purchase price allocation for NAAS is provisional.Additional purchase price adjustments will be recorded during the measurement period not to exceed one year beyond the acquisition date. Theseadjustments may have a material impact on the Company's results of operations and financial position.The table below presents the provisional estimated fair value of assets acquired and liabilities assumed on the acquisition date based on the bestinformation the Company has received to date, in accordance with ASC 805. These estimates will be revised as the Company revises final appraisal oftangible and intangible assets, certain liabilities assumed and other62Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)information related to the NAAS acquisition. Accordingly, the amounts below report the Company's best estimate of fair value based on the informationavailable at this time: October 17, 2014Cash$803Accounts receivable4,974Inventory866Property and equipment216Goodwill25,159Intangible assets17,000Other assets280 Total assets$49,298 Accounts payable$232Accrued expenses935Other noncurrent liabilities3,611 Total liabilities$4,778The provisional amounts recognized are based on the Company's best estimate using information that it has obtained as of the reporting date. TheCompany will finalize its estimate once it is able to determine that it has obtained all necessary information that existed as of the acquisition date related tothis matter or one year following the acquisition of NAAS, whichever is earlier.The NAAS acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financial statements fromthe effective date of acquisition. The NAAS acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. The Companyincurred $654 in acquisition-related costs in connection with the NAAS acquisition, which is recorded in selling, general and administrative expenses in theaccompanying Condensed Consolidated Statements of Income.Acquisition of GE Aviation - Hydraulic ActuationEffective June 27, 2014, the Company acquired the hydraulic actuation business of GE Aviation ("GE"). GE's hydraulic actuation business consists ofthree facilities located in Yakima, Washington, Cheltenham, England and the Isle of Man and is a technology leader in actuation systems. GE's key productofferings include complete landing gear actuation systems, door actuation, nose-wheel steerings, hydraulic fuses, manifolds flight control actuation andlocking mechanisms for the commercial, military and business jet markets. The acquired business will operate as Triumph Actuation Systems-Yakima andTriumph Actuation Systems-UK & IOM and its results are included in Aerospace Systems Group from the date of acquisition.The purchase price for the GE acquisition was $75,609, which included cash paid at closing, working capital adjustments, and deferred payments of$6,000 paid in April 2015. Goodwill in the amount of $161,160 was recognized for this acquisition and is calculated as the excess of considerationtransferred over the net assets recognized and represents future economic benefits arising from other assets acquired that could not be individually identifiedand separately recognized such as assembled workforce. The goodwill is deductible for tax purposes. The Company has also identified an intangible assetrelated to customer relationships valued at $32,496 with a weighted-average life of 12.0 years.The accounting for the business combination is dependent upon obtaining valuations and other information for certain assets and liabilities which havenot yet been completed or obtained to a point where definitive estimates can be made. The process for estimating the fair values of identified intangibleassets, certain tangible assets and assumed liabilities requires the use of judgment to determine the appropriate assumptions.As the Company finalizes estimates of the fair value of assets acquired and liabilities assumed, the purchase price allocation for GE is provisional.Additional purchase price adjustments will be recorded during the measurement period not to exceed one year beyond the acquisition date. Theseadjustments may have a material impact on the Company's results of operations and financial position.63Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)The table below presents the provisional estimated fair value of assets acquired and liabilities assumed on the acquisition date based on the bestinformation the Company has received to date, in accordance with ASC 805. These estimates will be revised as the Company receives final appraisal oftangible and intangible assets, certain liabilities assumed and other information related to the GE acquisition. Accordingly, the amounts below report theCompany's best estimate of fair value based on the information available at this time: June 27, 2014Cash$4,608Accounts receivable35,582Inventory48,469Property and equipment29,781Goodwill161,160Intangible assets32,496Deferred taxes62,731Other assets2,023 Total assets$376,850 Accounts payable$17,830Accrued expenses52,935Acquired contract liabilities230,476 Total liabilities$301,241Based on the information accumulated through the reporting date, the Company has recognized an accrued warranty liability of $39,222. Theprovisional amounts recognized are based on the Company's best estimate using information that it has obtained as of the reporting date. The Company willfinalize its estimate once it is able to determine that it has obtained all necessary information that existed as of the acquisition date related to this matter orone year following the acquisition of GE, whichever is earlier.The GE acquisition has been accounted for under the acquisition method and, accordingly, is included in the consolidated financial statements from theeffective date of acquisition. The GE acquisition was funded by the Company's long-term borrowings in place at the date of acquisition. The Companyincurred $1,834 in acquisition-related costs in connection with the GE acquisition, which is recorded in selling, general and administrative expenses in theaccompanying Condensed Consolidated Statements of Income.The acquisitions of the Tulsa Programs, NAAS and GE are referred to in this report as the "fiscal 2015 acquisitions."The following table presents information for the fiscal 2015 acquisitions which are included in the Company's Consolidated Statement of Income fromtheir respective dates of acquisitions through the end of fiscal 2015: For the Year Ended March 31,2015Net sales $307,558Operating income 41,679FISCAL 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.64Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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. Goodwill inthe 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, on October7, 2013, the Company, at its option, called General Donlee's Convertible Notes for $26,000, which were paid on November 12, 2013. Goodwill in the amountof $46,528 was recognized for this acquisition and is calculated as the excess of consideration transferred over the net assets recognized and represents futureeconomic benefits arising from other assets acquired that could not be individually identified and separately recognized such as assembled workforce. Thegoodwill is not deductible for tax purposes. The Company has also identified intangible assets related to customer relationships valued at approximately$24,596 with a weighted-average life of 15.0 years. Prior to the anniversary of the acquisition date, the Company finalized the purchase price allocation. Thefinalization of the Company's purchase accounting assessment did not result in significant measurement period adjustments and did not have a materialimpact on the Company's Consolidated Balance Sheet, Statement of Income, or Statement of Cash Flows.The following condensed balance sheet represents the amounts assigned to each major asset and liability caption in the aggregate from the acquisition ofGeneral Donlee, in accordance with ASC 805: October 4, 2013Accounts receivable$10,573Inventory15,645Prepaid expenses and other184Property and equipment31,952Goodwill46,528Intangible assets24,596 Total assets$129,478 Accounts payable$2,841Accrued expenses3,620Deferred taxes11,439Debt54,956 Total liabilities$72,856The Company finalized its estimate after it was able to determine that it had obtained all necessary information that exited as of the acquisition daterelated to these amounts.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 dateof acquisition. The Company incurred $766 in acquisition-related costs in connection with the General Donlee acquisition, which is recorded in selling,general and administrative expenses in the accompanying Consolidated Statements of Income for the fiscal year ended March 31, 2014.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 - Thailand65Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)and is included in the Aerostructures Group. Together, Triumph Structures - Farnborough and Triumph Structures - Thailand constitute a global supplier ofcomposite and metallic propulsion and structural composites and assemblies. In addition to its composite operations, the Thailand operation also machinesand 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.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."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 purchase price for the GPECS acquisition was $208,650 and provides the Company with new capabilities in a marketwhere the Company does not currently participate and further diversifies its customer base in electronic engine controls, fuel metering units and main fuelpumps for both OE and aftermarket/spares end markets. The Company incurred $2,936 in acquisition-related costs in connection with the GPECS acquisition,which is recorded in selling, general and administrative expenses in the accompanying Consolidated Statement of Income. The results for Triumph EngineControl Systems, LLC are included in the Aerospace Systems Group segment from the date of acquisition.66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 purchase price for the Embee acquisition was $141,864 and expands the Company's current capabilities to providecomprehensive processing services on precision engineered parts for hydraulics, landing gear, spare parts and electronic actuation systems. 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 results for Triumph Processing — Embee Division, Inc. are included in the Aerospace Systems Groupsegment.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 GE and fiscal 2014 acquisitions as if they had been consummated as of April1, 2013 and 2012, respectively. The pro forma results include the amortization associated with an estimate of acquired intangible assets and interest expenseon debt to fund these acquisitions, as well as fair value adjustments for property and equipment and off-market contracts. To better reflect the combinedoperating results, nonrecurring charges directly attributable to the transaction have been excluded. In addition, the unaudited pro forma results do notinclude 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 2015 and fiscal 2014 acquisitions been consummated as of April 1, 2013 and 2012,respectively, and had been included in the Company's results of operations for the full fiscal years 2015 and 2014. (unaudited) Year Ended March31, 2015 2014Net sales $3,939,659 $3,991,532Net income 240,746 207,142Net income, per share—basic $4.74 $4.01Net income, per share—diluted $4.72 $3.924.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. Asa result of the sale of TAS-Wichita, the Company recognized no gain or loss. The operating results of TAS-Wichita were included in the Aerostructures Groupthrough 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 operating results areincluded in the Aftermarket Services Group through the date of disposal.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).67Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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, 2015 2014Raw materials$79,786 $106,552Work-in-process1,291,377 1,102,626Finished goods91,639 67,608Less: unliquidated progress payments(189,923) (165,019)Total inventories$1,272,879 $1,111,767According 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 $70,121 and $64,418, respectively, at March 31, 2015 and 2014.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 related to the Company's contracts with Bombardier for theGlobal 7000/8000 program ("Bombardier") and Embraer for the second generation E-Jet ("Embraer") are as follows: March 31, 2015 2014Bombardier$238,871 $111,906Embraer68,112 19,452Total$306,983 $131,358The Company is still in the pre-production stages for the Bombardier and Embraer programs, as these aircrafts are not scheduled to enter service until2017, or later. Transition of these programs from development to recurring production levels is dependent upon the success of the programs at achievingflight testing and certification, as well as the ability of the Bombardier and Embraer programs to generate acceptable levels of aircraft sales. The failure toachieve these milestones and level of sales or significant cost overruns may result in an impairment of the capitalized pre-production costs.68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, 2015 and 2014 is: March 31, 2015 2014Land$72,893 $74,835Construction in process53,475 68,904Buildings and improvements374,763 353,096Furniture, fixtures and computer equipment146,834 135,986Machinery and equipment945,317 841,441 1,593,282 1,474,262Less accumulated depreciation644,380 542,832 $948,902 $931,430Depreciation expense for the fiscal years ended March 31, 2015, 2014 and 2013 was $108,347, $117,553 and $93,848, respectively, which includesdepreciation of assets under capital lease. Included in furniture, fixtures and computer equipment above is $84,098 and $80,361, respectively, of capitalizedsoftware at March 31, 2015 and 2014, which were offset by accumulated depreciation of $55,304 and $43,793, 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, 2015 and 2014: Aerostructures AerospaceSystems AftermarketServices TotalBalance, March 31, 2014$1,339,993 $395,912 $55,986 $1,791,891Goodwill recognized in connection with acquisitions74,837 161,160 25,159 261,156Effect of exchange rate changes870 (23,431) 108 (22,453)Balance, March 31, 2015$1,415,700 $533,641 $81,253 $2,030,594 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) 160 — (5)Balance, March 31, 2014$1,339,993 $395,912 $55,986 $1,791,891The fiscal year ended March 31, 2014, purchase accounting adjustments of $33 relates to an earnout on an acquisition accounted for prior to theadoption of ASC 805 for which the earnings target was achieved during the period.69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, 2015 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships16.5 $689,179 $(180,765) $508,414Product rights, technology and licenses11.8 56,419 (33,208) 23,211Noncompete agreements and other15.8 2,929 (565) 2,364TradenamesIndefinite-lived 438,400 — 438,400Total intangibles, net $1,186,927 $(214,538) $972,389 March 31, 2014 Weighted-Average Life (in Years) Gross CarryingAmount AccumulatedAmortization NetCustomer relationships16.7 $650,199 $(136,970) $513,229Product 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 $1,144,683 $(166,512) $978,171Amortization expense for the fiscal years ended March 31, 2015, 2014 and 2013 was $49,976, $46,724 and $35,658, respectively. Amortization expensefor the five fiscal years succeeding March 31, 2015 by year is expected to be as follows: 2016: $49,839; 2017: $43,624; 2018: $41,996; 2019: $40,230;2020: $38,394 and thereafter: $319,906.8.ACCRUED EXPENSESAccrued expenses are composed of the following items: March 31, 2015 2014Accrued pension$3,940 $3,960Deferred revenue, advances and progress billings32,210 20,428Accrued other postretirement benefits20,116 26,038Accrued compensation and benefits115,294 103,962Accrued interest16,624 17,966Warranty reserve47,203 13,628Accrued workers' compensation16,500 15,010Accrued income tax2,516 796Loss contract reserve99,559 2,236Contingent consideration972 —Legal contingencies— 38,000All other72,806 31,266Total accrued expenses$427,740 $273,29070Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)9.LEASESAt March 31, 2015, future minimum payments under noncancelable operating leases with initial or remaining terms of more than one year were asfollows: 2016—$25,975; 2017—$22,839; 2018—$20,624; 2019—$17,907; 2020—$14,294 and thereafter—$50,914 through 2027. In the normal course ofbusiness, operating leases are generally renewed or replaced by other leases.Total rental expense was $34,762, $41,508 and $38,349 for the fiscal years ended March 31, 2015, 2014 and 2013, respectively.10.LONG-TERM DEBTLong-term debt consists of the following: March 31, 2015 2014Revolving credit facility$148,255 $194,406Term loan356,250 375,000Receivable securitization facility100,000 162,400Equipment leasing facility91,913 74,342Senior notes due 2018— 348,423Senior notes due 2021375,000 375,000Senior notes due 2022300,000 —Convertible senior subordinated notes— 12,834Other debt7,978 7,978 1,379,396 1,550,383Less: current portion42,255 49,575 $1,337,141 $1,500,808Revolving Credit FacilityIn May 2014, the Company amended and restated its existing credit agreement (the “Credit Facility”) with its lenders to (i) increase the maximumamount allowed for the receivable securitization facility (the "Securitization Facility") and (ii) amend certain other terms and covenants.In November 2013, the Company amended and restated its Credit Facility with its lenders to (i) provide for a $375,000 term loan with a maturity date ofMay 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. In connection with the amendment to the CreditFacility, the Company incurred approximately $2,795 of financing costs. These costs, along with the $6,507 of unamortized financing costs prior to theamendment, 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 between0.25% and 0.45% on the unused portion of the Credit Facility. The Company’s obligations under the Credit Facility are guaranteed by the Company’sdomestic subsidiaries.71Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)At March 31, 2015, there were $148,255 in outstanding borrowings and $35,384 in letters of credit under the Credit Facility primarily to supportinsurance policies. At March 31, 2014, there were $194,406 in borrowings and $36,445 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 Facilitycould also cause the acceleration of obligations under certain other agreements. The Company is in compliance with all such covenants as of March 31,2015. As of March 31, 2015, the Company had borrowing capacity under the Credit Facility of $816,361 after reductions for borrowings and letters of creditoutstanding under 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,as well as its risk-management objective and strategy for undertaking the hedge, the nature of the risk being hedged, how the hedging instrument'seffectiveness will be assessed and a description of the method of measuring the ineffectiveness. The Company also formally assesses, both at the hedge'sinception and on a quarterly basis, whether the derivative item is highly effective offsetting changes in cash flows.As of March 31, 2015 and 2014, the interest rate swap agreement had a notional amount of $356,250 and $375,000, respectively, and a fair value of$(2,743) and $2,426, respectively, which is recorded in other comprehensive income net of applicable taxes (Level 2). The interest rate swap settles on amonthly basis when interest payments are made. These settlements occur through the maturity date.Receivables Securitization ProgramIn November 2014, the Company amended its receivable securitization facility (the "Securitization Facility"), increasing the purchase limit from$175,000 to $225,000 and extending the term through November 2017. In connection with the Securitization Facility, the Company sells on a revolvingbasis certain eligible accounts receivable to Triumph Receivables, LLC, a wholly owned special-purpose entity, which in turn sells a percentage ownershipinterest in the receivables to commercial paper conduits sponsored by financial institutions. The Company is the servicer of the accounts receivable under theSecuritization Facility. As of March 31, 2015, the maximum amount available under the Securitization Facility was $225,000. Interest rates are based onprevailing market rates for short-term commercial paper plus a program fee and a commitment fee. The program fee is 0.40% on the amount outstanding underthe Securitization Facility. Additionally, the commitment fee is 0.40% on 100% of the maximum amount available under the Securitization Facility. AtMarch 31, 2015, $100,000 was outstanding under the Securitization Facility. In connection with amending the Securitization Facility, the Company incurredapproximately $252 of financing costs. These costs, along with the $341 of unamortized financing costs prior to the amendment, are being amortized overthe life of the Securitization Facility. The Company securitizes its accounts receivable, which are generally non-interest bearing, in transactions that areaccounted for as borrowings pursuant to the Transfers 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, 2015.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, 2015, 2014 and 2013, the Company entered into new capital leases in the amounts of $52, $36 and $66,respectively, to finance a portion of the Company's capital additions for the respective years. During the fiscal years ended March 31, 2015, 2014 and 2013,the Company obtained financing for existing fixed assets in the amount of $37,608, $30,503 and $14,435, respectively.72Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Senior Notes due 2021On February 26, 2013, the Company issued $375,000 principal amount of 4.875% Senior Notes due 2021 (the "2021 Notes"). The 2021 Notes were soldat 100% of principal amount and have an effective interest yield of 4.875%. Interest on the Notes accrues at the rate of 4.875% per annum and is payablesemiannually in cash in arrears on April 1 and October 1 of each year, commencing on October 1, 2013. In connection with the issuance of the 2021 Notes,the Company incurred approximately $6,327 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2021Notes.The 2021 Notes are the Company's senior unsecured obligations and rank equally in right of payment with all of its other existing and future seniorunsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2021 Notes are guaranteed on a full,joint and several basis by each of the Guarantor Subsidiaries.The Company may redeem some or all of the 2021 Notes prior to April 1, 2017 by paying a "make-whole" premium. The Company may redeem some orall of the 2021 Notes on or after April 1, 2017 at specified redemption prices. In addition, prior to April 1, 2016, the Company may redeem up to 35% of the2021 Notes with the net proceeds of certain equity offerings at a redemption price equal to 104.875% of the aggregate principal amount plus accrued andunpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2021 Notes (the "2021 Indenture").The Company is obligated to offer to repurchase the 2021 Notes at a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any,as a result of certain change of control events and (ii) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain assetsales. These restrictions and prohibitions are subject to certain qualifications and exceptions.The 2021 Indenture contains covenants that, among other things, limit the Company's ability and the ability of any of the Guarantor Subsidiaries to(i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the GuarantorSubsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose ofsubstantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries,and (viii) enter into transactions with affiliates.Senior Notes Due 2022On June 3, 2014, the Company issued $300,000 principal amount of 5.250% Senior Notes due 2022 (the "2022 Notes"). The 2022 Notes were sold at100% of principal amount and have an effective interest yield of 5.250%. Interest on the 2022 Notes accrues at the rate of 5.250% per annum and is payablesemiannually in cash in arrears on June 1 and December 1 of each year, commencing on December 1, 2014. In connection with the issuance of the 2022Notes, the Company incurred approximately $4,990 of costs, which were deferred and are being amortized on the effective interest method over the term ofthe 2022 Notes.The 2022 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 2022 Notes are guaranteed on a full,joint and several basis by each of the Guarantor Subsidiaries.The Company may redeem some or all of the 2022 Notes prior to June 1, 2017 by paying a "make-whole" premium. The Company may redeem some orall of the 2022 Notes on or after June 1, 2017 at specified redemption prices. In addition, prior to June 1, 2017, the Company may redeem up to 35% of the2022 Notes with the net proceeds of certain equity offerings at a redemption price equal to 105.250% of the aggregate principal amount plus accrued andunpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2022 Notes (the "2022 Indenture").The Company is obligated to offer to repurchase the 2022 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 2022 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) incur73Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries, and (viii) enter into transactions withaffiliates.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 was 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 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 accrued atthe rate of 8.63% per annum and was 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 amortized on the effectiveinterest method over the term of the 2018 Notes.On June 23, 2014, the Company completed the redemption of the 2018 Notes. The principal amount of $350,000 was redeemed at a price of 104.79%plus accrued and unpaid interest. As a result of the redemption, the Company recognized a pre-tax loss on redemption of $22,615, consisting of earlytermination premium, write-off of unamortized discount and deferred financing fees and was recorded on the Condensed Consolidated Statements of Incomeas a component of "Interest expense and other" for the fiscal year ended March 31, 2015.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 fullyamortized as of September 30, 2011.The Convertible Notes accrued interest at a fixed rate of 2.63% per annum, payable in cash semiannually in arrears on each April 1 and October 1beginning April 1, 2007. During the period commencing on October 6, 2011 and ending on, but excluding, April 1, 2012 and each semiannual period fromOctober 1 to March 31 or from April 1 to September 30 thereafter, the Company paid contingent interest during the applicable interest period if the averagetrading price of a note for the five consecutive trading days ending on the third trading day immediately preceding the first day of the relevant semiannualperiod equals or exceeds 120% of the principal amount of the Convertible Notes. The contingent interest payable per note in respect of any semiannualperiod equaled 0.25% per annum calculated on the average trading price of a note for the relevant five trading day period.Prior to fiscal 2011, the Company paid $19,414 to purchase $22,200 in principal amount of the Convertible Notes.The Convertible Notes would have matured on October 1, 2026 unless earlier redeemed, repurchased or converted. The Company was able to redeem theConvertible Notes for 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 theConvertible Notes to be redeemed plus accrued and unpaid interest, including contingent interest and additional amounts, if any, up to but not including thedate of redemption. In addition, holders of the Convertible Notes had the right to require the Company to repurchase for cash all or a portion of theirConvertible Notes on October 1, 2016 and 2021, at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plusaccrued and unpaid interest, including contingent interest and additional amounts, if any, up to, but not including, the date of repurchase. The ConvertibleNotes were convertible into the Company's common stock at a rate74Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)equal to 36.8679 shares per $1 principal amount of the Convertible Notes (equal to an initial conversion price of approximately $27.12 per share), subject toadjustment as described in the Indenture. Upon conversion, the Company delivered to the holder surrendering the Convertible Notes for conversion, for each$1 principal amount of Convertible Notes, an amount consisting of cash equal to the lesser of $1 and the Company's total conversion obligation and, to theextent that the Company's total conversion obligation exceeded $1, at the Company's election, cash or shares of the Company's common stock in respect ofthe remainder.On May 22, 2014, the Company announced the redemption of the Convertible Notes. The redemption price for the Convertible Notes was equal to thesum of 100% of the principal amount of the Convertible Notes outstanding, plus accrued and unpaid interest on the Convertible Notes up to, but notincluding, the redemption date of June 23, 2014. The Convertible Notes were able to be converted at the option of the holder.The Convertible Notes were eligible for conversion upon meeting certain conditions as provided in the indenture governing the Convertible Notes. Forthe periods from January 1, 2011 through June 23, 2014, the Convertible Notes were eligible for conversion. During the fiscal year ended March 31, 2015,the Company settled the conversion of $12,834 in principal value of the Convertible Notes, with the principal and and the conversion benefit settled in cash.During the fiscal years ended March 31, 2014 and 2013, the Company settled the conversion of $96,535 and $19,286, respectively, in principal value of theConvertible Notes, as requested by the respective holders, with the principal settled in cash and the conversion benefit settled through the issuance of2,290,755 and 395,269 shares, respectively.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 $27.12. The average price of the Company's common stock for the fiscal years ended March 31, 2015, 2014 and 2013 was$65.11, $73.94 and $64.30, respectively. Therefore, 40,177, 811,083 and 2,400,439 additional shares, respectively, were included in the diluted earnings pershare calculation for the fiscal years ended March 31, 2015, 2014 and 2013, respectively.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, 2015 March 31, 2014CarryingValue FairValue CarryingValue FairValue$1,379,396 $1,358,306 $1,550,383 $1,580,447The 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, 2015, 2014 and 2013 amounted to $82,425, $81,100 and $62,229, respectively.Interest capitalized during the fiscal years ended March 31, 2015, 2014 and 2013 was $284, $4,246 and $1,114, respectively.As of March 31, 2015, the maturities of long-term debt are as follows: 2016—$42,255; 2017—$36,805; 2018—$294,284; 2019—$299,354;2020—$11,008; and thereafter—$695,691 through 2021.75Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)11.OTHER NONCURRENT LIABILITIESOther noncurrent liabilities are composed of the following items: March 31, 2015 2014Acquired contract liabilities, net$644,950 $141,505Deferred grant income20,354 21,905Accrued workers' compensation15,657 18,077Environmental contingencies8,638 9,959Accrued warranties31,769 12,022Income tax reserves3,690 3,196Contingent consideration— 1,740Legal contingencies9,500 9,500All other19,495 16,852Total other noncurrent liabilities$754,053 $234,75612.INCOME TAXESThe components of pretax income are as follows: Year ended March 31, 2015 2014 2013Foreign$(429) $3,482 $11,829Domestic349,723 308,751 451,228 $349,294 $312,233 $463,057The components of income tax expense are as follows: Year ended March 31, 2015 2014 2013Current: Federal$391 $672 $(24,403)State178 1,346 1,830Foreign4,751 1,090 1,516 5,320 3,108 (21,057)Deferred: Federal114,260 100,191 176,187State(1,857) 3,102 10,789Foreign(7,126) (424) (209) 105,277 102,869 186,767 $110,597 $105,977 $165,71076Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: Year ended March 31, 2015 2014 2013Statutory federal income tax rate35.0% 35.0% 35.0%State and local income taxes, net of federal tax benefit0.5 0.9 1.8Miscellaneous permanent items and nondeductible accruals(0.7) 0.5 (0.3)Research and development tax credit(1.9) (1.8) (1.1)Foreign tax credits(0.2) — —Other(1.0) (0.7) 0.4Effective income tax rate31.7% 33.9% 35.8% The components of deferred tax assets and liabilities are as follows: March 31, 2015 2014Deferred tax assets: Net operating loss and other credit carryforwards$186,172 $196,599Inventory2,987 6,687Accruals and reserves39,041 34,339Pension and other postretirement benefits186,806 186,941Acquired contract liabilities, net146,515 48,500Other— 737 561,521 473,803Valuation allowance(1,472) (1,424)Net deferred tax assets560,049 472,379Deferred tax liabilities: Long-term contract accounting311,521 317,377Property and equipment144,681 141,854Goodwill and other intangible assets342,794 333,889Prepaid expenses and other4,228 7,139 803,224 800,259Net deferred tax liabilities$243,175 $327,880As of March 31, 2015, the Company has federal and state net operating loss carryforwards of $919,503 expiring in various years through 2034. TheCompany also has a foreign net operating loss carryforward of $71,765.The effective income tax rate for the fiscal year ended March 31, 2015 was 31.7% as compared to 33.9% for the fiscal year ended March 31, 2014. Theeffective income tax rate for the fiscal year ended March 31, 2015 was reduced to reflect unrecognized tax benefits of $1,051, an additional tax benefitrelated to a net operating loss carryback claim of $367, the benefit of $2,805 from a decrease to the state deferred tax rates and the benefit of $5,969 from theretroactive reinstatement of the R&D tax credit.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 subsidiaries in Thailand was approximately $1,930 or $0.04 per diluted share in fiscal 2015, $347 or $0.01 per diluted share in fiscal 2014 and$1,549 or $0.03 per diluted share in fiscal 2013.77Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been recorded, is $27,747 atMarch 31, 2015. 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, 2015 and 2014, the total amount of accrued income tax-related interestand penalties was $207 and $204, respectively.As of March 31, 2015 and 2014, the total amount of unrecognized tax benefits was $8,348 and $8,865, respectively, of which $8,348 and $8,865,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.With a few exceptions, the Company is no longer subject to U.S. federal income tax examinations for fiscal years ended before March 31, 2011, state orlocal examinations for fiscal years ended before March 31, 2011, or foreign income tax examinations by tax authorities for fiscal years ended beforeMarch 31, 2009.As of March 31, 2015, the Company is no longer subject to examination in any state or foreign jurisdictions. The Company has filed appeals in a priorstate examination related to fiscal years ended March 31, 1999 through March 31, 2005. Because of net operating losses acquired as part of the acquisition ofVought, the Company is subject to U.S. federal income tax examinations and various state jurisdiction examinations for the years ended December 31, 2001and after related to previously filed Vought tax returns. The Company believes appropriate provisions for all outstanding issues have been made for alljurisdictions and all open years.During the fiscal years ended March 31, 2015, 2014 and 2013, the Company added $4, $32 and $3 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, 2015 and2014 follows: Ending Balance—March 31, 2013$7,710Additions 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, 20149,293Additions for tax positions related to the current year962Additions for tax positions of prior years178Reductions for tax positions of prior years(1,607)Reductions as a result of a lapse of statute of limitations—Settlements—Ending Balance—March 31, 2015$8,82613.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. During the fiscal years ended March 31, 2015 and 2014,the Company repurchased 2,923,011 and 300,000 of its common stock for $184,380 and $19,134, respectively. As a result, as of May 21, 2015, the Companyremains able to purchase an additional 2,277,789 shares. Repurchases may be made from time to time in open market transactions, block purchases, privatelynegotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program.During the fiscal year ended March 31, 2015, the Company settled the conversion of $12,834 in principal value of the Convertible Notes, with theprincipal and and the conversion benefit settled in cash. During the fiscal years ended March 31,78Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)2014, the Company settled the conversion of $96,535, in principal value of the Convertible Notes, as requested by the respective holders, with the principalsettled in cash and the conversion benefit settled through the issuance of 2,290,755.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, 2015 and 2014, zero shares of preferred stock wereoutstanding.Accumulated Other Comprehensive LossChanges in accumulated other comprehensive loss ("AOCI") by component for the years ended March 31, 2015 and 2014 were as follows: CurrencyTranslationAdjustmentUnrealized Gains andLosses on DerivativeInstrumentsDefined Benefit PensionPlans and OtherPostretirement Benefits Total (1)Balance March 31, 2013 $3,513$131$(64,616) $(60,972) OCI before reclassifications (3,315)1,38445,958 44,027 Amounts reclassified from AOCI —(19)(1,944)(2)(1,963) Net current period OCI (3,315)1,36544,014 42,064Balance March 31, 2014 1981,496(20,602) (18,908) OCI before reclassifications (46,949)(4,098)(122,667) (173,714) Amounts reclassified from AOCI —(155)(6,133)(2)(6,288) Net current period OCI (46,949)(4,253)(128,800) (180,002)Balance March 31, 2015 $(46,751)$(2,757)$(149,402) $(198,910)(1) Net of tax.(2) Primarily relates to amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic pension cost of which a portion is allocated toproduction 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 pershare: Year ended March 31, 2015 2014 2013 (thousands)Weighted-average common shares outstanding—basic50,796 51,711 49,663Net effect of dilutive stock options and nonvested stock169 265 382Net effect of convertible debt40 811 2,401Weighted-average common shares outstanding—diluted51,005 52,787 52,44615.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 beforetaxes. The Company generally matches contributions up to 60% of the first 6% of compensation contributed by the participant, calculated as 100% of thefirst 2% contributed, plus 40% of the next 4%79Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)contributed. All contributions and Company matches are invested at the direction of the employee in one or more mutual funds. Company matchingcontributions vest immediately and aggregated $20,020, $21,208 and $19,509 for the fiscal years ended March 31, 2015, 2014 and 2013, respectively.Defined Benefit Pension and Other Postretirement Benefit PlansThe Company sponsors several defined benefit pension plans covering some of its employees. Most employees are ineligible to participate in the plansor have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the defined benefitpension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation forcertain years. It is the Company's policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptionsacceptable under applicable 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, 2015. Employees achieve eligibility to participate in these contributory plans upon retirement from active service ifthey meet specified age and years of service requirements. Election to participate for some employees must be made at the date of retirement. Qualifyingdependents at the date of retirement are also eligible for medical coverage. Current plan documents reserve the right to amend or terminate the plans at anytime, subject to applicable collective bargaining requirements for represented employees. From time to time, changes have been made to the benefitsprovided to various groups of plan participants. Premiums charged to most retirees for medical coverage prior to age 65 are capped and based on years ofservice and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also have provisions 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, 2015, 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 ofthe measurement date. Investments that are not publicly traded were valued based on the estimated fair value of those investments based on our evaluation ofdata from fund managers and comparable market 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 ofMarch 31, 2015 and 2014, and the amounts recorded in the Consolidated Balance Sheets at March 31, 2015 and 2014. Company contributions includeamounts contributed directly to plan assets and indirectly as benefits are paid from the Company's assets. Benefit payments reflect the total benefits paid fromthe plans and the Company's assets. Information on the plans includes both the domestic qualified and nonqualified plans and the foreign qualified plans.80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, 2015 2014 2015 2014Change in projected benefit obligations Projected benefit obligation at beginning of year$2,160,708 $2,390,201 $311,012 $347,555Service cost12,902 12,854 2,868 3,060Interest cost90,576 92,938 12,332 12,552Actuarial loss (gain)341,719 (24,361) (61,261) (22,078)Acquisitions39,575 13,324 — —Plan amendments50 58 — —Participant contributions145 — 3,339 6,449Curtailments— (7,851) — —Settlements— (171,450) — —Benefits paid(158,638) (144,078) (29,023) (36,526)Currency translation adjustment(7,718) (927) — —Projected benefit obligation at end of year$2,479,319 $2,160,708 $239,267 $311,012Accumulated benefit obligation at end of year$2,464,418 $2,148,824 $239,267 $311,012Weighted-average assumptions used to determine benefitobligations at end of year Discount rate3.78% 4.32% 3.66% 4.14%Rate of compensation increase3.50% 3.50% N/A N/A81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, 2015 2014 2015 2014Change in fair value of plan assets Fair value of plan assets at beginning of year$1,933,269 $2,030,210 $— $—Actual return on plan assets236,782 160,297 — —Settlements— (171,450) — —Participant contributions145 — 3,339 6,449Company contributions112,338 46,347 25,684 30,077Acquisitions39,651 12,853 — —Benefits paid(158,638) (144,078) (29,023) (36,526)Currency translation adjustment(7,399) (910) — —Fair value of plan assets at end of year$2,156,148 $1,933,269 $— $—Funded status (underfunded) Funded status$(323,171) $(227,439) $(239,267) $(311,012)Reconciliation of amounts recognized in the consolidatedbalance sheets Pension asset—noncurrent$— $71 $— $—Accrued benefit liability—current(3,940) (3,960) (20,116) (26,038)Accrued benefit liability—noncurrent(319,231) (223,550) (219,151) (284,974)Net amount recognized$(323,171) $(227,439) $(239,267) $(311,012)Reconciliation of amounts recognized in accumulated othercomprehensive income Prior service credits$(20,155) $(25,493) $(8,682) $(13,211)Actuarial losses (gains)340,034 85,076 (74,615) (13,354)Income tax (benefits) related to above items(118,445) (22,384) 31,265 9,968Unamortized benefit plan costs (gains)$201,434 $37,199 $(52,032) $(16,597)82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, 2015, 2014 and 2013 are as follows: Pension Benefits OtherPostretirement Benefits Year Ended March 31, Year Ended March 31, 2015 2014 2013 2015 2014 2013Components of net periodicpension cost Service cost$12,902 $12,854 $18,503 $2,868 $3,060 $3,538Interest cost90,576 92,938 98,348 12,332 12,552 15,762Expected return on plan assets(150,565) (147,545) (137,334) — — —Amortization of prior servicecredit cost(5,288) (6,731) (5,829) (4,529) (4,529) (4,529)Amortization of net loss— 13,487 318 — — —Curtailment (gain) loss— (395) 23,662 — — —Settlements— 1,561 — — — —Special termination benefits— — 10,819 — — —Total net periodic benefit(income) expense$(52,375) $(33,831) $8,487 $10,671 $11,083 $14,771Weighted-average assumptionsused to determine net periodicpension cost Discount rate4.32% 4.07% 4.62% 4.14% 3.79% 4.35%Expected long-term rate on assets8.25% 8.25% 8.25% 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 expected return on plan assets is determined based on a market-related value of plan assets, which is smoothed asset value. The market-related valueof assets is calculating by recognizing investment performance that is different from that expected on a straight-line basis over five years. Actuarial gains andlosses are amortized over the average remaining expected future service for active participants, but only to the extent unrecognized gains or losses exceed acorridor equal to 10% of the greater of the projected benefit obligation or market-related value of assets.Effective April 1, 2015, the Company is changing the period over which actuarial gains and losses are being amortized for its U.S. pension plans from theaverage remaining future service period of active plan participants to the average life expectancy of inactive plan participants. This change was madebecause the Company has determined that as of that date almost all plan participants are inactive.During the fiscal year ended March 31, 2015, the Society of Actuaries released new mortality tables that reflect increased life expectancy for participantsof U.S. pension plans. The Company has reflected these new tables, along with an updated projection scale of mortality improvements, in the measurement ofour U.S. pension and other postretirement benefit plans as of March 31, 2015. This change resulted in an increase in benefit obligation.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 arerecognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable.83Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 March 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 theprojected pension obligation of $14,355 and a related curtailment gain of $8,427 included in "Curtailments, settlements and early retirementincentives" on the 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 loss of $8,031 included in "Curtailments and early retirement incentives" on theConsolidated Statement of Income for the fiscal year ended March 31, 2014. This curtailment loss included an increase in the projected pensionobligation of $6,503. Additionally, as part of the layoffs, the Company recorded an early retirement incentive severance charge of $916 included in"Selling, General and Administrative" on the Consolidated Statement of Income 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 presentedon the 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 groupof production and maintenance employees. The early retirement offer provided for the same increase, as the October 2012 offer, in pension benefitsto covered 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, 2013.84Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)•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.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 2016 net periodic benefit costs Prior service cost/(credit) ($3,297 and $2,830 net of tax, respectively)$(5,278) $(4,530)Actuarial (loss)/gain ($6,577 and ($4,035) net of tax, respectively)$(10,521) $6,460Expected 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*2016$181,617 $20,4822017174,814 19,7142018171,769 19,0832019167,056 19,0222020165,079 18,3732020 - 2024784,000 81,210* Net of expected Medicare Part D subsidies of $930 to $1,460 per year.Plan Assets, Investment Policy and StrategyThe table below sets forth the Company's target asset allocation for fiscal 2015 and the actual asset allocations at March 31, 2015 and 2014. ActualAllocation TargetAllocation March 31,Asset CategoryFiscal 2015 2015 2014Equity securities50 - 65% 45% 47%Fixed income securities20 - 45% 51 48Alternative investment funds2 - 10% 4 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 tomeet future 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 of85Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)the funding status and cover part, but not all, of the changes in liabilities. Most of the liabilities' changes are due to interest rate movements.To balance expected risk and return, allocation targets are established and monitored against acceptable ranges. All investment policies and proceduresare designed to ensure that the plans' investments are in compliance with the Employee Retirement Income Security Act of 1974 ("ERISA"). Guidelines areestablished defining permitted investments within each asset class. Each investment manager has contractual guidelines to ensure that investments are madewithin the parameters of their asset class or in the case of multi-asset class managers, the parameters of their multi-asset class strategy. Certain investments arenot permitted at any time including investment directly in employer securities and uncovered short sales.The tables below provide the fair values of the Company's plan assets at March 31, 2015 and 2014 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, 2015 Level 1 Level 2 Level 3 TotalAssets Cash and cash equivalents$91,499 $1,562 $— $93,061Equity securities International181,061 — — 181,061US equity72,911 — — 72,911US commingled fund619,297 — — 619,297International commingled fund47,366 68,165 — 115,531Fixed income securities Corporate bonds— 25,604 — 25,604Government securities— 182,456 — 182,456US commingled fund676,557 90,341 — 766,898International commingled fund10,174 3,512 13,686Other fixed income— 8,415 — 8,415Other Private equity and infrastructure— — 79,692 79,692Insurance contracts— — 920 920Total investment in securities—assets$1,698,865 $380,055 $80,612 $2,159,532Receivables 2,609Payables (5,993)Total plan assets $2,156,14886Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)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 — 724,601Mortgage-backed securities— 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 $1,933,269Cash 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 identicalinstruments in the principal market on which they are traded. Commingled funds that are open-ended mutual funds for which the fair value per share isdetermined and published by the respective mutual fund sponsor and is the basis for current observable transactions are categorized as Level 1 fair valuemeasures. All other commingled investment funds for which the Company uses NAV as a practical expedient to estimate fair value per unit are categorized asLevel 2 as long as they do not have redemption restrictions as of the measurement date. All commingled investment funds with redemption restrictions as ofthe measurement date are categorized as Level 3, if any. The NAV is the total value of the fund divided by the number of shares outstanding.Corporate, government agency bonds and mortgage-backed securities are primarily valued using a market approach with inputs that include brokerquotes, benchmark yields, base spreads and reported observable trades for identical or comparable instruments.Other investments include private equity and infrastructure funds and insurance contracts. Investments in private equity and infrastructure funds arecarried at estimated fair value based on NAV as a practical expedient and other appropriate adjustments to NAV as determined based on an evaluation of dataprovided by fund managers, including valuations of the underlying investments derived using inputs such as cost, operating results, discounted future cashflows, and market-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, 2014Balance Acquisitions Net Purchases(Sales) Net RealizedAppreciation(Depreciation) Net UnrealizedAppreciation(Depreciation) March 31, 2015BalancePrivate equity funds$89,113 — $(20,757) $(1,002) $12,338 $79,692Insurance contracts$— 920 $— $— $— $920Total$89,113 $920 $(20,757) $(1,002) $12,338 $80,61287Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) 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 $89,113Assumptions and SensitivitiesThe discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds.The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.The effect of a 25 basis-point change in discount rates as of March 31, 2015 is shown below: Pension Benefits OtherPostretirementBenefitsIncrease of 25 basis points Obligation*$(72,900) $(5,407)Net periodic expense (800) 414Decrease of 25 basis points Obligation*$76,600 $5,644Net periodic expense 600 (431)* 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. Theexpected long-term rate of return on assets was 8.25%. For fiscal 2016, 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, 2015 was 6.80% and is assumed to decrease gradually to 4.50% by fiscal 2027 and remain at that level thereafter. Theeffect 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$453 $(403)Obligation8,142 (7,225)Anticipated Contributions to Defined Benefit PlansAssuming a normal retirement age of 65, the Company expects to contribute $40,000 to its defined benefit pension plans and $20,400 to its OPEBduring fiscal 2016. No plan assets are expected to be returned to the Company in fiscal 2016.16.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 31,2015. There were no employee or non-employee director options granted during fiscal years ended March 31, 2015, 2014 and 2013.Since 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 ofpar value. Restricted shares generally vest in full after three or four years. The fair value of restricted shares under the Company's restricted stock plans isdetermined by the product of the number88Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)of shares granted and the grant date market price of the Company's common stock. Certain of these awards contain performance conditions, in addition toservice conditions. The fair value of restricted shares is expensed on a straight-line basis over the requisite service period of three or four years.The Company recognized $1,272, $4,653 and $6,367 of share-based compensation expense during the fiscal years ended March 31, 2015, 2014 and2013, respectively. The total income tax benefit recognized for share-based compensation arrangements for fiscal years ended March 31, 2015, 2014 and2013 was $445, $1,629 and $2,228, respectively.A summary of the Company's stock option activity and related information for its option plans for the fiscal year ended March 31, 2015 was as follows: Options Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm (in Years) AggregateIntrinsic ValueOutstanding at March 31, 201449,718 $15.72 Exercised(45,782) 15.72 Forfeited— — Outstanding at March 31, 20153,936 $15.37 0.1 $195,777Exercisable at March 31, 20153,936 $15.37 0.1 $195,777As of March 31, 2015 and 2014, 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, 2015, 2014 and 2013 was $2,234, $1,043 and $6,281, respectively. During April 2015, thebalance of outstanding stock options expired.At March 31, 2015 and 2014, 2,218,427 shares and 2,227,227 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, 2015 and changes during the fiscal yearended March 31, 2015, is presented below: Shares Weighted-Average GrantDate Fair ValueNonvested restricted stock and deferred stock units at March 31, 2014271,211 $59.37Granted8,800 64.44Vested(103,129) 55.49Forfeited(1,500) 72.76Nonvested restricted stock and deferred stock units at March 31, 2015175,382 $61.79The fair value of restricted stock which vested during fiscal 2015 was $9,157. The tax benefit from vested restricted stock was $673, $2,726 and $1,840during the fiscal years ended March 31, 2015, 2014 and 2013, respectively. The weighted-average grant date fair value of share-based grants in the fiscalyears ended March 31, 2015, 2014 and 2013 was $64.44, $79.80 and $62.25, respectively. Expected future compensation expense on restricted stock net ofexpected forfeitures, is approximately $1,188, which is expected to be recognized over the remaining weighted-average vesting period of 1.3 years.During the fiscal years ended March 31, 2015, 2014 and 2013, 8,800, 7,875 and 17,000 deferred stock units were granted to the non-employee membersof 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 Company andthe 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.89Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)In the course of discovery in the suit, the court began an investigation of allegations of wrongdoing by Eaton in its conduct of the litigation. OnDecember 22, 2010, the court dismissed all of Eaton's claims with prejudice based on the court's conclusion that a fraud had been perpetrated on the court bycounsel for Eaton, of which Eaton was aware or should have been aware. Eaton appealed, but on November 21, 2013, the Supreme Court of Mississippi, in aunanimous en banc decision, affirmed the lower court’s dismissal. Eaton moved for a rehearing of the Mississippi Supreme Court's affirmance but on March20, 2014, the Supreme Court denied Eaton's motion for rehearing. Meanwhile, the Company, several subsidiaries, and the employees sued by Eaton pursuedclaims (including antitrust claims) and counterclaims against Eaton based on the Eaton misconduct that led to the dismissal of Eaton's claims.On June 18, 2014, the Company announced it had settled all pending litigation involving the Company, its subsidiary the employees and Eaton. As partof the settlement, Eaton agreed to pay the Company $135,300 in cash. During the fiscal year ended March 31, 2015, the Company received paymentrepresenting a gain on legal settlement, net of expense, of $134,693, which is included on the Consolidated Statements of Income.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 priorto the acquisition dates. In the opinion of management, there are no significant environmental contingent liabilities which would have a material effect onthe financial 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, 2015 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 themovements and volatility in the financial markets including such events as the current credit and real estate market conditions. Declines in the market valuesof our plan assets could expose the total asset balance to significant risk which may cause an increase to future funding requirements. The Company'spotential risk related to OPEB projected obligations as of March 31, 2015 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 deems tobe immaterial. Some may involve claims or potential claims of substantial damages, fines or penalties. While the Company cannot predict the outcome of anypending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a material effect,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, Texas and to expand itsRed Oak, Texas ("Red Oak") facility to accommodate this relocation. The Company incurred approximately $86,640 in capital expenditures during the fiscalyears ended March 31, 2014, associated with this plan. The Company incurred $3,193 and $31,290 of moving expenses related to the relocation during thefiscal year ended March 31, 2015 and 2014, shown separately on the Consolidated Statements of Income. The relocation was substantially completed duringthe fiscal year ended March 31, 2014.90Table of Contents19.CUSTOMER CONCENTRATIONTrade accounts receivable from The Boeing Company ("Boeing") represented approximately 13% and 32% of total accounts receivable as of March 31,2015 and 2014, respectively. The Company had no other significant concentrations of credit risk. Sales to Boeing for fiscal 2015 were $1,634,367, or 42% ofnet sales, of which $1,441,892, $161,196 and $31,279 were from the Aerostructures segment, the Aerospace Systems segment and the Aftermarket Servicessegment, respectively. 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 theAerostructures segment, the Aerospace Systems segment and the Aftermarket Services 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 were from the Aerostructures segment, the Aerospace Systems segment and the AftermarketServices segment, respectively. No other single customer accounted for more than 10% of the Company's net sales; however, the loss of any significantcustomer, 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 19% of the Company's labor force is covered under collective bargaining agreements. As of March 31, 2015, approximately 42% of theCompany's collectively bargained 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. The Aerostructuressegment's revenues are derived from the design, manufacture, assembly and integration of metallic and composite aerostructures and structural components,including aircraft wings, fuselage sections, tail assemblies, engine nacelles, flight control surfaces as well as 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 on aworldwide 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 a gain on legalsettlement, net of expenses, of $134,693 for the fiscal year ended March 31, 2015.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.91Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)Selected financial information for each reportable segment and the reconciliation of Adjusted EBITDA to operating income before interest is as follows: Year Ended March 31, 2015 2014 2013Net sales: Aerostructures$2,507,878 $2,612,439 $2,781,344Aerospace systems1,089,117 871,750 615,771Aftermarket services304,013 287,343 314,507Elimination of inter-segment sales(12,286) (8,278) (8,920) $3,888,722 $3,763,254 $3,702,702Income before income taxes: Operating income (loss): Aerostructures$127,495 $252,910 $469,873Aerospace systems184,042 149,721 103,179Aftermarket services47,931 42,265 45,380Corporate75,205 (44,892) (87,219) 434,673 400,004 531,213Interest expense and other85,379 87,771 68,156 $349,294 $312,233 $463,057Depreciation and amortization: Aerostructures$100,096 $114,302 $95,884Aerospace systems45,200 37,453 19,870Aftermarket services8,559 7,529 9,118Corporate4,468 4,993 4,634 $158,323 $164,277 $129,506Amortization of acquired contract liabilities, net: Aerostructures$38,719 $25,207 $25,457Aerospace systems37,014 17,422 187 $75,733 $42,629 $25,644Adjusted EBITDA: Aerostructures$188,872 $342,005 $540,300Aerospace systems192,228 169,752 122,862Aftermarket services56,490 49,794 54,498Corporate(55,020) (38,733) (48,104) $382,570 $522,818 $669,556 Year Ended March 31, 2015 2014 2013Capital expenditures: Aerostructures$72,242 $167,198 $90,466Aerospace systems30,531 21,935 19,388Aftermarket services5,645 13,940 14,820Corporate1,586 3,341 2,216 $110,004 $206,414 $126,89092Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data) March 31, 2015 2014Total Assets: Aerostructures$4,004,642 $3,880,645Aerospace systems1,474,362 1,255,136Aftermarket services375,786 316,643Corporate214,653 100,962 $6,069,443 $5,553,386During fiscal years ended March 31, 2015, 2014 and 2013, the Company had foreign sales of $753,075, $621,625 and $504,079, respectively. TheCompany reports as foreign sales those sales with delivery points outside of the United States. As of March 31, 2015 and 2014, the Company had foreignlong-lived assets of $366,846 and $289,027, 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, 2015 and 2014, statements of income andcomprehensive income for the fiscal years ended March 31, 2015, 2014 and 2013, and statements of cash flows for the fiscal years ended March 31, 2015,2014 and 2013.93Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)SUMMARY CONSOLIDATING BALANCE SHEETS: March 31, 2015 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalCurrent assets: Cash and cash equivalents$620 $419 $31,578 $— $32,617Trade and other receivables, net3,578 180,796 337,472 — 521,846Inventories— 1,193,528 79,351 — 1,272,879Rotable assets— 35,248 13,572 — 48,820Deferred income taxes— 145,352 — — 145,352Prepaid expenses and other6,509 10,580 6,011 — 23,100Total current assets10,707 1,565,923 467,984 — 2,044,614Property and equipment, net8,209 806,442 134,251 — 948,902Goodwill and other intangible assets,net— 2,783,117 219,866 — 3,002,983Other, net24,601 34,955 13,388 — 72,944Intercompany investments andadvances4,062,058 81,540 63,897 (4,207,495) —Total assets$4,105,575 $5,271,977 $899,386 $(4,207,495) $6,069,443Current liabilities: Current portion of long-term debt$19,024 $23,231 $— $— $42,255Accounts payable8,919 380,457 38,072 — 427,448Accrued expenses38,275 326,455 63,010 — 427,740Total current liabilities66,218 730,143 101,082 — 897,443Long-term debt, less current portion1,166,095 71,046 100,000 — 1,337,141Intercompany debt719,525 1,769,564 407,722 (2,896,811) —Accrued pension and otherpostretirement benefits, noncurrent7,517 527,741 3,123 — 538,381Deferred income taxes and other10,435 1,088,896 61,363 — 1,160,694Total stockholders' equity2,135,785 1,084,587 226,096 (1,310,684) 2,135,784Total liabilities and stockholders'equity$4,105,575 $5,271,977 $899,386 $(4,207,495) $6,069,44394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, net1,591 226,407 289,306 — 517,304Inventories— 1,041,719 70,048 — 1,111,767Rotable assets— 28,113 13,553 — 41,666Deferred income taxes— 57,291 17 — 57,308Prepaid and other6,977 13,674 4,246 — 24,897Total current assets11,388 1,368,353 402,199 — 1,781,940Property and equipment, net9,933 801,560 119,937 — 931,430Goodwill and other intangible assets,net— 2,625,121 144,941 — 2,770,062Other, net58,536 7,860 3,558 — 69,954Intercompany investments andadvances4,094,443 84,180 12,333 (4,190,956) —Total assets$4,174,300 $4,887,074 $682,968 $(4,190,956) $5,553,386Current 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 24,114 — 619,944Total 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 $682,968 $(4,190,956) $5,553,38695Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2015 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $3,592,062 $320,907 $(24,247) $3,888,722Operating costs and expenses: Cost of sales— 2,900,408 265,292 (24,247) 3,141,453Selling, general and administrative50,562 199,569 35,642 — 285,773Depreciation and amortization2,269 141,561 14,493 — 158,323Relocation costs— 3,193 — — 3,193Gain on legal settlement, net ofexpenses(134,693) — — — (134,693) (81,862) 3,244,731 315,427 (24,247) 3,454,049Operating income81,862 347,331 5,480 — 434,673Intercompany interest and charges(205,075) 196,394 8,681 — —Interest expense and other85,555 10,438 (10,614) — 85,379Income from continuing operations,before income taxes201,382 140,499 7,413 — 349,294Income tax expense (income)58,049 54,359 (1,811) — 110,597Net income143,333 86,140 9,224 — 238,697Other comprehensive income(4,253) (128,800) (46,949) — (180,002)Total comprehensive income$139,080 $(42,660) $(37,725) $— $58,69596Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $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 $1,451$— $248,32097Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME: Fiscal year ended March 31, 2013 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet sales$— $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 loss— (49,834) (1,832) — (51,666)Total comprehensive income$58,252 $179,728 $7,701 $— $245,68198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, 2015 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations ConsolidatedTotalNet income$143,333 $86,140 $9,224 $— $238,697Adjustments to reconcile net income tonet cash (used in) provided byoperating activities(154,295) 397,607 (25,590) 10,913 228,635Net cash provided by (used in)operating activities(10,962) 483,747 (16,366) 10,913 467,332Capital expenditures(905) (92,686) (16,413) — (110,004)Reimbursements of capitalexpenditures— 653 — — 653Proceeds from sale of assets andbusinesses— 3,092 75 — 3,167Cash used for businesses andintangible assets acquired— 112,110 (73,829) — 38,281Net cash (used in) provided byinvesting activities(905) 23,169 (90,167) — (67,903)Net increase in revolving credit facility(46,150) — — — (46,150)Proceeds on issuance of debt300,000 37,660 171,300 — 508,960Retirements and repayments of debt(401,232) (20,928) (233,700) — (655,860)Purchase of common stock(184,380) — — — (184,380)Payments of deferred financing costs(6,487) — — — (6,487)Dividends paid(8,100) — — — (8,100)Proceeds from governmental grant— (3,198) — — (3,198)Repurchase of restricted shares forminimum tax obligation(673) — — — (673)Proceeds from exercise of stockoptions, including excess tax benefit720 — — — 720Intercompany financing and advances355,969 (521,180) 176,124 (10,913) —Net cash provided by (used in)financing activities9,667 (507,646) 113,724 (10,913) (395,168)Effect of exchange rate changes oncash and cash equivalents— — (642) — (642)Net change in cash and cashequivalents(2,200) (730) 6,549 — 3,619Cash and cash equivalents atbeginning of year2,820 1,149 25,029 — 28,998Cash and cash equivalents at end ofyear$620 $419 $31,578 $— $32,61799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 capitalexpenditures— 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 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)Repayment of 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 oncash and cash equivalents— — 5,362 — 5,362Net change in cash and cashequivalents(290) (388) (2,361) — (3,039)Cash and cash equivalents atbeginning of year3,110 1,537 27,390 — 32,037Cash and cash equivalents at end ofyear$2,820 $1,149 $25,029 $— $28,998100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 incometo net cash provided by operatingactivities42,111 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 capitalexpenditures— 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 creditfacility(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 oncash and 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 $— $32,037101Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)23.QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Fiscal 2015 Fiscal 2014 June 30 (6) (7) Sept. 30 Dec. 31 (8) (9) Mar. 31 June 30 (4) Sept. 30 Dec. 31 (5) Mar. 31BUSINESSSEGMENT SALES Aerostructures$611,863 $632,072 $559,465 $704,478 $651,888 $690,748 $637,202 $632,601Aerospace Systems219,852 288,902 279,198 301,165 219,526 205,483 211,402 235,339Aftermarket Services67,608 74,343 80,690 81,372 74,353 72,971 69,556 70,463Inter-segmentElimination(2,418) (1,194) (1,936) (6,738) (2,084) (1,857) (2,344) (1,993)TOTAL SALES$896,905 $994,123 $917,417 $1,080,277 $943,683 $967,345 $915,816 $936,410GROSS PROFIT(1)$188,112 $197,566 $24,068 $237,071 $222,303 $171,143 $166,518 $182,243OPERATINGINCOME Aerostructures$70,866 $72,230 $(102,461) $86,861 $100,387 $64,425 $52,412 $35,686Aerospace Systems37,352 46,214 41,863 58,612 42,643 31,740 32,504 42,834Aftermarket Services10,504 11,620 12,490 13,317 11,279 10,102 9,297 11,587Corporate121,802 (15,366) (13,158) (18,073) (12,963) (13,296) (9,434) (9,199)TOTAL OPERATINGINCOME$240,524 $114,698 $(61,266) $140,717 $141,346 $92,971 84,779 $80,908 NET INCOME$128,243 $67,446 $(39,832) $82,840 $79,043 $49,516 35,393 $42,304 Basic Earnings (Loss)per share(2)$2.48 $1.32 $(0.79) $1.66 $1.56 $0.96 $0.68 $0.81 Diluted Earnings (Loss)per share(2)(3)$2.46 $1.32 $(0.79) $1.66 $1.50 $0.94 $0.67 $0.80*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 the results of Primus from May 6, 2013 (date of acquisition) through March 31, 2014.(5)Includes the results of General Donlee from October 4, 2013 (date of acquisition) through March 31, 2014.(6)Includes the results of GE from June 27, 2014 (date of acquisition) through March 31, 2015.(7)Includes the Gain on Legal Settlement, net ($134,693).(8)Includes the results of NAAS from October 17, 2014 (date of acquisition) through March 31, 2015.(9)Includes the results of Tulsa Programs from December 30, 2014 (date of acquisition) through March 31, 2015 and a provision for forward losses ofapproximately $151,992 associated with our long-term contract on the 747-8 program.102Table of ContentsTRIUMPH GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Dollars in thousands, except per share data)24.SUBSEQUENT EVENTSIn April 2015, one of the Company's largest union-represented group of production and maintenance employees ratified a new collective bargainingagreement. Under terms of the agreement, actively employeed participants with 30 years of service will no longer continue to accrue a benefit. The agreementalso provides for an increase in the pension benefit payable to covered employees. The aforementioned changes result in a curtailment of the affected plan'sassets and obligations in the first quarter of fiscal 2016.TRIUMPH 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, 2015: Allowance for doubtful accountsreceivable $6,535 171 85 (316) $6,475For 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) $5,372(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 decisionsregarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures,no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarilywas required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.As of March 31, 2015, 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 thereasonable assurance level as of March 31, 2015.103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 authorizationsof management 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, 2015. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in InternalControl—Integrated Framework. Based on management's assessment and those criteria, management believes that Triumph maintained effective internalcontrol over financial reporting as of March 31, 2015.Management's assessment of and conclusion on the effectiveness of Triumph's internal control over financial reporting did not include the internalcontrols of Triumph Actuation Systems-Yakima, Triumph Aviation Services-NAAS Division or Triumph Aerostructures-Vought Aircraft Division - Tulsa,which were acquired in the fiscal year ended March 31, 2015. The acquisitions, which are more fully discussed in Note 3 to the consolidated financialstatements for fiscal 2015, are included in the fiscal 2015 consolidated financial statements of Triumph Group, Inc. and represented total assets ofapproximately $449 million or 7% at March 31, 2015, and revenues of approximately $222 million or 6% for the year ended March 31, 2015. 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/ Richard C. Ill Richard C. IllPresident, Chief Executive Officer and Director /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 21, 2015104Table of ContentsReport of Independent Registered Public Accounting FirmThe 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, 2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). TriumphGroup, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal 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 aswe considered 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 financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately andfairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the companyare being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financialstatements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with 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 onthe effectiveness of internal control over financial reporting did not include the internal controls of Triumph Actuation Systems-Yakima, Triumph AviationServices-NAAS Division or Triumph Aerostructures-Vought Aircraft Division-Tulsa, which are included in the fiscal year 2015 consolidated financialstatements of Triumph Group, Inc. and constituted $449 million and ($98) million of total and net assets, respectively, as of March 31, 2015 and $222million and $14 million of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of TriumphGroup, Inc. also did not include an evaluation of the internal control over financial reporting of Triumph Actuation Systems-Yakima, Triumph AviationServices-NAAS Division or Triumph Aerostructures-Vought Aircraft Division-Tulsa.In our opinion, Triumph Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, 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, 2015 and 2014, 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, 2015 of Triumph Group, Inc. and our report dated May 21, 2015 expressed anunqualified opinion thereon. /s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 21, 2015105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,additional changes may be made to our internal controls and procedures. However, we did not make any changes to our internal control over financialreporting in the fourth quarter of fiscal 2015 that has materially affected or is reasonably likely to materially affect our internal control over financialreporting.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 2015 Annual Meeting ofStockholders, which shall be filed within 120 days after the end of our fiscal year (the "2015 Proxy Statement"). Information required by this item concerningexecutive officers 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 2015 ProxyStatement.Code of Business ConductThe information required regarding our Code of Business Conduct is incorporated herein by reference to the 2015 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 2015 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 2015Proxy Statement.Item 11.Executive CompensationThe information required regarding executive compensation is incorporated herein by reference to the 2015 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 2015 Proxy Statement.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required under this item is incorporated herein by reference to the 2015 Proxy Statement.Item 14.Principal Accountant Fees and ServicesThe information required under this item is incorporated herein by reference to the 2015 Proxy Statement.106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 Firm47Consolidated Balance Sheets as of March 31, 2015 and 201448Consolidated Statements of Income for the Fiscal Years Ended March 31, 2015, 2014 and 201349Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2015, 2014 and 201350Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended March 31, 2015, 2014 and 201351Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2015, 2014 and 201352Notes to Consolidated Financial Statements53(2) The following financial statement schedule is included in this report: PageSchedule II—Valuation and Qualifying Accounts103All other schedules have been omitted as not applicable or because the information is included elsewhere in the Consolidated Financial Statements ornotes thereto.(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, as trustee,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)107Table of ContentsExhibitNumber Description4.10 Indenture, dated as of February 26, 2013, between Triumph Group, Inc. and U.S. Bank National Association, as trustee.(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 named therein.(18)4.13 Indenture, dated as of June 3, 2014, between Triumph Group, Inc. and U.S. Bank National Association, as trustee (23)4.14 Form of 5.250% Senior Notes due 2022 (included as Exhibit A to the Indenture filed as Exhibit 4.1). (23)4.15 Registration Rights Agreement, dated June 3, 2014, between Triumph Group, Inc. and parties named therein. (23)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 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)10.14#Triumph Group, Inc. Executive Incentive Plan, effective September 28, 2010.(15)10.15#Form of letter informing Triumph Group, Inc. executives they are eligible to participate in the Company's Long TermIncentive Plan.(16)10.16#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)10.17 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)10.18 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 of Tokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., and Manufacturers and Traders Trust Company, asDocumentation Agents, dated as of November 19, 2013. (20)108Table of ContentsExhibitNumber Description10.19 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)10.20#Triumph Group, Inc. 2013 Equity and Cash Incentive Plan. (22)10.21#Form of letter regarding eligibility to participate in the Triumph Group, Inc. Restricted Stock Plan. (22)10.22#Form of letter regarding grant of award under the Triumph Group, Inc. Excutive Incentive Plan. (22)10.23 Tenth Amendment to Receivables Purchase Agreement dated as of November 25, 2014. (24)10.24 Third Amendment to Third Amended and Restated Credit Agreement. (25)10.25#Separation letter agreement between Triumph Group, Inc. and Jeffry D. Frisby dated April 7, 2015. (26)10.26#The First Amendment of the Triumph Group, Inc. Supplemental Executive Retirement Plan. (27)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 ExchangeAct of 1934, as amended.31.2*Principal Financial Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities ExchangeAct of 1934, as amended.32.1*Principal Executive Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities ExchangeAct of 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 ExchangeAct of 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, 2015 and 2014; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2015, 2014 and 2013; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2015, 2014 and 2013; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2015, 2014 and 2013; (v) Consolidated Statements of ComprehensiveIncome for the fiscal years ended March 31, 2015, 2014 and 2013; and (vi) Notes to the Consolidated FinancialStatements.________________________________(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, 2010.109Table of Contents(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.(22)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.(23)Incorporated by reference to our Current Report on Form 8-K filed on June 5, 2014.(24)Incorporated by reference to our Current Report on Form 8-K filed on November 26, 2014.(25)Incorporated by reference to our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2014.(26)Incorporated by reference to our Current Report on Form 8-K filed on April 8, 2015.(27)Incorporated by reference to our Current Report on Form 8-K filed on May 7, 2015.*Filed herewith.#Compensation plans and arrangements for executives and others. 110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/ Richard C. IllDated:May 21, 2015By:Richard C. IllPresident, Chief Executive Officer and Director(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/ Richard C. Ill President, Chief Executive Officer and Director(Principal Executive Officer)May 21, 2015Richard C. Ill /s/ Jeffrey L. McRae Senior Vice President and Chief Financial Officer(Principal Financial Officer)May 21, 2015Jeffrey L. McRae /s/ Thomas A. Quigley Vice President and Controller (PrincipalAccounting Officer)May 21, 2015Thomas A. Quigley /s/ Ralph E. Eberhart Chairman and DirectorMay 21, 2015Ralph E. Eberhart /s/ Paul Bourgon DirectorMay 21, 2015 Paul Bourgon /s/ John G. Drosdick DirectorMay 21, 2015John G. Drosdick /s/ Richard C. Gozon DirectorMay 21, 2015Richard C. Gozon /s/ William L. Mansfield DirectorMay 21, 2015William L. Mansfield /s/ Adam J. Palmer DirectorMay 21, 2015Adam J. Palmer /s/s Joseph M. Silvestri DirectorMay 21, 2015Joseph M. Silvestri /s/ George Simpson DirectorMay 21, 2015George Simpson 111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, as trustee,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, as trustee.(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 named therein.(18)4.13 Indenture, dated as of June 3, 2014, between Triumph Group, Inc. and U.S. Bank National Association, as trustee (23)4.14 Form of 5.250% Senior Notes due 2022 (included as Exhibit A to the Indenture filed as Exhibit 4.1). (23)4.15 Registration Rights Agreement, dated June 3, 2014, between Triumph Group, Inc. and parties named therein. (23)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)112Table of ContentsExhibitNumber Description10.11 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 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)10.14#Triumph Group, Inc. Executive Incentive Plan, effective September 28, 2010.(15)10.15#Form of letter informing Triumph Group, Inc. executives they are eligible to participate in the Company's Long TermIncentive Plan.(16)10.16#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)10.17 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)10.18 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 of Tokyo-Mitsubishi UFJ, Ltd, U.S. Bank National Association, TD Bank, N.A., and Manufacturers and Traders Trust Company, asDocumentation Agents, dated as of November 19, 2013. (20)10.19 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)10.20#Triumph Group, Inc. 2013 Equity and Cash Incentive Plan. (22)10.21#Form of letter regarding eligibility to participate in the Triumph Group, Inc. Restricted Stock Plan. (22)10.22#Form of letter regarding grant of award under the Triumph Group, Inc. Executive Incentive Plan. (22)10.23 Tenth Amendment to Receivables Purchase Agreement dated as of November 25, 2014. (24)10.24 Third Amendment to Third Amended and Restated Credit Agreement. (25)10.25 Separation letter agreement between Triumph Group, Inc. and Jeffry D. Frisby dated April 7, 2015. (26)10.26 The First Amendment of the Triumph Group, Inc. Supplemental Executive Retirement Plan. (27)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 ExchangeAct of 1934, as amended.31.2*Principal Financial Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities ExchangeAct of 1934, as amended.32.1*Principal Executive Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities ExchangeAct of 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 ExchangeAct of 1934, as amended, and 18 U.S.C. Section 1350.113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, 2015 and 2014; (ii) ConsolidatedStatements of Income for the fiscal years ended March 31, 2015, 2014 and 2013; (iii) Consolidated Statements ofStockholders' Equity for the fiscal years ended March 31, 2015, 2014 and 2013; (iv) Consolidated Statements of CashFlows for the fiscal years ended March 31, 2015, 2014 and 2013; (v) Consolidated Statements of ComprehensiveIncome for the fiscal years ended March 31, 2015, 2014 and 2013; and (vi) Notes to the Consolidated FinancialStatements._______________________________________________(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.(22)Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.(23)Incorporated by reference to our Current Report on Form 8-K filed on June 5, 2014.(24)Incorporated by reference to our Current Report on Form 8-K filed on November 26, 2014.(25)Incorporated by reference to our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2014.(26)Incorporated by reference to our Current Report on Form 8-K filed on April 8, 2015.(27)Incorporated by reference to our Current Report on Form 8-K filed on May 7, 2015.*Filed herewith.#Compensation plans and arrangements for executives and others.114Exhibit 21.1Subsidiaries of Triumph Group, Inc.Aircraft On Ground, Inc. AOG Tank Tigers, Inc. HT Parts, L.L.C. MEP NAAS Holdco, Inc. MEP NAAS, Inc. NAAS Aircraft Services International Limited Nu-Tech Brands, Inc. Placas Termodinamicas, S.A. de C.V. SBP Holdings Limited Tank Devils Ltd. Taurus Tanks, Inc. The Mexmil Holding Company, LLC The Triumph Group Operations, Inc. Triumph (Beijing) Aviation Technology Co., Ltd. Triumph Accessory Services - Grand Prairie, Inc. Triumph Actuation Systems - Connecticut, LLC Triumph Actuation Systems - Isle of Man, Ltd. Triumph Actuation Systems - UK, Ltd. Triumph Actuation Systems - Valencia, Inc. Triumph Actuation Systems - Yakima, LLC Triumph Actuation Systems, LLC Triumph Aerospace Systems - Newport News, Inc. Triumph Aerospace Systems Group - UK LTD Triumph Aerospace Systems Group, LLC Triumph Aerostructures - Tulsa, LLC Triumph Aerostructures Holdings, LLC Triumph Aerostructures Real Estate Investment Co., LLC Triumph Aerostructures Vought Aircraft Technical Services (Chengdu) Co., Ltd.Triumph Aerostructures, LLC Triumph Aftermarket Services Group, LLC Triumph Airborne Structures, LLC Triumph Aviation Services - NAAS Division, Inc. Triumph Aviation Services Asia, Ltd. Triumph Aviations Inc. Triumph (Beijing) Aviation Technology Co., Ltd. Triumph Brands, Inc. Triumph China Holdings, LLC Triumph Composite Systems, Inc. Triumph Controls (Europe) SAS Triumph Controls - Germany GmbH Triumph Controls - UK Ltd. Triumph Controls France SAS Triumph Controls, LLC Triumph Engine Control Holdings, Inc. Triumph Engine Control Systems, LLC Triumph Engineered Solutions, Inc. Triumph Engineering Services, Inc. Triumph Fabrications - Fort Worth, Inc. Triumph Fabrications - Hot Springs, LLC Triumph Fabrications - Orangeburg, Inc. Triumph Fabrications - San Diego, Inc. Triumph Gear Systems - Macomb, Inc. Triumph Gear Systems - Toronto ULC Triumph Gear Systems, Inc. Triumph Group - Mexico Inmobiliaria, S. de R.L. de C.V. Triumph Group - Mexico, S. de R.L. de C.V. Triumph Group Acquisition Corp. Triumph Group Acquisition Financing, LLC Triumph Group Acquisition Holdings, Inc. Triumph Group Charitable Foundation Triumph Group Holdings - Mexico, LLC Triumph Group Holdings - UK, Ltd. Triumph Group Investment - Mexico, LLC Triumph Group Luxembourg Finance S.a.r.l. Triumph Group Luxembourg Holding S.a.r.l. Triumph Instruments - Burbank, Inc. Triumph Instruments, Inc. Triumph Insulation Systems - Germany GmbH Triumph Insulation Systems, LLC Triumph Integrated Aircraft Interiors Inmobiliaria, S. de R.L. de C.V. Triumph Integrated Aircraft Interiors, Inc. Triumph Interiors, LLC Triumph Investment Holdings, Inc. Triumph Metals Company Triumph Precision Castings Co. Triumph Processing - Embee Division, Inc. Triumph Processing, Inc. Triumph Real Estate - Mexico, LLC Triumph Receivables, LLC Triumph Structures (Thailand) Ltd. Triumph Structures - East Texas, Inc. Triumph Structures - Everett, Inc. Triumph Structures - Farnborough, Ltd. Triumph Structures - Kansas City, Inc. Triumph Structures - Long Island, LLC Triumph Structures - Los Angeles, Inc. Triumph Structures - Wichita, Inc. Triumph Structures International, Ltd Triumph Thermal Systems, LLC Triumph Turbine Services, Inc. Usher Aviation Ireland Limited VAC Industries, Inc. Worldwide Staffing Solutions, 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 Plan ofTriumph 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., andof our reports dated May 21, 2015, 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, 2015./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 21, 2015Exhibit 31.1CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OFTHE SECURITIES AND EXCHANGE ACT OF 1934I, Richard C. Ill, 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 our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose 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 21, 2015 /s/ Richard C. Ill Richard C. IllPresident 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 our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose 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 21, 2015 /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, 2015 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I, Richard C. Ill, 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/ Richard C. Ill Richard C. IllPresident and Chief Executive Officer(Principal Executive Officer) May 21, 2015________________________________________________________________________________________________________________________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, 2015 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 21, 2015________________________________________________________________________________________________________________________A signed original of this written statement required by Section 906 has been provided to Triumph Group, Inc. and will be retained by TriumphGroup, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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