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United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

Commission File Number: 1-12235

TRIUMPH GROUP, INC.
(Exact name of registrant as specified in its charter)

        Indicate 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 preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

        Common Stock, par value $0.001 per share, 15,854,064 shares as of January 24, 2003.

TRIUMPH GROUP, INC.

INDEX

Part I. Financial Information

Item: 1. Financial Statements

Triumph Group, Inc.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

1

Triumph Group, Inc.

Consolidated Balance Sheets (continued)

(dollars in thousands, except per share data)

SEE ACCOMPANYING NOTES.

2

Triumph Group, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

SEE ACCOMPANYING NOTES.

3

Triumph Group, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

4

Triumph Group, Inc.

Consolidated Statements of Cash Flows (continued)

(dollars in thousands)

(unaudited)

SEE ACCOMPANYING NOTES.

5

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(Unaudited)

1. BASIS OF PRESENTATION

        The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended December 31, 2002 are not necessarily indicative of the results that may be expected for the fiscal year ended March 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in Triumph Group, Inc.'s (the "Company") Annual Report on Form 10-K for the year ended March 31, 2002.

        Certain reclassifications have been made to prior year amounts in order to conform to the current year presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

        The Company's Aviation segment designs, engineers, manufactures or repairs and overhauls aircraft components and industrial gas turbine components and accessories for commercial airlines, air cargo carriers, and original equipment manufacturers of aircraft and aircraft components and power generation equipment on a worldwide basis. The Company's Metals segment manufactures, machines, processes, and distributes metal products to customers in the computer, construction, container and office furniture industries, primarily within North America.

USE OF ESTIMATES

        The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

USE OF DERIVATIVE FINANCIAL INSTRUMENTS

        The Company periodically uses derivative financial instruments principally to manage the risk that changes in interest rates will affect the amount of its future interest payments. The Company had entered into an interest rate swap contract which effectively converted a portion of its floating-rate debt to a fixed-rate basis through November 2002. Under the interest rate swap contract, the Company paid amounts equal to the specified fixed-rate interest (6.56%) multiplied by the notional principal amount ($100,000), and received a floating-rate interest (30-day LIBOR) multiplied by the same notional principal amount. The net effect of the spread between the floating rate and the fixed rate is reflected as an adjustment to interest expense in the period incurred.

        No other cash payments are made unless the contract is terminated prior to maturity, in which case the amount paid or received in settlement is established by agreement at the time of termination and should represent the market quotation, at current rates of interest, of the remaining obligations to

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exchange payments under the terms of the contract. The Company accounted for its interest rate swap contract as a cash flow hedge which was highly effective. At March 31, 2002, the interest rate swap is reflected at fair value of $3,115 and is included in accrued expenses and other. The Company's interest rate swap terminated in November 2002. The Company did not experience any ineffectiveness with its interest rate swap and, accordingly, did not recognize any gains or losses in its earnings.

INTANGIBLE ASSETS

        Intangible assets cost and accumulated amortization at December 31, 2002 were $48,619 and $16,558 respectively. Intangible assets cost and accumulated amortization at March 31, 2002 were $48,219 and $13,272, respectively. Intangible assets consist of two major classes: (i) product rights and licenses and (ii) non-compete agreements and other. Gross cost and accumulated amortization of product rights and licenses at December 31, 2002 were $37,108 and $9,816 respectively, and at March 31, 2002 were $36,708 and $7,136, respectively. Gross cost and accumulated amortization of noncompete agreements and other at December 31, 2002 were $11,511 and $6,742, respectively, and at March 31, 2002 were $11,511 and $6,136, respectively. Amortization expense for the three and nine-month periods ended December 31, 2002 were $1,125 and $3,286 respectively. Amortization expense for the fiscal year ending March 31, 2003 and the succeeding five fiscal years by year is expected to be as follows: 2003: $4,411; 2004: $4,500; 2005: $4,500; 2006: $4,500; 2007: $3,673; 2008: $3,343.

3. ACQUISITIONS

        In April 2002, the Company acquired certain assets of Ozone Industries, Inc. ("Ozone Assets"), which are being operated by the Company's subsidiary, HTD Aerospace, Inc. In July 2002, the Company acquired substantially all of the assets of Aerocell Structures, Inc. ("Aerocell Assets"), which are being operated by the Company's subsidiary, Airborne Nacelle Services, Inc. In August 2002, the Company acquired substantially all of the assets of Furst Aircraft and Instrument ("Furst") which are being operated by the Company's subsidiary, Furst Aircraft, Inc. The Company acquired the Ozone Assets to expand its product line offerings in hydraulic control systems, the Aerocell Assets to expand its capabilities and customer base in repair of flight control surfaces, and Furst to expand its capabilities and customer base in instrument repair. The Ozone Assets are used in conjunction with the design, development, testing and manufacturing of aircraft hydraulic systems and components for the defense and commercial aircraft markets. These proprietary products include nose wheel steering assemblies and hydraulic quick disconnect couplings. The Aerocell Assets are used in the repair and overhaul of airframe components, bonded components and structural assemblies for all commercial air fleets. Furst operates within the business jet market as a certified instrument repair, overhaul and re-certification facility and has capabilities on more than 1,500 components and represents most major manufacturers. In addition, Furst provides avionics installation services, rotables, loaners, engineering, 24-hour AOG support, inventory and parts management and field services. The purchase price of the combined asset purchases of $28,558 includes cash paid at the closings, direct costs of the transactions and deferred payments. The excess of the purchase price over the preliminary estimated fair value of the net assets acquired of $4,764 was recorded as goodwill.

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        In November 2002, the Company acquired the remaining four percent of the stock of its subsidiary, Triumph Controls, Inc. The purchase price of $3,425, net of the minority interest liability, was recorded as goodwill.

        These acquisitions have been accounted for under the purchase method and, accordingly, are included in the consolidated financial statements from their dates of acquisition. These acquisitions were funded by the Company's long-term borrowings in place at the date of each respective acquisition.

        The following unaudited pro forma information for the nine months ended December 31, 2002 and 2001 have been prepared assuming the acquisition of the Ozone Assets, the Aerocell Assets and Furst had occurred on April 1, 2001. The pro forma information for the nine months ended December 31, 2002 is as follows: Net sales: $451,754; Net income: $27,474; Earnings per share—basic: $1.74; and Earnings per share—diluted: $1.72. The pro forma information for the nine months ended December 31, 2001 is as follows: Net sales: $492,754; Net income: $34,026; Earnings per share—basic: $2.16; and Earnings per share—diluted: $2.14. The unaudited pro forma information includes adjustments for interest expense that would have been incurred to finance the purchases and additional depreciation based on the estimated fair market value of the property and equipment acquired. The unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed dates.

4. INVENTORIES

        The components of inventories are as follows:

5. LONG-TERM DEBT

        Long-term debt consists of the following:

        In November 2002, the Company retired all of the outstanding industrial revenue bonds ("Bonds") totaling $7,500, plus accrued interest. The retirement of the Bonds was funded by borrowings under the Company's revolving credit facility ("Credit Facility").

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5. LONG-TERM DEBT (Continued)

        In November 2002, the Company retired $11,180 of the subordinated promissory notes and $674 of junior subordinated promissory notes, which were included in other debt. The retirement of the subordinated promissory notes and junior subordinated promissory notes were funded by borrowings under the Company's Credit Facility.

        In December 2002, the Company issued two classes of Senior Notes: $80,000 of Class A notes and $70,000 of Class B notes. Class A notes carry a fixed rate of interest of 6.06% and mature on December 2, 2012. Class B notes carry a fixed rate of interest of 5.59% and mature in seven annual installments of $10,000 starting on December 2, 2006 through December 2, 2012. The proceeds of the Senior Notes were used to pay down the Credit Facility.

        In conjunction with the issuance of the Senior Notes, the Company amended its Credit Facility to reduce the credit limit from $350,000 to $250,000, extend the expiration date thereof from June 13, 2004 to December 13, 2006 and amend certain terms and covenants. The Credit Facility bears interest at either LIBOR plus between 1.0% and 2.0% or the prime rate (or the Federal Funds rate plus 0.5% if greater) or an overnight interest rate at the option of the Company. The variation in the interest rate is based upon the Company's ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.2% and 0.4% on the unused portion of the Credit Facility.

6. EARNINGS PER SHARE

        The following is a reconciliation between the weighted average outstanding shares used in the calculation of basic and diluted earnings per share:

        Options to purchase 548,500 shares of common stock, at prices ranging from $31.38 per share to $44.91 per share, were outstanding during the three months ended December 31, 2002. These options were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common stock during the three months ended December 31, 2002 and, therefore, the effect would be antidilutive.

7. COMMON STOCK

        During the quarter ended June 30, 2002, all 1,848,535 shares of Class D Common stock outstanding were converted to Common stock.

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8. SEGMENT REPORTING

        Selected financial information for each reportable segment is as follows:

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        For the three months ended December 31, 2002 and 2001, the Company had foreign sales of $27,991 and $35,710, respectively. For the nine months ended December 31, 2002 and 2001, the Company had foreign sales of $86,755 and $102,567, respectively.

9. SUBSEQUENT EVENT

        In January 2003, the Company acquired substantially all of the assets of The Boeing Company's Spokane Fabrication Operation, located in Spokane, Washington. The acquired business, which was renamed Triumph Composite Systems, Inc., adds new products and new capabilities to the Company's portfolio of Structural Component products and services. Triumph Composite Systems is dedicated to the production of aircraft parts made of composite and thermoplastic materials. Primary products include floor panels, air control system ducts and nonstructural composite flight deck components. As part of the transaction, the Company and The Boeing Company have entered into an eight-year single-source supply agreement for the products currently produced by Triumph Composite Systems. The purchase price which was paid in cash at closing for this acquisition of approximately $42,200 was funded by borrowings under the Company's Credit Facility.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(The following discussion should be read in conjunction with the Consolidated Financial Statements contained elsewhere herein.)

Three months ended December 31, 2002 compared to three months ended December 31, 2001

Aviation Segment

        Net sales.    Net sales for the Aviation segment decreased by $5.9 million, or 4.3%, to $132.6 million for the third quarter of fiscal 2003 from $138.5 million for the prior year period. This decline in revenue is primarily due to a decrease in commercial airframe build rates as compared to the prior year period, partially offset by certain military programs, most significantly the CH 47 and F-18 E/F programs. Revenue in the third quarter of fiscal 2003 was also assisted by the positive impact from the acquisitions of certain assets of Ozone Industries, Inc. in April 2002, certain assets of Aerocell Structures, Inc. in July 2002 and the acquisition of certain assets of Furst Aircraft and Instrument in August 2002 (collectively, the "2003 Acquisitions").

        Costs of products sold.