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Triumph Group 10-Q 2011

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32.1
  5. Ex-32.2
  6. Ex-32.2

Table of Contents

 

 

 

United States

Securities and Exchange Commission

Washington, D.C.  20549

 

FORM 10-Q

 

x

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended June 30, 2011

 

or

 

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Transition Period From                    to                   

 

Commission File Number:   1-12235

 

TRIUMPH GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

51-0347963

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

899 Cassatt Road, Suite 210, Berwyn, PA

 

19312

(Address of principal executive offices)

 

(Zip Code)

 

(610) 251-1000

(Registrant’s telephone number, including area code)

 

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 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 o

 

Indicate by check mark whether the registrant has submitted electronically and has posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 such files).   Yes x  No o

 

Indicate 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 “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer x

 

Accelerated filer   o

 

 

 

Non-accelerated filer o

(Do not check if a smaller reporting company)

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)   Yes o  No x

 

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

 

Common Stock, par value $0.001 per share, 49,049,443 shares outstanding as of August 3, 2011.

 

 

 



Table of Contents

 

TRIUMPH GROUP, INC.

INDEX

 

 

 

Page Number

 

 

 

Part I. Financial Information

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

Consolidated Balance Sheets

 

 

June 30, 2011 and March 31, 2011

1

 

 

 

 

Consolidated Statements of Income

 

 

Three months ended June 30, 2011 and 2010

2

 

 

 

 

Consolidated Statements of Cash Flows

 

 

Three months ended June 30, 2011 and 2010

3

 

 

 

 

Consolidated Statements of Comprehensive Income

 

 

Three months ended June 30, 2011 and 2010

4

 

 

 

 

Notes to Consolidated Financial Statements

 

 

June 30, 2011

5

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

 

 

 

Item 4.

Controls and Procedures

42

 

 

 

Part II. Other Information

 

 

 

 

Item 6.

Exhibits

43

 

 

 

Signatures

 

43

 



Table of Contents

 

Part I.  Financial Information

 

Item 1.  Financial Statements.

 

Triumph Group, Inc.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

 

 

 

JUNE 30,

 

MARCH 31,

 

 

 

2011

 

2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

36,425

 

$

39,328

 

Trade and other receivables, less allowance for doubtful accounts of $2,973 and $3,196

 

386,613

 

374,491

 

Inventories, net of unliquidated progress payments of $159,214 and $138,206

 

742,390

 

781,714

 

Rotable assets

 

31,299

 

26,607

 

Prepaid and other current assets

 

18,106

 

18,141

 

Assets held for sale

 

4,439

 

4,574

 

Total current assets

 

1,219,272

 

1,244,855

 

Property and equipment, net

 

727,935

 

734,879

 

Goodwill

 

1,532,663

 

1,530,580

 

Intangible assets, net

 

851,260

 

859,620

 

Deferred income taxes, noncurrent

 

56,837

 

54,539

 

Other, net

 

34,339

 

38,764

 

Total assets

 

$

4,422,306

 

$

4,463,237

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

170,135

 

$

300,252

 

Accounts payable

 

270,482

 

262,716

 

Accrued expenses

 

295,701

 

313,354

 

Deferred income taxes

 

105,799

 

78,793

 

Liabilities related to assets held for sale

 

856

 

431

 

Total current liabilities

 

842,973

 

955,546

 

Long-term debt, less current portion

 

1,068,459

 

1,011,752

 

Accrued pension and other postretirement benefits, noncurrent

 

647,381

 

680,754

 

Other noncurrent liabilities

 

172,340

 

180,462

 

Temporary equity

 

1,079

 

2,506

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $.001 par value, 100,000,000 shares authorized, 49,193,880 and 48,690,606 shares issued; 49,035,604 and 48,513,422 outstanding

 

49

 

49

 

Capital in excess of par value

 

826,115

 

819,197

 

Treasury stock, at cost, 158,276 and 177,184 shares

 

(4,614

)

(5,085

)

Accumulated other comprehensive income

 

122,014

 

120,471

 

Retained earnings

 

746,510

 

697,585

 

Total stockholders’ equity

 

1,690,074

 

1,632,217

 

Total liabilities and stockholders’ equity

 

$

4,422,306

 

$

4,463,237

 

 

SEE ACCOMPANYING NOTES.

 

1



Table of Contents

 

Triumph Group, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

 

 

 

THREE MONTHS  ENDED

 

 

 

JUNE 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Net sales

 

$

845,063

 

$

407,209

 

Operating costs and expenses:

 

 

 

 

 

Cost of sales (exclusive of depreciation and amortization shown separately below)

 

648,791

 

297,856

 

Selling, general and administrative

 

60,965

 

43,480

 

Acquisition and integration expense

 

460

 

17,367

 

Depreciation and amortization

 

29,467

 

15,656

 

 

 

739,683

 

374,359

 

 

 

 

 

 

 

Operating income

 

105,380

 

32,850

 

Interest expense and other

 

26,462

 

11,791

 

Income from continuing operations before income taxes

 

78,918

 

21,059

 

Income tax expense

 

28,014

 

9,479

 

Income from continuing operations

 

50,904

 

11,580

 

Loss from discontinued operations, net

 

(689

)

(208

)

Net income

 

$

50,215

 

$

11,372

 

 

 

 

 

 

 

Earnings per share—basic:

 

 

 

 

 

Income from continuing operations

 

$

1.05

 

$

0.33

 

Loss from discontinued operations, net

 

(0.01

)

(0.01

)

Net income

 

$

1.04

 

$

0.32

 

 

 

 

 

 

 

Weighted-average common shares outstanding—basic

 

48,466

 

35,507

 

Earnings per share—diluted:

 

 

 

 

 

Income from continuing operations

 

$

0.99

 

$

0.31

 

Loss from discontinued operations, net

 

(0.01

)

(0.01

)

Net income

 

$

0.98

 

$

0.30

 

 

 

 

 

 

 

Weighted-average common shares outstanding—diluted

 

51,299

 

37,463

 

 

 

 

 

 

 

Dividends declared and paid per common share

 

$

0.02

 

$

0.02

 

 

SEE ACCOMPANYING NOTES.

 

2



Table of Contents

 

Triumph Group, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

 

 

 

THREE MONTHS ENDED

 

 

 

JUNE 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

Net income

 

$

50,215

 

$

11,372

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

29,467

 

15,656

 

Amortization of acquired contract liabilities

 

(7,740

)

(859

)

Accretion of debt discount

 

3,069

 

1,664

 

Other amortization included in interest expense

 

7,061

 

753

 

Provision for doubtful accounts receivable

 

381

 

(142

)

Provision for deferred income taxes

 

26,210

 

487

 

Employee stock-based compensation

 

1,198

 

641

 

Changes in other current assets and liabilities, excluding the effects of acquisitions and dispositions of businesses:

 

 

 

 

 

Trade and other receivables

 

(12,374

)

34,370

 

Rotable assets

 

(4,692

)

(606

)

Inventories

 

39,155

 

(11,713

)

Prepaid expenses and other current assets

 

424

 

454

 

Accounts payable, accrued expenses and other current liabilities

 

(5,418

)

(34,804

)

Accrued pension and other postretirement benefits

 

(37,846

)

 

Changes in discontinued operations

 

556

 

(123

)

Other

 

1,585

 

5,515

 

Net cash provided by operating activities

 

91,251

 

22,665

 

Investing Activities

 

 

 

 

 

Capital expenditures

 

(15,664

)

(16,940

)

Proceeds from sale of assets

 

2,768

 

210

 

Acquisitions, net of cash acquired

 

(800

)

(333,228

)

Net cash used in investing activities

 

(13,696

)

(349,958

)

Financing Activities

 

 

 

 

 

Net increase in revolving credit facility

 

269,695

 

85,000

 

Proceeds from issuance of long-term debt

 

50,000

 

740,705

 

Repayment of debt and capital lease obligations

 

(395,791

)

(595,389

)

Payment of deferred financing costs

 

(3,870

)

(22,171

)

Dividends paid

 

(981

)

(668

)

Repurchase of restricted shares for minimum tax obligation

 

(482

)

(1,803

)

Proceeds from exercise of stock options, including excess tax benefit of $0 and $183 in fiscal 2012 and 2011

 

644

 

645

 

Net cash (used in) provided by financing activities

 

(80,785

)

206,319

 

Effect of exchange rate changes on cash

 

327

 

(538

)

 

 

 

 

 

 

Net change in cash

 

(2,903

)

(121,512

)

Cash at beginning of period

 

39,328

 

157,218

 

 

 

 

 

 

 

Cash at end of period

 

$

36,425

 

$

35,706

 

 

SEE ACCOMPANYING NOTES.

 

3



Table of Contents

 

Triumph Group, Inc.

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)

 

 

 

THREE MONTHS ENDED

 

 

 

JUNE 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Net income

 

$

50,215

 

$

11,372

 

Other comprehensive income (loss):

 

 

 

 

 

Foreign currency translation adjustment

 

2,009

 

(3,323

)

Pension and postretirement adjustments, net of income taxes of $427

 

(698

)

 

Unrealized gain on cash flow hedge, net of tax of $88 and $132

 

232

 

297

 

Total other comprehensive income (loss)

 

1,543

 

(3,026

)

 

 

 

 

 

 

Total comprehensive income

 

$

51,758

 

$

8,346

 

 

SEE ACCOMPANYING NOTES.

 

4



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

1.  BASIS OF PRESENTATION AND ORGANIZATION

 

The accompanying unaudited consolidated financial statements of Triumph Group, Inc. (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) 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 U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position and cash flows. The results of operations for the three months ended June 30, 2011 are not necessarily indicative of results that may be expected for the year ending March 31, 2012. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the fiscal 2011 audited consolidated financial statements and notes thereto, which are included in the May 2011 Form 10-K.

 

The Company designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. 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.

 

On June 9, 2011, the Company’s Board of Directors declared a two-for-one split of the Company’s common stock. The stock split resulted in the issuance of one additional share for each share owned. The stock split was paid on July 14, 2011, to stockholders of record at the close of business on June 22, 2011. Additionally, the Board of Directors approved a 100% increase in the quarterly cash dividend rate on the Company’s common stock to $0.04 per common share from $0.02 per common share on a post-split basis. All share and per share information included in this report has been retroactively adjusted to reflect the impact of the stock split.

 

Reclassifications have been made to prior-year amounts in order to conform to the current-year presentation related to the completion of the measurement period adjustments for the acquisition of Vought Aircraft Industries, Inc. (“Vought”) (Note 3) and the effect of the two-for-one stock split announced by the Company in June 2011.

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of the financial statements in conformity with U.S. GAAP 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.

 

Revenue Recognition

 

Revenues are generally recognized in accordance with the contract terms when products are shipped, delivery has occurred or services have been rendered, pricing is fixed and determinable, and collection is reasonably assured.  A significant portion of the Company’s contracts are within the scope of the Revenue - Construction-Type and Production-Type Contracts topic of the Accounting Standards Codification (“ASC”) and revenue and costs on contracts are recognized using percentage-of-completion method of accounting.  Accounting for the 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 to the 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 of progress towards completion.  Depending on the contract, the Company measures 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.

 

5



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

·                  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 equal to 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 at completion divided by the total units to be delivered.  As contracts can span multiple years, the Company often segments the contracts into production lots for the purposes of accumulating and allocating cost.  Profit is recognized as the difference between revenue for the units delivered and 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 progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications occur.  These estimates are also sensitive to the assumed rate of production.  Generally, the longer it takes to complete the contract quantity, the more relative overhead that contract will absorb.  The impact of revisions in cost estimates is recognized on a cumulative catch-up basis in the period in which the revisions are made.  Provisions for anticipated losses on contracts are recorded in the period in which they become evident (‘‘forward losses’’) and are first offset against costs that are included in inventory, with any remaining amount reflected in accrued contract liabilities in accordance with the Construction and Production-Type Contracts topic.  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 the Construction and Production-Type Contracts topic.

 

Amounts representing contract change orders or claims are only included in revenue when such change orders or claims have been settled with the customer 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 the amounts can be reliably estimated and their realization is reasonably assured.

 

Although fixed-price contracts, which extend several years into the future, generally permit the Company to keep unexpected profits if costs are less than projected, 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 a fixed-price contract, the Company must fully absorb cost overruns, not withstanding the difficulty of estimating all of the costs the Company will incur in performing these contracts and in projecting the ultimate level of revenue that may otherwise be achieved.

 

Failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-price contract may reduce the profitability of a fixed-price contract or cause a loss.  The Company believes that it has recognized adequate provisions in the financial statements for losses on fixed-price contracts, but cannot be certain that the contract loss provisions will be adequate to cover all actual future losses.

 

Included in net sales of the Aerostructures Group is the non-cash amortization of acquired contract liabilities recognized as fair value adjustments through purchase accounting of the acquisition of Vought. For the three months ended June 30, 2011 and 2010, the Company recognized $7,740 and $859, respectively, into net sales in the accompanying consolidated statements of income.

 

6



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

The Aftermarket Services Group provides repair and overhaul services, a small portion of which services are provided under long-term power-by-the-hour contracts. The Company applies the proportional performance method to recognize revenue under these contracts. Revenue is recognized over the contract period as units are delivered based on the relative value in proportion to the total estimated contract consideration. In estimating the total contract consideration, management evaluates the projected utilization of its customers’ fleet over the term of the contract, in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization of the fleet by customers, among other factors, may have an impact on these estimates and require adjustments to estimates of revenue to be realized.

 

Concentration of Credit Risk

 

The Company’s trade accounts receivable are exposed to credit risk. However, the risk is limited due to the diversity of the customer base and the customer base’s wide geographical area. Trade accounts receivable from The Boeing Company (“Boeing”) (representing commercial, military and space) represented approximately 38% and 32% of total trade accounts receivable as of June 30, 2011 and March 31, 2011, respectively. The Company had no other significant concentrations of credit risk. Sales to Boeing for the three months ended June 30, 2011 were $401,021, or 47% of net sales, of which $378,750, $15,804 and $6,467 were from the Aerostructures segment, the Aerospace Systems segment and Aftermarket Services segment, respectively. Sales to Boeing for the three months ended June 30, 2010 were $149,297, or 37% of net sales, of which $127,016, $14,249 and $8,032 were from the Aerostructures segment, the Aerospace Systems segment and Aftermarket Services segment, respectively.  No other single customer accounted for more than 10% of the Company’s net sales. However, the loss of any significant customer, including Boeing, could have a material adverse effect on the Company and its operating subsidiaries.

 

Stock-Based Compensation

 

The Company recognizes compensation expense for share-based awards based on the fair value of those awards at the date of grant.  Stock-based compensation expense for the three months ended June 30, 2011 and 2010 was $1,198 and $641, respectively. The benefits of tax deductions in excess of recognized compensation expense were $0 and $183 for the three months ended June 30, 2011 and 2010, respectively. The Company has classified share-based compensation within selling, general and administrative expenses to correspond with the same line item as the majority of the cash compensation paid to employees. Upon the exercise of stock options or vesting of restricted stock, the Company first transfers treasury stock, then will issue new shares.

 

Intangible Assets

 

The components of intangible assets, net, are as follows:

 

 

 

June 30, 2011

 

 

 

Weighted-
Average Life

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Net

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

16.4 years

 

$

456,387

 

$

(48,043

)

$

408,344

 

Product rights and licenses

 

12.0 years

 

73,739

 

(57,523

)

16,216

 

Non-compete agreements and other

 

12.7 years

 

13,239

 

(11,539

)

1,700

 

Tradename

 

Indefinite-lived

 

425,000

 

 

425,000

 

Total intangibles, net

 

 

 

$

968,365

 

$

(117,105

)

$

851,260

 

 

7



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

 

 

March 31, 2011

 

 

 

Weighted-
Average Life

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Net

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

16.4 years

 

$

456,282

 

$

(40,657

)

$

415,625

 

Product rights and licenses

 

12.0 years

 

73,739

 

(56,640

)

17,099

 

Non-compete agreements and other

 

12.7 years

 

13,239

 

(11,343

)

1,896

 

Tradename

 

Indefinite-lived

 

425,000

 

 

425,000

 

Total intangibles, net

 

 

 

$

968,260

 

$

(108,640

)

$

859,620

 

 

 

 

 

 

 

 

 

 

 

 

Amortization expense for the three months ended June 30, 2011 and 2010 was $8,449 and $4,280, respectively.

 

Supplemental Cash Flow Information

 

The Company paid $633 and $685 for income taxes, net of refunds received for the three months ended June 30, 2011 and 2010, respectively. The Company made interest payments of $18,886 and $25,481 for the three months ended June 30, 2011 and 2010, respectively, including $12,401 of interest on debt assumed in the acquisition of Vought (Note 3) during the three months ended June 30, 2010.

 

During the three months ended June 30, 2011 and 2010, the Company financed $19 and $6,804 of property and equipment additions through capital leases, respectively. During the three months ended June 30, 2011, the Company issued 366,626 shares in connection with certain redemptions of our convertible senior subordinated notes (Note 6). During the three months ended June 30, 2010, the Company issued 14,992,330 shares valued at $504,867 as partial consideration for the acquisition of Vought (Note 3).

 

3.  ACQUISITIONS

 

Vought Aircraft Industries, Inc.

 

On June 16, 2010, the Company acquired by merger all of the outstanding shares of Vought, now operating as Triumph Aerostructures-Vought Commercial Division, Triumph Aerostructures-Vought Integrated Programs Division, and Triumph Structures — Everett, for cash and stock consideration. The acquisition of Vought establishes the Company as a leading global manufacturer of aerostructures for commercial, military and business jet aircraft.

 

8



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

3.  ACQUISITIONS (Continued)

 

Recording of assets acquired and liabilities assumed: The following condensed balance sheet represents the amounts assigned to each major asset and liability caption in the aggregate for the acquisition of Vought:

 

 

 

June 16, 2010

 

Cash

 

$

214,833

 

Trade and other receivables

 

165,789

 

Inventory

 

410,279

 

Prepaid expenses and other

 

4,850

 

Property and equipment

 

375,229

 

Goodwill

 

1,026,763

 

Intangible assets

 

807,000

 

Deferred tax assets

 

244,895

 

Other assets

 

384

 

Total assets

 

$

3,250,022

 

 

 

 

 

Accounts payable

 

$

143,995

 

Accrued expenses

 

269,492

 

Deferred tax liabilities

 

4,674

 

Debt

 

590,710

 

Acquired contract liabilities, net

 

124,548

 

Accrued pension and other postretirement benefits, noncurrent

 

993,189

 

Other noncurrent liabilities

 

70,597

 

Total liabilities

 

$

2,197,205

 

 

The recorded amounts for assets and liabilities were completed as of June 15, 2011. The measurement period adjustments recorded in the first quarter of fiscal 2012 did not have a significant impact on the Company’s consolidated balance sheet, statements of income, or statements of cash flows.

 

Pro forma impact of the acquisition: The unaudited pro forma results presented below include the effects of the acquisition of Vought as if it had been consummated as of April 1, 2010. The pro forma results include the amortization associated with acquired intangible assets and interest expense associated with debt used to fund the acquisition, as well as fair value adjustments for property and equipment, off-market contracts and favorable leases. To better reflect the combined operating results, material nonrecurring charges directly attributable to the transaction have been excluded. In addition, the pro forma results do not include any anticipated synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of April 1, 2010.

 

 

 

 

Three months ended
June 30,

 

 

 

2010

 

Net sales

 

$

771,274

 

Income from continuing operations

 

14,168

 

 

 

 

 

Income from continuing operations — basic

 

$

0.30

 

Income from continuing operations — diluted

 

$

0.28

 

 

The unaudited pro forma information includes adjustments for interest expense that would have been incurred to finance the purchase, additional depreciation based on the estimated fair market value of the property and equipment acquired, and the amortization of the intangible assets arising from the transaction. The unaudited pro forma financial information is not necessarily indicative of the results of operations of the Company as it would have been had the transaction been effected on the assumed date.

 

9



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

4.  DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

 

In September 2007, the Company decided to sell Triumph Precision Castings Co., a casting facility in its Aftermarket Services segment that specializes in producing high-quality hot gas path components for aero and land-based gas turbines.

 

In July 2011, the Company completed the sale of Triumph Precision Castings Co. for proceeds of $3,902, plus contingent consideration, resulting in no gain or loss on the disposal.

 

Revenues of discontinued operations were $246 and $480 for the three months ended June 30, 2011 and 2010, respectively.  The loss from discontinued operations was $689 and $208, net of income tax benefit of $370 and $112 for the three months ended June 30, 2011 and 2010, respectively.  Interest expense of $62 and $63 was allocated to discontinued operations for the three months ended June 30, 2011 and 2010, respectively, based upon the actual borrowings of the operations, and such interest expense is included in the loss from discontinued operations.

 

Assets and liabilities held for sale are comprised of the following:

 

 

 

JUNE 30,

 

MARCH 31,

 

 

 

2011

 

2011

 

Assets held for sale:

 

 

 

 

 

Trade and other receivables, net

 

$

1,188

 

$

1,314

 

Inventories

 

228

 

237

 

Property, plant and equipment

 

3,000

 

3,000

 

Other

 

23

 

23

 

Total assets held for sale

 

$

4,439

 

$

4,574

 

Liabilities related to assets held for sale:

 

 

 

 

 

Accounts payable

 

$

106

 

$

99

 

Accrued expenses

 

578

 

154

 

Other noncurrent liabilities

 

172

 

178

 

Total liabilities related to assets held for sale

 

$

856

 

$

431

 

 

5.             INVENTORIES

 

Inventories are stated at the lower of cost (average cost or specific identification methods) or market. The components of inventories are as follows:

 

 

 

JUNE 30,

 

MARCH 31,

 

 

 

2011

 

2011

 

Raw materials

 

$

79,481

 

$

72,174

 

Manufactured and purchased components

 

181,822

 

171,283

 

Work-in-process

 

602,223

 

634,359

 

Finished goods

 

38,078

 

42,104

 

Less: unliquidated progress payments

 

(159,214

)

(138,206

)

Total inventories

 

$

742,390

 

$

781,714

 

 

10



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT

 

Long-term debt consists of the following:

 

 

 

 

JUNE 30,

 

MARCH 31,

 

 

 

2011

 

2011

 

 

 

 

 

 

 

Revolving credit facility

 

$

354,695

 

$

85,000

 

Receivable securitization facility

 

133,300

 

100,000

 

Equipment leasing facility and other capital leases

 

64,804

 

67,822

 

Term loan credit agreement

 

 

346,731

 

Secured promissory notes

 

7,288

 

7,505

 

Senior subordinated notes due 2017

 

172,864

 

172,801

 

Senior notes due 2018

 

347,682

 

347,623

 

Convertible senior subordinated notes

 

149,983

 

176,544

 

Other debt

 

7,978

 

7,978

 

 

 

1,238,594

 

1,312,004

 

Less current portion

 

170,135

 

300,252

 

 

 

$

1,068,459

 

$

1,011,752

 

 

Revolving Credit Facility

 

On April 5, 2011, the Company amended and restated its existing credit agreement (the “Credit Facility”) with its lenders to (i) increase the availability under the Credit Facility to $850,000, with a $50,000 accordion feature, from $535,000, (ii) extend the maturity date to April 5, 2016; and (iii) amend certain other terms and covenants.  Using availability under the Credit Facility, the Company immediately extinguished its term loan credit agreement (the “Term Loan”) at face value of $350,000, plus accrued interest. In connection with the amendment to the Credit Facility, the Company incurred approximately $3,552 of financing costs. These costs, along with the $5,282 of unamortized financing costs prior to the closing, are being amortized over the remaining term of the Credit Facility.

 

On May 10, 2010, the Company entered into the Credit Facility, which became available on June 16, 2010 in connection with the consummation of the acquisition of Vought. The Credit Facility replaced and refinanced the Company’s Amended and Restated Credit Agreement dated as of August 14, 2009 (the “2009 Credit Agreement”), which agreement was terminated and all obligations thereunder paid in full upon the consummation of the acquisition of Vought. The obligations under the Credit Facility and related documents are secured by liens on substantially all assets of the Company and its domestic subsidiaries pursuant to a Guarantee and Collateral Agreement, dated as of June 16, 2010, among the Company, and the subsidiaries of the Company party thereto. Such liens are pari passu to the liens securing the Company’s obligations under the Term Loan described below pursuant to an intercreditor agreement dated June 16, 2010 among the agents under the Credit Facility and the Term Loan, the Company and its domestic subsidiaries that are borrowers and/or guarantors under the Credit Facility and the Term Loan (the “Intercreditor Agreement”).

 

The Credit Facility bears interest at either: (i) LIBOR plus between 1.75% and 3.00%; (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 total indebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.300% and 0.500% on the unused portion of the Credit Facility.  The Company’s obligations under the Credit Facility are guaranteed by the Company’s domestic subsidiaries.

 

11



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

At June 30, 2011, there were $354,695 in borrowings and $30,422 in letters of credit outstanding under the Credit Facility.  At March 31, 2011, there were $85,000 in borrowings and $40,135 in letters of credit outstanding under the Credit Facility.  The level of unused borrowing capacity under the Credit Facility varies from time to time depending in part upon its compliance with financial and other covenants set forth in the related agreement.  The Credit Facility contains certain affirmative and negative covenants including limitations on specified levels of indebtedness to earnings before interest, taxes, depreciation and amortization, and interest coverage requirements, and includes limitations on, among other things, liens, mergers, consolidations, sales of assets, and incurrence of debt. If an event of default were to occur under the Credit Facility, the lenders would be entitled to declare all amounts borrowed under it immediately due and payable. The occurrence of an event of default under the Credit Facility could also cause the acceleration of obligations under certain other agreements. The Company is currently in compliance with all such covenants.  As of June 30, 2011, the Company had borrowing capacity under this facility of $464,883 after reductions for borrowings and letters of credit outstanding under the facility.

 

Receivables Securitization Program

 

In June 2011, the Company amended its $175,000 receivable securitization facility (the “Securitization Facility”) extending the term through June 2014.  In connection with the Securitization Facility, the Company sells on a revolving basis certain trade accounts receivable to Triumph Receivables, LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financial institutions.  The Company is the servicer of the trade accounts receivable under the Securitization Facility.  As of June 30, 2011, the maximum amount available under the Securitization Facility was $137,500.  Interest rates are based on prevailing market rates for short-term commercial paper plus a program fee and a commitment fee.   The program fee is 0.50% on the amount outstanding under the Securitization Facility.  Additionally, the commitment fee is 0.65% on 102% of the maximum amount available under the Securitization Facility.  At June 30, 2011, there was $133,300 outstanding under the Securitization Facility.  In connection with amending the Securitization Facility, the Company incurred approximately $325 of financing costs. These costs, along with the $831 of unamortized financing costs prior to the amendment, are being amortized over the life of the Securitization Facility.  The Company securitizes its trade accounts receivable, which are generally non-interest bearing, in transactions that are accounted 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 restricted payments, creation of certain liens, and certain corporate acts such as mergers, consolidations and the sale of substantially all assets.

 

Equipment Leasing Facility and Other Capital Leases

 

During March 2009, the Company entered into a 7-year Master Lease Agreement (the “Leasing Facility”) creating a capital lease of certain existing property and equipment. The Leasing Facility bears interest at a weighted-average fixed rate of 6.2% per annum.

 

During the three months ended June 30, 2011 and 2010, the Company entered into new capital leases in the amount of $19 and $6,804, respectively, to finance a portion of the Company’s capital additions for the period.

 

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Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

Term Loan Credit Agreement

 

The Company entered into the Term Loan dated as of June 16, 2010, which proceeds were used to partially finance the acquisition of Vought. The Term Loan provided for a six-year term loan in a principal amount of $350,000, repayable in equal quarterly installments at a rate of 1.00% of the original principal amount per year, with the balance payable on the final maturity date. The proceeds of the loans under the Term Loan, which were 99.500% of the principal amount, were used to consummate the acquisition of Vought. In connection with the closing on the Term Loan, the Company incurred approximately $7,133 of costs, which were deferred and were being amortized into expense over the term of the Term Loan.

 

The obligations under the Term Loan were guaranteed by substantially all of the Company’s domestic subsidiaries and secured by liens on substantially all of the Company’s and the guarantors’ assets pursuant to a Guarantee and Collateral Agreement (the “Term Loan Guarantee and Collateral Agreement”) and certain other collateral agreements, in each case subject to the Intercreditor Agreement. Borrowings under the Term Loan bore interest, at the Company’s option, at either the base rate (subject to a 2.50% floor), plus a margin between 1.750% and 2.000%, or at the Eurodollar Rate (subject to a 1.50% floor), plus a margin driven by net leverage between 2.750% and 3.000%.

 

On April 5, 2011, in connection with the amendment and restatement of the Credit Facility, the Company extinguished the Term Loan at face value of $350,000, plus accrued interest. As a result, the Company recognized a pre-tax loss on extinguishment of debt of $7,712 associated with the write-off of the remaining unamortized discount and deferred financing fees on the Term Loan included in Interest expense and other.

 

Senior Subordinated Notes Due 2017

 

On November 16, 2009, the Company issued $175,000 principal amount of 8% Senior Subordinated Notes due 2017 (the “2017 Notes”).  The 2017 Notes were sold at 98.558% of principal amount and have an effective interest yield of 8.25%. Interest on the 2017 Notes is payable semiannually in cash in arrears on May 15 and November 15 of each year. In connection with the issuance of the 2017 Notes, the Company incurred approximately $4,390 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2017 Notes.

 

The 2017 Notes are senior subordinated unsecured obligations of the Company and rank subordinate to all of the existing and future senior indebtedness of the Company and the Guarantor Subsidiaries (as defined below), including borrowings under the Company’s existing Credit Facility, and pari passu with the Company’s and the Guarantor Subsidiaries’ existing and future senior subordinated indebtedness. The 2017 Notes are guaranteed, on a full, joint and several basis, by each of the Company’s domestic restricted subsidiaries that guarantees any of the Company’s debt or that of any of the Company’s restricted subsidiaries under the Credit Facility, and in the future by any domestic restricted subsidiaries that guarantee any of the Company’s debt or that of any of the Company’s domestic restricted subsidiaries incurred under any credit facility (collectively, the “Guarantor Subsidiaries”), in each case on a senior subordinated basis.  If the Company is unable to make payments on the 2017 Notes when they are due, each of the Guarantor Subsidiaries would be obligated to make such payments.

 

The Company has the option to redeem all or a portion of the 2017 Notes at any time prior to November 15, 2013 at a redemption price equal to 100% of the principal amount of the 2017 Notes redeemed, plus an applicable premium set forth in the Indenture and accrued and unpaid interest, if any.  The 2017 Notes are also subject to redemption, in whole or in part, at any time on or after November 15, 2013, at redemption

 

13



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

prices equal to (i) 104% of the principal amount of the 2017 Notes redeemed, if redeemed prior to November 15, 2014, (ii) 102% of the principal amount of the 2017 Notes redeemed, if redeemed prior to November 15, 2015, and (iii) 100% of the principal amount of the 2017 Notes redeemed, if redeemed thereafter, plus accrued and unpaid interest.  In addition, at any time prior to November 15, 2012, the Company may redeem up to 35% of the principal amount of the 2017 Notes with the net cash proceeds of qualified equity offerings at a redemption price equal to 108% of the aggregate principal amount plus accrued and unpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2017 Notes (the “2017 Indenture”).

 

Upon the occurrence of a change-of-control, the Company must offer to purchase the 2017 Notes from holders at 101% of their principal amount plus accrued and unpaid interest, if any, to the date of purchase.  This change-of-control feature represents an embedded derivative. Since it is in the control of the Company to call the 2017 Notes at any time after November 15, 2013, the value of the derivative was determined to be de minimis. Accordingly, no value has been assigned at issuance or at June 30, 2011.

 

The 2017 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 Guarantor Subsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose of substantially 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 2018

 

On June 16, 2010, in connection with the acquisition of Vought, the Company issued $350,000 principal amount of 8.625% Senior Notes due 2018 (the “2018 Notes”). The 2018 Notes were sold at 99.270% of principal amount and have an effective interest yield of 8.75%. Interest on the 2018 Notes accrues at the rate of 8.625% per annum and is payable semiannually in cash in arrears on January 15 and July 15 of each year. In connection with the issuance of the 2018 Notes, the Company incurred approximately $7,307 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2018 Notes.

 

The 2018 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2018 Notes are guaranteed on a full, joint and several basis by each of the Guarantor Subsidiaries.

 

The Company may redeem some or all of the 2018 Notes prior to July 15, 2014 by paying a “make-whole” premium. The Company may redeem some or all of the 2018 Notes on or after July 15, 2014 at specified redemption prices. In addition, prior to July 15, 2013, the Company may redeem up to 35% of the 2018 Notes with the net proceeds of certain equity offerings at a redemption price equal to 108.625% of the aggregate principal amount plus accrued and unpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2018 Notes (the “2018 Indenture”).

 

The Company is obligated to offer to repurchase the 2018 Notes at a price of (a) 101% of their principal amount plus accrued and unpaid interest, if any, as a result of certain change-of-control events and (b) 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain asset sales. These restrictions and prohibitions are subject to certain qualifications and exceptions. This change-of-control feature represents an embedded derivative. Since it is in the control of the Company to call the 2018 Notes at

 

14



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

any time after July 15, 2014, the value of the derivative was determined to be de minimis. Accordingly, no value has been assigned at issuance or at June 30, 2011.

 

The 2018 Indenture contains covenants that, among other things, limit the Company’s ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted payments, (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose of substantially 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.

 

Convertible Senior Subordinated Notes

 

On September 18, 2006, the Company issued $201,250 in convertible senior subordinated notes (the “Convertible Notes”). The Convertible Notes are direct, unsecured, senior subordinated obligations of the Company, and rank (i) junior in right of payment to all of the Company’s existing and future senior indebtedness, (ii) equal in right of payment with any other future senior subordinated indebtedness, and (iii) senior in right of payment to all subordinated indebtedness.

 

The Company received net proceeds from the sale of the Convertible Notes of approximately $194,998 after deducting debt issuance expenses of approximately $6,252. The use of the net proceeds from the sale was for prepayment of the Company’s outstanding senior notes, including a make-whole premium, fees and expenses in connection with the prepayment, and to repay a portion of the outstanding indebtedness under the Company’s then-existing credit facility. Debt issuance costs have been recorded as other assets in the accompanying consolidated balance sheets and are being amortized over a period of five years.

 

The Convertible Notes bear interest at a fixed rate of 2.625% per annum, payable in cash semiannually in arrears on each April 1 and October 1. During the period commencing on October 6, 2011 and ending on, but excluding, April 1, 2012 and for each six-month period from October 1 to March 31 or from April 1 to September 30 thereafter, the Company will pay contingent interest during the applicable interest period if the average trading price of a note for the five consecutive trading days ending on the third trading day immediately preceding the first day of the relevant six-month period equals or exceeds 120% of the principal amount of the Convertible Notes. The contingent interest payable per note in respect of any six-month period will equal 0.25% per annum, calculated on the average trading price of a note for the relevant five trading day period. This contingent interest feature represents an embedded derivative. Since it is within the control of the Company to call the Convertible Notes at any time after October 6, 2011, the value of the derivative was determined to be de minimis. Accordingly, no value has been assigned at issuance or at June 30, 2011.

 

Prior to fiscal 2011, the Company paid $19,414 to purchase $22,200 in principal amounts of the Convertible Notes.

 

The Convertible Notes mature on October 1, 2026, unless earlier redeemed, repurchased or converted. The Company may redeem the Convertible Notes for cash, either in whole or in part, at any time on or after October 6, 2011 at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest, including contingent interest and additional amounts, if any, up to but not including the date of redemption. In addition, holders of the Convertible Notes will have the right to require the Company to repurchase for cash all or a portion of their Convertible Notes on October 1, 2011, 2016 and 2021, at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued and unpaid interest, including contingent interest and additional amounts, if any, up to, but not including, the date of repurchase. The Convertible Notes are convertible into the Company’s common stock at a rate equal to 36.731 shares per $1,000 principal amount of the Convertible Notes (equal

 

15



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

to an initial conversion price of approximately $27.23 per share), subject to adjustment as described in the Indenture. Upon conversion, the Company will deliver to the holder surrendering the Convertible Notes for conversion, for each $1,000 principal amount of Notes, an amount consisting of cash equal to the lesser of $1,000 and the Company’s total conversion obligation and, to the extent that the Company’s total conversion obligation exceeds $1,000, at the Company’s election, cash or shares of the Company’s common stock in respect of the remainder.

 

The Convertible Notes are eligible for conversion upon meeting certain conditions as provided in the indenture governing the Convertible Notes. For the periods from January 1, 2011 through June 30, 2011, the Convertible Notes were eligible for conversion.  During the quarter ended June 30, 2011, the Company settled the conversion of $27,988 in principal value of the Convertible Notes, as requested by the respective holders, with the principal settled in cash and the conversion benefit settled through the issuance of 366,626 shares.  In June 2011, the Company received notice of conversion from holders of $752 in principal value of the Convertible Notes. These conversions were settled in the second quarter of fiscal 2012 with the principal settled in cash and the conversion benefit settled through the issuance of approximately 12,800 shares. In July 2011, the Company delivered a notice to holders of the Convertible Notes to the effect that, for at least 20 trading days during the 30 consecutive trading days preceding June 30, 2011, the closing price of the Company’s common stock was greater than or equal to 130% of the conversion price of such notes on the last trading day. Under the terms of the Convertible Notes, the increase in the Company’s stock price triggered a provision, which gave holders of the Convertible Notes a put option through September 30, 2011. Accordingly, the balance sheet classification of the Convertible Notes will be short term for as long as the put option remains in effect.

 

To be included in the calculation of diluted earnings per share, the average price of the Company’s common stock for the quarter must exceed the conversion price per share of $27.23. The average price of the Company’s common stock for the fiscal quarters ended June 30, 2011 and 2010 was $45.33 and $35.21, respectively.  Therefore, 2,399,471 and 1,490,752 additional shares were included in the diluted earnings per share calculation as of the fiscal quarters ended June 30, 2011 and 2010, respectively.  If the Company undergoes a fundamental change, holders of the Notes will have the right, subject to certain conditions, to require the Company to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, including contingent interest and additional amounts, if any.

 

Effective April 1, 2009, the Company changed its method of accounting for its convertible debt instruments in order to separately account for the liability and equity components of the Convertible Notes in a manner that reflects the Company’s nonconvertible debt borrowing rate when interest and amortization cost is recognized in subsequent periods. The excess of the principal amount of the liability component over its carrying amount has been recognized as debt discount and amortized using the effective interest method. As of June 30, 2011, the remaining discount of $1,079 will be amortized on the effective interest method through October 1, 2011. The debt and equity components recognized for the Convertible Notes as of June 30, 2011 were as follows:

 

Principal amount of convertible notes

 

$

151,062

 

Unamortized discount (1)

 

1,079

 

Net carrying amount

 

$

149,983

 

 


(1)          Remaining recognition period of 0.25 years as of June 30, 2011, recorded in temporary equity at June 30, 2011.

 

16



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

6.             LONG-TERM DEBT (Continued)

 

The amount of interest expense recognized and the effective rate for the Convertible Notes were as follows:

 

 

 

Three months ended
June 30,

 

 

 

2011

 

2010

 

Contractual coupon interest

 

$

992

 

$

1,175

 

Amortization of discount on convertible notes

 

1,427

 

1,585

 

Interest expense

 

$

2,419

 

2,760

 

 

 

 

 

 

 

Effective interest rate

 

6.5

%

6.5

%

 

7.             FAIR VALUE MEASUREMENTS

 

The Company follows the Fair Value Measurements and Disclosures topic of the ASC, which requires additional disclosures about the Company’s assets and liabilities that are measured at fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

 

Level 1   Unadjusted quoted prices in active markets for identical assets or liabilities

 

Level 2          Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

 

Level 3   Unobservable inputs for the asset or liability

 

The following table provides the liabilities reported at fair value and measured on a recurring basis as of June 30, 2011:

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

 

 

Quoted Prices in
Active Markets for
Identical Assets

 

Significant Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

Description

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

(2,870

)

$

 

$

 

$

(2,870

)

 

The fair value of the contingent consideration at the date of acquisition was $2,545 which was estimated using the income approach based on significant inputs that are not observable in the market. Key assumptions included a discount rate and probability assessments of each milestone payment being made. The assumptions used to develop the estimate have not changed since the date of acquisition, with the exception of the present value factor.

 

The Financial Instruments topic of the ASC requires disclosure of the estimated fair value of certain financial instruments. These estimated fair values as of June 30, 2011 and March 31, 2011 have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on these estimates of fair value.

 

17



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

7.             FAIR VALUE MEASUREMENTS (Continued)

 

Carrying amounts and the related estimated fair values of the Company’s financial instruments not recorded at fair value in the financial statements are as follows:

 

 

 

June 30, 2011

 

March 31, 2011

 

 

 

Carrying
Value

 

Fair Value

 

Carrying
Value

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

1,238,594

 

$

1,406,876

 

$

1,312,004

 

$

1,483,796

 

 

The fair value of the long-term debt was calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available.

 

Except for long-term debt, the Company’s financial instruments are highly liquid or have short-term maturities. Therefore, the recorded value is approximately equal to the fair value. The financial instruments held by the Company could potentially expose it to a concentration of credit risk. The Company invests its excess cash in money market funds and other deposit instruments placed with major banks and financial institutions. The Company has established guidelines related to diversification and maturities to maintain safety and liquidity.

 

8.             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:

 

 

 

THREE MONTHS ENDED

 

 

 

JUNE 30,

 

 

 

(in thousands)

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Weighted-average common shares outstanding — basic

 

48,466

 

35,507

 

Net effect of dilutive stock options

 

434

 

465

 

Potential common shares — convertible debt

 

2,399

 

1,491

 

Weighted-average common shares outstanding — diluted

 

51,299

 

37,463

 

 

The weighted-average common shares outstanding — basic for the three months ended June 30, 2010 includes the 14,992,330 shares issued as partial consideration in the acquisition of Vought for the prorata portion of the quarter ended June 30, 2010 (see Note 3).

 

9.             INCOME TAXES

 

The Company follows the Income Taxes topic of the ASC, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

 

The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year.  Penalties and tax-related interest expense are reported as a component of income tax expense.  As of June 30, 2011 and March 31, 2011, the total amount of accrued income tax-related interest and penalties was $173 and $156, respectively.

 

18



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

9.             INCOME TAXES (Continued)

 

As of June 30, 2011 and March 31, 2011, the total amount of unrecognized tax benefits was $7,017 and $6,934, respectively, of which $5,234 and $5,151, respectively, would impact the effective rate, if recognized.  The Company does not anticipate that total unrecognized tax benefits will be reduced in the next 12 months.

 

The effective income tax rate for the quarter ended June 30, 2011 was 35.5% as compared to 45.2% for the quarter ended June 30, 2010 reflecting the non-deductibility of certain acquisition-related expenses in the prior year period, as well as the absence of the Research and Development tax credit, which had expired December 31, 2009.

 

The Company has filed appeals in a prior state tax examination jurisdiction related to fiscal years ended March 31, 1999 through March 31, 2005.  The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.

 

With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for fiscal years ended before March 31, 2009, state or local examinations for fiscal years ended before March 31, 2007, or foreign income tax examinations by tax authorities for fiscal years ended before March 31, 2008.

 

As of June 30, 2011, the Company was subject to examination in one state jurisdiction for fiscal years ended March 31, 2007 through March 31, 2009. The Company has filed appeals in a prior state examination related to fiscal years ended March 31, 1999 through March 31, 2005. Because of net operating losses acquired as part of the acquisition of Vought, the Company is subject to U.S. federal income tax examinations and various state jurisdictions for the years ended December 31, 2004 and after related to previously filed Vought tax returns. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.

 

10.           GOODWILL

 

The following is a summary of the changes in the carrying value of goodwill by reportable segment, from March 31, 2011 through June 30, 2011:

 

 

 

 

Aerostructures

 

Aerospace
Systems

 

Aftermarket
Services

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2011

 

$

1,284,478

 

$

193,633

 

$

52,469

 

$

1,530,580

 

Goodwill recognized in connection with acquisitions

 

1,949

 

 

 

1,949

 

Purchase price adjustments

 

(216

)

 

 

(216

)

Effect of exchange rate changes and other

 

 

350

 

 

350

 

Balance, June 30, 2011

 

$

1,286,211

 

$

193,983

 

$

52,469

 

$

1,532,663

 

 

19



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

11.           PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

 

The Company sponsors several defined benefit pension plans covering some of its employees.  Certain employee groups are ineligible to participate in the plans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the defined benefit pension plans.  Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation for certain years. It is the Company’s policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under U.S. Government regulations, by making payments into a separate trust.

 

In addition to the defined benefit pension plans, the Company provides certain healthcare and life insurance benefits for eligible retired employees.  Such benefits are unfunded. Employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meet specified age and years of service requirements. Election to participate for some employees must be made at the date of retirement. Qualifying dependents at the date of retirement are also eligible for medical coverage. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees. From time to time, changes have been made to the benefits provided to various groups 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 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.

 

In accordance with the Compensation — Retirement Benefits topic of the ASC, the Company has recognized the funded status of the benefit obligation as of the date of the last remeasurement, in the accompanying consolidated balance sheet. The funded status is measured as the difference between the fair value of the plan’s assets and the PBO or accumulated postretirement benefit obligation of the plan.  In order to recognize the funded status, the Company determined the fair value of the plan assets.  The majority of the plan assets are publicly traded investments which were valued based on the market price as of the date of remeasurement.  Investments that are not publicly traded were valued based on the estimated fair value of those investments based on our evaluation of data from fund managers and comparable market data.

 

20



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

11.           PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

 

Net Periodic Benefit Plan Costs

 

The components of net periodic benefit costs for our postretirement benefit plans are shown in the following table:

 

 

 

 

Pension benefits

 

 

 

Three months ended June 30,

 

 

 

2011

 

2010

 

Components of net periodic benefit cost:

 

 

 

 

 

Service cost

 

$

4,114

 

$

969

 

Interest cost

 

27,015

 

5,014

 

Expected return on plan assets

 

(31,901

)

(5,085

)

Amortization of prior service costs

 

(2,753

)

18

 

Amortization of net loss

 

29

 

46

 

Net periodic benefit cost

 

$

(3,496

)

$

962

 

 

 

 

Other postretirement benefits

 

 

 

Three months ended June 30,

 

 

 

2011

 

2010

 

Components of net periodic benefit cost:

 

 

 

 

 

Service cost

 

$

848

 

$

183

 

Interest cost

 

4,602

 

898

 

Expected return on plan assets

 

 

 

Amortization of prior service costs

 

(1,125

)

 

Net periodic benefit cost

 

$

4,325

 

$

1,081

 

 

12.           COMMITMENTS AND CONTINGENCIES

 

Sale of the Charleston 787 business

 

On July 30, 2009, Vought Aircraft Industries sold the assets and operations of its 787 business conducted at North Charleston, South Carolina (“the Boeing sale agreement”) to a wholly owned subsidiary of The Boeing Company (“Boeing”). Following the acquisition of Vought by the Company, Boeing has asserted various breaches to the Boeing sale agreement. In July 2011, the Company and Boeing agreed to a settlement. As of June 30, 2011, the Company had recognized a liability and an indemnification asset, which resulted in a net amount of $5,000. The amounts recognized were based on the Company’s best estimates using information that it has obtained as of the reporting date. The Company finalized its estimates during the quarter ended June 30, 2011 once it was able to determine that it had obtained all necessary information that existed as of the acquisition date.

 

Other

 

In the ordinary course of business, the Company is also involved in disputes, claims, lawsuits, and governmental and regulatory inquiries that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines or penalties.  While the Company cannot predict the outcome of any pending 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.

 

21



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

13.           SEGMENTS

 

The Company has three reportable segments: the Aerostructures Group, the Aerospace Systems Group and the Aftermarket Services Group.   The Company’s reportable segments are aligned with how the business is managed and the markets that the Company serves are viewed.  The Chief Operating Decision Maker (the “CODM”) evaluates performance and allocates resources based upon review of segment information. The CODM utilizes earnings before interest, income taxes, depreciation and amortization (“EBITDA”) as a primary measure of segment profitability to evaluate performance of its segments and allocate resources.

 

The Aerostructures segment consists of the Company’s operations that manufacture products primarily for the aerospace OEM market. The Aerostructures segment’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’s operations also design and manufacture composite assemblies for floor panels and environmental control system ducts.  These products are sold to various aerospace OEMs on a global basis.

 

The Aerospace Systems segment consists of the Company’s operations that also manufacture products primarily for the aerospace OEM market. The segment’s operations design and engineer mechanical and electromechanical controls, such as hydraulic systems, main engine gearbox assemblies, accumulators, mechanical control cables and non-structural cockpit components.  These products are sold to various aerospace OEMs on a global basis.

 

The Aftermarket Services segment consists of the Company’s operations that provide maintenance, repair and overhaul services to both commercial and military markets on components and accessories manufactured by third parties. Maintenance, repair and overhaul revenues are derived from services on auxiliary power units, airframe and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic drive units. In addition, the segment’s operations repair and overhaul thrust reversers, nacelle components and flight control surfaces.  The segment’s operations also perform repair and overhaul services and supply spare parts for various types of cockpit instruments and gauges for a broad range of commercial airlines on a worldwide basis.

 

Segment 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.  The Company does not accumulate net sales information by product or service or groups of similar products and services and, therefore, the Company does not disclose net sales by product or service because to do so would be impracticable.

 

22



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

13.           SEGMENTS (Continued)

 

Selected financial information for each reportable segment and the reconciliation of EBITDA to operating income is as follows:

 

 

 

THREE MONTHS ENDED

 

 

 

JUNE 30,

 

 

 

2011

 

2010

 

Net sales:

 

 

 

 

 

Aerostructures

 

$

643,306

 

$

231,335

 

Aerospace systems

 

133,010

 

117,433

 

Aftermarket services

 

70,368

 

59,797

 

Elimination of inter-segment sales

 

(1,621

)

(1,356

)

 

 

$

845,063

 

$

407,209

 

 

 

 

 

 

 

Income from continuing operations before income taxes:

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

Aerostructures

 

$

87,974

 

$

36,067

 

Aerospace systems

 

22,417

 

18,348

 

Aftermarket services

 

6,961

 

4,121

 

Corporate

 

(11,972

)

(25,686

)

 

 

105,380

 

32,850

 

Interest expense and other

 

26,462

 

11,791

 

 

 

$

78,918

 

$

21,059

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

Aerostructures

 

$

21,845

 

$

8,044

 

Aerospace systems

 

4,345

 

4,189

 

Aftermarket services

 

2,430

 

3,043

 

Corporate

 

847

 

380

 

 

 

$

29,467

 

$

15,656

 

 

 

 

 

 

 

Amortization of acquired contract liabilities, net:

 

 

 

 

 

Aerostructures

 

$

7,740

 

$

859

 

 

 

 

 

 

 

EBITDA:

 

 

 

 

 

Aerostructures

 

$

102,079

 

$

43,252

 

Aerospace systems

 

26,762

 

22,537

 

Aftermarket services

 

9,391

 

7,164

 

Corporate

 

(11,125

)

(25,306

)

 

 

$

127,107

 

$

47,647

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

Aerostructures

 

$

9,134

 

$

5,297

 

Aerospace systems

 

3,505

 

2,504

 

Aftermarket services

 

1,762

 

894

 

Corporate

 

1,263

 

8,245

 

 

 

$

15,664

 

$

16,940

 

 

23



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

13.           SEGMENTS (Continued)

 

 

 

 

JUNE 30,

 

MARCH 31,

 

 

 

2011

 

2011

 

Total Assets:

 

 

 

 

 

Aerostructures

 

$

3,551,475

 

$

3,567,294

 

Aerospace systems

 

550,095

 

564,235

 

Aftermarket services

 

299,666

 

307,413

 

Corporate

 

16,631

 

19,721

 

Discontinued operations

 

4,439

 

4,574

 

 

 

$

4,422,306

 

$

4,463,237

 

 

During the three months ended June 30, 2011 and 2010, the Company had foreign sales of $113,088 and $70,522, respectively.

 

14.         SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS

 

The 2017 Notes and the 2018 Notes are fully and unconditionally guaranteed on a joint and several basis by Guarantor Subsidiaries. The total assets, stockholder’s equity, revenue, earnings and cash flows from operating activities of the Guarantor Subsidiaries exceeded a majority of the consolidated total of such items as of and for the periods reported. The only consolidated subsidiaries of the Company that are not guarantors of the 2017 Notes and the 2018 Notes (the “Non-Guarantor Subsidiaries”) are: (a) the receivables securitization special-purpose entity, and (b) the international operating subsidiaries. The following tables present condensed consolidating financial statements including the Company (the “Parent”), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries. Such financial statements include summary consolidating balance sheets as of June 30, 2011 and March 31, 2011, condensed consolidating statements of income for the three months ended June 30, 2011 and 2010, and condensed consolidating statements of cash flows for the three months ended June 30, 2011 and 2010.

 

24



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

14. SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS

 

SUMMARY CONSOLIDATING BALANCE SHEETS:

 

 

 

 

June 30, 2011

 

 

 

Parent

 

Guarantor
Subsidiaries

 

Non-Guarantor
Subsidiaries

 

Eliminations

 

Consolidated
Total

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,489

 

$

1,070

 

$

19,866

 

$

 

$

36,425

 

Trade and other receivables, net

 

260

 

191,991

 

194,362

 

 

386,613

 

Inventories

 

 

716,991

 

25,399

 

 

742,390

 

Rotable assets

 

 

23,595

 

7,704

 

 

31,299

 

Prepaid expenses and other

 

7,238

 

9,642

 

1,226

 

 

18,106

 

Assets held for sale

 

 

4,439

 

 

 

4,439

 

Total current assets

 

22,987

 

947,728

 

248,557

 

 

1,219,272

 

Property and equipment, net

 

10,157

 

671,184

 

46,594

 

 

727,935

 

Goodwill and other intangible assets, net

 

1,509

 

2,330,551

 

51,863

 

 

2,383,923

 

Other, net

 

27,512

 

57,723

 

5,941

 

 

91,176

 

Intercompany investments and advances

 

792,684

 

(18,895

)

883

 

(774,672

)

 

Total assets

 

$

854,849

 

$

3,988,291

 

$

353,838

 

$

(774,672

)

$

4,422,306

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

150,492

 

$

17,240

 

$

2,403

 

$

 

$

170,135

 

Accounts payable

 

6,934

 

256,122

 

7,426

 

 

270,482

 

Accrued expenses

 

22,597

 

264,407

 

8,697

 

 

295,701

 

Deferred income taxes

 

 

105,799

 

 

 

105,799

 

Liabilities related to assets held for sale

 

 

856

 

 

 

856

 

Total current liabilities

 

180,023

 

644,424

 

18,526

 

 

842,973

 

Long-term debt, less current portion

 

881,538

 

53,621

 

133,300

 

 

1,068,459

 

Intercompany debt

 

(1,916,446

)

1,785,972

 

130,474

 

 

 

Accrued pension and other postretirement benefits, noncurrent

 

 

647,381

 

 

 

647,381

 

Deferred income taxes and other

 

19,660

 

155,124

 

(1,365

)

 

173,051

 

Total stockholders’ equity

 

1,690,074

 

701,769

 

72,903

 

(774,672

)

1,690,074

 

Total liabilities and stockholders’ equity

 

$

854,849

 

$

3,988,291

 

$

353,838

 

$

(774,672

)

$

4,422,306

 

 

25



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

14.  SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS (Continued)

 

SUMMARY CONSOLIDATING BALANCE SHEETS:

 

 

 

March 31, 2011

 

 

 

Parent

 

Guarantor
Subsidiaries

 

Non-Guarantor
Subsidiaries

 

Eliminations

 

Consolidated
Total

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,270

 

$

1,753

 

$

20,305

 

$

 

$

39,328

 

Trade and other receivables, net

 

 

155,126

 

219,365

 

 

374,491

 

Inventories

 

 

750,311

 

31,403

 

 

781,714

 

Rotable assets

 

 

22,032

 

4,575

 

 

26,607

 

Prepaid expenses and other

 

7,514

 

9,967

 

660

 

 

18,141

 

Assets held for sale

 

 

4,574

 

 

 

4,574

 

Total current assets

 

24,784

 

943,763

 

276,308

 

 

1,244,855

 

Property and equipment, net

 

38,028

 

680,929

 

15,922

 

 

734,879

 

Goodwill and other intangible assets, net

 

1,677

 

2,336,735

 

51,788

 

 

2,390,200

 

Other, net

 

36,767

 

56,291

 

245

 

 

93,303

 

Intercompany investments and advances

 

673,212

 

65,510

 

4,199

 

(742,921

)

 

Total assets

 

$

774,468

 

$

4,083,228

 

$

348,462

 

$

(742,921

)

$

4,463,237

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

180,669

 

$

17,177

 

$

102,406

 

$

 

$

300,252

 

Accounts payable

 

4,259

 

247,002

 

11,455

 

 

262,716

 

Accrued expenses

 

44,887

 

257,518

 

10,949

 

 

313,354

 

Deferred income taxes

 

 

78,793

 

 

 

78,793

 

Liabilities related to assets held for sale

 

 

431

 

 

 

431

 

Total current liabilities

 

229,815

 

600,921

 

124,810

 

 

955,546

 

Long-term debt, less current portion

 

955,009

 

56,743

 

 

 

1,011,752

 

Intercompany debt

 

(2,060,150

)

1,916,421

 

143,729

 

 

 

Accrued pension and other postretirement benefits, noncurrent

 

 

680,754

 

 

 

680,754

 

Deferred income taxes and other

 

17,577

 

166,807

 

(1,416

)

 

182,968

 

Total stockholders’ equity

 

1,632,217

 

661,582

 

81,339

 

(742,921

)

1,632,217

 

Total liabilities and stockholders’ equity

 

$

774,468

 

$

4,083,228

 

$

348,462

 

$

(742,921

)

$

4,463,237

 

 

26



Table of Contents

 

Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(unaudited)

 

14.  SELECTED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS (Continued)

 

CONDENSED CONSOLIDATING STATEMENTS OF INCOME:

 

 

 

Three months ended June 30, 2011

 

 

 

Parent

 

Guarantor
Subsidiaries

 

Non-Guarantor
Subsidiaries

 

Eliminations

 

Consolidated
Total

 

Net sales

 

$

 

$

820,148

 

$

27,940

 

$

(3,025

)

$

845,063

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

629,053

 

22,763

 

(3,025

)

648,791

 

Selling, general and administrative

 

8,637

 

48,006

 

4,322

 

 

60,965

 

Acquisition and integration expenses

 

460

 

 

 

 

460

 

Depreciation and amortization

 

437