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Triumph Group Reports Strong Second Quarter Fiscal 2013 Earnings; Raises Fiscal Year 2013 Guidance
  • Net sales for second quarter fiscal year 2013 increased 19% to $938.2 million
  • Operating income for second quarter fiscal year 2013 increased 32% to $142.9, reflecting an operating margin of 15%
  • Income from continuing operations for second quarter fiscal year 2013 was $80.2 million, or $1.53 per diluted share, which included integration costs of $1.4 million pre-tax ($0.02 per diluted share) and a $2.0 million pre-tax charge ($0.02 per diluted share) for early retirement incentives offered to certain Triumph Aerostructures employees. Excluding integration costs and the early retirement incentives, earnings per share from continuing operations increased 37% to $1.57 per diluted share
  • Year-to-date cash flow from operations before pension contributions of $56.0 million was $188.9 million

BERWYN, Pa.--(BUSINESS WIRE)--Oct. 30, 2012-- Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the second quarter of fiscal year ending March 31, 2013 totaled $938.2 million, a nineteen percent increase from last year’s second quarter net sales of $790.5 million. Substantially all of the sales growth for the quarter was organic.

Income from continuing operations for the second quarter of fiscal year 2013 was $80.2 million, or $1.53 per diluted share, versus $58.6 million, or $1.13 per diluted share, for the second quarter of the prior fiscal year. The quarter’s results included approximately $1.4 million pre-tax ($0.9 million after tax or $0.02 per diluted share) of integration expenses related to the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division). In addition, the second quarter results included a charge of $2.0 million pre-tax ($1.2 million after tax or $0.02 per diluted share) for early retirement incentives offered to certain Triumph Aerostructures employees. The prior fiscal year’s quarter included $1.1 million pre-tax ($0.7 million after tax) of integration costs associated with the Vought acquisition. Excluding integration costs and the early retirement incentives, income from continuing operations for the quarter was $82.3 million, or $1.57 per diluted share.

The number of shares used in computing diluted earnings per share for the second quarter of fiscal year 2013 was 52.3 million shares.

Net sales for the first six months of fiscal year 2013 were $1.826 billion, a twelve percent increase from net sales of $1.636 billion last fiscal year. Income from continuing operations for the first six months of fiscal year 2013 increased forty-three percent to $156.5 million, or $2.99 per diluted share, versus $109.5 million, or $2.13 per diluted share, in the prior year period. The year to date results included $2.0 million pre-tax ($1.3 million after tax or $0.02 per diluted share) of integration expenses related to the Vought acquisition and charges of $3.1 million pre-tax ($2.0 million after tax or $0.04 per diluted share) for early retirement incentives. The prior fiscal year period included $1.6 million pre-tax ($1.0 million after tax) of integration expenses associated with the Vought acquisition. Excluding these costs, income from continuing operations for the first six months of fiscal year 2013 was $159.8 million, or $3.06 per diluted share.

During the six months ended September 30, 2012, the company generated $188.9 million of cash flow from operations before Triumph Aerostructures’ pension contribution of $56.0 million; after this contribution, cash flow from operations was $132.9 million.

Segment Results

Aerostructures

The Aerostructures segment reported net sales for the quarter of $714.0 million compared to $588.0 million in the prior year period, an increase of twenty-one percent, all of which was organic. Operating income for the second quarter of fiscal year 2013 was $121.4 million compared to $92.5 million for the prior year period, an increase of thirty-one percent and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $0.2 million. The segment’s operating margin for the quarter was seventeen percent, a 130 basis points improvement over the prior year period. The segment’s operating results included $1.4 million of integration costs, the majority of which related to severance costs.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $150.1 million, compared to $133.8 million in the prior year period, an increase of twelve percent, all of which was organic. Operating income for the second quarter of fiscal year 2013 was $25.7 million compared to $22.6 million for the prior year period, an increase of fourteen percent. Operating margin for the quarter was seventeen percent. The segment’s operating results included $1.2 million of expense associated with the GECI Aviation (Sky Aircraft) bankruptcy and $1.0 million, compared to $0.5 million in the prior year period, of legal expenses associated with the previously reported trade secret litigation.

Aftermarket Services

The Aftermarket Services segment reported net sales for the quarter of $76.1 million, compared to $70.5 million in the prior year period, an increase of eight percent. Organic sales growth for the quarter was four percent. Operating income for the second quarter of fiscal year 2013 was $10.8 million compared to $7.0 million for the prior year period, an increase of fifty-four percent. Operating margin for the quarter was fourteen percent, a 430 basis points improvement over the prior year.

Outlook

Commenting on the company’s performance and its outlook for fiscal year 2013, Jeffry D. Frisby, Triumph’s President and Chief Executive Officer, said, “The second quarter was another great quarter for Triumph highlighted by increased revenue, record operating income and year over year margin expansion. Our backlog, which represents an ideal mix of programs across our end markets, is very strong and is testimony to our diverse product offering and our operating model.

“Based on the strong year-to-date performance, current production rates and a weighted average share count of 52.5 million shares, we are reaffirming our revenue guidance for fiscal year 2013 of $3.5 to $3.7 billion and are raising our full year earnings guidance to earnings per share from continuing operations of approximately $5.95 per diluted share, excluding integration costs and early retirement incentives.”

As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2013 second quarter results. The conference call will be available live and archived on the company’s website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast. An audio replay will be available from October 31st until November 7th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1593689.

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, 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.

More information about Triumph can be found on the company’s website at http://www.triumphgroup.com.

Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, and earnings results for fiscal 2013. All forward-looking statements involve risks and uncertainties which could affect the company’s actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the company.

Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph’s reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

FINANCIAL DATA (UNAUDITED)
             
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
 
 
Three Months Ended Six Months Ended
September 30, September 30,
 
CONDENSED STATEMENTS OF INCOME   2012   2011     2012   2011  
 
 
Net sales $ 938,181 $ 790,528 $ 1,825,869 $ 1,635,591
 
Operating income, before acquisition and integration
costs and early retirement incentives 146,336 109,600 288,973 215,440
Acquisition and integration costs 1,432 1,144 1,977 1,604
Early retirement incentives expense   1,957   -     3,107   -  
Operating income 142,947 108,456 283,889 213,836
 
Interest expense and other 16,668 17,671 33,900 44,133
Income tax expense   46,088   32,221     93,466   60,235  
 
Income from continuing operations 80,191 58,564 156,523 109,468
Loss from discontinued operations, net of tax   -   (76 )   -   (765 )
 
Net income $ 80,191 $ 58,488   $ 156,523 $ 108,703  
 
Earnings per share - basic:
 
Income from continuing operations $ 1.61 $ 1.20 $ 3.16 $ 2.25
Loss from discontinued operations   -   (0.00 )   -   (0.02 )
Net income $ 1.61 $ 1.20   $ 3.16 $ 2.24   *
 
Weighted average common shares outstanding - basic   49,657   48,697     49,536   48,582  
 
Earnings per share - diluted:
 
Income from continuing operations $ 1.53 $ 1.13 $ 2.99 $ 2.13
Loss from discontinued operations   -   (0.00 )   -   (0.01 )
Net income $ 1.53 $ 1.13   $ 2.99 $ 2.11   *
 
Weighted average common shares outstanding - diluted   52,289   51,646     52,280   51,478  
 
Dividends declared and paid per common share $ 0.04 $ 0.04   $ 0.08 $ 0.06  
 
*Difference due to rounding.

 

FINANCIAL DATA (UNAUDITED)
       
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
BALANCE SHEET Unaudited Audited
September 30, March 31,
  2012     2012  
Assets
Cash and cash equivalents $ 30,651 $ 29,662
Accounts receivable, net 397,262 440,608
Inventory, net of unliquidated progress payments of $138,940 and $164,450 891,353 817,956
Rotable assets 35,730 34,554
Deferred income taxes 51,448 72,259
Prepaid and other current assets   23,313     23,344  
Current assets 1,429,757 1,418,383
 
Property and equipment, net 744,748 733,380
Goodwill 1,546,259 1,546,374
Intangible assets, net 812,481 829,676
Other, net   57,848     26,944  
 
Total assets $ 4,591,093   $ 4,554,757  
 
Liabilities & Stockholders' Equity
 
Current portion of long-term debt $ 125,201 $ 142,237
Accounts payable 281,089 266,124
Accrued expenses   231,813     311,620  
Current liabilities 638,103 719,981
 
Long-term debt, less current portion 967,489 1,016,625
Accrued pension and post-retirement benefits, noncurrent 626,162 700,125
Deferred income taxes, noncurrent 283,366 188,370
Other noncurrent liabilities 124,844 136,287
 
Stockholders' Equity:
Common stock, $.001 par value, 100,000,000 shares
authorized, 50,078,428 and 49,590,273 shares issued 50 50
Capital in excess of par value 840,750 833,935
Treasury stock, at cost, 75,994 and 58,533 shares (3,168 ) (1,716 )
Accumulated other comprehensive loss (9,317 ) (9,306 )
Retained earnings   1,122,814     970,406  
Total stockholders' equity   1,951,129     1,793,369  
 
Total liabilities and stockholders' equity $ 4,591,093   $ 4,554,757  

 

       
FINANCIAL DATA (UNAUDITED)
   
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
 
 
SEGMENT DATA Three Months Ended Six Months Ended
September 30, September 30,
 
  2012     2011     2012     2011  
 
Net sales:
Aerostructures $ 713,978 $ 587,977 $ 1,383,831 $ 1,231,283
Aerospace Systems 150,139 133,775 290,651 266,784
Aftermarket Services 76,061 70,547 156,038 140,916
Elimination of inter-segment sales   (1,997 )   (1,771 )   (4,651 )   (3,392 )
$ 938,181   $ 790,528   $ 1,825,869   $ 1,635,591  
 
Operating income (loss):
Aerostructures $ 121,385 $ 92,489 $ 241,523 $ 180,463
Aerospace Systems 25,712 22,644 49,177 45,061
Aftermarket Services 10,767 7,015 22,574 13,976
Corporate   (14,917 )

2

  (13,692 )   (29,385 )

2

  (25,664 )
$ 142,947  

1

$ 108,456  

3

$ 283,889  

1

$ 213,836  

3

 
Depreciation and amortization:
Aerostructures $ 24,049 $ 21,937 $ 47,953 $ 43,782
Aerospace Systems 4,489 4,322 8,963 8,667
Aftermarket Services 2,288 2,341 4,614 4,771
Corporate   1,172     866     2,283     1,713  
$ 31,998   $ 29,466   $ 63,813   $ 58,933  
 
Amortization of acquired contract liabilities:
Aerostructures $ (6,563 ) $ (5,770 ) $ (13,555 ) $ (13,510 )
 
Capital expenditures:
Aerostructures $ 16,413 $ 12,590 $ 46,425 $ 21,725
Aerospace Systems 3,810 3,009 6,599 6,514
Aftermarket Services 3,378 1,571 7,475 3,333
Corporate   487     1,314     694     2,577  
$ 24,088   $ 18,484   $ 61,193   $ 34,149  
 

1 Includes $1,432 and $1,977 of acquisition and integration expenses primarily associated with the integration of Vought for the three and six months ended September 30, 2012, respectively, primarily in the Aerostructures segment.

2 Includes $1,957 and $3,107 of early retirement incentives due to defined benefit plan amendments for the three and six months ended September 30, 2012, respectively.

3 Includes $1,144 and $1,604 of acquisition and integration expenses associated with the acquisition of Vought for the three and six months ended September 30, 2011, respectively.

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

Non-GAAP Financial Measure Disclosures

We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the “SEC”) guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is EBITDA, which is our income from continuing operations before interest, income taxes, amortization of acquired contract liabilities, early retirement incentives, depreciation and amortization. We disclose EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.

We view EBITDA as an operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is income from continuing operations. In calculating EBITDA, we exclude from income from continuing operations the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on EBITDA as a substitute for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of EBITDA to income from continuing operations set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our EBITDA.

EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 15 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our income from continuing operations has included significant charges for depreciation and amortization. EBITDA excludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe EBITDA is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on EBITDA to provide a financial measure by which to compare our operating performance against that of other companies in our industry.

Set forth below are descriptions of the financial items that have been excluded from our income from continuing operations to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:

  • Early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) necessarily reflect the current and ongoing cash earnings related to our operations.
  • Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of below market contracts acquired through the acquisition of Vought. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
  • Amortization expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
  • Depreciation may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
  • The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business.

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

  • Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.

Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.

The following table shows our EBITDA reconciled to our income from continuing operations for the indicated periods (in thousands):

  Three Months Ended   Six Months Ended
September 30, September 30,
  2012       2011     2012       2011  
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
Income from Continuing Operations $ 80,191 $ 58,564 $ 156,523 $ 109,468
 
Add-back:
Income Tax Expense 46,088 32,221 93,466 60,235
Interest Expense and Other 16,668 17,671 33,900 44,133
Early Retirement Incentives Expense 1,957 - 3,107 -
Amortization of Acquired Contract Liabilities (6,563 ) (5,770 ) (13,555 ) (13,510 )
Depreciation and Amortization   31,998     29,466     63,813     58,933  
 
Earnings before Interest, Taxes, Depreciation
and Amortization ("EBITDA") $ 170,339   $ 132,152   $ 337,254   $ 259,259  
 
Net Sales $ 938,181   $ 790,528   $ 1,825,869   $ 1,635,591  
 
EBITDA Margin   18.2 %   16.7 %   18.5 %   15.9 %
 
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

 

Non-GAAP Financial Measure Disclosures (continued)

       

Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA):

Three Months Ended September 30, 2012
Segment Data
Total Aerostructures

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 80,191
 
Add-back:
Income Tax Expense 46,088
Interest Expense and Other   16,668  
 
Operating Income $ 142,947 $ 121,385 $ 25,712 $ 10,767 $ (14,917 )
 
Early Retirement Incentives Expense 1,957 - - - 1,957
Amortization of Acquired Contract Liabilities (6,563 ) (6,563 ) - - -
Depreciation and Amortization   31,998     24,049     4,489     2,288     1,172  
 
Earnings (Losses) before Interest, Taxes,
Depreciation and Amortization ("EBITDA") $ 170,339   $ 138,871   $ 30,201   $ 13,055   $ (11,788 )
 
Net Sales $ 938,181   $ 713,978   $ 150,139   $ 76,061   $ (1,997 )
 
EBITDA Margin   18.2 %   19.5 %   20.1 %   17.2 %   n/a  
 

 

Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA):

Six Months Ended September 30, 2012
Segment Data
Total Aerostructures

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 156,523
 
Add-back:
Income Tax Expense 93,466
Interest Expense and Other   33,900  
 
Operating Income (Loss) $ 283,889 $ 241,523 $ 49,177 $ 22,574 $ (29,385 )
 
Early Retirement Incentives Expense 3,107 - - - 3,107
Amortization of Acquired Contract Liabilities (13,555 ) (13,555 ) - - -
Depreciation and Amortization   63,813     47,953     8,963     4,614     2,283  
 
Earnings (Losses) before Interest, Taxes,
Depreciation and Amortization ("EBITDA") $ 337,254   $ 275,921   $ 58,140   $ 27,188   $ (23,995 )
 
Net Sales $ 1,825,869   $ 1,383,831   $ 290,651   $ 156,038   $ (4,651 )
 
EBITDA Margin   18.5 %   19.9 %   20.0 %   17.4 %   n/a  
 

 

         
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

Earnings before Interest, Taxes, Depreciation
and Amortization (EBITDA):

Three Months Ended September 30, 2011
Segment Data
Total Aerostructures

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 58,564
 
Add-back:
Income Tax Expense 32,221
Interest Expense and Other   17,671  
 
Operating Income (Loss) $ 108,456 $ 92,489 $ 22,644 $ 7,015 $ (13,692 )
 
Amortization of Acquired Contract Liabilities (5,770 ) (5,770 ) - - -
Depreciation and Amortization   29,466     21,937     4,322     2,341     866  
 
Earnings (Losses) before Interest, Taxes,
Depreciation and Amortization ("EBITDA") $ 132,152   $ 108,656   $ 26,966   $ 9,356   $ (12,826 )
 
Net Sales $ 790,528   $ 587,977   $ 133,775   $ 70,547   $ (1,771 )
 
EBITDA Margin   16.7 %   18.5 %   20.2 %   13.3 %   n/a  
 
 

Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA):

Six Months Ended September 30, 2011
Segment Data
Total Aerostructures

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 109,468
 
Add-back:
Income Tax Expense 60,235
Interest Expense and Other   44,133  
 
Operating Income (Loss) $ 213,836 $ 180,463 $ 45,061 $ 13,976 $ (25,664 )
 
Amortization of Acquired Contract Liabilities (13,510 ) (13,510 ) - - -
Depreciation and Amortization   58,933     43,782     8,667     4,771     1,713  
 
Earnings (Losses) before Interest, Taxes,
Depreciation and Amortization ("EBITDA") $ 259,259   $ 210,735   $ 53,728   $ 18,747   $ (23,951 )
 
Net Sales $ 1,635,591   $ 1,231,283   $ 266,784   $ 140,916   $ (3,392 )
 
EBITDA Margin 15.9 % 17.1 % 20.1 % 13.3 % n/a
 

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Operating income, income form continuing operations and income from continuing operations diluted per share, before acquisition and integration costs and early retirement incentives has been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to operating income, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following table reconciles operating income, income from continuing operations and income from continuing operations per diluted share, before early retirement incentives to the operating income, income from continuing operations and income from continuing operations per diluted share, respectively.

 

      Three Months Ended Six Months Ended
September 30, September 30,
  2012       2011     2012     2011  
Operating income, before acquisition and integration
costs and early retirement incentives $ 146,336 $ 109,600 $ 288,973 $ 215,440
Acquisition and integration costs 1,432 1,144 1,977 1,604
Early retirement incentives expense   1,957     -     3,107     -  
Operating income $ 142,947 $ 108,456 $ 283,889 $ 213,836
 
Income from continuing operations, before acquisition
and integration costs and early retirement incentives $ 82,343 $ 59,302 $ 159,751 $ 110,503
Acquisition and integration costs, net of tax 909 738 1,255 1,035
Early retirement incentives expense, net of tax   1,243     -     1,973     -  
Income from continuing operations $ 80,191 $ 58,564 $ 156,523 $ 109,468
 
Income from continuing operations, before acquisition and
integration costs and early retirement incentives per diluted share $ 1.57 $ 1.15 $ 3.06 $ 2.15
Acquisition and integration costs per diluted share (0.02 ) (0.01 ) (0.02 ) (0.02 )
Early retirement incentives expense per diluted share   (0.02 )   -     (0.04 )   -  
Income from continuing operations per diluted share $ 1.53   $ 1.13   * $ 2.99   * $ 2.13  
 
* Difference due to rounding.

 

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Cash provided by operations, before pension contributions has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for an consideration of strategic acquisitions, stock repurchases and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations, before pension contributions to cash provided by operations, as well as cash provided by operations to free cash flow available for debt reduction.

    Six Months Ended
September 30,
  2012       2011  
 
Cash provided by operations, before pension contributions $ 188,943 $ 122,063
Pension contributions   56,028     60,953  
Cash provided by operations 132,915 61,110
Less:
Capital expenditures 61,193 34,149
Dividends   3,997     2,943  
Free cash flow available for debt reduction $ 67,725 $ 24,018
 
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
 
September 30, March 31,
  2012     2012  
 

Calculation of Net Debt

Current portion $ 125,201 $ 142,237
Long-term debt   967,489     1,016,625  
Total debt 1,092,690 1,158,862
Less: Cash   30,651     29,662  
Net debt $ 1,062,039   $ 1,129,200  
 

Calculation of Capital

Net debt $ 1,062,039 $ 1,129,200
Stockholders' equity   1,951,129     1,793,369  
Total capital $ 3,013,168   $ 2,922,569  
 
Percent of net debt to capital 35.2 % 38.6 %

Source: Triumph Group, Inc.

Triumph Group, Inc.
Sheila Spagnolo, 610-251-1000
Vice President
sspagnolo@triumphgroup.com

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