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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

(Mark One)

/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the fiscal year ended March 31, 1998
or

/ / Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to

COMMISSION FILE NO. 1-12235

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TRIUMPH GROUP, INC.

(Exact name of registrant as specified in its charter)

DELAWARE 51-0347963
(State or other (I.R.S. Employer
jurisdiction of Identification
incorporation or Number)
organization)

FOUR GLENHARDIE CORPORATE CENTER,
1255 DRUMMERS LANE, SUITE 200,
WAYNE, PENNSYLVANIA 19087
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:
(610) 975-0420

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, PAR VALUE $.001 PER SHARE

Title of Class

Indicate by check mark whether the Registrant (1) has filed all reports 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 / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
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The number of outstanding shares of the Registrant's Common Stock, par value
$.001 per share, and Class D Common Stock, par value $.001 per share, on May 29,
1998 was 8,550,511 and 3,348,535, respectively. In making such calculation,
Registrant is not making a determination of the affiliate or non-affiliate
status of any holders of shares of Common Stock or Class D Common Stock.

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The aggregate market value of the shares of Common Stock held by
non-affiliates of the Registrant (computed by reference to the closing price of
such voting stock on the New York Stock Exchange on May 29, 1998 of $49) was
approximately $316,818,271.
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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following document are incorporated herein by reference:

Proxy Statement of Triumph Group, Inc. in connection with its 1998 Annual
Meeting of Stockholders is incorporated in part in Part III hereof, as specified
herein.

TABLE OF CONTENTS

ITEM NO. PAGE
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PART I.......................................................................................................... 4

1. Business............................................................................................. 4

2. Properties........................................................................................... 19

3. Legal Proceedings.................................................................................... 19

4. Submission of Matters to a Vote of Security Holders.................................................. 19

PART II......................................................................................................... 20

5. Market for Registrant's Common Equity and Related Stockholder Matters................................ 20

6. Selected Financial Data.............................................................................. 21

7. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 23

8. Financial Statements and Supplementary Data.......................................................... 29

9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................. 48

PART III........................................................................................................ 49

10. Directors and Executive Officers of Registrant....................................................... 49

11. Executive Compensation............................................................................... 50

12. Security Ownership of Certain Beneficial Owners and Management....................................... 50

13. Certain Relationships and Related Transactions....................................................... 50

PART IV......................................................................................................... 51

14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................... 51

PART I

ITEM 1. BUSINESS

This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 relating to the Company's
future operations and prospects, including statements that are based on current
projections and expectations about the markets in which the Company operates,
and management's beliefs concerning future performance and capital requirements
based upon current available information. Actual results could differ materially
from management's current expectations and there can be no assurance that
additional capital will not be required or that additional capital, if required,
will be available on reasonable terms, if at all, at such times and in such
amounts as may be needed by the Company. In addition to these factors and others
described elsewhere in this report, among other factors that could cause actual
results to differ materially are uncertainties relating to the integration of
acquired businesses, general economic conditions affecting the Company's two
business segments, dependence of certain of the Company's businesses on certain
key customers as well as competitive factors relating to the aviation and metals
industries. For a more detailed discussion of these and other factors affecting
the Company, see the Risk Factors described in Item 1 of this Annual Report on
Form 10-K. The Company does not undertake any obligation to revise these
forward-looking statements to reflect future events.

GENERAL

The Company designs, engineers, manufactures, repairs, overhauls and
distributes aircraft components, such as mechanical and electromechanical
control systems, aircraft and engine accessories, auxiliary power units
("APUs"), avionics and aircraft instruments. The Company serves a broad spectrum
of the aviation industry, including commercial airlines and air cargo carriers,
as well as original equipment manufacturers ("OEMs") of aerospace vehicles,
commercial and military aircraft, and aircraft components.

PRODUCTS AND SERVICES

The Company's aviation products and services may generally be divided into
three categories: structural components, instrument and flight controls, and
operational components. The following is a description of some of the products
and services offered by the Company in each of these three categories:

STRUCTURAL COMPONENTS. The Company performs stretch forming, bending, die
forming, machining, milling, welding, assembly and other fabrication on aircraft
wings, fuselages and skins for aircraft produced by OEMs such as The Boeing
Company ("Boeing") (including McDonnell Douglas and Rocketdyne, which have been
recently acquired by Boeing). The Company also manufactures metallic and
composite bonded honeycomb assemblies for fuselage, wings and flight control
surface parts for commercial airlines and other aircraft operators.

INSTRUMENT AND FLIGHT CONTROLS. The Company designs and engineers
mechanical and electromechanical controls such as remote valve operators and
push/pull controls ranging from simple vent controls to sophisticated
flight-critical engine controls for OEMs and commercial airlines and general
aviation. In certain cases, principally at Triumph Controls, Inc. ("TCI"), the
Company's designs and engineering for such controls are proprietary because such
designs are not sold to the OEM for whom the control is manufactured.
Consequently, the OEM generally relies on the Company to repair or replace such
component. The Company also performs repair and overhaul services and supplies
spare parts for various types of cockpit instruments and gauges for a broad
range of commercial airlines on a worldwide basis.

OPERATIONAL COMPONENTS. The Company performs complete repair and overhaul
services on APUs and components for APUs for both commercial airlines and OEMs.
APUs are used to provide power for all non-propulsion aircraft functions such as
air conditioning, lights and other electrical functions. The Company also
repairs and overhauls aircraft accessories, including constant speed drives,
pneumatic or

electrically actuated valves, cabin compressors, starters and generators, and
manufactures refueling booms. Certain of these components, like the APUs, are
repaired pursuant to SFAR 36 certifications. In addition, the Company
manufactures hot section components for small propulsion jet engines, APUs and
land-based power units and combustion system components for power equipment
manufacturers. Finally, the Company provides precision machining services for
other operational components manufactured from refractory and other metals for
the aviation and aerospace industry.

INDUSTRY OVERVIEW AND TRENDS

Both the aircraft component production and component repair industries are
highly fragmented, each consisting of a limited number of well-capitalized
companies, which offer a broad range of products and services, and a large
number of smaller, specialized companies. The aviation industry has been
consolidating at an increasing pace in recent years, and it is expected that
such consolidation will continue for the foreseeable future.

A number of significant trends are currently affecting the market for the
design, engineering, manufacture, repair and overhaul of aircraft components.
These trends include the following:

INCREASES IN AIR TRANSIT AND AIRCRAFT PRODUCTION. Boeing's 1997 Market
Outlook projected that global air travel will increase by 75% and that the
number of passenger and cargo delivery aircraft in service will increase by 48%
through the year 2006. This trend will be driven, in part, by the anticipated
continued growth of established carriers engaged in the air freight and package
delivery businesses. Average passenger seat miles flown is also expected to
increase significantly over the next few years. Further, many new airlines are
expected to commence operations in the United States and abroad, especially in
China and other countries in Asia where air traffic previously was limited.
Because start-up airlines generally do not invest in the infrastructure
necessary to service their aircraft, such airlines outsource all or most of
their repair and overhaul services. To meet their needs, certain foreign and
many start-up airlines have turned to older aircraft which generally require
more frequent servicing. Further, as aging aircraft are retired, new aircraft
production is increasing. The number of surplus aircraft is expected to
significantly decline while new aircraft production is expected to increase over
the next several years. The continued growth in air transit and aircraft
production will increase the demand for aircraft component purchases and
repairs.

INCREASED OUTSOURCING BY AIRCRAFT OPERATORS AND OEMS. Aircraft operators
have come under increasing pressure to reduce both operating and capital costs
associated with providing aviation services. While several of the expenditures
incurred by aircraft operators are beyond their direct control, such as fuel
prices and labor costs, aircraft operators seeking cost reductions have
increased purchases of certain components from third parties and have outsourced
repair and overhaul functions. Aircraft components sold by third party suppliers
and aircraft components that have been repaired and overhauled are generally
less expensive than new aircraft components sold by OEMs. In addition, OEMs are
increasingly becoming "assemblers" of aviation products by outsourcing more
manufacturing and repair functions to third parties. In this regard, the Company
supplies many OEMs with aircraft components and subassemblies, in addition to
performing repair and overhaul services. In addition, as consolidation in the
aviation services industry continues, aviation services consumers are requiring
vendors to offer a broader range of services including, in some instances,
inventory maintenance and management services. The Company believes that its
broad array of aviation products and services and its reputation for quality and
timely and reliable delivery will position the Company to continue to capitalize
on the outsourcing trend. The Company anticipates that increased reliance on
outsourcing will continue to cause consolidation in the industry since only
those suppliers with extensive capacities and adequate capital will secure such
agreements with OEMs and aircraft operators.

REDUCTION IN THE NUMBER OF APPROVED SUPPLIERS AND VENDORS. In order to
reduce purchasing costs, streamline purchasing decisions and have greater
control over quality, purchasing departments of OEMs

and aircraft operators have been reducing the number of approved suppliers and
vendors. In the past several years, several OEMs and aircraft operators have
reduced their supplier and vendor lists from as many as 50 to a core group of
five to ten "mega-suppliers" or "mega-vendors" who have the size and capacity to
meet their needs. The Company has secured a position on such lists of a number
of OEMs and airlines. The Company believes that this trend will continue in the
future and that, due to its established market presence and reputation for
quality, the Company will continue to be selected as an approved supplier and
vendor. See "--Government Regulation."

INCREASED MAINTENANCE AND SAFETY REQUIREMENTS. Under regulations
promulgated by the FAA and similar agencies in other countries, including the
Joint Aviation Authority (the "JAA") and the Civil Aviation Administration of
China (the "CAAC"), as well as guidelines established by OEMs and aircraft
operators, when an aircraft component fails to perform within certain prescribed
limits or after logging a prescribed number of flight hours, the aircraft
component must be brought to a repair facility certified by the FAA or similar
agency of a foreign nation for various types of designated service or
replacement. The FAA has changed the nature of the licenses that it grants, from
the grant of broad licenses for aircraft accessories or instruments within broad
classifications to more limited licenses covering specific parts within more
narrow classifications. The Company holds many perpetual broad licenses that
will continue unless abandoned, suspended or revoked. In addition, aircraft
components require regular maintenance and inspection and replacement of
"life-limited" components. The trend toward more stringent maintenance
requirements and more frequent maintenance and overhaul has increased the size
of the market for the repair of such components, because the use of new
components is not always cost effective. The Company believes that, because of
its broad licenses and long-standing emphasis on quality control, it will
benefit from these higher maintenance and safety standards.

INCREASED EMPHASIS ON COMPONENT TRACEABILITY. Because of concerns regarding
the use of unapproved aircraft spare parts, regulatory authorities have
increased the level of documentation that must be maintained on spare parts.
This requirement has been extended by OEMs and aircraft operators to the vendors
of spare parts. The high cost of required technology to compete effectively in
the redistribution market has made entry into and survival in the aircraft spare
parts redistribution market increasingly difficult and expensive. The Company
has implemented technology to enable it to meet these more stringent
traceability requirements and intends to continue to do so in the future.

COMPETITIVE ADVANTAGES

The Company believes that it is well positioned to take advantage of trends
affecting the market for the design, engineering, manufacture, repair and
overhaul of aircraft components due to:

BROAD ARRAY OF PRODUCTS AND SERVICES. The Company offers the aviation
industry a consolidated point of purchase for a broad array of aviation products
and services. The Company designs, engineers and manufactures aircraft
components to fulfill the particular needs and requirements of its customers,
including electromechanical controls and fuselage structural components for the
777 model aircraft for Boeing. In certain cases, the Company owns the
proprietary rights to these designs and, accordingly, the customer generally
relies on the Company to provide service on such aircraft components at every
stage of their useful lives, including the repair and overhaul or replacement of
such components. In addition, the Company manufactures aviation components
according to its customers' specifications. The Company also performs repair and
overhaul services for customers on various aviation components manufactured by
third parties such as AlliedSignal, Inc. ("AlliedSignal"). In addition, the
Company offers to maintain and manage inventories of aircraft components and
other products for certain of its customers. In certain instances, the Company's
customers require it to maintain and manage their inventories.

GOVERNMENT CERTIFICATIONS. The Company operates 15 FAA-certified repair
stations and has been granted licenses from the FAA and foreign regulatory
counterparts, including the JAA and the CAAC, to perform repair and overhaul
services on broad classifications of aircraft instruments and accessories.

Without such broad certifications and licenses, which are often expensive and
time-consuming to obtain and involve extensive audit procedures, other companies
are precluded from offering these products and services, thereby constituting a
significant barrier to entry. See "--Government Regulation." In addition, the
Company holds two exclusive licenses issued by the FAA which permit the Company
to design, engineer, repair, test and release into service without FAA approval
certain products to its own specifications for certain aircraft components and
therefore to compete directly with OEMs with respect to such compo nents. These
exclusive licenses, known as SFAR 36 certifications, enable the Company to
offer, on a proprietary basis, certain repaired parts relating to various
aircraft accessories such as APUs and constant speed drives to its customers at
a lower cost than other companies that must purchase replacement parts from
third parties. The Company employs Designated Engineering Representatives
("DERs") who are certified to act on behalf of the FAA to develop, substantiate
and approve repairs on components.

EMPHASIS ON QUALITY CONTROL. The Company incurs significant expenses to
maintain the most stringent quality control of its products and services. In
addition to domestic and foreign governmental regulations, OEMs, commercial
airlines and other customers require that the Company satisfy certain
requirements relating to the quality of its products and services. The Company
has continually met or exceeded these requirements, and has successfully
completed many audits conducted on a regular basis by the Coordinated Agency for
Supplier Evaluation ("C.A.S.E."), a consortium of United States airlines. As a
C.A.S.E.-listed vendor, the Company is reviewed on a regular basis for quality
and efficiency. The Company also performs testing and certification procedures
on all of the products that it designs, engineers, manufactures, repairs and
overhauls, and maintains detailed records to ensure traceability of the
production of and service on each aircraft component. The Company believes that
its emphasis on quality control has enabled it to obtain many of the FAA
licenses it enjoys, including its exclusive SFAR 36 certifications. The expense
required to institute and maintain the Company's quality control procedures
represents a barrier to entry for other companies.

BROAD CUSTOMER BASE. Due to the Company's broad array of products and
services and its emphasis on quality control and timely delivery, the Company's
customers include virtually all of the world's major commercial airlines and an
increasing number of the most widely recognized air cargo carriers, including
Federal Express Corporation and United Parcel Service of America, Inc., and OEMs
such as Boeing, AlliedSignal, Bombardier, Inc. and Aerospatiale (AirBus). The
Company expects that its customer base will continue to strengthen and broaden
with increased cross-selling efforts by the Company of its related products and
services. Boeing (including McDonnell Douglas and Rocketdyne which have been
recently acquired by Boeing) accounted for more than 10% of the Company's
consolidated revenues for the 12 months ended March 31, 1998. Although the loss
of Boeing could have a material adverse effect on the Company, the Company
provides various products and services to numerous Boeing facilities and,
accordingly, the Company believes that the loss of all Boeing business is
unlikely.

ESTABLISHED INDUSTRY PRESENCE. The operating divisions and subsidiaries in
the Company's Aviation Group have substantial experience in the aviation
industry. These entities are characterized by experienced management and
highly-skilled employees. Because of its established industry presence, the
Company enjoys strong customer relations, name recognition and repeat business.

COMPANY STRATEGY

The Company intends to grow its aviation business through:

EXPANSION OF PRODUCTS AND SERVICES. The Company will continue to introduce
new aviation products and services to take advantage of the growing aviation
industry and the increasing demand for aviation products and services. In an
effort to expand its existing array of products and services and to capture
additional repair and overhaul business, the Company plans to expand, as
appropriate, its program for the distribution and inventory management of third
party aircraft components. The Company will also expand its assembly and
subassembly capabilities on certain aircraft components. By broadening its
products and

services, the Company intends to further expand its position as a consoli dated
point of purchase to the aviation industry, capitalizing on the increasing trend
toward outsourcing and the reduction by aircraft operators and OEMs of the
number of approved suppliers and vendors.

ACQUISITIONS. The Company expects to continue its growth through
acquisitions of other companies, assets or product lines that add to or
complement the Company's existing aviation products and services. The Company
successfully completed seven acquisitions since October 1995, four of which were
completed since the Company's initial public offering. The Company acquired the
assets of J.D. Chapdelaine Co., which now operates as "JDC Company," as of April
30, 1997. JDC Company is engaged in the business of repairing, overhauling,
exchanging and selling instrumentation for the aviation industry. In addition,
the Company purchased Hydro-Mill Co. ("Hydro-Mill") on September 2, 1997.
Hydro-Mill manufactures, repairs and overhauls precision machine parts and
assemblies for the airline industry. The Company also acquired Stolper-Fabralloy
Company, L.L.C. ("Stolper") on October 29, 1997. Stolper fabricates precision
sheet metal components from high temperature alloys and provides repair and
overhaul services. Effective January 1, 1998, the Company purchased Frisby
Aerospace, Inc., which designs, manufactures, assembles and tests precision
aircraft components, including hydraulic controls, actuators, pump packages,
chassis, pneumatic valves and mechanical assemblies for military and commercial
OEMs, the United States government, prime contractors and major airlines.
Because of the fragmented nature of much of the market for aircraft products and
services, the Company believes that many additional acquisition opportunities
exist in the aviation industry. The Company is currently evaluating acquisition
opportunities. There can be no assurance that the Company will successfully
complete any of these acquisitions or, that if so acquired, such entities will
be properly integrated into the Company.

EXPANDED OPERATING CAPACITY. The Company plans to increase its operating
capacity to meet the expected increased growth and demand in the aviation
industry. The Company will increase its capital expenditures, including
expenditures for additional equipment and skilled labor, to support this
increased capacity. The Company intends to continue to invest in state of the
art machinery to increase its operating efficiencies and improve operating
margins.

INCREASED INTERNATIONAL MARKETING. The Company intends to continue to take
advantage of the expanding international market for aviation products and
services as worldwide air travel escalates and foreign nations, particularly
China and other countries in Asia, purchase used aircraft that require more
frequent repair and maintenance. The Company currently supplies products and
services to virtually every major commercial airline in the world and retains
independent sales representatives in a number of foreign countries. In addition,
the Company participates each year in several international trade shows,
including the Paris Air Show and the Singapore Air Show. The Company intends to
build on its existing international presence through continued market
penetration and, as appropriate opportunities arise, foreign acquisitions.

CAPITALIZING ON AVIATION GROUP AFFILIATION. Utilizing the group affiliation
of the Company's operating divisions and subsidiaries, the Company plans to
increase cross-selling of related capabilities to its customers. For example,
one of the Company's operating divisions distributes certain electromechanical
controls manufactured by a subsidiary of the Company. The Company's operating
divisions and subsidiaries will continue to share independent sales
representatives and jointly bid on projects where appropriate, while still
maintaining their individual identities.

HISTORICAL BACKGROUND

The Company was formed by members of management and Citicorp Venture
Capital, Ltd. ("CVC") to acquire (the "Acquisition") certain businesses and
assets from Alco Standard Corporation (now known as IKON Office Solutions, Inc.
or "IKON"). In connection with the Acquisition, 19 members of management
contributed capital in the aggregate amount of approximately $1.1 million and
CVC, an institutional investor, contributed capital in the aggregate amount of
approximately $6.9 million.

PROPRIETARY RIGHTS

The Company benefits from its proprietary rights relating to certain
designs, engineering, manufacturing processes and repair and overhaul
procedures. For example, at TCI, the Company designs and engineers flight
control systems and retains the proprietary rights to these designs and
engineering. Accordingly, the customer generally relies on the Company to
provide initial and additional components, as well as to redesign, reengineer,
replace or repair and provide overhaul services on such aircraft components at
every stage of their useful lives. In addition, the Company has proprietary
rights to certain of its manufacturing processes. For certain products, the
Company's unique manufacturing capabilities are required by the customer's
specifications or designs, thereby necessitating reliance on the Company for
production of such designed product. The Company also holds two SFAR 36
certifications that permit it to develop proprietary repair procedures to be
used in certain repair and overhaul processes, enabling the Company to offer the
customer a lower cost alternative to purchasing the OEM's replacement part. The
Company employs three DERs who are certified to act on behalf of the FAA to
develop, substantiate and approve repairs on components for certain of the
Company's operating divisions and subsidiaries.

RAW MATERIALS AND REPLACEMENT PARTS

The Company purchases raw materials, primarily consisting of steel and
aluminum coils, sheets and shapes, from various vendors. The Company also
purchases replacement parts which are utilized in its various repair and
overhaul operations. Although the Company believes that these raw materials and
replacement parts are generally available at competitive prices from numerous
sources, castings and extrusions are in short supply and remain difficult to
purchase in sufficient amounts to meets its customers' demands. See "Risk
Factors--Limited Availability of Raw Materials."

OPERATING DIVISIONS AND SUBSIDIARIES

The Company operates through several operating divisions and subsidiaries
which are divided into two groups: the Aviation Group and the Metals Group. The
following chart describes the operations, customer base and certain other
information with respect to the Company's operating divisions and subsidiaries:

OPERATING NUMBER
DIVISION/SUBSIDIARY OF
(YEAR ESTABLISHED) LOCATION BUSINESS TYPE OF CUSTOMERS EMPLOYEES
- --------------------------- ----------------- ------------------------- ------------------------- ---------------

Aviation Group Sells and services Commercial airlines, U.S. 84
A. Biederman(1)............ Glendale, CA aircraft and industrial military and cargo
(1933) instruments. carriers.
Advanced Materials Repairs and manufactures Aviation OEMs and 310
Technologies, Inc.(3)...... Chandler, AZ components for APUs and aircraft operators.
(1987) Tempe, AZ gas turbine engines.
Aerospace Technologies, Manufactures metallic/ Commercial airlines, U.S. 129
Inc.(1).................. Fort Worth, TX composite bonded military and component
(1969) honeycomb assemblies and supplier industry.
repairs fuselage, wing,
flight control surface
parts and other flight
critical components.
Frisby Aerospace, Designs, manufactures, Military and commercial 119
Inc.(3).................... Clemmons, NC assembles and tests OEMs, U.S. government,
(1940) Freeport, NY precision aircraft prime contractors and
components. major airlines.
Hydro-Mill Co.(1).......... Chatsworth, CA Manufactures, repairs and Aviation OEMs, commercial 169
(1937) overhauls precision airlines and aircargo
machine parts and carriers.
assemblies.
JDC Company(3)............. Ft. Lauderdale, Specializes in the Aircraft manufacturers 53
(1985) FL repair, overhaul and ranging from general
Austin, TX exchange of aviation to wide-body air
electromechanical and transport.
pneumatic aircraft
instruments.
K-T Corporation............ Shelbyville, IN Performs stretch forming, Aviation OEMs, U.S. 211
(1963) bending, die forming, military and aerospace,
machining, welding, mass transportation,
assembly and other energy and heavy trucking
fabrication on aircraft industries.
wings, fuselages and
skins.
L.A. Gauge................. Sun Valley, CA Machines, bonds and Defense, aerospace, 50
(1954) fabricates medical, automotive and
ultra-precision parts. computer industries.
Lamar Electro-Air(1)(2).... Wellington, KS Repairs and overhauls U.S. government, 103
(1965) aircraft and engine commercial airlines and
accessories, manufactures general aviation aircraft
pneumatic and operators.
electrically actuated
valves for aircraft.
Northwest Industries....... Albany, OR Machines and fabricates Aerospace, nuclear, 33
(1960) refractory, reactive, medical, electronic and
heat and chemical industries.
corrosion-resistant
precision products.
Special Processes of Produces and applies Aviation OEMs and 25
Arizona, Inc.(1)........... Phoenix, AZ plasma coating. aircraft operators.
(1987)

Stolper-Fabralloy Fabricates precision Commercial, military and 245
Company(3)................. Phoenix, AZ sheet metal components aerospace OEMs.
(1908) Brookfield, WI from high temperature
alloys and provides
repair and overhaul
services.
Triumph Air Repair(1)(2)... Phoenix, AZ Repairs and overhauls Worldwide commercial 127
(1979) APUs and supplemental airlines.
equipment.
Triumph Controls, Designs and manufactures Aviation OEMs, shipyards, 281
Inc.(1).................... North Wales, PA mechanical and repair and overhaul
(1943) electromechanical control facilities, airlines and
systems. U.S. and NATO military
forces.
Metals Group Great Western Produces steel products, Manufacturers, primarily 38
Steel.................... Chicago, IL specializing in flat in the home and office
(1918) rolled products. products industries.
Kilroy Structural Steel Erects structural steel General contractors, 69
Co......................... Cleveland, OH frameworks. engineers and architects
(1918) of commercial buildings
and bridges.
Triumph Industries......... Bridgeview, IL Produces and distributes Computer and electronic 53
(1960) specialty industries.
electrogalvanized
products.

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(1) Designates FAA-certified repair station.

(2) Designates SFAR 36 certification.

(3) Designates that two locations are FAA-certified repair stations.

METALS PROCESSING AND DISTRIBUTION

The Company's Metals Group consists of two operating divisions and one
subsidiary with substantial experience in the metals industry. These businesses
include a leading producer of electrogalvanized steel products and a steel
service center specializing in flat rolled steel products. These entities supply
products to several hundred manufacturers and other customers in the computer
and electronics industries on a regional and national basis. In addition, the
Company operates a business engaged in the erection of structural frameworks for
buildings and bridges in the midwestern United States.

The Company's Metals Group processes, converts and distributes steel and
steel products including electrogalvanized steel products which are stamped,
formed, welded and painted, and coated steel for the electronic and computer
industries. The Company's steel service center specializes in flat rolled
products and their processing, including hot or cold rolled sheet and coil and
galvanized sheet and coil used primarily by the home and office products and
appliance industry.

The Company also erects structural framework, including steel members and
allied materials, for buildings and bridges, with a specialty in commercial and
industrial buildings. Included among the Company's projects are Jacobs' Field,
the Cleveland Indians' baseball stadium, and the Rock 'n Roll Hall of Fame in
Cleveland, Ohio. These structural erection services are provided on a
project-by-project basis primarily in the midwestern United States. These
projects are generally awarded on a fixed fee, competitive bid basis.

SALES AND MARKETING

Each of the Company's operating divisions and subsidiaries independently
conducts sales and marketing efforts directed at their respective customers and
industries and, in some cases, collaborates with other operating divisions and
subsidiaries within its group for cross-marketing efforts. Each sales force and
the respective officers of the operating divisions and subsidiaries are
responsible for obtaining new customers and maintaining relationships with
existing customers. Sales and marketing efforts are conducted primarily by
independent regional manufacturer's representatives and in-house personnel.
Generally, manufacturer's representatives receive a commission on sales and the
in-house sales personnel receive a base salary plus commission. Engaging
independent sales representatives at the local level facilitates responsiveness
to each customer's changing needs and current trends in each marketplace in
which the Company operates.

Presidents of each of the Company's operating divisions and subsidiaries in
the Aviation Group meet periodically to discuss ways to improve sales and
cross-marketing opportunities. The management of each operating division and
subsidiary of the Company also maintains close business relationships with many
customers, thereby furthering the sales and marketing efforts of their
businesses.

A significant portion of the Company's government and defense contracts are
awarded on a competitive bidding basis. The Company generally does not bid or
act as the primary contractor, but will typically bid and contract as a
subcontractor on contracts on a fixed fee basis. The Company generally sells to
its other customers on a fixed fee, negotiated contract or purchase order basis.

BACKLOG

As of March 31, 1998, the Company's Aviation and Metals Groups had
outstanding purchase orders representing an aggregate invoice price of
approximately $174.2 million and $12.6 million, respectively. As of March 31,
1997, the Company's Aviation and Metals Groups had outstanding purchase orders
representing an aggregate invoice price of approximately $93.2 million and $22.1
million, respectively. The Company believes that purchase orders in an aggregate
approximate amount of $40.6 million will not be shipped by the Aviation Group by
March 31, 1999. The Company believes that all of the purchase orders will be
shipped by the Metals Group by March 31, 1999.

COMPETITION

The aircraft components production and repair industry is highly fragmented,
consisting of both a limited number of well-capitalized companies which offer a
broad range of products and services and a large number of smaller, specialized
companies. The Company believes that the principal competitive factors in the
aviation products and services industry are quality, turnaround time, overall
customer service and price. See "Competitive Advantages." The Company believes
that it competes favorably on the basis of the foregoing factors. The Company
does not believe that the location of its repair facilities is a significant
factor to its customers in selecting the Company, as substantially all of the
components serviced by the Company are transported by common carrier to the
Company's facilities for service.

The Company competes with third party manufacturers, some of which are
divisions or subsidiaries of OEMs or other large companies in the manufacture of
aircraft components and subassemblies. Competition for the repair and overhaul
of aviation components comes from three primary sources, some with greater
financial and other resources than the Company: OEMs, major commercial airlines
and other independent service companies. Certain major commercial airlines
continue to own and operate their own service centers, while others have begun
to sell their repair and overhaul services to other aircraft operators. The
repair and overhaul services provided by domestic airlines are primarily for
their own aircraft, although these airlines may outsource a limited amount of
repair and overhaul services to third parties. Foreign airlines that provide
repair and overhaul services typically provide these services not only for their
own aircraft but for other airlines as well. OEMs also maintain service centers
which provide repair and overhaul services for the components they manufacture.
Other independent service organizations also compete for the repair and overhaul
business of other users of aircraft components.

The Company's principal competitors in the metals industry include national
and regional steel mills, other steel service centers, steel erection companies
and pre-engineered building manufacturers. Some of these competitors have
greater financial and other resources than the Company.

GOVERNMENT REGULATION

The aviation industry is highly regulated in the United States by the FAA
and in other countries by similar agencies. The Company must be certified by the
FAA and, in some cases, by individual OEMs, in order to engineer and service
parts and components used in specific aircraft models. If material
authorizations or approvals were revoked or suspended, the operations of the
Company would be adversely affected. New and more stringent government
regulations may be adopted, or industry oversight heightened, in the future and
such new regulations, if enacted, or any industry oversight, if heightened, may
have an adverse impact on the Company.

The Company must also satisfy the requirements of its customers, including
OEMs, that are subject to FAA regulations, and provide these customers with
products and services that comply with the government regulations applicable to
aircraft components used in commercial flight operations. The FAA regulates
commercial flight operations and requires that aircraft components meet its
stringent standards. In addition, the FAA requires that various maintenance
routines be performed on aircraft components, and the Company currently
satisfies these maintenance standards in its repair and overhaul services.
Several of the Company's operating divisions are FAA-approved repair stations.

Currently, the FAA is granting licenses only for the manufacture or repair
of a specific aircraft component, rather than the broader licenses that have
been granted in the past. The FAA licensing process may be costly and
time-consuming. In order to obtain an FAA license, an applicant must satisfy all
applicable regulations of the FAA governing repair stations. These regulations
require that an applicant have experienced personnel, inspection systems,
suitable facilities and equipment. In addition, the applicant must demonstrate a
need for the license. Because an applicant must procure manufacturing and repair
manuals from third parties relating to a particular aircraft component in order
to obtain a license with respect to such component, the application process may
involve substantial cost.

The license approval processes for the JAA and CAAC are similarly stringent,
involving potentially lengthy audits conducted by these regulatory authorities.

The Company's aviation and metals operations are also subject to a variety
of worker and community safety laws. The Occupational Safety and Health Act of
1970 ("OSHA") mandates general requirements for safe workplaces for all
employees. In addition, OSHA provides special procedures and measures for the
handling of certain hazardous and toxic substances. Specific safety standards
have been promulgated for workplaces engaged in the treatment, disposal or
storage of hazardous waste. The Company believes that its operations are in
material compliance with OSHA's health and safety requirements.

ENVIRONMENTAL MATTERS

The Company's operations are subject to federal, state and local
environmental laws and regulation by government agencies, including the
Environmental Protection Agency ("EPA"). Among other matters, these regulatory
authorities impose requirements that regulate the emission, discharge,
generation, management, transportation and dispo sal of hazardous materials,
pollutants and contaminants, govern public and private response actions to
hazardous or regulated substances which may be or have been released to the
environment, and require the Company to obtain and maintain licenses and permits
in connection with its operations. This extensive regulatory framework imposes
significant compliance burdens and risks on the Company. Although management
believes that the Company's operations and its facilities are in material
compliance with such laws and regulations, there can be no assurance that future
changes in such laws, regulations or interpretations thereof or the nature of
the Company's operations will not require the Company to make significant
additional capital expenditures to ensure compliance in the future.

Certain of the Company's facilities have been or are currently the subject
of environmental remediation activities, the cost of which is subject to
indemnification provided by IKON pursuant to the Acquisition. One of these
facilities is connected with a site included on the National Priorities List of
Superfund sites maintained by the EPA. Another of these facilities is located on
a site included in the EPA's database of potential Superfund sites. IKON's
indemnification covers the Company for losses the Company might suffer in
connection with liabilities and obligations (and other liabilities and
obligations arising out of or in connection with the Acquisition) arising under
environmental, health and safety laws with respect to operations or use of those
facilities prior to their acquisition by the Company. More specifically, this
IKON indemnification covers both (i) the costs, claims and potential losses
associated with environmental matters identified in the purchase agreement for
the Acquisition as the result of environmental assessments or other disclosures
made in connection with the Acquisition, including the costs, claims and
potential losses associated with all the environmental remediation activities
and identified liabilities, and (ii) the losses connected to environmental
liabilities which were not identified in the purchase agreement and which arise
from conditions or activities existing at the facilities or operations acquired
from IKON prior to their acquisition from IKON, provided that they are
identified by the Company to IKON before July 22, 2000. Certain other facilities
acquired and operated by the Company or one of its subsidiaries, including a
leased facility located on an EPA National Priorities List site, were under
active investigation for environmental contamination by federal or state
agencies when acquired, and continue to be under such investigation. The Company
is indemnified by prior operators and/or present owners of the facilities for
liabilities which the Company incurs as a result of these investigations and the
environmental contamination found which pre-dates the Company's acquisition of
these facilities. Two Company facilities also have been the subject of notices
from a citizen group alleging failure to notify and file reports with
appropriate agencies regarding the presence of certain hazardous chemicals in
excess of specified threshold quantities. The Company has denied these
allegations and the citizen group has either withdrawn or ceased actively
pursuing these claims. See "Risk Factors--Potential Exposure to Environmental
Liabilities."

EMPLOYEES

As of March 31, 1998, the Company employed 2,071 persons, of whom 199 were
management employees, 75 were sales and marketing personnel, 115 were technical
personnel, 265 were administrative personnel and 1,417 were production workers.
As of March 31, 1998, 339 full-time employees were subject to collective
bargaining agreements. Two of these collective bargaining agreements will expire
in the next 12 months. The Company has not experienced any material
labor-related work stoppage and considers its relations with its employees to be
good.

RISK FACTORS

Statements in this Annual Report on Form 10-K, including those concerning
the Company's expectations regarding the effect of industry trends on the
Company, competitive advantages, strategies, future sales, gross profits,
capital expenditures, selling, general and administrative expenses, and cash
requirements, include certain forward-looking statements. As such, actual
results may vary materially from such expectations. Factors which could cause
actual results to differ from expectations include dependence on the aviation
industry, requirements of capital, integration of acquired businesses,
government regulation, dependence on key customers, technological developments
and obsolete inventory. For a description of these and additional risks, see the
discussion below. There can be no assurance that the Company's results of
operations will not be adversely affected by one or more of these factors.

DEPENDENCE ON AVIATION INDUSTRY. A substantial percentage of the Company's
gross profit and operating income is derived from its Aviation Group. The
Company's aviation operations are focused on designing, engineering and
manufacturing aircraft components on new aircraft and performing repair and
overhaul services on existing aircraft and aircraft components; therefore, the
Company's business is directly affected by economic factors and other trends
that affect its customers in the aviation industry, including a possible
decrease in outsourcing by aircraft operators and OEMs or projected market
growth that may not materialize or be sustainable. When such economic and other
factors adversely affect the aviation industry, they tend to reduce the overall
customer demand for the Company's products and services, thereby decreasing the
Company's operating income. There can be no assurance that economic and other
factors that might affect the aviation industry will not have an adverse impact
on the Company's results of operations. See "Business--Industry Overview and
Trends."

CAPITAL REQUIREMENTS AND INTEGRATION OF ACQUIRED BUSINESSES. A key element
of the Company's strategy has been, and continues to be, internal growth and
growth through the acquisition of additional companies engaged in the aviation
industry. In order to grow internally, the Company will be required to make
significant capital expenditures. The Company's ability to grow by acquisition
is dependent upon, and may be limited by, the availability of suitable
acquisition candidates and capital, and by certain restrictions contained in the
Company's revolving credit facility (the "Credit Facility") and its other
financing arrangements. Growth by acquisition involves risks that could
adversely affect the Company's operating results, including difficulties in
integrating the operations and personnel of acquired companies, the potential
amortization of acquired intangible assets and the potential loss of key
employees of acquired companies. There can be no assurance that the Company will
be able to obtain the capital necessary to pursue its internal growth and
acquisition strategy, consummate acquisitions on satisfactory terms or, if any
such acquisitions are consummated, satisfactorily integrate such acquired
businesses into the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "Business--Company Strategy."

COMPETITION. There are numerous competitors of the Company in both the
aviation services and metals processing and distribution industries. Competition
in the aviation industry comes from three primary sources: major commercial
airlines, many of which operate their own maintenance and overhaul units, OEMs,
which manufacture, repair and overhaul their own components, and other
independent service companies. The Company's principal competitors in the metals
industry include national and

regional steel mills, other steel service centers, steel erection companies and
pre- engineered building manufacturers. Certain of the Company's competitors in
both aviation and metals have substantially greater financial and other
resources than the Company. There can be no assurance that competitive pressures
in either industry will not materially adversely affect the Company's business,
financial condition or results of operations. See "Business--Competition."

GOVERNMENT REGULATION AND INDUSTRY OVERSIGHT. The aviation industry is
highly regulated in the United States by the FAA and in other countries by
similar agencies. The Company must be certified by the FAA and, in some cases,
by individual OEMs in order to engineer and service parts and components used in
specific aircraft models. If material authorizations or approvals were revoked
or suspended, the operations of the Company would be adversely affected. New and
more stringent government regulations may be adopted, or industry oversight
heightened, in the future and any such new regulations, if enacted, or any
industry oversight, if heightened, may have an adverse impact on the Company.
See "Business-- Government Regulation."

FLUCTUATIONS IN OPERATING RESULTS. The Company's overall operating results
are affected by many factors, including the timing of orders from large
customers and the timing of expenditures to manufacture parts and purchase
inventory in anticipation of future sales of products and services. A large
portion of the Company's operating expenses are relatively fixed. Because
several operating divisions and subsidiaries of the Company typically do not
obtain long-term purchase orders or commitments from their customers, they must
anticipate the future volume of orders based upon the historic purchasing
patterns of customers and upon their discussions with customers as to their
future requirements. Cancellations, reductions or delays in orders by a customer
or group of customers could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

DEPENDENCE OF CERTAIN BUSINESSES ON KEY CUSTOMERS. One customer of the
Company, Boeing, accounted for more than 10%, and one other customer accounted
for more than 5%, of the Company's consolidated revenues during the 12 months
ended March 31, 1998, and the loss of either of these customers could have a
material adverse effect on the Company. In addition, certain of the Company's
operating divisions and subsidiaries have significant customers, the loss of
whom could have an adverse effect on such businesses.

LIMITED AVAILABILITY OF RAW MATERIALS. Recently, the Company has
experienced extended lead times for delivery of aircraft quality castings and
extrusions. Such extended lead times may affect the Company's ability to meet
its customers' demands on a timely basis. There can be no assurance that the
Company will be able to purchase sufficient aircraft-quality castings and
extrusions or other raw materials to meet the demands of its customers in the
future or that such aircraft-quality castings and extrusions or other raw
materials will be available on satisfactory terms or reasonable prices or that
such limited availability will not have a material adverse effect on the
Company.

TECHNOLOGICAL DEVELOPMENTS. The aviation industry is constantly undergoing
development and change, and accordingly, it is likely that new products,
equipment and methods of repair and overhaul service will be introduced in the
future. In order to keep pace with any new developments, the Company may need to
expend significant capital to purchase new equipment and machines or to train
its employees in the new methods of production and service. There can be no
assurance that the Company will be successful in developing new products or,
that such capital expenditures will not have a material adverse effect on the
Company.

RISKS REGARDING THE COMPANY'S INVENTORY. The Company offers to maintain and
manage inventories of aircraft components and other products for certain of its
customers. In addition, certain of the Company's customers require the Company
to maintain and manage their inventories. If this inventory is not used by the
Company, because the Company ceases to supply such customers with the related
products

or services or because such components or other products become obsolete, the
Company will not realize any income to offset the expenses incurred by the
Company to acquire and maintain such inventory.

RELIANCE ON SKILLED PERSONNEL. From time to time, certain of the Company's
operating divisions and subsidiaries have experienced difficulties in attracting
and retaining skilled personnel to design, engineer, manufacture, repair and
overhaul sophisticated aircraft components. The ability of the Company to
operate successfully could be jeopardized if the Company is unable to attract
and retain a sufficient number of skilled personnel.

EXISTENCE OF COLLECTIVE BARGAINING AGREEMENTS. Several of the Company's
subsidiaries are parties to collective bargaining agreements with labor unions,
two of which will expire in the next 12 months. Under those agreements, the
Company currently employs approximately 339 full-time employees, and from time
to time employs up to an additional 150 temporary employees for its steel
erection business, all of whom are members of labor unions. Currently,
approximately 16% of the Company's permanent employees are represented by labor
unions and approximately 24% of the Aviation Group's revenues and 100% of the
Metals Group's revenues are derived from the operating divisions and
subsidiaries a portion of whose employees are unionized. The Company's inability
to negotiate acceptable contracts with these unions could result in strikes by
the affected workers and increased operating costs as a result of higher wages
or benefits paid to union members. If the unionized workers were to engage in a
strike or other work stoppage, or other employees were to become unionized, the
Company could experience a significant disruption of its operations and higher
ongoing labor costs, which could have an adverse effect on the Company's
business and results of operations.

PRODUCT LIABILITY; CLAIMS EXPOSURE. The Company's overall operations expose
it to potential liability for personal injury or death as a result of the
failure of an aircraft component that has been serviced by the Company, the
failure of an aircraft component designed or manufactured by the Company or the
irregularity of metal products processed or distributed by the Company. While
the Company believes that its liability insurance is adequate to protect it from
such liabilities and while no material claims have been made against the
Company, no assurance can be given that claims will not arise in the future or
that such insurance coverage will be adequate. Additionally, there can be no
assurance that insurance coverage can be maintained in the future at an
acceptable cost. Any such liability not covered by insurance or for which third
party indemnification is not available could have a material adverse effect on
the financial condition of the Company. See "Business--Legal Proceedings."

POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES. The Company's business
operations and facilities are subject to a number of federal, state and local
environmental laws and regulations. Although management believes that the
Company's operations and facilities are in material compliance with such laws
and regulations, there can be no assurance that future changes in such laws,
regulations or interpretations thereof or the nature of the Company's operations
will not require the Company to make significant additional capital expenditures
to ensure compliance in the future. Certain of Company's facilities have been or
are currently the subject of environmental remediation activities, the cost of
which is subject to indemnification provided by IKON. One of these facilities is
connected with a site included in the National Priorities List of Superfund
sites maintained by the EPA. Another of these facilities is located on a site
included in the EPA's database of potential Superfund sites. The IKON
indemnification covers both (i) the costs and claims associated with all of
these environmental remediation activities and liabilities and (ii) the cost of
unidentified liabilities that arise from conditions or activities existing at
facilities prior to their acquisition from IKON and that are identified before
July 22, 2000. Certain other facilities acquired and operated by the Company or
one of its subsidiaries, including a leased facility located on an EPA National
Priorities List site, have been under active investigation for environmental
contamination by federal or state agencies when acquired, and continue to be
under such investigation. The Company is indemnified by prior operators and/or
present owners of the facilities for liabilities which the Company incurs as a
result of

these investigations and the environmental contamination found which pre-dates
the Company's acquisition of these facilities. Two Company facilities also have
been the subject of notices from a citizen group alleging failure to notify and
file reports with appropriate agencies regarding the presence of certain
hazardous chemicals in excess of specified threshold quantities, although the
citizen group has either withdrawn or ceased actively pursuing these claims. The
Company does not maintain environmental liability insurance, and if the Company
were required to pay the expenses related to these environmental liabilities,
such expenses could have a material adverse effect on the Company. See
"Business--Environmental Matters."

ITEM 2. PROPERTIES

PROPERTIES

The Company's executive offices are located in Wayne, Pennsylvania, where
the Company leases 7,695 square feet of space. In addition, the Company owns or
leases the following facilities in which its operating divisions and
subsidiaries are located.

SQUARE OWNED/
LOCATION DESCRIPTION FOOTAGE LEASED
- ------------------------- ----------------------------------------------------------------- --------- ---------

AVIATION GROUP
Chandler, AZ Thermal processing facility/office............................... 7,000 Leased
Phoenix, AZ Plasma spray facility/office..................................... 13,500 Leased
Phoenix, AZ Repair and overhaul shop/office.................................. 50,000 Leased
Phoenix, AZ Manufacturing facility/office.................................... 35,000 Leased
Tempe, AZ Manufacturing facility/office.................................... 13,500 Owned
Tempe, AZ Machine shop..................................................... 9,300 Owned
Tempe, AZ Machine shop..................................................... 32,100 Owned
Chatsworth, CA Manfacturing facility/office..................................... 101,900 Owned
Chatsworth, CA Manufacturing facility........................................... 21,600 Leased
Glendale, CA Instrument shop/warehouse/office................................. 25,000 Leased
Santa Clara, CA Warehouse/repair shop/office..................................... 1,800 Leased
Sun Valley, CA Machine shop/office.............................................. 30,000 Owned
Ft. Lauderdale, FL Instrument shop/warehouse/office................................. 7,200 Leased
Shelbyville, IN Manufacturing facility/office.................................... 192,300 Owned
Shelbyville, IN Manufacturing facility/office.................................... 50,000 Owned
Wellington, KS Repair and overhaul/office....................................... 65,000 Leased
Freeport, NY Manufacturing facility/office/warehouse.......................... 29,000 Owned
Clemmons, NC Manufacturing facility/repair/office............................. 20,000 Owned
Albany, OR Machine shop/office.............................................. 25,000 Owned
North Wales, PA Manufacturing facility/office.................................... 111,400 Leased
Austin, TX Instrument shop/warehouse/office................................. 4,500 Leased
Fort Worth, TX Manufacturing facility/office.................................... 114,100 Owned
Brookfield, WI Manufacturing facility/office.................................... 62,000 Leased
METALS GROUP
Bridgeview, IL Steel processing facility/office................................. 135,700 Leased
Chicago, IL Steel distributing facility/office............................... 140,000 Owned
Cleveland, OH Steel fabrication facility/office................................ 163,000 Owned
Plain City, OH Office........................................................... 2,000 Leased

The Company believes that its properties are adequate to support its
operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

The Company is not presently involved in any material legal proceedings
outside of the ordinary course of business. The Company may in the future be
named as a defendant in lawsuits involving product defects, breach of warranty
or other actions relating to products that it manufactures or products that it
distributes that are manufactured by others. The Company believes that its
potential exposure is adequately covered by its aviation product and general
liability insurance.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock is traded on the New York Stock Exchange under the symbol
"TGI." The following table sets forth the range of high and low closing prices
for the Common Stock for the periods indicated:

HIGH LOW
--------- ---------

FISCAL 1998
1st Quarter............................................................... $31 7/8 $22 3/4
2nd Quarter............................................................... 33 5/8 27 1/8
3rd Quarter............................................................... 37 1/4 30 1/2
4th Quarter............................................................... 45 32 15/16

FISCAL 1997
3rd Quarter(1)............................................................ $27 1/4 $20 7/8
4th Quarter............................................................... 31 3/4 24

- ------------------------

(1) Commencing on October 25, 1996, the day on which trading commenced following
the Company's initial public offering.

As of May 29, 1998, the reported closing price for the Common Stock was $49.
As of May 29, 1998, there were approximately 52 holders of record of the Common
Stock and the Company believes that its Common Stock was beneficially owned by
1,520 persons.

The Company has never declared or paid cash dividends on any class of its
Common Stock and does not anticipate paying any cash dividends in the
foreseeable future. The Company currently intends to retain its earnings, if
any, and reinvest them in the development of its business. The Credit Facility
and the Company's 10.5% subordinated promissory note in the aggregate principal
amount of $5.5 million payable to Teleflex Incorporated prohibit the Company
from paying dividends or making any distributions on its capital stock, except
for the payment of stock dividends and redemptions of an employee's shares of
capital stock upon termination of employment.

ITEM 6. SELECTED FINANCIAL DATA

The following selected historical financial data should be read in
conjunction with the Consolidated Financial Statements and related Notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein.

PREDECESSOR
COMPANY
------------- TRIUMPH GROUP, INC.
----------------------
EIGHT MONTHS TEN MONTHS
ENDED ENDED YEARS ENDED
MAY 31, MARCH 31, MARCH 31,
------------- ----------- ----------------------
1993(1) 1994 1995 1996(2) 1997(3) 1998(4)
------------- ----------- ---------- ---------- ---------- ----------

IN THOUSANDS, EXCEPT PER SHARE DATA
Historical Operating Data:
Aviation Group
Net sales.................................. $ 46,517 $ 57,257 $ 70,714 $ 100,166 $ 167,731 $ 242,317
Cost of products sold...................... 34,568 39,941 51,395 70,643 110,932 164,978
------------- ----------- ---------- ---------- ---------- ----------
Gross profit............................... 11,949 17,316 19,319 29,523 56,799 77,339
Selling, general and administrative........ 5,830 6,799 8,761 12,915 24,228 29,611
Depreciation and amortization.............. 1,413 1,379 1,780 2,513 5,066 7,991
------------- ----------- ---------- ---------- ---------- ----------
Operating income, before corporate
expense(5)............................... 4,706 9,138 8,778 14,095 27,505 39,737
Metals Group
Net sales.................................. 57,216 72,738 93,451 86,608 82,747 87,141
Cost of products sold...................... 45,293 57,154 74,441 69,097 65,118 68,333
------------- ----------- ---------- ---------- ---------- ----------
Gross profit............................... 11,923 15,584 19,010 17,511 17,629 18,808
Selling, general and administrative........ 7,704 9,614 11,715 11,874 12,177 12,225
Depreciation and amortization.............. 658 594 916 999 979 1,100
------------- ----------- ---------- ---------- ---------- ----------
Operating income, before corporate
expense(5)............................... 3,561 5,376 6,379 4,638 4,473 5,483
------------- ----------- ---------- ---------- ---------- ----------
Combined operating income, before corporate
expene................................... $ 8,267 14,514 15,157 18,733 31,978 45,220
-------------
-------------
Corporate expense(6)....................... 1,573 1,606 2,522 4,371 3,944
Interest expense........................... 4,908 6,589 7,318 6,591 3,963
Gain on sale of assets..................... -- -- -- -- (2,250)
----------- ---------- ---------- ---------- ----------
Income from continuing operations, before
income taxes and extra-ordinary items.... 8,033 6,962 8,893 21,016 39,563
Income tax expense......................... 3,125 2,598 3,699 8,461 15,561
----------- ---------- ---------- ---------- ----------
Income from continuing operations, before
extraordinary items...................... 4,908 4,364 5,194 12,555 24,002
Extraordinary (loss) gain, net of income
taxes.................................... -- -- -- (1,478) 610
(Loss) income from discontinued
operations............................... (462) (2,852) 4,496 -- --
----------- ---------- ---------- ---------- ----------
Net income................................. $ 4,446 $ 1,512 $ 9,690 $ 11,077 $ 24,612
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
Preferred stock dividends and accretion...... (366) (489) (740) (460) --
Redemption of preferred stock................ -- -- -- (1,746) --
----------- ---------- ---------- ---------- ----------
Income available to common stockholders...... $ 4,080 $ 1,023 $ 8,950 $ 8,871 $ 24,612
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------

Earnings per share(7):
Income from continuing operations, before
extraordinary items(7):
Basic.................................... $ 0.78 $ 0.66 $ 0.76 $ 1.39 $ 2.29
Diluted.................................. 0.70 0.60 0.68 1.27 2.14
Shares used in computing earnings per share:
Basic.................................... 5,850 5,850 5,850 7,447 10,485
Diluted.................................. 6,500 6,500 6,514 8,146 11,231

Balance Sheet Data:
Working capital.............................. $ 33,296 $ 49,152 $ 39,609 $ 60,379 $ 56,288 $ 92,171
Total assets................................. 152,761 104,905 111,386 161,406 171,315 301,445
Long-term debt, including current portion.... 69,013 74,403 71,738 98,769 24,392 34,498
Redeemable preferred stock................... -- 1,423 1,912 2,652 -- --
Total stockholders' equity................... 63,398 5,080 6,094 15,065 91,413 182,879

- ------------------------

(1) Financial information related to the eight month period ended May 31, 1993
is unaudited and represents operating results for the divisions and
subsidiaries of the predecessor company which were purchased by the Company
as of June 1, 1993. Information is provided through operating income to
assist the reader in evaluating the Company's historical operating trends.
Financial information after operating income is excluded as the information
is not comparable to subsequent periods because of the significantly changed
corporate organization and capital structure which resulted from the
Acquisition.

(2) Results include the acquisitions of Triumph Controls, Inc. and Air Lab, Inc.
from the date of each respective acquisition. See Note 3 to the Consolidated
Financial Statements.

(3) Results include the acquisition of Advanced Materials Technologies, Inc.
from the date of acquisition. See Note 3 to the Consolidated Financial
Statements.

(4) Results include the acquisitions of JDC Company, Hydro-Mill Co.,
Stolper-Fabralloy Company and Frisby Aerospace, Inc. from the date of each
respective acquisition, and the sales of Air Lab and Deluxe Specialties
Mfg., Co. See Notes 3 and 4 to the Consolidated Financial Statements.

(5) Operating income, before corporate expense, is presented by group to assist
the reader in evaluating each of the group's results of operations before
financing and corporate expenses.

(6) Corporate expenses primarily consist of compensation, rent and general costs
related to the operation of the Company's corporate office and other general
expenses of the Company including professional fees.

(7) The earnings per share amounts prior to 1998 have been restated to comply
with Statement of Financial Accounting Standards No. 128, "Earnings per
Share".

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

FISCAL YEAR ENDED MARCH 31, 1998 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1997

AVIATION GROUP

NET SALES. Net sales for the Aviation Group increased by $74.6 million, or
44.5%, to $242.3 million for fiscal 1998 from $167.7 million for fiscal 1997.
This increase was primarily due to the inclusion of an aggregate of $77.8
million and $17.8 million in net sales for Advanced Materials Technologies, Inc.
("AMTI"), Frisby Aerospace, Inc. ("Frisby"), Hydro-Mill Co. ("Hydro"),
Stolper-Fabralloy Company ("Stolper") and JDC Company ("JDC") in fiscal 1998 and
fiscal 1997, respectively. The increase is partially offset by a reduction in
sales due to the sale of the Company's Air Lab division ("Air Lab") in the
second quarter of fiscal 1998. Air Lab had sales of $2.1 million and $5.5
million for the years ended March 31, 1998 and 1997, respectively. Net sales for
the other operating divisions and subsidiaries in the Aviation Group,
experienced a 12.4% increase in net sales over fiscal 1997. Increased demand for
overhaul and repair services from the commercial airlines and cargo carriers, as
well as increased orders of aircraft components from OEMs, accounted for the
increase in net sales in the Aviation Group.

COSTS OF PRODUCTS SOLD. Costs of products sold for the Aviation Group
increased by $54.0 million, or 48.7%, to $165.0 million for fiscal 1998 from
$110.9 million for fiscal 1997. This increase was primarily due to the inclusion
of $51.5 million and $10.1 million in fiscal 1998 and fiscal 1997, respectively,
of costs of products sold associated with net sales generated by AMTI, Frisby,
Hydro, Stolper and JDC. The remaining increase is associated with the increase
in net sales of the remaining operating divisions and subsidiaries in the
Aviation Group.

GROSS PROFIT. Gross profit for the Aviation Group increased by $20.5
million, or 36.2%, to $77.3 million for fiscal 1998 from $56.8 million for
fiscal 1997. This increase was primarily due to the inclusion of $26.4 million
and $7.7 million in fiscal 1998 and 1997, respectively, of gross profit on the
net sales generated by AMTI, Frisby, Hydro, Stolper and JDC. The remaining
increase was generated on the increased sales volume of the other operating
divisions and subsidiaries in the Aviation Group. As a percentage of net sales,
gross profit for the Aviation Group was 31.9% and 33.9% for fiscal 1998 and
fiscal 1997, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the Aviation Group increased by $5.4 million, or
22.2%, to $29.6 million for fiscal 1998 from $24.2 million for fiscal 1997,
primarily due to the AMTI, Frisby, Hydro, Stolper and JDC acquisitions.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the
Aviation Group increased by $2.9 million, or 57.7%, to $8.0 million for fiscal
1998 from $5.1 million for fiscal 1997, primarily due to the assets acquired in
connection with the AMTI, Frisby, Hydro, Stolper and JDC acquisitions.

OPERATING INCOME. Operating income for the Aviation Group increased by
$12.2 million, or 44.5%, to $39.7 million, excluding the $1.3 million gain on
the sale of Air Lab, for fiscal 1998 from $27.5 million for fiscal 1997. This
increase was assisted by the growth in aircraft production and the increased
outsourcing of repair and overhaul services by commercial aircraft operators.
This increase was also due to the addition of net sales and profits generated by
AMTI, Frisby, Hydro, Stolper and JDC, as well as the incremental operating
income resulting from increased sales volume. As a percentage of net sales,
operating income for the Aviation Group was 16.4% for both fiscal 1998 and
fiscal 1997.

METALS GROUP

NET SALES. Net sales for the Metals Group increased by $4.4 million, or
5.3%, to $87.1 million for fiscal 1998 from $82.7 million for fiscal 1997. This
increase was primarily due to increased demand for both flat-rolled and
electro-galvanized steel products processed by the Company.

COSTS OF PRODUCTS SOLD. Costs of products sold for the Metals Group
increased by $3.2 million, or 4.9%, to $68.3 million for fiscal 1998 from $65.1
million for fiscal 1997. This increase was primarily due to increased sales
volume partially offset by lower costs of raw materials.

GROSS PROFIT. Gross profit for the Metals Group increased by $1.2 million,
or 6.7%, to $18.8 million for fiscal 1998 from $17.6 million for fiscal 1997,
due to the reasons discussed above. As a percentage of net sales, gross profit
for the Metals Group was 21.6% and 21.3% for fiscal 1998 and fiscal 1997,
respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the Metals Group remained unchanged at $12.2 million
for fiscal 1998 from fiscal 1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the Metals
Group increased by $0.1 million, or 12.4%, to $1.1 million for fiscal 1998 from
$1.0 million for fiscal 1997.

OPERATING INCOME. Operating income for the Metals Group increased by $1.0
million, or 22.6%, to $5.5 million, excluding the $1.0 million gain on the sale
of Deluxe Specialties, Mfg Co. ("Deluxe"), for fiscal 1998 from $4.5 million for
fiscal 1997, due to the reasons discussed above. As a percentage of net sales,
operating income for the Metals Group was 6.3% and 5.4% for fiscal 1998 and
fiscal 1997, respectively.

OVERALL RESULTS

CORPORATE EXPENSES. Corporate expenses decreased by $0.4 million, or 9.8%,
to $3.9 million for fiscal 1998 from $4.4 million for fiscal 1997.

INTEREST EXPENSE. Interest expense decreased by $2.6 million, or 39.9%, to
$4.0 million for fiscal 1998 from $6.6 million for fiscal 1997. This decrease
was primarily due to reduced debt levels associated with the application of the
proceeds from the public offering of the Company's Common stock and the proceeds
from the sale of Air Lab, partially offset by the acquisitions of Frisby, Hydro,
Stolper and JDC, the cash portions of which were financed by borrowings under
the Company's credit agreement.

INCOME TAX EXPENSE. The effective tax rate was 39.3% for fiscal 1998 and
40.3% for fiscal 1997.

INCOME FROM CONTINUING OPERATIONS, BEFORE EXTRAORDINARY ITEMS. Income from
continuing operations, before extraordinary items increased by $11.4 million, or
91.2%, to $24.0 million for fiscal 1998 from $12.6 million for fiscal 1997. This
increase was primarily due to the contribution generated by AMTI, Frisby, Hydro,
Stolper and JDC and the overall favorable conditions in the aviation industry
resulting in increased net sales of the Company's products and services.

EXTRAORDINARY ITEMS. An extraordinary gain in fiscal 1998 of $0.6 million
(net of tax provision of $0.4 million) relates to a discount for the prepayment
of the $8.0 million subordinated note payable to IKON Office Solutions, Inc. An
extraordinary loss in fiscal 1997 of $1.5 million (net of tax benefit of $1.0
million), relates to prepayment premiums and the related write-off of
unamortized deferred financing costs due to the early retirement of 11% senior
subordinated notes, senior term loans and the revolving credit facility.

NET INCOME. Net income increased by $13.5 million, or 122.2%, to $24.6
million for fiscal 1998 from $11.1 million for fiscal 1997. The increase in
fiscal 1998 net income was primarily attributable to the strong

results of the Aviation Group, the extraordinary loss recorded in fiscal 1997
and the extraordinary gain recorded in fiscal 1998.

FISCAL YEAR ENDED MARCH 31, 1997 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1996

AVIATION GROUP

NET SALES. Net sales for the Aviation Group increased by $67.6 million, or
67.5%, to $167.7 million for fiscal 1997 from $100.2 million for fiscal 1996.
This increase was primarily due to the inclusion of an aggregate of $62.7
million and $11.0 million in net sales for Triumph Controls, Inc. ("TCI"), Air
Lab and AMTI in fiscal 1997 and fiscal 1996, respectively. Net sales for the
other operating divisions and subsidiaries in the Aviation Group, experienced a
17.8% increase in net sales over fiscal 1996. Increased demand for overhaul and
repair services from the commercial airlines and cargo carriers, as well as
increased orders of aircraft components from OEMs, accounted for the increase in
net sales in the Aviation Group.

COSTS OF PRODUCTS SOLD. Costs of products sold for the Aviation Group
increased by $40.3 million, or 57.0%, to $110.9 million for fiscal 1997 from
$70.6 million for fiscal 1996. This increase was primarily due to inclusion of
$35.5 million and $6.0 million in fiscal 1997 and fiscal 1996, respectively, of
costs of products sold associated with net sales generated by TCI, Air Lab and
AMTI. The remaining increase is associated with the increase in net sales of the
remaining operating divisions and subsidiaries in the Aviation Group.

GROSS PROFIT. Gross profit for the Aviation Group increased by $27.3
million, or 92.4%, to $56.8 million for fiscal 1997 from $29.5 million for
fiscal 1996. Of this increase, $22.2 million was a result of the inclusion of
gross profit on the net sales generated by TCI, Air Lab and AMTI. In addition,
$5.1 million of gross profit was generated on the increased sales volume of the
other operating divisions and subsidiaries in the Aviation Group. As a
percentage of net sales, gross profit for the Aviation Group was 33.9% and 29.5%
for fiscal 1997 and fiscal 1996, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the Aviation Group increased by $11.3 million, or
87.6%, to $24.2 million for fiscal 1997 from $12.9 million for fiscal 1996, due
to increased sales volume and the TCI, Air Lab and AMTI acquisitions.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the
Aviation Group increased by $2.6 million, or 101.6%, to $5.1 million for fiscal
1997 from $2.5 million for fiscal 1996, primarily due to the assets acquired in
connection with the TCI, Air Lab and AMTI acquisitions.

OPERATING INCOME. Operating income for the Aviation Group increased by
$13.4 million, or 95.1%, to $27.5 million for fiscal 1997 from $14.1 million for
fiscal 1996. This increase was assisted by the growth in aircraft production and
the increased outsourcing of repair and overhaul services by commercial aircraft
operators. This increase was also due to the addition of net sales and profits
generated by TCI, Air Lab and AMTI, as well as the incremental operating income
resulting from increased sales volume. As a percentage of net sales, operating
income for the Aviation Group was 16.4% and 14.1% for fiscal 1997 and fiscal
1996, respectively.

METALS GROUP

NET SALES. Net sales for the Metals Group decreased by $3.9 million, or
4.5%, to $82.7 million for fiscal 1997 from $86.6 million for fiscal 1996. This
decrease was primarily due to reduced sales volume at the Company's steel
erecting facility.

COSTS OF PRODUCTS SOLD. Costs of products sold for the Metals Group
decreased by $4.0 million, or 5.8%, to $65.1 million for fiscal 1997 from $69.1
million for fiscal 1996. This decrease was primarily due to

the reduced sales volume as a result of reorganizing the fabrication operations
at the Company's steel erecting facility.

GROSS PROFIT. Gross profit for the Metals Group increased by $0.1 million,
or 0.7%, to $17.6 million for fiscal 1997 from $17.5 million for fiscal 1996,
due to the reasons discussed above. As a percentage of net sales, gross profit
for the Metals Group was 21.3% and 20.2% for fiscal 1997 and fiscal 1996,
respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the Metals Group increased by $0.3 million, or 2.6%,
to $12.2 million for fiscal 1997 from $11.9 million for fiscal 1996.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the Metals
Group remained unchanged at $1.0 million for fiscal 1997 and 1996.

OPERATING INCOME. Operating income for the Metals Group decreased by $0.1
million, or 3.6%, to $4.5 million for fiscal 1997 from $4.6 million for fiscal
1996, due to the reasons discussed above. As a percentage of net sales,
operating income for the Metals Group was 5.4% for both years.

OVERALL RESULTS

CORPORATE EXPENSES. Corporate expenses increased by $1.9 million, or 73.3%,
to $4.4 million for fiscal 1997 from $2.5 million for fiscal 1996. This increase
was primarily due to additional incentive compensation, staffing and
professional fees associated with public company reporting requirements.

INTEREST EXPENSE. Interest expense decreased by $0.7 million, or 9.9%, to
$6.6 million for fiscal 1997 from $7.3 million for fiscal 1996. This decrease
was primarily due to reduced debt levels associated with the application of the
proceeds from the initial public offering of the Company's Common stock and the
proceeds from the sale of Quality Park Products, Inc. ("Quality Park"),
partially offset by the acquisitions of TCI, Air Lab, and AMTI, the cash
portions of which were financed by borrowings under the Company's credit
agreement.

INCOME TAX EXPENSE. The effective tax rate was 40.3% for fiscal 1997 and
41.6% for fiscal 1996.

INCOME FROM CONTINUING OPERATIONS, BEFORE EXTRAORDINARY LOSS. Income from
continuing operations, before extraordinary loss increased by $7.4 million, or
141.7%, to $12.6 million for fiscal 1997 from $5.2 million for fiscal 1996. This
increase was primarily due to the contribution generated by TCI, Air Lab and
AMTI and the overall favorable conditions in the aviation industry resulting in
increased net sales of the Company's products and services.

INCOME FROM DISCONTINUED OPERATIONS. The Company had income from
discontinued operations of $4.5 million in fiscal 1996, principally as a result
of the sale of Quality Park, which resulted in an after-tax gain of $2.5
million, and improved operating results at Quality Park due to the favorable
effects of restructuring efforts.

EXTRAORDINARY LOSS. An extraordinary loss in fiscal 1997 of $1.5 million
(net of tax benefit of $1.0 million), relates to prepayment premiums and the
related write-off of unamortized deferred financing costs due to the early
retirement of 11% senior subordinated notes, senior term loans and the revolving
credit facility.

NET INCOME. Net income increased by $1.4 million, or 14.3%, to $11.1
million for fiscal 1997 from $9.7 million for fiscal 1996. The increase in
fiscal 1997 net income was primarily attributable to the strong results of the
Aviation Group, partially offset by the extraordinary loss recorded in fiscal
1997 and the comparison to fiscal 1996 which included the results of
discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital needs are generally funded through cash flows
from operations and borrowings under its credit arrangements. The Company
generated approximately $13.6 million of cash flows from operating activities
for the twelve months ended March 31, 1998. The Company used approximately $83.4
million in investing activities, and raised $73.4 million in financing
activities for the twelve months ended March 31, 1998. As of March 31, 1998,
$106.0 million was available under the $125.0 million credit facility (the
"Credit Facility"). On October 24, 1997, the Company amended the Credit
Facility, increasing it to $125.0 million from $85.0 million. The Credit
Facility matures on March 31, 2003 and bears interest, at the option of the
Company, at the fluctuating prime rate or LIBOR, plus applicable points. On
March 31, 1998, an aggregate amount of approximately $17.7 million was
outstanding under the Credit Facility, $14.0 million of which was accruing
interest at LIBOR plus applicable basis points totaling 5.9875% per annum, and
$3.7 million of which was accruing at the prime rate of 8.5% per annum. Amounts
repaid under the Credit Facility may be reborrowed.

On September 15, 1997, the Company retired the remaining $8.0 million
subordinated note payable to IKON Office Solutions, Inc. (formerly Alco Standard
Corporation). The terms of the note provided for a $1.0 million discount in the
event the note was repaid by October 1, 1997. The cash payment of $7.0 million
was funded by the Company's long-term borrowings under its revolving credit
facility. The early extinguishment of this debt resulted in an extraordinary
gain of $0.6 million net of income taxes of $0.4 million.

In July 1997, the Company entered into a $10.0 million discretionary line of
credit ("Line of Credit"). The Line of Credit bears interest at the current rate
offered by the lender. Borrowings under the Line of Credit are payable on the
last day of the applicable interest period or on demand. The Line of Credit
expires in July 1998 and may be continued or renewed at that time. No amount was
outstanding on the Line of Credit as of March 31, 1998.

On May 5, 1997, the Company entered into a loan agreement with the City of
Shelbyville, Indiana related to the City of Shelbyville, Indiana Adjustable Rate
Economic Development Revenue Bonds, Series 1997 (the "Bonds"). The proceeds of
the Bonds of $5.0 million are being used to fund the expansion of the Company's
K-T Corporation facility. The Bonds are due to mature on May 1, 2012 and are
secured by an irrevocable letter of credit issued by PNC Bank, N.A.. The Bonds
bear interest at a variable weekly rate. At March 31, 1998, the interest rate of
the Bonds was 3.95%.

Capital expenditures were approximately $14.2 million for the twelve months
ended March 31, 1998 primarily for manufacturing machinery and equipment for the
Aviation Group. The Company funded these expenditures through borrowings under
its Credit Facility and from the proceeds from the Bonds. The Company expects
capital expenditures to be approximately $22.0 million for its fiscal year
ending March 31, 1999. The expenditures are expected to be used primarily to
expand capacity at several facilities in the Aviation Group.

In fiscal 1998, the Company acquired substantially all of the assets of
Frisby and JDC and also acquired all of the outstanding stock of Stolper and
Hydro. Frisby designs, manufactures, assembles and tests precision aircraft
components and subsystems from facilities located in Freeport, New York and
Clemmons, North Carolina. JDC, based in Ft. Lauderdale, Florida, specializes in
the repair, overhaul and exchange of electromechanical aircraft instruments.
Stolper fabricates sheet metal from high temperature alloys and provides repair
and overhaul service to aerospace end-users from facilities located in
Brookfield, Wisconsin and Phoenix, Arizona. Hydro, based in Chatsworth,
California, manufactures precision machined structural parts and assemblies for
the aerospace industry. The combined cash purchase price for these acquisitions
was $80,708 which was funded by borrowings under the Company's long-term debt
agreements. The Frisby acquisition agreement provides for a reduction in the
purchase price in the event certain performance measurements are not met on each
anniversary of the acquisition through the year 2003.

Also in fiscal 1998, the Company sold substantially all of the assets of
Deluxe and Air Lab for $10,697 in cash and the assumption by the purchaser of
certain liabilities. The Company also sold a portion of the assets of one of its
divisions. In connection with the sale of Air Lab, the Company and Sextant
Avionique, Inc. ("Sextant") entered into a five year marketing and service
agreement pursuant to which A. Biederman, a division of the Company, will serve
as an authorized warranty and nonwarranty repair station for certain products of
Sextant and as an authorized distributor for spare parts of Sextant. The Company
believes that such marketing and service agreement will enhance customer service
and increase its market share in instrument repair and distribution.

In November 1997, the Company completed the sale of 2,000,845 shares of its
Common Stock for $33.00 a share through an underwritten public offering. In
addition, the Company granted the Underwriters of its public offering a 30 day
option to purchase additional shares to cover over-allotments. In December 1997,
the Underwriters exercised the over-allotment option and the Company sold an
additional 143,100 shares of its Common Stock. The net proceeds from the sale of
$66.8 million were used to repay long-term debt.

The Company believes that cash generated by operations, borrowings under the
Credit Facility, and proceeds from the Bonds will be sufficient to meet
anticipated cash requirements for its current operations. However, the Company
has a stated policy to grow through acquisition and is continuously evaluating
various acquisition opportunities. As a result, the Company currently is
pursuing the potential purchase of a number of candidates. In the event that
more than one of these transactions are successfully consummated, the
availability under the Credit Facility might be fully utilized and additional
funding sources may be needed. There can be no assurance that such funding
sources will be available to the Company.

YEAR 2000 DATE CONVERSION

The Year 2000 issue exists because many computer systems and applications
use two-digit date fields to designate a year. As the century date change
occurs, date-sensitive systems may recognize the year 2000 as 1900, or not at
all. This inability to recognize or properly treat the year 2000 may cause
systems to process financial and operational information incorrectly.

The Company recognizes the issue and has engaged in the review and
modification procedures necessary to make its systems Year 2000 compliant. Each
operating unit is taking the lead for its own conversion and most of the
conversion activities are occurring in conjunction with normal sustaining
activities.

Conversions are planned to be completed by the end of Fiscal 1999. The
Company does not anticipate that internal Year 2000 conversion issues will
materially impact operations or operating results.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 relating to the Company's
future operations and prospects, including statements that are based on current
projections and expectations about the markets in which the Company operates,
and management's beliefs concerning future performance and capital requirements
based upon current available information. Actual results could differ materially
from management's current expectations and there can be no assurance that
additional capital will not be required or that additional capital, if required,
will be available on reasonable terms, if at all, at such times and in such
amounts as may be needed by the Company. In addition to these factors, among
other factors that could cause actual results to differ materially are
uncertainties relating to the integration of acquired businesses, general
economic conditions affecting the Company's two business segments, dependence of
certain of the Company's businesses on certain key customers as well as
competitive factors relating to the aviation and metals industries. For a more
detailed discussion of these and other factors affecting the Company, see the
risk factors described in the Company's registration statement on Form S-3 filed
with Securities and Exchange Commission and in Item 1 of this Annual Report on
Form 10-K, for the year ended March 31, 1998, filed with the SEC in June 1998.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Triumph Group, Inc.

We have audited the accompanying consolidated balance sheets of Triumph
Group, Inc. as of March 31, 1998 and 1997, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended March 31, 1998. Our audits also included the financial
statement schedule listed in the index at Item 14 (a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Triumph Group, Inc. at March 31, 1998 and 1997, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended March 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
April 17, 1998

TRIUMPH GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

MARCH 31,
----------------------

1997 1998
---------- ----------
ASSETS
Current assets:
Cash.................................................................................... $ 993 $ 4,642
Accounts receivable, less allowance for doubtful accounts:
1997--$1,619 and 1998--$1,840......................................................... 39,220 63,433
Inventories............................................................................. 54,310 77,103
Prepaid expenses and other.............................................................. 1,036 1,298
Deferred income taxes................................................................... 1,795 2,763
---------- ----------
Total current assets.................................................................. 97,354 149,239
Property and equipment, net............................................................... 48,349 78,829
Excess of cost over net assets acquired, net.............................................. 13,516 55,998
Intangible assets and other, net.......................................................... 12,096 17,379
---------- ----------
Total assets.......................................................................... $ 171,315 $ 301,445
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................................................ $ 20,461 $ 27,396
Accrued expenses........................................................................ 16,255 24,285
Income taxes payable.................................................................... 3,951 4,712
Current portion of long-term debt....................................................... 399 675
---------- ----------
Total current liabilities............................................................. 41,066 57,068
Long-term debt, less current portion...................................................... 23,993 33,823
Deferred income taxes and other........................................................... 14,843 27,675
Stockholders equity:
Common stock, $.001 par value, 15,000,000 shares authorized, 5,801,898 and 8,547,236
shares issued and outstanding at March 31, 1997 and 1998, respectively................ 6 9
Class D common stock convertible, $.001 par value, 6,000,000 shares authorized,
3,947,690 and 3,348,535 shares issued and outstanding at March 31, 1997 and 1998,
respectively.......................................................................... 4 3
Capital in excess of par value.......................................................... 68,479 135,331
Retained earnings....................................................................... 22,924 47,536
---------- ----------
Total stockholders' equity............................................................ 91,413 182,879
---------- ----------
Total liabilities and stockholders' equity.......................................... $ 171,315 $ 301,445
---------- ----------
---------- ----------

See notes to consolidated financial statements.

TRIUMPH GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED MARCH 31,
----------------------------------

1996 1997 1998
---------- ---------- ----------
Net sales.................................................................... $ 186,774 $ 250,478 $ 329,458
Operating costs and expenses:
Cost of products sold...................................................... 139,740 176,050 233,311
Selling, general and administrative........................................ 27,288 40,748 45,723
Depreciation and amortization.............................................. 3,535 6,073 9,148
Gain on sale of companies.................................................. -- -- (2,250)
---------- ---------- ----------
170,563 222,871 285,932
---------- ---------- ----------
Operating income............................................................. 16,211 27,607 43,526
Interest expense............................................................. 7,318 6,591 3,963
---------- ---------- ----------
Income from continuing operations, before income taxes and extraordinary
items...................................................................... 8,893 21,016 39,563
Income tax expense........................................................... 3,699 8,461 15,561
---------- ---------- ----------
Income from continuing operations, before extraordinary items................ 5,194 12,555 24,002
Extraordinary (loss) gain, net of income taxes............................... -- (1,478) 610
Income from discontinued operations.......................................... 4,496 -- --
---------- ---------- ----------
Net Income................................................................... $ 9,690 $ 11,077 $ 24,612
---------- ---------- ----------
---------- ---------- ----------
Preferred stock dividends and accretion...................................... (740) (460) --
Redemption of preferred stock................................................ -- (1,746) --
---------- ---------- ----------
Income available to common stockholders...................................... $ 8,950 $ 8,871 $ 24,612
---------- ---------- ----------
---------- ---------- ----------
Earnings Per Share--Basic:
Income from continuing operations, before extraordinary items.............. $ 0.76 $ 1.39 $ 2.29
Extraordinary (loss) gain, net of income taxes............................. -- (0.20) 0.06
Income from discontinued operations........................................ 0.77 -- --
---------- ---------- ----------
Net income................................................................. $ 1.53 $ 1.19 $ 2.35
---------- ---------- ----------
---------- ---------- ----------
Weighted average common shares outstanding--Basic............................ 5,850 7,447 10,485
---------- ---------- ----------
---------- ---------- ----------
Earnings Per Share--Assuming Dilution:
Income from continuing operations, before extraordinary items.............. $ 0.68 $ 1.27 $ 2.14
Extraordinary (loss) gain, net of income taxes............................. -- (0.18) 0.05
Income from discontinued operations........................................ 0.69 -- --
---------- ---------- ----------
Net income................................................................. $ 1.37 $ 1.09 $ 2.19
---------- ---------- ----------
---------- ---------- ----------
Weighted average common shares outstanding--Assuming Dilution................ 6,514 8,146 11,231
---------- ---------- ----------
---------- ---------- ----------

See notes to consolidated financial statements.

TRIUMPH GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)

COMMON CAPITAL IN
STOCK EXCESS OF TREASURY RETAINED
ALL CLASSES PAR VALUE STOCK EARNINGS TOTAL
------------- ---------- ----------- --------- ----------

Balance at March 31, 1995.............................. $ 6 $ 994 $ (9) $ 5,103 $ 6,094
Net income........................................... 9,690 9,690
Redeemable preferred stock dividends................. (594) (594)
Accretion of redeemable preferred stock.............. (146) (146)
Sale of 26,000 shares of common stock................ 12 9 21
--- ---------- --- --------- ----------
Balance at March 31, 1996.............................. 6 1,006 -- 14,053 15,065
Net income........................................... 11,077 11,077
Issuance of 3,000,000 shares of common stock in
public offering and direct sale (net of $1,250
issuance costs).................................... 3 51,757 51,760
Redeemable preferred stock dividends................. (370) (370)
Accretion of redeemable preferred stock.............. (1,836) (1,836)
Compensation in stock options issued to employee..... 80 80
Purchase of 45,500 shares of common stock............ (85) (85)
Acquisition consideration in stock options issued.... 164 164
Exercise of options to purchase common stock......... 75 75
Conversion of minority interest in subsidiary to
common stock....................................... 619 619
Retirement of treasury stock......................... (10) 10 --
Exchange of redeemable preferred stock for common
stock.............................................. 4,858 4,858
Exchange of junior subordinated promissory notes for
common stock....................................... 1 10,005 10,006
--- ---------- --- --------- ----------
Balance at March 31, 1997.............................. 10 68,479 -- 22,924 91,413
Net income........................................... 24,612 24,612
Issuance of 2,143,945 shares of common stock in
public offering (net of $400 issuance costs)....... 2 66,810 66,812
Exercise of options to purchase common stock......... 42 42
--- ---------- --- --------- ----------
Balance at March 31, 1998.............................. $ 12 $ 135,331 $ -- $ 47,536 $ 182,879
--- ---------- --- --------- ----------
--- ---------- --- --------- ----------

See notes to consolidated financial statements.

TRIUMPH GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

YEAR ENDED MARCH 31,
----------------------------------

1996 1997 1998
---------- ---------- ----------
Operating Activities
Net income.................................................................... $ 9,690 $ 11,077 $ 24,612
Adjustments to reconcile net income to net cash provided by operating
activities:
Discontinued operations..................................................... (4,396) -- --
Gain on sale of companies................................................... -- -- (2,250)
Gain on extinguishment of debt.............................................. -- -- (1,000)
Depreciation and amortization............................................... 3,535 6,073 9,148
Other amortization included in interest expense............................. 276 206 139
Provision for doubtful accounts receivable.................................. 243 959 173
Provision for deferred income taxes......................................... 719 1,067 3,555
Interest on subordinated and junior subordinated promissory notes paid by
issuance of additional notes.............................................. 1,161 1,550 758
Write-off deferred financing costs.......................................... -- 915 --
Changes in other current assets and liabilities, net of
acquisitions and dispositions of businesses............................... 3,799 (13,483) (20,340)
Other....................................................................... 1,074 (215) (1,216)
---------- ---------- ----------
Net cash provided by operating activities..................................... 16,101 8,149 13,579
---------- ---------- ----------
Investing Activities
Capital expenditures, net..................................................... (1,897) (8,183) (14,220)
Proceeds from sale of discontinued operations................................. -- 27,350 --
Proceeds from sale of companies, net of cash sold............................. -- -- 11,572
Cost of businesses acquired, net of cash acquired............................. (34,137) (7,950) (80,708)
---------- ---------- ----------
Net cash (used in) provided by investing activities........................... (36,034) 11,217 (83,356)
---------- ---------- ----------
Financing Activities
Net proceeds from common stock offering....................................... -- 51,760 66,812
Net increase (decrease) in revolving credit facility.......................... 2,129 (23,841) 9,013
Sale (purchase) of treasury stock, net........................................ 21 (10) --
Proceeds from exercise of stock options....................................... -- -- 42
Proceeds from issuance of long-term debt...................................... 20,827 54,065 5,000
Refinancing and retirement of long-term debt.................................. -- (93,616) (7,000)
Repayment of debt and capital lease obligations............................... (3,251) (6,872) (423)
Payment of deferred financing cost............................................ -- (398) (18)
---------- ---------- ----------
Net cash provided by (used in) financing activities........................... 19,726 (18,912) 73,426
---------- ---------- ----------
Net change in cash............................................................ (207) 454 3,649
Cash at beginning of year..................................................... 746 539 993
---------- ---------- ----------
Cash at end of year........................................................... $ 539 $ 993 $ 4,642
---------- ---------- ----------
---------- ---------- ----------

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. BASIS OF PRESENTATION

Triumph Group, Inc. ("Triumph") is a Delaware corporation which, through its
operating subsidiaries, is engaged in aviation services and metals converting
and distribution.

The accompanying consolidated financial statements include the accounts of
Triumph and its subsidiaries (collectively, the "Company"). Intercompany
accounts and transactions have been eliminated from the consolidated financial
statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Triumph's aviation segment designs, engineers, manufactures or repairs and
overhauls aircraft components for commercial airlines, air cargo carriers and
original equipment manufacturers on a worldwide basis. Triumph's metals segment
manufactures, machines, processes and distributes metal products to customers in
the computer, construction, container, farm equipment and office furniture
industries, primarily within North America. 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.
At March 31, 1998, trade accounts receivable from AlliedSignal and Boeing
Airplane Co. ("Boeing") represented approximately 16% and 12%, respectively, of
total accounts receivable. The Company had no other significant concentrations
of credit risk. For fiscal 1998, Boeing represented approximately 14% of
consolidated sales, mainly due to the combination of Boeing, McDonnell Douglas
and Rocketdyne. No other single customer accounts for more than 10% of the
Company's sales; however, the loss of any significant customer, including
Boeing, could have a material effect on the Company and its operating
subsidiaries. During fiscal years 1997 and 1998, the Company had export sales of
$32,853 and $45,237, respectively.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles 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.

EARNINGS PER SHARE

Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share", which required the
Company to change the method used to compute earnings per share ("EPS") and to
restate all prior periods presented. The presentation of primary and fully
diluted EPS had been replaced with basic and diluted EPS, respectively. Basic
earnings per share is computed using the weighted average number of common
shares outstanding during the period. The computation of diluted earnings per
share includes the dilutive effect of securities that could

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
be exercised or converted into common stock. The following is a reconciliation
between the average outstanding shares used in the calculation of basic and
diluted EPS:

YEARS ENDED MARCH 31,
-------------------------------

1996 1997 1998
--------- --------- ---------

(THOUSANDS)

Weighted average common shares outstanding............................................. 5,850 7,447 10,485
Net effect of dilutive stock options................................................... 14 49 96
Net effect of dilutive warrant......................................................... 650 650 650
--------- --------- ---------
Weighted average common shares outstanding--assuming dilution.......................... 6,514 8,146 11,231
--------- --------- ---------
--------- --------- ---------

NEW ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". Both Statements become effective for
fiscal periods beginning after December 15, 1997, with early adoption permitted.
The Company is evaluating the effects these Statements will have on its
financial reporting and disclosures. The Statements are expected to have no
material effect on the Company's results of operations, financial condition,
capital resources or liquidity.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the related assets by the straight-line method.
Buildings and improvements are depreciated over a period of 15 to 39-1/2 years,
and machinery and equipment are depreciated over a period of 7 to 15 years
(except for furniture, fixtures and computer equipment which is depreciated over
a period of 3 to 10 years).

EXCESS OF COST OVER NET ASSETS ACQUIRED

The excess of cost over the fair value of net assets acquired is being
amortized on a straight-line basis over a period of twenty-five to thirty years.
Accumulated amortization at March 31, 1997 and 1998 was $609 and $1,896,
respectively. The carrying value of excess of cost over net assets acquired is
evaluated periodically in relation to the operating performance and expected
future undiscounted cash flows of the underlying businesses.

INTANGIBLE ASSETS

Intangible assets at March 31, 1997 and 1998 of $9,897 and $14,793,
respectively, consist primarily of patents, trademarks, aerospace designs and
covenant not-to-compete agreements. Intangible assets are amortized on a
straight-line basis over their estimated useful lives which range from five to
twenty-five years. Accumulated amortization at March 31, 1997 and 1998 was
$2,199 and $4,103, respectively.

REVENUE RECOGNITION

Revenues are recorded when services are performed or when products are
shipped except for long-term construction contracts which are recorded on the
percentage-of-completion method based on the relationship between actual costs
incurred and total estimated costs at completion. Estimated costs to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
complete for each contract are reviewed periodically as work progresses and
appropriate adjustments are made to revenue recognition percentages, if
necessary. In the event such estimates indicate a loss would be incurred on the
contract, the estimated amount of such loss would be recognized in the period
the estimated loss was determined. Sales from long-term construction contracts
approximated 12%, 7% and 4% of total sales for the years ended March 31, 1996,
1997 and 1998, respectively.

STOCK-BASED COMPENSATION

The Company follows Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its employee stock-based compensation (see Note 9).

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current
year presentation.

3. ACQUISITIONS

In fiscal 1998, the Company acquired substantially all of the assets of
Frisby Aerospace ("Frisby") and J.D. Chapdelaine Co. ("JDC") and also acquired
all of the outstanding stock of Stolper-Fabralloy Company, LLC ("Stolper") and
Hydro-Mill Company ("Hydro"). Frisby designs, manufactures, assembles and tests
precision aircraft components and subsystems from facilities located in
Freeport, New York and Clemmons, North Carolina. JDC, based in Ft. Lauderdale,
Florida, specializes in the repair, overhaul and exchange of electromechanical
aircraft instruments. Stolper fabricates sheet metal from high temperature
alloys and provides repair and overhaul service to aerospace end-users from
facilities located in Brookfield, Wisconsin and Phoenix, Arizona. Hydro, based
in Chatsworth, California, manufactures precision machined structural parts and
assemblies for the aerospace industry. The combined purchase price for these
acquisitions was $93,632. The purchase price includes cash paid at closing, in
certain instances notes payable to the former owner, a long-term liability
related to a covenant not-to-compete contract, the assumption of certain
liabilities and direct costs of the acquisitions. The combined excess of
purchase price over net assets acquired of $43,769 is being amortized on a
straight-line basis over twenty-five to thirty years. The Frisby acquisition
agreement provides for a reduction in the purchase price in the event certain
performance measurements are not met on each anniversary of the acquisition
through year 2003.

In fiscal 1997, the Company acquired all of the outstanding stock of
Advanced Materials Technologies, Inc. ("AMTI") based in Tempe, Arizona for an
aggregate purchase price of $16,257, including cash consideration, an option to
purchase 13,000 shares of the Company's Class A Common Stock at an exercise
price of $1.87 per share valued at $164, a five-year covenant not-to-compete
contract and the assumption of certain liabilities and direct costs of the
transaction. AMTI repairs and refurbishes gas turbine engine components used in
the aviation industry. The excess of the purchase price over the fair value of
net assets acquired of $2,870 is being amortized over twenty-five years on a
straight-line basis.

In fiscal 1996, the Company acquired substantially all of the assets of
Triumph Controls, Inc. ("TCI"), formerly a division of Teleflex, Incorporated
("Teleflex"), and Air Lab, Inc. ("Air Lab"), for an aggregate purchase price of
$43,500. TCI manufactures and services mechanical controls for a broad range of
end users, primarily in the aviation industry. Air Lab services instruments and
avionics for the commercial aviation industry. The purchase price includes cash
paid, a long-term note, assumption of certain liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

3. ACQUISITIONS (CONTINUED)
and direct costs of the acquisition. The aggregate purchase price was allocated
to the assets based on their estimated fair values, including $5,500 of
intangible assets (patents, trademarks and aerospace designs). The excess of the
purchase price over the fair value of net assets acquired of $10,960 is being
amortized over twenty-five years on a straight-line basis.

These acquisitions have been accounted for under the purchase method and,
accordingly, are included in the consolidated financial statements from their
dates of acquisition. Changes in purchase accounting estimates may result in a
reallocation of the purchase price within one year of the acquisitions. These
acquisitions were funded by the Company's long-term borrowings in place at the
date of each respective acquisition.

The following unaudited pro forma information has been prepared assuming the
above acquisitions had taken place at the beginning of the year preceding the
year of acquisition.

YEAR ENDED MARCH 31,
----------------------------------

1996 1997 1998
---------- ---------- ----------
Net sales.................................................................... $ 230,168 $ 331,835 $ 374,809
Income from continuing operations, before extraordinary items................ 8,317 13,927 25,186
Income from continuing operations, before extraordinary items per share:
Basic...................................................................... 1.30 1.57 2.40
Diluted.................................................................... 1.16 1.44 2.24
Net income................................................................... 12,813 12,449 25,796
Net income per common share:
Basic...................................................................... 2.06 1.38 2.46
Diluted.................................................................... 1.85 1.26 2.30

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

4. DIVESTITURES AND DISCONTINUED PAPER OPERATIONS

In fiscal 1998, the Company sold substantially all of the assets of Deluxe
Specialties Mfg. Co. ("Deluxe") and Air Lab for $10,697 in cash and the
assumption by the purchasers of certain liabilities. The Company also sold a
portion of the assets of one of its divisions. The reported results for the year
ended March 31, 1998, include the $2,250 gain on sale of these assets. For the
years ended March 31, 1996, 1997 and 1998 these entities had net sales of
$11,553, $15,697, and $12,906, respectively, and operating income of $983,
$1,568, and $1,386, respectively.

On March 31, 1996, the Company sold substantially all of the assets of its
paper converting subsidiary, Quality Park Products, Inc. of St. Paul, MN, to
Mail-Well, Inc. for approximately $27,350 in cash and the assumption by the
purchaser of certain liabilities.

The results of Quality Park Products, Inc. have been reported separately as
a component of discontinued operations in the Consolidated Statements of Income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. DIVESTITURES AND DISCONTINUED PAPER OPERATIONS (CONTINUED)
The following is a summary of the results of operations of the Company's
paper converting business:

YEAR ENDED
MARCH 31, 1996
--------------------

Net sales................................................................................... $ 99,531
Income from operations (net of taxes of $1,156)............................................. 2,046
Gain on sale (net of taxes--$1,633)......................................................... 2,450
-------
Income from discontinued operations......................................................... $ 4,496
-------
-------

Interest expense of $2,045 was allocated to Quality Park Products, Inc. for
the year ended March 31, 1996. This amount is included in the income from
discontinued operations for that year. This cost was allocated based on the
operation's actual borrowings.

5. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out or last-in,
first-out methods) or market. The components of inventories are as follows:

MARCH 31,
--------------------

1997 1998
--------- ---------
Raw materials............................................................................... $ 15,863 $ 23,665
Work-in-process............................................................................. 17,295 26,796
Finished goods.............................................................................. 21,694 27,228
--------- ---------
Total inventories at FIFO cost.............................................................. 54,852 77,689
Less allowance to reduce certain FIFO costs to LIFO basis................................... 542 586
--------- ---------
Total inventories........................................................................... $ 54,310 $ 77,103
--------- ---------
--------- ---------

Approximately 12% of the inventory is valued using the LIFO method at March
31, 1997 and 1998.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. INCOME TAXES

The components of income tax expense related to continuing operations are as
follows:

YEAR ENDED MARCH 31,
-------------------------------

1996 1997 1998
--------- --------- ---------
Current:
Federal......................................................................... $ 2,689 $ 6,453 $ 10,430
State........................................................................... 291 941 1,576
--------- --------- ---------
2,980 7,394 12,006
Deferred:
Federal......................................................................... 574 1,169 2,993
State........................................................................... 145 (102) 562
--------- --------- ---------
719 1,067 3,555
--------- --------- ---------
$ 3,699 $ 8,461 $ 15,561
--------- --------- ---------
--------- --------- ---------

A reconciliation of the statutory federal income tax rate to the effective
tax rate is as follows:

YEAR ENDED
MARCH 31,
-------------------------------

1996 1997 1998
--------- --------- ---------
Statutory federal income tax rate........................................................... 34.0% 35.0% 35.0%
State and local income tax rate, net of federal tax benefit................................. 3.2 2.6 3.5
Miscellaneous permanent items and non-deductible accruals................................... 1.3 0.8 0.9
Other....................................................................................... 3.1 1.9 (0.1)
--- --- ---
Effective income tax rate................................................................... 41.6% 40.3% 39.3%
--- --- ---
--- --- ---

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts reportable for income tax purposes. The components of
deferred tax assets and liabilities are as follows:

MARCH 31,
--------------------

1997 1998
--------- ---------
Deferred tax assets:
Net operating loss carryforwards........................................................ $ -- $ 436
Accruals and reserves................................................................... 815 1,267
Accounts receivable..................................................................... 315 272
Inventories............................................................................. 947 1,158
--------- ---------
Deferred tax liabilities: 2,077 3,133
Property and equipment.................................................................. 6,214 13,906
Other assets............................................................................ 3,240 5,129
Prepaid expenses and other.............................................................. 812 900
--------- ---------
10,266 19,935
--------- ---------
Net deferred tax liabilities................................................................ $ 8,189 $ 16,802
--------- ---------
--------- ---------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. INCOME TAXES (CONTINUED)

Income taxes paid during the years ended March 31, 1996, 1997 and 1998 were
$904, $6,413 and $10,611, respectively. At March 31, 1996, the Company had
alternative minimum tax credit carryforwards of $1,558 for income tax purposes
which were fully utilized in 1997.

7. LONG-TERM DEBT

Long-term debt consists of the following:

MARCH 31,
--------------------

1997 1998
--------- ---------
Revolving credit facility................................................................... $ 8,707 $ 17,720
Subordinated promissory notes............................................................... 14,246 10,964
Industrial revenue bonds.................................................................... -- 5,000
Other debt and capital lease obligations.................................................... 1,439 814
--------- ---------
24,392 34,498
Less current portion........................................................................ 399 675
--------- ---------
$ 23,993 $ 33,823
--------- ---------
--------- ---------

On March 30, 1998, the Company amended and restated its existing $125,000
credit agreement ("Credit Facility") with its lenders to extend the maturity
date of the existing Credit Facility, reduce interest rates and amend certain
covenants. The Credit Facility bears interest at either LIBOR plus between 0.30%
and 1.00% (0.375% and 1.25% at March 31, 1997) or the prime rate (or the Federal
funds rate plus 0.5% if greater) at the option of the Company and expires on
March 21, 2003 (2002 at March 31, 1997). The variation in the interest rate is
based upon the Company's ratio of total indebtedness to earnings before
interest, taxes, and depreciation and amortization. In addition, the Company is
required to pay a commitment fee of between 0.10% and 0.225% (0.125% and 0.25%
at March 31,1997) on the unused portion of the Credit Facility without penalty.
Additionally, the Company may allocate up to $5,000 of the available Credit
Facility for the issuance of letters of credit of which $1,000 and $1,300 was
used as of March 31, 1997 and 1998, respectively.

On September 15, 1997, the Company retired the remaining $8,000 subordinated
note payable to IKON Office Solutions, Inc. (formerly Alco Standard
Corporation). The terms of the note provided for a $1,000 discount in the event
the note was repaid by October 1, 1997. The cash payment of $7,000 was funded by
the Company's long-term borrowings under its Credit Facility. The early
extinguishment of this debt resulted in an extraordinary gain of $610, net of
income taxes of $390.

In July 1997, the Company entered into a $10,000 discretionary line of
credit ("Line of Credit"). The Line of Credit bears interest at the current rate
offered by the lender. Borrowings under the Line of Credit are payable on the
last day of the applicable interest period or on demand. The Line of Credit
expires in July 1998 and may be continued or renewed at that time. No amounts
were outstanding on this Line of Credit as of March 31, 1998.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. LONG-TERM DEBT (CONTINUED)
an irrevocable letter of credit issued by PNC Bank, N.A. The Bonds bear interest
at a variable weekly rate, which was 3.95% at March 31, 1998.

On October 30, 1996, the Company paid down the then outstanding balance on
the revolving credit facility using the proceeds from the Company's initial
public offering (see Note 8). On December 31, 1996, the Company amended the
credit agreement increasing the revolving credit facility to $85,000 and
retiring the $33,750 term loan.

On July 19, 1996, the Company entered into an unsecured credit agreement for
a $50,000 revolving credit facility and a $35,000 term loan. The proceeds of the
new term loan, amounts borrowed under the new revolving credit facility and the
proceeds received from the sale of Quality Park Products, Inc. (see Note 4) were
used to extinguish the outstanding balances of the revolving credit facility,
the senior term loans, and the senior subordinated notes existing at March 31,
1996. The early extinguishment of this debt resulted in an extraordinary loss of
$1,478, net of an income tax benefit of $985 related to the write-off of
unamortized deferred financing fees and prepayment penalties.

At March 31, 1997 and 1998, the interest rate on borrowings under the Credit
Facility was 8.25% and 6.51%, respectively. As of March 31, 1998, $105,980 of
additional borrowings were available under the Credit Facility.

At March 31, 1998, the Subordinated Promissory Notes consist of two notes, a
$4,000 principal amount bearing interest at 7%, due in annual installments of
$800 on July 1 of each year commencing in 1999 through and including 2003, and
$6,964 principal amount bearing interest at 10.5%, due in equal installments on
December 31, 2002 and December 31, 2003. With regard to the 10.5% note, the
Company, at its sole discretion, may pay interest by issuance of additional
10.5% notes and elected to do so for $146, $626 and $692 for the years ended
March 31, 1996, 1997 and 1998, respectively.

At March 31, 1997, the Subordinated Promissory Notes consist of two notes,
an $8,000 principal amount bearing interest at 10%, due in installments of
$6,750 and $1,250 on June 1, 2002 and June 1, 2003, respectively, but which was
subsequently retired on September 15, 1997, and $6,246 principal amount bearing
interest at 10.5%, due in equal installments on December 31, 2002 and December
31, 2003.

The indentures under the debt agreements described above contain
restrictions and covenants which include limitations on the Company's ability to
incur additional indebtedness, issue stock options or warrants (excluding the
initial public offering and the employee stock option plan described in Notes 8
and 9), make certain restricted payments and acquisitions, create liens, enter
into transactions with affiliates, sell substantial portions of its assets, make
capital expenditures and pay cash dividends.

Additional covenants require compliance with financial tests, including
leverage, interest coverage ratio, and maintenance of minimum net worth.

The fair value of the Company's Credit Facility and the Bonds approximate
their carrying values. The fair value of the subordinated promissory notes,
based on a discounted cash flow method, is approximately $12,200.

Maturities of long-term debt are as follows: 1999--$675 ; 2000 -$1,156 ;
2001--$1,141 ; 2002--$1,135; 2003--$22,337; thereafter, $8,054 through 2013.

Interest paid on indebtedness during the years ended March 31, 1996, 1997,
and 1998 amounted to $7,552, $5,986 and $3,277, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. LONG-TERM DEBT (CONTINUED)
Financing fees and expenses of $782 incurred with respect to indebtedness
have been capitalized and are reflected in other assets. These fees and expenses
are being amortized over the terms of the related indebtedness (5-8 years).
Total amortization (included in interest expense) for the years ended March 31,
1996, 1997 and 1998 was $276, $206 and $139, respectively. On July 19, 1996, in
conjunction with the refinancing, $915 in unamortized deferred financing fees
related to the extinguished debt were written off and an additional $398 in
financing fees related to the new credit agreement were capitalized.

8. STOCKHOLDERS' EQUITY

In November 1997, the Company completed the sale of 2,000,845 shares of its
Common stock for $33.00 a share through an underwritten public offering. In
addition, the Company granted the Underwriters of its public offering a 30 day
option to purchase additional shares to cover over-allotments. In December 1997,
the Underwriters exercised the over-allotment option and the Company sold an
additional 143,100 shares of its Common stock. The net proceeds from the sale of
$66,812 were used to repay long-term debt.

In October 1996, the Company completed the sale of 2,500,000 shares of its
Common stock for $19.00 per share through an underwritten public offering and
the sale of 125,000 shares of its Common stock for $17.67 per share through a
direct sale by the Company. In addition, the Company granted the underwriters of
its public offering a 30-day option to purchase up to 375,000 additional shares
of its Common stock for $19.00 a share to cover over-allotments. In November
1996, the underwriters exercised the over-allotment option and the Company sold
an additional 375,000 shares of its Common stock. The net proceeds from the
sales were $51,760. The total net proceeds were used to pay down a portion of
the Company's long-term borrowings under its credit agreement and $5,500 of the
10% subordinated promissory note (see Note 7).

In October 1996, in conjunction with the sale of Common stock, the Company
recapitalized the Common stock through a 65-for-one stock split. All references
to shares and earnings per share data in the financial statements have been
restated to give effect to the stock split. In addition, the Company increased
the authorized number of shares of Common stock to 15,000,000 and Class D common
stock to 6,000,000. During fiscal 1997 and 1998, 197,370 and 599,155 shares of
Class D common stock were converted to shares of the Company's Common stock.

In October 1996, in conjunction with the public offering described above,
the Company exchanged all outstanding Redeemable preferred stock for common
stock. The liquidation value of the Redeemable preferred stock plus accumulated
dividends at the date of the exchange of $4,858 was converted to 281,318 shares
of common stock at the initial public offering price of $19.00 (less
underwriting discounts and commissions and estimated offering expenses payable
by the Company). The accretion of the original issue discount and accumulated
dividends of $740 and $2,206, for the years ended March 31, 1996 and 1997,
respectively, were charged to retained earnings.

In addition, in October 1996, the Company exchanged all outstanding 14%
junior notes and a portion of the outstanding 10.5% junior notes for common
stock. The face value of the junior notes exchanged plus accrued but unpaid
interest at the date of exchange of $10,006 was exchanged for 579,395 shares of
common stock at the initial public offering price of $19.00 (less underwriting
discounts and commissions and estimated offering expenses payable by the
Company).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

8. STOCKHOLDERS' EQUITY (CONTINUED)
The holders of the Common stock and the Class D common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders of
Triumph except that Class D does not participate in the voting of directors and
are entitled to participate ratably in any distributions.

The holders of Class D common stock may elect at any time to convert any or
all such shares into the Common stock on a share-for-share basis.

The Company issued a stock purchase warrant in conjunction with the issuance
of the senior subordinated notes which allows the holder to purchase 650,000
shares of Common stock for an aggregate exercise price of one hundred dollars
through July 31, 2003. The proceeds from the issuance of the senior subordinated
notes allocated to the warrants of $100 have been included in capital in excess
of par value.

The Company has Preferred stock of $100 par value, 250,000 shares
authorized. At March 31, 1997 and 1998 no shares of Preferred stock are
outstanding. At March 31, 1996, the Company had Class A, B and C common shares
outstanding, $.001 par value. The Class A had 6,500,455 shares authorized and
1,300,000 shares issued. The Class B and Class C were convertible to Class A and
had 4,550,000 and 455 shares authorized and issued, respectively. In conjunction
with the public offering, the Class A, B and C were converted to Common stock
and Class D common stock.

9. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLAN

Approximately 160 employees participate in a noncontributory defined benefit
pension plan sponsored by the Company. Normal retirement under the Plan is age
65 and participants receive monthly benefits of a stated amount for each year of
service. The Company's funding policy for the Plan is to make the minimum annual
contributions required by applicable regulations. The Plan's assets are
primarily invested in stocks and bonds. The net periodic pension cost and
related pension liability is not material.

DEFINED CONTRIBUTION PENSION PLAN

The Company sponsors a defined contribution 401(k) plan, under which
salaried and certain hourly employees may defer a portion of their compensation.
Eligible participants may contribute to the plan up to 15% of their regular
compensation before taxes. During fiscal 1997, the Company increased its
matching contribution from 33% to 50% of the first 6% of compensation
contributed by the participant. All contributions and Company matches are
invested at the direction of the employee in one or more mutual funds. Company
matching contributions vest immediately and aggregated $437, $749 and $1,049 for
the years ended March 31, 1996, 1997 and 1998, respectively.