TRIUMPH GROUP, INC.

INDEX

Part I. Financial Information

Item 1. Financial Statements.

Triumph Group, Inc.

Consolidated Balance Sheets

(dollars in thousands)

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Triumph Group, Inc.

Consolidated Balance Sheets (continued)

(dollars in thousands, except per share data)

SEE ACCOMPANYING NOTES.

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Triumph Group, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

SEE ACCOMPANYING NOTES.

3

Triumph Group, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

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Triumph Group, Inc.

Consolidated Statements of Cash Flows (continued)

(dollars in thousands)

(unaudited)

SEE ACCOMPANYING NOTES.

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Triumph Group, Inc.

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)

SEE ACCOMPANYING NOTES.

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Triumph Group, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Triumph Group, Inc. (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The Company designs, engineers and manufactures products for original equipment manufacturers of aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis.

USE OF ESTIMATES

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

STOCK-BASED EMPLOYEE COMPENSATION

The Company has a number of stock-related compensation plans, including stock option and restricted stock plans, which are described in Note 2, Note 8, Note 10 and Note 20 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005.

The Company uses the interim financial statement disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure,” which amends SFAS No. 123 “Accounting for Stock-Based Compensation.”  The Company continues to use the accounting method under Accounting Principles Board Opinion No. 25 (“APB 25”) and related interpretations in accounting for its employee stock options. Under APB 25, generally, when the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation cost is recognized.

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During April 2005, the Compensation Committee of the Company’s Board of Directors approved the granting to several of its senior executives and employees restricted stock, the number of shares of which is determined based upon the Company’s financial performance during fiscal 2006. Up to 80,595 shares may be earned. The amount of shares will be determined following the determination of net earnings per share for fiscal 2006. The restricted shares are subject to forfeiture should the grantee’s employment be terminated prior to the fourth anniversary of the date of grant. Also on the same date, the Compensation Committee of the Board of Directors of the Company granted to the same group of executives and employees options to purchase an additional 113,750 shares at an exercise price of $30.74 per share.

Also during April 2005, the Board of Directors of the Company approved the acceleration of vesting of “underwater” unvested stock options held by certain current employees, including executive officers. Options to purchase 238,250 shares were subject to such acceleration. Stock options held by non-employee directors were not included in the acceleration. A stock option was considered “underwater” if the option exercise price was greater than $30.74 per share, the market price on the date of the acceleration. The pro forma net income reflecting the grant of the restricted shares, the grant of the stock options and the acceleration of the vesting of certain stock option grants is included in the table below.

The fair value of the Company’s stock options granted in the first quarter of fiscal 2006 was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 4.0%; no dividends; a volatility factor of the expected market price of the Company’s Common stock of ..42; and an expected life of the options of 6 years. The fair value of the Company’s stock options granted in the first quarter of fiscal 2005 was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:  risk-free interest rate of 3.7%; no dividends; a volatility factor of the expected market price of the Company’s Common stock of .41; and an expected life of the options of 6 years.

For purposes of pro forma disclosure, the fair value of the options ($14.25 for the options granted in the first quarter of fiscal 2006 and $15.47 for the options granted in the first quarter of fiscal 2005) is amortized to expense over the options’ assumed vesting period. Pro forma disclosure, as required by SFAS No. 148, regarding net income and earnings per share has been determined as if the Company had accounted for its employee stock options under the fair value method.

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Pro Forma Net Income and Earnings Per Share

INTANGIBLE ASSETS

Intangible assets cost and accumulated amortization at June 30, 2005 were $83,077 and $28,671, respectively. Intangible assets cost and accumulated amortization at March 31, 2005 were $83,077 and $26,850, respectively. Intangible assets consists of two major classes: (i) product rights and licenses, which at June 30, 2005 had a weighted-average life of 11.6 years, and (ii) non-compete agreements, customer relationships and other, which at June 30, 2005 had a weighted-average life of 13.4 years. Gross cost and accumulated amortization of product rights and licenses at June 30, 2005 were $69,232 and $19,897, respectively, and at March 31, 2005 were $69,232 and $18,325, respectively. Gross cost and accumulated amortization of noncompete agreements, customer relationships and other at June 30, 2005 were $13,845 and $8,774, respectively and at March 31, 2005 were $13,845 and $8,525, respectively. Amortization expense for the three months ended June 30, 2005 was $1,821. Amortization expense for the fiscal year ended March 31, 2006 and the succeeding five fiscal years by year is expected to be as follows: 2006: $7,142; 2007: $6,946; 2008: $6,901; 2009: $6,763; 2010: $6,528; 2011: $4,737.

RECLASSIFICATIONS

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

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3. ACQUISITIONS

The purchase price of the acquisition in the fourth quarter of fiscal 2004 of Rolls-Royce Gear Systems, Inc., renamed Triumph Gear Systems, Inc., may be adjusted pending the outcome of the remaining open items associated with the continuing negotiation of the long-term supply agreements that were assumed in the transaction. The Company has recorded its best estimate of the liability under the long-term supply agreements.

4. INVENTORIES

The components of inventories are as follows:

5. LONG-TERM DEBT

Long-term debt consists of the following:

On July 27, 2005, the Company amended and restated its existing credit agreement (as amended and restated, the “Credit Facility”) with its lenders to reduce the Credit Facility to $250,000 from $265,000, extend the maturity date to July 27, 2010 and amend certain other terms and covenants. The Credit Facility bears interest at either (i) LIBOR plus between 0.75% and 1.75% or (ii) the prime rate (or the Federal Funds rate plus 0.5% if greater) plus between 0.00% and 0.25% or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company’s ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.175% and 0.375% on the unused portion of the Credit Facility. The Company may allocate up to $30,000 of the available Credit Facility for the issuance of letters of credit. The Company’s obligations under the Credit Facility are guaranteed by the Company’s subsidiaries.

On July 27, 2005, the Company entered into Amendment No. 4 to the Note Purchase Agreement dated as of November 21, 2002. The amendment reaffirms the Company’s covenants under the Note Purchase Agreement.

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6. EARNINGS PER SHARE

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

Options to purchase 423,950 shares of common stock, at prices ranging from $38.35 per share to $44.91 per share, were outstanding during the first quarter of fiscal 2006. These options were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common stock during the three months ended June 30, 2005 and, therefore, the effect would be antidilutive.

7. GOODWILL

The following is a summary of the changes in the carrying value of goodwill from March 31, 2005 through June 30, 2005:

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8. SEGMENTS

The Company has two reportable segments: Aerospace Systems and Aftermarket Services. The Company’s Aerospace Systems segment consists of 25 operating locations and the Aftermarket Services segment consists of 15 operating locations at June 30, 2005.

The Aerospace Systems segment consists of the Company’s operations which manufacture products that primarily service the aerospace OEM market. The segment’s operations design and engineer hydraulic, mechanical and electromechanical controls, such as high-lift actuation systems, main engine gearbox assemblies and mechanical cables. The segment’s revenues are also derived from stretch forming, die forming, milling, bonding, machining, welding and assembly and fabrication on aircraft wings, fuselages and various structural components. The segment’s operations also manufacture metallic and composite bonded honeycomb assemblies for floor panels, fuselage, wings and flight control surface parts. These products are sold to various aerospace OEMs on a global basis.

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

As of March 31, 2005, the Other segment operations ceased and any residual assets that were not sold were transferred to other Company facilities. The Other segment’s operations, primarily comprised of the industrial gas turbine businesses, manufactured or repaired and overhauled industrial gas turbine components, primarily for OEMs and power generation equipment operators and applied high temperature coatings for both internal and external customers.

Segment operating income is total segment revenue reduced by operating expenses identifiable with that segment. Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Company’s segments.

The Company evaluates performance and allocates resources based on operating income of each reportable segment, rather than at the operating location level. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see Note 2).

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Selected financial information for each reportable segment is as follows:

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During the three months ended June 30, 2005 and 2004, the Company had foreign sales of $44,962 and $34,378, respectively.

9. DISCONTINUED OPERATIONS

Revenues from discontinued operations were $12,903 for the three months ended June 30, 2004. Income from discontinued operations for the three months ended June 30, 2004 was $754, net of income taxes of $388. Interest expense of $148 was allocated to the discontinued operations for the three months ended June 30, 2004. Such amount is included in the income from discontinued operations for the quarter ended June 30, 2004.

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Changes in net sales and segment operating income are discussed within the “Business Segment Performance” section below.

Corporate general and administrative expenses increased by $0.9 million, or 29.2%, to $3.8 million for the quarter ended June 30, 2005 from $3.0 million for the quarter ended June 30, 2004, primarily due to rent expense and other costs associated with idle facilities as well as increased staffing and bonus accruals.

Interest expense and other decreased by $0.1 million, or 2.1%, to $3.2 million for the quarter ended June 30, 2005 compared to $3.3 million for the prior year period. This decrease was due to lower average borrowings outstanding partially offset by increased interest rates on our variable rate debt.

The effective tax rate was 32% for the quarter ended June 30, 2005 and 34% for the quarter ended June 30, 2004. The quarter ended June 30, 2005 effective tax rate of 32% varies from the federal statutory tax rate of 35% primarily due to benefits realized from the research and development tax credit and the Extraterritorial Income (ETI) Exclusion.

The discontinued operations were sold during fiscal 2005. Income from discontinued operations before income taxes was $1.1 million for the quarter ended June 30, 2004. The provision for income taxes for discontinued operations was $0.4 million for the quarter ended June 30, 2004.

Business Segment Performance

Effective March 31, 2005, we have two reportable segments:  Aerospace Systems and Aftermarket Services. The Aerospace Systems segment consists of our operations which manufacture products primarily for the aerospace OEM market. The segment’s operations design and engineer mechanical and electromechanical controls, such as hydraulic systems, main engine gearbox assemblies, accumulators and mechanical control cables.  The segment’s revenues are also derived from stretch forming, die forming, milling, bonding, machining, welding and assembly and fabrication of various structural components used in aircraft wings, fuselages and other significant assemblies. Further, the segment’s operations also manufacture metallic and composite bonded honeycomb assemblies for floor panels, fuselage, wings and flight control surface parts.  These products are sold to various aerospace OEMs on a global basis.

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

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Liquidity and Capital Resources

Our working capital needs are generally funded through cash flows from operations and borrowings under our credit arrangements. During the three months ended June 30, 2005, we generated approximately $1.1 million of cash flows from operating activities, used approximately $10.7 million in investing activities and generated approximately $10.5 million in financing activities.

On July 27, 2005, the Company amended and restated its existing credit agreement (as amended and restated, the “Credit Facility”) with its lenders to reduce the Credit Facility to $250.0 million from $265.0 million, extend the maturity date to July 27, 2010 and amend certain other terms and covenants. The Credit Facility bears interest at either (i) LIBOR plus between 0.75% and 1.75% or (ii) the prime rate (or the Federal Funds rate plus 0.5% if greater) plus between 0.00% and 0.25% or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company’s ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of between 0.175% and 0.375% on the unused portion of the Credit Facility. The Company may allocate up to $30.0 million of the available Credit Facility for the issuance of letters of credit. The Company’s obligations under the Credit Facility are guaranteed by the Company’s subsidiaries. As of June 30, 2005, $216.6 million was available under our Credit Facility. On June 30, 2005, an aggregate amount of approximately $39.8 million was outstanding under the Credit Facility, all of which was accruing interest at LIBOR plus applicable basis points totaling 4.8% per annum. Amounts repaid under the Credit Facility may be reborrowed.

On July 27, 2005, the Company entered into Amendment No. 4 to the Note Purchase Agreement dated as of November 21, 2002. The amendment reaffirms the Company’s covenants under the Note Purchase Agreement.

Capital expenditures were approximately $5.0 million for the three months ended June 30, 2005 primarily for manufacturing machinery and equipment. We funded these expenditures through borrowings under our Credit Facility. We expect capital expenditures to be up to $30.0 million for our fiscal year ending March 31, 2006. The expenditures are expected to be used mainly to expand capacity or replace old equipment at several facilities.

The expected future cash flows for the next five years for long term debt, leases and other obligations are as follows:

(1) Included in the Company’s balance sheet at June 30, 2005.

(2) Includes interest component.

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We believe that cash generated by operations and borrowings under the Credit Facility will be sufficient to meet anticipated cash requirements for our current operations. However, we have a stated policy to grow through acquisition and are continuously evaluating various acquisition opportunities. As a result, we currently are 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 us on terms favorable to us, if at all.

Critical Accounting Policies

The Company’s critical accounting policies are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and notes accompanying the consolidated financial statements that appear in the Annual Report on Form 10-K for the fiscal year ended March 31, 2005. Except as otherwise disclosed in the financial statements and accompanying notes included in this report, there were no material changes subsequent to the filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2005 in the Company’s critical accounting policies or in the assumptions or estimates used to prepare the financial information appearing in this report.

Forward Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our future operations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, and our beliefs concerning future performance and capital requirements based upon current available information. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like “may”, “might”, “will”, “expect”, “anticipate”, “believe”, “potential”, and similar expressions are intended to identify forward looking statements. Actual results could differ materially from our current expectations. For example, 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 us. 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 our business, dependence of certain of our businesses on certain key customers as well as competitive factors relating to the aviation industry. For a more detailed discussion of these and other factors affecting us, see the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2005, filed with the SEC in June 2005.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For information regarding our exposure to certain market risks, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended March 31, 2005. There has been no material change in this information.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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