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

OVERVIEW

We are a major supplier to the aerospace industry and have three operating segments: (i) Triumph Aerostructures Group, whose companies' revenues are derived from the design, manufacture, assembly and integration of both build-to-print and proprietary metallic and composite aerostructures and structural components for the global aerospace original equipment manufacturers, or OEM, market; (ii) Triumph Aerospace Systems Group, whose companies design, engineer and manufacture a wide range of proprietary and build-to-print components, assemblies and systems also for the OEM market and the related aftermarket; and (iii) Triumph Aftermarket Services Group, whose companies serve aircraft fleets, notably commercial airlines, the U.S. military and cargo carriers, through the maintenance, repair and overhaul of aircraft components and accessories manufactured by third parties.

Highlights for the third quarter of the fiscal year ending March 31, 2013 included:
• Net sales for the third quarter of the fiscal year ending March 31, 2013 increased 7.8% over the prior year period to $890.6 million.

• Operating income in the third quarter of fiscal 2013 increased 14.2% over the prior year period to $134.4 million.

• Income from continuing operations for the third quarter of fiscal 2013 increased 14.1% over the prior year period to $75.2 million.

• Backlog as of December 31, 2012 increased 5.4% year over year and 4.1% from the prior fiscal year end to $4.07 billion, and includes expected milestone payments on development contracts. Of our existing backlog of $4.07 billion, we estimate that approximately $1.32 billion will not be shipped by December 31, 2013.

• Income from continuing operations for the third quarter of fiscal 2013 was $1.43 per diluted common share, as compared to $1.27 per diluted share in the prior year period.

• We generated $230.6 million of cash flow from operating activities for the nine months ended December 31, 2012, after $103.8 million in pension contributions, as compared to $143.5 million in the prior year period.

The Budget Control Act of 2011 (the "Budget Act") has two primary parts. The first mandates a $487 billion reduction to previously planned defense spending over the next decade. The second part is a sequester mechanism that would impose an additional $500 billion of cuts on defense funding between the government's fiscal year 2013 (ending September 30) and fiscal year 2021 if Congress does not identify a means to reduce the U.S. deficit by $1.2 trillion. As of February 4, 2013, Congress has not identified these required savings. If Congress does not identify the required reduction, defense spending would likely sustain further cuts. For fiscal year 2013, the President has requested total defense funding of $525 billion, including $168 billion for investment accounts. In accordance with the first part of the Budget Act, the Department of Defense's five-year spending plan submitted with the fiscal year 2013 funding request incorporates $259 billion of cuts when compared with the previous five-year plan. However, the spending plan does not include the impact of sequestration, the second part of the Budget Act. Due to the planned reductions in defense spending under the Budget Act, we expect the declining trend in the overall military end market to continue.
On January 18, 2013, the Company signed a definitive agreement to acquire the pump and engine control systems business of Goodrich Corporation (Goodrich Pump & Engine Controls Systems or GPECS) from United Technologies Corporation. The acquisition is subject to regulatory approvals and other customary closing conditions and is expected to close prior to the Company's fiscal year end. The acquired business, which will operate as Triumph Engine Control Systems, LLC and be included in the Aerospace Systems Group, is expected to add approximately $195,000 in annual revenue and to be immediately accretive to earnings. GPECS is a leading independent aerospace fuel system supplier for the commercial, military, helicopter and business jets market. Located in West Hartford, Connecticut, GPECS's key products and service offerings include electronic engine controls, fuel metering units, main fuel pumps for both the OE and aftermarket/spares end markets. GPECS employs approximately 530 employees exclusively at its West Hartford facility.

RESULTS OF OPERATIONS

The following includes a discussion of our consolidated and business segment results of operations. The Company's diverse structure and customer base do not provide for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variances between the respective periods.

Non-GAAP Financial Measures

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

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

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

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

•           Early retirement incentives may be useful to investors to consider
            because it represents the current period impact of the change in
            defined benefit obligation due to the reduction in future service
            costs. We do not

                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations
                                  (continued)

believe these charges (gains) necessarily reflect the current and ongoing cash
earnings related to our operations.
•           Amortization of acquired contract liabilities may be useful for
            investors to consider because it represents the noncash earnings on
            the fair value of below-market contracts acquired through the
            acquisition of Vought Aircraft Industries, Inc. (Vought). We do not
            believe these earnings necessarily reflect the current and ongoing
            cash earnings related to our operations.


•           Amortization expense may be useful for investors to consider because
            it represents the estimated attrition of our acquired customer base
            and the diminishing value of product rights and licenses. We do not
            believe these charges necessarily reflect the current and ongoing
            cash charges related to our operating cost structure.


•           Depreciation may be useful for investors to consider because it
            generally represents the wear and tear on our property and equipment
            used in our operations. We do not believe these charges necessarily
            reflect the current and ongoing cash charges related to our operating
            cost structure.


•           The amount of interest expense and other we incur may be useful for
            investors to consider and may result in current cash inflows or
            outflows. However, we do not consider the amount of interest expense
            and other to be a representative component of the day-to-day
            operating performance of our business.


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

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

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

                                           Three Months Ended             Nine Months Ended
                                              December 31,                  December 31,
                                           2012           2011           2012           2011
Income from continuing operations      $   75,223     $   65,903     $  231,745     $  175,371
Early retirement incentives                 2,030              -          5,137              -
Amortization of acquired contract
liabilities, net                           (6,219 )       (4,994 )      (19,774 )      (18,504 )
Depreciation and amortization              32,331         30,131         96,144         89,064
Interest expense and other                 16,768         14,543         50,668         58,676
Income tax expense                         42,369         37,194        135,834         97,429
EBITDA                                    162,502        142,777        499,754        402,036
Integration expenses                          250          2,095          2,227          3,699
Adjusted EBITDA                        $  162,752     $  144,872     $  501,981     $  405,735

The following tables show our EBITDA by reportable segment reconciled to our operating income for the indicated periods (in thousands):

                                                        Three Months Ended December 31, 2012
                                                                    Aerospace       Aftermarket       Corporate/
                                    Total       Aerostructures       Systems          Services       Eliminations
Operating income                 $ 134,360     $      117,450     $    20,562     $       9,856     $     (13,508 )
Early retirement incentives          2,030                  -               -                 -             2,030
Amortization of acquired
contract liability                  (6,219 )           (6,219 )             -                 -                 -
Depreciation and amortization       32,331             24,180           4,707             2,282             1,162
EBITDA                           $ 162,502     $      135,411     $    25,269     $      12,138     $     (10,316 )

                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations
                                  (continued)


                                                        Three Months Ended December 31, 2011
                                                                    Aerospace       Aftermarket       Corporate/
                                    Total       Aerostructures       Systems          Services       Eliminations
Operating income                 $ 117,640     $      103,947     $    18,623     $       6,917     $     (11,847 )
Amortization of acquired
contract liability                  (4,994 )           (4,994 )             -                 -                 -
Depreciation and amortization       30,131             22,476           4,296             2,431               928
EBITDA                           $ 142,777     $      121,429     $    22,919     $       9,348     $     (10,919 )



                                                        Nine Months Ended December 31, 2012
                                                                    Aerospace       Aftermarket       Corporate/
                                    Total       Aerostructures       Systems          Services       Eliminations
Operating income                 $ 418,247     $      358,972     $    69,739     $      32,430     $     (42,894 )
Early retirement incentives          5,137                  -               -                 -             5,137
Amortization of acquired
contract liability                 (19,774 )          (19,774 )             -                 -                 -
Depreciation and amortization       96,144             72,133          13,670             6,897             3,444
EBITDA                           $ 499,754     $      411,331     $    83,409     $      39,327     $     (34,313 )



                                                        Nine Months Ended December 31, 2011
                                                                    Aerospace       Aftermarket       Corporate/
                                    Total       Aerostructures       Systems          Services       Eliminations
Operating income                 $ 331,476     $      284,410     $    63,684     $      20,893     $     (37,511 )
Amortization of acquired
contract liability                 (18,504 )          (18,504 )             -                 -                 -
Depreciation and amortization       89,064             66,258          12,963             7,202             2,641
EBITDA                           $ 402,036     $      332,164     $    76,647     $      28,095     $     (34,870 )

The fluctuations from period to period within the amounts of the components of the reconciliations above are discussed further below within Results of Operations.

Quarter ended December 31, 2012 compared to quarter ended December 31, 2011

                              Quarter Ended December 31,
                                 2012              2011
                                (dollars in thousands)
Net sales                  $     890,565       $  825,962
Segment operating income   $     147,868       $  129,487
Corporate expenses               (13,508 )        (11,847 )
Total operating income           134,360          117,640
Interest expense and other        16,768           14,543
Income tax expense                42,369           37,194
Net income                 $      75,223       $   65,903

Net sales increased by $64.6 million or 7.8% to $890.6 million for the quarter ended December 31, 2012 from $826.0 million for the quarter ended December 31, 2011. Organic sales increased $60.8 million, or 7.3%, due to the increases in our customers' production rates on existing programs. The remaining increase is due to net sales from recent acquisitions. Net sales for the quarter ended December 31, 2012 included $8.4 million in total non-recurring revenues, as compared to $24.2 million in non-recurring revenues for the quarter ended December 31, 2011 due to declines in non-recurring work related to the 747 program. The prior year period was negatively impacted by Boeing's delay with the 747.

Cost of sales increased by $45.2 million, or 7.3%, to $663.8 million for the quarter ended December 31, 2012 from $618.6 million for the quarter ended December 31, 2011. This increase was primarily due to increased sales. Gross margin for the quarter ended December 31, 2012 was 25.5% as compared to 25.1% for the quarter ended December 31, 2011. This change was impacted by improved execution, increased realization from synergies from the acquisition of Vought, changes in the overall sales mix and lower pension benefit expenses, offset in part by unfavorable cumulative catch-up adjustments noted below.

Segment operating income increased by $18.4 million, or 14.2%, to $147.9 million for the quarter ended December 31, 2012 from $129.5 million for the quarter ended December 31, 2011. The segment operating income increase was a direct result of the sales volume increases and continued realization from synergies from the acquisition of Vought, offset by net unfavorable cumulative catch-up adjustments on long-term contracts ($5.5 million), increased legal fees ($0.1 million) and production delay and related costs due to Hurricane Sandy ($0.9 million). The cumulative catch-up adjustments to operating income included gross favorable adjustments of $6.8 million and gross unfavorable adjustments of $12.2 million. The cumulative catch-up adjustments for the quarter ended December 31, 2012 were due to provisions for technical problems on production lots on early-stage programs and revisions in our mix of various material and labor costs related to our efforts to gain efficiencies through expansion of our in-sourcing capabilities. Segment operating income for the quarter ended December 31, 2011 included net favorable cumulative catch-up adjustments of $8.4 million.

Corporate expenses increased by $1.7 million, or 14.0%, to $13.5 million for the quarter ended December 31, 2012 from $11.8 million for the quarter ended December 31, 2011. This increase was due to $2.0 million special termination benefit for an early retirement incentive offered to a portion of our largest union represented employee pension plan participants and $0.5 million additional equity compensation, offset by improved efficiencies in our Mexican facility.

Interest expense and other increased by $2.2 million, or 15.3%, to $16.8 million for the quarter ended December 31, 2012 compared to $14.5 million for the prior year period. Included in interest expense and other for the quarter ended December 31, 2011 was a $2.9 million favorable fair value adjustment due to the reduction of a contingent earnout liability associated with a prior acquisition due to reductions in the projected earnings over the respective earnout periods.

The effective income tax rate for the quarter ended December 31, 2012 was 36.0% compared to 36.1% for the quarter ended December 31, 2011. For the three months ended December 31, 2012, the income tax provision included $2.2 million of tax expense due to the recapture of domestic production deductions taken in earlier years associated with a refund claim of $25.2 million filed in the second quarter. The refund claim receivable is included in "Other, net" in the consolidated balance sheet as of December 31, 2012. For the fiscal year ending March 31, 2013, the Company expects its effective tax rate to be approximately 35.5%, reflecting the retroactive reinstatement of the research and experimentation tax credit as of January 2013.

Business Segment Performance

We report our financial performance based on the following three reportable segments: the Aerostructures Group, the Aerospace Systems Group and the Aftermarket Services Group. The results of operations among our operating segments vary due to differences in competitors, customers, extent of proprietary deliverables and performance. For example, our Aerostructures segment generally includes long-term sole-source or preferred supplier contracts and the success of these programs provides a strong foundation for our business and positions us well for future growth on new programs and new derivatives. This compares to our Aerospace Systems segment which generally includes proprietary products and/or arrangements where we become the primary source or one of a few primary sources to our customers, where our unique manufacturing capabilities command a higher margin. Also, OEMs are increasingly focusing on assembly activities while outsourcing more manufacturing and repair to third parties, and as a result, are less of a competitive force than in previous years. In contrast, our Aftermarket Services segment provides MRO services on components and accessories manufactured by third parties, with more diverse competition, including airlines, OEMs and other third-party service providers. In addition, variability in the timing and extent of customer requests performed in the Aftermarket Services segment can provide for greater volatility and less predictability in revenue and earnings than that experienced in the Aerostructures and Aerospace Systems segments.
The Aerostructures segment consists of the Company's operations that manufacture products primarily for the aerospace OEM market. The Aerostructures segment's revenues are derived from the design, manufacture, assembly and integration of both build-to-print and proprietary metallic and composite aerostructures and structural components, including aircraft wings,

fuselage sections, tail assemblies, engine nacelles, flight control surfaces as well as helicopter cabins. Further, the segment's operations also design and manufacture composite assemblies for floor panels and environmental control system ducts. These products are sold to various aerospace OEMs on a global basis.
The Aerospace Systems segment consists of the Company's operations that also manufacture products primarily for the aerospace OEM market. The segment's operations design a wide range of proprietary and build-to-print components and engineer mechanical and electromechanical controls, such as hydraulic systems, main engine gearbox assemblies, accumulators, mechanical control cables and non-structural cockpit components. These products are sold to various aerospace OEMs on a global basis and the related aftermarket.
The Aftermarket Services segment consists of the Company's operations that provide maintenance, repair and overhaul services to both commercial and military markets on components and accessories manufactured by third parties. Maintenance, repair and overhaul revenues are derived from services on auxiliary power units, airframe and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic drive units. In addition, the segment's operations repair and overhaul thrust reversers, nacelle components and flight control surfaces. The segment's operations also perform repair and overhaul services and supply spare parts for various types of cockpit instruments and gauges for a broad range of commercial airlines on a worldwide basis.

We currently generate a majority of our revenue from clients in the commercial aerospace industry, the military, the business jet industry and the regional airline industry. Our growth and financial results are largely dependent on continued demand for our products and services from clients in these industries. If any of these industries experiences a downturn, our clients in these sectors may conduct less business with us. The following table summarizes our net sales by end market by business segment. The loss of one or more of our major customers or an economic downturn in the commercial airline or the military and defense markets could have a material adverse effect on our business.

                                       Three Months Ended December 31,
                                           2012                2011
Aerostructures
Commercial aerospace                         45.4 %               39.1 %
Military                                     18.6 %               23.8 %
Business Jets                                10.9 %               11.6 %
. . .