0000950170-24-027616.txt : 20240307
0000950170-24-027616.hdr.sgml : 20240307
20240307090757
ACCESSION NUMBER: 0000950170-24-027616
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 20240301
ITEM INFORMATION: Completion of Acquisition or Disposition of Assets
ITEM INFORMATION: Regulation FD Disclosure
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20240307
DATE AS OF CHANGE: 20240307
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TRIUMPH GROUP INC
CENTRAL INDEX KEY: 0001021162
STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT & PARTS [3720]
ORGANIZATION NAME: 04 Manufacturing
IRS NUMBER: 510347963
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-12235
FILM NUMBER: 24728327
BUSINESS ADDRESS:
STREET 1: 555 E LANCASTER AVENUE
STREET 2: SUITE 400
CITY: RADNOR
STATE: PA
ZIP: 19087
BUSINESS PHONE: (610) 251-1000
MAIL ADDRESS:
STREET 1: 555 E LANCASTER AVENUE
STREET 2: SUITE 400
CITY: RADNOR
STATE: PA
ZIP: 19087
FORMER COMPANY:
FORMER CONFORMED NAME: TRIUMPH GROUP INC /
DATE OF NAME CHANGE: 19960819
8-K
1
tgi-20240301.htm
8-K
8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 1, 2024
TRIUMPH GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-12235
51-0347963
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer Identification
No.)
555 E Lancaster Avenue, Suite 400
Radnor, Pennsylvania
19087
(Address of principal executive offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (610)251-1000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.001 per share
TGI
New York Stock Exchange
Purchase Rights
N/A
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01 Completion of Acquisition or Disposition of Assets.
The closing of the transactions (the “Transaction”) under the Security and Asset Purchase Agreement, dated December 21, 2023 (the “Agreement”), by and between Triumph Group, Inc., a Delaware corporation (the “Company”), Triumph Aftermarket Services Group, LLC, a Delaware limited liability company, Triumph Group Acquisition Corp., a Delaware corporation, Triumph Group Acquisition Holdings, Inc., a Delaware corporation, and The Triumph Group Operations, Inc., a Delaware corporation (collectively, the “Sellers”), and AAR Corp., a Delaware corporation (“Buyer”), occurred on March 1, 2024. In connection therewith, the Sellers sold the Product Support business to Buyer for $725 million in cash, subject to customary adjustments set forth in the Agreement.
The foregoing description of the Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, a copy of which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2023, and the terms of which are incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On March 1, 2024, the Company issued a press release announcing the closing of the Transaction. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 7.01, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Unaudited pro forma consolidated financial information of Triumph Group, Inc., giving effect to the Transaction, is attached hereto as Exhibit 99.2.
Cover page interactive data file (embedded within the Inline XBRL document).
* Schedules (as similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 7, 2024
TRIUMPH GROUP, INC.
By: /s/ Jennifer H. Allen______________________
Jennifer H. Allen
Chief Administrative Officer and Senior Vice President, General Counsel and Secretary
EX-99.1
2
tgi-ex99_1.htm
EX-99.1
EX-99.1
Exhibit 99.1
NEWS RELEASE
Contact:
Thomas A. Quigley, III
VP, Investor Relations, Mergers & Acquisition and Treasurer
Phone (610) 251-1000
tquigley@triumphgroup.com
TRIUMPH COMPLETES SALE OF PRODUCT SUPPORT BUSINESS TO AAR
RADNOR, Pa. – March 1, 2024 – Triumph Group, Inc. (NYSE: TGI) ("TRIUMPH" or the “Company”) announced today that it has completed the sale of its Product Support business to AAR CORP. (NYSE: AIR). The transaction is valued at $725 million, and the net after-tax proceeds are expected to be approximately $700 million, which will primarily be used for debt reduction.
The Product Support business is an industry leader in the Maintenance, Repair and Overhaul (MRO) of structures and airframe and engine accessories, servicing both the commercial and military aftermarkets across five primary locations.
“We are pleased to complete this transformative divestiture which delivers immediate and substantial value to TRIUMPH and our stakeholders. This transaction enables TRIUMPH to greatly accelerate our deleveraging progress while placing our third-party Product Support business with a market-leading MRO company that has a proven track record of customer support” said Dan Crowley, TRIUMPH’s chairman, president, and chief executive officer. “By strengthening our balance sheet and focusing on our OEM component, spares and IP-based aftermarket business, TRIUMPH will further improve its capacity to win and expects to profitably grow in the expanding markets we serve.”
Upon completion of the transaction, TRIUMPH will advance in aerospace and its adjacent markets as a value-added and IP-based business. The Systems & Support segment will consist of three pure play engineered systems components and aftermarket companies focused on Actuation Products and Services, Systems Electronics and Controls, and Geared Solutions. Together with the Interiors segment, TRIUMPH now has 21 sites and approximately 4,500 employees, and over 60% of the Company’s products and services will be based on TRIUMPH intellectual property and 90% supplied on a sole-sourced basis.
About TRIUMPH
TRIUMPH, headquartered in Radnor, Pennsylvania, designs, develops, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems and components. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
More information about TRIUMPH can be found on the Company’s website at triumphgroup.com.
Forward Looking Statements
Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies and organizational restructurings and our evaluation of potential adjustments to reported amounts, as described above. Forward-looking statements may also be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,’’ “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “seek,” “should,” “target,” “will,” or similar expressions and the negatives of those terms. All forward-looking statements involve risks and uncertainties which could affect the Company’s actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Such risks and uncertainties include, without limitation the inability to increase the Company’s profitability and growth, adequately deleverage its business, strengthen its balance sheet and win new business. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group’s reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
EX-99.2
3
tgi-ex99_2.htm
EX-99.2
EX-99.2
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
On March 1, 2024, Triumph Group, Inc. ("Triumph" or the “Company”) completed its previously announced sale of its maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support” or "TPS") to AAR CORP. (“AAR”) (the "TPS Divestiture"), pursuant to a securities and asset purchase agreement entered into on December 21, 2023, (as amended or supplemented through the date hereof) (the “Divestiture Agreement”), for a purchase price of $725 million in cash, subject to transaction adjustments in accordance with the Divestiture Agreement. For purposes of the unaudited pro forma condensed balance sheet, the cash proceeds received by the Company at closing, which are net of estimated closing adjustments and transaction cost funding, have been reflected as approximately $701 million. The divestiture of Product Support represents a strategic shift and therefore, beginning with the Company's quarterly report on Form-10-Q for the period ended December 31, 2023, Product Support was reflected as discontinued operations, including prior periods.
On February 6, 2024, Triumph issued (i) a notice of conditional redemption in respect of up to all $435.6 million of its outstanding 7.750% Senior Notes due 2025 (the “2025 Notes”) to be redeemed on March 6, 2024 (the "2025 Notes Redemption) and (ii) a notice of conditional redemption in respect of $120.0 million of its 9.000% Senior Secured First Lien Notes due 2028 (the “First Lien Notes”) to be redeemed on March 4, 2024 (the "First Lien Notes Redemption") (together, the "Senior Notes Redemptions"). The Senior Notes Redemptions were conditioned upon the consummation of the TPS Divestiture and therefore, on March 1, 2024, the Company concluded that the redemptions described on its February 6, 2024, Form 8-K were probable and the disclosure of related pro forma financial information would be material to investors.
Unaudited Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements of Triumph were derived from its historical consolidated financial statements and are being presented to give effect to the TPS Divestiture and the Senior Notes Redemptions (together, the "Transactions"). The unaudited pro forma condensed consolidated balance sheet as of December 31, 2023, gives effect to the Transactions as if they had occurred on that date. As the TPS Divestiture was reflected as a component of discontinued operations within the condensed consolidated statement of operations in Triumph's Quarterly Report on Form 10-Q for December 31, 2023, the unaudited pro forma consolidated statements of operations for the nine months ended December 31, 2023, only reflects pro forma transaction adjustments for the Senior Notes Redemptions.
The unaudited pro forma consolidated statements of operations for the years ended March 31, 2023, 2022 and 2021 give effect to the pro forma discontinued operations presentation of the TPS Divestiture as if the TPS Divestiture had occurred on April 1, 2020, and in accordance with Financial Accounting Standards Board Accounting Standards Codification 205, “Presentation of Financial Statements” (“ASC 205”) for those historical periods.
The unaudited pro forma consolidated statements of operations for the year ended March 31, 2023, give effect to the pro forma Senior Notes Redemptions as if they had occurred on April 1, 2022, after adjusting for the effects of the TPS Divestiture as disclosed further in Note 2 below.
The unaudited pro forma consolidated financial statements should be read in conjunction with: (i) the accompanying notes to the unaudited pro forma condensed consolidated financial statements, (ii) Triumph's audited consolidated financial statements, the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended March 31, 2023; and (iii) Triumph's unaudited condensed consolidated financial statements, the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2023.
The unaudited pro forma consolidated financial statements, prepared in accordance with Securities and Exchange Commission (“SEC”) Regulation S-X Article 11, Pro Forma Financial Information, have been prepared based upon the best available information and management estimates and are subject to assumptions and adjustments described in the accompanying notes to these financial statements, are for informational purposes only, and are not intended to be a complete presentation of the Company's operating results or financial position had the TPS Divestiture occurred as of and for the periods indicated, nor do they purport to project the results of operations or financial position for any future period or as of any future date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity.
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheets
as of December 31, 2023
(in thousands)
As Reported
TPS Divestiture
Senior Notes Redemptions
Total Pro Forma
ASSETS
Note 1
Note 2
Current assets:
Cash and cash equivalents
$
162,899
$
701,214
(a)
$
(575,202
)
(c)
$
288,911
Trade and other receivables, net
127,494
—
—
127,494
Contract assets
89,406
—
—
89,406
Inventory, net
352,188
—
—
352,188
Prepaid expenses and other current assets
16,578
—
—
16,578
Assets held for sale - current
180,642
(180,642
)
(a)
—
—
Total current assets
929,207
520,572
(575,202
)
874,577
Property and equipment, net
141,583
—
—
141,583
Goodwill
511,571
—
—
511,571
Intangible assets, net
67,308
—
—
67,308
Other, net
26,913
—
—
26,913
Total assets
$
1,676,582
$
520,572
$
(575,202
)
$
1,621,952
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt
$
3,342
$
(141
)
(b)
—
3,201
Accounts payable
133,550
—
—
133,550
Contract liabilities
40,182
—
—
40,182
Accrued expenses
140,092
(6,835
)
(b)
(15,981
)
(c)
117,276
Liabilities related to assets held for sale - current
32,216
(32,216
)
(a)
—
—
Total current liabilities
349,382
(39,192
)
(15,981
)
294,209
Long-term debt, less current portion
1,627,810
(193
)
(b)
(555,621
)
(c)
1,071,996
Accrued pension and other postretirement benefits
301,661
—
—
301,661
Deferred income taxes
7,356
—
—
7,356
Other noncurrent liabilities
60,653
—
—
60,653
Stockholders' deficit:
Common stock
77
—
—
77
Capital in excess of par value
1,107,241
—
—
1,107,241
Treasury stock, at cost
(5
)
—
—
(5
)
Accumulated other comprehensive loss
(534,676
)
—
—
(534,676
)
Accumulated deficit
(1,242,917
)
559,957
(a)
(3,600
)
(c)
(686,560
)
Total stockholders' deficit
(670,280
)
559,957
(3,600
)
(113,923
)
Total liabilities and stockholders' deficit
$
1,676,582
$
520,572
$
(575,202
)
$
1,621,952
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Nine Months Ended December 31, 2023
(in thousands, except per share amounts)
As Reported
Senior Notes Redemptions
Total Pro Forma
Net sales
$
833,456
$
—
$
833,456
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
618,742
—
618,742
Selling, general and administrative
135,479
—
135,479
Depreciation and amortization
22,062
—
22,062
Legal judgment loss
1,338
—
1,338
Restructuring
1,985
—
1,985
Loss on sale of assets and businesses
12,208
—
12,208
791,814
—
791,814
Operating income
41,642
—
41,642
Non-service defined benefit income
(2,460
)
—
(2,460
)
Debt modification and extinguishment (gain) loss
(5,125
)
9,691
(d)
4,566
Warrant remeasurement gain, net
(8,545
)
—
(8,545
)
Interest expense and other, net
94,354
(15,488
)
(d)
78,866
Loss from continuing operations before income taxes
(36,582
)
5,797
(30,785
)
Income tax expense
3,348
—
(g)
3,348
Net loss
$
(39,930
)
$
5,797
$
(34,133
)
Loss per share - continuing operations—basic
$
(0.55
)
$
(0.47
)
Weighted average common shares outstanding—basic
73,200
73,200
Loss per share - continuing operations—diluted
$
(0.55
)
$
(0.47
)
Weighted average common shares outstanding—diluted
73,200
73,200
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2023
(in thousands, except per share amounts)
As Reported
(a) TPS Divestiture
Senior Notes Redemptions
Total Pro Forma
Note 1
Note 2
Net sales
$
1,379,128
$
(248,566
)
—
$
1,130,562
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
991,599
(181,717
)
—
809,882
Selling, general and administrative
210,430
(19,342
)
—
191,088
Depreciation and amortization
35,581
(3,322
)
—
32,259
Restructuring
4,949
(1,777
)
—
3,172
Gain on sale of assets and businesses
(101,523
)
—
—
(101,523
)
1,141,036
(206,158
)
—
934,878
Operating income
238,092
(42,408
)
—
195,684
Non-service defined benefit income
(19,664
)
—
—
(19,664
)
Debt modification and extinguishment loss
33,044
—
7,337
(e)
40,381
Warrant remeasurement gain, net
(8,683
)
—
—
(8,683
)
Interest expense and other, net
137,714
(22,504
)
(23,059
)
(e)
92,151
Income from continuing operations before income taxes
95,681
(19,904
)
15,722
91,499
Income tax expense
6,088
(2,442
)
—
(g)
3,646
Net income
$
89,593
$
(17,462
)
$
15,722
$
87,853
Earnings per share - continuing operations—basic
$
1.38
$
1.35
Weighted average common shares outstanding—basic
65,021
65,021
Earnings per share - continuing operations—diluted
$
1.20
(f)
$
1.17
Weighted average common shares outstanding—diluted
71,721
71,721
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2022
(in thousands, except per share amounts)
As Reported
(a) TPS Divestiture
Total Pro Forma
Net sales
$
1,459,942
$
(197,238
)
$
1,262,704
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
1,073,063
(144,426
)
928,637
Selling, general and administrative
202,070
(17,815
)
184,255
Depreciation and amortization
49,635
(4,126
)
45,509
Impairment of long-lived assets
2,308
—
2,308
Restructuring
19,295
(74
)
19,221
Loss on sale of assets and businesses
9,294
—
9,294
1,355,665
(166,441
)
1,189,224
Operating income
104,277
(30,797
)
73,480
Non-service defined benefit income
(5,373
)
—
(5,373
)
Debt modification and extinguishment loss
11,624
—
11,624
Interest expense and other, net
135,861
(22,781
)
113,080
Loss from continuing operations before income taxes
(37,835
)
(8,016
)
(45,851
)
Income tax expense
4,923
(110
)
4,813
Net loss
$
(42,758
)
$
(7,906
)
$
(50,664
)
Loss per share - continuing operations—basic
$
(0.66
)
$
(0.79
)
Weighted average common shares outstanding—basic
64,538
64,538
Loss per share - continuing operations—diluted
$
(0.66
)
$
(0.79
)
Weighted average common shares outstanding—diluted
64,538
64,538
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2021
(in thousands, except per share amounts)
As Reported
(a) TPS Divestiture
Total Pro Forma
Net sales
$
1,869,719
$
(171,278
)
$
1,698,441
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)
1,476,266
(153,896
)
1,322,370
Selling, general and administrative
215,962
(18,787
)
197,175
Depreciation and amortization
93,334
(4,633
)
88,701
Impairment of long-lived assets
252,382
—
252,382
Restructuring
53,224
—
53,224
Loss on sale of assets and businesses
104,702
—
104,702
2,195,870
(177,316
)
2,018,554
Operating loss
(326,151
)
6,038
(320,113
)
Non-service defined benefit income
(49,519
)
—
(49,519
)
Interest expense and other, net
171,397
(26,226
)
145,171
Loss from continuing operations before income taxes
(448,029
)
32,264
(415,765
)
Income tax expense
2,881
108
2,989
Net loss
$
(450,910
)
$
32,156
$
(418,754
)
Loss per share - continuing operations—basic
$
(8.55
)
$
(7.94
)
Weighted average common shares outstanding—basic
52,739
52,739
Loss per share - continuing operations—diluted
$
(8.55
)
$
(7.94
)
Weighted average common shares outstanding—diluted
52,739
52,739
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following items resulted in adjustments in the unaudited pro forma condensed consolidated financial statements.
Transaction Accounting Adjustments:
Note 1
(a)
Reflects the removal of the Product Support business, including the associated assets, liabilities, equity and results of operations for the periods presented consistent with the principles under ASC 205-20, Discontinued Operations and the Company's related accounting policies as disclosed in the Company's Quarterly Report on Form 10-Q for December 31, 2023. The cash and cash equivalents represent the cash consideration received at closing from the TPS Divestiture, net of estimated closing adjustments and transaction cost funding. This amount is preliminary and may change in the future as the closing adjustments are finalized.
(b)
Reflects the use of a portion of the cash consideration to settle certain transaction costs and finance lease obligations accrued as of December 31, 2023.
Note 2
(c)
Reflects the use of approximately $575.2 million in cash to redeem approximately $555.6 million in principal as disclosed above, plus accrued interest of approximately $16.0 million and a premium on redemption of the First Lien Notes of approximately $3.6 million.
(d)
Reflects approximately $9.7 million in debt extinguishment losses and approximately $15.5 million in reduced interest expense that would have been avoided had the Senior Notes Redemption occurred on April 1, 2023. The $15.5 million of reduced interest expense is in addition to approximately $17.9 million in reduced interest expense that was allocated to discontinued operations in the Company's condensed consolidated statement of operations included on Form 10-Q for the nine months ended December 31, 2023.
(e)
The First Lien Notes were issued on March 14, 2023, including approximately $20.0 million in deferred debt issuance costs. The Company concluded that presenting pro forma adjustments for the First Lien Notes redemption would not provide investors with clear, understandable information about the effect of the Transactions because of the timing of the First Lien Notes issuance. Instead, the Company considered that, had the TPS Divestiture occurred on April 1, 2022, under the terms of the indenture of its then outstanding 8.875% Senior Secured First Lien Notes due June 1, 2024 (the "2024 First Lien Notes"), approximately $213.2 million of the sale proceeds would have been required to repay the 2024 First Lien Notes at a premium of 106.656% (the "2024 First Lien Notes Redemption"). As a result, only $342.5 million would remain available under the Senior Notes Redemptions described above to redeem the 2025 Notes (the "Residual 2025 Notes Redemption"). The effect of the assumptions made above results in the pro forma adjustments reflecting approximately $4.7 million in incremental loss on extinguishment principally on the increase in the premium of 2024 First Lien Notes redemptions of 106.656% as compared with the 104.438% premium that was recognized in the year ended March 31, 2023, when the 2024 First Lien Notes were redeemed in March 2023, and approximately $23.1 million in reduced interest expense had the 2024 First Lien Notes Redemption and the Residual 2025 Notes Redemption occurred on April 1, 2022. The $23.1 million of reduced interest expense is in addition to approximately $21.6 million in reduced interest expense that was allocated to discontinued operations as a result of the application of ASC 205-20, Discontinued operations and the Company's related accounting policies as described in Note 1 (a) above.
(f)
As disclosed in the Company's Annual Report on Form 10-K for the Year Ended March 31, 2023, the calculation of diluted earnings per share reflects the effect of all potentially dilutive securities (principally outstanding warrants and outstanding restricted stock units). The warrants outstanding in the year ended March 31, 2023, permitted the tendering of certain of the Company's long-term debt in payment of the exercise price. In computing diluted earnings per share, the Company applies the if-converted method to the warrants and such warrants are assumed to be exercised and the debt redeemed unless tendering cash would be more advantageous to the warrant holder. Interest (net of tax) on any Designated Notes assumed to be tendered is added back as an adjustment to the numerator. The numerator also is adjusted for any nondiscretionary adjustments based on income (net of tax) including, for example, warrant remeasurement gains recognized in the period. If cash exercise is more advantageous, the Company applies the treasury stock method to the warrants when calculating diluted EPS. In the year ended March 31, 2023, net income was reduced by approximately $3.6 million as a result of warrants related adjustments under the if-converted method. There were no warrants outstanding in the years ended March 31, 2022 and 2021.
(g)
Income tax adjustments have not been computed on the basis of statutory rates. Adjustments have been computed based on the Company's tax profile, including net operating losses, tax holidays, and estimates of effective tax rate. The Company believes that this method presents a tax adjustment that more closely