AAR CORP

Previous report

We may not realize the anticipated benefits from our acquisition of the Product Support Business from Triumph Group.

Previous report

Our acquisition of the Product Support Business from Triumph Group (the “Acquisition”) involves integrating the Product Support Business into our Company, both of which previously operated independent of each other. The success of the Product Support Business will depend, in part, on our ability to realize the anticipated benefits from successfully combining our business and the Product Support Business. We are devoting substantial management attention and resources to integrating our and the Product Support Business’s business practices so that we can fully realize the anticipated benefits of the Acquisition, all of which may divert attention of management from our existing business. Nonetheless, the business and assets acquired may not be successful or continue to grow at the same rate as when operated independently or may require greater resources and investments than originally anticipated. The Acquisition could also result in the assumption of unknown or contingent liabilities, and, because the Product Support Business operates in the same sector that we do, the Acquisition could also exacerbate a number of risks that currently apply to us by increasing our exposure to sector-specific trends.

Previous report

Potential difficulties we may encounter include, but are not limited to, the following:

Previous report

Based on our preliminary purchase accounting estimates, a significant portion of the purchase price for the Acquisition will be allocated to goodwill and intangible assets. We must test goodwill for possible impairment on at least an annual basis and must evaluate amortizable intangible assets for impairment if there are indicators of a possible impairment. If the Acquisition does not yield expected returns, we may be required to record impairment losses, which could materially adversely affect our reported results.

Previous report

Any of these risks could adversely affect our ability to maintain relationships with customers, vendors, employees and other commercial relationships or adversely affect our or the Product Support Business’s future operational results. As a result, the anticipated benefits of the Acquisition may not be realized at all or may take longer to realize or cost more than expected, which could adversely affect our business, financial condition, results of operations and growth prospects. The indebtedness incurred to finance the Acquisition may adversely affect our ability to operate our business, remain in compliance with debt covenants, or react to changes in our business or the industry in which we operate. In addition, changes in laws and regulations affecting the Triumph Group Product Support Business could adversely impact our business, financial condition, results of operations and growth prospects.

Previous report

We expect to incur material expenses and have incurred additional indebtedness related to the Acquisition.

Previous report

We expect to incur material expenses in connection with integrating the business and operations of the Product Support Business. While we have assumed that a certain level of transaction and integration expenses will be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. We also incurred additional indebtedness in order to fund the Acquisition, which increases our debt service obligations and the risk of a downgrade of our credit ratings by credit agencies. We cannot assure you that these additional expenses and indebtedness will not have an adverse effect on us or our results of operations.