UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ~~for the quarterly period ended June 29, 2002.~~

oFor ~~Transition~~the ~~Report~~quarterly ~~pursuant~~period toended ~~Section~~June 1326, or2004. ~~15(d) of the Securities Exchange Act of 1934~~

¨ ~~For~~Transition ~~the~~Report ~~transition~~pursuant ~~period~~to ~~from~~Section ~~__________________~~13 toor ~~_________________~~ 15(d) of the Securities Exchange Act of 1934

~~Commission~~For ~~File~~the ~~Number 333-71397~~ transition period from to

~~TransDigm~~Commission ~~Inc.~~File ~~(Exact~~Number ~~name~~333-108340 ofand ~~registrant~~333-108340-06 ~~as specified in its charter) TransDigm Holding Company (Exact name of registrant as specified in its charter)~~

~~Delaware~~TransDigm ~~(State~~Inc. ~~or other Jurisdiction of incorporation or organization) Delaware (State or other Jurisdiction of incorporation or organization)~~

~~34-1750032~~ (~~I.R.S.~~Exact ~~Employer~~name ~~Identification~~of ~~No.)~~registrant ~~13-3733378~~as ~~(I.R.S.~~specified ~~Employer~~in ~~Identification~~its ~~No.~~charter)

~~26380~~TransDigm ~~Curtiss~~Holding ~~Wright~~Company ~~Parkway, Richmond Heights, Ohio (Address of principal executive offices) 44143 (Zip Code)~~

(~~216)~~Exact ~~289-4939 (Registrants’~~name ~~telephone~~of ~~number,~~registrant ~~including~~as ~~area~~specified ~~code~~in its charter)


Delaware		Delaware
(State or other Jurisdiction of incorporation or organization)		(State or other Jurisdiction of incorporation or organization)

34-1750032		13-3733378
(I.R.S. Employer Identification No.)		(I.R.S. Employer Identification No.)


1301 East 9^th Street, Suite 3710, Cleveland, Ohio		44114
(Address of principal executive offices)		(Zip Code)

(216) 289-4939

(Registrants’ telephone number, including area code)

26380 Curtiss Wright Parkway, Richmond Heights, Ohio 44143

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether ~~the~~each ~~registrant~~of the co-registrants (1) has filed all reports required 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~~co-registrants was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.~~Yes~~ YES x NO ¨ ~~No o~~

Indicate ~~the~~by ~~number~~check ofmark ~~shares~~whether ~~outstanding~~the ofco-registrants ~~each~~are ofaccelerated ~~the~~filers ~~issuer’s~~(as ~~classes~~defined ofin ~~common~~Rule ~~stock,~~12b-2 as of the ~~latest~~Exchange ~~practicable date~~Act). YES ¨ NO x

~~Common~~The ~~Stock~~number ~~(Voting)~~of shares outstanding of TransDigm ~~Holding~~Inc.’s ~~Company~~common stock, par value $0.01 ~~Par~~per ~~Value~~share, ~~(Class)~~was ~~119,789~~100 ~~(Outstanding~~as atof June 2926, ~~2002)~~2004.

~~Class~~The Anumber ~~Common~~of ~~Stock~~shares ~~(Non-Voting)~~outstanding of TransDigm Holding Company’s common stock, par value $0.01 ~~Par~~per ~~Value~~share, ~~(Class)~~was ~~–0–~~100 ~~(Outstanding~~as atof June 2926, ~~2002)~~2004.

All of the outstanding capital stock of TransDigm Inc. is held by TransDigm Holding Company.

INDEX

		~~Page~~	Page
PART I:	FINANCIAL INFORMATION
Part I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Consolidated Balance Sheets – June 29, 2002 and September 30, 2001	1
	Condensed Consolidated Balance Sheets – June 26, 2004 and September 30, 2003		1
	Condensed Consolidated Statements of Income – Thirteen and Thirty-Nine Week Periods Ended June 29, 2002 and June 30, 2001	2
	Condensed Consolidated Statements of Income – Thirteen and Thirty-Nine Week Periods Ended June 26, 2004 and June 28, 2003		2
	Condensed Consolidated Statement of Changes in Stockholders’ Deficiency – Thirty-Nine Week Period Ended June 29, 2002	3
	Condensed Consolidated Statement of Changes in Stockholders’ Equity – Thirty-Nine Week Period Ended June 26, 2004		3
	Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended June 29, 2002 and June 30, 2001	4
	Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended June 26, 2004 and June 28, 2003		4
	Notes to Condensed Consolidated Financial Statements	5	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14	19
Item 3	Quantitative and Qualitative Disclosure About Market Risk	28	30
PART II:	OTHER INFORMATION
Item 4	Controls and Procedures		30
Item 6	Exhibits and Reports on Form 8-K	29
Part II	OTHER INFORMATION
Item 6	Exhibits and Reports on Form 8-K		31
SIGNATURES			32

SIGNATURES 30

PART ~~TRANSDIGM~~I: ~~HOLDING~~FINANCIAL ~~COMPANY~~INFORMATION

~~CONDENSED~~ITEM ~~CONSOLIDATED~~1 ~~BALANCE SHEETS (In Thousands of Dollars) (Unaudited)~~

	June 29, 2002			September 30, 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	33,017		$	11,221
Accounts receivable, net		35,441			40,215
Inventories (Note 3)		50,201			47,872
Deferred income taxes		9,749			9,749
Prepaid expenses and other		779			447
Total current assets		129,187			109,504
PROPERTY, PLANT AND EQUIPMENT - Net		39,506			42,095
INTANGIBLE ASSETS - Net		199,226			203,858
DEBT ISSUE COSTS - Net		11,922			12,494
DEFERRED INCOME TAXES AND OTHER		4,949			4,947
TOTAL	$	384,790		$	372,898
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
Current portion of long-term liabilities	$	6,577		$	15,822
Accounts payable		8,577			9,181
Accrued liabilities		26,504			28,829
Total current liabilities		41,658			53,832
LONG-TERM DEBT - Less current portion		404,602			399,587
OTHER NON-CURRENT LIABILITIES		6,257			8,033
Total liabilities		452,517			461,452
CUMULATIVE REDEEMABLE PREFERRED STOCK		15,359			13,222
REDEEMABLE COMMON STOCK (Note 5)		1,679			1,612
STOCKHOLDERS’ DEFICIENCY:
Common stock		102,080			102,080
Warrants		1,934			1,934
Retained deficit		(188,278	)		(206,901	)
Accumulated other comprehensive loss		(501	)		(501	)
Total stockholders’ deficiency		(84,765	)		(103,388	)
TOTAL	$	384,790		$	372,898

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts ~~See~~in ~~notes~~Thousands) ~~to consolidated financial statements.~~

(Unaudited)


	June 26, 2004			September 30, 2003
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	55,407		$	18,902
Marketable securities		50,262			—
Trade accounts receivable, net		42,394			36,709
Income taxes receivable		—			36,703
Inventories, net		60,648			77,386
Deferred income taxes		10,547			8,177
Prepaid expenses and other		1,452			3,850

Total current assets		220,710			181,727

PROPERTY, PLANT AND EQUIPMENT - Net		57,892			60,342

GOODWILL		805,378			807,714

OTHER INTANGIBLE ASSETS - Net		226,097			235,839

DEBT ISSUE COSTS - Net		24,245			28,771

OTHER		717			627

TOTAL ASSETS	$	1,335,039		$	1,315,020

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Current portion of long-term liabilities	$	4,443		$	7,634
Accounts payable		9,490			11,221
Accrued liabilities		32,977			29,625

Total current liabilities		46,910			48,480

LONG-TERM DEBT - Less current portion		691,320			692,050

DEFERRED INCOME TAXES		64,177			64,364

OTHER NON-CURRENT LIABILITIES		3,034			4,917

Total liabilities		805,441			809,811

STOCKHOLDERS’ EQUITY:
Common stock		516,084			508,100
Retained earnings / (deficit)		13,680			(2,788	)
Accumulated other comprehensive loss		(166	)		(103	)

Total stockholders’ equity		529,598			505,209

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,335,039		$	1,315,020

See notes to condensed consolidated financial statements.

-1-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME ~~FOR~~ ~~THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED JUNE 29, 2002 AND JUNE 30, 2001 (In Thousands of Dollars) (Unaudited)~~

	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	June 29, 2002		June 30, 2001		June 29, 2002		June 30, 2001
NET SALES	$	63,045	$	54,201	$	180,658	$	132,065
COST OF SALES (Including charges of $3,175 and $3,331 during the thirteen and thirty-nine week periods ended June 30, 2001, respectively, due to inventory purchase accounting adjustments)		32,451		33,113		96,599		75,933
GROSS PROFIT		30,594		21,088		84,059		56,132
OPERATING EXPENSES:
Selling and administrative		5,050		5,181		15,525		13,720
Amortization of intangibles		1,758		865		4,925		1,704
Research and development		657		817		2,029		2,018
Total operating expenses		7,465		6,863		22,479		17,442
INCOME FROM OPERATIONS		23,129		14,225		61,580		38,690
INTEREST EXPENSE – Net		10,315		7,940		27,200		22,221
INCOME BEFORE INCOME TAXES		12,814		6,285		34,380		16,469
INCOME TAX PROVISION		4,239		2,703		13,516		6,972
NET INCOME	$	8,575	$	3,582	$	20,864	$	9,497

FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED

JUNE ~~See~~26, ~~notes~~2004 toAND ~~consolidated~~JUNE ~~financial~~28, ~~statements.~~2003

(Amounts In Thousands)

(Unaudited)


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
			(Predecessor)				(Predecessor)
	June 26, 2004		June 28, 2003		June 26, 2004		June 28, 2003
NET SALES	$	76,348	$	75,751	$	215,933	$	225,172

COST OF SALES (Including inventory purchase accounting charges of $0 and $652 for the thirteen week periods ended June 26, 2004 and June 28, 2003, respectively, and $18,057 and $684 for the thirty-nine week periods ended June26, 2004 and June 28, 2003, respectively)		36,537		39,249		122,376		117,435

GROSS PROFIT		39,811		36,502		93,557		107,737

OPERATING EXPENSES:
Selling and administrative		7,541		6,749		22,032		18,436
Amortization of intangibles		2,883		288		8,521		859

Total operating expenses		10,424		7,037		30,553		19,295

INCOME FROM OPERATIONS		29,387		29,465		63,004		88,442

INTEREST EXPENSE - Net		11,688		8,181		36,864		26,163

INCOME BEFORE INCOME TAXES		17,699		21,284		26,140		62,279

INCOME TAX PROVISON		6,456		7,211		9,672		22,420

NET INCOME	$	11,243	$	14,073	$	16,468	$	39,859

See notes to condensed consolidated financial statements.

-2-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN ~~STOCKHOLDERS’ DEFICIENCY FOR THE THIRTY-NINE WEEK PERIOD ENDED JUNE 29, 2002 (In Thousands of Dollars) (Unaudited)~~

	Common Stock		Warrants		Retained Deficit			Accumulated Other Comprehensive Loss			Total
BALANCE, OCTOBER 1, 2001	$	102,080	$	1,934	$	(206,901	)	$	(501	)	$	(103,388	)
Net income						20,864						20,864
Adjustment of redeemable common stock						(104	)					(104	)
Cumulative redeemable preferred stock:
Dividends accrued						(1,933	)					(1,933	)
Amortization of original issue discount						(204	)					(204	)
BALANCE, JUNE 29, 2002	$	102,080	$	1,934	$	(188,278	)	$	(501	)	$	(84,765	)

STOCKHOLDERS’ EQUITY

FOR ~~See~~THE ~~notes~~THIRTY-NINE toWEEK ~~consolidated~~PERIOD ~~financial~~ENDED ~~statements.~~JUNE 26, 2004

(Amounts in Thousands)

(Unaudited)


	Common Stock			Retained Earnings / (Deficit)			Accumulated Other Comprehensive Loss			Total
BALANCE, OCTOBER 1, 2003	$	508,100		$	(2,788	)	$	(103	)	$	505,209

Equity contributions from TD Holding -
Stock option and deferred compensation costs incurred by TD Holding (Note 9)		4,630			—			—			4,630
Income tax benefit from interest expense incurred by TD Holding (Note 1)		3,850			—			—			3,850

Comprehensive income -
Net income		—			16,468			—			16,468
Foreign currency translation adjustment		—			—			19			19
Unrealized loss on marketable securities		—			—			(82	)		(82	)

Comprehensive income											16,405
Purchase of common stock		(520	)		—			—			(520	)
Proceeds from exercise of stock options		24			—			—			24

BALANCE, JUNE 26, 2004	$	516,084		$	13,680		$	(166	)	$	529,598

See notes to condensed consolidated financial statements.

-3-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~FOR~~ ~~THE THIRTY-NINE WEEK PERIODS ENDED JUNE 29, 2002 AND JUNE 30, 2001 (In Thousands of Dollars) (Unaudited)~~

	Thirty-Nine Week Periods Ended
	June 29, 2002			June 30, 2001
OPERATING ACTIVITIES:
Net income	$	20,864		$	9,497
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,189			3,930
Amortization of intangibles		4,925			1,704
Amortization/write-off of debt issue costs and note premium		3,615			1,294
Interest deferral on Holdings PIK Notes		2,469			2,205
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		4,774			(9,394	)
Inventories		(2,329	)		1,350
Other assets		(1,088	)		2,364
Accounts payable		(604	)		6,014
Accrued liabilities and other		(3,701	)		(2,980	)
Net cash provided by operating activities		34,114			15,984
INVESTING ACTIVITIES:
Capital expenditures		(2,140	)		(2,471	)
Acquisition of Champion Aerospace (Note 6)		—			(161,942	)
Acquisition of product line		—			(6,640	)
Net cash used in investing activities		(2,140	)		(171,053	)
FINANCING ACTIVITIES:
Proceeds from senior subordinated notes, net of fees of $3,068		73,938			—
Proceeds from term loans, net of fees of $5,040		—			154,960
Issuance of preferred stock, net of fees of $733		—			14,267
Net borrowings under revolving credit loans		—			8
Repayment of term loans		(84,079	)		(8,215	)
Purchase of capital stock		(37	)		(139	)
Net cash (used in) provided by financing activities		(10,178	)		160,881
INCREASE IN CASH AND CASH EQUIVALENTS		21,796			5,812
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		11,221			4,309
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	33,017		$	10,121
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	24,746		$	21,213
Cash paid during the period for income taxes	$	12,657		$	4,510

(Amounts In Thousands)

(Unaudited) ~~See notes to consolidated financial statements.~~


	Thirty-Nine Week Periods Ended
				(Predecessor)
	June 26, 2004			June 28, 2003
OPERATING ACTIVITIES:
Net income	$	16,468		$	39,859
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash inventory purchase accounting charge		18,057			684
Depreciation		5,820			4,973
Amortization of intangibles		8,521			859
Amortization of debt issue costs and note premium		2,839			1,897
Interest deferral on Holdings PIK Notes		—			1,546
Noncash stock option and deferred compensation costs		4,630			—
Changes in assets/liabilities, net of effects from acquisition of business:
Accounts receivable		(5,685	)		(1,027	)
Inventories		(1,319	)		(3,186	)
Income taxes receivable and other assets		38,613			1,376
Accounts payable		(1,731	)		(1,545	)
Accrued and other liabilities		6,739			(2,749	)

Net cash provided by operating activities		92,952			42,687

INVESTING ACTIVITIES:
Purchase of marketable securities		(64,788	)		—
Sales and maturity of marketable securities		14,444			—
Acquisition of Norco net assets		—			(53,025	)
Capital expenditures		(3,370	)		(3,930	)

Net cash used in investing activities		(53,714	)		(56,955	)

FINANCING ACTIVITIES:
Borrowings under credit facility, net of fees of $200		—			24,800
Repayment of Holdings PIK Notes		—			(32,802	)
Payment of amounts borrowed under credit facility		(737	)		(3,301	)
Payment of license obligation		(1,500	)		(2,600	)
Purchase of common stock		(520	)		—
Proceeds from exercise of stock options		24			—

Net cash used in financing activities		(2,733	)		(13,903	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		36,505			(28,171	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		18,902			49,206

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	55,407		$	21,035

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	25,690		$	27,978

Cash (received) paid during the period for income taxes	$	(33,575	)	$	16,792

See notes to condensed consolidated financial statements

-4-

TRANSDIGM HOLDING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~THIRTEEN~~ ~~AND THIRTY-NINE WEEK PERIODS ENDED JUNE 29, 2002 AND JUNE 30, 2001 (Unaudited)~~

~~1. DESCRIPTION~~THIRTEEN OFAND ~~THE~~THIRTY-NINE ~~BUSINESS~~WEEK PERIODS ENDED JUNE 26, 2004 AND JUNE 28, 2003

~~TransDigm Holding Company~~ (~~“Holdings”~~UNAUDITED), through its wholly-owned operating subsidiary, TransDigm Inc. (“TransDigm”), is a leading supplier of highly engineered power system and airframe components servicing predominantly the aerospace industry. TransDigm, which includes the AeroControlex and AdelWiggins Groups, along with its wholly-owned subsidiaries, Champion Aerospace Inc. (“Champion”), Marathon Power Technologies Company (“Marathon”), ZMP, Inc. (“ZMP”), and Adams Rite Aerospace, Inc. (“Adams Rite”) (collectively, the “Company”) offers a broad line of proprietary aerospace components. Major product offerings in the Power System Components category include ignition system components, fuel and lube pumps, mechanical actuators and controls, and batteries and chargers. Major product offerings in the Airframe System Components category include engineered connectors, engineered latches, and lavatory hardware and components.

1.	DESCRIPTION OF THE BUSINESS AND MERGER

Description of the Business—TransDigm Holding Company (“Holdings”), through its wholly-owned subsidiary, TransDigm Inc. (“TransDigm”), is a leading global supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. TransDigm, which includes the AeroControlex and Adel Wiggins Groups, along with its wholly-owned subsidiaries, Champion Aerospace Inc. (“Champion”), MarathonNorco Aerospace, Inc. (“Marathon”), ZMP, Inc. (“ZMP”), Adams Rite Aerospace, Inc. (“Adams Rite”) and TD Finance Corporation (collectively, and together with Holdings, the “Company”) offers a broad line of proprietary aerospace components in two product categories. Major product offerings in the Power System Components category include ignition system components, gear pumps, mechanical/electromechanical controls and actuators, batteries and chargers, and rods and locking devices used to hold open panels to allow access to engines for maintenance. Major product offerings in the Airframe System Components category include engineered connectors, engineered latches and locking devices, and lavatory hardware and components.

Merger—On July 22, 2003, Holdings consummated a merger with TD Acquisition Corporation (“TD Acquisition”) pursuant to which TD Acquisition merged with and into Holdings, with Holdings continuing as the surviving corporation as a wholly-owned subsidiary of a newly formed corporation, TD Holding Corporation (the “Merger”). In connection with the Merger, TransDigm Inc. completed a tender offer for its outstanding 10³/8% Senior Subordinated Notes due 2008 (the “Senior Subordinated Notes”). Of the $200 million aggregate principal amount of outstanding Senior Subordinated Notes, a total of approximately $197.8 million aggregate principal amount of Senior Subordinated Notes were validly tendered and the remaining $2.2 million aggregate principal amount of Senior Subordinated Notes were defeased pursuant to the terms of the indenture governing the Senior Subordinated Notes. In December 2003, TransDigm Inc. redeemed the defeased Senior Subordinated Notes. In addition, as a result of the consummation of the Merger, the outstanding balance of $197.5 million under TransDigm Inc.’s then existing senior secured credit facility became due and was repaid in its entirety upon the closing of the Merger. The cash merger consideration of approximately $759.7 million paid to Holdings’ former common and preferred stockholders, holders of in-the-money stock options and the holder of the warrant to purchase Holdings’ common stock (including merger related expenses of approximately $29.1 million borne by the then existing equity holders of Holdings and excluding the $35.7 million fair value of stock options rolled over in connection with the Merger), acquisition fees and expenses of approximately $34.7 million and the repayment of substantially all of TransDigm Inc.’s then existing debt in connection with the consummation of the Merger was financed through: (1) an investment of $471.3 million in TD Holding Corporation (“TD Holding”) by Warburg Pincus Private Equity VIII, L.P. (“Warburg Pincus”) and certain other institutional investors which was contributed as equity to TD Acquisition which then contributed such proceeds as equity to TD Funding Corporation which merged with and into TransDigm Inc. in connection with the Merger, (2) $295.0 million of borrowings under a new secured term loan facility, (3) $400.0 million of gross proceeds from the issuance by TransDigm Inc. of new 8³/8% Senior Subordinated Notes due 2011 (the “8³/8% Senior Subordinated Notes”) and (4) the use of existing cash balances. Following the Merger, Warburg Pincus, through its direct and indirect ownership, owns a majority of the outstanding common stock of TD Holding. The new 8³/8% Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior subordinated basis, by Holdings and all of TransDigm’s existing domestic subsidiaries.

Prior to the Merger, the Company filed its own consolidated federal income tax return. For periods subsequent to the Merger, the Company will file a consolidated federal income tax return with TD Holding. Accordingly, Holdings, TransDigm and its subsidiaries have entered into a tax sharing agreement with TD Holding under which each company’s federal income tax liability for any period will equal the lesser of (1) each company’s U.S. federal income taxes that would be payable by such company had the company filed a separate income tax return for that fiscal year based on the company’s separate taxable income; or (2) the product of (a) the affiliated group of corporations consisting of TD Holding, as the common parent, and each company’s actual consolidated U.S. federal tax liability for such fiscal year and (b) a fraction, the numerator of which is such company’s separate tax return liability for that fiscal year and the denominator of which is the sum of each company’s separate tax return liability for that fiscal year. Because TD Holding has no operations or assets other than its investment in Holdings,

-5-

TD Holding is expected to generate an annual tax loss, resulting from interest expense on the unsecured debt TD Holding incurred to finance its investment in Holdings. As the tax benefits from these losses reduce the federal income tax liability of the Company under the provisions of the tax sharing agreement, they will be recorded as an equity contribution to the Company from TD Holding. For the period ended June 26, 2004, the Company recorded $3.9 million of equity contributions from TD Holding relating to the tax sharing agreement.

The Merger was accounted for as a purchase and fair value adjustments to the Company’s assets and liabilities were recorded as of the date of the Merger. The Company expects that $681.1 million of the $805.4 million of goodwill recorded in connection with the Merger will not be deductible for income tax purposes.

The following table summarizes the fair values assigned to the Company’s assets and liabilities in connection with the Merger (in thousands):


Assets:
Current assets	$	214,747
Property, plant and equipment		60,732
Goodwill		805,378
Other intangible assets		237,814
Other assets		27,732

Total assets		1,346,403

Liabilities:
Current liabilities		82,100
Long-term debt		692,788
Deferred income taxes		59,814
Other liabilities		4,703

Total liabilities		839,405

TD Holding investment in Holdings	$	506,998

The following table summarizes the unaudited, consolidated pro forma results of operations of the Company, as if the Merger and the Norco Acquisition (see Note 4) had occurred on the first day of the thirteen and thirty-nine weeks ended June 28, 2003 (in thousands):


	Thirteen Weeks Ended June 28, 2003			Thirty-Nine Weeks Ended June 28, 2003
Net sales	$	75,751		$	232,672
Income from operations		6,667			46,450
Net (loss) income		(2,917	)		5,596

These pro forma results of operations include the effects of the: (i) inventory purchase accounting adjustments of approximately $18.1 million and $30.1 million that were charged to cost of sales during the thirteen and thirty-nine weeks ended June 28, 2003, respectively, as the inventory on hand as of the date of the transactions was sold, (ii) additional amortization expense that was recognized from the identifiable intangible assets recorded in accounting for the transactions, (iii) additional depreciation expense that resulted from the write-up of the carrying value of property, plant and equipment to fair value in accounting for the Merger, (iv) additional compensation expense that resulted from the new stock option plan and the deferred compensation plans of TD Holding established in conjunction with the Merger that cover certain management personnel of the Company, and (v) additional interest expense that resulted from the Company’s increased indebtedness resulting from the transactions. The pro forma results of operations for the periods ended June 28, 2003 exclude the $176 million Merger charge recorded in July 2003 that was principally composed of compensation costs recognized for stock options redeemed or rolled over in connection with the Merger, the premium paid to redeem the Senior Subordinated Notes and other costs related to the Merger. This pro forma information is not necessarily indicative of the results that actually would have been obtained if the transactions had occurred as of the beginning of the periods presented and is not intended to be a projection of future results.

-6-

Separate Financial Statements—Separate financial statements of TransDigm are not presented since the 8³/8% Senior Subordinated Notes are fully and unconditionally guaranteed on a senior subordinated basis by Holdings and all existing domestic subsidiaries of TransDigm and since Holdings has no significant operations or assets separate from its investment in TransDigm.

2.	UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information included herein is unaudited; however, the information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and results of operations and cash flows for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2003. The September 30, ~~2001~~2003 condensed consolidated balance sheet was derived from the Company’s audited financial statements. The results of operations for the thirteen and thirty-nine week periods ended June 2926, ~~2002~~2004 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the financial statements for the periods ended June 28, 2003 (Predecessor) to conform to the classifications used in the financial statements for the period ended June 26, 2004.

Since 3the date of the Merger (see Note 1), the accompanying financial statements include fair value adjustments to assets and liabilities, including inventory, goodwill, other intangible assets and property, plant and equipment and the subsequent impact on cost of sales, amortization, and depreciation expenses. ~~INVENTORIES~~ Accordingly, the accompanying condensed consolidated financial statements for periods prior to the Merger are labeled as “Predecessor” financial statements.

3.	NEW ACCOUNTING STANDARDS

During the quarter ended December 27, 2003, the Company implemented the provisions of the Financial Accounting Standards Board’s (the “FASB’s”) Emerging Issues Task Force Abstract No 00-21, Revenue Arrangements with Multiple Deliverables, which provides criteria for determining how to account for multiple-deliverable revenue arrangements. The implementation of this pronouncement had no impact on the Company’s consolidated financial position or results of operations.

During December 2003, the FASB issued a revised Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46R”), which requires existing, unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among the parties involved. The Company is not associated with variable interest entities; therefore, the adoption of this statement did not have any effect on the Company’s consolidated financial position or results of operations.

During December 2003, the FASB also issued a revision to Statement of Financial Accounting Standards No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106, which expands the disclosure requirements regarding plan assets and benefit obligations for the Company’s two defined benefit pension plans. The implementation of this pronouncement had no impact on the Company’s consolidated financial position or results of operations.

4.	ACQUISITIONS

Norco— On February 24, 2003, the Company acquired certain assets and assumed certain liabilities of the Norco, Inc. (“Norco”) business from TransTechnology Corporation for $51.0 million in cash (the “Acquisition”). In addition, the Company paid approximately $1.0 million of asset transfer tax payments in accordance with the purchase agreement, $1.0 million in costs associated with the Acquisition and, during August 2003, a $1.1 million purchase price adjustment was received from TransTechnology Corporation (excluding related fees and expenses of $0.1 million) based on a final determination of working capital as of the closing of the Norco Acquisition.

Norco is a leading aerospace component manufacturer of proprietary engine hold open mechanisms and specialty connecting devices. The primary reasons for the Acquisition were Norco’s proprietary aerospace components, significant aftermarket sales and large share of niche markets that are consistent with the Company’s overall

-7-

business and strategic direction. In addition, as a result of the Acquisition, Marathon reduced the combined operating costs through the relocation of the Norco manufacturing process into its existing Waco, Texas facility. During the fourth quarter of fiscal 2003, the Company relocated Norco’s manufacturing operations from Norco’s former facility in Connecticut to Marathon’s Waco, Texas facility. In connection with this relocation, Norco’s lease at its Connecticut facility was cancelled.

The Company accounted for the Acquisition as a purchase and included the results of operations of the acquired business in its consolidated financial statements from the effective date of the Acquisition. Substantially all of the goodwill recognized in accounting for the Acquisition is deductible for income tax purposes.

5.	MARKETABLE SECURITIES

Marketable securities consist of U.S. Treasury Notes, U.S. Government Agency mortgage-backed obligations, corporate bonds and asset backed securities. The Company accounts for its marketable securities under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”), which requires that marketable debt and equity securities be adjusted to market value at the end of each accounting period, except in the case of debt securities which a holder has the positive intent and ability to hold to maturity, in which case the debt securities are carried at cost. For marketable debt and equity securities carried at market value, unrealized market value gains and losses are charged or credited to a separate component of stockholders’ equity (“accumulated other comprehensive income”).

The Company determines the proper classification of its marketable debt and equity securities at the time of purchase and reevaluates such designations as of each balance sheet date. At June 26, 2004, all marketable securities were designated as available for sale. Accordingly, these securities are stated at market value, with unrealized gains and losses reported in a separate component of stockholders’ equity (“accumulated other comprehensive income”). Realized gains and losses on sale of securities, as determined on a specific identification basis, are included in net income.

Marketable securities at June 26, 2004 consist of the following (in thousands):


	Gross Unrealized
	Cost		Gains		Losses		Fair Value
Debt securities
U.S. Treasury Notes	$	23,950	$	—	$	27	$	23,923
U.S. Government Agency mortgage-backed securities		11,158		4		26		11,136
Corporate bonds		6,466		2		27		6,441
Asset backed securities		8,770		2		10		8,762

Total	$	50,344	$	8	$	90	$	50,262

Proceeds from the sale/maturity of marketable securities were $14.4 million during the thirty-nine week period ended June 26, 2004. Gross realized gains and losses for the thirteen and thirty-nine week periods ended June 26, 2004 were immaterial.

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The net carrying values of debt securities at June 26, 2004, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.


Available-for-Sale	Cost		Fair Value
Due in one year or less	$	7,372	$	7,355
Due after one year through three years		23,550		23,514
Due after three years		8,264		8,257

		39,186		39,126
Mortgage-backed securities		11,158		11,136

Total	$	50,344	$	50,262

6.	INVENTORIES

Inventories are stated at the lower of cost or market. Cost of inventories is determined by the average cost and the first-in, first-out (FIFO) methods. Inventories consist of the following (in thousands):

	June 29, 2002			September 30, 2001 *
	June 26, 2004				September 30, 2003
Work-in-progress and finished goods	$	28,459		$	30,990
Work-in-progress and finished goods (1)	$	34,734			$	49,915
Raw materials and purchased component parts		2933,~~163~~678			~~24,177~~	34,512
Total		5768,~~622~~412			~~55,167~~	84,427
Reserve for excess and obsolete inventory		(7,~~421~~764	)		~~(7,295~~	)(7,041	)
Inventories - net	$	5060,~~201~~648		$	~~47,872~~$	77,386

(1) ~~______________~~The balance at September 30, 2003 includes $18.1 million of purchase price accounting adjustments recorded in conjunction with the Merger (see Note 1).

* $57.8 ~~million~~INTANGIBLE of purchased component parts previously included in work-in-progress and finished goods inventory have been reclassified to raw materials and purchased component parts to conform to the presentation as of June 29, 2002.ASSETS

Intangible ~~4. SENIOR~~assets ~~SUBORDINATED~~subject ~~NOTES~~to ~~AND~~amortization ~~AMENDMENT~~consist TOof ~~SENIOR~~the ~~CREDIT~~following ~~FACILITY~~(in thousands):

On June 7, 2002, the Company issued $75 million in aggregate principal amount of additional 10 3/8% Senior Subordinated Notes, due December 1, 2008, at a premium of approximately $2 million. The proceeds of the Senior Subordinated Notes, net of fees and expenses of approximately $3 million, were used to repay $74 million of the borrowings outstanding under the Company’s Senior Credit Facility ($33 million under the Tranche A Facility, $19.5 million under the Tranche B Facility, and $21.5 million under the Tranche C Facility). In conjunction with the issuance of the Senior Subordinated Notes, TransDigm’s Senior Credit Facility was amended to, among other things, permit


	June 26, 2004
	Gross Carrying Amount		Accumulated Amortization		Net
Unpatented technology	$	82,033	$	3,410	$	78,623
License agreement		9,468		492		8,976
Trade secrets		11,772		491		11,281
Patented technology		1,345		163		1,182
Order backlog		6,480		5,939		541

Total	$	111,098	$	10,495	$	100,603

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TransDigm to: (1) incur up to $150 million of additional bank borrowings or subordinated debt (for which there are currently no commitments to provide such funds) to finance permitted acquisitions or pay dividends to Holdings to retire certain “paid-in-kind” subordinated notes issued by Holdings (the “Holdings PIK Notes”) and (2) make future permitted acquisitions as long as the aggregate purchase price of such permitted acquisitions does not exceed $225 million and certain other conditions are met. The amendment also modified certain financial covenants and waives any mandatory prepayment of amounts owed under the Senior Credit Facility from excess cash flow, if any, generated by TransDigm during fiscal 2002.


	September 30, 2003
	Gross Carrying Amount		Accumulated Amortization		Net
Unpatented technology	$	82,033	$	662	$	81,371
License agreement		10,687		101		10,586
Trade secrets		11,772		97		11,675
Patented technology		1,345		15		1,330
Order backlog		6,480		1,100		5,380

Total	$	112,317	$	1,975	$	110,342

The total carrying amount of identifiable intangible assets not subject to amortization consists of $125.5 million of trademarks and trade names at both June 26, 2004 and September 30, 2003. ~~CONTINGENCIES~~

~~Environmental -~~ The ~~Company~~aggregate ~~has been~~amortization ~~addressing~~expense ~~contaminated~~on ~~soil~~identifiable ~~and~~intangible ~~groundwater~~assets ~~beneath~~for ~~its facility in Waco, Texas. Although there can be no assurance that material expenditures will not be required in~~ the ~~future~~thirteen toand ~~address~~thirty-nine ~~currently~~weeks ~~unidentified~~ended ~~contamination~~June ~~or to satisfy~~26, ~~further~~2004 ~~requirements~~and ofJune ~~the~~28, ~~Texas~~2003 ~~Natural~~was ~~Resources~~approximately ~~Conservation~~$2.9 ~~Commission (“TNRCC”)~~million, ~~the~~$8.5 ~~Company~~million, ~~believes~~$0.3 ~~that~~million, ~~the current soil~~ and ~~groundwater~~$0.9 ~~remediation~~million, atrespectively. ~~the~~The ~~Waco~~estimated ~~facility~~amortization ~~will~~expense ~~not~~for ~~require~~fiscal ~~the~~2004 ~~incurrence~~is of$10.3 ~~material~~million ~~expenditures~~and ~~in excess~~for each of the ~~escrow~~five ~~fund~~succeeding ~~created~~years in2005 ~~August~~through ~~1997~~2009 is $5.0 million.

InThe ~~connection~~following ~~with~~is ~~the Company’s acquisition of Marathon,~~ a $2summary ~~million escrow was created to cover the cost~~ of ~~remediation that TNRCC might require at~~ the ~~facility.~~changes During September 1998, the former owner of Marathon filed a lawsuit against the Company to release the environmental escrow alleging that the Company had violated the requirements of the stock purchase agreement relating toin the ~~investigation~~carrying ofvalue ~~the presence~~ of ~~certain~~goodwill ~~contaminants~~from atSeptember ~~the Waco~~30, ~~Texas~~2003 ~~facility.~~through ~~The~~June ~~Company~~26, ~~has~~2004: ~~filed counter claims against the seller and the ultimate outcome of this matter cannot presently be determined.~~

Put Options - During the thirteen-week period ended March 30, 2002, a put option (“put”) became exercisable enabling the holder to require the Company to purchase up to 80% of his Common Stock (including shares that may be acquired through the exercise of stock options and held at least six months) at fair value, subject to certain restrictions under the Company’s long-term debt agreements and his continued service as Chairman of the Board of Holdings and TransDigm. As of June 29, 2002, there were no outstanding shares of Common Stock subject to the put; however, 8,114 shares of Common Stock that can be acquired under exercisable stock options at June 29, 2002 are subject to the put. The estimated fair value of such shares, net of the exercise price of the related stock options, totaled approximately $8.6 million at June 29, 2002. An additional 2,475 shares of Common Stock that are issuable in the future if certain stock options become exercisable upon the occurrence of certain events (change in control, achievement of certain earnings targets, etc.) or certain specified dates in the option agreements are also subject to the put. The estimated fair value of such shares, net of the exercise price of the related stock options, totaled approximately $1.1 million at June 29, 2002. Also, the Chairman of the Board of Holdings and TransDigm and other members of management hold put rights that may become exercisable in the future with respect to other shares of Common Stock, including shares of Common Stock subject to options.


Balance, September 30, 2003	$	807,714
Purchase price allocation adjustments		(2,336	)

Balance, June 26, 2004	$	805,378

~~Other - During the ordinary course of business, the Company is from time to time threatened with, or may become a party to, legal actions and other proceedings~~8. ~~While~~PRODUCT the Company is currently involved in some legal proceedings, it believes the results of these proceedings will not have a material adverse effect on its financial condition, results of operations, or cash flows. The Company believes that its potential exposure to such legal actions is adequately covered by its aviation product and general liability insurance. WARRANTY

The 6Company provides limited warranties in connection with the sale of its products. The warranty period for products sold varies among the Company’s ~~ACQUISITION~~operations, ranging from 90 days to five years; however, the warranty period for the majority of the Company’s sales generally does not exceed one year. A provision for the estimated cost to repair or replace the products is recorded at the time of sale and periodically adjusted to reflect actual experience. The following table presents a reconciliation of changes in the product warranty liability for the thirty-nine week periods ended June 26, 2004 and June 28, 2003 (Predecessor) (in thousands):

Through a newly-formed, wholly-owned subsidiary, Champion Aerospace Inc., TransDigm acquired substantially all of the assets and certain liabilities of the Champion Aviation Products (“Champion Aerospace”) business on May 31, 2001 (the “Acquisition”) from Federal Mogul Ignition Company (“Federal-Mogul”), a wholly-owned subsidiary of Federal-Mogul Corporation, for approximately $160.1 million in cash, subject to adjustment based on the level of acquired working capital as of the closing of the Acquisition. Champion Aerospace is engaged in researching, designing, developing, engineering, manufacturing, marketing, distributing and selling ignition systems and related components and other products (including, without limitation, igniters, spark plugs, and exciters) for turbine and piston aircraft applications as well as other aerospace engine and industrial applications.


	Thirty-Nine Weeks Ended
				(Predecessor)
	June 26, 2004			June 28, 2003
Liability balance at beginning of period	$	3,070		$	2,356
Product warranty accrual		1,225			1,367
Pre-existing warranty cost adjustment		(220	)		—
Warranty costs incurred		(1,296	)		(966	)

Liability balance at end of period	$	2,779		$	2,757

9.	RETIREMENT PLANS

Defined Benefit Pension Plans – The Company has two non-contributory defined benefit pension plans, which together cover certain union employees. The plans provide benefits of stated amounts for each year of service. The Company’s funding policy is to contribute actuarially determined amounts allowable under Internal Revenue Service regulations. The plans’ assets consist primarily of guaranteed investment contracts with an insurance company.

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The ~~purchase~~components ~~price consideration~~ of ~~$160.1~~net ~~million~~periodic inbenefit ~~cash~~cost ~~and~~are ~~$2.2~~detailed ~~million~~below ~~of costs associated with the Acquisition was funded through:~~ (1)in ~~$147.6 million of borrowings under the Company’s existing Senior Credit Facility, (2~~thousands): $14.3 million received (net of fees of $.7 million) from the issuance of $15 million of Holdings’ 16 percent Cumulative Redeemable Preferred Stock and warrants to purchase 1,381.87 shares of Holdings’ common stock, and (3) the use of $.4 million of the Company’s existing cash balances. TransDigm also borrowed an additional $15 million under the Senior Credit Facility to pay $5 million of debt issuance costs and provide $10 million of working capital for future operations.

Approximately $2.6 million of the additional borrowings were obtained under the Company’s revolving credit line, $45 million was added to the Company’s existing Tranche B Facility, and $115 million was borrowed in the form of a new Tranche C Facility maturing in May 2007 under the Senior Credit Facility.


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
				(Predecessor)						(Predecessor)
	June 26, 2004			June 28, 2003			June 26, 2004			June 28, 2003
Service cost	$	23		$	22		$	68		$	66
Interest cost		94			92			282			276
Expected return on plan assets		(64	)		(73	)		(191	)		(219	)
Net amortization and deferral		7			35			22			105

	$	60		$	76		$	181		$	228

~~The~~Deferred Compensation Plans—Certain management personnel of the Company ~~accounted~~participate ~~for~~in one or both of two deferred compensation plans of TD Holding that were established in connection with the ~~Acquisition~~ asMerger. Vested interests in a ~~purchase~~rollover ~~and~~deferred compensation ~~included~~plan ~~the~~equal ~~results~~to approximately $17.8 million of ~~operations~~the $35.7 million fair value of the ~~acquired~~stock ~~business~~options rolled over in ~~its~~connection ~~fiscal~~with ~~2001~~the ~~consolidated~~Merger ~~financial~~were ~~statements~~issued ~~from~~as partial compensation in exchange for such options (see Note 1). Management’s interest in the ~~effective~~rollover ~~date~~deferred compensation plan accretes at a rate of ~~the~~12% ~~Acquisition~~per annum. Notional interests in a management deferred compensation plan totaling $18.1 million were also issued to certain management personnel in connection with the Merger. The ~~purchase~~vesting ~~price~~provisions ~~was~~of ~~allocated~~the management deferred compensation plan are identical to the vesting provisions contained in the TD Holding stock option plan and are based on athe ~~determination~~achievement of time and performance criteria over a five-year ~~estimated~~period. ~~fair~~Management’s ~~values~~interests in the management deferred compensation plan were initially valued at zero and accrete at a rate equal to 11.1% of the ~~date~~sum of the ~~Acquisition~~interest ~~and~~accrued ~~resulted~~on the loans extended to TD Holding in ~~goodwill~~connection with the Merger and ~~other~~the ~~intangible~~notional ~~assets~~interest credited under the rollover deferred compensation plan. Because the participants of ~~approximately~~these deferred compensation plans are management personnel of the Company, the cost of the plans, which totaled $~~134~~1.5 million ~~being~~and ~~recorded~~$4.6 million onfor the thirteen and thirty-nine week periods ended period ended June 26, 2004, is pushed-down to the Company’s ~~consolidated~~and ~~balance~~recognized ~~sheet~~as an expense and a capital contribution from TD Holding. The ~~goodwill~~vested ~~and~~obligations ~~other~~under ~~intangible~~the ~~assets~~deferred ~~are~~compensation ~~being~~plans ~~amortized~~represent onobligations aof ~~straight-line~~TD ~~basis~~Holding ~~ranging~~and ~~from~~are 30not toguaranteed 40by ~~years~~Holdings or any of its subsidiaries.

~~The~~10. following table summarizes the unaudited, consolidated pro forma results of operations of the Company, as if the Acquisition had occurred at the beginning of the thirty-nine week period ended June 30, 2001 (in thousands):CONTINGENCIES

Net sales	$	179,053
Operating income	$	48,580
Net income	$	11,536

During the ordinary course of business, the Company is from time to time threatened with, or may become a party to, legal actions and other proceedings. While the Company is currently involved in certain legal proceedings, it believes the results of these proceedings will not have a material adverse effect on its financial condition, results of operations or cash flows. The Company believes that its potential exposure to such legal actions is adequately covered by its aviation product and general liability insurance.

~~This~~-11- pro forma information is not necessarily indicative of the results that actually would have been obtained if the operations had been combined as of the beginning of the period presented and is not intended to be a projection of future results.

7. SUPPLEMENTAL GUARANTOR INFORMATION

The Company’s Senior Subordinated Notes, including the additional notes issued on June 7, 2002 (see Note 4), are unconditionally guaranteed by Holdings and all direct and indirect subsidiaries of TransDigm (other than two wholly-owned, non-guarantor subsidiaries that have inconsequential assets, liabilities and equity, and whose only operations are the result of intercompany activity which is immediately dividended back to TransDigm) on a senior subordinated basis. The Holdings' guarantee of the Senior Subordinated Notes is subordinated to Holdings’ obligations under the Holdings PIK Notes, as well as the Holdings’ guarantee of TransDigm’s borrowings under its Senior Credit Facility. The following supplemental consolidating condensed financial information presents the balance sheets of the Company as of June 29, 2002 and September 30, 2001 and its statements of operations and cash flows for the thirty-nine week periods ended June 29, 2002 and June 30, 2001.

11.

DEBT

On April 1, 2004, TransDigm’s senior credit facility was amended and restated to refinance approximately $294 million of term loans then outstanding. The scheduled term loan payments under the amended and restated facility are approximately $2.9 million per annum (payable in quarterly installments) through June 30, 2010. The remaining unpaid principal amount of the term loan (approximately $276 million) will be due on July 22, 2010. The Amended and Restated Credit Agreement also eliminated the applicable margin percentage grid with respect to the term loans referred to above and fixed the applicable margin over the interest rate borne by the term loans to 2.25% per annum for adjusted LIBO rate term loans and 1.25% for alternate base rate term loans. Both of the applicable margins were reduced by .75% from the percentages in effect prior to the amendment. The amended and restated senior credit facility did not modify the applicable margin percentage grid with respect to loans made under the revolving credit line.

12.

SUBSEQUENT EVENT

On July 9, 2004, the Company completed the acquisition of Avionic Instruments, Inc. for $21 million in cash. The purchase price is subject to adjustment based upon a final determination of working capital as of the closing of the acquisition. The transaction was funded through the use of the Company’s existing cash balances. Avionic Instruments designs and manufactures specialized power conversion devises for a wide range of aerospace applications.

13.

SUPPLEMENTAL GUARANTOR INFORMATION

TransDigm’s 8³/8% Senior Subordinated Notes (see Note 1) are fully and unconditionally guaranteed by Holdings and all direct and indirect subsidiaries of TransDigm (other than one wholly-owned, non-guarantor subsidiary that has inconsequential assets, liabilities and equity) on a senior subordinated basis. The Holdings guarantee of the Senior Subordinated Notes is subordinated to Holdings’ guarantee of TransDigm’s borrowings under its new senior secured credit facility. The following supplemental consolidating condensed financial information presents the balance sheets of the Company as of June 26, 2004 and September 30, 2003 and its statements of income and cash flows for the thirty-nine weeks ended June 26, 2004 and June 28, 2003 (Predecessor).

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TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET AS ~~OF JUNE 29, 2002 (In Thousands of Dollars)~~

	Holdings			TransDigm		Subsidiary Guarantors			Eliminations			Total Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents				$	34,382	$	(1,365	)				$	33,017
Accounts receivable, net					14,717		20,724						35,441
Inventories					19,594		30,607						50,201
Deferred income taxes					9,749								9,749
Prepaid expenses and other					120		659						779
Total current assets					78,562		50,625						129,187
INVESTMENT IN SUBSIDIARIES AND INTERCOMPANY BALANCES	$	(144,430	)		389,813		(135,158	)	$	(110,225	)
PROPERTY, PLANT AND EQUIPMENT - Net					9,708		29,798						39,506
INTANGIBLE ASSETS - Net					18,617		180,609						199,226
DEBT ISSUE COSTS - Net		232			11,690								11,922
DEFERRED INCOME TAXES AND OTHER					4,949								4,949
TOTAL ASSETS	$	(144,198	)	$	513,339	$	125,874		$	(110,225	)	$	384,790
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term liabilities				$	6,577							$	6,577
Accounts payable					4,738	$	3,839						8,577
Accrued liabilities					13,778		12,726						26,504
Total current liabilities					25,093		16,565						41,658
LONG-TERM DEBT - Less current portion	$	30,065			374,537								404,602
OTHER NON-CURRENT LIABILITIES					4,895		1,362						6,257
Total liabilities		30,065			404,525		17,927						452,517
CUMULATIVE REDEEMABLE PREFERRED STOCK		15,359											15,359
REDEEMABLE COMMON STOCK		1,679											1,679
STOCKHOLDERS' EQUITY (DEFICIENCY)		(191,301	)		108,814		107,947		$	(110,225	)		(84,765	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)	$	(144,198	)	$	513,339	$	125,874		$	(110,225	)	$	384,790

AS OF JUNE 26, 2004

(Amounts in Thousands)


	Holdings		TransDigm		Subsidiary Guarantors			Eliminations			Total Consolidated
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	—	$	57,353	$	(1,946	)	$	—		$	55,407
Marketable securities		—		50,262		—			—			50,262
Trade accounts receivable - Net		—		18,234		24,160			—			42,394
Inventories		—		20,044		40,604			—			60,648
Deferred income taxes		—		10,547		—			—			10,547
Prepaid expenses and other		—		754		698			—			1,452

Total current assets		—		157,194		63,516			—			220,710

INVESTMENT IN SUBSIDIARIES AND INTERCOMPANY BALANCES		529,764		1,939,671		641,135			(3,110,570	)		—

PROPERTY, PLANT AND EQUIPMENT - Net		—		22,606		35,286			—			57,892

GOODWILL		—		408,094		397,284			—			805,378

OTHER INTANGIBLE ASSETS - Net		—		89,773		136,324			—			226,097

DEBT ISSUE COSTS - Net		—		24,245		—			—			24,245

OTHER		—		717		—			—			717

TOTAL ASSETS	$	529,764	$	2,642,300	$	1,273,545		$	(3,110,570	)	$	1,335,039

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Current portion of long-term liabilities	$	—	$	4,443	$	—		$	—		$	4,443
Accounts payable		—		5,072		4,418			—			9,490
Accrued liabilities		—		26,544		6,433			—			32,977

Total current liabilities		—		36,059		10,851			—			46,910

LONG-TERM DEBT - Less current portion		—		691,320		—			—			691,320

DEFERRED INCOME TAXES		—		64,177		—			—			64,177

OTHER NON-CURRENT LIABILITIES		—		1,832		1,202			—			3,034

Total liabilities		—		793,388		12,053			—			805,441

STOCKHOLDERS’ EQUITY		529,764		1,848,912		1,261,492			(3,110,570	)		529,598

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	529,764	$	2,642,300	$	1,273,545		$	(3,110,570	)	$	1,335,039

-13-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET AS ~~OF SEPTEMBER 30, 2001 (In Thousands of Dollars)~~

	Holdings			TransDigm		Subsidiary Guarantors			Eliminations			Total Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents				$	12,294	$	(1,073	)				$	11,221
Accounts receivable - net					17,481		22,734						40,215
Inventories					19,353		28,519						47,872
Deferred income taxes					9,749								9,749
Prepaid expenses and other					132		315						447
Total current assets					59,009		50,495						109,504
INVESTMENTS IN SUBSIDIARIES AND INTERCOMPANY BALANCES	$	(144,774	)		395,987		(141,163	)	$	(110,050	)
PROPERTY, PLANT AND EQUIPMENT - Net					10,954		31,141						42,095
INTANGIBLE ASSETS - Net					19,384		184,474						203,858
DEBT ISSUE COSTS - Net		255			12,239								12,494
DEFERRED INCOME TAXES AND OTHER					4,947								4,947
TOTAL ASSETS	$	(144,519	)	$	502,520	$	124,947		$	(110,050	)	$	372,898
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term liabilities				$	15,822							$	15,822
Accounts payable					4,909	$	4,272						9,181
Accrued liabilities					17,836		10,993						28,829
Total current liabilities					38,567		15,265						53,832
LONG-TERM DEBT - Less current portion	$	27,597			371,990								399,587
OTHER NON-CURRENT LIABILITIES					6,671		1,362						8,033
Total liabilities		27,597			417,228		16,627						461,452
CUMULATIVE REDEEMABLE PREFERRED STOCK		13,222											13,222
REDEEMABLE COMMON STOCK		1,612											1,612
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)		(186,950	)		85,292		108,320		$	(110,050	)		(103,388	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)	$	(144,519	)	$	502,520	$	124,947		$	(110,050	)	$	372,898

AS OF SEPTEMBER 30, 2003

(Amounts in Thousands)


	Holdings		TransDigm		Subsidiary Guarantors			Eliminations		Total Consolidated
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	—	$	19,352	$	(450	)	$	—	$	18,902
Trade accounts receivable - Net		—		14,520		22,189			—		36,709
Income taxes receivable		36,703		—		—			—		36,703
Inventories		—		26,337		51,049			—		77,386
Deferred income taxes		—		8,177		—			—		8,177
Prepaid expenses and other		—		3,296		554			—		3,850

Total current assets		36,703		71,682		73,342			—		181,727

INVESTMENTS IN SUBSIDIARIES AND INTERCOMPANY BALANCES		468,506		1,983,624		(144,773	)		2,307,357		—

PROPERTY, PLANT AND EQUIPMENT - Net		—		23,295		37,047			—		60,342

GOODWILL		—		412,028		395,686			—		807,714

OTHER INTANGIBLE ASSETS - Net		—		94,845		140,994			—		235,839

DEBT ISSUE COSTS - Net		—		28,771		—			—		28,771

OTHER		—		627		—			—		627

TOTAL ASSETS	$	505,209	$	2,614,872	$	502,296		$	2,307,357	$	1,315,020

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Current portion of long-term liabilities	$	—	$	7,634	$	—		$	—	$	7,634
Accounts payable		—		5,512		5,709			—		11,221
Accrued liabilities		—		21,696		7,929			—		29,625

Total current liabilities		—		34,842		13,638			—		48,480

LONG-TERM DEBT - Less current portion		—		692,050		—			—		692,050

DEFERRED INCOME TAXES		—		64,364		—			—		64,364

OTHER NON-CURRENT LIABILITIES		—		3,715		1,202			—		4,917

Total liabilities		—		794,971		14,840			—		809,811

TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)		505,209		1,819,901		487,456			2,307,357		505,209

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	505,209	$	2,614,872	$	502,296		$	2,307,357	$	1,315,020

-14-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF ~~INCOME FOR~~OPERATIONS ~~THE THIRTY-NINE WEEK PERIOD ENDED JUNE 29, 2002 (In Thousands of Dollars)~~

	Holdings			TransDigm		Subsidiary Guarantors		Eliminations		Total Consolidated
NET SALES				$	87,012	$	93,646			$	180,658
COST OF SALES					42,295		54,304				96,599
GROSS PROFIT					44,717		39,342				84,059
OPERATING EXPENSES:
Selling and administrative					9,452		6,073				15,525
Amortization of intangibles					904		4,021				4,925
Research and development					1,206		823				2,029
Total operating expenses					11,562		10,917				22,479
INCOME FROM OPERATIONS					33,155		28,425				61,580
INTEREST EXPENSE - Net	$	2,492			17,377		7,331				27,200
INCOME (LOSS) BEFORE INCOME TAXES		(2,492	)		15,778		21,094				34,380
INCOME TAX PROVISION (BENEFIT)		(980	)		6,203		8,293				13,516
NET INCOME (LOSS)	$	(1,512	)	$	9,575	$	12,801	$	—	$	20,864

FOR THE THIRTY-NINE WEEKS ENDED JUNE 26, 2004

(Amounts in Thousands)


	Holdings			TransDigm			Subsidiary Guarantors		Eliminations			Total Consolidated
NET SALES	$	—		$	94,140		$	121,793	$	—		$	215,933

COST OF SALES		—			45,971			76,405		—			122,376

GROSS PROFIT		—			48,169			45,388		—			93,557

OPERATING EXPENSES:
Selling and administrative		—			13,696			8,336		—			22,032
Amortization of intangibles		—			3,852			4,669		—			8,521

Total operating expenses		—			17,548			13,005		—			30,553

INCOME FROM OPERATIONS		—			30,621			32,383		—			63,004

OTHER INCOME (EXPENSES):
Interest expense - Net		(7,429	)		(32,087	)		2,652		—			(36,864	)
Equity in income of subsidiaries		21,148			22,072			—		(43,220	)		—

INCOME BEFORE INCOME TAXES		13,719			20,606			35,035		(43,220	)		26,140

INCOME TAX PROVISION (BENEFIT)		(2,749	)		(542	)		12,963		—			9,672

NET INCOME	$	16,468		$	21,148		$	22,072	$	(43,220	)	$	16,468

-15-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF ~~INCOME FOR~~OPERATIONS ~~THE THIRTY-NINE WEEK PERIOD ENDED JUNE 30, 2001 (In Thousands of Dollars)~~

	Holdings			TransDigm		Subsidiary Guarantors		Eliminations		Total Consolidated
NET SALES				$	74,395	$	57,670			$	132,065
COST OF SALES					40,893		35,040				75,933
GROSS PROFIT					33,502		22,630				56,132
OPERATING EXPENSES:
Selling and administrative					10,295		3,425				13,720
Amortization of intangibles					372		1,332				1,704
Research and development					1,333		685				2,018
Total operating expenses					12,000		5,442				17,442
INCOME FROM OPERATIONS					21,502		17,188				38,690
INTEREST EXPENSE - Net	$	2,228			19,806		187				22,221
INCOME (LOSS) BEFORE INCOME TAXES		(2,228	)		1,696		17,001				16,469
INCOME TAX PROVISION (BENEFIT)		(943	)		718		7,197				6,972
NET INCOME (LOSS)	$	(1,285	)	$	978	$	9,804	$	—	$	9,497

FOR THE THIRTY-NINE WEEKS ENDED JUNE 28, 2003 (PREDECESSOR)

(Amounts in Thousands)


	Holdings			TransDigm			Subsidiary Guarantors			Eliminations			Total Consolidated
NET SALES	$	—		$	89,995		$	135,177		$	—		$	225,172

COST OF SALES		—			39,125			78,310			—			117,435

GROSS PROFIT		—			50,870			56,867			—			107,737

OPERATING EXPENSES:
Selling and administrative		—			9,645			8,791			—			18,436
Amortization of intangibles		—			454			405			—			859

Total operating expenses		—			10,099			9,196			—			19,295

INCOME FROM OPERATIONS		—			40,771			47,671			—			88,442

OTHER INCOME (EXPENSES):
Interest expense - Net		(1,755	)		(18,225	)		(6,183	)		—			(26,163	)
Equity in income of subsidiaries		40,963			26,553			—			(67,516	)		—

INCOME BEFORE INCOME TAXES		39,208			49,099			41,488			(67,516	)		62,279

INCOME TAX PROVISION (BENEFIT)		(651	)		8,136			14,935			—			22,420

NET INCOME	$	39,859		$	40,963		$	26,553		$	(67,516	)	$	39,859

-16-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS ~~FOR~~ ~~THE THIRTY-NINE WEEK PERIOD ENDED JUNE 29, 2002 (In Thousands of Dollars)~~

	Holdings			TransDigm			Subsidiary Guarantors			Eliminations		Total Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(1,512	)	$	9,575		$	12,801				$	20,864
Adjustments to reconcile net income (loss) to net cash provided by operating activities		2,535			3,647			7,068					13,250
Net cash provided by operating activities		1,023			13,222			19,869					34,114
INVESTING ACTIVITIES - Capital expenditures					(946	)		(1,194	)				(2,140	)
FINANCING ACTIVITIES:
Changes in intercompany activities		(986	)		19,953			(18,967	)
Proceeds from senior subordinated notes					73,938								73,938
Repayment of term loans					(84,079	)							(84,079	)
Purchase of capital stock		(37	)										(37	)
Net cash provided by (used in) financing activities		(1,023	)		9,812			(18,967	)				(10,178	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					22,088			(292	)				21,796
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					12,294			(1,073	)				11,221
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	34,382		$	(1,365	)	$	—	$	33,017

FOR THE THIRTY-NINE WEEKS ENDED JUNE 26, 2004

(Amounts in Thousands)


	Holdings			TransDigm			Subsidiary Guarantors			Eliminations			Total Consolidated
OPERATING ACTIVITIES:
Net income	$	16,468		$	21,148		$	22,072		$	(43,220	)	$	16,468
Adjustments to reconcile net income to net cash provided by operating activities		15,555			5,664			12,045			43,220			76,484

Net cash provided by operating activities		32,023			26,812			34,117			—			92,952

INVESTING ACTIVITIES
Purchase of marketable securities		—			(64,788	)		—			—			(64,788	)
Sales and maturity of marketable securities		—			14,444			—			—			14,444
Capital expenditures		—			(1,735	)		(1,635	)		—			(3,370	)

Net cash used in investing activities		—			(52,079	)		(1,635	)		—			(53,714	)

FINANCING ACTIVITIES:
Changes in intercompany activities		(31,527	)		65,505			(33,978	)		—			—
Payment of amounts borrowed under credit facility		—			(737	)		—			—			(737	)
Payment of license obligation		—			(1,500	)		—			—			(1,500	)
Purchase of common stock		(520	)		—			—			—			(520	)
Proceeds from exercise of stock options		24			—			—			—			24

Net cash provided by (used in) financing activities		(32,023	)		63,268			(33,978	)		—			(2,733	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			38,001			(1,496	)		—			36,505

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—			19,352			(450	)		—			18,902

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	57,353		$	(1,946	)	$	—		$	55,407

-17-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS ~~FOR~~ ~~THE THIRTY-NINE WEEK PERIOD ENDED JUNE 30, 2001 (In Thousands of Dollars)~~

	Holdings			TransDigm			Subsidiary Guarantors			Eliminations		Total Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(1,285	)	$	978		$	9,804				$	9,497
Adjustments to reconcile net income (loss) to net cash provided by operating activities		2,228			3,061			1,198					6,487
Net cash provided by operating activities		943			4,039			11,002					15,984
INVESTING ACTIVITIES:
Capital expenditures					(1,172	)		(1,299	)				(2,471	)
Acquisition of product line					(6,640	)							(6,640	)
Acquisition of Champion Aerospace					(161,942	)							(161,942	)
Net cash used in investing activities					(169,754	)		(1,299	)				(171,053	)
FINANCING ACTIVITIES:
Changes in intercompany activities		(15,071	)		25,447			(10,376	)
Proceeds from term loans, net					154,960								154,960
Issuance of preferred stock		14,267											14,267
Net borrowings under revolving credit loans					8								8
Repayment of term loans					(8,215	)							(8,215	)
Purchase of capital stock		(139	)										(139	)
Net cash provided by (used in) financing activities		(943	)		172,200			(10,376	)				160,881
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					6,485			(673	)				5,812
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					4,554			(245	)				4,309
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	11,039		$	(918	)	$	—	$	10,121

FOR THE THIRTY-NINE WEEKS ENDED JUNE 28, 2003 (PREDECESSOR)

(Amounts in Thousands)


	Holdings			TransDigm			Subsidiary Guarantors			Eliminations			Total Consolidated
OPERATING ACTIVITIES:
Net income	$	39,859		$	40,963		$	26,553		$	(67,516	)	$	39,859
Adjustments to reconcile net income to net cash provided by operating activities		(39,208	)		(20,722	)		(4,758	)		67,516			2,828

Net cash provided by operating activities		651			20,241			21,795			—			42,687

INVESTING ACTIVITIES
Acquisition of Norco, Inc. net assets		—			—			(53,025	)		—			(53,025	)
Capital expenditures		—			(1,959	)		(1,971	)		—			(3,930	)

Net cash used in investing activities		—			(1,959	)		(54,996	)		—			(56,955	)

FINANCING ACTIVITIES:
Changes in intercompany activities		32,151			(66,236	)		34,085			—			—
Borrowings under credit facility, net of fees of $200		—			24,800			—			—			24,800
Repayment of Holdings PIK Notes		(32,802	)		—			—			—			(32,802	)
Payment of license obligation		—			(2,600	)		—			—			(2,600	)
Payment of amounts borrowed under credit facility		—			(3,301	)		—			—			(3,301	)

Net cash provided by (used in) financing activities		(651	)		(47,337	)		34,085			—			(13,903	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			(29,055	)		884			—			(28,171	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—			50,866			(1,660	)		—			49,206

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	21,811		$	(776	)	$	—		$	21,035

* * * * *

-18-

PART I1: FINANCIAL INFORMATION

ITEM 2 ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~References in this section to~~ ~~“TransDigm”~~MANAGEMENT’S ~~are~~DISCUSSION toAND ~~TransDigm~~ANALYSIS ~~Inc.~~OF ~~References~~FINANCIAL toCONDITION ~~“Holdings”~~AND ~~are~~RESULTS toOF ~~TransDigm~~OPERATIONS ~~Holding Company, which owns all of the outstanding capital stock of TransDigm. References to the “Company” are to Holdings, together with TransDigm and its subsidiaries.~~

The ~~This~~following ~~Quarterly~~discussion ~~Statement~~of ~~includes~~the ~~“forward-looking~~Company’s ~~statements”~~financial ~~within~~condition ~~the~~and ~~meaning~~results of ~~Section~~operations ~~27A~~should ofbe ~~the~~read ~~Securities~~together ~~Act~~with ~~and~~Holdings’ ~~Section~~consolidated ~~21E~~financial statements ofand the ~~Securities Exchange~~related ~~Act~~notes ofincluded ~~1934,~~elsewhere asin ~~amended,~~the ~~including,~~Report. References in ~~particular~~this section to “TransDigm,” ~~the~~“we,” ~~statements~~“us” ~~about~~or ~~the~~“our” ~~Company’s~~are ~~plans,~~to ~~strategies~~TransDigm Inc. and ~~prospects~~its ~~under~~subsidiaries. ~~this~~References to “~~Management’s~~Holdings” are ~~Discussion~~to ~~and~~TransDigm ~~Analysis~~Holding Company, which holds all of ~~Financial~~the ~~Condition~~outstanding ~~and~~capital ~~Results~~stock of ~~Operations” section~~TransDigm. ~~Although~~References to the “Company” ~~believes~~are ~~that~~to ~~its plans~~Holdings, ~~intentions~~together ~~and~~with ~~expectations~~TransDigm. ~~reflected~~Financial ininformation orpresented ~~suggested~~herein byfor ~~such~~the ~~forward-looking~~periods ~~statements~~through ~~are reasonable,~~ the merger ~~Company~~of ~~can~~TD ~~give~~Acquisition noCorporation ~~assurance~~into ~~that~~Holdings ~~such~~and ~~plans,~~TD ~~intentions~~Funding orCorporation ~~expectations~~into ~~will~~TransDigm ~~be achieved~~Inc. ~~Important~~on ~~factors~~July ~~that~~22, ~~could~~2003 ~~cause~~(see”—Recent ~~actual~~Developments”) ~~results~~is topresented ~~differ~~as ~~materially~~“Predecessor” ~~from~~financial ~~the~~information. ~~forward-looking~~The ~~statements~~Company’s ~~made~~condensed consolidated infinancial ~~this~~statements ~~Quarterly~~for ~~Statement~~the ~~are~~period ~~set~~subsequent ~~forth~~to ~~under~~ the ~~caption~~Merger ~~“Risk~~reflect ~~Factors”~~a ~~and~~new ~~elsewhere~~basis inof ~~this~~accounting ~~Quarterly~~incorporating ~~Statement. All~~the ~~forward-looking~~fair ~~statements~~value ~~attributable~~adjustments tomade ~~the~~in ~~Company~~recording orthe ~~persons~~Merger ~~acting~~while onprior ~~its~~periods ~~behalf~~ are ~~expressly~~presented ~~qualified~~using inthe ~~their~~historical ~~entirety~~cost bybasis ~~those~~of the ~~cautionary statements~~Company.

This Quarterly Statement includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, the statements about the Company’s plans, strategies and prospects under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Statement include but are not limited to:

•

We have a substantial amount of indebtedness which could adversely affect our financial health.

•

Increases in interest rates could increase our interest expense.

•

Our substantial indebtedness could prevent us from fulfilling our obligations under our indebtedness. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

•

Despite current indebtedness levels, we may still be able to incur substantially more debt.

•

The terms of our new senior secured credit facility and the indenture governing the senior subordinated notes may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

•

Future terrorist attacks may have a material, adverse impact on our business.

•

Our business is sensitive to the number of flight hours that our customers’ planes spend aloft and to our customers’ profitability. These items are, in turn, affected by general economic conditions. In addition, our sales to manufacturers of new large aircraft are cyclical.

•

We rely heavily on certain customers for much of our sales.

•

We generally do not have guaranteed future sales of our products. Further, we enter into fixed price contracts with some of our customers, so we take the risk for cost overruns.

•

A decline in the U.S. defense budget or the defense budget of foreign governments may adversely affect our sales of parts used in military aircraft.

•

Our business may be adversely affected if we lost our government or industry approvals or if more onerous government regulations were enacted or industry oversight increased.

-19-

•

We are dependent on our highly trained employees and any work stoppage or difficulty hiring similar employees would adversely affect our business.

•

If we lose our senior management, our business may be adversely affected.

•

Our business is dependent on the availability of certain components and raw materials that we buy from suppliers.

•

We could incur substantial costs as a result of violations of or liabilities under environmental laws.

•

Our international business exposes us to risks relating to increased regulation and political or economic instability, globally or within certain foreign countries.

•

We intend to pursue future acquisitions and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms or effectively integrate new operations.

•

We have recorded a significant amount of intangible assets, which may never generate the returns we expect.

•

We face significant competition.

•

We could be adversely affected as a result of a lawsuit if one of our components causes an aircraft to crash and we are not covered by our insurance policies.

All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by those cautionary statements. Many such factors are outside the control of the Company. Consequently, such forward-looking statements should be regarded solely as its current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Overview

TransDigm is a leading supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft. Most of the Company’s products share ~~three~~four common characteristics: (1) highly engineered and proprietary; (2) significant aftermarket content, (3) sole source provider; and (34) large ~~shares~~share of niche markets.

TransDigm’s ~~sells~~customers ~~its~~include ~~products~~distributors toof aerospace components, commercial airlines, aircraft maintenance facilities, aircraft and ~~aircraft system~~engine original equipment manufacturers, (“or OEMs”), ~~and~~ various ~~agencies~~armed forces of the United States and foreign governments, and defense OEMs. TransDigm generates the majority of its operating income from ~~operations and earnings before interest, taxes, depreciation and amortization (“EBITDA”) from~~ sales of replacement parts in the commercial and defense aftermarkets. Most of TransDigm’s OEM sales are on an exclusive sole source basis;, meaning ~~therefore~~that, in most cases, TransDigm is the only certified provider of these parts in the aftermarket. Aftermarket parts sales are driven by the size and usage of the worldwide aircraft fleet, are historically relatively stable and generate recurring revenues over the life of an aircraft that are many times the size of the original OEM purchases. TransDigm has over 40 years of experience in most of its product lines, ~~therefore~~which allows it ~~benefits~~to benefit from a large and growing installed base of aircraft.

The following is management’s discussion and analysis of certain significant factors that have affected the Company’s financial position and operating results during the periods included in the accompanying consolidated financial statements. The Company’s fiscal year ends on September 30.

Recent Developments

~~The~~On ~~aerospace~~July ~~industry~~9, ~~was~~2004, ~~hit~~the ~~particularly~~Company ~~hard~~completed by the ~~events~~acquisition of ~~September~~Avionic 11Instruments, ~~2001~~Inc. ~~The~~for ~~immediate~~$21 million ~~reduction~~ in ~~air traffic~~cash. ~~severely~~The ~~impacted~~purchase ~~the~~price ~~profitability~~is ofsubject ~~the~~to ~~airline~~adjustment ~~industry,~~based ~~which~~upon ~~began~~a tofinal ~~curtail~~determination ~~flights~~of ~~and~~working ~~stretch~~capital ~~out~~as orof ~~cancel~~the ~~airframe~~closing ~~deliveries.~~of ~~Facing~~the ~~this~~acquisition. ~~expected~~The ~~downturn,~~transaction ~~the~~was ~~Company~~funded ~~promptly~~through ~~developed~~the ause ~~near~~of ~~term~~the ~~market~~Company’s ~~forecast~~existing tocash ~~use~~balances. ~~as a~~Avionic ~~basis~~Instruments ~~for~~designs ~~fiscal~~and ~~2002~~manufactures ~~planning.~~specialized ~~Based~~power onconversion ~~this~~devises ~~forecast,~~for ~~which~~a ~~the~~wide ~~Company~~range ~~believed~~of toaerospace beapplications. ~~conservative,~~These ~~the~~products ~~Company~~are ~~implemented~~used aon ~~series~~most ofcommercial ~~actions~~and toregional ~~significantly~~transports ~~reduce~~as ~~its~~well ~~cost~~as ~~structure~~many ~~while~~corporate ~~maintaining~~and ~~its~~regional ~~ability~~transports toas ~~respond~~well ~~to market dynamics~~as corporate and ~~develop~~military ~~new business~~aircraft. AsThe ~~part~~acquisition ofsignificantly ~~this~~enhances ~~effort,~~ the Company’s ~~significantly~~existing ~~reduced~~market ~~its~~position ~~workforce~~ in ~~early~~aerospace ~~October~~power ~~2001~~conversion devices.

It-20- still appears that the overall market forecast the Company used for planning purposes was somewhat conservative. Although the Company continues to experience a significant downturn in the commercial aerospace markets, air travel has begun to recover at a faster pace than the Company initially anticipated. Although there are some recent indications of a flattening in revenue passenger miles, the Company still expects the aftermarket sector to recover over the next four to eight quarters as air traffic slowly increases. The Company expects commercial transport OEM production rates to continue to decline for the next few years as new transport delivery schedules are canceled or extended. The Company also expects regional and business jet operations and production rates to be negatively impacted to a lesser degree.

~~Inventory~~On ~~adjustments~~April ~~throughout~~1, ~~the~~2004, ~~industry~~TransDigm’s ~~have~~senior ~~adversely~~credit ~~impacted~~facility ~~both~~was ~~commercial~~amended ~~OEM~~ and ~~aftermarket~~restated ~~shipments.~~to ~~Military~~refinance ~~activity~~approximately is$294 million ~~difficult~~of toterm ~~predict,~~loans ~~but~~then ~~based~~outstanding. ~~upon~~The ~~the Company’s~~scheduled ~~broad~~term ~~base~~loan ofpayments ~~applications,~~under the ~~Company~~amended ~~anticipates~~and arestated ~~modest~~facility ~~increase~~are approximately $2.9 million per annum (payable in ~~military~~quarterly ~~orders~~installments) ~~over~~through ~~the~~June ~~near~~30, 2010. The remaining unpaid principal amount of the term loan (approximately $276 million) will be due on July 22, 2010.

~~Net~~On ~~sales~~July 22, ~~operating~~2003, ~~income~~Holdings consummated a merger with TD Acquisition Corporation (“TD Acquisition”) pursuant to which TD Acquisition merged with and ~~EBITDA~~into ~~during~~Holdings, with Holdings continuing as the ~~first~~surviving ~~nine~~corporation ~~months~~as a wholly-owned subsidiary of ~~fiscal~~a ~~year~~newly ~~2002 were~~formed ~~higher~~corporation, ~~than~~TD Holding Corporation (the ~~Company~~“Merger”). ~~anticipated~~In ~~compared~~connection towith ~~its~~the ~~near~~Merger, ~~term~~TransDigm ~~market~~Inc. ~~forecast~~completed ~~immediately~~a ~~following~~tender ~~September~~offer ~~11th.~~for ~~The~~its ~~Company~~outstanding ~~generated~~10 3/8% ~~net~~Senior ~~sales,~~Subordinated ~~operating~~Notes ~~income~~due ~~and~~2008 ~~EBITDA~~(the of“10 3/8% ~~$180~~Senior Subordinated Notes”).7 Of the $200 million aggregate principal amount of outstanding 10 3/8% Senior Subordinated Notes, a total of approximately $61197.68 million aggregate principal amount of 10 3/8% Senior Subordinated Notes were validly tendered and the remaining $712.72 million aggregate principal amount of 10 3/8% Senior Subordinated Notes were defeased pursuant to the terms of the indenture governing the 10 3/8% Senior Subordinated Notes. In December 2003, ~~respectively for~~TransDigm Inc. redeemed the ~~thirty-nine~~10 3/8% ~~week~~Senior ~~period~~Subordinated ~~ended~~Notes ~~June~~that 29were previously defeased. In addition, ~~2002~~as a result of the consummation of the Merger, the outstanding balance of $197.5 million under TransDigm Inc.’s then existing senior credit facility became due and was repaid in its entirety upon the closing of the Merger. The cash merger consideration of $63759.07 million paid to Holdings’ former common and preferred stockholders, holders of in-the-money stock options and the holder of the warrant to purchase Holdings’ common stock (including merger related expenses of approximately $2329.1 million borne by the then existing equity holders of Holdings and excluding the $2635.67 million ~~for~~fair ~~the~~value ~~thirteen~~of ~~week~~stock options ~~period~~rolled ~~ended~~over ~~June~~in 29connection with the Merger), ~~2002~~acquisition fees and expenses of approximately $34.7 Asmillion, ~~disclosed~~and inrepayment ~~the~~of ~~Company~~substantially all of TransDigm Inc.’s ~~Registration~~then ~~Statement~~existing onindebtedness ~~Form~~in ~~S-4,~~connection ~~dated~~with ~~June~~the ~~28,~~consummation ~~2002,~~of the ~~pro~~Merger ~~forma~~was ~~net~~financed ~~sales,~~through: ~~operating~~(1) ~~income~~an investment of $471.3 million in TD Holding Corporation (“TD Holding”) by Warburg Pincus Private Equity VIII, L.P. (“Warburg Pincus”) and ~~EBITDA,~~certain Asother ~~Defined~~institutional ~~were~~investors ~~$252~~which was ultimately contributed as equity to TD Acquisition which then contributed such proceeds as equity to TD Funding Corporation which merged with and into TransDigm Inc.3 ~~million~~in connection with the Merger, (2) $70295.90 million of borrowings under a new secured term loan facility, ~~and~~(3) $90400.20 million, ~~respectively,~~of ~~for~~proceeds from the ~~twelve~~issuance ~~months~~of ~~ended~~new ~~March~~8 3/8% ~~30,~~Senior ~~2002.~~Subordinated ~~Absent~~Notes ~~any~~due 2011 ~~further~~(“8 3/8% ~~disruptive~~Senior ~~events,~~Subordinated Notes”) and (4) the ~~Company~~use ~~expects~~of ~~that~~existing ~~for~~cash ~~fiscal year~~balances. ~~2002~~The ~~net~~8 3/8% ~~sales~~Senior ~~will~~Subordinated beNotes ~~slightly~~are ~~below,~~fully and ~~operating~~unconditionally ~~income~~guaranteed, jointly and ~~EBITDA,~~severally Asand ~~Defined~~on ~~will~~an ~~exceed~~unsecured senior subordinated basis, by Holdings and all of TransDigm’s existing domestic subsidiaries. Following the ~~corresponding~~Merger, ~~amounts~~Warburg ~~for~~Pincus controls a majority of the ~~twelve~~outstanding ~~months~~common ~~ended~~stock ~~March~~of ~~30,~~TD ~~2002~~Holding.

The following table sets forth a reconciliation of EBITDA and EBITDA, As Defined, to our net income reported under Generally Accepted Accounting Principles, or GAAP. EBITDA represents earnings before interest, taxes, depreciation, and amortization. EBITDA, As Defined, isrepresents ~~calculated~~EBITDA, byplus ~~adding~~inventory topurchase ~~EBITDA~~accounting ~~the~~adjustments, ~~incremental~~certain ~~inventory~~other ~~costs~~non-recurring ~~associated~~merger ~~with~~expenses, ~~the~~non-cash ~~write~~compensation upand ofdeferred ~~inventory~~compensation ~~required~~charges byand ~~the~~acquisition ~~purchase~~integration ~~accounting~~costs, ~~treatment~~as ~~applied~~applicable. toManagement believes that the ~~acquisitions~~ presentation of ~~Champion~~EBITDA ~~Aerospace~~ and aEBITDA, ~~product~~As ~~line~~Defined, will enhance an investor’s understanding of our operating performance. EBITDA and EBITDA, As Defined, are ~~presented~~also ~~herein~~the tomeasures ~~provide~~used ~~additional~~by ~~information~~TransDigm’s ~~with~~senior ~~respect~~management to evaluate the ~~ability~~performance of ~~the~~TransDigm’s ~~Company~~various tolines ~~satisfy~~of ~~its~~business ~~debt~~and ~~service~~for other required or discretionary purposes, ~~capital~~such ~~expenditure~~as ~~and~~measuring ~~working~~performance ~~capital requirements~~under ~~and~~our ~~because~~employee incentive programs. The credit agreement requires the Company to comply with certain financial ~~types~~ratios, ofincluding ~~covenants~~a inleverage ~~TransDigm’s~~ratio, fixed charged coverage ratio and ~~Holdings’~~interest ~~borrowing~~coverage ~~arrangements~~ratio. ~~are~~Leverage ~~tied~~ratio tois ~~similar~~defined ~~measures.~~in ~~While~~the ~~EBITDA-based~~credit ~~measures~~agreement, ~~are~~as ~~frequently~~of ~~used~~any date, as ~~measures~~the ratio of ~~operations~~the ~~and~~total indebtedness of the ~~ability~~Company toon ~~meet~~a ~~debt~~consolidated basis ~~service~~on ~~requirements,~~such ~~they~~date ~~are~~to ~~not~~Consolidated ~~necessarily~~EBITDA ~~comparable~~(as todefined ~~other~~in ~~similarly~~the ~~titled~~credit ~~captions~~agreement) for the period of ~~other~~four ~~companies~~consecutive ~~due~~fiscal quarters most recently ended on or prior to ~~differences~~such date. Fixed charge coverage ratio is defined in ~~methods~~the credit agreement as, for any period, the ratio of ~~calculation.~~(a) Consolidated EBITDA ~~and~~for ~~EBITDA~~such period to (b) consolidated fixed charges for such period. Interest coverage ratio is defined as, Asfor ~~Defined~~any ~~are~~period, ~~not~~the ~~measurements~~ratio of ~~financial~~(a) ~~performance~~Consolidated ~~under~~EBITDA for such period to (b) consolidated interest ~~accounting~~expense ~~principles~~for ~~generally~~such ~~accepted~~period. The failure to comply with the financial covenants in the ~~United~~credit ~~States~~agreement could result in an event of ~~America~~default thereunder (and, ~~should~~in ~~not~~turn, bean ~~considered~~event asof default under the credit agreement could result in an ~~alternative~~event toof ~~cash~~default under ~~flow~~the ~~from~~indenture ~~operating~~governing ~~activities,~~the as8 3/8% aSenior ~~measure~~Subordinated ofNotes). ~~liquidity~~The orcredit anagreement ~~alternative~~defines Consolidated EBITDA in a manner equal to ~~net~~how ~~income~~we asdefine ~~indicators~~EBITDA, ofAs ~~the Company’s~~Defined. ~~operating~~Neither ~~performance~~EBITDA ornor ~~any~~EBITDA, ~~other~~As ~~measures~~Defined, is a measurement of financial performance ~~derived~~under GAAP and neither should be considered as an alternative to (1) net income determined in accordance with ~~accounting~~GAAP ~~principles~~or ~~generally~~(2) ~~accepted~~operating incash ~~the~~flows ~~United~~determined ~~States~~in ofaccordance ~~America~~with GAAP.

~~During~~-21- fiscal year 2002, the Company was selected by Airbus to provide certain cockpit door security mechanisms. The Company has received orders for approximately $13 million as of June 29, 2002 and anticipates receiving additional orders in the fourth quarter of fiscal 2002 and in fiscal 2003. Shipments through June 29, 2002 have been modest but will increase through the balance of fiscal 2002 and into fiscal 2003.

This section includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. There can be no assurances that the Company’s current outlook will prove to be correct.

Significant Acquisition

In the ordinary course of business, the Company pursues acquisitions where it believes it can generate value. The following is a summary of a significant acquisition during 2001.

On May 31, 2001, TransDigm (through a newly-formed, wholly-owned subsidiary, Champion Aerospace Inc.) acquired substantially all of the assets and certain liabilities of the Champion Aviation Products business from Federal Mogul Ignition Company (“Federal-Mogul”), a wholly-owned subsidiary of Federal-Mogul Corporation, for approximately $160.1 million in cash, subject to adjustment based on the level of acquired working capital as of the closing of the acquisition. The Champion Aviation Products (“Champion Aerospace”) business is engaged in researching, designing, developing, engineering, manufacturing, marketing, distributing and selling ignition systems and related components and other products, including, without limitation, igniters, spark plugs, exciters; for turbine and piston aircraft applications as well as other aerospace engine and industrial applications.

Significant Accounting Policies

The Company’s consolidated financial statements reflect the selection and application of accounting policies that require management to make significant estimates and assumptions. The Company’s significant accounting policies are described in Note 3 to the consolidated financial statements included with the Company’s Form 10-K for the fiscal year ended September 30, 2001.

Accounting estimates are an integral part of the consolidated financial statements and are based on knowledge and experience about past and current events and on assumptions about future events. Significant accounting estimates reflected in the Company’s consolidated financial statements for the 2001 fiscal year and the thirteen and thirty-nine

~~week~~Management’s ~~periods~~calculation ~~ended~~of ~~June~~EBITDA ~~29, 2002~~ and ~~June 30~~EBITDA, ~~2001~~As ~~include the valuation allowances for inventory obsolescence and uncollectible accounts receivable~~Defined, ~~accrued~~may ~~liabilities~~not ~~recognized~~be ~~for losses~~comparable onto ~~uncompleted~~the ~~contracts,~~calculation ~~environmental costs, sales returns and repairs, and preliminary allocations~~ of ~~purchase~~similarly titled ~~prices~~measures ~~for~~reported ~~business~~by ~~combinations~~other ~~along with the pending purchase price adjustment amounts~~companies.

New Accounting Standards


	Thirteen Weeks Ended June 26, 2004		Thirteen Weeks Ended June 28, 2003 (Predecessor)		Thirty-Nine Weeks Ended June 26, 2004		Thirty-Nine Weeks Ended June 28, 2003 (Predecessor)
	(in millions)
Net income	$	11.2	$	14.1	$	16.5	$	39.9
Adjustments:
Depreciation and amortization expense		4.9		1.9		14.3		5.8
Interest expense, net		11.7		8.2		36.8		26.2
Income tax provision		6.5		7.2		9.7		22.4

EBITDA		34.3		31.4		77.3		94.3
Adjustments:
Inventory purchase accounting adjustments ⁽¹⁾		—		0.7		18.1		0.7
Acquisition integration costs ⁽²⁾		0.2		0.6		1.2		1.2
Non-cash compensation and deferred compensation costs ⁽³⁾		1.5		—		4.6		—

EBITDA, As Defined	$	36.0	$	32.7	$	101.2	$	96.2

~~In June 2001, the Financial Accounting Standards Board~~ (~~“FASB”~~1) ~~issued~~This ~~Statement~~represents ~~of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). SFAS No. 142 changes~~ the ~~accounting~~portion ~~for goodwill from an amortization method to an impairment-only approach. Amortization~~ of ~~goodwill, including goodwill recorded as a result of past business combinations, will cease upon adoption of this statement, which must occur no later than~~ the ~~first~~purchase ~~quarter~~accounting ofadjustments ~~our~~to ~~year~~inventory ~~ending~~pertaining ~~September 30,~~to ~~2003. In addition, upon implementation of this statement,~~ the ~~carrying~~Merger ~~amounts~~and ofNorco ~~intangible assets~~acquisition ~~recorded in connection with past business combinations~~ that dowas ~~not~~charged ~~meet~~to ~~the~~cost ~~criteria~~of insales ~~SFAS No. 141, Business Combinations, for recognition apart from goodwill, must be reclassified to goodwill~~ when ~~SFAS No. 142 is implemented. We have not determined~~ the ~~impact~~inventory ~~that~~was ~~this statement will have on our consolidated financial position or results of operations~~sold.

In(2) ~~June 2001,~~Represents ~~the~~costs ~~FASB~~incurred ~~issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement requires entities~~ to ~~record~~integrate the ~~fair~~Norco ~~value~~business of(see aNote ~~liability~~4 ~~for an asset retirement obligation in the period in which it is incurred. The amount recorded as a liability will be capitalized by increasing the carrying amount~~ of the ~~related~~Notes ~~long-lived asset. Subsequent~~ to ~~initial~~Condensed ~~measurement,~~Consolidated ~~the~~Financial ~~liability~~Statements) isinto ~~accreted to~~ the ~~ultimate~~Company’s amount anticipated to be paid and is also adjusted for revisions to the timing of the amount of estimated cash flows. The capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liabilityWaco, anTexas ~~entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement~~operations. ~~The provisions of this statement become effective for our fiscal year ending September 30, 2003. We have not determined the impact, if any, that this statement will have on our financial statements.~~

In(3) ~~August 2001,~~Represents the ~~FASB~~expenses ~~issued~~recognized ~~SFAS~~by ~~No. 144, Accounting for Impairment or Disposals of Long-Lived Assets. This statement specifies~~ the ~~accounting~~Company ~~model~~under toa bestock ~~used~~option ~~for~~plan ~~long-lived~~and ~~assets~~two todeferred becompensation ~~disposed~~plans of byTD ~~sale~~Holding ~~(whether~~that ~~previously~~relate ~~held~~to ~~and used or newly acquired) and by broadening~~ the ~~presentation~~ ofCompany’s ~~discontinued~~employees ~~operations~~who toparticipate ~~include~~in ~~more disposal transactions. The provisions of this statement become effective for our fiscal year ending September 30, 2003. We have not determined~~ the ~~impact that this statement will have on our consolidated financial position or results of operations~~plans.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with GAAP, which often requires the judgment of management in the selection and application of certain accounting principles and methods. Management believes that the quality and reasonableness of our most critical policies enable the fair presentation of our financial position and results of operations. However, investors are cautioned that the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

We have identified the following as the most critical accounting policies upon which our financial status depends. These critical policies were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. Our most critical accounting policies are as follows:

Revenue Recognition and Related Allowances: Revenues are recognized based upon shipment of products to the customer, at which time title and risk of loss passes to the customer. Substantially all sales are made pursuant to

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firm, fixed-price purchase orders received from customers. Provisions for returns, estimated contract losses, uncollectible accounts and the cost of repairs under contract warranty provisions are provided for in the same period as the related revenues are recorded and are principally based on historical results modified, as appropriate, by the most current information available. We have a history of making reasonably dependable estimates of such allowances; however, due to uncertainties inherent in the estimation process, it is possible that actual results may vary from the estimates and the differences could be material.

Management estimates the allowance for doubtful accounts based on the aging of the accounts receivable and customer creditworthiness. The allowance also incorporates a provision for the estimated impact of disputes with customers. Management’s estimate of the allowance amounts that are necessary includes amounts for specifically identified losses and a general amount for estimated losses. The determination of the amount of the allowance for doubtful accounts is subject to significant levels of judgment and estimation by management. If circumstances change or economic conditions deteriorate, management may need to increase the allowance for doubtful accounts.

The Company provides limited warranties in connection with the sale of its products. The warranty period for products sold varies throughout the Company’s operations, ranging from ninety days to five years; however, the warranty period for the majority of the Company’s sales generally does not exceed one year. In addition, certain contracts with distributors contain right of return provisions. The Company accrues for estimated returns and warranty claims based on knowledge of product performance issues and excess inventories provided by its customers and industry sources and also provides a general amount based on historical results. Actual product returns and warranty claims have not differed materially from the estimates originally established; however, due to uncertainties in the estimation process, it is possible that actual results in the future may vary from the estimates and the differences could be material.

Although the majority of the Company’s sales, particularly sales into the aftermarket, are made pursuant to firm, fixed-price purchase orders received from customers without long-term agreements, the Company has executed long-term supply agreements with certain OEMs, which cover particular products and require the Company to supply all the amounts ordered by the customers during the term (generally three to five years) of the agreements at specified prices. The Company expects to incur losses under some of the contracts. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are identified, based on estimated future shipment quantities provided by customers or industry sources and other factors. The cumulative effect of revisions to estimated future contract revenues and completion costs is recorded in the accounting period in which the amounts become known and can be reasonably estimated. Such revisions could occur any time there are changes to estimated future revenues or costs, and the effects could be material.

Inventories: Inventories are stated at the lower of cost or market. Cost of inventories is determined by the average cost and the first-in, first-out (FIFO) methods. Because the Company sells products that are installed on airframes that can be in-service for twenty or more years, it must keep a supply of such products on hand while the airframes are in use. Provision for potentially obsolete or slow-moving inventory is made based on our analysis of inventory levels, past usage and future sales forecasts. Although management believes that the Company’s estimates of obsolete and slow-moving inventory are reasonable, actual results may differ materially from the estimates and additional provisions may be required in the future. In addition, in accordance with industry practice, all inventories are classified as current assets as all inventories are available and necessary to support current sales, even though a portion of the inventories may not be sold within one year.

Intangible Assets: The Merger has resulted in significant increases in indefinite-lived intangible assets and goodwill. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of the Company’s intent to do so. Goodwill and indefinite-lived intangible assets are recorded at fair value on the date of acquisition and, under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), are reviewed at least annually for impairment based on cash flow projections and fair value estimates. The determination of undiscounted cash flows is based on the Company’s strategic plans and long-range planning forecasts. The revenue growth rates included in the plans are based on industry and Company specific data. The profit margin assumptions included in the plans are projected based on the current cost structure and anticipated cost changes. If different assumptions were used in these plans, the related undiscounted cash flows used in measuring impairment could be different and the recognition of an impairment loss might be required. Intangible assets, such as goodwill, that have an indefinite useful life are not amortized. All other intangible assets are amortized over their estimated useful lives.

-23-

Stock Options and Deferred Compensation Plans: Prior to the Merger, the Company applied Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations in accounting for its stock option plans. No compensation cost was recognized for Holdings’ stock option plans because the exercise price of the options issued equaled the fair value of the common stock on the grant date.

Effective with the consummation of the Merger and the issuance of TD Holding stock options to Company employees, the Company adopted the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, which requires the measurement of compensation expense under the stock option plan to be based on the estimated fair values of the awards under the plan on the grant dates and amortizes the expense over the options’ vesting periods. In addition, the Company accounts for the cost of the deferred compensation plans of TD Holding established in conjunction with the Merger in accordance with Opinion No. 12 of the Accounting Principles Board, which requires the cost of deferred compensation arrangements to be accrued over the service period of the related employees in a systematic and rational manner.

Because the stock options and deferred compensation plan interests issued to Company employees in conjunction with, or subsequent to, the Merger relate to the stock and employee benefit plans of TD Holding, the cost of such compensation arrangements is recognized by the Company as an expense and capital contribution from TD Holding.

Results of Operations

The following table sets forth, for the periods indicated, certain operating data of the Company as a percentage of net sales.

	Thirteen Week Periods Ended						Thirty-Nine Week Periods Ended
	June 29, 2002			June 30, 2001			June 29, 2002			June 30, 2001
	June 26, 2004			June 28, 2003			June 26, 2004			June 28, 2003
Net sales	100	~~100~~%	%	100	~~100~~%	%	100	~~100~~%	%	100	~~100~~%	%
Gross profit	52	48		48	39		43	46		48	42
Selling and administrative		8			10			9			10
Selling and administrative expenses	10			9			10			9
Amortization of intangibles	4	2		0	2		4	2		0	1
Research and development		1			1			1			2
Income from operations	38			39			29			39
Income from operations		37			26			34			29
Interest expense - net	15			11			17			11
Interest expense- net		16			14			15			17
Income tax provision	8			9			4			10
Provision for income taxes		7			5			7			5
Net income	15	%		19	%		8	%		18	%
Net income		14	%		7	%		12	%		7	%

Changes in Results of Operations

Thirteen -week period ended June 2926, ~~2002~~2004 compared with the thirteen -week period ended June 3028, ~~2001~~ 2003.

• Net Sales. Net sales increased by $80.86 million, or 160.38%, to $6376.04 million for the quarter ended June 2926, ~~2002 from $54.2 million for the comparable quarter last year~~2004, ~~primarily due to the Champion Aerospace acquisition, which more than offset decreases in sales resulting~~ from ~~the events described above in “Recent Developments”. • Gross Profit. Gross profit (net sales less cost of sales) increased by~~ $975.58 million, ~~or 45.1%, to $30.6 million~~ for the ~~quarter ended June 29, 2002 from $21.1 million for the~~ comparable quarter last year. This increase is ~~attributable~~primarily due to ~~the~~increases ~~higher sales discussed above and $3.2 million of non-cash charges~~ in ~~2001~~aftermarket ~~resulting from inventory purchase accounting adjustments pertaining to the Champion Aerospace acquisition and the acquisition of a product line. Gross profit as a percentage of net~~ sales ~~was 48% during the third quarter~~ of ~~fiscal~~approximately 2002 compared to 39% for the same period in fiscal 2001. The increase is due to the non-cash charges discussed above, cost saving actions taken after the September 11th terrorist attacks, and the strength of the Company’s proprietary products and market positions. • Selling and Administrative. Selling and administrative expenses decreased by $06.1 million, oran ~~2.5%,~~increase toin ~~$5.1~~OEM million for the quarter ended June 29, 2002 from $5.2 million for the quarter ended June 30, 2001. This decrease principally resulted from cost saving actions taken as a result of the September 11th terrorist attacks, partially offset by the Champion Aerospace acquisition. Selling and administrative expenses as a percentage of net sales ~~decreased from 9.6% for the quarter ended June 30, 2001 to 8.0% for the quarter ended June 29, 2002 due to increased selling and administrative efficiencies as a result~~ of ~~the Champion Aerospace acquisition and the cost reductions discussed above. • Amortization of Intangibles. Amortization of intangibles expense increased by~~ $0.9 million, orand ~~103.2%~~an ~~for~~increase ~~the quarter ended June 29, 2002 to $1.8 million from $0.9 million for the comparable quarter last year, due primarily to amortization of the intangible assets recognized~~ in ~~connection~~sales ~~with the Champion Aerospace acquisition. • Research and Development. Research and development expense~~ of $~~0.7 million for the quarter ended June 29, 2002 was consistent with the expense for the quarter ended June 30, 2001 of $0.8 million. Research and development expense, as a percentage of net sales, was~~ 1~~% for the quarters ended June 30, 2001 and June 29, 2002, respectively~~. ~~• Income from Operations. Operating income increased by $8.9 million, or 62.6%, to $23.~~1 million ~~for~~due ~~the quarter ended June 29, 2002 from $14.2 million for the quarter ended June 30, 2001, primarily as a result of the factors referred~~ to ~~above. • Interest Expense. Interest expense increased by $2.4 million, or 29.9%, to $10.3 million for~~ the ~~third~~Norco ~~quarter of fiscal 2002 from $7.9 million for the third quarter of fiscal 2001. This was caused by an increase in the level of outstanding borrowings as a result of the Champion Aerospace~~ acquisition, partially offset by ~~a decrease in average interest rates~~$7.5 •million ~~Income Taxes. Income tax expense as a percentage~~ of ~~income before income taxes decreased to 33% for the thirteen~~non-~~week~~repeat ~~period~~sales ~~ended~~in ~~June 29, 2002 compared to~~ the ~~43%~~prior ~~effective tax rate for the third quarter last~~ year. ~~This~~which ~~decline~~supported ~~results from an adjustment to~~ the ~~estimated~~cockpit ~~annual~~security ~~effective~~retrofit tax rate due to increased tax benefits expected to result from higher foreign sales, research and development tax credits, and less non-deductible expenses. • Net Income. The Company earned $8.6 million for the third quarter of ~~fiscal 2002 compared to $3.6 million earned for~~ the ~~third~~entire ~~quarter~~Airbus ~~of fiscal 2001 primarily as a result of the factors referred to above~~fleet.

~~Thirty~~-~~nine week period ended June 29, 2002 compared with the thirty~~24-~~nine~~ ~~week period ended June 30, 2001.~~

•

Net Sales. Net sales increased by $48.6 million, or 36.8%, to $180.7 million for the thirty-nine week period ended June 29, 2002 from $132.1 million for thirty-nine week period ended June 30, 2001, primarily due to the Champion Aerospace and product line acquisitions, which more than offset decreases in sales resulting from the events described above in “Recent Developments”.

•

Gross Profit. Gross profit (net sales less cost of sales) increased by $28.0 million, or 49.8%, to $84.1 million for the thirty-nine week period ended June 29, 2002 from $56.1 million for the comparable thirty-nine week period last year. This increase is attributable to the higher sales discussed above and $3.3 million of non-cash charges in 2001 resulting from inventory purchase accounting adjustments pertaining to the Champion Aerospace acquisition and the acquisition of a product line. Gross profit as a percentage of net sales was 46% during the thirty-nine week period of fiscal

2002 compared to 42% for the thirty-nine week period in fiscal 2001. The increase is primarily due to the 2001 non-cash charges discussed above, cost saving actions taken after the September 11th terrorist attacks, and the strength of the Company’s proprietary products and market positions. • ~~Selling~~Gross ~~and Administrative~~Profit. ~~Selling~~Gross ~~and~~profit administrative expenses increased by $1.8 million, or 13.2%, to $15.5 million for the thirty-nine week period ended June 29, 2002 from $13.7 million for the thirty-nine week period ended June 30, 2001 primarily due to the Champion Aerospace acquisition. Selling and administrative expenses decreased as a percentage of (net sales toless 8.6% for the thirty-nine week period ended June 29, 2002 from 10.4% for the thirty-nine week period ended June 30, 2001 due primarily to increased selling and administrative efficiencies as a result of the Champion Aerospace acquisition and September 11th related cost ~~reductions. • Amortization~~ of ~~Intangibles.~~sales) ~~Amortization of intangibles expense~~ increased by $3.23 million, or ~~189~~9.01% ~~for the thirty-nine week period ended June 29~~, ~~2002~~ to $439.98 million ~~from $1.7 million~~ for the ~~thirty-nine~~quarter ~~week period~~ ended June 3026, ~~2001,~~2004 ~~primarily~~from ~~as a result of amortization of the intangible assets recognized in connection with the Champion Aerospace acquisition. • Research and Development. Research and development expense was~~ $236.05 million for the ~~thirty-nine~~comparable ~~week~~quarter ~~periods~~last ~~ended June 29, 2002 and June 30, 2001~~year. ~~Research~~Gross ~~and~~profit ~~development expense,~~ as a percentage of ~~net~~ sales, ~~decreased~~improved ~~slightly~~four ~~from~~margin ~~1.5%~~percentage ~~for~~points ~~the thirty-nine week period ended June 30, 2001~~ to ~~1.1~~52% for the ~~thirty-nine~~thirteen week period ended June 2926, ~~2002.~~2004 ~~• Income~~ from ~~Operations. Operating income increased by $22.9 million, or 59.2~~48%, ~~from $38.7 million~~ for the ~~thirty-nine~~comparable ~~week~~ period ~~ended~~last ~~June 30, 2001 to $61~~year.6 ~~million~~The for the thirty-nine week period ended June 29, 2002, primarily as a result of the factors referred to above. • Interest Expense. Interest expense increased by $5.0 million, or 22.4%, to $27.2 million for the thirty-nine week period ended June 29, 2002 from $22.2 million for the thirty-nine week period ended June 30, 2001. This was caused by an increase in ~~the~~gross ~~level~~profit ofand ~~outstanding~~gross ~~borrowings~~profit as a ~~result of the Champion Aerospace acquisition partially offset by a decrease in average interest rates. • Income Taxes. Income tax expense as a~~ percentage of ~~income~~sales ~~before~~was ~~income~~primarily ~~taxes~~due ~~decreased~~ to ~~39%~~favorable ~~for~~product ~~the thirty-nine week period ended June 29~~mix, ~~2002 compared to~~ the ~~42%~~strength ~~effective~~of ~~tax rate for~~ the ~~thirty-nine~~Company’s ~~week~~proprietary ~~period~~products ~~ended June 30, 2001. This lower estimated annual effective tax rate was due to increased tax benefits expected to result from higher foreign sales, research~~ and ~~development~~market ~~tax credits~~positions, and ~~less~~productivity ~~non-deductible~~savings ~~expenses.~~from ~~• Net Income. The Company earned $20.9 million for~~ the ~~thirty-nine~~Norco ~~week~~acquisition ~~period~~and ~~ended~~core ~~June 29, 2002 compared to net income of $9~~operations.~~5 million for the thirty-nine week period ended June 30, 2001, primarily as a result of the factors referred to above.~~

• ~~Liquidity~~Selling and ~~Capital~~Administrative ~~Resources~~Expenses. Selling and administrative expenses increased by $0.8 million, or 11.7%, to $7.5 million, or 9.9% of sales, for the quarter ended June 26, 2004 from $6.7 million, or 8.9% of sales, for the comparable quarter last year. This increase includes $1.3 million, or 1.8% of sales, of non-cash stock option and deferred compensation plan charges that were recognized by the Company from TD Holding. This increase was partially offset by cost reductions realized through the relocation of the Norco manufacturing process in Connecticut into the Company’s facility in Waco, Texas.

~~The~~• ~~Company~~Amortization ~~generated~~of ~~approximately $34~~Intangibles.1 ~~million~~Amortization of ~~cash~~intangibles ~~from~~increased ~~operating~~by ~~activities during~~$2.6 ~~the~~million ~~thirty-nine week period ended June 29, 2002 compared~~ to ~~approximately~~ $162.09 million ~~during~~for the ~~thirty-nine~~quarter ~~week period~~ ended June 3026, ~~2001.~~2004 ~~The increase is primarily due to increased earnings~~ from ~~the~~$0.3 ~~Champion~~million ~~Aerospace~~for ~~acquisition, cost saving actions~~ the ~~Company~~comparable ~~undertook~~quarter aslast ayear ~~result~~due ofto the ~~September~~amortization ~~11th~~expense ~~terrorist~~on ~~attacks,~~additional aidentifiable ~~decrease~~intangible inassets ~~accounts~~recognized ~~receivable,~~in ~~and~~accounting ~~the~~for ~~strength of~~ the ~~Company’s proprietary products and market positions~~Merger.

~~Cash used~~• inIncome ~~investing~~from ~~activities~~Operations. ~~was~~Operating ~~approximately~~income decreased by $20.1 million, ~~during~~or ~~the~~0.3%, ~~thirty-nine~~to ~~week~~$29.4 ~~period~~million, ~~ended~~or ~~June~~38.5% 29of sales, ~~2002~~for ~~compared~~the toquarter ~~approximately~~ended June 26, 2004 from $~~171~~29.15 million, ~~during~~or 38.9% of sales, for the ~~thirty-nine~~comparable ~~week~~quarter last year. Operating income during the period ended June 3026, ~~2001~~2004 was reduced by additional non-cash charges of $2.6 ~~The~~million, ~~change~~or is3.4% ~~mainly~~of ~~due~~sales, relating to ~~the acquisition~~amortization of ~~Champion~~intangibles ~~Aerospace~~ and a$1.5 ~~product~~million, ~~line~~or in2.0% ~~the~~of ~~2001~~sales, ~~period~~of deferred compensation and stock option charges.

~~Cash~~• ~~used~~Interest inExpense. ~~financing~~Interest ~~activities~~expense ~~during~~increased ~~the thirty-nine week period ended June 29, 2002 was approximately~~ $103.25 million, ~~compared~~or 42.9%, to ~~cash provided by financing activities of~~ $~~160~~11.97 million ~~during~~for the ~~thirty-nine~~quarter ~~week period~~ ended June 3026, ~~2001.~~2004 ~~The cash used in financing activities during fiscal 2002 resulted~~ from ~~the repayment of term loans of approximately~~ $848.12 million ~~offset~~for ~~by proceeds from~~ the ~~issuance~~comparable ofquarter ~~additional~~last ~~Senior~~year ~~Subordinated~~principally ~~Notes, net of fees, of approximately $73.9 million. The cash provided by financing activities of approximately $160.9 million during fiscal 2001 was primarily~~ due to the ~~incurrence~~additional ~~of substantial~~ indebtedness ~~relating~~incurred toas ~~the~~a ~~acquisition~~result of ~~Champion~~the ~~Aerospace~~Merger.

•

Income Taxes. Income tax expense as a percentage of income before income taxes increased to approximately 36% for the quarter ended June 26, 2004 compared to 34% for the comparable quarter last year. The lower estimated effective tax rate in the prior year was due to increased tax benefits generated by higher foreign sales and a decrease in estimated state and local taxes.

•	Net Income. The Company earned $11.2 million, or 14.7% of net sales, for the third quarter of fiscal 2004 compared to $14.1 million, or 18.6% of sales, for the third quarter of fiscal 2003, primarily as a result of the factors referred to above.

Thirty-nine week period ended June 26, 2004 compared with the thirty-nine week period ended June 28, 2003.

•

Net Sales. Net sales decreased by $9.2 million, or 4.1%, to $215.9 million for the thirty-nine week period ended June 26, 2004, from $225.2 million for the comparable period last year. The decrease is primarily due to $26.9 million of non-repeat sales in the prior year which supported the cockpit security retrofit of the entire Airbus fleet and a slight decrease in OEM sales, partially offset by an increase in aftermarket sales of $11.1 million and an increase in sales of $7.8 million due to the Norco acquisition.

•

Gross Profit. Gross profit (net sales less cost of sales) decreased by $14.2 million, or 13.2%, to $93.6 million for the thirty-nine week period ended June 26, 2004 from $107.7 million from the comparable period last year. This decrease is primarily attributable to the $18.1 million, or 8.4% of net sales, non-cash charge included in cost of sales pertaining to the inventory purchase price adjustment recorded in accounting for the Merger. Gross profit as a percentage of sales decreased to 43.3% for the thirty-nine week period ended June 26, 2004 from 47.8% for the comparable period last year principally due to the non-cash charge discussed above partially offset by favorable product mix, continuing cost control measures and productivity savings from the Norco acquisition and the strength of the Company’s proprietary products and market positions.

-25-

~~The~~• ~~Company’s~~Selling ~~senior~~and ~~secured~~Administrative ~~credit~~Expenses. ~~facility~~Selling ~~(the~~and ~~“Senior~~administrative ~~Credit~~expenses ~~Facility”)~~increased ~~consists~~by ~~of (1) a~~ $303.06 million, ~~Revolving~~or ~~Credit Facility maturing six years from December 3~~19.5%, ~~1998~~ ~~(the~~to ~~“Execution Date”) and (2) a Term Loan Facility in an initial aggregate principal amount of~~ $~~263~~22.80 million, ~~consisting~~or ~~of a $43~~10.32% ~~million~~of ~~Tranche~~sales, Afor ~~Facility~~the ~~maturing~~thirty-nine ~~six~~week ~~years~~period ~~from~~ended ~~the~~June ~~Execution Date~~26, a2004 ~~$105.5 million Tranche B Facility maturing seven and a half years~~ from ~~the Execution Date and a~~ $~~115~~18.04 ~~Tranche~~million, Cor ~~Facility maturing eight and a half years from the Execution Date~~8.2% As of ~~June 29~~sales, ~~2002,~~for the ~~outstanding~~comparable ~~balances~~period oflast ~~the~~year ~~Revolving~~primarily ~~Credit~~due ~~Facility~~to ~~and the Tranche A, B and C facilities were~~ $~~0, $0, $84~~4.1 million, ~~and~~or ~~$92~~1.49% ~~million~~of sales, ~~respectively.~~of ~~The~~non-cash ~~Company~~stock ~~may~~option ~~not~~and ~~borrow~~deferred ~~any~~compensation ~~additional~~plan ~~amounts~~expenses ~~under~~that ~~the~~were ~~Tranche~~recognized A,by ~~B and C facilities of~~ the ~~Term~~Company ~~Loan~~from ~~Facility~~TD Holding.

~~The~~• ~~interest rate~~Amortization for the Senior Credit Facility is, at the Company’s option, either (A) a floating rate equal to the base rate plus the applicable margin, as defined in the Senior Credit Facility, or (B) the Eurodollar rate for fixed periods of ~~one, two, three, or six months, plus the applicable margin~~Intangibles. ~~The~~Amortization ~~overall interest rate and applicable margin are determined based on (1) in the case~~ of ~~the~~intangibles ~~Tranche~~increased ~~A Facility and the Revolving Credit Facility, (A) an interest rate determined~~ by ~~the base rate, plus 2~~$7.~~25%,~~6 ~~2.00%,~~million ~~1.75% or 1.50% depending on Holdings’ ability~~ to ~~achieve the respective debt coverage ratio specified in the Senior Credit Facility, as amended; or (B) an interest rate determined by the Eurodollar Rate, plus 3~~$8.~~25%, 3.00%,~~5 ~~2.75%~~million orfor ~~2.50% depending on Holdings’ ability to achieve~~ the ~~respective~~thirty-nine ~~debt~~week ~~coverage~~period ~~ratio~~ended ~~specified~~June ~~in the Senior Credit Facility~~26, as2004 ~~amended;~~from ~~and (2) in the case of the Tranche B Facility and the Tranche C Facility, (A) an interest rate determined by the base rate, plus 2~~$0.~~50%;~~9 ormillion ~~(B)~~for ~~an interest rate determined by~~ the ~~Eurodollar~~comparable ~~rate,~~period ~~plus~~last ~~3.50%.~~year ~~The~~due ~~Senior Credit Facility is subject~~ to ~~mandatory prepayment with a defined percentage of net proceeds from certain asset sales, insurance proceeds or other awards that are payable in connection with~~ the ~~loss,~~amortization ~~destruction~~expense oron ~~condemnation~~additional ofidentifiable ~~any~~intangible assets, ~~certain~~recognized ~~new debt and equity offerings and, during fiscal 2003 and thereafter, 50% of excess cash flow (as defined~~ in ~~the~~ ~~Senior~~accounting ~~Credit~~for ~~Facility) in excess of a predetermined amount under~~ the ~~Senior Credit Facility~~Merger.

~~The~~• ~~Senior~~Income ~~Credit~~from ~~Facility~~Operations. ~~requires~~Operating ~~the~~income ~~Company~~decreased toby ~~repay~~$25.4 ~~the~~million, ~~outstanding~~or ~~indebtedness~~28.8%, onto a$63.0 ~~periodic~~million, ~~basis through~~or ~~the various maturity dates~~29.2% ~~The~~of ~~Senior~~sales, ~~Credit~~for ~~Facility and~~ the ~~indentures~~thirty-nine ~~governing~~week ~~the~~period ~~Senior~~ended ~~Subordinated~~June ~~Notes~~26, ~~and~~2004 ~~the~~from ~~Holdings~~$88.4 ~~PIK Notes (the “Indentures”) also contain restrictive covenants that~~million, ~~among~~or ~~other~~39.3% ~~things, limit the incurrence~~ of ~~additional indebtedness~~sales, for the ~~payment~~comparable ofperiod ~~dividends,~~last ~~transactions~~year. ~~with~~Operating ~~affiliates,~~income ~~asset~~during ~~sales,~~the ~~acquisitions,~~thirty-nine ~~mergers~~week ~~and~~period ~~consolidations,~~ended ~~liens~~June ~~and encumbrances~~26, ~~and~~2004 ~~prepayments~~was ofreduced ~~other~~by ~~indebtedness~~$18.1 ~~In addition~~million, ~~the~~or ~~Senior Credit Facility requires the Company to meet certain financial ratios~~8.4% ~~Any~~of ~~failure~~sales, tofor ~~comply with~~ the ~~restrictions~~non-cash ofinventory ~~the~~purchase ~~Senior~~price ~~Credit Facility~~adjustment, ~~the~~$4.6 ~~Indentures~~million, or ~~any other subsequent financing agreements may result in an event of default~~2.1% ~~An event~~ of ~~default~~ ~~may~~sales, ~~allow~~for ~~the~~non-cash ~~creditors,~~stock ifoption ~~the~~and ~~agreements~~deferred socompensation ~~provide,~~charges toand ~~accelerate~~ the ~~related~~increase ~~debt~~in asamortization ~~well~~of asintangibles ~~any~~resulting ~~other~~from ~~debt~~the tomerger ~~which~~of a$7.6 ~~cross-acceleration~~million, or ~~cross-default~~3.6% ~~provision~~of ~~applies~~sales. InThese ~~addition,~~non-cash ~~the~~charges ~~lenders~~were ~~may~~partially beoffset ~~able~~by tofavorable ~~terminate~~operating ~~any commitments~~results ~~they~~due ~~had made~~ to ~~supply~~favorable ~~the~~product ~~Company~~mix, ~~with~~continuing ~~further~~cost ~~funds.~~control ~~The~~measures ~~Company~~and isproductivity ~~currently~~savings indiscussed ~~compliance with the covenants contained in the Senior Credit Facility and the Indentures~~above.

~~TransDigm~~• ~~repaid~~Interest ~~the Tranche~~Expense. AInterest ~~facility~~expense ~~and~~increased ~~part~~$10.7 ofmillion, ~~the~~or ~~Tranche B~~40.9%, ~~and~~to C$36.9 ~~facilities~~million ~~with~~for ~~a portion of~~ the ~~proceeds~~thirty-nine ~~from~~week ~~the~~period ~~offering~~ended ofJune an26, ~~additional~~2004 from $7526.2 million infor ~~aggregate principal amount of Senior Subordinated Notes. In addition, TransDigm amended~~ the ~~Senior Credit~~comparable ~~Facility~~period inlast ~~connection~~year ~~with~~principally ~~the~~due ~~offering~~to of the additional ~~Senior~~indebtedness ~~Subordinated~~incurred ~~Notes.~~as ~~The~~a ~~amendments~~result toof the ~~Senior Credit Facility:~~ Merger.

•	allowed TransDigm to incur the indebtedness represented by the additional Senior Subordinated Notes;
•	allow TransDigm to pay dividends to Holdings for the purpose of retiring the Holdings PIK Notes;
•	allow TransDigm to incur up to $150.0 million of additional bank borrowings or subordinated debt (for which there are currently no commitments to provide such funds), subject to certain restrictions, including a requirement that such debt must be used:
	•	to finance acquisitions permitted by the Senior Credit Facility, as amended, or
	•	to pay the dividends to Holdings to retire the Holdings PIK Notes;
•	allow TransDigm to effect permitted acquisitions, with the aggregate amount paid for all such permitted acquisitions not to exceed $225.0 million;
•	require that at least $10.0 million must remain unused and available under the $30.0 million Revolving Credit Facility immediately following any acquisition;
•	modified certain existing financial covenants; and
•	waive any mandatory prepayment from excess cash flow for fiscal 2002.

•	Income Taxes. Income tax expense as a percentage of income before income taxes was 37% for the thirty-nine week period ended June 26, 2004 compared to the 36% effective tax rate for the comparable period last year.

19• Net Income. The Company earned $16.5 million for the thirty-nine week period ended June 26, 2004 compared to $39.9 million for the comparable period last year, primarily as a result of the factors referred to above.

The prepayment provision of the Holdings PIK Notes contains a prepayment penalty that begins to increase on December 4, 2003. TransDigm may pay a dividend to Holdings to repurchase the Holdings PIK Notes prior to December 4, 2003. The Senior Credit Facility, as amended, will permit this dividend. In addition, TransDigm anticipates that on the date of its payment, this dividend will be permitted under the restricted payments covenant of the Indenture governing the Senior Subordinated Notes.

The Chairman of the Board of Directors of TransDigm and Holdings, Mr. Peacock, holds a presently-exercisable put option enabling him to require Holdings to purchase up to 80% of his common stock (including shares that may be acquired through the exercise of stock options and held at least six months) at fair value, subject to certain restrictions under the Company’s long-term debt agreements and subject to his continued service as Chairman of the Board of TransDigm and Holdings. As of June 29, 2002, 8,114 shares of common stock that Mr. Peacock can acquire under presently-exercisable stock options are subject to the put. The estimated fair value of such shares, net of the exercise price of the related stock options, totaled approximately $8.6 million at June 29, 2002. Mr. Peacock and other members of management hold put rights that may become exercisable in the future with respect to other shares of common stock, including shares of common stock subject to options. Also see Note 5 of the Notes to Consolidated Financial Statements.

The following table sets forth the Company’s contractual cash obligations and other commercial commitments for the next several fiscal years (in millions):

	2002 (1)		2003		2004		2005		2006		2007 and Thereafter		Total
Contractual Cash Obligations:
Long-Term Debt (2)	$	.7	$	4.5	$	13.2	$	36.7	$	54.9	$	296.6	$	406.6
Operating Leases		.3		1.2		1.2		1.1		1.0		5.5		10.3
Redeemable Preferred Stock		—		—		—		—		—		17.7		17.7
Other Long-Term Obligations		.4		2.2		2.2		2.2		—		—		7.0
Total Contractual Cash Obligations	$	1.4	$	7.9	$	16.6	$	40.0	$	55.9	$	319.8	$	441.6

______________

(1) Beginning June 30, 2002.

(2) The 2007 and Thereafter amount includes $30.1 million relating to the Holdings PIK Notes. As mentioned earlier, TransDigm may pay a dividend to Holdings to be used to prepay the Holdings PIK Notes in fiscal 2004.

The Company’s primary future cash needs will consist of debt service and capital expenditures. The Company incurs capital expenditures for the purpose of maintaining and replacing existing equipment and facilities and, from time to time, for facility expansion. Capital expenditures totaled approximately $4.5 million and $4.4 million during fiscal 2001 and 2000, respectively. Going forward, the Company expects its capital expenditures will increase moderately.

The Company may from time to time seek to retire its outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. In addition, the Company may issue additional debt if prevailing market conditions are favorable to doing so.

The Company intends to pursue additional acquisitions that present opportunities consistent with the Company’s value generation strategy. The Company regularly engages in discussions with respect to potential acquisitions and investments. However, there are no binding agreements with respect to any material acquisitions at this time, and there can be no assurance that the Company will be able to reach an agreement with respect to any future acquisition. The Company’s acquisition strategy may require substantial capital, and no assurance can be given that the Company will be able to raise any necessary funds on acceptable terms or at all. If the Company incurs additional debt to finance acquisitions, total interest expense will increase.

The Company’s ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, the Company’s indebtedness, or to fund planned capital expenditures and research and development efforts, will depend on its ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive,

legislative, regulatory and other factors that are beyond its control. Based on its current level of operations and anticipated cost savings and operating improvements, management believes that cash flow from operations, available cash and available borrowings under the Senior Credit Facility, will be adequate to meet future liquidity needs for at least the next several years. There can be no assurance, however, that the Company’s business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or at all or that future borrowings will be available to the Company under the Senior Credit Facility in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs. The Company may need to refinance all or a portion of its indebtedness on or before maturity. There can be no assurance that the Company will be able to refinance any of its indebtedness on commercially reasonable terms or at all. See “Risk Factors”.

Backlog

~~The~~Management ~~Company~~ believes that sales order backlog (i.e., orders for products that have not yet been shipped) is a useful indicator of future sales. As of June 2926, ~~2002~~2004, the Company estimated its sales order backlog at $~~120~~136.78 million compared to an estimated $~~109~~120.0 million ~~reported~~ as of June 3028, ~~2001~~2003. ~~The~~This increase in backlog is ~~primarily~~ due to an increase in orders ~~for~~across ~~the~~various ~~Airbus~~product ~~cockpit~~lines ~~door~~in ~~security~~both ~~mechanisms~~the ~~discussed~~OEM ~~above~~and aftermarket segments. The majority of the purchase orders outstanding as of June 2926, ~~2002~~2004 are scheduled for delivery within the next twelve months. Purchase orders ~~are~~may ~~generally~~ be subject to cancellation by the customer prior to shipment. The level of unfilled purchase orders at any given date during the year will be materially affected by the timing of the Company’s receipt of purchase orders and the speed with which those orders are filled. Accordingly, the Company’s backlog as of June 2926, ~~2002~~2004 may not necessarily represent the actual amount of shipments or sales for any future period.

Foreign Operations

~~The~~Although the Company manufactures all of its products in the United States~~. However~~, asome ~~portion~~components ofare ~~the~~purchased ~~Company’s~~from ~~current~~foreign ~~sales~~suppliers ~~is conducted abroad~~ and a portion of the Company’s products are resold to foreign end-users. ~~These~~Sales ~~sales~~to foreign customers are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other action that would have a direct or indirect adverse impact on the business or market opportunities of the Company within such governments’ countries. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to the Company’s operations and growth strategy.

-26-

Inflation

Many of the Company’s raw materials and operating expenses are sensitive to the effects of inflation, which could result in ~~higher~~changing operating costs. The effects of inflation on the Company’s businesses during the thirteen and thirty-nine week periods ended June 2926, ~~2002~~2004 and June 3028, ~~2001~~2003, respectively, were not significant.

Liquidity ~~Additional~~and ~~Disclosure~~Capital ~~Required~~Resources ~~by Indenture~~

~~Separate~~The ~~financial~~Company ~~statements~~generated of$93.0 ~~TransDigm~~million ~~are~~of ~~not~~cash ~~presented since Holdings has no operations or assets separate~~ from ~~its~~operating ~~investment~~activities induring ~~TransDigm and since~~ the ~~Senior Subordinated Notes are guaranteed by Holdings and all direct and indirect subsidiaries of TransDigm (other than two wholly~~thirty-~~owned,~~nine ~~non-guarantor~~week ~~subsidiaries~~period ~~that~~ended ~~have~~June ~~inconsequential assets~~26, ~~liabilities~~2004 ~~and~~compared ~~equity, and whose only operations are the result of intercompany activity which is immediately dividended back~~ to TransDigm). In addition, Holdings’ only obligations at June 29, 2002 other than its guarantees of debt under the indenture that governs the Senior Subordinated Notes and the Senior Credit Facility consist of (1) the Holdings PIK Notes of $3042.~~1 million due 2009; (2) the Holdings 16% Preferred Stock with an aggregate liquidation preference of $17.~~7 million; ~~and~~generated ~~(3) “put” rights held by certain persons to require Holdings to repurchase, at fair~~during ~~market value, shares of Holdings’ common stock (including shares that may be acquired through~~ the ~~exercise~~comparable ofperiod ~~stock~~ended ~~options)~~June ~~held~~28, ~~by such persons~~2003. The ~~Holdings~~increase ~~PIK Notes bear interest in the form~~ of additional Holdings PIK Notes at 12% annually and the Holdings 16% Preferred Stock accrue dividends in cash, or at Holdings’ option, in the form of additional shares of Holdings cumulative redeemable preferred stock, at 16% annually. Interest expense recognized on the Holdings PIK Notes during the thirteen and thirty-nine week periods ended June 29, 2002 was $050.93 ~~and $2.5~~ million, ~~respectively.~~is ~~Interest~~primarily ~~expense~~due ~~recognized~~to ~~on these notes during~~ the ~~thirteen~~receipt ~~and~~of ~~thirty-nine~~income ~~week~~tax ~~periods~~refunds ~~ended~~of ~~June 30, 2001 was~~ $037.81 million and ~~$2.2 million,~~lower ~~respectively.~~estimated ~~Dividend~~tax ~~accrual~~payments ~~on the Holdings 16% Preferred Stock~~ during the ~~thirteen and~~ thirty-nine week ~~periods~~period ended June 2926, ~~2002~~2004 ~~was $0.7 million and $1.9 million, respectively. As of June 29, 2002, 8,114 shares of common stock that~~resulting ~~the~~primarily ~~Chairman~~from ofmerger ~~the~~expense ~~Board~~ of ~~Directors~~$176 ofmillion ~~TransDigm~~incurred ~~and~~in ~~Holdings,~~fiscal Mr2003. ~~Peacock,~~ ~~can acquire under presently-exercisable stock options are subject to a put after such shares are held at least six~~

Cash used in investing activities was $53.7 million during the thirty-nine week period ended June 26, 2004 consisting primarily of the Company’s net investment in marketable securities of $50.3 million. Cash used in investing activities was $57.0 million during the thirty nine-weeks ended June 28, 2003 primarily a result of the acquisition of Norco.

Cash used in financing activities during the thirty-nine weeks ended June 26, 2004 decreased to $2.7 million compared to $13.9 million during the thirty-nine weeks ended June 28, 2003. The decrease of $11.2 million is primarily due to the repayment in fiscal 2003 of the Holdings PIK Notes of $32.8 million offset by the proceeds of new borrowings of $24.8 million under the then existing senior credit facility relating to the acquisition of Norco.

In connection with the consummation of the Merger, TransDigm Inc. obtained new senior secured credit facilities. The new senior secured credit facilities consisted of a $295 million term loan facility, which was fully drawn on the closing date of the Merger, and a $100 million revolving loan facility. On April 1, 2004, the Company amended and restated its existing credit agreement (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement consists of a term loan facility of $294.3 million, which was fully drawn on the closing date, and a $100 million revolving loan facility, of which $99.5 million was available as of June 26, 2004.

The amended and restated revolving loan facility matures in July 2009 and the amended and restated term loan facility matures in July 2010. The Amended and Restated Credit Agreement requires scheduled quarterly payments of principal on the term loans beginning June 30, 2004 in aggregate annual principal amounts equal to 1% of the original aggregate principal amount of the term loans during the life of the loans, with the balance payable at final maturity. Subject to exceptions, the Amended and Restated Credit Agreement also requires mandatory prepayments of term loans based on certain percentages of excess cash flows, as defined, commencing 95 days after the end of the fiscal year ending on September 30, 2006, net cash proceeds of asset sales, the issuance of equity securities or the issuance of certain debt securities.

In addition, the Company has the right to request (but no lender is committed to provide) additional term loans under such facilities, subject to the satisfaction of customary conditions, including being in compliance with the financial covenants in the credit agreement after giving effect, on a pro forma basis, to any such incremental term loan borrowing.

The interest rates per annum applicable to loans other than swingline loans (i.e., a short term line of credit that is provided as part of the revolving credit facility by the administrative agent, which can be converted at any time by the administrative agent into revolving credit loans under the revolving credit facility), under the Amended and Restated Credit Agreement are, at the Company’s option, equal to either an alternate base rate or an adjusted LIBO rate for one, two, three or six-month interest periods chosen by the Company, in each case, plus an applicable margin percentage. The alternate base rate is the greater of (1) Credit Suisse First Boston’s prime rate or (2) 50 basis points over the weighted average rates on overnight Federal funds as published by the Federal Reserve Bank of New York. The adjusted LIBO rate is determined by reference to settlement rates established for deposits in dollars in the London interbank market for a period equal to the interest period of the loan and the maximum reserve percentages established by the Board of Governors of the United States Federal Reserve to which the Company’s lenders are subject. The applicable margin percentage in the Amended and Restated Credit Agreement is a percentage per

-27-

~~months,~~annum ~~subject~~equal to ~~certain~~(1) ~~restrictions~~1.25% ~~under~~for ~~the~~alternate ~~Company’s~~base ~~long-~~rate term ~~debt~~loans, ~~agreements~~(2) ~~and~~2.25% ~~subject~~for toadjusted ~~his~~LIBO ~~continued~~rate ~~service~~term asloans, ~~Chairman~~(3) ~~of the Board of TransDigm and Holdings~~2.50% ~~The~~for ~~estimated~~alternate ~~fair~~base ~~value~~rate ofrevolving ~~such shares~~loans, ~~net~~and of(4) ~~the exercise price of the related stock options, totaled approximately $8~~3.650% ~~million~~for atLIBO ~~June~~adjusted ~~29,~~rate ~~2002.~~revolving Mrloans. ~~Peacock~~ ~~and~~The ~~other~~applicable ~~members~~margin ofpercentages ~~management~~under ~~hold put rights that may become exercisable in~~ the ~~future~~ ~~with~~revolving ~~respect~~loan tofacility ~~other~~are ~~shares of common stock, including shares of common stock~~ subject to ~~options.~~adjustment ~~Because~~in ~~the~~increments ~~common~~based ~~stock~~upon ~~subject~~the toCompany’s ~~put~~leverage ~~rights~~ratio isunder the ~~required~~Amended toand beRestated ~~repurchased~~Credit atAgreement ~~fair~~so ~~market~~long ~~value,~~as ~~the~~no ~~value~~event of ~~Holdings’~~default ~~repurchase obligation~~has ~~will~~occurred ~~increase~~and tois ~~the extent the fair market value of Holdings’ common stock increases~~continuing.

All ~~Risk~~borrowings ~~Factors~~under the new revolving loan facility are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.

In ~~Set~~connection ~~forth~~with ~~below~~the ~~are~~Merger, ~~important~~the ~~risks~~Company ~~and uncertainties~~also ~~that~~issued ~~could~~$400 ~~cause~~million ~~our~~aggregate ~~actual~~principal amount ~~results~~of to8 3/8% ~~differ~~Senior ~~materially~~Subordinated ~~from~~Notes. ~~those~~Such ~~expressed~~notes indo ~~forward-looking~~not ~~statements~~require ~~made~~principal bypayments ~~our~~prior ~~management.~~to Intheir ~~this~~maturity in ~~section~~July ~~only,~~2011. ~~the~~The ~~words~~notes ~~“TransDigm,”~~are ~~“we,”~~fully ~~“us”~~ and ~~“our”~~ ~~refer~~unconditionally toguaranteed, ~~TransDigm~~jointly ~~Inc.~~ and ~~our~~severally ~~subsidiaries~~and ~~unless~~on ~~the~~an ~~context~~unsecured ~~otherwise~~senior ~~indicates.~~subordinated ~~The~~basis, ~~term~~by “Holdings” ~~refers~~and toall ~~TransDigm~~of ~~Holding~~our ~~Company.~~existing ~~References~~domestic ~~to the “Company” are to Holdings, together with TransDigm and its~~ subsidiaries.

~~Substantial~~Both ~~Leverage—Our~~the ~~substantial~~Amended and Restated Credit Agreement and the new 8 3/8% Senior Subordinated Notes contain restrictive covenants that, among other things, limit the incurrence of additional indebtedness, ~~could~~the ~~adversely~~payment ~~affect~~of ~~our~~dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of other indebtedness. In addition, the Amended and Restated Credit Agreement and the new 8 3/8% Senior Subordinated Notes require the Company to meet certain financial ~~health~~ratios. Any failure to comply with the restrictions of the Amended and Restated Credit Agreement, the new 8 3/8% Senior Subordinated Notes or any other subsequent financing agreements may result in an event of default. An event of default may allow the creditors, if the agreements so provide, to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. In addition, the lenders under the Amended and Restated Credit Agreement may be able to terminate any commitments they had made to supply the Company with further funds.

The Company ~~has~~repaid ~~a significant~~or ~~amount~~defeased all of its long-term indebtedness. ~~The~~that ~~following~~was ~~chart~~outstanding ~~shows~~immediately ~~certain~~prior to the consummation of the Merger. The Company’s ~~important~~redeemed ~~credit~~the ~~statistics:~~defeased 10 3/8% Senior Subordinated Notes in December 2003.

	At June 29, 2002
	(dollars in millions)
Total TransDigm indebtedness	$	378.5
Total Holdings indebtedness	$	30.1

The Company’s primary future cash needs will consist of funding its acquisition of Avionic Instruments, debt service and capital expenditures. The Company incurs capital expenditures for the purpose of maintaining and replacing existing equipment and facilities and, from time to time, for facility expansion. Capital expenditures totaled approximately $3.4 million and $3.9 million during the thirty-nine weeks ended June 26, 2004 and June 28, 2003, respectively. The Company expects its capital expenditures in fiscal 2004 to be approximately $6 million and to increase moderately thereafter.

InThe ~~addition~~Company may from time to time seek to retire its outstanding debt through cash purchases and/or exchanges for equity securities, atin ~~June~~open 29market purchases, ~~2002~~privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s ~~had~~liquidity arequirements, ~~consolidated~~contractual ~~stockholders’~~restrictions ~~deficiency~~and ofother ~~$84~~factors.8 ~~million~~The amounts involved may be material. In addition, the Company may issue additional debt if prevailing market conditions are favorable to doing so.

The Company intends to continue its pursuit of acquisitions that present opportunities consistent with the Company’s value generation strategy. The Company regularly engages in discussions with respect to potential acquisitions and investments. The Company’s acquisition strategy may require substantial ~~indebtedness~~capital, ~~could~~and ~~have~~no ~~important~~assurance ~~consequences~~can be given that the Company will be able to raise any necessary funds on acceptable terms or at all. ~~For~~If ~~example~~the Company incurs additional debt to finance acquisitions, ittotal ~~could:~~interest expense will increase.

•The ~~increase~~Company’s ~~our vulnerability~~ ability to ~~general~~make ~~adverse~~scheduled ~~economic~~payments ~~and~~of ~~industry~~principal ~~conditions;~~of, •or ~~limit our ability~~ to ~~fund~~pay ~~future~~the ~~working~~interest ~~capital~~on, ~~capital~~or ~~expenditures~~to refinance, ~~research~~the ~~and~~Company’s ~~development~~indebtedness, ~~costs~~or ~~and~~to ~~other~~fund ~~general~~non-acquisition ~~corporate~~related ~~requirements;~~capital •expenditures ~~require~~and usresearch toand ~~dedicate~~development aefforts, ~~substantial~~will ~~portion~~depend ofon ~~our~~the ~~cash~~Company’s ability ~~flow from operations~~ to ~~payments~~generate oncash ~~our~~in ~~indebtedness, thereby reducing~~ the ~~availability~~future. ofThis ~~our~~is ~~cash~~subject ~~flow~~ to ~~fund~~general ~~working~~economic, ~~capital~~financial, ~~capital~~competitive, ~~expenditures~~legislative, ~~research~~regulatory and ~~development efforts and~~ other ~~general~~factors ~~corporate~~that ~~purposes;~~are •beyond ~~limit~~its ~~our~~control. ~~flexibility~~Based inon ~~planning~~its ~~for,~~current orlevels ~~reacting~~of ~~to,~~operations ~~changes~~and inanticipated ~~our~~cost ~~business~~savings and operating ~~the~~improvements ~~industry~~and inabsent ~~which~~any wedisruptive ~~operate;~~events, •management ~~place~~believes usthat atinternally agenerated ~~competitive~~funds ~~disadvantage~~and ~~compared~~borrowings toavailable under our ~~competitors~~revolving ~~that~~loan ~~have~~facility ~~less~~should ~~debt;~~provide ~~and~~sufficient •resources ~~limit~~to finance its operations, ~~along~~non-acquisition related ~~with~~capital ~~the~~expenditures, ~~financial~~research and ~~other~~development ~~restrictive~~efforts ~~covenants~~and inlong-term ~~our~~ indebtedness, ~~among~~obligations ~~other~~through ~~things,~~at ~~our~~least ~~ability~~fiscal to2004. ~~borrow~~There ~~additional~~can ~~funds.~~be no

In addition to the restrictive covenants contained in the Senior Credit Facility and the Indentures governing the Senior Subordinated Notes and the Holdings PIK Notes (the “Indentures”), the Senior Credit Facility contains covenants that require us to meet certain financial ratios. Any failure to comply with the restrictions of the Senior Credit Facility, the Indentures or any other subsequent financing agreements may result in an event of default. An event of default may allow the creditors, if the agreements so provide, to accelerate the related debt as well as any other debt to which a cross-28-

~~acceleration~~assurance, however, that the Company’s business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule, or ~~cross-default~~at ~~provision~~all, ~~applies~~or that future borrowings will be available to the Company under its Amended and Restated Credit Agreement in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs. InThe ~~addition~~Company may need to refinance all or a portion of its indebtedness on or before maturity. Also, to the ~~lenders~~extent the Company accelerates its growth plans, consummates acquisitions or has lower than anticipated sales or increases in expenses, the Company may bealso ~~able~~need to ~~terminate~~raise ~~any~~additional ~~commitments~~capital. ~~they~~In ~~had~~particular, ~~made~~increased working capital needs occur whenever the Company consummates acquisitions or experiences strong incremental demand. There can be no assurance that the Company will be able to ~~supply~~raise usadditional ~~with~~capital ~~further~~on ~~funds~~commercially reasonable terms or at all.

~~Additional~~Contractual ~~Borrowings~~Obligations Available—Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

WeThe ~~and~~following ~~our~~is ~~subsidiaries~~a ~~may~~summary beof ~~able~~contractual tocash ~~incur~~obligations ~~substantial additional indebtedness in the future. The terms~~ of the ~~Indenture~~Company ~~governing~~for the ~~Senior~~next ~~Subordinated~~several ~~Notes~~fiscal doyears ~~not~~(excluding ~~fully prohibit us or our subsidiaries from doing so. Our Senior Credit Facility will permit additional borrowings of up to $180.0 million~~interest), ~~including~~as ~~$30.0 million under our Revolving Credit Facility and $150.0 million~~ of ~~additional~~June ~~bank borrowings. If new debt is added to our current debt levels~~26, ~~the~~2004 ~~related~~(in ~~risks~~millions): ~~that we now face could intensify.~~

Ability to Service Debt—To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.


	2004 ⁽¹⁾		2005		2006		2007		2008		2009 and Thereafter		Total
Term Loan Facility	$	1.5	$	2.9	$	2.9	$	3.0	$	3.0	$	281.0	$	294.3
8³/8% Senior Subordinated Notes		—		—		—		—		—		400.0		400.0
Operating Leases		0.4		1.3		1.1		0.8		0.7		3.4		7.7
Other Long-Term Obligations		—		1.5		—		—		—		—		1.5

Total Contractual Cash Obligations	$	1.9	$	5.7	$	4.0	$	3.8	$	3.7	$	684.4	$	703.5

~~Our~~(1) ~~ability~~Contractual toobligations ~~make~~for ~~payments~~fiscal on2004 ~~and~~subsequent to ~~refinance~~June ~~our indebtedness~~26, or to fund planned capital expenditures and research and development, will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control2004.

~~Based~~New ~~upon~~Accounting ~~the~~Standards current level of operations and anticipated cost savings and operating improvements, we believe our cash flow from operations and available cash, together with available borrowings under the Senior Credit Facility, will be adequate to meet our future liquidity needs for at least the next several years.

NoDuring ~~assurance~~the ~~can~~quarter beended ~~given~~December ~~that~~27, ~~our business will generate sufficient cash flow from operations~~2003, ~~that~~the ~~currently anticipated~~Company ~~cost~~implemented ~~savings~~the ~~and~~provisions ~~operating~~of ~~improvements~~the ~~will~~Financial beAccounting ~~realized~~Standards onBoard’s ~~schedule~~(the or“FASB’s”) Emerging atIssues ~~all~~Task orForce ~~that~~Abstract ~~future~~No ~~borrowings~~00-21, ~~will~~Revenue beArrangements ~~available~~with toMultiple usDeliverables, ~~under~~which ~~the~~provides ~~Senior~~criteria ~~Credit~~for ~~Facility~~determining inhow ~~an amount sufficient~~ to ~~enable~~account usfor tomultiple-deliverable ~~pay~~revenue ~~our indebtedness or to fund our other liquidity needs~~arrangements. WeThe ~~may~~implementation ~~need~~of tothis ~~refinance~~pronouncement ~~all~~had no orimpact aon ~~portion~~the ofCompany’s ~~our~~consolidated ~~indebtedness~~financial onposition or ~~before~~results ~~maturity. We cannot assure you that we will be able to refinance any~~ of ~~our indebtedness on commercially reasonable terms or at all~~operations.

~~Risks~~During ~~Related~~December 2003, the FASB issued a revised Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46R”), which requires existing, unconsolidated variable interest entities to ~~Terrorism—We~~be consolidated ~~may~~by ~~not~~their ~~yet~~primary ~~know~~beneficiaries if the ~~full~~entities ~~impact~~do ofnot effectively disperse risks among the ~~September~~parties ~~11th~~involved. ~~terrorist~~The ~~attacks~~Company is not associated with variable interest entities; therefore, ~~and~~the ~~any~~adoption ~~future~~of ~~terrorist~~this ~~attacks~~statement ~~may~~did not have aany effect ~~material~~on ~~adverse~~the ~~impact~~Company’s onconsolidated ~~our~~financial ~~business~~position or results of operations.

OnDuring ~~September~~December 112003, ~~2001,~~ the ~~United~~FASB ~~States~~also ~~was~~issued ~~subjected~~a revision to ~~multiple~~Statement ~~terrorist attacks, which involved the hijacking~~ of ~~four~~Financial ~~U.S.~~Accounting ~~commercial~~Standards ~~aircraft~~No. ~~In the aftermath of the terrorist attacks~~132, ~~passenger~~Employers’ ~~traffic~~Disclosures onabout ~~commercial flights~~Pensions ~~was significantly lower than prior to the attacks~~ and ~~many~~Other ~~commercial~~Postretirement ~~airlines~~Benefits, ~~reduced~~an ~~their~~amendment ~~operating schedules. The overall result~~ of ~~the~~FASB ~~terrorist~~Statements ~~attacks was billions of dollars in losses to the airlines industry~~No. ~~The~~87, ~~full~~88, ~~impact of~~and ~~these~~106, ~~events~~which ~~and~~expands ~~any~~the ~~future~~disclosure ~~terrorist~~requirements ~~attacks~~regarding isplan ~~not~~assets ~~yet known~~ and ~~could~~benefit ~~result~~obligations infor ~~further~~the ~~reductions~~Company’s intwo ~~the~~defined ~~use~~benefit ofpension ~~commercial aircraft~~plans. ~~Such~~The ~~future~~implementation ~~reductions may cause airlines to delay purchases~~ of ~~spare~~this ~~parts~~pronouncement ~~and~~had ~~new~~no ~~aircraft~~impact oron tothe ~~file~~Company’s ~~for~~consolidated ~~bankruptcy.~~financial Ifposition ~~demand~~or ~~for~~results ~~new aircraft and spare parts decreases, there may be a decrease in demand for certain~~ of ~~our products~~operations.

~~Dependence~~Additional onDisclosure ~~Major Customers—We rely heavily on certain customers~~Required ~~for~~by ~~much~~Indenture ~~of our sales.~~

~~Our~~Separate ~~two~~financial ~~largest~~statements ~~customers~~of ~~for~~TransDigm ~~the~~are ~~year~~not ~~ended~~presented since ~~September~~Holdings ~~30,~~has ~~2001,~~no ~~were~~significant ~~Aviall~~operations (aor ~~distributor~~assets ofseparate ~~aftermarket~~from ~~parts~~its toinvestment ~~airlines~~in ~~throughout~~TransDigm ~~the world)~~ and ~~Boeing~~since ~~(including~~the ~~McDonnell Douglas).~~8 3/8% ~~These~~Senior ~~customers~~Subordinated ~~accounted~~Notes ~~for~~are ~~approximately~~guaranteed ~~17%~~by Holdings and ~~8%,~~all ~~respectively,~~direct ofand ~~our~~indirect ~~consolidated~~domestic ~~net~~restricted ~~sales~~subsidiaries inof ~~fiscal 2001~~TransDigm. ~~Our~~As ~~top~~of ~~ten~~June ~~customers~~26, ~~for~~2004, the ~~year~~only ~~ended~~subsidiary ~~September~~of ~~30,~~TransDigm ~~2001~~that ~~accounted~~has ~~for~~not ~~approximately~~guaranteed ~~55%~~the ofnotes ~~our~~is ~~consolidated~~one ~~net sales.~~wholly ~~The~~owned, ~~loss~~foreign ofsubsidiary ~~any~~that ~~one~~has orinconsequential ~~more~~assets, ofliabilities ~~these~~and ~~key customers could have a material adverse effect on our business~~equity.

~~Customer~~-29- ~~Contracts—We generally do not have guaranteed future sales of our products. Further, we are obligated under fixed price contracts with some of our customers, so we take the risk for cost overruns.~~

As is customary in our business, we do not have long-term contracts with most of our aftermarket customers and therefore do not have guaranteed future sales. Although we do have long-term contracts with many of our OEM customers, some of those customers may terminate these contracts on short notice and, in many other cases, our customers have not committed to buy any minimum quantity of our products. In addition, in certain cases, we must anticipate the future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with customers as to their anticipated future requirements. Cancellations, reductions or delays in orders by a customer or a group of customers could have a material adverse effect on our business, financial condition and results of operations.

~~We also have entered into multi-year, fixed-price contracts with some of our customers, where we agree to perform the work for a fixed price and, accordingly, realize all the benefit or~~ ~~detriment~~ITEM ~~resulting~~3 from any decreased or increased costs for making these products. Sometimes we accept a fixed-price contract for a product which we have not yet produced, which increases the risks of delays or cost overruns.

~~Almost~~QUANTITATIVE ~~all~~AND ofQUALITATIVE our contracts do not permit us to recover for increases in input prices, taxes or labor costs, although some contracts provide for renegotiation to address certain material adverse changes. Any such increasesDISCLOSURE ~~are~~ABOUT ~~likely~~MARKET toRISK ~~have an adverse effect on our business.~~

~~Aircraft~~At ~~Components~~June ~~Segment~~26, ~~Risks—Our~~2004, ~~business~~the isCompany ~~sensitive~~had toborrowings ~~the~~under ~~number~~its senior secured credit facilities of ~~flight~~$294.3 ~~hours~~million that ~~our~~were ~~customers~~subject to interest rate risk. Borrowings under the Company’s ~~planes~~senior ~~spend~~secured ~~aloft~~credit ~~and~~facility bear interest, at its option, at a rate equal to ~~our~~either an alternate base rate or an ~~customers’~~adjusted ~~profitability.~~LIBO ~~These~~rate ~~items~~for ~~are~~a one, two, three or six-month interest period chosen by the Company, in ~~turn~~each case, ~~affected~~plus byan ~~general~~applicable ~~economic~~margin ~~conditions~~percentage. ~~In addition~~Accordingly, ~~our~~the ~~sales~~Company’s cash flows and earnings will be exposed to ~~manufacturers~~the market risk of ~~new~~interest rate ~~large~~changes ~~aircraft~~resulting ~~are~~from ~~cyclical~~variable rate borrowings under its senior secured credit facilities. The effect of a hypothetical one percentage point increase in interest rates would increase the annual interest costs under the senior secured credit facilities by approximately $2.9 million based on the amount of outstanding borrowings at June 26, 2004. The weighted average interest rate on the $294.3 million of borrowings under the senior secured credit facilities on June 26, 2004 was 3.4%.

WeBecause ~~compete~~the ininterest ~~the~~rates ~~aircraft component~~on ~~segment~~borrowings ofunder the ~~aerospace~~senior ~~industry.~~secured ~~Our~~credit facilities ~~business~~vary iswith ~~directly~~market ~~affected~~conditions, bythe ~~economic~~amount ~~factors~~of ~~and~~outstanding ~~other~~borrowings ~~trends~~under ~~that~~the ~~affect~~senior ~~our~~secured ~~customers,~~credit ~~including~~facilities ~~projected~~approximates ~~market~~the ~~growth~~fair ~~that~~value ~~may~~of ~~not~~the ~~materialize~~indebtedness. orThe befair ~~sustainable.~~value ~~Specifically,~~of the ~~aircraft component~~$400 ~~segment~~million isaggregate ~~sensitive~~principal toamount ~~changes~~of in the Company’s ~~number~~8 3/8% ofSenior ~~miles~~Subordinated ~~flown~~Notes byis ~~paying~~exposed ~~customers of commercial airlines, which we refer~~ to asthe ~~revenue~~market ~~passenger~~risk ~~miles,~~of ~~and,~~interest torate ~~a lesser extent, to~~ changes. inThe estimated ~~the~~fair ~~profitability~~value of ~~the~~such ~~commercial~~notes ~~airline industry~~approximated ~~and~~$418 ~~the~~million ~~size~~at ~~and~~June ~~age~~26, of2004 ~~the~~based ~~worldwide~~upon ~~aircraft~~quoted ~~fleet~~market rates.

~~Revenue passenger miles and airline profitability have historically been correlated with the general economic environment, although national and~~ ~~international~~ITEM ~~events~~4 can also play a key role. For example, revenue passenger miles declined primarily as a result of increased security concerns among airline customers following the events of September 11, 2001. See “—Risks Related to Terrorism.” Any future reduction would reduce the use of commercial aircraft and, consequently, the need for spare parts and new aircraft. During periods of reduced airline profitability, some airlines may elect to delay purchases of spare parts, preferring instead to deplete existing inventories or to file for bankruptcy. If demand for new aircraft and spare parts decreases, there may be a decrease in demand for certain of our products. Therefore, any future decline in revenue passenger miles, airline profitability or the size of the worldwide aircraft fleet, for any reason, could have a material adverse effect on our business.

InCONTROLS ~~addition,~~AND ~~sales~~PROCEDURES to manufacturers of large commercial aircraft, which accounted for approximately 15% of our net sales in fiscal 2001, have historically experienced periodic downturns. In the past, these sales have been affected by airline profitability, which is impacted by fuel and labor costs and price competition, and other factors. Due in part to these factors, the number of large commercial aircraft delivered has dropped from a peak of approximately 914 aircraft in 1999. As a result of the events of September 11th and a weakened economy, many industry analysts expect aircraft deliveries to trend significantly downward from over 850 aircraft delivered in 2001. Prior downturns have adversely effected our net sales, gross margin and net income. These and certain other factors may cause a downturn in sales to manufacturers of large commercial aircraft in the future which may have a material adverse effect on our business.

~~Fluctuations~~Holdings and TransDigm maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in ~~Defense~~Holdings’ ~~Spending—A~~and ~~decline~~TransDigm’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the USEC’s rules and forms, and that such information is accumulated and communicated to Holdings’ and TransDigm’s management, including their Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.S. In designing ~~defense~~and ~~budget~~evaluating ~~may~~the ~~adversely~~disclosure ~~affect~~controls ~~our~~and ~~sales~~procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of ~~parts~~achieving ~~used~~the desired control objectives, and management necessarily was required to apply its judgment in ~~military~~evaluating ~~aircraft~~the cost-benefit relationship of possible controls and procedures.

~~Approximately~~As ~~20%~~of the end of ~~our~~the ~~sales~~period incovered ~~fiscal~~by ~~2001~~this ~~were~~report, ~~related~~Holdings toand ~~products~~TransDigm ~~used~~carried inout ~~military~~an ~~aircraft~~evaluation, ~~over~~under ~~half~~the supervision and with the participation of ~~which~~Holdings’ ~~were~~and ~~spare~~TransDigm’s ~~parts~~management, ~~provided~~including toHoldings’ ~~various~~and ~~governmental~~TransDigm’s ~~agencies~~Chief Executive Officer and Holdings’ and TransDigm’s Chief Financial Officer, of the effectiveness of the design and operation of Holdings’ and TransDigm’s disclosure controls and procedures. Based on the foregoing, Holdings’ and TransDigm’s Chief Executive Officer and Chief Financial Officer concluded that Holdings’ and TransDigm’s disclosure controls and procedures were effective.

~~The~~There ~~United~~have ~~States’~~been ~~defense~~no ~~budget~~significant ~~has~~changes ~~fluctuated~~ in ~~recent years, at times resulting in reduced demand for new aircraft and, to a lessor extent,~~ ~~spare~~Holdings’ ~~parts.~~or InTransDigm’s ~~addition,~~internal ~~foreign~~controls ~~military~~over ~~sales~~financial ~~are~~reporting ~~affected~~or byin ~~U.S.~~other ~~government~~factors ~~regulations,~~that ~~regulations~~could bysignificantly ~~the~~affect ~~purchasing foreign government and political uncertainties in~~ the ~~United~~internal ~~States~~controls ~~and~~over ~~abroad.~~financial ~~The~~reporting ~~United~~subsequent ~~States’ defense budget may continue~~ to ~~fluctuate,~~the ~~and~~date ~~may~~Holdings ~~decline,~~ and ~~sales~~TransDigm ofcompleted ~~defense related items to foreign governments may decrease~~their evaluations. ~~If there is a decline which reduces demand for our components, our business may be adversely affected.~~

In-30- addition, the terms of defense contracts with the U.S. government generally permit the government to terminate contracts partially or completely, with or without cause, at any time. Any unexpected termination of a significant government contract could have an adverse effect on our business.

Government Regulation and Industry Oversight—Our business would be adversely affected if we lost our government or industry approvals or if more onerous government regulations were enacted or industry oversight increased.

The aircraft component industry is highly regulated in the United States and in other countries. In order to sell our components, we and the components we manufacture must be certified by the Federal Aviation Administration, the United States Department of Defense and similar agencies in foreign countries and by individual manufacturers.

If new and more stringent government regulations are adopted or if industry oversight increases we might incur significant expenses to comply with any new regulations or heightened industry oversight. If material authorizations or approvals were revoked or suspended, our business would be adversely affected.

To the extent that we operate outside the United States, we are subject to the Foreign Corrupt Practices Act, or FCPA, which generally prohibits United States companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. In particular, we may be held liable for actions taken by our strategic or local partners even though such partners are foreign companies that are not subject to the FCPA. Any determination that we have violated the FCPA could result in sanctions that could have a material adverse effect on our business.

Risks Associated with our Workforce—We are dependent on our highly trained employees and any work stoppage or difficulty hiring similar employees would adversely affect our business.

Because our products are complicated and very detailed, we are highly dependent on an educated and trained workforce. There is substantial competition for skilled personnel in the aircraft component industry and we could be adversely affected by a shortage of skilled employees. We may not be able to fill new positions or vacancies created by expansion or turnover or attract and retain qualified personnel.

At September 30, 2001, approximately 10% of our employees were represented by the United Steelworkers Union, and approximately 5% were represented by the United Automobile, Aerospace and Agricultural Implement Workers of America. Our collective bargaining agreements with these labor unions expire in April 2005 and November 2004, respectively. Although we believe that our relations with our employees are good, we cannot assure you that we will be able to negotiate a satisfactory renewal of these collective bargaining agreements or that our employee relations will remain stable. Because we maintain a relatively small inventory of finished goods and operate on relatively short lead times for our products, any work shortage could have a material adverse effect on our business.

Dependence on Key Personnel—If we lose our senior management or technical personnel, our business may be adversely affected.

Our success is dependent upon our senior management, as well as on our ability to attract and retain qualified personnel, including engineers. There is substantial competition for these kinds of personnel in the aircraft component industry. We may not be able to retain our existing senior management or engineering staff, fill new positions or vacancies created by expansion or turnover, or attract additional qualified personnel. Although we have entered into employment agreements with certain executive officers, these agreements may not be renewed.

Risks Associated with Suppliers—Our business is dependent on the availability of certain components and raw materials that we buy from suppliers.

Our business is affected by the price and availability of the raw materials and component parts that we use to manufacture our components. Our business, therefore, could be adversely affected by factors affecting our suppliers, or by increased costs of such raw materials or components if we are unable to pass along such price increases to our customers. Because we maintain a relatively small inventory of raw materials and component parts, our business could be adversely affected if we are unable to obtain these raw materials and components from our suppliers in the quantities we require or on favorable terms. Although we believe that we could, in most instances, identify alternative suppliers, or alternative raw materials or component parts, the lengthy and expensive FAA and OEM certification process associated with aerospace products could prevent efficient replacement of a material or supplier and could have a material adverse effect on our business.

Potential Exposure to Environmental Liabilities— We may be liable for penalties under a variety of environmental laws, even if we did not cause any environmental problems. Changes in environmental laws or unexpected investigations could adversely affect our business.

Our business and our facilities are subject to a number of federal, state and local laws and regulations, which govern, among other things, the discharge of hazardous materials into the air and water as well as the handling, storage and disposal of such materials.

Pursuant to certain environmental laws, a current or previous owner or operator of land may be liable for the costs of investigation, removal or remediation of hazardous materials at such property. These laws typically impose liability whether or not the owner or operator knew of, or was responsible for, the presence of any hazardous materials. Persons who arrange (as defined under these statutes) for the disposal or treatment of hazardous materials also may be liable for the costs of investigation, removal or remediation of such substances at the disposal or treatment site, regardless of whether the affected site is owned or operated by them.

Because we own and operate a number of facilities, and because we arrange for the disposal of hazardous materials at many disposal sites, we may incur costs for investigation, removal and remediation, as well as capital costs associated with compliance with these laws. Although such environmental costs have not been material in the past and are not expected to be material in the future, changes in environmental laws or unexpected investigations and clean-up costs could have a material adverse effect on our business.

Risks Associated with International Operations —Our international business exposes us to risks relating to increased regulation and political or economic instability, globally or within certain foreign countries.

Our export sales to customers were approximately $54.8 million, $36.2 million and $30.7 million in fiscal 2001, fiscal 2000 and fiscal 1999, respectively. In addition, a portion of the products we sell to domestic distributors is resold to foreign end-users. These sales are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices.

Foreign governments could adopt regulations or take other actions that would have a direct or indirect adverse impact on our business or market opportunities abroad. Furthermore, the political, cultural and economic climate outside the United States may not be favorable to our business and growth strategy.

Risks Related to Potential Future Acquisitions—We intend to pursue future acquisitions and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms or effectively integrate new operations.

We intend to pursue acquisitions that we believe will present opportunities consistent with the Company’s value generation strategy. This acquisition strategy may require substantial capital, and we may not be able to raise the necessary funds on terms satisfactory to us or at all. Our acquisition strategy is also limited by the availability of suitable acquisition candidates. We cannot assure you that we will be able to consummate any future acquisitions.

We regularly engage in discussions with respect to potential acquisition and investment opportunities. If we consummate an acquisition, our capitalization and results of operations may change significantly and you will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds. Future acquisitions would likely result in the incurrence of debt and contingent liabilities and an increase in interest expense and amortization expenses or periodic impairment charges related to goodwill and other intangible assets, which could have a material adverse effect upon our business.

Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies, services and products of the acquired companies and the diversion of management’s attention from other business concerns. For all of these reasons, if any such acquisitions occur, our business could be adversely affected.

Competition—We face significant competition.

We operate in a highly competitive global industry and compete against a number of companies, including divisions of larger companies, some of which have significantly greater financial, technological and marketing resources than us. Competitors in our product lines are both U.S. and foreign companies and range in size from divisions of large corporations to small privately held entities. We believe that our ability to compete depends on high product performance, consistently high quality, short lead-time and timely delivery, competitive price, superior customer service

and support and continued certification under customer quality requirements and assurance programs. Our inability to compete successfully with respect to these or other factors may materially adversely affect our business and financial condition.

Control by Odyssey—We are controlled by Odyssey, whose interests may not be aligned with the Company's creditors and other shareholders.

Odyssey and its co-investors indirectly own approximately 83.7% of the common equity interests in Holdings, on a fully diluted basis (including shares issuable upon exercise of warrants but excluding shares issuable upon exercise of stock options) and, therefore, have the power, subject to certain exceptions, to control Holdings. They also control the appointment of management and the entering into of mergers, sales of substantially all assets and other extraordinary transactions. The interests of Odyssey may not in all cases be aligned with the Company’s creditors and other shareholders.

Product Liability; Claims Exposure—We could be adversely affected as a result of a lawsuit if one of our components causes an aircraft to crash and we are not covered by our insurance policies.

Our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us. While we believe that our liability insurance is adequate to protect us from future products liability claims, if claims were to arise, such insurance coverage may not be adequate.

Additionally, we may not be able to maintain insurance coverage 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 our business.

Forward-Looking Statements—Our Forward-Looking Statements May Prove To Be Inaccurate.

This Quarterly Statement includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements about forecasts, our plans, strategies and prospects in this Quarterly Statement. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we can give no assurance that they will be achieved. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this offering memorandum are set forth above in this “Risk Factors” section and elsewhere in this Quarterly Statement. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

PART I: FINANCIAL INFORMATION

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

At June 29, 2002, the Company is subject to interest rate risk with respect to borrowings under its Senior Credit Facility as the interest rates on such borrowings vary with market conditions and, thus, the amount of outstanding borrowings approximates the fair value of the indebtedness. The weighted average interest rate on the $176.5 million of borrowings outstanding under the Senior Credit Facility at June 29, 2002 was 5.4%. The effect of a hypothetical one percentage point increase in interest rates would increase the Company’s annual interest costs under the Senior Credit Facility by approximately $1.8 million based on the amount of borrowings outstanding at June 29, 2002.

Also outstanding at June 29, 2002 was $200.0 million of Company indebtedness in the form of the Senior Subordinated Notes, $30.1 million of the Holdings PIK Notes and Holdings 16% Preferred Stock with an aggregate liquidation preference of $17.7 million. In addition, as of June 29, 2002, 8,114 shares of common stock that the Chairman of the Board of Directors of TransDigm and Holdings, Mr. Peacock, can acquire under presently-exercisable stock options are subject to a put that enables Mr. Peacock to require Holdings to repurchase, at fair market value, shares held by Mr. Peacock after such shares are held at least six months, subject to certain restrictions under the Company’s long-term debt agreements and subject to his continued service as Chairman of the Board of TransDigm and Holdings. The estimated fair value of such shares, net of the exercise price of the related stock options, totaled approximately $8.6 million at June 29, 2002. Mr. Peacock and other members of management hold put rights that may become exercisable in the future with respect to other shares of common stock, including shares of common stock subject to options. The interest rates on the Senior Subordinated Notes and the Holdings PIK Notes are fixed at 10 3/8 % and 12% per year, respectively, and the dividends accrue on the Holdings 16% Preferred Stock at 16% annually. The fair value of the Senior Subordinated Notes was approximately $205 million at June 29, 2002, based upon quoted market prices. A determination of the fair value of the Holdings PIK Notes and the Holdings 16% Preferred Stock is not considered practicable because they are held by related parties and are not publicly traded. Because the common stock subject to put rights is required to be repurchased at fair market value, the value of Holdings’ repurchase obligation will increase to the extent the fair market value of Holdings’ common stock increases.

PART II: OTHER INFORMATION

ITEM 6 Exhibits and Reports on Form 8-K

	(a)		Exhibits
	*4.1		Registration Rights Agreement, dated June 7, 2002, among TransDigm Inc., the Guarantors and the Initial Purchasers (each as defined therein), relating to the $75 million of 10 3/8 Senior Subordinated Notes due 2008.
	*10.1		Employment Agreement Amendment, dated January 17, 2002, between TransDigm Holding Company and Douglas W. Peacock.
	*10.2		Employment Agreement Amendment, dated January 17, 2002, between TransDigm Holding Company and W. Nicholas Howley.
	*10.3		Purchase Agreement, dated June 4, 2002, by and among TransDigm Inc., the Guarantors and the Initial Purchasers (each as defined therein), with respect to the $75 million of 10 3/8 Senior Subordinated Notes due 2008.
	*10.4		First Amendment and Consent, dated as of May 14, 2002, to the Amended and Restated Credit Agreement.
	*		(Incorporated by reference to the same titled exhibit to our Registration Statement on Form S-4 dated June 28, 2002 File No. 333-91574, as amended)
	(b)		Reports on Form 8-K
			On May 24, 2002, the Company filed a report on Form 8-K related to its proposed offering of an additional $75 million of its 10 3/8% Senior Subordinated Notes due 2008 in a private placement.
			On May 29, 2002, the Company filed a report on Form 8-K related to disclosure of information not previously publicly disclosed in accordance with Regulation FD.

(a)

Exhibits



31.1		Certification by Principal Executive Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Principal Financial Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification by Principal Executive Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4		Certification by Principal Financial Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Chief Executive Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by Chief Financial Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3		Certification by Chief Executive Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.4		Certification by Chief Financial Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Reports on Form 8-K

On May 11, 2004, the Company filed a report on Form 8-K announcing its regular scheduled quarterly conference call.

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SIGNATURES

TRANSDIGM HOLDING COMPANY

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~this~~the ~~Report~~co-registrant has ~~been~~duly ~~signed~~caused ~~below~~this byreport ~~the following~~to ~~persons~~be signed on its behalf ofby the ~~Co-Registrant~~undersigned ~~and~~thereunto induly ~~the capacities and as of the dates indicated~~assigned.

SIGNATURE	TITLE	DATE
/s/ W. Nicholas HowleyW. Nicholas Howley	President and Chief Executive Officer(Principal Executive Officer) and Director	August 13, 2002
/s/ W. Nicholas Howley	President and Chief Executive Officer (Principal Executive Officer) and Director	August 5, 2004
/s/ Gregory RufusGregory Rufus	Chief Financial Officer (Principal Financialand Accounting Officer)	August 13, 2002
W. Nicholas Howley
/s/ Gregory Rufus	Chief Financial Officer (Principal Financial and Accounting Officer)	August 5, 2004
Gregory Rufus

TRANSDIGM INC.

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~this~~the ~~Report~~co-registrant has ~~been~~duly ~~signed~~caused ~~below~~this byreport ~~the~~to ~~following~~be ~~persons~~signed on ~~behalf~~ ofits ~~the~~behalf ~~Co-Registrant~~by ~~and in~~ the ~~capacities~~undersigned ~~and~~thereunto asduly ~~of the dates indicated~~assigned.

SIGNATURE	TITLE	DATE
/s/ W. Nicholas HowleyW. Nicholas Howley	President and Chief Executive Officer(Principal Executive Officer) and Director	August 13, 2002
/s/ W. Nicholas Howley	President and Chief Executive Officer (Principal Executive Officer) and Director	August 5, 2004
/s/ Gregory RufusGregory Rufus	Chief Financial Officer (Principal Financialand Accounting Officer)	August 13, 2002
W. Nicholas Howley
/s/ Gregory Rufus	Chief Financial Officer (Principal Financial and Accounting Officer)	August 5, 2004
Gregory Rufus

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EXHIBIT INDEX

TO FORM 10-Q FOR THE PERIOD ENDED JUNE 26, 2004


EXHIBIT NO.		DESCRIPTION
31.1		Certification by Principal Executive Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Principal Financial Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification by Principal Executive Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4		Certification by Principal Financial Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Chief Executive Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by Chief Financial Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3		Certification by Chief Executive Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.4		Certification by Chief Financial Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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