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~~January 261, ~~2004~~2005.

¨	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 333-~~108340~~71397 ~~and 333-108340-06~~

TransDigm Inc.


TransDigm Inc.		TransDigm Holding Company
(Exact name of registrant as specified in its charter)		(Exact name of registrant as specified 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)

(Exact name of registrant as specified in its charter)

TransDigm Holding Company

(Exact name of registrant as specified 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 9th 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 each 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 co-registrants was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the co-registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

The number of shares outstanding of TransDigm Inc.’s common stock, par value $.01 per share, was 100 as of ~~June~~January 261, ~~2004~~2005.

The number of shares outstanding of TransDigm Holding Company’s common stock, par value $.01 per share, was 100 as of ~~June~~January 261, ~~2004~~2005.

INDEX

		~~Page~~	Page
Part I	FINANCIAL INFORMATION
PART I		FINANCIAL INFORMATION
~~Item 1~~	~~Financial~~Item ~~Statements~~1	Financial Statements
	Condensed Consolidated Balance Sheets – June 26, 2004 and September 30, 2003	1
		Condensed Consolidated Balance Sheets – January 1, 2005 and September 30, 2004	1
	Condensed Consolidated Statements of Income – Thirteen and Thirty-Nine Week Periods Ended June 26, 2004 and June 28, 2003	2
		Condensed Consolidated Statements of Operations – Thirteen Weeks Ended January 1, 2005 and December 27, 2003	2
	Condensed Consolidated Statement of Changes in Stockholders’ Equity – Thirty-Nine Week Period Ended June 26, 2004	3
		Condensed Consolidated Statement of Changes in Stockholders’ Equity – Thirteen Weeks Ended January 1, 2005	3
	Condensed Consolidated Statements of Cash Flows – Thirty-Nine Week Periods Ended June 26, 2004 and June 28, 2003	4
		Condensed Consolidated Statements of Cash Flows – Thirteen Weeks Ended January 1, 2005 and December 27, 2003	4
	~~Notes to Condensed Consolidated Financial Statements~~	5Notes to Condensed Consolidated Financial Statements	5
~~Item 2~~	~~Management’s~~Item ~~Discussion and Analysis of Financial Condition and Results of Operations~~2	19Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
~~Item 3~~	~~Quantitative~~Item ~~and Qualitative Disclosure About Market Risk~~3	30Quantitative and Qualitative Disclosures About Market Risk	25
~~Item 4~~	~~Controls~~Item ~~and Procedures~~4	30Controls and Procedures	26
Part II	OTHER INFORMATION
PART II		OTHER INFORMATION
~~Item 6~~	~~Exhibits~~Item ~~and Reports on Form 8-K~~6	31Exhibits	27
SIGNATURES		32	28

PART I: FINANCIAL INFORMATION

~~ITEM~~Item 1. Financial Statements

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in ~~Thousands~~thousands)

(Unaudited)

	June 26,2004			September 30, 2003
	January 1,2005			September 30,2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5544,~~407~~029		$	1848,~~902~~498
Marketable securities		5049,~~262~~653			—50,601
Trade accounts receivable, net		42,394			36,709
Trade accounts receivable - Net		46,851			44,489
Income taxes receivable		—			36,703
Inventories		65,922			64,385
Inventories, net		60,648			77,386
Deferred income taxes		10,159			10,092
Deferred income taxes		10,547			8,177
Prepaid expenses and other		1,747			1,851
Prepaid expenses and other		1,452			3,850
Total current assets		218,361			219,916
Total current assets		220,710			181,727
PROPERTY, PLANT AND EQUIPMENT - Net		60,637			60,817
PROPERTY, PLANT AND EQUIPMENT - Net		57,892			60,342
GOODWILL		837,828			812,460
GOODWILL		805,378			807,714
TRADEMARKS AND TRADE NAMES		125,497			125,497
OTHER INTANGIBLE ASSETS - Net		~~226~~101,~~097~~165			~~235~~103,~~839~~101
DEBT ISSUE COSTS - Net		2422,~~245~~195			2823,~~771~~148
OTHER		~~717~~765			~~627~~710
TOTAL ASSETS	$	1,~~335~~366,~~039~~448		$	1,~~315~~345,~~020~~649
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term liabilities	$	42,~~443~~943		$	74,~~634~~431
Accounts payable		911,~~490~~290			11,~~221~~468
Accrued liabilities		3234,~~977~~286			2924,~~625~~800
Total current liabilities		4648,~~910~~519			4840,~~480~~699
LONG-TERM DEBT - Less current portion		~~691~~689,~~320~~113			~~692~~689,~~050~~848
DEFERRED INCOME TAXES		6465,~~177~~645			6465,~~364~~645
OTHER NON-CURRENT LIABILITIES		32,~~034~~894			42,~~917~~839
Total liabilities		~~805~~806,~~441~~171			~~809~~799,~~811~~031
STOCKHOLDERS’ EQUITY:
Common stock		516,084			508,100
Common stock—$.01 par value; authorized 900,000 shares; issued 100 at January 1, 2005 and September 30, 2004, respectively		—			—
Retained earnings / (deficit)		13,680			(2,788	)
Additional paid-in capital		523,078			520,078
Accumulated other comprehensive loss		(166	)		(103	)
Retained earnings		37,594			26,822
Total stockholders’ equity		529,598			505,209
Accumulated other comprehensive loss		(395	)		(282	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,335,039		$	1,315,020
Total stockholders’ equity		560,277			546,618
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,366,448		$	1,345,649

See notes to condensed consolidated financial statements.

-1-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

~~FOR~~(Amounts ~~THE~~in ~~THIRTEEN~~thousands) ~~AND THIRTY-NINE WEEK PERIODS ENDED~~

JUNE 26, 2004 AND JUNE 28, 2003

(Amounts In Thousands)

(Unaudited)

	Thirteen Week Periods Ended					Thirty-Nine Week Periods Ended
	Thirteen Weeks Ended
			(Predecessor)					(Predecessor)
	January 1,2005		December 27,2003
	June 26,2004		June 28,2003			June 26,2004		June 28,2003
NET SALES	$	80,270	$	67,682
NET SALES	$	76,348	$	75,751		$	215,933	$	225,172
COST OF SALES (Including inventory purchase accounting charge of $18,057 for the period ended December 27, 2003)		40,797		51,619
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		39,473		16,063
GROSS PROFIT		39,811		36,502			93,557		107,737
OPERATING EXPENSES:
OPERATING EXPENSES:
Selling and administrative		8,254		7,033
Selling and administrative		7,541		6,749			22,032		18,436
Amortization of intangibles		1,841		2,783
Amortization of intangibles		2,883		288			8,521		859
Total operating expenses		10,095		9,816
Total operating expenses		10,424		7,037			30,553		19,295
INCOME FROM OPERATIONS		29,378		6,247
INCOME FROM OPERATIONS		29,387		29,465			63,004		88,442
INTEREST EXPENSE - Net		12,279		12,669
INTEREST EXPENSE - Net		11,688		8,181			36,864		26,163
INCOME (LOSS) BEFORE INCOME TAXES		17,099		(6,422	)
INCOME BEFORE INCOME TAXES		17,699		21,284			26,140		62,279
INCOME TAX PROVISION (BENEFIT)		6,327		(2,402	)
INCOME TAX PROVISON		6,456		7,211			9,672		22,420
NET INCOME (LOSS)	$	10,772	$	(4,020	)
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’ EQUITY

~~STOCKHOLDERS’~~FOR ~~EQUITY~~THE THIRTEEN WEEKS ENDED JANUARY 1, 2005

~~FOR~~(Amounts ~~THE~~in thousands) ~~THIRTY-NINE WEEK PERIOD ENDED JUNE 26, 2004~~

(Amounts in Thousands)

(Unaudited)

	CommonStock			AdditionalPaid-InCapital	~~Retained Earnings /(Deficit)~~		RetainedEarnings		~~Accumulated Other ComprehensiveLoss~~	AccumulatedOtherComprehensiveLoss			~~Total~~	Total
BALANCE, OCTOBER 1, 2003	$	508,100			$	(2,788	)		$	(103	)		$	505,209
BALANCE, OCTOBER 1, 2004	$	—		$	520,078		$	26,822		$	(282	)		$	546,618
Equity contributions from TD Holding -
Equity contribution from TD Holding -
Stock option and deferred compensation costs incurred by TD Holding (Note 9)		4,630				—				—				4,630
Stock option and deferred compensation costs incurred by TD Holding		—			1,565			—			—				1,565
Income tax benefit from interest expense incurred by TD Holding (Note 1)		3,850				—				—				3,850
Income tax benefit from interest expense incurred by TD Holding		—			1,435			—			—				1,435
Comprehensive income -
Net income		—			—	~~16,468~~		10,772		—	—			~~16,468~~	10,772
Foreign currency translation adjustment		—				—				19				19
Other comprehensive loss		—			—			—			(113	)			(113	)
Unrealized loss on marketable securities		—				—				(82	)			(82	)
Comprehensive income															10,659
Comprehensive income														16,405
BALANCE, JANUARY 1, 2005	$	—		$	523,078		$	37,594		$	(395	)		$	560,277
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.

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TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts Inin ~~Thousands~~thousands)

(Unaudited)

	Thirty-Nine Week Periods Ended
	Thirteen Weeks Ended
				(Predecessor)
	January 1,2005			December 27,2003
	June 26, 2004			June 28, 2003
OPERATING ACTIVITIES:
Net income	$	16,468		$	39,859
Net income (loss)	$	10,772		$	(4,020	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash inventory purchase accounting charge		18,057			684
Inventory purchase accounting charge		—			18,057
Depreciation		52,~~820~~084			41,~~973~~865
Amortization of intangibles		81,~~521~~841			~~859~~2,783
Amortization of debt issue costs and note premium		2,839			1,897
Amortization of debt issue costs		953			1,008
Interest deferral on Holdings PIK Notes		—			1,546
Noncash stock option and deferred compensation costs		1,565			1,550
Noncash stock option and deferred compensation costs		4,630			—
Changes in assets and liabilities, net of effect from acquisition of business:
Changes in assets/liabilities, net of effects from acquisition of business:
Trade accounts receivable		(677	)		(1,500	)
Accounts receivable		(5,685	)		(1,027	)
Inventories		1,570			800
Inventories		(1,319	)		(3,186	)
Other assets		23			11,206
Income taxes receivable and other assets		38,613			1,376
Accounts payable		(303	)		(1,646	)
Accounts payable		(1,731	)		(1,545	)
Accrued and other liabilities		10,933			5,664
Accrued and other liabilities		6,739			(2,749	)
Net cash provided by operating activities		28,761			35,767
Net cash provided by operating activities		92,952			42,687
INVESTING ACTIVITIES:
Purchase of marketable securities		(64,788	)		—
Capital expenditures		(1,554	)		(629	)
Sales and maturity of marketable securities		14,444			—
Acquisition of Skurka		(30,206	)		—
Acquisition of Norco net assets		—			(53,025	)
Purchase of marketable securities		(33,434	)		—
Capital expenditures		(3,370	)		(3,930	)
Sales and maturity of marketable securities		34,199			—
Net cash used in investing activities		(5330,~~714~~995	)		(~~56,955~~629	)
FINANCING ACTIVITIES:
Borrowings under credit facility, net of fees of $200		—			24,800
Payment of amounts borrowed under credit facility		(735	)		—
Repayment of Holdings PIK Notes		—			(32,802	)
Payment of license obligation		(1,500	)		(1,500	)
Payment of amounts borrowed under credit facility		(737	)		(3,301	)
Proceeds from exercise of stock options		—			24
Payment of license obligation		(1,500	)		(2,600	)
Net cash used in financing activities		(2,235	)		(1,476	)
Purchase of common stock		(520	)		—
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(4,469	)		33,662
Proceeds from exercise of stock options		24			—
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		48,498			18,902
Net cash used in financing activities		(2,733	)		(13,903	)
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	44,029		$	52,564
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	$	253,~~690~~211		$	273,~~978~~227
Cash (received) paid during the period for income taxes	$	(33,575	)	$	16,792
Net cash paid (received) during the period for income taxes	$	69		$	(13,156	)

See notes to condensed consolidated financial statements.

-4-

TRANSDIGM HOLDING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THIRTEEN ~~AND~~WEEKS ~~THIRTY-NINE WEEK PERIODS~~ ENDED ~~JUNE~~JANUARY 261, ~~2004~~2005 AND ~~JUNE~~DECEMBER 2827, 2003

(UNAUDITED)

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~~offer 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~~power ~~and~~conversion ~~chargers~~devices, ~~and~~AC/DC motors, ~~rods~~batteries and ~~locking~~chargers, ~~devices used to~~ hold open ~~panels~~rods, ~~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~~an ~~consummated~~entity aformed ~~merger~~by ~~with~~Warburg TDPincus ~~Acquisition~~Private ~~Corporation~~Equity VIII, L.P. (“TDWarburg ~~Acquisition~~Pincus”) ~~pursuant~~and toHoldings ~~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~~TD Holding”). ~~In connection with the Merger, TransDigm Inc. completed a tender offer for its outstanding 10 3/8% Senior Subordinated Notes due 2008~~ (the “~~Senior Subordinated Notes~~Merger”). OfThe 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~~accounted infor ~~its~~as ~~entirety upon the closing of the~~a 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 ofadjustments ~~stock~~to ~~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.~~Company’s ~~then~~assets 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~~liabilities ~~other~~were ~~institutional~~recorded ~~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~~date ~~by TransDigm Inc.~~ of ~~new~~ ~~8 3/8% Senior Subordinated Notes due 2011 (~~the ~~“8 3/8% 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 8 3/8% 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~~2004. The September 30, ~~2003~~2004 condensed consolidated balance sheet was derived from the Company’s audited financial statements. The results of operations for the thirteen ~~and~~weeks ~~thirty-nine week periods~~ ended ~~June~~January 261, ~~2004~~2005 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~~period ended ~~June~~December 2827, 2003 ~~(Predecessor)~~ to conform to the classifications used in the financial statements for the period ended ~~June~~January 261, ~~2004~~2005.

Since the 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. 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 272004, ~~2003,~~ the ~~Company implemented the provisions of the~~ Financial Accounting Standards Board’s (the “FASB’s”) ~~Emerging~~issued ~~Issues~~Statement ~~Task~~No. ~~Force~~123 ~~Abstract~~(R), NoShare ~~00-21~~Based Payment, ~~Revenue~~which ~~Arrangements~~requires all ~~with~~share-based ~~Multiple~~payments ~~Deliverables~~to employees, ~~which~~including ~~provides~~grants ~~criteria~~of ~~for~~employee ~~determining~~stock ~~how~~options, to ~~account~~be ~~for~~recognized ~~multiple-deliverable~~in ~~revenue~~the ~~arrangements~~financial statements based on their fair values. The ~~implementation of~~Company anticipates adopting this pronouncement ~~had~~during nothe ~~impact~~first onquarter ~~the~~of fiscal 2006. The Company’s has not determined the impact, if any, that this statement will have on its 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~~Skurka— On ~~February~~December 2431, ~~2003~~2004, ~~the~~TransDigm ~~Company~~ acquired certain assets and assumed certain liabilities of ~~the~~Skurka ~~Norco,~~Engineering ~~Inc.~~ Company (“~~Norco~~Skurka”) ~~business~~ ~~from TransTechnology Corporation~~ for $5130.02 million in cash ~~(the~~subject ~~“Acquisition”).~~to Inadjustment ~~addition,~~based on the ~~Company~~level ~~paid~~of ~~approximately~~working ~~$1.0~~capital ~~million~~as of ~~asset~~the ~~transfer~~closing ~~tax~~of ~~payments in accordance with~~ the ~~purchase agreement, $1~~acquisition.0 ~~million~~Skurka ~~in costs~~designs ~~associated~~and ~~with~~manufactures ~~the~~specialized ~~Acquisition~~electromagnetic ~~and~~equipment, ~~during~~primarily ~~August~~AC/DC ~~2003,~~electric amotors and $1components.1 ~~million~~The ~~purchase~~products ~~price~~are ~~adjustment~~used ~~was~~on ~~received~~a ~~from~~wide ~~TransTechnology~~range ~~Corporation~~of ~~(excluding~~commercial ~~related~~aircraft ~~fees~~ and ~~expenses~~military ofaircraft, ~~$0.1~~ships ~~million)~~and ~~based~~ground onvehicles. aSkurka’s ~~final~~product ~~determination~~characteristics ofand ~~working capital~~market asposition offit ~~the~~well ~~closing~~with ofTransDigm’s ~~the~~overall ~~Norco Acquisition~~direction.

~~Norco~~-5- 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~~The ~~and~~purchase ~~strategic~~price ~~direction~~consideration of $30.2 Inmillion ~~addition,~~in ascash awas ~~result~~funded through the use of the Company’s ~~Acquisition,~~existing ~~Marathon~~cash ~~reduced~~balances. The Company accounted for the ~~combined~~ ~~operating~~acquisition ~~costs~~as ~~through~~a purchase and included the ~~relocation~~results of ~~the~~operations ~~Norco~~of ~~manufacturing~~the ~~process~~acquired ~~into~~business in its ~~existing~~consolidated ~~Waco,~~financial ~~Texas~~statements ~~facility.~~from ~~During~~ the ~~fourth~~effective ~~quarter~~date of ~~fiscal 2003,~~ the acquisition. The Company ~~relocated~~is ~~Norco’s~~in ~~manufacturing~~the ~~operations~~process ~~from~~of ~~Norco’s~~obtaining ~~former facility~~third-party invaluations ~~Connecticut~~of tocertain ~~Marathon’s~~tangible ~~Waco~~and intangible assets; thus, ~~Texas~~the ~~facility.~~values Inattributed ~~connection~~to ~~with~~acquired ~~this~~assets ~~relocation,~~in ~~Norco’s~~the ~~lease~~consolidated atfinancial ~~its~~statements ~~Connecticut~~are ~~facility~~subject ~~was~~to ~~cancelled~~adjustment.

The Company ~~accounted~~expects ~~for~~substantially ~~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~~acquisition isto be deductible for income tax purposes.

Pro forma net sales and results of operations for this acquisition, had the acquisition occurred at the beginning of the thirteen week period ended January 1, 2005 and December 27, 2003, respectively, are not significant and, accordingly, are not provided.

Avionic Instruments—On July 9, 2004, TransDigm acquired all of the outstanding capital stock of Avionic Instruments, Inc. (“Avionic Instruments”) and DAC Realty Corp. (“DAC”) for approximately $21.5 million in cash, subject to adjustment based on the level of acquired working capital as of the closing of the acquisition. Avionic Instruments designs and manufactures specialized power conversion devices for a wide range of aerospace applications. These products are used on most commercial and regional transports as well as many corporate and military aircraft. DAC is a realty company that holds the real property for Avionic Instruments. Avionic Instruments’ product characteristics and market position fit well with the Company’s overall direction.

The purchase price consideration of $21.5 million in cash was funded through the use of the Company’s existing cash balances. The Company accounted for the acquisition as a purchase and has included the results of operations of the acquired company in its consolidated financial statements from the effective date of the acquisition. The Company is in the process of obtaining third party valuations of certain tangible and intangible assets; thus, the values attributed to acquired assets in the consolidated financial statements are subject to adjustment.

Pro forma net sales and results of operations for this acquisition, had the acquisition occurred at the beginning of the thirteen week period ended December 27, 2003, are not significant and, accordingly, are not provided.

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~~following ~~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”thousands). :

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.


	January 1, 2005
			Gross Unrealized
	Cost		Gains		Losses		Fair Value
Debt securities

U.S. Treasury Notes	$	15,104	$	11	$	17	$	15,098
U.S. Government Agency mortgage-backed securities		14,126		12		20		14,118
Corporate bonds		8,996		—		182		8,814
Asset backed securities		11,680		9		66		11,623

Total	$	49,906	$	32	$	285	$	49,653

~~Marketable securities~~-6- ~~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.

-8-

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.


	September 30, 2004
			Gross Unrealized
	Cost		Gains		Losses		Fair Value
Debt securities
U.S. Treasury Notes	$	19,212	$	15	$	13	$	19,214
U.S. Government Agency mortgage-backed securities		11,055		13		20		11,048
Corporate bonds		8,689		3		71		8,621
Asset backed securities		11,715		24		21		11,718

Total	$	50,671	$	55	$	125	$	50,601

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

Proceeds from the sale/maturity of marketable securities were $34.2 million during the quarter ended January 1, 2005. Gross realized gains and losses for the quarter ended January 1, 2005 were immaterial.

The net carrying values of debt securities at January 1, 2005, 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 (in thousands).


	Cost		Fair Value
Available-for-Sale

Due in one year or less	$	12,390	$	12,301
Due after one year through three years		14,713		14,621
Due after three years		8,677		8,613

		35,780		35,535
Mortgage-backed securities		14,126		14,118

Total	$	49,906	$	49,653

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 26, 2004			September 30, 2003
	January 1,2005			September 30,2004
Work-in-progress and finished goods (1)	$	34,734		$	49,915
Work-in-progress and finished goods	$	36,948		$	36,728
Raw materials and purchased component parts		3335,~~678~~903			34,~~512~~314
Total		6872,~~412~~851			8471,~~427~~042
Reserve for excess and obsolete inventory		(76,~~764~~929	)		(76,~~041~~657	)
Inventories - net	$	6065,~~648~~922		$	7764,~~386~~385

~~(1)~~-7- ~~The balance at September 30, 2003 includes $18.1 million of purchase price accounting adjustments recorded in conjunction with the Merger (see Note 1).~~

7.	INTANGIBLE ASSETS

Intangible assets subject to amortization consist of the following (in thousands):

	June 26, 2004
	January 1, 2005
	Gross Carrying Amount		Accumulated Amortization		Net
	Gross CarryingAmount		AccumulatedAmortization		Net
Unpatented technology	$	8285,~~033~~186	$	35,~~410~~412	$	7879,~~623~~774
License agreement		9,~~468~~373		~~492~~759		8,~~976~~614
Trade secrets		11,772		~~491~~757		11,~~281~~015
Patented technology		1,345		~~163~~254		1,~~182~~091
Order backlog		67,~~480~~630		56,~~939~~959		~~541~~671
Total	$	~~111~~115,~~098~~306	$	1014,~~495~~141	$	~~100~~101,~~603~~165

-9-


	September 30, 2004
	Gross Carrying Amount		Accumulated Amortization		Net
Unpatented technology	$	85,186	$	4,363	$	80,823
License agreement		9,468		625		8,843
Trade secrets		11,772		623		11,149
Patented technology		1,345		209		1,136
Order backlog		7,630		6,480		1,150

Total	$	115,401	$	12,300	$	103,101

The total carrying amount of identifiable intangible assets not subject to amortization consists of $125.5 million of trademarks and trade names at both January 1, 2005 and September 30, 2004.

The aggregate amortization expense on identifiable intangible assets for the thirteen weeks ended January 1, 2005 and December 27, 2003 was approximately $1.8 million and $2.8 million, respectively. The estimated amortization expense for fiscal 2005 is $6.3 million and for each of the five succeeding years 2006 through 2010 is $5.1 million, $5.1 million, 5.1 million, $5.0 million and $5.0 million, respectively.

Intangible assets acquired during the thirteen weeks ended January 1, 2005 consisted of goodwill of approximately $25.3 million related to the acquisition of Skurka. The Company is in the process of obtaining third party valuations of certain intangible assets; thus the amount of goodwill recorded is subject to adjustment.

The following is a summary of changes to the carrying value of goodwill from September 30, 2004 through January 1, 2005:


Balance, September 30, 2004	$	812,460
Acquisition of Skurka		25,273
Other		95

Balance, January 1, 2005	$	837,828

-8-

	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.

The aggregate amortization expense on identifiable intangible assets for the thirteen and thirty-nine weeks ended June 26, 2004 and June 28, 2003 was approximately $2.9 million, $8.5 million, $0.3 million, and $0.9 million, respectively. The estimated amortization expense for fiscal 2004 is $10.3 million and for each of the five succeeding years 2005 through 2009 is $5.0 million.

The following is a summary of the changes in the carrying value of goodwill from September 30, 2003 through June 26, 2004:

Balance, September 30, 2003	$	807,714
Purchase price allocation adjustments		(2,336	)
Balance, June 26, 2004	$	805,378

8.	PRODUCT WARRANTY

The Company provides limited warranties in connection with the sale of its products. The warranty period for products sold varies among the Company’s 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):~~

	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

The following table presents a reconciliation of changes in the product warranty liability for the periods indicated below (in thousands):


	Thirteen Weeks Ended
	January 1, 2005			December 27, 2003
Liability balance at beginning of period	$	2,829		$	3,070
Accruals for warranties issued		162			483
Warranty claims settled		(303	)		(434	)

Liability balance at end of period	$	2,688		$	3,119

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. The components of net periodic benefit cost are as follows (in thousands):


	Thirteen Weeks Ended
	January 1, 2005			December 27, 2003
Service cost	$	21		$	22
Interest cost		96			94
Expected return on plan assets		(67	)		(63	)
Net amortization and deferral		8			8

	$	58		$	61

Deferred Compensation Plans—Certain management personnel of the Company participate in one or both of two deferred compensation plans of TD Holding that were established in connection with the Merger. Vested interests in a rollover deferred compensation plan equal to approximately $17.8 million of the $35.7 million fair value of the stock options rolled over in connection with the Merger were issued as partial compensation in exchange for such options. Management’s interest in the rollover deferred compensation plan accretes at a rate of 12% 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 vesting provisions of the management deferred compensation plan are identical to the vesting provisions contained in the TD Holding stock option plan and are based on the achievement of time and performance criteria over a five-year period. Management’s interests in the management deferred compensation plan were initially valued at zero and accrete at a rate equal to 11.1% of the sum of the interest accrued on the loans extended to TD Holding in connection with the Merger and the notional interest credited under the rollover deferred compensation plan. Because the participants of these deferred compensation plans are management personnel of the Company, the cost of the plans, which totaled $1.6 million and $1.5 million for the thirteen week periods ended

-9-

January 1, 2005 and December 27, 2003, respectively, is pushed-down to the Company and recognized as an expense and a capital contribution from TD Holding. The vested obligations under the deferred compensation plans represent obligations of TD Holding and are not guaranteed by Holdings or any of its subsidiaries.

10.

SUPPLEMENTAL GUARANTOR INFORMATION

TransDigm’s 8³/8% Senior Subordinated Notes, 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 8³/8% Senior Subordinated Notes is subordinated to Holdings’ guarantee of TransDigm’s borrowings under its Senior Credit Facility. The following supplemental consolidating condensed financial information presents the balance sheets of Holdings as of January 1, 2005 and September 30, 2004 and its statements of operations and cash flows for the thirteen weeks ended January 1, 2005, and December 27, 2003.

-10-

The components of net periodic benefit cost are detailed below (in thousands):

	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

Deferred Compensation Plans—Certain management personnel of the Company participate in one or both of two deferred compensation plans of TD Holding that were established in connection with the Merger. Vested interests in a rollover deferred compensation plan equal to approximately $17.8 million of the $35.7 million fair value of the stock options rolled over in connection with the Merger were issued as partial compensation in exchange for such options (see Note 1). Management’s interest in the rollover deferred compensation plan accretes at a rate of 12% 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 vesting provisions of the management deferred compensation plan are identical to the vesting provisions contained in the TD Holding stock option plan and are based on the achievement of time and performance criteria over a five-year period. Management’s interests in the management deferred compensation plan were initially valued at zero and accrete at a rate equal to 11.1% of the sum of the interest accrued on the loans extended to TD Holding in connection with the Merger and the notional interest credited under the rollover deferred compensation plan. Because the participants of these deferred compensation plans are management personnel of the Company, the cost of the plans, which totaled $1.5 million and $4.6 million for the thirteen and thirty-nine week periods ended period ended June 26, 2004, is pushed-down to the Company and recognized as an expense and a capital contribution from TD Holding. The vested obligations under the deferred compensation plans represent obligations of TD Holding and are not guaranteed by Holdings or any of its subsidiaries.

10. CONTINGENCIES

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.

-11-

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 8 3/8% 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).

-12-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF ~~JUNE~~JANUARY 261, ~~2004~~2005

(~~Amounts~~In in Thousands)

	Holdings		TransDigm		SubsidiaryGuarantors			Eliminations			~~Total Consolidated~~TotalConsolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	5744,~~353~~344	$	(~~1,946~~315	)	$	—		$	5544,~~407~~029
Marketable securities		—		5049,~~262~~653		—			—			5049,~~262~~653
Trade accounts receivable - Net		—		18,~~234~~519		2428,~~160~~332			—			4246,~~394~~851
Inventories		—		2018,~~044~~879		4047,~~604~~043			—			6065,~~648~~922
Deferred income taxes		—		10,~~547~~159		—			—			10,~~547~~159
Prepaid expenses and other		—		~~754~~1,064		~~698~~683			—			1,~~452~~747
Total current assets		—		~~157~~142,~~194~~618		6375,~~516~~743			—			~~220~~218,~~710~~361
INVESTMENT IN SUBSIDIARIES AND INTERCOMPANY BALANCES		~~529~~560,~~764~~672		1,~~939~~997,~~671~~227		~~641~~666,~~135~~670			(3,~~110~~224,~~570~~569	)		—
PROPERTY, PLANT AND EQUIPMENT - Net		—		2221,~~606~~809		3538,~~286~~828			—			5760,~~892~~637
GOODWILL		—		~~408~~404,~~094~~372		~~397~~433,~~284~~456			—			~~805~~837,~~378~~828
OTHER INTANGIBLE ASSETS - Net		—		89,773		136,324			—			226,097
TRADEMARKS AND TRADE NAMES		—		52,997		72,500			—			125,497
DEBT ISSUE COSTS - Net		—		24,245		—			—			24,245
OTHER INTANGIBLE ASSETS - Net		—		36,102		65,063			—			101,165
OTHER		—		717		—			—			717
DEBT ISSUE COSTS - Net		—		22,195		—			—			22,195
TOTAL ASSETS	$	529,764	$	2,642,300	$	1,273,545		$	(3,110,570	)	$	1,335,039
OTHER		—		765		—			—			765
TOTAL ASSETS	$	560,672	$	2,678,085	$	1,352,260		$	(3,224,569	)	$	1,366,448
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term liabilities	$	—	$	42,~~443~~943	$	—		$	—		$	42,~~443~~943
Accounts payable		—		5,~~072~~146		46,~~418~~144			—			911,~~490~~290
Accrued liabilities		—		2628,~~544~~893		65,~~433~~393			—			3234,~~977~~286
Total current liabilities		—		36,~~059~~982		1011,~~851~~537			—			4648,~~910~~519
LONG-TERM DEBT - Less current portion		—		~~691~~689,~~320~~113		—			—			~~691~~689,~~320~~113
DEFERRED INCOME TAXES		—		6465,~~177~~645		—			—			6465,~~177~~645
OTHER NON-CURRENT LIABILITIES		—		1,~~832~~787		1,~~202~~107			—			32,~~034~~894
Total liabilities		—		793,~~388~~527		12,~~053~~644			—			~~805~~806,~~441~~171
STOCKHOLDERS’ EQUITY		~~529~~560,~~764~~672		1,~~848~~884,~~912~~558		1,~~261~~339,~~492~~616			(3,~~110~~224,~~570~~569	)		~~529~~560,~~598~~277
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	~~529~~560,~~764~~672	$	2,~~642~~678,~~300~~085	$	1,~~273~~352,~~545~~260		$	(3,~~110~~224,~~570~~569	)	$	1,~~335~~366,~~039~~448

-1311-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, ~~2003~~ 2004

(~~Amounts~~In in Thousands)

	Holdings		TransDigm		SubsidiaryGuarantors			Eliminations			~~Total Consolidated~~	TotalConsolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	1950,~~352~~148	$	(~~450~~1,650	)	$	—		$	~~18,902~~$	48,498
Trade accounts receivable - Net		—		14,520		22,189			—			36,709
Marketable securities		—		50,601		—			—				50,601
Income taxes receivable		36,703		—		—			—			36,703
Trade accounts receivable - Net		—		17,508		26,981			—				44,489
Inventories		—		2619,~~337~~690		5144,~~049~~695			—			~~77,386~~	64,385
Deferred income taxes		—		810,~~177~~092		—			—			~~8,177~~	10,092
Prepaid expenses and other		—		31,~~296~~283		~~554~~568			—			~~3,850~~	1,851
Total current assets		~~36,703~~—		71149,~~682~~322		7370,~~342~~594			—			~~181,727~~	219,916
INVESTMENTS IN SUBSIDIARIES AND INTERCOMPANY BALANCES		~~468~~549,~~506~~688		1,~~983~~964,~~624~~550		~~(144~~656,~~773~~196	)		2(3,~~307~~170,~~357~~434	)		—	—
PROPERTY, PLANT AND EQUIPMENT - Net		—		2322,~~295~~185		3738,~~047~~632			—			~~60,342~~	60,817
GOODWILL		—		~~412~~404,~~028~~277		~~395~~408,~~686~~183			—			~~807,714~~	812,460
OTHER INTANGIBLE ASSETS - Net		—		94,845		140,994			—			235,839
TRADEMARKS AND TRADE NAMES		—		52,997		72,500			—				125,497
DEBT ISSUE COSTS - Net		—		28,771		—			—			28,771
OTHER INTANGIBLE ASSETS - Net		—		36,721		66,380			—				103,101
OTHER		—		627		—			—			627
DEBT ISSUE COSTS - Net		—		23,148		—			—				23,148
TOTAL ASSETS	$	505,209	$	2,614,872	$	502,296		$	2,307,357		$	1,315,020
OTHER		—		710		—			—				710
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
TOTAL ASSETS	$	549,688	$	2,653,910	$	1,312,485		$	(3,170,434	)		$	1,345,649
CURRENT LIABILITIES:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term liabilities	$	—	$	7,634	$	—		$	—		$	7,634
CURRENT LIABILITIES:
Accounts payable		—		5,512		5,709			—			11,221
Current portion of long-term liabilities	$	—	$	4,431	$	—		$	—			$	4,431
Accrued liabilities		—		21,696		7,929			—			29,625
Accounts payable		—		6,199		5,269			—				11,468
Total current liabilities		—		34,842		13,638			—			48,480
Accrued liabilities		—		17,079		7,721			—				24,800
LONG-TERM DEBT - Less current portion		—		692,050		—			—			692,050
Total current liabilities		—		27,709		12,990			—				40,699
DEFERRED INCOME TAXES		—		64,364		—			—			64,364
LONG-TERM DEBT - Less current portion		—		689,848		—			—				689,848
OTHER NON-CURRENT LIABILITIES		—		3,715		1,202			—			4,917
DEFERRED INCOME TAXES		—		65,645		—			—				65,645
Total liabilities		—		794,971		14,840			—			809,811
OTHER NON-CURRENT LIABILITIES		—		1,732		1,107			—				2,839
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)		505,209		1,819,901		487,456			2,307,357			505,209
Total liabilities		—		784,934		14,097			—				799,031
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	505,209	$	2,614,872	$	502,296		$	2,307,357		$	1,315,020
STOCKHOLDERS’ EQUITY		549,688		1,868,976		1,298,388			(3,170,434	)			546,618
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	549,688	$	2,653,910	$	1,312,485		$	(3,170,434	)		$	1,345,649

-1412-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE ~~THIRTY-NINE~~THIRTEEN WEEKS ENDED JANUARY ~~JUNE 26~~1, ~~2004~~2005

(~~Amounts~~In in Thousands)

Holdings

TransDigm

SubsidiaryGuarantors

Eliminations

~~Total Consolidated~~TotalConsolidated

NET SALES

—

9433,~~140~~918

~~121~~46,~~793~~352

—

~~215~~80,~~933~~270

COST OF SALES

—

4515,~~971~~274

7625,~~405~~523

—

~~122~~40,~~376~~797

GROSS PROFIT

—

4818,~~169~~644

4520,~~388~~829

—

9339,~~557~~473

OPERATING EXPENSES:

Selling and administrative

—

134,~~696~~536

83,~~336~~718

—

228,~~032~~254

Amortization of intangibles

—

~~3,852~~525

41,~~669~~316

—

81,~~521~~841

Total operating expenses

—

175,~~548~~061

135,~~005~~034

—

3010,~~553~~095

INCOME FROM OPERATIONS

—

3013,~~621~~583

3215,~~383~~795

—

6329,~~004~~378

OTHER INCOME (EXPENSES):

Interest expense - Net

(73,~~429~~057

)

(3210,~~087~~586

)

21,~~652~~364

—

(3612,~~864~~279

)

Equity in income of subsidiaries

2112,~~148~~698

2210,~~072~~810

—

(4323,~~220~~508

)

—

INCOME BEFORE INCOME TAXES

139,~~719~~641

2013,~~606~~807

3517,~~035~~159

(4323,~~220~~508

)

2617,~~140~~099

INCOME TAX PROVISION (BENEFIT)

(21,~~749~~131

)

~~(542~~1,109

)

126,~~963~~349

—

96,~~672~~327

NET INCOME

1610,~~468~~772

2112,~~148~~698

2210,~~072~~810

(4323,~~220~~508

)

1610,~~468~~772

-1513-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE ~~THIRTY-NINE~~THIRTEEN WEEKS ENDED DECEMBER ~~JUNE 28~~27, 2003 ~~(PREDECESSOR)~~

(~~Amounts~~In in Thousands)

	Holdings			TransDigm			SubsidiaryGuarantors			Eliminations	~~Eliminations~~		TotalConsolidated		~~Total Consolidated~~
NET SALES	$	—		$	8929,~~995~~723		$	~~135~~37,~~177~~959		$	$—	—	$	67,682	$	~~225,172~~
COST OF SALES		—			3918,~~125~~713			7832,~~310~~906			—	—		51,619		~~117,435~~
GROSS PROFIT		—			5011,~~870~~010			565,~~867~~053			—	—		16,063		~~107,737~~
OPERATING EXPENSES:
Selling and administrative		—			94,~~645~~416			82,~~791~~617			—	—		7,033		~~18,436~~
Amortization of intangibles		—			~~454~~1,250			~~405~~1,533			—	—		2,783		~~859~~
Total operating expenses		—			105,~~099~~666			94,~~196~~150			—	—		9,816		~~19,295~~
INCOME FROM OPERATIONS		—			405,~~771~~344			~~47,671~~903			—	—		6,247		~~88,442~~
OTHER INCOME (EXPENSES):
Interest expense - Net		(12,~~755~~433	)		(1810,~~225~~959	)		~~(6,183~~723	)		—	—		(12,669	)	~~(26,163~~	)
Equity in income of subsidiaries		40,963			26,553			—				(67,516	)			—
Equity in income (loss) of subsidiaries		(2,497	)		1,018			—			1,479			—
INCOME BEFORE INCOME TAXES		39,208			49,099			41,488				(67,516	)			62,279
INCOME (LOSS) BEFORE INCOME TAXES		(4,930	)		(4,597	)		1,626			1,479			(6,422	)
INCOME TAX PROVISION (BENEFIT)		(~~651~~910	)		8(2,~~136~~100	)		~~14,935~~608			—	—		(2,402	)	~~22,420~~
NET INCOME	$	39,859		$	40,963		$	26,553			$	(67,516	)		$	39,859
NET INCOME (LOSS)	$	(4,020	)	$	(2,497	)	$	1,018		$	1,479		$	(4,020	)

-1614-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~THIRTY-NINE~~THIRTEEN WEEKS ENDED JANUARY ~~JUNE 26~~1, ~~2004~~2005

(~~Amounts~~In in Thousands)

	Holdings			TransDigm			SubsidiaryGuarantors			Eliminations			~~Total Consolidated~~TotalConsolidated
OPERATING ACTIVITIES:
Net income	$	1610,~~468~~772		$	2112,~~148~~698		$	2210,~~072~~810		$	(4323,~~220~~508	)	$	1610,~~468~~772
Adjustments to reconcile net income to net cash provided by operating activities		15(12,~~555~~698	)		5,~~664~~263			121,~~045~~916			4323,~~220~~508			7617,~~484~~989
Net cash provided by operating activities		32,023			26,812			34,117			—			92,952
Net cash (used in) provided by operating activities		(1,926	)		17,961			12,726			—			28,761
INVESTING ACTIVITIES
Purchase of marketable securities		—			(64,788	)		—			—			(64,788	)
Capital expenditures		—			(428	)		(1,126	)		—			(1,554	)
Sales and maturity of marketable securities		—			14,444			—			—			14,444
Acquisition of Skurka		—			(30,206	)		—			—			(30,206	)
Capital expenditures		—			(1,735	)		(1,635	)		—			(3,370	)
Purchase of marketable securities		—			(33,434	)		—			—			(33,434	)
Net cash used in investing activities		—			(52,079	)		(1,635	)		—			(53,714	)
Sales and maturity of marketable securities		—			34,199			—			—			34,199
Net cash used in investing activities		—			(29,869	)		(1,126	)		—			(30,995	)
FINANCING ACTIVITIES:
Changes in intercompany activities		~~(31~~1,~~527~~926	)		658,~~505~~339			(3310,~~978~~265	)		—			—
Payment of amounts borrowed under credit facility		—			(~~737~~735	)		—			—			(~~737~~735	)
Payment of license obligation		—			(1,500	)		—			—			(1,500	)
Purchase of common stock		(520	)		—			—			—			(520	)
Net cash provided by (used in) financing activities		1,926			6,104			(10,265	)		—			(2,235	)
Proceeds from exercise of stock options		24			—			—			—			24
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			(5,804	)		1,335			—			(4,469	)
Net cash provided by (used in) financing activities		(32,023	)		63,268			(33,978	)		—			(2,733	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—			50,148			(1,650	)		—			48,498
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			38,001			(1,496	)		—			36,505
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	44,344		$	(315	)	$	—		$	44,029
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

-1715-

TRANSDIGM HOLDING COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~THIRTY-NINE~~THIRTEEN WEEKS ENDED DECEMBER ~~JUNE 28~~27, 2003 ~~(PREDECESSOR)~~

(~~Amounts~~In in Thousands)

	Holdings			TransDigm			SubsidiaryGuarantors			Eliminations			TotalConsolidated
OPERATING ACTIVITIES:
Net income	$	39,859		$	40,963		$	26,553		$	(67,516	)	$	39,859
Net income (loss)	$	(4,020	)	$	(2,497	)	$	1,018		$	1,479		$	(4,020	)
Adjustments to reconcile net income to net cash provided by operating activities		(39,208	)		(20,722	)		(4,758	)		67,516			2,828
Adjustments to reconcile net income (loss) to net cash provided by operating activities		20,719			6,365			14,182			(1,479	)		39,787
Net cash provided by operating activities		~~651~~16,699			203,~~241~~868			2115,~~795~~200			—			4235,~~687~~767
INVESTING ACTIVITIES
Acquisition of Norco, Inc. net assets		—			—			(53,025	)		—			(53,025	)
Capital expenditures		—			(194	)		(435	)		—			(629	)
Capital expenditures		—			(1,959	)		(1,971	)		—			(3,930	)
Net cash used in investing activities		—			(194	)		(435	)		—			(629	)
Net cash used in investing activities		—			(1,959	)		(54,996	)		—			(56,955	)
FINANCING ACTIVITIES:
Changes in intercompany activities		32(16,~~151~~723	)		~~(66~~30,~~236~~856	)		34(14,~~085~~133	)		—			—
Borrowings under credit facility, net of fees of $200		—			24,800			—			—			24,800
Proceeds from exercise of stock options		24			—			—			—			24
Repayment of Holdings PIK Notes		(32,802	)		—			—			—			(32,802	)
Payment of license obligation		—			(1,500	)		—			—			(1,500	)
Payment of license obligation		—			(2,600	)		—			—			(2,600	)
Net cash provided by (used in) financing activities		(16,699	)		29,356			(14,133	)		—			(1,476	)
Payment of amounts borrowed under credit facility		—			(3,301	)		—			—			(3,301	)
INCREASE IN CASH AND CASH EQUIVALENTS		—			33,030			632			—			33,662
Net cash provided by (used in) financing activities		(651	)		(47,337	)		34,085			—			(13,903	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—			19,352			(450	)		—			18,902
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			(29,055	)		884			—			(28,171	)
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	52,382		$	182		$	—		$	52,564
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

*-16- ~~* * * *~~

-18-

~~PART~~ Item ~~1: FINANCIAL~~2. ~~INFORMATION~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~ITEM~~The 2following discussion of the Company’s financial condition and results of operations should be read together with Holdings’ consolidated financial statements and the related notes included elsewhere in the Report. References in this section to the “Company,” “TransDigm,” “we,” “us” or “our” are to Holdings, together with TransDigm Inc. and its subsidiaries. References to “Holdings” are to TransDigm Holding Company, which holds all of the outstanding capital stock of TransDigm.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company’s financial condition and results of operations should be read together with Holdings’ consolidated financial statements and the related notes included elsewhere in the Report. References in this section to “TransDigm,” “we,” “us” or “our” are to TransDigm Inc. and its subsidiaries. References to “Holdings” are to TransDigm Holding Company, which holds all of the outstanding capital stock of TransDigm. References to the “Company” are to Holdings, together with TransDigm. Financial information presented herein for the periods through the merger of TD Acquisition Corporation into Holdings and TD Funding Corporation into TransDigm Inc. on July 22, 2003 (see”—Recent Developments”) is presented as “Predecessor” financial information. The Company’s condensed consolidated financial statements for the period subsequent to the Merger reflect a new basis of accounting incorporating the fair value adjustments made in recording the Merger while prior periods are presented using the historical cost basis of the 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~~would 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~~amended and restated 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.

•

Our government contracts entail certain risks.

•

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.

-17-

•

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 in service today. Most of the Company’s products share four common characteristics: (1) highly engineered and proprietary; (2) significant ~~aftermarket~~ aftermarket content, (3) sole source provider; and (4) large share of niche markets.

TransDigm’s customers include distributors of aerospace components, commercial airlines, aircraft maintenance facilities, aircraft and engine original equipment manufacturers, or OEMs, various armed forces of the United States and foreign governments, and defense OEMs. TransDigm generates the majority of its operating income from sales of replacement parts and services in the commercial and defense aftermarkets. ~~Most~~The majority of TransDigm’s OEM sales are on an exclusive sole source basis, meaning 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, which allows it to benefit from a large and growing installed base of aircraft.

On July 22, 2003, an entity formed by Warburg Pincus Private Equity VIII, L.P. (“Warburg Pincus”) and Holdings 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 (“TD Holding”) (the “Merger”). 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.

-18-

Recent Developments

On ~~July~~January 928, ~~2004~~2005, ~~the~~TransDigm ~~Company~~ completed the acquisition of ~~Avionic~~Fluid ~~Instruments~~Regulators Corporation (“Fluid Regulators”), ~~Inc.~~a wholly-owned subsidiary of Esterline Technologies Corporation, for $21 23.7 million in cash. ~~The purchase price is~~ subject to adjustment based ~~upon~~on athe ~~final~~level ~~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~~Fluid ~~Instruments~~Regulators designs and manufactures ~~specialized~~highly ~~power~~engineered ~~conversion~~flight ~~devises~~control ~~for~~and apressure ~~wide~~valves ~~range~~used ofin ~~aerospace~~hydraulic, fuel, lubrication and related applications. ~~These~~The products are used on ~~most~~a ~~commercial~~wide ~~and~~range ~~regional~~of ~~transports~~commercial asaircraft ~~well as many corporate~~ and ~~regional transports as well as corporate and~~ military aircraft. ~~The~~Fluid Regulators’ ~~acquisition~~product ~~significantly~~characteristics ~~enhances~~and ~~the Company’s existing~~ market position infit ~~aerospace~~well ~~power~~with ~~conversion~~TransDigm’s ~~devices~~overall direction.

~~-20-~~On December 31, 2004, TransDigm acquired certain assets and assumed certain liabilities of Skurka Engineering Company (“Skurka”) for $30.2 million in cash subject to adjustment based on the level of working capital as of the closing of the acquisition. The transaction was funded through the use of the Company’s existing cash balances. Skurka designs and manufactures specialized electromagnetic equipment primarily AC/DC electric motors and components. The products are used on a wide range of commercial aircraft and military aircraft, ships and ground vehicles. Skurka’s product characteristics and market position fit well with TransDigm’s overall direction.

EBITDA and EBITDA, As Defined

The following table sets forth a reconciliation of net income to EBITDA and EBITDA, As Defined.


	Thirteen Weeks Ended January 1, 2005		Thirteen Weeks Ended December 27, 2003
	(in millions)
Net income (loss)	$	10.8	$	(4.0	)
Adjustments:
Depreciation and amortization expense		3.9		4.6
Interest expense, net		12.3		12.7
Income tax provision (benefit)		6.3		(2.4	)

EBITDA ⁽¹⁾		33.3		10.9
Adjustments:
Inventory purchase accounting charge ⁽²⁾		—		18.1
Acquisition integration costs ⁽³⁾		—		0.7
Non-cash compensation and deferred compensation costs ⁽⁴⁾		1.6		1.5

EBITDA, As Defined ⁽¹⁾	$	34.9	$	31.2

(1)

EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA, As Defined, represents EBITDA, plus inventory purchase accounting charges, certain other non-recurring merger expenses, non-cash compensation and deferred compensation charges and acquisition integration costs, as applicable. Management believes that the presentation of EBITDA and EBITDA, As Defined, will enhance an investor’s understanding of our operating performance. EBITDA and EBITDA, As Defined, are also the measures used by TransDigm’s senior management to evaluate the performance of TransDigm’s various lines of business and for other required or discretionary purposes, such as measuring performance under our employee incentive programs. The amended and restated senior credit agreement requires the Company to comply with certain financial ratios, including a leverage ratio, fixed charged coverage ratio and interest coverage ratio. Leverage ratio is defined in the amended and restated senior credit agreement, as of any date, as the ratio of the total indebtedness of the Company on a consolidated basis on such date to Consolidated

-19-

OnEBITDA ~~April~~(as 1,defined ~~2004,~~in ~~TransDigm’s~~the ~~senior~~ credit ~~facility~~agreement) ~~was~~for the period of four consecutive fiscal quarters most recently ended on or prior to such date. Fixed charge coverage ratio is defined in the amended and restated senior credit agreement as, for any period, the ratio of (a) Consolidated EBITDA for such period to ~~refinance~~(b) ~~approximately~~consolidated ~~$294 million~~fixed charges for such period. Interest coverage ratio is defined as, for any period; the ratio of ~~term~~(a) ~~loans~~Consolidated ~~then~~EBITDA ~~outstanding~~for such period to (b) consolidated interest expense for such period. The ~~scheduled~~failure ~~term~~to ~~loan~~comply ~~payments~~with ~~under~~the financial covenants in the amended and restated ~~facility~~senior ~~are~~credit ~~approximately~~agreement ~~$2.9~~could ~~million~~result ~~per~~in ~~annum~~an event of default thereunder (~~payable~~and, in ~~quarterly~~turn, ~~installments~~an event of default under the amended and restated senior credit agreement could result in an event of default under the indenture governing the 8 3/8% Senior Subordinated Notes). ~~through~~The ~~June~~amended 30and restated senior credit agreement defines Consolidated EBITDA in a manner equal to how we define EBITDA, ~~2010~~As Defined. ~~The~~Neither ~~remaining~~EBITDA ~~unpaid~~nor ~~principal amount~~EBITDA, As Defined, is a measurement of ~~the~~financial ~~term~~performance ~~loan~~under U.S. generally accepted accounting principles, or GAAP and neither should be considered as an alternative to (~~approximately~~1) ~~$276~~net ~~million~~income determined in accordance with GAAP or (2) ~~will~~operating becash ~~due~~flows ondetermined ~~July~~in ~~22,~~accordance ~~2010~~with GAAP. Management’s calculation of EBITDA and EBITDA, As Defined, may not be comparable to the calculation of similarly titled measures reported by other companies.

~~On July 22, 2003, Holdings consummated a merger with TD Acquisition Corporation~~ (~~“TD Acquisition”~~2) ~~pursuant~~This torepresents ~~which TD Acquisition merged with and into Holdings, with Holdings continuing as~~ the ~~surviving~~portion ~~corporation as a wholly-owned subsidiary~~ of ~~a newly formed corporation, TD Holding Corporation (~~the ~~“Merger”).~~purchase Inaccounting ~~connection~~adjustment ~~with~~to ~~the~~inventory ~~Merger,~~pertaining TransDigm Inc. completed a tender offer for its outstanding 10 3/8% Senior Subordinated Notes due 2008 (the “10 3/8% Senior Subordinated Notes”). Of the $200 million aggregate principal amount of outstanding 10 3/8% Senior Subordinated Notes, a total of approximately $197.8 million aggregate principal amount of 10 3/8% Senior Subordinated Notes were validly tendered and the remaining $2.2 million aggregate principal amount of 10 3/8% Senior Subordinated Notes were defeased pursuant to the ~~terms~~Merger ~~of the indenture governing the 10 3/8% Senior Subordinated Notes. In December 2003, TransDigm Inc. redeemed the 10 3/8% Senior Subordinated Notes~~ that were previously defeased. 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 credit facility became due and was ~~repaid~~charged ~~in its entirety upon the closing of the Merger. The cash merger consideration of $759.7 million paid~~ to ~~Holdings’~~cost ~~former common and preferred stockholders, holders~~ of ~~in-the-money~~sales ~~stock options~~when ~~and~~ the ~~holder~~inventory 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 repayment of substantially all of TransDigm Inc.’s then existing indebtedness in connection with the consummation of the Merger was ~~financed through: (1) an investment of $471~~sold.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 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. in connection with the Merger, (2) $295.0 million of borrowings under a new secured term loan facility, (3) $400.0 million of proceeds from the issuance of new 8 3/8% Senior Subordinated Notes due 2011 (“8 3/8% Senior Subordinated Notes”) and (4) the use of existing cash balances. The 8 3/8% 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. Following the Merger, Warburg Pincus controls a majority of the outstanding common stock of TD Holding.

~~The following~~(3) ~~table~~Represents ~~sets~~costs ~~forth~~incurred ~~a reconciliation of EBITDA and EBITDA, As Defined,~~ to ~~our~~integrate net income reported under Generally Accepted Accounting Principles, or GAAP. EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA, As Defined, represents EBITDA, plus inventory purchase accounting adjustments, certain other non-recurring merger expenses, non-cash compensation and deferred compensation charges and acquisition integration costs, as applicable. Management believes that the ~~presentation~~Norco ofbusiness ~~EBITDA~~into ~~and EBITDA, As Defined, will enhance an investor’s understanding of our operating performance. EBITDA and EBITDA, As Defined, are also~~ the ~~measures used by TransDigm~~Company’s senior management to evaluate the performance of TransDigm’s various lines of business and for other required or discretionary purposes, such as measuring performance under our employee incentive programsoperations. The credit agreement requires the Company to comply with certain financial ratios, including a leverage ratio, fixed charged coverage ratio and interest coverage ratio. Leverage ratio is defined in the credit agreement, as of any date, as the ratio of the total indebtedness of the Company on a consolidated basis on such date to Consolidated EBITDA (as defined in the credit agreement) for the period of four consecutive fiscal quarters most recently ended on or prior to such date. Fixed charge coverage ratio is defined in the credit agreement as, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) consolidated fixed charges for such period. Interest coverage ratio is defined as, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) consolidated interest expense for such period. The failure to comply with the financial covenants in the credit agreement could result in an event of default thereunder (and, in turn, an event of default under the credit agreement could result in an event of default under the indenture governing the 8 3/8% Senior Subordinated Notes). The credit agreement defines Consolidated EBITDA in a manner equal to how we define EBITDA, As Defined. Neither EBITDA nor EBITDA, As Defined, is a measurement of financial performance under GAAP and neither should be considered as an alternative to (1) net income determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP.

~~-21-~~(4) Represents the expenses recognized by the Company under a stock option plan and two deferred compensation plans of TD Holding that relate to the Company’s employees who participate in the plans.

Management’s calculation of EBITDA and EBITDA, As Defined, may not be comparable to the calculation of similarly titled measures reported by other companies.

	ThirteenWeeksEndedJune 26, 2004		ThirteenWeeksEndedJune 28, 2003(Predecessor)		Thirty-NineWeeksEnded June 26, 2004		Thirty-NineWeeksEnded 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

(1) This represents the portion of the purchase accounting adjustments to inventory pertaining to the Merger and Norco acquisition that was charged to cost of sales when the inventory was sold.

(2) Represents costs incurred to integrate the Norco business (see Note 4 of the Notes to Condensed Consolidated Financial Statements) into the Company’s Waco, Texas operations.

(3) Represents the expenses recognized by the Company under a stock option plan and two deferred compensation plans of TD Holding that relate to the Company’s employees who participate in the 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~~our 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~~Substantially all 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 firm, fixed-price purchase orders received from customers. Provisions for returns, 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.

~~-22-~~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 based on historical information. 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.

-20-

~~firm,~~ warranty ~~fixed-price~~period ~~purchase orders received from customers. Provisions~~ for ~~returns,~~the ~~estimated~~majority ~~contract~~of ~~losses, uncollectible~~the ~~accounts~~Company’s ~~and~~sales ~~the~~generally ~~cost~~does ofnot ~~repairs~~exceed ~~under~~one ~~contract~~year. ~~warranty~~In ~~provisions~~addition, ~~are~~certain ~~provided~~contracts ~~for~~with indistributors ~~the~~contain right ~~same~~of ~~period~~return asprovisions. ~~the~~The ~~related~~Company ~~revenues~~accrues ~~are~~for ~~recorded~~estimated returns and ~~are~~warranty ~~principally~~claims based on ~~historical~~knowledge ~~results~~of ~~modified,~~product asperformance ~~appropriate,~~issues byand ~~the~~excess ~~most~~inventories ~~current information~~provided ~~available.~~by Weits ~~have~~customers aand ~~history~~industry ofsources. ~~making~~The ~~reasonably~~Company ~~dependable~~also ~~estimates~~provides ofa ~~such~~general amount ~~allowances;~~based ~~however,~~on ~~due~~historical toresults. ~~uncertainties~~Actual ~~inherent~~product inreturns ~~the~~and ~~estimation~~warranty ~~process,~~claims ithave isnot ~~possible~~differed ~~that~~materially ~~actual results may vary~~ from the estimates ~~and~~originally ~~the differences could be material~~established.

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”)~~ Board Statement 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, trademarks and trade names that have an indefinite useful life are not amortized. All other intangible assets are amortized over their estimated useful lives.

Stock Options and Deferred Compensation Plans: Effective with the issuance of the TD Holding stock options in July 2003, the Company adopted the provisions of SFAS No. 123, “Accounting for Stock-~~23-~~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 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 relate to the stock and employee benefit plans of TD Holding, the cost of such compensation arrangements is pushed-down to the Company and recognized as an expense and capital contribution from TD Holding.

Purchase accounting: Mergers and acquisitions are accounted for using the purchase method. Accordingly, fair value adjustments to the Company’s assets and liabilities are recognized and the results of operations of the acquired business are included in its consolidated financial statements from the effective date of merger or acquisition.

-21-

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
	Thirteen Weeks Ended
	June 26, 2004		June 28, 2003		June 26, 2004		June 28, 2003
	January 1, 2005		December 27, 2003
Net sales	100	%	100	%	~~100~~	%	~~100~~	%
Gross profit	5249		4824		43		48
Selling and administrative expenses	10		911		10		9
Amortization of intangibles	42		04		4		0
Income from operations	3837		399		29		39
Interest expense - net	1516		1119		17		11
Income tax provision	8		9		4		10
Income tax provision (benefit)	8		(4	)
Net income	15	%	19	%	8	%	18	%
Net income (loss)	13	%	(6	)%

Changes in Results of Operations

Thirteen~~-week~~ ~~period~~weeks ended ~~June~~January 261, ~~2004~~2005 compared with ~~the~~ thirteen~~-week~~ ~~period~~ weeks ended ~~June~~December 2827, 2003.

• Net Sales. Net sales increased by $012.6 million, or 018.86%, to $7680.43 million for the quarter ended ~~June~~January 261, ~~2004,~~2005 from $7567.87 million for the comparable quarter last year., ~~This increase is~~ primarily due to ~~increases~~an increase in commercial and defense aftermarket sales of ~~approximately~~ $6.10 million, an increase ~~in OEM sales~~ of $04.91 million ~~and an increase~~ in sales offrom ~~$1.1 million due to~~ the ~~Norco~~ acquisition ~~partially~~of ~~offset~~Avionic byInstruments ~~$7.5~~and ~~million~~an ofincrease ~~non-repeat sales~~ in ~~the~~OEM ~~prior~~sales ~~year which supported the cockpit security retrofit~~ of ~~the~~$2.5 ~~entire Airbus fleet~~million.

-• Gross Profit. Gross profit (net sales less cost of sales) increased by $23.4 million, or 145%, to $39.5 million for the quarter ended January 1, 2005 from $16.1 million from the comparable quarter last year. This increase is attributable to the higher sales discussed above and charges included in cost of sales in the prior year pertaining to the $18.1 million inventory purchase price charge recorded in accounting for the Merger and integration costs pertaining to the Norco acquisition. Gross profit as a percentage of net sales increased to 49% for the thirteen week period ended January 1, 2005 from 24-% for the comparable period last year primarily due to the inventory purchase price charge and the integration costs discussed above partially offset by unfavorable product mix resulting primarily from the increase in OEM sales and the dilutive effect of lower margins with Avionic Instruments.

•

Selling and Administrative Expenses. Selling and administrative expenses increased by $1.2 million, or 17.4%, to $8.3 million for the quarter ended January 1, 2005 from $7.1 million for the comparable quarter last year due to higher sales discussed above and the acquisition of Avionic Instruments. Selling and administrative expenses as a percentage of net sales was approximately 10% and 11% for the quarters ended January 1, 2005 and December 27, 2003, respectively.

•

Amortization of Intangibles. Amortization of intangibles decreased by $1.0 million, or 33.8%, to $1.8 million for the quarter ended January 1, 2005 from $2.8 million for the comparable quarter last year. The decrease was due to the order backlog that was recorded in accounting for the Merger that was subsequently fully amortized during fiscal 2004. This decrease was partially offset by an increase in amortization expense on the additional identifiable intangible assets recognized in the acquisition of Avionic Instruments.

-22-

• ~~Gross~~Income ~~Profit~~from Operations. ~~Gross~~Operating ~~profit~~income ~~(net sales less cost of sales)~~ increased by $323.32 million, or ~~9.1~~370%, to $3929.84 million for the quarter ended ~~June~~January 261, ~~2004~~2005 from $366.52 million for the comparable quarter last year~~. Gross profit as a percentage of sales improved four margin percentage points to 52% for the thirteen week period ended June 26~~, ~~2004 from 48% for the comparable period last year. The increase in gross profit and gross profit as a percentage of sales was primarily~~ due to ~~favorable product mix,~~ the ~~strength~~factors ofdiscussed ~~the Company’s proprietary products and market positions, and productivity savings from the Norco acquisition and core operations~~above.

• ~~Selling~~Interest ~~and Administrative Expenses~~Expense. ~~Selling~~Interest ~~and~~expense ~~administrative~~decreased ~~expenses~~slightly ~~increased~~ by $0.84 million, or 113.71%, to $712.53 million, ~~or 9.9% of sales,~~ for the quarter ended ~~June~~January 261, ~~2004~~2005 from $612.7 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.

• ~~Amortization~~Income ofTax ~~Intangibles~~Provision. ~~Amortization~~Income oftax ~~intangibles~~provision ~~increased~~(benefit) byas ~~$2.6~~a ~~million~~percentage toof ~~$2.9~~income ~~million~~before income taxes was 37.0% for the quarter ended ~~June~~January 261, ~~2004~~2005 ~~from~~and ~~$0.3~~was ~~million for the~~ comparable ~~quarter last year due~~ to the ~~amortization~~37.4% ~~expense~~effective ontax ~~additional~~rate ~~identifiable~~for ~~intangible~~the ~~assets~~quarter ~~recognized~~ended inDecember ~~accounting~~27, ~~for the Merger~~2003.

• Net Income ~~from Operations~~(Loss). ~~Operating~~The ~~income~~Company ~~decreased~~earned by $010.18 million, orfor ~~0.3%,~~the tofirst ~~$29.4~~quarter ~~million, or 38.5%~~ of ~~sales,~~fiscal ~~for~~2005 ~~the~~compared ~~quarter~~to ~~ended~~a ~~June~~net ~~26,~~loss ~~2004~~of ~~from~~ $294.50 million, ~~or 38.9% of sales,~~ for the ~~comparable~~first quarter ~~last~~of ~~year.~~fiscal ~~Operating income during the period ended June 26~~2004, ~~2004~~as ~~was~~a ~~reduced~~result ~~by additional non-cash charges~~ of ~~$2.6~~the ~~million,~~factors orreferred ~~3.4% of sales, relating~~ to ~~amortization of intangibles and $1~~above.~~5 million, or 2.0% of sales, of deferred compensation and stock option charges.~~

• Interest Expense. Interest expense increased $3.5 million, or 42.9%, to $11.7 million for the quarter ended June 26, 2004 from $8.2 million for the comparable quarter last year principally due to the additional indebtedness incurred as a result of the 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-

• Selling and Administrative Expenses. Selling and administrative expenses increased by $3.6 million, or 19.5%, to $22.0 million, or 10.2% of sales, for the thirty-nine week period ended June 26, 2004 from $18.4 million, or 8.2% of sales, for the comparable period last year primarily due to $4.1 million, or 1.9% of sales, of non-cash stock option and deferred compensation plan expenses that were recognized by the Company from TD Holding.

• Amortization of Intangibles. Amortization of intangibles increased by $7.6 million to $8.5 million for the thirty-nine week period ended June 26, 2004 from $0.9 million for the comparable period last year due to the amortization expense on additional identifiable intangible assets recognized in accounting for the Merger.

• Income from Operations. Operating income decreased by $25.4 million, or 28.8%, to $63.0 million, or 29.2% of sales, for the thirty-nine week period ended June 26, 2004 from $88.4 million, or 39.3% of sales, for the comparable period last year. Operating income during the thirty-nine week period ended June 26, 2004 was reduced by $18.1 million, or 8.4% of sales, for the non-cash inventory purchase price adjustment, $4.6 million, or 2.1% of sales, for non-cash stock option and deferred compensation charges and the increase in amortization of intangibles resulting from the merger of $7.6 million, or 3.6% of sales. These non-cash charges were partially offset by favorable operating results due to favorable product mix, continuing cost control measures and productivity savings discussed above.

• Interest Expense. Interest expense increased $10.7 million, or 40.9%, to $36.9 million for the thirty-nine week period ended June 26, 2004 from $26.2 million for the comparable period last year principally due to the additional indebtedness incurred as a result of the Merger.

• 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.

• 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.

Backlog

Management 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~~January 261, ~~2004~~2005, the Company estimated its sales order backlog at $~~136~~178.82 million compared to an estimated $~~120~~123.07 million as of ~~June~~December 2827, 2003. This $54.5 million increase in backlog is due to an increase from the acquisitions of Avionic Instruments and Skurka totaling $24.2 million as well as an increase in orders across various product lines in both the OEM and aftermarket segments. The majority of the purchase orders outstanding as of ~~June~~January 261, ~~2004~~2005 are scheduled for delivery within the next twelve months. Purchase orders may 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~~January 261, ~~2004~~2005 may not necessarily represent the actual amount of shipments or sales for any future period.

Foreign Operations

Although the Company manufactures all of its products in the United States, some components are purchased from foreign suppliers and a portion of the Company’s products are ~~resold~~sold to foreign end-users. 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 changing operating costs. The effects of inflation on the Company’s businesses during the thirteen ~~and thirty-nine~~ week periods ended ~~June~~January 261, ~~2004~~2005 and ~~June~~December 2827, 2003, ~~respectively,~~ were not significant.

Liquidity and Capital Resources

Operating Activities. The Company generated $9328.08 million of cash from operating activities during the ~~thirty-nine~~thirteen ~~week~~weeks ~~period~~ ended ~~June~~January 261, ~~2004~~2005 compared to $4235.78 million generated during the ~~comparable~~thirteen ~~period~~weeks ended ~~June~~December 2827, 2003. The ~~increase~~decrease of $507.30 million is primarily due to the receipt of an income tax ~~refunds~~refund of $3714.12 million during ~~and~~the ~~lower~~thirteen ~~estimated~~weeks ~~tax~~ended ~~payments~~December ~~during~~27, ~~the~~2003 ~~thirty-nine~~partially ~~week~~offset ~~period~~by ~~ended~~an ~~June~~increase ~~26,~~in ~~2004~~the ~~resulting primarily~~cash generated from ~~merger~~other ~~expense~~operating activities of $~~176~~7.2 million ~~incurred in fiscal 2003~~.

Investing Activities. Cash used in investing activities ~~was~~increased to $5331.70 million during the ~~thirty-nine~~thirteen ~~week~~weeks ~~period~~ ended ~~June~~January 261, ~~2004~~2005 ~~consisting~~compared ~~primarily~~to ~~of the Company’s net investment in marketable securities of~~ $500.36 million. ~~Cash~~ used ~~in investing activities was $57.0~~ ~~million~~ during the ~~thirty~~thirteen ~~nine-~~weeks ended ~~June~~December 2827, 2003 primarily adue ~~result~~to of the acquisition of ~~Norco~~Skurka for $30.2 million discussed previously.

~~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~~23-~~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

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~~annum~~Financing ~~equal to (1) 1~~Activities.~~25%~~ ~~for~~Cash ~~alternate~~used ~~base~~in ~~rate~~financing ~~term~~activities ~~loans,~~during ~~(2)~~the ~~2.25%~~thirteen ~~for~~weeks ~~adjusted~~ended ~~LIBO~~January ~~rate term loans~~1, ~~(3)~~2005 ~~2.50% for~~increased ~~alternate~~to ~~base rate revolving loans, and (4) 3~~$2.~~50%~~2 ~~for~~million ~~LIBO~~compared ~~adjusted~~to ~~rate revolving loans~~$1.5 ~~The~~million ~~applicable~~during ~~margin~~the ~~percentages~~thirteen ~~under~~weeks ~~the~~ended ~~revolving~~December ~~loan~~27, ~~facility~~2003, ~~are~~primarily ~~subject~~due to ~~adjustment~~a in$0.7 ~~increments~~million ~~based~~payment ~~upon~~by the Company’s ~~leverage ratio~~ under ~~the~~ ~~Amended~~its ~~and~~senior ~~Restated~~credit ~~Credit Agreement so long as no event of default has occurred and is continuing~~facility.

In connection with the Merger, all of TransDigm Inc.’s borrowings (term loans) under its previous senior secured credit facility were repaid and a new senior secured credit facility was obtained. On April 1, 2004, TransDigm’s senior credit facility was amended and restated to refinance approximately $294 million of term loans then outstanding. TransDigm’s new amended and restated senior secured credit facility (the “Amended and Restated Senior Credit Facility”) totals $394 million, which consists of (1) a $100 million revolving credit line (including a letter of credit sub-facility of $15 million) maturing in July 2009 and (2) a $294 million term loan facility maturing in July 2010. At January 1, 2005, the Company had a $0.5 million letter of credit outstanding and $99.5 million of borrowings available under the Amended and Restated Senior Credit Facility.

The revolving loan facility matures in July 2009 and the term loan facility matures in July 2010. The Amended and Restated Senior Credit Facility requires scheduled quarterly payments of principal on the term loans 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 Senior Credit Facility also require 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.

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 Senior Credit Facility 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 is a percentage per annum equal to (1) 1.25% for alternate base rate term loans, (2) 2.25% for adjusted LIBO rate term loans, (3) 2.50% for alternate base rate revolving loans and (4) 3.50% for adjusted LIBO rate revolving loans. The applicable margin percentages under the revolving loan facility will be subject to adjustment in increments based on the achievement of performance goals.

All borrowings 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 connection with the Merger, the Company also issued $400 million aggregate principal amount of 8³/8% Senior Subordinated Notes. Such notes do not require principal payments prior to their maturity in July 2011. The notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior subordinated basis, by Holdings and all of our existing domestic subsidiaries.

Both the Amended and Restated Senior Credit ~~Agreement~~Facility and the new 8 3/8% Senior Subordinated Notes contain restrictive covenants that, among other things, limit the incurrence of additional indebtedness, the payment of dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of other indebtedness. In addition, the Amended and Restated Senior Credit ~~Agreement~~ Facility and the new 8 3/8% Senior Subordinated Notes require the Company to meet certain financial ratios. Any failure to comply with the restrictions of the Amended and Restated Senior Credit ~~Agreement~~Facility, 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 repaid or defeased all of its long~~-~~term indebtedness~~24- ~~that was outstanding immediately prior to the consummation of the Merger. The Company redeemed the defeased 10 3/8% Senior Subordinated Notes in December 2003.~~

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.

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 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 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 non-acquisition related capital expenditures and research and development efforts, will depend on the Company’s ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. Based on its current levels of operations and anticipated cost savings and operating improvements and absent any disruptive events, management believes that internally generated funds and borrowings available under our revolving loan facility should provide sufficient resources to finance its operations, non-acquisition related capital expenditures, research and development efforts and long-term indebtedness obligations through at least fiscal 2004. There can be no

-28-

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

Contractual Obligations

The following is a summary of contractual cash obligations of the Company for the next several fiscal years (excluding interest), as of June 26, 2004 (in millions):

	2004 (1)		2005		2006		2007		2008		2009 andThereafter		Total
Term Loan Facility	$	1.5	$	2.9	$	2.9	$	3.0	$	3.0	$	281.0	$	294.3
8 3/8% 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

(1) Contractual obligations for fiscal 2004 subsequent to June 26, 2004.

New Accounting Standards

During ~~the quarter ended~~ December 272004, ~~2003,~~ the ~~Company implemented the provisions of the~~ Financial Accounting Standards Board’s (the “FASB’s”) ~~Emerging~~ ~~Issues~~issued ~~Task~~Statement ~~Force~~No. ~~Abstract~~123 No(R), ~~00-21~~Share Based Payment, ~~Revenue~~which ~~Arrangements~~requires ~~with~~all ~~Multiple~~share-based payments ~~Deliverables~~to employees, ~~which~~including ~~provides~~grants ~~criteria~~of ~~for~~employee ~~determining~~stock ~~how~~options, to ~~account~~be ~~for~~recognized ~~multiple-deliverable~~in ~~revenue~~the ~~arrangements~~financial statements based on their fair values. The ~~implementation~~Company ofanticipates adopting this pronouncement ~~had~~during the first quarter of fiscal 2006. The Company has nonot determined the impact, onif ~~the~~any, ~~Company’s~~that this statement will have on its consolidated financial position or results of operations.

Additional Disclosure Required by Indenture

Separate financial statements of TransDigm are not presented since Holdings has no significant operations or assets separate from its investment in TransDigm and since the 8 3/8% Senior Subordinated Notes are guaranteed by Holdings and all direct and indirect domestic restricted subsidiaries of TransDigm. As of ~~June~~January 261, ~~2004~~2005, the only subsidiary of TransDigm that ~~has~~is not ~~guaranteed~~obligated to guarantee the notes is one wholly owned, foreign subsidiary that has inconsequential assets, liabilities and equity.

~~-29-~~ Item 3. Quantitative and Qualitative Disclosures About Market Risk

At January 1, 2005, the Company had borrowings under its Amended and Restated Senior Credit Facility of $292.1 million that were subject to interest rate risk. Borrowings under the Company’s Amended and Restated Senior Credit Facility bear interest, at its option, at a rate equal to either an alternate base rate or an adjusted LIBO rate for a one, two, three or six-month interest period chosen by the Company, in each case, plus an applicable margin percentage. Accordingly, the Company’s cash flows and earnings will be exposed to the market risk of interest rate changes resulting from variable rate borrowings under its Amended and Restated Senior Credit Facility. The effect of a hypothetical one percentage point increase in interest rates would increase the annual interest costs under the Amended and Restated Senior Credit Facility by approximately $2.9 million based on the amount of outstanding borrowings at January 1, 2005. The weighted average interest rate on the $292.1 million of borrowings under the Amended and Restated Senior Credit Facility on January 1, 2005 was 4.6%.

Because the interest rates on borrowings under its Amended and Restated Senior Credit Facility vary with market conditions, the amount of outstanding borrowings under the Amended and Restated Senior Credit Facility approximates the fair value of the indebtedness. The fair value of the $400 million aggregate principal amount of the Company’s 8³/8% Senior Subordinated Notes is exposed to the market risk of interest rate changes. The estimated fair value of such notes approximated $428 million at January 1, 2005 based upon quoted market rates.

-25-

~~ITEM~~Item 34. Controls and Procedures

~~QUANTITATIVE~~As ~~AND~~of ~~QUALITATIVE~~January 1, ~~DISCLOSURE~~2005, Holdings and TransDigm Inc. carried out an evaluation, under the supervision and with the participation of Holdings’ and TransDigm Inc.’s management, including their Chief Executive Officer (Principal Executive Officer) and Chief ~~ABOUT~~Financial ~~MARKET~~Officer ~~RISK~~(Principal Financial Officer), of the effectiveness of the design and operation of Holdings’ and TransDigm Inc.’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Holdings’ and TransDigm Inc.’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Holdings and TransDigm Inc. in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to Holdings’ and TransDigm Inc.’s management, including their Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Holdings’ and TransDigm Inc.’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.

AtInternal ~~June~~Control ~~26,~~Over ~~2004,~~Financial ~~the~~Reporting Company had borrowings under its senior secured credit facilities of $294.3 million that were subject to interest rate risk. Borrowings under the Company’s senior secured credit facility bear interest, at its option, at a rate equal to either an alternate base rate or an adjusted LIBO rate for a one, two, three or six-month interest period chosen by the Company, in each case, plus an applicable margin percentage. Accordingly, the Company’s cash flows and earnings will be exposed to the market risk of interest rate changes resulting from 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%.

~~Because~~There ~~the~~have ~~interest~~been ~~rates~~no onchanges ~~borrowings~~in ~~under~~Holdings’ ~~the~~or ~~senior~~TransDigm ~~secured~~Inc.’s ~~credit facilities~~internal ~~vary~~control ~~with~~over ~~market~~financial ~~conditions,~~reporting ~~the~~that ~~amount~~occurred ofduring ~~outstanding borrowings under~~ the ~~senior~~first ~~secured~~quarter ~~credit facilities approximates the fair value~~ of the ~~indebtedness.~~fiscal ~~The~~year ~~fair~~ending ~~value~~September of30, ~~the~~2005 ~~$400~~that ~~million~~have ~~aggregate~~materially ~~principal~~affected, ~~amount~~or ~~of the~~are ~~Company’s~~reasonably ~~8 3/8%~~likely ~~Senior Subordinated Notes is exposed~~ to ~~the~~materially ~~market~~affect, ~~risk~~Holdings’ ofor ~~interest~~TransDigm ~~rate changes~~Inc.’s ~~The estimated~~internal ~~fair~~control ~~value~~over offinancial ~~such notes approximated $418 million at June 26, 2004 based upon quoted market rates~~reporting.

~~ITEM~~Sarbanes-Oxley 4Act – Section 404 Compliance

~~CONTROLS~~Section ~~AND~~404 ~~PROCEDURES~~of the Sarbanes-Oxley Act requires the Company’s management to report on, and its independent auditors to attest to, the Company’s internal control over financial reporting as of September 30, 2005. The Company is actively continuing its ongoing process, utilizing outside assistance, of documenting, testing and evaluating the effectiveness of its internal control over financial reporting. The process of documenting, testing and evaluating the Company’s internal control over financial reporting under the applicable guidelines is complex and time consuming, and available internal and external resources necessary to assist the Company in the documentation and testing required to comply with Section 404 are limited. While the Company currently believes it has dedicated the appropriate resources and that it will be able to fully comply with Section 404 in its Annual Report on Form 10-K for the year ending September 30, 2005 and be in a position to conclude that the Company’s internal control over financial reporting is effective as of September 30, 2005, there can be no assurance that the Company will ultimately be able to fully comply with Section 404 in its Annual Report on Form 10-K for the year ending September 30, 2005 or whether it will be able to conclude the Company’s internal control over financial reporting is effective as of September 30, 2005.

Holdings and TransDigm maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in Holdings’ and TransDigm’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’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. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-~~benefit~~26- ~~relationship of possible controls and procedures.~~

As of the end of the period covered by this report, Holdings and TransDigm carried out an evaluation, under the supervision and with the participation of Holdings’ and TransDigm’s management, including Holdings’ and TransDigm’s 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.

There have been no significant changes in Holdings’ or TransDigm’s internal controls over financial reporting or in other factors that could significantly affect the internal controls over financial reporting subsequent to the date Holdings and TransDigm completed their evaluations.

-30-

PART II: OTHER INFORMATION

~~ITEM~~Item 6. Exhibits ~~and Reports on Form 8-K~~

(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.

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.

-27-

(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.

-31-

SIGNATURES

TRANSDIGM HOLDING COMPANY

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

SIGNATURE	TITLE	DATE
/s/ W. Nicholas Howley	President and Chief Executive Officer (Principal Executive Officer) and Director	~~August~~February 511, ~~2004~~2005
W. Nicholas Howley
/s/ Gregory Rufus	Chief Financial Officer (Principal Financial and Accounting Officer)	~~August~~February 511, ~~2004~~2005
Gregory Rufus

TRANSDIGM INC.

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

SIGNATURE	TITLE	DATE
/s/ W. Nicholas Howley	President and Chief Executive Officer (Principal Executive Officer) and Director	~~August~~February 511, ~~2004~~2005
W. Nicholas Howley
/s/ Gregory Rufus	Chief Financial Officer (Principal Financial and Accounting Officer)	~~August~~February 511, ~~2004~~2005
Gregory Rufus

-3228-

EXHIBIT INDEX

TO FORM 10-Q FOR THE PERIOD ENDED ~~JUNE~~JANUARY 261, ~~2004~~2005

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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Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · TRANSDIGM HOLDING CO