SECURITIES AND EXCHANGE COMMISSION ~~WASHINGTON, D.C. 20549~~

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended July 26, 2003, or
o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from _______________ to _______________.

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended May 1, 2004, or

[ ] 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 333-38223

ARGO-TECH CORPORATION ~~(Exact name of registrant as specified in its charter)~~

Delaware		31-1521125
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)
23555 Euclid Avenue Cleveland, Ohio (Address of principal executive offices)		44117 (Zip code)
(216) 692-6000 (Registrant’s telephone number, including area code)

(Exact name of registrant as specified in its charter)

~~Indicate~~Delaware ~~by check mark whether the registrant~~ (~~1) has~~State ~~filed all reports required to be filed by Section 13~~ or ~~15(d)~~other ofjurisdiction ~~the Securities Exchange Act~~ of ~~1934~~incorporation ~~during the preceding 12 months (~~or ~~for such shorter period that the registrant was required to file such reports~~organization), ~~and~~31-1521125 (~~2) has~~I.R.S. ~~been~~employer ~~subject~~identification ~~to such filing requirements for the past 90 days~~no. ~~YES X NO~~ )

~~Indicate~~23555 byEuclid ~~check~~Avenue ~~mark~~Cleveland, ~~whether~~Ohio ~~the registrant is an accelerated filer~~ (asAddress ~~defined~~of inprincipal ~~Rule 12b-2~~executive ofoffices) ~~the~~44117 ~~Exchange Act~~(Zip code)~~. YES NO X~~

~~All~~(216) of692-6000 ~~the outstanding capital stock of the registrant is held by AT Holdings Corporation. As of September 1, 2003, 1 share of the registrant~~(Registrant’s ~~common~~telephone ~~stock~~number, ~~$.01~~including ~~par~~area ~~value, was outstanding.~~code)

~~TABLE~~Indicate OFby ~~CONTENTS~~check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO

PART I-FINANCIAL INFORMATION
	CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF NET INCOME
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	Item 6 — Exhibits and Reports on Form 8-K
SIGNATURE
EX-31.1 302 Certification of Chief Exec. Officer
EX-31.2 302 Certification of Chief Fin. Officer
EX-32 906 Certification

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] YES [X] NO

~~Table~~ All of ~~Contents~~the outstanding capital stock of the registrant is held by AT Holdings Corporation.

As of May 15, 2004, 1 share of the registrant’s common stock, $.01 par value, was outstanding.

INDEX

	Page No.
PART I — FINANCIAL INFORMATION
Item 1 – Condensed Financial Statements
Consolidated Balance Sheets as of July 26, 2003 and October 26, 2002	3
Consolidated Balance Sheets as of May 1, 2004 and October 25, 2003		3
Consolidated Statements of Net Income for the 39 week periods and 13 week periods ended July 26, 2003 and July 27, 2002	4
Consolidated Statements of Net Income for the 27 week period and 13 week period ended May 1, 2004 and the 26 week period and 13 week period ended April 26, 2003		4
Consolidated Statements of Cash Flows for the 39 week periods ended July 26, 2003 and July 27, 2002	5
Consolidated Statements of Cash Flows for the 27 week period ended May 1, 2004 and the 26 week period ended April 26, 2003		5
Notes to Consolidated Financial Statements	~~6-10~~	6 - 11
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	10-15
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		11 - 17
Item 3 — Quantitative and Qualitative Disclosure about Market Risk	15
Item 3 - Quantitative and Qualitative Disclosure about Market Risk		17
Item 4 – Controls and Procedures	15	17
PART II — OTHER INFORMATION
Item 6 — Exhibits and Reports on Form 8-K	15
Item 6 - Exhibits and Reports on Form 8-K		18
Signature	16	19
Certifications	~~17-19~~	20-22
Exhibit 31.1 Certification of Pres and CEO
Exhibit 31.2 Certification of Vice Pres and CFO
Exhibit 32 Cert of CEO and CFO

PART I- — FINANCIAL INFORMATION

ITEM 1. ARGO-TECH CORPORATION AND SUBSIDIARIES (A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED BALANCE SHEETS MAY 1, 2004 AND OCTOBER 25, 2003 (In thousands, except share data)

JULY 26, 2003 AND OCTOBER 26, 2002 (in thousands, except share data)


	2004			2003
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,383		$	14,057
Receivables, net		28,701			28,335
Income tax receivable		3,281			3,500
Inventories		26,385			25,701
Deferred income taxes and prepaid expenses		6,021			5,352

Total current assets		79,771			76,945

PROPERTY AND EQUIPMENT, net of accumulated depreciation		22,718			23,956
GOODWILL		110,059			110,059
INTANGIBLE ASSETS, net of accumulated amortization		33,209			34,916
DEFERRED FINANCING AND OTHER ASSETS		8,767			9,921

Total Assets	$	254,524		$	255,797

LIABILITIES AND SHAREHOLDER’S EQUITY/(DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term debt	$	13,000		$	12,000
Accounts payable		5,220			7,254
Accrued liabilities		24,321			22,757

Total current liabilities		42,541			42,011

LONG-TERM DEBT, net of current maturities		200,512			207,349
OTHER NONCURRENT LIABILITIES		21,701			21,753

Total Liabilities		264,754			271,113

REDEEMABLE ESOP STOCK		14,887			15,452
Unearned ESOP stock		(420	)		(840	)

		14,467			14,612
SHAREHOLDER’S EQUITY/(DEFICIENCY):
Common Stock, $.01 par value, authorized 3,000 shares; 1 share issued and outstanding		—			—
Paid-in capital		—			—
Accumulated comprehensive loss		(2,067	)		(2,143	)
Accumulated deficit		(22,630	)		(27,785	)

Total shareholder’s equity/(deficiency)		(24,697	)		(29,928	)

Total Liabilities and Shareholder’s Equity/(Deficiency)	$	254,524		$	255,797

			2003			2002
			(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	9,874		$	17,769
	Receivables, net			26,684			24,550
	Income tax receivable			3,274			3,274
	Inventories			26,875			25,123
	Deferred income taxes and prepaid expenses			5,610			5,002
		Total current assets		72,317			75,718
PROPERTY AND EQUIPMENT, net of accumulated depreciation				24,366			26,204
GOODWILL, net of accumulated amortization				110,059			110,059
INTANGIBLE ASSETS, net of accumulated amortization				35,770			38,331
DEFERRED FINANCING AND OTHER ASSETS				9,445			10,021
Total Assets			$	251,957		$	260,333
LIABILITIES
CURRENT LIABILITIES:
	Current portion of long-term debt		$	11,000		$	16,000
	Accounts payable			3,814			5,252
	Accrued liabilities			25,572			21,114
		Total current liabilities		40,386			42,366
LONG-TERM DEBT, net of current maturities				210,271			219,045
OTHER NONCURRENT LIABILITIES				21,212			21,720
		Total Liabilities		271,869			283,131
REDEEMABLE ESOP STOCK				11,082			11,355
	Unearned ESOP stock			(1,260	)		(2,520	)
				9,822			8,835
SHAREHOLDER’S EQUITY/(DEFICIENCY):
	Common Stock, $.01 par value, authorized 3,000 shares; 1 share issued and outstanding			—			—
	Paid-in capital			—			—
	Accumulated comprehensive loss			(3,209	)		(3,235	)
	Accumulated deficit			(26,525	)		(28,398	)
		Total shareholder’s equity/(deficiency)		(29,734	)		(31,633	)
Total Liabilities and Shareholder’s Equity/(Deficiency)			$	251,957		$	260,333

The accompanying notes to consolidated financial statements are an integral part of these statements.

ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED STATEMENTS OF NET INCOME

(In thousands)
UNAUDITED

			39 Week Period Ended								13 Week Period Ended
		27 WeekPeriod Ended				26 WeekPeriod Ended				13 Week Periods Ended
			July 26, 2003				July 27, 2002				July 26, 2003			July 27, 2002
		May 1, 2004				April 26, 2003				May 1, 2004			April 26, 2003
Net revenues		$	$91,836	~~115,373~~		$	$75,956	~~112,261~~		$	$47,399	~~39,417~~	$	$41,708	~~37,724~~
Cost of revenues			53,558	~~67,884~~			45,141	~~64,478~~			26,725	~~22,743~~		25,718	~~22,625~~
Gross profit	~~Gross profit~~		38,278	~~47,489~~			30,815	~~47,783~~			20,674	~~16,674~~		15,990	~~15,099~~
Selling, general and administrative			13,980	~~19,308~~			13,156	~~17,597~~			7,331	~~6,152~~		6,778	~~5,825~~
Research and development			5,715	~~6,784~~			4,775	~~8,766~~			3,332	~~2,009~~		2,267	~~2,703~~
Amortization of intangible assets			1,707	~~2,560~~			1,707	~~2,561~~			853	~~853~~		853	~~853~~
Operating expenses	~~Operating expenses~~		21,402	~~28,652~~			19,638	~~28,924~~			11,516	~~9,014~~		9,898	~~9,381~~
Income from operations			16,876	~~18,837~~			11,177	~~18,859~~			9,158	~~7,660~~		6,092	~~5,718~~
Interest expense			10,505	~~16,005~~			10,620	~~16,179~~			5,082	~~5,385~~		5,323	~~5,322~~
Other, net			(12	~~(26~~)	)		(76	~~(14~~)	)		(8	50)		(36	52)
Income before income taxes			6,383	~~2,858~~			633	~~2,694~~			4,084	~~2,225~~		805	~~344~~
Income tax provision/(benefit)				790				(70	)			649			(164	)
Income tax provision			2,070				141				1,395			198
Net income		$	$4,313	~~2,068~~		$	$492	~~2,764~~		$	$2,689	~~1,576~~	$	$607	~~508~~

The accompanying notes to the consolidated financial statements are an integral ~~part~~ part of these statements.

ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 27 WEEK PERIOD ENDED MAY 1, 2004 AND THE 26 WEEK PERIOD ENDED APRIL 26, 2003

FOR THE 39 WEEK PERIODS ENDED JULY 26, 2003 AND JULY 27, 2002

(In thousands)
UNAUDITED

				2003				2002
		2004				2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	~~Net income~~	$	4,313	$	~~2,068~~	$	492	$	~~2,764~~
Adjustments to reconcile net income to net cash provided by operating activities:	~~Adjustments to reconcile net income to net cash provided by operating activities:~~
Depreciation	~~Depreciation~~		1,924		~~3,125~~		2,105		~~3,678~~
Amortization of intangible assets and deferred financing costs	~~Amortization of intangible assets and deferred financing costs~~		2,903		~~4,358~~		2,852		~~4,099~~
Accretion of bond discount	~~Accretion of bond discount~~		163		~~225~~		148		~~206~~
Compensation expense recognized in connection with employee stock ownership plan	~~Compensation expense recognized in connection with employee stock ownership plan~~		1,260		~~1,008~~		1,260		~~1,892~~
Deferred income taxes	~~Deferred income taxes~~		(970	)	~~(1,331~~	)	(1,085	)	~~(1,279~~	)
Changes in operating assets and liabilities:	~~Changes in operating assets and liabilities:~~
Receivables		~~Receivables~~	(147	)	~~(2,134~~	)	1,593		~~11,348~~
Inventories		~~Inventories~~	(684	)	~~(1,752~~	)	(775	)	~~1,212~~
Prepaid expenses		~~Prepaid expenses~~	(600	)	~~(316~~	)	(593	)	(9	)
Accounts payable		~~Accounts payable~~	(2,034	)	~~(1,439~~	)	(1,149	)	~~(1,387~~	)
Accrued and other liabilities		~~Accrued and other liabilities~~	2,366		~~4,989~~		(595	)	~~2,816~~
Other, net		~~Other, net~~	84		28		15		~~240~~
Net cash provided by operating activities			8,578		~~8,829~~		4,268		~~25,580~~
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	~~Capital expenditures~~		(686	)	~~(1,287~~	)	(848	)	~~(1,055~~	)
Net cash used in investing activities	~~Net cash used in investing activities~~		(686	)	~~(1,287~~	)	(848	)	~~(1,055~~	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt	~~Repayment of long-term debt~~		(6,000	)	~~(14,000~~	)	(12,000	)	~~(13,959~~	)
Payment of financing related fees	~~Payment of financing related fees~~		—		~~(1,224~~	)	(1,224	)	—
Purchase of AT Holdings stock from former ESOP participants	~~Purchase of AT Holdings stock from former ESOP participants~~		(566	)	~~(273~~	)	(235	)	~~(527~~	)
Other, net	~~Other, net~~		—		60		60		~~(35~~	)
Net cash used in financing activities	~~Net cash used in financing activities~~		(6,566	)	~~(15,437~~	)	(13,399	)	~~(14,521~~	)
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the period			1,326		~~(7,895~~	)	(9,979	)	~~10,004~~
Balance, Beginning of period			14,057		~~17,769~~		17,769		~~8,057~~
Balance, End of period		$	15,383	$	~~9,874~~	$	7,790	$	~~18,061~~

The accompanying notes to consolidated financial statements are an integral part of these statements.

ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE 27 WEEK PERIOD ENDED MAY 1, 2004 AND THE 26 WEEK PERIOD ENDED APRIL 26, 2003 (Unaudited)

~~FOR~~1. ~~THE~~BASIS 39OF ~~WEEK~~PRESENTATION ~~PERIODS~~The ~~ENDED~~principal ~~JULY~~operations 26of Argo-Tech Corporation (a wholly-owned subsidiary of AT Holdings Corporation) and its subsidiaries include the design, manufacture and distribution of aviation products, primarily aircraft fuel pumps. In addition, Argo-Tech leases a portion of its Cleveland, Ohio manufacturing facility to other parties. Argo-Tech’s fiscal year ends on the last Saturday in October. Argo-Tech is required to fulfill the obligation of AT Holdings Corporation to purchase AT Holdings’ common stock in accordance with the provisions of the Argo-Tech Corporation Employee Stock Ownership Plan. As a result, that obligation has been reflected in its financial statements. Certain reclassifications have been made in the prior year’s financial statements to conform to the current year presentation. Argo-Tech Corporation is a parent holding company and all of its subsidiaries guarantee Argo-Tech’s senior subordinated notes. Argo-Tech has no outside assets, liabilities or operations apart from its wholly-owned subsidiaries. The senior subordinated notes are fully, unconditionally, jointly and severally guaranteed by the guarantor subsidiaries, and therefore, separate financial statements of the guarantor subsidiaries will not be presented. Management has determined that the information presented by such separate financial statements is not material to investors. 2. UNAUDITED 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 Argo-Tech’s financial position, 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 Argo-Tech’s Annual Report on Form 10-K for the year ended October 25, 2003 ~~AND~~. ~~JULY~~The results of operations for the 13 and 27 week periods ended May 1, ~~2002~~ 2004 are not necessarily indicative of the results to be expected for the full year. 3. INVENTORIES Inventories are stated at standard cost which approximates the costs which would be determined using the first-in, first-out (~~Unaudited~~FIFO) method. The recorded value of inventories is not in excess of market value. Inventories consist of the following (in thousands):

1. BASIS OF PRESENTATION The principal operations of Argo-Tech Corporation (a wholly-owned subsidiary of AT Holdings Corporation) and its subsidiaries include the design, manufacture and distribution of aviation products, primarily aircraft fuel pumps, throughout the world. In addition, Argo-Tech leases a portion of its Cleveland, Ohio manufacturing facility to other parties. Argo-Tech’s fiscal year ends on the last Saturday in October. Argo-Tech is obligated to fulfill certain obligations of AT Holdings Corporation. As a result, those obligations have been reflected in its financial statements. Certain reclassifications have been made in the prior year’s financial statements to conform to the current year presentation. Argo-Tech Corporation is a parent, holding company with four wholly-owned operating subsidiaries that guarantee Argo-Tech’s senior subordinated notes. Argo-Tech has no outside assets, liabilities or operations apart from its wholly-owned subsidiaries. The senior subordinated notes are fully, unconditionally, jointly and severally guaranteed by the guarantor subsidiaries, and therefore, separate financial statements of the guarantor subsidiaries will not be presented. Management has determined that the information presented by such separate financial statements is not material to investors. 2. UNAUDITED 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 Argo-Tech’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 Argo-Tech’s Annual Report on Form 10-K for the year ended October 26, 2002. The results of operations for the 39 week and 13 week periods ended July 26, 2003 are not necessarily indicative of the results to be expected for the full year. 3. INVENTORIES Inventories are stated at standard cost which approximates the costs which would be determined using the first-in, first-out (FIFO) method. The recorded value of inventories is not in excess of market value. Inventories consist of the following (in thousands):


	May 1,			October 25,
	2004			2003
Finished goods	$	2,642		$	1,481
Work-in-process and purchased parts		16,686			16,938
Raw materials and supplies		11,956			12,385

Total		31,284			30,804
Reserve for excess and obsolete inventory		(4,899	)		(5,103	)

Inventories — net	$	26,385		$	25,701

		July 26,			October 26,
		2003			2002
Finished goods		$	1,614		$	1,861
Work-in-process and purchased parts			18,463			16,593
Raw materials and supplies			11,593			11,723
	Total		31,670			30,177
Reserve for excess and obsolete inventory			(4,795	)		(5,054	)
Inventories — net		$	26,875		$	25,123

4.		INTANGIBLE ASSETS

		The following is a summary of intangible assets, other than goodwill (in thousands):

				July 26, 2003								October 26, 2002
		May 1, 2004								October 25, 2003
		Gross		~~Gross~~		Accumulated		~~Accumulated~~		Gross		~~Gross~~		Accumulated	~~Accumulated~~
		Amount		~~Amount~~		Amortization		~~Amortization~~		Amount		~~Amount~~		Amortization	~~Amortization~~
Intangible assets:
Contracts	~~Contracts~~	$	17,100	$	~~17,100~~	$	11,259	$	~~9,976~~	$	17,100	$	~~17,100~~	$	10,404	$	~~8,693~~
Spare parts annuity	~~Spare parts annuity~~		38,200		~~38,200~~		11,057		~~9,797~~		38,200		~~38,200~~		10,217		~~8,537~~
Patents	~~Patents~~		387		~~387~~		162		~~144~~		387		~~387~~		150		~~126~~
Total		~~Total~~$	55,687	$	~~55,687~~	$	22,478	$	~~19,917~~	$	55,687	$	~~55,687~~	$	20,771	$	~~17,356~~

		Amortization expense recorded on the intangible assets for the 13 week and 39 week periods ended July 26, 2003 and July 27, 2002 was $0.8 million and $2.6 million, respectively. The estimated amortization expense for each of the four succeeding fiscal years 2003 through 2006 is $3.4 million and in fiscal year 2007 is $3.2 million.
		Amortization expense recorded on the intangible assets for the 13 week periods ended May 1, 2004 and April 26, 2003 was $0.9 million and for the 27 week period ended May 1, 2004 and the 26 week period ended April 26, 2003 was $1.7 million. The estimated amortization expense for each of the three succeeding fiscal years 2004 through 2006 is $3.4 million, fiscal year 2007 is $3.2 million and fiscal year 2008 is $1.7 million. The weighted-average amortization period for contracts is 10 years, spare parts annuity is 26 years and patents is 15 years.
5.		PRODUCT WARRANTY
		Argo-Tech Corporation adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” effective as of its first quarter of fiscal 2003. FIN 45 requires disclosures to be made by a guarantor about its obligations under certain guarantees that it has issued.
		Argo-Tech accrues for warranty obligations for products sold based on management estimates of the amount that may be required to settle such potential obligations. These estimates are prepared with support from our sales, engineering, quality and legal functions. This accrual, which is reviewed in detail on a regular basis, is based on several factors: past experience, current claims, production changes and various other considerations. The following table presents a reconciliation of changes in the product warranty liability for the 27 week period ended May 1, 2004 and the 26 week period ended April 26, 2003 (in thousands):
		Argo-Tech accrues for warranty obligations for products sold based on management estimates of the amount that may be required to settle such potential obligations. These estimates are prepared with support from our sales, engineering, quality and legal functions. This accrual, which is reviewed in detail on a regular basis, is based on several factors: past experience, current claims, production changes and various other considerations. The following table presents a reconciliation of changes in the product warranty liability for the 39 week period ended July 26, 2003 (in thousands):

Beginning balance	$	2,064
	2004			2003
Accruals for warranties issued		89
Beginning balance	$	2,130		$	2,064
Accruals for pre-existing warranties (including changes in estimate)		789
Accruals for warranties issued		160			39
Warranty claims settled		(520	)
Accruals for pre-existing warranties (including changes in estimate)		553			512
Ending balance	$	2,422
Warranty claims settled		(462	)		(324	)
Ending balance	$	2,381		$	2,291

6.		CONTINGENCIES
		Environmental Matters — The soil and groundwater at Argo-Tech’s Cleveland, Ohio facility and Costa Mesa, California facility contain elevated levels of certain contaminants which are currently in the process of being removed and/or remediated. Because Argo-Tech has certain indemnification rights from former owners of the facilities for liabilities arising from these or other environmental matters, in the opinion of Argo-Tech’s management, the ultimate outcome is not expected to materially affect its financial condition, results of operations or liquidity.
		Other Matters — Argo-Tech is subject to various legal actions and other contingencies arising in the ordinary course of business. In the opinion of Argo-Tech’s management, after reviewing the information which is currently available with respect to such matters and consulting with Argo-Tech’s legal counsel, any liability which may ultimately be incurred with respect to these additional matters is not expected to materially affect Argo-Tech’s financial condition, results of operations or liquidity.

6.		EMPLOYEE BENEFIT PLANS

		The Company has two noncontributory defined benefit pension plans for qualifying hourly and salary employees. A plan covering salaried employees provides pension benefits that are based on the employees’ compensation and years of service. The future accrual of benefits was terminated in connection with the formation of the Employee Stock Ownership Plan (ESOP). A plan covering hourly employees provides 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.

7.		SEGMENT INFORMATION
		Argo-Tech operates in two business segments: Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, repair and overhaul of aviation products throughout the world, consisting of aircraft fuel pumps, fuel flow related products found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes the design, manufacture and distribution of industrial pumps, ground fueling valves and related components, industrial marine cryogenic pumps and nozzles for transferring liquefied natural gas and operation of a business park in Cleveland, Ohio where we maintain our headquarters and one of our production facilities.
		Argo-Tech evaluates the performance of its segments based primarily on operating profit before amortization of deferred financing fees and other identified intangibles, interest expense, interest income, other miscellaneous fees and income taxes.
		The following table presents revenues and other financial information by business segment (in thousands):

A summary of the components of net periodic benefit cost for the pension plans is as follows (in thousands):

13 Week Period Ended July 27, 2003


	27 week			26 week			13 week			13 week
	period ended			period ended			period ended			period ended
	May 1, 2004			April 26, 2003			May 1, 2004			April 26, 2003
Service cost	$	140		$	139		$	70		$	69
Interest cost		662			649			331			325
Expected return on plan assets		(878	)		(746	)		(439	)		(373	)
Net amortization and deferral		174			192			87			96

Net periodic pension cost	$	98		$	234		$	49		$	117

	Aerospace			Industrial			Corporate			Consolidated
Net revenues	$	28,766		$	10,651		$	—		$	39,417
Operating profit (loss)		7,304			1,300			(91	)		8,513
Amortization of intangible assets											853
Income from operations											7,660
Interest expense											5,385
Other, net											50
Income before income taxes										$	2,225
Capital expenditures		104			335						439
Depreciation		601			315			104			1,020
Compensation expense recognized in connection with employee stock ownership plan		(233	)		(19	)					(252	)

		Argo-Tech is expecting to contribute $185,000 to the hourly pension plan in 2004. As of May 1, 2004, no contributions have been made.

		The Company also provides certain postretirement health care benefits to qualifying hourly retirees and their dependents. This benefit is not funded.

		A summary of the components of net periodic benefit cost for the postretirement benefit is as follows (in thousands):

13 Week Period Ended July 27, 2002


	27 week		26 week		13 week		13 week
	period ended		period ended		period ended		period ended
	May 1, 2004		April 26, 2003		May 1, 2004		April 26, 2003
Service cost	$	93	$	94	$	43	$	47
Interest cost		455		402		213		201
Net amortization and deferral		88		11		23		5

Net periodic postretirement benefit cost	$	636	$	507	$	279	$	253

	Aerospace		Industrial		Corporate			Consolidated
7.	CONTINGENCIES
Net revenues	$	28,808	$	8,916	$	—		$	37,724
	Environmental Matters — The soil and groundwater at Argo-Tech’s Euclid, Ohio facility and Costa Mesa, California facility contain elevated levels of certain contaminants which are currently in the process of being removed and/or remediated. Because Argo-Tech has certain indemnification rights from former owners of the facilities for liabilities arising from these or other environmental matters, in the opinion of Argo-Tech’s management, the ultimate outcome is not expected to materially affect its financial condition, results of operations or liquidity.
Operating profit (loss)		6,040		711		(180	)		6,571
	Other Matters — Argo-Tech is subject to various legal actions and other contingencies arising in the ordinary course of business. In the opinion of Argo-Tech’s management, after reviewing the information which is currently available with respect to such matters and consulting with Argo-Tech’s legal counsel, any liability which may ultimately be incurred with respect to these matters is not expected to materially affect Argo-Tech’s financial condition, results of operations or liquidity.
Amortization of intangible assets									853
Income from operations									5,718
Interest expense									5,322
Other, net									52
Income before income taxes								$	344
Capital expenditures		187		212					399
Depreciation		704		340		150			1,194
Compensation expense recognized in connection with employee stock ownership plan		571		61					632

39 Week Period Ended July 26, 2003

8.		SEGMENT INFORMATION

		Argo-Tech operates in two business segments: Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, repair and overhaul of aviation products, consisting of aircraft fuel pumps, fuel flow related products found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes the design, manufacture and distribution of industrial pumps, ground fueling valves and related components, specialty industrial hose, cryogenic pumps and nozzles for transferring liquefied natural gas and operation of a business park in Cleveland, Ohio where we maintain our headquarters and one of our production facilities.

		Argo-Tech evaluates the performance of its segments based primarily on operating profit before amortization of deferred financing fees and other identified intangibles, interest expense, interest income, other miscellaneous fees and income taxes.

		The following table presents revenues and other financial information by business segment (in thousands):

	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	87,762	$	27,611	$	—		$	115,373
Operating profit (loss)		20,609		1,073		(285	)		21,397
Amortization of intangible assets									2,560
Income from operations									18,837
Interest expense									16,005
Other, net									(26	)
Income before income taxes								$	2,858
Capital expenditures		537		750					1,287
Depreciation		1,863		953		309			3,125
Compensation expense recognized in connection with employee stock ownership plan		887		121					1,008

13 Week Period Ended May 1, 2004

39 Week Period Ended July 27, 2002


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	35,076	$	12,323	$	—		$	47,399
Operating profit (loss)		9,932		156		(77	)		10,011
Amortization of intangible assets									853

Income from operations									9,158
Interest expense									5,082
Other, net									(8	)

Income before income taxes								$	4,084

Capital expenditures		140		142		—			282
Depreciation		544		307		100			951
Compensation expense recognized in connection with employee stock ownership plan		879		119					998

	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	87,254	$	25,007	$	—		$	112,261
Operating profit (loss)		21,419		1,134		(1,133	)		21,420
Amortization of intangible assets									2,561
Income from operations									18,859
Interest expense									16,179
Other, net									(14	)
Income before income taxes								$	2,694
Capital expenditures		571		484					1,055
Depreciation		2,122		1,021		535			3,678
Compensation expense recognized in connection with employee stock ownership plan		1,691		201					1,892

13 Week Period Ended April 26, 2003

8. OTHER COMPREHENSIVE INCOME Other comprehensive income includes foreign currency translation adjustments (in thousands).


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	32,203	$	9,505	$	—		$	41,708
Operating profit (loss)		6,975		71		(101	)		6,945
Amortization of intangible assets									853

Income from operations									6,092
Interest expense									5,323
Other, net									(36	)

Income before income taxes								$	805

Capital expenditures		283		100					383
Depreciation		634		318		101			1,053
Compensation expense recognized in connection with employee stock ownership plan		559		71					630

	39 week period ended					13 week period ended
	July 26,		July 27,			July 26,		July 27,
	2003		2002			2003		2002
Net income	$	2,068	$	2,764		$	1,576	$	508
Other comprehensive income (loss):
Foreign currency translation adjustment		26		(7	)		9		86
Other comprehensive income (loss) before tax		26		(7	)		9		86
Income tax benefit related to other
comprehensive income (loss)		—		—			—		—
Other comprehensive income (loss), net of tax		26		(7	)		9		86
Comprehensive income	$	2,094	$	2,757		$	1,585	$	594

9.		NEW ACCOUNTING PRONOUNCEMENTS
		In June 2002, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. Management determined the adoption of this statement had no effect on Argo-Tech’s consolidated financial statements.
		In November 2002, the FASB issued FASB Interpretation No. (“FIN”) 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee. In addition, FIN 45 requires disclosures about the guarantees that an entity has issued, including a rollforward of the entity’s product warranty liabilities. See Note 5 for this disclosure. Argo-Tech will apply the recognition provisions of FIN 45 prospectively to guarantees issued after December 31, 2002. Argo-Tech has not guaranteed any other obligation before or after December 31, 2002 that would require disclosure under FIN 45.
		In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities.” FIN 46 provides guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, noncontrolling interests, and results of operations of a VIE need to be included in a company’s consolidated financial statements. FIN 46 also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The provisions of this interpretation became effective upon issuance. Management believes the adoption of this interpretation is not likely to have a material impact on Argo-Tech’s consolidated financial statements.
		In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This statement establishes how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify certain financial instruments (as identified in the scope of the statement), as a liability (or an asset in some circumstances), that were previously classified as equity. The provisions of this statement are effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Management has not determined the impact, if any, that this statement will have on Argo-Tech’s consolidated financial statements.
		ITEM 2.
		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
		Overview
		We design, manufacture, sell and service high performance fuel flow devices and systems for both aerospace and general industrial applications. Argo-Tech operates in two business segments, Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, repair and overhaul of aviation products throughout the world, consisting of aircraft engine fuel pumps, fuel flow related products and systems found on a plane’s airframe, and aerial refueling pumps and related equipment. Argo-Tech provides these products and services to substantially all commercial and domestic military engine and airframe manufacturers, to airlines worldwide and to the U.S. and certain foreign militaries. The Industrial segment includes the design, manufacture and distribution of industrial pumps, ground fueling valves and related components, industrial marine cryogenic pumps and nozzles for transferring liquefied natural gas and operation of a business park in Cleveland, Ohio, where we maintain our headquarters and one of our production facilities.

27 Week Period Ended May 1, 2004


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	65,942	$	25,894	$	—		$	91,836
Operating profit (loss)		18,113		631		(161	)		18,583
Amortization of intangible assets									1,707

Income from operations									16,876
Interest expense									10,505
Other, net									(12	)

Income before income taxes								$	6,383

Capital expenditures		498		188					686
Depreciation		1,108		616		200			1,924
Compensation expense recognized in connection with employee stock ownership plan		1,110		150					1,260

26 Week Period Ended April 26, 2003


	Aerospace		Industrial			Corporate			Consolidated
Net revenues	$	58,995	$	16,961		$	—		$	75,956
Operating profit (loss)		13,305		(227	)		(194	)		12,884
Amortization of intangible assets										1,707

Income from operations										11,177
Interest expense										10,620
Other, net										(76	)

Income before income taxes									$	633

Capital expenditures		589		259						848
Depreciation		1,262		638			205			2,105
Compensation expense recognized in connection with employee stock ownership plan		1,120		140						1,260

9.		OTHER COMPREHENSIVE INCOME

		The following table presents other comprehensive income, which includes foreign currency translation adjustments (in thousands):


	27 week		26 week		13 week			13 week
	period ended		period ended		period ended			period ended
	May 1, 2004		April 26, 2003		May 1, 2004			April 26, 2003
Net income	$	4,313	$	492	$	2,689		$	607
Other comprehensive income (loss):
Foreign currency translation adjustment		76		17		(5	)		(45	)

Other comprehensive income (loss) before tax		76		17		(5	)		(45	)
Income tax benefit related to other comprehensive income (loss)		—		—		—			—

Other comprehensive income (loss), net of tax		76		17		(5	)		(45	)

Comprehensive income	$	4,389	$	509	$	2,684		$	562

~~The~~10. ~~following~~NEW isACCOUNTING ~~management’s~~PRONOUNCEMENTS ~~discussion~~In ~~and~~December ~~analysis~~2003, ofthe ~~certain~~Financial ~~significant~~Accounting ~~factors~~Standards ~~which~~Board ~~have~~(“FASB”) ~~affected~~issued ~~Argo-Tech’s~~a ~~financial~~revised ~~position~~FASB ~~and~~Interpretation ~~operating~~No. ~~results~~(“FIN”) ~~during~~46, ~~the~~“Consolidation ~~periods~~of ~~presented~~Variable inInterest ~~the~~Entities.” ~~accompanying~~FIN ~~condensed~~46 ~~consolidated~~requires ~~financial~~existing, ~~statements.~~unconsolidated ~~Argo-Tech’s~~variable ~~fiscal~~interest ~~year~~entities ~~ends~~to onbe ~~the~~consolidated ~~last~~by ~~Saturday~~their ofprimary ~~October~~beneficiaries ~~and~~if isthe ~~identified~~entities ~~according~~do tonot ~~the~~effectively ~~calendar~~disperse ~~year~~risks inamong ~~which~~the itparties ~~ends~~involved. ~~Critical Accounting Policies~~ Argo-Tech’s ~~condensed~~is ~~consolidated~~not ~~financial~~associated ~~statements~~with ~~reflect~~variable ~~the~~interest ~~selection~~entities; ~~and~~therefore, ~~application~~the adoption of ~~accounting~~this ~~policies~~statement ~~that~~did ~~require~~not ~~management~~have toany ~~make~~effect ~~significant~~on ~~estimates~~Argo-Tech’s ~~and~~consolidated ~~assumptions.~~financial ~~These~~position ~~estimates~~or ~~and~~results ~~assumptions are an integral part~~ of ~~our~~operations. ~~condensed~~In ~~consolidated~~December ~~financial~~2003, ~~statements~~the ~~and~~Medicare ~~are~~Prescription ~~based~~Drug, onImprovement ~~our knowledge~~ and ~~experience~~Modernization ~~about~~Act ~~past~~was ~~and~~enacted, ~~current~~which ~~events.~~introduced ~~Accounting~~a ~~policies~~Medicare ~~that~~prescription wedrug ~~believe~~benefit ~~are most critical to our financial condition~~ and ~~operating~~a ~~results~~federal ~~pertain~~subsidy to ~~the~~sponsors ~~valuation~~ of ~~accounts~~retiree ~~receivable, valuation of excess and obsolete inventory, goodwill and intangible assets and revenue recognition. Argo~~health-~~Tech’s~~care ~~significant~~plans ~~accounting~~that ~~policies~~provide ~~are~~a ~~described~~benefit inat ~~Note~~least 2actuarially equivalent to the ~~consolidated~~Medicare ~~financial~~benefit. ~~statements~~In ~~included~~accordance with ~~its~~FASB ~~Form~~Staff ~~10-K~~Position ~~for~~(“FSP”) ~~the~~Statement ~~fiscal~~of ~~year~~Financial ~~ended~~Accounting ~~October~~Standards ~~26,~~(“SFAS”) ~~2002~~No. ~~Fluctuations~~106-2, ~~of Operating Results; Limitation of Quarterly Comparisons~~ Argo-Tech’s ~~results~~has ofelected ~~operations are subject~~ to ~~fluctuations~~defer ~~from~~recognition ~~quarter~~of tothe ~~quarter~~effects ~~due~~of tothe ~~changes~~new inMedicare ~~demand~~Act. ~~for~~The ~~its~~accumulated ~~products,~~postretirement ~~changes~~benefit inobligation ~~product mix~~ and ~~other~~net ~~factors.~~periodic ~~Demand~~postretirement ~~for~~benefit ~~its~~cost ~~products~~do ~~can~~not ~~vary~~reflect ~~from~~the ~~quarter~~provisions toof ~~quarter~~the ~~due~~Act. toSpecific ~~changes~~authoritative inguidance ~~demand~~on accounting for, ~~and~~the ~~timing~~federal ofsubsidy ~~deliveries~~is ~~of,~~pending ~~OEM,~~and ~~aftermarket~~may ~~and~~require ~~military~~changes ~~products~~to ~~and~~previously ~~services~~reported information. In ~~particular~~December 2003, the ~~timing~~FASB ofissued ~~Argo-Tech’s aftermarket sales tends not to occur on~~ a ~~predictable~~revision ~~schedule and, furthermore, the sales tend~~ to ~~occur~~SFAS ~~in large quantities that can significantly impact quarterly comparisons~~No. ~~Accordingly~~132, ~~year-to-year~~“Employers’ ~~and~~Disclosures ~~quarter-to-quarter~~about ~~comparisons~~Pensions ofand ~~quarterly~~Other ~~results~~Postretirement ~~may not be meaningful~~Benefits,” ~~and~~which ~~quarterly~~expands ~~results during~~ the ~~year~~disclosure ~~are~~requirements ~~not~~regarding ~~necessarily~~plan ~~indicative~~assets ofand ~~the~~benefit ~~results~~obligations ~~that~~for ~~may~~Argo-Tech’s betwo ~~expected~~noncontributory ~~for~~defined ~~any~~benefit ~~future~~pension ~~period~~plans orand ~~for~~its ~~the~~postretirement ~~entire~~benefit ~~year~~plan. ~~Results~~Argo-Tech ofadopted ~~Operations for~~ the 13provisions ~~Week~~of ~~Period~~this ~~Ended~~statement ~~July~~effective ~~26,~~with ~~2003 Compared With~~ the ~~13 Week Period Ended July 27, 2002 Net revenues for the 13 week~~ period ~~ended~~beginning ~~July~~February ~~26, 2003 increased $~~1~~.7 million~~, or2004 ~~4.5%,~~(see toNote ~~$39~~6).4 ~~million from $37~~11.7 ~~million~~RECENT ~~for~~EVENTS ~~the~~Argo-Tech 13Corporation ~~week~~established ~~period~~an ~~ended~~Employee ~~July~~Stock ~~27,~~Ownership ~~2002.~~Plan ~~This~~(ESOP) ~~increase~~in ~~was~~1994 ~~primarily due~~ to anprovide ~~increase~~retirement inbenefits ~~industrial~~to ~~revenues. While aerospace revenues in total remained unchanged~~qualifying, ansalaried ~~increase of $1~~employees.7 ~~million~~Shares of ~~military~~AT ~~revenues~~Holdings’ ~~was~~common ~~offset~~stock bywere apurchased ~~decrease~~by ofthe ~~$1.7~~ESOP ~~million~~from inthe ~~commercial~~proceeds ~~aerospace~~of ~~revenues.~~a ~~Commercial~~loan ~~OEM~~made ~~revenues~~by ~~remained~~Argo-Tech ~~constant~~to ~~with~~the ~~last~~ESOP ~~year at $4.9 million~~ and ~~commercial~~are ~~aftermarket~~held ~~revenues~~in ~~decreased~~a ~~$1.7~~suspense ~~million,~~account orand ~~11.5%,~~released to ~~$13.1~~eligible ~~million~~participants inon ~~the 13 week period ended July 26, 2003. Commercial aftermarket revenues were lower primarily due to~~ a ~~decrease~~pro inrata ~~the~~basis ~~demand~~as ~~for~~loan ~~spare~~principal ~~part~~payments ~~sales~~are ~~and repair and overhaul activities~~made. ~~The~~Based ~~lower~~on ~~demand~~the ~~for~~loan ~~aftermarket~~payment ~~sales~~schedule, ~~and~~the ~~activities~~release ~~is a result~~ of the ~~reduced~~final ~~flying by commercial airlines~~21,000 ~~the~~shares ~~availability~~ of ~~spare~~stock, ~~parts~~representing ~~taken~~a ~~from~~half–year ~~parked~~allocation ~~aircraft and deferral~~ of ~~maintenance.~~common ~~Military~~stock ~~revenues~~from ~~increased~~the ~~primarily~~suspense ~~due~~account, towill ~~revenue~~be ~~related~~made toin ~~sales~~October of2004. ~~main engine pumps for the KC~~Argo-~~135,~~Tech ~~increased~~has ~~sales~~decided ofto ~~F-16~~continue ~~and~~this ~~F-22~~employee ~~airframe~~benefit ~~components,~~by ancontributing ~~increase in revenues related~~ to ~~airframe components on~~ the ~~Joint~~ESOP ~~Strike~~another ~~Fighter~~21,000 ~~development~~shares ~~program and higher sales~~ of ~~aftermarket~~AT ~~parts~~Holdings’ oncommon astock ~~variety~~in offiscal ~~aerial~~year ~~refueling~~2004 and ~~airframe programs~~42,000 ~~offset~~shares byin afiscal ~~decrease~~year in2005. ~~revenue~~These ~~related~~shares toof ~~KC-135~~stock ~~aerial~~are ~~refueling~~being ~~pumps~~contributed ~~due~~from toshares ~~the~~that ~~completion~~have ofbeen ~~the~~repurchased ~~retrofit~~from ~~program~~former ~~earlier~~ESOP ~~this~~participants ~~year.~~and ~~The~~are ~~$1.7~~currently ~~million~~being ~~increase~~held in ~~industrial~~treasury ~~revenues~~stock. ~~was~~All ~~primarily~~hourly ~~attributable~~employees toat ~~increased~~the ~~ground~~Cleveland ~~fueling~~facility ~~and~~are ~~cryogenic~~represented ~~pump revenues offset~~ by athe ~~decrease~~United inAuto ~~industrial~~Workers ~~gas~~union ~~turbine~~under ~~revenues.~~a ~~Aerospace~~collective ~~gross~~bargaining ~~profit~~agreement ~~for~~that ~~the~~expired 13on ~~week~~March ~~period ended July 26~~31, ~~2003 increased $0~~2004.8 ~~million,~~Argo-Tech oris ~~6.7%,~~currently tonegotiating ~~$12.7~~a ~~million~~new ~~from~~collective ~~$11.9~~bargaining ~~million~~agreement inwith the 13UAW ~~week~~and ~~period~~continues ~~ended July 27, 2002. Gross margin increased~~ to ~~44.1%~~operate ~~for~~under the 13existing ~~week period ended July 26~~agreement, ~~2003~~which ~~from~~is ~~41.3%~~renewed inon ~~the~~a 13daily ~~week~~basis ~~period~~until ~~ended~~negotiations ~~July~~are ~~27,~~completed. ~~2002~~12. ~~The~~SUBSEQUENT ~~increase~~EVENT inIn ~~gross~~May ~~profit~~2004, ~~and~~Argo-Tech ~~gross~~launched ~~margin is primarily attributable to~~ a ~~change~~tender inoffer ~~classification~~ and ~~allocation~~consent ofsolicitation ~~$0.6~~to ~~million~~purchase all of ~~certain~~its ~~costs~~outstanding to8 ~~selling,~~5/8% ~~general~~senior ~~and~~subordinated ~~administrative~~notes ~~expenses~~due ~~and a~~2007.

~~reduction~~ITEM in non-cash ESOP compensation expense partially offset by a decrease in sales of higher margin aerospace aftermarket products. Industrial gross profit for the 13 week period ended July 26, 2003 increased $0.7 million, or 21.2~~%, to $4~~.0 million from $3.3 million in the 13 week period ended July 27, 2002. Gross margin increased to 37.7% in the 13 week period ended July 26, 2003 from 37.1% in the 13 week period ended July 27, 2002. The increase in gross profit and gross margin was primarily attributable to an increase in ground fueling and cryogenic pump revenues offset by an increase in utility costs associated with the operation of our business park. Operating expenses for the 13 week period ended July 26, 2003 decreased $0.4 million, or 4.3%, to $9.0 million from $9.4 million in the 13 week period ended July 27, 2002. This decrease is primarily attributable to a decrease of $0.7 million in research and development expenses due to an increase in customer paid development expenses, which are included in cost of revenues, and a decrease in spending related to programs nearing completion. The decrease in research and development expense was partially offset by an increase in selling, general and administrative expenses of $0.3 million. Selling, general and administrative expenses includes $0.6 million due to a change in classification and allocation of certain costs from cost of sales and $0.3 million of severance costs associated with a reduction in the salaried workforce, offset by a decrease of $0.2 million in non-cash ESOP compensation expense and an increase in miscellaneous other income. Operating expenses as a percent of revenues decreased to 22.8% for the 13 week period ended July 26, 2003 as compared to 24.9% for the 13 week period ended July 27, 2002. Income from operations for the 13 week period ended July 26, 2003 increased $2.0 million, or 35.1%, to $7.7 million from $5.7 million in the 13 week period ended July 27, 2002. As a percent of revenues, income from operations for the 13 week period ended July 26, 2003 increased to 19.5% from 15.1% for the 13 week period ended July 27, 2002. These increases were primarily due to increased industrial revenues and a decrease in operating expenses partially offset by an increase in utility costs associated with the operation of our business park. Interest expense for the 13 week period ended July 26, 2003 increased $0.1 million, or 1.9%, to $5.4 million from $5.3 million in the 13 week period ended July 27, 2002. While there was a lower outstanding borrowing on the term loans for the 13 week period ended July 26, 2003 as compared to the 13 week period ended July 27, 2002, the interest rate for the current period was slightly higher as a result of the amendment and restatement of our credit facility in January 2003. The income tax provision was $0.6 million for the 13 week period ended July 26, 2003 as compared to a benefit of $0.2 million for the 13 week period ended July 27, 2002. This increase is primarily due to an increase in pre-tax income and the non-recurrence of favorable tax adjustments recorded in the 13 week period ended July 27, 2002. Net income for the 13 week period ended July 26, 2003 increased $1.1 million to $1.6 million from $0.5 million for the 13 week period ended July 27, 2002, primarily due to the revenue and expense factors discussed above. Results of Operations for the 39 Week Period Ended July 26, 2003 Compared With the 39 Week Period Ended July 27, 2002 Net revenues for the 39 week period ended July 26, 2003 increased $3.1 million, or 2.8%, to $115.4 million from $112.3 million for the 39 week period ended July 27, 2002. This increase was primarily due to an increase in aerospace revenues of $0.5 million and a $2.6 million increase in industrial revenues. The increase in aerospace revenues was attributable to an increase of $8.4 million in military revenues offset by a decrease of $7.9 million of commercial aerospace revenues. Commercial OEM revenues decreased $0.5 million, or 3.3%, to $14.8 million and commercial aftermarket revenues decreased $7.4 million, or 15.2%, to $41.4 million in the 39 week period ended July 26, 2003. Commercial OEM revenues decreased as a result of lower overall engine requirements from our customers in response to reduced aircraft build rates. Commercial aftermarket revenues were lower primarily due to a decrease in

12MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~Table of Contents~~Overview

~~demand~~Argo-Tech ~~for~~is ~~spare part sales and~~ a ~~decrease~~global indesigner, ~~repair~~manufacturer and ~~overhaul~~servicer ~~services. Military revenues increased primarily due to revenue related to increased sales~~ of ~~KC-135~~high performance ~~aerial~~fuel ~~refueling~~flow ~~components~~devices and ~~main~~systems. ~~engine~~We ~~pumps,~~operate ~~increased sales of F-16 and F-22 airframe components, an increase~~ in ~~revenues~~two ~~related to airframe components on the F-22 and Joint Strike Fighter development programs~~business segments, ~~and~~Aerospace ~~higher sales of aftermarket parts on a variety of aerial refueling~~ and ~~airframe programs.~~ Industrial ~~revenues increased $2~~.6 ~~million,~~The ~~primarily~~Aerospace ~~due~~segment consists toof anaircraft ~~increase~~engine infuel ~~ground~~pumps ~~fueling~~ and ~~cryogenic~~other ~~pump~~engine ~~revenues offset by a decrease in industrial gas turbine revenues. Aerospace gross profit for the 39 week period ended July 26~~products, 2003 decreased $0.8 million, or 2.0%, to $38.6 million from $39.4 million in the 39 week period ended July 27, 2002. Gross margin decreased to 44.0% for the 39 week period ended July 26, 2003 from 45.1% in the 39 week period ended July 27, 2002. The decrease in gross profit commercial and ~~gross margin is primarily attributable to a decrease in higher margin commercial aerospace aftermarket revenues partially offset by an increase in~~ military ~~revenues,~~products ~~a change in classification~~ and ~~allocation~~systems offound ~~$1.7~~on ~~million~~a ofplane’s ~~certain costs to selling~~airframe, ~~general~~ and ~~administrative~~aerial refueling ~~expenses~~pumps and arelated ~~reduction in non-cash ESOP compensation expense~~equipment. ~~Industrial gross profit for the 39 week period ended July 26, 2003 increased $0.2 million, or 2.2%, to $9.1 million from $8.9 million in the 39 week period ended July 27, 2002.~~ The ~~increase~~Industrial insegment ~~gross profit was attributable to an increase in~~ includes ground fueling ~~and cryogenic pump revenues partially offset by an increase in utility costs associated with the operation of our business park and a decrease in industrial gas turbine revenues. Gross margin~~nozzles, ~~which~~hoses ~~decreased to 33.0% in the 39 week period ended July 26, 2003 from 35.6% in the 39 week period ended July 27, 2002, was lower primarily due to the increase in utility costs~~ and another ~~unfavorable sales mix of~~ ground fueling ~~products. Operating expense for the 39 week period ended July 26~~components, ~~2003~~an automated ~~decreased~~fuel ~~$0.2~~management ~~million~~system, orcryogenic ~~0.7%,~~pumps ~~to $28.7 million from $28.9 million in the 39 week period ended July 27, 2002. Selling, general~~ and ~~administrative~~nozzles ~~expenses increased $1.8 million due to a $1.7 million change in classification~~ and ~~allocation of certain costs from cost of sales and a $0.7 million increase primarily related to increased marketing costs, airline bad debt expenses and severance costs associated with a reduction in~~ the operation ~~salaried workforce, which was partially offset by the non-recurrence~~ of a non-cash expense of $0.6 million related to a salaried employee early retirement program in the 39 week period ended July 27, 2002. The increase in selling, general and administrative expenses was offset by a decrease of $2.0 million in research and development expenses due to an increase in customer paid development expenses, which are included in cost of revenues, and a decrease in spending related to programs nearing completion. Operating expenses as a percent of revenues decreased to 24.9% for the 39 week period ended July 26, 2003 as compared to 25.7% for the 39 week period ended July 27, 2002. Income from operations for the 39 week period ended July 26, 2003 remained constant with the 39 week period ended July 27, 2002 at $18.8 million. As a percent of revenues, income from operations for the 39 week period ended July 26, 2003 decreased to 16.3% from 16.8% for the 39 week period ended July 27, 2002. This decrease was primarily due to the decrease in higher margin commercial aerospace aftermarket revenues, a decrease in industrial gas turbine revenues, an increase in utility costs associated with the operation of our business park ~~and an increase~~ in ~~selling~~Cleveland, ~~general and administrative expenses, partially offset by the decrease in non-cash ESOP compensation expense and research and development expenses~~Ohio. Interest expense for the 39 week period ended July 26, 2003 decreased $0.2 million, or 1.2%, to $16.0 million from $16.2 million for the 39 week period ended July 27, 2002 due to lower outstanding borrowings which were partially offset by an increase in interest rates on the term loans. The income tax provision was $0.8 million for the 39 week period ended July 26, 2003 as compared to a benefit of $0.1 million for the 39 week period ended July 27, 2002. This increase is primarily due to the non-recurrence of favorable tax adjustments recorded in the 39 week period ended July 27, 2002.

13The following is management’s discussion and analysis of certain significant factors which have affected Argo-Tech’s financial position and operating results during the periods presented in the accompanying condensed consolidated financial statements. Argo-Tech’s fiscal year ends on the last Saturday of October and is identified according to the calendar year in which it ends.

~~Table~~Export ~~of Contents~~Sales

~~Net~~Substantially ~~income~~all ~~for~~of ~~the~~our 39export ~~week~~sales ~~period~~are ~~ended~~denominated ~~July~~in ~~26, 2003 decreased $0~~U.7 ~~million, or 25~~S.~~0%,~~ ~~to $2~~dollars.1 Export ~~million~~sales ~~from $2.8 million~~ for the ~~39 week period ended July~~ 27, 2002 primarily due to the revenue and expense factors discussed above. Liquidity and Capital Resources Argo-Tech is a holding company that receives all of its operating income from its subsidiaries. As a result, Argo-Tech’s primary source of liquidity for conducting business activities and servicing its indebtedness has been cash flows from operating activities. Cash and cash equivalents for the 39 week period ended ~~July 26~~May 1, ~~2003~~2004 ~~decreased~~were $735.9 1 million ~~to $9~~.9 Sales ~~million. This was primarily due~~ to ~~the~~Europe ~~scheduled~~were repayment of term loans, payment of financing fees associated with amending and restating the credit agreement, capital expenditures and a slight increase in working capital requirements, offset by adjusted net income. Capital expenditures for the 39 weeks ended July 26, 2003 totaled $123.3 million compared to $1.1 million for the 39 weeks ended July 27, 2002. Argo-Tech expects to incur capital expenditures of approximately $1.0 million for the remainder of fiscal year 2003, related to the continued maintenance of facilities, equipment and ~~systems~~sales to ~~support~~all ~~current~~other ~~operating activities. In January 2003~~regions, individually ~~Argo-Tech~~less ~~amended~~that ~~and restated its credit facility. Long-term debt at July 26~~10%, ~~2003~~were ~~consisted of~~ $2711.8 million ~~principal~~for ~~amount of term loans and $193.5 million principal amount of senior subordinated notes. Scheduled payments of $14.0 million were made on~~ the ~~term loans in the 39~~ 27 week period ended ~~July 26, 2003. At July 26, 2003, Argo-Tech has available, after $~~ May 1~~.2 million in letters of credit~~, ~~an $18~~2004.8 million revolving credit facility. As of July 26, 2003, there were no outstanding borrowings on the revolving credit facility. The credit facility contains no restrictions on the ability of Argo-Tech’s subsidiaries to make distributions to Argo-Tech. Our expected future contractual cash obligations and other commercial commitments for the next five years are as follows (in millions):

	2003(1)		2004		2005		2006		2007
Contractual Obligations:
Long Term Debt	$	2.0	$	12.0	$	13.8	$	—	$	195.0
Operating Leases		0.1		0.3		—		—		—
Total Contractual Cash Obligations	$	2.1	$	12.3	$	13.8	$	—	$	195.0

Critical Accounting Policies

~~(1)~~Our –consolidated ~~Amount~~financial ~~remaining~~statements ~~for~~have ~~fiscal~~been ~~year~~prepared ~~2003~~in accordance with accounting principles generally accepted in the United States of America. The ~~Total~~preparation ~~obligation~~of ~~was~~these ~~$16~~financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.3 ~~million~~Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which enable the fair presentation of our financial position and results of operations. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of its consolidated financial statements.

WeRevenue ~~believe~~Recognition. ~~that~~Revenues ~~cash~~are ~~flow~~generally ~~from~~recognized ~~operations~~when ~~will~~goods ~~provide~~are shipped ~~adequate~~or ~~funds~~services ~~for~~provided, ~~our~~at ~~working~~which ~~capital~~time ~~needs,~~title ~~planned~~and ~~capital~~risk ~~expenditures~~of ~~and~~loss ~~near~~passes ~~term~~to the ~~debt~~customer. ~~service~~Substantially ~~obligations.~~all ~~Our~~sales ~~ability~~are tomade ~~fund~~pursuant ~~our~~to ~~operations~~firm, fixed-price ~~make~~purchase ~~planned~~orders ~~capital~~received ~~expenditures,~~from ~~and~~customers. toWe ~~make~~have ~~scheduled~~executed long-term ~~payments~~supply onagreements ~~our~~with ~~indebtedness~~certain ~~depends~~of on our ~~future~~OEM ~~operating~~customers. ~~performance~~These agreements ~~and~~require ~~cash~~Argo-Tech ~~flow.~~to Wesupply ~~may~~all ~~need~~the toamounts ~~refinance~~ordered ~~all~~by orthe customers aduring ~~portion~~the term of ~~our~~the ~~indebtedness~~agreements on(generally orthree ~~before~~to ~~maturity.~~five ~~There~~years) at ~~can~~specified beprices. noUnder ~~assurance~~certain ~~that~~of ~~Argo-Tech~~these ~~will~~agreements, bewe ~~able~~expect to ~~refinance~~incur losses. ~~any~~Provisions offor ~~its~~estimating ~~indebtedness~~losses on ~~commercially~~these ~~reasonable~~contracts ~~terms~~are ormade atin ~~all.~~the period ~~These~~in ~~items~~which such losses are ~~subject~~identified tobased ~~prevailing~~on ~~conditions~~cost and topricing information ~~financial,~~and ~~business,~~estimated ~~and~~future ~~other~~shipment ~~factors,~~quantities ~~some~~provided by the customer. The cumulative effect of ~~which~~revisions ~~are~~to ~~beyond~~estimated ~~our~~losses ~~control.~~on contracts ~~Certain~~is ~~Factors~~recorded ~~That~~in ~~May~~the ~~Affect~~accounting ~~Future~~period ~~Results~~in ~~From~~which ~~time~~the toamounts ~~time,~~become known ~~information~~and ~~provided~~can bybe ~~Argo-Tech,~~reasonably ~~statements~~estimated. bySuch ~~its~~revisions ~~employees~~could occur at any time there are changes to estimated future revenues or ~~information~~costs. ~~included~~Revenue infrom certain ~~its~~fixed ~~filings~~price ~~with~~engineering ~~the~~contracts ~~Securities~~for ~~and~~which ~~Exchange~~costs ~~Commission~~can ~~(including~~be ~~those~~reliably estimated ~~portions~~are ofrecognized ~~the~~based ~~Management’s~~on ~~Discussion~~milestone ~~and~~billings. ~~Analysis~~Variations ~~that~~in ~~refer~~actual labor performance, changes to ~~the~~estimated ~~future)~~profitability ~~may~~and ~~contain~~final ~~forward-looking~~contract settlements ~~statements~~may ~~that~~result ~~are~~in ~~not~~revisions ~~historical~~to ~~facts~~the cost estimates. ~~Those~~Revisions ~~statements~~in cost ~~are~~estimates ~~“forward-looking”~~as ~~within~~contracts progress have the ~~meaning~~effect of ~~the~~increasing ~~Private~~or decreasing ~~Securities~~profits ~~Litigation~~in ~~Reform~~the ~~Act~~period of ~~1995~~revision. ~~Such~~We ~~forward-looking~~record ~~statements,~~estimated ~~and~~reductions to ~~Argo-Tech’s~~revenue ~~future~~for ~~performance,~~volume-based ~~operating~~incentives ~~results,~~based ~~financial~~on ~~position~~expected ~~and~~customer ~~liquidity,~~activity for ~~are~~the ~~subject~~applicable toperiod. aRevisions ~~variety of factors that~~for

1412

~~could materially affect results. Some, but not necessarily all, of these factors include: Argo~~volume-~~Tech’s~~based ~~dependence~~incentives onare recorded ~~the aerospace industry, especially as the industry is affected by commercial airlines operating schedules, terrorism alert and health warnings and losses~~ in the ~~airline~~accounting ~~industry;~~period government regulation and oversight; defense spending; competition; product and environmental liabilities; and risks associated with its workforce, suppliers, and indebtedness. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK In the ordinary course of operations, Argo-Tech’s major market risk exposure is to changing interest rates, primarily with respect to its long-term debt obligations. At July 26, 2003, Argo-Tech had fixed rate debt totaling $195 million, including $1.5 million of accretion, at 8.625% and variable rate debt under its existing credit facility of $27.8 million calculated at Argo-Tech’s choice using an alternate base rate (ABR) or LIBOR, plus a supplemental percentage determined by the ratio of debt to EBITDA. The variable rate is not to exceed ABR plus 2.50% or LIBOR plus 3.50%. Argo-Tech currently has no derivative contracts and does not enter into derivative contracts for trading or speculative purposes. A 10% fluctuation in ~~interest~~which rates would not materially affect Argo-Tech’s financial condition, results of operations or cash flows. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. The term “disclosure controls and procedures” is defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934 (the “Exchange Act”). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Argo-Tech’s Chief Executive Officer and Chief Financial Officer have evaluated the design, operation and effectiveness of Argo-Tech’s disclosure controls and procedures and have concluded, based on such ~~evaluation,~~estimates ~~that~~can ~~such controls and procedures were effective at ensuring that required information will~~ be disclosed in Argo-Tech’s reports filed under the Exchange Act as of July 26, 2003. (b) Changes in internal controls. There were no changes in Argo-Tech’s internal controls or in other factors during the quarter ended July 26, 2003 that have, or are reasonably ~~likely to, materially affect Argo-Tech’s control over financial reporting~~ determined.

~~PART~~Valuation IIof —Accounts ~~OTHER~~Receivable ~~INFORMATION~~and ~~Item~~Allowance 6for —Doubtful ~~Exhibits~~Accounts. We evaluate the collectibility of our trade receivables based on a combination of factors. We regularly analyze our customer accounts, and ~~Reports~~when we become aware of a specific customer’s inability to meet its financial obligation to us, such as in the case of bankruptcy filings, we immediately record a bad debt expense and reduce the related receivable to the amount we reasonably believe is collectible. We estimate the allowance for doubtful accounts based on ~~Form~~the ~~8-K~~aging of the accounts receivable, customer creditworthiness and historical experience. Our estimate of the allowance amounts includes amounts for specifically identified losses and a general amount for estimated losses. If circumstances change or economic conditions deteriorate, our estimates of the recoverability of receivables could be further adjusted.

	(a)		Exhibit 31 – Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	(b)		Exhibit 32 – Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Valuation of Inventories. Our inventory purchases and commitments are made in order to build inventory to meet future shipment schedules based on forecasted demand for our products. Inventories are stated at the lower of cost or market, with cost being determined on the first-in, first-out, or FIFO, method. Periodically, we perform a detailed assessment of inventory, which includes a review of, among other factors, historical sales activity, future demand requirements, product life cycle and development plans and quality issues. Based on this analysis, we record provisions for potentially obsolete or slow-moving inventory to reflect inventory at net realizable value. These provisions could vary significantly, either favorably or unfavorably, from actual requirements based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen, or did not exist, when the valuation allowances were established.

~~Reports~~Valuation of Goodwill and Intangible Assets. Goodwill and identified intangible assets are recorded at fair value on ~~Form~~the ~~8-K~~date —of ~~None~~acquisition. 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 our intent to do so. Intangible assets, such as goodwill, that have an indefinite useful life are not amortized. All other intangible assets are amortized over their estimated useful lives. We review goodwill and purchased intangible assets for impairment annually, or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Our asset impairment review assesses the fair value of the assets based on the future cash flows the assets are expected to generate. This approach uses our estimates of future market growth, forecasted revenue and costs and appropriate discount rates. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value.

15Fluctuations of Operating Results; Limitation of Quarterly Comparisons

~~Table~~Argo-Tech’s results of ~~Contents~~operations are subject to fluctuations from quarter to quarter due to changes in demand for its products, changes in product mix and other factors. Demand for its products can vary from quarter to quarter due to changes in demand for, and timing of deliveries of, OEM, aftermarket and military products and services. In particular, the timing of Argo-Tech’s aftermarket sales tends not to occur on a predictable schedule and, furthermore, the sales tend to occur in large quantities that can significantly impact quarterly comparisons. Accordingly, year-to-year and quarter-to-quarter comparisons of quarterly results may not be meaningful, and quarterly results during the year are not necessarily indicative of the results that may be expected for any future period or for the entire year.

~~SIGNATURE~~Results of Operations for the 13 Week Period Ended May 1, 2004 Compared With the 13 Week Period Ended April 26, 2003

~~Pursuant~~Net revenues for the 13 week period ended May 1, 2004 increased $5.7 million, or 13.7%, to $47.4 million from $41.7 million for the ~~requirements~~13 week period ended April 26, 2003. This increase was primarily due to an increase in aerospace revenues of ~~the~~$2.9 million ~~Securities~~and ~~Exchange~~an ~~Act~~increase of ~~1934,~~$2.8 million ~~the~~in ~~registrant~~industrial ~~has~~revenues. ~~duly~~The ~~caused~~increase ~~this~~in ~~report~~aerospace revenues was attributable to an beincrease ~~signed~~of on$1.9 million ~~its~~of ~~behalf~~commercial byaerospace ~~the~~revenues and $1.0 ~~undersigned,~~million ~~thereunto~~of ~~duly~~military ~~authorized~~revenues. Commercial OEM revenues

Date:	September 8, 2003	ARGO-TECH CORPORATION
		By:	/s/	Frances S. St. Clair Frances S. St. Clair Vice President and Chief Financial Officer (Duly Authorized Officer)
		By:	/s/	Paul A. Sklad Paul A. Sklad Controller (Principal Accounting Officer)

16 Table of Contents

increased $0.6 million, or 10.5%, to $6.3 million and commercial aftermarket revenues increased $1.3 million, or 8.8%, to $16.0 million in the 13 week period ended May 1, 2004. Commercial OEM revenues increased primarily as a result of an increase in pump requirements from our customers. Commercial aftermarket revenues were higher primarily due to an increase in repair and overhaul activities along with a slight increase in the demand for spare part sales. Military revenues increased primarily due to revenue related to increased sales on a variety of OEM and aftermarket main engine pumps and components as well as an increase in revenues related to airframe components on various OEM development programs. The $2.8 million increase in industrial revenues was primarily attributable to an increase of $3.9 million in military ground fueling revenues offset by a decrease of $1.1 million in industrial gas turbine and cryogenic pump revenues.

Aerospace gross profit for the 13 week period ended May 1, 2004 increased $3.4 million, or 25.6%, to $16.6 million from $13.2 million in the 13 week period ended April 26, 2003. Gross margin increased to 47.4% for the 13 week period ended May 1, 2004 from 41.0% in the 13 week period ended April 26, 2003. The increase in gross profit and gross margin is primarily attributable to the increase in military revenues and higher margin commercial aerospace aftermarket revenues along with an increase in operating efficiencies at both our Cleveland and Costa Mesa facilities. Industrial gross profit for the 13 week period ended May 1, 2004 increased $1.3 million, or 46.4%, to $4.1 million from $2.8 million in the 13 week period ended April 26, 2003. Gross margin increased to 33.3% in the 13 week period ended May 1, 2004 from 29.5% in the 13 week period ended April 26, 2003. The increase in gross profit and gross margin was primarily attributable to an increase in military ground fueling revenues and reduced operating expenses of our business park partially offset by an increase in manufacturing costs for our cryogenic pump products.

Operating expenses for the 13 week period ended May 1, 2004 increased $1.6 million, or 16.2%, to $11.5 million from $9.9 million in the 13 week period ended April 26, 2003. This increase is primarily attributable to an increase of $1.0 million in research and development expenses and $0.6 million in selling, general and administrative expenses related to increased marketing costs, including commissions and royalties. The increase in research and development expenses is due to a decrease in customer paid development expenses. Operating expenses as a percent of revenues increased to 24.3% for the 13 week period ended May 1, 2004 as compared to 23.7% for the 13 week period ended April 26, 2003.

Income from operations for the 13 week period ended May 1, 2004 increased $3.1 million, or 50.8%, to $9.2 million from $6.1 million in the 13 week period ended April 26, 2003. As a percent of revenues, income from operations for the 13 week period ended May 1, 2004 increased to 19.4% from 14.6% for the 13 week period ended April 26, 2003. These increases were primarily due to increased military revenues, increased sales of higher margin commercial aerospace aftermarket revenues and the increase in military ground fueling revenues, partially offset by an increase in cryogenic pump manufacturing costs and higher operating expenses.

Interest expense for the 13 week period ended May 1, 2004 decreased $0.2 million, or 3.8%, to $5.1 million from $5.3 million in the 13 week period ended April 26, 2003 due to a lower interest rate applied to lower outstanding borrowings.

The income tax provision was $1.4 million for the 13 week period ended May 1, 2004 as compared to $0.2 million for the 13 week period ended April 26, 2003. This increase is primarily due to an increase in pre-tax income.

Net income for the 13 week period ended May 1, 2004 increased $2.1 million to $2.7 million from $0.6 million for the 13 week period ended April 26, 2003, primarily due to the revenue and expense factors discussed above.

Results of Operations for the 27 Week Period Ended May 1, 2004 Compared With the 26 Week Period Ended April 26, 2003

Net revenues for the 27 week period ended May 1, 2004 increased $15.9 million, or 20.9%, to $91.8 million from $75.9 million for the 26 week period ended April 26, 2003. This increase was primarily due to an increase in aerospace revenues of $7.0 million and an $8.9 million increase in industrial revenues. The increase in aerospace revenues was attributable to an increase of $1.6 million of commercial aerospace revenues and an increase of $5.4 million in military revenues. Commercial OEM revenues increased $1.1 million, or 11.1%, to $11.0 million and commercial aftermarket revenues increased $0.5 million, or 1.8%, to $28.8 million in the 27 week period ended May 1, 2004. Commercial OEM revenues increased primarily as a result of an increase in pump requirements from our customers. Commercial aftermarket revenues increased slightly primarily due to an increase in repair and overhaul services offset by a decrease in demand for spare part sales. The lower demand for spare part sales is a result of the availability of spare parts taken from parked aircraft and the deferral of maintenance. Military revenues increased primarily due to revenue related to increased sales on a variety of OEM and aftermarket main engine fuel pump and airframe components as well as an increase in revenues related to airframe components on various OEM development programs. Industrial revenues increased $8.9 million, primarily attributable to an increase of $6.8 million in ground fueling revenues, of which $6.1 million was attributable to military sales, and $2.5 million in cryogenic pump revenues, offset by slight decreases in industrial gas turbine and business park revenues.

Aerospace gross profit for the 27 week period ended May 1, 2004 increased $4.6 million, or 17.8%, to $30.5 million from $25.9 million in the 26 week period ended April 26, 2003. Gross margin increased to 46.3% for the 27 week period ended May 1, 2004 from 43.9% in the 26 week period ended April 26, 2003. The increase in gross profit and gross margin is primarily attributable to an increase in military revenues and an increase in operating efficiencies at both our Cleveland and Costa Mesa facilities. Industrial gross profit for the 27 week period ended May 1, 2004 increased $2.8 million, or 54.9%, to $7.9 million from $5.1 million in the 26 week period ended April 26, 2003. Gross margin increased to 30.5% in the 27 week period ended May 1, 2004 from 30.0% in the 26 week period ended April 26, 2003. The increase in gross profit and gross margin is primarily attributable to an increase in military ground fueling revenues partially offset by the increase in lower margin cryogenic pump revenues.

Operating expenses for the 27 week period ended May 1, 2004 increased $1.8 million, or 9.2%, to $21.4 million from $19.6 million in the 26 week period ended April 26, 2003. This increase is primarily due to an increase in selling, general and administrative expenses of $0.9 million and research and development expenses of $0.9 million. The increase in selling, general and administrative expenses of $0.9 million was related to an increase in marketing expenses, including commissions and royalties. The increase in research and development expenses is due to a decrease in customer paid development expenses. Operating expenses as a percent of revenues decreased to 23.3% for the 27 week period ended May 1, 2004 as compared to 25.8% for the 26 week period ended April 26, 2003.

Income from operations for the 27 week period ended May 1, 2004 increased $5.7 million, or 50.9%, to $16.9 million from $11.2 million in the 26 week period ended April 26, 2003. As a percent of revenues, income from operations for the 27 week period ended May 1, 2004 increased to 18.4% from 14.8% for the 26 week period ended April 26, 2003. These increases were primarily due to the increase in military and industrial revenues and increased operating efficiencies in Cleveland and Costa Mesa, partially offset by increased operating expenses.

Interest expense for the 27 week period ended May 1, 2004 decreased $0.1 million, or 0.9%, to $10.5 million from $10.6 million for the 26 week period ended April 26, 2003 due to lower outstanding borrowings and interest rates on the term loans partially offset by an increase in amortization of deferred financing fees resulting from the amendment to our existing credit facility in January 2003.

The income tax provision was $2.1 million for the 27 week period ended May 1, 2004 as compared to $0.1 million for the 26 week period ended April 26, 2003. This increase is primarily due to an increase in pre-tax income.

Net income for the 27 week period ended May 1, 2004 increased $3.8 million to $4.3 million from $0.5 million for the 26 week period ended April 26, 2003 primarily due to the revenue and expense factors discussed above.

Liquidity and Capital Resources

Argo-Tech is a holding company that receives all of its operating income from its subsidiaries. As a result, Argo-Tech’s primary source of liquidity for conducting business activities and servicing its indebtedness has been cash flows from operating activities.

Cash and cash equivalents for the 27 week period ended May 1, 2004 increased $1.3 million to $15.4 million. This was primarily due to an increase in net income partially offset by an increase in working capital and the scheduled repayment of term loans.

Capital expenditures for the 27 week period ended May 1, 2004 totaled $0.7 million compared to $0.8 million for the 26 week period ended April 26, 2003. Argo-Tech expects to incur capital expenditures of approximately $2.3 million for the remainder of fiscal year 2004, related to the continued maintenance of facilities, equipment and systems to support current operating activities.

Long-term debt at May 1, 2004 consisted of $19.9 million principal amount of term loans and $193.7 million principal amount of senior subordinated notes. Scheduled payments of $6.0 million were made on the term loans in the 27 week period ended May 1, 2004. At May 1, 2004, Argo-Tech has available, after $2.9 million in letters of credit, a $17.1 million revolving credit facility. As of May 1, 2004, there were no outstanding borrowings on the revolving credit facility. The credit facility contains no restrictions on the ability of Argo-Tech’s subsidiaries to make distributions to Argo-Tech.

Our expected future contractual cash obligations and other commercial commitments for the next five years are as follows (in millions):


	2004(1)		2005		2006		2007		2008
Contractual Obligations:
Term Loan Facility	$	12.0	$	13.8	$	—	$	—	$	—
8.625% Senior Subordinated Notes		—		—		—		195.0		—
Operating Leases		0.9		0.7		0.4		0.1		0.1
Other Long-Term Obligations (2)		17.0		16.8		16.8		16.8		—

Total Contractual Cash Obligations	$	29.9	$	31.3	$	17.2	$	211.9	$	0.1

(1) – Of the $29.9 million of total contractual cash obligations, $14.8 million has been paid to date.

(2) – Represents interest payments on the senior subordinated notes. Interest on the term loan facility is excluded as it is not fixed and determinable. Funding for retirement and other post-employment benefits is estimated to be $0.2 million.

We believe that cash flow from operations will provide adequate funds for our working capital needs, planned capital expenditures and near term debt service obligations. Our ability to fund our operations, make planned capital expenditures, and to make scheduled payments on our indebtedness depends on our future operating performance and cash flow. We may need to refinance all or a portion of our indebtedness on or before maturity. There can be no assurance that Argo-Tech will be able to refinance any of its indebtedness on commercially reasonable terms or at all. These items are subject to prevailing conditions and to financial, business, and other factors, some of which are beyond our control.

Certain Factors That May Affect Future Results

From time to time, information provided by Argo-Tech, statements by its employees or information included in its filings with the Securities and Exchange Commission (including those portions of the Management’s Discussion and Analysis that refer to the future) may contain forward-looking statements that are not historical facts. Those statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, and Argo-Tech’s future performance, operating results, financial position and liquidity, are subject to a variety of factors that could materially affect results. Some, but not necessarily all, of these factors include: Argo-Tech’s dependence on the aerospace industry, especially as the industry is affected by commercial airlines operating schedules, terrorism alert and health warnings and losses in the airline industry; government regulation and oversight; defense spending; competition; product and environmental liabilities; risks associated with its workforce, suppliers, and indebtedness; and other factors included in Argo-Tech’s annual report on Form 10-K for the year ended October 25, 2003.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

In the ordinary course of operations, Argo-Tech’s major market risk exposure is to changing interest rates, primarily with respect to its long-term debt obligations. At May 1, 2004, Argo-Tech had fixed rate debt totaling $195 million, including $1.3 million of accretion, at 8.625% and variable rate debt under its existing credit facility of $19.9 million calculated at Argo-Tech’s choice using an alternate base rate (ABR) or LIBOR, plus a supplemental percentage determined by the ratio of debt to EBITDA. The variable rate is not to exceed ABR plus 2.50% or LIBOR plus 3.50%. Argo-Tech currently has no derivative contracts and does not enter into derivative contracts for trading or speculative purposes. A 10% fluctuation in interest rates would not materially affect Argo-Tech’s financial condition, results of operations or cash flows.

ITEM 4.

CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Argo-Tech’s Chief Executive Officer and Chief Financial Officer have evaluated the design, operation and effectiveness of Argo-Tech’s disclosure controls and procedures and have concluded, based on such evaluation, that such controls and procedures were effective at ensuring that required information will be disclosed in Argo-Tech’s reports filed under the Exchange Act as of May 1, 2004.

(b) Changes in internal controls. There were no changes in Argo-Tech’s internal control over financial reporting or in other factors during the quarter ended May 1, 2004 that have materially affected, or are reasonably likely to materially affect, Argo-Tech’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 6 — Exhibits and Reports on Form 8-K

(a)		Exhibit 31.1 – Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(b)		Exhibit 31.2 – Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(c)		Exhibit 32 – Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports on Form 8-K – On May 18, 2004, the Company furnished a report on Form 8-K announcing a tender offer and consent solicitation for any and all of its outstanding 8 5/8% Senior Subordinated Notes due 2007.

SIGNATURE

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


Date: May 28, 2004	ARGO-TECH CORPORATION

		By: /s/	Frances S. St. Clair

			Frances S. St. Clair
			Vice President and Chief Financial Officer
			(Duly Authorized Officer)

		By: /s/	Paul A. Sklad

			Paul A. Sklad
			Controller
			(Principal Accounting Officer)

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