SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended April 3029, ~~2005~~2006, or


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

23555 Euclid Avenue
Cleveland, Ohio		44117
(Address of principal executive offices)		(Zip code)

Indicate by 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. YES þ NO o

~~(216)~~Indicate ~~692-6000~~by ~~(Registrant’s~~check ~~telephone~~mark ~~number~~whether the registrant is a large accelerated filer, ~~including~~an ~~area~~accelerated filer ~~code)~~or non-accelerated filer.

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~o ~~whether~~Accelerated ~~the~~filer ~~registrant~~o ~~(1) has~~Non-accelerated ~~filed~~filer 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. þ ~~YES o NO~~

Indicate by check mark whether the registrant is ana ~~accelerated~~shell ~~filer~~company (as defined in Rule 12b-2 of of the Exchange Act). o YES þo NO þ

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

As of June 1, ~~2005~~2006, 1 share of the registrant’s common stock, $.01 par value, was outstanding.

INDEX

	Page No.
PART I — FINANCIAL INFORMATION
Item 1 – Financial Statements
Item 1 — Financial Statements
Consolidated Balance Sheets as of April 30, 2005 and October 30, 2004		3
Consolidated Balance Sheets as of April 29, 2006 and October 29, 2005		3
Consolidated Statements of Net Income for the 26 week period and 13 week period ended April 30, 2005 and the 27 week period and 13 week period ended May 1, 2004		4
Consolidated Statements of Operations for the 26 week period and 13 week period ended April 29, 2006 and April 30, 2005 (Predecessor)		4
Consolidated Statements of Cash Flows for the 26 week period ended April 30, 2005 and the 27 week period ended May 1, 2004		5
Consolidated Statements of Cash Flows for the 26 week period ended April 29, 2006 and April 30, 2005 (Predecessor)		5
Notes to Consolidated Financial Statements		6 - 11
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		11 - 18
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		18
Item 3 — Quantitative and Qualitative Disclosure about Market Risk		17
Item 4 – Controls and Procedures		18
Item 4 — Controls and Procedures		17
PART II — OTHER INFORMATION
Item 6 – Exhibits		19
Item 6 — Exhibits		18
Signature		2019
Certifications		2120 - 2322
EXHIBIT 31.1 CERTIFICATION
EX-31.1 Certification
EXHIBIT 31.2 CERTIFICATION
EX-31.2 Certification
EXHIBIT 32 CERTIFICATION
EX-32 Certification

PART I — FINANCIAL INFORMATION

ITEM 1.

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

CONSOLIDATED BALANCE SHEETS ~~APRIL 30, 2005 AND OCTOBER 30, 2004 (In thousands, except share data)~~

	2005			2004
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,607		$	15,857
Receivables, net		34,593			29,013
Income tax receivable		973			1,203
Inventories, net		35,803			28,557
Deferred income taxes and prepaid expenses		8,076			6,245
Total current assets		86,052			80,875
PROPERTY AND EQUIPMENT, net of accumulated depreciation		23,222			23,213
GOODWILL		110,059			110,059
INTANGIBLE ASSETS, net of accumulated amortization		29,795			31,502
DEFERRED FINANCING AND OTHER ASSETS		8,012			8,613
Total Assets	$	257,140		$	254,262
LIABILITIES AND SHAREHOLDER’S EQUITY/(DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term debt	$	750		$	750
Accounts payable		9,028			9,396
Accrued liabilities		31,053			28,766
Total current liabilities		40,831			38,912
LONG-TERM DEBT, net of current maturities		263,688			264,063
OTHER NONCURRENT LIABILITIES		21,520			21,306
Total liabilities		326,039			324,281
REDEEMABLE ESOP STOCK		37,163			40,957
SHAREHOLDER’S EQUITY/(DEFICIENCY):
Common Stock, $.01 par value, authorized 3,000 shares; 1 share issued and outstanding		—			—
Paid-in capital		—			—
Accumulated comprehensive loss		(3,276	)		(3,315	)
Accumulated deficit		(102,786	)		(107,661	)
Total shareholder’s equity/(deficiency)		(106,062	)		(110,976	)
Total Liabilities and Shareholder’s Equity/(Deficiency)	$	257,140		$	254,262

April 29, 2006 and October 29, 2005
(In thousands, except share data)


	2006			2005
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	3,587		$	13,889
Receivables, net		45,172			40,319
Income tax receivable		—			3,630
Inventories, net		36,505			70,965
Prepaid expenses		2,395			1,688
Deferred income taxes		8,811			—


Total current assets		96,470			130,491


PROPERTY AND EQUIPMENT, net of accumulated depreciation		40,603			41,970

GOODWILL		200,152			200,152

INTANGIBLE ASSETS, net of accumulated amortization		208,527			214,440

OTHER ASSETS		1,310			1,453


Total Assets	$	547,062		$	588,506


LIABILITIES AND SHAREHOLDER’S EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt	$	750		$	750
Accounts payable		8,073			8,736
Accrued liabilities		31,205			47,681


Total current liabilities		40,028			57,167


LONG-TERM DEBT, net of current maturities		277,042			278,312
DEFERRED INCOME TAXES		72,723			75,120
OTHER NONCURRENT LIABILITIES		17,854			17,111


Total liabilities		407,647			427,710


SHAREHOLDER’S EQUITY:
Common Stock, $.01 par value, authorized 3,000 shares; 1 share issued and outstanding		—			—
Paid-in capital		158,418			160,796
Accumulated other comprehensive loss		(16	)		—
Accumulated equity / (deficit)		(18,987	)		—


Total shareholder’s equity		139,415			160,796


Total Liabilities and Shareholder’s Equity	$	547,062		$	588,506

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~~OPERATIONS

(In thousands) UNAUDITED


	26 week periods ended						13 week periods ended
(In thousands)	April 29, 2006			April 30, 2005			April 29, 2006			April 30, 2005
UNAUDITED				Predecessor						Predecessor
Net revenues	$	111,921		$	99,601		$	59,712		$	52,207
Cost of revenues (Including inventory purchase accounting charges of $37,615 and $11,132 for the 26 week and 13 week period ended April 29, 2006)		103,803			56,638			45,623			29,830


Gross profit		8,118			42,963			14,089			22,377


Selling, general and administrative		15,836			16,799			8,393			9,973
Research and development		6,111			6,533			3,207			3,807
Amortization of intangible assets		5,913			1,707			2,956			853


Operating expenses		27,860			25,039			14,556			14,633


Income / (loss) from operations		(19,742	)		17,924			(467	)		7,744
Interest expense		11,874			12,570			5,954			6,293
Other, net		(20	)		(25	)		(34	)		(49	)


Income / (loss) before income taxes		(31,596	)		5,379			(6,387	)		1,500

Income tax (benefit) / provision		(12,609	)		1,467			(2,260	)		407


Net income / (loss)	$	(18,987	)	$	3,912		$	(4,127	)	$	1,093

	26 week			27 week
	period ended			period ended			13 week periods ended
	April 30, 2005			May 1, 2004			April 30, 2005			May 1, 2004
Net revenues	$	99,601		$	91,836		$	52,207		$	47,399
Cost of revenues		56,638			53,558			29,830			26,725
Gross profit		42,963			38,278			22,377			20,674
Selling, general and administrative		16,799			13,980			9,973			7,331
Research and development		6,533			5,715			3,807			3,332
Amortization of intangible assets		1,707			1,707			853			853
Operating expenses		25,039			21,402			14,633			11,516
Income from operations		17,924			16,876			7,744			9,158
Interest expense		12,570			10,505			6,293			5,082
Other, net		(25	)		(12	)		(49	)		(8	)
Income before income taxes		5,379			6,383			1,500			4,084
Income tax provision		1,467			2,070			407			1,395
Net income	$	3,912		$	4,313		$	1,093		$	2,689

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

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 CASH FLOWS ~~FOR THE 26 WEEK PERIOD ENDED APRIL 30, 2005 AND THE 27 WEEK PERIOD ENDED MAY 1, 2004 (In thousands) UNAUDITED~~

	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,912		$	4,313
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		1,762			1,924
Amortization of intangible assets and deferred financing costs		2,285			2,903
Accretion of bond discount		—			163
Compensation expense recognized in connection with employee stock ownership plan (ESOP)		2,520			1,260
Compensation expense recognized in connection with ESOP excess benefit plan		150			—
Deferred income taxes		(1,945	)		(970	)
Changes in operating assets and liabilities:
Receivables		(5,350	)		(147	)
Inventories		(7,246	)		(684	)
Prepaid expenses		(977	)		(600	)
Accounts payable		(347	)		(2,034	)
Accrued and other liabilities		3,591			2,366
Other, net		32			84
Net cash provided by / (used in) operating activities		(1,613	)		8,578
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(1,771	)		(686	)
Net cash used in investing activities		(1,771	)		(686	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt		(375	)		(6,000	)
Purchase of AT Holdings stock from former ESOP participants		(3,795	)		(566	)
Dividend		(1,696	)		—
Net cash used in financing activities		(5,866	)		(6,566	)
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the period		(9,250	)		1,326
Balance, Beginning of period		15,857			14,057
Balance, End of period	$	6,607		$	15,383

For the 26 Week Periods Ending April 29, 2006 and April 30, 2005


(In thousands)				Predecessor
UNAUDITED	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	(18,987	)	$	3,912
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Depreciation		2,186			1,762
Amortization of intangible assets and deferred financing costs		6,071			2,285
Amortization of senior note fair value step-up		(896	)		—
Compensation expense recognized in connection with employee stock ownership plan (ESOP)		—			2,520
Compensation expense recognized in connection with ESOP excess benefit plan		—			150
Amortization of inventory fair value step-up		37,615			—
Deferred income taxes		(18,073	)		(1,945	)

Changes in operating assets and liabilities:
Receivables		(1,223	)		(5,350	)
Inventories		(3,155	)		(7,246	)
Prepaid expenses		(712	)		(977	)
Accounts payable		(623	)		(347	)
Accrued and other liabilities		(8,869	)		3,591
Other, net		(16	)		32


Net cash used in operating activities		(6,682	)		(1,613	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(819	)		(1,771	)


Net cash used in investing activities		(819	)		(1,771	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing of long-term debt		12,000			—
Repayment of long-term debt		(12,375	)		(375	)
Payment of financing related fees		(48	)		—
Intercompany activity with Parent		(2,061	)		—
Purchase of AT Holdings stock from former ESOP participants		—			(3,795	)
Dividend to AT Holdings		(317	)		(1,696	)


Net cash used in financing activities		(2,801	)		(5,866	)


CASH AND CASH EQUIVALENTS:
Net decrease for the period		(10,302	)		(9,250	)
Balance, beginning of period		13,889			15,857

Balance, end of period	$	3,587		$	6,607

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 26 WEEK PERIOD ENDED APRIL 30, 2005 AND THE 27 WEEK PERIOD ENDED MAY 1, 2004 (Unaudited)~~

1.FOR ~~BASIS~~THE OF26 ~~PRESENTATION~~ WEEK PERIODS ENDED APRIL 29, 2006 AND APRIL 30, 2005 (Predecessor) (Unaudited)

1. BASIS OF PRESENTATION The principal operations of Argo-Tech Corporation (a wholly-owned subsidiary of AT Holdings Corporation (“Holdings”)) and its subsidiaries (“Argo-Tech” or the “Company”) 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~~On isOctober ~~required~~28, to2005, ~~fulfill~~Holdings consummated a merger with Vaughn Merger Sub, Inc. (“Vaughn”) in which Vaughn merged with and into Holdings (the ~~obligation~~“Merger”), with Holdings surviving as a wholly owned subsidiary of ATV.G.A.T ~~Holdings Corporation~~Investors, toLLC. The Merger was accounted for as a purchase ATand ~~Holdings~~preliminary fair value adjustments to the Company’s ~~common~~assets ~~stock~~and liabilities were recorded as of the date of the Merger. The Company is in ~~accordance~~the ~~with~~process of obtaining third-party valuations of certain tangible and intangible assets; thus, the ~~provisions~~allocation of the purchase price to the Company’s assets and liabilities is subject to adjustment. Argo-Tech Corporation ~~Employee~~is ~~Stock~~a ~~Ownership~~parent ~~Plan~~holding company and all of its domestic subsidiaries guarantee Argo-Tech’s senior notes issued in June 2004. AsArgo-Tech aalso ~~result~~has two wholly-owned, ~~that~~non-guarantor ~~obligation~~foreign subsidiaries which have inconsequential assets, liabilities and equity. Argo-Tech has ~~been reflected~~no inoutside assets, liabilities or operations apart from its wholly-owned subsidiaries. The senior 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 29, 2005. The results of operations for the 13 and 26 week periods ended April 29, 2006 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. The balance at April 29, 2006 and October 29, 2005 includes $2.5 million and $40.3 million, respectively, of purchase price accounting adjustments recorded in conjunction with the Merger. Inventories consist of the following (in thousands):

Argo-Tech Corporation is a parent holding company and all of its domestic subsidiaries guarantee Argo-Tech’s senior notes issued in June 2004. Argo-Tech also has two wholly-owned, non-guarantor foreign subsidiaries which have inconsequential assets, liabilities and equity. Argo-Tech has no outside assets, liabilities or operations apart from its wholly-owned subsidiaries. The senior 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 30, 2004. The results of operations for the 13 and 26 week periods ended April 30, 2005 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):

	April 30,			October 30,
	2005			2004
Finished goods	$	2,765		$	2,686
Work-in-process and purchased parts		23,062			17,867
Raw materials and supplies		13,923			11,872
Total		39,750			32,425
Reserve for excess and obsolete inventory		(3,947	)		(3,868	)
Inventories — net	$	35,803		$	28,557

4. INTANGIBLE ASSETS


	April 29			October 29,
	2006			2005
Finished goods	$	2,732		$	5,401
Work-in-process and purchased parts		37,029			68,895
Raw materials and supplies		971			706

Total		40,732			75,002
Reserve for excess and obsolete inventory		(4,227	)		(4,037	)


Inventories — net	$	36,505		$	70,965

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

April 30, 2005

October 30, 2004

April 29, 2006

October 29, 2005

Gross

Accumulated

Gross

Accumulated

Amount

Amortization

Amount

Amortization

Intangible assets:

Contracts

1720,~~100~~870

121,~~971~~044

1720,~~100~~870

~~12,115~~—

Spare parts annuity

38,200

12,736

38,200

11,896

Customer relationships

193,090

4,828

193,090

—

Patents

~~387~~480

~~185~~41

~~387~~480

~~174~~—

Total

55214,~~687~~440

255,~~892~~913

55214,~~687~~440

~~24,185~~—

Amortization expense recorded on the intangible assets for the 13 week periods ended April 30, 2005 and May 1, 2004 was $0.9 million and for the 26 week period ended April 30, 2005 and the 27 week period ended May 1, 2004 was $1.7 million. The estimated amortization expense for each of fiscal years 2005 and 2006 is $3.4 million, for fiscal year 2007 is $3.3 million and for each of fiscal years 2008 and 2009 is $1.7 million. The intangible asset “Spare parts annuity” is the result of customer relationships that have been developed by supplying spare parts to our aftermarket customers. The weighted-average amortization period for contracts is 10 years, 26 years for spare parts annuity and 15 years for patents.

		Amortization expense recorded on the intangible assets for the 13 week periods ended April 29, 2006 and April 30, 2005 (Predecessor) was $2.9 million and $0.9 million, respectively, and for the 26 week periods ended April 29, 2006 and April 30, 2005 (Predecessor) was $5.9 million and $1.7 million, respectively. The estimated amortization expense for each of fiscal years 2006 through 2010 is $11.8 million. The weighted-average amortization period for contracts is 10 years, customer relationships is 20 years and patents is 9 years.

5.		PRODUCT WARRANTY

		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 26 week periods ended April 29, 2006 and April 30, 2005 (in thousands):

5. PRODUCT WARRANTY


				Predecessor
	2006			2005
Beginning balance	$	2,073		$	2,084
Accruals for warranties issued		25
Accruals for pre-existing warranties (including changes in estimate)		542			453
Warranty claims settled		(485	)		(323	)

Ending balance	$	2,155		$	2,214

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 26 week period ended April 30, 2005 and the 27 week period ended May 1, 2004 (in thousands):

	2005			2004
Beginning balance	$	2,084		$	2,130
Accruals for warranties issued					160
Accruals for pre-existing warranties (including changes in estimate)		453			553
Warranty claims settled		(323	)		(462	)
Ending balance	$	2,214		$	2,381

6. EMPLOYEE BENEFIT PLANS

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

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

6.		EMPLOYEE BENEFIT PLANS

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

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

	26 week			2726 week			13 week			13 week
	period ended			period ended			period ended			period ended
	April 30, 2005			May 1, 2004			April 30, 2005			May 1, 2004
	April 29, 2006			April 30, 2005			April 29, 2006			April 30, 2005
Service cost	$	183		$	140		$	94		$	70
				(Predecessor)						(Predecessor)
Interest cost		685			662			342			331
Service cost	$	192		$	183		$	100		$	94
Expected return on plan assets		(930	)		(878	)		(465	)		(439	)
Interest cost		733			685			365			342
Net amortization and deferral		215			174			104			87
Expected return on plan assets		(982	)		(930	)		(490	)		(465	)
Curtailment charge		369			—			369			—
Net amortization and deferral		—			215			—			104
Termination benefits		58			—			58			—
Curtailment charge		—			369			—			369
Net periodic pension cost	$	580		$	98		$	502		$	49
Termination benefits		—			58			—			58
Net periodic pension cost (benefit)	$	(57	)	$	580		$	(25	)	$	502

Argo-Tech expects to contribute $~~132~~1,030,000 to the hourly employee pension plan in ~~2005~~2006. As of April 30 29, ~~2005~~2006, no contributions have been made. In addition, the Company 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):

In addition, the Company 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):


	26 week		26 week		13 week		13 week
	period ended		period ended		period ended		period ended
	April 29, 2006		April 30, 2005		April 29, 2006		April 30, 2005
			(Predecessor)				(Predecessor)
Service cost	$	253	$	121	$	180	$	71
Interest cost		568		441		305		218
Net amortization and deferral		—		70		—		27

Net periodic postretirement benefit cost	$	821	$	632	$	485	$	316

	26 week		27 week		13 week		13 week
	period ended		period ended		period ended		period ended
	April 30, 2005		May 1, 2004		April 30, 2005		May 1, 2004
Service cost	$	121	$	93	$	71	$	43
Interest cost		441		455		218		213
Net amortization and deferral		70		88		27		23
Net periodic postretirement benefit cost	$	632	$	636	$	316	$	279

7.		CONTINGENCIES

		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

7. CONTINGENCIES

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.

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.

8. SEGMENT INFORMATION

Argo-Tech operates in two business segments: Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, and maintenance, repair and overhaul (MRO) 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 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’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 matters is not expected to materially affect Argo-Tech’s financial condition, results of operations or liquidity.

8.		SEGMENT INFORMATION

		Argo-Tech operates in two business segments: Aerospace and Industrial. The Aerospace segment includes the design, manufacture, distribution, and maintenance, repair and overhaul (MRO) 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 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. Corporate primarily includes expenses not specifically identified or charged to the operating business segments for measurement of operating performance. These expenses include, but are not limited to, certain depreciation, early retirement expenses, stock option compensation and stock appreciation rights expense.

		Argo-Tech evaluates the performance of its segments based primarily on operating profit before amortization of inventory fair value step-up, 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):

~~Argo-Tech~~13 ~~evaluates~~Week ~~the~~Period ~~performance~~Ended ~~of its segments based primarily on operating profit before amortization of deferred financing fees and other identified intangibles~~April 29, ~~interest expense,~~2006 ~~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	$	43,916	$	15,796	$	—		$	59,712

Operating profit (loss)		12,669		1,237		(285	)		13,621
Amortization of fair value inventory step-up									11,132
Amortization of intangible assets									2,956

Loss from operations									(467	)
Interest expense									5,954
Other, net									(34	)

Loss before income taxes								$	(6,387	)


Capital expenditures		312		186		—			498
Depreciation		511		320		262			1,093

13 Week Period Ended April 30, 2005

	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	38,189	$	14,018	$	—		$	52,207
Operating profit (loss)		9,115		1,471		(1,989	)		8,597
Amortization of intangible assets									853
Income from operations									7,744
Interest expense									6,293
Other, net									(49	)
Income before income taxes								$	1,500
Capital expenditures		676		354					1,030
Depreciation		502		297		92			891
Compensation expense recognized in connection with employee stock ownership plan		1,165		95					1,260

13 Week Period Ended May 1, 2004

	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

2613 Week Period Ended April 30, 2005 (Predecessor)


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	38,189	$	14,018	$	—		$	52,207

Operating profit (loss)		9,115		1,471		(1,989	)		8,597
Amortization of intangible assets									853

Income from operations									7,744
Interest expense									6,293
Other, net									(49	)

Income before income taxes								$	1,500


Capital expenditures		676		354		—			1,030
Depreciation		502		297		92			891
Compensation expense recognized in connection with employee stock ownership plan		1,165		95		—			1,260

26 Week Period Ended April 29, 2006


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	83,212	$	28,709	$	—		$	111,921

Operating profit (loss)		23,307		1,028		(549	)		23,786
Amortization of fair value inventory step-up									37,615
Amortization of intangible assets									5,913

Loss from operations									(19,742	)
Interest expense									11,874
Other, net									(20	)

Loss before income taxes								$	(31,596	)


Capital expenditures		546		273					819
Depreciation		1,019		655		512			2,186

26 Week Period Ended April 30, 2005 (Predecessor)


	Aerospace		Industrial		Corporate			Consolidated
Net revenues	$	74,623	$	24,978	$	—		$	99,601

Operating profit (loss)		19,099		2,587		(2,055	)		19,631
Amortization of intangible assets									1,707

Income from operations									17,924
Interest expense									12,570
Other, net									(25	)

Income before income taxes								$	5,379


Capital expenditures		1,109		662					1,771
Depreciation		993		586		183			1,762
Compensation expense recognized in connection with employee stock ownership plan		2,331		189					2,520

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

9. OTHER COMPREHENSIVE INCOME

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

	26 week		27 week		13 week			13 week
	period ended		period ended		period ended			period ended
	April 30, 2005		May 1, 2004		April 30, 2005			May 1, 2004
Net income	$	3,912	$	4,313	$	1,093		$	2,689
Other comprehensive income (loss):
Foreign currency translation adjustment		39		76		(21	)		(5	)
Other comprehensive income (loss) before tax		39		76		(21	)		(5	)
Income tax benefit related to other comprehensive income (loss)		—		—		—			—
Other comprehensive income (loss), net of tax		39		76		(21	)		(5	)
Comprehensive income	$	3,951	$	4,389	$	1,072		$	2,684

10.	NEW ACCOUNTING PRONOUNCEMENTS
	In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory Costs,” which is an amendment of Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing.” This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. The provisions of this statement become effective for the Company’s fiscal year beginning October 30, 2005. Management has not determined the impact, if any, that this statement will have on Argo-Tech’s consolidated financial statements.
	In December 2004, the FASB issued SFAS No. 123(R), “Share Based Payment,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company will adopt the provisions of this statement for the Company’s fiscal year beginning October 30, 2005 using the modified prospective method. Management believes the adoption of this statement will not have a material effect on Argo-Tech’s consolidated financial position or results of operations.
11.	RECENT EVENTS
	On March 1, 2005, the Company granted 45,200 Stock Appreciation Rights (“SARs”) to certain full-time employees of Argo-Tech and its subsidiaries. Our directors and executive officers do not participate in the plan. The total number of SARs which may be granted pursuant to the amended 2004 Stock Appreciation Rights Plan, which was approved by the Board of Directors on December 7, 2004, cannot exceed 50,000, except to the extent of certain authorized adjustments. The SARs vest 33-1/3% on the grant date and on each of the next two anniversary dates of the initial date (the date the value of the SAR is determined by the Board). Once vested and upon the earliest of: termination of employment for reasons other than cause, a change of control or ten years from the initial date, each SAR entitles the holder to a cash payment equal to the increase, if any, in the value of one share of AT Holdings Corporation common stock from the initial date to the date of payment. The granting of these SARs resulted in a non-cash compensation expense of $1.5 million in the 13 week and 26 week periods ended April 30, 2005.
	The Company made available to certain qualifying hourly employees a special early retirement window that ended on April 1, 2005, under which 7 employees elected to retire early and receive an additional benefit under the hourly employee pension plan. The additional benefit resulted in a non-cash compensation expense of $0.4 million in the 13 week and 26 week periods ended April 30, 2005.

9.		OTHER COMPREHENSIVE INCOME

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

ITEM 2.


	26 week			26 week		13 week			13 week
	period ended			period ended		period ended			period ended
	April 29, 2006			April 30, 2005		April 29, 2006			April 30, 2005
				(Predecessor)					(Predecessor)
Net income (loss)	$	(18,987	)	$	3,912	$	(4,127	)	$	1,093
Other comprehensive income (loss):
Foreign currency translation adjustment		(16	)		39		(9	)		(21	)

Other comprehensive income (loss) before tax		(16	)		39		(9	)		(21	)
Income tax benefit related to other comprehensive income (loss)		—			—		—			—

Other comprehensive income (loss), net of tax		(16	)		39		(9	)		(21	)

Comprehensive income (loss)	$	(19,003	)	$	3,951	$	(4,136	)	$	1,072

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

10.		NEW ACCOUNTING PRONOUNCEMENTS

		In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123(R), “Share Based Payment,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company will adopt the provisions of this statement for the Company’s fiscal year beginning October 29, 2006 using the modified prospective method. Management has not determined the effect the adoption of this statement will have on Argo-Tech’s consolidated financial position or results of operations.

		In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirements—an interpretation of SFAS No. 143” (“FIN 47”). FIN 47 clarifies that uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists to make a reasonable estimate of the fair value of the obligation. The provisions of this interpretation are effective for the Company’s fiscal year ending October 28, 2006. Management has not determined the impact, if any, that this interpretation will have on the Company’s consolidated financial statements.

~~Overview~~ ITEM 2.

Argo-Tech is a global designer, manufacturer and servicer of high performance fuel flow devices and systems. We operate in two business segments, Aerospace and Industrial. The Aerospace segment consists of aircraft engine fuel pumps and other engine products, commercial and military products and systems found on a planeMANAGEMENT’sS ~~airframe,~~DISCUSSION ~~and~~AND ~~aerial~~ANALYSIS ~~refueling~~OF ~~pumps~~FINANCIAL ~~and related~~CONDITION ~~equipment.~~AND ~~The~~RESULTS ~~Industrial~~OF segment includes ground fueling nozzles, hoses and other ground fueling components, an automated fuel management system, cryogenic pumps and nozzles and the operation of a business park in Cleveland, OhioOPERATIONS.

11 Overview

~~Table~~Argo-Tech is a global designer, manufacturer and servicer of ~~Contents~~high performance fuel flow devices and systems. We operate in two business segments, Aerospace and Industrial. The Aerospace segment consists of aircraft engine fuel pumps and other engine products, commercial and military products and systems found on a plane’s airframe, and aerial refueling pumps and related equipment. The Industrial segment includes ground fueling nozzles, hoses and other ground fueling components, an automated fuel management system, cryogenic pumps and nozzles and the operation of a business park in Cleveland, Ohio. The Corporate classification primarily includes expenses not specifically identified or charged to the operating business segments for measurement of operating performance. These expenses include,

~~The following is management’s discussion and analysis of certain significant factors which have~~11 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.

ExportTable Sales of Contents

~~Substantially~~but ~~all of our export sales~~ are ~~denominated~~not inlimited ~~U. S. dollars. Export sales for the 26 week period ended April 30, 2005 were $43.6 million. Sales~~ to ~~Europe were $24.3 million~~, ~~sales~~ tocertain ~~Pacific Rim countries were $14.5 million and sales to all other regions~~depreciation, ~~individually~~early ~~less~~retirement ~~than 10%~~expenses, ~~were~~and ~~$4.8 million~~compensation ~~for~~related ~~the~~to ~~26 week~~stock ~~period~~appreciation ~~ended~~rights ~~April 30, 2005~~(SARs).

~~Critical~~The ~~Accounting~~following ~~Policies~~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 consolidated financial statements. Management has included gross margin excluding the amortization of the step-up of inventory to fair market value, a non-GAAP financial measure, as a useful indicator of the Company’s performance as compared to the prior period. Argo-Tech’s fiscal year ends on the last Saturday of October and is identified according to the calendar year in which it ends.

~~Our~~Export consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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. 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. Sales

~~Revenue Recognition. Revenues are generally recognized when goods are shipped or services provided, 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. We have executed long-term supply agreements with certain~~ of our ~~original~~export ~~equipment~~sales ~~manufacture,~~are ~~or OEM,~~denominated ~~customers~~in U. ~~These agreements require Argo-Tech to supply all the amounts ordered by the customers during the term of the agreements (generally three to five years) at specified prices~~S. ~~Under certain of these agreements, we expect to incur losses~~dollars. ~~Provisions~~Export sales for ~~estimating~~ ~~losses on these contracts are made in~~ the 26 week period inended ~~which~~April 29, ~~such~~2006 ~~losses~~were ~~are identified based on cost and pricing information and estimated future shipment quantities provided by the customer~~$52.9 million. ~~The~~Sales ~~cumulative effect of revisions~~ to ~~estimated~~Europe ~~losses~~were ~~on contracts is recorded in the accounting period in which the amounts become known and can be reasonably estimated~~$22. ~~Such~~1 million, ~~revisions~~sales ~~could occur at any time there are changes~~ to ~~estimated~~Pacific ~~future~~Rim ~~revenues~~countries orwere ~~costs~~$18. ~~Revenue~~5 million from certain fixed price engineering contracts for which costs can be reliably estimated are recognized based on milestone billings. Variations in actual labor performance, changes to estimated profitability and ~~final~~sales ~~contract settlements may result in revisions~~ to ~~the~~ ~~cost~~all ~~estimates.~~other ~~Revisions~~regions, ~~in cost estimates as contracts progress have the effect of~~individually ~~increasing~~less orthan ~~decreasing~~10%, ~~profits~~were ~~in the period of revision~~$12.3 million ~~We record estimated reductions to revenue~~ for ~~volume-based incentives based on expected customer activity for~~ the ~~applicable period.~~26 week ~~Revisions for volume-based incentives are recorded in the accounting~~ period inended ~~which such~~April 29, ~~estimates can be reasonably determined~~2006.

~~Valuation~~Critical ofAccounting Accounts Receivable and Allowance for Doubtful Accounts. We evaluate the collectibility of our trade receivables based on a combination of factors. We regularly analyze our customer accounts, and 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 the 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. Policies

12Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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. 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. There have been no changes to our critical accounting policies as stated in our Annual Report on Form 10-K for the year ended October 29, 2005.

~~Table~~Fluctuations of ~~Contents~~Operating Results; Limitation of Quarterly Comparisons

~~Valuation~~Argo-Tech’s results of ~~Inventories.~~operations ~~Our~~are ~~inventory~~subject ~~purchases~~to ~~and~~fluctuations ~~commitments~~from ~~are~~quarter ~~made~~to inquarter ~~order~~due to ~~build~~ ~~inventory~~changes toin ~~meet~~demand ~~future~~for ~~shipment~~its ~~schedules~~products, ~~based~~changes onin ~~forecasted~~product ~~demand~~mix ~~for~~and ~~our~~other ~~products~~factors. Demand for its ~~Inventories~~products ~~are~~can ~~stated~~vary atfrom ~~the~~quarter ~~lower~~to ofquarter ~~cost~~due orto ~~market,~~changes ~~with~~in ~~cost~~demand ~~being~~for, ~~determined~~and ontiming ~~the~~of ~~first-in~~deliveries of, ~~first-out~~OEM, oraftermarket ~~FIFO,~~and ~~method.~~military ~~Periodically,~~products weand ~~perform~~services. aIn ~~detailed~~particular, ~~assessment~~the oftiming ~~inventory,~~of ~~which~~Argo-Tech’s ~~includes~~aftermarket asales ~~review~~tends ~~of,~~not ~~among~~to ~~other~~occur ~~factors,~~on ~~historical~~a ~~sales~~predictable ~~activity~~schedule and, ~~future~~furthermore, ~~demand~~the ~~requirements,~~sales ~~product~~tend ~~life~~to ~~cycle~~occur ~~and~~in ~~development~~large ~~plans~~quantities ~~and~~that ~~quality~~can ~~issues.~~significantly ~~Based~~impact onquarterly ~~this~~comparisons. ~~analysis~~Accordingly, ~~we record provisions for potentially obsolete or slow~~year-~~moving~~to-year ~~inventory~~and quarter-to ~~reflect~~-quarter ~~inventory~~comparisons atof ~~net~~quarterly ~~realizable~~results may ~~value.~~not ~~These~~be ~~provisions could vary significantly~~meaningful, ~~either favorably~~and orquarterly ~~unfavorably,~~results ~~from~~during ~~actual~~the ~~requirements~~year ~~based~~are ~~upon~~not ~~future~~necessarily ~~economic~~indicative ~~conditions,~~of ~~customer~~the ~~inventory~~results ~~levels~~that ormay ~~competitive~~be ~~factors~~expected ~~that~~for ~~were~~any ~~not~~future ~~foreseen,~~period or ~~did~~for ~~not exist, when~~ the ~~valuation~~entire ~~allowances were established~~year.

~~Valuation~~Results of ~~Goodwill~~Operations ~~and~~for ~~Intangible Assets. Goodwill and identified intangible assets are recorded at fair value on~~ the ~~date~~13 ofWeek ~~acquisition.~~Period ~~Intangible~~Ended ~~assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights~~April 29, or2006 ifCompared ~~the~~With 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~~13 ~~value of an~~Week ~~asset~~Period ~~may~~Ended 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 growthApril 30, ~~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.~~ 2005

~~Pensions~~Net ~~and~~revenues ~~post-retirement plan assumptions. We have two noncontributory defined benefit pension plans~~ for ~~qualifying~~the ~~hourly~~13 week ~~and~~period ~~salary~~ended ~~employees~~April 29, ~~and~~2006 aincreased ~~postretirement health care benefit plan for qualifying hourly retirees and their dependents~~$7.5 million, Weor ~~account for our defined benefit plans in accordance with SFAS No~~14. 874%, Noto $59.7 ~~106~~million ~~and No~~from $52.2 ~~132(R),~~million ~~which~~for ~~requires amounts recognized in~~ the ~~financial~~13 week ~~statements~~period toended beApril 30, ~~determined on an actuarial basis~~2005. WeThis ~~are required~~increase towas ~~make~~primarily ~~assumptions~~due ~~regarding~~to ~~such~~an ~~variables~~increase asin ~~the~~aerospace ~~expected~~revenues ~~long-term rate~~ of ~~return~~$5.7 million ~~on assets~~ and ~~the~~an ~~discount~~increase ~~rate,~~of ~~which are used to determine service cost and interest cost to arrive at~~$1.8 ~~pension~~million ~~income~~in orindustrial ~~expense~~revenues. ~~for~~The ~~the~~increase ~~year.~~in Weaerospace ~~are~~revenues ~~also~~was ~~required~~attributable to ~~make assumptions for the~~an ~~long-term~~increase ~~health~~of ~~care~~$4.2 million ~~cost~~of ~~trend~~commercial ~~rates~~aerospace ~~for~~revenues ~~our~~and ~~post-retirement benefit plan~~$1.5 million ~~The~~of ~~estimated~~military ~~cost~~revenues. ~~and~~Commercial ~~benefits~~OEM ofrevenues ~~the~~increased ~~noncontributory~~$1.7 million, ~~defined~~or ~~benefit~~24.6%, ~~pension~~to ~~plans~~$8.6 million and ~~the postretirement~~ ~~health~~commercial ~~care~~aftermarket ~~plan~~revenues ~~are~~increased ~~determined~~$2.5 million, byor ~~an independent actuary using various actuarial assumptions~~13.8%, ~~including,~~ ~~but not limited~~ to, ~~assumptions~~$20.6 million onin ~~demographic~~the ~~factors~~13 week ~~such~~period asended ~~retirement~~April 29, ~~mortality and turnover~~2006. WeCommercial ~~have~~OEM ~~analyzed~~revenues ~~the~~increased ~~rate~~primarily ofas ~~return~~a onresult ~~assets~~of an ~~used~~increase ~~and~~in ~~determined~~pump ~~that~~requirements ~~this~~from ~~rate~~our customers. isCommercial ~~reasonable~~aftermarket ~~based~~revenues onwere ~~the~~higher ~~plans’~~primarily ~~historical~~due ~~performance relative~~ to ~~the~~an ~~overall~~increase ~~markets.~~in ~~The~~maintenance, repair ~~discount~~and ~~rate~~overhaul, ~~assumption~~or isMRO, ~~consistent~~activities along with ~~prior~~a ~~years~~slight ~~and~~increase ~~is based on changes~~ in the ~~prevailing~~ ~~market~~demand ~~long-term~~for ~~interest~~spare ~~rates at the measurement date~~parts. Military Ifrevenues ~~any~~increased ofprimarily ~~our~~due ~~assumptions were~~ to ~~change,~~revenue ~~our~~related ~~benefit~~to ~~plan~~increased ~~expenses~~sales ~~would~~on ~~also~~a ~~change.~~variety ~~An increase/decrease in the~~of ~~discount~~OEM ~~rate,~~airframe ~~assuming~~components noand ~~other~~aftermarket ~~changes~~engine ~~in the estimates, reduces/increases the amount of the accumulated benefit obligation~~ and ~~the~~airframe ~~related~~components. ~~required~~The ~~expense~~$1.8 million increase in industrial

~~Fluctuations of Operating Results; Limitation of Quarterly Comparisons~~12

Argo-Tech’sTable results of 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. Contents

13revenues was primarily attributable to an increase of $2.8 million in cryogenic pump revenues and an increase of $2.5 million in commercial ground fueling revenues, partially offset by a decrease of $3.1 million in military ground fueling revenues and a decrease of $0.4 million in business park revenues related to a tenant not renewing a lease.

~~Table~~Aerospace gross profit for the 13 week period ended April 29, 2006 decreased $5.7 million, or 32.4%, to $11.8 million from $17.6 million in the 13 week period ended April 30, 2005. Gross margin decreased to 27.2% for the 13 week period ended April 29, 2006 from 46.0% in the 13 week period ended April 30, 2005. The decrease in gross profit and gross margin is primarily attributable to the amortization related to the step-up of ~~Contents~~inventory to fair market value. Gross profit was also impacted by the sales of higher margin commercial aerospace aftermarket products, an increase in sales of military products and a reduction of non-cash compensation expense associated with the ESOP benefit plan that was terminated in connection with the Merger, partially offset by an increase in compensation expense related to the company match for the 401(k) benefit plan. Excluding the $8.8 million amortization related to the step-up of inventory to fair market value, the aerospace gross margin for the 13 week period ended April 29, 2006 would have been 46.9%. Industrial gross profit for the 13 week period ended April 29, 2006 decreased $2.4 million, or 49.0%, to $2.5 million from $4.9 million in the 13 week period ended April 30, 2005. Gross margin decreased to 15.8% in the 13 week period ended April 29, 2006 from 34.9% in the 13 week period ended April 30, 2005. The decrease in gross profit and gross margin was primarily attributable to the amortization related to the step-up of inventory to fair market value. Gross profit was also negatively impacted by an increase in utility costs associated with the operation of our business park, partially offset by a decrease in manufacturing costs on cryogenic pump products. Excluding the $2.3 million amortization related to the step-up of inventory to fair market value, the industrial gross margin for the 13 week period ended April 29, 2006 would have been 30.4%.

~~Results~~Operating ofexpenses ~~Operations~~were $14.6 million for each of the 13 week ~~Week~~periods ~~Period~~ended ~~Ended~~April 29, 2006 and April 30, 2005. ~~Compared~~Selling, ~~With~~general and administrative expenses decreased $1.5 million primarily as a result of the 13non-recurrence ~~Week~~of non-cash compensation expenses associated with a stock ~~Period~~appreciation ~~Ended~~rights ~~May 1~~plan, ~~2004~~the ESOP benefit plan and an early retirement program for hourly employees, partially offset by an increase in compensation expense related to the company match for the 401(k) benefit plan. The stock appreciation rights plan and hourly early retirement expenses in fiscal 2005 were recorded in our Corporate business segment. Research and development expenses decreased $0.6 million and the non-cash amortization of intangible assets increased $2.1 million as a result of the Merger. Operating expenses as a percent of revenues decreased to 24.5% for the 13 week period ended April 29, 2006 as compared to 28.0% for the 13 week period ended April 30, 2005.

~~Net~~Income ~~revenues~~(loss) from operations for the 13 week period ended April 3029, ~~2005~~2006 ~~increased~~decreased $4.8 ~~million, or 10~~.~~1%, to $52.~~2 ~~million from $47.4 million for the 13 week period ended May 1, 2004. This increase was~~ ~~primarily due to an increase in aerospace revenues of $3.1~~ million ~~and an increase of $1.7 million in industrial revenues. The increase in aerospace revenues was attributable~~ to ~~an increase~~a ofloss ~~$2.7 million~~ of ~~commercial aerospace revenues and~~ $0.~~4 million of military revenues. Commercial OEM revenues increased $0.6 million, or 9.~~5~~%, to $6.9~~ million ~~and commercial~~from ~~aftermarket revenues increased~~ $27.17 million, ~~or 13.1%, to $18.1 million~~ in the 13 week period ended April 30, 2005. The ~~Commercial~~decrease ~~OEM~~in ~~revenues~~income ~~increased~~is primarily asattributable ato ~~result~~the ~~of an~~amortization ~~increase~~related into ~~pump~~the ~~requirements~~step-up ~~from our customers. Commercial aftermarket revenues were~~of ~~higher~~inventory ~~primarily~~to ~~due~~fair tomarket value, an increase in ~~maintenance,~~utility ~~repair~~costs ~~and~~associated ~~overhaul,~~with orthe ~~MRO,~~operation ~~activities~~of ~~along~~our ~~with~~business apark ~~slight~~and an increase in the ~~demand~~non-cash ~~for~~amortization ~~spare parts. Military revenues increased primarily due to revenue related to increased sales on a variety~~ of ~~OEM~~additional ~~and~~intangible ~~aftermarket~~assets, ~~airframe~~partially ~~components~~ offset by a decrease in ~~revenues~~manufacturing ~~related~~costs ~~to airframe components~~ on ~~various OEM~~cryogenic ~~development~~pump ~~programs~~products, asa ~~more of these products moved from development into production.~~net ~~The~~favorable ~~$1.7 million~~change ~~increase~~ in ~~industrial~~compensation ~~revenues~~expense ~~was~~associated ~~primarily~~with ~~attributable~~our tobenefit anplans ~~increase~~and a decrease in ~~cryogenic~~research ~~pump~~and ~~revenues~~development expenses.

~~Aerospace~~Interest ~~gross~~expense ~~profit~~ for the 13 week period ended April 3029, ~~2005~~2006 ~~increased~~decreased $1.0.4 million, or 6.03%, to $175.69 million from $~~16.~~6.3 million in the 13 week period ended May 1, 2004. The increase in gross profit is primarily attributable to the increase in higher margin commercial aerospace aftermarket revenues partially offset by an increase in non-cash compensation expense associated with the ESOP. Aerospace gross margin decreased to 46.0% for the 13 week period ended April 30, 2005 ~~from 47.4% in the 13 week period ended May 1, 2004~~ primarily asdue ~~a result~~to ofthe ~~an increase in~~ non-cash ~~compensation~~purchase ~~expense~~accounting ~~associated~~amortization ~~with~~of the ~~ESOP.~~write-up ~~Industrial~~on ~~gross profit for~~ the ~~13 week period ended April 30, 2005 increased~~ $0250.80 million, orof ~~19.5%, to $4.~~9-1/4% ~~million~~senior ~~from~~notes ~~$4.1 million~~issued in ~~the 13~~June ~~week period ended May 1,~~ 2004. ~~Industrial~~required ~~gross~~as ~~margin increased~~a toresult ~~34.9%~~of in the ~~13 week~~Merger ~~period~~and ~~ended~~a ~~April 30,~~reduction ~~2005 from 33.3%~~ in the amortization ~~13 week~~of ~~period ended~~loan ~~May 1~~commitment fees, ~~2004.~~partially ~~The~~offset by an increase in ~~gross~~the ~~profit~~principal amount and ~~gross~~interest ~~margin~~rates ~~was~~on ~~primarily~~our ~~attributable to~~term anloans ~~increase in revenues,~~ and ainterest ~~decrease~~on inour ~~manufacturing~~revolver ~~costs,~~borrowing ~~for~~during ~~our~~the ~~cryogenic pump products~~period.

~~Operating~~The ~~expenses~~income ~~for~~tax ~~the~~benefit ~~13 week~~was ~~period ended April 30, 2005 increased~~ $32.13 million, ~~or 27.0%,~~for ~~to $14.6 million from $11.5 million in~~ the 13 week period ended ~~May~~April 129, ~~2004.~~2006 ~~This increase~~as ~~is primarily attributable~~ compared to ana ~~increase~~provision of $~~2.7 million in selling, general and administrative expenses and $~~0.54 million in research and development expenses. The increase in selling, general and administrative expense is primarily related to an increase in non-cash compensation expenses associated with our stock appreciation rights plan, the ESOP and an early retirement program for hourly employees. The stock appreciation rights plan and hourly early retirement expenses were recorded in our Corporate business segment. 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 28.0% for the 13 week period ended April 30, 2005. asThis ~~compared~~is primarily due to ~~24.3% for~~ the ~~13 week~~pre-tax ~~period ended May 1, 2004~~loss.

~~Income from operations for the~~ 13 ~~week period ended April 30, 2005 decreased $1.5 million, or~~ 16.3%, to $7.7 million from $9.2 million in the 13 week period ended May 1, 2004. As a percent of revenues, income from operations for the 13 week period ended April 30, 2005 decreased to 14.8% from 19.4% for the 13 week period ended May 1, 2004. These decreases were primarily due to the increase in non-cash compensation expenses associated with our stock appreciation rights plan, the ESOP and an early retirement program for hourly employees and an increase in research and development expenses partially offset by increased sales of higher margin commercial aerospace aftermarket revenues, the increase in cryogenic pump revenues and a decrease in manufacturing costs for our cryogenic pump products.

InterestTable expenseof for the 13 week period ended April 30, 2005 increased $1.2 million, or 23.5%, to $6.3 million from $5.1 million in the 13 week period ended May 1, 2004 primarily due to the increase in Contents

14Net income for the 13 week period ended April 29, 2006 decreased $5.2 million to a loss of $4.1 million from income of $1.1 million for the 13 week period ended April 30, 2005, primarily due to the revenue and expense factors discussed above.

~~Table~~Results of ~~Contents~~Operations for the 26 Week Period Ended April 29, 2006 Compared With the 26 Week Period Ended April 30, 2005

~~interest~~Net ~~expense~~revenues onfor the 26 week period ended April 29, 2006 increased $~~250~~12.03 million, ofor 12.3%, to $111.9 million from $99.256 million for the 26 week period ended April 30, 2005. This increase was primarily due to an increase in aerospace revenues of $8.6 million and an increase of $3.7 million in industrial revenues. The increase in aerospace revenues was attributable to an increase of $8.4 million of commercial aerospace revenues and an increase of $0.2 million in military revenues. Commercial OEM revenues increased $4.4 million, or 34.9%, ~~senior~~to ~~notes~~$17.0 million and ~~issued~~commercial aftermarket revenues increased $4.0 million, or 12.2%, to $40.1 million in ~~June~~the 26 ~~2004~~week period ended April 29, ~~which~~2006. ~~was~~Commercial OEM revenues increased primarily as a result of an increase in pump requirements from our customers. Commercial aftermarket revenues increased primarily due to an increase in MRO services along with an increase in demand for spare parts. Military revenues increased slightly primarily due to an increase in revenues related to OEM airframe development programs and OEM and aftermarket main engine fuel pump revenues, partially offset by ~~lower~~a ~~outstanding~~decrease ~~borrowings~~in ~~under~~OEM ~~our~~airframe ~~credit~~components. ~~facility~~The $3.7 million increase in industrial revenues was primarily attributable to a $4.4 million increase in cryogenic pump revenues, partially offset by a $0.7 million decrease in business park revenues.

~~The~~Aerospace ~~income~~gross ~~tax~~profit ~~provision~~for ~~was~~the 26 week period ended April 29, 2006 decreased $27.1 million, or 79.5%, to $7.0 million from $34.41 million ~~for~~in the 1326 week period ended April 30, 2005. asGross ~~compared~~margin decreased to $18.4 ~~million~~% for the 1326 week period ended ~~May~~April 129, ~~2004~~2006 from 45.7% ~~This~~in the 26 week period ended April 30, 2005. The decrease in gross profit and gross margin is primarily ~~due~~attributable to athe ~~decrease~~amortization inrelated ~~pre~~to the step-~~tax~~up ~~income~~of inventory to fair market value. Gross profit was also impacted by the sales of higher margin commercial aerospace aftermarket products and a ~~lower~~reduction ~~estimated~~of ~~effective~~non-cash ~~tax~~compensation ~~rate~~expense associated with the ESOP benefit plan that was terminated in connection with the ~~current~~Merger, partially offset by an increase in ~~year~~compensation expense related to the company match for the 401(k) benefit plan. Excluding the $31.1 million amortization related to the step-up of inventory to fair market value, the aerospace gross margin for the 26 week period ended April 29, 2006 would have been 45.8%. Industrial gross profit for the 26 week period ended April 29, 2006 decreased $7.3 million, or 81.1%, to $1.7 million from $9.0 million in the 26 week period ended April 30, 2005. Gross margin decreased to 5.9% in the 26 week period ended April 29, 2006 from 36.0% in the 26 week period ended April 30, 2005. The decrease in gross profit and gross margin was primarily attributable to the amortization related to the step-up of inventory to fair market value. Gross profit was also negatively impacted by an increase in manufacturing costs on cryogenic pump products and an increase in utility costs associated with the operation of our business park. Excluding the $6.5 million amortization related to the step-up of inventory to fair market value, the industrial gross margin for the 26 week period ended April 29, 2006 would have been 28.6%.

~~Net~~Operating ~~income~~expenses for the 1326 week period ended April 3029, ~~2005~~2006 ~~decreased~~increased $12.69 million, or 11.6%, to $127.19 million from $225.70 million ~~for~~in the 1326 week period ended ~~May~~April 130, ~~2004,~~2005. This increase is primarily due to a $4.2 million increase in the ~~revenue~~non-cash amortization of intangible assets as a result of the Merger, partially offset by a $0.9 million decrease in selling, general and administrative expenses and $0.4 million in research and development expenses. The reduction in selling, general and administrative expenses is primarily as a result of the non-recurrence of non-cash compensation expenses associated with a stock appreciation rights plan, the ESOP benefit plan and an early retirement program for hourly employees, partially offset by an increase in compensation and marketing expenses and compensation expense ~~factors~~related ~~discussed~~to ~~above~~the company match for the 401(k) benefit plan. The stock appreciation rights plan and hourly early retirement expenses in fiscal 2005 were recorded in our Corporate business segment. Operating expenses as a percent of revenues decreased to 24.9% for the 26 week period ended April 29, 2006 as compared to 25.1% for the 26 week period ended April 30, 2005.

~~Results of Operations for the 26 Week Period Ended April 30, 2005 Compared With the 27 Week~~14 ~~Period Ended May 1, 2004~~

NetTable revenues for the 26 week period ended April 30, 2005 increased $7.8 million, or 8.5%, to $99.6 million from $91.8 million for the 27 week period ended May 1, 2004. This increase was primarily due to an increase in aerospace revenues of $8.7 million offset by a decrease of $0.9 million in industrial revenues. The increase in aerospace revenues was attributable to an increase of $8.9 million of commercial aerospace revenues and a decrease of $0.2 million in military revenues. Commercial OEM revenues increased $1.6 million, or 14.5%, to $12.6 million and commercial aftermarket revenues increased $7.3 million, or 25.3%, to $36.1 million in the 26 week period ended April 30, 2005. Commercial OEM revenues increased primarily as a result of an increase in pump requirements from our customers. Commercial aftermarket revenues increased primarily due to an increase in MRO services along with an increase in demand for spare parts. Military revenues decreased primarily due to a reduction in revenues related to OEM airframe development programs, partially offset by an increase in OEM and aftermarket main engine fuel pump revenues and OEM airframe components, as more of the airframe components moved from development into production. The $0.9 million decrease in industrial revenues was primarily attributable to a decrease in cryogenic pump and business park revenues, offset by a slight increase in ground fueling revenues. Contents

~~Aerospace~~Income ~~gross~~(loss) from ~~profit~~operations for the 26 week period ended April 3029, ~~2005~~2006 ~~increased~~decreased $337.6 million, ~~or 11.8%,~~ to a loss of $3419.17 million from income of $3017.59 million in the 2726 week period ended ~~May~~ April 130, ~~2004~~2005. The ~~increase~~ decrease in ~~gross~~income ~~profit~~ is primarily attributable to anthe ~~increase~~amortization inrelated to ~~sales~~the step-up of ~~higher~~inventory ~~margin commercial~~to ~~aerospace~~fair ~~aftermarket~~market ~~products~~value, ~~partially~~an ~~offset by a slight~~ increase in ~~manufacturing~~ utility costs ~~and non-cash compensation expense~~ associated with ~~the ESOP. Aerospace~~ ~~gross margin decreased to 45.7% for~~ the ~~26 week~~operation ~~period~~of ~~ended~~our ~~April 30,~~business ~~2005 from 46.3% in the 27 week period ended May 1~~park, ~~2004 primarily as a result of~~ an increase in ~~manufacturing~~the ~~costs and~~ non-cash ~~compensation~~amortization ~~expense~~of ~~associated~~additional intangible ~~with~~assets ~~the~~and ~~ESOP partially offset by~~ an increase in ~~sales~~ ofmanufacturing ~~higher~~costs ~~margin~~on ~~commercial~~cryogenic ~~aerospace~~pump ~~aftermarket~~ products~~. Industrial gross profit for the 26 week period ended April 30~~, ~~2005 increased $1.1 million, or 13.9%, to $9.0 million from~~partially ~~$7.9 million~~offset inby ~~the~~a ~~27 week~~net ~~period~~favorable ~~ended~~change ~~May 1, 2004. Industrial gross margin increased to 36.0%~~ in ~~the~~compensation ~~26 week~~expense ~~period~~associated ~~ended~~with ~~April 30,~~our ~~2005~~benefit ~~from~~plans ~~30.5% in the 27 week period ended May 1, 2004. The increase in gross profit~~ and ~~gross margin is primarily attributable to improved~~ ~~margins, and~~ a decrease in ~~manufacturing~~research ~~costs,~~and ~~for~~development ~~our cryogenic pump products~~expenses.

~~Operating~~Interest ~~expenses~~expense for the 26 week period ended April 3029, ~~2005~~2006 ~~increased~~decreased $30.67 million, or 16 5.86%, to $2511.09 million from $2112.46 million in the 2726 week period ended ~~May~~April 130, ~~2004.~~2005 ~~This increase is~~ primarily due to the annon-cash ~~increase~~purchase inaccounting ~~selling,~~amortization ~~general and administrative expenses~~ of ~~$2.8 million~~ ~~and~~the ~~research~~write-up ~~and~~on ~~development~~the ~~expenses of~~ $0250.80 million. ~~The~~of ~~increase in selling,~~9-1/4% ~~general~~senior ~~and~~notes ~~administrative~~issued ~~expense is primarily related to an increase~~ in ~~non-cash~~June 2004 ~~compensation expenses~~required ~~associated~~as ~~with~~a ~~our~~result ~~stock~~of ~~appreciation rights plan,~~ the ~~ESOP~~Merger and ana ~~early~~reduction ~~retirement program~~in ~~for hourly employees. The stock appreciation rights plan and hourly early retirement~~the ~~expenses~~amortization ~~were~~of ~~recorded~~loan incommitment ~~our~~fees, ~~Corporate~~partially ~~business~~offset ~~segment.~~by ~~The~~an increase in ~~research~~the ~~and development~~principal ~~expenses is due to a decrease in customer paid development expenses. Operating~~amount ~~expenses~~and asinterest arates ~~percent~~on ofour ~~revenues~~term ~~increased~~loans toand ~~25.1%~~interest ~~for~~on ~~the~~our ~~26 week~~revolver ~~period ended April 30, 2005 as compared to 23~~borrowing.~~3% for the 27 week period ended May 1, 2004.~~

15The income tax benefit was $12.6 million for the 26 week period ended April 29, 2006 as compared to a provision of $1.5 million for the 26 week period ended April 30, 2005. This is primarily due to the pre-tax loss.

~~Table~~Net income for the 26 week period ended April 29, 2006 decreased $22.9 million to a loss of $19.0 million ~~Contents~~from income of $3.9 million for the 26 week period ended April 30, 2005 primarily due to the revenue and expense factors discussed above.

~~Income~~Liquidity ~~from~~and ~~operations~~Capital for the 26 week period ended April 30, 2005 increased $1.0 million, or 5.9%, to $17.9 million from $16.9 million in the 27 week period ended May 1, 2004. As a percent of revenues, income from operations for the 26 week period ended April 30, 2005 decreased to 18.0% from 18.4% for the 27 week period ended May 1, 2004. The increase in income was primarily due to the increased sales Resources

ofArgo-Tech ~~higher~~is ~~margin~~a ~~commercial~~holding ~~aerospace~~company ~~aftermarket~~that ~~revenues~~receives ~~and~~all ~~improved~~of ~~margins~~its ~~and~~operating ~~reduced manufacturing~~income ~~costs~~from onits ~~cryogenic~~subsidiaries. As ~~pump~~a ~~products~~result, ~~partially offset by the increase in non~~Argo-~~cash compensation~~Tech’s ~~expenses~~primary ~~associated~~source ~~with~~of ~~our~~liquidity ~~stock~~for ~~appreciation~~conducting ~~rights~~business ~~plan,~~activities ~~the ESOP~~ and ~~an early~~ ~~retirement~~servicing ~~program~~its ~~for~~indebtedness ~~our~~has ~~hourly~~been ~~employees,~~cash ~~and~~flows anfrom ~~increase~~operating ~~in research and development expenses~~activities.

~~Interest~~Cash ~~expense~~and cash equivalents for the 26 week period ended April 3029, ~~2005~~2006 ~~increased~~decreased $210.13 million~~, or 20.0%,~~ to $123.6 million ~~from~~primarily as a result of a use of $106.57 million infor ~~the~~operating ~~27 week~~activities, ~~period~~$0.8 million ~~ended~~for ~~May~~investing activities and $2.8 1,million ~~2004~~used in financing activities. The cash used in operating activities was primarily due to ~~the~~ an increase in ~~interest~~inventory, ~~expense~~receivables onand ~~the~~prepaid expenses ~~$250.0 million~~in support of 9our manufacturing activities and a reduction in accrued and other liabilities for payments in connection with the Merger.~~25%~~ ~~senior~~The ~~notes~~cash ~~issued~~used in ~~June~~financing activities ~~2004~~was primarily due to intercompany activity with our Parent, ~~which~~a ~~was~~dividend ~~partially~~to ~~offset~~AT byHoldings ~~lower~~for ~~outstanding~~the development ~~borrowings~~of ~~under~~a ~~our~~proprietary ~~credit~~asset ~~facility.~~tracking technology and the scheduled repayment of our term loan.

~~The~~Capital ~~income~~expenditures ~~tax provision was $1.5 million~~ for the 26 week period ended April 3029, ~~2005~~2006 ~~as compared~~totaled $0.8 million compared to $2.1.8 million for the 2726 week period ended ~~May~~April 130, ~~2004~~2005. ~~This~~Argo-Tech ~~decrease~~expects isto ~~primarily~~incur ~~due~~capital toexpenditures aof ~~decrease~~approximately in$4.7 million ~~pre-tax~~for ~~income~~the ~~and~~remainder aof ~~lower~~fiscal ~~estimated~~year ~~effective~~2006 relating ~~tax~~to ~~rate~~the incontinued ~~the~~maintenance of facilities, equipment and systems to support current ~~year~~operating activities.

~~Net~~Long-term ~~income~~debt ~~for~~at April 29, 2006 consisted of $18.7 million principal amount of our term loan and $250.0 million of senior notes (excluding the $9.1 million fair value adjustment associated with purchase accounting). Scheduled payments of $0.4 million were made on the term loan in the 26 week period ended April 3029, ~~2005~~2006. ~~decreased~~Our amended and restated senior credit facility provides for a $040.40 million torevolving credit facility and a $319.91 million term loan facility. ~~from~~At April 29, 2006, Argo-Tech has available $429.31 million ~~for~~revolving ~~the~~credit ~~27 week~~facility, ~~period~~after ~~ended~~$10.9 million ~~May~~in letters of credit. As of April 129, ~~2004~~2006, ~~primarily~~there ~~due~~were tono ~~the~~outstanding ~~revenue~~borrowings ~~and~~on ~~expense~~the ~~factors~~revolving ~~discussed~~credit ~~above~~facility. The credit facility contains no restrictions on the ability of Argo-Tech’s subsidiaries to make distributions to Argo-Tech.

~~Liquidity and Capital Resources~~15

Argo-TechTable 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. Contents

~~Cash~~Our ~~and~~expected ~~cash~~future ~~equivalents~~contractual ~~for~~cash ~~the~~obligations ~~26 week period ended April 30, 2005 decreased $9.2 million to $6.6 million. This was primarily due to an increase in inventory, receivables~~ and ~~prepaid expenses~~other incommercial ~~support~~commitments offor ~~our manufacturing activities, capital expenditures,~~ the ~~purchase of AT~~next ~~Holdings~~several ~~stock~~fiscal ~~from former ESOP participants~~years, aas ~~dividend to AT Holdings for the development~~ of a ~~proprietary~~April 29, ~~asset tracking technology and the scheduled repayment of our term loan~~2006, ~~partially offset~~are byas anfollows ~~increase~~ (in ~~operating income and an increase in accrued and other liabilities for the accrual of interest on our $250.0 million of 9.25% senior notes and the liability associated with stock appreciation rights.~~ millions):

Capital expenditures for the 26 week period ended April 30, 2005 totaled $1.8 million compared to $0.7 million for the 27 week period ended May 1, 2004. Argo-Tech expects to incur capital expenditures of approximately $2.7 million for the remainder of fiscal year 2005 relating to the continued maintenance of facilities, equipment and systems to support current operating activities.


											2011 and
	2006 (1)		2007		2008		2009		2010		Thereafter		Total
Term loan facility	$	0.4	$	0.8	$	3.6	$	14.0	$	—	$	—	$	18.8

9-1/4% senior notes												250.0		250.0
Operating leases		0.2		0.2		0.1		0.1						0.6
Other long-term obligations (2)		12.3		26.1		26.2		25.6		25.0		37.4		152.6

Total contractual cash obligations	$	12.9	$	27.1	$	29.9	$	39.7	$	25.0	$	287.4	$	422.0

Long-term debt at April 30, 2005 consisted of $14.4 million principal amount of our term loan and $250.0 million of senior notes. Scheduled payments of $0.4 million were made on the term loan in the 26 week period ended April 30, 2005. Our amended and restated senior credit facility provides for a $30.0 million five-year revolving credit facility and a $15.0 million five-year term loan facility. At April 30, 2005, Argo-Tech has available, after $6.8 million in letters of credit, a $23.2 million revolving credit facility. As of April 30, 2005, 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.


(1)		– Contractual obligations for the remainder of fiscal 2006.

(2)		– Represents interest payments on the senior notes and the term loans, estimated funding for retirement and other post-employment benefits and other long-term commitments.

16We 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 we will be able to refinance any of our 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.

~~Table~~Certain ofFactors ~~Contents~~That May Affect Future Results

~~Our~~From ~~expected~~time ~~future~~to ~~contractual~~time, ~~cash~~information ~~obligations~~provided by Argo-Tech, statements by its employees or information included in its filings with the Securities and ~~other~~Exchange ~~commercial~~Commission ~~commitments~~(including those ~~for~~portions of the ~~next~~Management’s Discussion and Analysis that refer to the future) may ~~several~~contain ~~fiscal~~forward-looking ~~years,~~statements asthat are not historical facts. Those statements are “forward-looking” within the meaning of ~~April 30~~the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, ~~2005~~and Argo-Tech’s future performance, operating results, financial position and liquidity, are assubject ~~follows~~to ~~(in~~a ~~millions):~~variety of factors that could materially affect results. Some, but not necessarily all, of these factors include:

											2010 and
	2005 (1)		2006		2007		2008		2009		Thereafter		Total
Term loan facility	$	0.4	$	0.7	$	0.7	$	6.7	$	6.0	$	—	$	14.5
9-1/4% senior notes												250.0		250.0
Operating leases		0.3		0.3		0.2		0.1						0.9
Other long-term obligations (2)		11.7		23.7		24.4		23.5		23.2		46.2		152.7
Total contractual cash obligations	$	12.4	$	24.7	$	25.3	$	30.3	$	29.2	$	296.2	$	418.1

	•		changes and/or cyclicality in the aerospace industry;

	•		governmental regulation and oversight in the aerospace industry;

	•		levels of competition in the aerospace industry;

	•		the impact of terrorism and war on airline travel and the airline industry;

	•		our ability to meet future capital requirements;

	•		loss of a significant customer;

	•		risks associated with fixed-price contracts;

	•		costs associated with product liability and warranty claims;

(1)	–	Contractual obligations for the remainder of fiscal 2005.
(2)	–	Represents interest payments on the senior notes and estimated funding for retirement and other post-employment benefits. Interest on the term loan facility is excluded as it is not fixed and determinable.

WeTable 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 we will be able to refinance any of our 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. Contents

~~Certain~~• ~~Factors~~risks ~~That~~associated ~~May~~with ~~Affect~~our ~~Future~~international ~~Results~~ operations; • changes in environmental or other applicable governmental regulations; • reduction in military and/or defense spending and risks associated with government contracts; • changes in our relationship with our employees; • availability of essential materials used in our products; • risks associated with protection of our intellectual property rights; • the other factors described in Argo-Tech’s annual report on Form 10-K for the year ended October 29, 2005; and • other unforeseen circumstances.

~~From~~ITEM 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 facts3. 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:

•QUANTITATIVE ~~changes~~AND ~~and/or~~QUALITATIVE ~~cyclicality~~DISCLOSURE inABOUT ~~the~~MARKET aerospace industry; • governmental regulation and oversight in the aerospace industry; • levels of competition in the aerospace industry; • the impact of terrorism and war on airline travel and the airline industry; • our ability to meet future capital requirements; • loss of a significant customer; • risks associated with fixed-price contracts; • costs associated with product liability and warranty claims;RISK

17In 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 April 29, 2006, Argo-Tech had fixed rate debt totaling $250.0 million at 9.25% and variable rate debt under its existing credit facility of $18.7 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 adjusted EBITDA. The variable rate is not to exceed ABR plus 1.25% or LIBOR plus 2.75%. 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.

~~Table~~ITEM ~~of Contents~~4.

•CONTROLS ~~risks~~AND associated with our international operations; • changes in environmental or other applicable governmental regulations; • reduction in military and/or defense spending and risks associated with government contracts; • changes in our relationship with our employees; • availability of essential materials used in our products; • risks associated with protection of our intellectual property rights; • the other factors described in Argo-Tech’s annual report on Form 10-K for the year ended October 30, 2004; and • other unforeseen circumstances.PROCEDURES

~~ITEM~~(a) Evaluation 3of disclosure controls and procedures. The management of Argo-Tech, including its Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of Argo-Tech’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of April 29, 2006. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Argo-Tech’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by Argo-Tech in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.

~~QUANTITATIVE~~(b) Changes ~~AND~~in ~~QUALITATIVE~~internal ~~DISCLOSURE~~controls. ~~ABOUT~~There ~~MARKET~~were ~~RISK~~no changes in Argo-Tech’s internal control over financial reporting or in other factors during the quarter ended April 29, 2006 that have materially affected, or are reasonably likely to materially affect, Argo-Tech’s internal control over financial reporting.

In(c) Section 404 ~~the ordinary course~~ of ~~operations,~~the ~~Argo~~Sarbanes-~~Tech’s~~Oxley ~~major~~Act ~~market~~requires ~~risk~~management ~~exposure is~~ to ~~changing interest~~report ~~rates~~on, ~~primarily with respect to its long-term debt obligations. At April 30, 2005, Argo-Tech had fixed rate debt totaling $250.0 million at 9.25%~~ and ~~variable rate debt under~~ its ~~existing~~independent ~~credit~~auditors ~~facility~~to ofattest ~~$14.4 million~~to, ~~calculated at~~ Argo-Tech’s ~~choice~~internal ~~using~~control anover ~~alternate~~financial reporting ~~base~~in ~~rate~~its ~~(ABR) or~~annual ~~LIBOR~~report, ~~plus~~beginning awith ~~supplemental percentage determined by~~ the ~~ratio~~annual ofreport ~~debt~~for ~~to adjusted EBITDA. The variable rate is not to exceed ABR plus 1.25% or LIBOR plus 2.75%.~~ Argo-Tech’s ~~currently~~fiscal ~~has~~year ~~no derivative contracts and does not enter into derivative contracts~~ending ~~for~~October 27, ~~trading or speculative purposes~~2007. ~~A 10% fluctuation in interest rates would not materially affect~~ Argo-Tech’s ~~financial~~is ~~condition, results of operations or cash flows.~~ actively

~~ITEM 4.~~17

CONTROLSTable ANDof PROCEDURES Contents

~~(a) Evaluation~~continuing ~~of disclosure controls and procedures. The management of Argo-Tech, including~~ its ~~Chief~~ongoing ~~Executive~~internal ~~Officer~~process ~~and the Chief Financial Officer, has evaluated the effectiveness~~ of ~~Argo-Tech’s disclosure controls and procedures (as defined in Rules~~ ~~13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of April 30~~documenting, ~~2005. Based~~testing ~~on this evaluation, the Chief Executive Officer~~ and ~~Chief~~evaluating ~~Financial Officer concluded that Argo-Tech’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by Argo-Tech in~~ the ~~reports that~~effectiveness ~~it files or submits under the Securities Exchange Act~~ of ~~1934~~its isinternal ~~recorded,~~control ~~processed,~~over ~~summarized~~financial ~~and~~reporting ~~reported~~utilizing ~~within~~outside ~~the time periods specified by the Securities and Exchange Commission’s rules and forms~~assistance.

~~(b) Changes~~PART inII ~~internal~~— ~~controls.~~OTHER There were no changes in Argo-Tech’s internal control over financial reporting or in other factors during the quarter ended April 30, 2005 that have materially affected, or are reasonably likely to materially affect, Argo-Tech’s internal control over financial reporting. INFORMATION

~~(c)~~Item ~~Section 404~~6 of— the Sarbanes-Oxley Act requires management to report on, and its independent auditors to attest to, Argo-Tech’s internal control over financial reporting in its annual report, beginning with the annual report for Argo-Tech’s fiscal year ending October 28, 2006. Argo-Tech is actively continuing its ongoing internal process of documenting, testing and evaluating the effectiveness of its internal control over financial reporting utilizing outside assistance. Exhibits

(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.

~~Table of Contents~~18

PARTTable IIof — OTHER INFORMATION Contents

~~Item 6 — Exhibits~~SIGNATURE

~~(a)~~Pursuant ~~Exhibit 31.1 – Certification by Chief Executive Officer pursuant~~ to ~~Section~~the ~~302~~requirements of the ~~Sarbanes-Oxley~~Securities Exchange Act of ~~2002.~~1934, ~~(b) Exhibit 31.2 – Certification by Chief Financial Officer pursuant to Section 302 of~~ the ~~Sarbanes-Oxley~~registrant ~~Act~~has ofduly caused ~~2002.~~this ~~(c)~~report ~~Exhibit 32 – Certification Pursuant~~ to 18be ~~U.S.C.~~signed ~~Section~~on ~~1350,~~its asbehalf ~~adopted~~by ~~pursuant to Section 906 of~~ the ~~Sarbanes-Oxley~~undersigned, ~~Act~~thereunto ofduly ~~2002~~authorized.



Date: June 13, 2006	ARGO-TECH CORPORATION

	By:	/s/ John S. Glover

		John S. Glover
		Vice President and Chief Financial Officer
		(Duly Authorized Officer)

	By:	/s/ Paul A. Sklad

		Paul A. Sklad
		Controller
		(Principal Accounting Officer)

~~Table of Contents~~19

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: June 9, 2005 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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