##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|   |  |                                                                                    
|-- |  | -----------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES ACT OF 1934    
|  
|   |  | For the fiscal year ended October 29, 2005                                         
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES ACT OF 1934
|  
|   |  | For the transition period
    from           to          .                         

Commission file number:
333-38223


ARGO-TECH CORPORATION


(Exact name of registrant as specified in its charter)


|                                                                                 |  |                                         
|-------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                         |  | 31-1521125                              
|(State or Other Jurisdiction of
    Incorporation or Organization)               |  | (I.R.S. Employer
    Identification No.)
|                                                                                
|23555 Euclid Avenue,
    Cleveland, Ohio(Address of Principal Executive Offices) |  | 44117(Zip Code)                         

Registrants telephone number, including area code:


(216) 692-6000


Securities registered pursuant to Section 12(b) of the
Act: None


Securities registered pursuant to Section 12(g) of the
Act: None


o þ


þ o


þ o


Regulation S-K Form 10-K Form 10-K. þ


o o þ


Rule 12b-2 o þ




DOCUMENTS INCORPORATED BY REFERENCE


None










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##### 










INDEX TO ANNUAL REPORT ON
FORM 10-K


Table of Contents


|                                                            |  |                                                                                                    |  |      |    | 
|----------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                            |  |                                                                                                    |  | Page |   
|                                                            |  |                                                                                                    |  |      |   
|PART I:                                                    
|Item 1.                                                     |  | Business                                                                                           |  |      | 1  | 
|Item 1A.                                                    |  | Risk Factors                                                                                       |  |      | 8  | 
|Item 1B.                                                    |  | Unresolved Staff Comments                                                                          |  |      | 15 | 
|Item 2.                                                     |  | Properties                                                                                         |  |      | 15 | 
|Item 3.                                                     |  | Legal Proceedings                                                                                  |  |      | 16 | 
|Item 4.                                                     |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 16 | 
|                                                           
|PART II:                                                   
|Item 5.                                                     |  | Market for Registrants Common Equity,
    Related Stockholder                                     |  |      | 16 | 
|                                                            |  | Matters and Issuer Purchases of Equity Securities                                                  |  |      |    | 
|Item 6.                                                     |  | Selected Financial Data                                                                            |  |      | 16 | 
|Item 7.                                                     |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations          |  |      | 19 | 
|Item 7A.                                                    |  | Quantitative and Qualitative Disclosures
    About Market Risk                                     |  |      | 32 | 
|Item 8.                                                     |  | Financial Statements and Supplementary
    Data                                                    |  |      | 32 | 
|Item 9.                                                     |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure           |  |      | 32 | 
|Item 9A.                                                    |  | Controls and Procedures                                                                            |  |      | 32 | 
|                                                           
|PART III:                                                  
|Item 10.                                                    |  | Directors and Executive Officers of the
    Registrant                                             |  |      | 34 | 
|Item 11.                                                    |  | Executive Compensation                                                                             |  |      | 35 | 
|Item 12.                                                    |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |  |      | 46 | 
|Item 13.                                                    |  | Certain Relationships and Related
    Transactions                                                 |  |      | 47 | 
|Item 14.                                                    |  | Principal Accountant Fees and Services                                                             |  |      | 49 | 
|                                                           
|PART IV:                                                   
|Item 15.                                                    |  | Exhibits and Financial Statement
    Schedules                                                     |  |      | 50 | 
|Exhibit 2.1 Agreement and Plan of Merger                   
|Exhibit 2.2 First Amendment to Agreement and Plan of Merger
|Exhibit 4.2 First Supplemental Indenture                   
|Exhibit 10.6 Employment Agreement of Michael S. Lipscomb   
|Exhibit 10.7 Employment Agreement of Paul R. Keen          
|Exhibit 10.9 Rabbi Trust Amendment                         
|Exhibit 10.16 Fourth Amend/Employee Stock/Trust Agreement  
|Exhibit 10.17 Fifth Amend/Employee Stock/Trust Agreement   
|Exhibit 10.20 Second Amend/Employee Stock/Excess Benefits  
|Exhibit 10.30 Fourth Amended and Restated Credit Agreement 
|Exhibit 10.42 Form of Professional Services Agreement      
|Exhibit 10.47 Form of Unit Grant                           
|Exhibit 10.48 Form of Amendment and Waiver                 
|Exhibit 10.49 Form of Change of Control Agreement          
|Exhibit 10.50 Non Solicitation and Conidentiality Agreement
|Exhibit 12.1 Computation of Ratio of Earnings              
|Exhibit 24.1 Powers of Attorney                            
|Exhibit 31.1 Certification of Chairman, President and CEO  
|Exhibit 31.2 Certification of Vice President and CEO       
|Exhibit 32 Certification of CEO and CFO                    





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##### Table of Contents



ARGO-TECH CORPORATION





PART I







|        |          
|------- | ---------
|Item 1. | Business.



(216) 692-6000.


Recent Developments










| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we entered into an amended and restated credit facility (the
    Amended Credit Facility), which became effective
    upon the completion of the Merger and provides for aggregate
    borrowings by us of up to approximately $59.1 million,
    comprised of:



| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | senior secured term loans of approximately $19.1 million,
    consisting of the term loans outstanding ($14.1 million) on
    the effective date of the Amended Credit Facility plus an
    additional $5.0 million term loan extended on such
    effective date; and
|
| |  | loans under a senior secured revolving credit facility in an
    aggregate principal amount not to exceed $40.0 million.                                                                                                                                              



| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Holdings privately placed $67 million in aggregate
    principal amount at maturity ($42.6 million gross proceeds)
    of its
    113/4% senior
    discount notes due 2012;
|
| |  | we obtained the consents from holders of our
    91/4% senior
    notes to                                                                                                  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | amend the indenture governing our
    91/4% senior
    notes to (i) modify the covenant in the indenture that
    limits Restricted Payments (as defined in the indenture) to
    permit us to make distributions of up to $5.0 million to
    Holdings in connection with the Merger and (ii) modify the
    covenant in the indenture relating to financial reporting
    obligations to provide that if Holdings executes and delivers an
    unconditional guarantee to us and the trustee with respect to
    all obligations and liabilities under

1



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| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | the indenture, then the financial reports and other information
    required by that covenant may be provided by Holdings; and                                                                                                                                                 
|
| |  | waive our obligation under the change of control covenant of the
    indenture governing our
    91/4% senior
    notes to make a Change of Control Offer (as defined in such
    indenture) as a result of the ownership by the Sponsors of
    Holdings following the Merger.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Sponsors made an equity investment of approximately
    $108.8 million in VGAT;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | certain members of our management contributed an aggregate of
    41,760 shares of Holdings common stock to VGAT in exchange
    for Class A Units of VGAT;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | certain members of our management rolled over certain of their
    options to purchase Holdings common stock so that those options
    remained outstanding as options to purchase Class A Units
    of VGAT following completion of the Merger;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | unaffiliated third parties made an equity investment of
    approximately $2.4 million in VGAT;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Holdings entered into separate professional services agreements
    with each of the Sponsors pursuant to which the Sponsors will
    provide strategic financial planning, advisory and consulting
    services to Holdings in exchange for an annual fee of $375,000
    to each Sponsor. In addition, in connection with the Sponsors
    arranging equity and debt financing for the Merger, they
    received a one-time transaction fee at the closing of the Merger
    of approximately $5.4 million in the aggregate (with
    approximately $2.7 million being paid to each Sponsor). See
    Item 13. Certain Relationships and Related
    Transactions  Professional Services Agreements
    for a description of this agreement;        
|
| |  | the Sponsors, the unaffiliated third parties investing in VGAT
    and the members of management who contributed Holdings common
    stock to VGAT in exchange for Class A Units of VGAT and/or
    held options to purchase Class A Units of VGAT following
    the Merger entered into a securityholders agreement related to
    their ownership interests in VGAT, including voting agreements
    regarding representation on the management committee of VGAT,
    restrictions on transfer of units of VGAT and rights to
    participate in transfers by others, and customary registration
    rights. See Item 13. Certain Relationships and
    Related Transactions  Securityholders
    Agreements for a description of these agreements;
|
| |  | Michael S. Lipscomb, our Chairman, President, Chief Executive
    Officer and Director, and Paul R. Keen, our Executive Vice
    President, General Counsel and Secretary, entered into new
    employment agreements. These employment agreements replaced all
    existing employment, stay pay and severance agreements that
    Mr. Lipscomb and Mr. Keen previously had in place and
    govern any post-Merger severance payments Mr. Lipscomb or
    Mr. Keen are entitled to receive. See Item 11.
    Executive Compensation  Employment Arrangements
    Following the Merger for a description of the new
    employment agreements;                                                                                                       
|
| |  | Frances S. St. Clair, our former Executive Vice President
    and Chief Financial Officer, resigned effective upon completion
    of the Merger and entered into a non-solicitation and
    confidentiality agreement with VGAT, which provides for a
    two-year period in which she cannot solicit any employee,
    customer, supplier or other specified individual, cannot
    disclose any confidential information as defined in the
    non-solicitation and confidentiality agreement and assigns to us
    intellectual property created during her employment;                                                                                                                                                                               
|
| |  | Holdings redeemed all outstanding shares of its Series B
    Convertible Redeemable Preferred Stock; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

2



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| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the warrant held by J.P. Morgan Partners (SBIC), LLC, to
    purchase 46,025 shares of Holdings common stock was
    cancelled in exchange for a portion of the merger consideration.



Aerospace segment




30-year


Industrial segment






Products




| |          
| | ---------
| | Aerospace

Main Engine Fuel Pumps.


Boeing 747-8


CF34-8 ERJ-170, CF34-10


3



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##### Table of Contents



Airframe Products.


Aerial Refueling Systems.




| |           
| | ----------
| | Industrial

Ground Fueling Products. -


Cryogenic Products.


Aftermarket sales




Customers




| |          
| | ---------
| | Aerospace





| |           
| | ----------
| | Industrial



4



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Sales and Marketing








Suppliers and Raw Materials








Manufacturing, Repair and Overhaul






| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | a 150 acre business park in Cleveland, Ohio;                      
|
| |  | a 9.2 acre facility in Costa Mesa, California;                    
|
| |  | an 85,000 square foot facility in Tucson, Arizona;                
|
| |  | a 6,000 square foot facility in Inglewood,
    California; and    
|
| |  | a 3,500 square foot facility in
    Henley-on-Thames,
    England.

5



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Henley-on






Henley-on






Intellectual Property




Government Regulations




6



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Competition




Backlog


period-to


Development Expense Trends




Employees




Environmental Matters




7



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| |   |                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | costs associated with third party environmental claims relating
    to environmental conditions arising from activities conducted by
    TRW during its operation of its Power Accessories Division that
    have not been conducted by us after our purchase of the assets
    of the division in 1986; and                                                                                
|
| |  | until October 19, 2006, a portion of the costs associated
    with third party environmental claims arising from activities
    conducted by both TRW and us, the portion of the costs to be
    paid by each party being determined based on the length of time
    each party conducted the activity giving rise to the claim.
    After that date, we are responsible for all such costs.










|         |              
|-------- | -------------
|Item 1A. | Risk Factors.



8



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| |                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our sales and earnings are dependent on conditions in the
    airline industry, and a significant or prolonged downturn in the
    airline industry or a future terrorist attack would decrease the
    airline industrys demand for our products and reduce our
    sales.







| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The aerospace industry is subject to significant
    government regulation and oversight and failure to comply with
    these regulations could increase the cost of operating our
    business.





| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We compete with a number of established companies,
    virtually all of which have significantly greater financial,
    technological and marketing resources than we do. We may not be
    able to compete effectively with these companies, which could
    adversely affect our business and financial condition.



9



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| |                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to meet future capital requirements or to
    continue our research and development activities, or recoup some
    of our capital and research and development expenditures, our
    competitive position may suffer.







| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There are a limited number of customers for certain
    products, and the loss of a significant customer would reduce
    demand for our products and reduce our sales and cash
    flows.







| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | We have fixed-price contracts with some of our customers,
    and we bear the risk of costs in excess of our estimates.



10



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| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A significant portion of our sales is, and is expected to
    continue to be, from government contracts that are subject to
    reductions in defense spending, government regulation and risks
    particular to government contracts. The termination of any of
    our government contracts would reduce demand for our products
    and reduce our sales.





| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | suspend us from receiving new contracts pending resolution of
    alleged violations of procurement laws or regulations;
|
| |  | terminate existing contracts, with or without cause, at any time;                                                       
|
| |  | reduce the value of existing contracts;                                                                                 
|
| |  | audit our contract-related costs and fees, including allocated
    indirect costs; and                                  
|
| |  | control or potentially prohibit the export of our products,
    technology or other data.                               





| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | A large and growing portion of our revenue is derived from
    international sources, which exposes us to additional
    uncertainty.





| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | governmental embargoes or foreign trade restrictions on
    anti-dumping duties;                  
|
| |  | changes in U.S. and foreign governmental regulations;                                             
|
| |  | tariffs;                                                                                          
|
| |  | other trade barriers;                                                                             
|
| |  | the potential for nationalization of enterprises;                                                 
|
| |  | economic downturns;                                                                               
|
| |  | inflation;                                                                                        
|
| |  | environmental laws and regulations;                                                               
|
| |  | political, economic and social instability; and                                                   
|
| |  | difficulties in receivable collections and dependence on foreign
    personnel and foreign unions.

11



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| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our level of indebtedness could adversely affect our
    ability to raise additional capital to fund our operations,
    limit our ability to react to changes in the economy or our
    industry.

1 4




| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | it may limit our ability to obtain additional debt or equity
    financing for working capital, capital expenditures, product
    development, debt service requirements, acquisitions and general
    corporate or other purposes;                  
|
| |  | a substantial portion of our cash flows from operations will be
    dedicated to payments on our indebtedness and will not be
    available for other purposes, including our operations, capital
    expenditures and future business opportunities;
|
| |  | the debt service requirements of our indebtedness could make it
    more difficult for us to satisfy our financial obligations,
    including those related to the notes;                                                                            
|
| |  | certain of our borrowings, including borrowings under the credit
    facility, are, and are expected to continue to be, at variable
    rates of interest, exposing us to the risk of increased interest
    rates;                                  
|
| |  | it may limit our ability to adjust to changing market conditions
    and place us at a competitive disadvantage compared to our
    competitors that have less debt; and                                                                             
|
| |  | it may increase our vulnerability to a downturn in general
    economic conditions or in our business, and may make us unable
    to carry out capital spending and research and development
    activities that are important to our growth.        



| |                                                 
| | ------------------------------------------------
| | Two majority holders control our parent company.







| |                                                                    
| | -------------------------------------------------------------------
| | We depend on the skill and experience of our senior
    management.



12



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| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our operations depend on maintaining a skilled work force
    and any interruption in the work force at our facilities or
    those of OEMs and their suppliers could have a material adverse
    effect on our results of operations and financial
    condition.









| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Our business and profitability is affected by the price
    and continuity of supply of certain necessary raw materials and
    component parts.

CPM-10V,




| |                                                                            
| | ---------------------------------------------------------------------------
| | We depend on our Cleveland, Ohio and Costa Mesa,
    California facilities.

day-to




| |                                                                     
| | --------------------------------------------------------------------
| | We have potential exposure resulting from environmental
    matters.



13



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| |                                                                       
| | ----------------------------------------------------------------------
| | We have a potential risk of product liability and warranty
    claims.









| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be unable to identify attractive acquisition
    candidates, successfully integrate our acquired operations or
    realize the intended benefits of our acquisitions.

1 4


14



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| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | We have only a limited ability to protect our intellectual
    property rights, which are important to our success.





| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | Our inability to lease space in our Cleveland, Ohio
    business park would adversely affect our results of operations
    and cash flows.








|         |                           
|-------- | --------------------------
|Item 1B. | Unresolved Staff Comments.








|        |            
|------- | -----------
|Item 2. | Properties.

150-acre


9.2-acre




15



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Henley-on







|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.








|        |                                                     
|------- | ----------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders.






PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities.



1 4









|        |                         
|------- | ------------------------
|Item 6. | Selected Financial Data.

53-week 52-week




16



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|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |   |         |   |  |   |         |  
|------------------------------------------ | ---------------------------------------------------------------------------- | ---------------------- | - | ----------- | ----------- |  | ----------- | ----------- | - | ----------- | ----------- | ------- | ----------- | ----------- | - | ------- | - |  | - | ------- | -
|                                           |                                                                              | Fiscal Year Ended      |  
|                                           |                                                                              |                        |  
|                                           |                                                                              |                        |   | Predecessor |             |  | Predecessor |             |   | Predecessor |             |         | Predecessor |            
|                                           |                                                                              | October 29,            |   |             | October 30, |  |             | October 25, |   |             | October 26, |         |             | October 27, |  
|                                           |                                                                              | 2005                   |   |             | 2004        |  |             | 2003        |   |             | 2002        |         |             | 2001        |  
|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |  
|                                           |                                                                              | (Dollars in thousands) |  
|Operating results                          |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |   |         |   |  |   |        
|                                           | Net revenues                                                                 |                        | $ | 212,595     |             |  | $           | 187,328     |   |             | $           | 160,726 |             |             | $ | 155,303 |   |  | $ | 173,208 |  
|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |  
|                                           | Gross profit                                                                 |                        |   | 87,740      |             |  |             | 78,125      |   |             |             | 66,191  |             |             |   | 66,634  |   |  |   | 79,033  |  
|                                           | Selling, general and administrative                                          |                        |   | 35,514      |             |  |             | 31,166      |   |             |             | 26,417  |             |             |   | 23,359  |   |  |   | 23,094  |  
|                                           | Research and development                                                     |                        |   | 12,814      |             |  |             | 11,934      |   |             |             | 9,525   |             |             |   | 11,722  |   |  |   | 10,265  |  
|                                           | Amortization of intangibles                                                  |                        |   | 3,414       |             |  |             | 3,414       |   |             |             | 3,414   |             |             |   | 3,721   |   |  |   | 7,515   |  
|                                           | Merger expense                                                               |                        |   | 24,473      |             |  |             |            |   |             |             |        |             |             |   |        |   |  |   |        |  
|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |  
|                                           | Income from operations                                                       |                        |   | 11,525      |             |  |             | 31,611      |   |             |             | 26,835  |             |             |   | 27,832  |   |  |   | 38,159  |  
|                                           | Interest expense                                                             |                        |   | 25,601      |             |  |             | 22,705      |   |             |             | 21,257  |             |             |   | 21,434  |   |  |   | 24,534  |  
|                                           | Debt extinguishment expense                                                  |                        |   |            |             |  |             | 12,961      |   |             |             |        |             |             |   |        |   |  |   |        |  
|                                           | Other, net                                                                   |                        |   | (109        | )           |  |             | (95         | ) |             |             | (529    | )           |             |   | (97     | ) |  |   | (51     | )
|                                           | Income tax provision (benefit)                                               |                        |   | (7,768      | )           |  |             | (3,499      | ) |             |             | 1,579   |             |             |   | 569     |   |  |   | 2,876   |  
|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |  
|                                           | Net income (loss)                                                            |                        | $ | (6,199      | )           |  | $           | (461        | ) |             | $           | 4,528   |             |             | $ | 5,926   |   |  | $ | 10,800  |  
|                                           |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |  
|Balance sheet data
    (at end of period): |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |   |         |   |  |   |        
|                                           | Cash and cash equivalents                                                    |                        | $ | 13,889      |             |  | $           | 15,857      |   |             | $           | 14,057  |             |             | $ | 17,769  |   |  | $ | 8,057   |  
|                                           | Total assets                                                                 |                        |   | 588,506     |             |  |             | 254,262     |   |             |             | 255,797 |             |             |   | 260,333 |   |  |   | 273,574 |  
|                                           | Working capital                                                              |                        |   | 73,324      |             |  |             | 41,963      |   |             |             | 34,934  |             |             |   | 33,352  |   |  |   | 35,904  |  
|                                           | Total debt                                                                   |                        |   | 269,062     |             |  |             | 264,813     |   |             |             | 219,349 |             |             |   | 235,045 |   |  |   | 253,380 |  
|                                           | Debt fair market value adjustment(1)                                         |                        |   | 10,000      |             |  |             |            |   |             |             |        |             |             |   |        |   |  |   |        |  
|                                           | Redeemable ESOP stock, net(2)                                                |                        |   |            |             |  |             | 40,957      |   |             |             | 14,612  |             |             |   | 8,835   |   |  |   | 13,994  |  
|                                           | Stockholders equity/(deficiency)(3)                                         |                        |   | 160,796     |             |  |             | (110,976    | ) |             |             | (29,928 | )           |             |   | (31,633 | ) |  |   | (42,119 | )
|Other data:                                |                                                                              |                        |   |             |             |  |             |             |   |             |             |         |             |             |   |         |   |  |   |        
|                                           | Adjusted EBITDA(4)                                                           |                        | $ | 51,567      |             |  | $           | 44,893      |   |             | $           | 36,867  |             |             | $ | 38,447  |   |  | $ | 54,066  |  
|                                           | Adjusted EBITDA margin(5)                                                    |                        |   | 24.3        | %           |  |             | 24.0        | % |             |             | 22.9    | %           |             |   | 24.8    | % |  |   | 31.2    | %
|                                           | Net cash flows provided by operating activities                              |                        | $ | 193         |             |  | $           | 33,230      |   |             | $           | 15,673  |             |             | $ | 30,724  |   |  | $ | 18,063  |  
|                                           | Net cash flows used in investing activities                                  |                        |   | (4,376      | )           |  |             | (3,056      | ) |             |             | (1,939  | )           |             |   | (1,785  | ) |  |   | (1,885  | )
|                                           | Net cash flows provided by (used in) financing activities                    |                        |   | 2,215       |             |  |             | (28,374     | ) |             |             | (17,446 | )           |             |   | (19,227 | ) |  |   | (13,295 | )
|                                           | Depreciation and amortization of intangibles and deferred
    financing fees |                        |   | 8,224       |             |  |             | 9,175       |   |             |             | 10,053  |             |             |   | 10,387  |   |  |   | 15,214  |  
|                                           | Capital expenditures                                                         |                        |   | 4,376       |             |  |             | 3,056       |   |             |             | 1,939   |             |             |   | 1,785   |   |  |   | 1,885   |  
|                                           | Ratio of earnings to fixed charges(6)                                        |                        |   |            |             |  |             |            |   |             |             | 1.3     | x           |             |   | 1.3     | x |  |   | 1.6     | x






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the estimated amount to adjust the $250,000,000 of
    the
    91/4% senior
    notes to fair market value as of the closing date of the Merger,
    which will be amortized over the remaining life of the
    91/4% senior
    notes. The unamortized amount of the fair market value
    adjustment has been added to the principal amount of the
    91/4% senior
    notes for presentation in our financial statements.

17



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Redeemable ESOP Stock has been excluded from stockholders
    equity/(deficiency) due to the ability of holders of the ESOP
    Stock to put, subject to certain restrictions, the
    shares of ESOP Stock to Argo-Tech at the most recent valuation
    of our independent consulting firm. As a result of the Merger
    this requirement no longer exists.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Includes a dividend of $57.6 million to Holdings made in
    the third quarter of fiscal 2004 from the proceeds of our
    91/4% senior
    notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | EBITDA is net income plus interest, taxes,
    depreciation and amortization. Adjusted EBITDA is
    defined as EBITDA further adjusted to exclude ESOP compensation
    expense, amortization of purchase accounting, non-cash
    compensation/benefit cost, debt extinguishment expense, non-cash
    compensation expense related to granting of SARs on
    March 1, 2005, non-recurring Merger expense and a fixed
    asset write-off. EBITDA and Adjusted EBITDA do not represent,
    and should not be considered as alternatives to, net income or
    cash flows provided by operating activities, as determined by
    Generally Accepted Accounting Principles (GAAP), and
    our calculations thereof may not be comparable to that reported
    by other companies. EBITDA and Adjusted EBITDA are included in
    this report because they are a basis upon which we assess our
    liquidity position and because certain covenants in our
    borrowing arrangements are tied to similar measures. We also
    believe that it is widely accepted that EBITDA and Adjusted
    EBITDA provide useful information regarding a companys
    ability to service and/or incur indebtedness. This belief is
    based on our negotiations with our lenders who have indicated
    that the amount of indebtedness we will be permitted to incur
    will be based, in part, on our EBITDA and our Adjusted EBITDA.
    EBITDA and Adjusted EBITDA do not take into account our working
    capital requirements, debt service requirements, tax payments,
    capital expenditures and other commitments and, accordingly, are
    not necessarily indicative of amounts that may be available for
    discretionary use. We believe that inclusion of supplementary
    adjustments to EBITDA applied in presenting Adjusted EBITDA are
    appropriate to provide additional information to investors.

|                      |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |        |        |  |   |        |        | 
|--------------------- | -------------------------------------- | ---------------------- | ------ | ----------- | ----------- | - | ----------- | ----------- | - | ----------- | ----------- | ------ | ----------- | ----------- | ------ | ------ |  | - | ------ | ------ | 
|                      |                                        | Fiscal Year Ended      |       
|                      |                                        |                        |       
|                      |                                        |                        |        | Predecessor |             |   | Predecessor |             |   | Predecessor |             |        | Predecessor |            
|                      |                                        | October 29,            |        |             | October 30, |   |             | October 25, |   |             | October 26, |        |             | October 27, |       
|                      |                                        | 2005                   |        |             | 2004        |   |             | 2003        |   |             | 2002        |        |             | 2001        |       
|                      |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |       
|                      |                                        | (Dollars in thousands) |       
|Net income (loss)     |                                        | $                      | (6,199 | )           |             | $ | (461        | )           |   | $           | 4,528       |        |             | $           | 5,926  |        |  | $ | 10,800 |       
|Add:                  |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |        |        |  |   |        |       
|                      | Depreciation and amortization          |                        |        | 7,069       |             |   |             | 7,213       |   |             |             | 7,601  |             |             |        | 8,329  |  |   |        | 13,074 | 
|                      | Interest expense(a)                    |                        |        | 25,601      |             |   |             | 22,705      |   |             |             | 21,257 |             |             |        | 21,434 |  |   |        | 24,534 | 
|                      | Income tax provision (benefit)         |                        |        | (7,768      | )           |   |             | (3,499      | ) |             |             | 1,579  |             |             |        | 569    |  |   |        | 2,876  | 
|                      |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |       
|EBITDA                |                                        | $                      | 18,703 |             |             | $ | 25,958      |             |   | $           | 34,965      |        |             | $           | 36,258 |        |  | $ | 51,284 |       
|Add:                  |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |        |        |  |   |        |       
|                      | ESOP compensation expense(b)           |                        |        | 5,040       |             |   |             | 4,851       |   |             |             | 1,874  |             |             |        | 1,344  |  |   |        | 2,091  | 
|                      | Amortization of purchase accounting(c) |                        |        |            |             |   |             |            |   |             |             | 28     |             |             |        | 259    |  |   |        | 4      | 
|                      | Non-cash compensation/benefit cost(d)  |                        |        | 3,351       |             |   |             | 1,123       |   |             |             |       |             |             |        | 586    |  |   |        | 526    | 
|                      | Debt extinguishment expense(e)         |                        |        |            |             |   |             | 12,961      |   |             |             |       |             |             |        |       |  |   |        |       | 
|                      | Merger expense(f)                      |                        |        | 24,473      |             |   |             |             |   |             |             |        |             |             |        |        |  |   |        |        | 
|Fixed asset write-off |                                        |                        |       |             |             |   |            |             |   |             |            |        |             |             |       |        |  |   | 161    |       
|                      |                                        |                        |        |             |             |   |             |             |   |             |             |        |             |             |       
|Adjusted EBITDA       |                                        | $                      | 51,567 |             |             | $ | 44,893      |             |   | $           | 36,867      |        |             | $           | 38,447 |        |  | $ | 54,066 |       






|    |  |                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Interest expense includes the amortization of deferred financing
    fees.                                                                                                                                                                                                                                                        
|   
|(b) |  | Represents the value of the shares committed to be released by
    the ESOP trustee under the ESOPs provisions for allocation
    to participants and recognized as a non-cash compensation
    expense, excluding ESOP compensation expense of $3,413 recorded
    in connection with the Merger and included in Merger expense.

18



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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  | Represents the incremental depreciation relating to plant and
    equipment written up to its fair market value under purchase
    accounting applied to the acquisition of Argo-Tech Corporation
    Costa Mesa (formerly J.C. Carter Company, Inc.). Such
    amortization is included in cost of sales.                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(d) |  | In fiscal year 2001, this represents the non-cash expense
    related to the remeasurement of the stock option plans whose
    expiration date was extended. In fiscal year 2002, this
    represents the non-cash expense related to a salary early
    retirement program. In fiscal year 2004, this represents the
    non-cash compensation expense related to our ESOP Excess Benefit
    Plan. In fiscal year 2005, this represents $404 of non-cash
    compensation expense related to our ESOP Excess Benefit Plan,
    $2,521 of non-cash compensation expense related to the granting
    of SARs and $426 of non-cash expense related to the hourly
    employee early retirement program.
|   
|(e) |  | Represents the write-off of deferred financing fees associated
    with the refinancing of our
    85/8% senior
    subordinated notes and the amendment and restatement of our
    credit agreement in June 2004, amounts paid for the tender,
    consent and redemption of our senior subordinated notes and the
    recognition of the remaining accretion on a portion of our
    senior subordinated notes that were issued at a discount.                                                                                                                                                                                                                                                      
|   
|(f) |  | Represents non-recurring expense associated with the Merger
    consisting of stock compensation cost, ESOP Excess Benefit Plan
    cost, and severance and stay payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



|                                          |                                            |                        |     |             |             |   |             |             |   |             |             |         |             |             |        |         |   |   |        |         |  
|----------------------------------------- | ------------------------------------------ | ---------------------- | --- | ----------- | ----------- | - | ----------- | ----------- | - | ----------- | ----------- | ------- | ----------- | ----------- | ------ | ------- | - | - | ------ | ------- | -
|                                          |                                            |                        |     | Predecessor |             |   | Predecessor |             |   | Predecessor |             |         | Predecessor |            
|                                          |                                            | October 29,            |     |             | October 30, |   |             | October 25, |   |             | October 26, |         |             | October 27, |       
|                                          |                                            | 2005                   |     |             | 2004        |   |             | 2003        |   |             | 2002        |         |             | 2001        |       
|                                          |                                            |                        |     |             |             |   |             |             |   |             |             |         |             |             |       
|                                          |                                            | (Dollars in thousands) |    
|                                          | Adjusted EBITDA                            |                        | $   | 51,567      |             |   |             | 44,893      |   |             |             | 36,867  |             |             |        | 38,447  |   |   |        | 54,066  |  
|                                          | Change in operating assets and liabilities |                        |     | (6,376      | )           |   |             | 8,424       |   |             |             | (590    | )           |             |        | 14,973  |   |   |        | (6,559  | )
|                                          | Interest expense                           |                        |     | (25,601     | )           |   |             | (22,705     | ) |             |             | (21,257 | )           |             |        | (21,434 | ) |   |        | (24,534 | )
|                                          | Merger expense                             |                        |     | (24,473     | )           |   |             |             |   |             |             |         |             |             |        |         |   |   |        |         |  
|                                          | Income tax benefit (provision)             |                        |     | 7,768       |             |   |             | 3,499       |   |             |             | (1,579  | )           |             |        | (569    | ) |   |        | (2,876  | )
|                                          | All other adjustments                      |                        |     | (2,692      | )           |   |             | (881        | ) |             |             | 2,232   |             |             |        | (693    | ) |   |        | (2,034  | )
|                                          |                                            |                        |     |             |             |   |             |             |   |             |             |         |             |             |       
|Net cash provided by operating activities |                                            | $                      | 193 |             |             | $ | 33,230      |             |   | $           | 15,673      |         |             | $           | 30,724 |         |   | $ | 18,063 |        
|                                          |                                            |                        |     |             |             |   |             |             |   |             |             |         |             |             |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Adjusted EBITDA margin is computed as Adjusted EBITDA as a
    percentage of net revenues.                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(6) | For purposes of determining the ratio of earnings available to
    cover fixed charges, earnings consist of income before taxes
    plus fixed charges. Fixed charges consist of interest on
    indebtedness including amortization of deferred financing fees
    and fixed loan guarantee fees. No ratio is presented for the
    fiscal years ended October 29, 2005 and October 30,
    2004 as the earnings for those periods were $13,967,000 and
    $3,960,000 less than the fixed charges, respectively.






|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.

The following discussion of financial condition and results
of operations should be read together with Selected
Financial Data, Argo-Techs consolidated financial
statements and the notes to those statements and other financial
information included elsewhere in this report. Is this section
references to Argo-Tech, the Company,
we, us, or our are to
Argo-Tech Corporation, together with its subsidiaries.
References to Holdings are to AT Holdings
Corporation, which holds all of the outstanding capital stock of
Argo-Tech. The Merger closed on October 28, 2005. Any
operating results or cash flow information presented herein is
considered Predecessor financial information.
Balance sheet information as of October 30, 2004 and
October 25, 2003 is also considered Predecessor
financial information. The balance sheet information as of
October 29, 2005 reflects a new basis of accounting
incorporating the fair value adjustments made in recording the
Merger while prior periods are presented using the historical
cost basis of the Company. This report contains forward-looking
statements that involve risks and uncertainties. Our actual
results may differ materially from those indicated in the
forward-looking statements. See Risk Factors in Item 1A for
more information regarding forward-looking statements.


19



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Overview






30-year






Recent Developments




| |       
| | ------
| | Merger



20



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1 4


in-the 3 4 3 4




21



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|                                    |                               |   |         |         | 
|----------------------------------- | ----------------------------- | - | ------- | ------- | 
|Assets:                             |                               |   |         |        
|                                    | Current assets                |   | $       | 130,491 | 
|                                    | Property, plant and equipment |   |         | 41,970  | 
|                                    | Goodwill                      |   |         | 200,152 | 
|                                    | Intangible assets             |   |         | 214,440 | 
|                                    | Other assets                  |   |         | 2       | 
|                                    |                               |   |        
|                                    | Total assets                  |   | $       | 587,055 | 
|                                    |                               |   |        
|Liabilities:                        |                               |   |         |        
|                                    | Current liabilities           |   | $       | 56,313  | 
|                                    | Long-term debt                |   |         | 264,063 | 
|                                    | Other noncurrent liabilities  |   |         | 92,230  | 
|                                    |                               |   |        
|                                    | Total liabilities             |   |         | 412,606 | 
|                                    |                               |   |        
|Purchase price allocated to Company |                               | $ | 174,449 |        
|                                    |                               |   |        



|                     |  |             |         |   |             |   |         |  
|-------------------- |  | ----------- | ------- | - | ----------- | - | ------- | -
|                     |  | Year ended  |         |   | Year ended  |  
|                     |  | October 29, |         |   | October 30, |  
|                     |  | 2005        |         |   | 2004        |  
|                     |  |             |         |   |             |  
|Net sales            |  | $           | 212,595 |   |             | $ | 187,328 |  
|Loss from operations |  |             | (13,310 | ) |             |   | (17,936 | )
|Net loss             |  |             | (19,716 | ) |             |   | (23,254 | )

write-up write-up






| |     
| | ----
| | ESOP



22



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| |                                 
| | --------------------------------
| | Stock Appreciation Rights (SARs)

1 3




| |            
| | -----------
| | Refinancing

1 4




| |   |                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | purchasing through a tender offer our outstanding
    $195.0 million aggregate principal amount of senior
    subordinated notes due 2007, together with a premium of
    approximately $5.5 million and accrued and unpaid interest
    of approximately $4.0 million, and redeeming any of these
    notes that were not tendered;
|
| |  | redeeming all of Holdings outstanding Series A
    Cumulative Exchangeable Redeemable Preferred Stock at 100% of
    the $30.0 million liquidation preference, together with
    accrued and unpaid dividends of $27.6 million; and                                                                                                
|
| |  | restating $19.8 million of term loans outstanding under our
    then-existing senior credit facility, together with accrued and
    unpaid interest of $0.1 million.                                                                                                                                                                





| |             
| | ------------
| | Argo Tracker



23



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1 4




| |      
| | -----
| | Other







Critical Accounting Policies




Revenue Recognition.


24



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##### Table of Contents





Valuation of Accounts Receivable and Allowance for Doubtful
Accounts.


Valuation of Inventories. first-in,


Valuation of Goodwill and Intangible Assets.


Pensions and Post-retirement Plan Assumptions.


25



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##### Table of Contents





Purchase Accounting.


Results of Operations




|                                    |  |                   |       |    |             |  |       |             |  |  |       |  
|----------------------------------- |  | ----------------- | ----- | -- | ----------- |  | ----- | ----------- |  |  | ----- | -
|                                    |  | Fiscal Year Ended |      
|                                    |  |                   |      
|                                    |  | Predecessor       |       |    | Predecessor |  |       | Predecessor | 
|                                    |  | October 29,       |       |    | October 30, |  |       | October 25, | 
|                                    |  | 2005              |       |    | 2004        |  |       | 2003        | 
|                                    |  |                   |       |    |             |  |       |             | 
|Net revenues                        |  |                   | 100.0 | %  |             |  | 100.0 | %           |  |  | 100.0 | %
|Gross profit                        |  |                   | 41.2  |    |             |  | 41.7  |             |  |  | 41.2  |  
|Selling, general and administrative |  |                   | 16.7  |    |             |  | 16.6  |             |  |  | 16.5  |  
|Research and development            |  |                   | 6.0   |    |             |  | 6.4   |             |  |  | 5.9   |  
|Amortization of intangible assets   |  |                   | 1.6   |    |             |  | 1.8   |             |  |  | 2.1   |  
|Merger expense                      |  |                   | 11.5  |    |             |  |      |             |  |  |      |  
|                                    |  |                   |       |    |             |  |       |             | 
|Income from operations              |  |                   | 5.4   |    |             |  | 16.9  |             |  |  | 16.7  |  
|Interest expense                    |  |                   | 12.0  |    |             |  | 12.1  |             |  |  | 13.2  |  
|Debt extinguishment expense         |  |                   |      |    |             |  | 6.9   |             |  |  |      |  
|Other, net                          |  |                   |      |    |             |  |      |             |  |  | 0.3   |  
|                                    |  |                   |       |    |             |  |       |             | 
|Income/(loss) before income taxes   |  |                   | (6.6  | )  |             |  | (2.1  | )           |  |  | 3.8   |  
|Income tax provision/(benefit)      |  |                   | (3.7  | )  |             |  | (1.9  | )           |  |  | 1.0   |  
|                                    |  |                   |       |    |             |  |       |             | 
|Net income/(loss)                   |  |                   | (2.9  | )% |             |  | (0.2  | )%          |  |  | 2.8   | %
|                                    |  |                   |       |    |             |  |       |             | 

Fiscal 2005 Compared with Fiscal 2004






26



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1 4


5 8 5 8 5 8






27



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##### Table of Contents



Fiscal 2004 Compared with Fiscal 2003
















1 4


28



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##### Table of Contents





5 8 5 8 5 8






Export Sales




Liquidity and Capital Resources






29



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1 4 1 4






|                                  |                      |                                                  |   |        |             |   |   |             |       |  |   |         |        |  
|--------------------------------- | -------------------- | ------------------------------------------------ | - | ------ | ----------- | - | - | ----------- | ----- |  | - | ------- | ------ | -
|                                  |                      | Fiscal Year Ended                                |  
|                                  |                      |                                                  |  
|                                  |                      | Predecessor                                      |   |        | Predecessor |   |   | Predecessor |      
|                                  |                      | Fiscal Year                                      |   |        | Fiscal Year |   |   | Fiscal Year |      
|                                  |                      | Ended                                            |   |        | Ended       |   |   | Ended       |      
|                                  |                      | October 29,                                      |   |        | October 30, |   |   | October 25, |      
|                                  |                      | 2005                                             |   |        | 2004        |   |   | 2003        |      
|                                  |                      |                                                  |   |        |             |   |   |             |      
|Cash Flows Provided By (Used In): |                      |                                                  |   |        |             |   |   |             |       |  |   |        
|                                  | Operating Activities |                                                  | $ | 193    |             |   | $ | 33,230      |       |  | $ | 15,673  |       
|                                  | Investing Activities |                                                  |   | (4,376 | )           |   |   | (3,056      | )     |  |   | (1,939  | )     
|                                  | Financing Activities |                                                  |   | 2,215  |             |   |   | (28,374     | )     |  |   | (17,446 | )     
|                                  |                      |                                                  |   |        |             |   |   |             |      
|                                  |                      | Increase (decrease) in cash and cash equivalents |   | $      | (1,968      | ) |   | $           | 1,800 |  |   | $       | (3,712 | )
|                                  |                      |                                                  |   |        |             |   |   |             |      

Cash Flows from Operating Activities.


Cash Used In Investing Activities.


Cash Flows from Financing Activities. 5 8


30



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##### Table of Contents





Capital Expenditures.




Contractual Cash Obligations.


|                                                       |  |                       |      |          |      |   |      |      |  |   |      |  |  |            |      |  |       |   |       |  |  |   |       | 
|------------------------------------------------------ |  | --------------------- | ---- | -------- | ---- | - | ---- | ---- |  | - | ---- |  |  | ---------- | ---- |  | ----- | - | ----- |  |  | - | ----- | 
|                                                       |  | Payment Due By Period |      |          |     
|                                                       |  |                       |      |          |     
|                                                       |  |                       |      | 2010 and |      |   |     
|                                                       |  | 2006                  |      |          | 2007 |   |      | 2008 |  |   | 2009 |  |  | Thereafter |      |  | Total |  
|                                                       |  |                       |      |          |      |   |      |      |  |   |      |  |  |            |      |  |       |  
|                                                       |  | (Dollars in millions) |      |          |     
|Term Loans                                             |  | $                     | 0.7  |          |      | $ | 0.8  |      |  | $ | 3.6  |  |  | $          | 14.0 |  |       | $ |      |  |  | $ | 19.1  | 
|91/4% Senior
    Notes                                 |  |                       |     |          |      |   |     |      |  |   |     |  |  |            |     |  |       |   | 250.0 |  |  |   | 250.0 | 
|Operating leases                                       |  |                       | 0.3  |          |      |   | 0.2  |      |  |   | 0.1  |  |  |            | 0.1  |  |       |   |      |  |  |   | 0.7   | 
|Other long-term obligations*                           |  |                       | 26.1 |          |      |   | 26.0 |      |  |   | 26.2 |  |  |            | 25.7 |  |       |   | 60.4  |  |  |   | 164.4 | 
|                                                       |  |                       |      |          |      |   |      |      |  |   |      |  |  |            |      |  |       |  
|Total contractual and other long-term cash obligations |  | $                     | 27.1 |          |      | $ | 27.0 |      |  | $ | 29.9 |  |  | $          | 39.8 |  |       | $ | 310.4 |  |  | $ | 434.2 | 
|                                                       |  |                       |      |          |      |   |      |      |  |   |      |  |  |            |      |  |       |  






|  |                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Represents interest payments on the Term Loans (at an assumed
    average interest rate of 6.5%) and the
    91/4% Senior
    Notes, estimated funding for retirement and other
    post-employment benefits and other long-term commitments.



Off-Balance Sheet Arrangements.


New Accounting Standards




31



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|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk.

1 4







|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary Data.








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on Accounting
    and Financial Disclosure.








|         |                         
|-------- | ------------------------
|Item 9A. | Controls and Procedures.

Disclosure Controls and Procedures.


Rules 13a-15(e) 15d-15(e)


Change in Internal Controls.




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Sarbanes-Oxley Act  Section 404
Compliance.


1 4


33



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PART III







|         |                                                    
|-------- | ---------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant.



|                       |  |     |    |  |          |                                                          
|---------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------
|Name                   |  | Age |    |  | Position
|                       |  |     |    |  |         
|Michael S. Lipscomb    |  |     | 59 |  |          | Chairman, President, Chief Executive Officer and Director
|Paul R. Keen           |  |     | 56 |  |          | Executive Vice President, General Counsel and Secretary  
|John S. Glover         |  |     | 57 |  |          | Vice President and Chief Financial Officer               
|John Daileader         |  |     | 41 |  |          | Director                                                 
|Reginald L. Jones, III |  |     | 46 |  |          | Director                                                 
|Jeffrey W. Long        |  |     | 49 |  |          | Director                                                 
|Kathleen Moran         |  |     | 39 |  |          | Director                                                 
|Daniel S. OConnell    |  |     | 51 |  |          | Director                                                 
|John R. Woodard        |  |     | 41 |  |          | Director                                                 

Michael S. Lipscomb


Paul R. Keen


John S. Glover


John Daileader


Reginald L. Jones, III


Jeffrey W. Long


34



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Kathleen Moran


Daniel S. OConnell


John R. Woodard


Board Committees


Regulation S-K.


Code of Ethics for the Chief Executive Officer, Chief
Financial Officer and Senior Financial Officers


Form 8-K







|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

Board Compensation


out-of


Employment Arrangements Following the Merger






| |   |                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an initial term of three years with automatic renewals for
    one-year terms unless Argo-Tech or the executive gives written
    notice of election not to renew at least 90 days prior to
    the expiration of the applicable employment period;        
|
| |  | an annual base salary of $543,828 (Mr. Lipscomb) and
    $279,926 (Mr. Keen), which will be increased annually by no
    less than a percentage equal to the percentage increase, if any,
    in the Consumer Price Index in the prior twelve-month period;

35



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | participation in (i) bonus arrangements, as determined by
    the Compensation Committee of the Argo-Tech Board of Directors,
    and (ii) employee benefit plans that are provided or made
    available by Argo-Tech to its senior executive officers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | four weeks of paid vacation per calendar year, prorated in the
    case of a partial year;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | upon termination because of death or disability, the executive
    (or the executives estate) will receive an amount equal to
    (i) the executives salary through the date of
    termination plus (ii) a pro rata portion of the
    executives bonus for such year;                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | upon termination by Argo-Tech without cause (as defined in the
    agreement) or by the executive for good reason (as defined in
    the agreement) and subject to the executives compliance
    with the non-competition, non-solicitation and ownership of
    intellectual property provisions of the agreements, the
    executive will receive an amount equal to his current annual
    salary and bonus for the preceding fiscal year payable over the
    one-year period following termination as well as continuing
    health care coverage until the earlier of (i) one year
    following his departure and (ii) the date he becomes
    eligible for comparable coverage under health plans of any
    successor employer;
|
| |  | prohibitions against Mr. Lipscomb and Mr. Keen from
    competing with Argo-Tech or its subsidiaries or soliciting
    employees of Argo-Tech or its subsidiaries (both during
    employment and for a period of two years thereafter); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | payments intended to make them whole for any excise tax
    liability they incur due to their receipt of certain payments
    treated as being contingent upon a change in control in
    connection with the Merger under Section 280G of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





Incentive Compensation Following the Merger




| |                
| | ---------------
| | Incentive Units





36



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cash-on






| |                                                          
| | ---------------------------------------------------------
| | Current Benefit Plans Continuing Following the
    Merger

Salaried Pension Plan.




37



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|                     |  |         |          | 
|-------------------- |  | ------- | -------- | 
|                     |  | Monthly |         
|Name                 |  | Benefit |         
|                     |  |         |         
|Michael S. Lipscomb  |  | $       | 1,799.32 | 
|Paul R. Keen         |  |         | 1,188.83 | 
|Frances S. St. Clair |  |         | 411.56   | 







Salaried Savings Plan. catch-up






38



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1 2




Executive Life Insurance Plan.


Management Incentive Plan.


Historical director and executive compensation




|                            |                               |                     |      |      |           |   |              |         |  |   |           |         |  |   |           |        | 
|--------------------------- | ----------------------------- | ------------------- | ---- | ---- | --------- | - | ------------ | ------- |  | - | --------- | ------- |  | - | --------- | ------ | 
|                            |                               | Annual Compensation |      |      |          
|                            |                               |                     |      |      | All Other |  
|                            |                               | Fiscal              |      |      |           |   | Compensation |        
|Name and Principal Position |                               | Year                |      |      | Salary    |   |              | Bonus   |  |   | (1)(2)(3) |        
|                            |                               |                     |      |      |           |   |              |         |  |   |           |        
|Michael S. Lipscomb(4)      |                               |                     | 2005 |      |           | $ | 522,906      |         |  | $ | 458,583   |         |  | $ | 1,132,011 | (5)   
|                            | Chairman, President and       |                     |      | 2004 |           |   |              | 484,170 |  |   |           | 346,181 |  |   |           | 38,426 | 
|                            | Chief Executive Officer       |                     |      | 2003 |           |   |              | 461,112 |  |   |           | 225,023 |  |   |           | 50,475 | 
|Paul R. Keen(4)             |                               |                     | 2005 |      |           |   | 269,160      |         |  |   | 141,982   |         |  |   | 648,314   | (6)   
|                            | Executive Vice President,     |                     |      | 2004 |           |   |              | 258,804 |  |   |           | 142,342 |  |   |           | 29,074 | 
|                            | General Counsel and Secretary |                     |      | 2003 |           |   |              | 246,480 |  |   |           | 83,310  |  |   |           | 12,806 | 
|Frances S. St. Clair(7)     |                               |                     | 2005 |      |           |   | 252,804      |         |  |   | 133,354   |         |  |   | 637,000   | (8)   
|                            | Executive Vice President and  |                     |      | 2004 |           |   |              | 236,250 |  |   |           | 129,938 |  |   |           | 10,503 | 
|                            | Chief Financial Officer       |                     |      | 2003 |           |   |              | 225,000 |  |   |           | 76,050  |  |   |           | 23,582 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other annual compensation did not exceed the lesser of $50,000
    or 10% of salary plus bonus of any of the Named Executives in
    fiscal 2003, 2004 or 2005 except as noted in footnotes 5, 6
    and 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(2) | The amounts listed consist of the value of life insurance
    provided by us for the benefit of the Named Executives in excess
    of the value of life insurance provided by us for the benefit of
    all other salaried employees. For Mr. Lipscomb, the amounts
    listed also include $26,000 for fiscal 2005, $32,000 for fiscal
    2004 and $27,000 for fiscal 2003 paid as Holdings
    directors fees. For Mr. Keen, the amounts listed also
    include $25,000 for fiscal 2004 and $7,000 for fiscal 2003 paid
    as Holdings directors fees. For Ms. St. Clair, the
    amounts listed also include $26,000, $7,000 and $20,000 for
    fiscal 2005, 2004 and 2003, respectively, paid as Holdings
    directors fees.
|   
|(3) | The amounts listed do not reflect payments received as
    stockholders and/or derivative holders of Holdings on account of
    the Merger that are described in Item 13. Certain
    Relationships and Related Transactions  Interests of
    Certain Argo-Tech Directors and Officers in the
    Merger  Payments to Executive Officers and Directors
    of Argo-Tech as a Result of the Merger.                                                                                                                                                                                                                                                                                                                                 
|   
|(4) | Upon the completion of the Merger, Mr. Lipscomb and
    Mr. Keen entered into new employment agreements with
    Argo-Tech, which replaced all existing employment, stay pay and
    severance agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

39



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| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | they had entered into with Argo-Tech. For a discussion of these
    agreements, see  Employment Arrangements
    Following the Merger.



|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | This amount includes $869,094 Mr. Lipscomb received under
    his 1986 employment agreement and $217,274 he received under his
    stay pay and severance agreement because the Merger constituted
    a change in control under those agreements.
|   
|(6) | This amount includes $538,320 Mr. Keen received under his
    1989 employment agreement and $102,876 he received under his
    stay pay and severance agreement because the Merger constituted
    a change in control under those agreements.    
|   
|(7) | Effective as of the closing of the Merger on October 28,
    2005, Ms. St. Clair resigned as an officer and director of
    Holdings and Argo-Tech.                                                                                               
|   
|(8) | This amount includes $604,830 Ms. St. Clair received under
    her stay pay and severance agreement because the Merger
    constituted a change in control under that agreement.                                                                  

Stay Pay and Severance Agreements.












| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | life, health, medical/hospital, dental, and vision insurance
    benefits for a period of 12 months in the event that an
    executives full-time employment is terminated without
    cause or upon a Qualifying Voluntary Termination, either before
    or after a change in control occurred, subject to a reduction of
    such benefits to the extent comparable benefits are actually
    received from another employer during the twelve-month
    period; and

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| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | gross-up payments to
    cover any excise tax imposed by Section 4999 of the Code
    upon any payment made to the executive under the agreements,
    subject to certain limitations.



Trust Agreement.


make-up






Employment Agreements.






41



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##### Table of Contents









Nonqualified Deferred Compensation Agreement.


Current Benefit Plans Terminated Following the Merger


Employee Stock Ownership Plan.










42



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##### Table of Contents











|                     |  |                  |          |  |                  |  |            | 
|-------------------- |  | ---------------- | -------- |  | ---------------- |  | ---------- | 
|                     |  | Shares Allocated |         
|                     |  |                  |         
|                     |  | Year Ended       |          |  | Cumulative to    | 
|Name                 |  | October 29, 2005 |          |  | October 29, 2005 | 
|                     |  |                  |          |  |                  | 
|Michael S. Lipscomb  |  |                  | 551.3366 |  |                  |  | 5,108.7361 | 
|Paul R. Keen         |  |                  | 551.3366 |  |                  |  | 5,108.7361 | 
|Frances S. St. Clair |  |                  | 551.3366 |  |                  |  | 5,059.7717 | 







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Employee Stock Ownership Plan Excess Benefit Plan.




|                     |  |                            |            |  |                  |  |             | 
|-------------------- |  | -------------------------- | ---------- |  | ---------------- |  | ----------- | 
|                     |  | Equivalent Shares Credited |           
|                     |  |                            |           
|                     |  | Year Ended                 |            |  | Cumulative to    | 
|Name                 |  | October 29, 2005           |            |  | October 29, 2005 | 
|                     |  |                            |            |  |                  | 
|Michael S. Lipscomb  |  |                            | 1,718.6596 |  |                  |  | 11,192.9153 | 
|Paul R. Keen         |  |                            | 397.7742   |  |                  |  | 2,872.0394  | 
|Frances S. St. Clair |  |                            | 330.6695   |  |                  |  | 1,982.2305  | 



| |                              
| | -----------------------------
| | Incentive stock option plans.

Aggregate Option/ SAR Exercises in Last Fiscal Year


and Fiscal Year End Option/ SAR Values


|                    |  |          |        |        |             |  |        |              |  |   |               |  |  |               |         |     |  |  |           | 
|------------------- |  | -------- | ------ | ------ | ----------- |  | ------ | ------------ |  | - | ------------- |  |  | ------------- | ------- | --- |  |  | --------- | 
|                    |  |          |        |        |             |  |        | Number of    |  |   |              
|                    |  |          |        |        |             |  |        | Securities   |  |   | Value of      | 
|                    |  |          |        |        |             |  |        | Underlying   |  |   | Unexercised   | 
|                    |  |          |        |        |             |  |        | Unexercised  |  |   | in-the-Money  | 
|                    |  |          |        |        |             |  |        | Options/SARs |  |   | Options at    | 
|                    |  |          |        |        |             |  |        | at FY-end    |  |   | FY-end($)     | 
|                    |  |          |        | Shares |             |  |        |              |  |   |               |  | 
|                    |  | Exercise |        |        | Acquired    |  |        | Value        |  |   | Exercisable/  |  |  | Exercisable/  |        
|Name                |  | Price    |        |        | on Exercise |  |        | Realized(1)  |  |   | Unexercisable |  |  | Unexercisable |        
|                    |  |          |        |        |             |  |        |              |  |   |               |  |  |               |        
|Michael S. Lipscomb |  | $        | 10.00  |        |             |  | 8,670  |              |  | $ | 914,598       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 40.00  |        |             |  | 6,125  |              |  |   | 462,376       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 100.11 |        |             |  | 4,000  |              |  |   | 61,520        |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 49.79  |        |             |  | 18,926 |              |  |   | 1,243,438     |  |  |               | /     |     |  |  | /       | 
|Paul R. Keen        |  | $        | 10.00  |        |             |  |       |              |  |   | 380,591       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 40.00  |        |             |  |       |              |  |   | 445,056       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 100.11 |        |             |  |       |              |  |   | 141,599       |  |  |               | 1,400/ | (2) |  |  | 141,599/ | 
|                    |  |          | 49.79  |        |             |  |       |              |  |   | 1,013,735     |  |  |               | 3,600/ | (2) |  |  | 545,263/ | 
|Frances St. Clair   |  | $        | 10.00  |        |             |  |       |              |  |   | 571,843       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 40.00  |        |             |  |       |              |  |   | 445,056       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 100.11 |        |             |  |       |              |  |   | 141,599       |  |  |               | /     |     |  |  | /       | 
|                    |  |          | 49.79  |        |             |  |       |              |  |   | 1,013,735     |  |  |               | /     |     |  |  | /       | 






|    |                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Values include cash received for cancellation of options in
    connection with the Merger. In connection with the consummation
    of the Merger, the then existing options held by the named
    executive officers were cashed out or exchanged for options to
    purchase certain rollover securities described in Item 13.
|   
|(2) | Upon the completion of the Merger, these options became options
    to purchase Class A Units of VGAT.                                                                                                                                                                                                                          

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1991 Performance Stock Option Plan.


1991 Management Incentive Stock Option Plan.


1998 Equity Replacement Stock Option Plan.


1998 Incentive Plan. 1 3


Compensation Committee Interlocks and Insider
Participation






45



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##### Table of Contents








|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters.





| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | each person known to Argo-Tech to be the beneficial owner of
    more than 5% of VGATs units;
|
| |  | each director of Argo-Tech;                                                                   
|
| |  | each of the Named Executives; and                                                             
|
| |  | all of the Argo-Tech directors and executive officers as a group.                             



|                                            |                           |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|------------------------------------------- | ------------------------- | ------------- | ------- | ----------- | ---------------- |  | ----- | ----- |  | ---------------- | ------------- |  |  |  | ---- | - | 
|                                            |                           |               |         | Immediately |                  |  |       |       | 
|                                            |                           | Number of     |         |             | Exercisable      |  |       |       |  |                 
|                                            |                           | Class A Units |         |             | Options to       |  |       |       |  |                 
|                                            |                           | Beneficially  |         |             | Purchase Class A |  |       |       |  | Percent of Total |              
|Name of Beneficial Owner                    |                           | Owned         |         |             | Units(1)         |  |       | Total |  |                  | Class A Units | 
|                                            |                           |               |         |             |                  |  |       |       |  |                  |               | 
|Greenbriar Equity Group LLC                 |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|                                            | 555 Theodore Fremd Avenue |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|                                            | Rye, NY 10580             |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|Vestar Capital Partners IV, L.P.            |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|                                            | 245 Park Avenue           |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|                                            | 41stFloor                 |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|                                            | New York, NY 10167        |               |         |             |                  |  |       |       |  |                  |               |  |  |  |      |   | 
|Michael S. Lipscomb+                        |                           |               | 37,221  |             |                  |  |      |       |  |                  | 37,221        |  |  |  | 6.3  | %
|Paul R. Keen                                |                           |               | 4,039   |             |                  |  | 5,000 |       |  |                  | 9,039         |  |  |  | 1.5  | %
|John S. Glover                              |                           |               |        |             |                  |  | 2,600 |       |  |                  | 2,600         |  |  |  | *    |  
|John Daileader(2)+                          |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|Reginald L. Jones, III(3)+                  |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|Jeffrey W. Long(4)+                         |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|Kathleen Moran(5)+                          |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|Daniel S. OConnell(6)+                     |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|John R. Woodard(7)+                         |                           |               | 269,743 |             |                  |  |      |       |  |                  | 269,743       |  |  |  | 45.4 | %
|Directors and Executive Officers as a Group |                           |               | 580,746 |             |                  |  | 7,600 |       |  |                  | 588,346       |  |  |  | 97.7 | %






| |   |             
| | - | ------------
| | * | Less than 1%



| |   |                      
| | - | ---------------------
| | + | Director of Argo-Tech



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes options to purchase VGAT Class A Units exercisable
    within 60 days of January 24, 2006.                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | Mr. Daileader may be deemed to beneficially own the units
    beneficially owned by Greenbriar and its affiliated entities
    because of his relationship with Greenbriar and its affiliated
    entities and because Mr. Daileader was appointed to
    Argo-Techs Board of Directors at the request of
    Greenbriar. Mr. Daileader disclaims any beneficial
    ownership of the units owned by Greenbriar and its affiliates.
|   
|(3) | Mr. Jones may be deemed to beneficially own the units
    beneficially owned by Greenbriar and its affiliated entities
    because of his relationship with Greenbriar and its affiliated
    entities and because Mr. Jones was appointed to
    Argo-Techs Board of Directors at the request of
    Greenbriar. Mr. Jones disclaims any beneficial ownership of
    the units owned by Greenbriar and its affiliates.            

46



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Mr. Long may be deemed to beneficially own the units
    beneficially owned by Vestar and its affiliated entities because
    of his relationship with Vestar and its affiliated entities and
    because Mr. Long was appointed to Argo-Techs Board of
    Directors at the request of Vestar. Mr. Long disclaims any
    beneficial ownership of the units owned by Vestar and its
    affiliates.                   
|   
|(5) | Ms. Moran may be deemed to beneficially own the units
    beneficially owned by Greenbriar and its affiliated entities
    because of her relationship with Greenbriar and its affiliated
    entities and because Ms. Moran was appointed to
    Argo-Techs Board of Directors at the request of
    Greenbriar. Ms. Moran disclaims any beneficial ownership of
    the units owned by Greenbriar and its affiliates.
|   
|(6) | Mr. OConnell may be deemed to beneficially own the
    units beneficially owned by Vestar and its affiliated entities
    because of his relationship with Vestar and its affiliated
    entities and because Mr. OConnell was appointed to
    Argo-Techs Board of Directors at the request of Vestar.
    Mr. OConnell disclaims any beneficial ownership of
    the units owned by Vestar and its affiliates.    
|   
|(7) | Mr. Woodard may be deemed to beneficially own the units
    beneficially owned by Vestar and its affiliated entities because
    of his relationship with Vestar and its affiliated entities and
    because Mr. Woodard was appointed to Argo-Techs Board
    of Directors at the request of Vestar. Mr. Woodard
    disclaims any beneficial ownership of the units owned by Vestar
    and its affiliates.          






|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions.

Transactions with Officers


Loan agreements.




Securityholders Agreement






47



---



##### Table of Contents



Form S-1 Form S-2 or S-3




Professional Services Agreements


out-of


Interests of Certain Argo-Tech Directors and Officers in the
Merger


Rollover of Holdings Common Stock.


|                     |       |           |        |        |              |  |        |           |  |  |             |        |  |  |       |       | 
|-------------------- | ----- | --------- | ------ | ------ | ------------ |  | ------ | --------- |  |  | ----------- | ------ |  |  | ----- | ----- | 
|                     |       | Common    |        |        | Common       |  |        |           |  | 
|                     |       | Shares    |        |        | Shares to be |  |        | Options   |  |  | Options to  |       
|                     |       | Currently |        |        | Contributed  |  |        | Currently |  |  | Remain      |       
|Name                 |       | Held(1)   |        |        | to VGAT      |  |        | Held      |  |  | Outstanding |       
|                     |       |           |        |        |              |  |        |           |  |  |             |       
|Michael S. Lipscomb  |       |           | 59,744 |        |              |  | 37,721 |           |  |  |            |        |  |  |      |      
|Paul R. Keen         |       |           | 12,027 |        |              |  | 4,039  |           |  |  | 12,843      |        |  |  | 5,000 |      
|Frances S. St. Clair |       |           | 5,812  |        |              |  |       |           |  |  | 13,843      |        |  |  |      |      
|                     |       |           |        |        |              |  |        |           |  |  |             |       
|                     | Total |           |        | 77,583 |              |  |        | 41,760    |  |  |             | 26,686 |  |  |       | 5,000 | 
|                     |       |           |        |        |              |  |        |           |  |  |             |       






|    |                                       
|--- | --------------------------------------
|(1) | Excludes shares held through the ESOP.



Indemnification of Directors and Officers.


48



---



##### Table of Contents



Payments to Executive Officers and Directors of Argo-Tech as
a Result of the Merger.


|                  |       |               |        |        |                    |   |           |                |  |  |           |        |  |        |           |           |   |  |        |             |  |   |           |           |  |   |           |           |  |   |           |            | 
|----------------- | ----- | ------------- | ------ | ------ | ------------------ | - | --------- | -------------- |  |  | --------- | ------ |  | ------ | --------- | --------- | - |  | ------ | ----------- |  | - | --------- | --------- |  | - | --------- | --------- |  | - | --------- | ---------- | 
|                  |       | Common Shares |        |        |                    |   |           |                |  |  |          
|                  |       | Cashed Out    |        |        | Options Cashed Out |   |           | SERP Shares(1) |  |  | Stay Pay/ |        |  |       
|                  |       |               |        |        |                    |   |           |                |  |  | Severance |        |  |       
|Name              |       | Number        |        |        | $                  |   |           | Number         |  |  | $         |        |  | Number |           |           | $ |  |        | Payments(2) |  |   | Total(3)  |          
|                  |       |               |        |        |                    |   |           |                |  |  |           |        |  |        |           |           |   |  |        |             |  |   |           |          
|Michael Lipscomb  |       |               | 22,023 |        |                    | $ | 4,432,173 |                |  |  |          |        |  | $      |          |           |   |  | 11,193 |             |  | $ | 2,252,597 |           |  | $ | 1,086,368 |           |  | $ | 7,771,138 |           
|Frances St. Clair |       |               | 5,812  |        |                    |   | 1,169,677 |                |  |  | 13,843    |        |  |        | 2,172,233 |           |   |  | 1,982  |             |  |   | 398,928   |           |  |   | 604,830   |           |  |   | 4,345,668 |           
|Paul R. Keen      |       |               | 7,988  |        |                    |   | 1,607,601 |                |  |  | 7,843     |        |  |        | 1,294,119 |           |   |  | 2,872  |             |  |   | 578,004   |           |  |   | 641,196   |           |  |   | 4,120,920 |           
|                  |       |               |        |        |                    |   |           |                |  |  |           |        |  |        |           |           |   |  |        |             |  |   |           |          
|                  | Total |               |        | 35,823 |                    |   | $         | 7,209,451      |  |  |           | 21,686 |  |        | $         | 3,466,352 |   |  |        | 16,047      |  |   | $         | 3,229,529 |  |   | $         | 2,332,394 |  |   | $         | 16,237,726 | 
|                  |       |               |        |        |                    |   |           |                |  |  |           |        |  |        |           |           |   |  |        |             |  |   |           |          






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This information includes 2005 awards under the ESOP Excess
    Benefit Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | Because Mr. Lipscomb and Mr. Keen entered into new
    employment agreements with Argo-Tech, which replaced all
    existing employment, stay pay and severance agreements they had
    entered into, the amount of their payments listed in this column
    do not include any severance payments. Ms. St. Clair
    resigned as an officer and director of Holdings and Argo-Tech
    effective upon completion of the Merger. Accordingly, her amount
    in this column reflects an additional $509,144 to which she was
    entitled under her existing agreement.
|   
|(3) | The amounts included in this table for Mr. Lipscomb,
    Ms. St. Clair and Mr. Keen do not reflect the 5,108,
    5,059 and 5,108 shares, respectively, they owned through
    the ESOP.                                                                                                                                                                                                                                                                                                                                                                               

Distribution agreements









|         |                                        
|-------- | ---------------------------------------
|Item 14. | Principal Accountant Fees and Services.

Audit Fees




49



---



##### Table of Contents



Audit-Related Fees




Tax Fees




All Other Fees




Audit Committee Pre-Approval Policy







PART IV







|         |                                            
|-------- | -------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules.







| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Report of Independent Registered Public Accounting Firm                                                                                                                  
|
| | Consolidated Balance Sheets as of October 29, 2005 and
    October 30, 2004 (Predecessor)                                                                                
|
| | Consolidated Statements of Net Income (Loss) for the Fiscal
    Years ended October 29, 2005, October 30, 2004 and
    October 25, 2003 (Predecessor)                    
|
| | Consolidated Statements of Shareholders
    Equity/(Deficiency) for the Fiscal Years ended October 29,
    2005, October 30, 2004 and October 25, 2003
    (Predecessor)
|
| | Consolidated Statements of Cash Flows for the Fiscal Years ended
    October 29, 2005, October 30, 2004 and
    October 25, 2003 (Predecessor)                           
|
| | Notes to Consolidated Financial Statements for the Fiscal Years
    ended October 29, 2005, October 30, 2004 and
    October 25, 2003 (Predecessor)                      

50



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##### Table of Contents









| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | Valuation and Qualifying Account for the Fiscal Years ended
    October 29, 2005, October 30, 2004 and
    October 25, 2003



| |        |         
| | ------ | --------
| | (a)(3) | Exhibits

|        |    |                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | -- | ----------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                                                                                          
|Number  |    | Description of Exhibit (and document from which incorporated by reference, if applicable)
|        |    |                                                                                          
|        | 2  | .1*                                                                                       |  | Agreement and Plan of Merger, dated September 13, 2005, by
    and among AT Holdings Corporation, Argo-Tech, GreatBanc Trust
    Company, as Trustee for the Argo-Tech Corporation Employee Stock
    Ownership Plan, V.G.A.T. Investors, LLC and Vaughn Merger Sub,
    Inc.                                                                                                                                                    
|        | 2  | .2*                                                                                       |  | Amendment No. 1 to Agreement and Plan of Merger, dated as
    of October 26, 2005, by and among AT Holdings Corporation,
    Argo-Tech, Great Banc Trust Company, as Trustee for the
    Argo-Tech Corporation Employee Stock Ownership Plan, V.G.A.T.
    Investors, LLC and Vaughn Merger Sub, Inc.                                                                                                                            
|        | 3  | .1                                                                                        |  | Restated Certificate of Incorporation of Argo-Tech, dated
    April 16, 1999 (incorporated herein by reference to
    Exhibit 3.1 of Argo-Techs registration statement on
    form S-4/ A filed April 23, 1999, SEC File
    No. 333-73179)                                                                                                                                                                                     
|        | 3  | .2                                                                                        |  | Restated By-Laws of Argo-Tech dated April 16, 1999
    (incorporated herein by reference to Exhibit 3.2 of
    Argo-Techs registration statement on Form S-4/ A
    filed April 23, 1999, SEC File No. 333-73179)                                                                                                                                                                                                               
|        | 4  | .1                                                                                        |  | Indenture dated June 23, 2004, between Argo-Tech, the
    Subsidiary Guarantors signatory thereto and BNY Midwest Trust
    Company, as Trustee, relating to the
    91/4% Senior
    Notes due 2010 (the form of which is included in such Indenture)
    (incorporated herein by reference to Exhibit 4.1 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 31, 2004, SEC File No. 333-38223)    
|        | 4  | .2*                                                                                       |  | First Supplemental Indenture, dated October 25, 2005, to
    the Indenture, dated June 23, 2004, between Argo-Tech, the
    Subsidiary Guarantors signatory thereto and BNY Midwest Trust
    Company, as Trustee, relating to the
    91/4% Senior
    Notes due 2010                                                                                                                                                           
|        | 10 | .1+                                                                                       |  | Form of Stay Pay and Severance Agreement dated June 6,
    1996, between Argo-Tech and certain Executive Officers of
    Argo-Tech (Michael S. Lipscomb, Frances S. St. Clair, and Paul
    R. Keen) (incorporated herein by reference to Exhibit 10.1
    of Argo-Techs Registration Statement on Form S-1,
    filed October 17, 1997, SEC File No. 333-38223)
    (superceded by Exhibits 10.6, 10.52 and 10.7, respectively)
|        | 10 | .2+                                                                                       |  | Employment Agreement dated October 15, 1986 between
    Argo-Tech and Michael S. Lipscomb (incorporated herein by
    reference to Exhibit 10.3 of Argo-Techs Registration
    Statement on Form S-1, filed October 17, 1997, SEC
    File No. 333-38223) (superceded by Exhibit 10.6)                                                                                                                                          
|        | 10 | .3+                                                                                       |  | Employment Agreement dated February 13, 1989 between
    Argo-Tech and Paul R. Keen (incorporated herein by reference to
    Exhibit 10.2 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223 (superceded by Exhibit 10.7)                                                                                                                                                 
|        | 10 | .4+                                                                                       |  | Amendment, dated May 1, 2005, to Employment Agreement,
    dated October 15, 1986, between Argo-Tech and Michael S.
    Lipscomb (incorporated herein by reference to Exhibit 10.1
    of Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)
    (superceded by Exhibit 10.6)                                                                                            
|        | 10 | .5+                                                                                       |  | Amendment, dated May 1, 2005, to Employment Agreement dated
    February 13, 1989 between Argo-Tech and Paul R. Keen
    (incorporated herein by reference to Exhibit 10.2 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)
    (superceded by Exhibit 10.7)                                                                                                    
|        | 10 | .6+*                                                                                      |  | Employment Agreement, dated October 28, 2005, between
    Argo-Tech and Michael S. Lipscomb                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .7+*                                                                                      |  | Employment Agreement, dated October 28, 2005, between
    Argo-Tech and Paul R. Keen                                                                                                                                                                                                                                                                                                                                             

51



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|        |    |                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | -- | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                                                                                          
|Number  |    | Description of Exhibit (and document from which incorporated by reference, if applicable)
|        |    |                                                                                          
|        | 10 | .8+                                                                                       |  | Argo-Tech Corporation Trust Agreement dated
    October 28, 1994 between Argo-Tech and Society National
    Bank, as Trustee, relating to the Employment Agreement dated
    October 15, 1986 between Argo-Tech and Michael S. Lipscomb
    (incorporated herein by reference to Exhibit 10.4 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)
|        | 10 | .9+*                                                                                      |  | Rabbi Trust Amendment, dated October 25, 2005, to the
    Argo-Tech Corporation Trust Agreement dated
    October 28, 1994 between Argo-Tech and National City Bank,
    N.A. (as successor to Society National Bank), as Trustee,
    relating to the Employment Agreement dated October 15, 1986
    between Argo-Tech and Michael S. Lipscomb                                                        
|        | 10 | .10+                                                                                      |  | Argo-Tech Corporation Salaried Pension Plan, dated
    November 1, 1995 (incorporated herein by reference to
    Exhibit 10.5 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223)                                                                                                                                                                
|        | 10 | .11+                                                                                      |  | First Amendment to Argo-Tech Corporation Salaried Pension Plan
    (incorporated herein by reference to Exhibit 10.6 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)                                                                                                                                                                         
|        | 10 | .12+                                                                                      |  | Argo-Tech Corporation Employee Stock Ownership Plan and
    Trust Agreement, dated May 17, 1994 (incorporated
    herein by reference to Exhibit 10.7 of Argo-Techs
    Registration Statement on Form S-1, filed October 17,
    1997, SEC File No. 333-38223)                                                                                                                                        
|        | 10 | .13+                                                                                      |  | First Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan and Trust Agreement, dated October 26,
    1994 (incorporated herein by reference to Exhibit 10.8 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)                                                                                                             
|        | 10 | .14+                                                                                      |  | Second Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan and Trust Agreement, dated May 9, 1996
    (incorporated herein by reference to Exhibit 10.9 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)                                                                                                                 
|        | 10 | .15+                                                                                      |  | Third Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan and Trust Agreement, dated July 18,
    1997 (incorporated herein by reference to Exhibit 10.10 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)                                                                                                               
|        | 10 | .16+*                                                                                     |  | Fourth Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan and Trust Agreement, dated as of
    September 15, 2005                                                                                                                                                                                                                                                                 
|        | 10 | .17+*                                                                                     |  | Fifth Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan and Trust Agreement, dated as of
    October 25, 2005                                                                                                                                                                                                                                                                    
|        | 10 | .18+                                                                                      |  | Argo-Tech Corporation Employee Stock Ownership Plan Excess
    Benefit Plan, dated May 17, 1994 (incorporated herein by
    reference to Exhibit 10.11 of Argo-Techs Registration
    Statement on Form S-1, filed October 17, 1997, SEC
    File No. 333-38223)                                                                                                                                       
|        | 10 | .19+                                                                                      |  | First Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan Excess Benefit Plan (incorporated herein by
    reference to Exhibit 10.34 of Argo-Techs registration
    statement on Form S-4 filed March 2, 1999, SEC File
    No. 333-73179)                                                                                                                                        
|        | 10 | .20+*                                                                                     |  | Second Amendment to the Argo-Tech Corporation Employee Stock
    Ownership Plan Excess Benefit Plan                                                                                                                                                                                                                                                                                                     
|        | 10 | .21+                                                                                      |  | AT Holdings Corporation Stockholders Agreement, dated
    December 17, 1998 (incorporated herein by reference to
    Exhibit 10.12 of Argo-Techs Annual Report on
    Form 10-K for the year ended October 30, 1999, SEC
    File No. 333-38223)                                                                                                                                                      
|        | 10 | .22+                                                                                      |  | AT Holdings Corporation 1998 Supplemental Stockholders
    Agreement, dated December 17, 1998 (incorporated herein by
    reference to Exhibit 10.13 of Argo-Techs Annual
    Report on Form 10-K for the year ended October 30,
    1999, SEC File No. 333-38223)                                                                                                                                    
|        | 10 | .23+                                                                                      |  | Form of Management Incentive Compensation Plan for key employees
    of Argo-Tech (incorporated herein by reference to
    Exhibit 10.19 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223)                                                                                                                                                     

52



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|        |    |                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                                                                                          
|Number  |    | Description of Exhibit (and document from which incorporated by reference, if applicable)
|        |    |                                                                                          
|        | 10 | .24+                                                                                      |  | 1991 Management Incentive Stock Option Plan, as amended, dated
    May 16, 1994 (incorporated herein by reference to
    Exhibit 10.20 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223)                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .25+                                                                                      |  | Amendment to the 1991 Management Incentive Stock Option Plan, as
    amended, dated June 12, 2001 (incorporated herein by
    reference to Exhibit 10.3 of Argo-Techs Quarterly
    Report on Form 10-Q for the quarter ended July 28,
    2001, SEC File No. 333-38223)                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .26+                                                                                      |  | Form of Stock Option Agreement in connection with the Management
    Incentive Stock Option Plan, as amended, between Argo-Tech and
    each member of Argo-Techs Executive Staff (incorporated
    herein by reference to Exhibit 10.21 of Argo-Techs
    Registration Statement on Form S-1, filed October 17,
    1997, SEC File No. 333-38223)                                                                                                                                                                                                                                                               
|        | 10 | .27+                                                                                      |  | 1991 Performance Stock Option Plan, as amended, dated
    May 16, 1997 (incorporated herein by reference to
    Exhibit 10.22 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223)                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .28                                                                                       |  | Third Amended and Restated Credit Facility, dated June 23,
    2004, by and among Argo-Tech Corporation, the Guarantors party
    thereto, the Lenders party thereto and National City Bank, as
    administrative agent (incorporated herein by reference to
    Exhibit 10.1 of Argo-Techs quarterly report on
    Form 10-Q for the quarter ended July 31, 2004, SEC
    File No. 333-38223) (superceded by Exhibit 10.30)                                                                                                                                                                                     
|        | 10 | .29                                                                                       |  | First Amendment, dated as of January 19, 2005, to Third
    Amended and Restated Credit Agreement, dated as of June 23,
    2004, by and among Argo-Tech Corporation, AT Holdings
    Corporation, National City Bank, as administrative agent and an
    issuing bank, JPMorgan Chase Bank, as an issuing bank with
    respect to existing letters of credit issued thereunder and the
    other lenders signatory thereto. (incorporated herein by
    reference to Exhibit 10.1 of Argo-Techs current
    report on Form 8-K filed January 21, 2005, SEC File
    No. 333-38223) (superceded by Exhibit 10.30)
|        | 10 | .30*                                                                                      |  | Fourth Amended and Restated Credit Agreement, dated
    September 13, 2005, by and among Argo- Tech Corporation,
    the Guarantors party thereto, the Lenders party thereto and
    National City Bank, as administrative agent                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .31                                                                                       |  | Distributorship Agreement, dated December 24, 1990, between
    Argo-Tech, Yamada Corporation and Vestar Capital Partners, Inc.
    (incorporated herein by reference to Exhibit 10.25 of
    Argo-Techs Registration Statement on Form S-1, filed
    October 17, 1997, SEC File No. 333-38223)                                                                                                                                                                                                                                                                                                                  
|        | 10 | .32                                                                                       |  | Japan Distributorship Agreement, dated December 24, 1990,
    between Argo-Tech, Aerotech World Trade Corporation, Yamada
    Corporation, Yamada International Corporation and Vestar Capital
    Partners, Inc. (incorporated herein by reference to
    Exhibit 10.26 of Argo-Techs Registration Statement on
    Form S-1, filed October 17, 1997, SEC File
    No. 333-38223)                                                                                                                                                                                                                                
|        | 10 | .33                                                                                       |  | Stock Purchase Agreement, dated August 1, 1997, between
    Argo-Tech, J.C. Carter Company, Inc., Robert L. Veloz,
    Individually and as Trustee, Marlene J. Veloz, Individually and
    as Trustee, Edith T. Derbyshire, Individually and as Trustee,
    Harry S. Derbyshire, Individually and as Trustee, Michael Veloz,
    Katherine Canfield and Maureen Partch, as Trustee (incorporated
    herein by reference to Exhibit 10.27 of Argo-Techs
    Registration Statement on Form S-1/ A, filed
    November 26, 1997, SEC File No. 333-38223)                                                          
|        | 10 | .34                                                                                       |  | Prism Prototype Retirement Plan & Trust &
    401(k) Profit Sharing Plan Adoption Agreement, dated
    November 1, 1994 (incorporated herein by reference to
    Exhibit 10.28 of Argo-Techs Registration Statement on
    Form S-1/ A, filed November 26, 1997, SEC File
    No. 333-38223)                                                                                                                                                                                                                                                                                                                      
|        | 10 | .35                                                                                       |  | Prism Prototype Retirement Plan and Trust (incorporated herein
    by reference to Exhibit 10.29 of Argo-Techs
    Registration Statement on Form S-1/ A, filed
    November 26, 1997, SEC File No. 333-38223)                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .36                                                                                       |  | Agreement of Purchase and Sale between Agnem Holdings, Inc. and
    TRW Inc. dated as of August 5, 1986 (incorporated herein by
    reference to Exhibit 10.30 of Argo-Techs Registration
    Statement on Form S-1/ A, filed November 26, 1997, SEC
    File No. 333-38223)                                                                                                                                                                                                                                                                                                                                      

53



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##### Table of Contents



|        |     |                                                                                           |  |                                                                                                                                                                                                                                                                                                                     
|------- | --- | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |                                                                                          
|Number  |     | Description of Exhibit (and document from which incorporated by reference, if applicable)
|        |     |                                                                                          
|        | 10  | .37+                                                                                      |  | AT Holdings Corporation/ Argo-Tech Corporation 1998 Equity
    Replacement Stock Option Plan (incorporated herein by reference
    to Exhibit 10.32 of Argo-Techs registration statement
    on Form S-4 filed March 2, 1999, SEC File
    No. 333-73179)                                                          
|        | 10  | .38+                                                                                      |  | Amendment to the AT Holdings Corporation/ Argo-Tech Corporation
    1998 Equity Replacement Stock Option Plan dated June 12,
    2001 (incorporated herein by reference to Exhibit 10.2 of
    Argo-Techs Quarterly Report on Form 10-Q for the
    quarter ended July 28, 2001, SEC File No. 333-38223)           
|        | 10  | .39+                                                                                      |  | Form of Stock Option Agreement in connection with the AT
    Holdings Corporation/ Argo-Tech Corporation 1998 Equity
    Replacement Stock Option Plan (incorporated herein by reference
    to Exhibit 10.33 of Argo-Techs registration statement
    on Form S-4 filed March 2, 1999, SEC File
    No. 333-73179)
|        | 10  | .40+                                                                                      |  | Amendment, dated November 22, 2002, to Argo-Tech
    Corporation Trust Agreement, dated October 28, 1994
    (incorporated herein by reference to Exhibit 10.36 of
    Argo-Techs annual report on Form 10-K for the year
    ended October 26, 2002, SEC File No. 333-38223)                                      
|        | 10  | .41                                                                                       |  | Distribution Agreement, dated April 1, 2003, between
    Argo-Tech Corporation and Yamada Corporation (incorporated
    herein by reference to Exhibit 10.34 of Argo-Techs
    registration statement on Form S-4 filed September 23,
    2004, SEC File No. 333-119227)                                           
|        | 10  | .42*                                                                                      |  | Form of Professional Services Agreement, dated October 28,
    2005, between AT Holdings Corporation and Vestar Capital
    Partners/ Greenbriar Equity Group LLC                                                                                                                                                   
|        | 10  | .43+                                                                                      |  | Collateral Assignment Split Dollar Insurance Agreement, dated
    January 1, 1996, between Argo-Tech and Michael S. Lipscomb
    (incorporated herein by reference to Exhibit 10.3 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)                
|        | 10  | .44+                                                                                      |  | Collateral Assignment Split Dollar Insurance Agreement, dated
    January 1, 1996, between Argo-Tech and Paul R. Keen
    (incorporated herein by reference to Exhibit 10.4 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)                       
|        | 10  | .45+                                                                                      |  | Collateral Assignment Split Dollar Insurance Agreement, dated
    January 1, 1996, between Argo-Tech and Frances S. St. Clair
    (incorporated herein by reference to Exhibit 10.5 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)               
|        | 10  | .46                                                                                       |  | Nonqualified Deferred Compensation Agreement, dated
    December 28, 1995, between Argo-Tech and Frances S. St.
    Clair (incorporated herein by reference to Exhibit 10.6 of
    Argo-Techs quarterly report on Form 10-Q for the
    quarter ended July 30, 2005, SEC File No. 333-38223)                       
|        | 10  | .47+*                                                                                     |  | Form of Incentive Unit Grant Agreement, dated October 28,
    2005                                                                                                                                                                                                                                                  
|        | 10  | .48+*                                                                                     |  | Form of Amendment of Rollover Options and Waiver of Merger
    Consideration                                                                                                                                                                                                                                        
|        | 10  | .49+*                                                                                     |  | Change in Control Agreement, dated October 28, 2005,
    between Argo-Tech and John S. Glover                                                                                                                                                                                                                       
|        | 10  | .50+*                                                                                     |  | Non-Solicitation and Confidentiality Agreement, dated as of
    October 28, 2005, between AT Holdings Corporation and
    Frances S. St. Clair                                                                                                                                                                      
|        | 12  | .1*                                                                                       |  | Statement Regarding Computation of Ratios                                                                                                                                                                                                                                                                           
|        | 21  | .1                                                                                        |  | List of Subsidiaries (incorporated herein by reference to
    Exhibit 21.1 of Argo-Techs registration statement on
    Form S-4 filed September 23, 2004, SEC File
    No. 333-119227)                                                                                                                             
|        | 24  | .1*                                                                                       |  | Powers of Attorney                                                                                                                                                                                                                                                                                                  
|        | 31  | .1*                                                                                       |  | Certification by Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                              
|        | 31  | .2*                                                                                       |  | Certification by Chief Financial Officers pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                             
|        | 32* |                                                                                           |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002                                                                                                                                                                                      

54



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SIGNATURES


Form 10-K




| |                      
| | ---------------------
| | ARGO-TECH CORPORATION



| |     |                 
| | --- | ----------------
| | By: | /s/ Paul R. Keen

| |                   
| | ------------------
| |                   
| | Name: Paul R. Keen

| |        |                                                        
| | ------ | -------------------------------------------------------
| | Title: | Executive Vice President, General Counsel and Secretary



|                        |  |                                                                                             |  |                  |  | 
|----------------------- |  | ------------------------------------------------------------------------------------------- |  | ---------------- |  | 
|                       
|*Michael S. Lipscomb    |  | Director, Chairman, President and Chief Executive Officer
    (Principal Executive Officer) |  | January 27, 2006
|                       
|*John S. Glover         |  | Vice President and Chief Financial Officer (Principal Financial
    Officer)                |  | January 27, 2006
|                       
|*Paul A. Sklad          |  | Controller (Principal Accounting Officer)                                                   |  | January 27, 2006
|                       
|*John Daileader         |  | Director                                                                                    |  | January 27, 2006
|                       
|*Reginald L. Jones, III |  | Director                                                                                    |  | January 27, 2006
|                       
|*Jeffrey W. Long        |  | Director                                                                                    |  | January 27, 2006
|                       
|*Kathleen Moran         |  | Director                                                                                    |  | January 27, 2006
|                       
|*Daniel S. OConnell    |  | Director                                                                                    |  | January 27, 2006
|                       
|*John R. Woodard        |  | Director                                                                                    |  | January 27, 2006
|                       
|By:                     |  | /s/ Paul R. Keen(Paul R. Keen, as Attorney-in-fact)                                         |  |                  |  | 






|  |                                                                                                                                                                                                                                                                                
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The undersigned, by signing his name hereto, does sign and
    execute this report pursuant to a Power of Attorney executed on
    behalf of the above-indicated officers and directors of the
    registrant and filed herewith as Exhibit 24 on behalf of
    the registrant.

55



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##### Table of Contents



Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d)


of the Act by Registrants


Which Have Not Registered Securities Pursuant to
Section 12 of the Act




56



---



##### 










ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


ANNUAL REPORT ON
FORM 10-K:


FISCAL YEAR ENDED OCTOBER 29, 2005


ITEM 8 AND ITEM 15(a)(1)


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEX


|                                                                                                                                                                          |  |      |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | 
|                                                                                                                                                                          |  | Page |           
|                                                                                                                                                                          |  |      |           
|Financial Statements:                                                                                                                                                     |  |      |            | 
|Report of Independent Registered Public
    Accounting Firm                                                                                                               |  |      | F-2        | 
|Consolidated Balance Sheets as of
    October 29, 2005 and October 30, 2004 (Predecessor)                                                                                 |  |      | F-3        | 
|Consolidated Statements of Net
    Income/(Loss) for the Fiscal Years Ended October 29, 2005,
    October 30, 2004 and October 25, 2003 (Predecessor)                     |  |      | F-4        | 
|Consolidated Statements of
    Shareholders Equity/(Deficiency) for the Fiscal Years
    Ended October 29, 2005, October 30, 2004 and
    October 25, 2003 (Predecessor) |  |      | F-5        | 
|Consolidated Statements of Cash Flows for
    the Fiscal Years Ended October 29, 2005, October 30,
    2004 and October 25, 2003 (Predecessor)                            |  |      | F-6        | 
|Notes to Consolidated Financial Statements
    for the Fiscal Years Ended October 29, 2005,
    October 30, 2004 and October 25, 2003 (Predecessor)                       |  |      | F-7  F-30 | 
|Supplementary Data:                                                                                                                                                       |  |      |            | 
|Valuation and Qualifying Accounts for the
    Fiscal Years Ended October 29, 2005, October 30, 2004
    and October 25, 2003 (Predecessor)                                |  |      | F-31       | 



F-1



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




| |                                          
| | -----------------------------------------
| | of Argo-Tech Corporation and subsidiaries











| |                          
| | -------------------------
| | /s/ DELOITTE & TOUCHE LLP





F-2



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)





CONSOLIDATED BALANCE SHEETS


October 29, 2005 and October 30, 2004


|                                                        |                                                                                           |                                         |         |             |         |   |         |          |          |  
|------------------------------------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ----------- | ------- | - | ------- | -------- | -------- | -
|                                                        |                                                                                           |                                         |         | Predecessor |        
|                                                        |                                                                                           |                                         |         |             |        
|                                                        |                                                                                           | 2005                                    |         |             | 2004    |  
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                        |                                                                                           | (In thousand,                           |        
|                                                        |                                                                                           | except share data)                      |        
|ASSETS                                                 
|CURRENT ASSETS:                                         |                                                                                           |                                         |         |             |         |   |         |         
|                                                        | Cash and cash equivalents                                                                 |                                         | $       | 13,889      |         |   | $       | 15,857   |         
|                                                        | Receivables, net                                                                          |                                         |         | 40,319      |         |   |         | 29,013   |         
|                                                        | Income tax receivable                                                                     |                                         |         | 3,630       |         |   |         | 1,203    |         
|                                                        | Inventories, net                                                                          |                                         |         | 70,965      |         |   |         | 28,557   |         
|                                                        | Deferred income taxes and prepaid expenses                                                |                                         |         | 1,688       |         |   |         | 6,245    |         
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                        |                                                                                           | Total current assets                    |         |             | 130,491 |   |         |          | 80,875   |  
|                                                        |                                                                                           |                                         |         |             |         |  
|PROPERTY AND EQUIPMENT, net of accumulated depreciation |                                                                                           |                                         | 41,970  |             |         |   | 23,213  |         
|GOODWILL                                                |                                                                                           |                                         | 200,152 |             |         |   | 110,059 |         
|INTANGIBLE ASSETS, net of accumulated amortization      |                                                                                           |                                         | 214,440 |             |         |   | 31,502  |         
|OTHER ASSETS                                            |                                                                                           |                                         | 1,453   |             |         |   | 8,613   |         
|                                                        |                                                                                           |                                         |         |             |         |  
|Total Assets                                            |                                                                                           | $                                       | 588,506 |             |         | $ | 254,262 |         
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                       
|LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIENCY)      
|                                                       
|CURRENT LIABILITIES:                                    |                                                                                           |                                         |         |             |         |   |         |         
|                                                        | Current portion of long-term debt                                                         |                                         | $       | 750         |         |   | $       | 750      |         
|                                                        | Accounts payable                                                                          |                                         |         | 8,736       |         |   |         | 9,396    |         
|                                                        | Accrued liabilities                                                                       |                                         |         | 47,681      |         |   |         | 28,766   |         
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                        |                                                                                           | Total current liabilities               |         |             | 57,167  |   |         |          | 38,912   |  
|                                                        |                                                                                           |                                         |         |             |         |  
|LONG-TERM DEBT, net of current maturities               |                                                                                           |                                         | 278,312 |             |         |   | 264,063 |         
|DEFERRED INCOME TAXES                                   |                                                                                           |                                         | 75,120  |             |         |   | 7,747   |         
|OTHER NONCURRENT LIABILITIES                            |                                                                                           |                                         | 17,111  |             |         |   | 13,559  |         
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                        |                                                                                           | Total Liabilities                       |         |             | 427,710 |   |         |          | 324,281  |  
|                                                        |                                                                                           |                                         |         |             |         |  
|REDEEMABLE ESOP STOCK                                   |                                                                                           |                                         |        |             |         |   | 40,957  |         
|SHAREHOLDERS EQUITY/(DEFICIENCY):                      |                                                                                           |                                         |         |             |         |   |         |         
|                                                        | Common Stock, $.01 par value, authorized 3,000 shares;
    1 share issued and outstanding |                                         |         |            |         |   |         |         |         
|                                                        | Paid-in capital                                                                           |                                         |         | 160,796     |         |   |         |         |         
|                                                        | Accumulated other comprehensive loss                                                      |                                         |         |            |         |   |         | (3,315   | )       
|                                                        | Accumulated equity/ (deficit)                                                             |                                         |         |            |         |   |         | (107,661 | )       
|                                                        |                                                                                           |                                         |         |             |         |  
|                                                        |                                                                                           | Total shareholders equity/(deficiency) |         |             | 160,796 |   |         |          | (110,976 | )
|                                                        |                                                                                           |                                         |         |             |         |  
|Total Liabilities and Shareholders Equity/(Deficiency) |                                                                                           | $                                       | 588,506 |             |         | $ | 254,262 |         
|                                                        |                                                                                           |                                         |         |             |         |  



F-3



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)





CONSOLIDATED STATEMENTS OF NET INCOME/(LOSS)


For the Fiscal Years Ended October 29, 2005,
October 30, 2004 and October 25, 2003


|                                    |                    |                |         |        |      |   |         |        |  |   |         |        | 
|----------------------------------- | ------------------ | -------------- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                    |                    | Predecessor    |        
|                                    |                    |                |        
|                                    |                    | 2005           |         |        | 2004 |   |         | 2003   | 
|                                    |                    |                |         |        |      |   |         |        | 
|                                    |                    | (In thousands) |        
|Net revenues                        |                    | $              | 212,595 |        |      | $ | 187,328 |        |  | $ | 160,726 |       
|Cost of revenues                    |                    |                | 124,855 |        |      |   | 109,203 |        |  |   | 94,535  |       
|                                    |                    |                |         |        |      |   |         |        | 
|                                    | Gross profit       |                |         | 87,740 |      |   |         | 78,125 |  |   |         | 66,191 | 
|                                    |                    |                |         |        |      |   |         |        | 
|Selling, general and administrative |                    |                | 35,514  |        |      |   | 31,166  |        |  |   | 26,417  |       
|Research and development            |                    |                | 12,814  |        |      |   | 11,934  |        |  |   | 9,525   |       
|Amortization of intangible assets   |                    |                | 3,414   |        |      |   | 3,414   |        |  |   | 3,414   |       
|Merger expense                      |                    |                | 24,473  |        |      |   |        |        |  |   |        |       
|                                    |                    |                |         |        |      |   |         |        | 
|                                    | Operating expenses |                |         | 76,215 |      |   |         | 46,514 |  |   |         | 39,356 | 
|                                    |                    |                |         |        |      |   |         |        | 
|Income from operations              |                    |                | 11,525  |        |      |   | 31,611  |        |  |   | 26,835  |       
|Interest expense                    |                    |                | 25,601  |        |      |   | 22,705  |        |  |   | 21,257  |       
|Debt extinguishment expense         |                    |                |        |        |      |   | 12,961  |        |  |   |        |       
|Other, net                          |                    |                | (109    | )      |      |   | (95     | )      |  |   | (529    | )     
|                                    |                    |                |         |        |      |   |         |        | 
|Income/(loss) before income taxes   |                    |                | (13,967 | )      |      |   | (3,960  | )      |  |   | 6,107   |       
|Income tax (benefit)/provision      |                    |                | (7,768  | )      |      |   | (3,499  | )      |  |   | 1,579   |       
|                                    |                    |                |         |        |      |   |         |        | 
|Net income/(loss)                   |                    | $              | (6,199  | )      |      | $ | (461    | )      |  | $ | 4,528   |       
|                                    |                    |                |         |        |      |   |         |        | 



F-4



---



##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)





CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY/(DEFICIENCY)


For the Fiscal Years Ended October 29, 2005,
October 30, 2004 and October 25, 2003


|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |          |   |  |   |          |  
|------------------------------------------------------ |  | -------------- | - | ------- |  | ----------- | -------------- | - |  | ----------- | ------ | - | ----- | - | -------- | - |  | - | -------- | -
|                                                       |  |                |   |         |  | Accumulated |                |   |  |             |       
|                                                       |  | Common         |   | Paid-In |  |             | Comprehensive  |   |  | Accumulated |        |   |      
|                                                       |  | Stock          |   | Capital |  |             | Income/ (Loss) |   |  | Deficit     |        |   | Total |  
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |  
|                                                       |  | (In thousands) |  
|BALANCE, OCTOBER 26, 2002 (Predecessor)                |  | $              |  |         |  | $           |               |   |  | $           | (3,235 | ) |       | $ | (28,398  | ) |  | $ | (31,633  | )
|Net income                                             |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 4,528    |   |  |   | 4,528    |  
|Reduction minimum pension liability                    |  |                |   |         |  |             |                |   |  |             | 973    |   |       |   |          |   |  |   | 973      |  
|Accretion of redeemable ESOP stock                     |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (3,903   | ) |  |   | (3,903   | )
|Dividend                                               |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (226     | ) |  |   | (226     | )
|Foreign currency translation adjustment                |  |                |   |         |  |             |                |   |  |             | 119    |   |       |   |          |   |  |   | 119      |  
|Activity related to stock options                      |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 4        |   |  |   | 4        |  
|Other, net                                             |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 210      |   |  |   | 210      |  
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |         
|BALANCE, OCTOBER 25, 2003 (Predecessor)                |  | $              |  |         |  | $           |               |   |  | $           | (2,143 | ) |       | $ | (27,785  | ) |  | $ | (29,928  | )
|Net loss                                               |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (461     | ) |  |   | (461     | )
|Additional minimum pension liability                   |  |                |   |         |  |             |                |   |  |             | (1,179 | ) |       |   |          |   |  |   | (1,179   | )
|Accretion of redeemable ESOP stock                     |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (23,918  | ) |  |   | (23,918  | )
|Contributed redeemable ESOP stock                      |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 2,425    |   |  |   | 2,425    |  
|Dividend                                               |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (59,046  | ) |  |   | (59,046  | )
|Change in ESOP excess benefit plan                     |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 1,123    |   |  |   | 1,123    |  
|Foreign currency translation adjustment                |  |                |   |         |  |             |                |   |  |             | 7      |   |       |   |          |   |  |   | 7        |  
|Other, net                                             |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 1        |   |  |   | 1        |  
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |         
|BALANCE, OCTOBER 30, 2004 (Predecessor)                |  | $              |  |         |  | $           |               |   |  | $           | (3,315 | ) |       | $ | (107,661 | ) |  | $ | (110,976 | )
|Net loss                                               |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (6,199   | ) |  |   | (6,199   | )
|Additional minimum pension liability                   |  |                |   |         |  |             |                |   |  |             | (125   | ) |       |   |          |   |  |   | (125     | )
|Accretion of redeemable ESOP stock                     |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (32,255  | ) |  |   | (32,255  | )
|Contributed redeemable ESOP stock                      |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 8,453    |   |  |   | 8,453    |  
|Tax benefit on exercise of non-qualified stock options |  |                |   |         |  |             | 938            |   |  |             |        |   |       |   |          |   |  |   | 938      |  
|Dividend                                               |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (7,019   | ) |  |   | (7,019   | )
|Change in ESOP excess benefit plan                     |  |                |   |         |  |             |                |   |  |             |        |   |       |   | 404      |   |  |   | 404      |  
|Foreign currency translation adjustment                |  |                |   |         |  |             |                |   |  |             | (68    | ) |       |   |          |   |  |   | (68      | )
|Other, net                                             |  |                |   |         |  |             |                |   |  |             |        |   |       |   | (11      | ) |  |   | (11      | )
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |         
|BALANCE, OCTOBER 28, 2005 (Predecessor)                |  | $              |  |         |  | $           | 938            |   |  | $           | (3,508 | ) |       | $ | (144,288 | ) |  | $ | (146,858 | )
|Elimination of historical shareholders deficiency     |  |                |   |         |  |             | (938           | ) |  |             | 3,508  |   |       |   | 144,288  |   |  |   | 146,858  |  
|Investment from AT Holdings                            |  |                |   |         |  |             | 160,796        |   |  |             |        |   |       |   |          |   |  |   | 160,796  |  
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |         
|BALANCE, OCTOBER 29, 2005                              |  | $              |  |         |  | $           | 160,796        |   |  | $           |       |   |       | $ |         |   |  | $ | 160,796  |  
|                                                       |  |                |   |         |  |             |                |   |  |             |        |   |       |   |         



F-5



---



##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)





CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Fiscal Years Ended October 29, 2005,
October 30, 2004 and October 25, 2003


|                                       |                                                                                              |                               |        |        |         |   |        |          |        |   |        |         |        |  
|-------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------- | ------ | ------ | ------- | - | ------ | -------- | ------ | - | ------ | ------- | ------ | -
|                                       |                                                                                              | Predecessor                   |       
|                                       |                                                                                              |                               |       
|                                       |                                                                                              | 2005                          |        |        | 2004    |   |        | 2003     |       
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|                                       |                                                                                              | (In thousands)                |       
|CASH FLOWS FROM OPERATING ACTIVITIES:  |                                                                                              |                               |        |        |         |   |        |          |        |   |        |        
|                                       | Net income/(loss)                                                                            |                               | $      | (6,199 | )       |   | $      | (461     | )      |   | $      | 4,528   |       
|                                       | Adjustments to reconcile net income/(loss) to net cash provided
    by operating activities: |                               |        |        |         |   |        |          |        |   |        |         |       
|                                       | Depreciation                                                                                 |                               |        | 3,655  |         |   |        | 3,799    |        |   |        | 4,187   |       
|                                       | Amortization of intangible assets and deferred financing costs                               |                               |        | 4,569  |         |   |        | 5,375    |        |   |        | 5,866   |       
|                                       | Accretion of bond discount                                                                   |                               |        |       |         |   |        | 219      |        |   |        | 304     |       
|                                       | Debt extinguishment expense                                                                  |                               |        |       |         |   |        | 12,961   |        |   |        |        |       
|                                       | Non-cash stock option expense                                                                |                               |        | 841    |         |   |        |         |        |   |        |        |       
|                                       | Compensation expense recognized in connection with employee
    stock ownership plan (ESOP)  |                               |        | 8,453  |         |   |        | 4,851    |        |   |        | 1,874   |       
|                                       | Compensation expense recognized in connection with ESOP excess
    benefit plan              |                               |        |       |         |   |        | 1,123    |        |   |        |        |       
|                                       | Deferred pension cost                                                                        |                               |        |       |         |   |        | (912     | )      |   |        | 731     |       
|                                       | Deferred income taxes                                                                        |                               |        | (4,750 | )       |   |        | (2,150   | )      |   |        | (1,227  | )     
|                                       | Changes in operating assets and liabilities:                                                 |                               |        |        |         |   |        |          |        |   |        |         |       
|                                       |                                                                                              | Receivables                   |        |        | (13,732 | ) |        |          | 1,619  |   |        |         | (4,010 | )
|                                       |                                                                                              | Inventories                   |        |        | (2,111  | ) |        |          | (2,856 | ) |        |         | (578   | )
|                                       |                                                                                              | Prepaid expenses              |        |        | (430    | ) |        |          | (135   | ) |        |         | (348   | )
|                                       |                                                                                              | Accounts payable              |        |        | (700    | ) |        |          | 2,142  |   |        |         | 2,002  |  
|                                       |                                                                                              | Accrued and other liabilities |        |        | 10,672  |   |        |          | 7,640  |   |        |         | 2,220  |  
|                                       |                                                                                              | Other, net                    |        |        | (75     | ) |        |          | 15     |   |        |         | 124    |  
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|                                       | Net cash provided by operating activities                                                    |                               |        | 193    |         |   |        | 33,230   |        |   |        | 15,673  |       
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|CASH FLOWS FROM INVESTING ACTIVITIES:  |                                                                                              |                               |        |        |         |   |        |          |        |   |        |        
|                                       | Capital expenditures                                                                         |                               |        | (4,376 | )       |   |        | (3,056   | )      |   |        | (1,939  | )     
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|                                       | Net cash used in investing activities                                                        |                               |        | (4,376 | )       |   |        | (3,056   | )      |   |        | (1,939  | )     
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|CASH FLOWS FROM FINANCING ACTIVITIES:  |                                                                                              |                               |        |        |         |   |        |          |        |   |        |        
|                                       | Sale of senior notes                                                                         |                               |        |       |         |   |        | 250,000  |        |   |        |        |       
|                                       | Purchase of senior subordinated notes                                                        |                               |        |       |         |   |        | (200,571 | )      |   |        |        |       
|                                       | Borrowing of long-term debt                                                                  |                               |        | 5,000  |         |   |        | 15,000   |        |   |        |        |       
|                                       | Repayment of long-term debt                                                                  |                               |        | (750   | )       |   |        | (26,038  | )      |   |        | (16,000 | )     
|                                       | Payment of financing related fees                                                            |                               |        | (1,390 | )       |   |        | (7,719   | )      |   |        | (1,224  | )     
|                                       | Transaction related cash received from AT Holdings                                           |                               |        | 6,374  |         |   |        |         |        |   |        |        |       
|                                       | Purchase of AT Holdings stock from former ESOP participants                                  |                               |        | (3,886 | )       |   |        | (567     | )      |   |        | (273    | )     
|                                       | Dividend to AT Holdings                                                                      |                               |        | (3,133 | )       |   |        | (58,479  | )      |   |        |        |       
|                                       | Other, net                                                                                   |                               |        |       |         |   |        |         |        |   |        | 51      |       
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|                                       | Net cash provided by (used in) financing activities                                          |                               |        | 2,215  |         |   |        | (28,374  | )      |   |        | (17,446 | )     
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|CASH AND CASH EQUIVALENTS:             |                                                                                              |                               |        |        |         |   |        |          |        |   |        |        
|Net increase (decrease) for the period |                                                                                              |                               | (1,968 | )      |         |   | 1,800  |          |        |   | (3,712 | )      
|Balance, beginning of period           |                                                                                              |                               | 15,857 |        |         |   | 14,057 |          |        |   | 17,769 |        
|                                       |                                                                                              |                               |        |        |         |   |        |          |       
|Balance, end of period                 |                                                                                              | $                             | 13,889 |        |         | $ | 15,857 |          |        | $ | 14,057 |        
|                                       |                                                                                              |                               |        |        |         |   |        |          |       



F-6



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For the Fiscal Years Ended October 29, 2005,
October 30, 2004 and October 25, 2003




|   |                      
|-- | ---------------------
|1. | BASIS OF PRESENTATION







|   |       
|-- | ------
|2. | MERGER



1 4


F-7



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


in-the 3 4 3 4






|                                    |                               |   |         |         | 
|----------------------------------- | ----------------------------- | - | ------- | ------- | 
|Assets:                             |                               |   |         |        
|                                    | Current assets                |   | $       | 130,491 | 
|                                    | Property, plant and equipment |   |         | 41,970  | 
|                                    | Goodwill                      |   |         | 200,152 | 
|                                    | Intangible assets             |   |         | 214,440 | 
|                                    | Other assets                  |   |         | 2       | 
|                                    |                               |   |        
|                                    | Total assets                  |   | $       | 587,055 | 
|                                    |                               |   |        
|Liabilities:                        |                               |   |         |        
|                                    | Current liabilities           |   | $       | 56,313  | 
|                                    | Long-term debt                |   |         | 264,063 | 
|                                    | Other noncurrent liabilities  |   |         | 92,230  | 
|                                    |                               |   |        
|                                    | Total liabilities             |   |         | 412,606 | 
|                                    |                               |   |        
|Purchase price allocated to Company |                               | $ | 174,449 |        
|                                    |                               |   |        

F-8



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                     |  |             |         |   |             |   |         |  
|-------------------- |  | ----------- | ------- | - | ----------- | - | ------- | -
|                     |  | Year Ended  |         |   | Year Ended  |  
|                     |  | October 29, |         |   | October 30, |  
|                     |  | 2005        |         |   | 2004        |  
|                     |  |             |         |   |             |  
|Net sales            |  | $           | 212,595 |   |             | $ | 187,328 |  
|Loss from operations |  |             | (13,310 | ) |             |   | (17,936 | )
|Net loss             |  |             | (19,716 | ) |             |   | (23,254 | )

write-up write-up






|   |                                           
|-- | ------------------------------------------
|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation




Cash Equivalents


Receivables


Inventories


F-9



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


first-in, first-out,


Property and Equipment


|                           |  |  |                | 
|-------------------------- |  |  | -------------- | 
|Buildings and improvements |  |  | 7 to 30  years | 
|Equipment                  |  |  | 3 to 10  years | 

Goodwill and Intangible Assets




|                    |  |  |             | 
|------------------- |  |  | ----------- | 
|Contracts           |  |  | 10 Years    | 
|Spare Parts Annuity |  |  | 20 Years    | 
|Patents             |  |  | 5-16  Years | 

Deferred Financing Costs


Redeemable Stock


Foreign Currency Translation


Revenue Recognition


F-10



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




Stock Options


|                                                             |  |             |        |   |             |   |      |             |  |   |       |  
|------------------------------------------------------------ |  | ----------- | ------ | - | ----------- | - | ---- | ----------- |  | - | ----- | -
|                                                             |  | Predecessor |       
|                                                             |  |             |       
|                                                             |  | October 29, |        |   | October 30, |   |      | October 25, | 
|                                                             |  | 2005        |        |   | 2004        |   |      | 2003        | 
|                                                             |  |             |        |   |             |   |      |             | 
|Net income/(loss)  As reported                              |  | $           | (6,199 | ) |             | $ | (461 | )           |  | $ | 4,528 |  
|Compensation cost based on the fair value method (after tax) |  |             |        |   |             |   | (76  | )           |  |   | (254  | )
|                                                             |  |             |        |   |             |   |      |             | 
|Net income/(loss)  Pro forma                                |  | $           | (6,199 | ) |             | $ | (537 | )           |  | $ | 4,274 |  
|                                                             |  |             |        |   |             |   |      |             | 



Income Taxes


Use of Estimates


F-11



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|   |                                
|-- | -------------------------------
|4. | OTHER BALANCE SHEET INFORMATION



|                              |                                   |             |   |             |             |  |   |        |        | 
|----------------------------- | --------------------------------- | ----------- | - | ----------- | ----------- |  | - | ------ | ------ | 
|                              |                                   |             |   | Predecessor |            
|                              |                                   |             |   |             |            
|                              |                                   | October 29, |   |             | October 30, | 
|                              |                                   | 2005        |   |             | 2004        | 
|                              |                                   |             |   |             |             | 
|Accrued liabilities:          |                                   |             |   |             |             |  |   |       
|                              | Salaries and accrued compensation |             | $ | 11,961      |             |  | $ | 9,843  |       
|                              | Payroll taxes                     |             |   | 7,638       |             |  |   |        |       
|                              | Accrued interest                  |             |   | 9,635       |             |  |   | 8,222  |       
|                              | Accrued warranty                  |             |   | 2,073       |             |  |   | 2,084  |       
|                              | Deferred and other income taxes   |             |   | 7,052       |             |  |   | 810    |       
|                              | Other                             |             |   | 9,322       |             |  |   | 7,807  |       
|                              |                                   |             |   |             |             | 
|                              |                                   | Total       |   | $           | 47,681      |  |   | $      | 28,766 | 
|                              |                                   |             |   |             |             | 
|Other noncurrent liabilities: |                                   |             |   |             |             |  |   |       
|                              | Accrued post retirement benefits  |             | $ | 14,852      |             |  | $ | 11,397 |       
|                              | Other                             |             |   | 2,259       |             |  |   | 2,162  |       
|                              |                                   |             |   |             |             | 
|                              |                                   | Total       |   | $           | 17,111      |  |   | $      | 13,559 | 
|                              |                                   |             |   |             |             | 



|   |            
|-- | -----------
|5. | RECEIVABLES



|                                                                                 |                                                          |                      |        |             |             |   |        |        |      |  
|-------------------------------------------------------------------------------- | -------------------------------------------------------- | -------------------- | ------ | ----------- | ----------- | - | ------ | ------ | ---- | -
|                                                                                 |                                                          |                      |        | Predecessor |            
|                                                                                 |                                                          |                      |        |             |            
|                                                                                 |                                                          | October 29,          |        |             | October 30, |  
|                                                                                 |                                                          | 2005                 |        |             | 2004        |  
|                                                                                 |                                                          |                      |        |             |             |  
|Amounts billed  net of allowance for uncollectible
    amounts of $459 and $310 |                                                          | $                    | 39,193 |             |             | $ | 29,280 |       
|Amounts unbilled (principally commercial customers):                             |                                                          |                      |        |             |             |   |        |       
|                                                                                 | Net reimbursable costs incurred on uncompleted contracts |                      |        | 1,776       |             |   |        | 3,514  |     
|                                                                                 | Billings to date                                         |                      |        | (650        | )           |   |        | (3,781 | )   
|                                                                                 |                                                          |                      |        |             |             |  
|                                                                                 |                                                          | Total unbilled  net |        |             | 1,126       |   |        |        | (267 | )
|                                                                                 |                                                          |                      |        |             |             |  
|Net receivables                                                                  |                                                          | $                    | 40,319 |             |             | $ | 29,013 |       
|                                                                                 |                                                          |                      |        |             |             |  

F-12



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|   |            
|-- | -----------
|6. | INVENTORIES



|                                          |       |             |        |             |             |   |        |        | 
|----------------------------------------- | ----- | ----------- | ------ | ----------- | ----------- | - | ------ | ------ | 
|                                          |       |             |        | Predecessor |            
|                                          |       |             |        |             |            
|                                          |       | October 29, |        |             | October 30, |  
|                                          |       | 2005        |        |             | 2004        |  
|                                          |       |             |        |             |             |  
|Finished goods                            |       | $           | 5,401  |             |             | $ | 2,686  |       
|Work-in-process and purchased parts       |       |             | 68,895 |             |             |   | 28,963 |       
|Raw materials and supplies                |       |             | 706    |             |             |   | 776    |       
|                                          |       |             |        |             |             |  
|                                          | Total |             |        | 75,002      |             |   |        | 32,425 | 
|Reserve for excess and obsolete inventory |       |             | (4,037 | )           |             |   | (3,868 | )     
|                                          |       |             |        |             |             |  
|Inventories  net                         |       | $           | 70,965 |             |             | $ | 28,557 |       
|                                          |       |             |        |             |             |  



|   |                  
|-- | -----------------
|7. | INTANGIBLE ASSETS



|                   |                        |                  |   |                  |              |             |        |   |   |              |   |        |        |  |   |        |        | 
|------------------ | ---------------------- | ---------------- | - | ---------------- | ------------ | ----------- | ------ | - | - | ------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                   |                        |                  |   |                  |              | Predecessor |       
|                   |                        |                  |   |                  |              |             |       
|                   |                        | October 29, 2005 |   | October 30, 2004 |             
|                   |                        |                  |   |                  |             
|                   |                        | Gross            |   |                  | Accumulated  |             | Gross  |   |   | Accumulated  |  
|                   |                        | Amount           |   |                  | Amortization |             | Amount |   |   | Amortization |  
|                   |                        |                  |   |                  |              |             |        |   |   |              |  
|Intangible Assets: |                        |                  |   |                  |              |             |        |   |   |              |   |        |        |  |   |       
|                   | Contracts              |                  | $ | 20,870           |              |             | $      |  |   |              | $ | 17,100 |        |  | $ | 12,115 |       
|                   | Customer relationships |                  |   | 193,090          |              |             |        |  |   |              |   | 38,200 |        |  |   | 11,896 |       
|                   | Patents                |                  |   | 480              |              |             |        |  |   |              |   | 387    |        |  |   | 174    |       
|                   |                        |                  |   |                  |              |             |        |   |   |              |   |       
|                   |                        | Total            |   | $                | 214,440      |             |        | $ |  |              |   | $      | 55,687 |  |   | $      | 24,185 | 
|                   |                        |                  |   |                  |              |             |        |   |   |              |   |       





|   |         
|-- | --------
|8. | GOODWILL



F-13



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|   |                       
|-- | ----------------------
|9. | PROPERTY AND EQUIPMENT

Owned Property


|                                 |       |             |        |             |             |   |         |        | 
|-------------------------------- | ----- | ----------- | ------ | ----------- | ----------- | - | ------- | ------ | 
|                                 |       |             |        | Predecessor |            
|                                 |       |             |        |             |            
|                                 |       | October 29, |        |             | October 30, |  
|                                 |       | 2005        |        |             | 2004        |  
|                                 |       |             |        |             |             |  
|Land and land improvements       |       | $           | 7,071  |             |             | $ | 7,663   |       
|Buildings and building equipment |       |             | 25,205 |             |             |   | 34,548  |       
|Machinery and equipment          |       |             | 7,214  |             |             |   | 41,694  |       
|Office and automotive equipment  |       |             | 1,187  |             |             |   | 8,504   |       
|Construction-in-progress         |       |             | 1,293  |             |             |   | 1,325   |       
|                                 |       |             |        |             |             |  
|                                 | Total |             |        | 41,970      |             |   |         | 93,734 | 
|Accumulated depreciation         |       |             |       |             |             |   | (70,521 | )     
|                                 |       |             |        |             |             |  
|Total  net                      |       | $           | 41,970 |             |             | $ | 23,213  |       
|                                 |       |             |        |             |             |  

Property Leased to Others




|                                                  |       |             |       |       |      |   |       |       |  |   |       |       | 
|------------------------------------------------- | ----- | ----------- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                                                  |       | Predecessor |      
|                                                  |       |             |      
|                                                  |       | 2005        |       |       | 2004 |   |       | 2003  | 
|                                                  |       |             |       |       |      |   |       |       | 
|Minimum contractual amounts under property leases |       | $           | 3,811 |       |      | $ | 4,126 |       |  | $ | 4,498 |      
|Service contracts revenue based on usage          |       |             | 687   |       |      |   | 828   |       |  |   | 774   |      
|                                                  |       |             |       |       |      |   |       |       | 
|                                                  | Total |             | $     | 4,498 |      |   | $     | 4,954 |  |   | $     | 5,272 | 
|                                                  |       |             |       |       |      |   |       |       | 





|    |                 
|--- | ----------------
|10. | PRODUCT WARRANTY



F-14



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                                                         |  |             |       |             |             |   |       |  
|------------------------------------------------------------------------ |  | ----------- | ----- | ----------- | ----------- | - | ----- | -
|                                                                         |  |             |       | Predecessor |            
|                                                                         |  |             |       |             |            
|                                                                         |  | October 29, |       |             | October 30, |  
|                                                                         |  | 2005        |       |             | 2004        |  
|                                                                         |  |             |       |             |             |  
|Beginning balance                                                        |  | $           | 2,084 |             |             | $ | 2,130 |  
|Accruals for warranties issued                                           |  |             | 20    |             |             |   | 20    |  
|Accruals for pre-existing warranties (including changes in
    estimate) |  |             | 756   |             |             |   | 780   |  
|Warranty claims settled                                                  |  |             | (787  | )           |             |   | (846  | )
|                                                                         |  |             |       |             |             |  
|Ending balance                                                           |  | $           | 2,073 |             |             | $ | 2,084 |  
|                                                                         |  |             |       |             |             |  



|    |                       
|--- | ----------------------
|11. | EMPLOYEE BENEFIT PLANS

Employee Stock Ownership Plan




|                                                 |  |             |          |             |             |   |         |  
|------------------------------------------------ |  | ----------- | -------- | ----------- | ----------- | - | ------- | -
|                                                 |  |             |          | Predecessor |            
|                                                 |  |             |          |             |            
|                                                 |  | October 29, |          |             | October 30, |  
|                                                 |  | 2005        |          |             | 2004        |  
|                                                 |  |             |          |             |             |  
|Allocated shares                                 |  | $           | 441,000  |             |             | $ | 399,000 |  
|Shares released for allocation(a)                |  |             | 42,000   |             |             |   | 42,000  |  
|                                                 |  |             |          |             |             |  
|Total ESOP shares                                |  |             | 483,000  |             |             |   | 441,000 |  
|Repurchased shares received as distributions     |  |             | (121,971 | )           |             |   | (86,366 | )
|Repurchased shares in connection with the Merger |  |             | (361,029 | )           |             |   |        |  
|                                                 |  |             |          |             |             |  
|Total available ESOP shares                      |  |             |         |             |             |   | 354,634 |  
|                                                 |  |             |          |             |             |  
|Fair market value of unearned ESOP shares        |  | $           |         |             |             | $ |        |  
|                                                 |  |             |          |             |             |  






|    |  |                             
|--- |  | ----------------------------
|(a) |  | Includes contributed shares.







F-15



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






Pension and Savings Plans






|                                                 |  |             |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------ |  | ----------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                 |  | Predecessor |       
|                                                 |  |             |       
|                                                 |  | 2005        |        |   | 2004 |   |        | 2003 | 
|                                                 |  |             |        |   |      |   |        |      | 
|Service cost  benefits earned during the period |  | $           | 371    |   |      | $ | 279    |      |  | $ | 277    |  
|Interest cost on projected benefit obligation    |  |             | 1,383  |   |      |   | 1,324  |      |  |   | 1,299  |  
|Expected return on plan assets                   |  |             | (1,868 | ) |      |   | (1,756 | )    |  |   | (1,491 | )
|Net amortization and deferral                    |  |             | 410    |   |      |   | 348    |      |  |   | 384    |  
|                                                 |  |             |        |   |      |   |        |      | 
|Net periodic pension cost                        |  |             | 296    |   |      |   | 195    |      |  |   | 469    |  
|                                                 |  |             |        |   |      |   |        |      | 
|Curtailment loss                                 |  |             | 369    |   |      |   |       |      |  |   |       |  
|Special termination benefits                     |  |             | 57     |   |      |   |       |      |  |   |       |  
|                                                 |  |             |        |   |      |   |        |      | 
|Net periodic pension cost after settlements      |  | $           | 722    |   |      | $ | 195    |      |  | $ | 469    |  
|                                                 |  |             |        |   |      |   |        |      | 

F-16



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                        |  |             |        |             |             |   |        |  
|--------------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ------ | -
|                                        |  |             |        | Predecessor |            
|                                        |  |             |        |             |            
|                                        |  | October 29, |        |             | October 30, |  
|                                        |  | 2005        |        |             | 2004        |  
|                                        |  |             |        |             |             |  
|Benefit obligation at beginning of year |  | $           | 22,977 |             |             | $ | 20,809 |  
|Service cost                            |  |             | 371    |             |             |   | 279    |  
|Interest cost                           |  |             | 1,383  |             |             |   | 1,324  |  
|Benefits paid                           |  |             | (1,002 | )           |             |   | (923   | )
|Actuarial (gain)/loss                   |  |             | (251   | )           |             |   | 16     |  
|Change in plan provisions               |  |             | 542    |             |             |   |       |  
|Change due to assumptions               |  |             | 686    |             |             |   | 58     |  
|Curtailment loss                        |  |             | 369    |             |             |   |       |  
|Special termination benefits            |  |             | 57     |             |             |   |       |  
|Change in discount rate                 |  |             |       |             |             |   | 1,414  |  
|                                        |  |             |        |             |             |  
|Benefit obligation at end of year       |  | $           | 25,132 |             |             | $ | 22,977 |  
|                                        |  |             |        |             |             |  



|                                               |  |             |        |             |             |   |        |  
|---------------------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ------ | -
|                                               |  |             |        | Predecessor |            
|                                               |  |             |        |             |            
|                                               |  | October 29, |        |             | October 30, |  
|                                               |  | 2005        |        |             | 2004        |  
|                                               |  |             |        |             |             |  
|Fair value of plan assets at beginning of year |  | $           | 21,112 |             |             | $ | 19,974 |  
|Actual return on plan assets                   |  |             | 1,828  |             |             |   | 1,876  |  
|Employer contributions                         |  |             | 132    |             |             |   | 185    |  
|Benefits paid                                  |  |             | (1,002 | )           |             |   | (923   | )
|                                               |  |             |        |             |             |  
|Fair value of plan assets at end of year       |  | $           | 22,070 |             |             | $ | 21,112 |  
|                                               |  |             |        |             |             |  



|                                |  |             |        |             |             |   |        |  
|------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ------ | -
|                                |  |             |        | Predecessor |            
|                                |  |             |        |             |            
|                                |  | October 29, |        |             | October 30, |  
|                                |  | 2005        |        |             | 2004        |  
|                                |  |             |        |             |             |  
|Funded status                   |  | $           | (3,062 | )           |             | $ | (1,865 | )
|Unrecognized net loss           |  |             |       |             |             |   | 5,512  |  
|Unrecognized prior service cost |  |             |       |             |             |   | 380    |  
|                                |  |             |        |             |             |  
|Net amount recognized           |  | $           | (3,062 | )           |             | $ | 4,027  |  
|                                |  |             |        |             |             |  

F-17



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                                      |  |             |        |             |             |   |       |  
|----------------------------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ----- | -
|                                                      |  |             |        | Predecessor |            
|                                                      |  |             |        |             |            
|                                                      |  | October 29, |        |             | October 30, |  
|                                                      |  | 2005        |        |             | 2004        |  
|                                                      |  |             |        |             |             |  
|Prepaid pension cost at the beginning of the year     |  | $           | 4,027  |             |             | $ | 4,037 |  
|Net periodic pension cost                             |  |             | (722   | )           |             |   | (195  | )
|Employer contributions                                |  |             | 132    |             |             |   | 185   |  
|Purchase accounting adjustment                        |  |             | (6,499 | )           |             |   |      |  
|                                                      |  |             |        |             |             |  
|Prepaid (accrued) pension cost at the end of the year |  | $           | (3,062 | )           |             | $ | 4,027 |  
|                                                      |  |             |        |             |             |  



|                                     |  |             |        |             |             |   |        |  
|------------------------------------ |  | ----------- | ------ | ----------- | ----------- | - | ------ | -
|                                     |  |             |        | Predecessor |            
|                                     |  |             |        |             |            
|                                     |  | October 29, |        |             | October 30, |  
|                                     |  | 2005        |        |             | 2004        |  
|                                     |  |             |        |             |             |  
|Accrued benefit liability            |  | $           | (3,062 | )           |             | $ | (1,865 | )
|Intangible asset                     |  |             |       |             |             |   | 380    |  
|Accumulated other comprehensive loss |  |             |       |             |             |   | 5,512  |  
|                                     |  |             |        |             |             |  
|Net amount recognized                |  | $           | (3,062 | )           |             | $ | 4,027  |  
|                                     |  |             |        |             |             |  



|                                                                                    |  |             |        |             |             |   |        | 
|----------------------------------------------------------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ------ | 
|                                                                                    |  |             |        | Predecessor |            
|                                                                                    |  |             |        |             |            
|                                                                                    |  | October 29, |        |             | October 30, |  
|                                                                                    |  | 2005        |        |             | 2004        |  
|                                                                                    |  |             |        |             |             |  
|Accumulated benefit obligation at the end of the year                               |  | $           | 25,132 |             |             | $ | 22,977 | 
|Increase (decrease) in minimum liability included in other
    comprehensive income |  |             | 209    |             |             |   | 1,966  | 



|                                                 |  |             |       |  |      |  |       |      |  |  |       | 
|------------------------------------------------ |  | ----------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                                 |  | Predecessor |      
|                                                 |  |             |      
|                                                 |  | 2005        |       |  | 2004 |  |       | 2003 | 
|                                                 |  |             |       |  |      |  |       |      | 
|Discount rate                                    |  |             | 6.00% |  |      |  | 6.00% |      |  |  | 6.50% | 
|Expected long-term rate of return on plan assets |  |             | 9.00% |  |      |  | 9.00% |      |  |  | 9.00% | 



|                  |       |            |           |           |             |             |       |             |  |  |       |        | 
|----------------- | ----- | ---------- | --------- | --------- | ----------- | ----------- | ----- | ----------- |  |  | ----- | ------ | 
|                  |       |            |           | Assets at |            
|                  |       |            |           |           |            
|                  |       |            |           |           |             | Predecessor |      
|                  |       |            |           |           |             |             |      
|                  |       | Target     |           |           | October 29, |             |       | October 30, | 
|Asset Category    |       | Allocation |           |           | 2005        |             |       | 2004        | 
|                  |       |            |           |           |             |             |       |             | 
|Equity securities |       |            | 60% - 70% |           |             |             | 62.0% |             |  |  | 61.2% |       
|Debt securities   |       |            | 30% - 40% |           |             |             | 36.7% |             |  |  | 38.3% |       
|Cash              |       |            | 0% - 10%  |           |             |             | 1.3%  |             |  |  | 0.5%  |       
|                  |       |            |           |           |             |             |       |             | 
|                  | Total |            |           |           |             |             |       | 100.0%      |  |  |       | 100.0% | 
|                  |       |            |           |           |             |             |       |             | 

F-18



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)










|                                     |  |   |       | 
|------------------------------------ |  | - | ----- | 
|October 31, 2006                     |  | $ | 1,134 | 
|October 31, 2007                     |  |   | 1,124 | 
|October 31, 2008                     |  |   | 1,162 | 
|October 31, 2009                     |  |   | 1,210 | 
|October 31, 2010                     |  |   | 1,263 | 
|October 31, 2011 to October 31, 2015 |  |   | 8,076 | 

Other Postretirement Benefits






|                              |                                 |             |     |       |      |   |     |       |  |   |     |       | 
|----------------------------- | ------------------------------- | ----------- | --- | ----- | ---- | - | --- | ----- |  | - | --- | ----- | 
|                              |                                 | Predecessor |    
|                              |                                 |             |    
|                              |                                 | 2005        |     |       | 2004 |   |     | 2003  | 
|                              |                                 |             |     |       |      |   |     |       | 
|Service cost                  |                                 | $           | 241 |       |      | $ | 179 |       |  | $ | 187 |      
|Interest cost                 |                                 |             | 883 |       |      |   | 881 |       |  |   | 804 |      
|Net amortization and deferral |                                 |             | 139 |       |      |   | 135 |       |  |   | 23  |      
|                              |                                 |             |     |       |      |   |     |       | 
|                              | Net postretirement benefit cost |             | $   | 1,263 |      |   | $   | 1,195 |  |   | $   | 1,014 | 
|                              |                                 |             |     |       |      |   |     |       | 

F-19



---



##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                        |  |             |        |             |             |   |        |  
|--------------------------------------- |  | ----------- | ------ | ----------- | ----------- | - | ------ | -
|                                        |  |             |        | Predecessor |            
|                                        |  |             |        |             |            
|                                        |  | October 29, |        |             | October 30, |  
|                                        |  | 2005        |        |             | 2004        |  
|                                        |  |             |        |             |             |  
|Benefit obligation at beginning of year |  | $           | 14,476 |             |             | $ | 14,519 |  
|Service cost                            |  |             | 241    |             |             |   | 179    |  
|Interest cost                           |  |             | 883    |             |             |   | 881    |  
|Benefits paid                           |  |             | (552   | )           |             |   | (492   | )
|Plan participant contributions          |  |             | 150    |             |             |   | 133    |  
|Actuarial (gain)/loss                   |  |             | 399    |             |             |   | (1,315 | )
|Change in plan provisions               |  |             |       |             |             |   | (472   | )
|Change in assumptions                   |  |             | (245   | )           |             |   |       |  
|Change in discount rate                 |  |             |       |             |             |   | 1,043  |  
|                                        |  |             |        |             |             |  
|Benefit obligation at end of year       |  | $           | 15,352 |             |             | $ | 14,476 |  
|                                        |  |             |        |             |             |  





|                                               |  |             |      |             |             |   |      |  
|---------------------------------------------- |  | ----------- | ---- | ----------- | ----------- | - | ---- | -
|                                               |  |             |      | Predecessor |            
|                                               |  |             |      |             |            
|                                               |  | October 29, |      |             | October 30, |  
|                                               |  | 2005        |      |             | 2004        |  
|                                               |  |             |      |             |             |  
|Fair value of plan assets at beginning of year |  | $           |     |             |             | $ |     |  
|Benefits paid                                  |  |             | (552 | )           |             |   | (492 | )
|Employer contributions                         |  |             | 402  |             |             |   | 359  |  
|Plan participant contributions                 |  |             | 150  |             |             |   | 133  |  
|                                               |  |             |      |             |             |  
|Fair value of plan assets at end of year       |  | $           |     |             |             | $ |     |  
|                                               |  |             |      |             |             |  



|                                |  |             |         |             |             |   |         |  
|------------------------------- |  | ----------- | ------- | ----------- | ----------- | - | ------- | -
|                                |  |             |         | Predecessor |            
|                                |  |             |         |             |            
|                                |  | October 29, |         |             | October 30, |  
|                                |  | 2005        |         |             | 2004        |  
|                                |  |             |         |             |             |  
|Benefit obligation              |  | $           | (15,352 | )           |             | $ | (14,476 | )
|Unrecognized prior service cost |  |             |        |             |             |   | (472    | )
|Unrecognized net (gain) loss    |  |             |        |             |             |   | 3,151   |  
|                                |  |             |         |             |             |  
|Accrued benefit cost            |  | $           | (15,352 | )           |             | $ | (11,797 | )
|                                |  |             |         |             |             |  

F-20



---



##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                                                 |  |             |         |             |             |   |         |  
|---------------------------------------------------------------- |  | ----------- | ------- | ----------- | ----------- | - | ------- | -
|                                                                 |  |             |         | Predecessor |            
|                                                                 |  |             |         |             |            
|                                                                 |  | October 29, |         |             | October 30, |  
|                                                                 |  | 2005        |         |             | 2004        |  
|                                                                 |  |             |         |             |             |  
|Accrued postretirement benefit cost at the beginning of the year |  | $           | (11,797 | )           |             | $ | (10,961 | )
|Net periodic postretirement benefit cost                         |  |             | (1,263  | )           |             |   | (1,195  | )
|Claim payments                                                   |  |             | 402     |             |             |   | 359     |  
|Purchase accounting adjustment                                   |  |             | (2,694  | )           |             |   |        |  
|                                                                 |  |             |         |             |             |  
|Accrued postretirement benefit cost at the end of the year       |  | $           | (15,352 | )           |             | $ | (11,797 | )
|                                                                 |  |             |         |             |             |  



|              |  |      |       |  |      |  |       | 
|------------- |  | ---- | ----- |  | ---- |  | ----- | 
|              |  | 2005 |       |  | 2004 | 
|              |  |      |       |  |      | 
|Discount rate |  |      | 6.00% |  |      |  | 6.00% | 



|                                                  |  |      |      |   |      |  |      |  
|------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                                  |  | 2005 |      |   | 2004 | 
|                                                  |  |      |      |   |      | 
|Health care cost trend rate assumed for next year |  |      | 7.50 | % |      |  | 8.00 | %
|Ultimate rate                                     |  |      | 5.00 | % |      |  | 5.00 | %
|Year ultimate rate is valued                      |  |      | 2011 |   |      |  | 2011 |  



|                                        |  |   |     | 
|--------------------------------------- |  | - | --- | 
|Expected employer contributions         |  | $ | 487 | 
|Expected plan participant contributions |  | $ | 162 | 



|                                     |  |   |       | 
|------------------------------------ |  | - | ----- | 
|October 31, 2006                     |  | $ | 487   | 
|October 31, 2007                     |  |   | 551   | 
|October 31, 2008                     |  |   | 614   | 
|October 31, 2009                     |  |   | 677   | 
|October 31, 2010                     |  |   | 740   | 
|October 31, 2011 to October 31, 2015 |  |   | 4,208 | 



|                                            |  |          |       |  |          |   |        |  
|------------------------------------------- |  | -------- | ----- |  | -------- | - | ------ | -
|                                            |  | 1% point |       |  | 1% point |  
|                                            |  | Increase |       |  | Decrease |  
|                                            |  |          |       |  |          |  
|Effect on service and interest cost         |  | $        | 210   |  |          | $ | (168   | )
|Effect on postretirement benefit obligation |  | $        | 2,632 |  |          | $ | (2,139 | )

F-21



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Stock Appreciation Rights (SARs)


1 3




|    |             
|--- | ------------
|12. | INCOME TAXES



|                                 |                 |             |        |        |        |   |        |        |        |   |        |       |       | 
|-------------------------------- | --------------- | ----------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ----- | ----- | 
|                                 |                 | Predecessor |       
|                                 |                 |             |       
|                                 |                 | 2005        |        |        | 2004   |   |        | 2003   |       
|                                 |                 |             |        |        |        |   |        |        |       
|Current tax provision/(benefit): |                 |             |        |        |        |   |        |        |        |   |        |      
|                                 | Federal         |             | $      | (3,039 | )      |   | $      | (1,273 | )      |   | $      | 2,134 |      
|                                 | State and local |             |        | 21     |        |   |        | (76    | )      |   |        | 672   |      
|                                 |                 |             |        |        |        |   |        |        |       
|                                 |                 | Total       |        |        | (3,018 | ) |        |        | (1,349 | ) |        |       | 2,806 | 
|Deferred tax benefit             |                 |             | (4,750 | )      |        |   | (2,150 | )      |        |   | (1,227 | )    
|                                 |                 |             |        |        |        |   |        |        |       
|Income tax provision/(benefit)   |                 | $           | (7,768 | )      |        | $ | (3,499 | )      |        | $ | 1,579  |      
|                                 |                 |             |        |        |        |   |        |        |       



|                                                     |  |             |        |   |      |   |        |      |  |   |       |  
|---------------------------------------------------- |  | ----------- | ------ | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                                     |  | Predecessor |       
|                                                     |  |             |       
|                                                     |  | 2005        |        |   | 2004 |   |        | 2003 | 
|                                                     |  |             |        |   |      |   |        |      | 
|Income tax provision at statutory rate               |  | $           | (4,889 | ) |      | $ | (1,346 | )    |  | $ | 2,137 |  
|State tax provision  net of federal benefits        |  |             | (468   | ) |      |   | 80     |      |  |   | 391   |  
|Extraterritorial income                              |  |             | (1,490 | ) |      |   | (1,403 | )    |  |   | (829  | )
|R&D credit                                           |  |             | (748   | ) |      |   | (590   | )    |  |   | (252  | )
|ESOP                                                 |  |             |       |   |      |   | 539    |      |  |   | 66    |  
|Settlement of tax examination and reserve adjustment |  |             | (451   | ) |      |   | (720   | )    |  |   |      |  
|Other  net                                          |  |             | 278    |   |      |   | (59    | )    |  |   | 66    |  
|                                                     |  |             |        |   |      |   |        |      | 
|Income tax provision/(benefit)                       |  | $           | (7,768 | ) |      | $ | (3,499 | )    |  | $ | 1,579 |  
|                                                     |  |             |        |   |      |   |        |      | 



F-22



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                           |                                 |                 |         |             |             |   |        |         |        |  
|-------------------------- | ------------------------------- | --------------- | ------- | ----------- | ----------- | - | ------ | ------- | ------ | -
|                           |                                 |                 |         | Predecessor |            
|                           |                                 |                 |         |             |            
|                           |                                 | October 29,     |         |             | October 30, |  
|                           |                                 | 2005            |         |             | 2004        |  
|                           |                                 |                 |         |             |             |  
|Current:                   |                                 |                 |         |             |             |   |        |        
|                           | Inventory                       |                 | $       | (13,784     | )           |   | $      | 1,374   |       
|                           | Employee benefits               |                 |         | 1,496       |             |   |        | 1,361   |       
|                           | Warranty                        |                 |         | 798         |             |   |        | 815     |       
|                           | Engineering reserves            |                 |         | 699         |             |   |        | 1,329   |       
|                           | Net operating loss carryforward |                 |         | 3,727       |             |   |        |        |       
|                           | Other reserves                  |                 |         | 201         |             |   |        | 694     |       
|                           |                                 |                 |         |             |             |  
|                           |                                 | Total current   |         |             | (6,863      | ) |        |         | 5,573  |  
|                           |                                 |                 |         |             |             |  
|Long-term:                 |                                 |                 |         |             |             |   |        |        
|                           | Hourly retiree medical          |                 |         | 5,534       |             |   |        | 4,420   |       
|                           | Accrued pension benefit         |                 |         | 689         |             |   |        | 846     |       
|                           | Employee benefits               |                 |         |            |             |   |        | 500     |       
|                           | Property and equipment          |                 |         | (7,696      | )           |   |        | (584    | )     
|                           | Intangible assets               |                 |         | (79,332     | )           |   |        | (12,866 | )     
|                           | Senior notes                    |                 |         | 3,600       |             |   |        |        |       
|                           | R&D tax credit carryforward     |                 |         | 1,721       |             |   |        |        |       
|                           | Other  net                     |                 |         | 364         |             |   |        | (63     | )     
|                           |                                 |                 |         |             |             |  
|                           |                                 | Total long-term |         |             | (75,120     | ) |        |         | (7,747 | )
|                           |                                 |                 |         |             |             |  
|Net deferred tax liability |                                 | $               | (81,983 | )           |             | $ | (2,174 | )      
|                           |                                 |                 |         |             |             |  



F-23



---



##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|    |     
|--- | ----
|13. | DEBT

Summary


|                          |                  |             |         |             |             |   |         |         | 
|------------------------- | ---------------- | ----------- | ------- | ----------- | ----------- | - | ------- | ------- | 
|                          |                  |             |         | Predecessor |            
|                          |                  |             |         |             |            
|                          |                  | October 29, |         |             | October 30, |  
|                          |                  | 2005        |         |             | 2004        |  
|                          |                  |             |         |             |             |  
|Term loans                |                  | $           | 19,062  |             |             | $ | 14,813  |        
|Revolving credit facility |                  |             |        |             |             |   |        |        
|Senior notes              |                  |             | 260,000 |             |             |   | 250,000 |        
|                          |                  |             |         |             |             |  
|                          | Total borrowings |             |         | 279,062     |             |   |         | 264,813 | 
|Current maturities        |                  |             | (750    | )           |             |   | (750    | )      
|                          |                  |             |         |             |             |  
|Long-term portion         |                  | $           | 278,312 |             |             | $ | 264,063 |        
|                          |                  |             |         |             |             |  

Credit Facility and Term Loans


Senior Notes 1 4


1 4




F-24



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Annual Maturities and Interest Payments


|                    |       |        |         |         | 
|------------------- | ----- | ------ | ------- | ------- | 
|Fiscal Year         |       | Amount |        
|                    |       |        |        
|2006                |       | $      | 750     |        
|2007                |       |        | 750     |        
|2008                |       |        | 3,562   |        
|2009                |       |        | 14,000  |        
|2010                |       |        |        |        
|2011 and thereafter |       |        | 250,000 |        
|                    |       |        |        
|                    | Total |        | $       | 269,062 | 
|                    |       |        |        



Debt Extinguishment Expense 5 8 5 8 5 8




|    |                    
|--- | -------------------
|14. | SEGMENT INFORMATION





F-25



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




2005 Predecessor


|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | --------- | ------- |  | ---------- | - | ------ | --------- |  | - | ------------ | - |  | - | ------- | -
|                                                                                     |  | Aerospace |         |  | Industrial |   |        | Corporate |  |   | Consolidated |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Customer revenues                                                                    |  | $         | 154,842 |  |            | $ | 57,753 |           |  | $ |             |   |  | $ | 212,595 |  
|Operating profit (loss)                                                              |  |           | 38,501  |  |            |   | 4,138  |           |  |   | (3,227       | ) |  |   | 39,412  |  
|Amortization of intangible assets                                                    |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 3,414   |  
|Merger expenses                                                                      |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 24,473  |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Income from operations                                                               |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 11,525  |  
|Interest expense                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 25,601  |  
|Other, net                                                                           |  |           |         |  |            |   |        |           |  |   |              |   |  |   | (109    | )
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Loss before tax                                                                      |  |           |         |  |            |   |        |           |  |   |              |   |  | $ | (13,967 | )
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Capital expenditures                                                                 |  |           | 2,661   |  |            |   | 1,715  |           |  |   |              |   |  |   | 4,376   |  
|Depreciation                                                                         |  |           | 2,043   |  |            |   | 1,245  |           |  |   | 367          |   |  |   | 3,655   |  
|Compensation expense recognized in connection with employee
    stock ownership plan |  |           | 7,821   |  |            |   | 632    |           |  |   |              |   |  |   | 8,453   |  

2004 Predecessor


|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | --------- | ------- |  | ---------- | - | ------ | --------- |  | - | ------------ | - |  | - | ------- | -
|                                                                                     |  | Aerospace |         |  | Industrial |   |        | Corporate |  |   | Consolidated |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Customer revenues                                                                    |  | $         | 138,177 |  |            | $ | 49,151 |           |  | $ |             |   |  | $ | 187,328 |  
|Operating profit (loss)                                                              |  |           | 34,584  |  |            |   | 761    |           |  |   | (320         | ) |  |   | 35,025  |  
|Amortization of intangible assets                                                    |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 3,414   |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Income from operations                                                               |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 31,611  |  
|Interest expense                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 22,705  |  
|Debt extinguishment expense                                                          |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 12,961  |  
|Other, net                                                                           |  |           |         |  |            |   |        |           |  |   |              |   |  |   | (95     | )
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Loss before tax                                                                      |  |           |         |  |            |   |        |           |  |   |              |   |  | $ | (3,960  | )
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Capital expenditures                                                                 |  |           | 1,789   |  |            |   | 1,267  |           |  |   |              |   |  |   | 3,056   |  
|Depreciation                                                                         |  |           | 2,168   |  |            |   | 1,231  |           |  |   | 400          |   |  |   | 3,799   |  
|Compensation expense recognized in connection with employee
    stock ownership plan |  |           | 4,270   |  |            |   | 581    |           |  |   |              |   |  |   | 4,851   |  

F-26



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


2003 Predecessor


|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | --------- | ------- |  | ---------- | - | ------ | --------- |  | - | ------------ | - |  | - | ------- | -
|                                                                                     |  | Aerospace |         |  | Industrial |   |        | Corporate |  |   | Consolidated |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Customer revenues                                                                    |  | $         | 121,278 |  |            | $ | 39,448 |           |  | $ |             |   |  | $ | 160,726 |  
|Operating profit (loss)                                                              |  |           | 28,484  |  |            |   | 2,157  |           |  |   | (392         | ) |  |   | 30,249  |  
|Amortization of intangible assets                                                    |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 3,414   |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Income from operations                                                               |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 26,835  |  
|Interest expense                                                                     |  |           |         |  |            |   |        |           |  |   |              |   |  |   | 21,257  |  
|Other, net                                                                           |  |           |         |  |            |   |        |           |  |   |              |   |  |   | (529    | )
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Income before tax                                                                    |  |           |         |  |            |   |        |           |  |   |              |   |  | $ | 6,107   |  
|                                                                                     |  |           |         |  |            |   |        |           |  |   |              |  
|Capital expenditures                                                                 |  |           | 1,194   |  |            |   | 745    |           |  |   |              |   |  |   | 1,939   |  
|Depreciation                                                                         |  |           | 2,503   |  |            |   | 1,280  |           |  |   | 404          |   |  |   | 4,187   |  
|Compensation expense recognized in connection with employee
    stock ownership plan |  |           | 1,652   |  |            |   | 222    |           |  |   |              |   |  |   | 1,874   |  



|    |                           
|--- | --------------------------
|15. | RELATED PARTY TRANSACTIONS





|    |                                 
|--- | --------------------------------
|16. | MAJOR CUSTOMERS AND EXPORT SALES



|                                  |  |             |        |  |      |   |        |      |  |   |        | 
|--------------------------------- |  | ----------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                  |  | Predecessor |       
|                                  |  |             |       
|                                  |  | 2005        |        |  | 2004 |   |        | 2003 | 
|                                  |  |             |        |  |      |   |        |      | 
|Upsilon International Corporation |  | $           | 23,478 |  |      | $ | 20,326 |      |  | $ | 19,321 | 



|                                        |       |             |        |        |      |   |        |        |  |   |        |        | 
|--------------------------------------- | ----- | ----------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                        |       | Predecessor |       
|                                        |       |             |       
|                                        |       | 2005        |        |        | 2004 |   |        | 2003   | 
|                                        |       |             |        |        |      |   |        |        | 
|Europe                                  |       | $           | 42,238 |        |      | $ | 32,823 |        |  | $ | 30,371 |       
|Pacific Rim                             |       |             | 35,430 |        |      |   | 26,003 |        |  |   | 25,279 |       
|All others (individually less than 10%) |       |             | 17,702 |        |      |   | 21,379 |        |  |   | 11,041 |       
|                                        |       |             |        |        |      |   |        |        | 
|                                        | Total |             | $      | 95,370 |      |   | $      | 80,205 |  |   | $      | 66,691 | 
|                                        |       |             |        |        |      |   |        |        | 

F-27



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|    |                                    
|--- | -----------------------------------
|17. | FAIR VALUE OF FINANCIAL INSTRUMENTS





|    |              
|--- | -------------
|18. | STOCK OPTIONS



1991 Performance Stock Option Plan


1991 Management Incentive Stock Option Plan


1998 Equity Replacement Stock Option Plan


1998 Incentive Plan 1 3


Incentive Units


F-28



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)








|                                                               |  |                  |         |                 |                |   |        | 
|-------------------------------------------------------------- |  | ---------------- | ------- | --------------- | -------------- | - | ------ | 
|                                                               |  | 2005 Predecessor |        
|                                                               |  |                  |        
|                                                               |  |                  |         | Weighed Average |               
|                                                               |  | Shares           |         |                 | Exercise Price |  
|                                                               |  |                  |         |                 |                |  
|Outstanding at beginning of year                               |  |                  | 127,923 |                 |                | $ | 49.91  | 
|Granted                                                        |  |                  | 37,160  |                 |                |   | 201.25 | 
|Exercised                                                      |  |                  | (37,721 | )               |                |   | 44.39  | 
|Cancelled                                                      |  |                  | (90,202 | )               |                |   | 52.22  | 
|Outstanding at end of year                                     |  |                  | 37,160  |                 |                |   | 201.25 | 
|Options exercisable at year-end                                |  |                  |        |                 |                |   |       | 
|Weighted average fair value of options granted during the year |  | $                | 75.96   |                 |                |   |        | 

|                                                               |  |                  |         |                 |                |   |       | 
|-------------------------------------------------------------- |  | ---------------- | ------- | --------------- | -------------- | - | ----- | 
|                                                               |  | 2004 Predecessor |        
|                                                               |  |                  |        
|                                                               |  |                  |         | Weighed Average |               
|                                                               |  | Shares           |         |                 | Exercise Price |  
|                                                               |  |                  |         |                 |                |  
|Outstanding at beginning of year                               |  |                  | 133,713 |                 |                | $ | 50.20 | 
|Granted                                                        |  |                  |        |                 |                |   |      | 
|Exercised                                                      |  |                  | (4,000  | )               |                |   | 49.79 | 
|Cancelled                                                      |  |                  | (1,790  | )               |                |   | 71.77 | 
|Outstanding at end of year                                     |  |                  | 127,923 |                 |                |   | 49.91 | 
|Options exercisable at year-end                                |  |                  | 127,923 |                 |                |   | 49.91 | 
|Weighted average fair value of options granted during the year |  | $                |        |                 |                |   |       | 

|                                                               |  |                  |         |                 |                |   |       | 
|-------------------------------------------------------------- |  | ---------------- | ------- | --------------- | -------------- | - | ----- | 
|                                                               |  | 2003 Predecessor |        
|                                                               |  |                  |        
|                                                               |  |                  |         | Weighed Average |               
|                                                               |  | Shares           |         |                 | Exercise Price |  
|                                                               |  |                  |         |                 |                |  
|Outstanding at beginning of year                               |  |                  | 137,027 |                 |                | $ | 50.53 | 
|Granted                                                        |  |                  |        |                 |                |   |      | 
|Exercised                                                      |  |                  | (390    | )               |                |   | 10.00 | 
|Cancelled                                                      |  |                  | (2,924  | )               |                |   | 71.08 | 
|Outstanding at end of year                                     |  |                  | 133,713 |                 |                |   | 50.20 | 
|Options exercisable at year-end                                |  |                  | 115,175 |                 |                |   | 50.27 | 
|Weighted average fair value of options granted during the year |  | $                |        |                 |                |   |       | 

F-29



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|    |              
|--- | -------------
|19. | CONTINGENCIES

Environmental Matters


Other Matters






|    |                         
|--- | ------------------------
|20. | NEW ACCOUNTING STANDARDS







F-30



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES


(A Wholly-Owned Subsidiary of AT Holdings Corporation)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|    |                                  
|--- | ---------------------------------
|21. | OTHER COMPREHENSIVE INCOME/(LOSS)



|                                   |                                                                                 |             |        |        |      |   |      |        |   |   |       |       |  
|---------------------------------- | ------------------------------------------------------------------------------- | ----------- | ------ | ------ | ---- | - | ---- | ------ | - | - | ----- | ----- | -
|                                   |                                                                                 | Predecessor |       
|                                   |                                                                                 |             |       
|                                   |                                                                                 | 2005        |        |        | 2004 |   |      | 2003   |  
|                                   |                                                                                 |             |        |        |      |   |      |        |  
|Net income/(loss)                  |                                                                                 | $           | (6,199 | )      |      | $ | (461 | )      |   | $ | 4,528 |      
|Other comprehensive income/(loss): |                                                                                 |             |        |        |      |   |      |        |   |   |       |      
|                                   | Foreign currency translation adjustment                                         |             |        | (68    | )    |   |      | 7      |   |   |       | 119   |  
|                                   | Deferred pension income/(expense)                                               |             |        | (208   | )    |   |      | (1,966 | ) |   |       | 1,622 |  
|                                   |                                                                                 |             |        |        |      |   |      |        |  
|                                   | Other comprehensive income/(loss) before tax                                    |             |        | (276   | )    |   |      | (1,959 | ) |   |       | 1,741 |  
|                                   | Income tax (provision)/benefit related to other comprehensive
    income/(loss) |             |        | 83     |      |   |      | 787    |   |   |       | (649  | )
|                                   |                                                                                 |             |        |        |      |   |      |        |  
|                                   | Other comprehensive income/(loss) net of tax                                    |             |        | (193   | )    |   |      | (1,172 | ) |   |       | 1,092 |  
|                                   |                                                                                 |             |        |        |      |   |      |        |  
|                                   | Comprehensive income/(loss)                                                     |             | $      | (6,392 | )    |   | $    | (1,633 | ) |   | $     | 5,620 |  
|                                   |                                                                                 |             |        |        |      |   |      |        |  

F-31