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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended December 31, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
                     To



Commission file number 333-108365



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FASTENTECH, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 52-2225101                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|8500 Normandale Lake Boulevard Suite 1230 Minneapolis, MN      |  | 55437                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



Registrants
telephone number, including area code: (952) 921-2090



---



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



Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act). ̈Yes x No



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). ̈Yes x No



As of January 31, 2006, the number of outstanding shares of the
Registrants Class A Common Stock was 215,788, and the number of outstanding shares of the Registrants Class B Common Stock was 1,576,214.



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TABLE OF CONTENTS



FASTENTECH, INC

REPORT ON FORM 10-Q

FOR THE PERIOD ENDED December 31, 2005



INDEX



|                              |  |                                                                                                 |  |   
|----------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION |  |                                                                                                
|                              |  |                                                                                                
|ITEM 1.                       |  | Condensed Consolidated Balance Sheets  December 31, 2005 and September 30, 2005                |  | 1 
|                              |  | Condensed Consolidated Statements of Operations  Three months ended December 31, 2005 and 2004 |  | 2 
|                              |  | Condensed Consolidated Statements of Cash Flows  Three months ended December 31, 2005 and 2004 |  | 3 
|                              |  | Notes to Condensed Consolidated Financial Statements                                            |  | 4 
|                              |  |                                                                                                
|ITEM 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 17
|                              |  |                                                                                                
|ITEM 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                      |  | 26
|                              |  |                                                                                                
|ITEM 4.                       |  | Controls and Procedures                                                                         |  | 26
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                
|                              |  |                                                                                                
|ITEM 1.                       |  | Legal Proceedings                                                                               |  | 27
|                              |  |                                                                                                
|ITEM 1A.                      |  | Risk Factors                                                                                    |  | 27
|                              |  |                                                                                                
|ITEM 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                     |  | 27
|                              |  |                                                                                                
|ITEM 3.                       |  | Defaults Upon Senior Securities                                                                 |  | 27
|                              |  |                                                                                                
|ITEM 4.                       |  | Submission of Matters To a Vote Of Security Holders                                             |  | 27
|                              |  |                                                                                                
|ITEM 5.                       |  | Other Information                                                                               |  | 27
|                              |  |                                                                                                
|ITEM 6.                       |  | Exhibits                                                                                        |  | 27



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FastenTech, Inc. and Subsidiaries



PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



Condensed Consolidated Balance Sheets



|                                                                                                          |  |                             |         |   |                    |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------ | - | ------- | -
|(Dollars in thousands, except share and per share information)                                            |  | (Unaudited)December 31,2005 |         |   | September 30, 2005 |  
|Assets:                                                                                                   |  |                             |         |   |                    |   |         |  
|Current assets:                                                                                           |  |                             |         |   |                    |   |         |  
|Cash and cash equivalents                                                                                 |  | $                           | 15,188  |   |                    | $ | 11,730  |  
|Accounts receivable, net of allowance of $929 and $769 respectively                                       |  |                             | 53,352  |   |                    |   | 57,427  |  
|Inventory, net                                                                                            |  |                             | 87,148  |   |                    |   | 78,832  |  
|Deferred income taxes                                                                                     |  |                             | 2,199   |   |                    |   | 2,254   |  
|Other                                                                                                     |  |                             | 2,818   |   |                    |   | 2,729   |  
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total current assets                                                                                      |  |                             | 160,705 |   |                    |   | 152,972 |  
|                                                                                                          |  |                            
|Goodwill and other intangible assets, net                                                                 |  |                             | 111,474 |   |                    |   | 103,294 |  
|Property, plant, and equipment, net                                                                       |  |                             | 93,094  |   |                    |   | 90,532  |  
|Deferred income taxes                                                                                     |  |                             | 132     |   |                    |   | 214     |  
|Other assets                                                                                              |  |                             | 10,586  |   |                    |   | 10,377  |  
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total assets                                                                                              |  | $                           | 375,991 |   |                    | $ | 357,389 |  
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Liabilities and stockholders equity (deficiency in assets):                                              |  |                             |         |   |                    |   |         |  
|Current liabilities:                                                                                      |  |                             |         |   |                    |   |         |  
|Accounts payable                                                                                          |  | $                           | 28,601  |   |                    | $ | 29,272  |  
|Income taxes payable                                                                                      |  |                             | 771     |   |                    |   | 581     |  
|Accrued interest payable                                                                                  |  |                             | 4,057   |   |                    |   | 8,745   |  
|Other accrued liabilities                                                                                 |  |                             | 12,550  |   |                    |   | 13,579  |  
|Current portion of long-term debt                                                                         |  |                             | 3,500   |   |                    |   | 5,000   |  
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total current liabilities                                                                                 |  |                             | 49,479  |   |                    |   | 57,177  |  
|                                                                                                          |  |                            
|Long-term debt                                                                                            |  |                             | 310,000 |   |                    |   | 277,000 |  
|Redeemable preferred stock                                                                                |  |                             | 11,700  |   |                    |   | 17,481  |  
|Preferred stock dividends payable                                                                         |  |                             | 15,737  |   |                    |   | 19,715  |  
|Other long-term liabilities                                                                               |  |                             | 18,048  |   |                    |   | 17,124  |  
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total liabilities                                                                                         |  |                             | 404,964 |   |                    |   | 388,497 |  
|                                                                                                          |  |                            
|Stockholders equity (deficiency in assets):                                                              |  |                             |         |   |                    |   |         |  
|Common stock, $.01 par value: 5,000,000 shares authorized, 1,792,002 and 1,826,011 issued and outstanding |  |                             | 18      |   |                    |   | 18      |  
|Additional paid-in capital                                                                                |  |                             | 9,214   |   |                    |   | 9,253   |  
|Accumulated deficit                                                                                       |  |                             | (34,456 | ) |                    |   | (36,890 | )
|Accumulated other comprehensive loss                                                                      |  |                             | (3,749  | ) |                    |   | (3,489  | )
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total stockholders equity (deficiency in assets)                                                         |  |                             | (28,973 | ) |                    |   | (31,108 | )
|                                                                                                          |  |                             |         |   |                    |   |         |  
|Total liabilities and stockholders equity (deficiency in assets)                                         |  | $                           | 375,991 |   |                    | $ | 357,389 |  
|                                                                                                          |  |                             |         |   |                    |   |         |  



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



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Condensed Consolidated Statements of Operations

(Unaudited)



|                                                    |  |                                |        |   |      |   |        |  
|--------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                                    |  | Three Months EndedDecember 31, |       
|(Dollars in thousands)                              |  | 2005                           |        |   | 2004 |  
|Net sales                                           |  | $                              | 92,417 |   |      | $ | 69,778 |  
|Cost of sales                                       |  |                                | 69,752 |   |      |   | 51,754 |  
|                                                    |  |                                |        |   |      |   |        |  
|Gross profit                                        |  |                                | 22,665 |   |      |   | 18,024 |  
|                                                    |  |                               
|Selling, general, and administrative expenses       |  |                                | 13,650 |   |      |   | 10,627 |  
|                                                    |  |                                |        |   |      |   |        |  
|Operating income                                    |  |                                | 9,015  |   |      |   | 7,397  |  
|                                                    |  |                               
|Other income (expense):                             |  |                                |        |   |      |   |        |  
|Interest expense  long term debt                   |  |                                | (7,664 | ) |      |   | (6,139 | )
|Interest expense  redeemable preferred stock       |  |                                | (724   | ) |      |   |       |  
|Gain on repurchase of redeemable preferred stock    |  |                                | 2,210  |   |      |   |       |  
|Other, net                                          |  |                                | 201    |   |      |   | (126   | )
|                                                    |  |                                |        |   |      |   |        |  
|Income before income tax expense                    |  |                                | 3,038  |   |      |   | 1,132  |  
|Income tax expense                                  |  |                                | 604    |   |      |   | 441    |  
|                                                    |  |                                |        |   |      |   |        |  
|Net income                                          |  | $                              | 2,434  |   |      | $ | 691    |  
|Less preferred stock dividends                      |  |                                |       |   |      |   | (1,169 | )
|                                                    |  |                                |        |   |      |   |        |  
|Net income (loss) applicable to common stockholders |  | $                              | 2,434  |   |      | $ | (478   | )



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



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Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                            |  |                                |         |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                            |  | Three Months EndedDecember 31, |        
|(Dollars in thousands):                                                                     |  | 2005                           |         |   | 2004 |  
|Operating activities:                                                                       |  |                                |         |   |      |   |         |  
|Net income                                                                                  |  | $                              | 2,434   |   |      | $ | 691     |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                                |         |   |      |   |         |  
|Depreciation                                                                                |  |                                | 3,311   |   |      |   | 2,380   |  
|Amortization                                                                                |  |                                | 956     |   |      |   | 263     |  
|Noncash interest expense  long-term debt                                                   |  |                                | 362     |   |      |   | 355     |  
|Noncash interest expense  redeemable preferred stock                                       |  |                                | 724     |   |      |   |        |  
|Gain on repurchase of redeemable preferred stock                                            |  |                                | (2,210  | ) |      |   |        |  
|Changes in certain assets and liabilities, net of acquisitions:                             |  |                                |         |   |      |   |         |  
|Accounts receivable                                                                         |  |                                | 8,523   |   |      |   | 4,150   |  
|Inventory                                                                                   |  |                                | (1,933  | ) |      |   | (3,985  | )
|Other current assets                                                                        |  |                                | 92      |   |      |   | 114     |  
|Accounts payable                                                                            |  |                                | (2,779  | ) |      |   | (2,722  | )
|Accrued interest                                                                            |  |                                | (4,688  | ) |      |   | (5,151  | )
|Income taxes                                                                                |  |                                | 291     |   |      |   | (5,007  | )
|Other current liabilities                                                                   |  |                                | (2,828  | ) |      |   | (3,882  | )
|Other                                                                                       |  |                                | (893    | ) |      |   | (458    | )
|                                                                                            |  |                                |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                                         |  |                                | 1,362   |   |      |   | (13,252 | )
|                                                                                            |  |                               
|Investing activities:                                                                       |  |                                |         |   |      |   |         |  
|Cash used for acquisitions, net of cash acquired                                            |  |                                | (21,063 | ) |      |   | (38,759 | )
|Additions to property, plant, and equipment                                                 |  |                                | (1,627  | ) |      |   | (3,251  | )
|                                                                                            |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                                       |  |                                | (22,690 | ) |      |   | (42,010 | )
|                                                                                            |  |                               
|Financing activities:                                                                       |  |                                |         |   |      |   |         |  
|Net borrowings under the Credit Agreement                                                   |  |                                | 33,000  |   |      |   | 35,000  |  
|Repurchase of common and redeemable preferred stock                                         |  |                                | (8,307  | ) |      |   |        |  
|Other                                                                                       |  |                                |        |   |      |   | 27      |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Net cash provided by financing activities                                                   |  |                                | 24,693  |   |      |   | 35,027  |  
|                                                                                            |  |                               
|Effect of exchange rate fluctuations on cash                                                |  |                                | 93      |   |      |   | 433     |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                        |  |                                | 3,458   |   |      |   | (19,802 | )
|Cash and cash equivalents at beginning of period                                            |  |                                | 11,730  |   |      |   | 29,222  |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                  |  | $                              | 15,188  |   |      | $ | 9,420   |  



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



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Notes to Condensed Consolidated Financial Statements



|1. | Basis of Presentation
|-- | ---------------------



FastenTech, Inc. (the Company) is a leading manufacturer and marketer of certain aerospace-grade, specialized and application-specific
components. The Company is focused on profitably growing a number of product platforms for which the Company believes it holds leading market positions in the majority of the markets that it serves. The Company offers a diverse collection of highly
engineered components such as transition ducts, combustion chamber liners, and connection rods for gas turbine engines, gearboxes, planetary gear systems, and military track pins as well as specialty fasteners and fastener systems. The
Companys products are used in critical applications of a broad array of customers in various industries, including power generation, military, industrial, medium- and heavy-duty truck, construction, light vehicles, recreation, and aerospace.



The accompanying unaudited condensed consolidated financial
statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments
and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. Management believes that the disclosures are
adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto included in our financial statements for the period ended September 30, 2005 included in our Form 10-K, as
filed with the SEC. Operating results for the three-month periods ended December 31, 2005 and 2004 are not necessarily indicative of the results that may be expected for the full fiscal year. In the past, the Company has typically had stronger
results in the second half of the fiscal year. However, due to the significant number of acquisitions, the results of the Company will tend to be more consistent, except for the first fiscal quarter, which will continue to have lower results due to
the reduced production schedules of many of our OEM customers.



The Company committed to a plan to sell its interest in Progressive Stamping Co. (DE), Inc. (Progressive) during the fourth quarter of fiscal 2004 and expected to complete the transaction within 12 months. Therefore, the results of
Progressive were classified as discontinued operations in the fiscal 2005 first, second and third quarters. As part of the Companys ongoing business strategy, management periodically reviews and evaluates risks and opportunities within each of
its business units. As a result of these reviews, management determined that continuing to operate Progressive would create more shareholder value and suspended the sale of this business unit in the fourth quarter of fiscal 2005. As such, the
results of Progressive are classified in continuing operations for all periods presented.



New Accounting Pronouncement



SFAS No. 150Accounting for Certain Financial Instruments With Characteristics of Both Liabilities and Equity



As of January 1, 2005, the Company adopted SFAS No. 150, which establishes guidance for how certain financial instruments with characteristics of both
liabilities and equity are classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances). The Company determined that the characteristics of its redeemable preferred
stock were such that the securities should be classified as a liability. Restatement of prior periods was not permitted. The redeemable preferred stock was reclassified to the liabilities section of the balance sheet and the preferred dividends were
subsequently recorded as interest expense in the results of operations rather than as a reduction to retained earnings or additional paid in capital. The Company did not provide any tax benefit in connection with the interest expense on the
redeemable preferred stock because payment of the related preferred dividend is not tax-deductible.



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|2. | Inventory
|-- | ---------



Inventory is comprised of the following:



|                     |  |                  |        |   |                   |   |        |  
|-------------------- |  | ---------------- | ------ | - | ----------------- | - | ------ | -
|                     |  | December 31,2005 |        |   | September 30,2005 |  
|Raw material         |  | $                | 26,114 |   |                   | $ | 23,370 |  
|Work-in-process      |  |                  | 27,790 |   |                   |   | 28,834 |  
|Finished goods       |  |                  | 37,049 |   |                   |   | 30,027 |  
|Obsolescence reserve |  |                  | (3,805 | ) |                   |   | (3,399 | )
|                     |  |                  |        |   |                   |   |        |  
|Total inventory      |  | $                | 87,148 |   |                   | $ | 78,832 |  
|                     |  |                  |        |   |                   |   |        |  



|3. | Comprehensive Income
|-- | --------------------



Comprehensive income consists of the following:



|                                        |  |                                |       |   |      |   |      
|--------------------------------------- |  | ------------------------------ | ----- | - | ---- | - | -----
|                                        |  | Three Months EndedDecember 31,
|                                        |  | 2005                           |       |   | 2004
|Net income                              |  | $                              | 2,434 |   |      | $ | 691  
|Foreign currency translation adjustment |  |                                | (260  | ) |      |   | 1,819
|                                        |  |                                |       |   |      |   |      
|                                        |  | $                              | 2,174 |   |      | $ | 2,510
|                                        |  |                                |       |   |      |   |      



|4. | Long-Term Debt
|-- | --------------



Long-term debt is comprised of the following:



|                                         |  |                  |         |                   |   |        
|---------------------------------------- |  | ---------------- | ------- | ----------------- | - | -------
|                                         |  | December 31,2005 |         | September 30,2005
|Revolving Credit Facility                |  | $                | 132,000 |                   | $ | 99,000 
|Subordinated debt                        |  |                  | 6,500   |                   |   | 8,000  
|11.5% Senior Subordinated Notes due 2011 |  |                  | 175,000 |                   |   | 175,000
|                                         |  |                  |         |                   |   |        
|Total debt                               |  |                  | 313,500 |                   |   | 282,000
|Less current portion                     |  |                  | 3,500   |                   |   | 5,000  
|                                         |  |                  |         |                   |   |        
|Total long-term debt                     |  | $                | 310,000 |                   | $ | 277,000
|                                         |  |                  |         |                   |   |        



Effective
July 12, 2005, the Company increased the available borrowings under the Credit Agreement to $170.0 million (subject to certain limits, including borrowing limits under the indenture for the notes) (as amended, the Credit Agreement). Borrowings
under the Credit Agreement bear interest at the financial institutions reference rate as defined therein plus a margin from 1.25% to 2.00% or Eurocurrency (LIBOR) rates as defined therein plus a margin from 2.25% to 3.00% depending on the
ratio of current debt to EBITDA as defined therein. At December 31, 2005, the weighted average interest rate for borrowings under the Credit Agreement was approximately 7.4%. In addition, the Company is required to pay a commitment fee of
0.375% to 0.500% on the average unused commitment under the Credit Agreement depending on certain financial ratios. The Company had $132.0 million of borrowings under this agreement at December 31, 2005. The Credit Agreement expires in May
2010. Borrowings outstanding under the Credit Agreement are collateralized by substantially all of the Companys assets and are subject to certain financial and nonfinancial covenants. The Company was in compliance with all covenants as of
December 31, 2005.



In May 2003, the Company completed an
offering of $175.0 million 11.5% senior subordinated notes due 2011 (the Notes). The interest on the Notes is payable semiannually on May 1 and November 1 of each year. Net proceeds from this offering of approximately $167.1 million were
used to repay all outstanding debt at the time of the offering. Under a registration rights agreement between the Company and the initial purchasers of the Notes, the Company was required to complete an exchange offer and register the issuance of
the Notes under the Securities Act of 1933, as amended. The Company completed the exchange offer on April 14, 2005. Prior to the completion of the exchange offer, the interest rate on the Notes increased at a rate of 0.25% for each 90-day
period beginning November 27, 2003 until the notes were registered. Upon the completion of the exchange offer, the obligation to pay the 1% penalty interest rate ceased, and effective April 15, 2005, the interest rate on the Notes returned
to 11.5%.



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In conjunction with the acquisition of substantially all of the assets of Ogre Holdings, Inc. (see
Note 5), the Company issued to the selling shareholders a $5.0 million subordinated discount note due January 3, 2006 and a $3.0 million subordinated note due January 3, 2007, which accrues interest at a rate of 4.25% per annum. In December 2005,
the Company and the selling shareholders agreed to reduce the $5.0 million subordinated discount note due January 3, 2006 to $3.5 million as a result of certain working capital adjustments relating to the acquisition. The Company paid the $3.5
million balance of this note on January 3, 2006.



|5. | Acquisitions
|-- | ------------



Fiscal 2006 Acquisitions



On December 6, 2005, the Company acquired, through its wholly owned subsidiary, Speigelberg Manufacturing, Inc., 100% of the outstanding stock of BNC & Associates, Inc. (BNC) for a purchase price of approximately
$17.5 million including estimated fees and net of a preliminary working capital adjustment. BNC, through its wholly owned operating subsidiary, Stud Welding Associates, Inc. (SWA), manufactures and distributes stud welded fasteners and
systems to a wide array of end markets including the construction, industrial, energy and marine markets. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. The acquisition was accounted for using the
purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair market values at the date of acquisition. The Company is in the process of obtaining
independent appraisals on the intangible assets. Upon completion of the appraisals, the Company will finalize the purchase price allocation. The results of BNC have been included in the Companys Specialized Components segment. This transaction
resulted in a significant business acquisition within the definition provided by the Securities and Exchange Commission and therefore, separate financial statements have been presented and filed in a Form 8-K with the Securities and Exchange
Commission.



During the quarter ended December 31, 2005,
the Company acquired, through its wholly owned subsidiary, Specialty Bar Products Company, 100% of the outstanding stock of Erie Bolt Corporation for approximately $3.6 million in cash. This acquisition is not expected to have a material impact on
operating results.



Fiscal 2005 Acquisitions



On August 1, 2005, the Company acquired 100% of the members
interest of General Products Aerospace & Defense, LLC (f/k/a General Products Acquisition, LLC) (General Products) for $7.0 million. General Products is a private precision machining, fabrication, and finishing manufacturer that
precision welds, fabricates, and machines sheet metal and aluminum, titanium, and other metal alloys into component parts for military, aircraft, and aerospace customers. The Company funded this acquisition with cash on hand and borrowings under the
Credit Agreement. The acquisition was accounted for using the purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair market values at the date of
acquisition. The Company is in the process of obtaining an independent appraisal on the intangible assets. Upon completion of the appraisals, the Company will finalize the purchase price allocations. The results of General Products have been
included in the Companys Aerospace-grade Components segment. This transaction did not result in a significant business acquisition within the definition provided by the SEC, and therefore, separate financial statements have not been presented.



On June 30, 2005, the Company acquired, through a newly
created subsidiary of Integrated Energy Technologies, Inc., substantially all of the assets of Ogre Holdings, Inc. (f/k/a Acraline Products, Inc.) (Acraline), for a purchase price of approximately $40.0 million. Acraline is a private
manufacturer that supplies combustion liners, transition ducts, fuel nozzles, flow sleeves, impingement shields, end caps/covers, casings and annular combustors utilized in land based and aerospace gas turbine engines. The Company paid $32.0 million
in cash, funded with cash on hand and borrowings under the Credit Agreement, plus a $5.0 million subordinated discount note due January 3, 2006 and a $3.0 million subordinated note due January 3, 2007. The acquisition was accounted for using the
purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair market values at the date of acquisition. The Company is in the process of obtaining
independent appraisals on the intangible assets. Upon completion of the appraisals, the Company will finalize the purchase price allocation. The results of Acraline have been included in the Companys Aerospace-grade Components segment. This
transaction did not result in a significant business acquisition within the



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definition provided by the Securities and Exchange Commission and therefore, separate financial statements have not been presented.



In December 2004, the Company, through a newly created subsidiary of
Integrated Energy Technologies, Inc., acquired substantially all of the assets and certain liabilities of GCE Industries, Inc., and 100% of the stock of Katsakos Industries, Inc. (such businesses, collectively, GCE) for a purchase price
of approximately $31.1 million. GCE is a private manufacturer that supplies precision fabrications and machined components, such as transition ducts and other combustion system components, to the turbine engine and aerospace industries. The Company
funded the acquisition with cash on hand and borrowings under the Credit Agreement. The results of GCE have been included in the Companys Aerospace-grade Components segment. This transaction did not result in a significant business acquisition
within the definition provided by the Securities and Exchange Commission and therefore, separate financial statements have not been presented.



In December 2004, the Company, through its newly formed subsidiary, Spun Metals, Inc., acquired substantially all of the assets and certain liabilities of
Spun Metals, Inc., a Deakins Company, a private manufacturer of precision metal spinnings and machined components used in the aerospace, power generation, and heating, ventilation, and air conditioning (HVAC) industries, for a purchase price of
approximately $5.0 million. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. The results of Spun Metals, Inc. have been included in the Companys Aerospace-grade Components segment. This
transaction did not result in a significant business acquisition within the definition provided by the Securities and Exchange Commission and therefore, separate financial statements have not been presented.



During the fiscal year ended September 30, 2005, the Company, through
its wholly owned subsidiaries MECO, Inc. and GCE, acquired certain assets from the Triumph Group, Inc. in two separate transactions totaling approximately $8.8 million. These acquisitions are not expected to have a material impact on operating
results.



As a result of these transactions, the Companys
condensed consolidated results for the periods presented are not directly comparable. Pro forma results of operations for the three months ended December 31, 2005 and 2004, which assumes the acquisitions were completed as of October 1,
2004 are as follows (in thousands):



|           |  |                                |        |      |   |       
|---------- |  | ------------------------------ | ------ | ---- | - | ------
|           |  | Three Months EndedDecember 31,
|           |  | 2005                           |        | 2004
|Revenue    |  | $                              | 96,828 |      | $ | 96,137
|Net income |  | $                              | 2,614  |      | $ | 2,364 



Operating results for
the acquired companies are included in the Companys statement of operations from the date of acquisition.



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|6. | Goodwill and Other Intangible Assets
|-- | ------------------------------------



Goodwill and intangible assets consist of the following:



|                                                                         |  |                   |         |                   |   |        
|------------------------------------------------------------------------ |  | ----------------- | ------- | ----------------- | - | -------
|                                                                         |  | December 31, 2005 |         | September 30,2005
|Goodwill                                                                 |  | $                 | 42,471  |                   | $ | 30,957 
|Noncompete agreements                                                    |  |                   | 2,900   |                   |   | 2,448  
|Excess purchase price over the value of acquired assets not yet assigned |  |                   | 43,305  |                   |   | 59,470 
|Customer lists                                                           |  |                   | 17,696  |                   |   | 6,997  
|Proprietary know-how                                                     |  |                   | 3,868   |                   |   | 1,868  
|Trademark/tradename                                                      |  |                   | 1,679   |                   |   | 1,079  
|Distributor relationships                                                |  |                   | 3,200   |                   |   | 3,200  
|                                                                         |  |                   |         |                   |   |        
|Gross intangible assets                                                  |  |                   | 115,119 |                   |   | 106,019
|Accumulated amortization                                                 |  |                   | 3,645   |                   |   | 2,725  
|                                                                         |  |                   |         |                   |   |        
|Net intangible assets                                                    |  | $                 | 111,474 |                   | $ | 103,294
|                                                                         |  |                   |         |                   |   |        



The changes in the
carrying amount of goodwill as of December 31, 2005 is as follows:



|                             |  |                  |       
|---------------------------- |  | ---------------- | ------
|                             |  | December 31,2005
|Balance at beginning of year |  | $                | 30,957
|Additions                    |  |                  | 11,514
|                             |  |                  |       
|                             |  | $                | 42,471
|                             |  |                  |       



Identifiable
intangible assets are amortized over their estimated useful lives as follows:



| |  |  | Noncompete agreements  three to five years
| | - |  | -------------------------------------------



| |  |  | Customer lists  ten to thirty years
| | - |  | ------------------------------------



| |  |  | Proprietary know-how  six to fifteen years
| | - |  | -------------------------------------------



| |  |  | Trademark / tradename  indefinite life, therefore not amortized
| | - |  | ----------------------------------------------------------------



| |  |  | Distributor relationship  indefinite life, therefore not amortized
| | - |  | -------------------------------------------------------------------



The excess purchase price over the value of acquired assets not yet assigned of $43.3 million is currently being reviewed by an independent appraiser to
determine if any of this amount can be allocated to any identifiable intangible assets.



|7. | Employee Benefit Plans
|-- | ----------------------



The components of net periodic pension cost are as follows for the three months ended December 31:



|                              |  |                                |      |   |      |   |      |  
|----------------------------- |  | ------------------------------ | ---- | - | ---- | - | ---- | -
|                              |  | Three Months EndedDecember 31, |     
|                              |  | 2005                           |      |   | 2004 |  
|Service cost                  |  | $                              | 111  |   |      | $ | 84   |  
|Interest cost                 |  |                                | 395  |   |      |   | 396  |  
|Expected return on assets     |  |                                | (468 | ) |      |   | (518 | )
|Net amortization and deferral |  |                                | 129  |   |      |   | 227  |  
|Plan amendment                |  |                                |     |   |      |   | 7    |  
|                              |  |                                |      |   |      |   |      |  
|Net periodic benefit cost     |  | $                              | 167  |   |      | $ | 196  |  
|                              |  |                                |      |   |      |   |      |  



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The components of net periodic benefit cost for other benefits are as follows for the three months ended
December 31:



|                          |  |                                |    |      |   |    
|------------------------- |  | ------------------------------ | -- | ---- | - | ---
|                          |  | Three Months EndedDecember 31,
|                          |  | 2005                           |    | 2004
|Service cost              |  | $                              | 30 |      | $ | 33 
|Interest cost             |  |                                | 62 |      |   | 70 
|                          |  |                                |    |      |   |    
|Net periodic benefit cost |  | $                              | 92 |      | $ | 103
|                          |  |                                |    |      |   |    



For the three months
ended December 31, 2005, the Company made $0.1 million in pension plan contributions and expects to contribute a total of $1.1 million for fiscal year 2006.



|8. | Segment Data
|-- | ------------



Summary financial information by business segment is as follows (in thousands):



|                                                                          |  |                                |        |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                          |  | Three Months EndedDecember 31, |       
|                                                                          |  | 2005                           |        |   | 2004 |  
|Net sales                                                                 |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  | $                              | 48,067 |   |      | $ | 28,715 |  
|Specialized Components                                                    |  |                                | 39,886 |   |      |   | 37,159 |  
|Application-specific Components                                           |  |                                | 4,512  |   |      |   | 3,924  |  
|Eliminations                                                              |  |                                | (48    | ) |      |   | (20    | )
|                                                                          |  |                                |        |   |      |   |        |  
|Total net sales                                                           |  | $                              | 92,417 |   |      | $ | 69,778 |  
|Income before income tax expense                                          |  |                                |        |   |      |   |        |  
|EBITDA:                                                                   |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  | $                              | 9,227  |   |      | $ | 5,518  |  
|Specialized Components                                                    |  |                                | 5,627  |   |      |   | 5,710  |  
|Application-specific Components                                           |  |                                | 563    |   |      |   | 541    |  
|Unallocated corporate operating expenses                                  |  |                                | (1,728 | ) |      |   | (1,729 | )
|                                                                          |  |                                |        |   |      |   |        |  
|EBITDA(1)                                                                 |  |                                | 13,689 |   |      |   | 10,040 |  
|Depreciation and amortization                                             |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  |                                | (2,553 | ) |      |   | (986   | )
|Specialized Components                                                    |  |                                | (1,440 | ) |      |   | (1,351 | )
|Application-specific Components                                           |  |                                | (235   | ) |      |   | (291   | )
|Corporate                                                                 |  |                                | (39    | ) |      |   | (15    | )
|                                                                          |  |                                |        |   |      |   |        |  
|Depreciation and amortization                                             |  |                                | (4,267 | ) |      |   | (2,643 | )
|Excess of fair value assigned to inventory included in cost of goods sold |  |                                | (362   | ) |      |   |       |  
|Severance expense included in SG&A                                        |  |                                | (45    | ) |      |   |       |  
|                                                                          |  |                                |        |   |      |   |        |  
|Total operating income                                                    |  |                                | 9,015  |   |      |   | 7,397  |  
|Interest expense  long term debt                                         |  |                                | (7,664 | ) |      |   | (6,139 | )
|Interest expense  redeemable preferred stock                             |  |                                | (724   | ) |      |   |       |  
|Gain on repurchase of redeemable preferred stock                          |  |                                | 2,210  |   |      |   |       |  
|Other, net                                                                |  |                                | 201    |   |      |   | (126   | )
|                                                                          |  |                                |        |   |      |   |        |  
|Income before income tax expense                                          |  | $                              | 3,038  |   |      | $ | 1,132  |  
|                                                                          |  |                                |        |   |      |   |        |  
|Net Income                                                                |  | $                              | 2,434  |   |      | $ | 691    |  
|                                                                          |  |                                |        |   |      |   |        |  



|(1) | EBITDA is earnings before interest, taxes, depreciation, amortization, and nonrecurring items. EBITDA is not intended to represent and should not be
considered more meaningful than, or an alternative to, operating income, cash flows from operating activities or other measures of performance in accordance with generally accepted accounting principles. In addition, because of potential
inconsistencies in the method of calculation, EBITDA is not
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | necessarily comparable to other similarly titled captions used by other companies or used in the Companys debentures, credit or other similar
agreements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------



A summary of assets and expenditures for
property, plant, and equipment by segment is as follows:



|                                |  |                  |         |                   |   |        
|------------------------------- |  | ---------------- | ------- | ----------------- | - | -------
|                                |  | December 31,2005 |         | September 30,2005
|Assets                          |  |                  |         |                   |   |        
|Aerospace-grade Components      |  | $                | 218,474 |                   | $ | 214,722
|Specialized Components(1)       |  |                  | 137,483 |                   |   | 121,214
|Application-specific Components |  |                  | 13,752  |                   |   | 13,841 
|Corporate assets                |  |                  | 6,282   |                   |   | 7,612  
|                                |  |                  |         |                   |   |        
|Total consolidated assets       |  | $                | 375,991 |                   | $ | 357,389
|                                |  |                  |         |                   |   |        



|(1) | The increase in assets relates to the acquisition of BNC during the fiscal 2006 first quarter.
|--- | ----------------------------------------------------------------------------------------------



|                                                |  |                                |       |      |   |      
|----------------------------------------------- |  | ------------------------------ | ----- | ---- | - | -----
|                                                |  | Three months endedDecember 31,
|                                                |  | 2005                           |       | 2004
|Expenditures for property, plant and equipment  |  |                                |       |      |   |      
|Aerospace-grade Components                      |  | $                              | 1,163 |      | $ | 1,787
|Specialized Components                          |  |                                | 434   |      |   | 1,456
|Application-specific Components                 |  |                                | 30    |      |   | 8    
|Corporate assets                                |  |                                |      |      |   |     
|                                                |  |                                |       |      |   |      
|Consolidated expenditures for long-lived assets |  | $                              | 1,627 |      | $ | 3,251
|                                                |  |                                |       |      |   |      



|9. | Condensed Consolidating Guarantor and Non-Guarantor Financial Information
|-- | -------------------------------------------------------------------------



In May 2003, the Company completed the sale of $175.0 million 11.50% Senior Subordinated Notes which are due 2011. The
following consolidating financial information presents balance sheets, statements of operations, and cash flow information related to the Companys business. As of December 31, 2005, each Guarantor is a direct or indirect 100%-owned
subsidiary of the Company and has fully and unconditionally guaranteed the Notes issued by FastenTech, Inc. on a joint and several basis. Separate financial statements and other disclosures concerning the Guarantors have not been presented because
management believes that such information is not material to investors.



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Consolidating Balance Sheet

(Unaudited)

December 31, 2005



|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|----------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ----------------- | -------- | - |  | - | ------- | -
|                                                                  |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |         
|Assets                                                            |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current assets:                                                   |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Cash and cash equivalents                                         |  | $               | 374     |   |                       | $ | 8,676                     |  | $            | 6,138  |  | $                 |         |   |  | $ | 15,188  |  
|Accounts receivable, net                                          |  |                 | 14      |   |                       |   | 48,627                    |  |              | 7,107  |  |                   | (2,396   | ) |  |   | 53,352  |  
|Inventory                                                         |  |                 |        |   |                       |   | 81,394                    |  |              | 6,431  |  |                   | (677     | ) |  |   | 87,148  |  
|Income tax receivable                                             |  |                 | 13,036  |   |                       |   |                          |  |              |       |  |                   | (13,036  | ) |  |   |        |  
|Deferred income taxes                                             |  |                 | 328     |   |                       |   | 1,834                     |  |              | 10     |  |                   | 27       |   |  |   | 2,199   |  
|Other                                                             |  |                 | 490     |   |                       |   | 2,037                     |  |              | 291    |  |                   |         |   |  |   | 2,818   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current assets                                              |  |                 | 14,242  |   |                       |   | 142,568                   |  |              | 19,977 |  |                   | (16,082  | ) |  |   | 160,705 |  
|                                                                  |  |                 |         |   |                      
|Investment in consolidated subsidiaries                           |  |                 | 20,935  |   |                       |   | 15,402                    |  |              | 22,388 |  |                   | (58,725  | ) |  |   |        |  
|Goodwill, net                                                     |  |                 | (389    | ) |                       |   | 111,377                   |  |              | 400    |  |                   | 86       |   |  |   | 111,474 |  
|Property, plant, and equipment, net                               |  |                 | 303     |   |                       |   | 84,688                    |  |              | 8,103  |  |                   |         |   |  |   | 93,094  |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 132                       |  |              |       |  |                   |         |   |  |   | 132     |  
|Due from affiliates                                               |  |                 | 268,603 |   |                       |   |                          |  |              |       |  |                   | (268,603 | ) |  |   |        |  
|Other assets                                                      |  |                 | 7,754   |   |                       |   | 1,604                     |  |              | 1,228  |  |                   |         |   |  |   | 10,586  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total assets                                                      |  | $               | 311,448 |   |                       | $ | 355,771                   |  | $            | 52,096 |  | $                 | (343,324 | ) |  | $ | 375,991 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Liabilities and stockholders equity(deficiency in assets)        |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current liabilities:                                              |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Accounts payable                                                  |  | $               | 519     |   |                       | $ | 28,143                    |  | $            | 2,352  |  | $                 | (2,413   | ) |  | $ | 28,601  |  
|Income taxes payable                                              |  |                 |        |   |                       |   | 2,774                     |  |              | 714    |  |                   | (2,717   | ) |  |   | 771     |  
|Accrued interest payable                                          |  |                 | 3,994   |   |                       |   | 63                        |  |              |       |  |                   |         |   |  |   | 4,057   |  
|Other accrued liabilities                                         |  |                 | 1,471   |   |                       |   | 9,799                     |  |              | 1,280  |  |                   |         |   |  |   | 12,550  |  
|Current portion of long-term debt                                 |  |                 |        |   |                       |   | 3,500                     |  |              |       |  |                   |         |   |  |   | 3,500   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current liabilities                                         |  |                 | 5,984   |   |                       |   | 44,279                    |  |              | 4,346  |  |                   | (5,130   | ) |  |   | 49,479  |  
|                                                                  |  |                 |         |   |                      
|Long-term debt                                                    |  |                 | 307,000 |   |                       |   | 3,000                     |  |              |       |  |                   |         |   |  |   | 310,000 |  
|Deferred income taxes                                             |  |                 |        |   |                       |   |                          |  |              | 709    |  |                   | (709     | ) |  |   |        |  
|Redeemable Preferred Stock                                        |  |                 | 11,700  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 11,700  |  
|Preferred stock dividends payable                                 |  |                 | 15,737  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 15,737  |  
|Due to affiliates                                                 |  |                 |        |   |                       |   | 263,794                   |  |              | 1,112  |  |                   | (264,906 | ) |  |   |        |  
|Other long-term liabilities                                       |  |                 |        |   |                       |   | 16,323                    |  |              | 1,725  |  |                   |         |   |  |   | 18,048  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities                                                 |  |                 | 340,421 |   |                       |   | 327,396                   |  |              | 7,892  |  |                   | (270,745 | ) |  |   | 404,964 |  
|                                                                  |  |                 |         |   |                      
|Stockholders equity (deficiency in assets)                       |  |                 | (28,973 | ) |                       |   | 28,375                    |  |              | 44,204 |  |                   | (72,579  | ) |  |   | (28,973 | )
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficiency in assets) |  | $               | 311,448 |   |                       | $ | 355,771                   |  | $            | 52,096 |  | $                 | (343,324 | ) |  | $ | 375,991 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Consolidating Statement of Operations

(Unaudited)

Three Months Ended December 31, 2005



|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|----------------------------------------------------------- |  | --------------- | ------ | - | --------------------- | - | ------ | ------------------------- |  | ------------ | ------ |  | ----------------- | ------ | - |  | - | ------ | -
|                                                            |  | FastenTech,Inc. |        |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |       
|Net sales                                                   |  | $               |       |   |                       | $ | 86,431 |                           |  | $            | 10,138 |  | $                 | (4,152 | ) |  | $ | 92,417 |  
|Cost of sales                                               |  |                 |       |   |                       |   | 66,598 |                           |  |              | 7,306  |  |                   | (4,152 | ) |  |   | 69,752 |  
|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Gross profit                                                |  |                 |       |   |                       |   | 19,833 |                           |  |              | 2,832  |  |                   |       |   |  |   | 22,665 |  
|Selling, general, and administrative expenses               |  |                 | 1,767  |   |                       |   | 9,707  |                           |  |              | 2,176  |  |                   |       |   |  |   | 13,650 |  
|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Operating income                                            |  |                 | (1,767 | ) |                       |   | 10,126 |                           |  |              | 656    |  |                   |       |   |  |   | 9,015  |  
|Other income (expense):                                     |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Interest expense  long term debt                           |  |                 | (7,632 | ) |                       |   | (32    | )                         |  |              |       |  |                   |       |   |  |   | (7,664 | )
|Interest expense  redeemable preferred stock               |  |                 | (724   | ) |                       |   |       |                           |  |              |       |  |                   |       |   |  |   | (724   | )
|Gain on repurchase of redeemable preferred stock            |  |                 | 2,210  |   |                       |   |       |                           |  |              |       |  |                   |        |   |  |   | 2,210  |  
|Other, net                                                  |  |                 | 8,988  |   |                       |   | (8,822 | )                         |  |              | 35     |  |                   |       |   |  |   | 201    |  
|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Income from continuing operations before income tax expense |  |                 | 1,075  |   |                       |   | 1,272  |                           |  |              | 691    |  |                   |       |   |  |   | 3,038  |  
|Income tax expense                                          |  |                 | 210    |   |                       |   | 131    |                           |  |              | 197    |  |                   | 66     |   |  |   | 604    |  
|Equity in earnings of affiliates                            |  |                 | 1,569  |   |                       |   |       |                           |  |              |       |  |                   | (1,569 | ) |  |   |       |  
|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Net (loss) income                                           |  | $               | 2,434  |   |                       | $ | 1,141  |                           |  | $            | 494    |  | $                 | (1,635 | ) |  | $ | 2,434  |  
|                                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Condensed Consolidating Statement of Cash Flows

(Unaudited)

Three Months Ended December 31, 2005



|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ----------------- | - | - |  | - | ------- | -
|                                                                                 |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Operating activities                                                             |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash flows (used in) provided by operating activities from continuing operations |  | $               | (7,388  | ) |                       | $ | 7,929   |                           |  | $ | 821          |   |                   | $ |  |  | $ | 1,362   |  
|                                                                                 |  |                 |         |   |                      
|Investing activities                                                             |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired                                 |  |                 |        |   |                       |   | (21,063 | )                         |  |   |             |   |                   |   |  |  |   | (21,063 | )
|Additions to property, plant, and equipment                                      |  |                 |        |   |                       |   | (1,329  | )                         |  |   | (298         | ) |                   |   |  |  |   | (1,627  | )
|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities from continuing operations                 |  |                 |        |   |                       |   | (22,392 | )                         |  |   | (298         | ) |                   |   |  |  |   | (22,690 | )
|                                                                                 |  |                 |         |   |                      
|Financing activities                                                             |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net borrowings under revolver                                                    |  |                 | 33,000  |   |                       |   |        |                           |  |   |             |   |                   |   |  |  |   | 33,000  |  
|Repurchase of common and preferred stock                                         |  |                 | (8,307  | ) |                       |   |         |                           |  |   |             |   |                   |   |   |  |   | (8,307  | )
|Intercompany loans and advances                                                  |  |                 | (17,821 | ) |                       |   | 17,821  |                           |  |   |             |   |                   |   |  |  |   |        |  
|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash provided by financing activities from continuing operations             |  |                 | 6,872   |   |                       |   | 17,821  |                           |  |   |             |   |                   |   |  |  |   | 24,693  |  
|Effect of exchange rate fluctuations on cash                                     |  |                 |        |   |                       |   |        |                           |  |   | 93           |   |                   |   |  |  |   | 93      |  
|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                             |  |                 | (516    | ) |                       |   | 3,358   |                           |  |   | 616          |   |                   |   |  |  |   | 3,458   |  
|Cash and cash equivalents at beginning of period                                 |  |                 | 890     |   |                       |   | 5,318   |                           |  |   | 5,522        |   |                   |   |  |  |   | 11,730  |  
|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period                                       |  | $               | 374     |   |                       | $ | 8,676   |                           |  | $ | 6,138        |   |                   | $ |  |  | $ | 15,188  |  
|                                                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Consolidating Balance Sheet

September 30, 2005



|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|----------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ----------------- | -------- | - |  | - | ------- | -
|                                                                  |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |         
|Assets                                                            |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current assets:                                                   |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Cash and cash equivalents                                         |  | $               | 890     |   |                       | $ | 5,318                     |  | $            | 5,522  |  | $                 |         |   |  | $ | 11,730  |  
|Accounts receivable, net                                          |  |                 | 14      |   |                       |   | 53,171                    |  |              | 6,517  |  |                   | (2,275   | ) |  |   | 57,427  |  
|Inventory                                                         |  |                 |        |   |                       |   | 72,556                    |  |              | 6,921  |  |                   | (645     | ) |  |   | 78,832  |  
|Income tax receivable                                             |  |                 | 12,628  |   |                       |   |                          |  |              |       |  |                   | (12,628  | ) |  |   |        |  
|Deferred income taxes                                             |  |                 | 328     |   |                       |   | 1,889                     |  |              | 10     |  |                   | 27       |   |  |   | 2,254   |  
|Other                                                             |  |                 | 674     |   |                       |   | 1,737                     |  |              | 318    |  |                   |         |   |  |   | 2,729   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current assets                                              |  |                 | 14,534  |   |                       |   | 134,671                   |  |              | 19,288 |  |                   | (15,521  | ) |  |   | 152,972 |  
|                                                                  |  |                 |         |   |                      
|Investment in consolidated subsidiaries                           |  |                 | 20,048  |   |                       |   | 15,127                    |  |              | 22,388 |  |                   | (57,563  | ) |  |   |        |  
|Goodwill, net                                                     |  |                 | (389    | ) |                       |   | 103,198                   |  |              | 400    |  |                   | 85       |   |  |   | 103,294 |  
|Property, plant, and equipment, net                               |  |                 | 341     |   |                       |   | 81,934                    |  |              | 8,257  |  |                   |         |   |  |   | 90,532  |  
|Deferred Income Taxes                                             |  |                 |        |   |                       |   | 992                       |  |              |       |  |                   | (778     | ) |  |   | 214     |  
|Due from affiliates                                               |  |                 | 248,446 |   |                       |   |                          |  |              |       |  |                   | (248,446 | ) |  |   |        |  
|Other assets                                                      |  |                 | 8,009   |   |                       |   | 1,125                     |  |              | 1,243  |  |                   |         |   |  |   | 10,377  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total assets                                                      |  | $               | 290,989 |   |                       | $ | 337,047                   |  | $            | 51,576 |  | $                 | (322,223 | ) |  | $ | 357,389 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Liabilities and stockholders equity (deficiency in assets)       |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current liabilities:                                              |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Accounts payable                                                  |  | $               | 356     |   |                       | $ | 28,878                    |  | $            | 2,335  |  | $                 | (2,297   | ) |  | $ | 29,272  |  
|Income taxes payable                                              |  |                 |        |   |                       |   | 15,351                    |  |              | 641    |  |                   | (15,411  | ) |  |   | 581     |  
|Accrued interest payable                                          |  |                 | 8,713   |   |                       |   | 32                        |  |              |       |  |                   |         |   |  |   | 8,745   |  
|Other accrued liabilities                                         |  |                 | 1,832   |   |                       |   | 10,413                    |  |              | 1,334  |  |                   |         |   |  |   | 13,579  |  
|Current portion of long-term debt                                 |  |                 |        |   |                       |   | 5,000                     |  |              |       |  |                   |         |   |  |   | 5,000   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current liabilities                                         |  |                 | 10,901  |   |                       |   | 59,674                    |  |              | 4,310  |  |                   | (17,708  | ) |  |   | 57,177  |  
|                                                                  |  |                 |         |   |                      
|Long-term debt                                                    |  |                 | 274,000 |   |                       |   | 3,000                     |  |              |       |  |                   |         |   |  |   | 277,000 |  
|Deferred income taxes                                             |  |                 |        |   |                       |   |                          |  |              | 723    |  |                   | (723     | ) |  |   |        |  
|Redeemable preferred stock                                        |  |                 | 17,481  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 17,481  |  
|Preferred stock dividends payable                                 |  |                 | 19,715  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 19,715  |  
|Due to affiliates                                                 |  |                 |        |   |                       |   | 247,334                   |  |              | 1,112  |  |                   | (248,446 | ) |  |   |        |  
|Other long-term liabilities                                       |  |                 |        |   |                       |   | 15,388                    |  |              | 1,736  |  |                   |         |   |  |   | 17,124  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities                                                 |  |                 | 322,097 |   |                       |   | 325,396                   |  |              | 7,881  |  |                   | (266,877 | ) |  |   | 388,497 |  
|                                                                  |  |                 |         |   |                      
|Stockholders equity (deficiency in assets)                       |  |                 | (31,108 | ) |                       |   | 11,651                    |  |              | 43,695 |  |                   | (55,346  | ) |  |   | (31,108 | )
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficiency in assets) |  | $               | 290,989 |   |                       | $ | 337,047                   |  | $            | 51,576 |  | $                 | (322,223 | ) |  | $ | 357,389 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Consolidating Statement of Operations

(Unaudited)

Three Months Ended December 31, 2004



|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | --------------- | ------ | - | --------------------- | - | ------ | ------------------------- |  | ------------ | ------ |  | ----------------- | ------ | - |  | - | ------ | -
|                                                                   |  | FastenTech,Inc. |        |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |       
|Net sales                                                          |  | $               |       |   |                       | $ | 62,084 |                           |  | $            | 10,685 |  | $                 | (2,991 | ) |  | $ | 69,778 |  
|Cost of sales                                                      |  |                 |       |   |                       |   | 47,361 |                           |  |              | 7,384  |  |                   | (2,991 | ) |  |   | 51,754 |  
|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Gross profit                                                       |  |                 |       |   |                       |   | 14,723 |                           |  |              | 3,301  |  |                   |       |   |  |   | 18,024 |  
|                                                                   |  |                 |        |   |                      
|Selling, general, and administrative expenses                      |  |                 | 1,745  |   |                       |   | 6,494  |                           |  |              | 2,388  |  |                   |       |   |  |   | 10,627 |  
|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Operating income                                                   |  |                 | (1,745 | ) |                       |   | 8,229  |                           |  |              | 913    |  |                   |       |   |  |   | 7,397  |  
|                                                                   |  |                 |        |   |                      
|Other income (expense):                                            |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Interest expense  long term debt                                  |  |                 | (6,139 | ) |                       |   |       |                           |  |              |       |  |                   |       |   |  |   | (6,139 | )
|Other, net                                                         |  |                 | 6,063  |   |                       |   | (6,170 | )                         |  |              | 40     |  |                   | (59    | ) |  |   | (126   | )
|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|(Loss) income from continuing operations before income tax expense |  |                 | (1,821 | ) |                       |   | 2,059  |                           |  |              | 953    |  |                   | (59    | ) |  |   | 1,132  |  
|Income tax (benefit) expense                                       |  |                 | (741   | ) |                       |   | 844    |                           |  |              | 318    |  |                   | 20     |   |  |   | 441    |  
|Equity in earnings of affiliates                                   |  |                 | 1,771  |   |                       |   |       |                           |  |              |       |  |                   | (1,771 | ) |  |   |       |  
|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Net (loss) income                                                  |  | $               | 691    |   |                       | $ | 1,215  |                           |  | $            | 635    |  | $                 | (1,850 | ) |  | $ | 691    |  
|                                                                   |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  



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|9. | Consolidating Guarantor and Non-Guarantor Financial Information (continued)
|-- | ---------------------------------------------------------------------------



Condensed Consolidating Statement of Cash Flows

(Unaudited)

Three Months Ended December 31, 2004



|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------ | ------------------------- |  | - | ------------ | - | ----------------- | - | - |  | - | ------- | -
|                                                                                 |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Operating activities                                                             |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash flows (used in) provided by operating activities from continuing operations |  | $               | (14,825 | ) |                       | $ | 961    |                           |  | $ | 612          |   |                   | $ |  |  | $ | (13,252 | )
|                                                                                 |  |                 |         |   |                      
|Investing activities                                                             |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired                                 |  |                 | (38,759 | ) |                       |   |       |                           |  |   |             |   |                   |   |  |  |   | (38,759 | )
|Additions to property, plant, and equipment                                      |  |                 |        |   |                       |   | (3,221 | )                         |  |   | (30          | ) |                   |   |  |  |   | (3,251  | )
|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities from continuing operations                 |  |                 | (38,759 | ) |                       |   | (3,221 | )                         |  |   | (30          | ) |                   |   |  |  |   | (42,010 | )
|                                                                                 |  |                 |         |   |                      
|Financing activities                                                             |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net borrowings under revolver                                                    |  |                 | 35,000  |   |                       |   |       |                           |  |   |             |   |                   |   |  |  |   | 35,000  |  
|Intercompany loans and advances                                                  |  |                 | (1,980  | ) |                       |   | 1,980  |                           |  |   |             |   |                   |   |  |  |   |        |  
|Other                                                                            |  |                 | 27      |   |                       |   |       |                           |  |   |             |   |                   |   |   |  |   | 27      |  
|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash provided by (used in) financing activities from continuing operations   |  |                 | 33,047  |   |                       |   | 1,980  |                           |  |   |             |   |                   |   |  |  |   | 35,027  |  
|Effect of exchange rate fluctuations on cash                                     |  |                 |        |   |                       |   |       |                           |  |   | 433          |   |                   |   |  |  |   | 433     |  
|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                             |  |                 | (20,537 | ) |                       |   | (280   | )                         |  |   | 1,015        |   |                   |   |  |  |   | (19,802 | )
|Cash and cash equivalents at beginning of period                                 |  |                 | 21,110  |   |                       |   | 4,771  |                           |  |   | 3,341        |   |                   |   |  |  |   | 29,222  |  
|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period                                       |  | $               | 573     |   |                       | $ | 4,491  |                           |  | $ | 4,356        |   |                   | $ |  |  | $ | 9,420   |  
|                                                                                 |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



Forward-Looking Statements



Some of the statements in this document and any documents incorporated by reference constitute forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses
or our industries actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements include, in particular, statements about our plans,
strategies, prospects, changes, outlook and trends in our business and the markets in which we operate under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations. In some cases, you can
identify forward-looking statements by terminology such as may, will, could, would, should, expect, plan, anticipate, intend,
tends, believe, estimate, predict, potential or continue or the negative of those terms or other comparable terminology. These statements are only predictions. Actual events or
results may differ materially because of market conditions in our industries or other factors. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under Managements Discussion and
Analysis of Financial Condition and Results of Operations herein and Managements Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the annual period ended September 30, 2005,
as filed with the SEC and any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements. The forward-looking statements are made as of
the date of this document or the date of the documents incorporated by reference in this document, as the case may be, and we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from
those projected in the forward-looking statements.



We caution
you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if
any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on
forward-looking statements as a prediction of actual results. In addition, our estimates of future operating results are based on our current complement of businesses, which is constantly subject to change as we regularly review and negotiate
potential acquisitions and divestitures in the ordinary course of business.



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Executive Overview



Our Company is focused on profitably growing a number of product platforms for which we believe we hold leading market share positions in the majority
of the markets we serve. We are a leading manufacturer and marketer of aerospace-grade, specialized and application-specific components. Through our aerospace-grade segment, we design, manufacture and sell an array of engineered components such as
transition ducts, combustion chamber liners and connection rods for gas turbine engines, gearboxes, planetary gear systems, and military track pins. Through our specialized components segment, we offer a diverse collection of highly engineered
specialty fasteners and fastener systems, which includes custom engineered engine bolts, externally threaded fasteners, shear connectors, concrete anchors, punching resistor studs, inserts, ports, pipe & cable hangers, weld studs and
bosses, and the devices used to apply, assemble and weld these items. We also provide a variety of metal-formed parts and assemblies through our application-specific segment. Our products are used in the critical applications of a broad array of
customers in various industries, including power generation, military, industrial, medium- and heavy-duty truck, construction, light vehicles, recreational, and aerospace.



Our condensed consolidated results of operations for the three-month periods ended December 31, 2005 and 2004 include
the acquisitions of various operations and, therefore, are not directly comparable. Pro forma results of operations, which assume these transactions occurred at the beginning of their respective periods, are disclosed in Note 5 of the Notes to the
Unaudited Condensed Consolidated Financial Statements. Our first quarter results reflect the seasonal slow downs in our customers production schedules (see Seasonality, Competition and Trends for further information.)



Sales for the fiscal first quarter of 2006, inclusive of acquisitions,
were up 32.4% over the same period last year to $92.4 million. Operating income for the fiscal 2006 first quarter, inclusive of acquisitions, was $9.0 million compared to $7.4 million for the same period last year. Net cash provided by operating
activities was $1.4 million compared to a use of $13.3 million in the year-ago quarter.



Overall, we continue to benefit from the positive trends in our customers end markets and an increasing demand for their products. However, as we expected, lower demand for military tracked vehicle components in
the quarter impacted organic sales growth in our Aerospace-grade segment. Although we expect this trend to continue through fiscal 2006, we expect an improved order backlog for gas turbine components, particularly for our OEM customers
maintenance, repairs, and overhaul, which is up 61% from a year-ago, to mitigate the decline. In our Specialized and Application-specific components segments, improved demand across nearly all our product lines drove our organic revenue growth for
these segments higher this quarter than in the year-ago quarter. This, too, is a trend we expect to continue through fiscal 2006.



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RESULTS OF OPERATIONS



The unaudited information included in this Quarterly Report should be read in conjunction with the Consolidated Financial Statements
contained in our Form 10-K, as filed with the SEC. Interim results are not necessarily indicative of results for a full year. Over the past two years, we have completed eleven acquisitions. Refer to Note 5 in our Notes to Condensed
Consolidated Financial Statements. These acquisitions significantly impact year-over-year comparisons.



Consolidated Reported Results

(dollars in thousands)



|                                                 |  |                               |        |   |      |   |        |  
|------------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                                 |  | Three Months EndedDecember 31 |       
|(Dollars in thousands)                           |  | 2005                          |        |   | 2004 |  
|Net sales                                        |  | $                             | 92,417 |   |      | $ | 69,778 |  
|Cost of sales                                    |  |                               | 69,752 |   |      |   | 51,754 |  
|                                                 |  |                               |        |   |      |   |        |  
|Gross profit                                     |  |                               | 22,665 |   |      |   | 18,024 |  
|Gross profit margin                              |  |                               | 24.5   | % |      |   | 25.8   | %
|                                                 |  |                              
|Selling, general, and administrative expenses    |  |                               | 12,694 |   |      |   | 10,364 |  
|As a percent of sales                            |  |                               | 13.7   | % |      |   | 14.9   | %
|                                                 |  |                              
|Intangible asset amortization                    |  |                               | 956    |   |      |   | 263    |  
|                                                 |  |                               |        |   |      |   |        |  
|Operating income                                 |  |                               | 9,015  |   |      |   | 7,397  |  
|                                                 |  |                              
|Other income (expense):                          |  |                               |        |   |      |   |        |  
|Interest expense  long term debt                |  |                               | (7,664 | ) |      |   | (6,139 | )
|Interest expense  redeemable preferred stock    |  |                               | (724   | ) |      |   |       |  
|Gain on repurchase of redeemable preferred stock |  |                               | 2,210  |   |      |   |       |  
|Other, net                                       |  |                               | 201    |   |      |   | (126   | )
|                                                 |  |                               |        |   |      |   |        |  
|Income before income tax expense                 |  |                               | 3,038  |   |      |   | 1,132  |  
|Income tax expense                               |  |                               | 604    |   |      |   | 441    |  
|                                                 |  |                               |        |   |      |   |        |  
|Net income                                       |  | $                             | 2,434  |   |      | $ | 691    |  
|                                                 |  |                               |        |   |      |   |        |  
|Capital expenditures                             |  | $                             | 1,627  |   |      | $ | 3,251  |  
|Depreciation and amortization                    |  | $                             | 4,266  |   |      | $ | 2,643  |  



Consolidated
Results of Operations: First Quarter Fiscal 2006 Compared to First Quarter Fiscal 2005



Net sales. For the fiscal quarter ended December 31, 2005, net sales increased 32.4%, or $22.6 million, which included a net sales increase of
67.4% in our Aerospace-grade Components segment, 7.3% in our Specialized Components segment and 15.0% in our Application-specific Components segment. The fiscal first quarter of 2006 benefited from acquisitions made after the beginning of the fiscal
first quarter of 2005, which had a favorable impact on consolidated net sales of 32.7%. In addition, we had organic consolidated sales growth of 0.8%, which excludes a 1.1% unfavorable impact of foreign currency fluctuations in the Specialized
Components segment.



Gross profit. Gross profit margins
were 24.5% and 25.8% for the first quarters of fiscal 2006 and 2005, respectively. Gross profit for the first quarter of fiscal 2006 was negatively impacted by a non-cash charge of $0.4 million for the excess of fair value assigned to inventory
related to the acquisition of BNC. Excluding this item, gross profit for the first quarter of fiscal 2006 would have been 24.9%. The remaining decrease relates primarily to lower sales of military tracked vehicle components in the Aerospace-grade
Components segment, higher material and utility costs in the Specialized Components segment and lower margins due to a sales mix shift in the Application-specific segment.



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Selling, general and administrative expenses (SG&A).For the fiscal 2006 first quarter,
SG&A expenses, excluding intangible asset amortization, increased $2.3 million to $12.7 million, from $10.4 million for the comparable fiscal 2005 period. The increase was due primarily to acquisitions completed after the beginning of the fiscal
2005 first quarter. SG&A expenses of acquired companies included in the first quarter of fiscal 2006 that were not included in the same period of fiscal 2005 were approximately $2.1 million.



Interest expense  long term debt, net.For the fiscal 2006 first
quarter, net interest expense on long term debt increased 24.8%, or $1.5 million, compared to the fiscal 2005 first quarter, primarily due to higher average debt balances. Our average debt balance in the fiscal 2006 first quarter was $297.8 million
compared to $192.5 million in the fiscal 2005 first quarter, while the weighted average interest rate incurred, including the amortization of debt issuance costs, was 10.3% compared to 12.8% for the first quarters of fiscal 2006 and 2005,
respectively. This decrease in interest rates relates to the higher debt under the Credit Agreement, which carries a lower interest rate than the Senior Subordinated Notes. Under a registration rights agreement between us and the initial purchasers
of our 11.5% Senior Subordinated Notes due May 2011, we were required to complete an exchange offer and register the issuance of the notes under the Securities Act of 1933. We completed the exchange offer on April 14, 2005. Prior to completing
the exchange offer, the interest rate on the notes increased at a rate of 0.25% for each 90-day period beginning November 27, 2003 until the notes were registered. For the fiscal 2006 first quarter, the annualized interest rate on these notes
was 11.5% compared to 12.5% for the fiscal 2005 first quarter. Upon the completion of the exchange offer, our obligations to pay the 1% penalty interest rate ceased and, effective April 15, 2005, the interest rate on the notes reverted to
11.5%.



Interest expense  redeemable preferred
stock. Effective January 1, 2005, we adopted SFAS No. 150, which required us to record in our results of operations, the dividends on our redeemable preferred stock as interest expense rather than as a reduction to retained earnings or
additional paid in capital. We have not restated any prior periods, as it is not permitted. We did not record any tax benefit in connection with the interest expense on the redeemable preferred stock because payment of the related preferred dividend
is not tax-deductible.



Gain on repurchase of redeemable
preferred stock.During the first quarter of fiscal 2006, we recognized a $2.2 million gain due to the repurchase of redeemable preferred stock. We did not record any tax expense in connection with this gain on the redeemable preferred stock
because it is not a taxable gain.



Income tax expense.The consolidated effective income tax rate for the fiscal 2006 first quarter was 19.9% compared to 39.0% for the same period last year. Excluding the non-tax deductible interest expense on the redeemable preferred stock and the gain on
repurchase of redeemable preferred stock, our effective rate for the fiscal 2006 first quarter was 38.9%. We expect our effective tax rate, excluding the non-deductible interest expense on our preferred stock, will be between 38% and 41% for fiscal
2006, depending on results of foreign operations.



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SEGMENT RESULTS OF OPERATIONS



Segment Reported Results

(dollars in thousands)



|                                                                          |  |                                |        |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                          |  | Three Months EndedDecember 31, |       
|                                                                          |  | 2005                           |        |   | 2004 |  
|Net sales                                                                 |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  | $                              | 48,067 |   |      | $ | 28,715 |  
|Specialized Components                                                    |  |                                | 39,886 |   |      |   | 37,159 |  
|Application-specific Components                                           |  |                                | 4,512  |   |      |   | 3,924  |  
|Eliminations                                                              |  |                                | (48    | ) |      |   | (20    | )
|                                                                          |  |                                |        |   |      |   |        |  
|Total net sales                                                           |  | $                              | 92,417 |   |      | $ | 69,778 |  
|                                                                          |  |                                |        |   |      |   |        |  
|Income before income tax expense                                          |  |                                |        |   |      |   |        |  
|EBITDA:                                                                   |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  | $                              | 9,227  |   |      | $ | 5,518  |  
|Specialized Components                                                    |  |                                | 5,627  |   |      |   | 5,710  |  
|Application-specific Components                                           |  |                                | 563    |   |      |   | 541    |  
|Unallocated corporate operating expenses                                  |  |                                | (1,728 | ) |      |   | (1,729 | )
|                                                                          |  |                                |        |   |      |   |        |  
|EBITDA(1)                                                                 |  |                                | 13,689 |   |      |   | 10,040 |  
|Depreciation and amortization                                             |  |                                |        |   |      |   |        |  
|Aerospace-grade Components                                                |  |                                | (2,553 | ) |      |   | (986   | )
|Specialized Components                                                    |  |                                | (1,440 | ) |      |   | (1,351 | )
|Application-specific Components                                           |  |                                | (235   | ) |      |   | (291   | )
|Corporate                                                                 |  |                                | (39    | ) |      |   | (15    | )
|                                                                          |  |                                |        |   |      |   |        |  
|Depreciation and amortization                                             |  |                                | (4,267 | ) |      |   | (2,643 | )
|Excess of fair value assigned to inventory included in cost of goods sold |  |                                | (362   | ) |      |   |       |  
|Severance expense included in SG&A                                        |  |                                | (45    | ) |      |   |       |  
|                                                                          |  |                                |        |   |      |   |        |  
|Total operating income                                                    |  |                                | 9,015  |   |      |   | 7,397  |  
|Interest expense  long term debt                                         |  |                                | (7,664 | ) |      |   | (6,139 | )
|Interest expense  redeemable preferred stock                             |  |                                | (724   | ) |      |   |       |  
|Gain on repurchase of redeemable preferred stock                          |  |                                | 2,210  |   |      |   |       |  
|Other, net                                                                |  |                                | 201    |   |      |   | (126   | )
|                                                                          |  |                                |        |   |      |   |        |  
|Income before income tax expense                                          |  | $                              | 3,038  |   |      | $ | 1,132  |  
|                                                                          |  |                                |        |   |      |   |        |  
|Net Income                                                                |  | $                              | 2,434  |   |      | $ | 691    |  
|                                                                          |  |                                |        |   |      |   |        |  



|(1) | EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and nonrecurring items. Management uses EBITDA as a basis for presenting and using
segment financial data to aid it in making internal operating decisions. EBITDA is not intended to represent and should not be considered more meaningful than, or an alternative to, operating income, cash flows from operating activities or other
measures of performance in accordance with generally accepted accounting principles.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Segment Results of Operations: Three Months Ended December 31, 2005 Compared to December 31, 2004



Aerospace-grade Components



Overview



The term aerospace-grade is an industry term for components that are used in
high stress environments and are often made of high-grade metal alloys. The business units that comprise this segment manufacture components to the exacting quality specifications of OEMs serving the energy, defense and aerospace markets. As a
result, the majority of revenues in this segment relate to energy and defense spending.



After an unprecedented decline in orders for gas turbines during the 2001 to 2003 period, the trend leveled out in 2004 and is now showing signs of recovery in certain market segments and in certain parts of the
world. We have started to see increased demand for our gas turbine components, particularly for maintenance, repairs and overhaul, for which our order backlog is up 61% from a year ago.



The demand for certain of our military track pin vehicle products peaked in fiscal 2005. As a result of the reduced level of
military activity in Afghanistan and Iraq, we have seen a 32.1% quarter over quarter decline in organic sales of these related products and expect to see a similar impact for the rest of fiscal 2006 as orders have returned to a more normalized
level.



Net sales. Net sales for the fiscal first
quarter of 2006 were $48.1 million compared to $28.7 million in the fiscal first quarter of 2005, an increase of $19.4 million, or 67.4%. The fiscal first quarter of 2006 benefited from acquisitions completed after the beginning of the fiscal 2005
first quarter, which had a favorable impact on net sales of 74.4% and was partly offset by an 7.0% decline in organic sales. Organic sales were impacted by lower sales of high stress fasteners (down 13.9%) offset by higher sales of gas turbine
components (up 8.3%). The decrease in high stress fasteners was due to lower demand for military tracked vehicle components, which was down 32.1% compared to the prior year quarter.



EBITDA. For the fiscal 2006 first quarter, EBITDA from our Aerospace-grade Components segment increased $3.7 million
compared to the prior year. EBITDA margins for both periods were 19.2%. The EBITDA increase for the current quarter was due to the operating results of the acquired businesses.



Specialized Components



Overview



The performance of our Specialized Components segment mirrors that of broader U.S. economic trends. Increases or decreases in revenue growth for this
segment have generally tracked changes in gross domestic product (GDP), industrial production, and manufacturing capacity utilization.



Industrial manufacturing production for the first three months of fiscal 2006 was up 2.6% from September 30, 2005. We expect industrial manufacturing
production to remain strong through the end of our fiscal year 2006.



North American industry demand for construction equipment remained strong across all product lines. Based upon industry sources, nonresidential construction is expected to increase through fiscal 2006 as a result of improved corporate
profits, higher capacity utilization and public construction projects.



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During the first three months of fiscal 2006, truck unit production remained strong. According to
industry sources, truck production is expected to remain strong in 2006. Approximately 15-20% of our sales in this segment relate to Class 8 heavy trucks. During the first three months of fiscal 2006, Class 8 NAFTA vehicle production was up
approximately 4.7% compared to the same period a year ago as follows:



|                            |  |                                |  |     
|--------------------------- |  | ------------------------------ |  | ----
|                            |  | Three months endedDecember 31,
|(in 000s)                  |  | 2005                           |  | 2004
|Class 8 NAFTA Vehicle Build |  | 81.7                           |  | 78.0
|Source: ACT Research        |  |                                |  |     



Net sales. Net
sales for the fiscal first quarter of 2006 were $39.9 million compared to $37.2 million for the fiscal first quarter of 2005, an increase of $2.7 million or 7.3%. The increase was due to organic net sales growth of 5.4%, excluding the effects of
foreign currency fluctuations, which lowered organic net sales growth 2.1%, while the acquisition completed in the fiscal first quarter of 2006 had a favorable impact on net sales of 4.0%. The organic net sales growth reflected strong demand across
all end markets except the light vehicle market, which reflected an unfavorable year over year comparison due to an unusually large stud welding equipment sale ($1.1 million) recorded in the fiscal 2005 first quarter.



EBITDA.For the fiscal 2006 first quarter, EBITDA from our Specialized
Components segment decreased $0.1 million over the same period in fiscal 2005. EBITDA margins for the fiscal 2006 and 2005 first quarters were 14.1% and 15.4%, respectively. The decrease in EBITDA margin for the quarter ended December 31, 2005
relates primarily to higher raw material and utility costs as well as manufacturing inefficiencies.



Application-specific Components



Overview



The
performance of the Application-specific segment closely follows the North American Light Vehicle Build. Increases or decreases in the build rates will impact the revenues generated by this segment. Certain data related to production in the
automotive industry is as follows:



|                                 |  |                                |  |     
|-------------------------------- |  | ------------------------------ |  | ----
|                                 |  | Three months endedDecember 31,
|(in 000s)                       |  | 2005                           |  | 2004
|North American Lt. Vehicle Build |  | 4.1                            |  | 4.0 
|Source: CSM Worldwide            |  |                                |  |     



Net sales. In
our Application-specific Components segment, net sales for the fiscal 2006 first quarter increased $0.6 million, or 15.0% over the prior year. The majority of the increase reflects new component sales to automotive OEMs offset by the phase out of
certain discontinued products.



EBITDA.For the fiscal
2006 and 2005 first quarters, EBITDA from our Application-specific Components segment was $0.6 million compared to $0.5 million while EBITDA margins were 12.5% and 13.8%, respectively. The decrease in EBITDA margin for the quarter ended
December 31, 2005 relates primarily to sales mix, price reductions and operating inefficiencies.



Unallocated Corporate Operating Expenses



For the fiscal 2006 and fiscal 2005 first quarters, Unallocated Corporate Operating Expenses were $1.7 million.



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Liquidity and Capital Resources



Our short-term liquidity needs include required debt service, day-to-day operating expenses, working capital requirements
and the funding of capital expenditures. Long-term liquidity requirements include principal payments on long-term debt and funding of acquisitions. Our principal sources of cash to fund our short-term liquidity needs consist of cash generated by
operations and borrowings under our credit facility. As of December 31, 2005, we had $132.0 million in outstanding borrowings under our credit facility and we had $37.4 million of available borrowing capacity, subject to borrowing limits,
including limitations required under the indenture governing the notes.



We believe that cash generated from operations, together with the amounts available under our credit agreement, will be adequate to meet our debt service requirements, capital expenditures and working capital needs for at least the next 12
months, although no assurance can be given. Our future operating performance may be impacted by future economic conditions and financial, business, and other factors that are beyond our control.



We continually evaluate potential strategic acquisition candidates to
complement our existing businesses and evaluate various financing alternatives to enable us to execute additional and larger transactions. From time to time, we enter into discussions, letters of intent and confidentiality agreements with
acquisition candidates we find attractive. Certain discussions are ongoing and certain confidentiality agreements remain in effect. We also currently have non-disclosure agreements with potential acquisition candidates. Whether or not these
discussions and arrangements result in consummated transactions is uncertain.



Three Months Ended December 31, 2005 compared to Three Months Ended December 31, 2004



For the fiscal 2006 three-month period, we generated $1.4 million of operating cash flow compared to cash used of $13.3 million in the same period of the
prior year. The increase in cash generated from operations was primarily the result of improved working capital and lower cash taxes. Cash used for working capital and other operating assets and liabilities, excluding taxes, was $4.5 million
compared to $11.9 million in the prior year. The principal reasons for the decreased use of cash relates to increased accounts receivable collections and focused efforts to maintain more normalized inventory levels. During the fiscal 2006 first
quarter, we paid approximately $0.3 million in cash taxes compared to $5.5 million in the prior fiscal year first quarter. The prior year amount included the payment of capital gains taxes on the sale of FabriSteel. We paid approximately $12.0
million and $10.9 million of interest for the fiscal 2006 and 2005 first quarters, respectively.



Days sales outstanding in accounts receivable decreased to approximately 50 days at December 31, 2005 from approximately 52 days at
September 30, 2005. Days sales in inventory, based on cost of goods sold, increased slightly to approximately 109 days at December 31, 2005 from approximately 108 days at September 30, 2005.



Cash used in investing activities was $22.7 million for the fiscal 2006
quarter. We used $21.1 million for acquisitions in the fiscal 2006 first quarter including; approximately $17.5 million, including fees, and net of a working capital adjustment, for the purchase of 100% of the outstanding stock of BNC &
Associates, Inc. and approximately $3.6 million for the acquisition of Erie Bolt Corporation. This compares to $38.8 million used during the same period of the prior year to acquire: substantially all of the assets of Spun Metals, Inc., for
approximately $5.0 million; substantially all of the assets of GCE Industries, Inc. and 100% of the stock of Katsakos Industries, Inc. for approximately $31.1 million; and $2.7 million used for the acquisition of certain assets of the Triumph Group.



Capital expenditures decreased $1.6 million for the fiscal
2006 first quarter compared to the fiscal 2005 first quarter as a result of three major capital projects that occurred during fiscal 2005. These related to; 1) the launch of a manufacturing venture in China to produce stud weld and fastener products
within our Specialized Components segment; 2) installation of equipment and processes in the Aerospace-grade Components segment to produce an array of Lamilloy products to support the U.S. Joint-Strike Fighter, the newest class of military aircraft;
and 3) a capacity expansion project in our Aerospace-grade Components segment to meet increasing demand in the recreational vehicle market. We expect fiscal 2006 capital spending, including maintenance capital spending, to be in the range of
approximately $11.0 million to $13.0 million compared to $14.5 million in fiscal 2005.



Cash provided by financing activities was $24.7 million for the fiscal 2006 first quarter compared to $35.0 million for the fiscal 2005 first quarter. We borrowed $33.0 million under our credit agreement in the fiscal
2006



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first quarter compared to $35.0 million during the fiscal 2005 first quarter. In addition, for the fiscal 2006 first quarter, we used $8.3 million to
repurchase common and redeemable preferred stock.



In January 2006, we made a
scheduled payment of $3.5 million on the subordinated debt related to the acquisition of Acraline. This payment was funded with proceeds under the revolving credit facility. As of January 31, 2006, our balance under the revolving credit
facility was $136.0 million and our total debt, net of cash, was approximately $298.2 million.



Debt



The
following summarizes our outstanding debt and unused credit availability as of December 31, 2005:



|                                              |  |                 |       |                   |   |                          |  |   |     
|--------------------------------------------- |  | --------------- | ----- | ----------------- | - | ------------------------ |  | - | ----
|(Dollars in millions)                         |  | TotalCommitment |       | AmountOutstanding |   | UnusedCreditAvailability
|Revolving credit facility                     |  | $               | 170.0 |                   | $ | 132.0                    |  | $ | 38.0
|Subordinated debt                             |  |                 | 6.5   |                   |   | 6.5                      |  |   | 0.0 
|11.5% senior subordinated notes, due May 2011 |  |                 | 175.0 |                   |   | 175.0                    |  |   | 0.0 
|                                              |  |                 |       |                   |   |                          |  |   |     
|Total contractual cash obligations            |  | $               | 351.5 |                   | $ | 313.5                    |  | $ | 38.0
|                                              |  |                 |       |                   |   |                          |  |   |     



Credit Facility



Effective July 12, 2005, we increased the
available borrowings under the revolving credit facility to $170.0 million (subject to certain limits, including limitation requirements under the indenture for the notes). The loans provided under the credit agreement mature in May 2010.



Under the credit facility, borrowings bear interest, at our
option, at LIBOR plus the Applicable Rate or the ABR plus the Applicable Rate. During the first quarter of fiscal 2006, interest on the borrowings was calculated using LIBOR and we intend to select the most favorable borrowing alternate when future
borrowings are required. The Applicable Rate is based upon our Leverage Ratio, as defined in the credit facility. The Applicable rate on LIBOR borrowings is between 2.25% and 3.00% and on the ABR borrowings is between 1.25% to 2.00%.



Our credit facility is subject to annual commitment fees of 0.375% to 0.5% on
the average unused portion of the credit facility, depending on the level of outstanding borrowings. Our credit facility is collateralized by substantially all of the Companys assets and contains customary covenants, including financial
covenants. The first financial covenant does not permit the Leverage Ratio, as defined, to exceed 4.75 to 1.00 as of December 31, 2005. The second financial covenant does not permit the Interest Coverage Ratio, as defined, to be less than 2.00
to 1.00 as of December 31, 2005. The final financial covenant does not permit EBITDA, as defined in the credit agreement to be less than $49.0 million as of December 31, 2005. At December 31, 2005, we were in compliance with all of
our covenants. Our Leverage Ratio, as defined, was 4.64 to 1.00; our Interest Coverage Ratio, as defined, was 2.45 to 1.00; and our EBITDA, as defined, was $64.3 million.



Senior Notes



The indentures governing the notes contain a number of covenants that limit our ability, and the ability of our subsidiaries, to incur additional
indebtedness or issue preferred stock, to make certain distributions, investments and other restricted payments, create certain liens, sell assets, enter into transactions with our affiliates, sell capital stock of our restricted subsidiaries,
merge, consolidate or sell substantially all of our assets, or enter into new lines of business.



As of December 31, 2005, our Consolidated Coverage Ratio, as defined in the indenture governing the notes, was 2.29 to 1.00. The covenants under the
indenture limit the amount of additional indebtedness we may incur if the ratio is less than 2.00 to 1.00, after giving effect to the financing and any related transaction on a pro forma basis.



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Contractual Obligations



Besides obligations related to our operating activities, we have various obligations that could create future payments,
including potential earn outs of up to $5.0 million, $4.25 million and $2.0 million related to the acquisitions of the assets of the Evansville Operations of Rolls-Royce Corporation, Gear and Broach, Inc., and MECO, Inc., respectively. At
December 31, 2005, the total amount of accrued and unpaid dividends on the preferred stock of the Company was approximately $15.7 million.



Critical Accounting Policies



There have been no material changes to the Companys critical accounting policies as disclosed in the Companys Annual Report on Form 10-K for
the year ended September 30, 2005.



Seasonality, Competition and Trends



Many of our businesses closely follow changes in the
industries and end markets that they serve. In addition, certain of our businesses tend to be stronger during the fiscal third and fourth quarters due to the purchasing patterns of our customers. Our Aerospace-grade Components segment revenues
typically follow program launch and replacement component timing for gas turbine machines and military tracked vehicles, the largest markets in this segment. Demand for products in our Specialized Components segment is highly correlated to contract
timing on large construction projects, which may cause significant fluctuations from period to period. Our Application-specific segment revenues typically follow trends in the North American Car Build. In aggregate, our businesses have generally
tended to be stronger in the second half of the fiscal year. However, due to the significant number of acquisitions, the results of the Company will tend to be more consistent, except for the first fiscal quarter, which will continue to have lower
results due to the reduced production schedules of many of our OEM customers. Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since our
competitors do not offer all of the same product lines or serve all of the same markets. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous
concerns, both large and small, some of which have stronger financial resources than we possess. The principal methods of competition are price, service, product performance and technical innovations. These methods vary with the type of product
sold. We believe we can compete effectively on the basis of each of these factors as they apply to the various products we offer.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



There have been no material changes to our exposures to market risk since September 30, 2005.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal
executive officer (CEO) and principal financial officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in
reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There was no change in our internal control over financial reporting during our most
recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



From time to time, we are party to various legal actions in the normal course of business. We are not party to any litigation that, if adversely
determined, would have a material adverse effect on our business, financial conditions and results of operations.



|ITEM 1A. | RISK FACTORS
|-------- | ------------



There have been no material changes from risk factors previously disclosed in our Form 10-K.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



None.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



None.



|ITEM 6. | EXHIBITS
|------- | --------



|(a) | See the Exhibit Index.
|--- | ----------------------



SIGNATURES



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



|                  |  |  |  |                  |  |                                                                   |  | 
|----------------- |  |  |  | ---------------- |  | ----------------------------------------------------------------- |  | 
|                  |  |  |  | FASTENTECH, INC.
|                  |  |  | 
|February 14, 2006 |  |  |  | By:              |  | /s/ Michael R. Elia                                              
|DATE              |  |  |  |                  |  | Michael R. Elia                                                  
|                  |  |  |  |                  |  | Senior Vice President and Chief Financial OfficerFastenTech, Inc.



Exhibit Index



|     |  |                                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits Required by Item 601 of Regulation S-K                                                                         
|     | 
|31.1 |  | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.             
|     | 
|31.2 |  | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.             
|     | 
|32.1 |  | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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