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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 June 30, 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. ̈Yes    x  No



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



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##### Table of Contents

FASTENTECH, INC

REPORT ON FORM 10-Q

FOR THE PERIOD ENDED June 30, 2005



INDEX



|        |  |                                                                                                      |  |   
|------- |  | ---------------------------------------------------------------------------------------------------- |  | --
|PART I: |  | FINANCIAL INFORMATION                                                                                |  | 1 
|        |  |                                                                                                     
|Item 1. |  | Condensed Consolidated Balance Sheets  June 30, 2005 and September 30, 2004                         |  | 1 
|        |  |                                                                                                     
|        |  | Condensed Consolidated Statements of Operations  Three and Nine months ended June 30, 2005 and 2004 |  | 2 
|        |  |                                                                                                     
|        |  | Condensed Consolidated Statements of Cash Flows  Nine months ended June 30, 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                |  | 22
|        |  |                                                                                                     
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                           |  | 35
|        |  |                                                                                                     
|Item 4. |  | Controls and Procedures                                                                              |  | 35
|        |  |                                                                                                     
|Item 5. |  | Other Information                                                                                    |  | 35
|        |  |                                                                                                     
|PART II |  | OTHER INFORMATION                                                                                    |  | 35
|        |  |                                                                                                     
|Item 1. |  | Legal Proceedings                                                                                    |  | 35
|        |  |                                                                                                     
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                     |  | 35



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##### Table of Contents

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) June 30, 2005 |         |   | September 30, 2004 |  
|Assets:                                                                                                   |  |                           |         |   |                    |   |         |  
|Current assets:                                                                                           |  |                           |         |   |                    |   |         |  
|Cash and cash equivalents                                                                                 |  | $                         | 10,771  |   |                    | $ | 28,819  |  
|Accounts receivable, net of allowance of $692 and $739 respectively                                       |  |                           | 52,737  |   |                    |   | 42,893  |  
|Inventory                                                                                                 |  |                           | 73,516  |   |                    |   | 52,433  |  
|Deferred income taxes                                                                                     |  |                           | 1,530   |   |                    |   | 1,530   |  
|Other                                                                                                     |  |                           | 2,407   |   |                    |   | 2,203   |  
|Current assets of discontinued operations                                                                 |  |                           | 5,598   |   |                    |   | 5,717   |  
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total current assets                                                                                      |  |                           | 146,559 |   |                    |   | 133,595 |  
|                                                                                                          |  |                          
|Goodwill and other intangible assets, net                                                                 |  |                           | 94,812  |   |                    |   | 41,455  |  
|Property, plant, and equipment, net                                                                       |  |                           | 85,152  |   |                    |   | 61,105  |  
|Other assets                                                                                              |  |                           | 9,472   |   |                    |   | 9,001   |  
|Noncurrent assets of discontinued operations                                                              |  |                           | 8,199   |   |                    |   | 8,927   |  
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total assets                                                                                              |  | $                         | 344,194 |   |                    | $ | 254,083 |  
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Liabilities and stockholders equity (deficiency in assets):                                              |  |                           |         |   |                    |   |         |  
|Current liabilities:                                                                                      |  |                           |         |   |                    |   |         |  
|Accounts payable                                                                                          |  | $                         | 30,798  |   |                    | $ | 23,583  |  
|Income taxes payable                                                                                      |  |                           | 1,045   |   |                    |   | 5,087   |  
|Accrued interest payable                                                                                  |  |                           | 3,487   |   |                    |   | 8,945   |  
|Other accrued liabilities                                                                                 |  |                           | 10,148  |   |                    |   | 13,129  |  
|Current portion of long-term debt                                                                         |  |                           | 5,000   |   |                    |   |        |  
|Current liabilities of discontinued operations                                                            |  |                           | 2,660   |   |                    |   | 3,796   |  
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total current liabilities                                                                                 |  |                           | 53,138  |   |                    |   | 54,540  |  
|                                                                                                          |  |                          
|Long-term debt                                                                                            |  |                           | 262,000 |   |                    |   | 175,000 |  
|Deferred income taxes                                                                                     |  |                           | 310     |   |                    |   | 335     |  
|Redeemable preferred stock                                                                                |  |                           | 23,422  |   |                    |   |        |  
|Preferred stock dividends payable                                                                         |  |                           | 24,947  |   |                    |   | 21,311  |  
|Other long-term liabilities                                                                               |  |                           | 16,687  |   |                    |   | 16,057  |  
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total liabilities                                                                                         |  |                           | 380,504 |   |                    |   | 267,243 |  
|                                                                                                          |  |                          
|Redeemable preferred stock                                                                                |  |                           |        |   |                    |   | 23,422  |  
|                                                                                                          |  |                          
|Stockholders equity (deficiency in assets):                                                              |  |                           |         |   |                    |   |         |  
|Common stock, $.01 par value: 5,000,000 shares authorized, 1,861,982 and 1,859,104 issued and outstanding |  |                           | 19      |   |                    |   | 19      |  
|Additional paid-in capital                                                                                |  |                           | 9,613   |   |                    |   | 10,755  |  
|Accumulated deficit                                                                                       |  |                           | (41,478 | ) |                    |   | (43,288 | )
|Accumulated other comprehensive loss                                                                      |  |                           | (4,464  | ) |                    |   | (4,068  | )
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total stockholders equity (deficiency in assets)                                                         |  |                           | (36,310 | ) |                    |   | (36,582 | )
|                                                                                                          |  |                           |         |   |                    |   |         |  
|Total liabilities and stockholders equity (deficiency in assets)                                         |  | $                         | 344,194 |   |                    | $ | 254,083 |  
|                                                                                                          |  |                           |         |   |                    |   |         |  



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



1



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FastenTech, Inc. and Subsidiaries



Condensed Consolidated Statements of Operations

(Unaudited)



|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|----------------------------------------------- |  | -------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                |  | Three Months Ended June 30 |        |   | Nine Months Ended June 30 |  
|(Dollars in thousands)                          |  | 2005                       |        |   | 2004                      |   |        | 2005 |  |   | 2004    |  
|Net sales                                       |  | $                          | 79,219 |   |                           | $ | 61,441 |      |  | $ | 223,669 |   |  | $ | 159,000 |  
|Cost of sales                                   |  |                            | 58,743 |   |                           |   | 42,586 |      |  |   | 166,104 |   |  |   | 110,714 |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Gross profit                                    |  |                            | 20,476 |   |                           |   | 18,855 |      |  |   | 57,565  |   |  |   | 48,286  |  
|                                                |  |                            |        |  
|Selling, general, and administrative expenses   |  |                            | 10,983 |   |                           |   | 9,728  |      |  |   | 32,244  |   |  |   | 27,213  |  
|Restructuring charges                           |  |                            | 216    |   |                           |   |       |      |  |   | 216     |   |  |   |        |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                |  |                            | 9,277  |   |                           |   | 9,127  |      |  |   | 25,105  |   |  |   | 21,073  |  
|                                                |  |                            |        |  
|Other income (expense):                         |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Interest expense  long term debt               |  |                            | (6,426 | ) |                           |   | (5,876 | )    |  |   | (19,038 | ) |  |   | (17,080 | )
|Interest expense  redeemable preferred stock   |  |                            | (1,290 | ) |                           |   |       |      |  |   | (2,465  | ) |  |   |        |  
|Other, net                                      |  |                            | 274    |   |                           |   | 60     |      |  |   | 455     |   |  |   | 317     |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense                |  |                            | 1,835  |   |                           |   | 3,311  |      |  |   | 4,057   |   |  |   | 4,310   |  
|Income tax expense                              |  |                            | 1,227  |   |                           |   | 1,431  |      |  |   | 2,568   |   |  |   | 2,053   |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income from continuing operations               |  |                            | 608    |   |                           |   | 1,880  |      |  |   | 1,489   |   |  |   | 2,257   |  
|Income from discontinued operations, net of tax |  |                            | 61     |   |                           |   | 1,567  |      |  |   | 321     |   |  |   | 4,770   |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income                                      |  | $                          | 669    |   |                           | $ | 3,447  |      |  | $ | 1,810   |   |  | $ | 7,027   |  
|Less preferred stock dividends                  |  |                            |       |   |                           |   | (1,159 | )    |  |   | (1,169  | ) |  |   | (3,446  | )
|Plus discount on preferred stock repurchases    |  |                            |       |   |                           |   | 1,106  |      |  |   |        |   |  |   | 1,106   |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income applicable to common stockholders    |  | $                          | 669    |   |                           | $ | 3,394  |      |  | $ | 641     |   |  | $ | 4,687   |  
|                                                |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  



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



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FastenTech, Inc. and Subsidiaries



Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                                                   |  |                            |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                   |  | Nine Months Ended June 30, |        
|(Dollars in thousands):                                                                                            |  | 2005                       |         |   | 2004 |  
|Operating activities:                                                                                              |  |                            |         |   |      |   |         |  
|Net income                                                                                                         |  | $                          | 1,810   |   |      | $ | 7,027   |  
|Income from discontinued operations                                                                                |  |                            | (321    | ) |      |   | (4,770  | )
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Income from continuing operations                                                                                  |  |                            | 1,489   |   |      |   | 2,257   |  
|Adjustments to reconcile income from continuing operations to net cash (used in) provided by operating activities: |  |                            |         |   |      |   |         |  
|Depreciation                                                                                                       |  |                            | 7,854   |   |      |   | 5,752   |  
|Amortization                                                                                                       |  |                            | 808     |   |      |   | 214     |  
|Noncash interest expense  long-term debt                                                                          |  |                            | 1,082   |   |      |   | 837     |  
|Noncash interest expense  redeemable preferred stock                                                              |  |                            | 2,465   |   |      |   |        |  
|Changes in certain assets and liabilities, net of acquisitions:                                                    |  |                            |         |   |      |   |         |  
|Accounts receivable                                                                                                |  |                            | (4,070  | ) |      |   | (5,556  | )
|Inventory                                                                                                          |  |                            | (8,732  | ) |      |   | (5,348  | )
|Income taxes                                                                                                       |  |                            | (4,111  | ) |      |   | 7,796   |  
|Other current assets                                                                                               |  |                            | (61     | ) |      |   | (1,418  | )
|Accounts payable                                                                                                   |  |                            | 1,687   |   |      |   | 6,527   |  
|Other current liabilities                                                                                          |  |                            | (9,932  | ) |      |   | (2,713  | )
|Other                                                                                                              |  |                            | (879    | ) |      |   | (763    | )
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Net cash (used in) provided by operating activities from continuing operations                                     |  |                            | (12,400 | ) |      |   | 7,585   |  
|                                                                                                                   |  |                           
|Investing activities:                                                                                              |  |                            |         |   |      |   |         |  
|Cash used for acquisitions, net of cash acquired                                                                   |  |                            | (78,261 | ) |      |   | (18,342 | )
|Additions to property, plant, and equipment                                                                        |  |                            | (10,421 | ) |      |   | (6,834  | )
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Net cash used in investing activities from continuing operations                                                   |  |                            | (88,682 | ) |      |   | (25,176 | )
|                                                                                                                   |  |                           
|Financing activities:                                                                                              |  |                            |         |   |      |   |         |  
|Net borrowings under the Credit Agreement                                                                          |  |                            | 84,000  |   |      |   | 16,000  |  
|Debt issuance costs                                                                                                |  |                            | (1,139  | ) |      |   | (872    | )
|Repurchase of subsidiary preferred stock                                                                           |  |                            |        |   |      |   | (6,133  | )
|Other                                                                                                              |  |                            | 27      |   |      |   |        |  
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Net cash provided by financing activities from continuing operations                                               |  |                            | 82,888  |   |      |   | 8,995   |  
|                                                                                                                   |  |                           
|Effect of exchange rate fluctuations on cash                                                                       |  |                            | 36      |   |      |   | 85      |  
|Net cash provided by (used in) discontinued operations                                                             |  |                            | 110     |   |      |   | 6,707   |  
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                                          |  |                            | (18,048 | ) |      |   | (1,804  | )
|Cash and cash equivalents at beginning of period                                                                   |  |                            | 28,819  |   |      |   | 10,128  |  
|                                                                                                                   |  |                            |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                         |  | $                          | 10,771  |   |      | $ | 8,324   |  
|                                                                                                                   |  |                            |         |   |      |   |         |  



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



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FastenTech, Inc. and Subsidiaries



1. Basis of
Presentation



Our Company is a leading manufacturer and
marketer of certain specialized and aerospace-grade components. We are focused on profitably growing a number of product platforms for which we believe we hold leading market positions in the majority of the markets that we serve. We offer 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. Our 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, recreational, 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, 2004 included in our Registration
Statement on Form S-4, as filed with the SEC. Operating results for the three- and nine-month periods ended June 30, 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, particularly in the fiscal fourth quarter due to the purchasing patterns of the Companys customers. However, due to the significant number of acquisitions that have
permitted the Company to diversify its products offerings and end markets, the Company expects that its quarterly results will tend to be more consistent, except for the fiscal first quarter, which will continue to have lower results due to
production shutdowns at many of our OEM customers.



2. Inventory



Inventory is comprised of the following:



|                     |  |               |        |   |                    |   |        |  
|-------------------- |  | ------------- | ------ | - | ------------------ | - | ------ | -
|                     |  | June 30, 2005 |        |   | September 30, 2004 |  
|Raw material         |  | $             | 25,519 |   |                    | $ | 12,838 |  
|Work-in-process      |  |               | 22,418 |   |                    |   | 15,831 |  
|Finished goods       |  |               | 27,721 |   |                    |   | 25,734 |  
|Obsolescence reserve |  |               | (2,142 | ) |                    |   | (1,970 | )
|                     |  |               |        |   |                    |   |        |  
|Total inventory      |  | $             | 73,516 |   |                    | $ | 52,433 |  
|                     |  |               |        |   |                    |   |        |  



3. Comprehensive Income (Loss)



Comprehensive income (loss) consists of the following:



|                                        |  |                             |        |                            |      |   |       |  |   |       |   |  |   |      
|--------------------------------------- |  | --------------------------- | ------ | -------------------------- | ---- | - | ----- |  | - | ----- | - |  | - | -----
|                                        |  | Three Months Ended June 30, |        | Nine Months Ended June 30,
|                                        |  | 2005                        |        |                            | 2004 |   | 2005  |  |   | 2004 
|Net income                              |  | $                           | 669    |                            |      | $ | 3,447 |  | $ | 1,810 |   |  | $ | 7,027
|Foreign currency translation adjustment |  |                             | (1,268 | )                          |      |   | 2     |  |   | (396  | ) |  |   | 706  
|                                        |  |                             |        |                            |      |   |       |  |   |       |   |  |   |      
|                                        |  | $                           | (599   | )                          |      | $ | 3,449 |  | $ | 1,414 |   |  | $ | 7,733
|                                        |  |                             |        |                            |      |   |       |  |   |       |   |  |   |      



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FastenTech, Inc. and Subsidiaries



4. Long-Term Debt



Long-term debt is comprised of the following:



|                                         |  |               |         |                    |   |        
|---------------------------------------- |  | ------------- | ------- | ------------------ | - | -------
|                                         |  | June 30, 2005 |         | September 30, 2004
|Revolving Credit Facility                |  | $             | 84,000  |                    | $ |       
|Subordinated debt                        |  |               | 8,000   |                    |   |       
|11.5% Senior Subordinated Notes due 2011 |  |               | 175,000 |                    |   | 175,000
|                                         |  |               |         |                    |   |        
|Total debt                               |  |               | 267,000 |                    |   | 175,000
|Less current portion                     |  |               | 5,000   |                    |   |       
|                                         |  |               |         |                    |   |        
|Total long-term debt                     |  | $             | 262,000 |                    | $ | 175,000
|                                         |  |               |         |                    |   |        



In May 2003, the
Company entered into a new revolving credit agreement. This credit agreement was amended and restated on June 30, 2004 and again on June 10, 2005 to, among other things, increase the available borrowings from $40.0 million to $150.0 million, with
the option to further increase the commitment size to $175.0 million (subject to certain limits, including borrowing limits under the indenture for the notes) and to extend the term from May 2008 to May 2010 (as amended, the Credit
Agreement). Effective July 12, 2005, the Company increased the available borrowings under the Credit Agreement to $170.0 million. 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 June 30, 2005, the weighted average interest rate
for borrowings under the Credit Agreement was approximately 6.0%. In addition, the Company is required to pay a commitment fee of 0.375% on the average unused commitment under the credit agreement depending on the level of outstanding borrowings.
The Company had $84.0 million of borrowings under this agreement at June 30, 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 non-financial covenants. The Company was in compliance with all covenants as of June 30, 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 these 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. In the third fiscal quarter of 2005, the annualized interest rate on these notes was
11.7% compared to 12.25% in the third fiscal quarter of 2004. 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%.



In conjunction with the acquisition 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.



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FastenTech, Inc. and Subsidiaries



5. Acquisitions



On June 30, 2005, the Company acquired, through its wholly owned subsidiary, Acraline Products, Inc. (Acraline), substantially all of the
assets of Ogre Holdings, Inc. (f/k/a Acraline Products, Inc.), (Ogre Holdings), from Ogre Holdings and the stockholders of Ogre Holdings 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 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 definition provided by the Securities and Exchange Commission and therefore, separate financial statements have not been presented.



In March 2005, the Company acquired, through its wholly owned subsidiary
MECO, Inc. (MECO), substantially all of the fixed assets, inventory and certain other assets associated with Triumph Engineered Solutions, Inc.s Brookfield, Wisconsin facility for a purchase price of approximately $6.0 million. The
assets have been employed in the manufacturing of precision fabrications and machined components for the gas turbine and aerospace markets. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. 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. 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 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 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 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 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



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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 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.



In December 2004, the Company acquired substantially all of the assets of Special Processes of Arizona (SPOA).
SPOA is a processor of thermal spray coatings used in high temperature turbine components primarily in the aerospace industry. SPOA was acquired through GCE, for a purchase price of approximately $2.7 million. 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 results of SPOA 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 August 2004, the Company, through its newly formed subsidiary, MECO (DE), Inc., acquired substantially all of the assets and certain liabilities of
MECO, Inc. (MECO). MECO manufactures precision fabrications and machined components for the gas turbine and aerospace markets. The Company acquired MECO, including the accounts receivable, inventory, fixed assets, accounts payable, and accrued
liabilities, for a purchase price of approximately $8.4 million in cash plus estimated fees of approximately $0.3 million. The acquisition includes an earn out provision not to exceed $2.0 million based on the achievement of certain revenue targets.
In addition, the Company has agreed to pay non-compete and consulting agreement fees to the former owners totaling $1.6 million over the next five years. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement.
The results of this business unit have been included in the Aerospace-grade Components segment. 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. 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 March 2004, the Company, through its newly formed
subsidiary, Gear and Broach (DE), Inc., acquired substantially all of the assets and certain liabilities of Gear and Broach, Inc. (G&B). G&B manufactures gear components and systems designed to endure extreme temperatures, high cyclical
loads and vibration stresses that are sold primarily to the commercial vehicle market. The Company acquired G&B for a purchase price of approximately $13.2 million in cash. The acquisition includes an earn out provision not to exceed $4.25
million based on the achievement of a three-year graduated business unit EBITDA target. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. The results of G&B have been included in the Companys
Aerospace-grade Components segment.



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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 and nine months ended June 30, 2005 and 2004, which assumes the acquisitions were completed as of October 1, 2003 are as follows (in thousands):



|                                  |  |                             |        |                            |   |        |  |      |         |  |   |        
|--------------------------------- |  | --------------------------- | ------ | -------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                                  |  | Three Months Ended June 30, |        | Nine Months Ended June 30,
|                                  |  | 2005                        |        | 2004                       |   | 2005   |  | 2004
|Revenue                           |  | $                           | 86,655 |                            | $ | 78,468 |  | $    | 256,729 |  | $ | 216,098
|Income from continuing operations |  | $                           | 881    |                            | $ | 1,961  |  | $    | 3,844   |  | $ | 2,602  
|Net income                        |  | $                           | 942    |                            | $ | 3,528  |  | $    | 4,165   |  | $ | 7,372  



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



6. Discontinued Operations



The Company reviews its business portfolio on an ongoing basis as part of its strategic planning process. Based on this review, the Company determined
that the potential long-term returns from FabriSteel Products, Inc. and Profile Steel and Wire, Inc. (collectively referred to as FabriSteel) and Progressive Stamping Co. (DE) (Progressive), which manufacture fasteners and
components for automotive original equipment manufacturers and tier-one suppliers, were becoming less attractive and were no longer core to the Companys long-term growth strategy. As a result, the Company committed to a plan to divest its
interest in these business units.



On September 10, 2004, the
Company sold certain assets and liabilities of FabriSteel for net proceeds, after expenses, of $48.4 million, which were used to reduce revolving borrowings under the Credit Agreement. The gain on the sale was $8.3 million, net of $4.5 million in
taxes. In addition, during the fourth quarter of fiscal 2004, the Company committed to a plan to sell its interest in Progressive and expects to complete the transaction during fiscal 2005. In accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, FabriSteel and Progressive are reported as discontinued operations for all periods presented.



The results of operations for these discontinued business units for the three and nine months ended June 30, 2005 and 2004 are as follows:



|                                                |  |                             |       |                            |   |         |  |         |        |  |   |       
|----------------------------------------------- |  | --------------------------- | ----- | -------------------------- | - | ------- |  | ------- | ------ |  | - | ------
|                                                |  | Three Months Ended June 30, |       | Nine Months Ended June 30,
|                                                |  | 2005(1)                     |       | 2004(2)                    |   | 2005(1) |  | 2004(2)
|Net sales                                       |  | $                           | 4,319 |                            | $ | 15,553  |  | $       | 12,284 |  | $ | 47,125
|Income before income tax expense                |  | $                           | 93    |                            | $ | 2,435   |  | $       | 486    |  | $ | 7,402 
|Income tax expense                              |  |                             | 32    |                            |   | 868     |  |         | 165    |  |   | 2,632 
|                                                |  |                             |       |                            |   |         |  |         |        |  |   |       
|Income from discontinued operations, net of tax |  | $                           | 61    |                            | $ | 1,567   |  | $       | 321    |  | $ | 4,770 
|                                                |  |                             |       |                            |   |         |  |         |        |  |   |       

---

|(1) | Includes the operating results of Progressive only.
|--- | ---------------------------------------------------

|(2) | Includes the operating results of Progressive and FabriSteel.
|--- | -------------------------------------------------------------



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7. Goodwill and Other Intangible Assets



Goodwill and intangible assets consist of the following:



|                                                                         |  |               |        |                    |   |       
|------------------------------------------------------------------------ |  | ------------- | ------ | ------------------ | - | ------
|                                                                         |  | June 30, 2005 |        | September 30, 2004
|Goodwill                                                                 |  | $             | 29,821 |                    | $ | 28,237
|Noncompete agreements                                                    |  |               | 1,968  |                    |   | 3,878 
|Excess purchase price over the value of acquired assets not yet assigned |  |               | 50,340 |                    |   | 5,140 
|Customer lists                                                           |  |               | 6,695  |                    |   |      
|Proprietary know-how                                                     |  |               | 1,709  |                    |   |      
|Trademark/tradename                                                      |  |               | 1,079  |                    |   | 1,000 
|Distributor relationships                                                |  |               | 3,200  |                    |   | 3,200 
|                                                                         |  |               |        |                    |   |       
|                                                                         |  | $             | 94,812 |                    | $ | 41,455
|                                                                         |  |               |        |                    |   |       



The changes in the
carrying amount of goodwill as of June 30, 2005 and September 30, 2004 are as follows:



|                             |  |               |       
|---------------------------- |  | ------------- | ------
|                             |  | June 30, 2005
|Balance at beginning of year |  | $             | 28,237
|Additions                    |  |               | 1,584 
|Other adjustments            |  |               |      
|                             |  |               |       
|                             |  | $             | 29,821
|                             |  |               |       



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 $50.3 million is currently being reviewed by an independent appraiser to
determine if any of this amount can be allocated to any identifiable intangible assets.



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8. Employee Benefit Plans



The components of net periodic pension cost are as follows for the three and nine months ended June 30:



|                              |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  
|----------------------------- |  | --------------------------- | ---- | - | -------------------------- | - | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                              |  | Three Months Ended June 30, |      |   | Nine Months Ended June 30, |  
|                              |  | 2005                        |      |   | 2004                       |   |      | 2005 |  |   | 2004   |  
|Service cost                  |  | $                           | 122  |   |                            | $ | 106  |      |  | $ | 365    |   |  | $ | 319    |  
|Interest cost                 |  |                             | 389  |   |                            |   | 420  |      |  |   | 1,166  |   |  |   | 1,259  |  
|Expected return on assets     |  |                             | (410 | ) |                            |   | (457 | )    |  |   | (1,231 | ) |  |   | (1,370 | )
|Net amortization and deferral |  |                             | 126  |   |                            |   | 201  |      |  |   | 377    |   |  |   | 604    |  
|Plan amendment                |  |                             |     |   |                            |   | 8    |      |  |   |       |   |  |   | 25     |  
|                              |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  
|Net periodic benefit cost     |  | $                           | 227  |   |                            | $ | 278  |      |  | $ | 677    |   |  | $ | 837    |  
|                              |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  



The components of net periodic benefit
cost for other benefits are as follows for the three and nine months ended June 30:



|                          |  |                             |     |                            |   |      |  |      |     |  |   |    
|------------------------- |  | --------------------------- | --- | -------------------------- | - | ---- |  | ---- | --- |  | - | ---
|                          |  | Three Months Ended June 30, |     | Nine Months Ended June 30,
|                          |  | 2005                        |     | 2004                       |   | 2005 |  | 2004
|Service cost              |  | $                           | 33  |                            | $ | 29   |  | $    | 99  |  | $ | 87 
|Interest cost             |  |                             | 70  |                            |   | 60   |  |      | 211 |  |   | 181
|                          |  |                             |     |                            |   |      |  |      |     |  |   |    
|Net periodic benefit cost |  | $                           | 103 |                            | $ | 89   |  | $    | 310 |  | $ | 268
|                          |  |                             |     |                            |   |      |  |      |     |  |   |    



For the nine months ended June 30,
2005, the Company has contributed approximately $1.5 million in pension plan contributions and expects to contribute a total of $1.7 million for the fiscal year ended 2005.



9. 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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10. Segment Data



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



|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | --------------------------- | ------ | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                              |  | Three Months Ended June 30, |        |   | Nine Months Ended June 30, |  
|                                              |  | 2005                        |        |   | 2004                       |   |        | 2005 |  |   | 2004    |  
|Net sales                                     |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  | $                           | 42,780 |   |                            | $ | 35,753 |      |  | $ | 119,459 |   |  | $ | 96,733  |  
|Aerospace-grade Components                    |  |                             | 36,472 |   |                            |   | 25,743 |      |  |   | 104,318 |   |  |   | 62,443  |  
|Eliminations                                  |  |                             | (33    | ) |                            |   | (55    | )    |  |   | (108    | ) |  |   | (176    | )
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total net sales                               |  | $                           | 79,219 |   |                            | $ | 61,441 |      |  | $ | 223,669 |   |  | $ | 159,000 |  
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Income before income taxes                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  | $                           | 6,737  |   |                            | $ | 5,865  |      |  | $ | 18,364  |   |  | $ | 14,499  |  
|Aerospace-grade Components                    |  |                             | 7,700  |   |                            |   | 7,162  |      |  |   | 21,222  |   |  |   | 17,491  |  
|Unallocated corporate operating expenses      |  |                             | (1,825 | ) |                            |   | (1,730 | )    |  |   | (5,603  | ) |  |   | (4,951  | )
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA(1)                                     |  |                             | 12,612 |   |                            |   | 11,297 |      |  |   | 33,983  |   |  |   | 27,039  |  
|Depreciation and amortization                 |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  |                             | (1,409 | ) |                            |   | (1,310 | )    |  |   | (4,244  | ) |  |   | (3,969  | )
|Aerospace-grade Components                    |  |                             | (1,692 | ) |                            |   | (844   | )    |  |   | (4,365  | ) |  |   | (1,952  | )
|Corporate                                     |  |                             | (18    | ) |                            |   | (16    | )    |  |   | (53     | ) |  |   | (45     | )
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Depreciation and amortization                 |  |                             | (3,119 | ) |                            |   | (2,170 | )    |  |   | (8,662  | ) |  |   | (5,966  | )
|Restructuring charges                         |  |                             | (216   | ) |                            |   |       |      |  |   | (216    | ) |  |   |        |  
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total operating income                        |  |                             | 9,277  |   |                            |   | 9,127  |      |  |   | 25,105  |   |  |   | 21,073  |  
|                                              |  |                             |        |  
|Interest expense  long term debt             |  |                             | (6,426 | ) |                            |   | (5,876 | )    |  |   | (19,038 | ) |  |   | (17,080 | )
|Interest expense  redeemable preferred stock |  |                             | (1,290 | ) |                            |   |       |      |  |   | (2,465  | ) |  |   |        |  
|Other, net                                    |  |                             | 274    |   |                            |   | 60     |      |  |   | 455     |   |  |   | 317     |  
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense              |  | $                           | 1,835  |   |                            | $ | 3,311  |      |  | $ | 4,057   |   |  | $ | 4,310   |  
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net Income                                    |  | $                           | 669    |   |                            | $ | 3,447  |      |  | $ | 1,810   |   |  | $ | 7,027   |  
|                                              |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  

---

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



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



|                                                 |  |                            |         |                   |   |        
|------------------------------------------------ |  | -------------------------- | ------- | ----------------- | - | -------
|                                                 |  | June 30,2005               |         | September 30,2004
|Assets                                           |  |                            |         |                   |   |        
|Specialized Components                           |  | $                          | 115,749 |                   | $ | 102,084
|Aerospace-grade Components                       |  |                            | 205,726 |                   |   | 105,972
|Corporate assets                                 |  |                            | 8,922   |                   |   | 31,383 
|Assets of discontinued operations                |  |                            | 13,797  |                   |   | 14,644 
|                                                 |  |                            |         |                   |   |        
|Total consolidated assets                        |  | $                          | 344,194 |                   | $ | 254,083
|                                                 |  |                            |         |                   |   |        
|                                                 | 
|                                                 |  | Nine months ended June 30,
|                                                 |  | 2005                       |         | 2004             
|Expenditures for property, plant, and equipment: |  |                            |         |                   |   |        
|Specialized Components                           |  | $                          | 4,179   |                   | $ | 3,370  
|Aerospace-grade Components                       |  |                            | 6,228   |                   |   | 3,321  
|Corporate                                        |  |                            | 14      |                   |   | 143    
|                                                 |  |                            |         |                   |   |        
|Consolidated expenditures for long-lived assets  |  | $                          | 10,421  |                   | $ | 6,834  
|                                                 |  |                            |         |                   |   |        



11. 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 June 30, 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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11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Balance Sheet

(Unaudited)

June 30, 2005



|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|----------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | -------------------------- |  | ------------ | ------ |  | ----------------- | -------- | - |  | - | ------- | -
|                                                                  |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   | Non- GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |         
|Assets                                                            |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Current assets:                                                   |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Cash and cash equivalents                                         |  | $               | 1,444   |   |                       | $ | 5,790                      |  | $            | 3,537  |  | $                 |         |   |  | $ | 10,771  |  
|Accounts receivable, net                                          |  |                 | 14      |   |                       |   | 44,462                     |  |              | 9,425  |  |                   | (1,164   | ) |  |   | 52,737  |  
|Inventory                                                         |  |                 |        |   |                       |   | 67,628                     |  |              | 6,483  |  |                   | (595     | ) |  |   | 73,516  |  
|Income tax receivable                                             |  |                 | 13,377  |   |                       |   |                           |  |              |       |  |                   | (13,377  | ) |  |   |        |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 1,495                      |  |              | 8      |  |                   | 27       |   |  |   | 1,530   |  
|Other                                                             |  |                 | 699     |   |                       |   | 1,317                      |  |              | 391    |  |                   |         |   |  |   | 2,407   |  
|Current assets of discontinued operations                         |  |                 |        |   |                       |   | 5,598                      |  |              |       |  |                   |         |   |  |   | 5,598   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total current assets                                              |  |                 | 15,534  |   |                       |   | 126,290                    |  |              | 19,844 |  |                   | (15,109  | ) |  |   | 146,559 |  
|                                                                  |  |                 |         |   |                      
|Investment in consolidated subsidiaries                           |  |                 | 17,048  |   |                       |   | 15,127                     |  |              | 22,388 |  |                   | (54,563  | ) |  |   |        |  
|Goodwill, net                                                     |  |                 | (83     | ) |                       |   | 94,179                     |  |              | 629    |  |                   | 87       |   |  |   | 94,812  |  
|Property, plant, and equipment, net                               |  |                 | 135     |   |                       |   | 76,969                     |  |              | 8,048  |  |                   |         |   |  |   | 85,152  |  
|Deferred income taxes                                             |  |                 |        |   |                       |   |                           |  |              |       |  |                   |         |   |  |   |        |  
|Due from affiliates                                               |  |                 | 236,331 |   |                       |   |                           |  |              |       |  |                   | (236,331 | ) |  |   |        |  
|Other assets                                                      |  |                 | 7,759   |   |                       |   | 1,713                      |  |              |       |  |                   |         |   |  |   | 9,472   |  
|Noncurrent assets of discontinued operations                      |  |                 |        |   |                       |   | 8,199                      |  |              |       |  |                   |         |   |  |   | 8,199   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total assets                                                      |  | $               | 276,724 |   |                       | $ | 322,477                    |  | $            | 50,909 |  | $                 | (305,916 | ) |  | $ | 344,194 |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Liabilities and stockholders equity (deficiency in assets)       |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Current liabilities:                                              |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Accounts payable                                                  |  | $               | 1,130   |   |                       | $ | 27,967                     |  | $            | 2,859  |  | $                 | (1,158   | ) |  | $ | 30,798  |  
|Income taxes payable                                              |  |                 |        |   |                       |   | 3,614                      |  |              | 28     |  |                   | (2,597   | ) |  |   | 1,045   |  
|Accrued interest payable                                          |  |                 | 3,487   |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 3,487   |  
|Other accrued liabilities                                         |  |                 | 1,048   |   |                       |   | 7,824                      |  |              | 1,276  |  |                   |         |   |  |   | 10,148  |  
|Current portion of long-term debt                                 |  |                 |        |   |                       |   | 5,000                      |  |              |       |  |                   |         |   |  |   | 5,000   |  
|Current liabilities of discontinued operations                    |  |                 |        |   |                       |   | 2,660                      |  |              |       |  |                   |         |   |  |   | 2,660   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total current liabilities                                         |  |                 | 5,665   |   |                       |   | 47,065                     |  |              | 4,163  |  |                   | (3,755   | ) |  |   | 53,138  |  
|                                                                  |  |                 |         |   |                      
|Long-term debt                                                    |  |                 | 259,000 |   |                       |   | 3,000                      |  |              |       |  |                   |         |   |  |   | 262,000 |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 11,565                     |  |              | 821    |  |                   | (12,076  | ) |  |   | 310     |  
|Redeemable Preferred Stock                                        |  |                 | 23,422  |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 23,422  |  
|Preferred stock dividends payable                                 |  |                 | 24,947  |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 24,947  |  
|Due to affiliates                                                 |  |                 |        |   |                       |   | 228,530                    |  |              | 1,113  |  |                   | (229,643 | ) |  |   |        |  
|Other long-term liabilities                                       |  |                 |        |   |                       |   | 14,940                     |  |              | 1,747  |  |                   |         |   |  |   | 16,687  |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities                                                 |  |                 | 313,034 |   |                       |   | 305,100                    |  |              | 7,844  |  |                   | (245,474 | ) |  |   | 380,504 |  
|                                                                  |  |                 |         |   |                      
|Stockholders equity (deficiency in assets)                       |  |                 | (36,310 | ) |                       |   | 17,377                     |  |              | 43,065 |  |                   | (60,442  | ) |  |   | (36,310 | )
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficiency in assets) |  | $               | 276,724 |   |                       | $ | 322,477                    |  | $            | 50,909 |  | $                 | (305,916 | ) |  | $ | 344,194 |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  



13



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##### Table of Contents

FastenTech, Inc. and Subsidiaries



11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Statement of Operations

(Unaudited)

Three Months Ended June 30, 2005



|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | --------------- | ------ | - | --------------------- | - | ------ | -------------------------- |  | ------------ | ------ |  | ----------------- | ------ | - |  | - | ------ | -
|                                                                   |  | FastenTech,Inc. |        |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |       
|Net sales                                                          |  | $               |       |   |                       | $ | 63,874 |                            |  | $            | 22,624 |  | $                 | (7,279 | ) |  | $ | 79,219 |  
|Cost of sales                                                      |  |                 |       |   |                       |   | 50,580 |                            |  |              | 15,442 |  |                   | (7,279 | ) |  |   | 58,743 |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|Gross profit                                                       |  |                 |       |   |                       |   | 13,294 |                            |  |              | 7,182  |  |                   |       |   |  |   | 20,476 |  
|                                                                   |  |                 |        |   |                      
|Selling, general, and administrative expenses                      |  |                 | 1,843  |   |                       |   | 4,229  |                            |  |              | 4,911  |  |                   |       |   |  |   | 10,983 |  
|Restructuring and nonrecurring charges                             |  |                 |       |   |                       |   | 216    |                            |  |              |       |  |                   |        |   |  |   | 216    |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|Operating income                                                   |  |                 | (1,843 | ) |                       |   | 8,849  |                            |  |              | 2,271  |  |                   |       |   |  |   | 9,277  |  
|                                                                   |  |                 |        |   |                      
|Other income (expense):                                            |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|Interest expense  long term debt                                  |  |                 | (6,426 | ) |                       |   |       |                            |  |              |       |  |                   |       |   |  |   | (6,426 | )
|Interest expense  redeemable preferred stock                      |  |                 | (1,290 | ) |                       |   |       |                            |  |              |       |  |                   |       |   |  |   | (1,290 | )
|Other, net                                                         |  |                 | 7,110  |   |                       |   | (6,926 | )                          |  |              | 46     |  |                   | 44     |   |  |   | 274    |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|(Loss) income from continuing operations before income tax expense |  |                 | (2,449 | ) |                       |   | 1,923  |                            |  |              | 2,317  |  |                   | 44     |   |  |   | 1,835  |  
|Income tax (benefit) expense                                       |  |                 | (387   | ) |                       |   | 722    |                            |  |              | 812    |  |                   | 80     |   |  |   | 1,227  |  
|Equity in earnings of affiliates                                   |  |                 | 2,731  |   |                       |   |       |                            |  |              |       |  |                   | (2,731 | ) |  |   |       |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|Income (loss) from continuing operations                           |  |                 | 669    |   |                       |   | 1,201  |                            |  |              | 1,505  |  |                   | (2,767 | ) |  |   | 608    |  
|Income from discontinued operations                                |  |                 |       |   |                       |   | 61     |                            |  |              |       |  |                   |       |   |  |   | 61     |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  
|Net (loss) income                                                  |  | $               | 669    |   |                       | $ | 1,262  |                            |  | $            | 1,505  |  | $                 | (2,767 | ) |  | $ | 669    |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |              |        |  |                   |        |   |  |   |        |  



14



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##### Table of Contents

FastenTech, Inc. and Subsidiaries



11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Statement of Operations

(Unaudited)

Nine Months Ended June 30, 2005



|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|------------------------------------------------------------------ |  | --------------- | ------- | - | --------------------- | - | ------- | -------------------------- |  | ------------ | ------ |  | ----------------- | ------- | - |  | - | ------- | -
|                                                                   |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non- GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |        
|Net sales                                                          |  | $               |        |   |                       | $ | 201,356 |                            |  | $            | 33,309 |  | $                 | (10,996 | ) |  | $ | 223,669 |  
|Cost of sales                                                      |  |                 |        |   |                       |   | 154,275 |                            |  |              | 22,825 |  |                   | (10,996 | ) |  |   | 166,104 |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|Gross profit                                                       |  |                 |        |   |                       |   | 47,081  |                            |  |              | 10,484 |  |                   |        |   |  |   | 57,565  |  
|                                                                   |  |                 |         |   |                      
|Selling, general, and administrative expenses                      |  |                 | 5,656   |   |                       |   | 19,289  |                            |  |              | 7,299  |  |                   |        |   |  |   | 32,244  |  
|Restructuring and nonrecurring charges                             |  |                 |        |   |                       |   | 216     |                            |  |              |       |  |                   |        |   |  |   | 216     |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|Operating income                                                   |  |                 | (5,656  | ) |                       |   | 27,576  |                            |  |              | 3,185  |  |                   |        |   |  |   | 25,105  |  
|                                                                   |  |                 |         |   |                      
|Other income (expense):                                            |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|Interest expense                                                   |  |                 | (19,038 | ) |                       |   |        |                            |  |              |       |  |                   |        |   |  |   | (19,038 | )
|Interest expense  redeemable preferred stock                      |  |                 | (2,465  | ) |                       |   |        |                            |  |              |       |  |                   |        |   |  |   | (2,465  | )
|Other, net                                                         |  |                 | 20,169  |   |                       |   | (19,785 | )                          |  |              | 86     |  |                   | (15     | ) |  |   | 455     |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|(Loss) income from continuing operations before income tax expense |  |                 | (6,990  | ) |                       |   | 7,791   |                            |  |              | 3,271  |  |                   | (15     | ) |  |   | 4,057   |  
|Income tax (benefit) expense                                       |  |                 | (1,774  | ) |                       |   | 3,111   |                            |  |              | 1,130  |  |                   | 101     |   |  |   | 2,568   |  
|Equity in earnings of affiliates                                   |  |                 | 7,026   |   |                       |   |        |                            |  |              |       |  |                   | (7,026  | ) |  |   |        |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|Income (loss) from continuing operations                           |  |                 | 1,810   |   |                       |   | 4,680   |                            |  |              | 2,141  |  |                   | (7,142  | ) |  |   | 1,489   |  
|Income from discontinued operations                                |  |                 |        |   |                       |   | 321     |                            |  |              |       |  |                   |        |   |  |   | 321     |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  
|Net (loss) income                                                  |  | $               | 1,810   |   |                       | $ | 5,001   |                            |  | $            | 2,141  |  | $                 | (7,142  | ) |  | $ | 1,810   |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |         |   |  |   |         |  



15



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##### Table of Contents

FastenTech, Inc. and Subsidiaries



11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Condensed Consolidating Statement of Cash Flows

(Unaudited)

Nine Months Ended June 30, 2005



|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------ | -------------------------- |  | - | ------------ | - | ----------------- | - | - |  | - | ------- | -
|                                                                                 |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Operating activities                                                             |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash flows (used in) provided by operating activities from continuing operations |  | $               | (19,618 | ) |                       | $ | 8,272  |                            |  | $ | (1,054       | ) |                   | $ |  |  | $ | (12,400 | )
|                                                                                 |  |                 |         |   |                      
|Investing activities                                                             |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired                                 |  |                 | (78,261 | ) |                       |   |       |                            |  |   |             |   |                   |   |  |  |   | (78,261 | )
|Additions to property, plant, and equipment                                      |  |                 | (14     | ) |                       |   | (9,301 | )                          |  |   | (1,106       | ) |                   |   |  |  |   | (10,421 | )
|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities from continuing operations                 |  |                 | (78,275 | ) |                       |   | (9,301 | )                          |  |   | (1,106       | ) |                   |   |  |  |   | (88,682 | )
|                                                                                 |  |                 |         |   |                      
|Financing activities                                                             |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net borrowings under revolver                                                    |  |                 | 84,000  |   |                       |   |       |                            |  |   |             |   |                   |   |  |  |   | 84,000  |  
|Intercompany loans and advances                                                  |  |                 | (4,661  | ) |                       |   | 2,341  |                            |  |   | 2,320        |   |                   |   |  |  |   |        |  
|Other                                                                            |  |                 | (1,112  | ) |                       |   |       |                            |  |   |             |   |                   |   |  |  |   | (1,112  | )
|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net cash provided by financing activities from continuing operations             |  |                 | 78,227  |   |                       |   | 2,341  |                            |  |   | 2,320        |   |                   |   |  |  |   | 82,888  |  
|Effect of exchange rate fluctuations on cash                                     |  |                 |        |   |                       |   |       |                            |  |   | 36           |   |                   |   |  |  |   | 36      |  
|Net cash used in discontinued operations                                         |  |                 |        |   |                       |   | 110    |                            |  |   |             |   |                   |   |  |  |   | 110     |  
|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                             |  |                 | (19,666 | ) |                       |   | 1,422  |                            |  |   | 196          |   |                   |   |  |  |   | (18,048 | )
|Cash and cash equivalents at beginning of period                                 |  |                 | 21,110  |   |                       |   | 4,368  |                            |  |   | 3,341        |   |                   |   |  |  |   | 28,819  |  
|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period                                       |  | $               | 1,444   |   |                       | $ | 5,790  |                            |  | $ | 3,537        |   |                   | $ |  |  | $ | 10,771  |  
|                                                                                 |  |                 |         |   |                       |   |        |                            |  |   |              |   |                   |   |   |  |   |         |  



16



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##### Table of Contents

FastenTech, Inc. and Subsidiaries



11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Balance Sheet

September 30, 2004



|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|----------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | -------------------------- |  | ------------ | ------ |  | ----------------- | -------- | - |  | - | ------- | -
|                                                                  |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   | Non- GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |         
|Assets                                                            |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Current assets:                                                   |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Cash and cash equivalents                                         |  | $               | 21,110  |   |                       | $ | 4,368                      |  | $            | 3,341  |  | $                 |         |   |  | $ | 28,819  |  
|Accounts receivable, net                                          |  |                 | 9       |   |                       |   | 36,394                     |  |              | 6,868  |  |                   | (378     | ) |  |   | 42,893  |  
|Inventory                                                         |  |                 |        |   |                       |   | 46,453                     |  |              | 6,396  |  |                   | (416     | ) |  |   | 52,433  |  
|Income tax receivable                                             |  |                 | 6,956   |   |                       |   |                           |  |              |       |  |                   | (6,956   | ) |  |   |        |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 1,495                      |  |              | 8      |  |                   | 27       |   |  |   | 1,530   |  
|Other                                                             |  |                 | 1,228   |   |                       |   | 667                        |  |              | 308    |  |                   |         |   |  |   | 2,203   |  
|Current assets of discontinued operations                         |  |                 |        |   |                       |   | 5,717                      |  |              |       |  |                   |         |   |  |   | 5,717   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total current assets                                              |  |                 | 29,303  |   |                       |   | 95,094                     |  |              | 16,921 |  |                   | (7,723   | ) |  |   | 133,595 |  
|                                                                  |  |                 |         |   |                      
|Investment in consolidated subsidiaries                           |  |                 | 10,405  |   |                       |   | 12,127                     |  |              | 22,388 |  |                   | (44,920  | ) |  |   |        |  
|Goodwill, net                                                     |  |                 |        |   |                       |   | 41,455                     |  |              |       |  |                   |         |   |  |   | 41,455  |  
|Property, plant, and equipment, net                               |  |                 | 174     |   |                       |   | 53,696                     |  |              | 7,235  |  |                   |         |   |  |   | 61,105  |  
|Due from affiliates                                               |  |                 | 146,732 |   |                       |   |                           |  |              |       |  |                   | (146,732 | ) |  |   |        |  
|Other assets                                                      |  |                 | 7,655   |   |                       |   | 707                        |  |              | 639    |  |                   |         |   |  |   | 9,001   |  
|Noncurrent assets of discontinued operations                      |  |                 |        |   |                       |   | 8,927                      |  |              |       |  |                   |         |   |  |   | 8,927   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total assets                                                      |  | $               | 194,269 |   |                       | $ | 212,006                    |  | $            | 47,183 |  | $                 | (199,375 | ) |  | $ | 254,083 |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Liabilities and stockholders equity (deficiency in assets)       |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Current liabilities:                                              |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Accounts payable                                                  |  | $               | 391     |   |                       | $ | 20,829                     |  | $            | 2,580  |  | $                 | (217     | ) |  | $ | 23,583  |  
|Income taxes payable                                              |  |                 |        |   |                       |   | 13,966                     |  |              | 775    |  |                   | (9,654   | ) |  |   | 5,087   |  
|Accrued interest payable                                          |  |                 | 8,945   |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 8,945   |  
|Other accrued liabilities                                         |  |                 | 1,782   |   |                       |   | 9,708                      |  |              | 1,639  |  |                   |         |   |  |   | 13,129  |  
|Current liabilities of discontinued operations                    |  |                 |        |   |                       |   | 3,796                      |  |              |       |  |                   |         |   |  |   | 3,796   |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total current liabilities                                         |  |                 | 11,118  |   |                       |   | 48,299                     |  |              | 4,994  |  |                   | (9,871   | ) |  |   | 54,540  |  
|                                                                  |  |                 |         |   |                      
|Long-term debt                                                    |  |                 | 175,000 |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 175,000 |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 1,235                      |  |              | 845    |  |                   | (1,745   | ) |  |   | 335     |  
|Preferred stock dividends payable                                 |  |                 | 21,311  |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 21,311  |  
|Due to affiliates                                                 |  |                 |        |   |                       |   | 140,972                    |  |              | 1,112  |  |                   | (142,084 | ) |  |   |        |  
|Other long-term liabilities                                       |  |                 |        |   |                       |   | 14,321                     |  |              | 1,736  |  |                   |         |   |  |   | 16,057  |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities                                                 |  |                 | 207,429 |   |                       |   | 204,827                    |  |              | 8,687  |  |                   | (153,700 | ) |  |   | 267,243 |  
|                                                                  |  |                 |         |   |                      
|Redeemable preferred stock                                        |  |                 | 23,422  |   |                       |   |                           |  |              |       |  |                   |         |   |  |   | 23,422  |  
|                                                                  |  |                 |         |   |                      
|Stockholders equity (deficiency in assets)                       |  |                 | (36,582 | ) |                       |   | 7,179                      |  |              | 38,496 |  |                   | (45,675  | ) |  |   | (36,582 | )
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficiency in assets) |  | $               | 194,269 |   |                       | $ | 212,006                    |  | $            | 47,183 |  | $                 | (199,375 | ) |  | $ | 254,083 |  
|                                                                  |  |                 |         |   |                       |   |                            |  |              |        |  |                   |          |   |  |   |         |  



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11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Statement of Operations

(Unaudited)

Three Months Ended June 30, 2004



|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | --------------- | ------ | - | --------------------- | - | ------ | -------------------------- |  | - | ------------ | - |  | ----------------- | ------ | - |  | - | ------ | -
|                                                                   |  | FastenTech,Inc. |        |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |       
|Net sales                                                          |  | $               |       |   |                       | $ | 53,151 |                            |  | $ | 9,626        |   |  | $                 | (1,336 | ) |  | $ | 61,441 |  
|Cost of sales                                                      |  |                 |       |   |                       |   | 37,414 |                            |  |   | 6,508        |   |  |                   | (1,336 | ) |  |   | 42,586 |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|Gross profit                                                       |  |                 |       |   |                       |   | 15,737 |                            |  |   | 3,118        |   |  |                   |       |   |  |   | 18,855 |  
|                                                                   |  |                 |        |   |                      
|Selling, general, and administrative expenses                      |  |                 | 1,746  |   |                       |   | 5,810  |                            |  |   | 2,172        |   |  |                   |       |   |  |   | 9,728  |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|Operating income                                                   |  |                 | (1,746 | ) |                       |   | 9,927  |                            |  |   | 946          |   |  |                   |       |   |  |   | 9,127  |  
|                                                                   |  |                 |        |   |                      
|Other income (expense):                                            |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|Interest expense  long term debt                                  |  |                 | (5,876 | ) |                       |   |       |                            |  |   |             |   |  |                   |       |   |  |   | (5,876 | )
|Other, net                                                         |  |                 | 6,223  |   |                       |   | (6,134 | )                          |  |   | (16          | ) |  |                   | (13    | ) |  |   | 60     |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|(Loss) income from continuing operations before income tax expense |  |                 | (1,399 | ) |                       |   | 3,793  |                            |  |   | 930          |   |  |                   | (13    | ) |  |   | 3,311  |  
|Income tax (benefit) expense                                       |  |                 | (217   | ) |                       |   | 1,309  |                            |  |   | 361          |   |  |                   | (22    | ) |  |   | 1,431  |  
|Equity in earnings of affiliates                                   |  |                 | 4,629  |   |                       |   |       |                            |  |   |             |   |  |                   | (4,629 | ) |  |   |       |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|Income (loss) from continuing operations                           |  |                 | 3,447  |   |                       |   | 2,484  |                            |  |   | 569          |   |  |                   | (4,620 | ) |  |   | 1,880  |  
|Income from discontinued operations                                |  |                 |       |   |                       |   | 1,567  |                            |  |   |             |   |  |                   |       |   |  |   | 1,567  |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  
|Net (loss) income                                                  |  | $               | 3,447  |   |                       | $ | 4,051  |                            |  | $ | 569          |   |  | $                 | (4,620 | ) |  | $ | 3,447  |  
|                                                                   |  |                 |        |   |                       |   |        |                            |  |   |              |   |  |                   |        |   |  |   |        |  



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11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Consolidating Statement of Operations

(Unaudited)

Nine Months Ended June 30, 2004



|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|------------------------------------------------------------------ |  | --------------- | ------- | - | --------------------- | - | ------- | -------------------------- |  | ------------ | ------ |  | ----------------- | ------ | - |  | - | ------- | -
|                                                                   |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non- GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |       
|Net sales                                                          |  | $               |        |   |                       | $ | 134,775 |                            |  | $            | 29,306 |  | $                 | (5,081 | ) |  | $ | 159,000 |  
|Cost of sales                                                      |  |                 |        |   |                       |   | 95,066  |                            |  |              | 20,729 |  |                   | (5,081 | ) |  |   | 110,714 |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|Gross profit                                                       |  |                 |        |   |                       |   | 39,709  |                            |  |              | 8,577  |  |                   |       |   |  |   | 48,286  |  
|                                                                   |  |                 |         |   |                      
|Selling, general, and administrative expenses                      |  |                 | 4,996   |   |                       |   | 15,847  |                            |  |              | 6,370  |  |                   |       |   |  |   | 27,213  |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|Operating income                                                   |  |                 | (4,996  | ) |                       |   | 23,862  |                            |  |              | 2,207  |  |                   |       |   |  |   | 21,073  |  
|                                                                   |  |                 |         |   |                      
|Other income (expense):                                            |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|Interest expense  long term debt                                  |  |                 | (17,080 | ) |                       |   |        |                            |  |              |       |  |                   |       |   |  |   | (17,080 | )
|Other, net                                                         |  |                 | 18,227  |   |                       |   | (18,029 | )                          |  |              | 132    |  |                   | (13    | ) |  |   | 317     |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|(Loss) income from continuing operations before income tax expense |  |                 | (3,849  | ) |                       |   | 5,833   |                            |  |              | 2,339  |  |                   | (13    | ) |  |   | 4,310   |  
|Income tax (benefit) expense                                       |  |                 | (2,226  | ) |                       |   | 3,269   |                            |  |              | 792    |  |                   | 218    |   |  |   | 2,053   |  
|Equity in earnings of affiliates                                   |  |                 | 8,650   |   |                       |   |        |                            |  |              |       |  |                   | (8,650 | ) |  |   |        |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|Income (loss) from continuing operations                           |  |                 | 7,027   |   |                       |   | 2,564   |                            |  |              | 1,547  |  |                   | (8,881 | ) |  |   | 2,257   |  
|Income from discontinued operations                                |  |                 |        |   |                       |   | 4,770   |                            |  |              |       |  |                   |       |   |  |   | 4,770   |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  
|Net (loss) income                                                  |  | $               | 7,027   |   |                       | $ | 7,334   |                            |  | $            | 1,547  |  | $                 | (8,881 | ) |  | $ | 7,027   |  
|                                                                   |  |                 |         |   |                       |   |         |                            |  |              |        |  |                   |        |   |  |   |         |  



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11. Consolidating Guarantor and Non-Guarantor Financial Information (continued)



Condensed Consolidating Statement of Cash Flows

(Unaudited)

Nine Months Ended June 30, 2004



|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | -------------------------- |  | - | ------------ | - | ----------------- | - | - |  | - | ------- | -
|                                                                                 |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non- GuarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Operating activities                                                             |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash flows (used in) provided by operating activities from continuing operations |  | $               | (13,098 | ) |                       | $ | 16,464  |                            |  | $ | 4,219        |   |                   | $ |  |  | $ | 7,585   |  
|                                                                                 |  |                 |         |   |                      
|Investing activities                                                             |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired                                 |  |                 | (13,122 | ) |                       |   | (5,220  | )                          |  |   |             |   |                   |   |  |  |   | (18,342 | )
|Additions to property, plant, and equipment                                      |  |                 | (200    | ) |                       |   | (6,061  | )                          |  |   | (573         | ) |                   |   |  |  |   | (6,834  | )
|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities from continuing operations                 |  |                 | (13,322 | ) |                       |   | (11,281 | )                          |  |   | (573         | ) |                   |   |  |  |   | (25,176 | )
|                                                                                 |  |                 |         |   |                      
|Financing activities                                                             |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net borrowings under revolver                                                    |  |                 | 16,000  |   |                       |   |        |                            |  |   |             |   |                   |   |  |  |   | 16,000  |  
|Intercompany loans and advances                                                  |  |                 | 14,878  |   |                       |   | (13,431 | )                          |  |   | (1,447       | ) |                   |   |  |  |   |        |  
|Repurchase of redeemable preferred stock                                         |  |                 | (7,005  | ) |                       |   |        |                            |  |   |             |   |                   |   |   |  |   | (7,005  | )
|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net cash provided by (used in) financing activities from continuing operations   |  |                 | 23,873  |   |                       |   | (13,431 | )                          |  |   | (1,447       | ) |                   |   |  |  |   | 8,995   |  
|Effect of exchange rate fluctuations on cash                                     |  |                 |        |   |                       |   |        |                            |  |   | 85           |   |                   |   |  |  |   | 85      |  
|Net cash provided by discontinued operations                                     |  |                 |        |   |                       |   | 6,707   |                            |  |   |             |   |                   |   |  |  |   | 6,707   |  
|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                             |  |                 | (2,547  | ) |                       |   | (1,541  | )                          |  |   | 2,284        |   |                   |   |  |  |   | (1,804  | )
|Cash and cash equivalents at beginning of period                                 |  |                 | 3,538   |   |                       |   | 5,223   |                            |  |   | 1,366        |   |                   |   |  |  |   | 10,128  |  
|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period                                       |  | $               | 991     |   |                       | $ | 3,682   |                            |  | $ | 3,650        |   |                   | $ |  |  | $ | 8,324   |  
|                                                                                 |  |                 |         |   |                       |   |         |                            |  |   |              |   |                   |   |   |  |   |         |  



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12. Subsequent Events



On August 1, 2005, the Company acquired 100% of the members interest of General Products (General
Products), LLC for $7.0 million. General Products, which will be part of the Companys Aerospace-grade segment, 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 the acquisition with cash on hand and borrowings under the credit agreement. This acquisition did not meet
the definition of a significant acquisition under Rule 3 05 (b) 2.



In August 2005, the Company repurchased approximately $11.4 million of redeemable preferred stock, including accrued dividends, and 35,971 shares of common stock for approximately $8.3 million. In addition, the Company agreed, subject to
certain customary conditions, to repurchase approximately $11.3 million of additional redeemable preferred stock, including accrued dividends, and 34,009 shares of common stock for total consideration of approximately $8.3 million in fiscal 2006.



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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 Registration Statement on Form S-4, 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 a leading manufacturer and marketer of certain specialized and aerospace-grade components. We are focused on profitably growing a number
of product platforms for which we believe we hold leading market positions in the majority of the markets that we serve. We offer 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. Our 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, recreational, and aerospace. Over the past two years, through a number of acquisitions and divestitures, we have broadened our end market
profile substantially and reduced our exposure to the automotive market, which for the third fiscal quarter of 2005 represented less than 6% of our consolidated net sales.



Our condensed consolidated results of the three-month and nine-month periods ended June 30, 2005 and 2004 include the
acquisitions and divestiture 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.



Sales from continuing operations for the fiscal third quarter of 2005, inclusive of acquisitions, were up 28.9% over the same period last year to $79.2 million, and were supported by strong new business activity in the majority of our
markets. Operating income from continuing operations for the fiscal 2005 third quarter, inclusive of acquisitions, was $9.3 million compared to $9.1 million for the same period last year.



Sales from continuing operations for the first nine months of 2005, inclusive of acquisitions, increased 40.7% over the same
period last year to $223.7 million. Operating income from continuing operations for the first nine months of 2005, inclusive of acquisitions, was $25.1 million compared to $21.1 million for the same period last year.



Overall, we continue to benefit from the positive trends in our
customers end markets and an increasing demand for their products. However, the demand for certain components used in military track vehicles has peaked and end market demand for certain large gas turbine machines remains slow to recover,
affecting our sales of certain power generation components. Although higher material costs have not been a factor in most of our businesses, it has impacted profitability in certain of our markets. This combined with some very specific changes in
our sales mix kept our bottom line flat in light of higher sales. See Segment Results of Operations for further information regarding our end markets.



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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 Registration Statement on Form S-4, 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 eight 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 EndedJune 30 |        |   | Nine Months Ended June 30 |  
|(Dollars in thousands)                        |  | 2005                      |        |   | 2004                      |   |        | 2005 |  |   | 2004    |  
|Net sales                                     |  | $                         | 79,219 |   |                           | $ | 61,441 |      |  | $ | 223,669 |   |  | $ | 159,000 |  
|Cost of sales                                 |  |                           | 58,743 |   |                           |   | 42,586 |      |  |   | 166,104 |   |  |   | 110,714 |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Gross profit                                  |  |                           | 20,476 |   |                           |   | 18,855 |      |  |   | 57,565  |   |  |   | 48,286  |  
|Gross profit margin                           |  |                           | 25.9   | % |                           |   | 30.7   | %    |  |   | 25.7    | % |  |   | 30.4    | %
|                                              |  |                           |        |  
|Selling, general, and administrative expenses |  |                           | 10,784 |   |                           |   | 9,569  |      |  |   | 31,436  |   |  |   | 26,999  |  
|As a percent of sales                         |  |                           | 13.6   | % |                           |   | 15.6   | %    |  |   | 14.1    | % |  |   | 17.0    | %
|                                              |  |                           |        |  
|Restructuring charges                         |  |                           | 216    |   |                           |   |       |      |  |   | 216     |   |  |   |        |  
|Intangible asset amortization                 |  |                           | 199    |   |                           |   | 159    |      |  |   | 808     |   |  |   | 214     |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating income                              |  |                           | 9,277  |   |                           |   | 9,127  |      |  |   | 25,105  |   |  |   | 21,073  |  
|                                              |  |                           |        |  
|Other income (expense):                       |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Interest expense  long term debt             |  |                           | (6,426 | ) |                           |   | (5,876 | )    |  |   | (19,038 | ) |  |   | (17,080 | )
|Interest expense  redeemable preferred stock |  |                           | (1,290 | ) |                           |   |       |      |  |   | (2,465  | ) |  |   |        |  
|Other, net                                    |  |                           | 274    |   |                           |   | 60     |      |  |   | 455     |   |  |   | 317     |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense              |  |                           | 1,835  |   |                           |   | 3,311  |      |  |   | 4,057   |   |  |   | 4,310   |  
|Income tax expense                            |  |                           | 1,227  |   |                           |   | 1,431  |      |  |   | 2,568   |   |  |   | 2,053   |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income from continuing operations             |  |                           | 608    |   |                           |   | 1,880  |      |  |   | 1,489   |   |  |   | 2,257   |  
|Income from discontinued operations           |  |                           | 61     |   |                           |   | 1,567  |      |  |   | 321     |   |  |   | 4,770   |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income                                    |  | $                         | 669    |   |                           | $ | 3,447  |      |  | $ | 1,810   |   |  | $ | 7,027   |  
|                                              |  |                           |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Capital expenditures                          |  | $                         | 3,023  |   |                           | $ | 3,351  |      |  | $ | 10,421  |   |  | $ | 6,834   |  
|                                              |  |                           |        |  
|Depreciation and amortization                 |  | $                         | 3,119  |   |                           | $ | 2,170  |      |  | $ | 8,662   |   |  | $ | 5,966   |  



Consolidated Results of
Operations: Third Quarter Fiscal 2005 Compared to Third Quarter Fiscal 2004



Net sales. For the fiscal quarter ended June 30, 2005, net sales from continuing operations increased 28.9%, or $17.8 million, which included a net sales increase of 19.7% in our Specialized Components segment
and 41.7% in our Aerospace-grade Component segment. The consolidated net sales increase included $12.4 million related to the acquisitions that we completed in fiscal 2004 and 2005. Consolidated organic net sales increased 8.8% to $66.9 million,
which included the benefit of $0.8 million in favorable currency exchange rates in our Specialized Components segment. Organic net sales



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growth was driven by higher sales of critical engine bolts, up 27.9%, and weld stud fasteners and systems sales, up 18.6%, in the Specialized Components
segment, and recreational equipment and vehicle component sales up 23.7%, offset by a decrease in the power generation component sales of 31.3%, in our Aerospace-grade Components segment.



Gross profit. Gross profit margins were 25.9% for the third quarter of fiscal 2005, compared to 30.7% for the same
period of fiscal 2004. The decrease relates primarily to lower margins in the Aerospace-grade Components segment which experienced a decline of approximately $3.9 million in sales of certain power generation components due to slow end market demand
for certain large gas turbine machines and higher steel costs which were not passed on to certain markets of approximately $0.8 million compared to the prior period. In addition, gross profits declined as a result of the business acquisitions we
completed in fiscal 2004 and 2005, which yield lower margins than our base businesses.



Selling, general and administrative expenses (SG&A).For the fiscal third quarter, SG&A expenses, excluding intangible asset amortization, increased $1.2 million to $10.8 million, from $9.6 million for
the comparable fiscal 2004 period. The increase was due primarily to acquisitions completed after the beginning of the fiscal 2004 third quarter. SG&A expenses of acquired companies included in the third quarter of fiscal 2005 that were not
included in the same period of fiscal 2004 were approximately $0.7 million. The remaining increase relates to normal wage inflation in both the Specialized Components and Aerospace-grade Components segments.



Restructuring charges.During the fiscal quarter ended June 30, 2005,
we incurred restructuring charges of $0.2 million for severance related payments due to the termination of 15 employees at one of our business units in the Aerospace-grade Components segment. There are no additional severance expenses related to
these employees and we expect to generate annual savings of approximately $0.7 million as a result of these terminations.



Interest expense  long term debt, net.For the fiscal 2005 third quarter, net interest expense on long term debt increased 9.4%, or $0.6
million, compared to the fiscal 2004 third quarter, primarily due to higher average debt balances. Our average debt balance in the fiscal 2005 third quarter was $218.5 million compared to $192.0 million in the fiscal 2004 third quarter, while the
weighted average interest rate incurred for both periods, including the amortization of debt issuance costs, was 11.8%. 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. For the fiscal 2005 third quarter, the annualized interest rate on these notes was 11.7% compared to 12.25% in the fiscal 2004 third 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 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.



Income tax expense.The consolidated effective income tax rate for the fiscal 2005 third quarter was 66.9% compared to 43.2% for the same period
last year. Excluding the non tax deductible interest expense on the redeemable preferred stock, our effective rate for the fiscal 2005 third quarter was 39.3%. We expect our effective tax rate, excluding the non-deductible interest expense on our
preferred stock, will be between 38% and 41% for fiscal 2005, depending on results of foreign operations.



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Income from discontinued operations. We have accounted for the operations of FabriSteel and
Progressive as discontinued operations in accordance with the provisions of SFAS No. 144. The results of FabriSteel and Progressive for all periods presented are included in the consolidated financial statements as discontinued operations. The
fiscal 2005 third quarter includes the results of Progressive and the fiscal 2004 third quarter includes the results of both FabriSteel and Progressive. For further explanation, please refer to Note 6 in our Consolidated Financial Statements.



Consolidated Results of Operations: Nine Months Ended June 30, 2005
Compared to Nine Months Ended June 30, 2004



Net
sales. For the first nine months of fiscal 2005, net sales increased 40.7%, or $64.7 million, which included a net sales increase of 23.5% in our Specialized Components segment and 67.1% in our Aerospace-grade Component segment. The consolidated
net sales increase included $38.8 million related to the acquisitions that we completed in fiscal 2004 and 2005. Consolidated organic net sales increased 16.3% to $184.8 million, which included the benefit of $1.6 million in favorable currency
exchange rates in our Specialized Components segment. Organic net sales growth in the first nine months of fiscal 2005 was driven by higher sales of critical engine bolt sales, up 36.2%, and weld stud fasteners and systems sales, up 18.0%, in our
Specialized Components segment, and military track pin sales, up 23.8%, and recreational equipment component sales up 32.8%, offset by a decrease in the power generation component sales of 22.3%, in our Aerospace-grade Components segment.



Gross Profit. Gross profit margins were 25.7% for the
first nine months of fiscal 2005, compared to 30.4% for the same period in fiscal 2004. The decrease related primarily to lower margins in the Aerospace-grade Components segment, which experienced a decline of approximately $5.7 million in sales of
certain power generation components due to slow end market demand for certain large gas turbine machines and higher steel costs which were not passed on to certain markets of approximately $2.0 million compared to the prior period. In addition,
gross profits declined as a result of the business acquisitions we completed in fiscal 2004 and 2005, which yield lower margins than our base businesses.



Selling, general and administrative expenses (SG&A).For the first nine months of fiscal 2005, SG&A expenses, excluding intangible asset
amortization, increased $4.4 million to $31.4 million compared to $27.0 million for the comparable fiscal 2004 period. The increase was due primarily to the acquisitions completed after the beginning of fiscal 2004 and higher professional fees of
approximately $0.7 million related to Sarbanes-Oxley implementation and compliance, as well as expenses related to potential acquisition that will not be completed. SG&A expenses of acquired companies included in the first nine months of fiscal
2005 that were not included in the same period of fiscal 2004 were approximately $2.9 million. The remaining increase relates to normal wage inflation in both the Specialized Components and Aerospace-grade Components segments.



Restructuring charges.During the first nine months of fiscal 2005, we
incurred restructuring charges of $0.2 million for severance related payments due to the termination of 15 employees at one of our business units in the Aerospace-grade Components segment. There are no additional severance expenses related to these
employees and we expect to generate annual savings of approximately $0.7 million as a result of these terminations.



Interest expense  long term debt, net.For the first nine months of fiscal 2005, net interest expense on long term debt increased 11.5%, or
$2.0 million, compared to the first nine months of fiscal 2004, primarily due to higher average debt balances and higher interest rates due to increased LIBOR rates and an interest penalty on our 11.5% Senior Subordinated Notes due May 2011. Our
average debt balance



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for the first nine months of fiscal 2005 was $201.0 million compared to $191.0 million for the first nine months of fiscal 2004, while the weighted average
interest rate incurred, including the amortization of debt issuance costs, for the first nine months of fiscal 2005 was 12.6% compared to 11.9% for the prior year. Under a registration rights agreement between us and the initial purchasers of these
notes, we were required to complete an exchange offer and register the issuance of the notes under the Securities Act of 1933, which we completed on April 14, 2005. Prior to the completion of the exchange offering, the interest rate on the notes
increased at a rate of 0.25% for each 90-day period beginning November 27, 2003. For the first nine months of fiscal 2005 and 2004, the annualized interest rate on these notes, including the penalty interest rate of 1%, was 12.25%. 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
requires 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 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.



Income tax expense.The consolidated effective income tax rate for the
first nine months of fiscal 2005 was 63.3% compared to 47.6% for the first nine months of fiscal 2004. However, excluding the interest expense on the redeemable preferred stock that is not tax deductible, our effective rate was 39.4% for the fiscal
2005 period. Additionally, the 2004 period included lower pretax income from continuing operations. Had the discontinued operations been included in the pretax income from continuing operations, the effective tax rate would have been 40.0% for the
fiscal 2004 period. We expect our effective tax rate, excluding the non-deductible interest expense on our preferred stock, will be between 38% and 41% for fiscal 2005, depending on results of foreign operations.



Income from discontinued operations. We have accounted for the
operations of FabriSteel and Progressive as discontinued operations in accordance with the provisions of SFAS No. 144. The results of FabriSteel and Progressive for all periods presented are included in the consolidated financial statements as
discontinued operations. The first nine months of fiscal 2005 includes the results of Progressive and the first nine months of fiscal 2004 includes the results of both FabriSteel and Progressive. For further explanation, please refer to Note 6 in
our Consolidated Financial Statements.



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. Demand for products in our Specialized Components
segment is highly correlated to contract timing on large construction contracts, which may cause significant fluctuations from period to period. Our Aerospace-grade Components segment revenues typically follow program launch and replacement
component timing for gas turbine machines and military track vehicles, the largest markets in this segment. 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 that have permitted the Company to diversify its product offerings and end markets, we expect that the Companys quarterly results in fiscal 2006 will tend to be more consistent, except for the first fiscal quarter, which
will continue to have lower results due to production shutdowns at 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.



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Effect of Inflation



Inflation potentially affects us in two principal ways. First, a portion of our debt is tied to prevailing short-term interest rates, which may
change as a result of inflation rates, translating into changes in interest expense. Second, general inflation can impact material purchases, labor and other costs. In some cases, we may not be able to pass through inflation-related cost increases
due to the competitive nature of certain markets in which we operate. For the past few years, however, inflation has not been a significant factor with the exception of steel costs, which began rapidly increasing in late December 2003 as a result of
a weak dollar and rising demand in Asia and other parts of the world. Prices for hot-rolled steel increased as much as 75 to 100 percent during fiscal 2004. Thus far in fiscal 2005, on a consolidated basis, steel represented 32.2% of our total net
sales, compared to 25.3% in fiscal 2004. We have been able to offset high material costs through a combination of pricing and productivity improvements.



SEGMENT RESULTS OF OPERATIONS



Specialized Components



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 nine months of fiscal 2005 was up 4.0% from September 30, 2004. We expect industrial manufacturing
production to remain strong through the end of our fiscal year 2005.



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 2005 as a result of improved corporate
profits and higher capacity utilization.



During the first nine
months of 2005, truck unit production remained strong. According to industry sources, truck production is expected to remain strong into 2006. Approximately 15-20% of our sales in this segment relate to Class 8 heavy trucks. In the three and nine
months ended June 30, 2005, Class 8 NAFTA vehicle production was up approximately 43% and 48%, respectively, compared to the same periods a year ago as follows:



|                            |  |                            |  |                           |  |       |  |      
|--------------------------- |  | -------------------------- |  | ------------------------- |  | ----- |  | -----
|                            |  | Three months endedJune 30, |  | Nine months endedJune 30,
|(in 000s)                  |  | 2005                       |  | 2004                      |  | 2005  |  | 2004 
|Class 8 NAFTA Vehicle Build |  | 90.1                       |  | 63.0                      |  | 247.0 |  | 166.4
|Source: ACT Research        |  |                            |  |                           |  |       |  |      



Aerospace-grade Components



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 seven 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.



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The level of military activity in Afghanistan and Iraq has remained strong in the first nine months
of fiscal 2005 driving the demand for our replacement pins and bushings used to hold track tread together in military tracked vehicles. While year over year military product sales are up 4% for the fiscal 2005 third quarter, demand for certain track
vehicle products appears to have peaked. As a result, we expect to see a decrease in demand for certain military components in the fiscal 2005 fourth quarter and into fiscal 2006.



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. However, demand for certain large gas turbine machines, particularly in North America, has not yet rebounded and visibility of future demand is limited.
We believe the long-term growth prospects for this market are strong based on a steady increase in the installed base of gas turbines (original equipment) and increasing demand for component parts used for maintenance, repairs and overhauls
(aftermarket). However, the exact timing of a rebound in this segment is uncertain.



In addition, we continue to see strong growth trends in our recreational markets, particularly in the ATV market, and from new product introductions.



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Segment Reported Results

(dollars in thousands)



|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | -------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                              |  | Three Months EndedJune 30, |        |   | Nine Months EndedJune 30, |  
|                                              |  | 2005                       |        |   | 2004                      |   |        | 2005 |  |   | 2004    |  
|Net sales                                     |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  | $                          | 42,780 |   |                           | $ | 35,753 |      |  | $ | 119,459 |   |  | $ | 96,733  |  
|Aerospace-grade Components                    |  |                            | 36,472 |   |                           |   | 25,743 |      |  |   | 104,318 |   |  |   | 62,443  |  
|Eliminations                                  |  |                            | (33    | ) |                           |   | (55    | )    |  |   | (108    | ) |  |   | (176    | )
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total net sales                               |  | $                          | 79,219 |   |                           | $ | 61,441 |      |  | $ | 223,669 |   |  | $ | 159,000 |  
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before income taxes                    |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  | $                          | 6,737  |   |                           | $ | 5,865  |      |  | $ | 18,364  |   |  | $ | 14,499  |  
|Aerospace-grade Components                    |  |                            | 7,700  |   |                           |   | 7,162  |      |  |   | 21,222  |   |  |   | 17,491  |  
|Unallocated corporate operating expenses      |  |                            | (1,825 | ) |                           |   | (1,730 | )    |  |   | (5,603  | ) |  |   | (4,951  | )
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|EBITDA(1)                                     |  |                            | 12,612 |   |                           |   | 11,297 |      |  |   | 33,983  |   |  |   | 27,039  |  
|                                              |  |                            |        |  
|Depreciation and amortization                 |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Specialized Components                        |  |                            | (1,409 | ) |                           |   | (1,310 | )    |  |   | (4,244  | ) |  |   | (3,969  | )
|Aerospace-grade Components                    |  |                            | (1,692 | ) |                           |   | (844   | )    |  |   | (4,365  | ) |  |   | (1,952  | )
|Corporate                                     |  |                            | (18    | ) |                           |   | (16    | )    |  |   | (53     | ) |  |   | (45     | )
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Depreciation and amortization                 |  |                            | (3,119 | ) |                           |   | (2,170 | )    |  |   | (8,662  | ) |  |   | (5,966  | )
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Restructuring charges                         |  |                            | (216   | ) |                           |   |       |      |  |   | (216    | ) |  |   |        |  
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total operating income                        |  |                            | 9,277  |   |                           |   | 9,127  |      |  |   | 25,105  |   |  |   | 21,073  |  
|                                              |  |                            |        |  
|Interest expense  long term debt             |  |                            | (6,426 | ) |                           |   | (5,876 | )    |  |   | (19,038 | ) |  |   | (17,080 | )
|Interest expense  redeemable preferred stock |  |                            | (1,290 | ) |                           |   |       |      |  |   | (2,465  | ) |  |   |        |  
|Other, net                                    |  |                            | 274    |   |                           |   | 60     |      |  |   | 455     |   |  |   | 317     |  
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense              |  | $                          | 1,835  |   |                           | $ | 3,311  |      |  | $ | 4,057   |   |  | $ | 4,310   |  
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net Income                                    |  | $                          | 669    |   |                           | $ | 3,447  |      |  | $ | 1,810   |   |  | $ | 7,027   |  
|                                              |  |                            |        |   |                           |   |        |      |  |   |         |   |  |   |         |  

---

|(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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Segment Results of Operations: Three and Nine Months Ended June 30, 2005 Compared to June 30, 2004



Specialized Components



Net sales. In our Specialized Components segment, net sales for the fiscal 2005 third quarter increased $7.0 million, or 19.7% over the prior year.
For the first nine months of fiscal 2005, net sales increased $22.7 million, or 23.5%. The majority of the increase reflects higher sales of heavy truck bolts, up 31.3% and 40.9% for the fiscal 2005 third quarter and nine months, respectively, due
to an increase in downstream OEM unit production rates for Class 8 heavy trucks. In addition, weld stud fasteners and systems sales were up 18.6% and 18.0% for the fiscal 2005 third quarter and nine months, respectively primarily due to increased
sales to customers in the industrial and construction markets.



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EBITDA.For the fiscal 2005 third quarter and nine months, EBITDA from our Specialized
Components segment increased $0.9 and $3.9 million, respectively, over the same period in fiscal 2004. EBITDA margin for the fiscal 2005 and 2004 third quarters was 15.7% and 16.4%, respectively. EBITDA margin for the fiscal 2005 nine month period
increased to 15.4% from 15.0% for the year ago period. The increase in EBITDA reflects the overall increase in sales for the segment. The decrease in EBITDA margin for the quarter ended June 30, 2005 relates primarily to start up expenses in
connection with a new warehousing facility, a new manufacturing program between two of the business units within this segment as well as our operations in China. Combined, these initiatives had an approximate $0.4 impact on results.



Aerospace-grade Components



Net sales. Aerospace-grade component sales increased $10.7 million in
the fiscal 2005 third quarter, or 41.7% over the same period in fiscal 2004. For the fiscal 2005 nine month period, net sales increased $41.9 million, or 67.1%. For the fiscal 2005 third quarter and nine month period, approximately $12.4 million and
$38.8 million of these increases, respectively, relate to incremental sales from the acquisitions of GCE, Spun Metals, MECO, and Gear & Broach. The balance of the increase for the fiscal 2005 third quarter and year to date reflects strong
military sales growth of 4.3% and 23.8%, respectively, and 23.7% and 32.8% in recreational products, respectively, excluding the effect of acquisitions. This strong growth was moderated by fiscal 2005 third quarter and year to date sales declines of
31.3% and 22.3%, respectively, to our customers in the power generation market, excluding the results of acquisitions. The decline in the power generation sales relates to lower end market demand for certain large gas turbine machines, resulting in
lower sales of gas turbine components to one of our major customers.



EBITDA. For the fiscal 2005 third quarter and nine month periods, EBITDA from our Aerospace-grade Components segment increased $0.5 million and $3.7 million, respectively, compared to the prior year. EBITDA margins decreased from
27.8% to 21.1% in the fiscal 2005 third quarter and decreased from 28.0% to 20.3% for the fiscal 2005 nine month period compared to the prior year. The EBITDA increase for the current quarter and year to date was due to the operating results of GCE,
Spun Metals, MECO, and Gear & Broach, as well as the increases in sales to customers in the recreational markets. The decline in EBITDA margin for the fiscal 2005 third quarter and nine month period related to lower margins on military component
sales due to higher raw material costs (approximately $0.8 million and $2.0 million for the quarter and year to date, respectively), lower overhead absorption due to a decline of approximately $5.7 million in sales of certain gas turbine components,
and lower margins of the newly acquired businesses.



Unallocated Corporate Operating Expenses



For
the fiscal 2005 third quarter and nine month period, Unallocated Corporate Operating Expenses increased $0.1 million and $0.7 million over the same periods in fiscal 2004 to $1.8 million and $5.6 million, respectively. The increase for both periods
related primarily to higher professional fees for Sarbanes  Oxley implementation and compliance.



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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 of 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 June 30, 2005, we had $84.0 million in outstanding borrowings under our credit facility and we had $58.0 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 and confidentiality agreements with acquisition candidates we
find attractive. Certain discussions are ongoing and certain confidentiality agreements remain in effect. We also currently have signed letters of intent and non-disclosure agreements with potential acquisition candidates. Whether or not these
letters of intent result in consummated transaction is uncertain. On August 1, 2005, we acquired 100% of the members interest of General Products, LLC for $7.0 million. We funded the acquisition with cash on hand and borrowings under the
credit agreement. This acquisition did not meet the definition of a significant acquisition under Rule 3 05 (b) 2.



In August 2005, the Company repurchased approximately $11.4 million of redeemable preferred stock, including accrued dividends, and 35,971 shares of
common stock for approximately $8.3 million. In addition, the Company agreed, subject to certain customary conditions, to repurchase approximately $11.3 million of additional redeemable preferred stock, including accrued dividends, and 34,009 shares
of common stock for total consideration of approximately $8.3 million in fiscal 2006.



As a result of the acquisition and stock repurchase in August 2005, we have $97.0 million in outstanding borrowings under our credit facility as of August 15, 2005. In July 2005, we increased the commitment under our
credit facility from $150 million to $170 million. As of August 15, 2005, we had $72.4 million of available borrowing capacity subject to certain debt incurrence tests under our indenture.



Nine Months Ended June 30, 2005 compared to Nine Months Ended June 30, 2004



For the fiscal 2005 nine month period, net cash used
by operating activities from continuing operations was $12.4 million compared to cash generated of $7.6 million in the same period of the prior year, principally the result of higher cash taxes and increased working capital usage. Cash used for
working capital and other operating assets and liabilities, including taxes, was approximately $26.1 million compared to $1.5 million in the prior year. During the fiscal 2005 nine month period, we paid approximately $6.8 million in cash taxes,
including capital gains taxes of $4.5 million on the sale of FabriSteel, compared to receiving tax refunds of approximately $2.3 million in the same period of the prior year. The principal reasons for the increased use of cash also related to higher
inventory levels due to approximately $3.0 million of accelerated raw material purchases during the current year, higher incentive compensation payments and pension contributions of approximately $2.1 million, additional cash interest of
approximately $2.1 million and timing of accounts payable payments, which had an impact of approximately $4.8 million. We do not expect this trend to continue and expect to have positive cash flow from operations in the fiscal 2005 fourth quarter.
However, we do not expect to report positive cash flow from operations for the fiscal 2005 year ending September 30, 2005.



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Days sales outstanding in accounts receivable decreased to approximately 55 days at June 30, 2005
from approximately 56 days at September 30, 2004. Days sales in inventory, based on cost of goods sold, increased to approximately 103 days at June 30, 2005 from approximately 98 days at September 30, 2004. The increase in inventory days relates
primarily to increased raw material purchases described above and higher raw material costs.



Cash used in investing activities was $88.7 million for the fiscal 2005 nine month period. We used $78.3 million for acquisitions in the first nine months of fiscal 2005 including; the purchase of substantially all of
the assets of Ogre Holdings, Inc. for $32.0 million cash and the issuance of subordinated notes of $8.0 million; substantially all of the fixed assets, inventory and certain other assets associated with Triumph Engineered Solutions, Inc.s
Brookfield, Wisconsin facility for a purchase price of approximately $6.0 million; substantially all of the assets of Spun Metals, Inc., for approximately $5.0 million; and substantially all of the assets of GCE Industries, Inc., and 100% of the
stock of Katsakos Industries, Inc. for approximately $31.1 million. This compares to $18.3 million used during the same period of the prior year to acquire all of the capital stock of Spiegelberg Manufacturing, Inc. for approximately $5.2 million,
net of cash acquired and substantially all of the assets of Gear and Broach, Inc. for approximately $13.1 million.



Capital expenditures increased $3.6 million for the fiscal 2005 nine month period compared to the prior year. This increase represents additional
expenditures of $0.8 million to support product line expansions in the Specialized Components segment and $2.9 million to support the Aerospace-grade Components segment. We have three major capital projects planned or currently underway in fiscal
2005 including; the launch of a manufacturing venture in China to produce stud weld and fastener products within our Specialized Components segment; 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 a capacity expansion project in our Aerospace- grade Components segment to meet increasing demand in the recreational vehicle market. We
expect total spending of approximately $5.0 to $7.0 million for these three projects. While our long-term prospects for future revenue growth are quite strong for these product lines, we do not expect meaningful growth until 2006 to 2007. As a
result of these three major projects, we expect fiscal 2005 capital spending, including maintenance capital spending, to be approximately $14.0 million to $16.0 million compared to $9.7 million in fiscal 2004.



Cash provided by financing activities was $82.9 million for the fiscal 2005
nine month period compared to $9.0 million in the same period of the prior year. We borrowed $84.0 million under our credit agreement in the fiscal 2005 nine month period compared to $16.0 million during the same period last year. In addition, for
the fiscal 2004 nine month period, we used $6.1 million to repurchase redeemable and subsidiary preferred stock.



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Debt



The following summarizes our outstanding debt and unused credit availability as of June 30, 2005:



|                                              |  |                 |       |                   |   |                          |  |   |     
|--------------------------------------------- |  | --------------- | ----- | ----------------- | - | ------------------------ |  | - | ----
|(Dollars in millions)                         |  | TotalCommitment |       | AmountOutstanding |   | UnusedCreditAvailability
|Revolving credit facility                     |  | $               | 150.0 |                   | $ | 84.0                     |  | $ | 66.0
|                                              |  |                 |      
|Subordinated debt                             |  |                 | 8.0   |                   |   | 8.0                      |  |   | 0.0 
|                                              |  |                 |      
|11.5% senior subordinated notes, due May 2011 |  |                 | 175.0 |                   |   | 175.0                    |  |   | 0.0 
|                                              |  |                 |       |                   |   |                          |  |   |     
|Total contractual cash obligations            |  | $               | 333.0 |                   | $ | 267.0                    |  | $ | 66.0
|                                              |  |                 |       |                   |   |                          |  |   |     



Credit Facility



In May 2003, we entered into a new credit agreement,
which was amended and restated on June 30, 2004, and June 10, 2005 to, among other things, increase the available borrowings from $40.0 million to $150.0 million, with the option to further increase the commitment size to $175.0 million (subject to
certain limits, including limitation restrictions 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
fiscal 2005 third quarter, 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%. The interest rate on the credit facility was approximately 6.0% at June 30, 2005.



Our credit facility which is collateralized by substantially all of the
Companys assets, is subject to annual commitment fees of 0.375% on the average unused portion of the credit facility, depending on the level of outstanding borrowings. Our credit facility contains customary covenants, including financial
condition covenants, some of which are calculated based upon proforma financial results to include acquisitions and divestitures as if they had occurred at the beginning of the accounting period. The first financial condition covenant does not
permit the Leverage Ratio, as defined, to exceed 5.00 to 1.00 as of June 30, 2005. The second financial condition covenant does not permit the Interest Coverage Ratio, as defined, to be less than 1.75 to 1.00 as of June 30, 2005. The final financial
condition covenant does not permit EBITDA, as defined in the credit agreement to be less than $47.0 million as of June 30, 2005. As of June 30, 2005, we were in compliance with all of our covenants. Our Leverage Ratio, as defined, was 4.4 to 1.0;
our Interest Coverage Ratio, as defined, was 2.4 to 1.0; and our EBITDA, as defined, was $57.7 million.



Senior Subordinated 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.



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The Consolidated Coverage Ratio covenant limits the amount of additional indebtedness that we may
incur, after giving effect to the financing and related transactions on a pro forma basis, such that we must meet a minimum Consolidated Coverage Ratio of 2.0 to 1. As of June 30, 2005, our Consolidated Coverage Ratio, as defined in the indenture
governing the notes, was 2.3 to 1.0.



Subordinated Debt



In conjunction with the acquisition of Ogre Holdings,
Inc. (see Note 5), we issued, to the selling shareholders, a $5.0 million subordinated discount note due January 3, 2006 and a $3.0 million subordinated note, which accrues interest at a rate of 4.25% per annum, due January 3, 2007.



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 June 30,
2005, the total amount of accrued and unpaid dividends on the preferred stock of the Company was approximately $24.9 million. We also have contractually obligated interest payments related to the notes, which is approximately $20.1 million annually.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



There have been no material changes to our exposures to market risk since September 30, 2004.



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.



ITEM 5. OTHER INFORMATION



On
May 25, 2005, the Compensation Committee of the Company approved an Employment Agreement with Ron Kalich, the President and Chief Executive Officer of the Company, which has an effective date of October 1, 2005 and a term of 3 years with an option
to extend the term an additional 2 years (the Employment Agreement). Pursuant to the Employment Agreement, Mr. Kalich will continue to serve as President and Chief Executive Officer of the Company at an annual salary of at least $425,000
and will be eligible to receive other benefits and participate in the Companys 2004 Stock Incentive Plan and Executive Bonus Plan. The foregoing summary of the material terms of the employment agreement is qualified in its entirety by
reference to the employment agreement, a copy of which is attached as Exhibit 10.2 to this Quarterly Report.



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 believe that 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 6. EXHIBITS AND REPORTS ON FORM 8-K



See
the Exhibit Index.



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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.
|                |  |                 
|August 15, 2005 |  | By:              |  | /s/ Michael R. Elia
|DATE            |  |                  |  |                    



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Exhibit Index



|     |  |                                                                                                                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Second Amended and Restated Credit Agreement dated as of May 1, 2003, as amended and restated as of June 30, 2004 and asfurther amended and restated as of June 10, 2005 among FastenTech,
Inc. and the Banks and Financial Institutions partythereto.
|     | 
|10.2 |  | Management Agreement dated October 1, 2005 between FastenTech, Inc. and Ronald B. Kalich.                                                                                                                                                             
|     | 
|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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