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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, 2006

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



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

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

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

As of July 31, 2006, the number of outstanding shares of the Registrants Class A Common Stock was 370,717, and the number of outstanding
shares of the Registrants Class B Common Stock was 1,638,684.



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##### Table of Contents

TABLE OF CONTENTS

FASTENTECH, INC

REPORT ON FORM 10-Q

FOR THE PERIOD ENDED June 30, 2006

INDEX



|                                                                                                     |  |   
|---------------------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION                                                                        |  |   
|                                                                                                     | 
|ITEM 1.     Condensed Consolidated Balance Sheets  June 30, 2006 and September 30, 2005             |  | 1 
|                                                                                                     | 
|Condensed Consolidated Statements of Operations  Three and nine months ended June 30, 2006 and 2005 |  | 2 
|                                                                                                     | 
|Condensed Consolidated Statements of Cash Flows  Nine months ended June 30, 2006 and 2005           |  | 3 
|                                                                                                     | 
|Notes to Condensed Consolidated Financial Statements                                                 |  | 4 
|                                                                                                     | 
|ITEM 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 20
|                                                                                                     | 
|ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk                               |  | 30
|                                                                                                     | 
|ITEM 4.     Controls and Procedures                                                                  |  | 30
|                                                                                                     | 
|PART II. OTHER INFORMATION                                                                           |  |   
|                                                                                                     | 
|ITEM 1.     Legal Proceedings                                                                        |  | 31
|                                                                                                     | 
|ITEM 1A.  Risk Factors                                                                               |  | 31
|                                                                                                     | 
|ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds                              |  | 31
|                                                                                                     | 
|ITEM 3.     Defaults Upon Senior Securities                                                          |  | 31
|                                                                                                     | 
|ITEM 4.     Submission of Matters To a Vote Of Security Holders                                      |  | 31
|                                                                                                     | 
|ITEM 5.     Other Information                                                                        |  | 31
|                                                                                                     | 
|ITEM 6.     Exhibits                                                                                 |  | 31



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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 30,2006 |         |   | September 30, 2005 |  
|Assets:                                                                                                   |  |                         |         |   |                    |   |         |  
|Current assets:                                                                                           |  |                         |         |   |                    |   |         |  
|Cash and cash equivalents                                                                                 |  | $                       | 19,929  |   |                    | $ | 11,730  |  
|Accounts receivable, net of allowance of $1,047 and $769 respectively                                     |  |                         | 62,918  |   |                    |   | 57,427  |  
|Inventory, net                                                                                            |  |                         | 87,671  |   |                    |   | 78,832  |  
|Deferred income taxes                                                                                     |  |                         | 2,245   |   |                    |   | 2,254   |  
|Other                                                                                                     |  |                         | 3,413   |   |                    |   | 2,729   |  
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total current assets                                                                                      |  |                         | 176,176 |   |                    |   | 152,972 |  
|                                                                                                          |  |                        
|Goodwill and other intangible assets, net                                                                 |  |                         | 107,340 |   |                    |   | 103,294 |  
|Property, plant, and equipment, net                                                                       |  |                         | 90,859  |   |                    |   | 90,532  |  
|Deferred income taxes                                                                                     |  |                         | 93      |   |                    |   | 214     |  
|Other assets                                                                                              |  |                         | 10,204  |   |                    |   | 10,377  |  
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total assets                                                                                              |  | $                       | 384,672 |   |                    | $ | 357,389 |  
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Liabilities and stockholders equity (deficiency in assets):                                              |  |                         |         |   |                    |   |         |  
|Current liabilities:                                                                                      |  |                         |         |   |                    |   |         |  
|Accounts payable                                                                                          |  | $                       | 37,413  |   |                    | $ | 29,272  |  
|Income taxes payable                                                                                      |  |                         | 2,041   |   |                    |   | 581     |  
|Accrued interest payable                                                                                  |  |                         | 4,226   |   |                    |   | 8,745   |  
|Other accrued liabilities                                                                                 |  |                         | 13,025  |   |                    |   | 13,579  |  
|Current portion of long-term debt                                                                         |  |                         | 3,000   |   |                    |   | 5,000   |  
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total current liabilities                                                                                 |  |                         | 59,705  |   |                    |   | 57,177  |  
|                                                                                                          |  |                        
|Long-term debt                                                                                            |  |                         | 305,000 |   |                    |   | 277,000 |  
|Redeemable preferred stock                                                                                |  |                         | 10,992  |   |                    |   | 17,481  |  
|Preferred stock dividends payable                                                                         |  |                         | 16,690  |   |                    |   | 19,715  |  
|Other long-term liabilities                                                                               |  |                         | 17,740  |   |                    |   | 17,124  |  
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total liabilities                                                                                         |  |                         | 410,127 |   |                    |   | 388,497 |  
|                                                                                                          |  |                        
|Stockholders equity (deficiency in assets):                                                              |  |                         |         |   |                    |   |         |  
|Common stock, $.01 par value: 5,000,000 shares authorized, 2,009,401 and 1,826,011 issued and outstanding |  |                         | 21      |   |                    |   | 18      |  
|Additional paid-in capital                                                                                |  |                         | 10,767  |   |                    |   | 9,253   |  
|Accumulated deficit                                                                                       |  |                         | (33,515 | ) |                    |   | (36,890 | )
|Accumulated other comprehensive loss                                                                      |  |                         | (2,728  | ) |                    |   | (3,489  | )
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total stockholders equity (deficiency in assets)                                                         |  |                         | (25,455 | ) |                    |   | (31,108 | )
|                                                                                                          |  |                         |         |   |                    |   |         |  
|Total liabilities and stockholders equity (deficiency in assets)                                         |  | $                       | 384,672 |   |                    | $ | 357,389 |  
|                                                                                                          |  |                         |         |   |                    |   |         |  

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



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                  |  | Three Months EndedJune 30, |         |   | Nine Months EndedJune 30, |  
|(Dollars in thousands)                            |  | 2006                       |         |   | 2005                      |   |        | 2006 |  |   | 2005    |  
|Net sales                                         |  | $                          | 105,940 |   |                           | $ | 83,538 |      |  | $ | 302,892 |   |  | $ | 235,950 |  
|Cost of sales                                     |  |                            | 77,021  |   |                           |   | 62,575 |      |  |   | 224,808 |   |  |   | 176,645 |  
|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Gross profit                                      |  |                            | 28,919  |   |                           |   | 20,963 |      |  |   | 78,084  |   |  |   | 59,305  |  
|                                                  |  |                            |         |  
|Selling, general, and administrative expenses     |  |                            | 17,448  |   |                           |   | 11,377 |      |  |   | 47,450  |   |  |   | 33,507  |  
|Restructuring charges                             |  |                            |        |   |                           |   | 216    |      |  |   |        |   |  |   | 216     |  
|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                  |  |                            | 11,471  |   |                           |   | 9,370  |      |  |   | 30,634  |   |  |   | 25,582  |  
|                                                  |  |                            |         |  
|Other income (expense):                           |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Interest expense  long term debt                 |  |                            | (8,269  | ) |                           |   | (6,426 | )    |  |   | (24,064 | ) |  |   | (19,038 | )
|Interest expense  redeemable preferred stock     |  |                            | (703    | ) |                           |   | (1,290 | )    |  |   | (2,183  | ) |  |   | (2,465  | )
|Gain on repurchase of redeemable preferred stock  |  |                            |        |   |                           |   |       |      |  |   | 2,210   |   |  |   |        |  
|Loss on sale of discontinued product line         |  |                            | (2,308  | ) |                           |   |       |      |  |   | (2,308  | ) |  |   |        |  
|Other, net                                        |  |                            | (277    | ) |                           |   | 274    |      |  |   | (85     | ) |  |   | 464     |  
|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) before income tax expense (benefit) |  |                            | (86     | ) |                           |   | 1,928  |      |  |   | 4,204   |   |  |   | 4,543   |  
|Income tax expense (benefit)                      |  |                            | (563    | ) |                           |   | 1,259  |      |  |   | 829     |   |  |   | 2,733   |  
|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income                                        |  | $                          | 477     |   |                           | $ | 669    |      |  | $ | 3,375   |   |  | $ | 1,810   |  
|Less preferred stock dividends                    |  |                            |        |   |                           |   |       |      |  |   |        |   |  |   | (1,169  | )
|                                                  |  |                            |         |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income applicable to common stockholders      |  | $                          | 477     |   |                           | $ | 669    |      |  | $ | 3,375   |   |  | $ | 641     |  

The accompanying notes are an integral part of these condensed 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):                                                                     |  | 2006                       |         |   | 2005 |  
|Operating activities:                                                                       |  |                            |         |   |      |   |         |  
|Net income                                                                                  |  | $                          | 3,375   |   |      | $ | 1,810   |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                            |         |   |      |   |         |  
|Depreciation                                                                                |  |                            | 10,189  |   |      |   | 8,698   |  
|Amortization                                                                                |  |                            | 3,939   |   |      |   | 808     |  
|Noncash interest expense  long-term debt                                                   |  |                            | 1,088   |   |      |   | 1,082   |  
|Noncash interest expense  redeemable preferred stock                                       |  |                            | 2,183   |   |      |   | 2,465   |  
|Gain on repurchase of redeemable preferred stock                                            |  |                            | (2,210  | ) |      |   |        |  
|Loss on sale of discontinued product line                                                   |  |                            | 2,308   |   |      |   |        |  
|Changes in certain assets and liabilities, net of acquisitions:                             |  |                            |         |   |      |   |         |  
|Accounts receivable                                                                         |  |                            | (799    | ) |      |   | (3,863  | )
|Inventory                                                                                   |  |                            | (2,200  | ) |      |   | (8,722  | )
|Other current assets                                                                        |  |                            | (1,466  | ) |      |   | (105    | )
|Accounts payable                                                                            |  |                            | 5,898   |   |      |   | 1,280   |  
|Accrued interest                                                                            |  |                            | (4,519  | ) |      |   | (5,458  | )
|Income taxes                                                                                |  |                            | 1,595   |   |      |   | (4,111  | )
|Other current liabilities                                                                   |  |                            | (2,105  | ) |      |   | (5,124  | )
|Other                                                                                       |  |                            | (1,304  | ) |      |   | (879    | )
|                                                                                            |  |                            |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                                         |  |                            | 15,972  |   |      |   | (12,119 | )
|                                                                                            |  |                           
|Investing activities:                                                                       |  |                            |         |   |      |   |         |  
|Cash used for acquisitions, net of cash acquired                                            |  |                            | (20,910 | ) |      |   | (78,261 | )
|Additions to property, plant, and equipment                                                 |  |                            | (6,466  | ) |      |   | (10,537 | )
|                                                                                            |  |                            |         |   |      |   |         |  
|Net cash used in investing activities                                                       |  |                            | (27,376 | ) |      |   | (88,798 | )
|                                                                                            |  |                           
|Financing activities:                                                                       |  |                            |         |   |      |   |         |  
|Net borrowings under the Credit Agreement                                                   |  |                            | 32,000  |   |      |   | 84,000  |  
|Payment of subordinated notes                                                               |  |                            | (3,500  | ) |      |   |        |  
|Repurchase of Senior Subordinated Notes                                                     |  |                            | (1,000  | ) |      |   |        |  
|Repurchase of common and redeemable preferred stock, net                                    |  |                            | (8,307  | ) |      |   |        |  
|Debt issuance costs                                                                         |  |                            |        |   |      |   | (1,139  | )
|Other                                                                                       |  |                            | 337     |   |      |   | 27      |  
|                                                                                            |  |                            |         |   |      |   |         |  
|Net cash provided by financing activities                                                   |  |                            | 19,530  |   |      |   | 82,888  |  
|                                                                                            |  |                           
|Effect of exchange rate fluctuations on cash                                                |  |                            | 73      |   |      |   | 36      |  
|                                                                                            |  |                            |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                        |  |                            | 8,199   |   |      |   | (17,993 | )
|Cash and cash equivalents at beginning of period                                            |  |                            | 11,730  |   |      |   | 29,222  |  
|                                                                                            |  |                            |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                  |  | $                          | 19,929  |   |      | $ | 11,229  |  

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



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

1. Basis of Presentation

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

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (the SEC). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The September 30, 2005 condensed consolidated balance sheet is derived from our audited consolidated balance sheet as of
September 30, 2005. 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
fiscal year ended September 30, 2005 included in our Form 10-K, as filed with the SEC. Operating results for the three and nine-month periods ended June 30, 2006 and 2005 are not necessarily indicative of the results that may be expected
for the full fiscal year. In the past, the Company has typically had stronger results in the second half of the fiscal year. However, due to the significant number of acquisitions, the Company believes that its results will tend to be more
consistent quarter-to-quarter, except for the first fiscal quarter, which will continue to have lower results due to the reduced production schedules of many of our OEM customers.

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

New Accounting Pronouncement

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

As of January 1, 2005, the Company adopted SFAS No. 150, which establishes
guidance for how certain financial instruments with characteristics of both liabilities and equity are classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances).
The Company determined that the characteristics of its redeemable preferred stock were such that the securities should be classified as a liability under SFAS No. 150. 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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FastenTech, Inc. and Subsidiaries

2. Inventory

Inventory is comprised of the following:



|                     |  |               |        |   |                    |   |        |  
|-------------------- |  | ------------- | ------ | - | ------------------ | - | ------ | -
|                     |  | June 30, 2006 |        |   | September 30, 2005 |  
|Raw material         |  | $             | 23,593 |   |                    | $ | 23,370 |  
|Work-in-process      |  |               | 30,642 |   |                    |   | 28,834 |  
|Finished goods       |  |               | 37,324 |   |                    |   | 30,027 |  
|Obsolescence reserve |  |               | (3,888 | ) |                    |   | (3,399 | )
|                     |  |               |        |   |                    |   |        |  
|Total inventory (1)  |  | $             | 87,671 |   |                    | $ | 78,832 |  
|                     |  |               |        |   |                    |   |        |  

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|(1) | $6.5 million of the inventory increase relates to businesses acquired after September 30, 2005.
|--- | -----------------------------------------------------------------------------------------------

3. Comprehensive Income (Loss)

Comprehensive income (loss) consists of the following:



|                                        |  |                             |       |      |                            |        |      |  |      |       |  |   |       |  
|--------------------------------------- |  | --------------------------- | ----- | ---- | -------------------------- | ------ | ---- |  | ---- | ----- |  | - | ----- | -
|                                        |  | Three Months Ended June 30, |       |      | Nine Months Ended June 30, |       
|                                        |  | 2006                        |       | 2005 |                            |        | 2006 |  | 2005 |      
|Net income                              |  | $                           | 477   |      | $                          | 669    |      |  | $    | 3,375 |  | $ | 1,810 |  
|Foreign currency translation adjustment |  |                             | 731   |      |                            | (1,268 | )    |  |      | 761   |  |   | (396  | )
|                                        |  |                             |       |      |                            |        |      |  |      |       |  |   |       |  
|Total comprehensive income (loss)       |  | $                           | 1,208 |      | $                          | (599   | )    |  | $    | 4,136 |  | $ | 1,414 |  
|                                        |  |                             |       |      |                            |        |      |  |      |       |  |   |       |  

4. Long-Term Debt

Long-term debt is comprised of the following:



|                                         |  |               |         |                    |   |        
|---------------------------------------- |  | ------------- | ------- | ------------------ | - | -------
|                                         |  | June 30, 2006 |         | September 30, 2005
|Revolving Credit Facility                |  | $             | 131,000 |                    | $ | 99,000 
|Subordinated debt                        |  |               | 3,000   |                    |   | 8,000  
|11.5% Senior Subordinated Notes due 2011 |  |               | 174,000 |                    |   | 175,000
|                                         |  |               |         |                    |   |        
|Total debt                               |  |               | 308,000 |                    |   | 282,000
|Less current portion                     |  |               | 3,000   |                    |   | 5,000  
|                                         |  |               |         |                    |   |        
|Total long-term debt                     |  | $             | 305,000 |                    | $ | 277,000
|                                         |  |               |         |                    |   |        

Effective July 12, 2005, the Company increased the available borrowings under the Credit
Agreement to $170.0 million (subject to certain limits, including borrowing limits under the indenture for the notes) (as amended, the Credit Agreement). Borrowings under the Credit Agreement bear interest at the financial
institutions reference rate as defined therein plus a margin from 1.25% to 2.00% or Eurocurrency (LIBOR) rates as defined therein plus a margin from 2.25% to 3.00% depending on the ratio of current debt to EBITDA as defined therein. At
June 30, 2006 and 2005, the weighted average interest rate for borrowings under the Credit Agreement was approximately 8.25% and 6.0%, respectively. In addition, the Company is required to pay a commitment fee of 0.375% to 0.500% on the average
unused commitment under the Credit Agreement depending on certain financial ratios. The Company had $131.0 million of borrowings under this agreement at June 30, 2006. 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, 2006.

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



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FastenTech, Inc. and Subsidiaries

November 27, 2003 until the notes were registered. Upon the completion of the exchange offer, the obligation to pay the 1% penalty interest rate ceased, and effective April 15, 2005, the interest rate on the
Notes returned to 11.5%. During June 2006, the Company repurchased $1.0 million of Senior Subordinated Notes.

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

5. Acquisitions

Fiscal 2006 Acquisitions

On December 6, 2005, the Company acquired, through its wholly owned subsidiary, Speigelberg Manufacturing, Inc., 100% of the outstanding stock of BNC & Associates, Inc. (BNC) for a purchase
price of approximately $17.3 million including estimated fees and net of a preliminary working capital adjustment. BNC, through its wholly owned operating subsidiary, Stud Welding Associates, Inc. (SWA), manufactures and distributes stud
welded fasteners and systems to a wide array of end markets including the construction, industrial, energy and marine markets. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. The acquisition was
accounted for using the purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair market values at the date of acquisition. The Company is in the
process of obtaining independent appraisals on the intangible assets. Upon completion of the appraisals, the Company will finalize the purchase price allocation. The results of BNC have been included in the Companys Specialized Components
segment. This transaction resulted in a significant business acquisition within the definition provided by the SEC and therefore, separate financial statements have been presented and filed in a Form 8-K with the SEC.

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

Fiscal 2005 Acquisitions

On August 1, 2005, the Company acquired 100% of the members interest of General
Products Aerospace & Defense, LLC (f/k/a General Products Acquisition, LLC) (General Products) for $7.0 million. General Products is a private precision machining, fabrication and finishing manufacturer that precision welds,
fabricates, and machines sheet metal and aluminum, titanium, and other metal alloys into component parts for military, aircraft, and aerospace customers. The Company funded this acquisition with cash on hand and borrowings under the Credit
Agreement. The results of General Products have been included in the Companys Aerospace-grade Components segment. This transaction did not result in a significant business acquisition within the definition provided by the SEC, and therefore,
separate financial statements have not been presented.

On June 30, 2005, the Company acquired, through a newly created subsidiary of
Integrated Energy Technologies, Inc., substantially all of the assets of Ogre Holdings, Inc. (f/k/a Acraline Products, Inc.) (Acraline), for a purchase price of approximately $40.0 million. Acraline is a private manufacturer that
supplies combustion liners, transition ducts, fuel nozzles, flow sleeves, impingement shields, end caps/covers, casings and annular combustors utilized in land based and aerospace gas turbine engines. The Company paid $32.0 million in cash, funded
with cash on hand and borrowings under the Credit Agreement, plus a $5.0 million subordinated discount note due January 3, 2006 and a $3.0 million subordinated note due January 3, 2007. The 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 SEC 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.



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GCE is a private manufacturer that supplies precision fabrications and machined components, such as transition ducts and other combustion system
components, to the turbine engine and aerospace industries. The Company funded the acquisition with cash on hand and borrowings under the Credit Agreement. The results of GCE have been included in the Companys Aerospace-grade Components
segment. This transaction did not result in a significant business acquisition within the definition provided by the SEC and therefore, separate financial statements have not been presented.

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

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

As a result of these transactions, the Companys condensed consolidated results for the periods presented are not directly comparable. Pro forma results of operations for the three and nine months ended
June 30, 2006 and 2005, which assumes the acquisitions were completed as of October 1, 2004 are as follows (in thousands):



|           |  |                             |         |                            |   |         |  |      |         |  |   |        
|---------- |  | --------------------------- | ------- | -------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|           |  | Proforma Results           
|           |  | Three Months Ended June 30, |         | Nine Months Ended June
30,
|           |  | 2006                        |         | 2005                       |   | 2006    |  | 2005
|Revenue    |  | $                           | 105,940 |                            | $ | 101,672 |  | $    | 307,303 |  | $ | 301,066
|           |  |                             |         |                           
|Net income |  | $                           | 477     |                            | $ | 1,268   |  | $    | 3,552   |  | $ | 4,149  

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

6. Sale of Discontinued Product Line

On June 30, 2006, the Company sold the operations of Special Processes of Arizona (SPOA) and recorded a loss of $2.3 million related to
the write-off of fixed assets and goodwill. For the three and nine months ended June 30, 2006, SPOA had revenues of $0.6 and $1.4 million, respectively. For the three and nine months ended June 30, 2006, SPOA had operating losses of $0.2
and $0.5 million, respectively. The results of SPOA are not material and therefore have been included in continuing operations for all periods presented.



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7. Goodwill and Other Intangible Assets

Goodwill and intangible assets consist of the following:



|                                                                         |  |               |         |                   |   |        
|------------------------------------------------------------------------ |  | ------------- | ------- | ----------------- | - | -------
|                                                                         |  | June 30, 2006 |         | September 30,2005
|Goodwill                                                                 |  | $             | 57,838  |                   | $ | 30,957 
|Noncompete agreements                                                    |  |               | 8,741   |                   |   | 2,448  
|Excess purchase price over the value of acquired assets not yet assigned |  |               | 10,487  |                   |   | 59,470 
|Customer lists                                                           |  |               | 24,476  |                   |   | 6,997  
|Unpatented technology                                                    |  |               | 6,368   |                   |   | 1,868  
|Trademark/tradename                                                      |  |               | 2,839   |                   |   | 1,079  
|Distributor relationships                                                |  |               | 3,200   |                   |   | 3,200  
|                                                                         |  |               |         |                   |   |        
|Gross intangible assets                                                  |  |               | 113,949 |                   |   | 106,019
|Accumulated amortization                                                 |  |               | 6,609   |                   |   | 2,725  
|                                                                         |  |               |         |                   |   |        
|Net intangible assets                                                    |  | $             | 107,340 |                   | $ | 103,294
|                                                                         |  |               |         |                   |   |        

The changes in the carrying amount of goodwill as of June 30, 2006 is as follows:



|                             |  |               |        |  
|---------------------------- |  | ------------- | ------ | -
|                             |  | June 30, 2006 |       
|Balance at beginning of year |  | $             | 30,957 |  
|                             | 
|Deductions                   |  |               | (1,461 | )
|                             | 
|Additions                    |  |               | 28,342 |  
|                             |  |               |        |  
|                             |  | $             | 57,838 |  
|                             |  |               |        |  

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



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



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



| |  |  | Unpatented technology  three 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 $10.5 million is currently being reviewed by an independent appraiser to determine if any of this amount can be allocated to any
identifiable intangible assets.

8. Income Taxes

The consolidated effective income tax rate for the fiscal 2006 third quarter was a benefit of 654.7% compared to expense of 65.3% for the same period last year. The consolidated effective income tax rate for the
fiscal 2006 first nine months was 19.7% compared to 60.2% for the same period last year. During the quarter ended June 30, 2006, the Company recorded a tax benefit of $0.8 million related to research and development credits that were received.
Excluding the non-tax deductible interest expense on the redeemable preferred stock, the gain on repurchase of redeemable preferred stock and the tax benefit for the research and development credit, our effective rate would have been 39.0% for the
three and nine months ended June 30, 2006. Excluding the non-tax deductible interest expense on the redeemable preferred stock in the three and nine months ended June 30, 2005, the consolidated effective tax rate would have been 39.1% and
39.0%, respectively.



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9. 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, |  
|                              |  | 2006                        |      |   | 2005                       |   |      | 2006 |  |   | 2005   |  
|Service cost                  |  | $                           | 111  |   |                            | $ | 84   |      |  | $ | 332    |   |  | $ | 251    |  
|Interest cost                 |  |                             | 395  |   |                            |   | 396  |      |  |   | 1,184  |   |  |   | 1,189  |  
|Expected return on assets     |  |                             | (468 | ) |                            |   | (518 | )    |  |   | (1,405 | ) |  |   | (1,553 | )
|Net amortization and deferral |  |                             | 129  |   |                            |   | 227  |      |  |   | 386    |   |  |   | 681    |  
|Plan amendment                |  |                             |     |   |                            |   | 7    |      |  |   |       |   |  |   | 20     |  
|                              |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  
|Net periodic benefit cost     |  | $                           | 167  |   |                            | $ | 196  |      |  | $ | 497    |   |  | $ | 588    |  
|                              |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  

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,
|                          |  | 2006                        |    | 2005                       |   | 2006 |  | 2005
|Service cost              |  | $                           | 30 |                            | $ | 33   |  | $    | 91  |  | $ | 99 
|Interest cost             |  |                             | 62 |                            |   | 70   |  |      | 185 |  |   | 211
|                          |  |                             |    |                            |   |      |  |      |     |  |   |    
|Net periodic benefit cost |  | $                           | 92 |                            | $ | 103  |  | $    | 276 |  | $ | 310
|                          |  |                             |    |                            |   |      |  |      |     |  |   |    

For the nine months ended June 30, 2006, the Company made $0.5 million in pension plan
contributions and expects to contribute a total of $0.9 million for fiscal year 2006.

10. Capital Stock

On February 28, 2006, the Company and certain members of the management of the Company (Management) entered into a certain Securities
Purchase Agreement by which such management members sold approximately 70,790 shares of Company Series B Preferred Stock and Series C Preferred Stock, including all accrued and unpaid dividends thereon, to the Company for an aggregate purchase price
of approximately $1.2 million. These share purchases were individually negotiated and not part of a publicly announced program to purchase Preferred Stock. The Board of Directors of the Company authorized the execution and delivery of the Securities
Purchase Agreement by unanimous written consent dated February 27, 2006.

The participating members of management used the $1.2
million of proceeds from the sale of Company Series B Preferred Stock and Series C Preferred Stock, together with additional cash of approximately $0.2 million provided by such members of management for a total investment of $1.4 million, to
exercise stock options for 141,665 shares of Class A Common Stock of the Company, which had been granted at an exercise price of $10.00 per share pursuant to the Companys stock option plans.

During the quarter ended June 30, 2006, certain members of management exercised stock options for 13,264 shares of Class A Common Stock of the
Company, which had been granted at an exercise price of $10.00 per share pursuant to the Companys stock option plans. Also, during the quarter, a warrant that had been issued to Citicorp Mezzanine Partners, LP in March 2000 was exercised for
62,470 of Class B Common Stock.



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FastenTech, Inc. and Subsidiaries

11. Segment Data

Effective January 1, 2006, Progressive became a part of the Companys
Specialized Components Segment. As a result, Progressive is now aggregated into the Specialized Components segment. The Companys segment reporting has been restated to reflect this change. There were no other changes to the Companys
segment reporting.

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



|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | --------------------------- | ------- | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                          |  | Three Months Ended June 30, |         |   | Nine Months Ended June 30, |  
|                                                                          |  | 2006                        |         |   | 2005                       |   |        | 2006 |  |   | 2005    |  
|Net sales                                                                 |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  | $                           | 49,626  |   |                            | $ | 36,474 |      |  | $ | 146,720 |   |  | $ | 104,320 |  
|Specialized Components                                                    |  |                             | 56,563  |   |                            |   | 47,097 |      |  |   | 156,545 |   |  |   | 131,738 |  
|Eliminations                                                              |  |                             | (249    | ) |                            |   | (33    | )    |  |   | (373    | ) |  |   | (108    | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total net sales                                                           |  | $                           | 105,940 |   |                            | $ | 83,538 |      |  | $ | 302,892 |   |  | $ | 235,950 |  
|Income before income tax expense                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA:                                                                   |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  | $                           | 9,053   |   |                            | $ | 7,702  |      |  | $ | 27,946  |   |  | $ | 21,226  |  
|Specialized Components                                                    |  |                             | 9,730   |   |                            |   | 7,101  |      |  |   | 24,239  |   |  |   | 19,680  |  
|Unallocated corporate operating expenses                                  |  |                             | (2,108  | ) |                            |   | (1,825 | )    |  |   | (6,004  | ) |  |   | (5,602  | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA(1)                                                                 |  |                             | 16,675  |   |                            |   | 12,978 |      |  |   | 46,181  |   |  |   | 35,304  |  
|Depreciation and amortization                                             |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  |                             | 3,302   |   |                            |   | 1,692  |      |  |   | 8,775   |   |  |   | 4,361   |  
|Specialized Components                                                    |  |                             | 1,806   |   |                            |   | 1,682  |      |  |   | 5,237   |   |  |   | 5,092   |  
|Corporate                                                                 |  |                             | 39      |   |                            |   | 18     |      |  |   | 116     |   |  |   | 53      |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Depreciation and amortization                                             |  |                             | 5,147   |   |                            |   | 3,392  |      |  |   | 14,128  |   |  |   | 9,506   |  
|Excess of fair value assigned to inventory included in cost of goods sold |  |                             | (12     | ) |                            |   |       |      |  |   | (1,284  | ) |  |   |        |  
|Severance expense / restructuring included in SG&A                        |  |                             | (45     | ) |                            |   | (216   | )    |  |   | (135    | ) |  |   | (216    | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total operating income                                                    |  |                             | 11,471  |   |                            |   | 9,370  |      |  |   | 30,634  |   |  |   | 25,582  |  
|Interest expense  long term debt                                         |  |                             | (8,269  | ) |                            |   | (6,426 | )    |  |   | (24,064 | ) |  |   | (19,038 | )
|Interest expense  redeemable preferred stock                             |  |                             | (703    | ) |                            |   | (1,290 | )    |  |   | (2,183  | ) |  |   | (2,465  | )
|Loss on sale of discontinued product line                                 |  |                             | (2,308  | ) |                            |   |       |      |  |   | (2,308  | ) |  |   |        |  
|Gain on repurchase of redeemable preferred stock                          |  |                             |        |   |                            |   |       |      |  |   | 2,210   |   |  |   |        |  
|Other, net                                                                |  |                             | (277    | ) |                            |   | 274    |      |  |   | (85     | ) |  |   | 464     |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense                                          |  | $                           | (86     | ) |                            | $ | 1,928  |      |  | $ | 4,204   |   |  | $ | 4,543   |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net Income                                                                |  | $                           | 477     |   |                            | $ | 669    |      |  | $ | 3,375   |   |  | $ | 1,810   |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  

---

|(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, 2006 |         | September 30, 2005
|Assets                     |  |               |         |                    |   |        
|Aerospace-grade Components |  | $             | 216,654 |                    | $ | 214,722
|Specialized Components(1)  |  |               | 158,861 |                    |   | 135,055
|Corporate assets           |  |               | 9,157   |                    |   | 7,612  
|                           |  |               |         |                    |   |        
|Total consolidated assets  |  | $             | 384,672 |                    | $ | 357,389
|                           |  |               |         |                    |   |        

---

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



|                                                |  |                            |       |      |   |       
|----------------------------------------------- |  | -------------------------- | ----- | ---- | - | ------
|                                                |  | Nine months ended June 30,
|                                                |  | 2006                       |       | 2005
|Expenditures for property, plant and equipment  |  |                            |       |      |   |       
|Aerospace-grade Components                      |  | $                          | 3,799 |      | $ | 6,229 
|Specialized Components                          |  |                            | 2,625 |      |   | 4,294 
|Corporate                                       |  |                            | 42    |      |   | 14    
|                                                |  |                            |       |      |   |       
|Consolidated expenditures for long-lived assets |  | $                          | 6,466 |      | $ | 10,537
|                                                |  |                            |       |      |   |       

12. 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, 2006, 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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12. Consolidating Guarantor and Non-Guarantor Financial Information

(continued)

Consolidating Balance Sheet

(Unaudited)

June 30, 2006



|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|----------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ----------------- | -------- | - |  | - | ------- | -
|                                                                  |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |         
|Assets                                                            |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current assets:                                                   |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Cash and cash equivalents                                         |  | $               | 2,713   |   |                       | $ | 10,127                    |  | $            | 7,089  |  | $                 |         |   |  | $ | 19,929  |  
|Accounts receivable, net                                          |  |                 | 14      |   |                       |   | 56,079                    |  |              | 8,581  |  |                   | (1,756   | ) |  |   | 62,918  |  
|Inventory                                                         |  |                 |        |   |                       |   | 80,445                    |  |              | 7,812  |  |                   | (586     | ) |  |   | 87,671  |  
|Income tax receivable                                             |  |                 | 6,485   |   |                       |   |                          |  |              |       |  |                   | (6,485   | ) |  |   |        |  
|Deferred income taxes                                             |  |                 | 328     |   |                       |   | 1,879                     |  |              | 11     |  |                   | 27       |   |  |   | 2,245   |  
|Other                                                             |  |                 | 1,107   |   |                       |   | 1,916                     |  |              | 390    |  |                   |         |   |  |   | 3,413   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current assets                                              |  |                 | 10,647  |   |                       |   | 150,446                   |  |              | 23,883 |  |                   | (8,800   | ) |  |   | 176,176 |  
|                                                                  |  |                 |         |   |                      
|Investment in consolidated subsidiaries                           |  |                 | 47,794  |   |                       |   | 15,435                    |  |              | 22,388 |  |                   | (85,617  | ) |  |   |        |  
|Goodwill, net                                                     |  |                 | (389    | ) |                       |   | 107,281                   |  |              | 363    |  |                   | 85       |   |  |   | 107,340 |  
|Property, plant, and equipment, net                               |  |                 | 268     |   |                       |   | 82,295                    |  |              | 8,296  |  |                   |         |   |  |   | 90,859  |  
|Deferred income taxes                                             |  |                 |        |   |                       |   | 1,145                     |  |              |       |  |                   | (1,052   | ) |  |   | 93      |  
|Due from affiliates                                               |  |                 | 248,894 |   |                       |   |                          |  |              |       |  |                   | (248,894 | ) |  |   |        |  
|Other assets                                                      |  |                 | 7,079   |   |                       |   | 1,827                     |  |              | 1,298  |  |                   |         |   |  |   | 10,204  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total assets                                                      |  | $               | 314,293 |   |                       | $ | 358,429                   |  | $            | 56,228 |  | $                 | (344,278 | ) |  | $ | 384,672 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Liabilities and stockholders equity (deficiency in assets)       |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Current liabilities:                                              |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Accounts payable                                                  |  | $               | 1,427   |   |                       | $ | 34,588                    |  | $            | 3,167  |  | $                 | (1,769   | ) |  | $ | 37,413  |  
|Income taxes payable                                              |  |                 |        |   |                       |   | 9,866                     |  |              | 1,215  |  |                   | (9,040   | ) |  |   | 2,041   |  
|Accrued interest payable                                          |  |                 | 4,098   |   |                       |   | 128                       |  |              |       |  |                   |         |   |  |   | 4,226   |  
|Other accrued liabilities                                         |  |                 | 798     |   |                       |   | 10,787                    |  |              | 1,440  |  |                   |         |   |  |   | 13,025  |  
|Current portion of long-term debt                                 |  |                 |        |   |                       |   | 3,000                     |  |              |       |  |                   |         |   |  |   | 3,000   |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total current liabilities                                         |  |                 | 6,323   |   |                       |   | 58,369                    |  |              | 5,822  |  |                   | (10,809  | ) |  |   | 59,705  |  
|                                                                  |  |                 |         |   |                      
|Long-term debt                                                    |  |                 | 305,000 |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 305,000 |  
|Deferred income taxes                                             |  |                 | 243     |   |                       |   |                          |  |              | 754    |  |                   | (997     | ) |  |   |        |  
|Redeemable Preferred Stock                                        |  |                 | 10,992  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 10,992  |  
|Preferred stock dividends payable                                 |  |                 | 16,690  |   |                       |   |                          |  |              |       |  |                   |         |   |  |   | 16,690  |  
|Due to affiliates                                                 |  |                 |        |   |                       |   | 244,849                   |  |              | 1,112  |  |                   | (245,961 | ) |  |   |        |  
|Other long-term liabilities                                       |  |                 | 500     |   |                       |   | 15,386                    |  |              | 1,854  |  |                   |         |   |  |   | 17,740  |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities                                                 |  |                 | 339,748 |   |                       |   | 318,604                   |  |              | 9,542  |  |                   | (257,767 | ) |  |   | 410,127 |  
|                                                                  |  |                 |         |   |                      
|Stockholders equity (deficiency in assets)                       |  |                 | (25,455 | ) |                       |   | 39,825                    |  |              | 46,686 |  |                   | (86,511  | ) |  |   | (25,455 | )
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficiency in assets) |  | $               | 314,293 |   |                       | $ | 358,429                   |  | $            | 56,228 |  | $                 | (344,278 | ) |  | $ | 384,672 |  
|                                                                  |  |                 |         |   |                       |   |                           |  |              |        |  |                   |          |   |  |   |         |  



12



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. Consolidating Guarantor and Non-Guarantor Financial Information

(continued)

Consolidating Statement of Operations

(Unaudited)

Three Months Ended June 30,
2006



|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|--------------------------------------------- |  | --------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | ------------ | ------ |  | ----------------- | ------ | - |  | - | ------- | -
|                                              |  | FastenTech,Inc. |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  | Eliminations |        |  | ConsolidatedTotal |       
|Net sales                                     |  | $               |       |   |                       | $ | 100,422 |                           |  | $            | 11,748 |  | $                 | (6,230 | ) |  | $ | 105,940 |  
|Cost of sales                                 |  |                 |       |   |                       |   | 74,861  |                           |  |              | 8,390  |  |                   | (6,230 | ) |  |   | 77,021  |  
|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|Gross profit                                  |  |                 |       |   |                       |   | 25,561  |                           |  |              | 3,358  |  |                   |       |   |  |   | 28,919  |  
|                                              |  |                 |        |   |                      
|Selling, general, and administrative expenses |  |                 | 2,148  |   |                       |   | 12,867  |                           |  |              | 2,433  |  |                   |       |   |  |   | 17,448  |  
|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|Operating income                              |  |                 | (2,148 | ) |                       |   | 12,694  |                           |  |              | 925    |  |                   |        |   |  |   | 11,471  |  
|                                              |  |                 |        |   |                      
|Other income (expense):                       |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|Interest expense  long term debt             |  |                 | (8,237 | ) |                       |   | (32     | )                         |  |              |       |  |                   |       |   |  |   | (8,269  | )
|Interest expense  redeemable preferred stock |  |                 | (703   | ) |                       |   |        |                           |  |              |       |  |                   |       |   |  |   | (703    | )
|Loss related to discontinued product line     |  |                 |       |   |                       |   | (2,308  | )                         |  |              |       |  |                   |       |   |  |   | (2,308  | )
|Other, net                                    |  |                 | 9,394  |   |                       |   | (9,692  | )                         |  |              | 22     |  |                   | (1     | ) |  |   | (277    | )
|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|Income (loss) before income tax expense       |  |                 | (1,694 | ) |                       |   | 662     |                           |  |              | 947    |  |                   | (1     | ) |  |   | (86     | )
|Income tax expense (benefit)                  |  |                 | (1,299 | ) |                       |   | 354     |                           |  |              | 301    |  |                   | 81     |   |  |   | (563    | )
|Equity in earnings of affiliates              |  |                 | 872    |   |                       |   |        |                           |  |              |       |  |                   | (872   | ) |  |   |        |  
|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  
|Net (loss) income                             |  | $               | 477    |   |                       | $ | 308     |                           |  | $            | 646    |  | $                 | (954   | ) |  | $ | 477     |  
|                                              |  |                 |        |   |                       |   |         |                           |  |              |        |  |                   |        |   |  |   |         |  



13



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. Consolidating Guarantor and Non-Guarantor Financial Information

(continued)

Consolidating Statement of Operations

(Unaudited)

Nine Months Ended June 30,
2006



|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|------------------------------------------------ |  | --------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | ------- | -
|                                                 |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | ConsolidatedTotal |        
|Net sales                                        |  | $               |        |   |                       | $ | 269,495 |                           |  | $ | 48,371       |   |  | $                 | (14,974 | ) |  | $ | 302,892 |  
|Cost of sales                                    |  |                 |        |   |                       |   | 207,125 |                           |  |   | 32,657       |   |  |                   | (14,974 | ) |  |   | 224,808 |  
|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|Gross profit                                     |  |                 |        |   |                       |   | 62,370  |                           |  |   | 15,714       |   |  |                   |        |   |  |   | 78,084  |  
|                                                 |  |                 |         |   |                      
|Selling, general, and administrative expenses    |  |                 | 6,361   |   |                       |   | 30,210  |                           |  |   | 10,879       |   |  |                   |        |   |  |   | 47,450  |  
|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|Operating income                                 |  |                 | (6,361  | ) |                       |   | 32,160  |                           |  |   | 4,835        |   |  |                   |         |   |  |   | 30,634  |  
|                                                 |  |                 |         |   |                      
|Other income (expense):                          |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|Interest expense  long term debt                |  |                 | (23,968 | ) |                       |   | (96     | )                         |  |   |             |   |  |                   |        |   |  |   | (24,064 | )
|Interest expense  redeemable preferred stock    |  |                 | (2,183  | ) |                       |   |        |                           |  |   |             |   |  |                   |        |   |  |   | (2,183  | )
|Gain on repurchase of redeemable preferred stock |  |                 | 2,210   |   |                       |   |        |                           |  |   |             |   |  |                   |        |   |  |   | 2,210   |  
|Loss related to discontinued product line        |  |                 |        |   |                       |   | (2,308  | )                         |  |   |             |   |  |                   |        |   |  |   | (2,308  | )
|Other, net                                       |  |                 | 27,834  |   |                       |   | (25,566 | )                         |  |   | (2,351       | ) |  |                   | (2      | ) |  |   | (85     | )
|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|Income (loss) before income tax expense          |  |                 | (2,468  | ) |                       |   | 4,190   |                           |  |   | 2,484        |   |  |                   | (2      | ) |  |   | 4,204   |  
|Income tax expense (benefit)                     |  |                 | (1,949  | ) |                       |   | 1,766   |                           |  |   | 784          |   |  |                   | 228     |   |  |   | 829     |  
|Equity in earnings of affiliates                 |  |                 | 3,894   |   |                       |   |        |                           |  |   |             |   |  |                   | (3,894  | ) |  |   |        |  
|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  
|Net (loss) income                                |  | $               | 3,375   |   |                       | $ | 2,424   |                           |  | $ | 1,700        |   |  | $                 | (4,124  | ) |  | $ | 3,375   |  
|                                                 |  |                 |         |   |                       |   |         |                           |  |   |              |   |  |                   |         |   |  |   |         |  



14



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. Consolidating Guarantor and Non-Guarantor Financial Information

(continued)

Condensed Consolidating Statement of Cash Flows

(Unaudited)

Nine Months Ended June 30,
2006



|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|----------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ----------------- | - | - |  | - | ------- | -
|                                                      |  | FastenTech,Inc. |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | ConsolidatedTotal |  
|Operating activities                                  |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash flows (used in) provided by operating activities |  | $               | (11,756 | ) |                       | $ | 25,806  |                           |  | $ | 1,922        |   |                   | $ |  |  | $ | 15,972  |  
|                                                      |  |                 |         |   |                      
|Investing activities                                  |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired      |  |                 | (43     | ) |                       |   | (20,867 | )                         |  |   |             |   |                   |   |  |  |   | (20,910 | )
|Additions to property, plant, and equipment           |  |                 |        |   |                       |   | (5,695  | )                         |  |   | (771         | ) |                   |   |  |  |   | (6,466  | )
|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities                 |  |                 | (43     | ) |                       |   | (26,562 | )                         |  |   | (771         | ) |                   |   |  |  |   | (27,376 | )
|                                                      |  |                 |         |   |                      
|Financing activities                                  |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net borrowings under revolver                         |  |                 | 32,000  |   |                       |   |        |                           |  |   |             |   |                   |   |  |  |   | 32,000  |  
|Repurchase of senior subordinated notes               |  |                 | (1,000  | ) |                       |   |        |                           |  |   |             |   |                   |   |   |  |   | (1,000  | )
|Payment of subordinated notes                         |  |                 |        |   |                       |   | (3,500  | )                         |  |   |             |   |                   |   |   |  |   | (3,500  | )
|Repurchase of common and preferred stock              |  |                 | (8,307  | ) |                       |   |        |                           |  |   |             |   |                   |   |  |  |   | (8,307  | )
|Intercompany loans and advances                       |  |                 | (9,071  | ) |                       |   | 8,728   |                           |  |   | 343          |   |                   |   |  |  |   |        |  
|Other, net                                            |  |                 |        |   |                       |   | 337     |                           |  |   |             |   |                   |   |  |  |   | 337     |  
|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash provided by financing activities             |  |                 | 13,622  |   |                       |   | 5,565   |                           |  |   | 343          |   |                   |   |  |  |   | 19,530  |  
|Effect of exchange rate fluctuations on cash          |  |                 |        |   |                       |   |        |                           |  |   | 73           |   |                   |   |  |  |   | 73      |  
|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net increase in cash and cash equivalents             |  |                 | 1,823   |   |                       |   | 4,809   |                           |  |   | 1,567        |   |                   |   |  |  |   | 8,199   |  
|Cash and cash equivalents at beginning of period      |  |                 | 890     |   |                       |   | 5,318   |                           |  |   | 5,522        |   |                   |   |  |  |   | 11,730  |  
|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period            |  | $               | 2,713   |   |                       | $ | 10,127  |                           |  | $ | 7,089        |   |                   | $ |  |  | $ | 19,929  |  
|                                                      |  |                 |         |   |                       |   |         |                           |  |   |              |   |                   |   |   |  |   |         |  



15



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. Consolidating Guarantor and Non-Guarantor Financial Information

(continued)

Consolidating Balance Sheet

September 30, 2005



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



16



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. 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                                     |  | $               |       |   |                       | $ | 68,193 |                           |  | $            | 22,624 |  | $                 | (7,279 | ) |  | $ | 83,538 |  
|Cost of sales                                 |  |                 |       |   |                       |   | 54,412 |                           |  |              | 15,442 |  |                   | (7,279 | ) |  |   | 62,575 |  
|                                              |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Gross profit                                  |  |                 |       |   |                       |   | 13,781 |                           |  |              | 7,182  |  |                   |       |   |  |   | 20,963 |  
|                                              |  |                 |        |   |                      
|Selling, general, and administrative expenses |  |                 | 1,843  |   |                       |   | 4,623  |                           |  |              | 4,911  |  |                   |       |   |  |   | 11,377 |  
|Restructuring and nonrecurring charges        |  |                 |       |   |                       |   | 216    |                           |  |              |       |  |                   |       |   |  |   | 216    |  
|                                              |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Operating income                              |  |                 | (1,843 | ) |                       |   | 8,942  |                           |  |              | 2,271  |  |                   |       |   |  |   | 9,370  |  
|                                              |  |                 |        |   |                      
|Other income (expense):                       |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Interest expense  long term debt             |  |                 | (1,290 | ) |                       |   |       |                           |  |              |       |  |                   |       |   |  |   | (1,290 | )
|Interest expense  redeemable preferred stock |  |                 | (6,426 | ) |                       |   |       |                           |  |              |       |  |                   |       |   |  |   | (6,426 | )
|Other, net                                    |  |                 | 7,110  |   |                       |   | (6,926 | )                         |  |              | 46     |  |                   | 44     |   |  |   | 274    |  
|                                              |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|(Loss) income before income tax expense       |  |                 | (2,449 | ) |                       |   | 2,016  |                           |  |              | 2,317  |  |                   | 44     |   |  |   | 1,928  |  
|Income tax (benefit) expense                  |  |                 | (387   | ) |                       |   | 754    |                           |  |              | 812    |  |                   | 80     |   |  |   | 1,259  |  
|Equity in earnings of affiliates              |  |                 | 2,731  |   |                       |   |       |                           |  |              |       |  |                   | (2,731 | ) |  |   |       |  
|                                              |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  
|Net (loss) income                             |  | $               | 669    |   |                       | $ | 1,262  |                           |  | $            | 1,505  |  | $                 | (2,767 | ) |  | $ | 669    |  
|                                              |  |                 |        |   |                       |   |        |                           |  |              |        |  |                   |        |   |  |   |        |  



17



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##### Table of Contents

12. 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                                     |  | $               |        |   |                       | $ | 213,637 |                           |  | $            | 33,309 |  | $                 | (10,996 | ) |  | $ | 235,950 |  
|Cost of sales                                 |  |                 |        |   |                       |   | 164,816 |                           |  |              | 22,825 |  |                   | (10,996 | ) |  |   | 176,645 |  
|                                              |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  
|Gross profit                                  |  |                 |         |   |                       |   | 48,821  |                           |  |              | 10,484 |  |                   |        |   |  |   | 59,305  |  
|                                              |  |                 |         |   |                      
|Selling, general, and administrative expenses |  |                 | 5,656   |   |                       |   | 20,552  |                           |  |              | 7,299  |  |                   |        |   |  |   | 33,507  |  
|Restructuring and nonrecurring charges        |  |                 |        |   |                       |   | 216     |                           |  |              |       |  |                   |        |   |  |   | 216     |  
|                                              |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  
|Operating income                              |  |                 | (5,656  | ) |                       |   | 28,053  |                           |  |              | 3,185  |  |                   |        |   |  |   | 25,582  |  
|                                              |  |                 |         |   |                      
|Other income (expense):                       |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  
|Interest expense  long term debt             |  |                 | (2,465  | ) |                       |   |        |                           |  |              |       |  |                   |        |   |  |   | (2,465  | )
|Interest expense  redeemable preferred stock |  |                 | (19,038 | ) |                       |   |        |                           |  |              |       |  |                   |        |   |  |   | (19,038 | )
|Other, net                                    |  |                 | 20,169  |   |                       |   | (19,776 | )                         |  |              | 86     |  |                   | (15     | ) |  |   | 464     |  
|                                              |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  
|(Loss) income before income tax expense       |  |                 | (6,990  | ) |                       |   | 8,277   |                           |  |              | 3,271  |  |                   | (15     | ) |  |   | 4,543   |  
|Income tax (benefit) expense                  |  |                 | (1,774  | ) |                       |   | 3,276   |                           |  |              | 1,130  |  |                   | 101     |   |  |   | 2,733   |  
|Equity in earnings of affiliates              |  |                 | 7,026   |   |                       |   |        |                           |  |              |       |  |                   | (7,026  | ) |  |   |        |  
|                                              |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  
|Net (loss) income                             |  | $               | 1,810   |   |                       | $ | 5,001   |                           |  | $            | 2,141  |  | $                 | (7,142  | ) |  | $ | 1,810   |  
|                                              |  |                 |         |   |                       |   |         |                           |  |              |        |  |                   |         |   |  |   |         |  



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##### Table of Contents

FastenTech, Inc. and Subsidiaries

12. 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 |  | $               | (19,618 | ) |                       | $ | 8,553  |                           |  | $ | (1,054       | ) |                   | $ |  |  | $ | (12,119 | )
|                                                      |  |                 |         |   |                      
|Investing activities                                  |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash used for acquisitions, net of cash acquired      |  |                 | (78,261 | ) |                       |   |       |                           |  |   |             |   |                   |   |  |  |   | (78,261 | )
|Additions to property, plant, and equipment           |  |                 | (14     | ) |                       |   | (9,417 | )                         |  |   | (1,106       | ) |                   |   |  |  |   | (10,537 | )
|                                                      |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net cash used in investing activities                 |  |                 | (78,275 | ) |                       |   | (9,417 | )                         |  |   | (1,106       | ) |                   |   |  |  |   | (88,798 | )
|                                                      |  |                 |         |   |                      
|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             |  |                 | 78,227  |   |                       |   | 2,341  |                           |  |   | 2,320        |   |                   |   |  |  |   | 82,888  |  
|Effect of exchange rate fluctuations on cash          |  |                 |        |   |                       |   |       |                           |  |   | 36           |   |                   |   |  |  |   | 36      |  
|                                                      |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents  |  |                 | (19,666 | ) |                       |   | 1,477  |                           |  |   | 196          |   |                   |   |  |  |   | (17,993 | )
|Cash and cash equivalents at beginning of period      |  |                 | 21,110  |   |                       |   | 4,368  |                           |  |   | 3,341        |   |                   |   |  |  |   | 29,222  |  
|                                                      |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  
|Cash and cash equivalents at end of period            |  | $               | 1,444   |   |                       | $ | 5,845  |                           |  | $ | 3,537        |   |                   | $ |  |  | $ | 11,229  |  
|                                                      |  |                 |         |   |                       |   |        |                           |  |   |              |   |                   |   |   |  |   |         |  



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##### Table of Contents

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

Forward-Looking
Statements

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

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



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##### Table of Contents

Executive Overview

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

Our condensed consolidated results of operations for the three and nine-month periods ended June 30, 2006 and 2005 include
the acquisitions of various operations and, therefore, are not directly comparable. See Note 5 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information. Based upon information provided to us by the sellers of
the companies we acquired, we estimate that our pro forma sales and earnings before interest, taxes, depreciation and amortization, assuming these transactions occurred at the beginning of each respective period were as follows:



|          |  |                            |         |                            |   |         |  |      |         |  |   |        
|--------- |  | -------------------------- | ------- | -------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|          |  | Proforma Results          
|          |  | Three Months EndedJune 30, |         | Nine Months Ended June 30,
|          |  | 2006                       |         | 2005                       |   | 2006    |  | 2005
|Net sales |  | $                          | 105,940 |                            | $ | 101,672 |  | $    | 307,303 |  | $ | 301,066
|          |  |                            |         |                           
|EBITDA    |  | $                          | 16,675  |                            | $ | 16,254  |  | $    | 46,868  |  | $ | 47,567 

Sales for the fiscal third quarter of 2006, inclusive of acquisitions, were up 26.8% over the same
period last year to $105.9 million. Operating income for the fiscal 2006 third quarter, inclusive of acquisitions, was $11.5 million compared to $9.4 million for the same period last year.

Sales for the first nine months of fiscal 2006, inclusive of acquisitions, were up 28.4% over the same period last year to $302.9 million. Operating
income for the first nine months of fiscal 2006, inclusive of acquisitions, was $30.6 million compared to $25.6 million for the same period last year. Net cash provided by operating activities was $16.0 million for the first nine months of fiscal
2006 compared to a use of $12.1 million in the same period for the prior year.

Overall, we continue to benefit from the positive trends in
our customers end markets and an increasing demand for their products. However, as we expected, lower demand for military tracked vehicle components in the first nine months of fiscal 2006 impacted organic sales growth in our Aerospace-grade
segment. Although we expect this trend to continue through fiscal 2006, we expect an improved order backlog for gas turbine components, particularly for our OEM customers maintenance, repairs, and overhaul, which is up 24.1% from a year-ago,
to mitigate the decline. In our Specialized Components segment, improved demand across nearly all our product lines drove our organic revenue growth for these segments higher for the first nine months of fiscal 2006 compared to the same period of
the prior year. This, too, is a trend we expect to continue through fiscal 2006.

During February 2006, we had a fire at one of our
manufacturing plants in the Specialized Components segment and have recorded an immaterial loss during the first nine months of fiscal 2006. We expect to recognize a gain of between $0.5 million and $1.0 million during the fiscal 2006 fourth quarter
when we receive expected insurance proceeds for business interruption expenses. The fire had a minimal effect on our operations and financial performance.



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##### Table of Contents

RESULTS OF OPERATIONS

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

Consolidated Reported Results



|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------ |  | ------------------------- | ------- | - | ------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                 |  | Three Months EndedJune 30 |         |   | Nine Months EndedJune 30 |  
|(Dollars in thousands)                           |  | 2006                      |         |   | 2005                     |   |        | 2006 |  |   | 2005    |  
|Net sales                                        |  | $                         | 105,940 |   |                          | $ | 83,538 |      |  | $ | 302,892 |   |  | $ | 235,950 |  
|Cost of sales                                    |  |                           | 77,021  |   |                          |   | 62,575 |      |  |   | 224,808 |   |  |   | 176,645 |  
|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Gross profit                                     |  |                           | 28,919  |   |                          |   | 20,963 |      |  |   | 78,084  |   |  |   | 59,305  |  
|Gross profit margin                              |  |                           | 27.3    | % |                          |   | 25.1   | %    |  |   | 25.8    | % |  |   | 25.1    | %
|                                                 |  |                           |         |  
|Selling, general, and administrative expenses    |  |                           | 15,700  |   |                          |   | 11,178 |      |  |   | 43,511  |   |  |   | 32,699  |  
|As a percent of sales                            |  |                           | 14.8    | % |                          |   | 13.4   | %    |  |   | 14.4    | % |  |   | 13.9    | %
|                                                 |  |                           |         |  
|Restructuring charges                            |  |                           |        |   |                          |   | 216    |      |  |   |        |   |  |   | 216     |  
|Intangible asset amortization                    |  |                           | 1,748   |   |                          |   | 199    |      |  |   | 3,939   |   |  |   | 808     |  
|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                 |  |                           | 11,471  |   |                          |   | 9,370  |      |  |   | 30,634  |   |  |   | 25,582  |  
|                                                 |  |                           |         |  
|Other income (expense):                          |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Interest expense  long term debt                |  |                           | (8,269  | ) |                          |   | (6,426 | )    |  |   | (24,064 | ) |  |   | (19,038 | )
|Interest expense  redeemable preferred stock    |  |                           | (703    | ) |                          |   | (1,290 | )    |  |   | (2,183  | ) |  |   | (2,465  | )
|Gain on repurchase of redeemable preferred stock |  |                           |        |   |                          |   |       |      |  |   | 2,210   |   |  |   |        |  
|Loss on sale of discontinued product line        |  |                           | (2,308  | ) |                          |   |       |      |  |   | (2,308  | ) |  |   |        |  
|Other, net                                       |  |                           | (277    | ) |                          |   | 274    |      |  |   | (85     | ) |  |   | 464     |  
|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense (benefit)       |  |                           | (86     | ) |                          |   | 1,928  |      |  |   | 4,204   |   |  |   | 4,543   |  
|Income tax expense (benefit)                     |  |                           | (563    | ) |                          |   | 1,259  |      |  |   | 829     |   |  |   | 2,733   |  
|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Net income                                       |  | $                         | 477     |   |                          | $ | 669    |      |  | $ | 3,375   |   |  | $ | 1,810   |  
|                                                 |  |                           |         |   |                          |   |        |      |  |   |         |   |  |   |         |  
|Capital expenditures                             |  | $                         | 2,819   |   |                          | $ | 6,466  |      |  | $ | 3,076   |   |  | $ | 10,537  |  
|                                                 |  |                           |         |  
|Depreciation and amortization                    |  | $                         | 5,147   |   |                          | $ | 3,389  |      |  | $ | 14,128  |   |  | $ | 9,503   |  

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

Net sales. For the fiscal quarter ended June 30, 2006, net sales increased 26.8%, or $22.4 million, which
included a net sales increase of 36.0% in our Aerospace-grade Components segment and 20.1% in our Specialized Components segment. The fiscal third quarter of 2006 benefited from acquisitions made after the beginning of the fiscal third quarter of
2005, which had a favorable impact on consolidated net sales of 25.3%. In addition, we had organic consolidated sales growth of 1.6%, which excludes a 0.1% unfavorable impact of foreign currency fluctuations in the Specialized Components segment.

Gross profit. Gross profit margins were 27.3% and 25.1% for the third quarters of fiscal 2006 and 2005, respectively. The increase
reflects favorable sales mix and higher sales volumes in both segments.



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##### Table of Contents

Selling, general and administrative expenses (SG&A).For the fiscal 2006 third quarter,
SG&A expenses, excluding intangible asset amortization, increased $4.5 million to $15.7 million, from $11.2 million for the comparable fiscal 2005 period. The increase was due primarily to acquisitions completed after the beginning of the fiscal
2005 third quarter. SG&A expenses of acquired companies included in the third quarter of fiscal 2006 that were not included in the same period of fiscal 2005 were approximately $2.9 million. The remaining difference relates to higher wages and
volume related expenses, primarily higher commissions.

Interest expense  long term debt, net.For the fiscal 2006 third
quarter, net interest expense on long term debt increased 28.7%, or $1.8 million, compared to the fiscal 2005 third quarter, primarily due to higher average debt balances. Our average debt balance in the fiscal 2006 third quarter was $309.0 million
compared to $242.0 million in the fiscal 2005 third quarter, while the weighted average interest rate incurred, including the amortization of debt issuance costs, was 10.7% compared to 10.6% for the third quarters of fiscal 2006 and 2005,
respectively. Under a registration rights agreement between us and the initial purchasers of our 11.5% Senior Subordinated Notes due May 2011, we were required to complete an exchange offer and register the issuance of the notes under the Securities
Act of 1933. We completed the exchange offer on April 14, 2005. Prior to completing the exchange offer, the interest rate on the notes increased at a rate of 0.25% for each 90-day period beginning November 27, 2003 until the notes were
registered. For the fiscal 2006 third quarter, the annualized interest rate on these notes was 11.5% compared to 11.7% for the fiscal 2005 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 record any tax benefit in connection with the interest expense on the redeemable preferred stock because payment of the related
preferred dividend is not tax-deductible.

Loss on sale of discontinued product line.During the third fiscal quarter of 2006, we
recorded a non-cash loss of $2.3 million related to a discontinued product line. Refer to Note 6 in our Notes to Condensed Consolidated Financial Statements for further information.

Income tax expense (benefit).The consolidated effective income tax rate for the fiscal 2006 third quarter was a benefit of 654.7% compared to an
expense of 65.3% for the same period last year. During the quarter ended June 30, 2006, we recorded a tax benefit of $0.8 million related to research and development credits that were received. Excluding the non-tax deductible interest expense
on the redeemable preferred stock and the tax benefit related to the research and development credits for the third quarter of fiscal 2006, our effective rate would have been 39.0% and 39.1% for the third quarter of fiscal 2006 and 2005,
respectively. We expect our consolidated effective tax rate for fiscal 2006 to be between 37% and 41%, depending on results of foreign operations. We expect our effective tax rate, excluding the non-deductible interest expense on our preferred
stock, will be between 32% and 35% for fiscal 2006, depending on results of foreign operations.

Consolidated Results of Operations: Nine Months
Ended June 30, 2006 Compared to June 30, 2005

Net sales. For the nine months ended June 30, 2006, net sales
increased 28.4%, or $66.9 million, which included a net sales increase of 40.6% in our Aerospace-grade Components segment and 18.8% in our Specialized Components segment. The first nine months of 2006 benefited from acquisitions made after the
beginning of fiscal 2005, which had a favorable impact on consolidated net sales of 26.9%. In addition, we had organic consolidated sales growth of 2.3%, which excludes a 0.8% unfavorable impact of foreign currency fluctuations in the Specialized
Components segment.

Gross profit. Gross profit margins were 25.8% and 25.1% for the first nine months of fiscal 2006 and 2005,
respectively. Gross profit for the first nine months of fiscal 2006 was negatively impacted by a non-cash charge of $1.3 million for the excess of fair value assigned to inventory related to the acquisition of BNC. Excluding this item, gross profit
for the first nine months of fiscal 2006 would have been 26.2%. The increase reflects higher sales volumes in both segments.



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Selling, general and administrative expenses (SG&A).For the fiscal 2006 first nine months,
SG&A expenses, excluding intangible asset amortization, increased $10.8 million to $43.5 million, from $32.7 million for the comparable fiscal 2005 period. The increase was due primarily to acquisitions completed after the beginning of the
fiscal 2005 nine-month period. SG&A expenses of acquired companies included in the first nine months of fiscal 2006 that were not included in the same period of fiscal 2005 were approximately $8.3 million. The remaining difference relates to
higher wages and volume related expenses, primarily higher commissions. In addition, we recorded approximately $0.3 million of expenses associated with unconsummated strategic transactions during the first nine months of fiscal 2006.

Interest expense  long term debt, net.For the nine months ended June 30, 2006, net interest expense on long term debt increased 26.4%,
or $5.0 million, compared to the nine months ended June 30, 2005, primarily due to higher average debt balances. Our average debt balance in the nine months ended June 30, 2006 was $295.0 million compared to $221.0 million in the same
period of fiscal 2005, while the weighted average interest rate incurred, including the amortization of debt issuance costs, was 10.9% compared to 11.5% for the first nine months of fiscal 2006 and 2005, respectively. This decrease in weighted
average interest rates relates to the higher debt under the Credit Agreement, which carries a lower interest rate than the Senior Subordinated Notes. Under a registration rights agreement between us and the initial purchasers of our 11.5% Senior
Subordinated Notes due May 2011, we were required to complete an exchange offer and register the issuance of the notes under the Securities Act of 1933. We completed the exchange offer on April 14, 2005. Prior to completing the exchange offer,
the interest rate on the notes increased at a rate of 0.25% for each 90-day period beginning November 27, 2003 until the notes were registered. For the fiscal 2006 first nine months, the annualized interest rate on these notes was 11.5%
compared to 12.25% for the fiscal 2005 first nine months. Upon the completion of the exchange offer, our obligations to pay the 1% penalty interest rate ceased and, effective April 15, 2005, the interest rate on the notes reverted to 11.5%.

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

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

Loss related to sale of discontinued product line.During the first nine months of 2006, we recorded a non-cash loss of $2.3 million related to a
discontinued product line. Refer to Note 6 in our Notes to Condensed Consolidated Financial Statements for further information.

Income
tax expense.The consolidated effective income tax rate for the fiscal 2006 first nine months was 19.7% compared to 60.2% for the same period last year. Excluding the non-tax deductible interest expense on the redeemable preferred stock in
fiscal 2006 and fiscal 2005 and the gain on repurchase of redeemable preferred stock in fiscal 2006, our effective rate was 19.8% and 39.0% for the first nine months of fiscal 2006 and 2005. During the first nine months of fiscal 2006, we recorded a
tax benefit of $0.8 million related to research and development credits that were received. We expect our consolidated effective tax rate for fiscal 2006 to be between 37% and 41%, depending on results of foreign operations. We expect our effective
tax rate, excluding the non-deductible interest expense on our preferred stock, will be between 32% and 35% for fiscal 2006, depending on results of foreign operations.



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SEGMENT RESULTS OF OPERATIONS

Segment Reported Results



|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | --------------------------- | ------- | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                          |  | Three Months Ended June 30, |         |   | Nine Months Ended June 30, |  
|                                                                          |  | 2006                        |         |   | 2005                       |   |        | 2006 |  |   | 2005    |  
|Net sales                                                                 |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  | $                           | 49,626  |   |                            | $ | 36,474 |      |  | $ | 146,720 |   |  | $ | 104,320 |  
|Specialized Components                                                    |  |                             | 56,563  |   |                            |   | 47,097 |      |  |   | 156,545 |   |  |   | 131,738 |  
|Eliminations                                                              |  |                             | (249    | ) |                            |   | (33    | )    |  |   | (373    | ) |  |   | (108    | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total net sales                                                           |  | $                           | 105,940 |   |                            | $ | 83,538 |      |  | $ | 302,892 |   |  | $ | 235,950 |  
|Income before income tax expense                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA:                                                                   |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  | $                           | 9,053   |   |                            | $ | 7,702  |      |  | $ | 27,946  |   |  | $ | 21,226  |  
|Specialized Components                                                    |  |                             | 9,730   |   |                            |   | 7,101  |      |  |   | 24,239  |   |  |   | 19,680  |  
|Unallocated corporate operating expenses                                  |  |                             | (2,108  | ) |                            |   | (1,825 | )    |  |   | (6,004  | ) |  |   | (5,602  | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA(1)                                                                 |  |                             | 16,675  |   |                            |   | 12,978 |      |  |   | 46,181  |   |  |   | 35,304  |  
|Depreciation and amortization                                             |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Aerospace-grade Components                                                |  |                             | 3,302   |   |                            |   | 1,692  |      |  |   | 8,775   |   |  |   | 4,361   |  
|Specialized Components                                                    |  |                             | 1,806   |   |                            |   | 1,682  |      |  |   | 5,237   |   |  |   | 5,092   |  
|Corporate                                                                 |  |                             | 39      |   |                            |   | 18     |      |  |   | 116     |   |  |   | 53      |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Depreciation and amortization                                             |  |                             | 5,147   |   |                            |   | 3,392  |      |  |   | 14,128  |   |  |   | 9,506   |  
|Excess of fair value assigned to inventory included in cost of goods sold |  |                             | (12     | ) |                            |   |       |      |  |   | (1,284  | ) |  |   |        |  
|Severance expense / restructuring included in SG&A                        |  |                             | (45     | ) |                            |   | (216   | )    |  |   | (135    | ) |  |   | (216    | )
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Total operating income                                                    |  |                             | 11,471  |   |                            |   | 9,370  |      |  |   | 30,634  |   |  |   | 25,582  |  
|Interest expense  long term debt                                         |  |                             | (8,269  | ) |                            |   | (6,426 | )    |  |   | (24,064 | ) |  |   | (19,038 | )
|Interest expense  redeemable preferred stock                             |  |                             | (703    | ) |                            |   | (1,290 | )    |  |   | (2,183  | ) |  |   | (2,465  | )
|Loss related to discontinued product line                                 |  |                             | (2,308  | ) |                            |   |       |      |  |   | (2,308  | ) |  |   |         |  
|Gain on repurchase of redeemable preferred stock                          |  |                             |        |   |                            |   |       |      |  |   | 2,210   |   |  |   |        |  
|Other, net                                                                |  |                             | (277    | ) |                            |   | 274    |      |  |   | (85     | ) |  |   | 464     |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax expense                                          |  | $                           | (86     | ) |                            | $ | 1,928  |      |  | $ | 4,204   |   |  | $ | 4,543   |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net Income                                                                |  | $                           | 477     |   |                            | $ | 669    |      |  | $ | 3,375   |   |  | $ | 1,810   |  
|                                                                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  

---

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



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Segment Results of Operations

Aerospace-grade Components  Overview

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

After an unprecedented decline in orders for gas
turbines during the 2001 to 2003 period, the trend leveled out in 2004 and is now showing signs of recovery in certain market segments and in certain parts of the world. We have started to see increased demand for our gas turbine components, for
which our order backlog is up 24.1% from a year ago. As a result of changes to certain long-term supply agreements giving customers shorter lead-times on orders, the current backlog covers a shorter time horizon than in the past.

The demand for certain of our military track pin vehicle products peaked in fiscal 2005. As a result of the reduced level of military activity in
Afghanistan and Iraq, for the three and nine month periods ended June 30, 2006, we have seen a 58.2% and 44.4% decline, respectively, in organic sales of these related products and expect to see a similar impact for the fourth quarter of fiscal
2006 as orders have returned to a more normalized level.

Aerospace-grade Components  Results of Operations: Three and Nine Months Ended
June 30, 2006 Compared to June 30, 2005

Net sales. Net sales for the fiscal third quarter of 2006 were $49.6 million
compared to $36.5 million in the fiscal third quarter of 2005, an increase of $13.1 million, or 36.0%. For the first nine months of fiscal 2006, net sales increased $42.4 million, or 40.6%. The three and nine month periods ended June 30, 2006
benefited from acquisitions completed after the beginning of fiscal 2005, which had favorable impacts on net sales of 38.9% and 46.6%, respectively. These increases were partly offset by a 2.9% and 6.0% decline in organic sales for the fiscal 2006
third quarter and nine month period, respectively. Organic sales were impacted by lower sales of high stress fasteners (down 32.2% and 22.6% for the three and nine months ended June 30, 2006) offset by higher sales of gas turbine components (up
26.1% and 13.1% for the three and nine months ended June 30, 2006). The decrease in high stress fasteners was due to lower demand for military tracked vehicle components, which was down 58.2% and 44.4% for the fiscal 2006 third quarter and nine
month period compared to the prior year.

EBITDA. For the fiscal 2006 third quarter and nine month period, EBITDA from our
Aerospace-grade Components segment increased $1.4 million and $6.7 million, respectively, over the same periods in the prior year. EBITDA margins for the fiscal third quarters of 2006 and 2005 were 18.2% and 21.1%, respectively. EBITDA margins for
the first nine months of fiscal 2006 and 2005 were 19.0% and 20.3%, respectively. The EBITDA increase for both periods was due to the operating results of the acquired businesses. The decline in EBITDA margin for both periods was due to lower sales
of high stress fasteners and higher new product development expenses.

Specialized Components  Overview

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

Industrial manufacturing production for the first nine months of fiscal 2006 was up 6.0% from September 30, 2005. We expect industrial manufacturing production to remain strong through the end of our fiscal year 2006.

North American nonresidential construction remains strong, driving demand within our weld studs and systems product lines. Based upon industry sources,
nonresidential construction is expected to increase through fiscal 2006 as a result of improved corporate profits, higher capacity utilization and public construction projects.



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During the first nine months of fiscal 2006, truck unit production remained strong. However, production
volumes slowed during the current quarter. According to industry sources, truck production is expected to remain strong in 2006. The growth through 2006 reflects a rebound from 2001, a pre-buy ahead of the 2007 emissions regulations and an increase
in the light duty diesel market share.

After 2006, we expect that total truck unit production may decline as much as 30% to 40% and
rebound towards another significant medium- and heavy-duty truck pre-buy in 2009 before the 2010 emissions regulations. Light duty trucks are expected to contribute significantly to growth from 2007 through 2010 due to increased market share.
Approximately 13% of our sales in this segment relate to heavy trucks, 6% light trucks, and 4% medium trucks. On a consolidated basis, these amounts approximate 6% for heavy truck, 4% for light, and 2% for medium.

For the quarter ended June 30, 2006, Class 8 NAFTA vehicle production was flat with the same period a year ago. During the first nine month of
fiscal 2006, Class 8 NAFTA vehicle production was up approximately 6.1% compared to the same period a year ago as follows:



|                            |  |                            |  |                           |  |       |  |      
|--------------------------- |  | -------------------------- |  | ------------------------- |  | ----- |  | -----
|(in 000s)                  |  | Three months endedJune 30, |  | Nine months endedJune 30,
|                            |  | 2006                       |  | 2005                      |  | 2006  |  | 2005 
|Class 8 NAFTA Vehicle Build |  | 90.9                       |  | 90.1                      |  | 264.7 |  | 249.5
|Source: ACT Research        |  |                            |  |                           |  |       |  |      

Specialized Components  Results of Operations: Three and Nine Months Ended June 30, 2006 Compared to
June 30, 2005

Net sales. Net sales for the fiscal third quarter of 2006 were $56.6 million compared to $47.1 million for
the fiscal third quarter of 2005, an increase of $9.5 million or 20.1%. Net sales for the nine month period ended June 30, 2006 increased $24.8 million or 18.8%. The acquisition completed in the fiscal first quarter of 2006 had a favorable
impact on net sales of 14.8% and 11.2% for the fiscal 2006 third quarter and nine month period. The remaining increase in net sales was due to organic net sales growth of 5.6% and 9.0% for the fiscal 2006 third quarter and nine month period,
respectively, excluding the effects of foreign currency fluctuations, which lowered organic net sales growth approximately 0.3% and 1.4% for the respective periods. The organic net sales growth reflected strong demand principally in the industrial
and construction markets.

EBITDA.For the fiscal 2006 third quarter and nine month period, EBITDA from our Specialized Components
segment increased $2.6 million and $4.6 million, respectively, over the same periods of fiscal 2005. EBITDA margins for the fiscal 2006 and 2005 third quarters were 17.2% and 15.1%, respectively. EBITDA margins for the first nine months of fiscal
2006 were 15.5 % and 14.9%, respectively. The increase in EBITDA for both periods was due to the operating results of acquired companies and higher sales volumes. The EBITDA margin increase for both periods relates to higher sales volumes.

Unallocated Corporate Operating Expenses

For the fiscal 2006 third quarter and nine-month period, unallocated corporate operating expenses increased $0.3 million and $0.4 million, respectively. The increases related to higher professional fees for the quarter and approximately
$0.3 million of expenses associated with unconsummated strategic transactions for the first nine months of fiscal 2006.



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Liquidity and Capital Resources

Our short-term liquidity needs include required debt service, day-to-day operating expenses, working capital requirements and the funding of capital expenditures. Long-term liquidity requirements include principal
payments on long-term debt and funding of acquisitions. Our principal sources of cash to fund our short-term liquidity needs consist of cash generated by operations and borrowings under our credit facility. As of June 30, 2006, we had $131.0
million in outstanding borrowings under our credit facility and we had $37.7 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 facility, 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 or larger transactions. From time to time, we enter into discussions, letters of intent and confidentiality agreements with acquisition candidates we find
attractive. Certain discussions are ongoing and certain confidentiality agreements remain in effect. We also currently have non-disclosure agreements with potential acquisition candidates. Whether or not these discussions and arrangements result in
consummated transactions is uncertain.

Nine Months Ended June 30, 2006 compared to Nine Months Ended June 30, 2005

For the fiscal 2006 nine-month period, we generated $16.0 million of operating cash flow compared to cash used of $12.1 million in the same period of the
prior year. The increase in cash generated from operations was primarily the result of improved working capital and lower cash taxes. Cash used for working capital and other operating assets and liabilities, excluding taxes, was $6.5 million
compared to $22.9 million in the prior year. The principal reasons for the decreased use of cash relates to increased accounts receivable collections and focused efforts to maintain more normalized inventory levels. During the fiscal 2006 nine-month
period, we received approximately $0.8 million in tax refunds compared to payments of $6.8 million in the prior fiscal year nine-month period. The prior year amount included the payment of capital gains taxes on the sale of our FabriSteel business.
We paid approximately $27.5 million and $23.3 million of interest for the fiscal 2006 and 2005 nine-month periods, respectively.

Days
sales outstanding in accounts receivable increased slightly to approximately 53 days at June 30, 2006 from approximately 52 days at September 30, 2005. Days sales in inventory, based on cost of goods sold, decreased to approximately 102
days at June 30, 2006 from approximately 108 days at September 30, 2005.

Cash used in investing activities was $27.4 million for
the fiscal 2006 nine-month period. We used $20.9 million for acquisitions in the nine months ended June 30, 2006 including; approximately $17.3 million, including fees, and net of a working capital adjustment, for the purchase of 100% of the
outstanding stock of BNC & Associates, Inc. and approximately $3.6 million for the acquisition of Erie Bolt Corporation. This compares to $78.3 million used during the same period of the prior year to acquire: substantially all of the
assets of Spun Metals, Inc., for approximately $5.0 million; substantially all of the assets of GCE Industries, Inc. and 100% of the stock of Katsakos Industries, Inc. for approximately $31.3 million; substantially all of the assets of Ogre
Holdings, Inc. for $32.0 million cash and the issuance of subordinated notes for $8.0 million; and $8.8 million used for the acquisition of certain assets of the Triumph Group.

Capital expenditures decreased $4.1 million for the fiscal 2006 nine month period compared to the same period of fiscal 2005 as a result of three major
capital projects that occurred during fiscal 2005. These related to: (1) the launch of a manufacturing venture in China to produce stud weld and fastener products within our Specialized Components segment; (2) installation of equipment and
processes in the Aerospace-grade Components segment to produce an array of Lamilloy products to support the U.S. Joint-Strike Fighter, the newest class of military aircraft; and (3) a capacity expansion project in our Aerospace-grade Components
segment to meet increasing demand in the recreational vehicle market. We expect fiscal 2006 capital spending, including maintenance capital spending, to be in the range of approximately $10.0 million to $11.0 million compared to $14.5 million in
fiscal 2005.



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Cash provided by financing activities was $19.5 million for the fiscal 2006 nine-month period compared to
$82.9 million for the fiscal 2005 nine-month period. We borrowed $32.0 million under our credit agreement in the fiscal 2006 nine-month period compared to $84.0 million during the fiscal 2005 nine month period. In January 2006, we made a scheduled
payment of $3.5 million on the subordinated debt related to the acquisition of Acraline. In addition, during the fiscal 2006 nine-month period, we used $8.3 million to repurchase common and redeemable preferred stock. In June 2006, we repurchased
$1.0 million of Senior Subordinated Notes.

As of July 31, 2006, our total debt, net of cash, was approximately $283.7 million.

Debt

The following summarizes
our outstanding debt and unused credit availability as of June 30, 2006:



|                                              |  |                 |       |                   |   |                          |  |   |     
|--------------------------------------------- |  | --------------- | ----- | ----------------- | - | ------------------------ |  | - | ----
|(Dollars in millions)                         |  | TotalCommitment |       | AmountOutstanding |   | UnusedCreditAvailability
|Revolving credit facility                     |  | $               | 170.0 |                   | $ | 131.0                    |  | $ | 39.0
|Subordinated debt                             |  |                 | 3.0   |                   |   | 3.0                      |  |   | 0.0 
|11.5% senior subordinated notes, due May 2011 |  |                 | 174.0 |                   |   | 174.0                    |  |   | 0.0 
|                                              |  |                 |       |                   |   |                          |  |   |     
|Total                                         |  | $               | 347.0 |                   | $ | 308.0                    |  | $ | 39.0
|                                              |  |                 |       |                   |   |                          |  |   |     

Credit Facility

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

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

Our credit facility is subject to annual commitment fees of 0.375% to 0.5% on the average unused portion of the credit facility, depending
on the level of outstanding borrowings. Our credit facility is collateralized by substantially all of the Companys assets and contains customary covenants, including financial covenants. The first financial covenant does not permit the
Leverage Ratio, as defined, to exceed 4.75 to 1.00 as of June 30, 2006. The second financial covenant does not permit the Interest Coverage Ratio, as defined, to be less than 2.00 to 1.00 as of June 30, 2006. The final financial covenant
does not permit EBITDA, as defined in the credit agreement to be less than $49.0 million as of June 30, 2006. At June 30, 2006, we were in compliance with each of these financial covenants. Our Leverage Ratio, as defined, was 4.47 to 1.00;
our Interest Coverage Ratio, as defined, was 2.14 to 1.00; and our EBITDA, as defined, was $64.5 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.

As of June 30, 2006, our
Consolidated Coverage Ratio, as defined in the indenture governing the notes, was 2.07 to 1.00. The covenants under the indenture limit the amount of additional indebtedness we may incur if the ratio is less than 2.00 to 1.00, after giving effect to
the financing and any related transaction on a pro forma basis.



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Contractual Obligations

Besides obligations related to our operating activities, we have various obligations that could create future payments, including potential earn outs of up to $4.25 million and $2.0 million related to the acquisitions
of the assets of Gear and Broach, Inc. and MECO, Inc., respectively. At June 30, 2006, the total amount of accrued and unpaid dividends on the preferred stock of the Company was approximately $16.7 million.

Critical Accounting Policies

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

Seasonality, Competition and Trends

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

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



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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

In April and June 2006, certain
members of management exercised stock options for a total of 13,264 shares of Class A Common Stock of the Company, at an exercise price of $10.00 per share pursuant to the Companys stock option plans. Such members of management paid cash
consideration in respect of this exercise. In addition, in June 2006, Citicorp Mezzanine Partners, LP exercised a warrant dated March 17, 2000, for 62,470 shares of Class B Common Stock of the Company, at an exercise price $0.01 per share
pursuant to the terms of the Warrant Agreement. Citicorp Mezzanine Partners, LP paid cash consideration in respect of this exercise. The issuances of Class A and Class B Common Stock were exempt from registration under Section 4(2).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



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

SIGNATURES

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



|                     |  |                                                  
|-------------------- |  | -------------------------------------------------
|Date: August 4, 2006 |  | FASTENTECH, INC.                                 
|                     | 
|                     |  | /s/ Michael R. Elia                              
|                     |  | Michael R. Elia                                  
|                     |  | Senior Vice President and Chief Financial Officer
|                     |  | FastenTech, Inc.                                 



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##### Table of Contents

Exhibit Index



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



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