##### Table of Contents



FORM 10-Q
 
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-7872
 
 BREEZE-EASTERN CORPORATION
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    95-4062211
(I.R.S. employer
identification no.)35 Melanie Lane
Whippany, New Jersey
(Address of principal executive offices)
    
    07981
(Zip Code)
  þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ
 o þ




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##### 



INDEX
 Page No.PART 1
    
    Financial InformationItem 1.
    
    Condensed Consolidated Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets December 31, 2010 (Unaudited) and March 31, 2010
    
    
    4Condensed Consolidated Statements of Operations Three and Nine Month Periods Ended December 31, 2010 and December 27, 2009 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows Nine Month Periods Ended December 31, 2010 and December 27, 2009 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7 - 17Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18 - 27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    29PART II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 6.
    
    Exhibits
    
    
    29SIGNATURES
    
    
    
    
    29EX-31.1EX-31.2EX-32.1


2



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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  st
  3




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##### Table of Contents



REEZE-EASTERN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
    
    (Audited)December 31, 2010
    
    March 31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    3,421
    
    
    $
    3,371Accounts receivable (net of allowance for doubtful accounts
of $233 at December 31, 2010 and $150 at March 31, 2010)
    
    
    14,291
    
    
    
    12,102Tax refund receivable
    
    
    904
    
    
    
    904Inventories
    
    
    18,102
    
    
    
    17,365Prepaid expenses and other current assets
    
    
    696
    
    
    
    423Deferred income taxes
    
    
    4,986
    
    
    
    5,686Total current assets
    
    
    42,400
    
    
    
    39,851PROPERTY:Property and equipment
    
    
    17,243
    
    
    
    20,323Less accumulated depreciation and amortization
    
    
    8,833
    
    
    
    10,748Property  net
    
    
    8,410
    
    
    
    9,575OTHER ASSETS:Deferred income taxes
    
    
    12,937
    
    
    
    13,718Goodwill
    
    
    402
    
    
    
    402Real estate held for sale
    
    
    3,800
    
    
    
    3,800Other
    
    
    8,948
    
    
    
    8,762Total other assets
    
    
    26,087
    
    
    
    26,682TOTAL ASSETS
    
    $
    76,897
    
    
    $
    76,108LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITES:Revolving credit facility
    
    $
    
    
    
    $
    Current portion of long-term debt
    
    
    822
    
    
    
    3,286Accounts payable  trade
    
    
    8,226
    
    
    
    5,578Accrued compensation
    
    
    2,954
    
    
    
    2,286Accrued income taxes
    
    
    223
    
    
    
    114Other current liabilities
    
    
    3,010
    
    
    
    3,399Total current liabilities
    
    
    15,235
    
    
    
    14,663LONG-TERM DEBT, NET OF CURRENT PORTION
    
    
    12,321
    
    
    
    14,786OTHER LONG-TERM LIABILITIES
    
    
    18,946
    
    
    
    18,839COMMITMENTS AND CONTINGENCIES (Note 13)
    
    
    
    
    
    
    TOTAL LIABILITIES
    
    
    46,502
    
    
    
    48,288STOCKHOLDERS EQUITYPreferred stock  authorized, 300,000 shares; none issued
    
    
    
    
    
    
    Common stock  authorized, 14,700,000 shares of $.01 par
value; issued, 9,846,003 at December 31, 2010 and 9,813,097
at March 31, 2010
    
    
    98
    
    
    
    98Additional paid-in capital
    
    
    94,939
    
    
    
    94,612Accumulated deficit
    
    
    (57,677
    )
    
    
    (59,863
    )Accumulated other comprehensive loss
    
    
    (216
    )
    
    
    (285
    )37,144
    
    
    
    34,562Less treasury stock, at cost  416,967 at December 31, 2010 and 416,147 at March 31, 2010
    
    
    (6,749
    )
    
    
    (6,742
    )Total stockholders equity
    
    
    30,395
    
    
    
    27,820TOTAL LIABILITIES & STOCKHOLDERS EQUITY
    
    $
    76,897
    
    
    $
    76,108
  4




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##### Table of Contents



BREEZE-EASTERN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three Months Ended
    
    Nine Months EndedDecember 31, 2010
    
    December 27, 2009
    
    December 31, 2010
    
    December 27, 2009Net sales
    
    $
    19,614
    
    
    $
    21,168
    
    
    $
    51,260
    
    
    $
    50,938Cost of sales
    
    
    12,339
    
    
    
    13,159
    
    
    
    31,676
    
    
    
    31,732Gross profit
    
    
    7,275
    
    
    
    8,009
    
    
    
    19,584
    
    
    
    19,206Selling, general, and administrative expenses
    
    
    5,434
    
    
    
    4,522
    
    
    
    14,880
    
    
    
    13,194Relocation expense
    
    
    
    
    
    
    14
    
    
    
    211
    
    
    
    203Operating income
    
    
    1,841
    
    
    
    3,473
    
    
    
    4,493
    
    
    
    5,809Interest expense
    
    
    167
    
    
    
    213
    
    
    
    550
    
    
    
    676Other expense  net
    
    
    31
    
    
    
    58
    
    
    
    176
    
    
    
    186Income before incomes taxes
    
    
    1,643
    
    
    
    3,202
    
    
    
    3,767
    
    
    
    4,947Income tax provision
    
    
    690
    
    
    
    1,345
    
    
    
    1,582
    
    
    
    2,078Net income
    
    $
    953
    
    
    $
    1,857
    
    
    $
    2,185
    
    
    $
    2,869Earnings per common share:Basic net income per share
    
    $
    0.10
    
    
    $
    0.20
    
    
    $
    0.23
    
    
    $
    0.31Diluted net income per share
    
    
    0.10
    
    
    
    0.20
    
    
    
    0.23
    
    
    
    0.31Weighted-average basic shares outstanding
    
    
    9,429,000
    
    
    
    9,400,000
    
    
    
    9,409,000
    
    
    
    9,385,000Weighted-average diluted shares outstanding
    
    
    9,464,000
    
    
    
    9,404,000
    
    
    
    9,430,000
    
    
    
    9,393,000
  5




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BREEZE-EASTERN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months EndedDecember 31, 2010
    
    December 27, 2009Cash flows from operating activities:Net income
    
    $
    2,185
    
    
    $
    2,869Adjustments
to reconcile net income to net cash provided by operating activities:Loss on disposal of property and equipment
    
    
    29
    
    
    
    Depreciation and amortization
    
    
    1,470
    
    
    
    1,125Non-cash reserve accretion
    
    
    328
    
    
    
    17Stock based compensation
    
    
    325
    
    
    
    532Provision for losses on accounts receivable
    
    
    82
    
    
    
    121Deferred taxes-net
    
    
    1,431
    
    
    
    1,786Changes in assets and liabilities:(Increase) decrease in accounts receivable and other receivables
    
    
    (2,271
    )
    
    
    5,480Increase in inventories
    
    
    (737
    )
    
    
    (6,104
    )Increase in other assets
    
    
    (90
    )
    
    
    (657
    )Increase in accounts payable
    
    
    2,648
    
    
    
    246Increase in accrued compensation
    
    
    664
    
    
    
    132Increase in accrued income taxes
    
    
    109
    
    
    
    162Decrease in other liabilities
    
    
    (491
    )
    
    
    (380
    )Net cash provided by operating activities
    
    
    5,682
    
    
    
    5,329Cash flows from investing activities:Capital expenditures
    
    
    (327
    )
    
    
    (4,864
    )Capitalized project costs
    
    
    (376
    )
    
    
    (840
    )Net cash (used in) investing activities
    
    
    (703
    )
    
    
    (5,704
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (4,929
    )
    
    
    (2,464
    )Net borrowings (repayments) of other debt
    
    
    
    
    
    
    2,700Net cash (used in) provided by financing activities
    
    
    (4,929
    )
    
    
    236Increase (decrease) in cash
    
    
    50
    
    
    
    (139
    )Cash at beginning of period
    
    
    3,371
    
    
    
    2,667Cash at end of period
    
    $
    3,421
    
    
    $
    2,528Supplemental information:Interest payments
    
    $
    478
    
    
    $
    599Income tax payments
    
    
    42
    
    
    
    127
  6




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NOTE 1. Financial Presentation
  NOTE 2. Earnings Per Share
   Three Months Ended
    
    Nine Months EndedDecember 31,
    
    December 27,
    
    December 31,
    
    December 27,2010
    
    2009
    
    2010
    
    2009Basic Earnings per Common Share:Weighted-average common shares
outstanding for basic earnings
per share calculation
    
    
    9,429,000
    
    
    
    9,400,000
    
    
    
    9,409,000
    
    
    
    9,385,000Diluted Earnings per Common Share:Weighted-average common shares
outstanding
    
    
    9,429,000
    
    
    
    9,400,000
    
    
    
    9,409,000
    
    
    
    9,385,000Stock options (a)
    
    
    35,000
    
    
    
    4,000
    
    
    
    21,000
    
    
    
    8,000Weighted-average common shares
outstanding for diluted earnings
per share calculation
    
    
    9,464,000
    
    
    
    9,404,000
    
    
    
    9,430,000
    
    
    
    9,393,000
 
 (a)
    
    During the three and nine month periods ended December 31, 2010, options to purchase 327,000
and 349,000 shares of common stock, respectively, and during the three and nine month periods
ended December 27, 2009, options to purchase 493,000 and 456,000 shares of common stock,
respectively, were not included in the computation of diluted earnings per share because the
exercise prices of these options were greater than the average market price of the common
share. 7




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NOTE 3. Stock-Based Compensation
       2011 $2.21
    
    2011 $2.41
    
    2010 $2.52
    
    2010 $2.55
    
    2010 $2.63value per
    
    value per
    
    value per
    
    value per
    
    value peroption
    
    option
    
    option
    
    option
    
    optionDividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    25.7
    %
    
    
    30.2
    %
    
    
    32.6
    %
    
    
    34.0
    %
    
    
    34.0
    %Risk-free interest rate
    
    
    2.1
    %
    
    
    3.2
    %
    
    
    3.1
    %
    
    
    3.2
    %
    
    
    3.4
    %Expected term of
options (in years)
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0
 8




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Aggregate
    
    Approximate
    
    Weighted-Intrinsic
    
    Remaining
    
    AverageNumber
    
    Value
    
    Contractual
    
    Exerciseof Shares
    
    (in thousands)
    
    Term (Years)
    
    PriceOutstanding at March 31, 2010
    
    
    624,911
    
    
    $
    198
    
    
    
    7
    
    
    $
    8.38Granted
    
    
    117,000
    
    
    
    
    
    
    
    
    
    
    
    6.74Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled or expired
    
    
    (65,000
    )
    
    
    
    
    
    
    
    
    
    
    9.08Outstanding at December 31, 2010
    
    
    676,911
    
    
    
    283
    
    
    
    7
    
    
    
    8.03Options exercisable at December
31, 2010
    
    
    429,244
    
    
    
    124
    
    
    
    5
    
    
    
    8.83Unvested options expected to become
exercisable after December 31, 2010
    
    
    247,667
    
    
    
    159
    
    
    
    9
    
    
    
    6.64Shares available for future option
grants at
December 31, 2010 (a)
    
    
    78,308
 
 (a)
    
    May be decreased by restricted stock grants.     Weighted-AverageNumber
    
    Grant Dateof Shares
    
    Fair ValueNon-vested at March 31, 2010
    
    
    37,984
    
    
    $
    6.43Granted
    
    
    32,906
    
    
    
    6.85Vested
    
    
    (36,899
    )
    
    
    6.29Cancelled
    
    
    (239
    )
    
    
    11.07Non-vested at December 31, 2010
    
    
    33,752
    
    
    
    6.95
  9




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NOTE 4. Inventories
  December 31,
    
    
    March 31,2010
    
    
    2010Finished goods
    
    $
    414
    
    
    $
    1,985Work in process
    
    
    6,123
    
    
    
    6,133Purchased and manufactured parts
    
    
    14,043
    
    
    
    11,78520,580
    
    
    
    19,903Reserve for slow moving and obsolescence
    
    
    (2,478
    )
    
    
    (2,538
    )Total
    
    $
    18,102
    
    
    $
    17,365
  NOTE 5. Property, Equipment, and Related Depreciation
   Machinery and equipment
    
    3 to 10 yearsFurniture and fixtures
    
    3 to 10 yearsComputer hardware and software
    
    3 to 5 yearsLeasehold improvements
    
    10 years
  10




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NOTE 6. Product Warranty Costs
  Balance at March 31, 2010
    
    $
    179Warranty costs incurred
    
    
    (99
    )Change in estimates to pre-existing warranties
    
    
    35Product warranty accrual
    
    
    113Balance at December 31, 2010
    
    $
    228
 NOTE 7. Income Taxes
       11




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NOTE 8. Long-Term Debt Payable to Banks
  December 31, 2010
    
    
    March 31, 2010Senior Credit Facility
    
    $
    13,143
    
    
    $
    18,072Less current maturities
    
    
    822
    
    
    
    3,286Total long-term debt
    
    $
    12,321
    
    
    $
    14,786
 Senior Credit Facility 
   Interest Rate Swap
 12




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NOTE 9. Fair Value Measurements
  
    
    Level 1- Unadjusted quoted prices for identical assets or liabilities in active markets;
    
    Level 2-Inputs other than quoted prices in active markets for identical assets or
liabilities that are observable whether directly or indirectly for substantially the full
term of the asset or liability; and
    
    Level 3-Unobservable inputs for the asset or liability, which include managements own
assumptions about what the assumptions market participants would use in pricing the asset
or liability, including assumptions about risk.
   Carrying Amount
    
    Fair ValueLong-term debt
    
    $
    13,143
    
    
    $
    13,143Interest rate swap liability included in
other long-term liabilities (Level 2)
    
    
    98
    
    
    
    98
 NOTE 10. Employee Benefit Plans
    13




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Postretirement BenefitsThree Months Ended
    
    Nine Months EndedDecember 31,
    
    December 27,
    
    December 31,
    
    December 27,2010
    
    2009
    
    2010
    
    2009Interest cost
    
    $
    11
    
    
    $
    9
    
    
    $
    32
    
    
    $
    27Amortization of net (gain) loss
    
    
    5
    
    
    
    
    
    
    
    17
    
    
    
    Net periodic cost
    
    $
    16
    
    
    $
    9
    
    
    $
    49
    
    
    $
    27
 Pension PlanThree Months Ended
    
    Nine Months EndedDecember 31,
    
    December 27,
    
    December 31,
    
    December 27,2010
    
    2009
    
    2010
    
    2009Interest cost
    
    $
    47
    
    
    $
    101
    
    
    $
    136
    
    
    $
    197Amortization of net (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    47
    
    
    $
    101
    
    
    $
    136
    
    
    $
    197
 NOTE 11. Concentration of Credit Risk
  NOTE 12. New Accounting Standards
  NOTE 13. Contingencies
 Environmental Matters
  14




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15




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##### Table of Contents



Litigation
  NOTE 14. Segment, Geographic Location and Customer Information
  16




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Three Months Ended
    
    Nine Months EndedDecember 31,
    
    December 27,
    
    December 31,
    
    December 27,2010
    
    2009
    
    2010
    
    2009Customer A
    
    
    36
    %
    
    
    22
    %
    
    
    29
    %
    
    
    22
    %Customer B
    
    
    24
    
    
    
    18
    
    
    
    21
    
    
    
    19Customer C
    
    
    17
    
    
    
    15
    
    
    
    16
    
    
    
    19Customer D
    
    
    *
    
    
    
    17
    
    
    
    *
    
    
    
    *
 
 *
    
    Represents less than 10% of total revenues.  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 27,
    
    
    December 31,
    
    
    December 27,Location
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009United States
    
    $
    13,083
    
    
    $
    14,204
    
    
    $
    31,349
    
    
    $
    30,179Italy
    
    
    2,134
    
    
    
    1,760
    
    
    
    5,340
    
    
    
    7,019England
    
    
    1,135
    
    
    
    1,282
    
    
    
    2,085
    
    
    
    1,893Other European countries
    
    
    603
    
    
    
    772
    
    
    
    3,095
    
    
    
    2,804Pacific and Far East
    
    
    717
    
    
    
    1,113
    
    
    
    3,886
    
    
    
    3,407Other international
    
    
    1,942
    
    
    
    2,037
    
    
    
    5,505
    
    
    
    5,636Total
    
    $
    19,614
    
    
    $
    21,168
    
    
    $
    51,260
    
    
    $
    50,938
 17




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
    18




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OVERVIEW
  CORE BUSINESS
  PRODUCTS AND SERVICES
  Products
     19




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Services
    LABOR MATTERS
  STRATEGIC
INTENT
  CRITICAL ACCOUNTING POLICIES
  20




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Results of Operations
 Three Months Ended December 31, 2010 Compared with Three Months Ended December 27, 2009
 Three Months EndedDecember 31,
    
    December 27,
    
    Increase/(Decrease)2010
    
    2009
    
    $
    
    %Products
    
    $
    14,244
    
    
    $
    15,430
    
    
    $
    (1,186
    )
    
    
    (7.7
    )%Services
    
    
    5,370
    
    
    
    5,738
    
    
    
    (368
    )
    
    
    (6.4
    )Net sales
    
    
    19,614
    
    
    
    21,168
    
    
    
    (1,554
    )
    
    
    (7.3
    )Products
    
    
    8,752
    
    
    
    9,539
    
    
    
    (787
    )
    
    
    (8.3
    )Services
    
    
    3,587
    
    
    
    3,620
    
    
    
    (33
    )
    
    
    (0.9
    )Cost of sales
    
    
    12,339
    
    
    
    13,159
    
    
    
    (820
    )
    
    
    (6.2
    )Gross profit
    
    
    7,275
    
    
    
    8,009
    
    
    
    (734
    )
    
    
    (9.2
    )As a % of net sales
    
    
    37.1
    %
    
    
    37.8
    %
    
    
    N/A
    
    
    
    (0.7
    )%PtSelling,
general, and administrative
expenses
    
    
    5,434
    
    
    
    4,522
    
    
    
    912
    
    
    
    20.2
    %Relocation expense
    
    
    
    
    
    
    14
    
    
    
    (14
    )
    
    
    N/AOperating income
    
    
    1,841
    
    
    
    3,473
    
    
    
    (1,632
    )
    
    
    (47.0
    )Interest expense
    
    
    167
    
    
    
    213
    
    
    
    (46
    )
    
    
    (21.6
    )Net income
    
    $
    953
    
    
    $
    1,857
    
    
    $
    (904
    )
    
    
    (48.7
    )%
 Net Sales.
   Cost of Sales.
 21




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Gross profit.
 Selling, General, and Administrative Expenses.
 Interest Expense
 Net Income
 New Orders
 Backlog.
   22




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Nine Months Ended December 31, 2010 Compared with Nine Months Ended December 27, 2009
 Nine Months EndedDecember 31,
    
    December 27,
    
    Increase/(Decrease)2010
    
    2009
    
    $
    
    %Products
    
    $
    38,117
    
    
    $
    35,343
    
    
    $
    2,774
    
    
    
    7.8
    %Services
    
    
    13,143
    
    
    
    15,595
    
    
    
    (2,452
    )
    
    
    (15.7
    )Net sales
    
    
    51,260
    
    
    
    50,938
    
    
    
    322
    
    
    
    0.6Products
    
    
    21,798
    
    
    
    21,403
    
    
    
    395
    
    
    
    1.8Services
    
    
    9,878
    
    
    
    10,329
    
    
    
    (451
    )
    
    
    (4.4
    )Cost of sales
    
    
    31,676
    
    
    
    31,732
    
    
    
    (56
    )
    
    
    (0.2
    )Gross profit
    
    
    19,584
    
    
    
    19,206
    
    
    
    378
    
    
    
    2.0As a % of net sales
    
    
    38.2
    %
    
    
    37.7
    %
    
    
    N/A
    
    
    
    0.5
    % PtSelling,
general, and administrative
expenses
    
    
    14,880
    
    
    
    13,194
    
    
    
    1,686
    
    
    
    12.8
    %Relocation expense
    
    
    211
    
    
    
    203
    
    
    
    8
    
    
    
    3.9Operating income
    
    
    4,493
    
    
    
    5,809
    
    
    
    (1,316
    )
    
    
    (22.7
    )Interest expense
    
    
    550
    
    
    
    676
    
    
    
    (126
    )
    
    
    (18.6
    )Net income
    
    $
    2,185
    
    
    $
    2,869
    
    
    $
    (684
    )
    
    
    (23.8
    )%
 Net Sales.
   Cost of Sales.
 23




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##### Table of Contents



Gross profit.
 Selling, General, and Administrative Expenses.
  Interest Expense
 Net Income
 New Orders
  Backlog
  Liquidity and Capital Resources
  24




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##### Table of Contents



Working Capital
   Capital Expenditures
  Senior Credit Facility
  25




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##### Table of Contents



Interest Rate Swap
  TAX BENEFITS FROM NET OPERATING LOSSES
  CONTRACTUAL OBLIGATIONS
  Payments Due By PeriodLess Than
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsDebt principal
repayments (a)
    
    $
    13,143
    
    
    $
    822
    
    
    $
    12,321
    
    
    $
    
    
    
    $
    Estimated interest
payments on
long-term debt (b)
    
    
    641
    
    
    
    109
    
    
    
    532
    
    
    
    
    
    
    
    Operating leases
    
    
    8,924
    
    
    
    1,079
    
    
    
    2,142
    
    
    
    1,977
    
    
    
    3,726Purchase
obligations (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    22,708
    
    
    $
    2,010
    
    
    $
    14,995
    
    
    $
    1,977
    
    
    $
    3,726
 
 (a)
    
    Obligations for long-term debt reflect the requirements of the term loan under the Senior
Credit Facility. See Note 8 of Notes to Condensed Consolidated Financial Statements contained in
Part I, Item 1of this report.(b)
    
    Estimated interest payments on long-term debt reflect the scheduled interest payments of the
term loan under the Senior Credit Facility and assume an effective weighted average interest rate
of 3.5%, our blended interest rate at December 31, 2010.(c)
    
    Our supplier purchase orders contain provisions allowing vendors to recover certain costs in
the event of cancellation for convenience by us. We believe that we do not have ongoing purchase
obligations with respect to our suppliers that are material in amount or that would result,
individually or collectively, in a material loss exposure to us if cancelled for convenience.
Furthermore, purchase obligations for capital assets and services historically have not been
material in amount. INFLATION
  CONTINGENCIES
 Environmental matters 
 26




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Litigation 
 RECENTLY ISSUED ACCOUNTING STANDARDS
   27




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     28




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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
  
 Item 6. EXHIBITS
 31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 SIGNATURES
  BREEZE-EASTERN CORPORATION
(Registrant)Dated:  February 3, 2011
    By:
    /s/  Mark D. MishlerMark D. Mishler, Senior Vice President,Chief Financial Officer, Treasurer, and Secretary* 
 *
    
    On behalf of the Registrant and as Principal Financial and Accounting Officer. 29