##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



---



FORM 10-Q



---



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended December 27, 2003.



| ̈ | 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 333-71397



---



|                                                       |  |                                                       
|------------------------------------------------------ |  | ------------------------------------------------------
|TransDigm Inc.                                         |  | TransDigm Holding Company                             
|(Exact name of registrant as specified in its charter) |  | (Exact name of registrant as specified in its charter)



---



|                                                               |  |                                                               
|-------------------------------------------------------------- |  | --------------------------------------------------------------
|Delaware                                                       |  | Delaware                                                      
|(State or other Jurisdiction of incorporation or organization) |  | (State or other Jurisdiction of incorporation or organization)
|                                                               | 
|34-1750032                                                     |  | 13-3733378                                                    
|(I.R.S. Employer Identification No.)                           |  | (I.R.S. Employer Identification No.)                          
|                                                               | 
|26380 Curtiss Wright Parkway, Richmond Heights, Ohio           |  | 44143                                                         
|(Address of principal executive offices)                       |  | (Zip Code)                                                    



(216) 289-4939

(Registrants telephone number, including area code)



---



(Former name, former address and former fiscal year, if changed since last report.)



---



Indicate by check mark whether each of the co-registrants (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 co-registrants was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    YES ̈NO  x



Indicate by check mark whether the co-registrants are accelerated filers (as
defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x



The number of shares outstanding of TransDigm
Inc.s common stock, par value $.01 per share, was 100 as of December 27, 2003.



The number of shares outstanding of TransDigm Holding Companys common stock, par value $.01 per share, was 100 as of December 27, 2003.

---



---

##### Table of Contents

INDEX



|           |  |                       |  |                                                                                                                              |  |     
|---------- |  | --------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                       |  |                                                                                                                              |  | Page
|Part I     |  | FINANCIAL INFORMATION |  |                                                                                                                             
|           |  |                       | 
|           |  | Item 1                |  | Financial Statements                                                                                                         |  |     
|           |  |                       | 
|           |  |                       |  | Condensed Consolidated Balance Sheets  December 27, 2003 and September 30, 2003                                             |  | 1   
|           |  |                       | 
|           |  |                       |  | Condensed Consolidated Statements of Operations  Thirteen Weeks Ended December 27, 2003 and December 28, 2002 (Predecessor) |  | 2   
|           |  |                       | 
|           |  |                       |  | Condensed Consolidated Statement of Changes in Stockholders Equity  Thirteen Weeks Ended December 27, 2003                 |  | 3   
|           |  |                       | 
|           |  |                       |  | Condensed Consolidated Statements of Cash Flows  Thirteen Weeks Ended December 27, 2003 and December 28, 2002 (Predecessor) |  | 4   
|           |  |                       | 
|           |  |                       |  | Notes to Condensed Consolidated Financial Statements                                                                         |  | 5   
|           |  |                       | 
|           |  | Item 2                |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 18  
|           |  |                       | 
|           |  | Item 3                |  | Quantitative and Qualitative Disclosure About Market Risk                                                                    |  | 28  
|           |  |                       | 
|           |  | Item 4                |  | Controls and Procedures                                                                                                      |  | 29  
|           |  |                      
|Part II    |  | OTHER INFORMATION     |  |                                                                                                                             
|           |  |                       | 
|           |  | Item 6                |  | Exhibits and Reports on Form 8-K                                                                                             |  | 30  
|           | 
|SIGNATURES |  | 31                   



---

##### Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1



TRANSDIGM HOLDING COMPANY



CONDENSED
CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

---



|                                           |  |                   |           |   |                    |   |           |  
|------------------------------------------ |  | ----------------- | --------- | - | ------------------ | - | --------- | -
|                                           |  | December 27, 2003 |           |   | September 30, 2003 |  
|ASSETS                                     |  |                   |           |   |                    |   |           |  
|                                           |  |                  
|CURRENT ASSETS:                            |  |                   |           |   |                    |   |           |  
|Cash and cash equivalents                  |  | $                 | 52,564    |   |                    | $ | 18,902    |  
|Trade accounts receivable - Net            |  |                   | 38,209    |   |                    |   | 36,709    |  
|Income taxes receivable                    |  |                   | 20,031    |   |                    |   | 36,703    |  
|Inventories                                |  |                   | 58,529    |   |                    |   | 77,386    |  
|Deferred income taxes                      |  |                   | 13,777    |   |                    |   | 8,177     |  
|Prepaid expenses and other                 |  |                   | 1,125     |   |                    |   | 3,850     |  
|                                           |  |                   |           |   |                    |   |           |  
|Total current assets                       |  |                   | 184,235   |   |                    |   | 181,727   |  
|                                           |  |                  
|PROPERTY, PLANT AND EQUIPMENT - Net        |  |                   | 59,106    |   |                    |   | 60,342    |  
|                                           |  |                  
|GOODWILL - Net                             |  |                   | 807,815   |   |                    |   | 807,714   |  
|                                           |  |                  
|OTHER INTANGIBLE ASSETS - Net              |  |                   | 231,837   |   |                    |   | 235,839   |  
|                                           |  |                  
|DEBT ISSUE COSTS - Net                     |  |                   | 27,763    |   |                    |   | 28,771    |  
|                                           |  |                  
|OTHER                                      |  |                   | 633       |   |                    |   | 627       |  
|                                           |  |                   |           |   |                    |   |           |  
|TOTAL ASSETS                               |  | $                 | 1,311,389 |   |                    | $ | 1,315,020 |  
|                                           |  |                   |           |   |                    |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |                   |           |   |                    |   |           |  
|                                           |  |                  
|CURRENT LIABILITIES:                       |  |                   |           |   |                    |   |           |  
|Current portion of long-term liabilities   |  | $                 | 4,450     |   |                    | $ | 7,634     |  
|Accounts payable                           |  |                   | 9,575     |   |                    |   | 11,221    |  
|Accrued liabilities                        |  |                   | 35,555    |   |                    |   | 29,625    |  
|                                           |  |                   |           |   |                    |   |           |  
|Total current liabilities                  |  |                   | 49,580    |   |                    |   | 48,480    |  
|                                           |  |                  
|LONG-TERM DEBT - Less current portion      |  |                   | 692,050   |   |                    |   | 692,050   |  
|                                           |  |                  
|DEFERRED INCOME TAXES                      |  |                   | 64,046    |   |                    |   | 64,364    |  
|                                           |  |                  
|OTHER NON-CURRENT LIABILITIES              |  |                   | 2,950     |   |                    |   | 4,917     |  
|                                           |  |                   |           |   |                    |   |           |  
|Total liabilities                          |  |                   | 808,626   |   |                    |   | 809,811   |  
|                                           |  |                   |           |   |                    |   |           |  
|STOCKHOLDERS EQUITY:                      |  |                   |           |   |                    |   |           |  
|Common stock                               |  |                   | 509,674   |   |                    |   | 508,100   |  
|Accumulated deficit                        |  |                   | (6,808    | ) |                    |   | (2,788    | )
|Accumulated other comprehensive loss       |  |                   | (103      | ) |                    |   | (103      | )
|                                           |  |                   |           |   |                    |   |           |  
|Total stockholders equity                 |  |                   | 502,763   |   |                    |   | 505,209   |  
|                                           |  |                   |           |   |                    |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |  | $                 | 1,311,389 |   |                    | $ | 1,315,020 |  
|                                           |  |                   |           |   |                    |   |           |  



See notes to condensed consolidated
financial statements.



1



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands)

(Unaudited)

---



|                                                                                                                 |  |                      |        |   |                                 |   |       
|---------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | ------------------------------- | - | ------
|                                                                                                                 |  | Thirteen Weeks Ended
|                                                                                                                 |  | December 27, 2003    |        |   | (Predecessor) December 28, 2002
|NET SALES                                                                                                        |  | $                    | 67,682 |   |                                 | $ | 69,805
|                                                                                                                 |  |                     
|COST OF SALES (Including inventory purchase accounting charge of $18,057 for the period ended December 27, 2003) |  |                      | 51,619 |   |                                 |   | 35,495
|                                                                                                                 |  |                      |        |   |                                 |   |       
|GROSS PROFIT                                                                                                     |  |                      | 16,063 |   |                                 |   | 34,310
|                                                                                                                 |  |                     
|OPERATING EXPENSES:                                                                                              |  |                      |        |   |                                 |   |       
|Selling and administrative                                                                                       |  |                      | 6,516  |   |                                 |   | 5,213 
|Amortization of intangibles                                                                                      |  |                      | 2,783  |   |                                 |   | 284   
|Research and development                                                                                         |  |                      | 517    |   |                                 |   | 476   
|                                                                                                                 |  |                      |        |   |                                 |   |       
|Total operating expenses                                                                                         |  |                      | 9,816  |   |                                 |   | 5,973 
|                                                                                                                 |  |                      |        |   |                                 |   |       
|INCOME FROM OPERATIONS                                                                                           |  |                      | 6,247  |   |                                 |   | 28,337
|                                                                                                                 |  |                     
|INTEREST EXPENSE - Net                                                                                           |  |                      | 12,669 |   |                                 |   | 8,939 
|                                                                                                                 |  |                      |        |   |                                 |   |       
|INCOME (LOSS) BEFORE INCOME TAXES                                                                                |  |                      | (6,422 | ) |                                 |   | 19,398
|                                                                                                                 |  |                     
|INCOME TAX PROVISION (BENEFIT)                                                                                   |  |                      | (2,402 | ) |                                 |   | 7,280 
|                                                                                                                 |  |                      |        |   |                                 |   |       
|NET INCOME (LOSS)                                                                                                |  | $                    | (4,020 | ) |                                 | $ | 12,118
|                                                                                                                 |  |                      |        |   |                                 |   |       



See notes to condensed consolidated
financial statements.



2



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE THIRTEEN WEEKS ENDED DECEMBER 27, 2003

(Amounts in thousands)

(Unaudited)

---



|                                                                                                          |  |              |         |                     |   |        |                                      |  |   |       |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ------------------- | - | ------ | ------------------------------------ |  | - | ----- | - |  | - | ------- | -
|                                                                                                          |  | Common Stock |         | Accumulated Deficit |   |        | Accumulated Other Comprehensive Loss |  |   | Total |  
|BALANCE, OCTOBER 1, 2003                                                                                  |  | $            | 508,100 |                     | $ | (2,788 | )                                    |  | $ | (103  | ) |  | $ | 505,209 |  
|                                                                                                          |  |              |         |                    
|Equity contribution from TD Holding - Stock option and deferred compensation costs incurred by TD Holding |  |              | 1,550   |                     |   |       |                                      |  |   |      |   |  |   | 1,550   |  
|                                                                                                          |  |              |         |                    
|Comprehensive loss - Net loss                                                                             |  |              |        |                     |   | (4,020 | )                                    |  |   |      |   |  |   | (4,020  | )
|                                                                                                          |  |              |         |                    
|Proceeds from exercise of stock options                                                                   |  |              | 24      |                     |   |       |                                      |  |   |      |   |  |   | 24      |  
|                                                                                                          |  |              |         |                     |   |        |                                      |  |   |       |   |  |   |         |  
|BALANCE, DECEMBER 27, 2003                                                                                |  | $            | 509,674 |                     | $ | (6,808 | )                                    |  | $ | (103  | ) |  | $ | 502,763 |  
|                                                                                                          |  |              |         |                     |   |        |                                      |  |   |       |   |  |   |         |  



See notes to condensed consolidated
financial statements.



3



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

---



|                                                                                         |  |                      |         |   |                                 |   |        |  
|---------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ------------------------------- | - | ------ | -
|                                                                                         |  | Thirteen Weeks Ended |        
|                                                                                         |  | December 27, 2003    |         |   | (Predecessor) December 28, 2002 |  
|OPERATING ACTIVITIES:                                                                    |  |                      |         |   |                                 |   |        |  
|Net income (loss)                                                                        |  | $                    | (4,020  | ) |                                 | $ | 12,118 |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                      |         |   |                                 |   |        |  
|Noncash inventory purchase accounting charge                                             |  |                      | 18,057  |   |                                 |   |       |  
|Depreciation                                                                             |  |                      | 1,865   |   |                                 |   | 1,720  |  
|Amortization of intangibles                                                              |  |                      | 2,783   |   |                                 |   | 284    |  
|Amortization of debt issue costs and note premium                                        |  |                      | 1,008   |   |                                 |   | 501    |  
|Interest deferral on Holdings PIK Notes                                                  |  |                      |        |   |                                 |   | 919    |  
|Noncash stock option and deferred compensation costs                                     |  |                      | 1,550   |   |                                 |   |       |  
|Changes in assets and liabilities:                                                       |  |                      |         |   |                                 |   |        |  
|Trade accounts receivable                                                                |  |                      | (1,500  | ) |                                 |   | 2,972  |  
|Inventories                                                                              |  |                      | 800     |   |                                 |   | (1,772 | )
|Income taxes receivable and other assets                                                 |  |                      | 11,206  |   |                                 |   | (505   | )
|Accounts payable                                                                         |  |                      | (1,646  | ) |                                 |   | (1,183 | )
|Accrued and other liabilities                                                            |  |                      | 5,664   |   |                                 |   | 1,150  |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|Net cash provided by operating activities                                                |  |                      | 35,767  |   |                                 |   | 16,204 |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|INVESTING ACTIVITIES:                                                                    |  |                      |         |   |                                 |   |        |  
|Capital expenditures                                                                     |  |                      | (629    | ) |                                 |   | (734   | )
|                                                                                         |  |                      |         |   |                                 |   |        |  
|Net cash used in investing activities                                                    |  |                      | (629    | ) |                                 |   | (734   | )
|                                                                                         |  |                      |         |   |                                 |   |        |  
|FINANCING ACTIVITIES:                                                                    |  |                      |         |   |                                 |   |        |  
|Payment of amounts borrowed under credit facility                                        |  |                      |        |   |                                 |   | (741   | )
|Proceeds from exercise of stock options                                                  |  |                      | 24      |   |                                 |   |       |  
|Payment of license obligation                                                            |  |                      | (1,500  | ) |                                 |   |       |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|Net cash used in financing activities                                                    |  |                      | (1,476  | ) |                                 |   | (741   | )
|                                                                                         |  |                      |         |   |                                 |   |        |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                |  |                      | 33,662  |   |                                 |   | 14,729 |  
|                                                                                         |  |                     
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           |  |                      | 18,902  |   |                                 |   | 49,206 |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                 |  | $                    | 52,564  |   |                                 | $ | 63,935 |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                        |  |                      |         |   |                                 |   |        |  
|Cash paid during the period for interest                                                 |  | $                    | 3,227   |   |                                 | $ | 12,034 |  
|                                                                                         |  |                      |         |   |                                 |   |        |  
|Cash paid (received) during the period for income taxes                                  |  | $                    | (13,156 | ) |                                 | $ | 552    |  
|                                                                                         |  |                      |         |   |                                 |   |        |  



See notes to condensed consolidated
financial statements.



4



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

THIRTEEN WEEKS ENDED DECEMBER 27, 2003 AND DECEMBER 28, 2002 (PREDECESSOR)

(UNAUDITED)

---



|1. | DESCRIPTION OF THE BUSINESS AND MERGER
|-- | --------------------------------------



Description of the BusinessTransDigm Holding Company (Holdings), through its wholly-owned subsidiary, TransDigm Inc.
(TransDigm), is a leading global supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. TransDigm, which includes the AeroControlex and Adel Wiggins Groups, along with
its wholly-owned subsidiaries, Champion Aerospace Inc. (Champion), MarathonNorco Aerospace, Inc. (Marathon), ZMP, Inc. (ZMP), Adams Rite Aerospace, Inc. (Adams Rite) and TD Finance Corporation
(collectively, and together with Holdings, the Company) offers a broad line of proprietary aerospace components. Major product offerings in the Power System Components category include ignition system components, gear pumps,
mechanical/electromechanical controls and actuators, batteries and chargers, and rods and locking devices used to hold open panels to allow access to engines for maintenance. Major product offerings in the Airframe System Components category include
engineered connectors, engineered latches and locking devices, and lavatory hardware and components.



MergerOn July 22, 2003, Holdings consummated a merger with TD Acquisition Corporation (TD Acquisition) pursuant to which
TD Acquisition merged with and into Holdings, with Holdings continuing as the surviving corporation as a wholly-owned subsidiary of a newly formed corporation, TD Holding Corporation (the Merger). In connection with the Merger, TransDigm
Inc. completed a tender offer for its outstanding 103/8% Senior Subordinated Notes due 2008 (the Senior
Subordinated Notes). Of the $200 million aggregate principal amount of outstanding Senior Subordinated Notes, a total of approximately $197.8 million aggregate principal amount of Senior Subordinated Notes were validly tendered and the
remaining $2.2 million aggregate principal amount of Senior Subordinated Notes were defeased pursuant to the terms of the indenture governing the Senior Subordinated Notes. In December 2003, TransDigm Inc. redeemed the defeased Senior Subordinated
Notes. In addition, as a result of the consummation of the Merger, the outstanding balance of $197.5 million under TransDigm Inc.s then existing senior secured credit facility became due and was repaid in its entirety upon the closing of the
Merger. The cash merger consideration of approximately $759.7 million paid to Holdings former common and preferred stockholders, holders of in-the-money stock options and the holder of the warrant to purchase Holdings common stock
(including merger related expenses of approximately $29.1 million borne by the then existing equity holders of Holdings and excluding the $35.7 million fair value of stock options rolled over in connection with the Merger), acquisition fees and
expenses of approximately $34.7 million and the repayment of substantially all of TransDigm Inc.s then existing debt in connection with the consummation of the Merger was financed through: (1) an investment of $471.3 million in TD Holding
Corporation (TD Holding) by Warburg Pincus Private Equity VIII, L.P. (Warburg Pincus) and certain other institutional investors which was contributed as equity to TD Acquisition which then contributed such proceeds as equity
to TD Funding Corporation which merged with and into TransDigm Inc. in connection with the Merger, (2) $295.0 million of borrowings under a new secured term loan facility, (3) $400.0 million of gross proceeds from the issuance by TransDigm Inc. of
new 83/8% Senior Subordinated Notes due 2011 (the 83/8% Senior Subordinated Notes) and (4) the use of existing cash balances. Following the Merger, Warburg Pincus, through its direct and indirect
ownership, owns a majority of the outstanding common stock of TD Holding. The new 83/8% Senior Subordinated
Notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior subordinated basis, by Holdings and all of TransDigms existing domestic subsidiaries.



The Merger was accounted for as a purchase and preliminary fair value
adjustments to the Companys assets and liabilities were recorded as of the date of the Merger. The Company is in the process of obtaining third-party valuations of certain tangible and intangible assets; thus, the allocation of TD
Holdings investment to the Companys assets and liabilities is subject to adjustment. The Company expects that $681.1 million of the $807.8 million of goodwill recorded in connection with the Merger will not be deductible for income tax
purposes.



5



---

##### Table of Contents

The following table summarizes the preliminary fair values assigned to the Companys assets and
liabilities in connection with the Merger (in thousands):



|                                  |  |   |          
|--------------------------------- |  | - | ---------
|Assets:                           |  |   |          
|Current assets                    |  | $ | 213,576  
|Property, plant and equipment     |  |   | 60,732   
|Goodwill                          |  |   | 807,815  
|Other intangible assets           |  |   | 237,814  
|Other assets                      |  |   | 30,038   
|                                  |  |   |          
|Total assets                      |  |   | 1,349,975
|                                  |  |   |          
|Liabilities:                      |  |   |          
|Current liabilities               |  |   | 82,035   
|Long-term debt                    |  |   | 692,788  
|Deferred income taxes             |  |   | 63,451   
|Other liabilities                 |  |   | 4,703    
|                                  |  |   |          
|Total liabilities                 |  |   | 842,977  
|                                  |  |   |          
|TD Holding investment in Holdings |  | $ | 506,998  
|                                  |  |   |          



The following table
summarizes the unaudited, consolidated pro forma results of operations of the Company, as if the Merger and the Norco Acquisition (see Note 4) had occurred on the first day of the thirteen-week period ended December 28, 2002 (Predecessor) (in
thousands):



|                       |  |                                                      |        |  
|---------------------- |  | ---------------------------------------------------- | ------ | -
|                       |  | Thirteen Weeks Ended December 28, 2002 (Predecessor) |       
|Net sales              |  | $                                                    | 74,998 |  
|                       | 
|Income from operations |  |                                                      | 7,069  |  
|                       | 
|Net loss               |  |                                                      | (4,058 | )



These pro forma
results of operations include the effects of the: (i) inventory purchase accounting adjustments that were charged to cost of sales in the year following the transactions as the inventory on hand as of the date of the transactions is sold, (ii)
additional amortization expense that was recognized from the identifiable intangible assets recorded in accounting for the transactions, (iii) additional depreciation expense that resulted from the write-up of the carrying value of property, plant
and equipment to fair value in accounting for the Merger, (iv) additional compensation expense that resulted from the new stock option plan and the deferred compensation plans of TD Holding established in conjunction with the Merger that cover
certain management personnel of the Company, and (v) additional interest expense that resulted from the Companys increased indebtedness resulting from the transactions. The pro forma results of operations for the period ended December 28, 2002
exclude the $176 million Merger charge recorded in July 2003 that was principally composed of compensation costs recognized for stock options redeemed or rolled over in connection with the Merger, the premium paid to redeem the Senior Subordinated
Notes and other costs related to the Merger. This pro forma information is not necessarily indicative of the results that actually would have been obtained if the transactions had occurred as of the beginning of the periods presented and is not
intended to be a projection of future results.



Separate
Financial StatementsSeparate financial statements of TransDigm are not presented since the 83/8%
Senior Subordinated Notes are fully and unconditionally guaranteed on a senior subordinated basis by Holdings and all existing domestic subsidiaries of TransDigm and since Holdings has no significant operations or assets separate from its investment
in TransDigm.



6



---

##### Table of Contents

|2. | UNAUDITED INTERIM FINANCIAL INFORMATION
|-- | ---------------------------------------



The financial information included herein is unaudited; however, the information reflects all adjustments (consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary for a fair presentation of the Companys financial position and results of operations and cash flows for the interim periods presented. These financial statements and notes should
be read in conjunction with the financial statements and related notes included in the Companys Annual Report on Form 10-K for the year ended September 30, 2003. The September 30, 2003 condensed consolidated balance sheet was derived from the
Companys audited financial statements. The results of operations for the thirteen weeks ended December 27, 2003 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the
financial statements for the period ended December 28, 2002 (Predecessor) to conform to the classifications used in the financial statements for the period ended December 27, 2003.



Since the date of the Merger (see Note 1), the accompanying financial statements include fair value adjustments to assets
and liabilities, including inventory, goodwill, other intangible assets and property, plant and equipment and the subsequent impact on cost of sales, amortization, and depreciation expenses. Accordingly, the accompanying condensed consolidated
financial statements for periods prior to the Merger are labeled as Predecessor financial statements.



|3. | NEW ACCOUNTING STANDARDS
|-- | ------------------------



During the quarter ended December 27, 2003, the Company implemented the provisions of the Financial Accounting Standards Boards (the
FASBs) Emerging Issues Task Force Abstract No 00-21, Revenue Arrangements with Multiple Deliverables,which provides criteria for determining how to account for multiple-deliverable revenue arrangements. The implementation
of this pronouncement had no impact on the Companys consolidated financial position or results of operations.



During December 2003, the FASB issued a revised Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which
requires existing, unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among the parties involved. The Company is not associated with variable interest
entities; therefore, the adoption of this statement did not have any effect on the Companys consolidated financial position or results of operations.



During December 2003, the FASB also issued a revision to Statement of Financial Accounting Standards No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106, which expands the disclosure requirements regarding plan assets and benefit obligations for the Companys two defined benefit pension plans.
The provisions of this statement are effective for the second quarter of fiscal 2004.



|4. | ACQUISITION
|-- | -----------



On February 24, 2003, Marathon acquired certain assets and assumed certain liabilities of the Norco, Inc. (Norco)
business from TransTechnology Corporation for $51.0 million in cash (the Acquisition). In addition, the Company was required to pay approximately $1.0 million of asset transfer tax payments in accordance with the purchase agreement and,
during August 2003, a $1.1 million purchase price adjustment was received from TransTechnology Corporation (excluding related fees and expenses of $0.1 million) based on a final determination of working capital as of the closing of the Norco
Acquisition.



Norco is a leading aerospace component
manufacturer of proprietary engine hold open mechanisms and specialty connecting devices. The primary reasons for the Acquisition were Norcos proprietary aerospace components, significant aftermarket sales and large share of niche markets that
are consistent with the Companys overall business and strategic direction. In addition, as a result of the Acquisition, Marathon expects to reduce the combined operating costs through the relocation of the Norco manufacturing process into its
existing Waco, Texas facility. During the fourth quarter of fiscal 2003, the Company relocated Norcos manufacturing operations from Norcos former facility in Connecticut to Marathons Waco, Texas facility. In connection with this
relocation, Norcos lease at its Connecticut facility was cancelled.



7



---

##### Table of Contents

The initial purchase price consideration of $51.0 million in cash, $1.0 million asset transfer tax
payments and $1.0 million of costs associated with the Acquisition were funded through the use of $28.2 million of the Companys existing cash balances and $24.8 million (net of fees of $0.2 million) of borrowings under its previous senior
secured credit facility (the Old Credit Facility). All amounts outstanding under the Old Credit Facility were repaid in connection with the consummation of the Merger (see Note 1).



The Company accounted for the Acquisition as a purchase and included the
results of operations of the acquired business in its consolidated financial statements from the effective date of the Acquisition. The Company is in the process of obtaining third-party valuations of certain tangible and intangible assets,
accordingly, the allocation of the purchase price is subject to refinement.



The Company expects substantially all of the goodwill recognized in accounting for the Acquisition will be deductible for income tax purposes. The following table summarizes the estimated fair values of the assets
acquired and recognized in accounting for the Acquisition and the liabilities assumed (in thousands):



|                                              |  |   |       
|--------------------------------------------- |  | - | ------
|Current assets                                |  | $ | 8,487 
|Property, plant and equipment                 |  |   | 834   
|Goodwill                                      |  |   | 28,180
|Other intangible assets                       |  |   | 17,137
|                                              |  |   |       
|Total assets acquired                         |  |   | 54,638
|Total liabilities assumedcurrent liabilities |  |   | 2,600 
|                                              |  |   |       
|Net assets acquired                           |  | $ | 52,038
|                                              |  |   |       



|5. | INVENTORIES
|-- | -----------



Inventories are stated at the lower of cost or market. Cost of inventories is determined by the average cost and the first-in, first-out (FIFO) methods.
Inventories consist of the following (in thousands):



|                                            |  |                   |        |   |                    |   |        |  
|------------------------------------------- |  | ----------------- | ------ | - | ------------------ | - | ------ | -
|                                            |  | December 27, 2003 |        |   | September 30, 2003 |  
|Work-in-progress and finished goods(1)      |  | $                 | 31,686 |   |                    | $ | 49,915 |  
|Raw materials and purchased component parts |  |                   | 33,732 |   |                    |   | 34,512 |  
|                                            |  |                   |        |   |                    |   |        |  
|Total                                       |  |                   | 65,418 |   |                    |   | 84,427 |  
|Reserve for excess and obsolete inventory   |  |                   | (6,889 | ) |                    |   | (7,041 | )
|                                            |  |                   |        |   |                    |   |        |  
|Inventories - net                           |  | $                 | 58,529 |   |                    | $ | 77,386 |  
|                                            |  |                   |        |   |                    |   |        |  

---

|(1) | The balance at September 30, 2003 includes $18.1 million of purchase price accounting
adjustments recorded in conjunction with the Merger (see Note 1).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



8



---

##### Table of Contents

|6. | INTANGIBLE ASSETS
|-- | -----------------



Intangible assets subject to amortization consist of the following (in thousands):



|                      |  |                       |         |                          |   |       |  |   |        
|--------------------- |  | --------------------- | ------- | ------------------------ | - | ----- |  | - | -------
|                      |  | December 27, 2003    
|                      |  | Gross Carrying Amount |         | Accumulated Amortization |   | Net  
|Unpatented technology |  | $                     | 82,033  |                          | $ | 1,509 |  | $ | 80,524 
|License agreement     |  |                       | 9,468   |                          |   | 252   |  |   | 9,216  
|Trade secrets         |  |                       | 11,772  |                          |   | 223   |  |   | 11,549 
|Patented technology   |  |                       | 1,345   |                          |   | 74    |  |   | 1,271  
|Order backlog         |  |                       | 6,480   |                          |   | 2,700 |  |   | 3,780  
|                      |  |                       |         |                          |   |       |  |   |        
|Total                 |  | $                     | 111,098 |                          | $ | 4,758 |  | $ | 106,340
|                      |  |                       |         |                          |   |       |  |   |        
|                      | 
|                      |  | September 30, 2003   
|                      |  | Gross Carrying Amount |         | Accumulated Amortization |   | Net  
|Unpatented technology |  | $                     | 82,033  |                          | $ | 662   |  | $ | 81,371 
|License agreement     |  |                       | 10,687  |                          |   | 101   |  |   | 10,586 
|Trade secrets         |  |                       | 11,772  |                          |   | 97    |  |   | 11,675 
|Patented technology   |  |                       | 1,345   |                          |   | 15    |  |   | 1,330  
|Order backlog         |  |                       | 6,480   |                          |   | 1,100 |  |   | 5,380  
|                      |  |                       |         |                          |   |       |  |   |        
|Total                 |  | $                     | 112,317 |                          | $ | 1,975 |  | $ | 110,342
|                      |  |                       |         |                          |   |       |  |   |        



During the period
ended December 27, 2003, the carrying value of the license agreement intangible asset and related obligation were reduced approximately $1.2 million as a result of a mutual agreement with the licensor to modify the license agreement.



The total carrying amount of identifiable intangible assets not subject to
amortization consists of $125.5 million of trademarks and trade names at both December 27, 2003 and September 30, 2003.



Information regarding the amortization expense of amortizable intangible assets is detailed below (in thousands):



|                                                           |  |   |       
|---------------------------------------------------------- |  | - | ------
|Aggregate Amortization Expense:                            |  |  
|Thirteen weeks ended December 27, 2003                     |  | $ | 2,783 
|Thirteen weeks ended December 28, 2002 (Predecessor)       |  |   | 284   
|                                                           | 
|Estimated Amortization Expense: Period
Ended September 30, |  |  
|Thirty-nine weeks ended 2004                               |  | $ | 7,542 
|Fiscal year ended 2005                                     |  |   | 4,988 
|Fiscal year ended 2006                                     |  |   | 4,988 
|Fiscal year ended 2007                                     |  |   | 4,988 
|Fiscal year ended 2008                                     |  |   | 4,988 
|Fiscal year ended 2009                                     |  |   | 4,874 
|Thereafter                                                 |  |   | 73,972



9



---

##### Table of Contents

|7. | PRODUCT WARRANTY
|-- | ----------------



The Company provides limited warranties in connection with the sale of its products. The warranty period for products sold varies among the Companys
operations, ranging from 90 days to five years; however, the warranty period for the majority of the Companys sales generally does not exceed one year. A provision for the estimated cost to repair or replace the products is recorded at the
time of sale and periodically adjusted to reflect actual experience. The following table presents a reconciliation of changes in the product warranty liability for the thirteen week periods ended December 27, 2003 and December 28, 2002 (Predecessor)
(in thousands):



|                                         |  |                      |       |   |                                 |   |       |  
|---------------------------------------- |  | -------------------- | ----- | - | ------------------------------- | - | ----- | -
|                                         |  | Thirteen Weeks Ended |      
|                                         |  | December 27, 2003    |       |   | December 28, 2002 (Predecessor) |  
|Liability balance at beginning of period |  | $                    | 3,070 |   |                                 | $ | 2,356 |  
|Accruals for warranties issued           |  |                      | 483   |   |                                 |   | 229   |  
|Warranty claims settled                  |  |                      | (434  | ) |                                 |   | (345  | )
|                                         |  |                      |       |   |                                 |   |       |  
|Liability balance at end of period       |  | $                    | 3,119 |   |                                 | $ | 2,240 |  
|                                         |  |                      |       |   |                                 |   |       |  



|8. | CONTINGENCIES
|-- | -------------



EnvironmentalThe Company has been addressing contaminated soil and groundwater beneath its facility in Waco, Texas under the Texas
Voluntary Cleanup Program. On October 15, 2003, the Texas Commission on Environmental Quality (TCEQ) issued a certificate of completion for such matter. Although there can be no assurance that material expenditures will not be required
in the future to address currently unidentified contamination or to satisfy further requirements of TCEQ, the Company believes, based upon information currently available, that the current soil and groundwater remediation at the Waco, Texas facility
will not require the incurrence of material future expenditures.



In connection with the Companys acquisition of Marathon, a $2.0 million escrow was created to cover the cost of certain remediation at Marathons Waco, Texas facility. During September 1998, the former owners of Marathon filed a
lawsuit against the Company to release the environmental escrow alleging, among other things, that the Company had violated the requirements of the stock purchase agreement relating to the investigation of the presence of certain contaminants at the
Waco facility. The Company asserted a counterclaim against such former owners and denied the allegations in the complaint. On October 15, 2003, the TCEQ issued a certificate of completion for the ongoing remediation at the Waco facility. In
connection with the completion of the matter, the Company and the former owners of Marathon are in the process of finalizing a proposed settlement of the ongoing litigation. Under the terms of the proposed settlement, the Company expects to be
reimbursed out of the escrow fund for certain amounts (which are not material) expended by it in connection with the remediation covered by the escrow. The balance of the escrow fund will then be used to pay the fees of the escrow agent with the
remainder released to the former owners of Marathon in accordance with the terms of the stock purchase agreement. As part of the settlement, the former owners of Marathon and the Company will each agree to dismiss the litigation



OtherIn the ordinary course of business, the Company is
from time to time threatened with, or may become a party to, legal actions and other proceedings. While the Company is currently involved in certain legal proceedings, it believes the results of these proceedings will not have a material adverse
effect on its financial condition, results of operations, or cash flows. The Company believes that its potential exposure to such legal actions is adequately covered by its aviation product and general liability insurance.



10



---

##### Table of Contents

|9. | SUPPLEMENTAL GUARANTOR INFORMATION
|-- | ----------------------------------



TransDigms 83/8% Senior Subordinated Notes (see Note 1), are fully and unconditionally guaranteed by Holdings and all direct and indirect subsidiaries of TransDigm (other than one wholly-owned, non-guarantor subsidiary that has inconsequential
assets, liabilities and equity) on a senior subordinated basis. The Holdings guarantee of the 83/8% Senior
Subordinated Notes is subordinated to Holdings guarantee of TransDigms borrowings under its new senior secured credit facility. The following supplemental consolidating condensed financial information presents the balance sheets of
Holdings as of December 27, 2003 and September 30, 2003 and its statements of operations and cash flows for the thirteen weeks ended December 27, 2003, and December 28, 2002 (Predecessor).



11



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 27, 2003

(In Thousands)



|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|---------------------------------------------------- |  | -------- | ------- | --------- | - | --------------------- |  | ------------ | ------- |  | ------------------ | ---------- | - |  | - | ---------
|                                                     |  | Holdings |         | TransDigm |   | Subsidiary Guarantors |  | Eliminations |         |  | Total Consolidated
|ASSETS                                               |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|                                                     |  |          |         |           |  
|CURRENT ASSETS:                                      |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|Cash and cash equivalents                            |  | $        |        |           | $ | 52,382                |  | $            | 182     |  | $                  |           |   |  | $ | 52,564   
|Trade accounts receivable - Net                      |  |          |        |           |   | 16,483                |  |              | 21,726  |  |                    |           |   |  |   | 38,209   
|Income taxes receivable                              |  |          | 20,031  |           |   |                      |  |              |        |  |                    |           |   |  |   | 20,031   
|Inventories                                          |  |          |        |           |   | 20,688                |  |              | 37,841  |  |                    |           |   |  |   | 58,529   
|Deferred income taxes                                |  |          |        |           |   | 13,777                |  |              |        |  |                    |           |   |  |   | 13,777   
|Prepaid expenses and other                           |  |          |        |           |   | 837                   |  |              | 288     |  |                    |           |   |  |   | 1,125    
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|Total current assets                                 |  |          | 20,031  |           |   | 104,167               |  |              | 60,037  |  |                    |           |   |  |   | 184,235  
|                                                     |  |          |         |           |  
|INVESTMENT IN SUBSIDIARIES AND INTERCOMPANY BALANCES |  |          | 482,835 |           |   | 1,343,559             |  |              | 133,289 |  |                    | (1,959,683 | ) |  |   |         
|                                                     |  |          |         |           |  
|PROPERTY, PLANT AND EQUIPMENT - Net                  |  |          |        |           |   | 22,718                |  |              | 36,388  |  |                    |           |   |  |   | 59,106   
|                                                     |  |          |         |           |  
|GOODWILL - Net                                       |  |          |        |           |   | 411,986               |  |              | 395,829 |  |                    |           |   |  |   | 807,815  
|                                                     |  |          |         |           |  
|OTHER INTANGIBLE ASSETS - Net                        |  |          |        |           |   | 92,376                |  |              | 139,461 |  |                    |           |   |  |   | 231,837  
|                                                     |  |          |         |           |  
|DEBT ISSUE COSTS - Net                               |  |          |        |           |   | 27,763                |  |              |        |  |                    |           |   |  |   | 27,763   
|                                                     |  |          |         |           |  
|OTHER                                                |  |          |        |           |   | 633                   |  |              |        |  |                    |           |   |  |   | 633      
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|TOTAL ASSETS                                         |  | $        | 502,866 |           | $ | 2,003,202             |  | $            | 765,004 |  | $                  | (1,959,683 | ) |  | $ | 1,311,389
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|LIABILITIES AND STOCKHOLDERS EQUITY                 |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|                                                     |  |          |         |           |  
|CURRENT LIABILITIES:                                 |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|Current portion of long-term liabilities             |  | $        |        |           | $ | 4,450                 |  | $            |        |  | $                  |           |   |  | $ | 4,450    
|Accounts payable                                     |  |          |        |           |   | 4,919                 |  |              | 4,656   |  |                    |           |   |  |   | 9,575    
|Accrued liabilities                                  |  |          |        |           |   | 28,812                |  |              | 6,743   |  |                    |           |   |  |   | 35,555   
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|Total current liabilities                            |  |          |        |           |   | 38,181                |  |              | 11,399  |  |                    |           |   |  |   | 49,580   
|                                                     |  |          |         |           |  
|LONG-TERM DEBT - Less current portion                |  |          |        |           |   | 692,050               |  |              |        |  |                    |           |   |  |   | 692,050  
|                                                     |  |          |         |           |  
|DEFERRED INCOME TAXES                                |  |          |        |           |   | 64,046                |  |              |        |  |                    |           |   |  |   | 64,046   
|                                                     |  |          |         |           |  
|OTHER NON-CURRENT LIABILITIES                        |  |          |        |           |   | 1,748                 |  |              | 1,202   |  |                    |           |   |  |   | 2,950    
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|Total liabilities                                    |  |          |        |           |   | 796,025               |  |              | 12,601  |  |                    |           |   |  |   | 808,626  
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|STOCKHOLDERS EQUITY                                 |  |          | 502,866 |           |   | 1,207,177             |  |              | 752,403 |  |                    | (1,959,683 | ) |  |   | 502,763  
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY           |  | $        | 502,866 |           | $ | 2,003,202             |  | $            | 765,004 |  | $                  | (1,959,683 | ) |  | $ | 1,311,389
|                                                     |  |          |         |           |   |                       |  |              |         |  |                    |            |   |  |   |          



12



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2003

(In Thousands)



|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|------------------------------------------------------- |  | -------- | ------- | --------- | - | --------------------- |  | - | ------------ | - |  | ------------------ | ---------- | - |  | - | ---------
|                                                        |  | Holdings |         | TransDigm |   | Subsidiary Guarantors |  |   | Eliminations |   |  | Total Consolidated
|ASSETS                                                  |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|                                                        |  |          |         |           |  
|CURRENT ASSETS:                                         |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|Cash and cash equivalents                               |  | $        |        |           | $ | 19,352                |  | $ | (450         | ) |  | $                  |           |   |  | $ | 18,902   
|Trade accounts receivable - Net                         |  |          |        |           |   | 14,520                |  |   | 22,189       |   |  |                    |           |   |  |   | 36,709   
|Income taxes receivable                                 |  |          | 36,703  |           |   |                      |  |   |             |   |  |                    |           |   |  |   | 36,703   
|Inventories                                             |  |          |        |           |   | 26,337                |  |   | 51,049       |   |  |                    |           |   |  |   | 77,386   
|Deferred income taxes                                   |  |          |        |           |   | 8,177                 |  |   |             |   |  |                    |           |   |  |   | 8,177    
|Prepaid expenses and other                              |  |          |        |           |   | 3,296                 |  |   | 554          |   |  |                    |           |   |  |   | 3,850    
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|Total current assets                                    |  |          | 36,703  |           |   | 71,682                |  |   | 73,342       |   |  |                    |           |   |  |   | 181,727  
|                                                        |  |          |         |           |  
|INVESTMENTS IN SUBSIDIARIES AND INTERCOMPANY BALANCES   |  |          | 468,506 |           |   | 1,371,847             |  |   | (632,774     | ) |  |                    | (1,207,579 | ) |  |   |         
|                                                        |  |          |         |           |  
|PROPERTY, PLANT AND EQUIPMENT - Net                     |  |          |        |           |   | 23,295                |  |   | 37,047       |   |  |                    |           |   |  |   | 60,342   
|                                                        |  |          |         |           |  
|GOODWILL - Net                                          |  |          |        |           |   | 412,028               |  |   | 395,686      |   |  |                    |           |   |  |   | 807,714  
|                                                        |  |          |         |           |  
|OTHER INTANGIBLE ASSETS - Net                           |  |          |        |           |   | 94,845                |  |   | 140,994      |   |  |                    |           |   |  |   | 235,839  
|                                                        |  |          |         |           |  
|DEBT ISSUE COSTS - Net                                  |  |          |        |           |   | 28,771                |  |   |             |   |  |                    |           |   |  |   | 28,771   
|                                                        |  |          |         |           |  
|OTHER                                                   |  |          |        |           |   | 627                   |  |   |             |   |  |                    |           |   |  |   | 627      
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|TOTAL ASSETS                                            |  | $        | 505,209 |           | $ | 2,003,095             |  | $ | 14,295       |   |  | $                  | (1,207,579 | ) |  | $ | 1,315,020
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)       |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|                                                        |  |          |         |           |  
|CURRENT LIABILITIES:                                    |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|Current portion of long-term liabilities                |  | $        |        |           | $ | 7,634                 |  | $ |             |   |  | $                  |           |   |  | $ | 7,634    
|Accounts payable                                        |  |          |        |           |   | 5,512                 |  |   | 5,709        |   |  |                    |           |   |  |   | 11,221   
|Accrued liabilities                                     |  |          |        |           |   | 21,696                |  |   | 7,929        |   |  |                    |           |   |  |   | 29,625   
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|Total current liabilities                               |  |          |        |           |   | 34,842                |  |   | 13,638       |   |  |                    |           |   |  |   | 48,480   
|                                                        |  |          |         |           |  
|LONG-TERM DEBT - Less current portion                   |  |          |        |           |   | 692,050               |  |   |             |   |  |                    |           |   |  |   | 692,050  
|                                                        |  |          |         |           |  
|DEFERRED INCOME TAXES                                   |  |          |        |           |   | 64,364                |  |   |             |   |  |                    |           |   |  |   | 64,364   
|                                                        |  |          |         |           |  
|OTHER NON-CURRENT LIABILITIES                           |  |          |        |           |   | 3,715                 |  |   | 1,202        |   |  |                    |           |   |  |   | 4,917    
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|Total liabilities                                       |  |          |        |           |   | 794,971               |  |   | 14,840       |   |  |                    |           |   |  |   | 809,811  
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|TOTAL STOCKHOLDERS EQUITY (DEFICIENCY)                 |  |          | 505,209 |           |   | 1,208,124             |  |   | (545         | ) |  |                    | (1,207,579 | ) |  |   | 505,209  
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY) |  | $        | 505,209 |           | $ | 2,003,095             |  | $ | 14,295       |   |  | $                  | (1,207,579 | ) |  | $ | 1,315,020
|                                                        |  |          |         |           |   |                       |  |   |              |   |  |                    |            |   |  |   |          



13



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THIRTEEN WEEKS ENDED DECEMBER 27, 2003

(In Thousands)



|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|--------------------------------------- |  | -------- | ------ | - | --------- | - | ------- | -------------------- |  | ------------ | ------ | ----------------- | - | ----- |  | - | ------- | -
|                                        |  | Holdings |        |   | TransDigm |   |         | SubsidiaryGuarantors |  | Eliminations |        | TotalConsolidated |  
|NET SALES                               |  | $        |       |   |           | $ | 29,723  |                      |  | $            | 37,959 |                   | $ |      |  | $ | 67,682  |  
|                                        |  |          |        |   |          
|COST OF SALES                           |  |          |       |   |           |   | 18,713  |                      |  |              | 32,906 |                   |   |      |  |   | 51,619  |  
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|GROSS PROFIT                            |  |          |       |   |           |   | 11,010  |                      |  |              | 5,053  |                   |   |      |  |   | 16,063  |  
|                                        |  |          |        |   |          
|OPERATING EXPENSES:                     |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|Selling and administrative              |  |          |       |   |           |   | 4,082   |                      |  |              | 2,434  |                   |   |      |  |   | 6,516   |  
|Amortization of intangibles             |  |          |       |   |           |   | 1,250   |                      |  |              | 1,533  |                   |   |      |  |   | 2,783   |  
|Research and development                |  |          |       |   |           |   | 334     |                      |  |              | 183    |                   |   |      |  |   | 517     |  
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|Total operating expenses                |  |          |       |   |           |   | 5,666   |                      |  |              | 4,150  |                   |   |      |  |   | 9,816   |  
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|INCOME FROM OPERATIONS                  |  |          |       |   |           |   | 5,344   |                      |  |              | 903    |                   |   |      |  |   | 6,247   |  
|                                        |  |          |        |   |          
|OTHER INCOME (EXPENSES):                |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|Interest expense - Net                  |  |          | (2,433 | ) |           |   | (10,959 | )                    |  |              | 723    |                   |   |      |  |   | (12,669 | )
|Equity in income (loss) of subsidiaries |  |          | (2,497 | ) |           |   | 1,018   |                      |  |              |       |                   |   | 1,479 |  |   |        |  
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|INCOME (LOSS) BEFORE INCOME TAXES       |  |          | (4,930 | ) |           |   | (4,597  | )                    |  |              | 1,626  |                   |   | 1,479 |  |   | (6,422  | )
|                                        |  |          |        |   |          
|INCOME TAX PROVISION (BENEFIT)          |  |          | (910   | ) |           |   | (2,100  | )                    |  |              | 608    |                   |   |      |  |   | (2,402  | )
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  
|NET INCOME (LOSS)                       |  | $        | (4,020 | ) |           | $ | (2,497  | )                    |  | $            | 1,018  |                   | $ | 1,479 |  | $ | (4,020  | )
|                                        |  |          |        |   |           |   |         |                      |  |              |        |                   |   |       |  |   |         |  



14



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THIRTEEN WEEKS ENDED DECEMBER 28, 2002 (PREDECESSOR)

(In Thousands)



|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|-------------------------------- |  | -------- | ------ | - | --------- | - | ------ | --------------------- |  | - | ------------ | - |  | ------------------ | ------- | - |  | - | ------ | -
|                                 |  | Holdings |        |   | TransDigm |   |        | Subsidiary Guarantors |  |   | Eliminations |   |  | Total Consolidated |        
|NET SALES                        |  | $        |       |   |           | $ | 29,099 |                       |  | $ | 40,706       |   |  | $                  |        |   |  | $ | 69,805 |  
|                                 |  |          |        |   |          
|COST OF SALES                    |  |          |       |   |           |   | 12,304 |                       |  |   | 23,191       |   |  |                    |        |   |  |   | 35,495 |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|GROSS PROFIT                     |  |          |       |   |           |   | 16,795 |                       |  |   | 17,515       |   |  |                    |        |   |  |   | 34,310 |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|OPERATING EXPENSES:              |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|Selling and administrative       |  |          |       |   |           |   | 2,908  |                       |  |   | 2,067        |   |  |                    |        |   |  |   | 5,213  |  
|Amortization of intangibles      |  |          |       |   |           |   | 151    |                       |  |   | 133          |   |  |                    |        |   |  |   | 284    |  
|Research and development         |  |          |       |   |           |   | 430    |                       |  |   | 284          |   |  |                    |        |   |  |   | 476    |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|Total operating expenses         |  |          |       |   |           |   | 3,489  |                       |  |   | 2,484        |   |  |                    |        |   |  |   | 5,973  |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|INCOME FROM OPERATIONS           |  |          |       |   |           |   | 13,306 |                       |  |   | 15,031       |   |  |                    |        |   |  |   | 28,337 |  
|                                 |  |          |        |   |          
|OTHER INCOME (EXPENSES):         |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|Interest expense - Net           |  |          | (927   | ) |           |   | (5,883 | )                     |  |   | (2,129       | ) |  |                    |        |   |  |   | (8,939 | )
|Equity in income of subsidiaries |  |          | 12,697 |   |           |   | 8,060  |                       |  |   |             |   |  |                    | (20,757 | ) |  |   |       |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|INCOME BEFORE INCOME TAXES       |  |          | 11,770 |   |           |   | 15,483 |                       |  |   | 12,902       |   |  |                    | (20,757 | ) |  |   | 19,398 |  
|                                 |  |          |        |   |          
|INCOME TAX PROVISION (BENEFIT)   |  |          | (348   | ) |           |   | 2,786  |                       |  |   | 4,842        |   |  |                    |        |   |  |   | 7,280  |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  
|NET INCOME                       |  | $        | 12,118 |   |           | $ | 12,697 |                       |  | $ | 8,060        |   |  | $                  | (20,757 | ) |  | $ | 12,118 |  
|                                 |  |          |        |   |           |   |        |                       |  |   |              |   |  |                    |         |   |  |   |        |  



15



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THIRTEEN WEEKS ENDED DECEMBER 27, 2003

(In Thousands)



|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | -------- | ------- | - | --------- | - | ------ | --------------------- |  | - | ------------ | - |  | ------------------ | ------ | - |  | - | ------ | -
|                                                                                        |  | Holdings |         |   | TransDigm |   |        | Subsidiary Guarantors |  |   | Eliminations |   |  | Total Consolidated |       
|OPERATING ACTIVITIES:                                                                   |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Net income (loss)                                                                       |  | $        | (4,020  | ) |           | $ | (2,497 | )                     |  | $ | 1,018        |   |  | $                  | 1,479  |   |  | $ | (4,020 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities |  |          | 20,719  |   |           |   | 6,365  |                       |  |   | 14,182       |   |  |                    | (1,479 | ) |  |   | 39,787 |  
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Net cash provided by operating activities                                               |  |          | 16,699  |   |           |   | 3,868  |                       |  |   | 15,200       |   |  |                    |       |   |  |   | 35,767 |  
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|INVESTING ACTIVITIES                                                                    |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Capital expenditures                                                                    |  |          |        |   |           |   | (194   | )                     |  |   | (435         | ) |  |                    |       |   |  |   | (629   | )
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Net cash used in investing activities                                                   |  |          |        |   |           |   | (194   | )                     |  |   | (435         | ) |  |                    |       |   |  |   | (629   | )
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|FINANCING ACTIVITIES:                                                                   |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Changes in intercompany activities                                                      |  |          | (16,723 | ) |           |   | 30,856 |                       |  |   | (14,133      | ) |  |                    |       |   |  |   |       |  
|Proceeds from exercise of stock options                                                 |  |          | 24      |   |           |   |       |                       |  |   |             |   |  |                    |       |   |  |   | 24     |  
|Payment of license obligation                                                           |  |          |        |   |           |   | (1,500 | )                     |  |   |             |   |  |                    |       |   |  |   | (1,500 | )
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|Net cash provided by (used in) financing activities                                     |  |          | (16,699 | ) |           |   | 29,356 |                       |  |   | (14,133      | ) |  |                    |       |   |  |   | (1,476 | )
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|INCREASE IN CASH AND CASH EQUIVALENTS                                                   |  |          |        |   |           |   | 33,030 |                       |  |   | 632          |   |  |                    |       |   |  |   | 33,662 |  
|                                                                                        |  |          |         |   |          
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          |  |          |        |   |           |   | 19,352 |                       |  |   | (450         | ) |  |                    |       |   |  |   | 18,902 |  
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                |  | $        |        |   |           | $ | 52,382 |                       |  | $ | 182          |   |  | $                  |       |   |  | $ | 52,564 |  
|                                                                                        |  |          |         |   |           |   |        |                       |  |   |              |   |  |                    |        |   |  |   |        |  



16



---

##### Table of Contents

TRANSDIGM HOLDING COMPANY



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THIRTEEN WEEKS ENDED DECEMBER 28, 2002 (PREDECESSOR)

(In Thousands)



|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|-------------------------------------------------------------------------------- |  | -------- | ------- | - | --------- | - | ------ | -------------------- |  | - | ------------ | - |  | ----------------- | ------- | - |  | - | ------ | -
|                                                                                 |  | Holdings |         |   | TransDigm |   |        | SubsidiaryGuarantors |  |   | Eliminations |   |  | TotalConsolidated |        
|OPERATING ACTIVITIES:                                                            |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Net income                                                                       |  | $        | 12,118  |   |           | $ | 12,697 |                      |  | $ | 8,060        |   |  | $                 | (20,757 | ) |  | $ | 12,118 |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |          | (11,770 | ) |           |   | (1,654 | )                    |  |   | (3,247       | ) |  |                   | 20,757  |   |  |   | 4,086  |  
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Net cash provided by operating activities                                        |  |          | 348     |   |           |   | 11,043 |                      |  |   | 4,813        |   |  |                   |        |   |  |   | 16,204 |  
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|INVESTING ACTIVITIES                                                             |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Capital expenditures                                                             |  |          |        |   |           |   | (339   | )                    |  |   | (395         | ) |  |                   |        |   |  |   | (734   | )
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Net cash used in investing activities                                            |  |          |        |   |           |   | (339   | )                    |  |   | (395         | ) |  |                   |        |   |  |   | (734   | )
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|FINANCING ACTIVITIES:                                                            |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Changes in intercompany activities                                               |  |          | (348    | ) |           |   | 4,464  |                      |  |   | (4,116       | ) |  |                   |        |   |  |   |       |  
|Payment of amounts borrowed under credit facility                                |  |          |        |   |           |   | (741   | )                    |  |   |             |   |  |                   |        |   |  |   | (741   | )
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|Net cash provided by (used in) financing activities                              |  |          | (348    | ) |           |   | 3,723  |                      |  |   | (4,116       | ) |  |                   |        |   |  |   | (741   | )
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|INCREASE IN CASH AND CASH EQUIVALENTS                                            |  |          |        |   |           |   | 14,427 |                      |  |   | 302          |   |  |                   |        |   |  |   | 14,729 |  
|                                                                                 |  |          |         |   |          
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                   |  |          |        |   |           |   | 50,866 |                      |  |   | (1,660       | ) |  |                   |        |   |  |   | 49,206 |  
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                         |  | $        |        |   |           | $ | 65,293 |                      |  | $ | (1,358       | ) |  | $                 |        |   |  | $ | 63,935 |  
|                                                                                 |  |          |         |   |           |   |        |                      |  |   |              |   |  |                   |         |   |  |   |        |  



*    *    *    *    *



17



---

##### Table of Contents

PART I: FINANCIAL INFORMATION



ITEM 2



MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following
discussion of the Companys financial condition and results of operations should be read together with Holdings consolidated financial statements and the related notes included elsewhere in the Report. References in this section to
TransDigm, we, us or our are to TransDigm Inc. and its subsidiaries. References to Holdings are to TransDigm Holding Company, which holds all of the outstanding capital stock of TransDigm.
References to the Company are to Holdings, together with TransDigm. Financial information presented herein for the periods through the merger of TD Acquisition Corporation into Holdings and TD Funding Corporation into TransDigm Inc. on
July 22, 2003 (seeRecent Developments) is presented as Predecessor financial information. The Companys condensed consolidated financial statements for the period subsequent to the Merger reflect a new basis of
accounting incorporating the fair value adjustments made in recording the Merger while prior periods are presented using the historical cost basis of the Company.



This Quarterly Statement includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended, including, in particular, the statements about the Companys plans, strategies and prospects under this Managements Discussion and Analysis of Financial Condition and Results
of Operations section. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions or
expectations will be achieved. Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Statement include but are not limited to:



| |  | We have a substantial amount of indebtedness which could adversely affect our financial health.
| | - | -----------------------------------------------------------------------------------------------



| |  | Increases in interest rates could increase our interest expense.
| | - | ----------------------------------------------------------------



| |  | Our substantial indebtedness could prevent us from fulfilling our obligations under our indebtedness. To service our indebtedness, we will require a significant amount of cash. Our
ability to generate cash depends on many factors beyond our control.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Despite current indebtedness levels, we may still be able to incur substantially more debt.
| | - | -------------------------------------------------------------------------------------------



| |  | The terms of our new senior secured credit facility and the indenture governing the senior subordinated notes may restrict our current and future operations, particularly our
ability to respond to changes or to take certain actions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Future terrorist attacks may have a material, adverse impact on our business.
| | - | -----------------------------------------------------------------------------



| |  | Our business is sensitive to the number of flight hours that our customers planes spend aloft and to our customers profitability. These items are, in turn, affected by
general economic conditions. In addition, our sales to manufacturers of new large aircraft are cyclical.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We rely heavily on certain customers for much of our sales.
| | - | -----------------------------------------------------------



| |  | We generally do not have guaranteed future sales of our products. Further, we enter into fixed price contracts with some of our customers, so we take the risk for cost overruns.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A decline in the U.S. defense budget or the defense budget of foreign governments may adversely affect our sales of parts used in military aircraft.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



18



---

##### Table of Contents

| |  | Our business may be adversely affected if we lost our government or industry approvals or if more onerous government regulations were enacted or industry oversight increased.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We are dependent on our highly trained employees and any work stoppage or difficulty hiring similar employees would adversely affect our business.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | If we lose our senior management, our business may be adversely affected.
| | - | -------------------------------------------------------------------------



| |  | Our business is dependent on the availability of certain components and raw materials that we buy from suppliers.
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | We could incur substantial costs as a result of violations of or liabilities under environmental laws.
| | - | ------------------------------------------------------------------------------------------------------



| |  | Our international business exposes us to risks relating to increased regulation and political or economic instability, globally or within certain foreign countries.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We intend to pursue future acquisitions and our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms or effectively integrate new
operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have recorded a significant amount of intangible assets, which may never generate the returns we expect.
| | - | -----------------------------------------------------------------------------------------------------------



| |  | We face significant competition.
| | - | --------------------------------



| |  | We could be adversely affected as a result of a lawsuit if one of our components causes an aircraft to crash and we are not covered by our insurance policies.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



All forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by those cautionary statements. Many such factors are outside the control of the Company. Consequently, such forward-looking statements should be regarded solely as its current
plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances
after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.



Overview



TransDigm is a leading
supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft. Most of the Companys products share four common characteristics: (1) highly engineered and proprietary; (2) significant aftermarket
content, (3) sole source provider; and (4) large share of niche markets.



TransDigms customers include distributors of aerospace components, commercial airlines, aircraft maintenance facilities, aircraft and engine original equipment manufacturers, or OEMs, various armed forces of the United States and
foreign governments, and defense OEMs. TransDigm generates the majority of its operating income from sales of replacement parts in the commercial and defense aftermarkets. Most of TransDigms OEM sales are on an exclusive sole source basis,
meaning that, in most cases, TransDigm is the only certified provider of these parts in the aftermarket. Aftermarket parts sales are driven by the size and usage of the worldwide aircraft fleet, are historically relatively stable and generate
recurring revenues over the life of an aircraft that are many times the size of the original OEM purchases. TransDigm has over 40 years of experience in most of its product lines, which allows it to benefit from a large and growing installed base of
aircraft.



Recent Developments



On July 22, 2003, Holdings consummated a merger with TD Acquisition Corporation (TD
Acquisition) pursuant to which TD Acquisition merged with and into Holdings, with Holdings continuing as the surviving corporation as a wholly-owned subsidiary of a newly formed corporation, TD Holding Corporation (the Merger). In
connection



19



---

##### Table of Contents

with the Merger, TransDigm Inc. completed a tender offer for its outstanding 103/8% Senior Subordinated Notes due 2008 (the 103/8% Senior Subordinated Notes). Of the $200 million aggregate principal amount of outstanding 103/8% Senior Subordinated Notes, a total of approximately $197.8 million aggregate principal amount of 103/8% Senior Subordinated Notes were validly tendered and the remaining $2.2 million aggregate principal amount of 103/8% Senior Subordinated Notes were defeased pursuant to the terms of the indenture governing the 103/8% Senior Subordinated Notes. In December 2003, TransDigm Inc. redeemed the 103/8% Senior
Subordinated Notes that were previously defeased. In addition, as a result of the consummation of the Merger, the outstanding balance of $197.5 million under TransDigm Inc.s then existing senior credit facility became due and was repaid in its
entirety upon the closing of the Merger. The cash merger consideration of $759.7 million paid to Holdings former common and preferred stockholders, holders of in-the-money stock options and the holder of the warrant to purchase Holdings
common stock (including merger related expenses of approximately $29.1 million borne by the then existing equity holders of Holdings and excluding the $35.7 million fair value of stock options rolled over in connection with the Merger), acquisition
fees and expenses of approximately $34.7 million, and repayment of substantially all of TransDigm Inc.s then existing indebtedness in connection with the consummation of the Merger was financed through: (1) an investment of $471.3 million in
TD Holding Corporation (TD Holding) by Warburg Pincus Private Equity VIII, L.P. (Warburg Pincus) and certain other institutional investors which was ultimately contributed as equity to TD Acquisition which then contributed
such proceeds as equity to TD Funding Corporation which merged with and into TransDigm Inc. in connection with the Merger , (2) $295.0 million of borrowings under a new secured term loan facility, (3) $400.0 million of proceeds from the issuance of
new 83/8% Senior Subordinated Notes due 2011 (83/8% Senior Subordinated Notes) and (4) the use of existing cash balances. The 83/8% Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior subordinated basis, by Holdings and all of TransDigms
existing domestic subsidiaries. Following the Merger, Warburg Pincus controls a majority of the outstanding common stock of TD Holding.



The following table sets forth the calculation of EBITDA and EBITDA, As Defined. EBITDA
represents earnings before interest, taxes, depreciation and amortization. EBITDA, As Defined, represents EBITDA, plus inventory purchase accounting adjustments, certain other non-recurring merger expenses, non-cash compensation and deferred
compensation charges and acquisition integration costs, as applicable. Management believes that the presentation of EBITDA and EBITDA, As Defined, will enhance an investors understanding of our operating performance. EBITDA and EBITDA, As
Defined, are also the measures used by TransDigms senior management to evaluate the performance of TransDigms various lines of business and for other required or discretionary purposes, such as measuring performance under our employee
incentive programs. The credit agreement requires the Company to comply with certain financial ratios, including a leverage ratio, fixed charged coverage ratio and interest coverage ratio. Leverage ratio is defined in the credit agreement, as of any
date, as the ratio of the total indebtedness of the Company on a consolidated basis on such date to Consolidated EBITDA (as defined in the credit agreement) for the period of four consecutive fiscal quarters most recently ended on or prior to such
date. Fixed charge coverage ratio is defined in the credit agreement as, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) consolidated fixed charges for such period. Interest coverage ratio is defined as, for any period,
the ratio of (a) Consolidated EBITDA for such period to (b) consolidated interest expense for such period. The failure to comply with the financial covenants in the credit agreement could result in an event of default thereunder (and, in turn, an
event of default under the credit agreement could result in an event of default under the indenture governing the 83/8% Senior Subordinated Notes). The credit agreement defines Consolidated EBITDA in a manner equal to how we define EBITDA, As Defined. Neither EBITDA nor EBITDA, As Defined, is a measurement of financial performance under U.S.
generally accepted accounting principles, or GAAP and neither should be considered as an alternative to (1) net income determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP.



20



---

##### Table of Contents

Managements calculation of EBITDA and EBITDA, As Defined, may not be comparable to the calculation of similarly
titled measures reported by other companies.



|                                                         |  |                                        |      |   |                                                      |   |     
|-------------------------------------------------------- |  | -------------------------------------- | ---- | - | ---------------------------------------------------- | - | ----
|                                                         |  | Thirteen Weeks Ended December 27, 2003 |      |   | Thirteen Weeks Ended December 28, 2002 (Predecessor)
|                                                         |  | (in millions)                         
|Net income (loss)                                        |  | $                                      | (4.0 | ) |                                                      | $ | 12.1
|Adjustments:                                             |  |                                        |      |   |                                                      |   |     
|Depreciation and amortization expense                    |  |                                        | 4.6  |   |                                                      |   | 2.0 
|Interest expense, net                                    |  |                                        | 12.7 |   |                                                      |   | 9.0 
|Income tax provision (benefit)                           |  |                                        | (2.4 | ) |                                                      |   | 7.3 
|                                                         |  |                                        |      |   |                                                      |   |     
|EBITDA                                                   |  |                                        | 10.9 |   |                                                      |   | 30.4
|Adjustments:                                             |  |                                        |      |   |                                                      |   |     
|Inventory purchase accounting adjustments(1)             |  |                                        | 18.1 |   |                                                      |   |    
|Acquisition integration costs(2)                         |  |                                        | 0.7  |   |                                                      |   |    
|Non-cash compensation and deferred compensation costs(3) |  |                                        | 1.5  |   |                                                      |   |    
|                                                         |  |                                        |      |   |                                                      |   |     
|EBITDA, As Defined                                       |  | $                                      | 31.2 |   |                                                      | $ | 30.4
|                                                         |  |                                        |      |   |                                                      |   |     

---

|(1) | This represents the portion of the purchase accounting adjustment to inventory pertaining to the Merger that was charged to cost of sales when the inventory was sold.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents costs incurred to integrate the Norco business into the Companys operations.
|--- | ----------------------------------------------------------------------------------------

|(3) | Represents the expenses recognized by the Company under a stock option plan and two deferred compensation plans of TD Holding that relate to the Companys employees who
participate in the plans.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Critical Accounting Policies



Our consolidated financial statements have been prepared in accordance
with GAAP, which often requires the judgment of management in the selection and application of certain accounting principles and methods. Management believes that the quality and reasonableness of our most critical policies enable the fair
presentation of our financial position and results of operations. However, investors are cautioned that the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different
conditions or using different assumptions.



We have identified the following as
the most critical accounting policies upon which our financial status depends. These critical policies were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. Our most critical
accounting policies are as follows:



Revenue Recognition and Related
Allowances:Revenues are recognized based upon shipment of products to the customer, at which time title and risk of loss passes to the customer. Substantially all sales are made pursuant to firm, fixed-price purchase orders received from
customers. Provisions for returns, estimated contract losses, uncollectible accounts and the cost of repairs under contract warranty provisions are provided for in the same period as the related revenues are recorded and are principally based on
historical results modified, as appropriate, by the most current information available. We have a history of making reasonably dependable estimates of such allowances; however, due to uncertainties inherent in the estimation process, it is possible
that actual results may vary from the estimates and the differences could be material.



Management estimates the allowance for doubtful accounts based on the aging of the accounts receivable and customer creditworthiness. The allowance also incorporates a provision for the estimated impact of disputes with customers.
Managements estimate of the allowance amounts that are necessary includes amounts for specifically identified losses and a general amount for estimated losses. The determination of the amount of the allowance for doubtful accounts is subject
to significant levels of judgment and estimation by management. If circumstances change or economic conditions deteriorate, management may need to increase the allowance for doubtful accounts.



21



---

##### Table of Contents

The Company provides limited warranties in connection with the sale of its products. The warranty period for products
sold varies throughout the Companys operations, ranging from ninety days to five years; however, the warranty period for the majority of the Companys sales generally does not exceed one year. In addition, certain contracts with
distributors contain right of return provisions. The Company accrues for estimated returns and warranty claims based on knowledge of product performance issues and excess inventories provided by its customers and industry sources and also provides a
general amount based on historical results. Actual product returns and warranty claims have not differed materially from the estimates originally established; however, due to uncertainties in the estimation process, it is possible that actual
results in the future may vary from the estimates and the differences could be material.



Although the majority of the Companys sales, particularly sales into the aftermarket, are made pursuant to firm, fixed-price purchase orders received from customers without long-term agreements, the Company has
executed long-term supply agreements with certain OEMs, which cover particular products and require the Company to supply all the amounts ordered by the customers during the term (generally three to five years) of the agreements at specified prices.
The Company expects to incur losses under some of the contracts. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are identified, based on estimated future shipment quantities provided by customers
or industry sources and other factors. The cumulative effect of revisions to estimated future contract revenue and completion costs is recorded in the accounting period in which the amounts become known and can be reasonably estimated. Such
revisions could occur any time there are changes to estimated future revenues or costs, and the effects could be material.



Inventories:Inventories are stated at the lower of cost or market. Cost of inventories is determined by the average cost and the first-in, first-out (FIFO)
methods. Because the Company sells products that are installed on airframes that can be in-service for twenty or more years, it must keep a supply of such products on hand while the airframes are in use. Provision for potentially obsolete or
slow-moving inventory is made based on our analysis of inventory levels, past usage and future sales forecasts. Although management believes that the Companys estimates of obsolete and slow-moving inventory are reasonable, actual results may
differ materially from the estimates and additional provisions may be required in the future. In addition, in accordance with industry practice, all inventories are classified as current assets as all inventories are available and necessary to
support current sales, even though a portion of the inventories may not be sold within one year.



Intangible Assets:The Merger has resulted in significant increases in identifiable intangible assets and goodwill. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is
obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of the Companys intent to do so. Goodwill and identifiable intangible assets are recorded at fair value
on the date of acquisition and, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets (SFAS 142), are reviewed at least annually for
impairment based on cash flow projections and fair value estimates. The determination of undiscounted cash flows is based on the Companys strategic plans and long-range planning forecasts. The revenue growth rates included in the plans are
based on industry and Company specific data. The profit margin assumptions included in the plans are projected based on the current cost structure and anticipated cost changes. If different assumptions were used in these plans, the related
undiscounted cash flows used in measuring impairment could be different and the recognition of an impairment loss might be required. Intangible assets, such as goodwill, that have an indefinite useful life are not amortized. All other intangible
assets are amortized over their estimated useful lives.



Stock Options and
Deferred Compensation Plans:Prior to the Merger, the Company applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plans.
No compensation cost was recognized for Holdings stock option plans because the exercise price of the options issued equaled the fair value of the common stock on the grant date.



22



---

##### Table of Contents

Effective with the consummation of the Merger and the issuance of TD Holding stock options to Company employees, the
Company adopted the provisions of SFAS No. 123, Accounting for Stock-Based Compensation,which requires the measurement of compensation expense under the stock option plan to be based on the estimated fair values of the awards
under the plan on the grant dates and amortizes the expense over the options vesting periods. In addition, the Company accounts for the cost of the deferred compensation plans of TD Holding established in conjunction with the Merger in
accordance with Opinion No. 12 of the Accounting Principles Board, which requires the cost of deferred compensation arrangements to be accrued over the service period of the related employees in a systematic and rational manner.



Because the stock options and deferred compensation plan interests issued to Company
employees in conjunction with, or subsequent to, the Merger relate to the stock and employee benefit plans of TD Holding, the cost of such compensation arrangements is recognized by the Company as an expense and capital contribution from TD Holding.



Purchase Accounting and Pending Purchase Price Adjustment: The Merger
(see Recent Developments) was accounted for as a purchase and preliminary fair value adjustments to the Companys assets and liabilities were recorded. The Company is in the process of obtaining third-party valuations of
certain tangible and intangible assets; thus, the final allocation of TD Holdings investment in the Company to its assets and liabilities could result in adjustments to recorded tangible and intangible assets, including related depreciation
and amortization expense.



On February 24, 2003, Marathon acquired certain
assets and assumed certain liabilities of the Norco, Inc (Norco) business from TransTechnology Corporation for $51.0 million in cash. In addition, the Company was required to pay approximately $1.0 million of asset transfer tax payments
in accordance with the purchase agreement. During August 2003, a $1.1 million purchase price adjustment was received by the Company based on a final determination of working capital as of the closing of the Norco acquisition. The Company accounted
for the Norco acquisition as a purchase and included the results of operations of the acquired business in its consolidated financial statements from the effective date of the acquisition. The Company is in the process of obtaining third-party
valuations of certain tangible and intangible assets; thus, the allocation of the purchase price is subject to refinement and could result in adjustments to recorded tangible and intangible assets, including related depreciation and amortization
expense.



Results of Operations



The following table sets forth, for the periods indicated, certain operating data of the
Company as a percentage of net sales.



|                                    |  |                      |    |  |                                |  
|----------------------------------- |  | -------------------- | -- |  | ------------------------------ | -
|                                    |  | Thirteen Weeks Ended |   
|                                    |  | December 27,2003     |    |  | December 28,2002 (Predecessor) |  
|Net sales                           |  | 100                  | %  |  | 100                            | %
|                                    |  |                      |    |  |                                |  
|Gross profit                        |  | 24                   |    |  | 49                             |  
|Selling and administrative expenses |  | 10                   |    |  | 7                              |  
|Amortization of intangibles         |  | 4                    |    |  |                               |  
|Research and development            |  | 1                    |    |  | 1                              |  
|                                    |  |                      |    |  |                                |  
|Income from operations              |  | 9                    |    |  | 41                             |  
|Interest expense - net              |  | 19                   |    |  | 13                             |  
|Income tax provision (benefit)      |  | (4                   | )  |  | 11                             |  
|                                    |  |                      |    |  |                                |  
|Net income (loss)                   |  | (6                   | )% |  | 17                             | %
|                                    |  |                      |    |  |                                |  



23



---

##### Table of Contents

Changes in Results of Operations



Thirteen weeks ended December 27, 2003 compared with thirteen weeks ended December 28, 2002 (Predecessor).



| |  | Net Sales. Net sales decreased by $2.1 million, or 3.0%, to $67.7 million for the quarter ended December 27, 2003 from $69.8 million for the comparable quarter last year,
primarily due to a decline in sales of approximately $5.0 million with Airbus due to lower shipments relating to the retrofit portion of the cockpit door security products, partially offset by an increase in sales of approximately $3.8 million due
to the Norco acquisition.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Gross Profit. Gross profit (net sales less cost of sales) decreased by $18.2 million, or 53.2%, to $16.1 million for the quarter ended December
27, 2003 from $34.3 million from the comparable quarter last year. This decrease is primarily attributable to the $18.1 million, or 26.7% of net sales, non-cash charge included in cost of sales pertaining to the inventory purchase price adjustment
recorded in accounting for the Merger and $0.7 million, or 1.1% of net sales, of integration costs pertaining to the Norco acquisition. Gross profit as a percentage of net sales decreased to 23.7% for the thirteen week period ended December 27, 2003
from 49.2% for the comparable period last year principally due to the non-cash and non-recurring charges discussed above partially offset by continuing cost control measures and the strength of the Companys proprietary products and market
positions. Excluding these charges, the gross profit margin would have been 51.5%.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Selling and Administrative Expenses. Selling and administrative expenses increased by $1.3 million, or 25.0%, to $6.5 million for the quarter
ended December 27, 2003 from $5.2 million for the comparable quarter last year due to $1.5 million of stock option and deferred compensation plan expenses that were recognized by the Company from TD Holding, partially offset by a reduction in other
selling and administrative expenses resulting from continuing efforts to control costs. The stock option and deferred compensation costs pertain to Company employees who participate in a stock option plan and two deferred compensation plans of TD
Holding established contemporaneously with the Merger. Selling and administrative expenses increased as a percentage of net sales to 9.6% for the quarter ended December 27, 2003 from 7.5% for the comparable quarter last year primarily due to the
stock option and deferred compensation expense discussed above.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Amortization of Intangibles. Amortization of intangibles increased by $2.5 million, or 879.9%, to $2.8 million for the quarter ended December 27,
2003 from $0.3 million for the comparable quarter last year due to the amortization expense on additional identifiable intangible assets recognized in accounting for the Merger.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Research and Development. Research and development was $0.5 million for each of the quarters ended December 27, 2003 and December 28, 2002.
Research and development expense, as a percentage of net sales, was approximately 1% for both quarters.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Income from Operations. Operating income decreased by $22.1 million, or 78.0%, to $6.2 million for the quarter ended December 27, 2003 from $28.3
million for the comparable quarter last year, due to the factors discussed above.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest Expense. Interest expense increased by $3.7 million, or 41.7%, to $12.7 million for the quarter ended December 27, 2003 from $8.9 million
for the comparable quarter last year principally due to the additional indebtedness incurred as a result of the Merger.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Income Taxes. Income tax provision (benefit) as a percentage of income before income taxes was 37.4% for the quarter ended December 27, 2003 and
was comparable to the 37.5% effective tax rate for the quarter ended December 28, 2002.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net Income (Loss). The Company incurred a net loss of $4.0 million for the first quarter of fiscal 2004 compared to earnings of $12.1 million for the first quarter of fiscal
2003, primarily as a result of the factors referred to above.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



---

##### Table of Contents

Backlog



Management believes that sales order backlog (i.e., orders for products that have not yet been shipped) is a useful indicator of future sales. As of December 27, 2003,
the Company estimated its sales order backlog at $123.7 million compared to an estimated $125.2 million as of December 28, 2002. This $1.5 million decrease in backlog is primarily comprised of a $14 million decrease in orders for the Airbus cockpit
door security mechanism due to reduced volume of the retrofit portion of our products, offset by a $10.3 million increase in backlog resulting from the Norco acquisition and an aggregate $2.2 million increase in the backlog pertaining to other
product lines. The majority of the purchase orders outstanding as of December 27, 2003 are scheduled for delivery within the next twelve months. Purchase orders may be subject to cancellation by the customer prior to shipment. The level of unfilled
purchase orders at any given date during the year will be materially affected by the timing of the Companys receipt of purchase orders and the speed with which those orders are filled. Accordingly, the Companys backlog as of December 27,
2003 may not necessarily represent the actual amount of shipments or sales for any future period.



Foreign Operations



Although the
Company manufactures all of its products in the United States, some components are purchased from foreign suppliers and a portion of the Companys products are resold to foreign end-users. Sales to foreign customers are subject to numerous
additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take
other action that would have a direct or indirect adverse impact on the business or market opportunities of the Company within such governments countries. Furthermore, there can be no assurance that the political, cultural and economic climate
outside the United States will be favorable to the Companys operations and growth strategy.



Inflation



Many of the Companys
raw materials and operating expenses are sensitive to the effects of inflation, which could result in changing operating costs. The effects of inflation on the Companys businesses during the thirteen week periods ended December 27, 2003 and
December 28, 2002 were not significant.



Liquidity and Capital Resources



Operating Activities. The Company generated $35.8 million of cash
from operating activities during the thirteen weeks ended December 27, 2003 compared to $16.2 million generated during the thirteen weeks ended December 28, 2002. The increase of $19.6 million is primarily due to the receipt of an income tax refund
of $14.2 million during the thirteen weeks ended December 27, 2003 and an $8.8 million decline in the amount of interest paid resulting from a change in the timing of interest payments relating to the Companys 83/8% Senior Subordinated Notes, partially offset by a decrease in the cash generated from other operating activities
of $3.4 million.



Investing Activities. Cash used in investing
activities decreased slightly to $0.6 million during the thirteen weeks ended December 27, 2003 compared to $0.7 million used during the thirteen weeks ended December 28, 2002 due to a decline in the Companys capital expenditures.



Financing Activities. Cash used in financing activities during the thirteen weeks
ended December 27, 2003 increased to $1.5 million compared to $0.7 million during the thirteen weeks ended December 28, 2002, principally due to a $1.5 million payment that was made during the period ended December 27, 2003 under a license agreement
purchase obligation. No such payment was made during the thirteen weeks ended December 28, 2002; however, the Company did repay $0.7 million of its borrowings under its previous senior credit facility. No such payments were made under the
Companys new senior credit facility during the quarter ended December 27, 2003.



In connection with the consummation of the Merger, TransDigm Inc. obtained new senior secured credit facilities. The new senior secured credit facilities consist of a $295 million term loan facility, which was fully drawn on the closing
date of the Merger, and a $100 million revolving loan facility, of which $99.5 million is available as of December 27, 2003.





25



---

##### Table of Contents

The new revolving loan facility matures in July 2009 and the new term loan facility matures in July 2010. The new senior
secured credit facilities require scheduled quarterly payments of principal on the term loans beginning December 31, 2003 in aggregate annual principal amounts equal to 1% of the original aggregate principal amount of the term loans during the life
of the loans, with the balance payable at final maturity. Subject to exceptions, the new senior secured credit facilities also require mandatory prepayments of term loans based on certain percentages of excess cash flows, as defined, commencing 95
days after the end of the fiscal year ending on September 30, 2004, net cash proceeds of asset sales, the issuance of equity securities or the issuance of certain debt securities.



In addition, the Company has the right to request (but no lender is committed to provide) additional term loans under such facilities,
subject to the satisfaction of customary conditions, including being in compliance with the financial covenants in the credit agreement after giving effect, on a pro forma basis, to any such incremental term loan borrowing.



The interest rates per annum applicable to loans other than swingline loans (i.e., a short
term line of credit that is provided as part of the revolving credit facility by the administrative agent, which can be converted at any time by the administrative agent into revolving credit loans under the revolving credit facility), under the new
senior secured credit facilities are, at the Companys option, equal to either an alternate base rate or an adjusted LIBO rate for one, two, three or six-month interest periods chosen by the Company, in each case, plus an applicable margin
percentage. The alternate base rate is the greater of (1) Credit Suisse First Bostons prime rate or (2) 50 basis points over the weighted average rates on overnight Federal funds as published by the Federal Reserve Bank of New York. The
adjusted LIBO rate is determined by reference to settlement rates established for deposits in dollars in the London interbank market for a period equal to the interest period of the loan and the maximum reserve percentages established by the Board
of Governors of the United States Federal Reserve to which the Companys lenders are subject. The applicable margin percentage initially was a percentage per annum equal to (1) 2.00% for alternate base rate term loans, (2) 3.00% for adjusted
LIBO rate term loans, (3) 2.50% for alternate base rate revolving loans, and (4) 3.50% for LIBO adjusted rate revolving loans. The applicable margin percentages under the term loan facility and the revolving loan facility are subject to adjustment
in increments based upon achievement of performance goals so long as no event of default has occurred and is continuing.



All borrowings under the new revolving loan facility are subject to the satisfaction of customary conditions, including absence of a default and accuracy of
representations and warranties.



In connection with the Merger, the Company
also issued $400 million aggregate principal amount of 83/8% Senior Subordinated Notes. Such notes do not
require principal payments prior to their maturity in July 2011. The notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior subordinated basis, by Holdings and all of our existing domestic subsidiaries.



Both the new senior secured credit facilities and the new 83/8% Senior Subordinated Notes contain restrictive covenants that, among other things, limit the incurrence of
additional indebtedness, the payment of dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of other indebtedness. In addition, the new senior secured credit
facilities and the new 83/8% Senior Subordinated Notes require the Company to meet certain financial ratios. Any
failure to comply with the restrictions of the new senior secured credit facilities, the new 83/8% Senior
Subordinated Notes or any other subsequent financing agreements may result in an event of default. An event of default may allow the creditors, if the agreements so provide, to accelerate the related debt as well as any other debt to which a
cross-acceleration or cross-default provision applies. In addition, the lenders under the new senior secured credit facilities may be able to terminate any commitments they had made to supply the Company with further funds.



The Company repaid or defeased all of its long-term
indebtedness that was outstanding immediately prior to the consummation of the Merger. The Company redeemed the defeased 103/8% Senior Subordinated Notes in December 2003.



26



---

##### Table of Contents

The Companys primary future cash needs will consist of debt service and capital expenditures. The Company incurs
capital expenditures for the purpose of maintaining and replacing existing equipment and facilities and, from time to time, for facility expansion. Capital expenditures totaled approximately $0.6 million and $0.7 million during the thirteen weeks
ended December 27, 2003 and December 28, 2002, respectively. The Company expects its capital expenditures in fiscal 2004 to be approximately $7 million and to increase moderately thereafter.



The Company may from time to time seek to retire its outstanding debt through cash purchases
and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Companys liquidity requirements,
contractual restrictions and other factors. The amounts involved may be material. In addition, the Company may issue additional debt if prevailing market conditions are favorable to doing so.



The Company intends to pursue acquisitions that present opportunities consistent with the
Companys value generation strategy. The Company regularly engages in discussions with respect to potential acquisitions and investments. However, there are no binding agreements with respect to any acquisitions at this time, and there can be
no assurance that the Company will be able to reach an agreement with respect to any future acquisition. The Companys acquisition strategy may require substantial capital, and no assurance can be given that the Company will be able to raise
any necessary funds on acceptable terms or at all. If the Company incurs additional debt to finance acquisitions, total interest expense will increase.



The Companys ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, the Companys indebtedness, or to fund
non-acquisition related capital expenditures and research and development efforts, will depend on the Companys ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and
other factors that are beyond its control. Based on its current levels of operations and anticipated cost savings and operating improvements and absent any disruptive events, management believes that internally generated funds and borrowings
available under our new revolving loan facility should provide sufficient resources to finance its operations, non-acquisition related capital expenditures, research and development efforts and long-term indebtedness obligations through at least
fiscal 2004. There can be no assurance, however, that the Companys business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule, or at all, or that
future borrowings will be available to the Company under the new senior secured credit facilities in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs. The Company may need to refinance all or a portion
of its indebtedness on or before maturity. Also, to the extent the Company accelerates its growth plans, consummates acquisitions or has lower than anticipated sales or increases in expenses, the Company may also need to raise additional capital. In
particular, increased working capital needs occur whenever the Company consummates acquisitions or experiences strong incremental demand. There can be no assurance that the Company will be able to raise additional capital on commercially reasonable
terms or at all.



Contractual Obligations



The following is a summary of contractual cash obligations of the Company for the next
several fiscal years (excluding interest), as of December 27, 2003 (in millions):



|                                   |  |          |     |      |   |      |  |      |     |      |   |                    |  |       |     |  |   |       |  |   |      
|---------------------------------- |  | -------- | --- | ---- | - | ---- |  | ---- | --- | ---- | - | ------------------ |  | ----- | --- |  | - | ----- |  | - | -----
|                                   |  | 2004 (1) |     | 2005 |   | 2006 |  | 2007 |     | 2008 |   | 2009 andThereafter |  | Total
|Term Loan Facility                 |  | $        | 2.9 |      | $ | 2.9  |  | $    | 2.9 |      | $ | 2.9                |  | $     | 2.9 |  | $ | 280.5 |  | $ | 295.0
|83/8% Senior Subordinated Notes    |  |          |    |      |   |     |  |      |    |      |   |                   |  |       |    |  |   | 400.0 |  |   | 400.0
|Operating Leases                   |  |          | 1.1 |      |   | 1.2  |  |      | 1.1 |      |   | 0.8                |  |       | 0.7 |  |   | 3.4   |  |   | 8.3  
|Other Long-Term Obligations        |  |          |    |      |   | 1.5  |  |      |    |      |   |                   |  |       |    |  |   |      |  |   | 1.5  
|                                   |  |          |     |      |   |      |  |      |     |      |   |                    |  |       |     |  |   |       |  |   |      
|Total Contractual Cash Obligations |  | $        | 4.0 |      | $ | 5.6  |  | $    | 4.0 |      | $ | 3.7                |  | $     | 3.6 |  | $ | 683.9 |  | $ | 704.8
|                                   |  |          |     |      |   |      |  |      |     |      |   |                    |  |       |     |  |   |       |  |   |      

---

|(1) | Beginning December 28, 2003.
|--- | ----------------------------



27



---

##### Table of Contents

New Accounting Standards



During the quarter ended December 27, 2003, the Company implemented the provisions of the Financial Accounting Standards Boards (the FASBs)
Emerging Issues Task Force Abstract No 00-21, Revenue Arrangements with Multiple Deliverables,which provides criteria for determining how to account for multiple-deliverable revenue arrangements. The implementation of this pronouncement had
no impact on the Companys consolidated financial position or results of operations.



During December 2003, the FASB issued a revised Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which requires existing, unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively disperse risks among the parties involved. The Company is not associated with variable interest entities; therefore, the adoption of this statement did not have any
effect on the Companys consolidated financial position or results of operations.



During December 2003, the FASB also issued a revision to Statement of Financial Accounting Standards No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and
106, which expands the disclosure requirements regarding plan assets and benefit obligations for the Companys two defined benefit pension plans. The provisions of this statement are effective for the second quarter for fiscal 2004.



Additional Disclosure Required by Indenture



Separate financial statements of TransDigm are not presented since Holdings has no
significant operations or assets separate from its investment in TransDigm and since the 83/8% Senior
Subordinated Notes are guaranteed by Holdings and all direct and indirect domestic restricted subsidiaries of TransDigm. As of December 27, 2003, the only subsidiary of TransDigm that has not guaranteed the notes is one wholly owned, foreign
subsidiary that has inconsequential assets, liabilities and equity.



ITEM 3



QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK



At December 27, 2003, the Company had borrowings under
its senior secured credit facilities of $295 million that were subject to interest rate risk. Borrowings under the Companys senior secured credit facility bear interest, at its option, at a rate equal to either an alternate base rate or an
adjusted LIBO rate for a one, two, three or six-month interest period chosen by the Company, in each case, plus an applicable margin percentage that will be subject to periodic adjustment based on the achievement of certain performance goals.
Accordingly, the Companys cash flows and earnings will be exposed to the market risk of interest rate changes resulting from variable rate borrowings under its senior secured credit facilities. The effect of a hypothetical one percentage point
increase in interest rates would increase the annual interest costs under the senior secured credit facilities by approximately $3.0 million based on the amount of outstanding borrowings at December 27, 2003. The weighted average interest rate on
the $295 million of borrowings under the senior secured credit facilities on December 27, 2003 was 4.1%.



Because the interest rates on borrowings under the senior secured credit facilities vary with market conditions, the amount of outstanding borrowings under the senior secured credit facilities approximates the fair
value of the indebtedness. The fair value of the $400 million aggregate principal amount of the Companys 83/8% Senior Subordinated Notes is exposed to the market risk of interest rate changes. The estimated fair value of such notes approximated $434 million at December 27, 2003 based upon quoted market rates.



28



---

##### Table of Contents

ITEM 4



CONTROLS AND PROCEDURES



Holdings and TransDigm maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in Holdings and TransDigms Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such
information is accumulated and communicated to Holdings and TransDigms management, including their Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing
and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



As of the end of the period covered by this report, Holdings and TransDigm carried out an evaluation, under the supervision and with the participation of Holdings
and TransDigms management, including Holdings and TransDigms Chief Executive Officer and Holdings and TransDigms Chief Financial Officer, of the effectiveness of the design and operation of Holdings and
TransDigms disclosure controls and procedures. Based on the foregoing, Holdings and TransDigms Chief Executive Officer and Chief Financial Officer concluded that Holdings and TransDigms disclosure controls and
procedures were effective.



There have been no significant changes in
Holdings or TransDigms internal controls or in other factors that could significantly affect the internal controls subsequent to the date Holdings and TransDigm completed their evaluations.



29



---

##### Table of Contents

PART II:    OTHER INFORMATION



ITEM 6      Exhibits and Reports on Form 8-K



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



|     |  |                                                                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certification by Principal Executive Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|     | 
|31.2 |  | Certification by Principal Financial Officer of TransDigm Holding Company pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|     | 
|31.3 |  | Certification by Principal Executive Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.           
|     | 
|31.4 |  | Certification by Principal Financial Officer of TransDigm Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.           
|     | 
|32.1 |  | Certification by Chief Executive Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                
|     | 
|32.2 |  | Certification by Chief Financial Officer of TransDigm Holding Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                
|     | 
|32.3 |  | Certification by Chief Executive Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                           
|     | 
|32.4 |  | Certification by Chief Financial Officer of TransDigm Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                           



| | (b) | Reports on Form 8-K
| | --- | -------------------



None



30



---

##### Table of Contents

SIGNATURES



TRANSDIGM HOLDING COMPANY



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



|                       |  |                                                                                  |  |                 
|---------------------- |  | -------------------------------------------------------------------------------- |  | ----------------
|SIGNATURE              |  | TITLE                                                                            |  | DATE            
|/s/ W. Nicholas Howley |  | President and Chief Executive Officer (Principal Executive Officer) and Director |  | February 3, 2004
|W. Nicholas Howley     |  |                                                                                 
|                       |  |                                                                                 
|/s/ Gregory Rufus      |  | Chief Financial Officer (Principal Financial and Accounting Officer)             |  | February 3, 2004
|Gregory Rufus          |  |                                                                                 



TRANSDIGM INC.



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



|                       |  |                                                                                  |  |                 
|---------------------- |  | -------------------------------------------------------------------------------- |  | ----------------
|SIGNATURE              |  | TITLE                                                                            |  | DATE            
|/s/ W. Nicholas Howley |  | President and Chief Executive Officer (Principal Executive Officer) and Director |  | February 3, 2004
|W. Nicholas Howley     |  |                                                                                 
|                       |  |                                                                                 
|/s/ Gregory Rufus      |  | Chief Financial Officer (Principal Financial and Accounting Officer)             |  | February 3, 2004
|Gregory Rufus          |  |                                                                                 



31



---

##### Table of Contents

EXHIBIT INDEX

TO FORM 10-Q FOR THE PERIOD ENDED DECEMBER 27, 2004



|            |  |                                                                          
|----------- |  | -------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                              
|            | 
|31.1        |  | Certification by Principal Executive Officer of TransDigm Holding Company
|            | 
|31.2        |  | Certification by Principal Financial Officer of TransDigm Holding Company
|            | 
|31.3        |  | Certification by Principal Executive Officer of TransDigm Inc.           
|            | 
|31.4        |  | Certification by Principal Financial Officer of TransDigm Inc.           
|            | 
|32.1        |  | Certification by Chief Executive Officer of TransDigm Holding Company    
|            | 
|32.2        |  | Certification by Chief Financial Officer of TransDigm Holding Company    
|            | 
|32.3        |  | Certification by Chief Executive Officer of TransDigm Inc.               
|            | 
|32.4        |  | Certification by Chief Financial Officer of TransDigm Inc.               





32