##### Table of Contents



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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 27, 2002, or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________.

Commission file number 333-38223

ARGO-TECH CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                             |  |                                                
|---------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)      |  | 31-1521125
(I.R.S. employer
identification no.)
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  |                                                
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|23555 Euclid Avenue
Cleveland, Ohio
(Address of principal executive offices) |  | 44117
(Zip code)                               

(216) 692-6000

(Registrants telephone number, including area code)


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

All of the outstanding capital stock of the registrant is held by AT Holdings Corporation.

As of September 1, 2002, 1 share of the registrants common stock, $.01 par value, was outstanding.





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TABLE OF CONTENTS



|                               |                                                                                        |                                            |  |  |  |  |  | 
|------------------------------ | -------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               |                                                                                        | CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                        | CONSOLIDATED STATEMENTS OF NET INCOME     
|                               |                                                                                        | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                               |                                                                                        | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                               | ITEM 2.                                                                               
|                               | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                               | ITEM 3.                                                                               
|                               | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                             
|                               | ITEM 4.                                                                               
|                               | CONTROLS AND PROCEDURES                                                               
|PART II  OTHER INFORMATION   
|                               | Item 6  Exhibits and Reports on Form 8-K                                             
|SIGNATURE                     
|CERTIFICATION                 
|EX 99 Certification           



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##### Table of Contents



INDEX

|                                                                                               |                                                                                                                       |  |          |        | 
|---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- |  | -------- | ------ | 
|                                                                                               |                                                                                                                       |  | Page No.
|PART I  FINANCIAL INFORMATION                                                                 |                                                                                                                       |  |          |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 1  Condensed Financial Statements                                                        |                                                                                                                       |  |          |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Consolidated Balance Sheets as of July 27, 2002 and October 27, 2001                                                  |  |          | 3      | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Consolidated Statements of Net Income for the 39 week period and 13 week
period ended July 27, 2002 and July 28, 2001 |  |          | 4      | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Consolidated Statements of Cash Flows for the 39 week period ended July 27, 2002
and July 28, 2001                    |  |          | 5      | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Notes to Consolidated Financial Statements                                                                            |  |          | 6 - 10 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 2 - Managements Discussion and Analysis of Financial Condition and Results
of Operations |                                                                                                                       |  | 11 - 14  |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 3 - Quantitative and Qualitative Disclosure about Market Risk                             |                                                                                                                       |  | 14       |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 4  Controls and Procedures                                                               |                                                                                                                       |  | 14       |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|PART II  OTHER INFORMATION                                                                    |                                                                                                                       |  |          |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 6 - Exhibits and Reports on Form 8-K                                                      |                                                                                                                       |  | 15       |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Signature                                                                                      |                                                                                                                       |  | 16       |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Certifications                                                                                 |                                                                                                                       |  | 17 - 19  |       

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION

ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)




CONSOLIDATED BALANCE SHEETS
JULY 27, 2002 AND OCTOBER 27, 2001
(In thousands, except share data)

|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ----------- | ------- | ---- | ------- | ------- | ------- | -
|                                                        |                                                                                       |                                         |         | 2002        |         | 2001
|                                                        |                                                                                       |                                         |         |             |         |     
|                                                        |                                                                                       |                                         |         | (Unaudited) |         |      |         |        
|ASSETS                                                  |                                                                                       |                                         |         |             |         |      |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|CURRENT ASSETS:                                         |                                                                                       |                                         |         |             |         |      |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Cash and cash equivalents                                                             |                                         | $       | 18,061      |         |      | $       | 8,057   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Receivables, net                                                                      |                                         |         | 21,012      |         |      |         | 32,051  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Income tax receivable                                                                 |                                         |         | 3,576       |         |      |         | 3,885   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Inventories                                                                           |                                         |         | 27,649      |         |      |         | 28,861  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Deferred income taxes and prepaid expenses                                            |                                         |         | 5,829       |         |      |         | 5,648   |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|                                                        |                                                                                       | Total current assets                    |         |             | 76,127  |      |         |         | 78,502  |  
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|PROPERTY AND EQUIPMENT, net of
accumulated depreciation |                                                                                       |                                         | 26,404  |             |         |      | 29,027  |        
|                                                       
|                                                       
|                                                       
|                                                       
|GOODWILL, net of accumulated amortization               |                                                                                       |                                         | 110,368 |             |         |      | 108,933 |        
|                                                       
|                                                       
|                                                       
|                                                       
|INTANGIBLE ASSETS, net of accumulated amortization      |                                                                                       |                                         | 39,185  |             |         |      | 44,145  |        
|                                                       
|                                                       
|                                                       
|                                                       
|OTHER ASSETS                                            |                                                                                       |                                         | 11,081  |             |         |      | 12,967  |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|Total Assets                                            |                                                                                       | $                                       | 263,165 |             |         | $    | 273,574 |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|LIABILITIES                                             |                                                                                       |                                         |         |             |         |      |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|CURRENT LIABILITIES:                                    |                                                                                       |                                         |         |             |         |      |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Current portion of long-term debt                                                     |                                         | $       | 18,612      |         |      | $       | 18,612  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Accounts payable                                                                      |                                         |         | 3,453       |         |      |         | 4,840   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Accrued liabilities                                                                   |                                         |         | 22,238      |         |      |         | 19,146  |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|                                                        |                                                                                       | Total current liabilities               |         |             | 44,303  |      |         |         | 42,598  |  
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|LONG-TERM DEBT, net of current maturities               |                                                                                       |                                         | 221,015 |             |         |      | 234,768 |        
|                                                       
|                                                       
|                                                       
|                                                       
|OTHER NONCURRENT LIABILITIES                            |                                                                                       |                                         | 21,883  |             |         |      | 24,333  |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|                                                        |                                                                                       | Total Liabilities                       |         |             | 287,201 |      |         |         | 301,699 |  
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|REDEEMABLE ESOP STOCK                                   |                                                                                       |                                         | 17,668  |             |         |      | 18,194  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Unearned ESOP stock                                                                   |                                         |         | (2,940      | )       |      |         | (4,200  | )      
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|                                                        |                                                                                       |                                         |         |             | 14,728  |      |         |         | 13,994  |  
|                                                       
|                                                       
|                                                       
|                                                       
|SHAREHOLDERS EQUITY/(DEFICIENCY):                      |                                                                                       |                                         |         |             |         |      |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Common Stock, $.01 par value, authorized 3,000 shares;
1 share issued and outstanding |                                         |         |            |         |      |         |        |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Paid-in capital                                                                       |                                         |         |            |         |      |         |        |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Accumulated other comprehensive loss                                                  |                                         |         | (1,955      | )       |      |         | (1,948  | )      
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Accumulated deficit                                                                   |                                         |         | (36,809     | )       |      |         | (40,171 | )      
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|                                                        |                                                                                       | Total shareholders equity/(deficiency) |         |             | (38,764 | )    |         |         | (42,119 | )
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  
|Total Liabilities and Shareholders Equity/(Deficiency) |                                                                                       | $                                       | 263,165 |             |         | $    | 273,574 |        
|                                                        |                                                                                       |                                         |         |             |         |      |         |         |         |  

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

3



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ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)




CONSOLIDATED STATEMENTS OF NET INCOME

(In thousands)
UNAUDITED

|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|----------------------------------- | ------------------ | - | -------------------- | ------ | -------------------- | - | ------------- | ------ | ------------- | - | ------ | ------ |  | - | ------ | ------ | 
|                                    |                    |   | 39 Week Period Ended |        | 13 Week Period Ended
|                                    |                    |   |                      |        |                     
|                                    |                    |   | July 27, 2002        |        | July 28, 2001        |   | July 27, 2002 |        | July 28, 2001
|                                    |                    |   |                      |        |                      |   |               |        |              
|Net revenues                        |                    | $ | 112,261              |        |                      | $ | 124,086       |        |               | $ | 37,724 |        |  | $ | 44,074 |       
|                                   
|                                   
|                                   
|                                   
|Cost of revenues                    |                    |   | 64,478               |        |                      |   | 67,852        |        |               |   | 22,625 |        |  |   | 23,276 |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|                                    | Gross profit       |   |                      | 47,783 |                      |   |               | 56,234 |               |   |        | 15,099 |  |   |        | 20,798 | 
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|Selling, general and administrative |                    |   | 17,597               |        |                      |   | 17,423        |        |               |   | 5,825  |        |  |   | 6,220  |       
|                                   
|                                   
|                                   
|                                   
|Research and development            |                    |   | 8,766                |        |                      |   | 7,633         |        |               |   | 2,703  |        |  |   | 2,530  |       
|                                   
|                                   
|                                   
|                                   
|Amortization of intangible assets   |                    |   | 2,561                |        |                      |   | 5,636         |        |               |   | 853    |        |  |   | 1,879  |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|                                    | Operating expenses |   |                      | 28,924 |                      |   |               | 30,692 |               |   |        | 9,381  |  |   |        | 10,629 | 
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|Income from operations              |                    |   | 18,859               |        |                      |   | 25,542        |        |               |   | 5,718  |        |  |   | 10,169 |       
|                                   
|                                   
|                                   
|                                   
|Interest expense                    |                    |   | 16,179               |        |                      |   | 18,643        |        |               |   | 5,322  |        |  |   | 6,002  |       
|                                   
|                                   
|                                   
|                                   
|Other, net                          |                    |   | (14                  | )      |                      |   | (104          | )      |               |   | 52     |        |  |   | 120    |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|Income before income taxes          |                    |   | 2,694                |        |                      |   | 7,003         |        |               |   | 344    |        |  |   | 4,047  |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|Income tax (benefit) / provision    |                    |   | (70                  | )      |                      |   | 2,565         |        |               |   | (164   | )      |  |   | 1,260  |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 
|Net income                          |                    | $ | 2,764                |        |                      | $ | 4,438         |        |               | $ | 508    |        |  | $ | 2,787  |       
|                                    |                    |   |                      |        |                      |   |               |        |               |   |        |        |  |   |        |        | 

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

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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)




CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEK PERIOD ENDED JULY 27, 2002 AND JULY 28, 2001

(In thousands)
UNAUDITED

|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------- | ------ | ------- | ------ | ---- | ------ | ------ | ------ | -
|                                      |                                                                                   |                               |        | 2002    |        | 2001
|                                      |                                                                                   |                               |        |         |        |     
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                                                                   |                               |        |         |        |      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Net income                                                                        |                               | $      | 2,764   |        |      | $      | 4,438  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Adjustments to reconcile net income to net cash
provided by operating activities: |                               |        |         |        |      |        |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Depreciation                                                                      |                               |        | 3,678   |        |      |        | 4,175  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Amortization of intangible assets and deferred financing costs                    |                               |        | 4,099   |        |      |        | 7,240  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Accretion of bond discount                                                        |                               |        | 206     |        |      |        | 188    |       
|                                     
|                                     
|                                     
|                                     
|                                      | Compensation expense recognized in connection with
employee stock ownership plan  |                               |        | 1,892   |        |      |        | 2,520  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Compensation expense recognized in connection with
stock options                  |                               |        |        |        |      |        | 526    |       
|                                     
|                                     
|                                     
|                                     
|                                      | Deferred income taxes                                                             |                               |        | (1,279  | )      |      |        | (1,392 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Changes in operating assets and liabilities:                                      |                               |        |         |        |      |        |        |       
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Receivables                   |        |         | 11,348 |      |        |        | (132   | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Inventories                   |        |         | 1,212  |      |        |        | (2,200 | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Prepaid expenses              |        |         | (9     | )    |        |        | (184   | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Accounts payable              |        |         | (1,387 | )    |        |        | (710   | )
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Accrued and other liabilities |        |         | 2,816  |      |        |        | 2,624  |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                   | Other, net                    |        |         | 240    |      |        |        | (716   | )
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|                                      | Net cash provided by operating activities                                         |                               |        | 25,580  |        |      |        | 16,377 |       
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES: |                                                                                   |                               |        |         |        |      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Capital expenditures                                                              |                               |        | (1,055  | )      |      |        | (1,245 | )     
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|                                      | Net cash used in investing activities                                             |                               |        | (1,055  | )      |      |        | (1,245 | )     
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES: |                                                                                   |                               |        |         |        |      |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Repayment of long-term debt                                                       |                               |        | (13,959 | )      |      |        | (6,981 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Purchase of AT Holdings stock from former ESOP participants                       |                               |        | (527    | )      |      |        | (1,602 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Dividend                                                                          |                               |        | (35     | )      |      |        | (40    | )     
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|                                      | Net cash used in financing activities                                             |                               |        | (14,521 | )      |      |        | (8,623 | )     
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|CASH AND CASH EQUIVALENTS:            |                                                                                   |                               |        |         |        |      |        |       
|                                     
|                                     
|                                     
|                                     
|Net increase for the period           |                                                                                   |                               | 10,004 |         |        |      | 6,509  |       
|                                     
|                                     
|                                     
|                                     
|Balance, Beginning of period          |                                                                                   |                               | 8,057  |         |        |      | 5,174  |       
|                                      |                                                                                   |                               |        |         |        |      |        |        |        |  
|Balance, End of period                |                                                                                   | $                             | 18,061 |         |        | $    | 11,683 |       
|                                      |                                                                                   |                               |        |         |        |      |        |        |       

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

5



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##### Table of Contents



ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 39 WEEK PERIOD ENDED JULY 27, 2002 AND JULY 28, 2001
UNAUDITED



|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The principal operations of Argo-Tech Corporation (a wholly-owned subsidiary
of AT Holdings Corporation) and its subsidiaries include the design,
manufacture and distribution of aviation products, primarily aircraft fuel
pumps, throughout the world. In addition, Argo-Tech leases a portion of its
Cleveland, Ohio manufacturing facility to other parties. Argo-Techs fiscal
year ends on the last Saturday in October. Argo-Tech is obligated to fulfill
certain obligations of AT Holdings Corporation. As a result, those
obligations have been reflected in its financial statements. Certain
reclassifications have been made in the prior years financial statements to
conform to the current year presentation.
|
| | Argo-Tech Corporation is a parent, holding company with four wholly-owned
operating subsidiaries that guarantee Argo-Techs senior subordinated notes.
Argo-Tech has no outside assets, liabilities or operations apart from its
wholly-owned subsidiaries. The senior subordinated notes are fully,
unconditionally, jointly and severally guaranteed by the guarantor
subsidiaries, and therefore, separate financial statements of the guarantor
subsidiaries will not be presented. Management has determined that the
information presented by such separate financial statements is not material
to investors.                                                                                                            



|2. |  | UNAUDITED 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 Argo-Techs financial position and results of operations and
cash flows for the interim periods presented. The results of operations for
the interim periods presented are not necessarily indicative of the results
to be expected for the full year.



|3. |  | INVENTORIES
|-- |  | -----------



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Inventories are stated at standard cost which approximates the costs which
would be determined using the first-in, first-out (FIFO) method. The
recorded value of inventories is not in excess of market value. Inventories
consist of the following (in thousands):

|                                          |       |   |          |        |             |   |        |        | 
|----------------------------------------- | ----- | - | -------- | ------ | ----------- | - | ------ | ------ | 
|                                          |       |   | July 27, |        | October 27,
|                                          |       |   | 2002     |        | 2001       
|                                          |       |   |          |        |            
|Finished goods                            |       | $ | 1,710    |        |             | $ | 2,100  |       
|                                         
|                                         
|                                         
|                                         
|Work-in-process and purchased parts       |       |   | 17,850   |        |             |   | 17,696 |       
|                                         
|                                         
|                                         
|                                         
|Raw materials and supplies                |       |   | 12,269   |        |             |   | 12,975 |       
|                                          |       |   |          |        |             |   |        |       
|                                          | Total |   |          | 31,829 |             |   |        | 32,771 | 
|                                         
|                                         
|                                         
|                                         
|Reserve for excess and obsolete inventory |       |   | (4,180   | )      |             |   | (3,910 | )     
|                                          |       |   |          |        |             |   |        |       
|Inventories  net                         |       | $ | 27,649   |        |             | $ | 28,861 |       
|                                          |       |   |          |        |             |   |        |       

6



---



##### Table of Contents





|4. |  | INTANGIBLE ASSETS
|-- |  | -----------------



| |                                                                                     
| | ------------------------------------------------------------------------------------
| | The following is a summary of intangible assets, other than goodwill (in
thousands):

|                   |                     |       |   |               |        |                  |   |        |        |              |   |        |        |  |   |       |        | 
|------------------ | ------------------- | ----- | - | ------------- | ------ | ---------------- | - | ------ | ------ | ------------ | - | ------ | ------ |  | - | ----- | ------ | 
|                   |                     |       |   | July 27, 2002 |        | October 27, 2001
|                   |                     |       |   |               |        |                 
|                   |                     |       |   | Gross         |        | Accumulated      |   | Gross  |        | Accumulated 
|                   |                     |       |   | Amount        |        | Amortization     |   | Amount |        | Amortization
|                   |                     |       |   |               |        |                  |   |        |        |             
|Intangible assets: |                     |       |   |               |        |                  |   |        |        |              |   |        |        |  |   |      
|                  
|                  
|                  
|                  
|                   | Contracts           |       | $ | 17,100        |        |                  | $ | 8,265  |        |              | $ | 17,100 |        |  | $ | 6,983 |       
|                  
|                  
|                  
|                  
|                   | Spare parts annuity |       |   | 38,200        |        |                  |   | 8,117  |        |              |   | 38,200 |        |  |   | 6,857 |       
|                  
|                  
|                  
|                  
|                   | Patents             |       |   | 387           |        |                  |   | 120    |        |              |   | 387    |        |  |   | 102   |       
|                  
|                  
|                  
|                  
|                   | Workforce-in-place  |       |   |              |        |                  |   |       |        |              |   | 4,900  |        |  |   | 2,500 |       
|                   |                     |       |   |               |        |                  |   |        |        |              |   |        |        |  |   |      
|                   |                     | Total |   | $             | 55,687 |                  |   | $      | 16,502 |              |   | $      | 60,587 |  |   | $     | 16,442 | 
|                   |                     |       |   |               |        |                  |   |        |        |              |   |        |        |  |   |      



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amortization expense recorded on the intangible assets for the 13 week and 39
week periods ended July 27, 2002 was $0.9 million and $2.5 million,
respectively, and for the 13 week and 39 week periods ended July 28, 2001 was
$1.0 million and $3.0 million, respectively. The reduction in the gross
carrying amount and accumulated amortization in the table above reflect the
removal of the intangible asset, workforce in place, which was reclassified
from intangible assets to goodwill upon the adoption of SFAS No. 142. The
estimated amortization expense for each of the five succeeding fiscal years
2002 through 2006 is $3.4 million per year.



|5. |  | CONTINGENCIES
|-- |  | -------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Environmental Matters  The soil and groundwater at Argo-Techs Cleveland,
Ohio facility and the Costa Mesa, California facility contain elevated levels
of certain contaminants which are currently in the process of being removed
and/or remediated. Because Argo-Tech has certain indemnification rights from
former owners of the facilities for liabilities arising from these or other
environmental matters, in the opinion of Argo-Techs management, the ultimate
outcome is not expected to materially affect its financial condition, results
of operations or liquidity.
|
| | Other Matters  Argo-Tech is subject to various legal actions and other
contingencies arising in the ordinary course of business. In the opinion of
Argo-Techs management, after reviewing the information which is currently
available with respect to such matters and consulting with Argo-Techs legal
counsel, any liability which may ultimately be incurred with respect to these
additional matters is not expected to materially affect Argo-Techs financial
condition, results of operations or liquidity.                                                               



|6. |  | SEGMENT INFORMATION
|-- |  | -------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Argo-Tech operates in two business segments: Aerospace and Industrial. The
Aerospace segment includes the design, manufacture and distribution of
aviation products throughout the world consisting of aircraft fuel pumps,
fuel flow related products found on a planes airframe and aerial refueling
systems. The Industrial segment includes the design, manufacture and
distribution of industrial pumps, ground fueling system valves and related
components, industrial marine cryogenic pumps for transferring liquefied
natural gas and operation of a business park in Cleveland, Ohio where we
maintain our headquarters and one of our production facilities.
|
| | Argo-Tech evaluates the performance of its segments based primarily on
operating profit before amortization of goodwill, deferred financing fees and
other identified intangibles, interest expense, interest income, other
miscellaneous fees and income taxes.                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | The following table presents revenues and other financial information by
business segment (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

7



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##### Table of Contents



13 Week Period Ending
July 27, 2002

|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|-------------------------------------------------------------------------------- |  | --------- | ------ | ---------- |  | --------- | ----- | ------------ |  | - | ---- | - |  | - | ------ | 
|                                                                                 |  | Aerospace |        | Industrial |  | Corporate |       | Consolidated
|                                                                                 |  |           |        |            |  |           |       |             
|Net revenues                                                                     |  | $         | 28,808 |            |  | $         | 8,916 |              |  | $ |     |   |  | $ | 37,724 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Operating profit (loss)                                                          |  |           | 6,040  |            |  |           | 711   |              |  |   | (180 | ) |  |   | 6,571  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Amortization of intangible assets                                                |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 853    | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Income from operations                                                           |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 5,718  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 5,322  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other, net                                                                       |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 52     | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Income before income taxes                                                       |  |           |        |            |  |           |       |              |  |   |      |   |  | $ | 344    | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Capital expenditures                                                             |  |           | 187    |            |  |           | 212   |              |  |   |      |   |  |   | 399    | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Depreciation                                                                     |  |           | 704    |            |  |           | 340   |              |  |   | 150  |   |  |   | 1,194  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with employee
stock ownership plan |  |           | 571    |            |  |           | 61    |              |  |   |      |   |  |   | 632    | 

13 Week Period Ending July 28, 2001

|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|-------------------------------------------------------------------------------- |  | --------- | ------ | ---------- |  | --------- | ----- | ------------ |  | - | ---- | - |  | - | ------ | 
|                                                                                 |  | Aerospace |        | Industrial |  | Corporate |       | Consolidated
|                                                                                 |  |           |        |            |  |           |       |             
|Net revenues                                                                     |  | $         | 35,012 |            |  | $         | 9,062 |              |  | $ |     |   |  | $ | 44,074 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Operating profit (loss)                                                          |  |           | 11,797 |            |  |           | 891   |              |  |   | (640 | ) |  |   | 12,048 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Amortization of intangible assets                                                |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 1,879  | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Income from operations                                                           |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 10,169 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 6,002  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other, net                                                                       |  |           |        |            |  |           |       |              |  |   |      |   |  |   | 120    | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Income before income taxes                                                       |  |           |        |            |  |           |       |              |  |   |      |   |  | $ | 4,047  | 
|                                                                                 |  |           |        |            |  |           |       |              |  |   |      |   |  |   |        | 
|Capital expenditures                                                             |  |           | 276    |            |  |           | 142   |              |  |   |      |   |  |   | 418    | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Depreciation                                                                     |  |           | 770    |            |  |           | 374   |              |  |   | 237  |   |  |   | 1,381  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with employee
stock ownership plan |  |           | 759    |            |  |           | 81    |              |  |   |      |   |  |   | 840    | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with stock options                 |  |           |        |            |  |           |       |              |  |   | 526  |   |  |   | 526    | 

39 Week Period Ending July 27, 2002

|                                                                                 |  |           |        |            |  |           |        |              |  |   |        |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------- | ------ | ---------- |  | --------- | ------ | ------------ |  | - | ------ | - |  | - | ------- | -
|                                                                                 |  | Aerospace |        | Industrial |  | Corporate |        | Consolidated
|                                                                                 |  |           |        |            |  |           |        |             
|Net revenues                                                                     |  | $         | 87,254 |            |  | $         | 25,007 |              |  | $ |       |   |  | $ | 112,261 |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Operating profit (loss)                                                          |  |           | 21,419 |            |  |           | 1,134  |              |  |   | (1,133 | ) |  |   | 21,420  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Amortization of intangible assets                                                |  |           |        |            |  |           |        |              |  |   |        |   |  |   | 2,561   |  
|                                                                                 |  |           |        |            |  |           |        |              |  |   |        |   |  |   |         |  
|Income from operations                                                           |  |           |        |            |  |           |        |              |  |   |        |   |  |   | 18,859  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |  |           |        |            |  |           |        |              |  |   |        |   |  |   | 16,179  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other, net                                                                       |  |           |        |            |  |           |        |              |  |   |        |   |  |   | (14     | )
|                                                                                 |  |           |        |            |  |           |        |              |  |   |        |   |  |   |         |  
|Income before income taxes                                                       |  |           |        |            |  |           |        |              |  |   |        |   |  | $ | 2,694   |  
|                                                                                 |  |           |        |            |  |           |        |              |  |   |        |   |  |   |         |  
|Capital expenditures                                                             |  |           | 571    |            |  |           | 484    |              |  |   |        |   |  |   | 1,055   |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Depreciation                                                                     |  |           | 2,122  |            |  |           | 1,021  |              |  |   | 535    |   |  |   | 3,678   |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with employee
stock ownership plan |  |           | 1,691  |            |  |           | 201    |              |  |   |        |   |  |   | 1,892   |  

8



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##### Table of Contents



39 Week Period Ending July 28, 2001

|                                                                                 |  |           |         |            |  |           |        |              |  |   |        |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | --------- | ------- | ---------- |  | --------- | ------ | ------------ |  | - | ------ | - |  | - | ------- | -
|                                                                                 |  | Aerospace |         | Industrial |  | Corporate |        | Consolidated
|                                                                                 |  |           |         |            |  |           |        |             
|Net revenues                                                                     |  | $         | 101,483 |            |  | $         | 22,603 |              |  | $ |       |   |  | $ | 124,086 |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Operating profit (loss)                                                          |  |           | 32,508  |            |  |           | (181   | )            |  |   | (1,149 | ) |  |   | 31,178  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Amortization of intangible assets                                                |  |           |         |            |  |           |        |              |  |   |        |   |  |   | 5,636   |  
|                                                                                 |  |           |         |            |  |           |        |              |  |   |        |   |  |   |         |  
|Income from operations                                                           |  |           |         |            |  |           |        |              |  |   |        |   |  |   | 25,542  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |  |           |         |            |  |           |        |              |  |   |        |   |  |   | 18,643  |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other, net                                                                       |  |           |         |            |  |           |        |              |  |   |        |   |  |   | (104    | )
|                                                                                 |  |           |         |            |  |           |        |              |  |   |        |   |  |   |         |  
|Income before income taxes                                                       |  |           |         |            |  |           |        |              |  |   |        |   |  | $ | 7,003   |  
|                                                                                 |  |           |         |            |  |           |        |              |  |   |        |   |  |   |         |  
|Capital expenditures                                                             |  |           | 911     |            |  |           | 334    |              |  |   |        |   |  |   | 1,245   |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Depreciation                                                                     |  |           | 2,345   |            |  |           | 1,118  |              |  |   | 712    |   |  |   | 4,175   |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with employee
stock ownership plan |  |           | 2,241   |            |  |           | 279    |              |  |   |        |   |  |   | 2,520   |  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Compensation expense recognized
in connection with stock options                 |  |           |         |            |  |           |        |              |  |   | 526    |   |  |   | 526     |  



|7. |  | OTHER COMPREHENSIVE INCOME (LOSS)
|-- |  | ---------------------------------



| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other comprehensive income (loss) includes foreign currency translation
adjustments and changes in the fair value of the interest rate swaps (in
thousands).

|                                                                |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |     |  
|--------------------------------------------------------------- | -------------------------------------------------- | - | -------------------- | -- | -------------------- | - | -------- | ---- | -------- | - | --- | -- |  | - | ----- | --- | -
|                                                                |                                                    |   | 39 week period ended |    | 13 week period ended
|                                                                |                                                    |   |                      |    |                     
|                                                                |                                                    |   | July 27,             |    | July 28,             |   | July 27, |      | July 28,
|                                                                |                                                    |   | 2002                 |    | 2001                 |   | 2002     |      | 2001    
|                                                                |                                                    |   |                      |    |                      |   |          |      |         
|Net income                                                      |                                                    | $ | 2,764                |    |                      | $ | 4,438    |      |          | $ | 508 |    |  | $ | 2,787 |    
|                                                               
|                                                               
|                                                               
|                                                               
|Other comprehensive income (loss):                              |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |    
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Foreign currency translation adjustment            |   |                      | (7 | )                    |   |          | 141  |          |   |     | 86 |  |   |       | 3   |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Cumulative effect of accounting change             |   |                      |    |                      |   |          | 284  |          |   |     |    |  |   |       |     |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Change in fair market value of interest
rate swaps |   |                      |    |                      |   |          | (441 | )        |   |     |    |  |   |       | (22 | )
|                                                                |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |    
|Other comprehensive income (loss)
before tax                    |                                                    |   | (7                   | )  |                      |   | (16      | )    |          |   | 86  |    |  |   | (19   | )  
|                                                               
|                                                               
|                                                               
|                                                               
|Income tax benefit related to other
comprehensive income (loss) |                                                    |   |                      |    |                      |   | 63       |      |          |   |     |    |  |   | 9     |    
|                                                                |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |    
|Other comprehensive income (loss),
net of tax                   |                                                    |   | (7                   | )  |                      |   | 47       |      |          |   | 86  |    |  |   | (10   | )  
|                                                                |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |    
|Comprehensive income                                            |                                                    | $ | 2,757                |    |                      | $ | 4,485    |      |          | $ | 594 |    |  | $ | 2,777 |    
|                                                                |                                                    |   |                      |    |                      |   |          |      |          |   |     |    |  |   |       |    



|8. |  | NEW ACCOUNTING PRONOUNCEMENTS
|-- |  | -----------------------------



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Argo-Tech adopted Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets as of October 28, 2001. Under
this statement, goodwill and other intangibles

9



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | determined to have an infinite life are no longer amortized; however, these
assets are to be reviewed for impairment on a periodic basis. The initial
step of the transitional impairment test is to be completed within six
months of adoption of SFAS No. 142 and the final step of the transitional
impairment test, if required, is to be completed by the end of the fiscal
year. Argo-Tech tested goodwill for impairment during the second fiscal
quarter of 2002 using a present value of future cash flows valuation method.
This process did not result in any impairment to be recorded upon the
adoption of SFAS No. 142.
|
| | Upon adoption of SFAS No. 142, $2.4 million related to the unamortized
portion of the intangible asset, workforce in place, was reclassified from
intangible assets to goodwill along with the related long-term deferred tax
liability of $1.0 million. The following pro forma information shows what
income would have been had SFAS No. 142 been in effect as of October 29,
2000:                                                                                                                                                                                                                                               

|                          |                                                |   |                      |  |                      |   |          |       |          |   |     |  |  |   |       |     | 
|------------------------- | ---------------------------------------------- | - | -------------------- |  | -------------------- | - | -------- | ----- | -------- | - | --- |  |  | - | ----- | --- | 
|                          |                                                |   | 39 week period ended |  | 13 week period ended
|                          |                                                |   |                      |  |                     
|                          |                                                |   | July 27,             |  | July 28,             |   | July 27, |       | July 28,
|                          |                                                |   | 2002                 |  | 2001                 |   | 2002     |       | 2001    
|                          |                                                |   |                      |  |                      |   |          |       |         
|Net income as reported    |                                                | $ | 2,764                |  |                      | $ | 4,438    |       |          | $ | 508 |  |  | $ | 2,787 |    
|                         
|                         
|                         
|                         
|Add amortization expense: |                                                |   |                      |  |                      |   |          |       |          |   |     |  |  |   |       |    
|                         
|                         
|                         
|                         
|                          | Goodwill                                       |   |                      |  |                      |   |          | 2,616 |          |   |     |  |  |   |       | 872 | 
|                         
|                         
|                         
|                         
|                          | Workforce in place, net of tax of
$183 and $61 |   |                      |  |                      |   |          | 276   |          |   |     |  |  |   |       | 92  | 
|                          |                                                |   |                      |  |                      |   |          |       |          |   |     |  |  |   |       |    
|Adjusted net income       |                                                | $ | 2,764                |  |                      | $ | 7,330    |       |          | $ | 508 |  |  | $ | 3,751 |    
|                          |                                                |   |                      |  |                      |   |          |       |          |   |     |  |  |   |       |    



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, Accounting for Asset Retirement Obligations. This statement
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The amount
recorded as a liability will be capitalized by increasing the carrying
amount of the related long-lived asset. Subsequent to initial measurement,
the liability is accreted to the ultimate amount anticipated to be paid and
is also adjusted for revisions to the timing of the amount of estimated cash
flows. The capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles
the obligation for its recorded amount or incurs a gain or loss upon
settlement. The provisions of this statement become effective for
Argo-Techs fiscal year beginning October 27, 2002. Management has not
determined the impact, if any, that this statement will have on Argo-Techs
consolidated financial statements.
|
| | In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long Lived Assets. This statement requires that one
accounting model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, and by broadening the
presentation of discontinued operations to include more disposal
transactions. The provisions of this statement become effective for
Argo-Techs fiscal year beginning October 27, 2002. Management has not
determined the impact, if any, that this statement will have on Argo-Techs
consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement requires that a liability
for a cost associated with an exit or disposal activity be recognized when
the liability is incurred. The provisions of this statement are effective
for exit or disposal activities that are initiated after December 31, 2002.
Management has not determined the impact, if any, that this statement will
have on Argo-Techs consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

10



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##### Table of Contents






ITEM 2.




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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Argo-Tech Corporation is a leading designer, manufacturer and servicer of
high performance fuel flow devices for the aerospace industry providing a
broad range of products and services to substantially all commercial and
domestic military engine and airframe manufacturers, to airlines worldwide
and to the U.S. and certain foreign militaries. Argo-Tech is the worlds
leading supplier of main engine fuel pumps to the commercial aircraft
industry and a leading supplier of airframe products and aerial refueling
systems. Argo-Tech is also a leading manufacturer of components for ground
fueling systems and is a manufacturer of industrial marine cryogenic pumps.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | The following is managements discussion and analysis of certain significant
factors which have affected Argo-Techs financial position and operating
results during the periods presented in the accompanying condensed
consolidated financial statements. Argo-Techs fiscal year ends on the last
Saturday of October and is identified according to the calendar year in
which it ends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Results of Operations for the 13 Week Period Ended July 27, 2002 Compared
With the 13 Week Period Ended July 28, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Net revenues for the 13 week period ended July 27, 2002 decreased $6.4
million, or 14.5%, to $37.7 million from $44.1 million for the 13 week
period ended July 28, 2001. This decrease was primarily due to a decrease
in aerospace revenues of $6.3 million and a decrease of $0.1 million in
industrial revenues. The decrease in aerospace revenues was attributable to
a decrease of $9.3 million of commercial aerospace revenues offset by an
increase of $3.0 million in military revenues. Commercial OEM revenues
decreased $2.5 million, or 34.2%, to $4.8 million and commercial aftermarket
revenues decreased $6.8 million, or 31.6%, to $14.7 million in the 13 week
period ended July 27, 2002. Commercial OEM revenues declined as a result of
lower overall engine requirements from our customers in response to
decreasing aircraft build rates. Commercial aftermarket revenues were lower
primarily due to a decrease in the demand for spare part sales and repair
and overhaul services as a result of the reduced flying capacity of
commercial airlines. Military revenues increased primarily due to revenue
related to increased sales of KC-135 aerial refueling pumps, F-22 airframe
components and higher sales of aftermarket parts on a variety of aerial
refueling and airframe programs. The $0.1 million decrease in industrial
revenues was primarily attributable to decreased ground fueling and
industrial gas turbine revenues offset by an increase in cryogenic pump
revenues.
|
| | Gross profit for the 13 week period ended July 27, 2002 decreased $5.7
million, or 27.4%, to $15.1 million from $20.8 million in the 13 week period
ended July 28, 2001. Gross margin decreased to 40.0% for the 13 week period
ended July 27, 2002 from 47.2% for the 13 week period ended July 28, 2001.
The decrease in gross profit and gross margin is primarily due to the
decrease of higher margin commercial aerospace aftermarket revenues, a $0.6
million reserve for potential losses for inventory on hand and termination
claims relating to the bankruptcy of a former airframe customer, and the
lower absorption of fixed manufacturing overhead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Operating expenses for the 13 week period ended July 27, 2002 decreased $1.2
million, or 11.3%, to $9.4 million from $10.6 million in the 13 week period
ended July 28, 2001. This decrease is primarily attributable to the
cessation of goodwill and workforce in place amortization of $1.0 million as
a result of adopting SFAS No. 142 on October 28, 2001 and a reduction of
general and administrative expenses, offset by a slight increase in research
and development expenses. Operating expenses as a percent of revenues
increased to 24.9% for the 13 week period ended July 27, 2002 as compared to
24.0% for the 13 week period ended July 28, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income from operations for the 13 week period ended July 27, 2002 decreased
$4.5 million, or 44.1%, to $5.7 million from $10.2 million in the 13 week
period ended July 28, 2001. As a percent of revenues, income from
operations for the 13 week period ended July 27, 2002 decreased to 15.1%
from 23.1% for the 13 week period ended July 28, 2001. These decreases were
primarily due to the decreased sales of higher margin commercial aerospace
aftermarket revenues, a $0.6 million reserve for potential losses for
inventory on hand and termination claims relating to the bankruptcy of a
former airframe customer, and the lower absorption of fixed manufacturing
overhead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Interest expense for the 13 week period ended July 27, 2002 decreased $0.7
million, or 11.7%, to $5.3 million from $6.0 million for the 13 week period
ended July 28, 2001 due to lower outstanding borrowings and lower interest
rates on the term loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | The income tax provision for the 13 week period ended July 27, 2002
decreased $1.5 million to a benefit of $0.2 million from an expense of $1.3
million in the 13 week period ended July 28, 2001. This decrease is
primarily due to a lower pre-tax income of $0.5 million (adjusted for
non-deductible ESOP expense) in the 13 week period ended July 27, 2002 as
compared to $6.0 million (adjusted for SFAS No. 142, non-recurring stock
option expense and non-deductible ESOP expense) for the 13 week period ended
July 28, 2001 offset by the favorable effect of tax benefits related to the
extraterritorial income exclusion on foreign sales, research and development
tax credits and a decrease in the favorable adjustments of prior years tax
accruals related to permanent differences.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Net income for the 13 week period ended July 27, 2002 decreased $2.3 million
to $0.5 million from $2.8 million for the 13 week period ended July 28, 2001
primarily due to the revenue and expense factors discussed above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Results of Operations for the 39 Week Period Ended July 27, 2002 Compared
With the 39 Week Period Ended July 28, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Net revenues for the 39 week period ended July 27, 2002 decreased $11.8
million, or 9.5%, to $112.3 million from $124.1 million for the 39 week
period ended July 28, 2001. This decrease was primarily due to a decrease
in aerospace revenues of $14.2 million offset by a $2.4 million increase in
industrial revenues. The decrease in aerospace revenues was attributable to
a decrease of $21.2 million of commercial aerospace revenues offset by an
increase of $7.0 million in military revenues. Commercial OEM revenues
decreased $6.9 million, or 31.2%, to $15.2 million and commercial
aftermarket revenues decreased $14.3 million, or 22.6%, to $48.8 million in
the 39 week period ended July 27, 2002. Commercial OEM revenues decreased
as a result of lower overall engine requirements from our customers in
response to reduced aircraft build rates. Commercial aftermarket revenues
were lower primarily due to a decrease in demand for spare part sales as a
result of the reduced flying capacity of commercial airlines and a slight
decrease in repair and overhaul services. Military revenues increased
primarily due to revenue related to increased sales of KC-135 aerial
refueling pumps, F-15, F-16 and F-22 airframe components, F-18E/F 480 gallon
fuel tank components and higher sales of aftermarket parts and overhaul
services on a variety of aerial refueling and airframe programs. Industrial
revenues increased $2.4 million, primarily due to an increase in ground
fueling and cryogenic pump revenues offset by a slight decrease in
industrial gas turbine revenues.
|
| | Gross profit for the 39 week period ended July 27, 2002 decreased $8.4
million, or 14.9%, to $47.8 million from $56.2 million in the 39 week period
ended July 28, 2001. Gross margin decreased to 42.6% for the 39 week
period ended July 27, 2002 from 45.3% in the 39 week period ended July 28,
2001. The decrease in gross profit and gross margin is primarily due to the
decrease in higher margin commercial aerospace aftermarket revenues, a $0.6
million reserve for potential losses for inventory on hand and termination
claims relating to the bankruptcy of a former airframe customer, and lower
absorption of fixed manufacturing overhead offset by an increase in
industrial revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Operating expenses for the 39 week period ended July 27, 2002 decreased $1.8
million, or 5.9%, to $28.9 million from $30.7 million in the 39 week period
ended July 28, 2001. This decrease is primarily attributable to the
cessation of goodwill and workforce in place amortization of $3.1 million as
a result of adopting SFAS No. 142 on October 28, 2001, offset by an increase
in research and development expenses and selling, general
and administrative expenses, which includes a non-cash expense of $0.6
million related to a salaried employee early retirement program. Operating
expenses as a percent of revenues increased to 25.7% for the 39 week period
ended July 27, 2002 as compared to 24.7% for the 39 week period ended July
28, 2001.                                                                           
|
| | Income from operations for the 39 week period ended July 27, 2002 decreased
$6.6 million, or 25.9%, to $18.9 million from $25.5 million in the 39 week
period ended July 28, 2001. As a percent of revenues, income from operations
for the 39 week period ended July 27, 2002 decreased to 16.8% from 20.5% for
the 39 week period ended July 28, 2001. These decreases were due to the
decrease in higher margin commercial aerospace aftermarket revenues, a $0.6
million reserve for potential losses for inventory on hand and termination
claims relating to the bankruptcy of a former airframe customer, and lower
absorption of fixed manufacturing overhead offset by an increase in
industrial revenues and lower operating expenses.                                                                                              
|
| | Interest expense for the 39 week period ended July 27, 2002 decreased $2.4
million, or 12.9%, to $16.2 million from $18.6 million for the 39 week
period ended July 28, 2001 due to lower outstanding borrowings and lower
interest rates on the term loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | The income tax provision for the 39 week period ended July 27, 2002
decreased $2.7 million to a benefit of $0.1 million from $2.6 million in
the 39 week period ended July 28, 2001. This decrease is primarily due to a
lower pre-tax income of $3.3 million (adjusted for non-deductible ESOP
expense) in the 39 week period ended July 27, 2002 as compared to $11.3
million (adjusted for SFAS No. 142, non-recurring stock option expense and
non-deductible ESOP expense) for the 39 week period ended July 28, 2001
offset by the favorable effect of tax benefits related to the
extraterritorial income exclusion on foreign sales, research and development
tax credits and a decrease in the favorable adjustments of prior years tax
accruals related to permanent differences.                                                  
|
| | Net income for the 39 week period ended July 27, 2002 decreased $1.6
million, or 36.4%, to $2.8 million from $4.4 million for the 39 week period
ended July 28, 2001 primarily due to the revenue and expense factors
discussed above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Fluctuations of Operating Results; Limitation of Quarterly Comparisons                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Argo-Techs results of operations are subject to fluctuations from quarter
to quarter due to changes in demand for its products, changes in product mix
and other factors. Demand for its products can vary from quarter to quarter
due to changes in demand for, and timing of deliveries of, OEM, aftermarket
and military products and services. In particular, the timing of
Argo-Techs aftermarket sales tends not to occur on a predictable schedule
and, furthermore, the sales tend to occur in large quantities that can
significantly impact quarterly comparisons. Accordingly, year-to-year and
quarter-to-quarter comparisons of quarterly results may not be meaningful,
and quarterly results during the year are not necessarily indicative of the
results that may be expected for any future period or for the entire year.
|
| | Liquidity and Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Argo-Tech is a holding company that receives all of its operating income
from its subsidiaries. As a result, Argo-Techs primary source of liquidity
for conducting business activities and servicing its indebtedness has been
cash flows from operating activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Cash and cash equivalents for the 39 week period ended July 27, 2002
increased $10.0 million to $18.1 million. This was primarily due to
operating income, a decrease in accounts receivable, inventories and prepaid
expenses, and an increase in accrued and other liabilities, offset by the
scheduled repayment of the term loans, the purchase of stock from former
ESOP participants and a decrease in accounts payable.                                                                                                                                                                                                                                                                                                                                                                                                                

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Capital expenditures for the 39 weeks ended July 27, 2002 totaled $1.1
million compared to $1.2 million for the 39 weeks ended July 28, 2001.
Argo-Tech expects to incur capital expenditures of approximately $0.7
million for the remainder of fiscal year 2002, related to the continued
maintenance of facilities, equipment and systems to support current
operating activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Long-term debt at July 27, 2002 consisted of $46.5 million principal amount
of term loans and $193.1 million principal amount of senior subordinated
notes. Scheduled payments of $14.0 million were made on the term loans in
the 39 week period ended July 27, 2002. Argo-Tech has available, after $0.5
million in letters of credit, a $19.5 million revolving credit facility. As
of July 27, 2002, there were no outstanding borrowings on the revolving
credit facility. The credit facility contains no restrictions on the
ability of Argo-Techs subsidiaries to make distributions to Argo-Tech.                                                                                                                                                                                                                                                                                                                                                         
|
| | Argo-Tech anticipates that it will explore an extension of its credit
facility sometime before the end of this fiscal year. This extension will
result in refinancing costs and a likely increase in applicable interest
rate charges, which could have a material adverse effect on
quarter-to-quarter comparisons of quarterly results, but is not expected to
impact Argo-Techs ability to meet its EBITDA or other financial covenants
contained in the indenture governing its senior subordinated notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Certain Factors That May Affect Future Results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | From time to time, information provided by Argo-Tech, statements by its
employees or information included in its filings with the Securities and
Exchange Commission (including those portions of the Managements Discussion
and Analysis that refer to the future) may contain forward-looking
statements that are not historical facts. Those statements are
forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements, and Argo-Techs future
performance, operating results, financial position and liquidity, are
subject to a variety of factors that could materially affect results. Some,
but not necessarily all, of these factors include: Argo-Techs dependence
on the aerospace industry; government regulation and oversight; defense
spending; competition; product and environmental liabilities; and risks
associated with its workforce, suppliers, and future acquisitions.




ITEM 3.




QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the ordinary course of operations, Argo-Techs major market risk exposure
is to changing interest rates. Argo-Techs exposure to changes in interest
rates relates primarily to its long-term debt obligations. At July 27,
2002, Argo-Tech had fixed rate debt totaling $195 million, including $1.9
million of accretion, at 8.625% and variable rate debt under its existing
credit facility of $46.5 million calculated at Argo-Techs choice using an
alternate base rate (ABR) or LIBOR, plus a supplemental percentage
determined by the ratio of debt to EBITDA. The variable rate is not to
exceed ABR plus 1.50% or LIBOR plus 2.50%. Argo-Tech currently has no
derivative contracts and does not enter into derivative contracts for
trading or speculative purposes. A 10% fluctuation in interest rates would
not materially affect Argo-Techs financial condition, results of operations
or cash flows.




ITEM 4.




CONTROLS AND PROCEDURES



| | (a) |  | Not applicable.                                                                                                                                                             
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | There were no significant changes in Argo-Techs internal controls
or in other factors that could significantly affect these controls
subsequent to managements evaluation.

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| |                            
| | ---------------------------
| | PART II  OTHER INFORMATION






| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Item 6  Exhibits and Reports on Form 8-K                                                                                                
|
| | (a) Exhibit 99   Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
| | Reports on Form 8-K  None                                                                                                               

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##### Table of Contents






SIGNATURE



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

|                         |  |         |  |                                                                                                               
|------------------------ |  | ------- |  | --------------------------------------------------------------------------------------------------------------
|Date: September 10, 2002 |  |         |  | ARGO-TECH CORPORATION                                                                                         
|                        
|                        
|                        
|                        
|                         |  |         |  |                                                                                                               
|                        
|                        
|                        
|                        
|                         |  | By: /s/ |  | Frances S. St. Clair
Frances S. St. Clair
Vice President and Chief Financial Officer
(Duly Authorized Officer)
|                        
|                        
|                        
|                        
|                         |  |         |  |                                                                                                               
|                        
|                        
|                        
|                        
|                         |  | By: /s/ |  | Paul A. Sklad
Paul A. Sklad
Controller
(Principal Accounting Officer)                                         

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##### Table of Contents






CERTIFICATION

I, Michael S. Lipscomb, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Argo-Tech
Corporation;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         |  |         |  |                                                
|------------------------ |  | ------- |  | -----------------------------------------------
|Date: September 10, 2002 |  |         |  |                                                
|                        
|                        
|                        
|                        
|                         |  |         |  |                                                
|                        
|                        
|                        
|                        
|                         |  | By: /s/ |  | Michael S. Lipscomb
Chairman, President and CEO

17



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##### Table of Contents



CERTIFICATION

I, Frances S. St. Clair, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Argo-Tech
Corporation;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         |  |         |  |                                            
|------------------------ |  | ------- |  | -------------------------------------------
|Date: September 10, 2002 |  |         |  |                                            
|                        
|                        
|                        
|                        
|                         |  |         |  |                                            
|                        
|                        
|                        
|                        
|                         |  | By: /s/ |  | Frances S. St. Clair
Vice President and CFO

18