##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q (Mark One) þ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period ended April 30, 2005, 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
    
    31-1521125(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)
 23555 Euclid AvenueCleveland, Ohio
    
    44117(Address of principal executive offices)
    
    (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. þ YES o NO Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act).oYESþNO All of the outstanding capital stock of the registrant is held by AT Holdings
Corporation. As of June 1, 2005, 1 share of the registrants common stock, $.01 par value, was
outstanding.




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INDEX Page No.PART I  FINANCIAL INFORMATIONItem 1  Financial StatementsConsolidated Balance Sheets as of April 30, 2005 and October 30, 2004
    
    
    3Consolidated Statements of Net Income for the 26 week period
and 13 week period ended April 30, 2005 and the 27 week period and
13 week period ended May 1, 2004
    
    
    4Consolidated Statements of Cash Flows for the 26 week period ended
April 30, 2005 and the 27 week period ended May 1, 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6 - 11Item 2 - Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    11 - 18Item 3 - Quantitative and Qualitative Disclosure about Market Risk
    
    
    18Item 4  Controls and Procedures
    
    
    18PART II  OTHER INFORMATIONItem 6  Exhibits
    
    
    19Signature
    
    
    20Certifications
    
    
    21 - 23EXHIBIT 31.1  CERTIFICATIONEXHIBIT 31.2  CERTIFICATIONEXHIBIT 32 CERTIFICATION
  2




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PART I  FINANCIAL INFORMATION 
 ITEM 1.
 ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation)
 
 CONSOLIDATED BALANCE SHEETS 
APRIL 30, 2005 AND OCTOBER 30, 2004
(In thousands, except share data) 2005
    
    
    2004(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    6,607
    
    
    $
    15,857Receivables, net
    
    
    34,593
    
    
    
    29,013Income tax receivable
    
    
    973
    
    
    
    1,203Inventories, net
    
    
    35,803
    
    
    
    28,557Deferred income taxes and prepaid expenses
    
    
    8,076
    
    
    
    6,245Total current assets
    
    
    86,052
    
    
    
    80,875PROPERTY AND EQUIPMENT, net of
accumulated depreciation
    
    
    23,222
    
    
    
    23,213GOODWILL
    
    
    110,059
    
    
    
    110,059INTANGIBLE ASSETS, net of accumulated amortization
    
    
    29,795
    
    
    
    31,502DEFERRED FINANCING AND OTHER ASSETS
    
    
    8,012
    
    
    
    8,613Total Assets
    
    $
    257,140
    
    
    $
    254,262LIABILITIES AND SHAREHOLDERS EQUITY/(DEFICIENCY)CURRENT LIABILITIES:Current portion of long-term debt
    
    $
    750
    
    
    $
    750Accounts payable
    
    
    9,028
    
    
    
    9,396Accrued liabilities
    
    
    31,053
    
    
    
    28,766Total current liabilities
    
    
    40,831
    
    
    
    38,912LONG-TERM DEBT, net of current maturities
    
    
    263,688
    
    
    
    264,063OTHER NONCURRENT LIABILITIES
    
    
    21,520
    
    
    
    21,306Total liabilities
    
    
    326,039
    
    
    
    324,281REDEEMABLE ESOP STOCK
    
    
    37,163
    
    
    
    40,957SHAREHOLDERS EQUITY/(DEFICIENCY):Common Stock, $.01 par value, authorized 3,000 shares;
1 share issued and outstanding
    
    
    
    
    
    
    Paid-in capital
    
    
    
    
    
    
    Accumulated comprehensive loss
    
    
    (3,276
    )
    
    
    (3,315
    )Accumulated deficit
    
    
    (102,786
    )
    
    
    (107,661
    )Total shareholders equity/(deficiency)
    
    
    (106,062
    )
    
    
    (110,976
    )Total Liabilities and Shareholders Equity/(Deficiency)
    
    $
    257,140
    
    
    $
    254,262
 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 26 week
    
    
    27 weekperiod ended
    
    
    period ended
    
    
    13 week periods endedApril 30, 2005
    
    
    May 1, 2004
    
    

April 30, 2005
    
    
    May 1, 2004Net revenues
    
    $
    99,601
    
    
    $
    91,836
    
    
    $
    52,207
    
    
    $
    47,399Cost of revenues
    
    
    56,638
    
    
    
    53,558
    
    
    
    29,830
    
    
    
    26,725Gross profit
    
    
    42,963
    
    
    
    38,278
    
    
    
    22,377
    
    
    
    20,674Selling, general and administrative
    
    
    16,799
    
    
    
    13,980
    
    
    
    9,973
    
    
    
    7,331Research and development
    
    
    6,533
    
    
    
    5,715
    
    
    
    3,807
    
    
    
    3,332Amortization of intangible assets
    
    
    1,707
    
    
    
    1,707
    
    
    
    853
    
    
    
    853Operating expenses
    
    
    25,039
    
    
    
    21,402
    
    
    
    14,633
    
    
    
    11,516Income from operations
    
    
    17,924
    
    
    
    16,876
    
    
    
    7,744
    
    
    
    9,158Interest expense
    
    
    12,570
    
    
    
    10,505
    
    
    
    6,293
    
    
    
    5,082Other, net
    
    
    (25
    )
    
    
    (12
    )
    
    
    (49
    )
    
    
    (8
    )Income before income taxes
    
    
    5,379
    
    
    
    6,383
    
    
    
    1,500
    
    
    
    4,084Income tax provision
    
    
    1,467
    
    
    
    2,070
    
    
    
    407
    
    
    
    1,395Net income
    
    $
    3,912
    
    
    $
    4,313
    
    
    $
    1,093
    
    
    $
    2,689
 The accompanying notes to consolidated financial statements are an integral part of these
statements. 4




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ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation) 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEK PERIOD ENDED APRIL 30, 2005 AND THE 27 WEEK PERIOD ENDED MAY 1, 2004
(In thousands)
UNAUDITED 2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    3,912
    
    
    $
    4,313Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation
    
    
    1,762
    
    
    
    1,924Amortization of intangible assets and deferred financing costs
    
    
    2,285
    
    
    
    2,903Accretion of bond discount
    
    
    
    
    
    
    163Compensation expense recognized in connection with
employee stock ownership plan (ESOP)
    
    
    2,520
    
    
    
    1,260Compensation expense recognized in connection with
ESOP excess benefit plan
    
    
    150
    
    
    
    Deferred income taxes
    
    
    (1,945
    )
    
    
    (970
    )Changes in operating assets and liabilities:Receivables
    
    
    (5,350
    )
    
    
    (147
    )Inventories
    
    
    (7,246
    )
    
    
    (684
    )Prepaid expenses
    
    
    (977
    )
    
    
    (600
    )Accounts payable
    
    
    (347
    )
    
    
    (2,034
    )Accrued and other liabilities
    
    
    3,591
    
    
    
    2,366Other, net
    
    
    32
    
    
    
    84Net cash provided by / (used in) operating activities
    
    
    (1,613
    )
    
    
    8,578CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (1,771
    )
    
    
    (686
    )Net cash used in investing activities
    
    
    (1,771
    )
    
    
    (686
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of long-term debt
    
    
    (375
    )
    
    
    (6,000
    )Purchase of AT Holdings stock from former ESOP participants
    
    
    (3,795
    )
    
    
    (566
    )Dividend
    
    
    (1,696
    )
    
    
    Net cash used in financing activities
    
    
    (5,866
    )
    
    
    (6,566
    )CASH AND CASH EQUIVALENTS:Net increase (decrease) for the period
    
    
    (9,250
    )
    
    
    1,326Balance, Beginning of period
    
    
    15,857
    
    
    
    14,057Balance, End of period
    
    $
    6,607
    
    
    $
    15,383
 The accompanying notes to consolidated financial statements are an integral part of these statements. 5




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ARGO-TECH CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of AT Holdings Corporation) 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 26 WEEK PERIOD ENDED APRIL 30, 2005 AND THE 27 WEEK PERIOD ENDED
MAY 1, 2004 (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. 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 required to fulfill the obligation of AT Holdings
Corporation to purchase AT Holdings common stock in accordance with the provisions of the
Argo-Tech Corporation Employee Stock Ownership Plan. As a result, that obligation has been
reflected in its financial statements. Argo-Tech Corporation is a parent holding company and all of its domestic subsidiaries guarantee
Argo-Techs senior notes issued in June 2004. Argo-Tech also has two wholly-owned,
non-guarantor foreign subsidiaries which have inconsequential assets, liabilities and equity.
Argo-Tech has no outside assets, liabilities or operations apart from its wholly-owned
subsidiaries. The senior 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, results of
operations and cash flows for the interim periods presented. These financial statements and
notes should be read in conjunction with the financial statements and related notes included in
Argo-Techs Annual Report on Form 10-K for the year ended October 30, 2004. The results of
operations for the 13 and 26 week periods ended April 30, 2005 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): April 30,
    
    
    October 30,2005
    
    
    2004Finished goods
    
    $
    2,765
    
    
    $
    2,686Work-in-process and purchased parts
    
    
    23,062
    
    
    
    17,867Raw materials and supplies
    
    
    13,923
    
    
    
    11,872Total
    
    
    39,750
    
    
    
    32,425Reserve for excess and obsolete inventory
    
    
    (3,947
    )
    
    
    (3,868
    )Inventories  net
    
    $
    35,803
    
    
    $
    28,557
 6




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4. INTANGIBLE ASSETS The following is a summary of intangible assets, other than goodwill (in thousands): April 30, 2005
    
    
    October 30, 2004Gross
    
    
    Accumulated
    
    
    Gross
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Contracts
    
    $
    17,100
    
    
    $
    12,971
    
    
    $
    17,100
    
    
    $
    12,115Spare parts annuity
    
    
    38,200
    
    
    
    12,736
    
    
    
    38,200
    
    
    
    11,896Patents
    
    
    387
    
    
    
    185
    
    
    
    387
    
    
    
    174Total
    
    $
    55,687
    
    
    $
    25,892
    
    
    $
    55,687
    
    
    $
    24,185
 Amortization expense recorded on the intangible assets for the 13 week periods ended April 30,
2005 and May 1, 2004 was $0.9 million and for the 26 week period ended April 30, 2005 and the 27
week period ended May 1, 2004 was $1.7 million. The estimated amortization expense for each of
fiscal years 2005 and 2006 is $3.4 million, for fiscal year 2007 is $3.3 million and for each of
fiscal years 2008 and 2009 is $1.7 million. The intangible asset Spare parts annuity is the
result of customer relationships that have been developed by supplying spare parts to our
aftermarket customers. The weighted-average amortization period for contracts is 10 years, 26
years for spare parts annuity and 15 years for patents. 5. PRODUCT WARRANTY Argo-Tech accrues for warranty obligations for products sold based on management estimates of
the amount that may be required to settle such potential obligations. These estimates are
prepared with support from our sales, engineering, quality and legal functions. This accrual,
which is reviewed in detail on a regular basis, is based on several factors: past experience,
current claims, production changes and various other considerations. The following table
presents a reconciliation of changes in the product warranty liability for the 26 week period
ended April 30, 2005 and the 27 week period ended May 1, 2004 (in thousands): 2005
    
    
    2004Beginning balance
    
    $
    2,084
    
    
    $
    2,130Accruals for warranties issued
    
    
    
    
    
    
    160Accruals for pre-existing warranties
(including changes in estimate)
    
    
    453
    
    
    
    553Warranty claims settled
    
    
    (323
    )
    
    
    (462
    )Ending balance
    
    $
    2,214
    
    
    $
    2,381
 6. EMPLOYEE BENEFIT PLANS The Company has two noncontributory defined benefit pension plans, one for qualifying hourly
employees and a second for salaried employees. The salaried employee plan provides pension
benefits that are based on the employees compensation and years of service. The future
accrual of benefits under this plan was terminated in connection with the formation of the
Employee Stock Ownership Plan (ESOP). The hourly employee plan provides benefits of stated
amounts for each year of service. The Companys funding policy is to contribute actuarially
determined amounts allowable under Internal Revenue Service regulations. 7




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A summary of the components of net periodic benefit cost for the two pension plans is as
follows (in thousands): 26 week
    
    
    27 week
    
    
    13 week
    
    
    13 weekperiod ended
    
    
    period ended
    
    
    period ended
    
    
    period endedApril 30, 2005
    
    
    May 1, 2004
    
    
    April 30, 2005
    
    
    May 1, 2004Service cost
    
    $
    183
    
    
    $
    140
    
    
    $
    94
    
    
    $
    70Interest cost
    
    
    685
    
    
    
    662
    
    
    
    342
    
    
    
    331Expected return on plan
assets
    
    
    (930
    )
    
    
    (878
    )
    
    
    (465
    )
    
    
    (439
    )Net amortization and
deferral
    
    
    215
    
    
    
    174
    
    
    
    104
    
    
    
    87Curtailment charge
    
    
    369
    
    
    
    
    
    
    
    369
    
    
    
    Termination benefits
    
    
    58
    
    
    
    
    
    
    
    58
    
    
    
    Net periodic pension cost
    
    $
    580
    
    
    $
    98
    
    
    $
    502
    
    
    $
    49
 Argo-Tech expects to contribute $132,000 to the hourly employee pension plan in 2005. As of
April 30, 2005, no contributions have been made. In addition, the Company provides certain postretirement health care benefits to qualifying
hourly retirees and their dependents. This benefit is not funded. A summary of the components
of net periodic benefit cost for the postretirement benefit is as follows (in thousands): 26 week
    
    
    27 week
    
    
    13 week
    
    
    13 weekperiod ended
    
    
    period ended
    
    
    period ended
    
    
    period endedApril 30, 2005
    
    
    May 1, 2004
    
    
    April 30, 2005
    
    
    May 1, 2004Service cost
    
    $
    121
    
    
    $
    93
    
    
    $
    71
    
    
    $
    43Interest cost
    
    
    441
    
    
    
    455
    
    
    
    218
    
    
    
    213Net amortization and deferral
    
    
    70
    
    
    
    88
    
    
    
    27
    
    
    
    23Net periodic postretirement
benefit cost
    
    $
    632
    
    
    $
    636
    
    
    $
    316
    
    
    $
    279
  7.
    CONTINGENCIES Environmental Matters  The soil and groundwater at Argo-Techs Euclid, Ohio facility and 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 matters is not
expected to materially affect Argo-Techs financial condition, results of operations or
liquidity.  8.
    SEGMENT INFORMATION Argo-Tech operates in two business segments: Aerospace and Industrial. The Aerospace segment
includes the design, manufacture, distribution, and maintenance, repair and overhaul (MRO) of
aviation products, consisting of aircraft fuel pumps, fuel flow related products found on a
planes airframe, and 8




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aerial refueling pumps and related equipment. The Industrial segment
includes the design, manufacture and distribution of ground fueling valves and related
components, specialty industrial hose, cryogenic pumps and nozzles 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 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): 13 Week Period Ended April 30, 2005 Aerospace
    
    
    Industrial
    
    
    Corporate
    
    
    ConsolidatedNet revenues
    
    $
    38,189
    
    
    $
    14,018
    
    
    $
    
    
    
    $
    52,207Operating profit (loss)
    
    
    9,115
    
    
    
    1,471
    
    
    
    (1,989
    )
    
    
    8,597Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    853Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,744Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,293Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,500Capital expenditures
    
    
    676
    
    
    
    354
    
    
    
    
    
    
    
    1,030Depreciation
    
    
    502
    
    
    
    297
    
    
    
    92
    
    
    
    891Compensation expense recognized
in connection with employee
stock ownership plan
    
    
    1,165
    
    
    
    95
    
    
    
    
    
    
    
    1,260
 13 Week Period Ended May 1, 2004 Aerospace
    
    
    Industrial
    
    
    Corporate
    
    
    ConsolidatedNet revenues
    
    $
    35,076
    
    
    $
    12,323
    
    
    $
    
    
    
    $
    47,399Operating profit (loss)
    
    
    9,932
    
    
    
    156
    
    
    
    (77
    )
    
    
    10,011Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    853Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,158Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,082Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,084Capital expenditures
    
    
    140
    
    
    
    142
    
    
    
    
    
    
    
    282Depreciation
    
    
    544
    
    
    
    307
    
    
    
    100
    
    
    
    951Compensation expense recognized
in connection with employee
stock ownership plan
    
    
    879
    
    
    
    119
    
    
    
    
    
    
    
    998
 9




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26 Week Period Ended April 30, 2005 Aerospace
    
    
    Industrial
    
    
    Corporate
    
    
    ConsolidatedNet revenues
    
    $
    74,623
    
    
    $
    24,978
    
    
    $
    
    
    
    $
    99,601Operating profit (loss)
    
    
    19,099
    
    
    
    2,587
    
    
    
    (2,055
    )
    
    
    19,631Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,707Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,924Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,570Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,379Capital expenditures
    
    
    1,109
    
    
    
    662
    
    
    
    
    
    
    
    1,771Depreciation
    
    
    993
    
    
    
    586
    
    
    
    183
    
    
    
    1,762Compensation expense recognized
in connection with employee
stock ownership plan
    
    
    2,331
    
    
    
    189
    
    
    
    
    
    
    
    2,520
 27 Week Period Ended May 1, 2004 Aerospace
    
    
    Industrial
    
    
    Corporate
    
    
    ConsolidatedNet revenues
    
    $
    65,942
    
    
    $
    25,894
    
    
    $
    
    
    
    $
    91,836Operating profit (loss)
    
    
    18,113
    
    
    
    631
    
    
    
    (161
    )
    
    
    18,583Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,707Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,876Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,505Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,383Capital expenditures
    
    
    498
    
    
    
    188
    
    
    
    
    
    
    
    686Depreciation
    
    
    1,108
    
    
    
    616
    
    
    
    200
    
    
    
    1,924Compensation expense recognized
in connection with employee
stock ownership plan
    
    
    1,110
    
    
    
    150
    
    
    
    
    
    
    
    1,260
  9.
    OTHER COMPREHENSIVE INCOME The following table presents other comprehensive income, which includes foreign currency
translation adjustments (in thousands): 26 week
    
    
    27 week
    
    
    13 week
    
    
    13 weekperiod ended
    
    
    period ended
    
    
    period ended
    
    
    period endedApril 30, 2005
    
    
    May 1, 2004
    
    
    April 30, 2005
    
    
    May 1, 2004Net income
    
    $
    3,912
    
    
    $
    4,313
    
    
    $
    1,093
    
    
    $
    2,689Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    39
    
    
    
    76
    
    
    
    (21
    )
    
    
    (5
    )Other comprehensive income (loss)
before tax
    
    
    39
    
    
    
    76
    
    
    
    (21
    )
    
    
    (5
    )Income tax benefit related to other
comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income (loss), net
of tax
    
    
    39
    
    
    
    76
    
    
    
    (21
    )
    
    
    (5
    )Comprehensive income
    
    $
    3,951
    
    
    $
    4,389
    
    
    $
    1,072
    
    
    $
    2,684
 10




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10.
    NEW ACCOUNTING PRONOUNCEMENTSIn November 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 151, Inventory Costs, which is an amendment of
Accounting Research Bulletin (ARB) No. 43, Chapter 4, Inventory Pricing. This statement
clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted
materials (spoilage) should be recognized as current-period charges. The provisions of this
statement become effective for the Companys fiscal year beginning October 30, 2005.
Management has not determined the impact, if any, that this statement will have on Argo-Techs
consolidated financial statements.In December 2004, the FASB issued SFAS No. 123(R),
Share Based Payment, which requires all
share-based payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair values. The Company will adopt the
provisions of this statement for the Companys fiscal year beginning October 30, 2005 using
the modified prospective method. Management believes the adoption of this statement will not
have a material effect on Argo-Techs consolidated financial position or results of
operations.11.
    RECENT EVENTSOn March 1, 2005, the Company granted 45,200 Stock Appreciation Rights (SARs) to certain
full-time employees of Argo-Tech and its subsidiaries. Our directors and executive officers do
not participate in the plan. The total number of SARs which may be granted pursuant to the
amended 2004 Stock Appreciation Rights Plan, which was approved by the Board of Directors on
December 7, 2004, cannot exceed 50,000, except to the extent of certain authorized adjustments.
The SARs vest 33-1/3% on the grant date and on each of the next two anniversary dates of the
initial date (the date the value of the SAR is determined by the Board). Once vested and upon
the earliest of: termination of employment for reasons other than cause, a change of control or
ten years from the initial date, each SAR entitles the holder to a cash payment equal to the
increase, if any, in the value of one share of AT Holdings Corporation common stock from the
initial date to the date of payment. The granting of these SARs resulted in a non-cash
compensation expense of $1.5 million in the 13 week and 26 week periods ended April 30, 2005.The Company made available to certain qualifying hourly employees a special early retirement
window that ended on April 1, 2005, under which 7 employees elected to retire early and receive
an additional benefit under the hourly employee pension plan. The additional benefit resulted
in a non-cash compensation expense of $0.4 million in the 13 week and 26 week periods ended
April 30, 2005. 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview Argo-Tech is a global designer, manufacturer and servicer of high performance fuel flow devices
and systems. We operate in two business segments, Aerospace and Industrial. The Aerospace
segment consists of aircraft engine fuel pumps and other engine products, commercial and
military products and systems found on a planes airframe, and aerial refueling pumps and
related equipment. The Industrial segment includes ground fueling nozzles, hoses and other
ground fueling components, an automated fuel management system, cryogenic pumps and nozzles and
the operation of a business park in Cleveland, Ohio. 11




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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. Export Sales Substantially all of our export sales are denominated in U. S. dollars. Export sales for the
26 week period ended April 30, 2005 were $43.6 million. Sales to Europe were $24.3 million,
sales to Pacific Rim countries were $14.5 million and sales to all other regions, individually
less than 10%, were $4.8 million for the 26 week period ended April 30, 2005. Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the
results of which enable the fair presentation of our financial position and results of
operations. Actual results may differ from these estimates under different assumptions or
conditions. Management believes the following critical accounting policies reflect its more
significant estimates and assumptions used in the preparation of its consolidated financial
statements. Revenue Recognition.Revenues are generally recognized when goods are shipped or services
provided, at which time title and risk of loss passes to the customer. Substantially all sales
are made pursuant to firm, fixed-price purchase orders received from customers. We have
executed long-term supply agreements with certain of our original equipment manufacture, or
OEM, customers. These agreements require Argo-Tech to supply all the amounts ordered by the
customers during the term of the agreements (generally three to five years) at specified
prices. Under certain of these agreements, we expect to incur losses. Provisions for
estimating losses on these contracts are made in the period in which such losses are identified
based on cost and pricing information and estimated future shipment quantities provided by the
customer. The cumulative effect of revisions to estimated losses on contracts is recorded in
the accounting period in which the amounts become known and can be reasonably estimated. Such
revisions could occur at any time there are changes to estimated future revenues or costs.
Revenue from certain fixed price engineering contracts for which costs can be reliably
estimated are recognized based on milestone billings. Variations in actual labor performance,
changes to estimated profitability and final contract settlements may result in revisions to
the cost estimates. Revisions in cost estimates as contracts progress have the effect of
increasing or decreasing profits in the period of revision. We record estimated reductions to
revenue for volume-based incentives based on expected customer activity for the applicable
period. Revisions for volume-based incentives are recorded in the accounting period in which
such estimates can be reasonably determined. Valuation of Accounts Receivable and Allowance for Doubtful Accounts.We evaluate the
collectibility of our trade receivables based on a combination of factors. We regularly
analyze our customer accounts, and when we become aware of a specific customers inability to
meet its financial obligation to us, such as in the case of bankruptcy filings, we immediately
record a bad debt expense and reduce the related receivable to the amount we reasonably believe
is collectible. We estimate the allowance for doubtful accounts based on the aging of the
accounts receivable, customer creditworthiness and historical experience. Our estimate of the
allowance amounts includes amounts for specifically identified losses and a general amount for
estimated losses. If circumstances change or economic conditions deteriorate, our estimates of
the recoverability of receivables could be further adjusted. 12




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Valuation of Inventories.Our inventory purchases and commitments are made in order to build
inventory to meet future shipment schedules based on forecasted demand for our products.
Inventories are stated at the lower of cost or market, with cost being determined on the
first-in, first-out, or FIFO, method. Periodically, we perform a detailed assessment of
inventory, which includes a review of, among other factors, historical sales activity, future
demand requirements, product life cycle and development plans and quality issues. Based on
this analysis, we record provisions for potentially obsolete or slow-moving inventory to
reflect inventory at net realizable value. These provisions could vary significantly, either
favorably or unfavorably, from actual requirements based upon future economic conditions,
customer inventory levels or competitive factors that were not foreseen, or did not exist, when
the valuation allowances were established. Valuation of Goodwill and Intangible Assets.Goodwill and identified intangible assets are
recorded at fair value on the date of acquisition. Intangible assets other than goodwill are
recognized if the benefit of the intangible asset is obtained through contractual or other
legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged,
regardless of our intent to do so. Intangible assets, such as goodwill, that have an
indefinite useful life are not amortized. All other intangible assets are amortized over their
estimated useful lives. We review goodwill and purchased intangible assets for impairment
annually, or whenever events or changes in circumstances indicate the carrying value of an
asset may not be recoverable. Our asset impairment review assesses the fair value of the
assets based on the future cash flows the assets are expected to generate. This approach uses
our estimates of future market growth, forecasted revenue and costs and appropriate discount
rates. When impairment is identified, the carrying amount of the asset is reduced to its
estimated fair value. Pensions and post-retirement plan assumptions.We have two noncontributory defined benefit
pension plans for qualifying hourly and salary employees and a postretirement health care
benefit plan for qualifying hourly retirees and their dependents. We account for our defined
benefit plans in accordance with SFAS No. 87, No. 106 and
No. 132(R), which requires amounts
recognized in the financial statements to be determined on an actuarial basis. We are required
to make assumptions regarding such variables as the expected long-term rate of return on assets
and the discount rate, which are used to determine service cost and interest cost to arrive at
pension income or expense for the year. We are also required to make assumptions for the
long-term health care cost trend rates for our post-retirement benefit plan. The estimated
cost and benefits of the noncontributory defined benefit pension plans and the postretirement
health care plan are determined by an independent actuary using various actuarial assumptions,
including, but not limited to, assumptions on demographic factors such as retirement, mortality
and turnover. We have analyzed the rate of return on assets used and determined that this rate
is reasonable based on the plans historical performance relative to the overall markets. The
discount rate assumption is consistent with prior years and is based on changes in the
prevailing market long-term interest rates at the measurement date. If any of our assumptions
were to change, our benefit plan expenses would also change. An increase/decrease in the
discount rate, assuming no other changes in the estimates, reduces/increases the amount of the
accumulated benefit obligation and the related required expense. 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. 13




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Results of Operations for the 13 Week Period Ended April 30, 2005 Compared With the 13 Week
Period Ended May 1, 2004 Net revenues for the 13 week period ended April 30, 2005 increased $4.8 million, or 10.1%, to
$52.2 million from $47.4 million for the 13 week period ended May 1, 2004. This increase was
primarily due to an increase in aerospace revenues of $3.1 million and an increase of $1.7
million in industrial revenues. The increase in aerospace revenues was attributable to an
increase of $2.7 million of commercial aerospace revenues and $0.4 million of military
revenues. Commercial OEM revenues increased $0.6 million, or 9.5%, to $6.9 million and
commercial aftermarket revenues increased $2.1 million, or 13.1%, to $18.1 million in the 13
week period ended April 30, 2005. Commercial OEM revenues increased primarily as a result of
an increase in pump requirements from our customers. Commercial aftermarket revenues were
higher primarily due to an increase in maintenance, repair and overhaul, or MRO, activities
along with a slight increase in the demand for spare parts. Military revenues increased
primarily due to revenue related to increased sales on a variety of OEM and aftermarket
airframe components offset by a decrease in revenues related to airframe components on various
OEM development programs, as more of these products moved from development into production.
The $1.7 million increase in industrial revenues was primarily attributable to an increase in
cryogenic pump revenues. Aerospace gross profit for the 13 week period ended April 30, 2005 increased $1.0 million, or
6.0%, to $17.6 million from $16.6 million in the 13 week period ended May 1, 2004. The
increase in gross profit is primarily attributable to the increase in higher margin commercial
aerospace aftermarket revenues partially offset by an increase in non-cash compensation expense
associated with the ESOP. Aerospace gross margin decreased to 46.0% for the 13 week period
ended April 30, 2005 from 47.4% in the 13 week period ended May 1, 2004 primarily as a result
of an increase in non-cash compensation expense associated with the ESOP. Industrial gross
profit for the 13 week period ended April 30, 2005 increased $0.8 million, or 19.5%, to $4.9
million from $4.1 million in the 13 week period ended May 1, 2004. Industrial gross margin
increased to 34.9% in the 13 week period ended April 30, 2005 from 33.3% in the 13 week period
ended May 1, 2004. The increase in gross profit and gross margin was primarily attributable to
an increase in revenues, and a decrease in manufacturing costs, for our cryogenic pump
products. Operating expenses for the 13 week period ended April 30, 2005 increased $3.1 million, or
27.0%, to $14.6 million from $11.5 million in the 13 week period ended May 1, 2004. This
increase is primarily attributable to an increase of $2.7 million in selling, general and
administrative expenses and $0.5 million in research and development expenses. The increase in
selling, general and administrative expense is primarily related to an increase in non-cash
compensation expenses associated with our stock appreciation rights plan, the ESOP and an early
retirement program for hourly employees. The stock appreciation rights plan and hourly early
retirement expenses were recorded in our Corporate business segment. The increase in research
and development expenses is due to a decrease in customer paid development expenses. Operating
expenses as a percent of revenues increased to 28.0% for the 13 week period ended April 30,
2005 as compared to 24.3% for the 13 week period ended May 1, 2004. Income from operations for the 13 week period ended April 30, 2005 decreased $1.5 million, or
16.3%, to $7.7 million from $9.2 million in the 13 week period ended May 1, 2004. As a percent
of revenues, income from operations for the 13 week period ended April 30, 2005 decreased to
14.8% from 19.4% for the 13 week period ended May 1, 2004. These decreases were primarily due
to the increase in non-cash compensation expenses associated with our stock appreciation rights
plan, the ESOP and an early retirement program for hourly employees and an increase in research
and development expenses partially offset by increased sales of higher margin commercial
aerospace aftermarket revenues, the increase in cryogenic pump revenues and a decrease in
manufacturing costs for our cryogenic pump products. Interest expense for the 13 week period ended April 30, 2005 increased $1.2 million, or 23.5%,
to $6.3 million from $5.1 million in the 13 week period ended May 1, 2004 primarily due to the
increase in 14




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interest expense on the $250.0 million of 9.25% senior notes issued in June 2004, which was
partially offset by lower outstanding borrowings under our credit facility. The income tax provision was $0.4 million for the 13 week period ended April 30, 2005 as
compared to $1.4 million for the 13 week period ended May 1, 2004. This decrease is primarily
due to a decrease in pre-tax income and a lower estimated effective tax rate in the current
year. Net income for the 13 week period ended April 30, 2005 decreased $1.6 million to $1.1 million
from $2.7 million for the 13 week period ended May 1, 2004, primarily due to the revenue and
expense factors discussed above. Results of Operations for the 26 Week Period Ended April 30, 2005 Compared With the 27 Week
Period Ended May 1, 2004 Net revenues for the 26 week period ended April 30, 2005 increased $7.8 million, or 8.5%, to
$99.6 million from $91.8 million for the 27 week period ended May 1, 2004. This increase was
primarily due to an increase in aerospace revenues of $8.7 million offset by a decrease of $0.9
million in industrial revenues. The increase in aerospace revenues was attributable to an
increase of $8.9 million of commercial aerospace revenues and a decrease of $0.2 million in
military revenues. Commercial OEM revenues increased $1.6 million, or 14.5%, to $12.6 million
and commercial aftermarket revenues increased $7.3 million, or 25.3%, to $36.1 million in the
26 week period ended April 30, 2005. Commercial OEM revenues increased primarily as a result
of an increase in pump requirements from our customers. Commercial aftermarket revenues
increased primarily due to an increase in MRO services along with an increase in demand for
spare parts. Military revenues decreased primarily due to a reduction in revenues related to
OEM airframe development programs, partially offset by an increase in OEM and aftermarket main
engine fuel pump revenues and OEM airframe components, as more of the airframe components moved
from development into production. The $0.9 million decrease in industrial revenues was
primarily attributable to a decrease in cryogenic pump and business park revenues, offset by a
slight increase in ground fueling revenues. Aerospace gross profit for the 26 week period ended April 30, 2005 increased $3.6 million, or
11.8%, to $34.1 million from $30.5 million in the 27 week period ended May 1, 2004. The
increase in gross profit is primarily attributable to an increase in sales of higher margin
commercial aerospace aftermarket products, partially offset by a slight increase in
manufacturing costs and non-cash compensation expense associated with the ESOP. Aerospace
gross margin decreased to 45.7% for the 26 week period ended April 30, 2005 from 46.3% in the
27 week period ended May 1, 2004 primarily as a result of an increase in manufacturing costs
and non-cash compensation expense associated with the ESOP partially offset by an increase in
sales of higher margin commercial aerospace aftermarket products. Industrial gross profit for
the 26 week period ended April 30, 2005 increased $1.1 million, or 13.9%, to $9.0 million from
$7.9 million in the 27 week period ended May 1, 2004. Industrial gross margin increased to
36.0% in the 26 week period ended April 30, 2005 from 30.5% in the 27 week period ended May 1,
2004. The increase in gross profit and gross margin is primarily attributable to improved
margins, and a decrease in manufacturing costs, for our cryogenic pump products. Operating expenses for the 26 week period ended April 30, 2005 increased $3.6 million, or
16.8%, to $25.0 million from $21.4 million in the 27 week period ended May 1, 2004. This
increase is primarily due to an increase in selling, general and administrative expenses of
$2.8 million and research and development expenses of $0.8 million. The increase in selling,
general and administrative expense is primarily related to an increase in non-cash compensation
expenses associated with our stock appreciation rights plan, the ESOP and an early retirement
program for hourly employees. The stock appreciation rights plan and hourly early retirement
expenses were recorded in our Corporate business segment. The increase in research and
development expenses is due to a decrease in customer paid development expenses. Operating
expenses as a percent of revenues increased to 25.1% for the 26 week period ended April 30,
2005 as compared to 23.3% for the 27 week period ended May 1, 2004. 15




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Income from operations for the 26 week period ended April 30, 2005 increased $1.0 million, or
5.9%, to $17.9 million from $16.9 million in the 27 week period ended May 1, 2004. As a
percent of revenues, income from operations for the 26 week period ended April 30, 2005
decreased to 18.0% from 18.4% for the 27 week period ended May 1, 2004. The increase in income
was primarily due to the increased sales of higher margin commercial aerospace aftermarket revenues and improved margins and reduced
manufacturing costs on cryogenic pump products partially offset by the increase in non-cash
compensation expenses associated with our stock appreciation rights plan, the ESOP and an early
retirement program for our hourly employees, and an increase in research and development
expenses. Interest expense for the 26 week period ended April 30, 2005 increased $2.1 million, or 20.0%,
to $12.6 million from $10.5 million in the 27 week period ended May 1, 2004 primarily due to
the increase in interest expense on the $250.0 million of 9.25% senior notes issued in June
2004, which was partially offset by lower outstanding borrowings under our credit facility. The income tax provision was $1.5 million for the 26 week period ended April 30, 2005 as
compared to $2.1 million for the 27 week period ended May 1, 2004. This decrease is primarily
due to a decrease in pre-tax income and a lower estimated effective tax rate in the current
year. Net income for the 26 week period ended April 30, 2005 decreased $0.4 million to $3.9 million
from $4.3 million for the 27 week period ended May 1, 2004 primarily due to the revenue and
expense factors discussed above. 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 26 week period ended April 30, 2005 decreased $9.2 million to
$6.6 million. This was primarily due to an increase in inventory, receivables and prepaid
expenses in support of our manufacturing activities, capital expenditures, the purchase of AT
Holdings stock from former ESOP participants, a dividend to AT Holdings for the development of
a proprietary asset tracking technology and the scheduled repayment of our term loan, partially
offset by an increase in operating income and an increase in accrued and other liabilities for
the accrual of interest on our $250.0 million of 9.25% senior notes and the liability
associated with stock appreciation rights. Capital expenditures for the 26 week period ended April 30, 2005 totaled $1.8 million compared
to $0.7 million for the 27 week period ended May 1, 2004. Argo-Tech expects to incur capital
expenditures of approximately $2.7 million for the remainder of fiscal year 2005 relating to
the continued maintenance of facilities, equipment and systems to support current operating
activities. Long-term debt at April 30, 2005 consisted of $14.4 million principal amount of our term loan
and $250.0 million of senior notes. Scheduled payments of $0.4 million were made on the term
loan in the 26 week period ended April 30, 2005. Our amended and restated senior credit
facility provides for a $30.0 million five-year revolving credit facility and a $15.0 million
five-year term loan facility. At April 30, 2005, Argo-Tech has available, after $6.8 million
in letters of credit, a $23.2 million revolving credit facility. As of April 30, 2005, 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. 16




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Our expected future contractual cash obligations and other commercial commitments for the next
several fiscal years, as of April 30, 2005, are as follows (in millions): 2010 and2005 (1)
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    TotalTerm loan facility
    
    $
    0.4
    
    
    $
    0.7
    
    
    $
    0.7
    
    
    $
    6.7
    
    
    $
    6.0
    
    
    $
    
    
    
    $
    14.59-1/4% senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250.0
    
    
    
    250.0Operating leases
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.9Other long-term
obligations (2)
    
    
    11.7
    
    
    
    23.7
    
    
    
    24.4
    
    
    
    23.5
    
    
    
    23.2
    
    
    
    46.2
    
    
    
    152.7Total contractual cash
obligations
    
    $
    12.4
    
    
    $
    24.7
    
    
    $
    25.3
    
    
    $
    30.3
    
    
    $
    29.2
    
    
    $
    296.2
    
    
    $
    418.1
   (1)
    
    Contractual obligations for the remainder of fiscal 2005.(2)
    
    Represents interest payments on the senior notes and estimated funding for retirement and
other post-employment benefits. Interest on the term loan facility is excluded as it is not
fixed and determinable. We believe that cash flow from operations will provide adequate funds for our working capital
needs, planned capital expenditures and near term debt service obligations. Our ability to
fund our operations, make planned capital expenditures, and to make scheduled payments on our
indebtedness depends on our future operating performance and cash flow. We may need to
refinance all or a portion of our indebtedness on or before maturity. There can be no
assurance that we will be able to refinance any of our indebtedness on commercially reasonable
terms or at all. These items are subject to prevailing conditions and to financial, business,
and other factors, some of which are beyond our control. 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:  
    changes and/or cyclicality in the aerospace industry;
    governmental regulation and oversight in the aerospace industry;
    levels of competition in the aerospace industry;
    the impact of terrorism and war on airline travel and the airline industry;
    our ability to meet future capital requirements;
    loss of a significant customer;
    risks associated with fixed-price contracts;
    costs associated with product liability and warranty claims; 17




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
    risks associated with our international operations;
    changes in environmental or other applicable governmental regulations;
    reduction in military and/or defense spending and risks associated with
government contracts;
    changes in our relationship with our employees;
    availability of essential materials used in our products;
    risks associated with protection of our intellectual property rights;
    the other factors described in Argo-Techs annual report on Form 10-K for the
year ended October 30, 2004; and
    other unforeseen circumstances. 
 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, primarily with respect to its long-term debt obligations. At April 30, 2005,
Argo-Tech had fixed rate debt totaling $250.0 million at 9.25% and variable rate debt under its
existing credit facility of $14.4 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
adjusted EBITDA. The variable rate is not to exceed ABR plus 1.25% or LIBOR plus 2.75%.
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) Evaluation of disclosure controls and procedures. The management of Argo-Tech,
including its Chief Executive Officer and the Chief Financial Officer, has evaluated the
effectiveness of Argo-Techs disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of April 30, 2005.
Based on this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that Argo-Techs disclosure controls and procedures are effective to provide
reasonable assurance that information required to be disclosed by Argo-Tech in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified by the Securities and Exchange
Commissions rules and forms. (b) Changes in internal controls. There were no changes in Argo-Techs internal control
over financial reporting or in other factors during the quarter ended April 30, 2005 that
have materially affected, or are reasonably likely to materially affect, Argo-Techs
internal control over financial reporting. (c) Section 404 of the Sarbanes-Oxley Act requires management to report on, and its independent
auditors to attest to, Argo-Techs internal control over financial reporting in its annual
report, beginning with the annual report for Argo-Techs fiscal year ending October 28, 2006.
Argo-Tech is actively continuing its ongoing internal process of documenting, testing and
evaluating the effectiveness of its internal control over financial reporting utilizing outside
assistance. 18




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PART II  OTHER INFORMATION 
 Item 6  Exhibits  (a)
    Exhibit 31.1  Certification by Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.(b)
    Exhibit 31.2  Certification by Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.(c)
    Exhibit 32  Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 19




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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: June 9, 2005
    ARGO-TECH CORPORATION By:
    
    /s/
    
    Frances S. St. ClairFrances S. St. ClairVice President and Chief Financial Officer(Duly Authorized Officer)By:
    
    /s/
    
    Paul A. SkladPaul A. SkladController(Principal Accounting Officer)
 20