Notes to Consolidated Financial Statements

1. SUMMARY OF ACCOUNTING PRINCIPLES

		2002		2001		2000
Basic earnings per     common share:         Weighted-average common         shares outstanding		6,181,000		6,167,000		6,139,000
Diluted earnings per     common share:         Weighted-average common         shares outstanding		6,181,000	6,167,000	6,139,000
Stock options		52,000	--	11,000
Denominator for diluted     earnings per common share		6,233,000	6,167,000	6,150,000

Options to purchase 450,183 shares of common stock at prices between $8.84 and $27.88 were outstanding during 2002 but were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the common shares. Similarly, during 2001, options to purchase 505,971 shares of common stock at prices between $8.84 and $27.88 were outstanding but were not included in the computation of diluted EPS. During 2000, options to purchase 288,759 shares of common stock at prices between $15.13 and $30.13 were outstanding but were not included in the computation of diluted EPS.

Research, Development and Engineering Costs - Research and development costs and engineering costs, which are charged to expense when incurred, amounted to $2.4 million, $2.4 million and $1.8 million in 2002, 2001 and 2000, respectively. Included in these amounts were expenditures of $1.2 million, $1.2 million and $1.3 million in 2002, 2001 and 2000, respectively, which represent costs related to research and development activities.

Foreign Currency Translation - The assets and liabilities of the Company's international operations have been translated into U.S. dollars at year-end exchange rates, with resulting translation gains and losses accumulated as a separate component of Accumulated other comprehensive loss. Income and expense items are converted into U.S. dollars at average rates of exchange prevailing during the year. Cumulative translation adjustments related to companies which have been sold have been reflected in the operating results from discontinued operations.

Income Taxes - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. The Company periodically assesses recoverability of deferred tax assets and provisions for valuation allowances are made as required.

Investments - In 2001, the Company wrote off its investment in an investee in the amount of $3.2 million, together with a note receivable in the amount of $3.7 million, as a result of a foreclosure on the investee's outstanding loans by its senior lenders.

Financial Instruments - The Company does not hold or issue financial instruments for trading purposes. The estimated liability relating to interest rate swap agreements has been accrued during 2002. See Note 9 for further discussion.

New Accounting Standards - In June 2000, the Financial Accounting Standards Board ("FASB") issued SFAS No. 138, "Accounting for Certain Derivative Financial Instruments and Certain Hedging Activities – an amendment of FASB Statement No. 133." This statement amends the accounting and reporting standards of SFAS 133 for certain derivative instruments and for certain hedging activities. The Company adopted SFAS 133 and SFAS 138 on April 1, 2001. The effect of the adoption of these pronouncements was a charge of approximately $3.6 million ($2.0 million after tax) to other comprehensive income attributable to the net liability to be recorded which was subsequently included as a component of loss on disposal of discontinued businesses.

In July 2001, the FASB issued SFAS No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets separate from goodwill. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under a non-amortization approach, goodwill and certain intangibles will not be amortized into results of operations, but instead will be reviewed for impairment and written down and charged to results of operations only in the periods in which the recorded value of goodwill and certain intangibles is more than its fair value. The provisions of each statement, which apply to goodwill and intangible assets acquired prior to June 30, 2001, will be adopted by the Company on April 1, 2002. The Company expects the adoption of these accounting standards will have the impact of reducing amortization of goodwill and intangibles commencing April 1, 2002; however, impairment reviews may result in future periodic write-downs. Goodwill amortization for the years ended March 31, 2002, 2001 and 2000 was $0.2 million in each of the three years.

In July 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations," which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and the associated asset retirement to be capitalized as part of the carrying amount of the long-lived asset. SFAS 143 is effective for years beginning after June 15, 2002. In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," which requires all long-lived assets classified as held for sale to be valued at the lower of their carrying amount or fair value less cost to sell and which broadens the presentation of discontinued operations to include more disposal transactions. SFAS 144 is effective for years beginning after December 15, 2001. The Company is currently evaluating the effect, if any, that the adoption of SFAS 143 will have on the Company's consolidated financial position, results of operations and cash flows. The Company has adopted SFAS 144 in connection with the sale of Aerospace Rivet Manufacturers Corporation, which has been recorded as part of discontinued operations in the accompanying financial statements.

Impairment of Long-Lived Assets - The Company, in the event that circumstances arise that indicate that its long-lived assets may be impaired, performs evaluations of asset impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The assets' carrying values are compared to the estimated future undiscounted cash flows of the assets, or expected sale proceeds for assets anticipated to be sold, to determine if a write-down is required. The Company reported an impairment of long-lived assets in 2001, as discussed in Note 2.

Segment Information - The Company operates in only one business segment, the design, manufacture and sale of equipment for use in the aerospace industry.

2. DISCONTINUED OPERATIONS AND RESTRUCTURING

On January 19, 2001, the Company announced its intention to restructure and divest its cold-headed products (TCR), retaining ring (Seeger-Orbis, TransTechnology (GB), TT Brasil, and TransTechnology Engineered Rings USA), hose clamp (Breeze Industrial and Pebra) and aerospace rivet (Aerospace Rivet Manufacturers Corp.) operations. In addition, on April 12, 2001, the Company announced that it would divest TransTechnology Engineered Components (TTEC), a manufacturer of spring steel engineered fasteners and headlight adjusters. For business segment reporting purposes, these above-mentioned business units, excluding ARM for 2002, have previously been classified as the "Specialty Fasteners Segment." The Company has reclassified these business units as discontinued operations for all periods presented.

A portion of the Company's interest expense has been allocated to discontinued operations based upon the net asset balances attributable to those operations. Interest expense allocated to discontinued operations was $17.0 million, $29.6 million and $17.0 million, in 2002, 2001 and 2000, respectively. Income taxes have been allocated to discontinued operations based on the estimated tax attributes of the income and assets of the underlying discontinued businesses.

On July 10, 2001, the Company sold its Breeze Industrial and Pebra hose clamp businesses to Industrial Growth Partners and members of Breeze Industrial's management for $46.2 million, which was paid in cash. In a related transaction, the Company sold the real estate occupied by Breeze Industrial to a quasi-governmental organization for $2.0 million. Proceeds from the sales were used to repay borrowings outstanding under the Credit Facility.

On December 5, 2001, the Company sold its TransTechnology Engineered Components ("TTEC") businesses to a company formed by affiliates of Kohlberg & Company, L.L.C. for $98.5 million, of which $96.0 million was cash and the balance the assumption of certain liabilities related to the purchased businesses. The cash proceeds of the sale were used to repay borrowings outstanding under the Credit Facility. In the fiscal quarter ended September 30, 2001, as part of its restructuring program, the Company reported a pre-tax asset impairment charge for TTEC in the amount of $85.8 million to reduce the carrying value of these businesses to estimated fair market value. This non-cash charge was specifically related to the write-down of goodwill. The sale proceeds of TTEC approximated its adjusted carrying value.

On February 21, 2002, the Company sold its Seeger-Orbis retaining ring business in Germany to Barnes Group Inc. for $20.0 million cash. The net proceeds of the sale were used to repay borrowings outstanding under the Credit Facility. The balance sheet of the Company contains a non-current asset and a non-current liability in the amount of $3.1 million relating to the pension plan of Seeger-Orbis. These amounts represent the legal liability of the Company under German law and the indemnification received from the buyer of the business for that liability.

On April 16, 2002, the Company sold its Aerospace Rivet Manufacturers Corporation subsidiary to Allfast Fastening Systems, Inc. for $3.2 million cash. The net proceeds of the sale were used to repay borrowings outstanding under the Credit Facility.

On May 30, 2002, the Company completed the sale of substantially all of the net assets of its U.S. retaining ring business for $2.9 million of cash, a promissory note of $0.8 million and warrants for 5% of the equity of the purchaser.

Net sales and losses from the discontinued operations were as follows (in thousands):

		2002		2001		2000
Net sales		$ 161,389		$ 257,590		$ 238,416
Loss on disposal of     discontinued businesses     including provision for     operating losses during     phase out period		$ (131,465)	$ --	$ --
Income from sale of     businesses and income     (loss) from operations     of discontinued     businesses prior to     phase out period		24,426	(74,192)	7,498
Income tax (benefit)     provision		(34,485)	(7,268)	2,849
Net (loss) income from     discontinued operations		$ (72,554)	$ (66,924)	$ 4,649

The 2002 loss was comprised of $110.3 million of impairment charges related to reducing the carrying values of the discontinued businesses to their estimated net realizable values; $3.7 million of actual operating income of the discontinued businesses through their expected divestiture dates; $17.0 million of allocated interest expense; $8.4 million from the write-off of capitalized loan fees and the mark to market of interest rate swaps required under the terms of the Company's credit agreements; $24.7 million of gains recognized on the sale of certain business units; and, $0.2 million of other income or credits associated with the discontinued operations. These gains and losses, which aggregated $107.1 million, were reduced by a tax benefit of $34.5 million. The fiscal 2001 loss from discontinued operations consisted of $67.9 million of impairment charges; $23.2 million of operating income of the discontinued businesses; and $29.6 million of allocated interest expense. These fiscal 2001 losses, which aggregated $74.2 million, were reduced by a tax benefit of $7.3 million. The fiscal 2000 income from discontinued operations included $24.5 million of operating income from the discontinued businesses and $17.0 million of allocated interest expense, the net of which was reduced by an income tax provision of $2.8 million.

Assets and liabilities of the discontinued businesses were as follows (in thousands):

		2002		2001
Current assets		$ 23,458		$ 87,533
Property, plant and equipment		6,904		71,952
Other assets		8,124		147,529
Assets held for sale		$ 38,486	$ 307,014
Current liabilities		$ 16,752	$ 29,396
Long-term liabilities		1,259	9,536
Liabilities of     discontinued businesses		$ 18,011	$ 38,932

3. INVENTORIES

Inventories at March 31, consisted of the following (in thousands):

		2002		2001
Finished goods		$ 209		$ 5
Work in process		5,034		6,155
Purchased and manufactured parts		18,452		13,797
Total		$ 23,695	$ 19,957

4. OTHER CURRENT LIABILITIES

Other current liabilities at March 31, consisted of the following (in thousands):

		2002		2001
Interest rate swap obligation		$ 3,827		$ 90
Accrued interest		2,606		3,293
Other		8,106		4,981
Total		$ 14,539	$ 8,364

5. INCOME TAXES

The components of total income (loss) from operations (including continuing and discontinued operations and extraordinary items) before income taxes were (in thousands):

		2002		2001		2000
Domestic		$ (86,453)		$ (51,288)		$ 16,008
Foreign		(18,952)		(32,534)		(5,378)
Total		$ (105,405)	$ 83,822	$ 10,630

The (benefit) provision for income taxes is summarized below (in thousands):

		2002		2001		2000
Currently (receivable)     payable:         Federal		$ (9,372)		$ (5,600)		$ 3,285
Foreign		46		105		1,318
State		400		452		419
		(8,926)	(5,043)	5,022
Deferred		(29,556)	(15,455)	(988)
Valuation allowance		4,857	9,646	--
		(24,699)	(5,809)	(988)
Total		$ (33,625)	$ (10,852)	$ 4,034

The provision (benefit) for income taxes is allocated between continuing and discontinued operations and extraordinary items as summarized below (in thousands):

		2002		2001		2000
Continuing		$ 860		$ (3,584)		$ 1,524
Extraordinary		--		--		(339)
Discontinued		(34,485)		(7,268)		2,849
Total		$ (33,625)	$ (10,852)	$ 4,034

The consolidated effective tax rates for continuing operations differ from the federal statutory rates as follows:

		2002		2001		2000
Statutory federal rate		35.0%		(35.0%)		35.0%
State income taxes after     federal income tax		15.9		(4.6)		3.1
Earnings of the foreign     sales corporation		--		--		(14.5)
Amortization of purchase     price of businesses not     deductible for tax purposes		0.9		1.8		10.0
AMT Credit		--		(0.5)		--
Other		0.6		1.1		(4.4)
Consolidated effective tax rate		52.4%	(37.2%)	38.0%

The following is an analysis of accumulated deferred income taxes (in thousands):

		2002		2001
Assets
Current:
Bad debts		$ 243		$ 408
Employee benefit accruals		638		884
Inventory		1,111		680
Net operating loss carryforward		--		100
Other		(454)		(560)
Total current		1,538	1,512
Noncurrent:
Employee benefit accruals		(795)	754
Environmental		1,329	389
Accrued Liabilities		1,836	984
AMT credit		--	453
Net operating loss carryforward		43,101	16,818
Other		(1,702)	1,608
Valuation allowance		(14,503)	9,646)
Total noncurrent		29,266	11,360
Total assets:		$ 30,804	$ 12,872
Liabilities:     Property		$ 1,188	$ 5,298
Total liabilities:		$ 1,188	$ 5,298

The cumulative amount of undistributed earnings of international subsidiaries for which U.S. income taxes have not been provided was approximately $2.2 million at March 31, 2002. It is not practical to estimate the amount of unrecognized deferred U.S. taxes on these undistributed earnings.

The valuation allowance required under Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," has been established for deferred income tax benefits related to certain foreign subsidiary loss carryforwards that may not be realized.

The Company has federal, state and foreign net operating loss carryforwards of $53.8 million, $75.0 million and $40.0 million, respectively, which will be available to offset taxable income during the carryforward period. The tax benefits of these items are reflected in the above analysis of deferred tax assets and liabilities. If not used, some of these carryforwards begin to expire in 2004 through 2022.