SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934:

Certain of the statements contained in the body of this Annual Report on Form 10-K are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In the preparation of this Report, where such forward-looking statements appear, the Company has sought to accompany such statements with meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those described in the forward-looking statements.

FORWARD-LOOKING STATEMENTS

Certain statements in this Report constitute "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Acts"). Any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements.

This Annual Report on Form 10-K and the information we are incorporating herein by reference contain forward-looking statements within the meaning of the federal securities laws, including information regarding our fiscal 2010 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only our current expectations regarding such matters. These statements inherently involve a wide range of known and unknown uncertainties. Our actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission. Given these factors, as well as other variables that may affect our operating results, you should

not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or trends in future periods. We expressly disclaim any obligation or intention to provide updates to the forward-looking statements and the estimates and assumptions associated with them. Forward-looking statements are subject to the safe harbors created in the Acts.

Any number of factors could affect future operations and results, including, without limitation, competition from other companies; changes in applicable laws, rules, and regulations affecting the Company in the locations in which it conducts its business; interest rate trends; a decrease in the United States Government defense spending, changes in spending allocation or the termination, postponement, or failure to fund one or more significant contracts by the United States Government or other customers; determination by the Company to dispose of or acquire additional assets; general industry and economic conditions; events impacting the U.S. and world financial markets and economies; and those specific risks that are discussed or referenced elsewhere in this Annual Report on Form 10-K.

The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information or future events.

GENERAL

We design, develop, manufacture, sell and service sophisticated lifting equipment for specialty aerospace and defense applications. With over 50% of the global market, we have long been recognized as the world's leading designer, manufacturer, service provider and supplier of performance-critical rescue hoists and cargo hook systems. We also manufacture weapons-handling systems, cargo winches, and tie-down equipment. Our products are designed to be efficient and reliable in extreme operating conditions and are used to complete rescue operations and military insertion/extraction operations, move and transport cargo, and load weapons onto aircraft and ground-based launching systems. We have three major operating segments which we aggregate into one reportable segment. The operating segments are Hoist and Winch, Cargo Hooks, and Weapons Handling. The nature of the production process (assemble, inspect, and test) is similar for each operating segment, as are the customers and the methods of distribution for the products.

All references to years in this Management's Discussion and Analysis of Financial Condition and Results of Operations refer to the fiscal year ended March 31 of the indicated year unless otherwise specified.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected. We believe the following critical accounting policies are affected by significant estimates, assumptions, and judgments used in the preparation of our consolidated financial statements.

Inventory. We purchase parts and materials to assemble and manufacture components for use in our products and for use by our engineering and repair and overhaul departments. Our decision to purchase a set quantity of a particular material is influenced by several factors including current and projected cost, future estimated availability, lead time for production of our products, existing and projected contracts to produce certain items, and the estimated needs for our repair and overhaul business.

We value our inventories using the lower of cost or market on a first-in, first-out (FIFO) basis. We reduce the carrying amount of these inventories to net realizable value based on our assessment of inventory that is considered excess or obsolete based on our full backlog of sales orders and historical usage. Since all of our products are produced to meet specific customer requirements, our focus for reserves is on purchased and manufactured parts.

Environmental Reserves. We provide for environmental reserves when, after consultation with our internal and external counsel and other environmental consultants, we determine that a liability is both probable and estimable. In many cases, we do not fix or cap the liability for a particular site when we first record it. Factors that affect the recorded amount of the liability in future years include our participation percentage due to a settlement by, or bankruptcy of, other potentially responsible parties, a change in the environmental laws resulting in more stringent requirements, a change in the estimate of future costs that will be incurred to remediate the site, changes in technology related to environmental remediation, and the application of appropriate discount factors to reflect the net present value of expected expenditures.

We discuss current estimated exposures related to environmental claims under the caption "Environmental Matters" below.

Deferred Tax Asset. This asset, against which a valuation allowance for a portion of the noncurrent state taxes has been established, represents income tax benefits expected to be realized in the future, primarily as a result of the use of net operating loss carry forwards. In fiscal 2009, the valuation allowance related to the noncurrent state taxes was decreased by approximately $3.7 million to reflect the expiration and utilization of a portion of the state net operating loss carry forwards. Because we expect to generate adequate amounts of taxable income prior to the expiration of the federal and state net operating loss carry forwards in 2022 through 2025 and 2010 through 2012 respectively, no additional valuation allowance was considered necessary. If we do not generate adequate taxable earnings, some or all of our deferred tax assets may not be realized. Additionally, changes to the federal and state income tax laws also could impact our ability to use the net operating loss carry forwards. In such cases, we may need to increase the valuation allowance established related to deferred tax assets for state tax purposes.

Stock-Based Compensation. The Company adopted the provisions of Financial Accounting Standards Board ("FASB") Statement No. 123R, "Accounting for Stock-Based Compensation", on April 1, 2006, using the modified prospective transition method. FASB Statement No. 123R requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors based on estimated fair values. The Company's consolidated financial statements for the years ended March 31, 2009, 2008 and 2007, reflect the impact of FASB Statement No. 123R. In accordance with the modified prospective transition method, the Company's consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of FASB Statement No. 123R. Stock-based compensation expense recognized under FASB Statement No. 123R for each of the years ended March 31, 2009, 2008 and 2007 was $0.4 million, net of tax.

The Company estimates the fair value of stock-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statement of earnings. Prior to the adoption of FASB Statement No. 123R, the Company accounted for stock-based awards to employees and directors using the intrinsic value method related to stock options in accordance with Accounting Principles Board (APB) Opinion No. 25 as allowed under FASB Statement No. 123, "Accounting for Stock-Based Compensation".

Prior to 2006, the Company applied APB Opinion No. 25 and did not recognize compensation expense for stock options granted, as the exercise price of the options on the date of grant was equal to their fair market value as of that date. However, for grants of restricted stock, the Company recognized compensation expense on a straight-line basis over the period that the restrictions expired. The fair value of the options granted during fiscal 2009, 2008 and 2007 was estimated as $4.52 per common share, $6.80 per common share, and $6.83 per common share, respectively. See Note 8 of "Notes to the Consolidated Financial Statements" for further discussion related to stock-based compensation.

RESULTS OF OPERATIONS

Fiscal 2009 Compared to Fiscal 2008


                                                         Fiscal Year Ended                  Increase
                                                    March 31,        March 31,             (Decrease)
                                                       2009            2008             $             %
                                                                         (In thousands)

New Equipment                                       $   39,087      $    44,739      $ (5,652 )       (12.6 )
Spare Parts                                             14,820           15,127          (307 )        (2.0 )
Overhaul and Repair                                     17,083           15,109         1,974          13.1
Engineering Services                                     4,437              999         3,438         344.1

Net Sales                                               75,427           75,974          (547 )        (0.7 )
Cost of Sales                                           45,337           43,457         1,880           4.3

Gross Profit                                            30,090           32,517        (2,427 )        (7.5 )
General, administrative, and selling expenses           18,832           19,574          (742 )        (3.8 )
Interest expense                                         1,367            3,311        (1,944 )       (58.7 )
Loss on extinguishment                                     551                -           551         100.0
of debt
Gain on sale of facility                                     -           (6,811 )      (6,811 )      (100.0 )
Net income                                          $    5,760      $     9,442      $ (3,682 )       (39.0 )

Net Sales. Our net sales of $75.4 million in fiscal 2009 decreased by $0.5 million from net sales of $76.0 million in fiscal 2008. Sales of new equipment decreased $5.7 million in fiscal 2009 as compared to the same period last year, and were driven by $4.1 million lower shipments in the hoist and winch operating segment and $1.7 million lower shipments in the cargo hook operating segment. The decrease in new equipment sales was attributable to lower shipment volume over the prior period and order patterns of customers.

In fiscal 2009 as compared to fiscal 2008, shipments of spare parts in the hoist and winch operating segment decreased $1.8 million, but was partially offset by an increase in spare parts shipments of $0.8 million and $0.7 million in the weapons handling and cargo hook operating segments, respectively. The demand for spare parts remained weak during fiscal 2009 due primarily, we believe, to the delay by the U.S. Government in fully funding the war effort in Iraq and Afghanistan.

Overhaul and repair sales were $17.1 million in fiscal 2009, an increase of $2.0 million, as compared to $15.1 million in fiscal 2008. Higher shipments in the hoist and winch operating segment accounted for the majority of the increase.

The $3.4 million increase in engineering sales during fiscal 2009 as compared to fiscal 2008 is attributable to the weapons handling operating segment. Specifically, it is the result of a contract for the design and development of a recovery winch being developed for the U.S. Army under the Future Combat Systems (FCS) program.

The timing of U.S. Government awards, the availability of U.S. Government funding and product delivery schedules are among the factors that affect the period in which revenues are recorded. In recent years, our revenues in the second half of the fiscal year have generally exceeded revenues in the first half of the fiscal year and fiscal 2009 demonstrated a continuance of this trend.

Cost of Sales. The three operating segments of hoist and winch, cargo hooks, and weapons handling equipment have generated sales in three components: new equipment, overhaul and repair, and spare parts, each of which has progressively better margins. Accordingly, cost of sales as a percentage of sales will be affected by the weighting of these components to the total sales volume. In fiscal 2009, the $45.3 million cost of sales as a percent of sales was approximately 60%. In fiscal 2008, the $43.5 million cost of sales as a percentage of sales was approximately 57%. The 3% increase was mainly due to the higher costs incurred in fiscal 2009 associated with a contract to develop a new piece of equipment for a fixed wing aircraft to be used by the U.S. Army for tactical combat operations. See "Gross Profit" section below.

Gross Profit. As discussed in the "Cost of Sales" section above, the three components of sales in each of the operating segments have margins reflective of the market. During the last four fiscal years, the gross profit margin on new equipment has been generally in the range of 31% to 35%, with overhaul and repair ranging from 34% to 43% and spare parts ranging from 66% to 71%. The balance or mix of this activity, in turn, will have an impact on overall gross profit and overall gross profit margins. The overall gross margin was 40% for fiscal 2009 as compared to 43% for fiscal 2008. The decrease in the overall gross margin is mainly attributable to volume, lower gross profit in the engineering operating segment and a shift in the mix of products sold. In fiscal 2009, we had increased sales in the engineering operating segment but the higher sales volume did not contribute favorably to the overall gross profit margin. Gross profit on engineering services varies significantly with the specific services rendered. Engineering costs incurred in fiscal 2009 associated with a contract to develop a new piece of equipment for a fixed wing aircraft to be used by the U.S. Army for tactical combat operations offset any gross margin from other engineering services sales and accounted for a decrease in the overall gross profit margin for fiscal 2009 of approximately 2%. Sales in the overhaul and repair operating segment increased in fiscal 2009 as compared to fiscal 2008, but the gross profit in fiscal 2009 was lower than in the previous fiscal year due to the product mix within that operating segment.

General, Administrative, and Selling Expenses. General, administrative, and selling expenses were approximately $18.8 million in fiscal 2009 compared to approximately $19.6 million in fiscal 2008, a decrease of approximately $0.8 million. This decrease was primarily due to lower marketing expenses and having no incentive bonuses, as the operating targets were not met in fiscal 2009. These decreases in general, administrative and selling expenses for fiscal 2009 as compared to fiscal 2008 were partially offset by higher internal research and development costs related to new product development.

In fiscal 2010 we will be relocating to a new facility in Whippany, New Jersey. Aside from the actual cost of the physical move to the new location which is estimated to be $0.8 million, we expect the additional costs related to the occupancy of the new facility to be approximately $0.4 million in fiscal 2010.

Interest Expense. The refinancing of our Former Senior Credit Facility was completed in the second quarter of fiscal 2009 (see Senior Credit Facility section below). Interest expense was $1.4 million in fiscal 2009, versus $3.3 million in fiscal 2008. The decline in the interest rates due to the refinancing coupled with the reduction of our Former Senior Credit Facility through cash flows from operations and proceeds from the sale of the Company's Union, New Jersey facility in the fourth quarter of fiscal 2008, caused the decrease in interest expense of $1.9 million in fiscal 2009 as compared to fiscal 2008.

Loss on Extinguishment of Debt. In the second quarter of fiscal 2009, we refinanced and paid in full the Former Senior Credit Facility with a new 60 month, $33.0 million Senior Credit Facility consisting of a $10.0 million revolving credit facility, and term loans totaling $23.0 million. As a result of this refinancing, in the second quarter of fiscal 2009, we recorded a pre-tax charge of $0.6 million consisting of $0.2 million for the write-off of unamortized debt issue costs and $0.4 million for the payment of a pre-payment premium associated with the payoff of the Former Senior Credit Facility.

Gain on Sale of Facility. In February 2008, we completed the transaction for the sale of our headquarters facility and plant in Union, New Jersey, for $10.5 million, before selling expenses. The net cash proceeds received at closing of approximately $9.8 million were used to pay down the term portion of our Former Senior Credit Facility (as defined below). The transaction resulted in a realized pre-tax gain, net of sale expenses, of approximately $6.8 million, and a deferred gain of approximately $1.7 million. See Note 11 of "Notes to the Consolidated Financial Statements" for further discussion related to the sale of the facility. As part of the sale agreement we entered into a leaseback of the facility for up to two years after closing. We have executed a lease for an alternate site in Whippany, New Jersey, at market terms, which is better suited to our current and expected needs.

Net Income. We reported net income of $5.8 million in fiscal 2009, which included a pretax charge of $0.6 million related to the refinancing of the Company's debt compared to net income reported in fiscal 2008 of $9.4 million, which included a pretax gain of $6.8 million from the sale of our headquarters facility and plant. This decrease in net income resulted from the reasons discussed above. The provision for income taxes in fiscal 2009 includes the release of $0.4 million for an unrecognized tax benefit from prior years which was settled in the current fiscal year which added to the lower overall effective tax rate in fiscal 2009 as compared to fiscal 2008. See Note 5 of "Notes to Consolidated Financial Statements" which is included elsewhere in this Report.

New Orders. New orders received during fiscal 2009 totaled $82.1 million as compared to $81.1 million of new orders received during fiscal 2008. Orders for new equipment increased $6.9 million in the cargo hook operating segment, which was mainly the result of a $4.9 million order for the manufacture of the cargo hook for the CH-47F Chinook helicopter. Orders for new equipment in the hoist and winch operating segment had a total increase of $0.9 million in fiscal 2009 as compared to fiscal 2008, despite orders that were received during the current fiscal year totaling $7.7 million for the manufacture of the probe hoist for the MH-60R Naval Hawk and $4.0 million in orders for the manufacture of the electric rescue hoist system for the H-60 Black Hawk MEDEVAC helicopter.

Orders for new equipment in the weapons handling operating segment under the contract for the manufacture and support of the High Mobility Artillery Rocket System (HIMARS) rocket pod loading hoists for the U.S. Army were $3.8 million in fiscal 2009 as compared to $5.2 million in fiscal 2008. This accounted for the majority of the decrease of $1.7 million of new production in the weapons handling operating segment.

In fiscal 2009 as compared to fiscal 2008, orders for overhaul and repair in both the hoist and winch and cargo hook operating segments increased $3.6 million and $1.0 million, respectively. The increased orders for overhaul and repair are attributable to the order patterns of customers.

Orders for spare parts in the hoist and winch and weapons handling operating segments decreased $3.6 million and $0.6 million, respectively, but were partially offset by an increase of approximately $0.7 million of orders in the cargo hook operating segment. The demand for spare parts continued to remain weak during fiscal 2009, due, we believe, primarily to prioritization of procurement due to the delay in fully funding the war effort in Iraq and Afghanistan. While we remain confident that the unrealized portion of the anticipated spare part sales will eventually be ordered, it is not clear at this time when that will happen.

New orders for engineering in the weapons handling operating segment decreased $6.1 million in fiscal 2009 as compared to the prior fiscal year. This decrease is directly attributable to a new order received in fiscal 2008 for a contract for the system design and development of a recovery winch for the Field Recovery and Maintenance Vehicle (FRMV) being developed for the U.S. Army under the Future Combat Systems (FCS) program.

Backlog. Backlog at March 31, 2009 was $131.0 million, an increase of $6.7 million from the $124.3 million at March 31, 2008. The increase in backlog is mainly attributable to a $7.7 million order for the manufacture of the probe hoist for the MH-60R Naval Hawk and a $4.0 million order for the manufacture of the electric rescue hoist system for the H-60 Black Hawk MEDEVAC helicopter, and a $4.9 million order for the manufacture of the cargo hook for the CH-47F Chinook helicopter. The offsetting decrease is attributable to previously scheduled shipments. The backlog at March 31, 2009 and March 31, 2008 includes approximately $65.0 million relating to the Airbus A400M military transport aircraft which is scheduled to commence shipping in late calendar 2009 and continue through 2020. There have been recent reports by analysts that there is a delay in the production schedule for the Airbus A400M military transport aircraft. Notwithstanding these reports, we have not, to date, received notification from Airbus that there is a significant delay in delivering our equipment for this program.

The product backlog varies substantially from time to time due to the size and timing of orders. We measure backlog by the amount of products or services that our customers have committed by contract to purchase from us as of a given date. Approximately $31.9 million of backlog at March 31, 2009 is scheduled for shipment during the next twelve months. The book-to-bill ratio is computed by dividing the new orders received during the period by the sales for the period. A book-to-bill ratio in excess of 1.0 is potentially indicative of continued overall growth in our sales. Our book to bill ratio was 1.1 for both fiscal 2009 and fiscal 2008. Although significant cancellations of purchase orders or substantial reductions of product quantities in existing contracts seldom occur, such cancellations or reductions could substantially and materially reduce our backlog. Therefore, our backlog information may not represent the actual amount of shipments or sales for any future period.

Fiscal 2008 Compared to Fiscal 2007


                                                        Fiscal Year Ended                  Increase
                                                   March 31,        March 31,             (Decrease)
                                                      2008            2007             $             %
                                                                        (In thousands)

New Equipment                                      $   44,739      $    33,379      $ 11,360          34.0
Spare Parts                                            15,127           24,001        (8,874 )       (37.0 )
Overhaul and Repair                                    15,109           15,492          (383 )        (2.5 )
Engineering Services                                      999              467           532         113.9

Net Sales                                              75,974           73,339         2,635           3.6
Cost of Sales                                          43,457           40,853         2,604           6.4

Gross Profit                                           32,517           32,486            31           0.1
General, administrative, and selling expenses          19,574           19,890          (316 )        (1.6 )
Interest expense                                        3,311            4,231          (920 )       (21.7 )
Gain on sale of facility                               (6,811 )              -         6,811         100.0
Loss on extinguishment                                      -            1,331        (1,331 )      (100.0 )
of debt
Net income                                         $    9,442      $     3,961      $  5,481         138.4

Net Sales. Our net sales increased to $76.0 million for fiscal 2008, an increase of $2.6 million from net sales of $73.3 million in fiscal 2007. During fiscal 2008 we experienced a shift in product mix whereby sales of new equipment accounted for 59% of total net sales as compared to 46% for fiscal 2007. The $11.4 million increase in net sales of new equipment in fiscal 2008 as compared . . .