UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 29, 2003

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: 333-32207

HCC INDUSTRIES INC.

(Exact name of Registrant as specified in its charter)

Delaware		95-2691666
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

4232 Temple City Blvd., Rosemead, California 91770

(Address of principal executive offices)

(626) 443-8933

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class		Name of each exchange on which registered
None		None

Securities registered pursuant to Section 12 (g) of the Act:

10 ¾% Senior Subordinated Notes Due 2007

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. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o No ý

Registrant’s Common Stock, outstanding at March 29, 2003 was 137,945 shares.

DOCUMENTS INCORPORATED BY REFERENCE:

None

HCC INDUSTRIES INC.

INDEX TO ANNUAL REPORT ON FORM 10-K

PART I

	Item 1.	BUSINESS
	Item 2.	PROPERTIES
	Item 3.	LEGAL PROCEEDINGS
	Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


PART II

	Item 5	MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
	Item 6.	SELECTED FINANCIAL DATA
	Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 7a.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RATE RISK
	Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
	Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

PART III

	Item 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	Item 11.	EXECUTIVE COMPENSATION
	Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	Item 14.	CONTROLS AND PROCEDURES

PART IV

	Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

SIGNATURES

PART I

Item 1 - Business

General

Except where the context indicates otherwise, the term “Company” means HCC Industries Inc. and its wholly owned subsidiaries Hermetic Seal Corporation, Glasseal Products, Inc., Sealtron, Inc., Norfolk Avon Realty Trust, HCC Industries International, HCC Machining Company, Inc. and HCC Foreign Sales Corporation.

The Company was incorporated in Delaware in 1985 and is one of the largest custom manufacturers of high precision hermetically sealed electronic connection devices in the United States. High precision hermetic seals are used primarily to permit the flow of electricity across a barrier used to separate different atmospheric media (such as gas or liquid to air or vacuum) existing on opposite sides of the barrier. A hermetic seal is generally accomplished through the creation of a glass-to-metal seal (“GTMS”). The hermetic seals manufactured by the Company generally fall into four categories - terminals, headers, connectors and microelectronics packages. A “terminal” is a device characterized by having only a single contact pin, while a “header” has multiple contact pins inserted in a frame. A “connector” is a type of terminal or header which can be mechanically coupled to or uncoupled from another connection. A “microelectronic package” is a container for thick and thin film substrates onto which hybrid circuitry has been etched. The Company operates in the premium segment of the market by providing high precision GTMS, custom designed to meet specific customer requirements. Each GTMS generally consists of a metal body or housing, metal contact pins, and an insulator fabricated from glass, ceramic or glass/ceramic mixtures. GTMS range in size from a two foot long, eight inch diameter cylindrical connector utilized for through-hull communication links for nuclear submarines, to a 40/1000 inch outside diameter (12/1000 inch inside diameter) implant to measure pressure in the heart chamber.

The Company believes that it has been an industry leader in the design and manufacture of GTMS since it developed its GTMS process in 1945. The Company has developed over 75,000 different configurations, primarily for the following industries: (1) automotive (for use in, for example, the initiators in airbags and seat belt pretensioners); (2) aerospace and military electronics (for use in, for example, gyro guidance devices, flight instrumentation, jet engine controls, and space suit controls); (3) test and measurement (for use in, for example, temperature and pressure transducers, infrared detection instrumentation, electro-optical devices and fuel injection monitoring devices); (4) medical electronics (for use in, for example, pacemakers, kidney dialysis machines and devices for monitoring vital life signs); (5) telecommunications (for use in, for example, fiber optics); and (6) energy (for use in, for example, oil drilling equipment and downhole logging instrumentation and for conventional and nuclear electric power generating plants).

The demand for the Company’s products is largely dependent on the automotive and aerospace industries. Sales to the Company’s ten largest customers accounted for approximately 37% of consolidated sales for fiscal year 2003. Approximately 58% of the Company’s consolidated sales for fiscal 2003 were to customers with which the Company had contractual agreements, sole source relationships, letters of intent or long-term purchase orders. A substantial portion of these business relationships are informal and certain of the Company’s contractual arrangements may be terminated at will. Sales to the Company’s largest customer accounted for approximately 8% of consolidated sales for the fiscal year ended March 29, 2003.

Competitive Strengths

The Company believes that it has the following competitive strengths:

Long-Term Customer Relationships. Many of the Company’s customers have been customers for over twenty years. The Company believes that both automotive and aerospace OEMs continue to seek long-term partnerships with fewer core suppliers. The Company’s relationships are strengthened by the fact that many of its arrangements with its customers provide for the Company to act as the sole source of supply for the customer. The Company estimates that approximately 58% of the Company’s consolidated sales for fiscal year 2003 were from contractual agreements, sole source relationships, letters of intent or long-term purchase orders.

Market Leadership. A number of the Company’s products hold leading market positions in their respective niche markets. The Company focuses on high margin custom products in a highly fragmented supplier base.

Commitment to Quality and Service. The Company believes that its commitment to provide consistent, high quality products and services and flexible manufacturing and custom designed products at competitive prices, forms the basis for its strong and diversified customer relationships. The Company manufactures most of its parts to specific customer requirements. The Company utilizes Statistical Process Control, Design Failure Mode Effects Analysis, Process Failure Mode Analysis, and a strict adherence to complete manufacturing documentation in order to manufacture high quality products for internal use as well as external customer sales. The Company’s four operating subsidiaries are registered to ISO 9001.

Proprietary Technology. The Company operates in the automotive, aerospace and general industrial technologies markets in which products typically require sophisticated engineering and production techniques. The Company designs and manufactures new products to fulfill customer needs, and has developed proprietary manufacturing technology since its founding in 1945. The Company believes that this proprietary technology helps enable it to attract and retain customers who require customized, high tolerance products. The Company estimates that it has produced over 75,000 different variations of GTMS.

Low Cost Operations. The Company believes that its extensive “in-house” capabilities and vertical integration are competitive advantages that have allowed it to become a low cost producer. By controlling the tolerance of the component parts, the Company has been able to reduce scrap and to increase the yields of its products. Furthermore, the Company is continually developing and assessing its programs designed to increase efficiency and enhance economies of scale in order to further reduce costs.

Diverse Products and Customers. The Company has a diverse customer base, with sales of numerous product variations to approximately 1,000 customers in fiscal 2003. Over the past several years, the Company has recognized consistent long-term growth in sales of GTMS products to the telecommunication, automotive, aerospace and general industrial markets.

Business Strategy

The Company’s strategy is to expand its business through:

Focusing on Core Strengths. The Company continues to focus on what it believes are its core strengths and to invest in those businesses that are consistent with those strengths and which exhibit high growth potential. Core strengths include the timely custom design and manufacturing of high tolerance, high reliability components and the effective program management of long term contracts and supply agreements.

Leveraging Customer Relationships. The Company works closely with its customers to jointly develop and design new products and to improve the performance and lower the cost of the Company’s customers’ products. The Company has sole source supply contracts, shares product development, and enters into other teaming arrangements with its key customers to further strengthen and broaden its relationships. The Company believes that this strategy, together with the successful performance under existing contracts has led to additional long-term business from key existing customers and new customers.

Pursuing Selective Acquisitions. The Company intends to pursue selective acquisitions and to add products and capabilities that are complementary to its existing operations. Priority is expected to be given to acquiring businesses whose products can be manufactured in the Company’s existing facilities (“fold-in” acquisitions). The Company’s operations are characterized by a relatively high level of operating leverage; therefore, such fold-in acquisitions should allow the Company to allocate costs across broader synergistic product lines and represent additional volume through the Company’s existing facilities which should provide opportunities to improve profitability.

Industries

The Company estimates the total size of the GTMS market to be $600 million, with approximately one-half estimated to be the specialized, high precision segments in which the Company competes. The Company believes based upon internal analysis that the market for high-end hermetically sealed products is extremely fragmented, with no other competitor offering the same breadth of products as the Company. The Company believes that its focus on the high-end, custom segment of the GTMS market enables it to achieve higher margins.

The Company sells its products to five principal industries: (i) the telecommunication industry for use in optical networking components; (ii) the automotive parts industry for use in airbag initiators, seat belt pretensioners, climate control devices and anti-lock braking systems; (iii) the aerospace industry for use primarily in commercial and military aviation and electronics; (iv) general industry for use primarily in process control, and other industrial and medical applications; and (v) the petrochemical industry, for use primarily in oil and gas downhole logging equipment.

Telecommunication

The Company designs and manufactures highly engineered hermetic packaging used to facilitate the infrastructure outbuild of fiber optic telecommunications, supporting global internet communications. The Company has a strong position in the current OC-192 technology, as well as qualified designs for a variety of next generation products for increased speed and bandwidth.

Automotive

The Company provides GTMS products used in initiators for airbag devices. At present, each airbag device requires at least one initiator (the device that deploys the airbag). The automotive airbag industry has undergone dynamic growth over the recent past stemming from increased consumer demand for automotive safety devices and federal regulations requiring such devices. Regulations adopted by the National Highway Traffic Safety Administration require that airbags be the automatic frontal crash protection system used for both the driver and front passenger in 100% of all passenger automobiles, light trucks and vans manufactured for sale in the United States.

Although not mandated by law, initiator-based safety systems are also employed in automobiles produced and sold in Europe and Asia, although fewer than in the U. S. The systems utilized in Europe and Asia include airbag systems similar to those in use in the U. S. and seat-belt pretensioners that employ initiators. While the majority of airbag initiators manufactured for use in cars outside the U. S. employ plastic initiators, there is a trend toward using GTMS in such products due to their increased reliability.

Commercial and Military Aviation and Electronics

The Company provides hermetic seals that are used for a number of different applications in commercial and military aviation and electronics, primarily to protect guidance and sensor devices from the effects of changes in atmospheric conditions. The Company believes based upon internal estimates that GTMS products are utilized in almost every model of commercial aircraft currently in production and its customers include essentially all major aerospace suppliers. The Company’s sales to the aerospace industry are dependent to a certain extent on new construction of commercial and military aircraft. The Company competes with a number of different suppliers in this market, based on quality, delivery and price.

General and Industrial

The Company provides GTMS used in pressure and temperature transducers (sensors), industrial process control equipment, capacitor end-seals for electronic devices and other industrial and medical applications. The Company believes that its ability to help customers develop products to meet demanding specifications allows for significant opportunities within this market segment, including those customers not currently served by the Company’s products. The Company also believes that the increased sophistication of equipment and increased level of automation being used in industrial applications will increase demand for GTMS products.

Petrochemical

The Company provides GTMS used for downhole logging equipment in the oil and gas industry primarily under long-term contracts to oil field equipment and service companies. The Company’s sales to this industry during any period are somewhat dependent on the current level of exploration and drilling in the oil and gas industry and current demand for and price of crude oil. The Company believes that it is one of only two significant providers of GTMS to this industry. The Company expects that the trend toward more sophisticated measurement-while-drilling equipment in the petrochemical industry is likely to lead to more demand for the Company’s products.

Customers and Applications

The Company has approximately 1,000 active customers. The Company’s ten largest customers accounted for approximately 37% of consolidated sales for fiscal year 2003. The Company’s largest customer represented approximately 8% of consolidated sales for fiscal year 2003. Approximately 58% of the Company’s consolidated sales for fiscal year 2003 were to customers with which the Company had contractual agreements, sole source relationships, letters of intent or long-term purchase orders. The Company only begins to manufacture products upon receipt of a purchase order.

The following table sets forth the Company’s principal end-user markets and certain applications for its products.

End Markets	Automotive	Aerospace	Industrial/Petrochemical	Telecommunication

Applications:	Airbag Initiators Thermistors Airbag Pressure Switches ABS	Jet Engine Monitors Avionics Fuel Gauge Indicators Temperature Sensors De-icing Sensors Air Speed Indicators	Process Control Sensors Downhole Drilling Sensors Lithium Batteries	Optical Switching DWDM Transport Optical Components Metro Access DWDM

Specific example of product application:	Airbag initiator	Temperature Sensors	High pressure electrical bulkheads for downhole use (oil exploration)	Modulator

What the product does:	Electric current flows from crash sensor through initiator to begin inflation of the airbag.	Passes electric current from sensors that detect excessive heat and/or fire in aircraft	Carries electrical signals between geological formation measurement tools and sensors.	Optical shutter to create binary code for laser transmission along fiber.

Result:	Airbag is inflated in approximately 6 to 14 milliseconds	Warning signal and automatic release of fire retardant	Allows precise measurement of geology while protecting sensitive equipment from extreme heat and pressure.	Higher speed data transmission.

Manufacturing Process

A GTMS is made by assembling three sets of component parts (metal contacts or pins, glass bead(s) and an outer metal housing or shell) on a graphite fixture. This assembly is put through a controlled atmosphere furnace at approximately 1,800 degrees Fahrenheit until the glass becomes molten. The graphite fixture is used to hold the components in place while the glass is molten. As the assembly cools, a physical and/or chemical bond is formed between the glass and the shell as well as the glass and the pin, thus forming a hermetic seal.

The Company believes that its extensive “in-house” capabilities are a key competitive advantage that has allowed it to become a low cost producer. By specifically controlling the tolerance of the component parts, the Company believes that it is able to increase the end yields of its product. This attention to quality throughout the manufacturing process also helps to ensure the timely delivery of its products. It also enables the Company to respond very quickly to prototype and new product development opportunities.

The Company manufactures most of its parts to specific customer requirements. All three of the Company’s operating subsidiaries use Computer Aided Design (“CAD”) to produce the drawings and specifications required by the customer. The Company estimates that it has produced over 75,000 different variations to GTMS since 1945. This extensive library of designs enables the Company to suggest design changes to its customers that reduce manufacturing costs without sacrificing quality and therefore reduce the cost to the customer (value engineering).

The Company has made a significant investment in Computer Numerically Controlled (“CNC”) machining equipment in order to manufacture the metal shells and pins to demanding customer specifications. The Company also machines most of its own graphite fixtures thereby allowing it to maintain process quality. Many of the glass preforms used in the Company’s products are manufactured internally as well. The Company has many proprietary formulas for glass and glass/ceramic mixtures that it has developed in over 55 years of manufacturing. In addition, the Company has extensive capabilities in selective plating of precious and non-precious metals.

The Company utilizes Statistical Process Control (“SPC”), Design Failure Mode Effects Analysis, Process Failure Mode Effects Analysis and a strict adherence to complete manufacturing documentation in order to manufacture high quality products for internal use as well as external customer sales. The Company believes that its knowledge and use of these procedures give the Company a competitive advantage. Hermetic, Glasseal, Sealtron and HCC Machining are ISO 9001 registered. The ISO 9001 registration, an international standard of quality, should facilitate business expansion in Europe.

Marketing and Sales

The Company’s products are marketed throughout the Unites States to customers in a wide variety of industries, both by Company-employed salespersons, who work out of the Company’s plants, and by a number of independent regional manufacturers’ sale representatives. The 24 Company-employed salespersons receive a base salary plus bonus potential. Sales in Europe are through two sales offices located in Northampton, England and Paris, France. As part of the Company’s growth strategy, the Company believes that it can capture an increasing share of the business outside the United States. International sales (primarily Europe) accounted for approximately 19% (2003), 12% (2002), and 11% (2001), of consolidated sales by HCC. Economic, political, governmental and regulatory conditions in such international markets could adversely affect the Company’s ability to successfully enter or operate in such markets. Therefore, no assurances can be given that the Company’s attempts to expand its business into such international markets will be successful. The Company currently has 8 independent regional manufacturers-sales representatives spread geographically across North America and Europe. These representatives, who do not exclusively sell the Company’s products, are remunerated on a commission basis. The Company believes there is a significant opportunity to increase its sales through expansion of its sales and distribution efforts, both within the markets it currently serves and in new markets.

Competition

The Company believes based upon internal analysis that most of the Company’s competitors in the GTMS sector of the industry in which it competes are smaller and have less technological and manufacturing expertise than the Company. The Company believes that it occupies a favorable competitive position because of its experience in engineering and production techniques and also its extensive vertical integration. Price has generally been a less significant competitive factor than the quality and design of the GTMS because their cost typically is a small percentage of the total cost of the end products in which they are used and because of the importance of the uses to which many of the Company’s products are put. In addition, products for airbag initiators are qualified for particular new automotive models and new products are subject to design and process verification testing (prior to which there are no sales) which typically takes 8 to 24 months and, therefore, helps to inhibit new entry into the market.

Backlog

As of March 29, 2003, the Company had a backlog of $26.9 million compared to $25.2 million as of March 30, 2002. The Company sells a majority of its products pursuant to contractual agreements, sole source relationships, letters of intent or long-term purchase orders, each of which may permit early termination by the customer. However, due to the specialized, highly engineered nature of the Company’s product, it is not practical in many cases for customers to shift their business to other suppliers without incurring significant switching and opportunity costs.

Employees

At March 29, 2003, the Company had approximately 534 employees, substantially all of whom were located in the United States. None of the Company’s employees are subject to a union contract. The Company considers its relations with its employees to be excellent.

Raw Materials

The Company obtains raw materials, component parts and supplies from a variety of sources and generally from more than one supplier. The Company’s principal raw materials are steel and glass. The Company’s suppliers and sources of raw materials are based in the United States and the Company believes that its sources are adequate for its needs for the foreseeable future. The loss of any one supplier would not have a material adverse effect on the Company’s financial condition or results of operations.

Environmental Matters

The Company’s operations are subject to numerous environmental laws, including those regulating air emissions and discharges to water, and the storage, handling and disposal of solid and hazardous waste. The Company believes that it is in substantial compliance with such laws and regulations. Because environmental laws are becoming increasingly more stringent, the Company’s environmental capital expenditures and costs for environmental compliance may increase in the future.

Under certain environmental laws, in particular CERCLA, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Generally, liability under CERCLA is joint and several and remediation can extend to properties owned by third parties. Persons who arrange for the disposal or treatment of hazardous or toxic substances or otherwise cause the release of such substances into the environment may also be liable under such laws for the costs of removal or remediation of such substances at a disposal or treatment facility or other location where the substances have migrated or come to be located, whether or not such facility or location is or ever was operated by such person and regardless of whether the method of disposal or treatment was legal at the time. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for the presence of such hazardous or toxic substances, and the liability under such laws has been interpreted to be strict, joint and several unless the harm is divisible and there is a reasonable basis for the allocation of responsibility. In addition, the presence of hazardous or toxic substances, or the failure to properly remedy such property may adversely affect the market value of the property, as well as the owner’s ability to sell or lease the property. The Company has potential liability under environmental laws for the remediation of contamination at two of its facilities (see Item 3 for further discussion of environmental matters).

Item 2 - Properties

Facilities

The Company’s principal executive offices are owned by the Company and are located in the Hermetic Seal facility located in Rosemead, California. Additionally, the Company has operating facilities in El Monte, California, Lakewood, New Jersey, and Reading, Ohio, as set forth below. The Company also owns approximately 47,400 square feet of plant and office space in Avon, Massachusetts, which is currently vacant.

Location	Owned/Leased	Square Feet
Rosemead, CA	Owned	37,000
El Monte, CA	Owned	110,000
Lakewood, NJ	Owned	50,000
Reading, OH	Owned	37,000

Item 3 - Legal Proceedings

Environmental Matters

Rosemead, California

Regional Groundwater Contamination. A portion of the San Gabriel Valley in which the Rosemead facility is located was designated by the EPA as a federal Superfund site in 1984. The Company has been named as a potentially responsible party (“PRP”) under CERCLA for the El Monte Operable Unit. If the Rosemead facility contributed to the regional contamination, such contribution is in connection with alleged spills of the degreasing solvent tetracholoroethylene (PCE).

Many other companies are believed to be contributors to the groundwater contamination in the El Monte Operable Unit. The Company and 18 other such companies have formed the Northwest El Monte Community Task Force (the “Task Force”) to undertake the investigation of the remediation, to identify other potential contributors and potentially to undertake required remediation. In March 1995, the Task Force entered into a Consent Administrative Order with the EPA to perform a Remedial Investigation and Feasibility Study (RI/FS) of the El Monte Operable Unit. The RI/FS was completed in 1999 and the EPA issued an interim record of decision. The RI/FS costs of approximately $2,400,000 to date have been funded with about one-quarter of the costs coming from governmental entities and the balance paid pursuant to a confidential interim allocation agreement of Task Force members. To date an additional $2,200,000 has been spent or committed to be spent to undertake early remediation efforts on a voluntary basis. In addition, the Task Force, in conjunction with Southern California Water Company, received a $650,000 grant through the San Gabriel Valley Water Quality Authority (“WQA”) to upgrade remediation facilities in connection with the remediation of the deep aquifer on the west side of the El Monte Operable Unit in 2001. Those facilities have been installed. In 2002, an additional $3,250,000 grant was awarded by the WQA to undertake further shallow and deep aquifer remediation as well as pay for ongoing operations and maintenance of the deep aquifer remedy. It is anticipated that an agreement between some members of the Task Force and the EPA to undertake the balance of the remediation required consistent with the record of decision will be executed by September 2003.

On-site/Soil and Groundwater Cleanup Costs. In addition to the Operable Unit Remediation costs, the Company has voluntarily undertaken both on-site soil and groundwater remediation. In 1995, the Company installed a soil vapor extraction system. To date, the remediation system has removed over 99% of contaminants in the soil.

The Company has installed a groundwater extraction system in conjunction with a neighboring facility. This system extracts contaminated water from the shallow aquifer and pumps the water for use in our neighbor’s manufacturing process prior to discharge to the municipal sanitary sewer. The system has been operational since August 1996 and is designed to capture contaminated groundwater from under the Company’s property before it impacts the regional groundwater flow. Although the system has been successful, it is premature to determine how long it will be needed to remediate the groundwater to acceptable levels, or if the operation of the system will be discontinued and replaced with a regional groundwater remediation program.

The Company believes that its financial liability with respect to regional groundwater contamination may be substantially reduced by acting on its own initiative to commence early remediation of groundwater contamination under its property.

Avon, Massachusetts

The Company’s facility in Avon, Massachusetts, currently inactive, was purchased in 1985 and operated as its Hermetite facility until June 1988. The facility became inactive in August of 1989. Subsequent to its closure, the Company identified significant levels of solvents in the groundwater. Subsurface investigations have delineated a plume of contaminants extending from the facility, beneath a neighboring property and into a town public water supply wellfield about 800 feet to the southeast of the property. Despite the risk that the contaminants pose to the wellfield, the levels at the well field remain within acceptable drinking water standards.

The Avon property is subject to Massachusetts “Chapter 21E,” the state’s hazardous site cleanup program. The property is classified as a “Tier 1B” category based on the level of contaminants. Under Tier 1B procedures, the Company may design its own remediation program subject to state oversight, auditing, and scheduling.

Pursuant to this procedure, the Company, through its licensed consultants, designed a remediation system which is intended to capture the contaminants before they reach the town wells. In 1996, the program was approved, constructed and became operational. In 1999, to accelerate the cleanup, the Company installed additional extraction wells closer to the source area and removed the suspected source of contamination. No additional infrastructure is anticipated at this time. To date, the system has been very successful in reducing contaminant levels. Although the system has been successful, it is premature to determine how long it will be needed to remediate the groundwater to acceptable levels.

Financial Impact

Uncertainty as to (a) the extent to which the Company caused, if at all, the conditions being investigated, (b) the extent of environmental contamination and risks, (c) the applicability of changing and complex environmental laws (d) the number and financial viability of other PRP’s, (e) the stage of the investigation and/or remediation, (f) the unpredictability of investigation and/or remediation costs (including as to when they will be incurred), (g) applicable clean-up standards, (h) the remediation (if any) that will ultimately be required, and (i) available technology make it difficult to assess the likelihood and scope of further investigation or remediation activities or to estimate the future costs of such activities if undertaken. In addition, liability under CERCLA is joint and several, and any potential inability of other PRP’s to pay their pro rata share of the environmental remediation costs may result in the Company being required to bear costs in excess of its pro rata share.

In fiscal 1997, the Company determined a cost estimate and accrued $10,000,000 for existing estimated environmental remediation and other related costs. The time frame over which the Company expects to incur such costs varies with each site, ranging up to 30 years. The most significant judgments and assumptions underlying the measurement of the environmental liability for the Avon site relate to the projected costs of the remediation, the effectiveness of the remediation technology on the site geology and the estimated time required for the remediation. The most significant judgments and assumptions underlying the measurement of the environmental liability for the El Monte Operable Unit are the determination of the extent (vertical and horizontal migration of contaminants) of the contamination within the EMOU, the projected costs to complete the required remediation, the expected timeframe required to complete the remediation, the required standard of clean up to be required by the regulatory agencies and the ultimate number and financial viability of the Potentially Responsible Parties.

As of March 29, 2003, the accrual for estimated environmental costs was $7,438,000. Actual expenditures for environmental remediation were $736,000 (2003) $528,000 (2002) and $476,000 (2001). The Company believes its accrual is adequate, but as the scope of its obligations becomes more clearly defined, this accrual may be modified and related charges against earnings may be made.

Claims for recovery of costs already incurred and future costs have been asserted against various insurance companies. The Company has neither recorded any asset nor reduced any liability in anticipation of recovery with respect to such claims made.

Other

In August 2002, the Company filed a lawsuit in California Superior Court against Special Devices, Inc. (“SDI”) alleging breach of contract. The allegations primarily related to SDI’s failure to tender payment to the Company for shipments of parts the Company manufactured and delivered and SDI’s breach of exclusivity requirements. In June 2003, the Company settled this lawsuit with SDI. Under the terms of the settlement SDI paid the Company $530,000 and certain mutual releases related to the underlying claims of the litigation were executed. When combined with earlier payments from SDI related to certain initial claims in the litigation, the aggregate recovery on the lawsuit was approximately $800,000.

In addition to the above, the Company is involved in other claims and litigation arising in the normal course of business. Based on the advice of counsel and in the opinion of management, the ultimate resolution of these matters will not have a significant adverse impact on the results of operations, cash flows or financial position of the Company.

The Company currently maintains insurance coverage for product liability claims. There can be no assurance that coverage under insurance policies will be adequate to cover any future product liability claims against the Company. In addition, product liability insurance coverage is expensive, difficult to maintain and may be unobtainable in the future on acceptable terms.

Indemnification/Restricted Cash

Pursuant to the terms of a recapitalization in 1997, the selling shareholders agreed to indemnify the Company for the after-tax costs of contingent liabilities up to a total of $30 million. As part of the transaction, $6 million was withheld by the Company from the purchase price to the selling shareholders and placed in an interest bearing escrow account (“Restricted Cash”) intended primarily to fund the after-tax costs of the environmental liability and other contingencies. Upon agreement of the parties, but in no event before February 2004, any funds remaining in the account will be paid to the selling shareholders. At this date, the only remaining contingencies are environmental contingencies and residual litigation costs. The restricted cash escrow balance was $5,311,000 at March 29, 2003 and $5,901,000 at March 30, 2002. In the event the Restricted Cash is not adequate to cover the liabilities, the Company has been informed by the selling stockholders that they will draw upon personal funds to cover such excess costs.

Included in other assets is $391,000 due from a selling shareholder or shareholders related to legal costs advanced on litigation. The Company has been advised by one of the selling shareholders that he disputes some or all of this receivable. However, if such dispute is not otherwise resolved, the Company believes that this advance is recoverable from the Restricted Cash.

Item 4 - Submission of Matters to a Vote of Security Holders

None

PART II

Item 5 — Market for the Registrant’s Common Equity and Related Stockholder Matters

Not Applicable

Item 6 — Selected Financial Data

The following selected consolidated financial information for each of the five fiscal years in the period ended March 29, 2003 has been derived from the audited consolidated financial statements of the Company. The information presented below should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of the Company and related notes thereto appearing elsewhere herein (in thousands).

	April 3,			April 1,			March 31,			March 30,			March 29,
	1999			2000			2001			2002			2003
Statement of Operations Data
Net sales	$	67,701		$	54,607		$	80,539		$	64,207		$	41,086
Cost of goods sold	41,361			39,794			53,405			43,278			33,080
Gross profit	26,340			14,813			27,134			20,929			8,006
Selling, general and administrative expenses	7,213			8,073			8,329			6,424			5,851
Impairment of assets	—			—			—			—			500
Earnings from operations	19,127			6,740			18,805			14,505			1,655
Other Income (Expense)
Interest and other income	755			734			649			233			132
Interest expense	(11,190		)	(11,333		)	(10,717		)	(9,847		)	(9,582		)
Total other expense, net	$	(10,435	)	$	(10,599	)	$	(10,068	)	$	(9,614	)	$	(9,450	)
Earnings (loss) before taxes, extraordinary items and cumulative effect of accounting change	8,692			(3,859		)	8,737			4,891			(7,795		)
Taxes (benefit) on earnings (loss)	3,325			(1,525		)	2,975			1,705			(891		)

Earnings (loss) before extraordinary items and cumulative effect of accounting change	5,367			(2,334		)	5,762			3,186			(6,903		)
Extraordinary gain, net of taxes(1)	—			—			3,187			—			—
Cumulative effect of accounting change	—			—			—			—			(3,561		)

Net earnings (loss)	$	5,367		$	(2,334	)	$	8,949		$	3,186		$	(10,465	)

Balance Sheet Data (at period end)
Total assets	$	70,368		$	71,768		$	69,222		$	65,635		$	51,153
Working capital	22,079			13,255			11,019			14,753			11,595
Long-term debt, less current portion	102,043			97,475			87,864			86,627			84,833
Stockholders’ deficit	(51,372		)	(53,706		)	(44,614		)	(41,411		)	(51,859		)
Dividends declared	—			—			—			—			—

(1) Represents gain on early retirement of debt, net of taxes.

Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table and discussion should be read in conjunction with the information contained in the consolidated financial statements and notes thereto of the Company appearing elsewhere herein. Unless otherwise stated, all references to years means the Company’s fiscal year ending March 29, 2003 (2003), March 30, 2002 (2002), and March 31, 2001 (2001), respectively.

Results of Operations (In millions)

	2003			Percent		2002			Percent		2001			Percent

Net sales	$	41.1		100.0	%	$	64.2		100.0	%	$	80.5		100.0	%
Gross profit	8.0			19.5	%	20.9			32.6	%	27.1			33.7	%
Selling, general and administrative expenses	5.9			14.4	%	6.4			10.0	%	8.3			10.3	%
Write-down on impairment of assets	.5			1.2	%	—			—		—			—
Earnings from operations	1.7			4.1	%	14.5			22.6	%	18.8			23.4	%
Other expense, net	(9.4		)	(22.9	)%	(9.6		)	(15.0	)%	(10.1		)	(12.5	)%
Cumulative effect of accounting Change	(3.6		)	(8.8	)%	—			—		—			—
Extraordinary gain(1)	—			—		—			—		3.2			4.0	%
Net earnings (loss)	$	(10.5	)	(25.5	)%	$	3.2		5.0	%	$	8.9		11.1	%

⁽¹⁾Represents extraordinary gain on early retirement of debt, net of taxes.

Comparison of the Fiscal Year Ended 2003 with 2002

Net Sales

The Company’s net sales decreased by approximately 36.0% or $23.1 million to $41.1 million for 2003 compared to sales of $64.2 million for 2002. The decrease was due to decreased demand in all markets, but primarily due to the loss of an automotive contract as discussed below.

Sales to existing aerospace, industrial process control, and petrochemical customers decreased by approximately 14% in 2003 compared to 2002. Based on current order volume, the Company expects modest strengthening of demand in the aerospace, industrial process control and petrochemical markets over the next few quarters.

On the automotive side, unit shipments of airbag initiator products decreased significantly due to the loss of a significant customer. The Company’s airbag initiator shipments to its formerly largest customer, Special Devices, Inc. (“SDI”) ended in March 2002. Overall, revenue from all automotive shipments decreased approximately 74% in 2003 compared to 2002. Currently, the Company is in the process of transitioning its capacity to other manufacturers of initiators and micro gas generators for the production of airbags and seat belt pretensioners. However, these programs and relationships with other customers will take time to develop and there is no assurance the Company will be able to ultimately regain its previous market share in these products. On the whole, the Company expects significantly lower revenues from automotive products during fiscal 2004.

The Company had developed a significant market presence in the telecommunications markets through components designed for optical networking infrastructure. However, shipments of these products decreased dramatically as the market for these products collapsed. Sales of these products decreased by approximately 61% in 2003 compared to 2002. Based on recent industry reports, the Company expects significant weakness in these markets during fiscal 2004.

Gross Profit

Gross profit decreased by approximately 61.7% or $12.9 million, to $8.0 million for 2003 compared to $20.9 million for 2002. Gross margin decreased to 19.5% for 2003 from 32.6% for 2002.

The decrease in gross profit is primarily attributable to the $23.1 million decrease in sales in 2003. The decrease in gross margin was primarily attributable to the significant decrease in revenue and the corresponding impact of fixed overhead costs leveraged on lower revenue. The most significant fixed overhead costs are depreciation, utilities and property taxes. These costs are allocated to inventory and ultimately cost of sales, based on the proportion of total fixed costs to total direct labor costs. The ongoing weakness in sales will continue to adversely impact gross profitability and gross margin.

Selling, General and Administrative Expenses

Selling, general and administrative (“S,G&A”) expenses decreased by approximately 7.8% or $0.5 million to $5.9 million for 2003 compared to $6.4 million for 2002. S,G&A expenses as a percent to sales increased to 14.4% in 2003 from 10.0% for 2002.

The $0.5 million decrease in S,G&A expenses was primarily attributable to decreased compensation costs. The increase in the percentage of S,G&A expenses to sales reflects the impact of the modest decrease in S,G&A expenses in relation to the significantly lower revenue.

Earnings from Operations

Operating earnings decreased $12.8 million to $1.7 million for 2003 compared to $14.5 million for 2002. The significant decrease in operating earnings was attributable to the same factors (as discussed above) that contributed to the decrease in gross profit, gross margin and S,G&A expenses.

Other Expense, net

Other expense, net (which is predominantly net interest expense) decreased 2.1% or $0.2 million to $9.4 million in 2003 compared to $9.6 million in 2002. The $0.2 million decrease was primarily attributable to lower interest expense. The Company has $86.6 million indebtedness as of March 29, 2003 compared to $88.7 million at March 30, 2002.

Income Taxes

The Company's effective tax rate for fiscal 2003 was a benefit of 11.4% versus a provision of 34.9% during fiscal 2002. The change is attributable to the tax effect of the Company's net loss offset by a full valuation allowance recorded against the Company's deferred tax assets. The valuation allowance was recorded to reduce the deferred tax assets to the amount expected to be realized.

Net Earnings

Net earnings decreased by approximately $13.7 million to a $10.5 million loss for 2003 compared to net earnings of $3.2 million in 2002. The decrease in net earnings was primarily attributable to the decrease in earnings from operations and the $3.6 million charge related to the Cumulative Effect of an Accounting Change.

Comparison of the Fiscal Year Ended 2002 with 2001

Net Sales

The Company’s net sales decreased by approximately 20.2% or $16.3 million to $64.2 million for 2002 compared to sales of $80.5 million for 2001. The decrease was due to decreasing demand in all markets. Sales to existing aerospace, industrial process control, and petrochemical customers decreased by approximately 2% in 2002 compared to 2001. Based on current order volume, the Company expects continued weakness in the aerospace, industrial process control and petrochemical markets to continue over the next quarter.

On the automotive side, unit shipments of airbag initiator products decreased significantly due to a decline in customer demand on several existing programs. The Company’s airbag initiator shipments to its formerly largest customer, Special Devices, Inc. decreased approximately 20% in 2002 compared to 2001. Overall, revenue from all automotive shipments decreased approximately 26% in 2002 compared to 2001. In January 2002, the Company’s annual supply agreement with SDI expired and was not renewed. The Company stopped selling product to SDI in March 2002. Currently, the Company is in the process of transitioning its capacity to other manufacturers of initiators and micro gas generators for the production of airbags and seat belt pretensioners. However, these programs and relationships with other customers will take time to develop and there is no assurance the Company will be able to ultimately regain its previous market share in these products. On the whole, the Company expects significantly lower future revenues from automotive products.

The Company has continued to develop a significant market presence in the telecommunications markets through component products designed for optical networking infrastructure. Shipments of these products decreased dramatically as the market for these products collapsed. Sales of these products decreased by approximately 59% in 2002 compared to 2001. Based on recent industry reports, the Company expects significant weakness in these markets to prevail for the next few quarters.

Gross Profit

Gross profit decreased by approximately 22.9% or $6.2 million, to $20.9 million for 2002 compared to $27.1 million for 2001. Gross margin decreased to 32.6% for 2002 from 33.7% for 2001.

The decrease in gross profit is attributable to the $16.3 million decrease in sales in 2002. The decrease in gross margin was primarily attributable to the impact of fixed overhead costs leveraged over lower revenue.

Selling, General and Administrative Expenses

Selling, general and administrative (“S,G&A”) expenses decreased by approximately 22.9% or $1.9 million to $6.4 million for 2002 compared to $8.3 million for 2001. S,G&A expenses as a percent to sales decreased to 10.0% in 2002 from 10.3% for 2001. S,G&A expenses are expected to increase in 2003 over 2002 due to the impact of the litigation settlement received in 2002.

The $1.9 million decrease in S,G&A expenses was primarily attributable to decreased compensation costs and reduced legal expenses due to the settlement of the Neubauer litigation. The improvement in the percentage of S,G&A expenses to sales reflects the impact of the significant decrease in S,G&A expenses over lower revenue.

Earnings from Operations

Operating earnings decreased $4.3 million to $14.5 million for 2002 compared to $18.8 million for 2001. The significant decrease in operating earnings was attributable to the same factors (as discussed above) that contributed to the decrease in gross profit, gross margin and S,G&A expenses.

Other Expense, net

Other expense, net (which is predominantly net interest expense) decreased 5.0% or $0.5 million to $9.6 million in 2002 compared to $10.1 million in 2001. The $0.5 million decrease was primarily attributable to lower interest expense realized from the early retirement of debt during 2001. The Company has $88.7 million of indebtedness as of March 30, 2002 compared to $91.0 million at March 31, 2001.

Net Earnings

Net earnings decreased by approximately $5.7 million to $3.2 million for 2002 from net earnings of $8.9 million in 2001. The decrease in net earnings was primarily attributable to the decrease in earnings from operations and the extraordinary gain recognized in 2001, partially offset by the reduction in interest expense.

Liquidity and Capital Resources

Net cash used in operating activities was $2.2 million for 2003 compared to net cash provided of $6.0 million for 2002. The decrease of $8.2 million was primarily attributable to decreased net earnings (excluding the charge related to the cumulative effect of accounting change).

Net cash used in investing activities was $0.4 million for 2003 compared to $0.7 million for 2002. The decrease was due to a reduction in purchases of property, plant and equipment.

Net cash used in financing activities was $2.1 million for 2003 compared to $3.2 million for 2002. The decrease in 2003 is primarily attributable to a decrease in required principal payments on long-term debt.

As of March 29, 2003, the Company’s outstanding indebtedness was $86.6 million, consisting of $79.8 million principal amount of the senior subordinated notes and $6.8 million of capitalized lease obligations and mortgage debt. On June 18, 2003, the Company entered into a $7.5M Revolving Credit Agreement (the “Revolver”). Under the terms of the Revolver, the Company may borrow up to 85% of eligible accounts receivable. The Revolver provides for interest on outstanding balances at the bank’s prime rate plus 1 ½% (or LIBOR plus 3½%) and is collateralized by accounts receivable, inventories, equipment and intangible assets of the Company. There are no borrowings outstanding under the Revolver and on June 18, 2003, approximately $4,000,000 was available. The Revolver includes covenants requiring maintenance of certain financial ratios.

The Company believes that cash on hand of $6.2 million, income tax refunds from carryback of tax losses of $2.6 million and cash generated from operations, prior to interest payments on long-term debt, will provide adequate funds for ongoing operations, planned capital expenditures and debt service for the near-term. Over the next 12 months, the primary cash obligations of the Company are interest payments ($9.4 million), principal payments on existing debt ($1.8 million), and capital expenditures ($0.6 -$0.8 million).

For the longer term, the operating results of the Company must improve to satisfy its liquidity needs. The annual interest payments and principal payment obligations decrease only modestly over the next several years until the Notes become due in 2007. The Company is making substantial efforts to increase its sales levels and thereby improve the operating results. There is no assurance that these efforts will be successful. In addition, an increase in sales for the Company will require additional investment in working capital to support such increased operations.

Capital expenditures for fiscal 2004 are expected to focus on investments in equipment to expand prototyping and qualification of new programs for new and existing customers. Expected capital expenditures for fiscal 2004 are approximately $0.8 million and will be financed through working capital.

Critical Accounting Policies

In response to the SEC’s Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies,” we identified the most critical accounting policies upon which our financial status depends. We determined the critical principles by considering accounting policies that involve the most complex or subjective decisions or assessments. We state these accounting policies in the notes to the consolidated financial statements and at relevant sections in the management’s discussion and analysis.

The Company does not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report.

Revenue Recognition

The Company generally manufacturers products under both individual firm purchase orders and fixed price, long-term production contracts. The contracts vary in length, but generally are completed within 12 to 24 months. Sales under individual purchase orders and long-term production contracts are recognized at the time units are shipped and title and risk of loss transfers (FOB shipping point). Our products are warranted to meet the specifications of manufacture and customer “right of return” is only for failure to meet the specifications.

Allowance for Uncollectible Accounts Receivable

Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future. This estimated allowance is based primarily on management’s evaluation of the financial condition of the various customers and, to date, has been within management’s expectations. No customer account exceeds 10% of the accounts receivable balance at March 29, 2003.

Allowance for Obsolete and Excess Inventory

Inventories are valued at the lower of cost (first-in, first-out method) or market and have been reduced for any identified excess or obsolete inventories. Management bases it’s analysis of excess or obsolete inventories on actual demand for components or raw material stocks.

Impairment of Long-Lived Assets

Intangible and other long-lived assets are reviewed by management for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

Intangible assets relate to a customer listing acquired in 1997. Total cost of the customer list was $1,400,000 and it is amortized over 14 years on a straight-line basis. Amortization expense is $100,000 for each fiscal year 2003, 2002 and 2001. Accumulated amortization was $575,000 and $475,000 at March 29, 2003 and March 30, 2002, respectively. Amortization expense will be $100,000 per year through fiscal 2011.

Goodwill

In adopting SFAS No. 142 “Goodwill and Other Intangible Assets”, the Company ceased amortizing goodwill in the first quarter of fiscal 2003 and has assessed initial impairment under transitional rules as of March 31, 2002. The goodwill was acquired at a cost of approximately $6,200,000 and had previously been amortized on a straight-line basis over 40 years. Goodwill amortization for fiscal 2002 and 2001 was $189,000 each year. Accumulated amortization of goodwill was $2,639,000 at March 30, 2002. If no amortization had been recorded in fiscal 2002 and 2001, proforma net income would have been $3,375,000 and $9,138,000, respectively.

During the quarter ended September 28, 2002, the Company completed its assessment of the estimated fair value of its two reporting units under the transitional rules of SFAS No. 142 using a valuation method based on a multiple of earnings before interest, taxes, depreciation and amortization. For purposes of its assessment under SFAS No. 142, the Company concluded it had two reporting units, Hermetic (consisting of Hermetic Seal Corporation and its related entities/operations) and Glasseal (consisting of Glasseal Products, Inc. and its subsidiary Sealtron, Inc.). For purposes of calculating earnings before interest, taxes, depreciation and amortization (“EBITDA”) of each of the reporting units, the Company used forward 12 months forecasted operating results for fiscal 2003 due to 1) the loss in March 2002 of SDI, formerly its largest customer and 2) the significant decrease in sales to the telecommunications market. An allocation of the cost of shared resources and corporate expenses directly related to the reporting units was also reflected in EBITDA. The multiple applied against EBITDA was 5.7. As a result, the Company determined that the goodwill of the Company’s reporting units was fully impaired and has recorded an impairment charge of $3,561,000. No income tax benefit has been recognized for this charge, as the goodwill is not deductible for income tax purposes.

Deferred Income Tax Assets

Deferred income tax assets and liabilities have been recorded for the differences between the financial accounting and income tax basis of assets and liabilities. Recorded deferred income tax assets and liabilities are described in detail under Note 7 - “Taxes on Earnings” in the related notes to the consolidated financial statements. Significant factors considered by management in the determination of the probability of realization of deferred tax assets include historical operating results and expectations of future earnings and taxable income. During Fiscal 2003, the Company recorded a full valuation allowance against its deferred tax assets, as it was determined that it was more likely than not that they will not be realized.

Protection of the Environment

The Company’s operations involve the use and disposal of certain substances regulated under environmental protection laws. On an ongoing, regular basis, certain processes continue to be modified in order to reduce the impact on the environment, including the reduction or elimination of certain chemicals used in and wastes generated from operations. Liabilities related to environmental matters are further discussed under Item 3 — “Legal Proceedings” and under Note 10 - “Environmental and Other Liabilities” in the related notes to the consolidated financial statements.

Contingencies

The Company is subject to various investigations, claims, legal and administrative proceedings, covering a wide range of matters that arise in the ordinary course of business activities. Any liability that may result from these proceedings in not expected to have a material adverse effect on the Company’s results of operations, cash flows or financial position.

A number of claims / disputes have arisen with SDI in conjunction with the wind down of the sales to SDI. The Company is pursuing its claims and will use all remedies available to resolve the issues. The ultimate resolution of these claims is not expected to have a material adverse impact on the results of operations, cash flows or financial position of the Company.

Other Matters

The Company does not have off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs). In the ordinary course of business, the Company leases certain real properties, primarily sales and office facilities, and equipment. Transactions with related parties are in the ordinary course of business, are conducted on an arm’s-length basis, and are not material to the Company’s financial position, results of operations or cash flow.

Contractual Obligations Related to Long-term Debt and Related Risk Disclosure

The Company is exposed to market risk from changes in interest rates on the Company’s Revolving Credit Facility. At June 18, 2003 (the effective date of the Facility), the Company had no outstanding borrowings under the Revolver. See Note 5 - “Long-term Debt” and Note 6 - “Revolving Credit Facility” in the related notes to the consolidated financial statements.

Impact Of Recently Issued Accounting Standards

Statement of Financial Accounting Standard No. 145: In May 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 145, “Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS No. 13, and Technical Corrections.” Among other things, SFAS No. 145 rescinds various pronouncements regarding early extinguishments of debt and allows extraordinary accounting treatment for early extinguishment only when the provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations / Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” are met. SFAS No. 145 provisions regarding early extinguishment of debt are generally effective for fiscal years beginning after May 15, 2002. Management does not believe that the adoption of this statement will have a material impact on our consolidated financial statements.

Statement of Financial Accounting Standard No. 146: In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” Under EITF Issue No. 94-3, a liability for an exit cost is recognized at the date an entity commits to an exit plan. SFAS No. 146 eliminates the definition and requirements for recognition of exit costs in EITF Issue No. 94-3 and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This Statement also establishes that fair value is the objective for initial measurement of the liability. The provisions of this Statement will be effective after December 31, 2002. The adoption of SFAS No. 146 will affect the timing of the recognition of future costs associated with exit or disposal activities and will not affect previous charges related to such activities.

Statement of Financial Accounting Standard No.148: In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure — an amendment of SFAS No. 123.” This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The amendments to Statement 123 in paragraphs 2(a)-2(e) of this Statement shall be effective for financial statements for fiscal years ending after December 15, 2002. Earlier application of the transition provisions in paragraphs 2(a)-2(d) is permitted for entities with a fiscal year ending prior to December 15, 2002, provided that financial statements for the 2002 fiscal year have not been issued as of the date this Statement is issued. Early application of the disclosure provisions in paragraph 2(e) is encouraged. The amendment to Statement 123 in paragraph 2(f) of this Statement and the amendment to Opinion 28 in paragraph 3 shall be effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002. The Company does not believe this standard will have a material impact on its financial position or results of its operations.

Financial Accounting Standards Board Interpretation No. 45: In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This Interpretation clarifies the requirements for a guarantor’s accounting for and disclosures of certain guarantees issued and outstanding. This Interpretation also clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the obligations the guarantor has undertaken in issuing that guarantee. The disclosure provisions of the Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this Interpretation did not have a material impact on the Company’s financial position, results of operations or cash flows.

Financial Accounting Standards Board Interpretation No. 46: In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51.” The Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of this Interpretation are effective for all enterprises with variable interests in variable interest entities created after January 31, 2003. The adoption of this Interpretation is not expected to have a significant impact on the Company’s financial results.

Inflation

Although increases in operating costs could adversely affect the Company’s operations, management does not believe inflation has had a material effect on operating profit during the past several years.

Disclosure Regarding Forward Looking Statements

This filing contains statements that are “forward looking statements”, and includes, among other things, discussions of the Company’s business strategy and expectations concerning market position, future operations, margins, profitability, liquidity and capital resources. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

All phases of the operations of the Company are subject to a number of uncertainties, risks and other influences, including general economic conditions, regulatory changes and competition, many of which are outside the control of the Company, any one of which, or a combination of which, could materially affect the results of the Company’s operations and whether the forward looking statements made by the Company ultimately prove to be accurate. The Company does not assume any obligation to update these forward looking statements.

Item 7a — Quantitative and Qualitative Disclosures About Market Rate Risk

The Company is exposed to market risk from changes in interest rates on the Company’s Revolving Credit Facility. At June 18, 2003 (effective date of the Revolving Credit Facility), the Company had no outstanding borrowings under the Revolver and, therefore, changes in interest rates would have no impact on the Company’s results of operations.

Item 8 — Financial Statements and Supplemental Data

INDEX TO FINANCIAL STATEMENTS

Report of Independent Auditors

Consolidated Balance Sheets as of March 29, 2003 and March 30, 2002

Consolidated Statements of Operations for the years ended

March 29, 2003, March 30, 2002, and March 31, 2001

Consolidated Statements of Stockholders’ Equity (Deficit)

for the years ended March 29, 2003, March 30, 2002, and

March 31, 2001

Consolidated Statements of Cash Flows for the years ended

March 29, 2003, March 30, 2002, and March 31, 2001

Notes to Consolidated Financial Statements

Schedule II - Valuation and Qualifying Accounts

All other financial statement schedules not listed have been omitted since the required information is

included in the consolidated financial statements, the notes thereto, is not applicable, or not required.

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders

HCC Industries Inc. and Subsidiaries

Rosemead, California

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of HCC Industries Inc. and Subsidiaries at March 29, 2003 and March 30, 2002, and the results of their operations and their cash flows for each of the three years in the period ended March 29, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1, effective March 31, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

May 15, 2003, except for Note 6, and the fifth paragraph of Note 1, as to which the date is

June 18, 2003.

HCC INDUSTRIES INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share data)

ASSETS

	March 29,			March 30,
	2003			2002

Current Assets:
Cash and cash equivalents	$	6,215		$	10,990
Trade accounts receivable, less allowance for doubtful accounts of $70 (2003) and $70 (2002)	6,626			8,356
Inventories	5,174			6,016
Income taxes receivable	2,473			506
Prepaid and other current assets	857			1,130

Total current assets	21,345			26,998

Property, Plant and Equipment, net	22,278			24,895

Other Assets:
Goodwill	—			3,561
Intangible assets	825			925
Deferred financing costs	1,394			1,732
Deferred income taxes, net	—			1,623
Restricted cash	5,311			5,901

Total assets	$	51,153		$	65,635

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:
Current portion of long-term debt	$	1,779		$	2,109
Accounts payable	1,504			1,475
Accrued liabilities	6,467			7,721

Total current liabilities	9,750			11,305

Long Term Liabilities:
Long-term debt, net of current portion	84,833			86,627
Environmental and other liabilities	8,429			9,114
	103,012			107,046

Commitments and contingencies

Stockholders’ Equity (Deficit):
Common stock; $.10 par value; authorized 550,000 shares, issued and outstanding 137,945 shares	14			14
Additional paid-in capital	377			360
Accumulated deficit	(52,250		)	(41,785		)

Total stockholders’ deficit	(51,859		)	(41,411		)

Total liabilities and stockholders’ deficit	$	51,153		$	65,635

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

HCC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

	For The Year Ended
	March 29,			March 30,			March 31,
	2003			2002			2001

Net sales	$	41,086		$	64,207		$	80,539
Cost of goods sold	33,080			43,278			53,405

Gross profit	8,006			20,929			27,134

Selling, general and administrative expenses	5,851			6,424			8,329
Impairment of assets	500			—			—

Earnings from operations	1,655			14,505			18,805

Other income (expense):
Interest and other income	132			233			649
Interest expense	(9,582		)	(9,847		)	(10,717		)

Total other expenses, net	(9,450		)	(9,614		)	(10,068		)

Earnings (loss) before taxes and cumulative effect of accounting change and extraordinary item	(7,795		)	4,891			8,737

Taxes (benefit) on earnings (loss)	(891		)	1,705			2,975

Earnings (loss) before cumulative effect of accounting change and extraordinary item	(6,904		)	3,186			5,762

Cumulative effect of accounting change	(3,561		)	—			—

Extraordinary gain on retirement of debt, net of taxes of $2,125	—			—			3,187

Net earnings (loss)	$	(10,465	)	$	3,186		$	8,949

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

HCC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

				Additional		Retained			Total
	Common Stock			Paid-In		Earnings			Stockholders’
	Shares	Amount		Capital		(Deficit)			Equity(Deficit)

Balance, April 1, 2000	135	$	14	$	200	$	(53,920	)	$	(53,706	)

Sale of stock	3	—		50		—			50

Non-cash stock compensation	—	—		93		—			93

Net earnings	—	—		—		8,949			8,949

Balance, March 31, 2001	138	14		343		(44,971		)	(44,614		)

Non-cash stock compensation	—	—		17		—			17

Net earnings	—	—		—		3,186			3,186

Balance, March 30, 2002	138	14		360		(41,785		)	(41,411		)

Non-cash stock compensation	—	—		17		—			17

Net loss	—	—		—		(10,465		)	(10,465		)

Balance, March 29, 2003	138	$	14	$	377	$	(52,250	)	$	51,859

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

HCC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For The Year Ended
	March 29,			March 30,			March 31,
	2003			2002			2001
Cash flows from operating activities:
Net earnings (loss)	$	(10,465	)	$	3,186		$	8,949
Reconciliation of net earnings (loss) to net cash provided by (used in) operating activities:
Depreciation	2,544			2,599			2,251
Amortization	438			628			639
Impairment of assets	500			—			—
Cumulative effect of accounting change	3,561			—			—
Deferred income taxes	2,059			903			1,622
Extraordinary gain	—			—			(3,187			)
Non-cash stock compensation	17			17			93
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable, net	1,730			2,443			(758			)
Decrease (increase) in inventories	842			452			(1,953			)
Decrease (increase) in other assets	(1,540		)	17			44
(Decrease) increase in accounts payable	29			(2,125		)	59
(Decrease) increase in accrued and other liabilities	(1,939		)	(2,137		)	917

Net cash provided by (used in) operating activities	(2,224		)	5,983			8,676

Cash flows from investing activities:
Purchases of property, plant and equipment	(427		)	(736		)	(2,565			)

Net cash used in investing activities	(427		)	(736		)	(2,565			)

Cash flows from financing activities:
Principal payments on long-term debt	(3,215		)	(3,153		)	(7,204			)
Proceeds from issuance of long-term debt	1,091			—			—
Early retirement of debt	—			—			(4,598			)
Proceeds from sale of stock	—			—			50

Net cash used in financing activities	(2,124		)	(3,153		)	(11,752			)

Net increase (decrease) in cash and cash equivalents	(4,775		)	2,094			(5,641			)

Cash and cash equivalents at beginning of period	10,990			8,896			14,537
Cash and cash equivalents at end of period	$	6,215		$	10,990		$	8,896

Supplemental noncash financing activities:
Capital lease obligations	$	1,091		$	922		$		3,917
Cash taxes paid	$	(983	)	$	950		$		3,250
Cash interest paid	$	9,234		$	9,462		$		10,325

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

HCC INDUSTRIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

General

HCC Industries Inc. and Subsidiaries (“HCC” or “Company”) was incorporated in Delaware in 1985. HCC designs, manufactures and markets broad lines of state-of-the-art, high precision electronic connection devices known as hermetic seals and operates in one reportable industry segment. The Company’s products are sold primarily in North America and Europe to the aerospace, energy, telecommunications, test and measurement and automotive industries.

On February 14, 1997, pursuant to a Stock Purchase and Sale Agreement dated as of December 23, 1996, the Company, certain members of management and an investor group completed a recapitalization of the Company (the “Recapitalization”). In connection with the Recapitalization, the Company issued an aggregate of 87,721 shares of common stock to the investor group and repurchased an aggregate of 245,972 shares of common stock from the former principal stockholders. As a result, the investor group acquired a 65% ownership interest in the Company. In accounting for the Recapitalization, no fair value adjustments were made to the book value of the Company’s assets and no goodwill was recognized. The amounts paid to the selling stockholders to purchase and retire the shares of common stock was charged to stockholders’ equity as a treasury stock transaction.

Liquidity and Capital Resources

On June 18, 2003, the Company entered into a $7.5M Revolving Credit Agreement (the “Revolver”). Under the terms of the Revolver, the Company may borrow up to 85% of eligible accounts receivable. The Revolver provides for interest on outstanding balances at the bank’s prime rate plus 1 ½% (or LIBOR plus 3½%) and is collateralized by accounts receivable, inventories, equipment and intangible assets of the Company. There are no borrowings outstanding under the Revolver and on June 18, 2003, approximately $4,000,000 was available. The Revolver includes covenants requiring maintenance of certain financial ratios.

Indemnification/Restricted Cash

In conjunction with the Recapitalization, the selling shareholders agreed to indemnify the Company for the after-tax costs of contingent liabilities up to a total of $30 million. As part of the transaction, $6 million was withheld by the Company from the purchase price to the selling shareholders and placed in an interest bearing escrow account (“Restricted Cash”) intended primarily to fund the after-tax costs of the environmental liability and other contingencies. Upon agreement of the parties, but in no event before February 2004, any funds remaining in the account will be paid to the selling shareholders. At this date, the only remaining contingencies are environmental contingencies and residual litigation costs. The restricted cash escrow balance was $5,311,000 at March 29, 2003 and $5,901,000 at March 30, 2002. In the event the Restricted Cash is not adequate to cover the liabilities, the Company has been informed by the selling stockholders that they will draw upon personal funds to cover such excess costs.

Principles Of Consolidation

The consolidated financial statements include the accounts of the Company and all wholly owned subsidiaries. All intercompany transactions (which are primarily sales/purchases and receivables/payables) have been eliminated in consolidation.

The Company’s 10 ¾% Senior Subordinated Notes and the Revolving Credit Facility are guaranteed by all operating subsidiaries of the Company (the “Subsidiary Guarantors”). The guarantee obligations of the Subsidiary Guarantors (which are all direct or indirect wholly owned subsidiaries of the Company) are full, unconditional and joint and several. The aggregate assets, liabilities, earnings, and equity of the Subsidiary Guarantors are substantially equivalent to the total assets, liabilities, earnings and equity of HCC Industries Inc. and its subsidiaries on a consolidated basis. Separate financial statements of the Subsidiary Guarantors are not included in the accompanying financial statements because management of the Company has determined that separate financial statements of the Subsidiary Guarantors would not be material to investors.

The Company has no direct or indirect guarantees of the indebtedness of others.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, reported results of operations and disclosure of contingencies at the dates of the consolidated financial statements. Actual results could differ from those estimates.

Accounting Period

The consolidated financial statements are based on the fiscal year ending on the Saturday nearest to March 31.

Reclassifications

Certain reclassifications have been made to the 2002 and 2001 financial statements to conform to the 2003 presentation.

Revenue Recognition

Cash Equivalents

The Company considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The Company has bank balances, including cash, cash equivalents, and restricted cash, which exceed federally insured limits.

Accounts Receivable, Concentration Of Credit Risk and Geographic Information

The Company grants uncollateralized credit to its customers who are located in various geographical areas. Estimated credit losses and returns have been provided for in the financial statements and, to date, have been within management’s expectations. No customer account exceeds 10% of the accounts receivable balance at March 29, 2003.

The Company stopped selling products to Special Devices, Inc. (“SDI”) in March 2002. Sales to SDI were $14,596,000 (23%) and $20,736,000 (26%) for the fiscal years 2002 and 2001, respectively. The related accounts receivable from SDI as of March 30, 2002 was $2,401,000. Sales to another customer amounted to $8,920,000 (11%) for the fiscal year 2001 and the related receivable as of March 31, 2001 was $375,000.

Sales to International customers (primarily Europe) were approximately $7,619,000 (19%), $7,738,000 (12%) and $9,250,000 (12%) of the Company’s consolidated sales for fiscal years 2003, 2002 and 2001, respectively. Sales are attributed to countries based on the shipping location of customers.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Depreciation is computed generally by the straight-line method over the estimated useful lives of the respective assets as follows: furniture, fixtures and equipment — 3 to 10 years; buildings and improvements — 10 to 40 years.

Repairs and maintenance are charged directly to expense as incurred. Additions and betterments to property, plant and equipment are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in operations in the period of disposition.

Intangible Assets

Intangible and other long-lived assets are reviewed by management for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

Goodwill

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the Company evaluates the carrying value of its intangible assets and property, plant and equipment on an ongoing basis and recognizes an impairment when the estimated future undiscounted cash flows from operations are less than the carrying value of the related long-lived assets.

Fair Value of Financial Instruments

All financial instruments are held for purposes other than trading. The estimated fair value of the Company’s long-term debt is based on either quoted market prices or current rates for similar issues for debt of the same remaining maturities. All other non-derivative financial instruments as of March 29, 2003 and March 30, 2002 approximate their carrying amounts either because of the short maturity of the instrument, or based on their effective interest rates compared to current market rates for similar long-term debt or obligations.

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Significant factors considered by management in the determination of the probability of realization of deferred tax assets include historical operating results and expectations of future earnings and taxable income. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Stock Based Employee Compensation Awards

SFAS No. 123, “Accounting for the Awards of Stock-Based Compensation to Employees” encourages, but does not require companies to record compensation cost for stock-based compensation plans at fair value. The Company has adopted the disclosure requirements of SFAS No. 123, which involves pro forma disclosure of net income under SFAS No. 123, detailed descriptions of plan terms and assumptions used in valuing stock option grants. The Company has chosen to continue to account for stock-based employee compensation awards in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”.

Impact Of Recently Issued Accounting Standards

2. INVENTORIES:

Inventories consist of the following (in thousands):

	March 29,		March 30,
	2003		2002

Raw materials and component parts	$	4,094	$	4,503
Work in process	1,080		1,513

	$	5,174	$	6,016

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following (in thousands):

	March 29,			March 30,
	2003			2002

Land	$	4,017		$	4,017
Buildings and improvements	9,458			9,938
Furniture, fixtures and equipment	26,661			26,254

	40,136			40,209
Less accumulated depreciation	(17,858		)	(15,314		)
	$	22,278		$	24,895

Equipment acquired under capitalized leases is included in the table above. The cost of leased equipment was $8,836,000 (2003) and $10,431,000 (2002). The accumulated amortization was $2,651,000 (2003) and $2,237,000 (2002).

The Company recognized a $0.5 million write-down in the fair value of one of its properties in the second quarter of Fiscal 2003. The vacant property located in Avon, Massachusetts had been held in anticipation of potential future use as a manufacturing facility. In September 2002, the Board authorized management to pursue selling the property. Based on recent market activity and management’s best estimate, the fair value of the property was less than the current book value and required a corresponding write-down to properly reflect its estimated fair market value.

4. ACCRUED LIABILITIES

Accured liabilities consist of the following (in thousands):

	March 29,		March 30,
	2003		2002

Accrued compensation	$	1,747	$	2,689
Accrued interest	3,251		3,251
Accrued other	1,469		1,781

	$	6,467	$	7,721

5. LONG-TERM DEBT:

Long-term debt consists of the following (in thousands):

	March 29,		March 30,
	2003		2002
10 ¾% Senior Subordinated Notes - interest payable semi-annually; due May 15, 2007	$	79,785	$	79,785

Term loans on land, building and improvements - 8% interest payable monthly; due May 2008	2,763		2,762

Capital lease obligations (interest rates ranging between 6.36% and 9.63%)	4,064		6,189

	86,612		88,736
Less current portion	1,779		2,109

	$	84,833	$	86,627

On May 6, 1997, the Company issued $90,000,000 in principal amount of 10 ¾% Senior Subordinated Notes (“Notes”) due in May 2007 and used the proceeds of such issuance to refinance existing debt. In issuing the Notes, the Company incurred $3,870,000 in deferred financing costs. These costs are being amortized using the straight-line method (which approximates the effective interest method) over the term of the respective Notes. At March 29, 2003, the unamortized deferred financing cost was $1,394,000. The Notes are redeemable at the option of the Company commencing on May 15 of the year set forth at the following redemption prices: 105.375% (2002), 103.583% (2003), 101.792% (2004) and 100% (2005 and thereafter).

During fiscal year 2001, the Company purchased for retirement $10.2 million face value of the Notes for $4.6 million in cash. The transaction resulted in an extraordinary gain on the early retirement of debt of $3.2 million, net of taxes of $2.1 million.

Minimum payments due under long-term debt as of March 29, 2003 are as follows (in thousands):

	Capitalized Leases
			Less
Fiscal	Total		Interest		Net		Other
Year	Obligation		Portion		Amount		Debt		Total
2004	$	2,039	$	260	$	1,779	$	—	$	1,779
2005	1,657		125		1,532		—		1,532
2006	732		29		703		—		703
2007	51		1		50		—		50
2008							79,785		79,785
2009 and thereafter							2,763		2,763
	$	4,479	$	415	$	4,064	$	82,548	$	86,612

The fair value of the 10 ¾% Senior Subordinated Notes (“Notes”) may vary from time to time based on Company specific factors and other market related factors external to the Company. Presently, the Company is unaware of any recent trading activity or trade prices, however, the Company believes the fair value of the Notes may be significantly less than the carrying value. This belief is based upon the current market conditions in the high-yield bond market, the recent losses incurred by the Company and the Company’s knowledge of the past limited trading activity in the Notes including the Company’s repurchase of Notes in fiscal 2001. Further, continued poor operating performance by the Company may negatively impact the credit quality of the Notes, which may have a negative impact on the fair value of the Notes. Although the Company believes that the fair value of the Notes may be significantly less than the carrying value, settlement of the Notes at less than the carrying amount may not be possible or may not be a prudent management decision.

6. REVOLVING CREDIT FACILITY:

7. TAXES ON EARNINGS:

The components of income tax expense (benefit) before extraordinary item consist of the following

(in thousands):

	2003			2002		2001
Current:
Federal	$	(2,915	)	$	749	$	1,190
State	(35		)	53		163
	(2,950)			802		1,353

Deferred:
Federal	1,711			751		1,378
State	348			152		244
	2,059			903		1,622

	$	(891)		$	1,705	$	2,975

The Company’s effective tax rate differs from the statutory federal income tax rate as follows:

	2003		2002		2001

Tax provision (benefit) at the statutory rate	(34.0	)%	34.0	%	34.0	%
Valuation allowance	22.6	%	—		—
Nondeductible expenses	0.1	%	1.5	%	0.7	%
State taxes, net of federal benefit	0.1	%	2.8	%	1.6	%
Other	(0.2	)%	(3.4	)%	(2.2	)%

	(11.4	)%	34.9	%	34.1	%

The components of the net deferred taxes are as follows (in thousands):

	March 29,			March 30,
	2003			2002
Deferred Tax Assets:
Environmental liabilities	$	2,980		$	3,270
Accrued vacation and other	566			461
	3,546			3,731
Deferred Tax Liabilities:
Depreciation and other	(1,787		)	(1,647		)

Deferred Tax Asset, net	1,759			2,084

Valuation allowance	(1,759		)	—

Deferred Tax Asset, net	$	—		$	2,084

During Fiscal 2003, the Company recorded a full valuation allowance against its deferred tax assets, as it was determined that it was more likely than not that they will not be realized.

8. CAPITAL STOCK:

The Company is authorized to issue an aggregate of 550,000 shares of common stock. These shares may be issued in four different classes (A, B, C or D shares) which differ only in voting rights per share as follows:

		Voting Rights
Class		Per Share
A		1
B		1
C		None
D		10

During fiscal year 2001, the Company sold 2,450 shares of Class A common stock to the Company’s Chairman for $50,000. In conjunction with this transaction, the Company recorded non-cash compensation of $76,000 during fiscal year 2001. The changes in each class of common shares for each of the three years in the period ended March 29, 2003 are as follows (in thousands):

	Class of Common Stock
	A			B			C			D			Total
		Par			Par			Par			Par			Par
	Shares	Value		Shares	Value		Shares	Value		Shares	Value		Shares	Value

Balance - April 1, 2000	103	$	10	27	$	3	4	$	1	1	$	—	135	$	14
Sale of Stock (2001)	3	—		—	—		—	—		—	—		3	—

Balance - March 29, 2003	106	$	10	27	$	3	4	$	1	1	$	—	138	$	14

The remaining 412,055 shares are undesignated as to class.

In February 1997, the Company adopted a stock option plan (the “Option Plan”) which provides for the grant to employees and directors, from time to time, of non-qualified stock options to purchase up to an aggregate of 17,990 shares of common stock at exercise prices to be determined by the Board of Directors. The Option Plan provides for the grant of management options to purchase 5,485 shares of common stock (the “Management Options”), management performance options to purchase 10,870 shares of common stock (the “Management Performance Options”), director options to purchase 515 shares of common stock (the “Director Options”) and director performance options to purchase 1,120 shares of common stock (the “Director Performance Options”). The Management Options and Director Options are subject to a vesting schedule that generally provides for each series of options to vest 20% per year over five years if the Company attains specified annual or cumulative earnings targets as defined in the Option Plan. The Management Performance Options and Director Performance Options are subject to a vesting schedule based on a change in control in which the investor group realizes specified annual rates of return on its equity investment in the Company as defined in the Option Plan. All options are exercisable over a period of 10 years and will automatically vest on the seventh anniversary of the date on which the Option Plan was adopted, regardless of whether the performance criteria are achieved. As of March 29, 2003, 15,815 options have been granted under the Option Plan which entitles the holders to purchase upon vesting 15,815 shares of common stock at an exercise price of $370.49 per share.

The Company granted options to purchase 3,000 and 2,500 shares of common stock during fiscal years 2001 and 2000, respectively, with an exercise price of $370 per share (or higher), which is equal to (or above) the fair value of common stock at the date of grant, except for 1,000 options in fiscal year 2000 with an exercise price below estimated fair market value. Such difference will be recognized as additional compensation expense on a straight line basis over the vesting period of the underlying options. During fiscal year 2002 and 2001, the Company recorded non-cash compensation of $17,000 related to these options.

The weighted average fair value of each option granted was estimated on the date of grant to be approximately $85 to $100 using the minimum value method with the following assumptions (i) risk-free interest rate of 5.32% and 6.38% for fiscal 2001 and 2000, respectively, (ii) expected option life of 5 years, (iii) forfeiture rate of 0 and (iv) no expected dividends.

The following table summarizes outstanding stock options:

		Weighted
	Number	Average
	of Shares	Exercise Price

Outstanding at April 1, 2000	21,325	$	379.18
Granted	5,000	740.98
Canceled	3,435	370.49
Outstanding at March 31, 2001	22,890	459.51
Canceled	160	370.49
Outstanding at March 30, 2002	22,730	460.14
Canceled	1,415	370.49
Outstanding at March 29, 2003	21,315	$	466.09

The following table summarizes information concerning currently outstanding and exercisable stock options at March 29, 2003:

		Weighted
		Average
Exercise	Number	Remaining	Number
Price	Outstanding	Life	Exercisable

0.00	1,000	7.0	1,000
370.49	15,815	4.3	1,200
740.98	2,500	7.3	1,667
1,111.47	2,000	7.8	1,333
	21,315		5,200

The Company has adopted the disclosure only provisions of SFAS No. 123. For the years ended March 29, 2003, March 30, 2002 and March 31, 2001, had the Company recognized compensation expense in accordance with Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, net earnings (loss) would have been ($10,487,000), $2,938,000 and $8,715,000, respectively.

9. EMPLOYEE BENEFITS:

In 1993, the Company adopted the HCC Savings and Investment Plan (the “Plan”) which covers all eligible full-time employees. The Company established the Plan to meet the requirements of a qualified retirement plan pursuant to the provisions of Section 401(k) of the Internal Revenue Code. The Plan provides participants the opportunity to make tax deferred contributions to a retirement trust account in amounts up to 15% of their gross wages. The Company has elected to make matching contributions in amounts that may change from year to year. The Company contributed $543,000 (2003), $668,000 (2002), and $667,000 (2001) in matching contributions to the Plan.

10. ENVIRONMENTAL AND OTHER LIABILITIES:

Environmental and other liabilities consist of the following (in thousands):

	March 29,		March 30,
	2003		2002

Due to Selling Shareholders	$	991	$	940
Environmental Liability	7,438		8,174

	$	8,429	$	9,114

The due to Selling Shareholders represents interest earned to the benefit of the Selling Shareholders on the restricted cash account in accordance with the terms of the Recapitalization transaction in February 1997. Payment of this liability is subject to the same limitations as the Restricted Cash. (See Note 1).

In August 1994, the U.S. Environmental Protection Agency (“EPA”) identified the Company as a potentially responsible party (“PRP”) in the El Monte Operable Unit (“EMOU”) of the San Gabriel Valley Superfund Sites. In early 1995, the Company and the EPA executed an Administrative Consent Order which requires the Company and other PRP’s to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the EMOU. The RI/FS was completed in 1999 and the EPA issued an interim record of decision. In addition, the Company’s facility in Avon, Massachusetts is subject to Massachusetts “Chapter 21E”, the State’s hazardous site clean-up program. Uncertainty as to (a) the extent to which the Company caused, if at all, the conditions being investigated, (b) the extent of environmental contamination and risks, (c) the applicability of changing and complex environmental laws (d) the number and financial viability of other PRP’s, (e) the stage of the investigation and/or remediation, (f) the unpredictability of investigation and/or remediation costs (including as to when they will be incurred), (g) applicable clean-up standards, (h) the remediation (if any) that will ultimately be required, and (i) available technology make it difficult to assess the likelihood and scope of further investigation or remediation activities or to estimate the future costs of such activities if undertaken. In addition, liability under CERCLA is joint and several, and any potential inability of other PRP’s to pay their pro rata share of the environmental remediation costs may result in the Company being required to bear costs in excess of its pro rata share.

projected costs to complete the required remediation, the expected timeframe required to complete the remediation, the required standard of clean up to be required by the regulatory agencies and the ultimate number and financial viability of the Potentially Responsible Parties.

Currently at the Avon site, a remediation system has been installed and has been operational for several years. Progress in the remediation is monitored regularly to assess the effectiveness of the system and to provide a basis for periodic reporting to the Massachusetts Department of Environmental Protection.

The EPA has selected a remediation plan for the EMOU and has required the PRP’s to submit a plan. The Company is currently negotiating with the EPA and other PRP’s to attempt to develop an operating plan and financial allocation to share the cost of the required remediation. There is no assurance that such negotiations will be successful at reaching an agreement.

11. COMMITMENTS AND CONTINGENCIES

12. RELATED PARTY TRANSACTIONS:

The Company pays an annual management fee of $125,000 plus expenses to Windward Capital Partners (a member of the investor group). The total annual management fee and expenses paid to Windward Capital Partners was $143,000, $155,000, and $143,000 for the fiscal years ended March 29, 2003, March 30, 2002, and March 31, 2001, respectively.

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
	(In thousands, except per share data)

2003
Net sales	$	10,591		$	10,004		$	9,678		$	10,814
Gross profit	1,994			1,927			1,878			2,208
Net Loss	(1,121		)	(5,319		)	(1,263		)	(2,761		)

2002
Net sales	$	18,790		$	18,358		$	14,394		$	12,665
Gross profit	6,207			6,039			4,555			4,128
Net Income	1,140			1,150			543			353

2001
Net sales	$	18,517		$	20,211		$	21,158		$	20,653
Gross profit	6,157			7,252			7,129			6,596
Net Income	914			4,622			1,488			1,925

HCC INDUSTRIES INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

			Additions—
	Balance		Charged		Deductions—
	at		to Costs		Uncollectible		Balance
	Beginning		and		Accounts		at End
	of Year		Expenses		Write Offs		of Year

2003
Allowance for doubtful accounts	$	70	$	8	$	8	$	70

Tax Valuation Allowance	$	—	$	1,759	$	—	$	1,759

2002
Allowance for doubtful accounts	$	61	$	40	$	31	$	70

2001
Allowance for doubtful accounts	$	51	$	81	$	71	$	61

Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

PART III

Item 10 — Directors and Executive Officers for the Registrant

Management

The following table sets forth certain information concerning the directors and executive officers of the Company. Each director is elected for a one (1) year term or until such person’s successor is duly elected and qualified.

Name	Age	Position
Richard Ferraid	47	Director, Chairman, President and CEO of HCC
Christopher H. Bateman	51	Director, Vice President and Chief Financial Officer of HCC
D. Thomas Divird	61	Director of HCC
Andy Goldfarb	55	Director of HCC
John M. Leonis	69	Director of HCC
Robert H. Rau	66	Director of HCC
Thomas J. Sikorski	42	Director of HCC
Gary L. Swenson	65	Director of HCC

Mr. Ferraid joined the Company in 1992 and currently serves as the Chairman, President and Chief Executive Officer of HCC. Prior to becoming the President and CEO of HCC in March 2000, he served in various capacities including President of Glasseal from 1994-2000. Mr. Ferraid became a director of the Company in February 1997 following the consummation of the Recapitalization. Mr. Ferraid previously worked at Electrical Industries, a competitor of the Company. Mr. Ferraid has over 20 years of experience in the GTMS industry.

Mr. Bateman joined the Company in 1986 and has served in various capacities. He currently serves as Vice President, Secretary and Chief Financial Officer of HCC. Mr. Bateman has been a director of the Company since 1989. Prior to joining HCC, Mr. Bateman worked for Touche Ross & Co. from 1978 through 1986. He currently serves as Chairman of the Board of Directors of Methodist Hospital Foundation, a non-profit foundation.

Mr. Divird was elected a director of HCC in May 2003. Currently, Mr. Divird is Chairman and Chief Executive Officer of Pressure Systems, Inc. Previously, Mr. Divird served as CEO of Coating Technologies International, Inc. from March 1996 to April 1999. During the prior five years, Mr. Divird served as a general management and financial consultant with several firms including the position of interim CEO at Meyer Sound Systems and interim CFO at U. S. Leisure, Inc. From 1981 to 1990, Mr. Divird held the position of CFO at Hexcel Corporation. Mr. Divird currently serves on the Board of Directors of two other companies — Pressure Systems, Inc. and VBS Industries, Inc. Mr. Divird holds a BS degree in Industrial Engineering from California State Polytechnic University, San Luis Obispo, CA.

Mr. Goldfarb retired as Chairman, Chief Executive Officer and President of HCC in January 2000 after having served in various capacities since 1976. Mr. Goldfarb has been a director of the Company since 1979 and continues to serve the Company in that role. He currently serves on the Board of Directors of Safety Components International.

Mr. Leonis was elected a director of HCC in July 1997. Mr. Leonis retired as Chairman of the Board of Directors of Litton Industries, Inc. in April 1999. Mr. Leonis worked at Litton Industries in various capacities for over 36 years.

Mr. Rau was elected a director of HCC in July 1998. Mr. Rau retired December 31, 1998 as President of the Aerostructures Group of The Goodrich Company. Prior to its merger with Goodrich, Mr. Rau was President and Chief Executive Officer of Rohr, Inc. from 1993 to 1997. Before joining Rohr, he was an Executive Vice President of Parker Hannifin Corporation and President of its Aerospace Sector. In addition, Mr. Rau is a past member of the Board of Governors of the Aerospace Industries Association, a past Chairman of the General Aviation Manufacturers Association, a member of the Board of Directors of Goodrich Aerospace Europe, Innovative Solutions and Support Corp., and Chairman of the International Advisory Panel of Singapore Aerospace.

Mr. Sikorski was elected a director of HCC in February 1997 following the consummation of the Recapitalization. Mr. Sikorski is currently a Managing Director of First Reserve Corporation. Mr. Sikorski had been a Managing Director of Windward Capital Partners, L.P. since its founding in 1994 until May 2002. Prior to joining Windward Capital Partners, L.P., Mr. Sikorski was Director of MetLife Private Equity Investments from 1992 to 1994 and prior to that was a Vice President in the Leveraged Buyout Group at the First Boston Corporation from 1986 to 1992. Mr. Sikorski currently serves on the Board of Directors of Aquilex Services, Inc., Palace Entertainment, Inc. and Quanta Services, Inc. Mr. Sikorski holds an undergraduate degree Magna Cum Laude from Harvard College and an MBA from the Stanford Business School. Mr. Sikorski is Mr. Swenson’s son-in-law.

Mr. Swenson was elected a director of HCC in February 1997 following the consummation of the Recapitalization. Mr. Swenson has been President and Senior Managing Director of Windward Capital Partners, L.P. since it’s founding in 1994, and was a Managing Director of CS First Boston Corporation from 1974 to 1994. Mr. Swenson currently serves on the Board of Directors of Meridian Automotive Systems, Inc. Mr. Swenson is Mr. Sikorski’s father-in-law.

Item 11 — Executive Compensation

The following table sets forth the total value of compensation received by the Chief Executive Officer and the two most highly compensated executive officers, other than the Chief Executive Officer, who served as executive officers of the Company as of March 29, 2003, (collectively with the Chief Executive Officer, the “Named Executive Officers”) for services rendered in all capacities to the Company for the year ended March 29, 2003.

Summary Compensation Table (1)

Name and Principal Position	Fiscal Year							Long-Term Compensation - Number of Securities Underlying Options		All Other Compensation(2)



		Annual Compensation
		Salary		Bonus

Richard Ferraid	2003	$	364,000	$		109,679		$	17,000	$	18,360
Chairman, Chief Executive Officer	2002	$	364,000	$		497,546	(4)	$	17,000	$	16,160
and President	2001	$	350,000	$		526,968	(3)	$	17,000	$	14,790

Christopher Bateman	2003	$	220,480	$	66,434			—		$	18,552
Chief Financial Officer and	2002	$	220,480	$	340,135		(4)	—		$	16,160
Vice President	2001	$	212,496	$	476,968		(3)	—		$	15,360

Dennis Moore	2003	$	124,415	$		37,488		—		$	19,026
Vice President	2002	$	124,415	$		187,542	(4)	—		$	16,826
	2001	$	119,910	$		257,858	(3)	—		$	15,922

(1) None of the executive officers has received perquisites the value of which exceeded the lesser of $50,000 or 10% of the salary and bonus of such executive officer.

(2) For 2003 all other compensation included the following amounts: Mr. Ferraid, $9,000 for Company contributions into the Company’s 401(k) plan, $9,000 for automobile allowance and $360 for allocated life insurance; Mr. Bateman, $9,000 for Company contributions into the Company’s 401(k) plan, $9,000 for automobile allowance and $552 for allocated life insurance; Mr. Moore, $9,000 of Company contributions into the Company’s 401(k) plan, $9,000 for automobile allowance and $1,026 for allocated life insurance;

(3) Includes payment of deferred compensation earned in fiscal 1998 under the terms of the Contingent Bonus Plan as follows: Mr. Ferraid $475,000; Mr. Bateman $425,000 and Mr. Moore $228,537.

(4) Includes payment of deferred compensation earned in fiscal 1999 under the terms of the Contingent Bonus Plan as follows: Mr. Ferraid $170,301; Mr. Bateman $141,918 and Mr. Moore $75,690.

Grants of Stock Options

Options on 3,000 shares were granted to Mr. Ferraid during the fiscal year ended March 31, 2001. These options vest at 1/3 per year for calendar years 2001, 2002 and 2003. Options on 2,500 shares were granted to Mr. Ferraid during the fiscal year ended April 1, 2000. The options vest at 1/3 per year for fiscal years 2001, 2002 and 2003. These options are not part of the Option Plan as discussed below.

The following table sets forth information concerning the value of unexercised options held by the Named Executive Officers. The Named Executive Officers did not exercise any options during the fiscal year ended March 29, 2003.

	Options Outstanding at March 29, 2003
	Number of Shares	Value of Unexercised
	Under Option -	Options -
	Exercisable/	Exercisable/
Name	Unexercisable	Unexercisable(1)

Richard Ferraid	4,244 / 4,846	$	370,490/$-
Christopher Bateman	244 / 2,951	$	- / $-
Dennis Moore	71/ 1,074	$	- / $-

(1) There is no public market for the Company’s stock. The fair market value of a share of Common Stock is assumed to be equal to the exercise price per share of the options that were granted under the Option Plan ($370.49 per share).

Employment Agreements

In March 2000, Richard Ferraid entered into an employment agreement with HCC (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Ferraid will be employed by HCC until March 31, 2004 provided that HCC may terminate Mr. Ferraid by reason of disability, death or for good cause (as defined in the Employment Agreement). Upon termination by the Company for reasons other than death, disability or good cause, Mr. Ferraid will be entitled to receive salary and benefits for a period of 24 months. The agreement provides for a base salary to be determined in accordance with HCC’s policies and an annual bonus contingent on certain performance-based criteria. Pursuant to the terms of the agreement, Mr. Ferraid, during the term of the Employment Agreement and a one year period thereafter, may not solicit customers of the Company, engage in business with any competing entity or induce any other employee of the Company to leave his or her employment with the Company. On December 31, 2000, Mr. Ferraid’s employment agreement was amended to reflect the additional stock options granted to him.

Mr. Rau served as the Chief Executive Officer (CEO) of the Company from January 3, 2000 through March 8, 2000 (when Mr. Ferraid was named CEO) and agreed to serve as the Non-Executive Chairman of the Company for a one year period ending December 31, 2000. Mr. Rau’s compensation for the period was $450,000. Mr. Rau was also given an option to purchase 2,450 shares of HCC stock at a price of $50,000, which purchase was made in June 2000.

Option Plan

In connection with the Recapitalization, HCC adopted the Option Plan which provides for the grant to employees from time to time of non-qualified stock options to purchase up to an aggregate of 17,990 shares of Common Stock at exercise prices to be determined by the Board of Directors. The Option Plan provides for the grant of management options to purchase 5,485 shares of Common Stock (the “Management Options”), management performance options to purchase 10,870 shares of Common Stock (the “Management Performance Options”), director options to non-affiliates of Windward to purchase 515 shares of Common Stock (the “Director Options”), and director performance options to non-affiliates of Windward to purchase 1,120 shares of Common Stock (the “Director Performance Options”). The Management Options and Director Options were granted subject to an EBITDA (as defined in the Option Plan) vesting schedule that provides for 20% of each series of options to vest in each of fiscal year 1998 through fiscal year 2002 if the Company attains a specified target for each such year. The Options will also vest if certain cumulative EBITDA targets are achieved after certain multiple year periods or, so long as the Windward Group realizes specified rates of return on its aggregate equity investment, upon a Change of Control (as defined in the Option Plan). In

addition, regardless of whether the performance criteria are achieved, all Options including, the performance-based Options, will vest automatically on the seventh anniversary of the date of grant. To date, only 20% of stock options related to the Management Options and Director Options have vested.

The Management Performance Options and Director Performance Options were granted subject to a vesting schedule providing for approximately 50% of each series of options to vest upon a Change of Control in which the Windward Group realizes a 30% compounded annual rate of return on its aggregate equity investment in the Company and the remaining options vesting upon a Change of Control in which Windward Group realizes a 40% compounded annual rate of return on its aggregate equity investment in the Company.

As of March 29, 2003, 15,815 options have been granted under the Option Plan which entitle the holders to purchase upon vesting 15,815 shares of Common Stock at an exercise price of $370.49 per share. An additional 2,175 options may be granted under the Option Plan.

Director Compensation

Each of Messrs. Leonis, Rau and Divird receive an annual fee of $20,000. Messrs. Leonis and Rau were granted 470 stock options each of which 150 stock options each are subject to a vesting schedule that generally provides for each option to vest 20% per year over five years (25% over four years for Mr. Rau) commencing on the first anniversary of the date of grant if the Company attains specified annual or cumulative earnings targets set forth in the Option Plan and the remaining options vest upon a change in control in which the Windward Group realized specified annual rates of return on its equity investment in the Company as defined in the Option Plan and consistent with the terms of the management stock option plan. All options automatically vest on the seventh anniversary of the date of grant regardless of whether the performance criteria are achieved. All options have an exercise price equal to the fair value of the common stock at the date of grant ($370.49 per share).

Compensation Committee Interlocks and Insider Participation

In fiscal 2003, the Company had no compensation committee and compensation matters were handled either by Mr. Ferraid or by the Board of Directors.

Item 12 — Security Ownership of Certain Beneficial Owners and Management

The following table lists all shares of HCC’s Common Stock as of March 29, 2003, beneficially owned by each director of HCC, each executive officer of HCC and each person known by the Company to beneficially own more than 5% of such outstanding shares of Common Stock at such date. The table also reflects the percentage of the shares owned beneficially by all executive officers and directors of HCC as a group. Share numbers and percentages in the table are rounded to the nearest whole share. As of March 29, 2003 there were 137,945 shares of HCC Common Stock outstanding.

Name and Address	Number of Shares of
of Beneficial Owners	Common Stock*	Percent

Windward/Park HCC, L.L.C.(a)(b)	53,836	39.0	%
Windward/Merban, L.P.(a)(b)	10,767	7.8	%
Windward/Merchant, L.P.(a)(b)	21,535	15.6	%
Windward Capital Associates, L.P.(a)(b)(c)	87,721	63.6	%
Windward Capital Associates, Inc.(b)(c)	87,721	63.6	%
Gary Swenson(b)(d)(e)	87,721	63.6	%
Thomas J. Sikorski(b)(e)	—	**
John M. Leonis(h)	270	0.2	%
Robert Rau(g)(h)	2,720	2.0	%
Andrew Goldfarb(h)(k)	30,453	22.1	%
Christopher Bateman(h)(i)(j)	9,173	6.6	%
Richard Ferraid(h)(j)	3,558	2.6	%

All directors and executive officers of the Company
as a group (7 persons)(j)(l)	46,174	33.5	%

* HCC’s common equity is divided into four separate classes of Common stock, par value $.10 per share: (i) Class A Common Stock with one vote per share, (ii) Class B Common Stock with one vote per share, (iii) Class C Common Stock with no voting rights, except as required by applicable state law and (iv) Class D Common Stock with 10 votes per share. Except for voting rights, all the common equity of the Company have identical economic terms. Other than Windward/Merban, L.P. and Windward/Merchant, L.P., all other stockholders of HCC own Class A Common Stock. See note (a) below.

** Less than 1.0%

(a) Windward/Park HCC, L.L.C. owns 53,836 shares of Class A Common Stock, Windward/Merban L.P. owns 6,451 shares of Class B Common Stock and 4,316 shares of Class C Common Stock, Windward/Merchant, L.P. owns 21,055 shares of Class B Common Stock and 480 shares of Class D Common Stock and Windward Capital Associates, L.P. owns 1,583 shares of Class A Common Stock. The Windward Group due to their common control may be deemed to beneficially own each other’s shares, but each disclaims such beneficial ownership. The Windward Group consists of Windward, Windward/Merchant, L.P., the partners of which are Windward and an affiliate of Credit Suisse First Boston Corporation, Windward/Merban, L.P., the partners of which are Windward and an affiliate of Credit Suisse First Boston Corporation and Windward/Park HCC, LLC, the members of which are Windward and MetLife. Pursuant to a set of program agreements, the Windward Group, along with certain other entities, invests in merchant banking investments organized and managed by Windward and its affiliates. The program agreements govern the relationship among the Windward Group and provide for, among other things, procedures for investments, allocations of income and loss, distributions of funds, transfers of interests between and among the partners or members or third parties, provisions relating to the activities of the general partner or manager, including in respect of fees, powers and limitations and removal by the other partners or members, and procedures for the limited partners or non-managing members to exercise voting and management control of the investments. Windward and the other members of the Windward Group have reached agreement concerning an early termination of the period during which they may make future investments under their program agreements. Windward and the other members have informed the Company that such termination will not have any effect on their investment in, or the management or control of, the Company.

(b) The business address for such person(s) is c/o Windward Capital Partners, L.P., 1177 Avenue of the Americas, 42nd Floor, New York, New York 10036.

(c) Windward Capital Associates, L.P. may be deemed to share beneficial ownership of the Common Stock owned of record by the Windward Group, by virtue of its status as the general partner of Windward/Merchant, L.P., Windward/Merban, L.P. and the Managing Member of Windward/Park HCC, L.L.C., but disclaims such beneficial ownership. Windward Capital Associates, Inc. may be deemed to share beneficial ownership of shares of Common Stock owned of record by the Windward Group by virtue of its status as the general partner of Windward Capital Associates, L.P., but disclaims such beneficial ownership.

(d) Mr. Swenson may be deemed to share beneficial ownership of the shares of Common Stock owned of record by the Windward Group, by virtue of his status as the sole stockholder of Windward Capital Associates, Inc., the general partner of Windward Capital Associates, L.P. Mr. Swenson disclaims such beneficial ownership. Windward Capital Associates, L.P. is the general partner of Windward/Merchant, L.P., Windward/Merban, L.P. and the Managing Member of Windward/Park HCC, L.L.C.

(e) Messrs. Swenson and Sikorski are limited partners of Windward Capital Associates, L.P. None of Messrs. Swenson and Sikorski, in their capacities as limited partners of Windward Capital Associates, L.P., has or shares voting or investment power with Windward Capital Associates, L.P. with respect to the Common Stock owned by Windward Capital Associates, L.P.

(f) Includes 270 shares of Common Stock owned by the Leonis Family 1989 Inter Vivos Family Trust dated March 6, 1989.

(g) Includes 2,720 shares of Common Stock owned by the Rau Family Trust dated December 14, 1984.

(h) The business address of such person(s) is c/o HCC Industries, Inc., 4232 Temple City Blvd., Rosemead, CA 91770-1592.

(i) Includes 9,173 shares of Common Stock owned by the Bateman Rillorta Family Trust 2000 dated December 18, 2000.

(j) Excludes outstanding options to purchase shares of Common Stock of which 244 and 4,244 are exercisable at March 29, 2003 for Mr. Bateman and Mr. Ferraid, respectively.

(k) Includes 27,753 shares of Common Stock owned by the Andrew and Denise Goldfarb Revocable Trust of 1995. Also includes 1,350 shares of Common Stock owned by the Jessica Anne Goldfarb Irrevocable Trust and the 1,350 shares of Common Stock owned by the Rebecca Goldfarb Irrevocable Trust of which Mr. Goldfarb’s brother is the trustee. Mr. Goldfarb disclaims beneficial ownership of the shares of Common Stock owned by such trusts.

(l) Excludes shares of Common Stock referred to in notes (d) and (e) above.

The following table sets forth, as of March 29, 2003, information as to all equity compensation plans of the Company including information as to (a) the number of shares of Common Stock to be issued upon exercise of all outstanding options, warrants and rights, (b) the weighted average exercise price of all outstanding options, warrants and rights and (c) the number of shares of the Common Stock available for future issuance under equity compensation plans, other than shares to be issued upon exercise of all outstanding options, warrants and rights. There are no equity compensation plans that have been approved by the Company’s shareholders. A description of the Stock Option Plan is set forth in Item 11 — Executive Compensation.

Equity Compensation Plan Information
	(a)	(b)	(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights.	Weighted-average exercise price of outstanding options, warrants and rights.	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a).
Equity compensation plans approved by security holders.	0	0	0
Equity compensation plans not approved by security holders	21,315	$466.09	2,175

Item 13 — Certain Relationships and Related Transactions

The Company pays an annual management fee of $125,000 plus expenses to Windward Capital Partners (a member of the investor group). The total annual management fee and expenses paid to Windward Capital Partners was $143.000, $155,000 and $143,000 for the fiscal years ended March 29, 2003, March 30, 2002 and March 31, 2001, respectively.

Item 14 — Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13A-14 (c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s reports filed or submitted under the Exchange Act.

Changes in Internal Controls.

Since the Evaluation Date, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such controls.

PART IV

Item 15 — Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following documents are filed as part of this report:

(a)(1) Financial Statements

Report of Independent Auditors

Consolidated Balance Sheets at March 29, 2003 and March 30, 2002

Consolidated Statements of Operations for each of the three years ended

March 29, 2003, March 30, 2002 and March 31, 2001.

Consolidated Statements of Stockholders’ Equity for each of the three years

March 29, 2003, March 30, 2002 and March 31, 2001.

Consolidated Statements of Cash Flows for each of the three years ended

March 29, 2003, March 30, 2002 and March 31, 2001.

Notes to Financial Statements

(a)(2) Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the applicable instructions or the required information is included in the Consolidated Financial Statements and Notes thereto, or they are inapplicable and are therefore omitted.

The guarantee obligations of the Subsidiary Guarantors (which are all direct or indirect wholly owned subsidiaries of the Company) are full, unconditional and joint and several. The aggregate assets, liabilities, earnings, and equity of the Subsidiary Guarantors are substantially equivalent to the total assets, liabilities, earnings and equity of HCC Industries Inc. and its subsidiaries on a consolidated basis. Separate financial statements of the Subsidiary Guarantors are not included in this Form 10-K because management of the Company has determined that separate financial statements of the Subsidiary Guarantors would not be material to investors.

(a)(3) Exhibits

Regulation S-K Exhibit

Table Reference

2. Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession.

2.1 First Amendment and Restatement of the Stock Purchase and Sale Agreement, dated as of December 23, 1996, by and among the Company, the Windward Group, MetLife and the

Sellers named therein.(1)

2.3 Escrow Agreement, dated as of February 14, 1997, by and among the Company, Windward Capital Associates L.P., the Sellers named therein and U. S. Trust Company of California, N.A., as escrow agent.(1)

3. Certificate of Incorporation and By-Laws.

3.1 Amended and Restated Certificate of Incorporation of the Company.(1)

3.2 Amended and Restated By-Laws of the Company.(1)

3.3 Certificate of Incorporation of Hermetic Seal Corporation.(1)

3.4 By-Laws of Hermetic Seal Corporation.(1)

3.5 Certificate of Incorporation of Glasseal Products, Inc.(1)

3.6 By-Laws of Glasseal Products, Inc.(1)

3.7 Certificate of Incorporation of Sealtron, Inc.(1)

3.8 By-Laws of Sealtron, Inc.(1)

3.9 Certificate of Incorporation of Sealtron Acquisition Corp.(1)

3.10 By-Laws of Sealtron Acquisition Corp.(1)

3.11 Articles of Incorporation of HCC Industries International.(1)

3.12 By-Laws of HCC Industries International.(1)

3.13 Declaration of Trust of Norfolk Avon Realty Trust.(1)

3.14 Certificate of Incorporation of HCC Machining Company, Inc.(4)

3.15 By-Laws of HCC Machining Company, Inc.(4)

4. Instruments Defining the Right of Security Holders, including Indentures.

4.1 Indenture, dated as of May 6, 1997 (the “Indenture”), among the Company, the Subsidiary Guarantors and IBJ Schroder Bank & Trust Company, as Trustee, relating to the 10¾% Senior Subordinated Notes due 2007 and the 10¾% Senior Subordinated Exchange Notes due 2007.(1)

4.2 Form of 10¾% Senior Subordinated Exchange Notes due 2007.(1)

4.4 First Supplemental Indenture, dated as of October 24, 1997, to the Indenture.(1)

9. Voting Trust Agreement

9.1 Stockholders Agreement, dated as of February 14, 1997, by and among the Company, the

Windward Group and the Stockholders named therein.(1)

9.1.1 Amended and Restated Stockholders Agreement, dated February 14, 1997 and amended as of September 12, 2000, by and among the Company, the Windward Group and the Stockholders named therein.

10. Material Contracts.

10.3 HCC Industries Inc. Stock Option Plan, dated February 14, 1997.(1)

10.4 Form of Stock Option Agreement (included in Exhibit 10.3).(1)

10.8.1 Employment Agreement dated as of April 3, 2000 by and between the Company and Christopher H. Bateman(2)

10.9.2 Amended and Restated Employment Agreement dated as of December 31, 2000, by and between the Company and Richard L. Ferraid.(3)

10.10 Financial Advisory Services Agreement, dated as of February 14, 1997, by and between Windward Capital Partners, L.P. and the Company.(1)

10.11 Letter Agreement, dated February 14, 1997 from the Company to Windward Capital Partners, L.P., related to fees.(1)

10.12 Credit Agreement dated as of June 18, 2003, between HCC Industries Inc. and CIT Business Credit.

12. Ratio of Earnings to Fixed Charges.

12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Company.

21. Subsidiaries

21.1 Subsidiaries of the Company.(1)

99.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________

(1) Previously filed under the same exhibit number as an exhibit to Registration Statement on Form S-4 (File No. 333-32207) and incorporated herein by reference.

(2) Previously filed under the same exhibit number as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2000 and incorporated herein by reference.

(3) Previously filed under the same exhibit number as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2001 and incorporated herein by reference.

(4) Previously filed under the same exhibit number as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2002 and incorporated herein by reference.

(a)(4) Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the city of Rosemead, State of California, on June 23, 2003.

HCC INDUSTRIES INC.

By: /s/ Richard L. Ferraid

Richard L. Ferraid

President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Richard L. Ferraid	Chairman, President and Chief	June 23, 2003
Richard L. Ferraid	Executive Officer
	(Principal Executive Officer)

/s/ Christopher H. Bateman	Director, Vice President and	June 23, 2003
Christopher H. Bateman	Chief Financial Officer
	(Principal Financial/Accounting
	Officer)

/s/ D. Thomas Divird	Director	June 23, 2003
D. Thomas Divird

	Director	June 23, 2003
Andrew Goldfarb

/s/ John M. Leonis	Director	June 23, 2003
John M. Leonis

/s/ Robert H. Rau	Director	June 23, 2003
Robert H. Rau

/s/ Thomas J. Sikorski	Director	June 23, 2003
Thomas J. Sikorski

/s/ Gary L. Swenson	Director	June 23, 2003
Gary L. Swenson

CERTIFICATION

I, Richard L. Ferraid, President and Chief Executive Officer of HCC Industries Inc. certify that:

1. I have reviewed this Annual Report on Form 10-K of HCC Industries Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

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

Date: June 23, 2003	/s/	Richard L. Ferraid
	Name:	Richard L. Ferraid
	Title:	Chief Executive Officer

CERTIFICATION

I, Christopher H. Bateman, Chief Financial Officer of HCC Industries Inc. certify that:

1. I have reviewed this Annual Report on Form 10-K of HCC Industries Inc.;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: June 23, 2003	/s/	Christopher H. Bateman
	Name:	Christopher H. Bateman
	Title:	Chief Financial Officer