Let me move now to our prospects for fiscal year ’03. Ninety days ago, we projected fiscal 2003 sales of $764 million and net earnings of $42.4 million, or $2.75 per share, a 10% increase over fiscal ’02 earnings per share. Since that time, we’ve seen some shifts in the mix, both in terms of sales and margins. But the end result is a projection of sales that’s very close, $760 million, and a confirmation of our earnings projection of $2.75 per share.

Let me go through each of the segments and relate the current outlook both to our fiscal year ’02 results and the projection we made for ’03 the last time we talked.


We are now projecting Aircraft sales for ’03 of $394 million. This is up somewhat from the $386 million we described last time. Let me describe the military and commercial components.

We now see our military aircraft revenues for ’03 at $249 million, up $46 million from our actuals in ’02. The big change, of course, is our start-up contract on the F-35. We’re projecting ’03 revenues of over $40 million compared to $11 million in ’02 – so, an increase of $29 million. But there are other big increases as well. We’re forecasting a $10 million increase in sales on the V-22. This will be, in part, a catch-up on some of the missed deliveries in fiscal ’02, but also a contract to replace swashplate actuators that we shipped earlier in the program in a configuration that has since been updated. Last year’s aftermarket revenues of $89 million were up 26% from the year previous. Nevertheless, we’re looking for another 10% increase this year, mostly the result of activity on the F-18, updating hydraulic drive units for the maneuvering leading edge, and overhauling wingfold actuation. These are firm contracts. We depend only on the ability of the Navy to pull equipment off aircraft and get it to our Company for overhaul and turnaround.

The other major increase we’ll have is on the F-15. We’ll have some increased production as a result of the Korean buy, and we also have a nice order for sub-assemblies to support the Japanese production at Mitsubishi.

Taken altogether, this is a 23% increase in military aircraft revenues, coming on the heels of a 28% increase in the year previous.

This military aircraft picture has improved some over the last 90 days. We had previously forecast $227 million. The major differences are stronger aftermarket and more revenue on the F-35, the V-22 and the F-15.

In the commercial aircraft side, we’re now projecting ’03 revenues of $145 million, an 8% decline from the $157 million of last year. The declines in both ’02 to ’03 were almost all in revenues on original equipment to Boeing. We’re now projecting $43 million for ’03 compared to $60 million in ’02. The decline in sales to Boeing is offset partly by increased revenues on business jets which are up about $5 million.

We’re projecting only a slight decline in the aftermarket, revenues of just under $50 million, which is about 6% less than the rate we’ve been running for the last six months.

The projection I’ve just described for commercial aircraft in ’03 is a reduction of $14 million from what we discussed in our last call. Taking a more conservative view of the ongoing production rate at Boeing in fiscal ’04 caused a $7 million reduction in our forecast. Boeing’s ’04 production rate will influence our level of effort in the latter part of ’03 and, therefore, the revenues we recognize. In addition, we’ve reduced our forecast for the aftermarket. We had previously based our ’03 forecast on the run rate of the third quarter of ’02. Based on our fourth quarter experience, we’ve ratcheted our ’03 forecast down to match our entire ’02 experience.