Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today’s date, our Form 10K for the year ended September 28, 2002, and in certain of our other public filings with the SEC.


Good morning, everybody. Thanks for joining us today. This morning, we’re reporting results for the first quarter of fiscal 2003. We’ll also discuss the trends that have developed in our business and we’ll fine tune our guidance for the rest of the fiscal year.

The first quarter of ’03 was another very solid quarter. Sales of $180 million were up from $174 million a year ago, and there were some interesting mix shifts.

Earnings were on target at $9.8 million, net profit margins improved to 5.4%, and earnings per share of 64 cents were up 10% from a year ago.

You may remember that we sold 2 million shares in the middle of last year’s first quarter and, because of the averaging of shares outstanding, in that quarter we had fewer outstanding shares last year than this year. As a result, our 10% EPS increase was the result of a 19% increase in net earnings, a sizable increase on a relatively small sales increase. It came about because R&D and interest were lower as a per cent of sales this year than last and our tax rate this year is lower. The biggest change is in interest. In last year’s first quarter, we expensed $7.2 million, or 4.2% of sales. This year we’re down to $5.4 million, or 3% of sales.

Now, let me go to the segments.

Aircraft

Aircraft sales for the quarter of $93 million were up 8%, or $7 million. Of that increase, $6.5 million came in military aircraft, and all because of the start-up of the Joint Strike Fighter. That program, by itself, increased sales in the quarter by almost $9 million. We also saw a sizable increase, about $3 million, in revenues on the V-22. But that increase was offset by lower shipments this year than last on the F-18. Last year, we had a booming first quarter on the F-18 and shipped almost one-third of the year’s revenue in that quarter.

Although we’re expecting a 10% increase for the year in military aftermarket, we didn’t see any increase in the first quarter. We think this has all to do with the timing of order placement and we expect to get caught up before year-end.

Our revenues of $41.6 million in the commercial aircraft business were substantially better than we had anticipated. Aftermarket revenues in commercial were over $15 million and $4 million higher than last year’s first quarter, and almost $3 million better than we had forecasted as the run rate for the year. The strength in the aftermarket is, in part, a reflection of the fact that over half of our aftermarket revenues come from foreign airlines and the Europeans and Asians are in much better shape than the U. S. carriers. This increase offset a $4 million decline in OEM revenues to Boeing. We shipped in the quarter $12.8 million, which itself is $2 million better than our forecasted run rate for the year.