Also during the quarter, we signed a contract to re-start delivery of flight controls for the Indian Light Combat Aircraft and had sales of almost $1 million, and, on the Blackhawk helicopter, we had OEM sales of $2.7 million, up $1.3 million from last year.

The only aggravation we have in the military aircraft business is that some of the aftermarket orders that we know are coming are being delayed. Usually, these delays are the result of funding limitations. As a result, on a year-to-date basis, our military aftermarket is down $1.6 million from last year. We were looking for a $9 million increase for the year and we’re now thinking that we will see an increase, but it may be only $5 million. That $4 million shortfall from our original forecast will be picked up, though, through increased shipments to Sikorsky on the Blackhawk, and increased revenue from Boeing on the V-22. So, we still believe that our forecast of $249 million for total military aircraft is achievable.

Commercial aircraft revenues of $37 million were down almost $6 million from last year’s second quarter. The decline is all in OEM business with Boeing Commercial. Last year, we averaged $15 million per quarter for Boeing Commercial. Last year’s second quarter, though, was very strong and we had sales of $19 million. This year, we’re looking for average quarters of less than $11 million, but this latest quarter was a relatively weak $9 million. Therefore, in the quarter-to-quarter comparison, we’re down by $10 million. On the other hand, we had a pick-up of over $3 million in revenues on our business jet development programs. There were other minor shifts in the commercial product line but they had little impact on the quarter – so, on a net basis, we were down only $6 million.

The commercial airplane aftermarket of $12.6 million was actually up $400K from a year ago. Year to date, we’re at almost $28 million in commercial aftermarket. We had forecasted $50 million for the year. So, even if the SARS impact on Asian airlines knocks our run rate down by 20%, we will still make our forecast.

For the first half of ‘03, our total commercial aircraft revenues were $78 million and our projection for the year was $145 million. So, we’re still in good shape. For the Aircraft segment in total, then, we’re staying with our forecast of $394 million for the year and at the half-year point we’ve achieved 49% of that total.

Margin performance in the Aircraft segment continues to be strong. For the quarter, margins were 17.5%, up substantially from the 16.5% in the second quarter of last year. We began the year forecasting 16.4% in Aircraft for the year. Last quarter, we increased that forecast to 17% and, based on the results of the most recent quarter, it looks like we should move to an average of 17.5% for the year.

That’s some of our good news. Now, for some not-so-good news.

Space & Missiles

Before I describe what’s going on in our Space & Missiles business, I want to remind everyone that, although this is an important business for us, it is our smallest segment. In our original plan for the year it represented 13% of our total sales. Sales in this quarter of $22 million are down over $7 million from the $29 million of last year. The quarter-over-quarter decline in sales comes about in this fashion. $2.6 million is related to the completion of two sizable programs – the Crew Return Vehicle for Space Station and the gas management system for Gravity Probe B. Another $2.4 million is simply a lower level of activity in the commercial satellite business, reflecting the dearth of orders for new satellites and the inventory position of some of our major customers. The third contributor to the sales decline has to do with equipment we’re building for a couple of scientific space vehicles in Japan. (One is a lunar explorer. The other is a satellite which will monitor ozone layers and global pollution.) Both these programs are multi-million-dollar jobs. They’ve been in work for some years and they should be complete by now. But we’re still working to achieve the required performance, and the costs that we’re incurring are contract overruns and they generate no revenue.

Lastly, in the quarter, our missile business experienced a net decline of a little over $1 million despite a $2 million increase in programs associated with National Missile Defense. This increase was offset by the anticipated decline in a number of tactical missile programs, including Hellfire, TOW, and AGM-142.

All these factors taken together add up to a $7 million decline in the Space segment and get us down to a level of less than $22 million for the quarter.