When we began the year, we were looking for a $9 million increase in military aftermarket revenue. As it turns out, the increase will be deferred to next year. The total for this year turned out to be $89.5 million, only $500K more than last year. We’ve mentioned in a couple previous conference calls that we believe the growth in our military aftermarket was constrained in ‘03 as a result of funding limitations in some of the depots.

The decline in commercial aircraft revenue is all the result of the reduction in sales to Boeing Commercial. Last year, we had sales of almost $60 million. This year, sales were about $38 million – a $22 million reduction. While the $38 million for ’03 is less than we’d been projecting, we think we’re getting close to the bottom in OEM sales to Boeing.

Our sales to Airbus of about $11 million were the same as last year. Our business jets revenues of $23 million were up a couple million from last year. And, our aftermarket revenues, which we had been projecting at $50 million for the year, actually came in slightly over $51 million, and about $1 million higher than last year. In terms of the commercial airplane aftermarket, we saw a peak in fiscal ’01 of $57 million. We were at $50 million in ’02 and now $51 million in ’03. So, the commercial airplane aftermarket is not getting worse and there are a lot of folks who feel that increased airplane traffic will result in a stronger aftermarket in fiscal ’04.

Aircraft margins for the year came in at 17.4%, down from last year’s record 18.2%. The fourth quarter, at 16.5%, was down slightly from the third quarter. These are very high Aircraft margins relative to our history. We used to achieve 15% to 15.5%. We’re very pleased with the margin achievements in ’02 and ’03.

Aircraft for ‘04

Ninety days ago, we forecasted our Aircraft business for fiscal ’04 at $408 million, which would be a very small increase above the $404 million that we just described for ’03. We still believe that forecast for ’04 is valid.

In the military side of the business, we expect a continuation of the fiscal ’03 levels on the Joint Strike Fighter and the F-18. There’ll be a little less business on the F-15 because we don’t expect the same level of activity from Mitsubishi. Revenues on the V-22 will be down 10% to about $27 million. You’ll recall, in ’03, we were delivering a number of replacement swashplate actuators and there’ll be less of that work in ’04. On the other hand, we are anticipating an increase in the aftermarket to about $97 million. Taken altogether, the military aircraft part of the business would be up to $273 million from $266 million in ’03.

On the other hand, the commercial part of ’04 will be down about $3 million from ’03. Boeing Commercial will be at a slightly lower level - $35 million vs. $38 million, Airbus $9 million vs. $11 million. The business jet product line would hold at about $23 million. We are now projecting the aftermarket at $53 million. This gets us to a total of $135 million, down about $3 million from fiscal ’03.

Ninety days ago, we forecasted ’04 margins of 16.2% for our Aircraft segment and we still believe that’s a reasonable projection. The ’04 mix will be slightly less favorable than ’03 and trending back to historical levels.

Space & Missiles Q4