We adopted a new accounting pronouncement. It’s known as FIN 46. This is the much-heralded FASB pronouncement regarding off balance sheet activities and its adoption has no effect on cash flow measurement, other than making it more confusing to explain.

The new rules required that we put on our balance sheet the capitalized value of two old operating leases relating to our factories in Germany. We added $9.3 million of debt to our total debt figures at the end of the December quarter along with the related fixed assets. Of course, since the new treatment wasn’t effective last Fall, these figures were not in our year-end numbers ninety days ago. In order to correctly measure our cash flows, one should take the $9.3 million out of the 12/31/03 total debt of $353.6 million to get an adjusted debt of $344.3 million.

Subtracting the $19.1 million of cash that we had at 12/31 provides a net adjusted debt figure of $325.2 million. This debt number should be compared with our net debt of $179.2 million at September plus the $158 million we paid for Poly-Sci in the quarter. That sum is $337.2 million which when compared with 12/31/03 net adjusted debt of $325.2 million provides a difference of $12 million. That’s the amount by which we paid down debt in the quarter.

We expect even stronger cash flows and debt reductions in our second quarter. We’re thinking, at least, $20 million. For one thing, we’ll be getting $6 million back from Northrop relating to a working capital adjustment formula in our Poly-Sci Purchase Agreement, and we’ll get at least
$14 million from operations. For the year, we expect free cash flow to be about $50 million.

By the way, our final purchase price for Poly-Sci turns out to be $152 million after the working capital refund. If you annualize the 1st quarter EBITDA of $5.4 million for the Components Group, which is after adding back the $1.8 million write-off related to the inventory step-up, the result is $21.6 million. Our final and adjusted purchase price of $152 million is a multiple of 7 times their annualized EBITDA.

Our total and consolidated EBITDA was $30.5 for the quarter. Depreciation and amortization was
$9 million and capital expenditures were $11.2 million which includes an expansion to our facilities in Italy in the amount of $3.5 million.