Aircraft sales for the quarter, rounded to $103 million, were about one-fourth of our forecast for the year. As it turns out, military aircraft sales of $70 million were about $2 million higher than the run rate we’re projecting for the year, and commercial sales, at $33 million, were $1 million lower than the average for the year. This is typical of quarter-to-quarter variations.

Compared with a year ago, total Aircraft sales were up 10%. But military aircraft sales were way up, an increase of 35%, or $18 million. The biggest component of this increase was the F-35 program. We had a very big quarter on the F-35; revenues were $17.4 million. There’s a lot of activity underway at the moment, particularly on the part of our team partners, Parker Hannifin and Hamilton Sundstrand. Their work is invoiced to us and we, in turn, invoice it to our customer. This level of effort is not expected to sustain itself. At this point, we’ll stick with our forecast for the year of about $53 million. Those of you who follow the program are aware that there is a weight problem on the STOVL aircraft and that there will likely be a stretch of some magnitude in some, or all, of the schedules on the program. We’re due to begin safety-of-flight testing on the Air Force airplane shortly and we’re scheduled to deliver aircraft #1 flight hardware in October of this calendar year. It’s too early for us to predict how the program schedules will change and what the impact is likely to be on our workload and revenues for the fiscal year.

In the quarter, sales were up also on the F-18 by about $2 million. We’re in work on the Japanese F-2, with sales of over $1 million a quarter, and we weren’t working on that in the first quarter of last year. V-22 is up a little bit. The engine business is strong. Our aftermarket, at $20 million, was up about $700K from last year at this time. So, all in all, it was a very strong quarter for the military aircraft business.

On the commercial side, sales for the quarter of $33 million were down 21%, or almost $9 million, compared with last year. The big change, of course, was in original equipment to Boeing Commercial. Sales of $8.1 million were down from $12.8 million a year ago at this time. The first quarter of ’03 was the last really strong quarter for deliveries to Boeing Commercial. During the rest of ’03, our sales fluctuated between $7 million and $9 million per quarter. The $8.1 million this quarter is close to the average that we expect for this year. Sales to Airbus of $3.5 million were a little heavy in this quarter. We only forecasted $9.5 million for the year.

Our business jet product line came in at $5.9 million for the quarter, close to what we were anticipating, but down from last year. Last year at this time, we had three major development jobs underway, the Hawker Horizon, the Bombardier Challenger and the Gulfstream G450. This year, the development workload is much reduced, but we have, in the quarter, completed some scope change negotiations which have affected sales in the quarter, profits and loss reserves. In this quarter, the profit impact, taken altogether, was a favorable $1.8 million.

Aftermarket of $12.4 million is a little light but in the ballpark. It was down from a strong $15 million quarter a year ago, but comparable to the typical quarter in the balance of ’03.

So, as I said a little earlier, in total, the Aircraft business was just fine in the first quarter. Sales are right on target for the year. Margin performance, at 16.5%, was down in comparison to an unusually high 19% margin the first quarter of last year, but headed in the direction that we anticipate. We had projected margins for this fiscal year of 16.2%, recognizing the influence of the modest margins on the F-35, much lighter shipments of F-15 equipment overseas, and the potential of additional expense on the 7E7.

Space & Missiles Q1’04

Sales for the quarter of just under $22 million were just about what we anticipated. Our plan for the year would average just over $22 million. Compared with the same quarter a year ago, we’re down about 5%, or about $1 million.

There are a number of puts and takes in the quarter-to-quarter comparison. This year, in the quarter, we delivered less hardware to Lockheed for the A2100 and, compared with last year, there was a smaller complement of science projects in the space mechanisms part of our business.