The largest single military program in the quarter is a complement of slip rings and motors used on the Bradley Fighting Vehicle for the Commander’s Independent Viewing System. It’s about $1 million. But, in the Moog product breakdown, we include these kinds of defense controls in our Industrial category since they don’t fit either Aircraft or Space.

If we continue to look on a program basis, the ten largest programs add up to a little over $3.6 million, or about 12% of sales, and most programs involve a collection of hardware which includes both slip rings and motors. There are radar programs like Lamps, Lantirn and Longbow, aircraft programs on the F-18, the Apache, the V-22 and the Comanche, and solar array drive actuators for the Lockheed A2100.

If we turn to the industrial side, not including $2.2 million worth of defense systems for military vehicles, the balance is just a little over $11 million, which breaks down to $4 million for Respironics, about $1 million in slip rings for CAT scan applications, and about $5.5 million of straight industrial business, of which 75% are slip rings. A lot of them go into either robotic applications or closed-circuit TV, the eyeball in the sky for surveillance systems. The balance are small electric motors sold in a wide variety of applications.

If we break down the $31 million in sales for the quarter by product, it’s about 45% slip rings, 36% motors and the balance, 19%, electromechanical instrumentation, actuators and fiber-optic devices. In terms of operating profit margins, the product lines all seem to be quite comparable and consistent one with the other. So, at this point, it doesn’t appear that product mix is a major variable in the profitability of the operation. Operating margins for the quarter were 8.5% after the write-off of $1.8 million that was added to our beginning inventory balances per acquisition accounting under FAS 141. Without that impact, the operating margins would have been over 14%.

With respect to prospects for the future, as I said at the outset, a sales forecast for the Components Group of about $135 million will be more reasonable than the $140 million that we had been talking about. That would involve a quarterly sales level only slightly higher than what we’ve just experienced. This is a business where some orders have long lead times and are on programs that provide a lot of visibility. On the other hand, some of the major customers are ordering on lead times measured in days. So, one can’t speak with a great deal of certainty, but we are optimistic that sales in the second quarter will be comparable or up slightly from the current quarter.

Summary

Putting it all together, we had a great quarter, particularly when you consider the negative impact of the recall reserve of $1.8 million and the one-time inventory write-off for the Components Group of $1.8 million. On the other hand, scope change pick-ups don’t happen each quarter either and they provided a positive $1.8 million. So, we can net all these down to $1.8 million pre-tax negative in the quarter, or a $1.2 million negative after-tax effect. That’s about $.07 per share. Without all of these items, our $.72 could have been about $.79.

So, we’re therefore confident in our ’04 sales forecast of $920 million and $940 million, net earnings between $54.8 million and $58.3 million, and earnings per share between $3.10 and $3.30. Using the middle of this range, we see quarterly earnings per share for the next three quarters as $.78, $.84 and $.86, respectively.

Our outlook for ’04 Aircraft sales remains at $408 million, with operating margins at 16.2%. Sales of Space products should improve to $91 million and margins for the entire year can still achieve break even. Industrial sales are likely to increase by $3 million from our earlier forecasts to $296 million based on the improving outlook for products sold by our Industrial folks in the U. S. Margins of 8.6% should be achieved. Some Components Group sales will probably slide out to ’05, so we’re tuning that forecast down to $135 million. On the other hand, operating margins will improve from 10.5% to at least 11.2%, including the costs of opening balance sheet inventory amortization. Consolidated operating margins are expected to come in at around 11.5%.

Let me ask Bob to detail our strong cash flow numbers.

Cash flow was quite strong in the quarter at $12 million. For those who have already tried to compute the cash generation from the balance sheet in this morning’s press release, you’re probably interested in our math. Here’s some detail.