Now, Bob will describe in more detail our very strong cash flow.

Bob Banta, EVP and CFO:

Cash flow, as measured by our reduction in debt, net of cash balances was outstanding in the last ninety days! Our net debt was reduced by $45.3 million. Adding this to the $12 million we generated in Q1, gets us to $57 million for the first half. That’s way beyond our expectations. Fifty-seven million equals or exceeds our previous guidance for the whole of ’04. We’re very pleased to say the least. Not only are we saving interest on the $57 million of debt reduction, but the ratio of our net debt, divided by our trailing twelve-month EBITDA ratio, has been reduced to the point where we’ll automatically obtain a quarter point reduction to 1 ½% over Libor for the $127 million of variable rate, unswapped debt outstanding under our bank revolving credit agreement. Our loan agreement includes a schedule for spread pricing using this ratio.

So, from where did all the cash come? Let me outline some items. Several of these items are things that won’t reoccur every quarter. For example, we received $6 million dollars back from Northrop, the seller of Poly-Sci per a post-closing working capital adjustment. Also, we collected $7.5 million from scope change negotiations from our business jet products. You might remember that we accrued and billed these scope changes last quarter. We received advance payments totaling $10 million on two military programs. One for $6.5 million was on the F/A-18E/F. The money from Boeing will be used to make design changes and manufacturing improvements that will lower our costs of production and, therefore, our prices to Boeing. The cash received from Boeing will be recognized in future years as our activity progresses. The other advance of $3.5 million was from the Koreans on their T-50 airplane program. We often obtain up-front milestones from customers overseas. Lastly, we received $3.7 million from our fire insurance carrier in Germany. During the quarter, one of our German facilities suffered a fire that damaged inventory and some equipment. Fortunately, our folks were quickly back in operation. The advance, a partial payment, will be used to replace the damaged assets.

All these somewhat unique items totaled $27.2 million. Perhaps you could say our more normal cash flow was about $18 million in the quarter, or even $28 million if you consider that we made an extra $10 million of payments into our pension plan. Whatever, we think it’s great. Interest costs will be reduced!

Our new forecast for net debt reduction for all of ’04 is approximately $70 million. That includes an average of about $7 million for each of the last two quarters. This assumes more normal cash contributions to our pension plan (approximately $5 million per quarter globally). However, we may decide to accelerate payments into these plans in order to generate FAS 87 pension savings both in FY ‘04 and ‘05.

I’d also like to comment on the $3.9 million reduction in contract loss reserves on the balance sheet. In the quarter, we reduced our loss reserve on the now terminated Comanche Helicopter development program by $1.2 million. Also, we utilized, or amortized, about $900,000 of the $1.8 million reserve we established last quarter to fix the valves acquired from PerkinElmer. Production utilized another $1.8 million of loss reserves on our biz jets programs.

Depreciation and amortization for the quarter was $8.9 million while capital expenditures were $6.2 million in the quarter. Our long-term debt to total capitalization ratio is now under 40%.