Sales for the quarter were $234 million, up 23% from a year ago. Our sales this year include almost $33 million of sales from the Moog Components Group, the acquisition we made at the beginning of this year. Sales without the acquisition would have been up 6%.

Earnings of $14.1 million were up 37% from a year ago. Since last year, we’ve sold 2 million + shares which covered about half of the acquisition cost, and we’ve also completed a three-for-two stock split. As a result, we have 15% more shares outstanding and, on an earnings-per-share basis, the results this quarter were 53 cents, up 18% from 45 cents a share last year at this time.

This is a great set of results, particularly since they were achieved in spite of some problems which I’ll describe in some detail in a few minutes.

If we look at the P&L, a couple of numbers really stand out. In this quarter, we completed a major proposal effort for the Boeing 7E7. That effort is expensed as bid and proposal activity and shows up in selling expenses and, as a result, those expenses are up considerably. Some of the folks who were a part of that effort would normally be charging to contracts and their costs would be in costs of good sold. A reassignment into selling expense reduces costs of goods sold and improves gross margins. Some other of those folks would normally be charging to Company-funded research and development and, since they weren’t, those expense levels are down as a per cent of sales. So, in the quarter, we had high gross margins, low R&D, and high selling expense. Operating profit was up nicely and interest expense was down from last year. You’ll recall that last year we still had high-yield debt outstanding which we retired in the third quarter. As a result of these puts and takes, pre-tax and after-tax earnings were up significantly over the second quarter of last year.

Bob Banta will discuss cash flow and debt levels. That’s a very positive story as well. But, before we get to that, I’ll report on the four segments of our business.

Aircraft - Q2’04

Aircraft sales of $102 million were almost the same as last quarter, up about 3% from the same quarter a year ago. However, the military portion at $71 million, now 70% of the total, was up 14%, or $9 million. The commercial portion at $30 million is down 17%, or $6 million. So, it’s the net of the two that results in an increase of about 3%.

The principal driver for the increase in military sales is, once again, the Joint Strike Fighter Program. Sales in the quarter were close to $18 million, and $6 million higher than last year’s second quarter. The increase in this quarter was not so much activity in our Company. As you know, we have two partners on the primary flight control portion of the program, Parker Hannifin and Hamilton Sundstrand. The activity level in both those companies has grown dramatically over the last year and peaked in this quarter. I’ll come back to the Joint Strike Fighter Program in a moment. In addition, though, to the JSF increase, we did have sales increases on the F-18 and the V-22. Also, in the quarter, we had a lot of activity on flight controls for the Indian Light Combat Aircraft.

The military aftermarket was actually down slightly from the same quarter a year ago and at a level comparable to what we achieved last quarter.

So, that’s how the second quarter came out in the military aircraft business. Before I move on to the discussion of the commercial airplane business in the quarter, let me describe some small swings in the military business for the balance of the year. We had a forecast for the year of military aircraft sales of $273 million. We’re currently more than halfway through that forecast and, if the current level of activity on the Joint Strike Fighter were to continue, we’d overshoot by many millions. But that’s not going to happen. We are close to completion on some major tasks on the program. We’ve completed the production of test hardware for the Air Force aircraft, test equipment is close to complete, and a major effort in software development is drawing to a close. So, what has been an $18 million per quarter program will trend down to $10 million for the next couple quarters. Even so, we now think we’ll end the year at $56 million for the program, about $3 million higher than our most recent forecast. In addition to that, we’re running a little stronger on the F-18 than we’d planned, the engine controls product line is running ahead of forecast, and we expect a new order for sub-assemblies which will be delivered to our Japanese F-15 customer. These increases, as we now see it, will more than offset a $7 million shortfall in the military aftermarket, and the cancellation of the Comanche, which will reduce sales by $1.4 million. Last year, our revenues in the military aftermarket were just under $90 million. For this year, we had projected an increase to about $97 million. But we continue to encounter delays in funding releases for U. S. Air Force F-15 repairs and for Black Hawk actuators from the Redstone Arsenal. In addition, we’ve experienced some delays in the return of hardware for repair on both the F-16 and the F-18. A realistic look at this whole situation suggests that somewhere between $90 million and $92 million is perhaps a more realistic target.

When you put the whole picture together, as close as we can call it at this stage, we’ll achieve $276 million in sales for military aircraft, and it will be achieved with a slightly different mix than we’d originally projected.