Now, I'll turn you over to Bob Banta who will talk about cash flow and debt levels. Here's Bob.

As most of you will recall, our ’05 guidance for cash flow as measured by our reduction in total debt, net of cash balances, has been $50-$55 million. Based on our performance in the first quarter, we’ll have to take that estimate up.

Our total debt, net of cash, decreased by $37 million for the quarter just ended. That’s way beyond our expectations. Cash flow from operations off the cash flow statement was $43 million with depreciation and amortization of $8.7 million and capital expenditures at $9.0 million.

This performance, well in excess of our plans, was pushed by the receipt of $13 million of customer advances for our recently restarted work on the Indian Light Combat Aircraft and for our work on deliveries of F-15 hardware for the Japanese. Without the increase in customer advances, cash flow was running about $30 million for the quarter. For all of ’05, we’re now expecting to reduce debt by an amount in excess of $70 million.

Based on our debt reduction and the increase in shareholders’ book equity, our total debt to total capitalization ratio is 37%. Shareholders’ book equity is over half a billion dollars. Our strong earnings and the conversion of all our assets overseas into dollars caused our book equity to increase by $31 million in the quarter.

EBITDA was $34.3 million in the first quarter and we're expecting EBITDA for all of '05 to amount to $148 million.





Loss reserve liabilities increased by $800 thousand to $15.1 million in the quarter from $14.3 million at year-end. Bob outlined the cost increases that we've accrued for the Hawker Program which pushed up our loss reserves.

Contributions to our pension plans totaled $6 million on a worldwide basis with $5 million of that for the U.S. plans. We still see all of ’05 running about $10 million in worldwide outlays as we accelerated some payments in Q1 given our strong cash flow.