Given the strong sales and incoming order rates we've experienced the first half of the year, it now appears that the Components will exceed our most recent forecast of $140 million and probably come in at $145 million. Margins for the Components were also strong, 13.8% in the quarter, 13.5% in the first six months. It now appears reasonable to increase our margins for the year from what was 13.3% to a new level of 13.7%.

Recap

Now, let me recap the changes we've made in the segments. We've maintained our Aircraft sales forecast at $424 million, but reduced the margin to 14.7%. We've maintained the sales forecast in Space & Defense at $128 million, and increased margins to 10.4%. We've increased the sales forecast for our Industrial segment to $308 million, but reduced margins to 8.7%, and we've increased the sales forecast for our Components segment to $145 million, and increased margins to 13.7%. The overall result would be sales of just over $1 billion and overall margins of 12.2%, which margin performance compares quite favorably to the last two years at 11.6% and 11.3%.

So, in summary, our guidance for sales is up slightly so that our midrange forecast is just over $1 billion, but we're maintaining our guidance of midrange earnings at $64.3 million, or $1.63 a share. We're now at 78 cents for earnings per share year-to-date and we anticipate that the third and fourth quarters will be in a range centered around 42 cents and 43 cents, respectively.

Here's Bob Banta.

For the first half of '05, we've reduced our debt, net of cash balances, by $34 million. The change from the end of Q1 to this March saw net debt go up by $2.7 million. We did have three items that used almost $8 million of cash. We spent $3 million on the high-yield debt issuance costs, $2.1 million on the ProControl acquisition that Bob outlined, and $2.5 million for another small acquisition in Holland that does repair work on our flight control products used on commercial aircraft. So, adjusting for these $8 million of outlays means net debt reduction would have been $5 million in the last 90 days. Our receivables increased by $20.5 million in the last 90 days, mostly in our Aircraft segment. Collection of these balances from a wide variety of customers in the second half still gives us confidence that we would have reduced debt by about $72 million for the year. After adjusting by the $8 million spent this quarter, the year-end number will be about $64 million in net debt reduction.

Capital expenditures were $5.8 million in the quarter and $14.8 million for the first half. Depreciation and amortization was $8.9 million for the 90 days and totals $17.6 million for the half.

EBITDA for the first six months of fiscal 2005 was $70.1 million through March, or 13.9% of sales.

Contract loss reserves decreased by $900K in the last 90 days in spite of the increase in the reserves by $2.4 million for the A400M and the A380. Reductions or utilization of the reserve for normal activities on the “Bizjet” programs, the Joint Common Missile, and various other activities used up the reserves to bring our March end totals to $14.3 million.

Lastly, I'd like to make note of our new level of shares outstanding. As a result of our very recent three-for-two stock split (or stock dividend to be technically correct), we now have just under 40 million shares outstanding. This split follows two other successful three-for-two splits. We've substantially increased daily trading volume. Improving trading liquidity continues to be one of our goals.