Given the performance in this quarter, we're revising our Aircraft forecast for the year. We're increasing military aircraft by $5 million to $306 million. This is mostly the impact of increased costs incurred on the F-35 cost-plus development contract. On the Commercial side, we're increasing by $6.5 million to $191 million reflecting the strength in the aftermarket. So the new Aircraft total will be $497 million. We're expecting some improvement in Aircraft margins as the year goes on, and taken together with the results from the first half, we now think margins for the year will average 13.2%.

We're through all the rough stuff now. From here on out, there's nothing but good news.

Space & Defense

Space and Defense had sales of $38.9 million, an increase of 26% or $8 million compared with last year. Of the sales increase, $1.7 million was the result of the Flo-Tork acquisition. But, setting that aside, the organic sales increase was 20%.

The big increases were in Defense Controls and in Tactical Missiles. In Defense Controls, sales were up over $2 million to $8.7 million. Sales increased in a variety of programs wherein we're providing electric motors and the associated motor controllers. Among the programs are the Marine Corps LAV-25 and the Stryker Mobile Gun System in the US, the Hagglund's CV90-30 in Europe, and a vehicle called the M-113 for Tenix in Australia. For over 20 years, we've been developing and refining our product line of electric drives and electronic motor controllers for military vehicles. As more and more of these vehicles shift away from hydraulic drives to electric, this product line has more and more potential.

The big news in Defense Controls is the announcement just made by Curtiss-Wright that General Dynamics Land Systems has selected the team of Curtiss-Wright and Moog to provide Servo Motor Controllers for the U.S. Army's Future Combat System Manned Ground Vehicles. Curtiss-Wright Controls will be the contract lead and the work will be shared equally. Moog's part will be providing a family of multi-axis motor controllers. The initial contract to Curtiss-Wright will be $32 million for 45 systems but the program potential is huge. The Army has plans to build 5,500 systems over the next 15 years. Including the impact of this new program, our forecast for Defense Controls in '06 is slightly over $36 million.

The other growth category in Space and Defense is Tactical Missiles. Sales were up $4.5 million to a total of just under $8 million. Compared to a year ago, the increase reflects a new order for Maverick missile systems, the restart of production on the TOW Missile, and resumed deliveries on VT1.

Our strategic missile business was up slightly in the quarter to a total of $3.6 million and the increase was mostly the refurbishment work on Minuteman.

Satellite revenues were down slightly in the quarter to just under $10 million. In previous quarters, we've reported that our military satellite activity, which was hectic in fiscal '05, would ease off slightly in '06 as some classified satellite programs completed. That's happening, but at a slower pace than we predicted. As a result, we're increasing our forecast for the year for the satellite business by $9 million to a new total of just under $38 million.

As I mentioned earlier, the Flo-Tork acquisition provided $1.7 million in defense sales in this quarter. This was primarily work on Navy submarines.

Given the strength in Satellites and Defense Controls and the resumption of some of the Tactical Missile programs, we're increasing our forecast for the year in Space and Defense from $138 million to $148 million.