(INTRODUCTION FOR CONFERENCE CALL)

Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today's date, our most recent Form 10K filed on November 29, 2006, and in certain of our other public filings with the SEC.

Good morning. Thanks for joining us. This morning we'll report on the first quarter of fiscal '07, and we'll update our guidance for the year.

The results I'm about to describe are the strongest first quarter I can remember. Sales of $356 million were up 15%. Net earnings of $24.1 million were up 43% from the year previous and earnings per share at $.56 were up 30%. We're $.05 ahead of our most recent guidance for this quarter.

Looking at the consolidated P&L, the $46 million sales increase produced a $20 million increase in gross margin. R&D was way up. An increase of almost $9 million took R&D to 6.2% of sales. On the other hand, SG&A was down to 15.9% of sales. Interest was about the same. Net earnings of $24.1 million were 6.8% of sales and up 43% from last year. You'll recall that we issued shares in the early part of '06 so our average share count has increased. Earnings per share at $.56, as I said before, were up 30%.

This was a great start for the year. In three of our Segments product mix was very favorable and operating profits were unusually strong. We do think that the next three quarters are likely to track more closely to our original plan. We expect that there will be some small changes in our sales forecast but in total we're forecasting an upward shift in the midpoint of our range by $2 million. So our sales guidance is now $1.440 billion ± 10 million. We expect that margins will return to more normal levels and that the next three quarters will be $.55, $.58, and $.61 bringing us to a total of $2.30 per share. That will represent a 17% EPS increase.

Now, let me go to the segments.

Aircraft Q1

As you know, our Aircraft business is in the midst of a period of intense product and program development. For the year, we had predicted modest sales growth of about 4% and slightly reduced margins. That was the pattern in the first quarter. Overall Aircraft sales grew by 3% to $131 million. The growth was all in commercial programs. OEM sales to Boeing Commercial were up by 16% to just under $13 million. Sales on business jets were up slightly to just over $8 million. Commercial aftermarket revenue grew 7% to $21.2 million. Total commercial aircraft sales of $51.2 million were up 8% from last year.

Military aircraft sales of $79.6 million were very slightly below last year's first quarter. Sales on our major production programs were pretty close to last year. Revenue on the F 35 development programs of $18 million was down about $800,000 from last year. As you all know, the F-35 made its first flight in mid-December. All our equipment performed flawlessly. We're now entering a phase in which the level of effort on the development programs will trend down over the course of the year. We're forecasting that the next three quarters will average about $16 million a quarter.

The Military aftermarket at $24.3 million was down $2 million from last year. We're expecting that it will strengthen as the year progresses and we're now forecasting $114 million for the year. This is a reduction of about $7 million from our previous forecast. However, it appears that our previous forecast for OEM equipment on the V 22, and the Blackhawk was a little conservative, so we're maintaining our Military aircraft forecast at the $321 million we previously projected. We're still comfortable with our commercial forecast of $227 million so in total we're still projecting Aircraft for '07 at $548 million.